The Ayawilca zinc-silver-tin project in Peru includes a significant component of silver within the resource base, enhancing the project’s overall value. The Ayawilca ‘zinc zone’ contains 14.9 million ounces of silver in the Indicated Mineral Resource category and an additional 14.6 million ounces in the Inferred Mineral Resource category. In addition, there are 3.7 million ounces in the ‘silver zone’ at much higher grade, and although relatively small the ‘silver zone’ structure has barely been drilled and remains open for expansion. The silver resources at Ayawilca already stand as a significant silver deposit, with substantial potential for expansion with additional drilling. The notable presence of silver not only diversifies the project's potential revenue stream but also strengthens its economic viability, positioning Tinka in the global silver market.
Silver has a rich history and a wide range of applications that make it one of the most versatile and sought-after metals in the world. Its unique properties such as high electrical conductivity, reflectivity, and thermal conductivity, distinguish it from other metals and contribute to its extensive use in many industries. These unique physical and chemical properties have cemented its status as a valuable industrial metal as well as a precious metal:
Aesthetic Appeal: Silver’s physical properties including its metallic lustre, malleability and resistance to oxidation has made it is one of the most preferred and versatile precious metals for jewelry, silverware, and ornamental items. Its aesthetic value continues to drive its demand in the luxury goods market.
Electrical Conductivity: Silver is the best conductor of electricity among all metals, making it indispensable in the production of electrical components and conductors. This property is critical for the manufacture of high-performance batteries, solar panels, and electronic devices.
Thermal Conductivity: Silver's excellent thermal conductivity is utilized in heat-sensitive applications. It is used in thermal management systems for electronics, in automotive radiators, and in various industrial processes.
Reflectivity: Silver reflects more than 95% of visible light, making it ideal for mirrors, telescopes, and other optical instruments. It is also used in coatings for windows to reduce heat transmission.
Antibacterial Properties: Silver has strong antibacterial properties, leveraged in medical applications including wound dressings, catheters, and coatings for medical devices. It is also used in water purification systems.
Malleability and Ductility: Silver can be easily shaped and drawn into thin wires, sheets, and complex shapes, which makes it highly adaptable for various industrial and decorative applications.
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The Global Silver Market
The global silver market is multifaceted, with demand driven by a combination of industrial, investment, and consumer applications. Like most precious metals, the price of silver is known for its volatility, influenced by factors such as industrial demand, investor sentiment, currency fluctuations, and geopolitical events. While silver prices have experienced significant swings, the long-term trend has been upward, driven by increasing industrial applications and investment interest. Understanding the dynamics of this market is essential for appreciating the role silver plays in the broader economy.
Industrial Demand: The largest segment of silver demand comes from industrial applications, accounting for approximately 50% of total demand. Key industries include electronics, photovoltaics (solar panels), automotive, and healthcare. The growing adoption of renewable energy technologies, particularly solar power, has significantly increased the demand for silver in recent years.
2. Investment Demand: Silver is also a popular investment metal, with investors purchasing silver bars, coins, and exchange-traded products (ETPs) to hedge against economic uncertainty and inflation. Investment demand can fluctuate based on market conditions, geopolitical events, and changes in monetary policy.
3. Jewelry and Silverware: Approximately 30% of silver demand is attributed to the production of jewelry and silverware. Silver's affordability compared to gold makes it a popular choice for consumers seeking attractive and durable precious metal items.
4. Supply Dynamics: The supply of silver is primarily sourced from mining, with a smaller percentage coming from recycling. The top silver-producing countries in 2024 include Mexico, Peru, and China. Silver is often a byproduct of mining for other metals such zinc, lead, and copper, which can influence its supply dynamics and market price.
Silver at Ayawilca
Silver is a key component of Ayawilca, mostly associated with the zinc zone mineralization but also in the silver zone (which boasts higher silver grades but is substantially smaller). The silver enhances the project's overall value and economic potential through:
A Growing Resource Base: Ayawilca contains around 15 million ounces in Indicated mineral resources and another 19 million ounces in Inferred resources (dated January 1st, 2024), mostly associated with base metal (zinc-dominant) mineralization.
Revenue Diversification: Silver, along with zinc and tin, contributes to the diversification of revenue streams for the Ayawilca project based on the 2024 Preliminary Economic Assessment (PEA). By having multiple valuable commodities within a single project, Tinka can mitigate risks associated with price volatility in any one metal and capitalize on favorable market conditions across different metals. Based on the 2024 PEA, silver is expected to contribute around 9% of the overall revenue of the project (together with lead) once in production.
Silver's unique properties and diverse applications make it an indispensable metal in today's economy. The global silver market is characterized by increasing industrial demand in the technology sector, investment interest, and significant use in jewelry and silverware. The Ayawilca zinc-silver-tin project contains a significant quantity of critical metals, including silver. These metals will be essential for the continued growth and development of green technologies.
