Yeah, there’s a government who wants these metals to be taken out of the ground to go green, and so what happens? You know, metal supplies dwindle, you know, that’s why you’ve seen silver supply in the mining sector be flat. You know, it’s been between 800 and 830 million ounces a year for the last 10 years, and there’s not going up. There’s no big silver mines coming on, on stream, and who’s going to make the investment? You know, there are silver mines around the world, which we know of, that are low-grade, that have substantial ounces, but it’s going to require $100 silver for those ounces to come out of the ground.

Well, hello there, my friends. Chris Marcus here with you for Arcadia Economics. We are live at the Rule Symposium, and I’m joined by Keith Neumeier of First Majestic Silver, and what has been a nice first half of the year in the silver market. You know something you’re happy about, a lot of people in the silver community cited, and nice to catch up with you here at the conference. Get to interact with investors in the midst of what’s happening. A little bit of a lighter mood, and first of all, welcome on in. How are you today? Well, it’s nice seeing you, Chris, and great to have this opportunity.

We haven’t seen each other for quite some time. Yeah, well, it’s good to be here in person. I know you spoke a little while ago, and perhaps any thoughts from the conference, conversations you’ve had, the mood in general of the resource investing crowd? Well, Rick always puts on a good conference. We’ve been coming to these conferences, you know, for over a decade, and it’s been here in Boca Raton for I think this is its third year. A great venue brings a lot of people here, and the weather’s obviously quite interesting, being so warm and humid the way it is, but it’s kind of a nice break from the west coast, so we’re happy to be here.

And for me, you know, just talking to shareholders, when I come to a conference like this, no matter what it is or who’s managing it, I measure the success on how many investors I actually meet, you know, how many shareholders are actually meeting. And then this conference and others that are run by this group always attract, you know, people that are actually invested in Chris Majestic and First Mining, you know, other companies that I’m interested in. Yeah, and it’s an interesting demographic here because obviously there’s a lot of gold and silver in there, also other resources.

What are some of the generalists that you talk to seeing in silver? Is there still that fear that a couple months from now, maybe silver will be back to $25 and a hesitancy to jump in? Or what’s the feeling you get from people who are less of the gold and silver hardcore enthusiasts? And a little bit outside that? Are they getting ready? Do you think? No, I don’t think so. And then when you say generalists, there are no generals. They’re gone. So they ran from this market in 2012. And they never come back.

So you know, the big mutual funds, the big pension funds, they’re all chasing the video and Tesla and Apple. And they don’t give a shit about the mining sector. And they’re nowhere even close to looking. So where do you think that leaves us? Obviously, we hear goals to triple solar and net clean energy. By 2030, we have the numbers that show a deficit. You see the decline in inventory. So seems like a bit of a divergence. Well, I could probably count the number of institutions that are following this sector on one hand.

And it’s pretty shocking. If you look at our shareholder base back in 2010, 2011, you know, we had, you know, we had a half a dozen shareholders that were that own 5% of the company each. And these are the big pension funds in Canada, the big generalist funds in the United States. And they’re long gone, and they’ve never shown up again. The big funds that own the mining sector today are really ETFs, you know, GDX, GDXJ, you know, some of these other ETFs that are out there. That’s all passive money. There’s no fund manager.

The only reason why they own your stock is because of volume. And they adjust their portfolio, generally speaking on a daily or weekly basis based on your volume. And that’s all they care about is how many shares you trade, and then not only that, they lend the shares out for a fee, and they short your stock. So, you know, it’s a crazy sector. And you know, that’s why you look at the GDX and you see what it’s trading at compared to five years ago. You know, we have $2400 of gold and $31 silver, and yet the stocks are, you know, last time silver hit 30 bucks, first majestic stock was 30 bucks.

So, you know, it’s going to change, but we need, you know, these tech stocks to crash, like we did in 2000. You know, we saw the NASDAQ drop from 5000 in March of 2000 to 850, you know, three years later, you know, 80% a fall. So all that money, where did it go? It went into real estate, it went into the resource sector, when the gold, silver, and you know, that silver went from five bucks to 50 bucks, and gold went from 240 to, you know, 18 something. And that’s all going to happen all over again.

But you just don’t know when that’s going to be. Yeah, it’s really interesting to see how we’ve seen the rally without that happening yet. So on one hand, you could say if the western markets do get involved, certainly would be a nice scenario to watch unfold. And actually, we did see earlier this week that the gold ETFs after they had a string of consecutive outflows finally had an inflow last month, a small one, but hopefully some signs of things changing. Another thing that has been changing a little bit, you’ve been involved with you’ve talked before about the petition to have silver listed as a strategic medal in Canada, want to touch on getting some of the comments we had about the US yet.

