2014 FULL YEAR RESULTS: Top Primary Silver Miners Lost $1.9 Billion

With the last remaining company finally releasing their year-end results, my top primary silver miners lost a combined $1.9 billion in net income in 2014.  While two-thirds of the group reported significant write-downs (impairments),  two of the largest companies suffered the highest losses.

Even though the group experienced record net losses, seven of the twelve actually enjoyed positive adjusted income.  Let me explain.  Companies report net income and adjusted income.  Net income includes various items such as impairments, losses (or gains) on derivatives, hedges, investments or financial exchange losses (gains), and etc.

While these financial items are apart of their profit and loss statement, I like to focus on their adjusted income which removes these items in order to get a better idea of how successful they are at MINING SILVER.  As I mentioned before, two of the largest silver producers in the group suffered huge net income losses due to large impairments, but their adjusted income wasn’t as bad.

For example, Coeur stated the largest net income loss of the group at $1.15 billion while Pan American Silver came in second at $545 million in the red.  However, the adjusted income for Coeur was -$112 million compared to Pan American Silver at -$20.8 million.  Coeur’s large adjusted loss for the year, awarded them with the third highest estimated break-even of the group at $22.38.  Which means, Coeur lost an estimated $3.51 for each ounce of silver they sold at an average price of $18.87 in 2014.

Here is the combined financial data for the top 12 primary silver miners in my group:

Top 12 Primary Silver Miners 2014 vs 2013 Full Year

As we can see from the table above, the group sold nearly 21 million oz (Moz) more silver in 2014 than 2013, but their total revenue only increased $282 million from $3.1 billion to $3.4 billion.  Basically, the group sold 23% more silver in 2014 and was awarded with a paltry 8% increase in total revenue.

The major reason the group’s total silver production and sales increased so much in 2014 was due to Tahoe Resources Escobal mine reaching full year commercial status.  Tahoe’s Escobal mine produced over 20 Moz of silver in 2014, but only sold 18.1 Moz.  Tahoe is the lowest cost producer of the group even though Hecla likes to brag it has one of the lowest cash costs.  CASH COST accounting is not a GAAP (Generally Accepted Accounting Principle) and I believe is totally useless in determining the overall profitability of a mining company.

You will also notice the group’s total production costs increased $288 million, year over year.  This was due to the addition of Tahoe Resources $127 million in production costs along with the group adding a few newly acquired primary gold mines as well as cost increases from higher silver production from the other members.

I would like to point out just how much by-product (and gold) revenue the group reported in 2014:

By-Prpduct Revenue2

The total group’s by-product and gold metal sales in 2014 were $1.5 billion of the total $3.4 billion in revenue.  Thus, the group’s by-product and gold metal sales accounted for 44% of total revenue.  That’s a lot of copper, zinc, lead and gold.

CASH COST ACCOUNTING:  Needs To Be Thrown Out The Window

I brought this subject up to prove to the precious metal investor that by-product sales are not CREDITS as the industry lists them on their balance sheet when they calculate their cash costs.  To arrive at a CASH COST figure, the company deducts their by-product credits from the cost.   What a silly and stupid waste of time.

Can you imagine the losses the individual companies and the group would have suffered if they did not include their by-product sales in their balance sheets?  We must remember a CREDIT is a FREEBIE.  When you go to the store and you have a CREDIT on your account, that’s a freebie.  On the other hand, the mining companies need every bit of their by-product revenue to fortify their balance sheets.

Sure, some of the revenue comes from a few primary gold mines, but the majority is a by-product of mining silver.  This isn’t a CREDIT, it’s a DAMN necessity… LOL.

If we were to deduct $1.3 billion of the supposed by-product credits from the total revenue, how would that impact their bottom line??  Instead of the group suffering a total adjusted loss of $77 million, it would be a whopping $1.37 billion (add $77 million to $1.3 billion).  Now, I used $1.3 billion of by-product revenue instead of the full $1.5 billion shown above because I deducted a conservative $200 million of primary gold sales from their primary gold mines.

Again, for a company to actually list a CREDIT, it wouldn’t need that income or revenue to be profitable.  Which means, if by-product metal sales were actually CREDITS, then the company would be profitable without them.  As we can see, this is not the case.

