Top Primary Silver Mining Industry Production Yield Falls To The Lowest Ever

Summary

• The top primary silver mining companies' average yield fell from 13 oz/t in 2005 to 6.0 oz/t last year.
• Peru's Hochschild average yield declined from 7.5 oz/t in 2018 to 5.9 oz/t last year, while Buenaventura's average yield fell from 10.6 oz/t to 7.5 oz/t during the same period.
• Also, Russia's Polymetal International, Dukat Operations, saw its average yield fall to 7.7 oz/t last year down from 8.5 oz/t in 2018.

By Steve St. Angelo

The era of high-grade silver mines may be coming to an end. Remarkably, the top primary silver miners' average yield fell to the lowest ever in 2019. Which begs the question, will high-grade silver mines become extinct in the not-so-distant future? Well, if we look at the data, it seems to be already happening.

Since I started researching the primary silver mining industry, the yields at many high-grade silver mines have fallen drastically. For example, Fresnillo Plc's (OTCPK:FNLPF) Flagship mine, the Fresnillo Mine, had seen its average yield decline from 15 oz/t (ounce per tonne) in 2005 to only 5.3 oz/t last year. That is one hell of a reduction in just 14 years… nearly 10 oz/t of silver yield evaporated.

Take a look at how much more silver the Fresnillo Mine was producing in 2005 compared to 2019… processing LESS ORE!!

• Fresnillo Mine 2005 Production = 33.4 million oz
• Fresnillo Mine 2005 Processed Ore = 2.2 million tons
• Fresnillo Mine 2005 Average Yield = 15.2 oz/t
• Fresnillo Mine 2019 Production = 13.0 million oz
• Fresnillo Mine 2019 Processed Ore = 2.5 million tons
• Fresnillo Mine 2019 Average Yield = 5.3 oz/t

As we can see, workers at the Fresnillo Mine processed more ore in 2019 to produce 20 million fewer ounces of silver. No wonder the cost to produce silver has risen from $4-5 per ounce back in 2005 to over $15+ an ounce presently.

Now, if we combine the top seven primary silver miners in my group, the average yield fell to a record low of 6.0 oz/t in 2019:

The top primary silver mining companies' average yield fell from 13 oz/t in 2005 to 6.0 oz/t last year. That's a 54% decline in average yield from the top primary silver mining industry. This means these silver mining companies have to extract, transport, and process more than twice the amount of ore than they did in 2005 to produce the same amount of metal.

The companies that impacted the group's average yield the most were from Peru. Peru's Hochschild (OTCQX:HCHDF) average yield declined from 7.5 oz/t in 2018 to 5.9 oz/t last year, while Buenaventura's (BVN) average yield fell from 10.6 oz/t to 7.5 oz/t during the same period. Mexico's Fresnillo Plc's average yield from its primary silver mines (Fresnillo, Saucito and San Julian) fell from 5.7 oz/t in 2018 to 5.0 oz/t in 2019.

Also, Russia's Polymetal International (OTCPK:POYYF), Dukat Operations, saw its average yield fall to 7.7 oz/t last year down from 8.5 oz/t in 2018. The only primary silver miner that saw an increase in yield was Hecla (HL). Mainly due to Hecla's Greens Creek Mine, the company's average silver yield increased from 10 to 11.5 oz/t during the same period.

The world is running out of its HIGH-GRADE, easy to get to silver deposits. While there are still some high-grade silver deposits still remaining in the world, the primary mining industry continues to BURN through its better-quality reserves. At some point, production from these top seven silver mines will no longer be able to offset the declines from falling ore grades.

Investors have no idea what a deal they are getting in acquiring silver for such a great deal when we compare it to most of the overvalued financial paper assets and real estate. The few silver miners in the world may just surprise the market when investors begin to move into them in a BIG WAY.

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Comments

[Keith King]

Great analyses, have you done the same for gold?

[Mike 007]

outstanding research, and absolute correct informations (same i catch up, doing my due dilligence about the quarterly reports of silver mining companies i have shares) . The biggest silver mines are bleeding out fast speeding. At the very moment only 2 bigger mines have their income >60% from silver. With this low silver prices (under 18$) its hard to make any possitive income.
Most are mining outside the US $ and pay foreign (cheap currencies) salaries and sell their Product Silver in hard US$.....once the USD starts to fall ....every percent the USD fall in price their possitive earnings dwindle.
Silver will become scarce in the very nearterm.

[Why_is_my_portfolio_red]

so lower supply, higher prices?

[Mike 007]

if USD fall....yes
if silver demand pick little by little up....yes
if economy will only pick up a little....yes
if inflation sets in after printing endless paper money.....yes
if salaries get higher....oil higher....yes

[Why_is_my_portfolio_red]

Good optimistic outlooks for my silver!

[adriano321]

Escobal....will this beast ever reopen? Actually, I hope not in the current low cost environment.

[Mike 007]

thats the PAAS mine right?.....not so soon!....=less silver

[Profitshearer]

Is this just a scare tactic? Based on this article, I would think the reductions in mining of high grade silver would already be reflected in prices. But...not so. Prices should have already been steadily rising, but they're not. So the question is, why not? Answer that; then, you'll know what to do.

[Mike 007]

silver miners holding their stockpile back....
but paper-future selling manipulates market prices....
banks are short...in Gold, silver, platinum
2022 they are allowed to pile up their holdings in this metals to meet BASEL III requirements....they not want to pay high.....well what banks thinks i dont know

[angusai]

Declining supply of an essential resource hmmmmm should mean higher prices. Especially as the cost of extracting more ‘difficult to get to’ silver will raise the AISCs and if the price falls as some feel inclined to suggest mines will close. Basic economics at play. Demand will rise, supply is falling there is no other scenario other than higher silver prices! How high (apart from being a Chinaman) is anyone’s guess!

[deeminimus]

Investors moving into miners, or physical?

[adriano321]

I recommend both...insurance and investment

[Captain Oblivious]

Wow!!!

[Mike 007]

its an no brainer.....that if i need to pay for an hamburger or hotdog ....or any meal..the same amount like to buy an silver/oz coin.....pure silver coin....

it was seldom so cheap to get a whole big box of silver coins for just such little amount of paper money
well once was 1USD ...just 1 oz Goldcoin....
i guess today you pay more than 1USD for 1 oz of Gold.......dont you?

[Why_is_my_portfolio_red]

What on earth?