• Gold: 1,616.26 -5.46
  • Silver: 14.34 -0.06
  • Euro: 1.079 -0.002
  • USDX: 100.677 0.573
  • Oil: 28.94 4.09

Next Generation Silver Producers Pt. II

Following Part I of this piece, which highlighted three of six “next generation silver producers”, we will focus this piece on the next three, which include SilverCrest Metals, Alexco Resources, and Aurcana. The latter two don’t have tier-I silver asset but are very high grade and this group has an an all-in sustaining cost profile (AISC) in the bottom 50% on the industry cost curve, with SilverCrest and Aurcana having an AISC profile in the lowest quartile. Unlike Part I, whereby one company was nearing production, another was about to make an official production decision, and the last was still 3-4 years away from one (though worth inclusion as it will inevitably be an absolutely massive operation), these three companies are all nearing a production decision, which will be made this year assuming COVID-19 doesn’t completely shut down the capital markets or make the cost of equity very high for a prolonged period of time. As of this writing, it is looking like the metals have put in bottoms as a result of unprecedented global monetary and fiscal stimulus and rampant physical demand, but anything can happen.

Silver Seeker Report: This Week in Mining Issue #6 -- Temporarily Suspended Mining Operations

Due to government mandated shutdowns of select businesses and in this case, mining, in response to the COVID-19 outbreak, there has been rather limited news flow except that related to temporarily suspending mining operations. It is important to note those companies which have temporarily placed operations on care and maintenance (C&M) will see cash outflows from those assets as C&M cost money. Strong balance sheets and available liquidity are imperative given the current market uncertainty. $AEM $AGI $BTC $CXB.TO $CG.TO $EGO $EDV.TO $EQX $FSM $HL $IAG $HL $LUG.TO $MUX $OGC.TO $PAAS $SSRM

Next Generation Silver Producers: Part I

While there are a dearth of primary silver producers and even fewer quality companies, the same can’t be said of the next generation of primary silver producers. With the exception of Pan-American, Hochschild, Hecla, Fortuna, Fresnillo and arguably First Majestic Silver, there are essentially only a couple to no other high-quality primary silver producers (meaning no other companies derive at least 65% of total revenue from silver-equivalent production (silver and gold) and at least 40%-45% +/- from silver, now or in the future (inclusive a company’s advanced development projects), and have an all-in sustaining cost (AISC) profile per ounces of silver in the lowest quartile or bottom 40-50% on the industry cost curve (which may exclude First Majestic Silver for the time being).

Silver Seeker Report: This Week in Mining Issue #5

Endeavour Silver: Things are going from bad to worse for the higher-cost silver producer. In 2019, the company announced its El Cubo mine (which was its most profitable operation for a couple years) had become depletes of mineral reserves and it would be winding down operations until the company could drill out additional resources. This lowered output and caused an increase in companywide all-in sustaining costs (AISC). Further, due to heavy selling in silver and the company’s all-in cost structure being well above spot prices, should this continue for a prolonged period of time, it will be a cash drain. Beyond that, this week, the company completed the updated pre-feasibility study (PFS) at its Terronera silver project. Based on the preliminary economic assessment (PEA) and initial PFS, in addition to encouraging drill results after the study was completed, Terronera was to be its cornerstone asset, and by a substantial margin. Instead of publishing a summary of the PFS, Endeavour is now reviewing the study internally as it is less robust relative to the previous PFS. This could be resolved and be every bit at economic as originally thought but this in nonetheless unsettling news for the time being. | $AUY $PAAS $SILV $SVM $NEE.V $NGD $MUX $KL $GUY.TO $GCM.TO $EXK $ELY.V $GOLD $ALO $AGI

Silver Seeker Report: This Week in Mining Issue #4

$USA $EDV.to $EQX.to $FSM $FNV $WPM $KGC $MAX.to $OSK.to $PVG $NVO.V | America’s Gold and Silver Corp: Reported FY 2019 production of 5.8m AgEq oz, though only 1.2m oz. of that was actual silver ounces, the rest being base metals converted to silver equivalent. 2019 was a transition year for the company as it recapitalized and entered into a JV agreement with Eric Sprott for its Galena Complex. Having visited the site a couple times over the years, it is a solid smaller silver operation but optimization measures, a larger resource base and in turn production coupled with higher silver prices will make this a profitable operation in a couple of years. The real-story here is achieving commercial production at its Relief Canyon gold mine. When first acquired, this was going to be a profitable operation but with low margins, but now with gold $200-$250/oz. higher, it should have solid margins (assuming a long-term gold price deck between $1,450-$1,500/oz). In other words, it is looking like the worst days are behind it and over the next year and a half, should begin to generate a fair amount of cash flow.

