The following content is excerpted from the prospectus of Sunshine Silver Mining & Refining Corporation (to be renamed Gatos Silver, Inc.) dated October 6, 2020 filed on SEDAR.
Markets and Outlook
The price of silver has experienced significant volatility over the last 25 years. The price of silver
averaged approximately $4.71/oz from 2000 through the end of 2003. Beginning in 2004, the price of
silver began to appreciate considerably, reaching a high of $48.70/oz in April 2011. This significant
ascent in the price of silver was driven in part by investors' heightened risk aversion amid concerns
over the possible effects of quantitative easing measures introduced in the wake of the global financial
crises of 2008 and 2009. Subsequent to April 2011, the silver price trended lower, with the average
annual price declining for four consecutive years between 2012 and 2015, reaching a low of $13.65/oz in
December 2015. Between January 1, 2016 and August 31, 2020, the price of silver traded within a range
of $12.01 and $28.33/oz.
In 2019, the average LBMA silver price increased 3.4% year-over-year to $16.21/oz. In 2019, the
price of silver reached a high of $19.31/oz, a low of $14.38/oz and ended the year at $18.05/oz. The
largest contributor to silver price movements is believed to be the ongoing trade dispute between the
U.S. and China, which has had the impact of strengthening the U.S. dollar and weighing on the price
of silver and other precious metals. The U.S. Federal Reserve took a dovish stance through 2019, as it
lowered the federal funds rate three times.
The price of silver rallied strongly to multi-year highs in August 2020. As of August 31, 2020, the
LBMA silver price has increased 52% compared to the year-end 2019 price. The recent silver price
appreciation is believed to have been driven by accommodative monetary policy, aggressive stimulus
measures and accelerating investment demand in the midst of the COVID-19 pandemic, as well as
disrupted production and a recovery in industrial consumption. These factors have enhanced silver's
appeal to investors seeking a hedge against inflation, a decrease in the value of the U.S. dollar and
general economic and geopolitical uncertainty. Trading volumes at futures and options exchanges have
increased significantly, and ETPs inflows have been strong. As of August 31, 2020, silver has a
long-term research analyst average consensus price outlook of $18.75/oz.
A chart indicating silver prices between January 1, 2000 and July 31, 2020 is set out below. As of
August 31, 2020, the price of silver was $27.35/oz.
Source: Prospectus of Sunshine Silver Mining & Refining Corporation (to be renamed Gatos Silver, Inc.) dated October 6, 2020 filed on SEDAR.
Silver Market
Silver Industry Overview >>
Silver is one of the eight precious, or noble, metals; the others are gold and the six
platinum-group metals. Silver occurs naturally in its solid metallic state and is commonly associated with deposits of gold, copper, lead and zinc as a secondary metal. Silver is distinct from other precious metals in that it is...
More >>
Silver Demand >>
The three principal drivers of silver demand are industrial applications, consumer use and
investment. According to The Silver Institute's World Silver Survey 2020, demand for industrial applications is mainly driven by electrical and electronics uses, which accounted for 58.3% of industrial demand and 30.0% of total...
More >>
Silver Supply >>
Silver supply is primarily driven by mined silver production, which, according to The Silver
Institute's World Silver Survey 2020, accounted for 81.7% of supply in 2019. Recycling largely accounted
for the remainder of silver supply. Global silver supply increased 0.6% year-over-year in 2019 to 1,023 million ounces...
More >>
