Does silver have a minimum price?

A

ausau

Active Member
Silver Stacker
Hi,
Just wondering if silver has a minimum price it can go to for an ounce before it starts losing its value based on production costs?
As in the cost of producing an ounce of silver costs say $10 plus other overheads etc to make it $15 then what is the minimum silver can sell for before it is no longer viable to mine and produce?

Mining companies can surely work out when a gold mine is no longer viable due to the cost of production so silver must be the same.

This is probably stupid me trying to pick how far silver can fall more than anything!

Blake.
 
Silver is a biproduct of copper mining ,I think there are only 2 mines around the world that mine silver
 
yes, there is, the cost to move the rocks around is higher than the silver price... that must be the minimum, else we can just leave the rocks around :P
 
Blake17 - it's a good question and one I've been looking into - it's true majority of silver is a by product, however to extract the silver out of the remaining raw material (using acids) has a cost.

Miners are not idiots - even if silver isn't there major source of revenue,they wouldn't sell it for $1/oz as mentioned on another post

More research to be done but appears around $16 is the current 'break even' - meaning labour,energy,acids,etc

Quick link to one site suggestion approx $16/oz http://www.tfmetalsreport.com/forum/3186/cash-cost-vs-complete-cost-mining-silver
 
spannermonkey said:
Silver is a biproduct of copper mining ,I think there are only 2 mines around the world that mine silver
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Isn't CCU at Cobar NSW one of them?
 
Ag said:
Miners are not idiots - even if silver isn't there major source of revenue,they wouldn't sell it for $1/oz as mentioned on another post
Click to expand...
Very true.

Even if the mining companies didn't want to do anything with the silver they mined, someone else would pick it up and do the rest of the process which is obviously at a cost.
 
RetardedMonkey said:
Even if the mining companies didn't want to do anything with the silver they mined, someone else would pick it up and do the rest of the process which is obviously at a cost.
Click to expand...

This is precisely what "streamers" like Silver Wheaton do.
 
Ag said:
Miners are not idiots - even if silver isn't there major source of revenue,they wouldn't sell it for $1/oz as mentioned on another post
Click to expand...

This is true except for the fact that if they don't extract - it costs them to dispose of it other ways so it comes down to which is cheaper - spending $15 oz to extract and selling for $1 oz or spending $20 oz disposing of it in another way that is approved of by the current governing body. These days you can't just bring ore to the surface and leave it by the side of the mine. The government want's to know how you are going to dispose of it and where.

malachii
 
malachii said:
Ag said:
Miners are not idiots - even if silver isn't there major source of revenue,they wouldn't sell it for $1/oz as mentioned on another post
Click to expand...

This is true except for the fact that if they don't extract - it costs them to dispose of it other ways so it comes down to which is cheaper - spending $15 oz to extract and selling for $1 oz or spending $20 oz disposing of it in another way that is approved of by the current governing body. These days you can't just bring ore to the surface and leave it by the side of the mine. The government want's to know how you are going to dispose of it and where.

malachii
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Wouldn't it just go with any other impurities out to tailings dams? It is at such a low percentage when mining other ores
 
malachii said:
Ag said:
Miners are not idiots - even if silver isn't there major source of revenue,they wouldn't sell it for $1/oz as mentioned on another post
Click to expand...

This is true except for the fact that if they don't extract - it costs them to dispose of it other ways so it comes down to which is cheaper - spending $15 oz to extract and selling for $1 oz or spending $20 oz disposing of it in another way that is approved of by the current governing body. These days you can't just bring ore to the surface and leave it by the side of the mine. The government want's to know how you are going to dispose of it and where.

malachii
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Thanks malachii

Any links to support the above? Just curious to read about refining is cheaper than disposal (i.e $20 dispose or $15 refine)
 
The 2 companies i'm in are pure Silver plays. CCU which will be producing this year and AYN which has been producing for around 6mths or so. CCU is Australias biggest pure Silver play (50m+ /oz).

AYN is currently Australias only pure Silver producer.

Both of these will do very well IMHO. CCU up 12.6% today after being extremely oversold the last mth or so.It was solid around the 80's and 90's and was $1.10 from memory.Minor delays in a few areas knocked this down way to low. Not much patience in the market place, especially late last year. Excellent entry level in the 50's and 60's etc.

$10.20 /oz cash cost of production and only $6.50 /oz with Lead recovery. As you can see, some companies can still produce even at half the current Silver price.



Scorp
 
AYN and CCU are basically my SMSF - seriously promising long term plays...
 
Ag said:
Thanks malachii

Any links to support the above? Just curious to read about refining is cheaper than disposal (i.e $20 dispose or $15 refine)
Click to expand...

No links at this stage but I'll keep looking. I only came across this relatively recently at a AGM of one of the larger mining companies. I was discussing a copper mine that (to me) approval was too slow in coming with the development officer. His comment was that because of the new regs that were being pushed by our new government in regards to waste products - they were having trouble making the numbers work. The comment that triggered me was when he said that price for the waste products was irrelevant as it was cheaper for them to process the tailings than it was to dispose of them. I should state that his comment was not in regards to silver but other byproducts. I'm extrapolating his comments to other mines where silver is a byproduct. It is possibly not even relevant to older mines as these would be approved under old guidlines but new mines (or mines seeking expansion) would come under new guidlines and these might catch them out.

It would also be a case by case because some mines may be able to process or dispose of waste cheaper than others depending on distance, facilities nearby, other processing plants around them etc.

My comments were more a warning that refining costs are not the only thing that companies have to take into account when they produce a product for sale. We can draw a line and say "this costs X to produce" but there are many other factors as to why a company may produce something at a loss. Just ask any farmer!

malachii
 
Ag said:
AYN and CCU are basically my SMSF - seriously promising long term plays...
Click to expand...

Interesting to know why you think AYN is a promising long term play. With a 7-10 Year mine life as the only income earner at present is there something I am missing?
 
This is interesting , I remember when a couple years ago palladium dropped to about $160 an oz and back them I looked into the same thing and it looked like it cost about $400 to get it processed so I bought a ton of it and sold most of it for around $700-$800 oz, although at the time i couldnt get it for under $213 oz which seemed like a high premium and the wait time was like 3 months if I remember. What about gold production cost? anyone know about that
 
Lovey80 said:
Ag said:
AYN and CCU are basically my SMSF - seriously promising long term plays...
Click to expand...

Interesting to know why you think AYN is a promising long term play. With a 7-10 Year mine life as the only income earner at present is there something I am missing?
Click to expand...

Lovely80 - sorry - poor choice of words. I'm surrounded by day traders who flip most items very quickly - for example,buy and hold doesn't compute to them. So when I say yy Long term, I'm really meaning 3-5 years.

AYN is around the 7-10year life (providing no other mines procured) but my thinking is the cherry will be picked well before then - somewhere in my 'Long term'
 
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