I am quite surprised that Jeff Christian’s CPM Group still uses the worthless CASH COST metric in their annual Silver Yearbooks.  CPM Group sort of bragged in their 2014 Silver Yearbook that the primary silver miners cash cost fell to $9.68 in 2013 compared to $10.01 in 2012.

Unfortunately, there still seems to be a good percentage of precious metals investors (new and old) who believe it costs $10 to produce silver.  There isn’t one company in my group that has an estimated breakeven anywhere near $10.  The lowest is Tahoe at $13.70 with most in the $17-22 range.

Estimated Breakeve

Here is the highlighted estimated breakeven for the group taken from the table above.  In 2014, the top 12 primary silver miners lowered their estimated breakeven to $19.24 down from $24.05 in 2013.  Even though group was able to lower costs which in turn lowered their estimated breakeven ($4.81 an oz) compared to 2013, the average realized price they received for silver ($4.23 an oz) declined significantly as well.

According to my formula, the group suffered a net loss of $0.39 for every ounce of silver they sold in 2014.  How high would the group’s losses be if we didn’t include their by-product metal sales?  Let’s be really conservative and subtract $1 billion of by-product metal sales and see how that would impact the loss per ounce:

$1 billion divided by 112.7 Moz of silver sold = -$8.87 an ounce

Without adding the supposed BY-PRODUCT CREDITS of a conservative $1 billion, the group would have lost another $8.87 on each ounce of silver sold.  Thus, the breakeven for the group would have jumped to ($19.24 + $8.87) $28.11.  If the primary silver mining industry received $18+ an ounce for the silver they produced in 2014, without their by-product revenue, they would be in REAL TROUBLE.

This is exactly how CPM Group gets away with publishing a primary silver mining industry $10 cash cost.  By the industry deducting all of its by-product metal sales (credits), it can show a very low CASH COST which has nothing to do with profitability.  So why does the industry continue to publish this worthless metric?  That’s a good question.

How Much Lower Can The Group’s Breakeven Go?

I would imagine we will continue to see a drop in the group’s breakeven over the next several quarters.  Because the price of oil is now half of what it was in 2014, this should finally make its way through the cost structure in the primary silver mining industry.  However, I don’t see that much of an overall decline in the group’s breakeven for producing silver.

If the estimated breakeven for the group was $19.24 in 2014, I don’t see it falling too much below $18 this year.  I believe the primary silver mining companies have done as much as they can to cut costs and there really isn’t a lot of wiggle room left.

Furthermore, even if the group’s break even was to fall to say $17.50, the average price of silver is now trading at $15.90.  Thus, the primary silver miners as a group would still be losing money.  This is quite a shame because these mining companies are the few entities in the world actually producing WEALTH or a STORE OF WEALTH, while the Commercial and Central Banks continue to rob, steal and loot wealth from the public.

PRIMARY SILVER MINERS:  One Of The Few Bright Spots In The Future

Some readers may interpret my breakeven analysis on the primary silver miners as being bearish or critical.  While I like to point out the facts as I see them, I believe the primary silver mining industry will be one of the FEW BRIGHT SPOTS in the future.  This will be due to the negative ramifications of the peak and decline of global unconventional oil production on most paper and physical assets.  As investors flee increasingly worthless paper assets in the future and into the primary silver miners, their share prices will explode higher.

I will be publishing PAID REPORTS on various aspects of the silver industry and market.  One will focus on the top 12 primary silver miners in my group analyzing which companies are the best candidates to consider owning when we finally get the MAD RUSH IN GOLD & SILVER.

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33 Comments on "2014 FULL YEAR RESULTS: Top Primary Silver Miners Lost $1.9 Billion"

  1. Since the 2011 high, the COMEX’ core purpose and players will not let the price of the four PM’s to go up priced in the dollars or other currencies pegged to the dollar, which is almost all fiat currencies.

    In time there will be profound shortages in the face of increasing physical demand, and this is probably the only thing that will break the manipulation.

    Some may remember a few years ago writers were calling the rise in gold & silver prices from the early 2000’s to mid 2010 “managed retreat”. No retreat now. Just all-out manipulation.

