- What is the relationship between Mineral Solutions and Bayhorse Silver?
Currently, we operate under a letter agreement that establishes a working relationship. This gives us the ability to do longer-term planning for the concentrate we produce. We work very closely with Mineral Solutions and provide them with the material they need to optimize and expand their process. Very much a win/win
- Does the Mineral Solutions process work with lower grade material?
Yes, it does. But like any process, there must be a cost/benefit analysis done to see whether it is cost effective at lower grades. It is the same as producing concentrates for smelters. The higher the concentrate grade, the lower the cost per ounce. We conduct a cost benefit analysis on everything we do. Rick Low, our CFO, has substantial practical experience, as the past CFO of a producing mining company. He runs the numbers on everything to ensure we are not deluding ourselves on the costs.
- How much money does Bayhorse save by processing locally rather than sending material to overseas smelters?
For a start, we save shipping. We have been quoted US$4,000 per 20 foot container load to ship to smelters in China. The maximum container weight is 20 ton. We were proposing direct shipping grade of approximate 150-200 ounces a ton, so the gross ounces shipped would have been 3,000 to 4,000 ounces per container load. Shipping cost per ounce between $1.00 to $1.34 per ounce. By comparison, Coeur D’Alene Idaho is approximately 370 miles and 8 hours (going at 50 mph average). A far cry from shipping to China, over 6,000 miles away and, assuming a timely shipment, two to three weeks for delivery at a minimum.
Then we have the refining charge, that is between $1.00 and $2.00 per ounce. At the top end including shipping, that would be as much as $3.34 per ounce.
But what really kills you is “the payout”. We were quoted payouts from a low as 76% to up to 81%, (including VAT) depending on the grade per ton. Smelters run up the Jolly Roger when they see a miner looking to sell/process/refine precious metals. The smelters can hold you to ransom. At the current spot price of Silver, $15.00, a payout of 76% is $11.40. 81% is $12.15.
So you get paid, say, $11.40 and you have to cover shipping and refining of $3.34, you would be lucky to break even . Of course, as the spot price silver goes up, the picture gets rosier, but shareholders want now, not tomorrow, and we want to operate profitably, not at a loss.
Mineral Solutions gives us the capacity to process and refine a few hours down the road at a reasonable fixed price per ton.
- Can you give us a timeline on how soon Bayhorse will be able to ship a significant quantity of silver concentrate to Mineral Solutions?
We are already shipping silver concentrate to Mineral Solutions. We will be shipping in greater quantities when we’ve installed additional gravity concentration equipment and when Mineral Solutions has increased its leaching capacity which they are doing right now.
- Do you have buyers for your .9999 grade silver? If so, how much can you sell?
Yes. As we produce refined .9999 fine silver, selling it is probably our easiest task. We can sell all we produce, to any mint, or even retailers, or individuals, in bar form. Bulk sales are of course easier for us.
As an example, Liberty Refiners, which is in a Joint Venture with Mineral Solutions, supplies the Sunshine Mint, also located in the Silver Valley of Idaho, with refined silver and gold. Even in this depressed precious metals market, Sunshine mints approximately 1 million ounces a week of refined silver. They source the silver from many refiners, including Liberty, and deliver minted silver and gold blanks to entities such as the US Mint, and the Canadian Mint. They also do custom minting. If Sunshine buys our silver, that would be at spot, as they do not have to pay for shipping and insurance on any silver they purchase from us, because Liberty Refiners is located so close. Just like popping down to the corner store, so to speak.
- We understand that there are other metals contained in the Bayhorse Silver deposit. Can Mineral Solutions recover those metals?
They can, but that requires additional processes that have yet to be set up. Silver can be removed from the concentrate and refined quickly and efficiently. The next set up will be copper, that is the next easiest to separate. After that, once again, the cost/benefit analysis comes into play.
- How do you see things playing out over the next few months?
The precious metals market has been in a prolonged slump for over four years. Every little uptick that has occurred has been met with optimism, has been dashed to pieces, as the downturn has gone on. Every prognosticator says it will get better, and silver cannot stay at 85:1 with gold, but they aren’t miners. We have to deal with the real world as it is.
Low prices are the cure for low prices. Bayhorse has been bargain hunting for months to identify a property that will help us add greater value to the Company. We have found such a property in Brandywine, at what we believe is a bargain price.
With Brandywine we have added a gold and silver project with substantial exploration data, along with historic mining data. Brandywine balances our existing Bayhorse Silver Mine. It is easy to get to, and compared to many other company’s projects, relatively inexpensive to explore and support and, because it is in Canada, it is eligible for flow through funds.
So, we will raise flow through funds to explore Brandywine and we’ll keep mining, concentrating and shipping silver material from the Bayhorse.