Why Are Sterling Mining Company (SRLMQ) Shares Being Bid Up?

Shares of Sterling Mining Company are up over 100% in the last 4 trading days from $0.08 to $0.18 as of this writing. But why?

Sterling entered into bankruptcy on March 2, 2009. It's share price has traded as low as under 1 cent per share. But now, the shares are rocketing higher.

One reason might be that Sterling Mining just took back control of the famous (infamous) Sunshine Silver Mine.

Sterling Mining Company Spokesman Bob Higdem, left, receives the keys to the Sunshine Mine from Sunshine Precious Metals Inc., security personnel Wednesday afternoon.

Source: Shoshone News Press

But, do Sterling Mining Company common shares which currently trade under the symbol SRLMQ have any value?

Apparently someone thinks they do. But I have to wonder seeing as they entered bankruptcy if the common shareholders will retain any value when all is said and done. It seems possible that the common shareholders could just get wiped out by the bankruptcy court leaving the shareholders the empty bag.

It is pretty interesting to see them take back control of the mine though.

I own shares of Sterling Mining and have lost almost all of my investment on this company.

Sterling Mining Loses The Famous Sunshine Mine and More

Sterling Mining Company (SRLM) has lost the asset that made it famous and made it an attractive investment for many people. The company has finally run out of places to hide and has taken almost all of it's investors for a terrible ride.

With the stock trading for around 3 pennies, it is looking highly probable that Sterling Mining will end up completely bankrupt and without any value for its shareholders. This company was very mismanaged and lost a lot of money for a lot of people.

I am one of those people. Although I hold my shares in certificate form, they really are not worth much more than the toilet paper that I wipe with.

More information here:

http://sev.prnewswire.com/mining-metals/20090223/NY7392523022009-1.html

http://www.proactiveinvestors.com/companies/news/1003/minco-silver-forecloses-on-sterling-mining--1003.html

Update on Sterling Mining (SRLM)

If you have read here before then you know that I own shares of Sterling Mining Company (SRLM). I paid more than $3.00 per share for the shares I own. I purchased SRLM as a long term investment as I believed (and still do) in the core property that they operate which is the famous Sunshine Mine in the Silver Valley, Idaho.

Since the time I wrote my last post on Sterling Mining, alot has happened. While the price of silver was steadily climbing, the price of Sterling common shares were continually heading lower. While I poised the question, "Sterling Mining: What is Wrong With This Picture?", I didn't know how prophetic that would be.

I guess that the charts really do tell us what is about to happen sometimes. Since then, SRLM has basically had a collapse in its share price. The company struck a deal to merge with Minco Silver in Canada, but that plan ultimately ended with no deal being struck.

Sterling Mining share price has gone from over $3.00 per share to under 20 cents. Unfortunately for me and many other investors in SRLM commong stock, the company seems to have taken on more that it can handle and hasn't been able to effectively raise capital in this environment to keep its operations ongoing.

I read that they were able to borrow $5 million from Minco before the transaction was dissolved. Since then, Sterling Mining has stated that they are going to pare back operations and reduce the mining staff.

I can only imagine that they are trying to conserve cash at this time and that they are continuing to explore financing options to keep the company on track to return the Sunshine Mine to its full operating capacity.

Further speculating, could there be some naked short selling in this stock? Certainly it is possible as I have read that many of the junior mining shares have been under extreme downward price pressure due to naked short selling. I don't know if this is the case with SRLM or not but I would venture to say it is possible and the timing along with the financial difficulties of the company would have been complimentary.

I don't know if Sterling Mining is fairly valued right now or not. I wonder if the property has lost all of its value. I don't know how it could of since the metal is still in the ground. This would mean that as long as Sterling Mining can stay in business and control this prolific silver property, it is still a long term call option on the silver in the ground.

If Sterling management is prudent and finds a way to achieve continued financing without completely and irresponsibly diluting the existing shareholders, there is still a chance that this company will come out of this ok and be able to return value to the shareholders.