  2. Steve,

    I don’t understand how the 2014 “Adj-Silver Income/oz can go down $.38 (assume color is in error) so that the increase is $.59 y/y when the “Realized Silver Price oz” was $18.85 and “Estimated Break-Even per oz) was $19.24 or $.39 less per oz?

    Is your estimate of Break-Even cost include, on a rational accounting basis, of all the costs that a GAAP calculation would include?

    Great article and cannot wait for your first paid report. Owning the right silver miners when the SHTF will pay even better than just the metal. Assuming uncle sam doesn’t confiscate it all or nationalize the mines.



    • SteveW,

      I received you email on the correct. Yes, that -$0.38 was supposed to be in RED. As for your question on my way to achieve ESTIMATED BREAKEVEN, yes is it more according to GAAP. There is a good story behind how I researched and came up with my methodology. I need to put that in a new article.


  3. maybe this is old hat but what i dont get is you have a multibillion dollar industry with a lot of companies from a lot of different countries. yet the price of silver is manipulated on the paper markets to their disadvantage.

    these companies also have employees who work to feed their families. i dont understand why they tolerate the lack of real price discovery or complain about the manipulation.

    although maybe they do complain and i dont read or hear about it but in regards to social responsibility (i know – if such a thing exists anymore) the executives of these companies should be fighting for a free market instead of waiting for something to happen. they act as if they have sanctions against them.

    anybody know why? just curiuos.

    • See company major holders info on Yahoo Finance.
      Update—The Silver Squelchers will resume in near

      • Charles,

        What factor [or a few major factors] will break the ability to manipulate the price of a precious, declining natural resource like silver on the COMEX? Profound shortage is all I can think of.

    • JacksonAG,

      It’s because the Primary Gold & Silver Miners have the wrong kind of money press. They produce real PHYSICAL MONEY, but they are competing with the FED and MEMBER BANKS who are printing monopoly money. I will get into the details with future reports.


  4. Great work Steve!

  5. It looks like there was an overproduction of silver in those two years of about five million ozs. That would seem to have a depressing price effect, right?

  6. silverfreaky | April 21, 2015 at 12:46 am |

    Slowly some people realize that we are in a deep bearmarket with silver.
    The money-burning goes on and on.
    It’ a human mannerism not to accept that his decisions where wrong.Look to the silverchart and see when we had the same price level in silver like today.

    Than you realize silver is pump and dumb.Not all people who make investment in silver can wait 10 years to be even at their buying price level.But when you have made this investment for a partly income in pension you are the big loser.
    Not many people who mad in investment even before 2011 sell at the peak in 2011.So it is a total money burner.
    The other reason that the financial system crashes will happen some day.But to count on this
    is very questionable.Human live ist limited.

    • Max Meister | April 21, 2015 at 4:20 am |

      Yeah human life is limited just like the life of paper currencies as we know from historaäöy.
      You could have made a quick buck by investing in the stockmarket but those stocks can crash at any time. If you’re not inn since 2011 the train have deffinitelly departed without you. What they have won can be lost again very quickly. At some point the stockmarket will crash because it’s at least as manipulated as the PM’s just into the opposite direction. What will these stock investors run into when stocks and bonds are going to crater? What if we will experience a currency collapse? Just look at greece. If they go bust they could potentially break up the Euro. You are right. Not everybody can wait ten years to get back to break even, but those people have probably put too many eggs in one basket. I’ m still convinced that it is wise to have some of your savings invested in PM’s just as a hedge against geopolitical and monetary risks. How much it should be depends on your personal situation.

      • Silverwillwin | April 21, 2015 at 4:40 am |


      • “You are right. Not everybody can wait ten years to get back to break even, but those people have probably put too many eggs in one basket. I’ m still convinced that it is wise to have some of your savings invested in PM’s just as a hedge against geopolitical and monetary risks. How much it should be depends on your personal situation.”

        Very well said.

        Makes no sense for my 86 year old mother to get into physical possession of PM’s, although with silver available below cost of production that would protect what she intends to pass on after her passing. Same with gold. She is highly intelligent with a sound mind, and highly educated. But a few months ago she asked me “it is illegal to own gold isn’t it?”. Well other than jewelry it was from 1933 to 1975. But what a mind job has been done on “mainstream” citizens to keep them unaware of what gold and silver are, and have been throughout human history.

