Americas Gold and Silver Corporation (TSX: USA) (NYSE American:
USAS) (“Americas” or the “Company”), a growing North American
precious metals producer, reports consolidated financial and
operational results for the quarter ended March 31, 2021 along with
the progress to reopen the Cosalá Operations, continued exploration
success at the Galena Complex and an update for Relief Canyon.
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Figure 1: Long Section (Looking North)
depicting some significant intercepts from 5500 Level drilling
(Graphic: Americas Gold and Silver Corporation)
This earnings release should be read in conjunction with the
Company’s Management’s Discussion and Analysis, Financial
Statements and Notes to Financial Statements for the corresponding
period, which have been posted on the Americas Gold and Silver
Corporation SEDAR profile at www.sedar.com, and on its EDGAR
profile at www.sec.gov, and which are also available on the
Company’s website at www.americas-gold.com. All figures are in U.S.
dollars unless otherwise noted.
Highlights
● Revenue of $10.2 million and a net loss of $91.8 million for
Q1-2021 or a loss of ($0.72) per share, which includes an
impairment charge of $55.6 million and an inventory write-down of
$23.0 million related to Relief Canyon. Adjusted net loss1 was
$13.2 million prior to these one-time adjustments or ($0.10) per
share.
● Following an extensive review and a challenging ramp-up at
Relief Canyon, the operation is proceeding with run-of-mine heap
leaching. The Company expects this change will improve overall
project economics going forward.
● The Company is confident that a resolution will be reached to
reopen the Cosalá Operations with all employees returning to work
in the near term with a ramp-up to full production in Q3-2021. Full
Mexican government support will ensure the long-term stability of
the operation.
● At the Galena Complex, geologists have located and drilled the
downdip extension of the prolific Silver Vein. All of the first 8
holes hit high-grade mineralization highlighted by the
following:
- Hole 55-175A: 7,370 g/t silver and 6.3% copper (8,020
g/t silver equivalent [2]) over 2.7 m [3]
including: 30,200 g/t silver and 26.1% copper
(32,900 g/t silver equivalent) over 0.3 m
including: 23,000 g/t silver and 17.0% copper
(24,800 g/t silver equivalent) over 0.2 m
including: 11,500 g/t silver and 10.0% copper
(12,500 g/t silver equivalent) over 0.2 m
- Hole 55-148: 5,320 g/t silver and 4.1% copper (5,730 g/t
silver equivalent) over 0.8 m
including: 10,200 g/t silver and 7.9% copper
(11,000 g/t silver equivalent) over 0.4 m
- Hole 55-176: 3,110 g/t silver and 2.4% copper (3,350 g/t
silver equivalent) over 1.8 m
including: 23,900 g/t silver and 17.5% copper
(25,700 g/t silver equivalent) over 0.2 m
and: 1690 g/t silver and 1.1% copper (1,810
g/t silver equivalent) over 0.4 m
“Based on our latest discussions with both the state and federal
Mexican government, we are on the cusp of a resolution to the
illegal blockade at our Cosalá Operations and anticipate our
employees will be back to work this quarter,” stated Americas Gold
and Silver President & CEO Darren Blasutti. “The restart of the
Cosalá Operations and the recent high-grade Silver Vein discovery
at the Galena Complex, near existing infrastructure, will increase
exposure to silver and cash flow to the Company and our
shareholders. At Relief Canyon, following months of study, we have
decided to transition to run-of-mine heap leaching to simplify the
flowsheet and improve performance. While the ramp-up has been more
difficult than the Company envisioned, I believe this change will
lead to better economics and enhanced profitability for the
operation.”
Relief Canyon
The ramp-up at Relief Canyon has been a challenge and continues
to be challenging as documented since the Company first poured gold
in February 2020. During this period, the Company and its
consultants have performed extensive analyses and implemented a
number of procedural changes to address the start-up challenges. As
part of this analysis, the Company identified naturally occurring
carbonaceous material within the Relief Canyon pit. The
identification of this material was not recognized in the
feasibility study.
During the first phase of mining (Phase 1 of 5), several adverse
impacts affected the operation including the onset of the COVID-19
pandemic and the failure of the Company’s radial stacker.
