Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
16:45 know, and what Jorge said about, you know, the reality is our industry, if the price stays here, it's a wildly profitable industry. And we don't need the price to go higher. But I think that there's a lot of things that are telling me that, you know, and I don't know, it'd be interesting to get Sam and Jorge's comments on this, but, you know, with all things being equal, looking at all other asset classes, looking at inflation, looking at, you know, the supply demand fundamentals, I think price discovery should take us somewhere between 70 and $75 an ounce. And that's where I see the silver price going. I see it staying there. That'd be I'd be curious to see what Sam and Jorge thought about that or if they had their own targets.
17:35 I love me to put real numbers on in a panel. And, you know, we do the follow up in 6 months. We can see who's closest. But Jorge, let you speak to silver bugs. But also, if you want to put a price tag it up there. Yeah, look, related to silver bugs, it's I mean, one of the interesting things about the job we have as CEOs of public companies with silver is you actually get to speak to different kinds of investors, including people who are silver bugs. You know, certainly the you know, I have seen a big change over the last 4 years. I think initially, like in 2020, a lot of people came in with a lot of force. And from that group of people, some of them have become a little disillusioned with silver. But some of them have sort of Sean was saying sort of developed a commitment to just physical silver and storing physical silver. At the end of the day it is It is a factor that does contribute towards the whole silver story.
18:34 It's not the main factor, but it is an important factor. When you talk about, you know, the way that I look at it as the CEO of a silver company is you do want to have, you know, You do want to have silver bugs aware of your story because you want to have all sorts of investors that have different times horizons. That's what makes a public company successful is you want to have people who are holding long term. You want people who are who are more speculative and coming in and out so that you can create enough volume for institutions to participate. So you know it's it's in terms of seeing that develop. Obviously When we do roadshows with investors in the US, you see an incredible, incredible interest and believe in silver that I don't see anywhere else. But then again, when you look at Asia, silver in China and India is also I just had an opportunity to be in India with the Mexican embassy there. They arranged some meetings with some of the silver importers into India.
19:43 And it's just you just can't believe the numbers like really incredible the role it plays in their culture. And I'm sure we're all watching those numbers. India and China have become some of the biggest consumers of silver over the last 4 years and the reason the reason they don't necessarily can articulate it with these words, but at the end of the day, what they're doing is they can see that the fiat currencies are being debased and they want to have real assets. So I think worldwide, there is an understanding that you have to have silver as part of your portfolio. And that's great for our industry. And can I hold you to a price target? In terms of price target, look, I agree with Sean that it's, if it's not, if it doesn't happen in this year and like if you, I'll put it this way, if you have told me that silver was going to be, you know, $31 with the amount of inflation, the amount of debt that we've had, the amount of money printing, I really would have thought it would be much higher.
20:50 So I do feel, you know, studying the market, there's a number of things that are keeping it artificially afloat on the silver price. But I do think that those factors are not sustainable. And I do think it's gonna move quite a bit higher. If I had to venture a number, I'll go for 50. You know, just in the sense that like, honestly, 50 doesn't seem that far-fetched. You know, once you once you eliminate some of the resistance levels, you know, it seems like like not, you know, from where we're now, it doesn't seem far-fetched. I think some of us remember that move that silver had from about this price to 45, 47 in 2010.
21:35 And I just remember the effect on the equities, right? The effect of the valuations just went through the moon. So, you know, obviously hoping that that happens. But, you know, the what Peter Magal likes to tell me is, you know, don't focus when you're running the companies, don't focus on on the silver price, but focus on finding high grade silver so that you can always make money. And, you know, a good example of it is look at Max Silver. I think their oil sustaining is something like $6 per ounce. So it would be really interesting to see what happens in a $50 environment to companies that have high-grid silver. But Again, even if you're producing at $18, $20 silver, just the margins become ridiculous.
22:23 Great. Thanks. So we got $50 and $7.75. Sam, you get the privilege of going last on price target. Well, I think when I think about price, I think about kind of the fundamentals behind it. And I think if you look at the fundamentals, either from the perspective of a traditional precious base where you're looking at a 75 to 1 ratio with gold, that would be supportive of a much higher price. And I think when you look at the kind of the industrial side of the supply and demand, and you're seeing last year, with a shortfall of right around 500 to 550 million ounces in the difference between supply and demand expected to be larger this year.
