There Is More Value For Silver Producers Than Just The Price - Mining Executive
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| Brad Thrall, president of Alexco Resource shows the entrance to the silver company's Flame & Moth underground project. The company expects production to start by the start of 2019 |
(Kitco News)- The silver market is struggling to gain traction as prices are atthe bottom of their range near a six-month low, but there is growing optimismin Canada’s largest historic silver district.
In an interview with Kitco News, Brad Thrall, president of AlexcoResource (NYSE: AXU, TSX: AXR), said that the Canadian silver market is probably in better shape nowthan compared to the heydays of 2011 when global prices were at an all-timehigh of $50 an ounce.
He added that there is more to the value in the marketplace forsilver producers than just the price of the precious metal.
“There are a lot of things that make the silver market comfortablefor us,” he said.
Thrall explained that one of the most significant advantages ofbeing a Canadian silver producer has been the price of the raw commodity inCanadian dollar terms. While silver priced in U.S. dollars is hovering below$16 an ounce, the Canadian price has been relatively stable, with priceshovering above $21 an ounce.
A second factor that is helping to support the silver market isrising zinc prices. Thrall added that although Alexco will always be a silverproducer, the company also produces lead and zinc as by-products. While off itshighs, zinc prices saw record highs at the start of the year as the market hasbeen in a strong uptrend since January 2016. Zinc prices last trading at $1.33per pound.
The third factor supporting the silver market is smelter costs,said Thrall. Alexco, when it is back in production, will create asilver-lead-zinc concentrate that will be shipped to a smelter to be produced.
Thrall explained that smelters are desperate for raw material andas a result mining companies are seeing fees drop by more than one-third fromprevious years.
Currently, Alexco is in the final processes of permitting andThrall said in a presentation that the company hopes to make a productiondecision before the end of the year.
“I think when you combine all these things, they make the marketattractive, compared to looking at just the silver price,” he said. “There arecertainly many factors we will look at before we make our production decision.”
While the U.S. silver price has been frustrating for investors,Thrall added that he thinks it is only a matter of time before the market entersa long-term uptrend as demand for the precious metal continues to grow andsupply continues to decline.
Thrall added that once his company gets all the permits in placeand makes a production decision, it won’t take long to get the mill up andrunning as the company has completed a lot of the preliminary work. Ifeverything moves smoothly, the company could see new silver production by early2019.
“The runway to production is going to be very short,” said Thrall.
Alexco halted its silver production in 2013 because of low silverprices and underused mill capacity. Since then, the company has beenaggressively exploring and is close to identifying nearly 100 million ounces of resource.
Alan McOnie, vice president of exploration, said that the KenoHills Mining district also provides important value for the company. He notedthat in 100 years, the region had produced more than 200 ounces of silver.
“There is still a lot of untapped potential in the district,” hesaid. “We are just scratching the surface.”
Alexco recentlyhosted a site visit as part of the joint initiative from the government ofYukon and the Yukon Mining Alliance to promote the territory’s growing resourcesector.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.