Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
15:01 that time is coming near. And I think silver, like gold, and we keep talking about gold here, but gold is much more of a financial safe haven, right? I think we all agree with that. But I think silver's safe haven characteristics will become more and more important very soon. I don't think we have to be patient. I think it's happening virtually now. There are some very unusual things happening in the bond market, in money flows, we've talked about wars, not just the Strait of Hormuz situation, but there are conflicts in many other locations around the world. All of these things will only add to the favorable outlook for silver, not just supply demand, which we've talked about many times.
15:56 It's gonna take on a whole other life, is what I'm trying to say. No, I wanna jump in if you don't mind. Kind of disagree with the premise of your question. In my opinion, the short term paper, silver volatility is driven by financial conditions as represented by the Fed policy and rate expectations, as you say, but the fundamental long term underlying price is driven by physical reality over time. Look at it this way. We mentioned a silver deficit over the last 6 years. In March $3,020 US bought you just over 79 ounces of silver. Today that same $1,000 buys you only 17 ounces, a 78% decrease in just 6 years. Similarly, today's dollar buys you 64% fewer ounces of gold. Silver's larger increase in value over the longer term reflects the physical deficit that we're talking about.
16:50 The price driver you're looking for is here. You just have to squint. Sticking with the physical, Eric, with over half of the silver demand now industrial rather than monetary. How exposed to silver to a slowdown in any single sector like solar or either like John Paul stated, AI data centers. Both both Chad and John Paul talked about the interesting aspects of silver. Its unique physical properties make it a fascinating metal which many uses come from. So innovation's always gone hand in hand with silver. From 2016 to 2025, silver use in electrical and electronics demand rose 45%, reflecting chips, EVs, solar, etc.
17:40 In 1999, photographic demand was around, peaked at 25% of total silver fabrication demand. Now only 2%. So despite the dawn of digital photography, silver is still here and stronger than ever. Today, silver industrial demand is suitably spread across many, many different uses, such that a decline in any one single use is not going to destroy silver. In general, we just need GDP growth to drive silver fabrication demand. Does anyone else have further commentary on that regarding any potential slowdown in the industrial demand for Silver? Back to my days at BMO, the big discussion was thrifting Silver.
18:30 That was back in 2013-2014, when they were starting to produce the photovoltaics and that was the big talk and you know, you look fast forward, they probably thrifted as much as they possibly. We've lost John Paul, I think. Yeah, I'm back. Okay. Yes, I was saying, what was the last thing you guys heard about thrifting. About thrifting in the... Yeah. So they had reduced it to, until it was a paste basically, to line the photovoltaics. So they've basically thrifted as much as they possibly could. And then when it comes to substitution of Silver by Copper or other metals, there's sub-optimal properties of other metals that you're just not getting the same conductivity and long-time use.
19:30 And so for the future of silver, I think it has a very strong position both in electronics as well as the growth in photovoltaics and AI and EVs. I don't think that's going to change. In fact, I think new uses will be found. You know, silver has antimicrobial characteristics. Alexander the Great, right? Famous, the soldiers carried a silver coin to put in the water to purify the water. That's why we throw coins into fountains. And that's not going away anytime soon. So I think because of Silver's myriad uses currently and potential future uses, I think we're fine in terms of ongoing demand needs.
20:21 And the wild card, as I think Eric was alluding to, is the financial system. That's the icing on the cake, if you will, with the cherry on top. How high silver will go will depend on the financial system much like gold. Well the dual nature of silver is fascinating. I want to direct you guys to some questions in the chat. I'm wondering if any of you are familiar with what Chris is highlighting. He said, I would be interested in your thoughts on the Samsung solid-state battery that requires 1 kilogram of silver. Does anyone have an opinion on that or heard about it? I'm involved in a, I'm the chairman of Critical Elements Lithium, which has a lithium deposit in Quebec.
