Zeev's Turnips Patch-No Politics (ZEEV)

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*** Silver related post (ETF) ***


Beaty: SUA's Anti-ETF Argument "Just Plain Wrong"

By: Dorothy Kosich
03-NOV-05 05:00'

RENO--(Mineweb.com) Despite the concerns of the Silver Users Association that a silver ETF could make silver too expensive or illiquid in the world market, Pan American Silver Chairman Ross Beaty Wednesday called that argument "just plain wrong."

Last month, the association announced its opposition to the SEC application of Barclays Global Investors International iSHARES Silver Trust. The Silver Users Association (SUA) asserted that--since silver is a small market--a sudden enormous purchase of silver that a silver ETF could generate "would be a severe strain on the market liquidity."

During a conference call Wednesday to discuss the third-quarter results of Pan American Silver, Beaty asserted that there is currently more silver inventory than copper and lead inventories, adding "we don't think there are liquidity problems" involving metals markets in general. He declared that he believes the silver ETF "will impact markets positively" and prove to be "a service to the general investing public."

During the past few weeks, Mineweb has tried unsuccessfully to get the Silver Institute and North American silver mining companies to comment on the proposed silver ETF. However all, including Beaty, have declined comment expressing concern that their statements might negatively influence SEC consideration of the ETF. Nevertheless, in recent years silver miners and the Silver Institute have indicated their support for a silver ETF. Barclay's silver ETF will require Barclays Global Investors to buy 130 million ounces of silver in anticipation of investor demand for the silver ETF. The COMEX division of NYMEX currently hold 117 million ounces of silver in stock.

The Silver Users have insisted that the silver ETF would "only exaggerate silver's illiquidity given the sheer volume of physical silver needed to be shipped and stored. While a silver ETF might initially provide price benefits for producers, we believe it would disrupt the market in the short term and may harm the market in the long term."

The SUA pronouncement brought considerable joy to hard-core silver bugs who have long insisted that there are physical silver shortages and silver price manipulation.

However, GoldIsMoney.com columnist Jason Hommel recently wrote: "It appears as if the SUA is more concerned with keeping silver available to its members than keeping prices low, since they can no longer continue to do both. The SUA is risking endorsing the bullish story for silver, attempting to keep silver available to users, and away from highly capitalized investors who may want to buy through the silver ETF."

During Wednesday's conference, Beaty predicted "strong investment demand if the silver ETF is approved by the SEC in the next four to five months," adding that investment demand has also shown that "more people are buying physical silver."

RECORD SILVER PRODUCTION

During the Pan American Silver conference call, Beaty noted that the company achieved the 3.2 million of silver production during the third quarter of this year, the highest silver production in its history. He forecast that the company would produce 12.5 million ounces of silver this year.

Beaty explained to analysts that the company achieved record production and higher profits despite a third quarter which included higher depreciation costs, higher G&A expense, higher reclamation costs, and a much lower level of concentrate shipments.

Pan American reported net earnings of $2.3 million or 3-cents per share during the third quarter, in comparison to the $3.3 million reported during the third quarter of 2004. However, those earnings include a one-time gain on the sale of land for $3.6 million, offset by a charge of $1.3 million. For the nine months ended September 30, 2005, PanAm reported a net loss of $500,000, compared to the same period of 2004, which reported net earnings of $4.2 million including the $3.6 million on the sale of land.

Silver production increased 15% to 9,286,658 ounces during the first nine months of this year, compared to the same period of 2004. Zinc production increased 13% to 28,094 tonnes, copper production rose 27% to 3,020 tonnes, and lead production decreased 11% to 11,492 tonnes. Beaty said this year's total silver production is anticipated to be 12.5 million with 14 million ounces predicted for 2006. Pan American is aiming for 25 million ounces of future annual silver production, he added.

In a news release, Geoff Burns, President and CEO, stated, "We set a new record for silver production this quarter, we decreased our unit costs over the first two quarters of this year and we were profitable. We've resumed production at San Vicente ahead of schedule and the construction of Alamo remains on time and on budget. The star performer this quarter, thought, has been Morococha, which just keeps getting better and better."

During Wednesday's conference call, Burns noted Morococha produced 705,981 ounces of silver during the third quarter at cash costs of below $2 per ounce. Exploration drilling is now attempting to add 23 million ounces of silver reserves and resources delineated in the first half of this year at the Peruvian operation. Beaty said construction is proceeding on the Alamo Dorado mine with late 2006 commercial production planned that will produce 5 million ounces of silver annually. In October, Pan American resumed production at its San Vicente JV venture with the Bolivian mining company EMUSA. Pan American owns 55% of the operation, which is anticipated to add 100,000 ounces of silver to Pan American's total 2005 production.

CONSUMER CONFIDENCE

In an unrelated matter, Gianni Cacchione, President of the CIBJO (The World Jewellery Confederation) Sterling Silver Commission, has called for a summit meeting of all the global players in the mining and manufacture of silver to discuss issues that could damage consumer confidence in the metal. Cacchione declared that customers "want to see companies making genuine and comprehensive efforts to meet their social and corporate responsibilities and prove that they are doing so."

Gianni called on the Silver Institute, miners, bankers, bullion dealers, manufacturers, wholesales and retailers, to get involved in a worldwide promotion campaign promoting silverware.

http://www.mineweb.net/sections/gold_silver/520205.htm