Amongst all of that, we had that report come out about a month or so ago that the US Defense Department is now allocating money to minerals, securitizing minerals in Canada, possibly, I believe it was 15 million in the first round, but the act calls for up to half a billion dollars. And anything you could share there about that trend we’re seeing also me further update from Canada, and then maybe we’ll touch on what the US said as well. Well, you’re dealing with politicians. And that’s part of the problem, because they’re not engineers, they’re not geologists.

A politician will say, hey, we want to go green, and we want to bring green energy to the world, and we want to replace fossil fuels, or at least supplement fossil fuels with other technologies. And they’re now talking about nuclear, which is surprising. But previous to that, they were just basically talking about wind power and solar power. But yet, on the other side of the equation, they don’t want to permit mines. So one of my companies that I’m involved in, it’s been eight years in permitting. And we don’t expect a permit for at least another two to three years.

The investment that has to be made on an annual basis is about $20 million. So over a 10-year period, that’s $200 million. So a mining company, that’s tough. You’ve got to raise that money every single year, and you’re at risk to the government. You don’t know if you’re going to get your permit. So it’s all risk mining. It’s all speculative of money. It’s hard money to raise, because the people that are putting money into their mining company know that it’s a long game. They’re not going to get a return tomorrow. It might take 10 plus a year, 20 years, in some cases, to get a return on that money.

So it’s very tough money to raise. And yet, the government wants these metals to be taken out of the ground to build green. And the mining sector says, well, screw it. So what happens? Metal supplies dwindle. That’s why you’ve seen silver supply in the mining sector be flat. It’s been between $800 and $830 million a year for the last 10 years. And there’s not going up. There’s no big silver mines coming on on stream. And who’s going to make the investment? There are silver mines around the world, which we know of, that are low grade, that have substantial ounces.

But it’s going to require $100 silver for those ounces to come out of the ground. And even if we hit $100 silver tomorrow, the mining company still wouldn’t make the investment because they would think, oh, geez, how long is it going to last? We need $100 silver for the next 30 years in order to pay back our investment that is going to cost to build this mine. So what executive team is going to bet on $100 silver for 30 years? It’s never happened before. So it’s all just basically risk capital. If the governments would loosen up the controls and say, hey, look, we actually are going to put our actions behind what we’re saying, and we’re actually going to let the mining sector bring the metal out of the ground and get it into industry.

And then the mining sector might decide, OK, well, we’ll work with others. But we need zinc. We need copper. We need silver. We need these critical metals to be extracted. These are extractive industries. And if we expect to accomplish all the things we want to accomplish, the government’s got to do joint ventures with the mining sector, simple as that. Yeah, and that’s why it’s interesting to see that the Defense Department has actually been doing that because you raise a good point. It’s a tough capital cycle for many people to be patient through.

And I’ve wondered if we hit a recession or if there’s a downturn, which I think there’s a case to be made. That’s certainly a possibility. When you think about how would the government leave the Fed aside, but how would the government respond? They want to stimulate things. I mean, what’s one of the key areas that they would target? Obviously, we’ve seen the green investment. And just interesting to see that now, the government also investing in some of these mineral projects. One other question on the US that can be touched on a little bit earlier this year, but I know you had mentioned that you had spoken with the US as well about having silver as a strategic mineral there.

And I thought it was interesting what they told you. And perhaps you could share that and the latest debt you’ve heard from them. You know, I don’t understand the politics behind how they choose certain metals over others. I looked at the list when it came out last summer, and this is what really started the whole process. And for me, I look at silver as a strategic metal. I’ve been saying I called silver strategic metal over 10 years ago. And everything we do, even in this interview right now, and all the wars that have been going on around the world, and whatever the case may be, everything that we do as a human race requires silver.

And if it’s not strategic, then what the hell is this strategic? On that list, there’s probably 10 metals I’ve never even heard of. And they’re the smallest metals there are out there. And sure, okay, fine, you could make an argument for it, that maybe they’re interesting. Whether there’s substitution available for some of those metals, I don’t know. But there is no substitute for silver. Silver is the most electrically conducted metal, it’s most reflective metal, it’s got antibacterial properties to it as well. So it’s used in all kinds of applications. And there’s nothing that you know, the solar panel companies have tried to replace silver with other metals using aluminum and others.

And they failed doing it because the productivity of the solar panels dropped to the degree where they weren’t pretty much so they actually silver consumption of solar panels, they are actually higher than they were five years ago as a result of these solar panel companies waking up to the fact that they’re producing crappy solar panels, and they had to smarten up and bring us a better product. And that required a little bit more silver, and that’s what they’re doing. So yeah, I’m talking about, you know, the government’s going back to that.

