Heralding Argentina’s Silver
Marc Davis, www.BNWnews.ca
With gold prices continuing to
shine as the fragile global economic recovery falters yet again, equally buoyant
silver prices have given the mining industry considerable impetus to increase
production. But that’s simply not happening.
The fact is that most silver
production is a by-product of gold mining. And the increasing scarcity of
sizeable new gold deposits has precipitated a global slide in output of around
5% per annum for nearly a decade. This has obviously impacted silver yields,
The situation has also been
compounded by a decline in the number of stand-alone silver discoveries in
recent years. As the low-hanging fruit has already been picked, major new silver
finds tend to be buried deep and are harder to get at, which typically makes
them more expensive to bring on-stream. Or they are in environmentally sensitive
areas – which make their future prospects politically problematic. Others tend
to be metallurgically challenged – which makes processing recoveries low as
compared to gold.
Hence, readily accessible
below-ground silver inventories in many mature mining jurisdictions are getting
mined-out. This helps explain why the world’s two largest producers – Peru and
Mexico – could only manage a paltry rise in output of 4.6% and 0.6%,
respectively, in 2009, in spite of surging silver prices.
Such uninspiring numbers
represent an all too familiar picture among the well-established silver
producing nations. This is further illustrated by the fact that worldwide silver
production (among market economies that report reliable output numbers) has
remained more or less steady over the past three years in the 550 million ounce
However, at least one other
Spanish-speaking emerging economy is rising to the challenge. Argentina posted
a 55% jump in silver output in 2009 to 15.5 million ounces over the previous
year. One of the world’s few remaining stable democracies that is mineral-rich
but underdeveloped, this geographically large Latin American nation is set to
continue to ramp-up its output in the coming years.
An unheralded player among the
world’s silver producers, Argentina’s production profile for the next few years
suggests that it will break into ranks of the top 10 producer nations. This is
expected to happen as a number of new silver mines or silver-rich gold mines
The most significant to date is
the Pirquitas mine, which was commissioned in 2009 with an initial output of
only 1.1 million ounces. But the mine is on-track to accelerate output this year
to 7 million ounces. Owned by Vancouver-headquartered Silver Standard Resources
(TSX: SSO) (NASDAQ: SSRI), this mine is expected to generate some 10 million
ounces a year once in full production – and for up to 14 years.
Among the more significant new
mines to be built by the industry will be the long-awaited world-class Navidad
primary silver deposit. With a scheduled initial output of around 5 million
ounces annually, Vancouver-based Pan American Silver Corp. (TSX: PAA) (NASDAQ:
PAAS) is hoping to begin monetizing this veritable basin of silver in 2013. At
an estimated 450 million ounces in size, Navidad should emerge as the largest
new contributor to Argentina’s growing silver output.
Then there’s Andean Resources (TSX:
AND) in mining-friendly Santa Cruz Province, which is targeting a 2012 launch of
its high-grade Cerro Negro gold-silver mine. An annual output of 3.5 million
silver ounces is forecast, along with 250,000-300,000 of gold.
A number of other important
silver-gold discoveries are also shaping up nicely. They include the Cerro Moro
deposit, which is also in Santa Cruz Province.
It is owned by another Vancouver-based junior, Extorre Gold
Mines (TSX: XG), which benefits from a resource base of 27
million ounces of silver and one million
ounces of gold. The company’s high grade Escondida Vein runs a bonanza silver
grade of 805
grams per tonne (g/t), plus 18 g/t gold.
This is where the numbers become
interesting. With nearly 45% of the deposit’s value reported as silver, a 10%
rise in the silver price relative to gold could make this a viable silver mine.
30 or so other
known veins on the property. And one of them has already revealed 6 million
ounces of silver so far. There may be more to come as this vein is reportedly
wide ‘open’ (continuous) along trend. Extorre is also aggressively drilling at
least half a dozen other veins – which management believes may further bolster
the ‘bonanza grade’ silver potential of the property.
Not just an explorer, Extorre
Gold Mines is targeting a production decision for its
Cerro Moro deposit in the first
part of 2011.
Despite Extorre and Andean being well
ahead of the pack towards producer status, a growing number of other ambitious
gold and silver explorers are aggressively working to build up their own early
stage discoveries in Argentina. All of which aim to capitalize on a rising tide
for gold and for the grey metal that Chinese investors refer to as “poor man’s
Indeed, historically high
investment demand for both gold and silver, especially
in Europe and the Far East, is continuing to firmly support their lofty spot
prices. Meanwhile, silver consumption is being underpinned by its many
industrial uses, which are entirely independent of silver hoarding for
A number of key 21st
century applications such as solar panels and flat screen television panels are
forecast to contribute strongly to heightened demand. Furthermore, the
marketplace for semiconductors (microchips)
– which are used in an array
of portable electronic devices and other high-tech applications
– is experiencing explosive
Disclaimer: The principals of
do not directly or indirectly own shares in any of the companies mentioned in