        Starting right now however [because the past is history], it makes no sense to me to think of preparing for my future [past a few years] in accumulated dollars or dollar-based investments.

  7. Silver Miner CEO’s are not the smartest people in the world. Or perhaps, they are…. Are they being subsidized by the Feds under the table???

    • silverfreaky | April 21, 2015 at 5:48 am |

      Maybe.How is it possible that Miners not break down, according to this low prices?
      The output is at a record level.
      Why do they scratch out all this gold and silver when they loose money?

      • Max Meister | April 21, 2015 at 9:37 am |

        This is a good question that i’ve asked myself too. On the first spot it looks illogic and it seems to be conflicting with the basic ruled of economics. Economics 101 teaches us that supply is depending on demand and any inbalance on either side determines the price of an item. As demand is not missing for neither gold nor silver and the price doesn’t reflect demand there must be a third factor and that third factor is manipulation. The reason why the miners have even increased their output in spite of the price slump is actually not illogic. They have a liquidity problem. They cannot afford to hold back their PM while waiting for better times. They need to stay liquid in order to run their operations. There are salaries, equipment and energy bills to pay. Thanks to the sale of their mining byproducts they can stay above the waterline. The manipulators know all this and they know exactly how low they can suppress the price without causing too much damage. They even force the miners to exployt their highest ore grade deposits for this matter. This is irresponsible or flat out robbery but this is what the manipulators do and they don’t care.

    • lastmanstanding | April 21, 2015 at 7:02 am |

      I have thought this for years.

      Anything can and will be done with digital money creation or money printed “out of thin air”.

      Don’t we all wish we could print worthless bills and buy real tangible items?…even for one day.

      • Max Meister | April 21, 2015 at 9:46 am |

        Yes, if they would be smart they would buy physical Gold with printed currency but they can’t because they need to deliver it to the east. Once they fail to deliver the game will be over.

  8. Steve,

    This may be the most data you’ve provided in any article to date. The by-product metal sales would surely help the bottom line since gold is over 70x the value of silver. Also, I heard from Dave Morgan recently that fuel accounts for about 25% of total production costs so the drop in oil prices has been a huge help to miners as well. Once the paper market folds and true price discovery is achieved these miners should prosper handily. The global demand can’t allow these manipulated low prices to continue much longer. Just my 2 cents.

    • With 50% haircut on oïl it would give about 17 $/oz. Still not much lower than current levels especially if crashing again to 12/14…

  9. silverfreaky | April 21, 2015 at 8:39 am |

    The next stop is 14$.Miners lower and lower.Always a sign that the price drops.

  10. silverfreaky | April 21, 2015 at 10:17 am |

    Juncker (Chief of the ECB) exludes Grexit to 100%.

  11. It looks like Russia tucked away another 1m oz of gold in March, seeming to be continuing the dollars from oil into gold plan.

  12. Hi Steve,

    Can you tell me how you calculated estimated break-even per ounce & net income break-even per ounce?


    • Terry,

      It’s my secret formula derived after dozens of years of work. LOL. Only kidding. There is a pretty good story behind how I arrived at my formula. I need to put it in my next Q1 2015 update. Anyhow. I use the adjusted income with a certain formula to arrive at a ESTIMATED BREAKEVEN via the companies’ adjusted income, and net income for estimated breakeven for the net income approach.

      As you can see, the huge impairments really pushed the estimated breakeven out of whack. My approach using adjusted income, estimated percentage of silver income profit to arrive at an estimated break-even I believe is the best out there. Of course it’s not exact, but it gives us a much better idea than the industry’s cash cost or even the new AISC- All In Sustaining Cost as they also deduct by-product credits to get that figure.

      In my PAID REPORT, I will explain my entire process.


  13. Thank you Steve, very much appreciated. Also very much looking forward to the Q1 2015 results.

    I agree that the lower oil price won’t make much of a difference. For example, the price at the pump here in Austria just dropped from 1,4 to 1,1€ per litre of gasoline, when the oil price halved from 100 to 50$. There are lots of other costs involved in fuel prices.. refining, transport, taxes, ….

