Americas Silver Corporation (TSX:USA) (NYSE MKT:USAS) (“Americas
Silver” or the “Company”) announces preliminary consolidated
production and operating cost results for fiscal 2016, and guidance
for fiscal 2017. A subsidiary of the Company has also entered into
a non-dilutive $15 million pre-payment facility with a subsidiary
of Glencore PLC with proceeds used to support the development costs
for the San Rafael zinc-lead-silver project (the “Project”) within
the Cosalá district of Sinaloa, Mexico. The information provided in
this press release is preliminary and unaudited; final results in
the 2016 annual Consolidated Financial Statements and Management's
Discussion and Analysis may differ. All amounts are in U.S. dollars
unless otherwise indicated.
Consolidated 2016 Results and 2017
Guidance
The Company produced consolidated silver production of 2.4
million silver ounces and 4.7 million silver equivalent ounces1
slightly below the 2.5 million silver ounces and 5.0 million silver
equivalent ounces 2016 guidance estimates. This shortfall to
guidance was primarily due to the ground movement at the Nuestra
Señora Mine announced in April 2016 that impaired access to the
mine for the entire 2nd quarter as development crews worked to
re-establish access. Despite this ground movement, both silver cash
costs2 and all-in sustaining costs (“AISC”)2 met guidance at $10.00
per ounce and $12.71 per ounce, a decrease of 22% and 26%,
respectively, as a result of cost discipline and the increase in
the sales price of its by-product metals. Please see the chart
below for details. The cash balance as at December 31, 2016 was
$24.1 million.
Table 1 Consolidated Results & Guidance
2015 2016 2017
Actual Actual Guidance Silver
Production 2.65M oz. 2.39M oz. 2.0 - 2.5M
oz.
Silver Equivalent
Production1
4.87M oz.
4.68M oz.
5.5 - 6.0M oz.
Silver Cost of Sales1 $10.80/oz. AgEq.
$9.92/oz. AgEq.
$8 - $10/oz. AgEq.
Silver Cash Costs2 $12.75/oz. $10.00/oz.
$4 - $5/oz.
Silver All‐In
Sustaining Costs2
$17.16/oz.
$12.71/oz.
$9 - $10/oz.
1 Silver equivalent figures for 2015 are based on $17.00 per
ounce silver, $0.95 per pound zinc, $0.90 per pound lead and $2.90
per pound copper throughout this press release. Silver equivalent
figures for 2016 are based on $14.50 per ounce silver, $0.75 per
pound zinc, $0.80 per pound lead and $2.00 per pound copper
throughout this press release. Silver equivalent figures and silver
cost guidance for 2017 are based on $16.50 per ounce silver, $1.15
per pound zinc, $0.95 per pound lead and $2.50 per pound copper
throughout this press release.
2 Cash cost per ounce and all‐in sustaining cost per ounce are
non‐IFRS financial performance measures with no standardized
definition. For further information and detailed reconciliations,
please refer to the Company’s 2015 year‐end and quarterly MD&A.
The performance measures for the year ended December 31, 2016 are
preliminary throughout this press release subject to refinement
from the Company’s year-end financial results to be released on or
before March 14, 2017.
As previously announced, the Company began construction of the
San Rafael Project at its Cosalá Operations after receiving Board
approval at the end of Q3, 2016. The Project is targeted to be in
production by the end of Q3, 2017 at a reduced initial capital cost
of $18.0 million. The Nuestra Señora and El Cajón mines are
expected to operate up to the end of Q2, 2017, after which the
Project is expected to begin pre-production operations during Q3,
2017. As a result, the first half of the year is expected to have
results similar to those experienced in 2016, followed by a gradual
reduction in silver cash costs and AISC in the 3rd quarter with the
Project in commercial production in the 4th quarter with
significantly lower silver cash costs and AISC. The Galena mine is
expected to continue to operate similarly as in 2016 with a
continuing focus on mining silver-lead mineralization on the 3200
and 4900 levels of the mine. As a result, consolidated silver cash
costs are projected to fall approximately 55% year‐over‐year to
between $4 ‐ $5 per ounce, and silver all‐in sustaining cash costs
are projected to drop approximately 25% year‐over‐year to $9 ‐ $10
per ounce.
