How much does it cost the mining companys to mine 1OZ gold and 1 OZ silver?

fivecents

And which mining companys are solid to invest in?

cinman14

<< <i>How much does it cost the mining companys to mine 1OZ gold and 1 OZ silver? >>

Less than they sell it for...



<< <i>And which mining companys are solid to invest in? >>

The ones that have figured that out...

cohodk

This is what Hecla Mining said earlier this week. From Briefing.com....

Hecla Mining Updates Guidance Increasing Silver Production and Lowering Cash Costs Per Ounce (3.74 ) : Co announces improved operating performance, increased exploration spending and an update on the development plans for the Lucky Friday mine. Hecla says its operations continue to show marked improvement as a result of previously implemented plans which focused on lowering cash costs through cost-cutting and optimization programs. Hecla is revising anticipated full year 2009 silver production to 10.5-11 mln ounces from 10-11 mln ounces. The estimate of cash cost per ounce of silver has been reduced by a third to less than $3.00 per ounce of silver from the previously announced estimate of $4.50 per ounce

roadrunner

Some of the silver companies might have per oz costs of $5-$8/oz and even that may not be all in when one considers currency swaps, foreign exchange rates, derivatives, and who knows what else.

The gold miners typically show per oz costs of $300-$450 per oz. The top miners are in the $300-$350 range. Note that when the prices of copper, tin, zinc, and other industrial metals were much stronger the next cost per oz was much reduced. In fact I believe it was either Yamana or Agnico Eagle that had a net gold cost of zero in one of their mines when silver was rocking. In other words their silver by-product covered the entire mining expense of the gold.

Miners in the HUI index (unhedged) or XAU (hedged) are a good place to start to determine worthy candidates. If you go to Kitco home page you can click on either index on the right hand side of the page and see who is a member of each index.

roadrunner

dbcoin

For silver I like Silver Wheaton, SLW. They don't mine silver. They are a royalty company. They pay mining companies an upfront fee and then they pay $3.90/oz for all the silver they mine. They will sell something like 20M oz's of silver next year and about 40M oz's in 5 years making them the biggest silver company in the world. And they have less then 10 employees. The mining companies have all the risk and they make all the profits.

For gold I like Goldcorp, GG. They mine gold for about $300/oz. They have properties in North America. They are unhedged in their gold, but hedge their copper and silver production. They pay a monthly dividend, and have no debt. I think they are the second largest gold miner behind Barrick, but Barrick has all those nasty gold hedges to deal with.

roadrunner

The definition of "unhedged" per the HUI does not mean a miner is fully unhedged. But just that at most a small % of their short term forward production is hedged. When the 2nd QTR reports came out one of the unhedged miners (Yamana?) took a beating to the tune of tens of millions to their bottom line on derivative's losses as well as underwater currency swaps.

roadrunner

dino2008

5 cent, I have some stock in silver metals corp. Its a mining co headquarted in canada with the bulk of its production in china...been doin o.k. for me, bought @ 2.50 its headed for 5$ ... good luck

adamlaneus

The way I see it is this:

Mines are capital intensive. Lots of up front costs.

The cost for that first ounce of gold or silver is mind-bogglingly insane. Like $400,000,000 per ounce.

But then, after that first ounce...

They get the rest practically for free.

mash

Eldorado gold corp, symbol: EGO is a popular mining stock
So is Freeport-McMoran Copper and Gold, symbol: FCX

cladking

Silver tends to be a by product of other mining so establishing a cost
per ounce isn't really meaningful.

Many miners simply expand and contract operations dependent on the
price of silver. They always try to maximize profit and production which
means they tend to produce for a significant fraction of whatever the
current price is. There are notable exceptions.

wpr101

Check out SLT, they are an Indian metal mining company with a good reputation.