    • Oh, and a little addenum: I find it exceedingly perverted that the more losses the miners make, the more they seem to produce.

      If you cant produce something at a profit, you STOP PRODUCING. Unless you are morons. Which these miners have proven again and again that they are.

      • You have to keep in mind the massive amounts of capital expenditures to get a mine up and running.

        Once it is up, they need to somehow recoup their return on investment (ROI), even if it is to just break even on the investment. The really unfortunate ones who are losing money given their cost of production is higher than the paper price continue to produce because they have to.

        As someone previously mentioned, they need to pay their bills, employees, service their debt, keep some liquidity and try to weather the storm. The one’s with weaker productive assets, operations, and balance sheets will either fail, or be acquired. Others will have to weather the storm until the fiat currency collapse finally occurs.

        • Alright, then let them exhaust themselves. No matter how long it takes. If you don’t stop an unproductive enterprise, eventually noone will finance you anymore, and you’ll have to declare bankruptcy.

          I look forward to nothing more than watching them crash and burn. They are what make these low prices possible. They make it worse for us investors, and for themselves. That’s worse than what the bullion banks are doing, and they need to be punished for that.

    • Markus,

      I look forward to Q1 2015 results myself. I agree with you that the lower energy cost is already BAKED IN THE CAKE for miners the most part. I mean the price of silver is $16, $3 lower than the groups breakeven for 2014.


  14. Hi!, Patrons Of SRSrocco Report E. Al.:

    In my minds’ eye it is totally unfortunate that OUR miners or anyone else who works for their living are so exploited that they literally can’t see straight anymore evidently? Please allow me to further explain: As laborers we are use to making what we call a living which evolved our corresponding relationship with feelings all the way into family and community life roles but today we have to factor making that living including insidious government and FED. policies that dilute OUR living standards and we even plan for asking ourselves and each other what the future costs of inflation will be and how that will become reflected in OUR interest rate schedules etc. This lack of FREE market confluence of influences has reduced us to slaves to the policies of other whereby not even OUR power to vote seems effective anymore and here’s what another analyst has to say about that:

    GOLD is the money of KINGS
    SILVER is the money of gentlemen
    Paper is the money of slaves