“We are very excited for our investors as the San Rafael Project
is developed and transitions into production this year. The
transition will prove to be a significant catalyst for our share
price as it will drive our consolidated costs lower to
silver-industry, first quartile, consolidated cash costs and all-in
sustaining costs, and create considerable free cash flow. This is
an accomplishment which neither of the predecessor companies ever
envisioned,” said Darren Blasutti, President and CEO of Americas
Silver Corporation. “Though 2016 silver and silver equivalent
production was slightly below guidance, the Company was able to
maintain its pattern of cost control and benefitted from higher
by-product metal prices.”
Consolidated Production
Details
Consolidated silver production for the 2016 was approximately
2,390,000 ounces, which represents an decrease of 10% compared to
2015. Silver equivalent production was approximately 4,682,000
ounces, down 4% compared to 2015. Consolidated cash costs improved
by 22% to $10.00 per silver ounce compared with 2015, while AISC
improved by 26% to $12.71 per silver ounce compared with 2015. In
addition, lead production increased 27% year-over-year, as the
Galena Complex continued to successfully increase silver-lead ore
production as part of management’s strategic vision for the
mine.
Table 2 Consolidated Production Highlights
2016 2015 Change
Processed Ore (tonnes milled) 671,616 657,617
2% Silver Production (ounces) 2,389,808
2,652,026 -10% Silver Equivalent Production (ounces)
4,682,030 4,866,145 -4% Silver Grade (grams
per tonne) 126 141 -10% Cost of Sales
($ per equivalent ounce silver) $9.92 $10.80
-8% Cash Costs ($ per ounce silver) $10.00
$12.75 -22% All-in Sustaining Costs ($ per ounce
silver) $12.71 $17.16 -26% Zinc
(pounds) 10,488,733 11,647,962 -10%
Lead (pounds) 29,067,673 22,905,826 27%
Copper (pounds) 1,058,250 2,054,896
-49%
Galena Complex Production
Details
The Galena Complex produced approximately 1,384,000 ounces of
silver and approximately 2,756,000 silver equivalent ounces during
2016 at cash costs of $11.60 per silver ounce and all-in sustaining
costs of $15.18 per silver ounce. Silver production decreased 7%
compared to 2015, while silver equivalent production increased 12%
for the same period as a result of a 43% increase in lead
production. Silver cash costs improved 19% compared to 2015 and
AISC also improved 20% for the same period.
The Galena Complex had a solid year with performance meeting
expectations and the Company expects the mine to provide
consistent, predictable performance for 2017, similar to that
experienced in 2016. As a result of decisions and actions taken
more than a year ago, producing areas were well balanced across
several levels of the mine. Given the recently improved economic
outlook for the asset, and continued drilling and capital
development, further areas for improvement have been identified
including near-term development opportunities on both the 3200 and
4900 levels of the mine. These projects promise to add further
operational flexibility and consistency in the future.
Table 3 Galena Complex Highlights
2016 2015 Change
Processed Ore (tonnes milled) 171,107 151,469
13% Silver Production (ounces) 1,383,689
1,489,736 -7% Silver Equivalent Production (ounces)
2,756,331 2,464,841 12% Grade (grams
per tonne) 266 324 -18% Cost of Sales
($ per equivalent ounce silver) $10.43 $12.32
-15% Cash Costs ($ per ounce silver) $11.60
$14.27 -19% All-in Sustaining Costs ($ per ounce
silver) $15.18 $18.92 -20% Lead
(pounds) 24,879,134 17,436,671 43%
Copper (pounds) - 304,753 NA
Cosalá Operations Production
Details
The Cosalá Operations produced approximately 1,006,000 ounces of
silver during 2016 and approximately 1,926,000 ounces of silver
equivalent during the same period at cash costs of $7.79 per silver
ounce and all-in sustaining costs of $9.31 per silver ounce. Silver
production decreased 13% compared to 2015, while silver equivalent
production decreased by 20%. Cash costs per silver ounce improved
by 28% compared to 2015 while AISC improved 37% year-over-year.
