It's no secret that silver is critical in many industries and that overall demand is increasing and supply is decreasing. Last year, for the third year in a row, silver demand massively exceeded supply. Global silver deficit last year was 184.3Moz (5,732t), one of the highest figures on record! Furthermore, it is projected that in 2024 the gap between silver supply and demand will grow by 17%, to 215.4 Moz, this will be the fourth consecutive year of deficits.
The growing industrial sector is driving demand. Offtake from the industrial sector achieved a record high last year, rising 11% to 654.4Moz (20,353t). Ongoing structural gains from green economies underpin these gains, mainly the photovoltaic (PV) sector. Globally, energy transition targets mandate solar PV power generation to grow by 25% annually until 2030.
Higher than expected PV capacity additions, combined with a faster adoption of new generation cells, raised electronics and electrical demand by a significant 20% last year, which in turn, drive demand for silver.
As subsidies and innovation continue to drive demand, the significant supply deficit and shrinking inventories provide a strong backdrop for increasing silver prices in the future, which should bode well for silver investors.
With the recent turbulence in silver exploration and production in countries like Mexico, investors might look to other, more consistent global mining jurisdictions for their investments. Peru is a favorable mining jurisdiction with access to infrastructure and home to some of the largest silver players in the world. Currently, Peru is the 3rd largest producer of silver, with the largest reserves of silver in the world.
In Southern Peru, there is a small-cap company Tier One Silver (TSXV: TSLV) that is exploring for silver on a 16,800-hectare land package that is adjacent to mining giants Vale and Rio Tinto.
TSLV’s Curibaya Silver Project is situated in a copper porphyry belt that hosts Freeport McMoRan’s Cerro Verde deposit, Southern Copper’s Cuajone and Toquepala deposits, and Anglo American’s Quellaveco deposit.
TSLV’s Curibaya Silver Project has a high-grade precious metals system sitting on top of a potential copper porphyry. It contains a 4km x 5km alteration system where the company has discovered initial surface samples of up to 298,000 g/t silver and 940 g/t gold. TSLV, in its 2021 maiden drilling program, hit high grade intercepts in 30% of its drill holes at Curibaya.
TSLV Chairman Ivan Bebek was formerly the President, CEO and co-founder of Cayden Resources, which was sold to Agnico Eagle Mines (AEM) in November 2014 for $205 million. Prior to that, he was a co-founder of Keegan Resources now known as Galiano Gold (GAU).
TSLV has identified six distinct silver-gold mineralized kilometric corridors to date at Curibaya. TSLV recently completed a field work program and once financed, plans to follow up with drilling at its higher elevation Cambaya corridors where the Company believes there is potential for high grade silver mineralization and scale.
When TSLV first listed for trading in 2021 it reached a market cap of CAD$200 million+ and traded 7.557 million shares in a single month hitting a high of $1.90 per share. TSLV has a current market cap at $0.12 per share of approximately CAD$20.53 million. TSLV also trades on the U.S. OTC under the symbol TSLVF.
There are far fewer publicly traded silver exploration companies than there are gold exploration companies and finding a premier silver focused exploration company outside of Mexico can be challenging. Despite the Mexican government’s new anti-mining policies aimed at banning open pit mining, Mexico has continued to produce record amounts of silver; however, Peru has become a dominant silver producing country and is recognized by the majors as a favorable mining jurisdiction with access to infrastructure.
Even if Mexico doesn’t ban currently operating open pit mines in the country, there’s the potential they could ban the approval of any new open pit mines in the country. As currently producing Mexican silver mines see their resources exhausted, there wouldn’t be any new Mexican silver mines coming into production to replace them. Already, investors are becoming reluctant to invest into Mexican silver exploration companies, which poses a significant opportunity for investment into Peru. The biggest driver of the new silver bull market could be a future silver shortage due to a lack of new silver mines being developed globally.
This introduction was prepared in cooperation with Tier One Silver Inc. whose technically qualified person, Christian Rios (SVP of Exploration), P.Geo, is the Qualified Person who has reviewed and assumes responsibility for the technical contents of this article. NIA is not an investment advisor and does not provide investment advice, this article is for general interest only. NIA has received compensation from Tier One of US$50,000 cash for a six-month marketing contract. Always do your own research and make your own investment decisions. For full details about Tier One review its securities regulatory filings at www.sedarplus.com.