23:09 Where is that supply coming from? Well, I mean, it's coming out of inventory and that silver that's not available for the precious side of the business. So anyway, I think any way you look at the silver price, you're looking at needing to have a much higher base silver price to support the fundamentals, either from a precious perspective or an industrial perspective. So it wouldn't surprise me if over the next 12 to 18 months, we saw another step up like we've seen this year, where another $15 to $20 an ounce is added to the silver price at it and is sustained at that level.
23:57 Particularly when you look at the supply side, and it is true that the cure for high prices or low prices is low prices. But the problem and the challenge in silver space and in mining in general is that supply can't react instantaneously. It takes from discovery to production a decade or more to bring additional supply online. And so the response to a supply deficit is quite protracted. So all of that together, it wouldn't surprise me if we saw another jump up in the $15 to $20 a range that was a new sustainable base in the next 12 to 18 months.
24:47 I appreciate that. And I do want to get into now actually kind of a deeper dive into the industrial demand. So I think everybody sees the, you know, investors see the highline numbers on industrial demand, but I'd love to get into just the details of where that demand is coming from and why it's likely to grow over the next 5, 10 years. Because I think those factors are in a lot of ways easier to predict than speculators. So I'm eager to hear your perspective on what's driving that growth, where it's going, and what might impact it. Sean, I can start with you. I'll keep this one short. Look, I think we've all seen the growth in solar pick up significantly. 10 years ago, solar represented 3% of demand. It's closer to 14 today and it's forecasted to go to 50. So I think, you know, we'll talk about the solar side of it.
25:43 And beyond that, you know, there's actually a question in the chat about the military sector. And, you know, I've got a friend, John Little, out of Pennsylvania, who has got the Silver Academy. And he's highlighted, you know, really the underreporting of, you know, how much silver goes into weapons. And I think unfortunately we're in a world right now that we've seen a rise in conflict, so that means an increase in the usage of weapons. And if you're a government and it's critical in weaponry, you're probably gonna under-report, under-represent how much silver you actually need. So, I think, look, there's, so, like I said, but historically what sends silver through these price, you know, to get a 15, $20 move in the next 18 months.
26:42 Historically, you know, it hasn't been a slow pickup in industrial demand. It's been the precious aspect of Silver. And I think Jorge's point, going to India, in Q1, a third of the demand for Silver came from India and came from Solar. And my heritage, my family is from India. I talk to people back there regularly. And the reality is, even though they have a growing middle class, and, you know, growth and prosperity, both in China and India, it's unattainable to acquire gold and rupees for 99.9% of the population. And so the new wealth building for the younger generation is out of necessity because they're priced out of the market are moving to silver.
27:38 Silver jewelry, silver investment. And so I really think silver is the new gold for much of the world. It's always been that way out west. It's been the gentleman's medal versus gold for the kings. But we're starting to see, I think the reason we're... And you asked earlier about speculation. I just want to touch on this point. I don't think we have a lot of speculation going on right now. I think that it's really been an industrial story and it's been a story of, you know, some from the East slowly picking up the metal. But I think it, I really don't think it started, which excites me because, you know, we as an industry can't survive with 16, $17 silver. It just doesn't work. So these new prices are a good start, but I think if we really want to incentivize exploration and to really replenish and to find out where we're going to get this future silver.
28:35 You know, we need to invest in that. And the last point I want to make for any viewers who are new to this industry, the reality is only 28% of the silver comes from primary mines, right? You know, Most of it gets thrown off as a byproduct. We should be talking about Copper because if 65% of our Silver comes from Copper mines, and we talk about some of the challenges, if I were to be lucky enough to make a copper discovery, which is rare an economic discovery the timeline into production on an aggressive basis would be a minimum of 20 years and We're talking about billions of dollars of capital and more likely 30 years. So if we think about and we ask ourselves, where are we going to get the world's future silver and we need, you know, we're in the setup for things like copper. You know, we don't know where we're getting the copper. We're not getting this silver either and It it's it's why I have that target that initial target of you know, 73 dollars But I think ultimately I would triple digit silver would not surprise me Appreciate that Or he'll shoot to you for where you see the growth in industrial demand coming from.
