Precious Metals

Silver fell to its lowest price in two and a half years last week, but has since begun to climb slowly — but steadily — upward.

After falling to $20.25 per ounce last week, its lowest level in over two and a half years, silver began to move higher this week. 

The white metal started the week at $22.52, trading between $22.70 and $22.45 on Monday as US traders stayed in for the Memorial Day holiday. Tuesday morning, silver slipped slightly lower, to $22.24, as a result of chart consolidation and a stronger US dollar, Kitco’s Jim Wyckoff reported. Though the white metal rose as high as $22.52 that day, it ultimately closed at $22.32 in New York.

Wednesday marked the beginning of the white metal’s ascension as it tracked gold higher, Reuters reported. After starting the day at $22.31, silver posted a close of $22.47, continuing that climb the next day to hit $22.99.

The precious metal declined slightly from that high, closing Thursday at $22.78 in New York.

Technical analyst Axel Rudolph said in a note that last week’s silver price slump and subsequent rebound were accompanied by “a positive divergence between the daily price and the relative-strength index,” according to Bloomberg. He thinks that will bring silver “back above its one-month resistance line at $23.25 and the $24.87 late-April high toward $25.”

American Eagle demand drops

Premiums charged by wholesale dealers on American Eagle silver coins have fallen to 13 percent, down from April’s four-year high of 25 percent, Bloomberg reported coin dealer Richard Nachbar as saying. That is an indication of declining demand, the publication notes.

Nevertheless, a Coin News article states that proof sets and Silver Eagles have garnered the highest sales at the US Mint over the past week.

Company news

Sierra Metals (TSXV:SMT), which bills itself as Latin America’s newest mid-tier precious and base metals producer, released its financial results for the first quarter of 2013, noting that its revenue came in at $41.9 million, down from $46.3 million in the year-ago quarter. Its silver production increased from 584,284 ounces a year ago to 610,407 ounces.

Daniel Tellechea, president and CEO of Sierra, also noted that the company is “very excited to announce the conditional approval to be listed on the TSX from the TSX Venture.”

First Majestic Silver (NYSE:AG,TSX:FR) announced an updated NI 43-101 technical report for its San Martin silver mine, located in Mexico, commenting that its proven and probable reserves have increased 224 percent, to 22 million ounces of silver. The mine’s life has been extended to nine and a half years at a higher throughput rate of 1,300 MT per day.

The company also provided an economic assessment of its expansion program.

Precious metals streamer Silver Wheaton (TSX:SLW,NYSE:SLW) closed a non-revolving term loan worth US$1 billion; the loan has a three-year term that is extendable by one year with the lenders’ unanimous consent. The company plans to use the loan to in part to repay the balance on its bridge facility.

Separately, CEO Randy Smallwood expressed the belief that Barrick Gold’s (NYSE:ABX,TSX:ABX) Pascua Lama project will move toward production even though it has been fined $16.4 million for “violations regarding the completion of a water management system,” Forbes reported. Silver Wheaton has an agreement in place under which it will receive 25 percent of the silver produced during the mine’s life.

Junior company news

SilverCrest Mines (TSXV:SVL) provided updated reserve and resource estimates for its Mexico-based Santa Elena mine. Probable reserves are now estimated to be 8.2 million MT grading 74.9 g/t silver and 1.24 g/t gold containing 19.7 million ounces of silver and 327,430 ounces of gold. That adds up to a 103-percent increase in contained silver and a 50-percent increase in contained gold.

Indicated resources now sit at 2.1 million MT grading 114.9 g/t silver and 1.69 g/t gold containing 7.9 million ounces of silver and 116,000 ounces of gold, a 127-percent increase in contained silver and a 99-percent increase in contained gold.

J. Scott Drever, president and CEO of the company, commented, “[t]he significant increase in Reserves has clearly defined processing feed for our planned 3,000 tonne per day processing facility (Milling & CCD leaching) for an additional 8 years. What is even more exciting is that we have yet to define the limits of the Main Mineralized Zone and have only begun to explore the newly discovered high grade El Cholugo and El Cholugo Dos zones.”

Silver Mountain Mines (TSXV:SMM) filed its first-quarter financial statements on SEDAR and announced that it plans to evaluate strategic alternatives, including “a purchase of assets, participation in other assets … a merger, recapitalization, amalgamation or any combination thereof” with the aim of increasing shareholder value.


Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

Related reading: 

Is Silver Nearing its Bottom?

Silver Wheaton’s Smallwood Optimistic About Q1 Results


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