Miners in Latin America are facing both growth and challenges. Heiko Ihle, senior research analyst with Euro Pacific Capital, examines the factors behind these trends. In this Gold Report interview, Ihle urges investors to evaluate mining companies based on three important features rather than on the performance of others in the region.
The Gold Report: Heiko, you cover many companies in Latin America. One silver miner in Mexico is challenging an eviction notice from its property in Chihuahua, Mexico, which is causing a stir in the mining industry. Does that give you cause to reevaluate Mexico as a mining jurisdiction or is this an isolated incident?
Heiko Ihle: Mexico is a more challenging mining jurisdiction than the United States or Canada, but it’s also a much easier place than Bolivia, for example. There are some common challenges with mining there. One of the companies I cover, Fortuna Silver Mines Inc., has some issues with the community in Oaxaca. This sort of thing happens all the time, and it’s mostly business as usual.
TGR: What sort of gold and silver prices are you using in your models to evaluate these companies?
HI: I’m a stock analyst, as opposed to a macroanalyst, so I use conservative numbers: $1,600/ounce (oz) long-term gold prices and $34/oz long-term silver prices. In the long term, those numbers are likely to be a little too low, but they produce a margin of safety to our net asset value (NAV) and cash-flow models.
Read the entire interview . . .
See also: MAG Silver on Mexico expulsion news