Polymetallic Deposits Generate Profits Even at Low Silver Prices

Silver is experiencing its sixth consecutive annual structural deficit, and prices have reflected this trend. Spot silver traded around $65 an ounce through mid-August, but the more interesting aspect of this story lies in polymetallic deposits where silver arrives alongside zinc, lead, and copper.

In these types of deposits, base metal by-product credits can push a mine's cash cost below zero. This is because the revenue generated from selling these metals exceeds the total costs of production, making the operation profitable even at low silver prices.

Honey Badger Silver Inc., a company with significant holdings in polymetallic deposits, recently announced a positive preliminary economic assessment for its PC Silver Mine. The study projects 22 years of mine life, with average annual production of approximately 10.7 million ounces of silver equivalent over the first seven years.

The all-in sustaining cost of the operation is reported to be negative $22 per silver ounce in the long-term consensus pricing case and negative $36 per ounce at spot pricing. This is a significant finding, as it suggests that even if silver prices remain low, the mine can still generate profits due to the revenue generated from selling by-products.