TORONTO,
March 24, 2014 /CNW/ - U.S. Silver
& Gold Inc. (TSX: USA) (OTCQX:
USGIF) ("U.S. Silver & Gold" or the "Company") today reported
year-end financial and operational results for 2013.
This earnings release should be read in
conjunction with the Company's MD&A, Financial Statements and
Notes to Financial Statements for the corresponding period, which
have been posted on SEDAR at www.sedar.com and are also available
on the Company's website at www.us-silver.com. All figures are in
U.S. dollars unless otherwise noted. As a cost containment measure,
the Company has discontinued quarterly conference calls until
further notice.
Financial Highlights
For the fourth quarter of 2013, the Company
reported the following results from continuing operations:
- Production of 450,000 silver ounces and 543,000 silver
equivalent1 ounces at a cash cost of $16.26 and an all-in sustaining cost of
$21.002 per ounce, which
represent decreases of 3% in production, 8% in cash costs and 9% in
all-in sustaining costs per ounce over Q3 2013.
- Revenues of $10.5 million and a
net loss of ($0.4) million or
($0.01) cents per share.
- Cash balance of $7.2 million at
December 31, 2013 with net working
capital of approximately $12.2
million.
For the full year 2013, the Company reported the
following results from continuing operations:
- Galena Complex production of 2.12 million silver ounces at a
cash cost of $17.76 per ounce and an
all-in sustaining cost of $24.242, which represent decreases of
6% in production, 7% in cash costs and 20% in all-in sustaining
costs per ounce year-over-year.
- Revenues of $64.2 million and a
net loss of ($15.6) million or
$0.25 per share, a reduction of 12%
year-over-year.
- If Small Mine Plan implementation costs were excluded, the
Galena Complex would have made an operating profit of approximately
$0.9 million in the second half of
the year.
"Our focus over the last year has been on
increasing profitability and positive cash flow in a low silver
price environment," stated Darren
Blasutti, President and CEO of U.S. Silver and Gold. "In
2013, we saw a consistent reduction in costs as we applied
disciplined cost containment, implemented a Small Mine Plan,
addressed working capital issues and protected our balance sheet
through strategic equity, non-core asset sales and debt financing.
We exited 2013 mining higher grade ore as planned, and in the first
quarter of 2014 began the transition from a majority of
silver-copper to silver-lead stopes. This transition will allow us
to address the current silver price environment by benefitting from
lower cost bulk mining methods and higher silver equivalent grades
throughout the remainder of this year, and going forward and over
the longer term."
___________________________
1 Silver equivalent production is based on prices of $22
per ounce silver; $0.90 per pound lead and $3.25 per pound copper
for Q4 2013.
2 Comprised of silver industry cash cost plus all
development, capital expenditures, exploration spending and
mine-related general and administrative expenditures. |
Silver production for 2014 is forecast between
2.0 - 2.4 million ounces with projected cash costs of $14.50 - $15.50 per ounce and all in sustaining
costs between $18.00 and $19.00 per
ounce. The Galena Complex will transition toward increased
silver-lead production and decreased silver-copper production in
order to increase the Company's profitability at current silver
prices and maintain its long-term viability. This strategy takes
advantage of higher silver equivalent grade and lower production
costs, as the silver-lead areas are wider on average allowing for
bulk mining methods. Staff re-deployment to silver-lead
stopes will occur during the first half of the year with Q1 2014
expected to be the lowest silver production and highest cost
quarter, while Q3 and Q4 are expected to be highest silver
production and lowest costs quarters of 2014.
Consolidated Production and Operating
Costs
In 2013, the Company produced 2.16 million
ounces of silver at a by-product cash cost of $18.33 per ounce silver, compared with 2.31
million ounces of silver and cash costs of $18.33 per ounce in 2012. This decrease in
production was expected due to workforce reductions following
implementation of the Small Mine Plan (SMP) in the third quarter
which aimed to reduce costs and increase grade at the Galena
Complex.
The Company recorded a consolidated net loss of
$15.6 million for the year ended
December 31, 2013, compared to net
loss of $17.8 million for the year
ended 2012. The decrease in net loss was primarily
attributable to lower exploration costs, gain on sale of assets,
lower stock-based compensation and management compensation, lower
acquisition costs, lower impairment charges, partially offset by
lower production and realized metals prices, SMP implementation
costs incurred, higher operating loss from the Drumlummon Mine,
associated care and maintenance costs and higher finance costs.