29:53 Yeah, so definitely very much agree with Sean. I think in terms of industrial demand, obviously solar, I think there is also, you may have seen the numbers for electric vehicles. It's also, you know, the numbers that I have seen, different reports, but in general speaking, 5 to 6 times more silver in an electric vehicle as possible. Now, I think the numbers that we've all seen for electric vehicles seem like maybe not as optimistic as some of the reports from a couple of years ago, but obviously long term that's another sector that's going to contribute. I was also had a similar experience with my trip to India. And as many of you know, I'm based in Hong Kong. So there's a little district in Hong Kong that has a Kitco store where they sell the silver coins and then they have sort of a few more kind of more Chinese local versions.
30:47 And I like to go there and just chat with the store owners, just, you know, anecdotally what they're seeing. And, you know, because of the price of gold being so high, a big move into people who regularly buy physical gold to buy physical silver. That was something that I wanted to just, you know, again, maybe sometimes it doesn't get as much mention. And then The last thing that I would say in terms of the key is to focus on the supply. I think that's the part of that. Again, year after year, you see the numbers and it does seem like we consume all the silver that gets produced and more. And then if you count the paper market it seems like you know we trade a lot more silver than that it's produced.
31:42 I I honestly can't believe I can fully understand how how we did you know the industrial players get their silver. And some of you may have heard me mention this story, but about maybe 3 years ago I was in Mexico City and I had a breakfast meeting with a gentleman who was in charge of procurement for raw materials for Samsung. And he was telling me, you know, one of the one of the things that that he has been mandated with is just make sure that they have deals with small producers around the world because they don't want to wake up 1 day and be like, you know, we can't meet our production targets for, for, you know, a laptop or mobile phones because we don't have enough silver. That, that, that worry has been there very strongly from, you know, for the last 5, 6 years.
32:33 So I think I think it's something that it's coming. You know, it's I think the silver production is not obviously obscure because of what Sean was mentioning. And it's you know, It's easier to track the primary silver producers, but it's a little bit harder to track the byproduct from especially from nickel and copper around the world. So I think those are factors to take into consideration as well. Awesome. And Sam, should you for growth and industrial demand? Well I think that the largest area of growth in industrial demand is going to be from photovoltaics. But I think what's interesting about that is that I think the growth in China is pretty safe and secure.
33:23 They're they're clearly looking to achieve energy independence. And solar is a massive part of that equation for China. But I think that in the West, in Europe and the United States, there's a bit of a backtrack, I believe. And it'll be interesting to see with the results of the US election, whether the pace of the low carbon energy transition is as fast as what was projected a year or 2 ago. So I still think there's gonna be significant demand and significant growth in that space. But I do think that, you know, some of the political decisions that are coming up in the next year throughout Europe, in the United States, there could be a bit of a pivot and a bit of a step back on the pace of the low carbon energy transition, which may to a certain extent, you know, reduce some of the industrial demand projections from a Western world perspective.
34:36 But I think that it's pretty clear that China is still driving significant increases in silver demand for the transition and the effort and the focus that they're putting on energy independence and the role that solar plays. Thanks. And I got kind of a hot take question next. I know all of you have operations in North America. I'm curious if you think, and Jorge, I'll start with you. Do you think silver should be considered a critical or strategic mineral and what the likelihood of that happening in the near future actually is? Yeah, I think absolutely it should be considered critical and strategic. I think what it's going to take is exactly what I was telling you. You know, 1 news story like, you know, of like some of our dear electronic products like an iPhone or, you know, or laptops being delayed, something that makes a big headline for people to take it seriously.
35:36 Maybe the one thing that you could make an argument you can make against silver is that it's like, for instance, compared to other strategic metals. I mean, silver is abundant in the West. So maybe you could say it's not like, for instance, with many rare earths, both the production and the processing is completely in China. So maybe that's something against silver. But I think, you know, generally speaking from conversations that we've had with people in the US, it does seem like people are starting to take it, people in government and different think tanks are starting to take that silver into account as a potential strategic metal. And I do think it will eventually get there.
