This year\’s Vancouver Resource Investment Conference (VRIC) just wrapped up, and for the Investing News Network, one highlight was Monday\’s silver producers panel.
The panel was led by Peter Spina of GoldSeek.com and SilverSeek.com, and featured four big names in the silver industry: Ross Beaty, chairman of Pan American Silver (TSX:PAA,NASDAQ:PAAS); Randy Smallwood, president and CEO of Silver Wheaton (TSX:SLW,NYSE:SLW); Keith Neumeyer, president and CEO of First Majestic Silver (TSX:FR,NYSE:AG); and Phillips S. Baker, Jr., president and CEO of Hecla Mining (NYSE:HL).
Topics covered over the course of the 30-minute panel were diverse, but Spina started off by simply asking the panelists how the market volatility seen these past few weeks is affecting the silver price and silver miners. Overall, the participants emphasized that the current market activity is nothing new — the market is cyclical and it currently happens to be at a rocky point in that cycle.
Neumeyer added some color to that oft-repeated sentiment, commenting, “I believe 2016 is the beginning of the next cycle.” He said that he recently had nine meetings, two with traditional resource funds and the rest with generalist funds. While the resource funds have unsurprisingly been “devastated” the last few years, the generalist funds have “made an absolute fortune” — Neumeyer sees these cash-laden generalist funds coming into the market and driving a new cycle.
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Of course, the market isn\’t better yet, and Spina also asked the panelists to share what keeps them up at night. He got some interesting answers, with Neumeyer admitting, “I would never have predicted what\’s gone on in this market — I thought we had a low at $20.” As a result, a big challenge for him has been re-engineering First Majestic for success.
On a different note, Smallwood said that because Silver Wheaton is a streaming company, his biggest concern is whether the company is making the right investments — in other words, “focusing on assets that will survive through low commodity prices.” Meanwhile, Baker highlighted mine safety and productivity as issues that are often on his mind.
Productivity came up again during the panel when Spina asked participants about the long-term consequences of having a silver price that\’s lower than miners\’ all-in sustaining costs. Put more bluntly, how long can silver miners continue in an environment like that?
Beaty gave a fairly positive answer to that question, noting that because “mines die hard,” it\’s much better to keep a mine going even if you\’re “just barely breaking even.” He also quipped that perhaps the mines that actually do get shut down when the markets are bad “maybe shouldn\’t have been built in the first place.”
For his part, Neumeyer reiterated his belief that a new market cycle will start soon. He noted that while First Majestic is preparing for lower silver prices, he “think