MINERAL REVIEW AND FORECAST: PRECIOUS METALS; SILVER

Silver prices trended downwards throughout the 1980s and reached a 17-year low of US$3.58/oz in February, 1991. Prices subsequently improved, due to strengthening demand and lower supplies, and averaged US$4.04 in 1991.

In Canada, production fell in 1991 to 1,240 tonnes from 1,380 tonnes in 1990. Most of Canada’s silver output is produced as a byproduct or co-product of other mining. It is estimated that a 7% reduction in annual silver capacity resulted from mine closures in 1991. Some losses were offset by new operations, such as the Sa Dena Hes, Goldstream and Norita East base metal producers.

A further reduction of approximately 30% in Canadian capacity is expected to occur during 1992 as reserves are depleted at both the Equity Silver and Samatosum mines in British Columbia.

Reclamation work at the Equity Silver mine, Canada’s largest silver producer, continued through 1991 while the company completed the placement of a $32-million bond to cover post-closure effluent treatment costs. The mine is expected to operate at full capacity of 10,000 t/d until reserves are depleted in June and the mine closes in the fall of 1992. The mine opened in 1980 and produced 66.4 million oz Ag, 449,400 oz. Au and 77,000 tonnes Cu to the end of 1991.

The Samatosum mine was opened by owners Minnova and Rea Gold in 1989 and has produced approximately 9.5 million oz Ag, 17,000 oz Au, 3,700 tonnes Cu, 4,300 tonnes Pb, and 7,900 tonnes Zn to the end of 1991. The operation is scheduled to close in October, 1992.

Prices and Outlook

Current low prices are limiting new silver supplies while having a positive effect on industrial demand. It is predicted that a supply-demand deficit will exist throughout the 1990s; however, the deficits are expected to be small when compared with the large overhang of world stocks which will continue to place downward pressure on prices.

The silver price is forecast to range between $4 and $5 in 1992, with a similar long-term outlook, unless major new uses are developed or a reversal occurs in investor and speculator sentiment.