Offsetting these challenges was that the definition of the gold
mineralized zones through blasthole sampling reconciled reasonably
to the block model. However, during Phase 1, an unknown quantity of
carbonaceous material was crushed, stacked and disseminated onto
the leach pad resulting in lower-than-expected recovery of the
placed gold ore. Following realization of this adverse material,
the Company implemented additional measures to the ore control
procedure to minimize the impact the carbonaceous material could
have on leach pad performance. Additional efforts focussed on
improving mining selectivity including the use of a hydraulic
excavator operating on split (10 foot) benches when required.
Phase 2 mining, which commenced in late Q4-2020/early Q1-2021,
has demonstrated a more structurally complex area than initially
interpreted, caused by additional faults and folds. Gold
mineralization is strongly influenced by structural controls. The
impact of the structural complexity, combined with the increased
mining selectivity to reject carbonaceous material, has decreased
ore availability in Q1-2021 and into Q2-2021.
As a result of these challenges, the Company began two small
run-of-mine test pads in Q1-2021 to evaluate the possibility of
simplifying the flowsheet by by-passing the crushing and conveying
circuits. Results have been encouraging and the operation has
transitioned to this method of ore placement to further demonstrate
its applicability with haul trucks now delivering the ore directly
from the pit to the leach pad. The Company continues to evaluate
options to improve the short-term operational and financial
performance of the asset.
Additional improvements in the predictability of the resource
model are progressing with incorporation of the latest geological
detail from recent pit mapping as well as new data from an
extensive re-assaying program of over 10,000 historic exploration
pulp samples. Completion of this data compilation and analysis is
targeted for late Q3-2021 as part of the Company’s mid-year update
of its reserve and resource estimates.
As a result of the differences observed between the modelled
(planned) and mined (actual) ore tonnage and the carbonaceous
material identified in the early phases of the mine plan, an
impairment charge of $55.6 million has been taken in Q1-2021,
reducing the carrying value of the Relief Canyon mineral interest,
and property, plant and equipment. An additional reduction of $23.0
million was taken to inventory as a result of the decreased
recovery expected from crushed gold ounces already placed on the
leach pad. As further test work is ongoing, future results may
cause a reassessment of the remaining carrying value and cause a
subsequent recovery or an increase to the impairment.
Cosalá Operations
The illegal blockade at the Cosalá Operations, which has been in
place since February 2020, is nearing a resolution and the Company
is confident that the operations will restart this quarter. The
expected resolution follows tireless efforts by the Company’s
representatives in Mexico in cooperation with various members of as
the Mexican federal government, who have sought to properly
characterize the nature of the conflict with decision makers
(including President Manuel Lopez Obrador) and to establish a
framework that will allow for the safe return of the Company’s
employees and allow for continuous operation in the long term. The
Company understands that a recent positive development in the
conflict is the engagement for the first time of state government
with its federal counterparts to support a resolution that benefits
the people of Cosalá with the peaceful removal of the illegal
blockade. Assuming the delivery of agreed conditions and the
enforcement of applicable law, the Company eagerly anticipates
getting the operation restarted and is targeting full mining
operations in Q3-2021.
Upon resolution of the illegal blockade and a re-start of
operations, higher silver prices will allow the Company to target
the higher-grade silver ores in the Upper Zone of San Rafael and
develop the silver-copper EC120 project. Mining these silver-rich
areas of the Cosalá Operations is expected to significantly
increase silver production to over 2.5 million ounces of silver per
annum in the years following the removal of the blockade.
Galena Complex
Initial drilling from the new drill station on the 5500 Level
has yielded several high-grade intercepts at depth. Galena
geologists discovered a new silver-copper trend south of the
prolific Silver Vein. The strike and dip of this new trend matches
very well with the strike and dip of the majority of the Silver
Vein mined from the 3200 Level to the 4300 Level. Initial
interpretations are that this trend is either a southern splay of
the Silver Vein or that it is the true Silver Vein at depth.
