In this excellent interview with Sprott’s Thoughts, Keith Neumeyer noted that Silver Standard, Tahoe, Coeur D’Alene, and Pan American Silver have all diluted their silver portfolios toward gold. Why?
Because quality silver assets are extremely rare…
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Submitted by Sprott’s Thoughts:
In anticipation of the Sprott Vancouver Natural Resource Symposium from July 26th-29th, Sprott’s Thoughts is proud to present another exclusive interview with one of the conference’s Platinum Sponsors: First Majestic Silver founder, Keith Neumeyer.
Interviewed by Sprott Global Resource Investment’s Kenton Ralph Toews, Mr. Neumeyer discussed highlights of his career, as well as observed changes in the silver mining industry.
While many resource & mining entrepreneurs have a geology or mining engineering background, Mr. Neumeyer started in financial services, initially as a trader on the Vancouver stock exchange. Later he worked at various banks and brokerage houses, including Dominion, Scotiabank and Merrill Lynch.
This financial background gives Mr. Neumeyer a view of what “works” from an investor’s standpoint. “I learned there are a lot of bad investors in the space,” he noted, “[And] I’ve been successful in really surrounding myself with good people and that has been one of my primary talents.”
A question addressed in the interview, has been the progressive dilution of primary silver mining businesses, in terms of operators migrating asset portfolios toward gold.
Mr. Neumeyer noted that Silver Standard, Tahoe, Coeur D’Alene, and Pan American Silver have all diluted their silver portfolios toward gold. Why? Because quality silver assets are extremely rare.
While companies have been busy selling off “non-core” assets over the last few years, pure-play silver deposits are still seemingly unavailable. The issue, Mr. Neumeyer believes, is that the market does not appreciate how rare silver deposits have become.
Rather than selling off assets during the bear market, Mr. Neumeyer noted the company has worked to improve operations, automate projects, and implement new software and technology to assure the company runs as leanly as possible.
While reducing operational costs, the company has managed to increase production and reserves. They also reduced production over the last few years, noting that selling their silver production at extremely low prices was not the preferred business plan. Shockingly, many companies undertook this method, trying to increase throughput to make up for a squeezed margin—in other words, the ‘Last Man Standing’ battle.
But by reducing production while remaining operational, allows the Firm to “ramp up” production as silver prices begin to rise, as Mr. Neumeyer anticipates over the next few years. “The difference in cash flow quarter over quarter is going to be enormous,” he noted.
Mr. Neumeyer has also been active in the monitoring the transparency of the silver markets. He believes more players are needed in the market to assure liquidity and a fair price, and has been vocal about creating partnerships with others in the industry.
To hear Kenton’s full interview with Keith Neumeyer, including his views on the future of the silver price and the potential crushing of manipulation in the paper markets, click the below link.
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