But if the stock price alone is any indication of how the future of this company will end up, then things surely look bleak indeed.

See my previous post on Sterling Mining Here.

Silver and Sterling Mining: What's Wrong With This Picture?

6 Month Chart of Silver ETF (SLV)

6 Month Chart of Sterling Mining Company (SRLM)

There is something wrong with this picture. See if you can find what it is.

While the price of silver is pushing to new highs, the common shares of Sterling Mining Company (SRLM) are sinking in a reverse relationship to the price of the metal it is in the business of prospecting and producing.

I find this odd for a couple of reasons. While silver prices are rocketing higher, SRLM is not showing any positive price action. This smells fishy to me as Sterling appears to be on the verge of being one of the premier silver mining companies in the world in the near future.

Sterling Mining Company has strengthened its status as one of the world's few primary silver producers by restoring the Sunshine Mine in North Idaho's "Silver Valley" to production. The Company acquired the rights to the mine and related assets in mid-2003, and officially commenced initial production in December of 2007.

Along with the Sunshine Mine and exploration properties encompassing over 25,000 acres in North Idaho's "Silver Valley" and neighboring Montana, the Company is exploring and developing properties totaling over 62,500 acres in the historic Zacatecas Silver District of Mexico.

Some recent Sterling Mining Highlights include:

Sterling Mining Company Geographically Diverse Project Portfolio

• The Company's core projects are situated in two of the world's most geologically prospective silver-mining districts, Idaho's renowned Coeur d'Alene (Silver Valley) district and Mexico's historic Zacatecas silver-mining district.

Low Geopolitical Risk

• The Company's advanced projects and newly expanded portfolio of silver properties are situated in politically stable regions with a strong mining heritage. The United States and Mexico are signatories to free-trade agreements and have laws and legislation governing investment in their mineral sectors.

Strong Technical Management

• Sterling Mining has assembled a strong technical and management team to achieve its growth plans in the United States and Mexico, including many Sunshine Mine veterans who contributed their expertise to restoring the Sunshine Mine to production.

Current Highlights

• Commenced initial production at the Sunshine Mine in late 2007.
• Assembled a team of more than 120 employees at the Sunshine Mine by year-end 2007, including many Sunshine Mine veterans.
• Secured a listing with the Toronto Stock Exchange under the trading symbol "SMQ," reflecting a strategy to raise Sterling's global profile and shareholder base. The company's shares began trading on this resource-based exchange on October 2, 2007.
• Began processing Sunshine vein ore from the Mine's Upper Country development in the newly refurbished mill in September of 2007.
• Sterling common shares began trading on the OTC Bulletin Board under the symbol "SRLM" on August 14, 2006. The company is also listed on the Frankfurt Stock Exchange (FSE:SMX).
• Completed a successful financing of US$24.7 million in August of 2007.
• Retained the independent engineering firm to complete a NI 43-10 technical report which identifies a reserve of 23.48M oz and a resource of 231M oz.
• Completed the 5,700-foot Sterling Tunnel Project, and also renovated the Silver Summit Hoist and rehabilitated the Silver Summit shaft to the 3,000-foot Level to complete the Sunshine Mine's secondary escapeway system.
• Expanded landholdings in the United States and Mexico, while continuing to explore priority projects independently or through industry joint ventures.

In the meantime, this may be a great opportunity for those who wish to load up on some shares of SRLM at bargain prices.

Disclaimer: I own shares of Sterling Mining Company (SRLM) and stand to make profits on a rise in the common shares of this company. Do your own due dilligence before you make any investing decision including this one.

Sterling Mining (SRLM) Weekly Chart

This is an updated weekly chart of Sterling Mining Company. Sterling Mining Company owns the famous Sunshine Mine in the Silver Valley.

Sterling Mining Falling Wedge

I recently posted some charts on Caledonia Mining (CALVF) with a bullish falling wedge. Well, it did not break out, but it did go lower.....

What will happen with SRLM? I am looking for a breakout higher again.