Sector Snap: Silver Companies Gain

Sector Snap: Silver Companies Gain Monday April 7, 2:45 pm ET By Mike Obel, By AP Business Writer
Shares of Silver Producers Gain but Deutsche Bank Analyst Remains Tepid on Sector's Prospects

NEW YORK (AP) -- Shares of silver companies gained Monday, as the stock of two big North American producers recovered from the effect of recent increases in the number of outstanding shares, an analyst said.

Idaho-based Coeur d'Alene Mines Corp. shares, which were mostly higher all morning, were recently unchanged at $3.94, and Vancouver, British Columbia-based Silver Standard Resources Inc. rose 19 cents to $31.35 in afternoon trading.

Deutsche Bank-North America analyst Jorge M. Beristain said Coeur d'Alene has been underperforming in the first quarter after having done well in the fourth quarter.

He attributed Coeur d'Alene's first-quarter struggles to its fourth-quarter issuance of $230 million in convertible debentures, which diluted the stock's value. Further, on March 28, the analyst cut his price target on the stock to $4.40 from $4.60.

Similarly, Silver Standard issued $138 million in senior convertible notes early in the first quarter, which also hurt the share price. The analyst on March 30 cut his price target to $34.72 from $39.68.

Beristain, who has a "Hold" rating on both stocks, does not see them gaining from industrial demand, as the shares of base metal producers typically do.
"We don't see dynamics in the silver market being as tight as base metals," he said in an interview. "Silver is more driven by financial speculation, inflation hedging and jewelry demand than industrial demand, as copper is."

Shares of other silver miners gained. Pan American Silver Corp. was up 53 cents to $39.19, and Hecla Mining Co. gained 8 cents to $11.80. Shares of Silver Wheaton Corp. bucked the trend, declining 17 cents to $16.50.