By Rick Mills – Re-Blogged From http://www.Silver-Phoenix500.com

Consider:

• There is a slowing of production and dwindling of reserves at many of the world’s largest mines.
• All the oz’s or pounds are never recovered from a mine – they simply becomes too expensive to recover.
• The pace of new elephant-sized discoveries has decreased in the mining industry.
• Discoveries are smaller and in less accessible regions.
• Mineralogy & metallurgy is more complicated making extraction of metals from the mined ore increasingly more complex and expensive.
• Mining is cyclical which makes mining companies reluctant to spend on exploration and development.
• A looming skills shortage
• There is no substitute for many metals except other metals – plastic piping is one exception.
• Metal markets are small so speculation is a larger factor.
• There hasn’t been a new technology shift in mining for decades – heap leach and open pit mining come to mind but they are both decades old innovation.
• Country risk – resource extraction companies, because the number of discoveries was falling and existing deposits were being quickly depleted, have had to diversify away from the traditional geo-politically safe producing countries. The move out of these “safe haven” countries has exposed investors to a lot of additional risk.
• Lack of recognition for population growth, growing middle class w/disposable incomes and urbanization as on-going demand growth factors.
• Climate change.

Increasingly we will see falling average grades being mined, mines becoming deeper, more remote and come with increased political risk.

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