36:27 Appreciate that. Sam, I'll throw it to you for the politics. You think it's likely to become 1 and in what time frame? I think that I think that potentially it's likely. I think that, you know, Jorge's right, is that from a geopolitical standpoint, I think that when governments look at silver production, I don't think it's probably near the top of their list of concerns, but I think that it is strategic, particularly if the political will exists to accelerate a low carbon energy transition on the supply side. I think that it also can begin to play an increasing role, potentially in reserve currency backing, And so that it could have some strategic implications from that perspective.
37:21 But I think that Horny also touched on another point. I was talking with the metal trading group this last week as we're getting ready to go into production. So always keeping a kind of a, dealers out there understanding the market. There's so much demand for concentrate, in particular lead concentrate and zinc concentrate coming from China. And a lot of silver goes that direction for processing. So even though you have supply in the North and South America, A significant portion of that is exported to China for smelting and refining and never comes back.
38:09 So, you know, so that's an interesting angle that I actually don't know enough about and doing, you know, looking into that right now to see how much of Western supply of silver actually at the end of the day makes it to a Western market. And I'll throw it to you finally, Sean, for the politics. Yeah, listen, we have lobbied the government federally here. It was an initiative that was led by First Majestic. And we're working towards making the case and the argument so that it is considered critical. And I think, look, I think, you know, we've got, you know, whether it's energy ministers or mining ministers from all over the world that meet with industry and they listen. And I think at some point in the near future, it will be a critical mineral. So I'm optimistic that we get that status suit.
39:05 Great. I'll start with you, Sean. This is really more of a marketing question than anything else. Common thing I hear from investors that they generally don't appreciate and they're sometimes quite vocal about it, when companies headline their silver equivalent ounces. So given, and we've already discussed, silver is largely a byproduct, is there an issue in the market where lead, zinc, etc. Mines market as silver companies and hope to trade at a greater premium? Do you see this as a problem or do you think it's kind of an inevitability? It's a really good question. And again, I want to be sensitive, especially considering that most silver comes as a byproduct. If you know, we'd be really in a tough, precarious position if we didn't have that byproduct silver. But I think what you have to consider if you're an investor and you're wanting to get exposure to silver, if you believe, you know, if you're looking at the supply and demand for silver and you're bullish on silver, the company does express things on a silver equivalent basis.
40:05 And you know, only a third of their result resource or the results are actually silver. And you've got a third lead and a third zinc or, you know, It all depends on what the other equivalent is. Is it gold? And if you're a precious metals investor, is that okay? So I think it's a complicated question, but the reality is I'm more bullish on silver than I am on other metals. I think copper is gonna go up. I think all the metals are going up. They've actually led silver and they've gone to new all-time highs. Talking out my own book a little bit, you know, we've got primary silver mines And I'm an advocate that our silver should trade at a premium because it is primary and it's rare.
40:55 It's 28% of the market. But I also think investors should understand that you are getting value for those other metals. So maybe what companies can do is they can, in addition to putting out the equivalent number, break down what percentage of that is silver. And I think that would be helpful. But look, I celebrate all silver, but at the end of the day, you know, when I'm looking for opportunities, it's the silver that goes into the photovoltaic cell. It's not the other metals. And then that's where the demand is coming from. So I hope that answers your question. No, definitely. Like I said, it's largely a marketing question more than anything else. But I'll throw it to you for your perspective. Yeah, for our company, for instance, we have a policy of not doing silver equivalent numbers.
41:44 We have a project in Mexico that's mostly silver with very little byproducts. But the CRD projects in our portfolio do have silver, lead, zinc and and a little bit of copper. But we really focus on on on separating the numbers. You know, and again, like you, I think a couple of useful things for investors to look at is number 1, you wanna look and make sure that the silver grade alone is sustainable. So, you know, I mean, with this silver prices, 250 grams per tonne silver is okay. You know, with sort of the previous decade pricing 300 to 350 is a better price. And then the other thing I would say is you know some companies I've seen companies that say have 60 percent, 70 percent silver and then they have 30 percent byproducts.
