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Silver Miners’ Q4’16 Fundamentals
zealllc.com / Adam Hamilton / March 24, 2017
The silver miners’ stocks have had a roller-coaster ride of a year so far. They surged, plunged, and then started surging again last week on a less-hawkish-than-expected Fed. Such big volatility has spawned similar outsized swings in sentiment, distorting investors’ perceptions of major silver miners. But their recently-reported fourth-quarter operating and financial results reveal the true underlying fundamental realities.
Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports. Required by securities regulators, these quarterly results are exceedingly important for investors and speculators. They offer a clear snapshot of what’s really going on fundamentally, in individual silver miners and this small sector as a whole. There’s no silver-stock data I look forward to more.
Normally quarterlies are due 45 calendar days after quarter-ends, in the form of 10-Qs required by the SEC for American companies. But after the final quarter of fiscal years, which are calendar years for most silver miners, that deadline extends out up to 90 days depending on company size. The 10-K annual reports required once a year are bigger, more complex, and require fully-audited numbers unlike 10-Qs.
So it takes companies more time to prepare full-year financials and then get them audited by CPAs right in the heart of their busy season. As a silver-stock trader this additional Q4 delay is irritating, since the data is getting stale by Q1’s end. But as a CPA and former Big Six auditor of mining companies, I have some understanding of just how much work goes into an SEC-mandated 10-K annual report. It’s enormous!
This extended Q4-reporting window naturally delays the analysis of Q4 results. While I can start digging into the first three quarters’ results 5 or 6 weeks after those interim quarter-ends, I have to wait longer for the fiscal-year quarter-ends. Thankfully the majority of silver miners have reported by 9 or 10 weeks, so we don’t quite have to wait until early Q2 to analyze Q4 results. The silver miners’ Q4’16 proved fairly strong!
Silver mining is a tough business both geologically and economically. Primary silver deposits, those with enough silver to generate over half their revenues when mined, are quite rare. Most of the world’s silver ore formed alongside base metals or gold, and their value usually well outweighs silver’s. Thus around 2/3rds of all the silver mined worldwide is actually a byproduct of base-metals and gold mining.
As scarce as silver-heavy deposits supporting primary silver mines are, primary silver miners are even rarer. Since silver is so much less valuable than gold, most silver miners need multiple mines in order to generate sufficient cash flows. These often include non-primary-silver ones, usually gold. More and more traditional elite silver miners are aggressively bolstering their gold production, often at silver’s expense.
The post Silver Miners’ Q4’16 Fundamentals appeared first on Silver For The People.
Source: http://silveristhenew.com/2017/03/24/silver-miners-q416-fundamentals/
