Uh silver is having a moment having broken decisively through 20. An ounce keith tell us about this rally. Well, you know, look i i’m watching it over the last couple of days, and you know i have to pinch myself just to make sure i’m i’m actually awake, because i’ve been a bull on silver for 18 years, and you know these rallies uh. I i’ve predicted many times and, and the last five or six years have been pretty tough and uh it’s, just really nice to see that finally we’re getting some attention and it’s great for shareholders in the space as well, now there’s a lot happening, uh and uh There’S, obviously, the production fall off uh due to cobit 19 suspensions there’s, the industrial demand, because we see things really heating up in the green tech space and then obviously the precious metal interest. Can you talk about what you see in uh, the demand picture we’ll get to the supply picture in a minute, but what are some of the major factors right now in this rally? Well, you touched it uh, you know, demand is growing every year and uh. You know we know that you know there’s a pretty solid, you know four to six percent increase in demand, going back know over a decade and um, you know and supply has been dwindling away, and then this deficit that’s been building and it’s.

Of course you know some people, you know dispute the numbers, but um, you know we’re, members of the silver institute and uh.

You know i’m uh i’ve been quite critical of how a lot of this data gets accumulated in the space and, quite honestly, it’s all made up um. You know there’s, really, no good data out there um. You know we we, we know the miners produce pretty well and we don’t know what all the miners produce, but at least there’s some guessing going on, but the publicly traded ones uh. We could count but uh when it comes to the demand side. You know the big demand uh or the big consumers of the metal silver don’t want to talk about what they consume and actually they’re paranoid to. Let you know exactly what they consume, because they’re afraid that you and i and every hedge fund on the planet is going to front, run them and uh drive the price of the metal. You know to highs where it should actually be trading at so you know there’s a you know: there’s, a very secret network of uh players in the space that uh just don’t allow this information to come out. Um, you know being in the solar space uh running a first majestic for 18 years. I know the tightness of the market. I i talk to traders. I talk to the industry, i i know the demands in the sector and i know how tight the supplies are, but um you know it’s only gon na get worse as we go green as a human race.

What are the major uh factors on the industrial side? Well, you know we’re getting off oil and gas that’s quite clear, and then this ball started to roll a few years ago, when i put this company together, you know we didn’t have solar panels to any great degree. We didn’t have electric cars to any great degree. Now, solar panels are the largest consumer of silver. You know in the space and you know, consuming over 10 percent of the world’s supply of metal, one industry which didn’t exist 20 years ago, uh the electric car industry as well. You know the electric car as far as we can tell, and of course these numbers are are held pretty close to the chest of all the auto manufacturers because they don’t want you to know the numbers, but based on our analysis. So we we feel that there’s about three times more silver being used in electric car versus a fuel combustion car huge demands on metal. Of course, you know we’re all wanting computers and all the gadgets that we, you know use on a daily basis. You know even to pull this call off. It requires a ton of silver, so there’s a lot of drivers on the demand side and for us to electrify this planet uh, as we want to electrify it and change the way we do things for humanity, we’re, going to need a lot more silver and the Prices need to go much much higher for us to supply the demand that’s required that’s on the demand side, let’s switch to the supply side, obviously latin america being one of the major producing regions for silver, also, one of the regions that uh was hard hit by Colvin 19 and some very strict, uh suspensions that were put down in that region.

When you last talked to daniela and kitko at the end of march, you were starting to tabulate what uh the production picture looked like as the suspensions were being introduced. We now have the q2s that are starting to trickle out uh. We did have the notice, for instance, about panamerica that is going to be suspending some mines down improve. What is the uh supply picture? Looking like right now, do we have more clarity on it? Well, if you just look at the data that’s been available for all of us, you, you publish it yourself on an annual basis. You know the data comes out. You know, usually in the april may time frame every single year. It is quite delayed, um and and it’s shown quite clearly that there’s, the supply of silver has been dropping uh, almost yearly for for the last four years and uh um consumption has gone up uh and then we know that so with the covet situation, it’s even Got worse because you know at one point in may: we had 50 of the world’s supply of silver offline and that’s a pretty big number uh. You know if you’re uh, you know one of the major electronic manufacturers. You know you’re not going to stop buying your metal for the production of your televisions or or your computers or an automobile meal manufacturer. You know not just going to stop buying their critical components to produce what they need to produce, so the supply or the consumption side remained in place well.

