By-Product Credits Can Push a Silver Mine's Cash Cost Below Zero

VANCOUVER, BC, Sept. 17, 2026 /PRNewswire/ -- Silver is running its sixth consecutive annual structural deficit, and the price has followed. Spot silver traded around $65 an ounce through mid-August and was assessed at $66.41 on August 31. That alone would be the story in most years. The more interesting arithmetic is happening one layer down, in the polymetallic deposits where silver arrives alongside zinc, lead and copper. When base metal by-product credits are subtracted from total costs, the all-in sustaining cost of the silver itself can go negative, which is to say the base metals pay for the mine and the silver is margin. That is not a pricing curiosity. It changes which deposits are financeable and in what order. Active Companies from around the markets with current developments this week include: Honey Badger Silver Inc. (TSXV: TUF) (OTCQB: HBEIF) (FSE: 1QA) (Tradegate: 1QA), Hecla Mining Company (NYSE: HL), Pan American Silver Corp. (NYSE: PAAS), Vizsla Silver Corp. (NYSE American: VZLA), and Coeur Mining, Inc. (NYSE: CDE).

The deficit itself is well documented and has been persistent rather than cyclical. Industrial demand, led by solar and electronics, has grown faster than mine supply for six straight years, and silver is mostly produced as a by-product of other metals rather than from primary silver mines, which means the supply response to a higher silver price is weaker than in most commodities. A copper miner does not open a pit because silver went up.

That structure is exactly why polymetallic deposits behave differently from primary silver deposits at this point in the cycle. A deposit carrying meaningful zinc, lead and copper alongside its silver generates revenue from metals whose own markets are tight, and those revenues are credited against the cost of producing the silver. The reported cash cost per silver ounce falls, sometimes below zero, and the project's sensitivity to the silver price changes shape entirely.

The second variable is what has already been spent. Most projects reaching a preliminary economic assessment are proposing to build everything: mill, camp, tailings facility, road, power. A project where a mill, an airstrip and kilometres of underground development already exist is answering a different capital question, and the study that describes it should be read differently as a result.

Honey Badger Silver Announces Positive Preliminary Economic Assessment for the PC Silver Mine; Sees Significant Silver Plus Critical Minerals Production

• A 22-year mine life on an updated Mineral Resource Estimate containing 11.63 million tonnes of Measured and Indicated resources grading 424 g/t AgEq and 8.47 million tonnes of Inferred resources grading 492 g/t AgEq.

• Average annual production of approximately 10.7 million ounces of silver equivalent over the first seven years, comprising roughly 3.7 million ounces of silver plus 157 million pounds of zinc, 118 million pounds of lead and 2.2 million pounds of copper.

• All-in sustaining cost of negative US$22 per silver ounce in the long-term consensus pricing case, net of by-product credits, and negative US$36 per ounce at spot pricing.

• After-tax NPV of $1.2 billion at an 8% discount rate with a 29% IRR and 3.1-year payback in the long-term consensus case; $1.8 billion and 38% at spot pricing.

• Capital costs of $197 million for mine development, mill refurbishment, tailings and other onsite work, plus $205 million for a 170 km all-season road, $174 million indirect and $92 million contingency.

Honey Badger Silver Inc. (TSXV: TUF) (OTCQB: HBEIF) (FSE: 1QA) (Tradegate: 1QA) announced the results of an updated Preliminary Economic Assessment and updated Mineral Resource Estimate for its 100%-owned PC Silver Mine, historically known as Prairie Creek, in the Northwest Territories. All amounts are in Canadian dollars unless otherwise stated. The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the PEA will be realized.

The study contemplates an underground operation mining approximately 2,400 tonnes per day, with dense media separation upgrading and milling at approximately 1,500 tonnes per day post-DMS over 22 years. Mined grade before DMS is 112 g/t silver with 6.1% lead, 8.5% zinc and 0.25% copper, rising to a mill head grade of 173 g/t silver with 9.4% lead, 12.8% zinc and 0.39% copper after upgrading. Life-of-mine payable production is approximately 56.1 million ounces of silver alongside 2,080 million pounds of lead, 2,577 million pounds of zinc and copper.

The negative sustaining cost figure is the number that will draw attention, and it is worth stating precisely what it is. All-in sustaining cost is a non-GAAP measure, and the negative figures are reported net of by-product credits. The zinc, lead and copper revenue exceeds the total cost of the operation, so the cost attributable to each silver ounce computes below zero. It is a legitimate and widely used presentation in polymetallic mining, and it is also entirely dependent on base metal prices holding. At weaker zinc, lead and copper prices the same mine has a positive silver cash cost.

"Second, PC Silver is an existing mine, which was built in the early 1980's, with significant capital already invested, extensive existing infrastructure, key permits in place and strong relationships with Indigenous communities, territorial and federal governments and other partners. We are advancing a significantly developed asset with decades of hard work and capital investment already behind it," commented Chad Williams, Executive Chairman of Honey Badger Silver.

