Ceo Comments

2018-08-23

CEO Comments

The construction of the Silver Mine continues according to the set timetable and cost framework and is constantly moving towards production. We focus on putting up the buildings and equipment and getting the production infrastructure ready. During the autumn, the equipment will be installed in the processing plant. The construction of the water treatment plant, ore mining and recruitment of employees will begin.

Sotkamo Silver has agreed with VAPO to develop a bioenergy-based solution for ventilation air heating as part of energy efficient and responsible underground mining. The solution is part of the continued development of sustainable mining, in which the company is committed to.

The silver price development correlates well with other raw material prices. The low-price level affects the valuations of silver mining companies. From a historical perspective, silver and other mining companies' shares are currently low-valued. This view is also supported by the gold-silver price ratio, which has recently been between 1/75 and 1/83 when it has been around 1/56 observed in the last 50 years.

Minerals are a prerequisite for sustainable development. Mining is needed in a circular economy together with recycling. Alternative sources of energy increase demand for metals; lithium, cobalt and nickel are significant battery metals that are remarkably noted today. However, it should be noted that silver is another battery metal, that is also used in high- and environmental technology. The reason for the increasing industrial demand for silver has been the use in high-tech automotive industry as part of the transition to electrification based on, for example, the solar energy. Silver demand in the automotive industry increased 5%, and 19% in the solar industry in 2017 compared with the previous year. Silver has a critical role in the transition to electric cars while the demand for solar energy is increasing at an accelerating rate. The industrial and technological demand of the silver is more than half of the total demand. The silver still has a big importance as an investment metal aside from gold. In the current global economy, the silver (industrial / batteries / electrification / automation / environment) demand is growing when the mine production is limited and has been less than the demand during the last 10 years.

Since mining production is lower than demand, silver production and demand-driven prospects support potential strong price development in silver. One might imagine that the silver and the silver mining companies could be an attractive investment for investors considering the global silver market situation. However, this affects the amount of investment silver stored in the vaults and its possible return through recycling to the industrial market. Price fluctuations can be rapid and significant in today's unstable world political situation.

 

CEO Timo Lindborg

2018-08-23