Investing News Network recently interviewed Chris Ritchie, the president of SilverCrest Metals, to discuss the impact of inflation on gold and silver miners. Ritchie shared insights on how his company has navigated the current environment, particularly highlighting the decision to hold precious metals on its balance sheet.
### Operational Strategy at Las Chispas
SilverCrest’s Las Chispas operation in Mexico began production two years ago and quickly paid off all its debt within seven months. As the company assessed its next steps with the incoming cash flow, Ritchie mentioned that the initial reaction to build a new mine was reconsidered. Instead, the team opted to analyze the performance of the current mine and calculated the true cost per ounce of gold and silver. This analysis revealed a cost of around US$25 per ounce, a significant insight given the prevailing market price of silver at the time.
### Holding Precious Metals
With silver trading at around US$18 to US$19, SilverCrest recognized that selling its precious metals at a loss was not ideal. Ritchie emphasized the value in holding physical gold and silver, describing them as “real money” that surpasses fiat currency. This strategic decision to retain precious metals on the company’s balance sheet aligns with the belief that preserving these assets can offer greater long-term benefits, especially during periods of weak prices or market conditions.
### Industry Reception and Flexibility
SilverCrest’s approach of holding onto physical gold and silver has garnered mixed reactions within the investment community. While traditional players in the mining industry may hesitate, Ritchie noted that external stakeholders, including those outside the sector, have shown a favorable attitude towards this strategy. The company’s ability to adapt and remain flexible in its operational decisions has been crucial in pursuing its unique path in the precious metals market.
### Final Thoughts
Ritchie’s insights shed light on SilverCrest’s distinctive position in the industry, emphasizing the importance of choice and responsibility in managing precious metal assets. The company’s commitment to holding physical gold and silver as reserves, rather than immediately selling them, reflects a deliberate strategy to optimize returns and enhance overall financial health. By taking a proactive and calculated approach in response to market dynamics, SilverCrest Metals demonstrates resilience and foresight in navigating the challenges of the mining sector.
