Thank goodness you didn’t sell any yet. Man Novo Resources just continues to surge higher and higher. Wow!!!

It is a shame for Tanzania, for the stakeholders inside and outside of the country, and asking for 2 centuries of the production from $ACA.L is ridiculous and FAR from realistic.

When I saw the news break about them asking for 190 Billion Dollars….. all I could think of was this clip from Dr. Evil. #GoldMafia

**** 100 Billion Dollars!

https://www.youtube.com/watch?v=BRAkobf-tVI

+1

It’s an inferior approach that some would call deceptive, that’s all.

From one standpoint, it can confuse those that interpret Gold eq. ounces or Silver eq ounces as all Gold or Silver, but if they’ve converted over the Base Metals credits on the concentrates or the throughput/production over the same value as Gold or Silver at the time of reporting, it’s really the same measure of value at that specific point in time when they sell the metals.

For reporting purposes, all I care about is how much was produced, and what the margins are to see if they are starting to make money. That’s the main thing, since it is a business of selling metals, and all Silver producers are polymetallic by nature.

Right now with Zinc & Lead & Copper so elevated, due to real supply/demand fundamentals, I’d produce as much of those Base Metals as possible (because may not be as valuable at other points in the commodities cycle).

Overall, I’m actually extremely impressed that they are holding back the Silver for when the pricing improves back up into the $20s. Why blow out the Silver at low prices, when you can shelve some of those, and make it rain with Zinc/Lead/Copper. They are still producing plenty of Silver along with those Base Metals of course, but they are purposely letting those values flat-line in favor of the better economics on the BMs. They’ve been very open about it, and Silver equivalent ounces or Gold equivalent ounces is the industry standard most companies use.

That’s where we disagree. For reporting purposes, all I care about is how much actual silver was produced and what the costs were. knowing this is more useful if you care about how much leverage to silver to expect from a company.

I DO care about how much leverage i get which is why my top three silver positions (by far) 18 months ago were IPT, AXU, and USA. Each went 10-11 bagger in about 6 months while SILJ did almost half as well. Today, I think IPT has retained more of what gave it such leverage than either USA or AXU.

One last point. The fact that companies have been open about their reporting does mean that investors understand the flaws in such reporting.

Those are some valid points concerning a companies leverage to Silver prices Matthew and I appreciate you sharing them.

I do agree that IPT has some of the most leverage to Silver, and always attributed that to how pure of a Silver producer they were. This is also why investors like First Majestic so much. The high grade Alexco has been hitting at Bermingham and Flame&Moth has upped their leverage to Silver as well. The fact that they worked things out with Silver Wheaton where they now have a sliding scale will also help out on leverage. Excellon is about to tap into their higher grade sections of the mine that have been underwater for years. They have 5+ years of really high grade material to mine, and are exploring and continuing to grow those resources, so that should give them excellent leverage as well.

I like that IPT’s revenue comes mostly from silver but that is just a small part of where the leverage comes from. There are many more important factors to consider when trying to figuring out how much leverage to expect.

Yes , agreed. I mostly look at costs, margins, production guidance, reserves, the pipeline of projects, and exploration upside. I’m still learning every day though, and enjoyed your comments on only looking at how the precious metal portion will perform for a given company, and using the base metal credits to recalculate their costs. Thanks for the insights as always.

IPT has had a much higher Silver percentage at 89% so it was the most pure silver producer, but it is dropping to the mid 70% range this year, and they are also producing more Zinc & Lead than in years past, so it will be interesting to see if they convert those over to Silver Eq Ounces as well.

Its the same for the vast majority of the companies in the Silver space as none are 100% silver. All are polymetallic by nature. Honestly, many of the ZINC companies are doing the exact same thing, only they count their Silver and Lead as Zinc Equivalent Ounces. 🙂

I think you’re missing my point, Ex. Getting those base metal credits is fine and dandy but they should not be called “silver equivalent” ounces. They are not. They should simply be applied to the costs necessary to produce silver or real silver equivalent ounces (Ag+Au). IPT’s management agrees and does it right.

The same goes for gold companies regardless of how many are doing it wrong. Base metals are not monetary metals and, therefore, have different drivers.

P.s. – IPT is unlikely to “convert” base metals to AgEq ounces as long as the current management is in charge.

I agree that it would be better to adjust costs using the Base metals credits and only report in the Silver or Gold ounces. Even though the AISC numbers get massaged all kinds of ways, it’s at least one metric to watch in those regards. That’s why I’ve mentioned how significant it will be with San Rafael coming online in September or October for (USA) (USAS). They’ll be dropping it from around $10 to $3 as far as how they report their All In Sustaining Costs. That’s a major improvement.

The only other “Silver” miners I’m aware of that have costs that low are Silvercorp and the projected costs for MAG Silver when they come on-line.

There’s no dispute about the robust economics but an AISC number for AgEq ounces will be much different than one for actual Ag ounces. I care more about the latter while much of the industry wants investors to focus on the former.

That’s a really interesting vantage point, and I haven’t really looked at things with that type of filter before. Good lesson to ponder today. Thanks.

I’m not smart enough when reading over balance sheets and financials to really calculate what the true cost for the Silver ounces are, so I’ve defaulted to AISC numbers as one of my key metrics, but those have all the base metals intertwined.

Do you have a quick calculation for rooting out a companies real costs that you utilize? (one that can be used by dummies like me 🙂 )