That existing-asset argument is the reason the capital line reads the way it does. The site hosts a historic mill, an airstrip and approximately five kilometres of underground workings, and the all-season road is described as an upgrade to an existing winter road rather than a new corridor. The Company holds Impact and Benefit Agreements with the Nahɒą Dehé Dene Band and Łíídlįį Kų́ę́ First Nation and a Benefit Agreement with Acho Dene Koe First Nation, and a federal National Trade Corridors Fund contribution of up to $25 million toward the road has previously been announced and remains subject to drawdown conditions.

Williams also flagged what the study deliberately leaves out. No economic value has been attributed to germanium, antimony or tungsten, nor to recent Canadian tax incentives, and the Company has said it will evaluate a staged, lower-capital initial production start that could generate cash flow earlier before ramping toward the scenario in the PEA. The board has authorised the next stage of engineering with a Feasibility Study targeted for completion in the second quarter of 2027. On financing, Williams referred to inbound interest from smelters and off-takers, debt providers, government agencies and infrastructure investors, and two unsolicited expressions of interest for turnkey project financing. None of that is a commitment, no financing has been arranged, and no production decision has been made.

Read this and more news from around the sector at: https://Equity-Insider.com.

In other industry developments and happenings in the market this week include:

Hecla Mining Company (NYSE: HL) is the largest silver producer in the United States and the clearest live illustration of what by-product economics do to margin. It reported 231 million ounces of silver reserves at the end of 2025, guided 2026 silver production of 15.1 million to 16.5 million ounces, and produced 4.2 million ounces in the second quarter of 2026. Chief Executive Rob Krcmarov has described the Company as accelerating investment, with the 2026 exploration and pre-development budget raised to $55 million.

The balance sheet moved in the same direction, with the last $263 million of senior notes redeemed in April 2026 and the revolving credit facility undrawn. Hecla operates Greens Creek, Lucky Friday and Keno Hill, all polymetallic, which is why its reported silver costs sit so far below the prevailing price. It is a long-established multi-mine producer at a completely different stage and scale from a company completing a PEA, and is referenced as sector context rather than as a comparable.

Pan American Silver Corp. (NYSE: PAAS) produced 22.8 million ounces of silver in 2025 and has guided 25 million to 27 million ounces for 2026, with the integration of the Juanicipio operation supporting a stronger production profile into a tightening market. It is the scale benchmark for the primary silver sector in the Americas.

Pan American is included because its guidance is one of the few reliable public read-throughs on whether primary silver supply is actually responding to the price. An increase of two to four million ounces across a portfolio of that size, against a market running a projected 67 million ounce deficit, is a useful measure of how slowly mine supply moves even when the incentive is obvious.

Vizsla Silver Corp. (NYSE American: VZLA) is the closest developer analogue in this group. Its Feasibility Study on the Panuco project in Mexico returned an after-tax net present value of approximately US$1.8 billion and an internal rate of return of 111% at a silver price of $35.50 per ounce, and the Company has reported holding more than US$450 million in cash alongside a 60,000 metre district drill program.

Two things are worth drawing from it. The first is that a study result of that order was generated at a silver price well below where the metal has traded through 2026, which is a reminder of how much of the current enthusiasm rests on price assumptions rather than on rock. The second is the capital position: a developer with several hundred million dollars in the bank is playing a fundamentally different financing game from one that has yet to arrange construction capital. Vizsla is at a more advanced study stage in a different jurisdiction and is not a comparable.

Coeur Mining, Inc. (NYSE: CDE) operates a portfolio of precious metals mines across the United States, Mexico and Canada, and has been among the more actively traded silver names through 2026 alongside Hecla, Pan American and First Majestic. It has been a consolidator in the sector, and its valuation has historically traded at a materially lower earnings multiple than Hecla's.

Coeur earns its place here as the counterweight to the enthusiasm. Silver equities have moved sharply on the deficit narrative, and multiples across the group have diverged widely, which tells you the market is not pricing these businesses on a single view of the metal. Readers should treat any silver equity, including every name in this article, as exposed to a commodity that has been notably volatile. Coeur is a producer at a different scale in different jurisdictions and is not a comparable of the profiled company.

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Article Sources:

[1] Honey Badger Silver Inc., "Honey Badger Silver Announces Positive Preliminary Economic Assessment for the PC Silver Mine; Sees Significant Silver Plus Critical Minerals Production," September 17, 2026 (PEA results, updated Mineral Resource Estimate, operating and capital summary, Chad Williams commentary, Qualified Persons).
[2] Honey Badger Silver Inc., updated Mineral Resource Estimate with an effective date of June 21, 2026, prepared by Greg Mosher, P.Geo., of Global Mineral Resource Services.
[3] Hecla Mining Company and Pan American Silver Corp. public disclosures, guidance and operating results, 2026.
[4] Vizsla Silver Corp. Feasibility Study results and corporate disclosures; Coeur Mining, Inc. public disclosures.
[5] Public disclosures and filings of the referenced companies.