-->hat mir der director Paul LaFontaine gerade gemailt.

SILVER STANDARD RES. - SSO (TSX-VEN) $9.01; SSRI (NASDAQ) US$6.00
Target Raised to Reflect Silver Price Rise Impact - Now $11.30, was $9.00
Ian Howat - (416) 869-7936 - ian.howat@nbfinancial.com
Associate: Johann Aler - 416-869-6538 - johann.aler@nbfinancial.com
STOCK RATING: SECTOR PERFORM (S) u TARGET: Cdn$11.30 (was Cdn$9.00)
Industry Rating (Precious Metals & Minerals): Underweight (NBF Economics & Strategy Group)
Estimates (Year-End Dec. 31) Valuation Basic Information
01A 02E 03E 02E 03E 52-Week Range 12-Month Target
Oper. EPS (0.13) (0.07) (0.08) P/E NA NA $11.90 - $3.45 $11.30
Silver US$/oz. 4.40 4.70 5.30 Shs O/S (FD mln) Mkt. Val. ($mln)
Oper. CFPS (0.06) (0.07) (0.08) P/CF NA NA 47.4 $ 427.1
All $ numbers in Cdn$, unless otherwise stated; (S) = speculative.
Silver prices are up over 11% since Oct. 21, 2002, when we last updated our target price for Silver Standard and
the company has made several announcements. The share price has rallied over 70% during this period. We believe
there is more upside, especially as we expect the silver price to continue its recent upward trend along with the gold price,
the weakening U.S. dollar and an improving economic outlook. The silver price closed on Friday (Jan. 3) at US$4.90 per
ounce. Our forecast is for the silver price to average US$5.30 per ounce in 2003 and then US$6.00 per ounce in 2004.
To value Silver Standard we have used Option Based Valuation: Being a non-producer, we would expect Silver
Standard’s option value to constitute a dominant portion of its value and this is exactly the case. At the current silver price,
all the company’s projects are uneconomical (negative net present values) using each project’s risk-adjusted discount
rate. However, at projected breakeven costs (cash costs plus sustaining capex per ounce), and considering the resource
bases, these projects offer significant call values, especially Pirquitas, Bowdens, Diablillos and Manantial Espejo. Using
this methodology and our forecast average silver price of US$5.30 per ounce, we have calculated a fair value estimate of
US$9.30 per share. This value takes into account 100% of the company’s share of measured and indicated resources but
attributes no value to the substantial inferred resources nor to the ounces at its recent acquired properties or interests.
With the recent increase in the share price, we have lowered our estimate of the required dilution required to develop
these projects. We have analyzed the effect on the option-based value of the company under different dilution scenarios.
A dilution of 30% on the company’s number of shares outstanding would result in a fair value of $11.31 per share. This is
the basis of our target price of $11.30. Our previous target was based on 50% dilution. If 50% of the value of the inferred
resources were included then the option-based value would reach $17.38 at 30% dilution.
Including the Silvertip project and the Maverick Springs project, Silver Standard’s measured and indicated resources now
total over 250 million ounces (5.3 ounces per fully diluted share) and inferred resources another 317 million ounces (6.7
ounces per share). If silver prices continue to rise, the option value of these ounces will also rise.
Announcements Since Our Last Note
On Dec. 30, 2002, Silver Standard announced positive results from a drilling program at the Bowdens project located in
New South Wales, Australia, where a 13,500-metre drilling program is in progress. The first set of results from 10 in-filling
cored holes totalling 1,045 metres identified a new lens of high-grade silver and base metal massive sulfide mineralization
in the Bundarra North Zone and continues to confirm grade and continuity encountered in previous drilling programs. The
high-grade lens identified in three holes to date extends over a strike length of at least 150 metres. Assay results ranged
from 155.9 ounces of silver per ton, 20.5% lead and 12.7% zinc over 3.9 feet (1.25 metres) in BGD-026 to 36.7 ounces of
silver per ton, 20.5% lead and 3.5% zinc over 3.9 feet (1.2 metres) in BGD-029. The high-grade zone occurs within thick
sequences of lower grade mineralization and is open laterally and along strike. Other holes planned in the current
program will test the extent of mineralization in the vicinity of these holes.
On Dec. 20, 2002, Silver Standard closed the US$2.2 million financing from a private placement of 550,000 units at a
price per unit of US$4.05 with Elliott International and Liverpool Partnership, the company’s 56.6% partners in the
Pirquitas project. Each unit consisted of one common share and 0.55 of a two-year warrant with an exercise price of
US$5.05.
