Americas Silver Corporation (TSX: USA) (NYSE “MKT”: USAS)
(“Americas Silver” or the “Company”) today announced consolidated
production and operating cost results for the second quarter of
2017 and individually for its Cosalá Operations and Galena Complex.
All figures are in U.S. dollars unless otherwise indicated.
Second Quarter
Highlights
- Consolidated silver production for the
quarter of approximately 558,000 silver ounces and 1.2 million
silver equivalent1 ounces, representing increases of 7% and 6%,
respectively, when compared to Q1, 2017, and increases of 1% and
18%, respectively, year-over-year.
- Consolidated cash costs2 for the
quarter were approximately $6.31 per silver ounce, a decrease of
40% when compared to Q1, 2017 and 45% year-over-year, while
consolidated all-in sustaining costs2 were approximately $9.74 per
silver ounce, a decrease of 30% when compared to Q1, 2017 and 33%
year-over-year.
- As at June 30, 2017, the Company had
spent approximately $10.5 million of the revised $18 million budget
for the San Rafael development project located in Sinaloa, Mexico
and expects to have sufficient resources from cash on hand and cash
flow generated from continuing operations to fund the remaining
project development. The project is on time and on budget for
production before the end of the third quarter.
- Guidance for 2017 remains at 2.0 - 2.5
million ounces of silver production with projected cash costs of
$4.00 - $5.00 per silver ounce and all-in sustaining cash costs of
$9.00 - $10.00 per silver ounce. Silver equivalent production has
been reduced slightly to 5.0 - 5.5 million ounces.
- The Company had cash and cash
equivalents of $12.8 million at June 30, 2017.
“I am very pleased with the Company’s overall performance in the
second quarter”, said Darren Blasutti, President & CEO of
Americas Silver. “Silver production met expectations, we lowered
our costs substantially over last year and last quarter, we had
tremendous exploration success at both mines and made significant
progress at the San Rafael project for its first production before
the end of the third quarter.”
The Company expects to release its second quarter financial
results on or before August 10, 2017.
Consolidated Second Quarter Production
Details
Consolidated silver production for the second quarter of 2017
was 557,892 silver ounces which represents an increase of 7% over
the previous quarter and 1% year-over-year. Silver equivalent
production was approximately 1.2 million ounces, up 6% over the
previous quarter and 18% year-over-year. The increase in silver and
silver equivalent production is primarily due to increased tonnage
at the Galena mine and continuing strong production from the
Nuestra Señora mine as it winds down operations prior to the start
of San Rafael in the fall.
Table 1 Consolidated Production Highlights
Q2 2017 Q1 2017 Change
Q2 2016 Change Processed Ore (tonnes
milled) 179,427 167,493 7% 161,700 11% Silver Production (ounces)
557,892 523,747 7% 556,404 0% Silver Equivalent Production (ounces)
1,175,836 1,104,237 6% 997,537 18% Silver Grade (grams per tonne)
107 107 0% 130 -18% Cost of Sales ($ per equiv. ounce silver)1
$10.93 $9.93 10% $10.80 1% Cash Costs ($ per ounce silver)1 $6.31
$10.49 -40% $11.38 -45% All-in Sustaining Costs ($ per ounce
silver)1 $9.74 $13.97 -30% $14.62 -33% Zinc Production (pounds)
2,904,374 2,389,133 22% 2,081,046 40% Lead Production (pounds)
6,435,048 6,160,732 4% 6,677,247 -4% Copper Production (pounds)
273,475 308,100 -11% 225,785 21%
1 Cost of sales per silver equivalent ounce, cash costs per
silver ounce, and all-in sustaining costs per silver ounce for Q2,
2017 and Q1, 2017 excludes pre-production of 22,549 and 62,714
silver ounces, respectively, and 32,955 and 88,656 silver
equivalent ounces, respectively, mined from El Cajón during its
commissioning period. Pre-production revenue and cost of sales from
El Cajón are capitalized as an offset to development costs.
Consolidated cash costs decreased 40% to $6.31 per silver ounce
compared to the previous quarter and 45% year-over-year. All-in
sustaining costs decreased 30% to $9.74 per silver ounce compared
to the previous quarter and 33% year-over-year. The decrease in
cash costs and all-in sustaining costs was primarily due to lower
operating costs, lower development required at Nuestra Señora,
increased zinc and lead production, and the increase in the
realized prices from these by-product metals.
Cosalá Operations Production
Details
The Cosalá Operations produced 242,523 ounces of silver during
the second quarter of 2017 and 564,112 ounces of silver equivalent
inclusive of pre-production material from El Cajón. Excluding the
El Cajón material, the Cosalá Operations produced 219,974 ounces of
silver during the second quarter of 2017 and 531,157 ounces of
silver equivalent during the same period at cost of sales of $7.57
per silver equivalent ounce, cash costs and all-in sustaining costs
of negative $2.43 per silver ounce. While silver production
remained relatively flat year-over-year, silver equivalent
production increased 39% year-over-year as ore production was
suspended briefly during Q2, 2016 due to the processing of oxidized
stockpiles as a result of unexpected ground movements at Nuestra
Señora. Cash costs improved by 193% compared to the previous
quarter and decreased 126% year-over-year while all-in sustaining
costs improved 190% compared to the previous quarter and 120%
year-over-year.
