Silver no longer second best

The Paris silver project on South Australia’s Eyre Peninsula.

Since film photography became obsolete, silver has been a bridesmaid commodity for the more favoured gold. Here, three silver companies discuss the new industrial trend that is driving the commodity back into popularity.

In Australia, silver is often seen as a by-product for producers of gold or other base metals, adding bonus revenue on top of the consistency of gold, which investors traditionally flock to in troubled times as a safe haven.

Some Australian producers are challenging this norm though, focussing predominantly on silver as their primary product, for both its traditional uses in jewellery making and its growing use in new technologies such as electric vehicles (EVs) and solar panels.

New South Wales miner Manuka Resources is actually jumping ship the opposite way, transitioning from mining activities at the Mt Boppy gold mine in Cobar, New South Wales to concentrate solely on the nearby Wonawinta silver operations, where it processes the gold ore extracted at Mt Boppy.

Manuka’s knowledge and experience in both gold and silver, and knowledge of the relationship between the two precious metals, will be key as it moves towards commencing silver production at Wonawinta mid this year.

“Silver’s relationship with gold should never be underestimated,” Manuka Resources executive chairman Dennis Karp tells Australian Mining. 

“The trading ratio of silver and gold has been interesting historically, in the last 25 to 30 years it’s been that every one ounce of gold equates to 40 ounces of silver.

“This jumped to a ratio of 1:70 over the last two years and has had highs of 1:123 when COVID broke out last year. We are expecting it to break below 1:70 and hit 1:50 which means a 40 per cent appreciation in silver price when compared to gold.”

The Investigator Resources team drilling at the Paris silver project in South Australia.

While these ratios still see silver trailing behind, Karp is confident that silver’s versatility will secure its future in industrial applications as the world continues to embrace more advanced technologies.

“The relationship is key because while gold could have a substantial industrial application, it is just so expensive to make,” Karp explains.

“Silver, on the other hand, has fantastic conductivity and healthy benefits, it is used in a variety of industries and while it is expensive to produce, it is nowhere near the expense of gold.

“While less than 5 per cent of global silver production goes into photography, compared with 15 per cent 15 years ago, solar panelling has picked up the slack and EVs are projected to pick it back up and balance this further.”

As Manuka completes final gold processing from Mt Boppy by this June, it will be ready to move immediately into silver production.

Thanks to a healthy stockpile of 500,000 tonnes ready for processing, Manuka will be able to transform an estimated 1.2 million ounces of contained silver into silver doré for refining with zero associated mining costs.

“This is a huge advantage for us, having no mining costs associated with that stockpile, to be able to have a nice quick financial burst to the company once we make the transition,” Karp says. 

“Being able to kick off straight away from the stockpile then progress the stockpile to mining existing pits, we’re conducting infill drilling at the moment. We expect to upgrade the nameplate capacity of our processing plant from 850,000 tonnes per annum to one million tonnes per annum.”

Another Australian company focussing on silver as its primary product is Investigator Resources, which stumbled upon its own piece of Paris on South Australia’s Eyre Peninsula.

Former managing director and company founder John Anderson was exploring for a uranium deposit in the area during 2012 when he identified what is now the Paris silver project.

Starting out with its own greenfields project, Investigator spent eight years increasing its knowledge of the resource base and keeping an eye on silver prices until the timing became right to conduct South Australia’s biggest drilling program. 

Investigator Resources managing director Andrew McIlwain also recognises the worldwide shift towards EVs as a key catalyst in the silver revival.

“The big shift for silver is going to be EVs, with some countries even pledging to not have any petrol vehicles operating by 2030,” McIlwain says.

“This will be followed by a change in economic demand for similar to what we’re seeing with copper prices now.

“Then on the supply side of the equation, we see it is more challenged as South American grades have plummeted.”

With this door left open by other markets, Investigator Resources has come knocking with its high-grade product and an anticipated resource increase result from the 26,000-metre drilling program completed in December last year.

McIlwain expects Investigator to deliver its resource estimate this March, then by mid-year release a pre-feasibility study into the market and make the decision on whether or not to continue with a definitive feasibility study.

Manuka Resources’ Wonawinta silver mine in New South Wales.

“With the current view of the silver price, I certainly expect we will be doing that and that we’ll be back on the ground with more drilling, planning and development,” McIlwain continues.

“One of the great things about Paris is it’s about 50 kilometres north of Kimba, there’s nothing else out there, it’s not in arable land or in the watershed of any catchments.

“We have great relations with the Traditional Owners having gone through the formal native title mining approval process for exploration permits so there are no community issues to impediment development.”

With the highway within 15 kilometres of the project and the promise of Investigator bringing in new infrastructure such as water and power stations and trade for local businesses, the Kimba community is excited to have this opportunity on its doorstep.

“However we end up producing, whether it’s silver containing concentrate or if we smelt on site and produce doré, we’re sellers into a commodity market,” McIlwain explains.

“We’re really well positioned to have a project that is an absolute pinpoint for silver, especially as the prices continue to look promising on a daily basis.”

Thomson Resources is another company that was keeping a keen eye on the transition of silver from solely a precious metal to a battery metal in markets around the world, particularly the United States.

It was observing the growth of this metal that led Thomson to acquire Australia’s highest grade undeveloped silver asset, the Webbs project in northern New South Wales and the Conrad silver project, also in the region last November. 

In the past, aspiring silver producers like Thomson struggled to compete commercially against other metal companies producing it as a by-product.

Thomson executive chairman David Williams, however, believes the silver story is at a crossroads of change.

“Where silver is now and where we see it going is quite a different story, particularly if you can get a reasonable sized resource,” Williams says.

“The other side of it is gold exploration and production is a very busy paddock; every man and his dog are doing it but with silver, there’s not as many in the space in Australia to compete against.”

With the use of silver furthering into EVs, the commodity is experiencing a “back to the future” transition, as it returns to the roots of its former industrial success in film photography.

“Silver has always had its place as an industrial metal but now people from that side are beginning to recognise its importance and relevance in this space,” Williams says. 

“People are also directing their attention to getting out of currencies into assets like gold, but for those it is too expensive to invest into, silver is often the next obvious choice.”

As the globe turns its attention to greener solutions for vehicles, power and energy, Thomson Resources has been full steam ahead since finalising the acquisition to develop its resource and form a strategy to expand its existing projects. 

“What’s interesting is I don’t think silver will ever lose its status as a precious metal,” Williams says. 

“It’s not as if its going to become the iron ore of batteries, but with silver’s growing role in the automotive industry because of motor vehicles becoming more smart and eco-friendly, there is clearly a growing demand due to its combination of precious and industrial metal.”  

This story also appears in the March issue of Australian Mining.

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