Well, the supply side obviously fell away. We felt that on the retail side, you know our our premiums, uh on our retail products, went up dramatically, as probably yours did as well. Actually, i know yours did as well um. We started running out of our retail inventories quite quickly in march and april, when the, when the demand spiked and at one point there, we’re selling silver for five dollars above spot, and i know that other companies, like yourself and other retailers out there were also um In the same situation, because the inventories were just getting so low, you know we’re even having a hard time now, uh replenishing our our retail inventories, because you know the the refineries and the smelters have a lot of pressure on them to push the metal into industry. Where they have long term contracts, let’s talk about uh. First majestic you had to the quarter that you released recently uh operations down in mexico. Uh production was cranked, uh what’s, it look like going forward. Well, q2 was the difficult quarter. Obviously um you know the production was, i don’t have the numbers in front of me, but you know somewhere around half of what you know was expelled was a anticipated without covid situation. You know um, and everyone knew that and it wasn’t just us. It was the entire sector, as i just pointed out, about the silver supply being cut by 50 that’s. You know worldwide and, of course, we’re affected by q3 we’re back up and running uh um.

We had a bit of a slow start in in the first week of july, just getting people back to work, there’s still a group of people in mexico that aren’t allowed to come to work there’s a vulnerable group that um is made up of. You know, individuals that are obese or have diabetes or other health uh issues, or maybe they’re just um over the age of 60, and the government has put them in a category. So we continually have those individuals on our payroll about 10 of our workforce is in that category, so you know we haven’t been able to get all our workers back to site. We are hiring some part time temporary workers to fill in the gaps uh to to um uh. Take care of you know some of the key positions that some of the vulnerable people may have been holding previously and we’ll see how all that works out. But um things are looking pretty good. You know the production’s picking up uh. We expect to end q3 with a pretty strong quarter. I don’t know exactly it’s too early to say what the quarter is going to look like, but you know by q4. I think we’ll be back up and running and uh we’re trying to make up the ounces we lost uh. You know whether we can do that. Um across the board is hard to say, it’s a big challenge, making it back those kinds of bounces, but you know we’re working our best to end the year.

On a strong note, keith i was trying to remember: did you release uh guidance for the year at or no? We did. We put guidance out just a couple weeks ago and uh cost guidance came down which is nice to see um, so our costs have dropped from our previous guidance productions down a bit as well. I think we dropped the production by somewhere around a million ounces or maybe million and a half ounces i’d have to go back and look look at the numbers, but yeah it’s, not um um from a production standpoint, definitely lower than what we originally guided back in January uh, one thing that struck out to me is this: is that you were timing, your silver sales uh, looking for an improvement in uh prices uh later into the year. I guess when that was uh released not too long ago, uh we’re! Looking for a recovery. So can you comment more on that sure i’d love to you know it’s it’s um. You know, i guess it’s. Just in my blood, you know it’s the training isn’t that blood. I i like to take advantage of markets when, when they get out of whack, when where they, when one way or the other and uh you know in the case of silver, you know it definitely got uh oversold and you know it broke down below 17 bucks. An ounce – and i just stopped selling silver. I i didn’t, you know i just felt it wasn’t in the best interest of the business and uh.

You know it was already six weeks or so before um. We resumed our sales again because it took a while before silver to resume uh it’s normal from you know, price range, or at least normal in in my view, and why you know it’s by by making that move. You know i saved the company. You know several million dollars and then uh i’ll do it again if, if i see fit, and our inventory has got up to about one and a half million ounces of silver by by early may and it wasn’t until in late june, that i started liquidating some Of those ounces, and now it made us, look pretty good from a financial perspective and it’s a big savings, and you know quite honestly, i really you know, took pride in not feeding that cheap silver to the banks who are infamous and taking advantage of this marketplace. Uh, do you first majestic, has also made some news in the spring um i’d. Just like to go back. Can you tell us about uh the spring pole, silver dew yeah, look i’m, the founder of both companies and uh. First, first mining gold uh has a pretty incredible portfolio of gold, um development assets that um i was able to accumulate. You know during the the you know harder days of 2014 and 2015, when prices were dramatically low, lower and uh i’m, proud of putting that portfolio together and uh, one of the biggest or the the single biggest asset is actually the springfield gold project, which is, which Is likely one of the largest undeveloped gold mines in all of canada, one of the top gold projects in all of the world and uh they’re anxiously uh, permitting it and it’s a long process.

