Silver seats going to be hard to find

Mexico, the world's number one silver producer, will be out of mineable reserves at current prices in under 3 years. This article below sums up the metal's supply challeneges ahead. Mexico will begin to play hard ball with foreign owned miners shifting goalposts under labour issue and environmental guises, thereby constraining global markets of supply.

The opportunity for Australian based miners is compelling. Bearing in mind it is rare to find deposits that are and can be 100% dedicated silver producers. It is usually mined as a by product in gold and base metals projects. You can count the number of Australian based silver deposits on one hand meaning that when the retail investor gets it, the potential moves up on these stocks will be fuelled by lack of seats at the table. There will be little space for whale moves from institutional investors except with capital raisings. Reminds me of the fertilizer boom in Minemakers and Reward Minerals in 2007 (both were 10 baggers). Was but 2 stocks on the ASX when the fertilizer commodites went to the moon.

The other positive for this metal as globally conflicts escalate in Ukraine, Middle East and possibly Taiwan, is from the military industrial complex. A single tomahawk missile has a rumoured 500oz requirement. Sadly this reflects a positivity for silver demand but a negative for humanity.

Awaiting the broader market to correct to create value in the few silver stocks with ounces in Ozzie turf. Mexico miners going to find a nightmare lies ahead for their best intentions.

Silver Production Shortage: Mexico's Supply Has Dropped Off A Cliff
Dec. 31, 2023 10:30 AM

Mexico's silver production is declining double digits annually for the first time in almost a decade. Latin American labor and environmental activism pose a risk to mining activity in the region. Silver is critical for Net Zero economies and renewable energy, with high demand expected in industries such as solar.

Mexico's silver production is now declining double digits annually for the first time in almost a decade. Historical trends indicate that substantial contractions in new supply have presented excellent opportunities to invest in the metal. More importantly: Consider that silver is currently at one of its most undervalued levels in history, especially compared to gold, as the gold-to-silver ratio currently stands at 85. Mexico has been the #1 producer of silver but the nation's silver production is down almost 25% in the past two years. That is a shocking drop off the cliff in silver production.




Now factor in the risk of contagion. Latin America is favoring labor and environmental activism which can interfere further with mining activity. Newmont’s (NEM) Peñasquito mine, also located in Mexico, just came back into production about two months ago. Recent trends in Peru, Chile, Panama where labor and environmental clashes are closing down mines. Silver investors who hold bullion today are in great shape, but this may be a short-sided lens.

Silver is the critical mineral for Net Zero economies. Especially in hydrogen fuel cell cars, trucks, vans, ships, barges, and ferries. Especially in satellites, robotics, AI, solar, and other renewables like wind power. There are over 10,000 other industrial applications (military, aerospace, health care, electronics, et al). The United Nations Climate Change Conference just met (COP 28), and they are all in on renewable energy that is silver intensive.Let’s talk solar. For every Gigawatt ('GW) of solar, 500,000 ounces of silver are used. Just this one manufacturing facility in Houston, Texas will use 1,500,000 ounces per year and just down the street from this plant is another plant using another 1,000,000 ounces per year.

Now let's look at solar subsidies... Today, Solar Is Getting 300 Times More In Federal Subsidies Than Nuclear! According to Vince Lanci, “Mexico is in the process of soft nationalization of its remaining Silver as well. The BRICS nations are increasingly restricting G7 access to their remaining resources now.” The situation in Mexico is particularly dire. As the world's leading silver producer, Mexico has seen an average annual output of 5,600 tons in the past decade. Unfortunately, its resource reserves dwindle to a mere 37,000 tons as of 2020. If mining continues at the current pace, the country's reserves will be exhausted by the end of 2026.

Silver Price Is too Low Compared to the All-In Sustaining Cost of Mining
Most AISC models don’t capture all the capital drain that went into exploration and advancing. Enormous costs associated before the first shovel breaks ground. In many projects, silver’s cost of production is now over $24 per ounce. This will keep increasing due to rising labor and diesel costs. This doesn’t capture the embattled risk with Mexico most likely to maximize the fact that BRICS devours silver monetarily while NATO devours silver industrially. Mexico sits right in the middle of this geopolitical tug of war and will figure out creative ways to bid up the “out of ground” cost. Moreover, laborers know how to engage environmentalists, vice versa. Expect labor strikes throughout these prolific silver mining districts. When you add up all the significant energy, exploration, personnel, drilling, equipment, admin, insurance, assaying, testing, permitting and advancing mineral resources stages…




Now miners are potentially losing money considering an adjusted minimum of $25.75 per ounce (Adjusted All in Cost factors factor in pre-production costs such as exploration and advancement).Is this sustainable? I think not.

This article was written byMoney Metals Exchange3.09K FollowersFollowPrecious Metals News & Analysis - Gold News, Silver News from Money Metals Exchange Money Metals Exchange provides the latest precious metals news for savvy, self-reliant investors who want to invest in gold, silver & other precious metals. | Check Silver Prices: https://www.moneymetals.com/silver-price | Check Gold Prices: https://www.moneymetals.com/gold-price