Galena Complex
As previously announced in the January 20, 2014 press release, fourth quarter
production at the Galena Complex totalled 450,000 silver ounces and
543,000 silver equivalent ounces at a cash cost of $16.26 per ounce and an all-in sustaining cost of
$21.00 per ounce. In December,
the Company received an order from the Mine Safety and Health
Administration which resulted in the shutdown of an operating shaft
for 10 days. Had this not occurred, the mine would have
delivered comparable annual production to 2013 as well as lower
cash costs and all-in sustaining costs. Total production for
the year was 2.12 million silver ounces compared with 2.25 million
ounces in 2012.
Following implementation of the SMP, head grade
increased by 34% for the fourth quarter and 12% for the year, while
cash costs fell to their lowest level of the year at $16.26 per ounce silver compared to $17.67 per ounce silver in the third quarter of
2013 despite the 10 day shutdown. Full-year cash costs also
decreased to $17.76 per ounce silver
compared to $19.02 per ounce silver
in 2012.
Drumlummon Mine
As previously announced, given current gold
prices and recent mine performance, production at the Drumlummon
Mine in Idaho was discontinued and
the mine was put on care and maintenance effective May 31, 2013. The majority of equipment,
materials and supplies were subsequently moved to the Galena
Complex in Idaho. The
Company recorded an impairment charge of $1.4 million for the year.
Exploration Update
Given economic conditions and current metal
prices, the Company's exploration budget was reduced to
$0.7 million for the second half of
2013. The 2014 exploration focus at the Galena Complex is to
develop and further expand immediate and near-term minable,
higher-grade silver equivalent resources close to existing
infrastructure, including silver-lead stopes between the 2800 and
3700 levels, the 4900 high-grade Caladay silver-lead areas, and the
5200 level silver-lead areas. Further priorities include
completing the block modelling on priority veins and evaluating the
remainder of the 2013 drill results.
The Company had drilled over 60,600 feet
underground by the end of the fourth quarter 2013 and exploration
was focused on defining areas of high-grade ore to supplement the
mining plan introduced earlier in the year. Further
evaluation of the Caladay Zone continued in areas of known
mineralization between the 4900 and 5200 level with more than
23,550 feet completed in 2013. As a result, a plan was implemented
at year-end to advance development into an area with thick diamond
drill intersections of high-grade silver-lead mineralization on the
4900 level.
Private Placement
Subsequent to the year-end, the Company
completed a private placement for aggregate gross proceeds of
approximately C$6.7 million on
March 21, 2014. Approximately
C$4.7 million of these proceeds were
received upon closing through issuance of units. Each unit consists
of one common share and one quarter of one common share purchase
warrant where each whole warrant is exercisable for one common
share at an exercise price of C$0.73
for a period of two years. Approximately C$2.0 million of the aggregate gross proceeds are
held in escrow through issuance of subscription receipts pending
approval from shareholders in May
2014, after which the subscription receipts will be
exchanged for units (see Company press release dated Friday March,
21 2014 for further detail).
Adoption of Advance Notice By-Law
The Company's board of directors (the "Board")
has adopted amendments to the Company's By-Laws, introducing an
advance notice requirement in connection with shareholders
intending to nominate directors in certain circumstances (the
"By-Law Amendments"). In particular, the By-Law Amendments
set forth a procedure requiring advance notice to the Company by
any shareholder who intends to nominate any person for election as
director of the Company other than pursuant to (i) a proposal made
in accordance with the provisions of the Business Corporations Act
(Ontario) (the "Act") or (ii) a
requisition of the shareholders made in accordance with the
provisions of the Act. Among other things, the By-Law Amendments
set a deadline by which such shareholders must notify the Company
in writing of an intention to nominate directors prior to any
meeting of shareholders at which directors are to be elected and
set forth the information that the shareholder must include in the
notice for it to be valid.
The Board believes that the By-Law Amendments
provide a clear and transparent process for all shareholders to
follow if they intend to nominate directors. In that regard the
By-Law Amendments provide a reasonable time frame for shareholders
to notify the Company of their intention to nominate directors and
require shareholders to disclose information concerning the
proposed nominees that is mandated by applicable securities laws.
The Board will be able to evaluate the proposed nominees'
qualifications and suitability as directors and respond as
appropriate in the best interests of the Company as part of an
orderly and efficient meeting process.