Of course – and you know, their stock has underperformed in my view and uh, you know, rather than them going out and doing an equity financing and diluting their shares at a ridiculous share price. You know, i thought it was a good opportunity for first majestic to up its investment in that company we’re already a holder of shares in first mining, but through that uh spring coal stream. Not only do we get access to the silver which is great for first majestic but also gives first majestic a more of an equity position in first mining, which i think is going to be great for uh the shareholders of first majestic and, of course, uh. Less much less dilutive and supportive for first mining. Can you uh take us up again where the location of that um, where the location of that asset is yeah, it’s, north of red lake it’s it’s in the northern ontario region, okay, uh and then there was also golden goliath right. The gold line project was um. One of the other assets that i was successful in acquiring it was owned by a private company called tomaca. It never actually did reach the public markets, but you know they have. You know north of two million ounces of gold there, or there are abouts and we’ve been drilling. Our first mining has been drilling on that for the last couple years, but you know with such a large portfolio uh and with spring poll being such a big project.

We felt as a management team at first mining that goldland was getting somehow lost in the portfolio and the company wasn’t really getting the value, the neighboring property or the neighboring company. A company called treasury metals uh has has been dancing with first mining for quite some time. You know a couple years on on trying to maybe consolidate that region and we just made sense. You know it took a while to convince me personally but um. I i felt that you know the deal was good um. We got a huge toll hold in in treasury metals, and so we get the upside um and also our shareholders will benefit as well, because we’re actually planning our first first mining is planning on dividing out a good chunk of those shares of treasury two, the shareholders. First, mining, so all of responding shareholders will get a piece of this new company with you know large gold holding uh and a future. You know gold mine as far as i’m concerned in a great part of ontario, so i think it’s, one of those classic win win deals for both companies. Uh keith uh you’ve, been in the industry for a while you’ve been doing this for a while uh. Can you talk about uh this rise in precious metals? Is there anything different between what you’ve seen in the past to say to 08? Well, you know it’s still early days. You know, i think, that um, you know whether we’re gon na go we’re gon na be in a five year: bull market or ten year, bull market.

I don’t have a crystal ball, but um um we’re still early on um. I think that this bull market started in 2016 and we had a bit of a pause in 2017 2018 and a resumption in 2019 and uh. You know now you know it’s it’s, uh, it’s. Definitely we’re touching. You know close to new highs on on gold and uh silver’s got a lot of ketchup to do. You know. Last time gold was trading at these prices. Silver was 40 bucks, an ounce so just to equal. You know what where we were back in 2010 2011. So we would have to double from current prices which, which i think are going to happen, but um. I think gold is going a lot higher um. You know i i’ve thrown numbers out in the market before you know. 3 000 is a is an easy number to achieve. In my view whether it goes to 5 000, who knows uh, you know there’s others out there that are, you know, talking much much higher numbers um, but you know i’m more focused on silver than than gold. You know i i look very much at the the silver gold ratio and i know there’s a lot of people out there that think it’s. You know it’s old way of measuring silver and it doesn’t apply anymore. I disagree. I think it actually applies more than it ever has due to the industrial component of of the metal, because, in my opinion, supply demand, fundamentals all always prevail.

Um. You know where you know: markets go through imperfections, i’ve talked about this before and and the pricing and perfection of silver is quite extreme uh. You know where you have, or we as an industry, the mining sector, mines for every one ounce of gold. Only eight ounces of silver and and if you can explain to me why we’re trading in ninety to one when we’re, only mining, eight to one, you know, love to hear your your rationale for that. I’Ve got my own views of why that’s the case, but um. You know whether we see silver at ten to one gold or twenty to one gold. You know i don’t know where you know it’s actually going. Ultimately, as i said, i don’t have a crystal ball, but i think it’s going to get a lot closer to 10 and then to 100 over the over this coming uh, bull market and uh. You know if gold goes to my minimum target of three thousand dollars, then you know that puts a pretty hefty number on on silver prices.

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