Table 4 Cosalá Operations Highlights
2016 2015 Change
Processed Ore (tonnes milled) 500,509 506,148
-1% Silver Production (ounces) 1,006,119
1,162,290 -13% Silver Equivalent Production (ounces)
1,925,699 2,401,303 -20% Silver Grade
(grams per tonne) 78 86 -9% Cost of
Sales ($ per equivalent ounce silver) $9.19
$9.25 -1% Cash Costs ($ per ounce silver)
$7.79 $10.80 -28% All-in Sustaining Costs ($ per
ounce silver) $9.31 $14.89 -37% Zinc
(pounds) 10,488,773 11,647,962 -10%
Lead (pounds) 4,188,539 5,469,155 -23%
Copper (pounds) 1,058,250 1,750,143
-40%
The Cosalá Operations made progress on several fronts. Cost
containment efforts continue to lower costs despite lower silver
production and silver equivalent production than the previous year.
At the Nuestra Señora mine, activities began to slow as
preparations were made to transition to other ore sources.
Dewatering is completed and stope development continues for El
Cajón with production supplementing Nuestra Señora feed through the
first half of 2017. Most importantly for the Company, San Rafael
construction began in the third quarter as previously
discussed.
An exploration budget of $2 million has been approved for the
Cosalá Operations focusing on exciting targets in the San Rafael/El
Cajón corridor and on the San Rafael 120 Zone to increase
confidence in the known resource and to expand mineralization to
the south east. This is the first exploration drilling at the
Cosalá Operations in over 4 years.
Glencore Pre-Payment Facility and
Concentrate Sales Agreements
The Company is pleased to announce it has entered into a low
interest rate $15 million concentrate pre-payment facility (the
“Facility”) with Metagri S.A. de C.V., a subsidiary of Glencore PLC
(“Glencore”), to fund a portion of the development costs for the
Project. Under the terms of the Facility, Glencore will provide the
Company with the four-year Facility of up to $15 million to be used
for the development of the Project and commercial production of its
concentrates. The Facility is secured by a promissory note in the
amount of up to $15 million issued by the Company to Glencore and a
parent company guarantee. The Company has also entered into
four-year offtake agreements with Glencore for the zinc and lead
concentrates produced from the Project. Glencore will pay for the
concentrates at prevailing market prices for silver, lead and zinc,
less treatment and refining charges.
“The Company is honoured to be entering into this strategic
financing agreement and exclusive offtake agreement with one of the
world’s premier metal traders,” said Warren Varga, Chief Financial
Officer. “This agreement marks a major milestone for Americas
Silver. Glencore’s due diligence on the Project and support of the
management team indicates significant approval of the Company and
its strategic direction. Furthermore, this low cost financing
recapitalizes its existing debt and ensures that Americas Silver
will have sufficient capital to further advance operations and
continue with its growth strategy without dilution to
shareholders.”
The Company has changed its resource estimate timing to a
cut-off of June 30th to better support its annual budgeting and
life-of-mine modelling.
About Americas Silver
Corporation
The Americas Silver is a silver mining company focused on growth
in precious metals from its existing asset base and execution of
targeted accretive acquisitions. It owns and operates the Cosalá
Operations in Sinaloa, Mexico and the Galena Complex in Idaho,
USA.
Daren Dell, Chief Operating Officer and a Qualified Person under
Canadian Securities Administrators guidelines, has approved the
applicable contents of this news release. For further information
please see SEDAR or americassilvercorp.com.
Cautionary Statement on 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, assumptions and beliefs with
respect to, among other things, the realization of operational and
development plans (including the San Rafael Project), the Cosalá
Operations and Galena Complex as well as the Company’s financing
efforts. Often, but not always, forward‐looking information can be
identified by forward‐looking words such as “anticipate”,
“believe”, “expect”, “goal”, “plan”, “intend”, “estimate”, “may”,
“assume” 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
Cosalá and Galena properties, risks associated with the mining
industry such as economic factors (including future commodity
prices, currency fluctuations and energy prices), ground conditions
and factors other factors limiting mine access, failure of plant,
equipment, processes and transportation services to operate as
anticipated, environmental risks, government regulation, actual
results of current exploration and production 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 the
Company 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 that 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20170130005432/en/
Americas Silver CorporationDarren Blasutti,
416‐848‐9503President and CEO
Americas Gold and Silver (AMEX:USAS)
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