Santacruz Silver Mining Ltd (SCZ.V)

SCZ trades at a reasonable valuation of 8.3X forward earnings, sales growth has been strong, margins are expanding, and debt levels are reasonable. It generates healthy free cash flows, and we think it looks fairly attractive here.
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Total production fell 4%. We are not geologists or mining engineers, and 'water' issues are always very uncertain. The company has noted that the overflow has been resolved and stopes are being returned to normal. Investors are clearly not concerned, considering the giant gain in the stock this year. We have no reason to be wary of management's statements, but nature does have a way of throwing curve balls. But, so far so good in terms of the 'fix'. Regardless, the still very low valuation here of 7X earnings, and the strong sector, makes it interesting and we would be OK with a small position today.
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EPS of $0.06 beat estimates of $0.02 and revenues of $73.3M missed estimates of $79M. Sales grew 4%, margins expanded nicely, and its cash position grew significantly for the year. Despite its challenges at the Bolivar mine, it demonstrated resilience through its San Lucas ore sourcing business, and management feels the production at Bolivar will normalize by Q4, positioning it for further growth. We think this name looks attractive here. We would position it in the upper decile of all TSX small cap mining companies.
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Silver tends to follow gold, with the caveat that it also has industrial usages, so in a recession it may lag. But we think the outlook is good, with rates likely to decline (eventually) and the US dollar possible weaker (especially if policy moves push it into recession, which is not beyond possibility). Then, we are the typical 'fear' trade on both gold and silver. Recent concern on the gold in Fort Knox is interesting because it has long been rumoured also that silver bullion is in shortage if one looks at all the silver certificates that have been issued. Bottom line: we do think silver moves higher. SCZ is up 100% in the past year, Production has ramped nicely, with 4.7M oz in the Q4. Revenue rose 21% and EBITDA rose 242% in the Q3 (Q4 financials not yet out, just production). It did have a mine fatality in February. Insiders own 11% and net over six months insiders have been buyers. CEO buys are always a little more meaningful. Things look decent here for investors in the sector and willing to take on small cap risks here. 
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The silver sector has had a spectacular run. He has a prejudice against small mines, because they have all the risks of the big mines, but can never make you money.