You know, we’re we’re pushing the US government there, they they’re going to come out with a new list in 2025. We’re lobbying them, we hope to see solar show up on that list. Canada just published their list. And lo and behold, you know, politicians did not include silver on that strategic metals of Canada, which is quite disappointing, despite the fact that we had several meetings with them. We’re now continuing that lobby effort, we’re not stopping. But unfortunately, their next list is not coming out until 2027. Right, well, I think there’s still steps and progress made in the effort to get it out there and fortunately, not getting the answer from Canada yet that we’d like.

But there are efforts going on in Europe, I think France is putting out a list in the next several months. And I think there’s another a couple other countries also doing the same. Okay. In terms of some of the developments with first majestic now that you’ve been a couple more months underway with the mint facility in Nevada, I know you’ve wanted to take as much metal out of the COMEX system as possible. Anything that you’ve seen of note or just as getting getting more reps going through that process? Anything that you’ve taken away so far? Well, we’ve received lots of compliments.

I think it’s really kind of shaken things up a little bit out there. You’re the mints, the minting industry is quite a small industry. And you were trying to just get more metal out there. The mints have been constrained through their own production capabilities. And we were getting constrained in our sales because they just simply wouldn’t produce what we wanted them to produce. So I decided that we should just open up our own mint. So we did that. And we’ve been producing since I think about March, April. And it’s fun.

It’s a lot of fun, something that we’re very proud of. And our CEO of some nice points are selling over at the first majestic group here at the real symposium. So that’s right. Yeah, people, if you want to come stop on by, you can get some of those here. And he obviously also have had the water issue at Lawton Cantata, which I know you’ve identified and give an update on how things are coming along there. Sure. Yeah, in June of 2023, we lost one of our water wells. You know, mining is a very water intensive industry, obviously.

So losing a third of our water was a big dent on production. So, you know, you know, when you lose production like that, your costs are going to go up. And that’s what happened. So we’ve been producing ounces. They’re quite a high costs for those for the last three or four quarters that we discovered a new water well in April. We’re now back up to 3000 tons a day there. So it’s not quite normalized, but we’re getting back to normal. So over the next quarter, we expect to see Lawton Cantata become profitable again.

It certainly comes at a good time. Obviously, we don’t know what the silver price will do for the rest of the year, but should we have the water issue resolved and even stay at current levels, certain sets of guys up for a good second half and I guess I predict a $30 silver this year. So I think I’m going to change my target to 35. Okay, I think that’ll work for a lot of people. I know there’s some who say 50 or less. They’re not smiling till then. Although in some ways, really, I don’t know if this has gotten as much attention as it should.

But to me, it’s a bit historic that we’re seeing the $30 silver. You rule out the couple hours in 2021 is only the third time in history. We’ve been there very brief spike in 1980 stayed up longer in 2011. So I think a good step in the right direction, especially in a world where we see people pulling back their resources and becoming more protective. And keep the last thing seasonality as well, you know, because June, July are tend to be weak months for the metal prices. And you’re right in the depths of the summer.

And, you know, for silver to break through 30 and hold that this number was this level, you know, through one of the weakest periods on a cyclical basis. I think that’s very positive. And in the face of the higher interest rates, which now we’re seeing that one shift as well. A lot of forecasts for cuts coming out. We’ll see what the rest of the year holds. But last thing I wanted to just run by you had some thrilling results. Recently, you guys put out from San Dimas. And if you could share your thoughts, I know you’re pretty excited about what you found there.

So well, we have a big aspiration budget this year, we’re spending 39 million over all the assets. And we’re having great success. That’s indeed is what we put some news on issues that came out a couple of weeks ago, where we just started drilling tomorrow, pardon me, next week, at Jerro Canyon plus the first 10 million into Jerro Canyon, the first investment there since we shut down that operation. And we’re hopefully putting the news release out towards the end of August on expiration results at Santa Elena, which has been ongoing.

And we’re excited about that project as well. Keith will wrap up for here. I know you’ve got a lot going on here at the conference today. But again, you can find out more about Keith and the first majestic silver at first majestic silver.com. And Keith, pleasure to see you as always. And congratulations on getting through some of the challenging years and in an environment in a good direction. And great to catch up with you and see you again. Yeah, it’s great. Great seeing you again. If people can follow me on Twitter as well, you know, just keep underscore new Meyer.

And I tried to put all the first majestic stuff out there and first mining gold news as well. All right. And he’s Twitter handle in the description field below. And thanks for tuning in. Keith, great to see you and enjoy the rest of the show. Thanks, Chris. [tr:trw].

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