Page 2
On Dec. 16, 2002, Vista Gold (T-VGZ), Silver Standard’s joint venture partner in the Maverick Springs project, released
the results of the just completed reverse-circulation drilling program. The drilling program successfully outlined continuous
mineralization in a 2,200-foot by 1,200-foot area, flat-lying and predominantly oxidized to depths of up to 900 feet. The
highest grade intersection consisted of 14.13 ounces per ton over 40 feet, or 484 grams per tonne. Under the joint venture
agreement, SSO will own all the property’s silver resources while Vista will own the gold resources. Current indicated and
inferred resources stand at 824,000 ounces of gold and 101 million ounces of silver.
On Dec. 2, 2002, Silver Standard finalized the purchase of a 100% interest in the Silvertip project from Imperial Metals
Corporation. Located in northern British Columbia, the deposit reportedly contains indicated and inferred resources
totalling 26.9 million ounces of silver. Total consideration consisted of $1.2 million in cash and 100,000 common shares
with a four-month holding period. At current share prices, this places the acquisition cost at US$0.045 per resource ounce
of silver, in line with the company’s strategy of less than US$0.05 per resource ounce acquisition price. We have not
included this property in our option valuation as we are waiting for some more details on the property to allow us to
calculate an NAV.
On Nov. 25, 2002, Pan American Silver and Silver Standard announced the results from the first 2.4 kilometres of the
currently ongoing six-kilometre drilling program at the equally-owned silver-gold Manantial Espejo project in Argentina.
Costing approximately US$2 million, the infill drilling is being conducted on the principal vein, resource definition drilling at
an adjacent vein and extension and exploration drilling. Results from the 10-infill drill holes confirmed the continuity of the
main vein called Maria, where the best intercept showed 14.3 grams per tonne (g/t) gold and 360.3 g/t of silver over an
8.5-metre intercept. The Maria vein has been traced on the surface for a strike length of at least 2 kilometres, and
comprises 70% of the known mineralization in the project. Step out holes are planned in the current program to determine
the vein’s continuity at depth. Assays were also received for six holes drilled at the Melissa vein, 700 metres from the
Maria vein, where previous drill holes intersected bonanza-grade silver and gold values. The best result from the current
drilling program comprises a 3.4-metre intercept grading 17.8 g/t of gold and 1,531 g/t of silver. A resource estimate on
the Melissa Vein is expected from the drilling program. The program is also expected to result in an updated project prefeasibility
study in 2003.
On Nov. 7, 2002, Silver Standard entered into an earn-in agreement with Vista Gold covering a gold-silver prospect called
Maverick Springs in Nevada. Silver Standard will pay US$300,000 on closing and contribute US$1.2 million in exploration
and holding costs. A joint venture will be formed that is 55% owned by SSO and 45% by VGZ, but SSO will end up
owning all of the property’s silver resources while VGZ will get all the gold resources. Vista acquired 100% of Maverick
Springs from Newmont subject to back-in rights and underlying royalties. Total indicated and inferred gold resources are
currently estimated at 824,000 ounces of gold and 101 million ounces of silver. Silver Standard will pay approximately
US$0.015 per ounce of silver resource, subject to Newmont’s back-in rights.
Silver Standard represents a unique way to play rising silver prices with its large resource of silver ounces in the ground.
We believe that silver prices will continue to rise as the U.S. dollar falls and as economic activity improves. We rate the
shares a speculative Sector Perform (S), while the Precious Metals and Minerals Sector is rated Underweight by
our Economics & Strategy Group. We have increased our target price to $11.30.
# National Bank Financial has assumed an underwriting liability for, and/or provided financial advice for consideration to, this company during the past 12 months.
** Two or more classes of common shares exist with differential voting rights.
National Bank Financial (the Firm) is an indirect wholly owned subsidiary of National Bank of Canada.
The particulars contained herein were obtained from sources which we believe reliable but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and
interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The Firm may act as financial advisor, fiscal agent or underwriter for
certain of the companies mentioned herein and may receive a remuneration for its services. The Firm and/or its officers, directors, representatives, associates, may have a position in the securities
mentioned herein and may make purchases and/or sales of these securities from time to time in the open market or otherwise.
To U.S. residents: NBC International (USA), an affiliate of the Firm, accepts responsibility for the contents of this report, subject to any terms set out above. Any U.S. person wishing to effect transactions
in any security discussed herein should do so only through NBC International (USA).