Initial intercepts from the 5500-level drilling includes:
- Hole 55-175A: 7,370 g/t silver and 6.3% copper (8,020 g/t
silver equivalent) over 2.7 m
including: 30,200 g/t silver and 26.1% copper
(32,900 g/t silver equivalent) over 0.3 m
including: 23,000 g/t silver and 17.0% copper
(24,800 g/t silver equivalent) over 0.2 m
including: 11,500 g/t silver and 10.0% copper
(12,500 g/t silver equivalent) over 0.2 m
- Hole 55-148: 5,320 g/t silver and 4.1% copper (5,730 g/t silver
equivalent) over 0.8 m
including: 10,200 g/t silver and 7.9% copper
(11,000 g/t silver equivalent) over 0.4 m
- Hole 55-178: 4,290 g/t silver and 3.1% copper (4,610 g/t silver
equivalent) over 0.9 m
- Hole 55-146: 3,430 g/t silver and 3.1% copper (3,740 g/t silver
equivalent) over 1.1 m
including: 21,800 g/t silver and 18.9% copper
(23,700 g/t silver equivalent) over 0.1 m
and: 844 g/t silver and 7.9% lead (1,180 g/t
silver equivalent) over 2.0 m
- Hole 55-147: 3,290 g/t silver and 3.7% copper (3,680 g/t silver
equivalent) over 2.5 m
including: 5,250 g/t silver and 5.7% copper
(5,840 g/t silver equivalent) over 1.2 m
and: 1,110 g/t silver and 6.8% lead (1,430
g/t silver equivalent) over 1.6 m
- Hole 55-174: 1,750 g/t silver and 2.0% copper (1,960 g/t silver
equivalent) over 2.2 m
including: 2,770 g/t silver and 2.5% copper
(3,040 g/t silver equivalent) over 0.7 m
- Hole 55-176: 3,110 g/t silver and 2.4% copper (3,350 g/t silver
equivalent) over 1.8 m
including: 23,900 g/t silver and 17.5% copper
(25,700 g/t silver equivalent) over 0.2 m
and: 1,690 g/t silver and 1.1% copper (1,810
g/t silver equivalent) over 0.4 m
and: 758 g/t silver and 0.6% copper (820 g/t
silver equivalent) over 1.7 m
- Hole 55-144: 749 g/t silver and 0.7% copper (818 g/t silver
equivalent) over 0.9 m
East Coeur drilling, which commenced in January 2021, targeting
the area between Galena’s historically prolific West Argentine
mining front and the Coeur mine continues to provide solid results.
Key results from the East Coeur drilling includes:
- Hole 34-122: 1,170 g/t silver and 1.3% copper (1,310 g/t silver
equivalent) over 1.8 m
- Hole 34-125: 1,900 g/t silver and 2.4% copper (2,150 g/t silver
equivalent) over 0.4 m
- Hole 34-124: 2,590 g/t silver and 2.7% copper (2,870 g/t silver
equivalent) over 0.2 m
- Hole 34-132: 2,360 g/t silver and 3.6% copper (2,730 g/t silver
equivalent) over 0.2 m
Geologists drilled an additional hole further east of the
current East Coeur drilling which intercepted a new, un-named vein.
Additional drilling is planed to further test this area but initial
results are encouraging.
- Hole 34-133: 713 g/t silver and 2.0% copper (914 g/t silver
equivalent) over 1.4 m
A full table of drill results can be found at:
https://americas-gold.com/site/assets/files/4297/dr20210516.pdf
The Company expects 2021 to be a transitional year at the Galena
Complex for future production with continued exploration drilling
supporting production growth toward a 2 million silver ounce per
year plan. Longer term and assuming continued exploration success,
with the results from the 5500 Level and East Coeur drilling
providing a solid initial indication, the Company is confident that
the operation will again reach peak historical annual production
levels of approximately 5 million ounces per year.
The Company is targeting further mineral resource additions at
the Galena Complex from the remainder of Phase 1 drilling through
June 2021 with the potential increase exceeding the originally
targeted addition of 50 million ounces of silver.
At-The-Market Offering
Americas has entered into an at-the-market offering agreement
dated May 17, 2021 (the “ATM Agreement”) with H.C. Wainwright &
Co., LLC (the “Lead Agent”) and ROTH Capital Partners, LLC as
agents, pursuant to which the Company established an at-the-market
equity program (the “ATM Program”). Pursuant to the ATM Program and
ATM Agreement, the Company may, at its discretion and from
time-to-time during the term of the ATM Agreement, sell, through
the Lead Agent, such number of common shares of the Company
(“Common Shares”) as would result in aggregate gross proceeds to
the Company of up to US$50.0 million. Sales of Common Shares, if
any, through the Lead Agent, acting as agent, will be made through
“at the market” issuances, including without limitation, sales made
directly on the NYSE American LLC or other existing trading market
for the shares in the United States at the market price prevailing
at the time of each sale, and, as a result, sale prices may vary.
