Silver prices are up, but supply is uncertain
COVID-19 flare ups and the consequent travel restrictions are hampering production in Mexico and Argentina, said Rob McEwen, CEO of McEwen Mining (NYSE: MUX; TSX: MUX).
McEwen spoke to Kitco on Thursday.
McEwen said mining in Argentina at the company's San Jose operation is hampered by travel restrictions.
"In Argentina, there are no flights. Our mine is in southern Argentina and the bulk of our workers come from northern Argentina, so the mine is operating at about 50% capacity," said McEwen.
Overall, McEwen said precious metal production is uncertain worldwide.
"I think COVID-19 highlights the issue of the unpredictability of production. All of sudden you have a COVID-19 case and maybe you can't go underground. Maybe you shut your mine down to prevent spreading."
The unpredictability of production pared with sharp demand is driving silver higher. On Thursday silver hit another 6.5-year high overnight. September Comex silver prices were last down $0.114 at $23.035 an ounce. Factors driving silver higher are gold and the interest in precious metals. There is also increased industrial demand due to the government stimulus.
McEwen also points out that silver can accelerate much faster compared to gold.
"Gold is up 18% since March, but silver is up 83%," said McEwen.
McEwen's company has not been able to fully enjoy the moment due to production woes. In Q2 production was significantly impacted by temporary mine suspensions at all four of our operations as a result steps taken to stop the spread of COVID-19, along with operational issues at several mines. The company reported 19,200 gold equivalent ounces compared to 45,900 in the year prior. McEwen Mining has also been challenged by its Gold Bar Mine in Nevada. A changed geological model required a write down and a substantial reduction in expected gold production over the life of mine.