Top Stories This Week: Silver’s Lowest Possible Price, Latest Lithium Results
Catch up and get informed with this week’s content highlights from Charlotte McLeod, our editorial director.
We’ve focused a lot on gold over the summer, and for good reason given its price action — but for this week’s update we’re starting off with silver, which is making waves of its own.
Like gold, silver has surged this year, although it remains about US$20 off its all-time high. Interestingly, the white metal’s rise has prompted questions about the lowest possible price for silver.
Responding to a reader’s question this week, INN’s Georgia Williams asked experts what the minimum price for silver would be given its varied uses.
Adam Webb of Metals Focus explained to Georgia that to answer that question it’s important to look at the 90th percentile — if the silver price is above the 90th percentile, high-cost operations may be incentivized to come online; on the flip side, if it’s below that level it’s possible that some mines will close. In Q1 of this year, the 90th percentile was around US$19 per ounce.
“Generally speaking, when you’re looking at the cost, you tend to look at the 90th percentile. If the price of silver is above that 90 percentile, that would incentivize high-cost operations to come online. If the price drops below that 90 percentile, generally it will mean that some mines will close” — Adam Webb, Metals Focus
David Morgan of the Morgan Report shared his thoughts as well, saying that US$15 to US$17 is the “bare minimum” for mines to stay open.
INN also took a look this week at the lithium space, where the major players have now all released their Q2 results. Like other sectors, lithium has definitely been impacted by COVID-19, and all of the top producers have experienced hardships of some kind.
Of note on the downside, Tianqi Lithium (SZSE:002466) reported a net loss of about 696 million yuan for the first half of 2020, down around 460 percent year-on-year.
But optimism remains in the market, with most of the lithium producers expressing confidence in the long term — for example, Albemarle (NYSE:ALB) CEO Kent Masters said that the company’s strategy hasn’t significantly changed despite current conditions.
“We remain confident that we have the right strategy in place to deliver value to our stakeholders by investing in and growing our lithium business. While our strategy has not materially changed, the environment in which we operate has changed dramatically” – Albemarle CEO Kent Masters.
On a different note, INN is gearing up right now to look at the upcoming US election and how it could impact the resource space. We started off with a simple question for our Twitter followers: Has the mining industry benefited from Trump’s presidency?
By the time the poll closed, only a small majority said that it has. One person elaborated: “Yes, because he has pumped trillions into a failed economy.”
We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts!
In the marijuana space this week, INN’s Bryan Mc Govern spoke with Michelle Sundquist of SoRSE Technology, a CBD product developer. She spoke extensively about cannabis drinks and the challenges companies are facing as they introduce them to the market, saying that while beverages are still a major opportunity it’s not surprising that consumers have not yet fully embraced these new products.
“People might be a little bit hesitant to buy it because it’s not calling out to them as something that’s made for them. So a lot of it comes down to figuring out who your consumer is and figuring out how they are going to get your product” – Michelle Sundquist, SoRSE Technology
Sundquist, who spent 20 years working at coffee giant Starbucks (NASDAQ:SBUX), mostly in product development, emphasized that cannabis companies need to focus on who they are selling to — but they must also recognize that timing is key.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.