Where Are Silver Prices Heading? 'Flip A Coin' .
Denver-Colorado (Sept 15) Determining the movement of silver prices may just have to come down to a coin flip, says SilverCrest Mines Inc.’s (TSX:SVL)(NYSE MKT:SVLC) Eric Fier, president and chief operating officer of SiverCrest Mines.
The white metal peaked in summer trading July 11 at $21.44, and has had a bit of a roller coaster trend downwards since.
“Flip a coin,” Fier said with a chuckle during an interview at the 25th Denver Gold Forum.
“We’re about half way through what I would say would be a bear trend,” he continued. “We may be near a bottom on the next three to six months and then we’ll see prices rising from there.
“There’s still going to be quite a bit of pressure with the U.S. dollar rise and Goldman Sachs putting pressure on metals prices,” he added.
While higher commodity prices are naturally good news for producers, SilverCrest’s low cost Santa Elena Mine, located in Sonora, Mexico, still has healthy margins despite silver prices tracking lower.
Fier said the company is seeing all-in sustaining costs at Santa Elena between $11 and $12.
The company recently completed commissioning of its new 3,000 ton per day mill at its Santa Elena mine. SilverCrest has been transitioning the mine from an open-pit leach operation to an underground operation.
Minding costs are still at the top of the list.
“With the transition going from open pit heap leach to underground milling, it’s a whole different format of tracking,” Fier said. “We use SAP, it’s a powerful tool and it helps us track costs on a daily basis.”
The company continues to focus on organic growth, and Santa Elena offers the company some options.
“There’s also a large trend that’s developing, a regional trend around Santa Elena for organic growth,” Fier said. “So over the last year and a half we’ve come up with multiple targets, drill ready, so we’re pretty excited – there’s a lot of smoke at the surface there.
“It’s a good shot at making a discovery," he continued. “We have a processing facility, so you don’t need much to make a discovery. It’s more feed to the mill, more feed to the leach pad – we’re going to have leach pad capacity coming up here, low grade or high grade.
“About 80% to 90% are on that organic growth as far the growth profile percent,” he said. SilverCrest is also still working on La Joya, where they spent about $1 million on the prospect, looking at infill drilling and more metallurgical work to prefeasibility level.
Fier is also eyeballing the M&A market, but is finding it difficult to find comparable value to what SilverCrest is putting out.
“That M&A market is very tough, there’s not a lot of great stuff out there and one of our challenges,” he said. “We’re one of the lowest cost producers in the industry and to find someone comparable to that to make it accretive is very difficult.”
The silver miner recently updated total production from Santa Elena in 2014 to between 3.3 and 3.6 million silver equivalent ounces.