42:42 If the byproduct is gold, I honestly don't have a problem at all with doing silver equivalency because gold kind of tends to move more in tandem with silver. If it's zinc and lead, I think the part that I personally don't like as an investor is if you know all of a sudden you have, like you were saying, 20% silver then 80% lead zinc. I think that's a little bit, But at the end of the day, I think that the most important thing is just for investors to just look at it carefully. And I think most companies do disclose it, even if it might be on the fine print somewhere. So at the end of the day, there's times where lead and zinc are also very good additions and very valuable. And it does create a nice addition.
43:30 In CRD deposits, oftentimes you can basically have the lead and zinc pay for the entire cost of development and capex. So that would be my opinion. Don't have an issue of it so much when it's equivalent gold and silver. And then when it's lead zinc, you know, I think if it's, if it's like really 30% or 20% or 10% silver, when I've seen companies report that as a silver equivalent number, it does feel a little bit misleading to investors. Yes, it's something we hear about a lot. We get a lot of emails. So I thought I'd try to get Sam, I'm curious for your perspective. Well, I agree with Jorge. So I can tell you about Bunker Hill a little bit because we're in this, we have this, we have a polymetallic deposit. 70% of our revenue is from zinc. We're very upfront about that.
44:26 But we also want to make sure that the market is aware that the Bunker Hill mine, we're going to produce 750,000 to a million ounces of silver a year. And there was 165 million ounces produced historically over a hundred year period. So silver is a part of our story, but it would be disingenuous for Bunker Hill to market itself as a primary silver mine. We're clearly not. And so I think that at a minimum, if you want to report in zinc or in silver equivalent, it should be not just a majority, but kind of a strong majority of silver.
45:12 And if you're in a strong majority of silver and you're targeting a silver focused investor, then why not just speak to the silver only and talk about a base metal portion as well or a discount associated with it, but speak to the production itself in and it strictly ounces, right? You know, when you're talking about a cost per ounce, that's a little bit more challenging because you certainly generate revenue from, you know, the other marketable metals, But if you're talking about the actual production, even though we're zinc equivalent or zinc dominant, I don't talk about our zinc equivalent pounds that we produce. I talk about I'm producing this many pounds of zinc, this many pounds of lead, this many ounces of silver.
46:12 So my thoughts on it are that clear and transparent is what investors should demand and what companies should provide. Appreciate that. I think I'm sure our investors do too. Sam, I'll throw it to you for a follow-up actually. I'll give each of you a kind of individual question for your specific company. Sam, Bunker Hill, as I understand, has a fairly unique strategy for regenerating the previously closed Bunker Hill mine. Curious if you could elaborate on this, the approach you're taking, how it differentiates you from other miners. Yeah, absolutely. So Bunker Hill is kind of an interesting mine. It operated for a hundred years in the Silver Valley of Northern Idaho. It was vertically integrated with a lead smelter and a zinc plant. It was closed for environmental performance reasons. And for the last 40 years has been in the US Superfund cleanup.
47:03 And we're now bringing that mine back into production. And it's very unique. And it was specifically what we were looking for, myself and our executive chairman, when we were looking for an opportunity to build a company. And that is the ability to move through the regulatory process in an efficient manner and back into production. So in addition to being on a super fund site, in addition to having a hundred year operating life, in addition to having a history of producing 165 million ounces of silver, Bunker Hill is all on private land and all on patented mining claims, which simplifies the regulatory process.
47:54 So this is a mine restart and we're dealing solely with the state of Idaho for our regulatory oversight and regulatory permitting. And really what that means is that, you know, that regulatory process is not driven by politics. It's driven by the technical merits of the technical work and advancing towards restart, which is why we've been able to come to a site that 4 years ago that we didn't own. The company had a lease with an option to purchase and in a four-year period advanced through getting a resource in place, doing the technical work, financing the build, and going into production in a four-year window.
48:45 And Sean mentioned that the timelines for bringing a mine typically into production is 10 to 20 years, and he's absolutely right. But we were intentionally seeking an opportunity where we could beat that timeline. And we found it in Bunker Hill. And our approach and our strategy right from day 1 has been to leverage the existing infrastructure on site and execute a low cap X rapid restart, get into a cashflow generating perspective, and then use that free cash flow to unlock the enormous upside value that we see in the asset and in the district. Awesome. Appreciate that. Sean, I'm going to throw into you. I know Delivard operates and is exploring in the Golden Triangle.
