edr silver 2 brochure web2004 2006 2008 2010 2012 2014 2016 2018 2019 silver etfs represent 742.7moz...
TRANSCRIPT
A NEW GOLD-SILVER CYCLE
SILVER SETTING UP FOR A PERFECT STORM
2 3PART 1
THE SILVER SERIES
DEMANDINVESTMENT
Silver is a precious metal.
Currency debasement is not new: governments throughout history have “printed” money, while silver
retains its value relative to these paper assets.
Just like gold, silver has functionedas money for centuries—and its role
as a store of value and a hedge against monetary inflation is growing.
In addition to the investment thesis for silver as a monetary metal, silver is also special for its industrial uses:
With base metals currently in a bear market, there is a dwindling supply of silver.
Silver is produced primarily as a by-product of non-
precious metals mining.
This is placingupward pressure on
the price of silver—potentially
indicating the start of a new
gold-silver cycle.
But silver is a green metal which supports
rising industrial demand.
DEMANDSUPPLY AND
Until recently, ETF investment has been relatively flat, but there has been a surge in the price of silver. Meanwhile, demand for silver-backed financial products has increased the demand for physical silver.
2002
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02004 2006 2008 2010 2012 2014 2016 2018 2019
Silver ETFs represent 742.7Moz
DEC 2019
UK
GERMANYAUSTRALIA
SWITZERLAND
CANADA
USA
TOTAL
Silver ETFs represented approximately 6.6Moz
DEC 2000
Since 2000, the amount of financial instruments has ballooned across many financial products and markets.
This is a 116x increase, worth approximately ~$13.6 billion intoday’s silver prices*.
SILVER OUNCES IN ETFS BY COUNTRY
*US$17.95 per oz. Source: CPM Group
But the average investor today does not own physical silver. Rather, they invest in financial instruments that track the performance of the physical commodity itself, such as silver exchange-traded funds (ETFs).
There are two types of silver ETFs:
A Direct Silver ETF owns the silver bullion and acts as a custodian on behalf of the buyer.
An Equity Silver ETF buys stocks of silver mining companies andtracks an equity index.
#1
#2
In fact, silver is powering the green revolution.
Silver is the best natural conductor of electricity and heat. It’s used in:
A silver paste is used in the solar PV cell which collects electrons and subsequently forms an electric current. Silver then helps conduct electricity out of the cell. Without silver, solar panels could not be as efficient in turning sunlight into usable energy.
As investments and the green revolution are demanding more and more silver, where is the precious metal coming from?
LED & RFID chips
Semiconductors Electricvehicles
Alloys & coatings
Solar panelsBatteriesElectronics
2019201620132010200720042001
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0
Source: Silver Institute
DEMANDINDUSTRIAL
Silver is not just an investment, but also a green metal with many industrial applications.
ANNUAL FABRICATION DEMAND
Photovoltaic
Imports intotrans economies
Other countries
Other Uses
Biocides
Superconductors
Electronics
Jewelry &silverware
Photography
Silver is finding a new and growing use in photovoltaic solar cells.
1,000Moz
Supply disruptions in Canada, U.S., and Guatemala caused a 2% drop in global production, the third year of decline in a row.
Concentration of production can lead to severe supply disruptions.
GLOBAL SILVER MINE PRODUCTION BY COUNTRY, 2018
SUPPLY Silver production is highly concentrated in several countries.
SILVER MINE
196.6Moz144.9Moz
114.9Moz43.4Moz42.1Moz
39.9Moz39.6Moz
35.4Moz28.0Moz26.5Moz
24.8Moz23.2Moz
19.5Moz14.6Moz
11.9Moz11.2Moz
5.5Moz5.0Moz3.6Moz3.4Moz
21.7Moz
MexicoPeru
ChinaRussia
ChileBoliviaPoland
AustraliaUnited States
ArgentinaCanada
IndiaKazakhstan
SwedenIndonesiaMorocco
TurkeyArmenia
IranDominican Republic
Rest of World
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Source: Silver Institute
SOURCE OF SILVER IN MINE PRODUCTION
The bulk of silver production comes as a by-product of other metal mines.
As silver is not the primary metal emerging from some of these mines, it faces a supply crunch now.
Zinc & leadmines
Silvermines
Coppermines
Goldmines
31.7% 22.8%29.8% 15.7%
Typeof Mine
% of Total MineSupply 2018
Source: CPM Group
CRUNCHSILVER SUPPLY
Silver supply is falling for 3 reasons:
Declining production
#1
Declining silver mine capacity
#2
Declining reserves of silver
#3
Prolonged weakness in price provides little incentive for primary silver producers to increase output through expansions or build new mines.
#1 SILVER SUPPLY BY SOURCE
Source: GFMS
Mine Production Secondary Government Disposals
20002002
20042006
20082010
20122014
20162018
2020
Supply has decreasedfor the last three years
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New silver mine capacity increased due to run up in prices between 2010-2011 followed by a sharp decline from 2013 onwards.
While “above-ground” supply is dwindling, so is silver in the ground. Nearly all reserves at the largest silver mines have been in decline.
#2 ANNUAL ADDITIONS OF SILVER MINE CAPACITY
Source: GFMS
2013 2014 2015 2016 2017 2018 2019p0
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edrsilver.com
Endeavour Silver finds, builds, and operates quality silver mines in a sustainable way
to create real value for stakeholders.
TSE: EDR NYSE: EXK
#3 “LIFE OF MINE” (LOM) SILVER RESERVE DECLINES
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: USGS, 2018
Fresnillo mine
San Jose
Saucito
Arcata
Cannington
San Bartolomé
Dukat
Palmarejo
Pirquitas
La Colorada
Greens Creek
Uchucchacua
Silver miners who make new discoveries could prove to bethe next great opportunity. Declining supply and rising silver
demand is setting silver up for the perfect storm.
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400Moz Global decline in reserves for Ag, Au & Cu due to reduction in
exploration expenses as companiessought to preserve capital.
There are fewer high grade, world scale deposits.