Because a huge chunk of the annual supply of newly-mined silver comes from secondary operations where silver is a small byproduct of a gold or copper mine, the few companies that are primary silver miners are especially hurt by low silver prices. However, the results haven't turned out nearly as bad as one might expect.
For two major silver miners in particular, operations appear to be moving ahead full-speed. As the results from the fourth quarter of last year are now being reported by many silver miners across the industry, the overall success for these two firms becomes apparent.
In spite of consistently falling silver prices and weakening stock values, both Pan American Silver Corp (NASDAQ:PAAL; TSX:PAA) and First Majestic Silver Corp (NYSE:AG; TSX:FR) each reported strong fourth-quarter results that contributed to annual records for overall silver output for both companies.
Despite seeing publicly traded shares of the company lose roughly half of their value through the course of the year, Pan American Silver was able to accomplish a great deal of good in 2015.
Not only did the company lower its cash costs by 15%, helping to improve its bottom line, but it also saw significant growth in both its silver mining and gold mining operations. Pan American's mines produced 48,200 troy ounces of gold during Q4 2015 alone, a 14% increase year-on-year, which increased its full-year gold output to a new annual record of 183,700 ounces.
Meanwhile, by producing nearly 6.8 million troy ounces of silver across its various mines during the final quarter of last year, Pan Silver managed to post a new annual silver output record for the fourth consecutive year. In total, the company mined 26.12 million oz of the argent metal in 2015.
In a press release announcing its annual production numbers, Pan American observed that rising output from its projects in La Colorada, Dolores, Huaron, and San Vicente were more than enough to offset declines at its Alamo Dorado, Morococha, and Manatial Espejo mines. As its name implies, the company operates mines across Argentina, Bolivia, Mexico, and Peru, and also owns other projects in the U.S.
The company also provided guidance and projections for its 2016 operations. Pan American forecasts it will maintain silver production between 24 million and 25 million ounces, along with 175,000 to 185,000 ounces of gold. It also provided estimates for its zinc, lead, and copper output.
Perhaps most encouraging is that the firm plans to spend $135 million to $140 million on expansion and long-term development next year.
Another major among the silver miners, First Majestic, also saw new record levels of silver output. It produced more than 16 million oz of silver in 2015, a 5% increase year-on-year. Production of gold exceed 25,000 ounces in addition to considerable output of lead and zinc. This was despite also seeing its stock price fall by more than 50%.
First Majestic's mines are spread across six locations, all in Mexico. Between its Del Toro, La Encantada, La Guitarra, La Parrilla, San Martin, and Santa Elena mining projects, Q4 silver output rose 29% year-on-year and 31% more than Q3. In the fourth quarter alone, the firm set quarterly records of 4.8 million oz of silver and over 14,500 oz of gold.
Next year, the company expects its silver production to fall between 17.8 million and 19.8 million ounces. It also holds $51 million in cash on-hand.
If the performance of First Majestic and Pan American are any indication of what other silver miners will be striving for, the low price environment for silver should continue to be a boon for consumers. This is especially true considering it hasn't forced major silver miners to cut back output.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.