    The processes of paper money reverses cognizant thinking and introspection about all economic events, because we are busy attempting to keep and or beat the system that evidences of the required change goes foggy to say the least. Back during the 1960’s or so using Bretton Woods Agreement dollars a gallon of gas was costing me $.29 but today using fiat money my gasoline costs are more than 10 X just like yours dear reader and we know that these fuel costs are shared throughout the economy by all ordinary drivers plus the trucking operations. There a probably trillions of considerations involved in these considerations but we have no space to illustrate all that here. My efforts have been aimed over the past couple years trying to translate this to the operations manager of a local mechanics shop such as to remind him that parts are constantly adjusting to costs and, when inflation enters the picture and prices rise he will be left with the producers’ and distributors’ bills like the increased prices or not. He must plan around the turns in economic distortions now overwhelming everyone who works for their living; as we are taught growing up to become those adults having such initiatives to form businesses and or find jobs that through proper taxation helps sustain our entire overall economy. However, now that we are faced with fiat money, which is the opposite to what OUR silver/gold/platinum/palladium etc. miners are producing from Mother Earth, OUR miners, instead of operating out of true money like they are digging which has been vividly illustrated for all of US in Article 1; Section of OUR US Constitution calling for gold and silver coins only, are left with the terms of fiat pay that also includes the redundant costs of holding those same $’s being manipulated into devaluations by the collusive forces of the US. Gov. and the FED. Now!, we have been completely cornered by the US Gov. and FED. collusion forces prompting historical bubble creations throughout OUR US and world economies using the currency productions of their central banks also. If we would have reasoned instead to commit OUR economy to the no inflation model of OUR US Constitution for example, we could not have been corned via the manipulations for which we await the destructive decisions of the Gov. tapping the FED. for further currency dilution would we? We are now attempting to sustain what history has proven over and over can not be sustained which means historically speaking in my view we have become like the delusional dog who remains chasing his tail without hesitation or thought. Pavlov proved this with his behavior psychology experiments he used to prompt dogs to salivate for being fed when Pavlov rang a bell. People salivate getting their fiat money for shopping, working, paying bills, going out to eat and entertainment, mortgages and their ever increasing need to have a rising paycheck which evidently isn’t happening for them anymore which is disheartening by killing their sense of prosperity but then go home to watch someone win several hundred million $’s from the winning state lottery ticket again salivating that if only they could won their fiat money problems would end but they were not included in those immense winnings. The answer of coarse is to totally recognize that fiat money is worse than worthless; as is not only owed back to its’ creators but also with interest and that interest is NEVER created which means that the fiat National US debt can NEVER be paid no matter what else happens along the yearly path set again for OUR debt to the creator of OUR fiat currency and so every year evidently as the debt ceiling is lifted higher and higher to accommodate OUR Nations’ Big Spenders we get another pat on the back by Pavlov for helping them save US all from immediate bankruptcy due to OUR Fiat Money Economy; while the Big Spenders move on down the timeline using their National Credit card to spend bigger and bigger allotments of money for which we the people are responsible for repayment over and over again while prices rise with inflation or fall with deflation according to the whims of the Big Spenders but we NEVER catch on to the cue do we to throw all OUR personal fiat money into the trash barrel out back and burn it or give it over for precious metals the Big Spenders can’t dilute but today the Big Spenders have OUR Middle Class so clipped by a loss of purchasing power that buying a lot of gold @ around $1,100 – $1,200 has become far too pricy but as the prices of gold and silver climb some analysts predict towards infinity the price option will be filtering out many would be buyers at lower prices plus the supplies of both metals could go into a wait for delivery mode; especially should OUR miners close up shop on their ever dwindling supplies etc. Laborers use to work not for their fiat pay but for their specie (gold and silver based) paychecks which provided them ample buying powers upon which to raise their families etc. but now many young people have neither homes nor jobs which can lead to a total destruction of any Nations’ economy. Talents like theirs not being distributed into OUR economy going to waste on the sidelines is the WRONG position to take in lieu of OUR young people wanting/needing and requiring jobs to provide them a self sustaining life style but some analysts are stating those days of yore are long past never to return but should we agree to that letdown? Would Pavlov be proud of such reactions from intelligent humans; when he worked with less cognizant dogs and knew the primary differences? Are we not men and women who know how to think, feel and make very intelligent decisions and not moths that unintelligently fly back into the flames again and again without a corresponding, intelligent response by which to turn our lives and economy away from a sure death spiral towards the true light of economic creativities required to light our way and sustain civilization instead? The precious metals were given to US all through the light of the Constitution handed US by OUR Forefathers’ forethoughtfulness, by which they attempted to design the model not of a Democracy but for a Republic for which it would stand, indivisible with LIBERTY AND JUSTICE FOR ALL. For any readers who do not feel their personal connections to OUR US Constitutions plus its’ attendant Declaration Of Independence but like to here are some segments you may want to decide to retain for future verification and referral time and time again: After a long assignment of various grievances between OUR Founding colonists against the abuses arising from the usurpations by the King (CROWN) Of England OUR Forefather colonists listed below declared their final announcements as follows….we, therefore, the Representatives of The United States Of America, in General Congress, Assembled, appealing to the supreme judge of the World for the rectitude of OUR intentions, do, in the name, and by the Authority of the good people of these Colonies, solemnly Publish and Declare, That these United Colonies are, and have a right to be, Free and Independent States; that they are absolved from all Allegiance to the British Crown, and that all Political Connection between them and the British Crown, and that all political Connections between them and the State of Great-Britain, is and ought to be dissolved; and that as FREE and Independent States, they have power to levy War, conclude Peace, contract Alliances, establish Commerce, and do all other Acts and Things which Independent States may of rights do—And for the support of this Declaration, with a firm reliance upon the Protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes, and sacred Honor. Signed Action Of The Second Continental Congress July 4, 1776. Dear Reader, if you desire to know who signed this Declaration, please take the time and effort to look them up thank you very much.

    RUSS SMITH, CA. ( One Of Our Broke, Fiat Money Corrupt States) resmith1942@gmail.com

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