Silver Seeker Report: This Week in Mining Issue #3

Aurcana: Increased the previously announced non-brokered private placement from $4m to $5.76m and completed the second tranche. This will go toward underground development (and in turn, reducing cap-ex) to bring its principle asset (Revenue-Virginius) into production and ideally, the remaining capital investment will be funded via debt or at least in large part. While it is difficult to generate positive operating cash flow in the current silver price environment, due to the higher grade nature of the deposit and in turn AISC/AgEq oz. is sub-$10.75/oz. (or $8/oz. Ag), due in part to a resource grade >1k g/t, this shouldn’t be an issue. The asset currently has a relatively small resource base of 21.2m oz. (2P), 29.9m (M&I inclusive of 2P), and an additional 13.2m oz. (Inferred). This asset, while small, will also derive the vast majority of revenue from precious metals: silver (71%) and gold (9%). $AUN.v $BCM.V $CALDAS $EQX $FSM $GOLD.TO $GORO $HIGH.V $MAG $MMX $SAND $SMF.TO $SILV $WM.TO

Silver Seeker Report: This Week in Mining Issue #2

Companies covered in this weekly review: $BTG $KOR.TO $EDV.TO $GCM.TO $MAG $SKE.V $AUY MAG Silver: Construction of the world class Juanicipio silver project continues to progress. The underground mine will commence production ahead of schedule in mid-2020. Over 25km of underground development has been completed to date. There are slight capital-cost over-runs relative to the January 2018 estimate, now estimated at $440m ($194m attributable to MAG). The ramp up will take some time on this large underground mine but this won’t really impact profitability as silver grades are highest in the earlier years. The project is now expected to reach 85% of nameplate capacity in Q4 2021 (up from 65% previously) and 90-95% in 2022. Commissioning of the flotation plant will start mid-2021.

Silver Seeker Report: This Week in Mining Issue #1

Alexco: is in the process of divesting its profitable and fast-growing remediation business (AEG) to the AEG management group. On closing of the transaction AEG will be pay Alexco $12.1m in cash, with the balance of $1.25m payable pursuant to a promissory note maturing on February 14th, 2021. This will go a long way to reducing the required capital investment to bring several Keno Hill mines back into production, feeding a central mill. Construction will start in 2020 and the because the company has already built the mill and started mine development, the buildout period is estimated at 8 or so months... Companies covered in this weekly report: $AXU $USAS $KOR.to $AG $FSM $KNT.v $GSV $KL $OR $SILV $PAAS $TXG.to $WGO.v

Fortuna Silver Mines: Going for the Gold

Fortuna Silver, one of the stalwarts amongst primary silver producers is now in the transition phase from deriving roughly and equal amount of revenue from both silver and gold. Like so many primary silver producers over the last decade, the dearth of primary silver deposits (that which derives more than 65% of total revenue from silver) basically forced Fortuna to look at gold and gold development projects as the best way to grow.

New Pacific Acquires the Silverstrike Project, Bolivia

The Silverstrike Project, at an elevation of 4,000 to 4,500 metres (“m”), is located approximately 140 kilometres (“km”) southwest of La Paz, Bolivia or approximately 450 km northwest of New Pacific’s Silver Sand Project. The Silverstrike Project consists of nine (9) Special Temporary Authorizations (“ATEs”) with an area of approximately 13km2 currently in the process of conversion to ‘Mining Administrative Contracts’ before AJAM. The Vendor has also applied for exploration rights over areas surrounding the Silverstrike Project as part of the transaction.

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