Illuminati Silver : The Truth about Costs of Production and Most Silver Miners are not going bust.


Welcome to Illuminati Silver – we tell you
the truth about silver. Today is Sunday 28th June 2015 Most Silver miners are not about to go bust. There are lies, untruths and exaggerations
perpetrated on the Internet in order to panic you into buying silver to prop up an inevitable
price falling commodity – so that dealers can exit their stocks at reasonable prices. This is how it goes: These guys claim that $16 silver is below
the cost of production – therefore the miners and mines will go bust or close down, supply
will dry up, and silver prices will skyrocket – so buy now while it’s cheap and while you
can actually get hold of the stuff Well let’s look at this situation a little
closer shall we? Firstly, there are 2 main cost assessments; 1. Cash Costs – the actual physical direct
costs of extracting silver from the ground 2. All-in sustaining costs – which include
cash costs, plus admin, plus exploration charges. Now it does make sense for any business to
look at the all in sustaining costs closely as this depicts its level of profit before
tax. However, companies can survive on cash costs for a while and in the past many have
for cash flow purposes. The second area to look at is the types of
mines which exist; as the 2 main types have very different cost levels. 1. You have the Primary Silver mines which
represent 30% of all silver mined. 2. And you have those mines such as Gold,
Lead and Zinc which produce silver as a by-product – and these represent 70% of the silver mined
in any given year. It makes sense therefore that the mines which
produce silver as a by- product can do so much cheaper than the Primary silver mines. According to Mineweb.com, who, from our analysis
produce relatively reliable assessments, the top 10 mining companies in the world in 2014
mined some 400 million oz – just under half of the silver mined globally. Of these 10
miners, 4 are Primary Silver Miners. The 10 companies are:
KGHM Polska Miedsz Fresnillo
Gold Corp BHP Billiton
Glencore Xstrata Poly metal
Pan American Silver Cia Minera Volcan
Buenaventura Coeur Mining A report by Metals Focus (a UK specialist
consultancy) shows that these miners had an average All-in sustaining cost of $14.09 oz.
So at current prices, these companies are making, on average $2 an oz. – with most producing
30 – 40million oz – not a bad net profit level on just their silver mining operations. This
is why, the consultancy predicts that silver supply will continue to increase primarily
the result of recent Primary Silver Mine openings – excuse me, we thought, these mines were
on the verge of bankruptcy? Well if that was the case, why has a brand
new mine in Guatemala recently opened and is predicted to become one of the World’s
largest Silver mines? Hardly the action of an industry that is about to go bust? To look at these issues, a little deeper,
let’s now assess cash costs – you remember the direct costs of extracting silver from
the ground. According to the Silver Institute, a renowned professional Industry Body, Primary
Silver Mine cash costs dropped to $7.74 an oz. in 2014. So even the more expensive mines
have cash costs more than 50% lower than current silver prices, so what are the cash costs
of those mines that produce silver as a by- product? You’ve guessed it, in many cases
below $5 an oz. and remember they represent 70% of the Market. Now before we are heckled, we are not saying
that these miners can survive at prices equivalent to cash costs for long, but they can for a
while. This will undoubtedly affect explorations and therefore long term silver prices, but
short term though, these companies can still survive. So our conclusion is this: At $15 and above silver mines are not going
to close or go bust (except those which are already inefficient or have insufficient capital
– as in any industry). In fact most are making money. At $12 – $13 an oz., silver mines are not
going to close or go bust, but explorations will be affected At $10 an oz., some mines will close and one
or two companies will go through Below $8 only the strongest will survive more
than a year or two or those which produce silver as a by- product. It is for these reasons, we believe that it
is unlikely (though not impossible) for silver prices to fall much below $12 and a base of
$10 is the lowest we can see prices fall to before serious ramifications affect the market. One of the greatest critics on You Tube, the
Internet and at conferences of the silver price level is Keith Neumeyer the CEO of First
Majestic Silver. But even his company have reduced all in sustainable costs to $13.88
an oz and cash costs to $8.22 – so draw your own conclusions. We hope you have found this video helpful,
and would appreciate it if you would give us a thumb up or down, comment and if you
haven’t already done so subscribe. Disclaimer:
Silver Illuminati owners come from a background of Banking, International Wealth Management
and Economics. Having now retired from these worlds we are not now qualified to give investment
advice. Therefore, this and other productions must not be deemed to be giving such advice
and merely represent the personal views of its owners.

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