In the case of an annual meeting of
shareholders, notice to the Company must be made not less than 30
and not more than 65 days prior to the date of the annual meeting;
provided, however, that in the event that the annual meeting is to
be held on a date that is less than 50 days after the date on which
the first public announcement of the date of the annual meeting was
made, notice may be made not later than the close of business on
the 10th day following such public announcement. In the case
of a special meeting of shareholders (which is not also an annual
meeting) called for the purpose of electing directors, notice to
the Company must be made not later than the close of business on
the 15th day on which the first public announcement of the date of
the special meeting was made.
The By-Law Amendments are effective immediately
and will be placed before shareholders for ratification at the
annual and special meeting of shareholders of the Company to be
held in May 2013 (the "Meeting"). A
copy of the By-Law Amendments will filed under the Company's
profile at www.sedar.com. The By-Law Amendments are in effect
until they are confirmed, confirmed as amended or rejected by
shareholders at the Meeting and, if the By-Law Amendments are
confirmed at the Meeting, they will continue in effect in the form
in which they were so confirmed.
Quality Assurance / Quality Control
("QA/QC")
U.S. Silver & Gold maintains a QA/QC Program
for all assays, whether completed at the Drumlummon laboratory or
at a contract laboratory including the use of standards, blanks and
duplicates. All QA/QC results are evaluated using a program of
QA/QC monitoring. Both the contract laboratory and the
Drumlummon laboratory maintain programs of QA/QC as well.
Assays for the Caladay Zone were prepared by a commercial
laboratory located in Osburn,
Idaho.
About U.S. Silver & Gold Inc.
U.S. Silver & Gold is a silver and gold
mining company focused on growth from its existing asset base and
execution of targeted accretive acquisitions. It owns and operates
the Galena Mine Complex in the heart of the Silver Valley/Coeur d'Alene Mining District,
Shoshone County, Idaho which
produces high-grade silver ore and is the second most prolific
silver mine in U.S. history, delivering over 200 million ounces to
date. U.S. Silver & Gold also owns the Drumlummon Mine Complex
in Lewis and Clark County,
Montana.
Mr. Jim Atkinson,
Vice President, Exploration and a Qualified Person under Canadian
Securities Administrators guidelines, has approved the contents of
this news release.
For further information please see SEDAR or
www.us-silver.com for the NI 43-101 compliant Technical Report on
the Galena Project dated March 22,
2013.
Cautionary Statement Regarding Forward
Looking Information:
This news release contains "forward‐looking
information" within the meaning of applicable securities laws.
Forward‐looking information includes, but is not limited to, the
Company's expectations intentions, plans, and beliefs with respect
to, among other things, the Galena Complex and the Drumlummon Mine.
Often, but not always, forward‐looking information can be
identified by forward‐looking words such as "anticipate",
"believe", "expect", "goal", "plan", "intend", "estimate", "may",
and "will" or similar words suggesting future outcomes, or other
expectations, beliefs, plans, objectives, assumptions, intentions,
or statements about future events or performance. Forward‐looking
information is based on the opinions and estimates of the Company
as of the date such information is provided and is subject to known
and unknown risks, uncertainties, and other factors that may cause
the actual results, level of activity, performance, or achievements
of the Company to be materially different from those expressed or
implied by such forward looking information. This includes the
ability to develop and operate the Galena and Drumlummon
properties, risks associated with the mining industry such as
economic factors (including future commodity prices, currency
fluctuations and energy prices), failure of plant, equipment,
processes and transportation services to operate as anticipated,
environmental risks, government regulation, actual results of
current exploration activities, possible variations in ore grade or
recovery rates, permitting timelines, capital expenditures,
reclamation activities, social and political developments and other
risks of the mining industry. Although U.S. Silver and Gold has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward‐looking information, there may be other factors that cause
results not to be as anticipated, estimated, or intended. Readers
are cautioned not to place undue reliance on such information. By
its nature, forward‐looking information involves numerous
assumptions, inherent risks and uncertainties, both general and
specific those contribute to the possibility that the predictions,
forecasts, and projections of various future events will not occur.
The Company undertakes no obligation to update publicly or
otherwise revise any forward‐looking information whether as a
result of new information, future events or other such factors
which affect this information, except as required by law.
SOURCE U.S. Silver & Gold Inc.