21:13 And it's an area that we follow quite closely. The advent of the solid-state battery is huge. Huge increases in the energy density with a solid-state battery, huge reduction in the time to charge a battery, and yes, Silver is an essential component to that, not just with Samsung, but with the other solid-state battery configurations as well. It's the future of the EV and definitely we'll see further growth as a result. It speaks to what Chad and Jean-Paul were talking about. Silver is an amazing metal that has a lot of different uses and we're going to continue to see innovations like the use of silver in those solid-state batteries. We've been talking a lot about the use cases and the future use cases here, but an individual in the chat is wondering if the US were to succumb to a serious recession, thus negatively affecting consumer discretionary income and consumption, do you think this fall in demand of silver reliance goods could significantly drop the spot price.
22:20 And I'll leave it open to anyone who wants to address it. Yeah, so. Go ahead, Jake. Yeah, so, you know, you talked a little bit about what's happening in the Middle East earlier. And so if we go back, you know, about 50 years to the 70s, you know, we had the same sort of situation, obviously different circumstances led to the limiting of oil being sent around. But at that time, you know, we got pushed into a recession on the back of that. And what did we see is, you know, the Gold price lifted in that kind of environment at a time when inflation was going up as well. And so I think there is a possible future where both will be aligned, both inflation as well as the driving up of the gold price, which in that sense would also drive up the silver price.
23:12 But it would be offset slightly by the industrial demand for silver. So there would be some offset there. But I think the growth that would happen on the Silver price based on the financial side or the safe haven, I think that would be much greater than any slow in the industrial just because there is still a demand for silver for a bunch of uses beyond that. Chad, did you have anything further to add to that? I lost you for a second there, but I think the question is, in a recession, will the silver price suffer? Is that right? Yeah. I guess it depends on a few factors. One is the actual consumption of silver.
24:00 So presumably a recession or a depression would lead to fewer people buying electric vehicles or fewer people installing solar panels. So for that reason, yes, the silver price should suffer. And if money is too tight, which is probably why we're in a recession or depression in the first place, that means the currency has greater value, and therefore silver and gold will appear to fall, right? Because these commodities are measured in, let's say, US dollars. So if the US dollar, if money's too tight, the currency is too valuable, yes. But the solution to recessions and depressions is the, you know, people call it, the term commonly used as printing of money or quantitative easing.
24:53 And that always leads to a rebound in precious metals. So even If there is a recession or depression, I'm not particularly concerned. It might hurt in the short term, but longer term it'll just mean that the prices go higher for precious metals. Bruce is looking for insight regarding the Silver price difference between COMEX and Singapore due to paper versus physical. Anyone pay close attention to that? I'm aware of it but I'm not an expert in that. I'm aware that they're eliminating paper contracts and it'll be fascinating to watch.
25:42 I don't have much else to add. That's fine. I like to ask people's questions. They take the time out of the day to join us, so it's all good. It's a great question. I wish I had the answer. Time will tell. But obviously, We all are aware in our industry that the demand for precious metals in China is enormous. The largest ETF in China is now a gold ETF. And so they have a historic, I'm generalizing amongst a country here, but they have a historic affinity and understanding for the safe haven value of precious metals. That alone should tell everybody on the line that they're concerned about the financial system.
26:31 That's a canary in a coal mine I guess or canary in a gold and or silver mine if you want to look at it that way. There's something going on here and they feel it and they know it because they have historic experience with it which quite frankly we don't have in the Western world. Anybody who's been born after, let's say 1945, hasn't really suffered the currency devaluation and all kinds of financial turmoil that some of these other countries in the world have suffered from. I think there's a bunch of Europeans that would disagree with you. That's true too. That's true too. Which is why we all travel to Switzerland to meet with key investors and so on. But you're right. But it's interesting to me how the Euro is holding up so strongly.
27:19 But again, there's a whole other discussion about that. Indeed. I have one more question here prepared and then we've got a question for each of the specific companies and you guys can take your time and get into a little more detail with those ones. But maybe I'll start with you, Eric, for this one. Looking ahead, will growing industrial demand pull silver away from gold and toward trading like a growth commodity or will safe haven demand keep the 2 metals moving along together? I believe there will always be a monetary or financial element to silver, separate from industrial demand. I'm not keen on the safe haven moniker, preferring the store of value over time. I don't understand why, but for some reason, the US dollar is still viewed as a safe haven in times of crisis.
