Re Valuation, page-48

I'm very bullish on Silver. The commercials (banks that always seem to be on the right side of the trade) are net neutral having covered all of their shorts and the small speculators (mostly wrong side of the trade - believers in free and fair markets) are at record net short levels. Ag could easily bounce $5 from here. Au COT, whilst not as bullish as Ag, will handsomely reward the bullion banks and slaughter the small speculators too, with a $100-200 price rise. We're primed for short squeeze rallies in both metals.

Whether this upcoming rally is another several month affair followed by the usual beat down (with bullion banks winning again on the downside) - who knows!! I'm patiently waiting for something along the lines of commercial signal failure, when physical supply can't meet the weakest physical demand. All bets on price are off at this moment. That's the moment that you've either got your physical metal/ quality mining stocks (at a reasonable price) or you haven't.

The beauty about SAU is that it could still do quite well with current metal prices (or perhaps even slightly lower). If though, prices can rise to AUD $2000 Au/ $35 Ag - we're sitting very pretty. At $5000 Au/ $100 Ag, every metric tonne of ore within our tenements (within striking distance) with grades of 1.0 g/t Au, 50 g/t will be highly economic to mine (at least until mining costs rise subsequently, years later). That's a mind blowing amount - I would hesitate to even guess at.

Higher gold/silver prices would help SAU, JORC up many millions of Au (equivalent) ounces in reserves. Every multi gram per tonne vein will be mined (actual economic at current prices). Gubong and Cowarna projects could be the biggest beneficiaries of higher prices because their high tonnages of ore that can be mined - could be huge.

The high grade stuff is absolutely manna from heaven for SAU at current prices. However, at higher prices, SAU has several high tonnage, lower grade ore (haha 1-2 or 3-4 g/t), options. All bases seem well covered, IMO.