I have been in contact with several people from the Nevada Bureau of Mines as well as the Alaska Division of Geological and Geophysical Surveys to get to the bottom of the true U.S. silver production figures in 2010. “Off the Record” speaking, they informed me that silver production decreased in most mines in Alaska and Nevada. These are the top 2 producing silver states in the country. They will not release their final reports for 2010 until the end of July or in August. I will do an update at that time and set the record straight.
Looking at the chart above, I found out that Nevada produced some serious silver in 1997….nearly 25 million ounces. It is truly amazing that in just 12 years Nevada’s silver production has declined 70%. In 2009 Nevada produced only 7.3 million ounces whereas; Alaska came in more than double at 15.6 million ounces. In 2009 Nevada was the top Gold mining state in the U.S. providing 70% of total gold production and now second in silver production behind Alaska.
In the second table I compare Nevada’s 1997 production to 2009. Here, the differences in gold and silver production stick out like a sore thumb. Even though Nevada’s gold production declined from 7.8 million oz in 1997 to 5.0 million in 2009, this is only a 35% decline. Silver on the other hand decreased twice that of gold or 70% since 1997.
According to the Silver Institute, the United States produced 70.1 million ounces of silver in 1997, while Nevada accounted for 24.7 million ounces or 36% of the total. In 2009, the United States silver production declined to 40.2 million ounces and Nevada only mined 7.3 million ounces or 18% of the total.
Except for Coeur d’ Alene’s Rochester primary silver producing Mine in Pershing, NV, all other silver production comes as a by-product from either copper-moly or gold mines. In 2009 the Rochester Mine produced 2.18 million of Nevada’s total of 7.3 million silver ounces. If we do the math this ratio turns out to be a neat 29.8% of primary silver to by-product mining. This is the same as the global percentage according to the 2010 Silver Institute.
We have to remember Nevada is the home of the great Comstock Lode that produced upwards of 192 million ounces of silver alone. The peak year of production was in 1877 that accounted for $21,000,000 million in silver sales. Back in the early days, silver production was listed in a dollar amount. If we look at Kitco’s annual price of silver in 1877 we find it was $1.21 an ounce.
$21,000,000 / $1.21 = 17.3 million ounces
I have seen estimates of miners getting $2,000 a ton for silver from some areas of the Comstock. If we assume a safe average of silver at $1.50 an ounce (between 1860-1880) that would give an approximate ore grade of 1,333 oz of silver per ton….truly amazing to say the least. In most cases in the early days of the Comstock Lode, it would cost about $10 a ton to mine the ore and sell for approximately $50 a ton. Again, if we assume $50 divided by $1.50 an ounce…this is about 33 oz per ton as an overall grade.
As a comparison, according to Coeur d’ Alene’s 2010 Annual Report, the average ore grade for the Rochester mine in 2008 was 0.54 oz per ton; in 2009 it was 0.52 oz per ton and in 2010 it fell to 0.44 oz per ton. Just think about that. The Rochester Mine in Nevada produced slightly over 2 million ounces in 2010, with an average ore grade of 0.44 a ton. This is a staggering 98.7% decline in ore grade compared to what was a normal grade at the Comstock Lode (33 oz per ton).
I wasn’t able to easily find Coeur d’ Alene’s 1997 10-k Annual Report, but I was able to get their 1998 report. In 1998, the Rochester mine produced 7.2 million ounces of silver at an average ore grade of 1.36 oz per ton. Mining at the Rochester mine ceased in August 2007 as the reserves had been depleted. In their last year of full mining production in 2006, their average ore grade was 0.74 oz per ton. Coeur d Alene is producing silver by continued residual heap leach activities until 2014.
We can see time and time again, how falling ore grades along with increasing amounts of tonnage are necessary to produce less and less silver as time goes by. This is the reason why it is vital in understanding the falling EROI- energy returned on invested and how it will impact mining going forward. I have many more future guest posts explaining this in several different examples.
More to come….
Tinka Zone1 has 90 to 500g/t (3 - 16oz/ton) near surface. It sounds pretty good compared to even 1.333 oz/ton.
ReplyDeletezsiros did you mean 1,333 oz/ton? I noticed a period between the 1 and 3. Amazingly the Comstock had a ton with over 1 thousands ounces of silver in it.
ReplyDeleteNo doubt Tinka has some good ore grades as it is in Peru. We must remember each continent has its own peak in resources. Europe peaked in drilling and mining its resoures in the late 1800's whereas the United States in the early 1950's. It looks like Russia and the former Soviet States peaked in overall resources in the 1990's.
Australia/Canada looks like it is peaking presently. We will see continued growth especially in the precious metals production from South American countries as well as Mexico.
This will not offset coming depletion in the countries listed above as well as base metal mining falling off a cliff when the global hyperinlfationary depression finally kicks in.
Lastly, there is a great deal of unrest in many countries and there is fear of nationalization of resources, including precious metal mines. There is continued push for it in Bolivia, Peru, Argentina and now recently South Africa. Can you imagine if the Gold mines in SA get nationalized??
I believe once the Global Depression hits and the US Dollar finally finds its way into the Toilet where it belongs, most of the countries in South America and Mexico will more than likely nationalize their gold and silver mines as this will be MONEY ONCE AGAIN. You can bet your bottom silver dollar that South Africa will be also included in that list.
This means countires like the USA will have to survive on its own SILVER and GOLD mining.
GOOD GRIEF.
Yes SRSrocco, it supposed to be a comma ...
ReplyDeleteMineral Ridge Gold Project Behind the Scenes Mine Tour with VisionVictory.
ReplyDeleteInteresting leaching process to extract gold:
http://www.youtube.com/watch?v=HQ8Wk-dlCTU&feature=player_embedded#at=62
EXAMPLE OF HOW MUCH US SILVER PRODUCED BETWEEN 1840's-1931
ReplyDeleteARIZONA = 205 million ounces
COLORADO = 600 million ounces
IDAHO = 333 million ounces
MONTANA = 533 milllion ounces
UTAH = 585 million ounces
This was not all the states, but the grand total production from the USA during those years was:
3.2 billion ounces
I noticed that in 1940 there was another big increase in gold and silver production. There have been 3 peaks. One in the 1915-1916 period: another in the 1940 period, and the last one in the 1997-98 period. The last one wasn't as high as the production during the 1915-1916 period. Mark my words, the USA will not increase production in silver ever again to match what it did in 1997....70.1 million ounces.
Folks....don't let anyone tell you otherwise, the USA blew its wad in resource production so to speak, during World War 2 and the period immeidately after it.
The US DOLLAR has been able to allow us to live on the PHAT for much longer.
more exposure to the fraud: BIS report
ReplyDeletehttp://news.silverseek.com/GoldIsMoney/1309983136.php
Excellent post. Keep those fundamentals based reports coming, that's what long-term investors need, as it keeps those "bubble bears" away like a repelent. :)
ReplyDeleteProduction is also heavily influenced by price. Many mines were shuttered due to
ReplyDeleteProduction cost/$oz. as the S & G prices bottomed around 00''. A return to production at prior levels may not happen soon if ever. Another hidden consequence of price manipulation.