49:37 Given the recent incident in the neighboring Yukon, I'm curious if your team has received any calls from concerned investors about potential regional risks or if you feel there's an enhanced risk of regional risks? No, great question. What happened up in the Kenohe district of the Yukon is very unfortunate. And We see these incidents from time to time, and it's part of the risks that come into the sector. There's really, you know, it's a separate province, you know, separate territory in the case of the Yukon. So no, there's, if anything, it's actually had the opposite effect, where investors actually view the Golden Triangle, particularly our project, as more valuable today.
50:27 Because, you know, If you look at the history of Daly Vardin, it was the richest Silver mine in the British Empire when it was in operation. The adjoining Torbert mine, which we also own, was Canada's third largest Silver producer. Those are both underground mines, very different than the open pit heap leach operation up in the Yukon. If anything, it's actually, we've seen a capital flow into their district and the region. And just speaking about the neighbourhood, we've had some record high gold pour days at Newmont's Bruce Jack mine. Skeena has gotten their project construction. So we're seeing that majors like Newmont, like Tech come into the golden triangle.
51:19 We're seeing companies like Dolly Varden, you know, grow significantly in market cap and evaluation. It's a very prospective area. So to answer your question about the unfortunate, you know, events in the Yukon recently, it's actually made this district more attractive. And particularly, like I've been a big proponent of minimal disturbance, high grade underground mines. It's just something that I've known for the last 20 years. And, you know, from a community standpoint, from a disturbance standpoint, and from a grade standpoint, it's been just my preferred, you know, method of mining. And so I think that's the biggest difference.
52:06 I appreciate that. Finally, Jorge, I've got one for you. I know Reyna has diverse portfolio projects. I do want to zoom in on your projects in Nevada. I'm curious if you could share some of the unique geological features of the Griffin and Medicine Springs projects, just for investors in the audience who might not know about it. Curious how it might differentiate you from other silver exploration. Yeah, absolutely. And I think, you know, especially the project we're going to drill this summer called Griffin. It's a very good illustration of something that's happening in the area of Nevada where we are. And essentially, it's one of these stories where, I think Nevada, especially the Carling District, is very famous for obviously Carling Gold deposits. Some of the bigger deposits in the world are there. And I think one of the things that happened the last few years, for those of you who follow the I-80 story, is that's a Carling Gold open pit gold mine that was in production.
53:07 IAD bought the property and then as they were doing some holes, Knowing that there was some CRD silver mineralization there historically, but I think my understanding is they were looking more for to see how much deeper their gold deposit went. They started finding the stunning CRD silver rich mineralization all through the walls of the open pit. And I had an opportunity to visit the core shack a few months ago. And really some stunning high-grade silver with lead, zinc, gold, copper. And what that has caused is people to relook at the Carlin district and realize that that a lot of CRD me realization have been missed But this project we're doing this summer is called Griffin and it's a project that actually Peter McGough had had in size on for the past 10, 15 years, and had always been basically under exploration by one of the majors, the last major that I had was Agnico, but they're really focused on the gold potential.
54:17 We inherited the project with an incredible amount of drilling, geological data, and some very interesting drill results on both gold and silver. But this is the first time that we have an opportunity to do a systematic approach looking specifically for that CRD high silver great potential and you know We're about to start drilling in the next in the next few days actually and very excited We've done a lot of work since we took the property last year, developing our targets, and we're excited to start. From what both Medicine Springs and Griffin do have the opportunity of being a high-grade, large silver deposit in Nevada.
55:05 And there has been in the last few years a renaissance of exploration for silver in Nevada. And we're excited to be part of it. Awesome. Well, Azur, close to the end of the hour, gentlemen, thank you so much for your time today. We really appreciate it. And for those watching either on replay or in the live audience, if you do have any questions specific to the executives, let me know. Just reach out and we'll make sure that it gets to the right audience. But Sam, Sean, Jorge, thank you so much for your time today. This was great. Thank you. Thank you very much. Have a good day, everyone.