28:10 But yeah, I think that the idea of silver as a monetary asset will carry through in the future. I have a question for each of you, company specific. Let's start with you, Chad, with Honey Badger Silver. You recently closed the acquisition of the Prairie Creek project, a permitted underground Silver Zinc-led project in the Northwest Territories that's already been through a feasibility study and PEA. With Silver in a multi-year supply deficit, how does having a permitted development ready asset change your positioning for early stage Silver explorers and what does that path to production decision look like?
29:04 It's a great question and I'll be brief to make sure the other fellows have a chance here. But just to rewind a little bit, I took control of Honeybadger a little over 6 years ago because I had a thesis that silver was going to rise dramatically. So in the intervening period, we acquired not 1 but 8 silver projects. All of them are located in northern Canada. It's very cold in the winter, but there are no coups, there are no cartels, and quite frankly, the government support, and I'm not talking just about the, let's call it the territorial governments, but I'm talking about the indigenous governments locally, they're very supportive.
29:51 And that's very meaningful. Where we are today, we're very fortunate in that we recently closed on the acquisition of Prairie Creek, which we're calling the PC Silver Mine. This mine was built, completely built, in 1982. The Hunt brothers bought it. In fact, they paid $100 million for it then, and they built it. They were the wealthiest family in the world then. And so they, and I'll be honest, I didn't really realize this until I went to site and I saw all of what we acquired. Money was no object to them. They built with the finest materials, the finest engineers. And so what we've inherited is an incredibly valuable, solid, impressive mine, really. I mean, mill, We've got 5 kilometers of underground development. 80,000 M. Like just to do the underground development would cost $150 million today.
30:57 80,000 M of drilling. That's $80 million. The mill to rebuild what we have would probably cost $400 million. And by the way, all of this would take me at least 5 years. And so what we inherited is fascinating, surprising. And I think that we will be able to, you mentioned we are fully permitted, That's accurate. And we've signed IBAs with the 3 local indigenous governments. I've met with them one of them as recently as last week, and I can tell you they're very supportive. The point being is it's full speed ahead. We're going to be outrageously busy over the next 6 months. And I think we'll surprise a lot of people. I don't want to over promote and under promise because I'm talking about a restoration.
31:44 Not a construction. And when you restore something, many of these things are out of our control. And I'm sure we'll have some negative surprises, but so far we've been positively surprised. And I think we can be producing concentrate much faster than people think. Stay tuned. Great, thank you. Over to Eric. GR Silver is running a 20,000 metre resource expansion program at San Marcial, while working to integrate San Marcial and Plumosas into a single silver development project. In a persistent supply deficit environment, what's the strategic logic of consolidating the district into one project rather than advancing the area separately? And what milestones should investors watch before the updated resource and PEA?
32:33 For that question, Kyle, as you say, we're part way through an extensive 20,000 meter drill program designed to significantly expand. The San Marcial component of our Climosa Silver project. We're releasing drill results in batches on a roughly monthly basis, with the exception of our spectacular intercept released in May of 45m averaging 1.6kg of silver, including 8m of 8kg of silver. At the end of the program, we will deliver a mineral resource update, followed by an integrated preliminary economic assessment. As you noted, the PEA will integrate the former Plumosus mine in the north with the San Marcial discovery just to the south. The rationale of combining the 2 relates to permitting and social license.
33:23 The Plumosis mine is fully developed, features existing infrastructure and all major permits on a mining concession. San Marcial, however, is on an exploration concession. On a standalone basis, San Marcial would be years from development, going through the permitting process as a greenfields project. We believe that by advancing the 2 together, maintaining the trust the authorities have in us and employing a considerable number of local people. We can potentially accelerate development of San Marcial, which potentially generates a significant increase in the project net present value for shareholders. That's the rationale. Thank you, Eric. John Paul, Chesapeake's heap oxidation technology, now protected by a newly issued US patent, is designed to unlock Gold and Silver locked in refractory sulphide deposits that conventional heap leaching can't recover.