Table 2 Cosalá Operations Highlights
Q2 2017 Q1 2017 Change
Q2 2016 Change Processed Ore (tonnes milled)
134,778 128,577 5% 120,347 12% Silver Production (ounces) 242,523
250,296 -3% 244,548 -1% Silver Equivalent Production (ounces)
564,112 533,762 6% 405,797 39% Silver Grade (grams per tonne) 66 70
-7% 88 -25% Cost of Sales ($ per equiv. ounce silver)1 $7.57 $7.22
5% $9.51 -20% Cash Costs ($ per ounce silver)1 ($2.43) $2.61 -193%
$9.34 -126% All-in Sustaining Costs ($ per ounce silver)1 ($2.43)
$2.69 -190% $11.89 -120% Zinc Production (pounds) 2,904,374
2,389,133 22% 2,081,046 40% Lead Production (pounds) 1,351,258
1,124,464 20% 574,775 135% Copper Production (pounds) 273,475
308,100 -11% 225,785 21%
1 Cost of sales per silver equivalent ounce, cash costs per
silver ounce, and all-in sustaining costs per silver ounce for Q2,
2017 and Q1, 2017 excludes pre-production of 22,549 and 62,714
silver ounces, respectively, and 32,955 and 88,656 silver
equivalent ounces, respectively, mined from El Cajón during its
commissioning period. Pre-production revenue and cost of sales from
El Cajón are capitalized as an offset to development costs.
Production for the Cosalá Operations was primarily sourced from
the Nuestra Señora mine during Q2, 2017 as higher zinc and lead
prices prioritized this ore above the stockpiled silver-copper El
Cajón ore. Nuestra Señora was initially planned to cease production
in early Q2, 2017, however further economic material continues to
be sourced at lower operating costs and with minimal development
cost from various levels of existing workings. It is expected that
both the stockpiled El Cajón ore and remaining Nuestra Señora ore
will be processed during Q3, 2017 up to the commencement of San
Rafael. The significant decrease in cash costs and all-in
sustaining costs was due to lower operating costs and lack of
capitalized development at Nuestra Señora, increased zinc and lead
production, and the increase in the realized prices from these
by-product metals.
The Company updated its shareholders on July 17, 2017 on the
status of development at the San Rafael project in Sinaloa, Mexico.
The development remains on budget and on time to begin processing
ore by the end of the Q3, 2017 with mill modifications, machinery
refurbishments, and ramp development progressing well. The March
30, 2016 San Rafael Pre-Feasibility Study forecasted average annual
production of 1 million ounces of silver, 50 million pounds of zinc
and 20 million pounds of lead over an initial 6-year mine life at
negative all-in sustaining costs based on current reserves and
metal prices. The mine is expected to have an IRR of greater than
100%, generate substantial free cash flow and provide a step change
in the Company’s cash cost and all-in sustaining cost profile in
2018.
The Company expects to provide an exploration update on its
Cosalá properties before the end of the third quarter as results
have been encouraging to date.
Galena Complex Production
Details
The Galena Complex produced 315,369 ounces of silver during the
second quarter of 2017 and 611,724 ounces of silver equivalent
during the same period at cost of sales of $13.85 per silver
equivalent ounce, cash costs of $12.40 per silver ounce and all-in
sustaining costs of $18.23 per silver ounce. Silver and silver
equivalent production increased 15% and 7%, respectively, compared
to the previous quarter, and increased 1% and 3%, respectively,
year-over-year. Cash costs improved by 22% compared to the previous
quarter and 5% year-over-year and all-in sustaining costs were down
16% compared to the previous quarter.
Table 3 Galena Complex Highlights Q2
2017 Q1 2017 Change Q2
2016 Change Processed Ore (tonnes milled) 44,649
38,916 15% 41,353 8% Silver Production (ounces) 315,369 273,451 15%
311,856 1% Silver Equivalent Production (ounces) 611,724 570,475 7%
591,740 3% Silver Grade (grams per tonne) 231 230 0% 251 -8% Cost
of Sales ($ per equiv. ounce silver) $13.85 $12.05 15% $11.68 19%
Cash Costs ($ per ounce silver) $12.40 $15.89 -22% $12.98 -5%
All-in Sustaining Costs ($ per ounce silver) $18.23 $21.71 -16%
$16.76 9% Lead Production (pounds) 5,083,790 5,036,268 1% 6,102,472
-17%
Despite greater tonnage, both silver and lead production were
below expectations in the second quarter due to a shortfall in
grade. This shortfall was primarily a result of operational
challenges, including reduced equipment availability and inadequate
cemented fill quality, in some of the key production areas in the
lower parts of the mine. The mill relied more than expected on
lower grade development ore from the upper levels of the mine. The
specific issues are being addressed and site personnel continue to
advance their planning practices to improve production flexibility
in the future. As a result of the lower lead grades processed in
the first half of the year, lead production was approximately 3.5
million pounds below expectations. This underperformance is the
primary reason for reducing silver equivalent production guidance
to 5.0 - 5.5 million ounces.
Direct operating costs have been tracking well against
expectations excluding of an unexpected increase in employee
related medical costs in the quarter. The shortfall in lead
production negatively impacted the cash costs because of lower
by-product credits. Improvements will be realized as grades return
to historic norms and new production areas begin to contribute
consistently.
About Americas Silver Corporation
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 Mine Complex in Idaho,
USA. The Company has acquired an option on the San Felipe
development project in Sonora, Mexico.
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 successful completion of 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.
1 Silver equivalent production throughout this press release was
calculated based on silver, zinc, lead and copper realized prices
during each respective period.2 Cash cost per ounce and all-in
sustaining cost per ounce are non-IFRS performance measures with no
standardized definition. For further information and detailed
reconciliations, please refer to the Company’s 2016 year-end and
quarterly MD&A. The performance measures for the quarter ended
June 30, 2017 are preliminary throughout this press release subject
to refinement from the Company’s second quarter financial results
to be released on or before August 10, 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170724006164/en/
Americas Silver CorporationDarren Blasutti,
416-848-9503President and CEO
Americas Gold and Silver (AMEX:USAS)
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