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….