34:17 If the technology proves successful and is adopted at scale across the industry, what impact could it have on global silver supply and could it meaningfully change the supply deficit picture this panel has been discussing? Yeah, So thank you, Kyle. So just a little background for our audience, and I'll use Metates as an example. So Metates on the measured and indicated category is 17 million ounces of gold and over 400 million ounces of silver. So It's a significant deposit that hasn't been developed. It was discovered in the 1980s. The only reason why it wasn't developed over the last 40 years is the fact that the Gold and Silver are trapped in refractory sulfides. Many operators tried to move the project forward.
35:03 The latest is obviously Chesapeake. In 2016, we went down a POX autoclave process pathway, which was kind of the standard way of treating refractory sulfides. And that resulted in a $3.5 billion CapEx because it required desalination plant at the Pacific to pump water up into the Sierra Madre. It required a dedicated power plant on site. And as all these projects go, as you start building it, the only way in a small margin environment is you just keep increasing the scale. So it got to a 90,000 ton per day operation. And that's what caused the big blowout in CAPEX. Fast forward to 2020, we merged with a technology company. And what this technology does is rather than grinding, crushing, making into basically sand that goes through flotation and then epox autoclave, we just crush and we place it onto an oxidation pad where the proprietary technology causes the sulfides to actually oxidize, opening up the sulfides for cyanidation.
36:10 So we can actually heat bleach it thereafter and recover the precious metals. The last results we put out showed that on the Gold basis, we could get it to from 33% recovery without the technology, all the way up to over 70%. And then on the Silver basis, it was 35% recovery to above 50% recovery. So that's a meaningful switch. The CapEx that we put out in the PA in 2021 was $360M. It was a 35% IRR at $1,600 Gold and $22 Silver with a $1.1Bn NPV. So It's a very exciting opportunity or technology. We didn't want to just look at it in the context of Metates. We've actually been looking at the market, estimated Gold refractory globally, about 1 a quarter of the market is a refractory. That's about 580 million ounces of gold out there that's trapped in that same form.
37:10 And then on a silver basis, we'll use the standard ratio between gold and silver from the mining ratio, which is about 1 to 8. So it gives you an idea that there's about 8 times. So we'll take half of that because that's all we're going to recover. And so that's a significant amount of silver that's out there that can then be unlocked. Now, the question is, is that gonna happen today or is that gonna happen over a long period? And the answer here is it's gonna be over a period of time. It's very difficult to basically permanent bring a mine in production. We've found ways of partnering with 3 companies that we're working with right now in the lab. One's a producing mine that's coming to its end. Another one is a mine that has been on care and maintenance, and another one's been closed for a while and they're looking to restart. So all of these have advantages, where there's equipment in place, there's infrastructure in place, and permitted so that we could advance the technology and start putting these things into production.
38:10 But there's a big significant amount of deposits that that are also requiring new permitting and development like Metates. And so we're kind of taking a 2 prong approach, We're going to develop Metates, but we're also looking at the technology for applications globally. Is this going to be the creation of synthetic diamonds and the collapse of the diamond market and the drop of De Beers from an $18 billion company to 1 billion dollar company. No, I don't think that's the case. I think this is going to be more of a stepwise where heap leaching came in for copper. And it's not like the copper price got completely depressed after that. No, it just filled in the gaps where production was dropping and then it just continued to keep production levels at where they were. But it provides opportunities to access precious metals that are known and we can bring that production forward. So I think it's a very exciting opportunity for anyone that's a shareholder in Chesapeake to be a part of the story as we advance Metatis, but also as we advance the technology story alongside that.
39:15 Perfect. Gentlemen, thank you so much. The reason I asked these company-specific questions at the end is I hope I garnered some people's interest. I might have joined the call for 1 company but heard of a new one and you might want to learn more. So when I close off here, there is a book a meeting link. Feel free to contact which companies you'd like to meet. If you'd like to meet them, they'd be more than happy to take your calls, I'm sure.
