STUNNING RESULTS: Four Top Primary Silver Miners Production Plummets

by Steve St. Angelo, SRSrocco:

In an interesting change of events, production at four of the top primary silver miners plummeted during the second quarter of 2017.  This goes well beyond normal fluctuations in mining companies production figures during different quarterly reporting periods.  The company with the least percentage decline in silver production still suffered a 20% reduction of mine supply in the second quarter.

According to recently released company data, silver production declined between 20-34% from these four primary silver miners during the second quarter.  The company that suffered the biggest decline in silver production was Hecla at -34%, followed by Endeavour Silver at -26%, Silver Standard at -24% and First Majestic with a decrease of 20%:

Total silver production from these four primary silver miners fell 27%, from 11 million oz (Moz) during Q2 2016, to 8 Moz Q2 2017.  We can see the breakdown in the chart below:

Hecla suffered the largest decline in silver production by falling 34% due to a mining strike at its Lucky Friday Mine in Idaho.  Production at the Lucky Friday Mine has been suspended since a workers strike began at the mine on March 13th.  Furthermore, Hecla’s Green Creek Mine in Alaska saw its silver production decline from 2.1 Moz Q2 2016 to 1.9 Moz Q2 2017 due to falling ore grades.

The second largest percentage decline in silver production was from Endeavour Silver.  Production at Endeavour Silver fell from 1.6 Moz in the second quarter of 2016 to 1.1 Moz in Q2 2017.  This 26% decline in silver mine supply was blamed on several factors:

  1. Reduction in capital and exploration expenditures in the beginning of 2016 due to lower silver prices, but the company has increased spending once again in the second half of 2016
  2. narrowing veins, falling ore grades and less ore processing due to a reduced capital expenditures in the beginning of 2016
  3. less access to mine areas as pump failures due to power overloading caused flooding in some portions of the mines

This huge decline in silver production at Endeavour Silver, plus falling earnings, impacted its stock price which fell 16% in one day after the news.

Silver Standard (renamed SSR Mining) which suffered a 24% decrease in silver production saw its mine supply fall to 1.9 Moz in Q2 2017 versus 2.5 Moz during the same period last year.  This steep reduction in the company’s silver mine supply was due to the closure of their Pirquitas open-pit mine.  SSR Mining’s mine plan for Pirquitas was to move from open-pit operations to underground mining.  Silver production at Pirquitas for the remainder of 2017 will be from processing of open-pit stockpiled ore.

Furthermore, SSR Mining will be supplementing silver production from its Pirquitas underground mine from new venture called Chinchillas project located 45 km from Pirquitas.  However, production from the Chinchillas project is not expected to begin until the second half of 2018.

The company that experienced the least percentage decline of silver production in the group was First Majestic.  Silver production at First Majestic fell 20% from 2.8 Moz during Q2 2016 compared to 2.3 Moz Q2 2017.  Production declines at First Majestic were due to mine stoppages at several projects due to unionized worker disputes and labor issues.  In addition, declining silver yields of approximately 8% also attributed the decline in Q2 2017 silver production versus the same period last year.

So, we can see how labor disputes, falling ore grades and power outages have negatively impacted many of the top primary silver miners in the industry.  Of course, not all primary silver miners experienced declines in production.

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