-- Posted 21 November, 2004 | | Source: SilverSeek.com
The deposits of silver mines rarely have reserves in 100 % of silver. There is always an association with the other metals as gold, zinc, copper, lead. It is even frequent as these mines possess deposits of the other minerals. It is a problem for the investor of silver because, when it looks for a silver mine, but it is very often in ownership of a big brass or zinc mine with a part of the silver reserves.
I. Various categories of silver’s mines.
I do not want to speak here of metallogeny, nor of the forming of deposits. I just want to make a sort of fast classification of mines according to their location with regard to their deposits of silver. I shall classify them in three big categories:
1. Mines 100 % to silver.
They rarely manage to have only deposits of silver, but they base all their strategies on the valuation and the research for deposits of silver. They are mines of Canada and USA.
2. The mixed mines.
It is the most wide-spread category, it possesses and develops several types of minerals and does not attach more importance for the silver than for the copper, the zinc etc....
3. The big international mines.
Most have a deposit of silver somewhere which they exploit in an extensive and a faster way. They do not communicate on the value of these deposits, moreover most of the financial observers even forgot that they have silver mines somewhere in the world. We locate it by looking at the classification of the biggest producers of silver.
II. The proportions of silver in the mining companies.
1. A mine in particular.
I take here a very interesting silver mine from the point of view of its reserves, it has an only big deposit, here is its distribution of reserves: gold 23 %, silver 21% and the other 56% (copper, lead and zinc).
2. My 14 favorite mines.
Out of curiosity, I assessed these silver mines to know the part of silver in the value of their reserves. After small fast calculations, I discovered that 17 % of their reserves were gold, silver 46 % and the other 37 % (zinc, copper, lead etc.).
In spite of my efforts to have companies with most possible silver there is only 46 % of silver under ground for these companies in the current rate.
3. All the silver mines.
On a list of fifty silver mines, containing the biggest part of the existing silver, the reserves are 30 % in gold, 43 % in the silver and 37 % in the other resources.
III. Explanations of the percentage of the reserves of silver’s mines.
- The first example has only one selected mine, the second example has 14 selected mines (a sort of ideal portfolio) and the last example is a list of fifty mines. The third example contains all the mines which have known reserves. The percentage of the reserves in the current rate of the silver thus gives a fork of percentage of silver in the reserves in the zone from 43 % to 46 %.
What does this mean to an investor which selects silver mines for their portfolio? There is a strong chance that money in reserve in ground represents only a little less than 50 % of the total reserves in minerals.
This implies two remarks:
- The companies of silver are little numerous and of more their money in reserve represent a little less than fifty percent of their reserves.
- The price of the silver is going to increase much faster than the rate of the gold or the zinc and so this percentage of valuation of the reserves is going to evolve during the next years. The share of the value of the silver in the reserves will thus increase.
Silver mines indeed have frequently the other reserves of minerals which often represent a majority of the valuation of their reserves under ground. It is largely due to the weak price of the ounce of silver. And so an investor, who thinks of having bought 100 % of silver mine, buys very often less than 50 % of money in reserve. We undergo a sort of compulsory diversification when we buy silver miners.
-- Posted 21 November, 2004 | |