No Common Shares will be offered or sold on the Toronto Stock
Exchange or any other trading markets in Canada. The ATM Program
will be effective until March 1, 2023 unless terminated prior to
such date. Americas intends to use the net proceeds from the ATM
Program, if any, primarily to support the growth and development of
the Company’s existing mine operations as well as working capital
and general corporate purposes.
The ATM Program will be made by way of a prospectus supplement
dated May 17, 2021 (the “Prospectus Supplement”) to the Company's
existing Canadian short form base shelf prospectus dated January
29, 2021 (the “Base Shelf Prospectus”) and U.S. registration
statement on Form F-10, as amended (File No. 333-240504) (the
“Registration Statement”), dated January 29, 2021. The Registration
Statement was declared effective by the United States Securities
and Exchange Commission (the “SEC”) on February 1, 2021. The
Prospectus Supplement has been filed with the applicable provincial
regulatory authorities in Canada and the SEC. The Canadian
Prospectus Supplement (together with the related Canadian Base
Shelf Prospectus) is available on the SEDAR website maintained by
the Canadian Securities Administrators at www.sedar.com. The U.S.
Prospectus Supplement (together with the related U.S. Base Shelf
Prospectus) is available on the SEC's EDGAR website at
www.sec.gov.
This news release does not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
these Common Shares in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such
jurisdiction.
About Americas Gold and Silver Corporation
Americas Gold and Silver Corporation is a high-growth precious
metals mining company with multiple assets in North America. The
Company owns and operates the Relief Canyon mine in Nevada, USA,
the Cosalá Operations in Sinaloa, Mexico and manages the 60%-owned
Galena Complex in Idaho, USA. The Company also owns the San Felipe
development project in Sonora, Mexico. For further information,
please see SEDAR or www.americas-gold.com.
Technical Information and Qualified Persons
The scientific and technical information relating to the
operation of the Company’s material operating mining properties
contained herein has been reviewed and approved by Daren Dell,
P.Eng., Chief Operating Officer of the Company. The scientific and
technical information relating to mineral reserves contained herein
has been reviewed and approved by Shawn Wilson, Vice-President,
Technical Services of the Company. The scientific and technical
information relating to mineral resources and exploration contained
herein has been reviewed and approved by Niel de Bruin, Director of
Geology of the Company. Each of Messrs. Dell, Wilson, and de Bruin
are "qualified persons" for the purposes of NI 43-101.
The Company’s current Annual Information Form and the NI 43-101
Technical Reports for its other material mineral properties, all of
which are available on SEDAR at www.sedar.com, and EDGAR at
www.sec.gov contain further details regarding mineral reserve and
mineral resource estimates, classification and reporting
parameters, key assumptions and associated risks for each of the
Company’s material mineral properties, including a breakdown by
category.
The diamond drilling program used NQ-size core. Americas Gold
and Silver’s standard QA/QC practices were utilized to ensure the
integrity of the core and sample preparation at the Galena Complex
through delivery of the samples to the assay lab. The drill core
was stored in a secure facility, photographed, logged and sampled
based on lithologic and mineralogical interpretations. Standards of
certified reference materials, field duplicates and blanks were
inserted as samples shipped with the core samples to the lab.
Analytical work was carried out by American Analytical Services
Inc. (“AAS”) located in Osburn, Idaho. AAS is an independent,
ISO-17025 accredited laboratory. Sample preparation includes a
30-gram pulp sample analyzed by atomic absorption spectrometry
(“AA”) techniques to determine silver, copper, and lead, using aqua
regia for pulp digestion. Samples returning values over 514g/t Ag
are re-assayed using fire-assay techniques for silver.
Additionally, samples returning values over 23% Pb are re-assayed
using titration techniques.
Duplicate pulp samples were sent out quarterly to ALS Global, an
independent, ISO-17025 accredited laboratory based in Reno, Nevada
to perform an independent check analysis. A conventional AA
technique was used for the analysis of silver, copper and lead at
ALS Global with the same industry standard procedures as those used
by AAS. The assay results listed in this report did not show any
significant contamination during sample preparation or sample bias
of analysis.
All mining terms used herein have the meanings set forth in
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”), as required by Canadian securities
regulatory authorities. These standards differ significantly from
the requirements of the SEC that are applicable to domestic United
States reporting companies. Any mineral reserves and mineral
resources reported by the Company in accordance with NI 43-101 may
not qualify as such under SEC standards. Accordingly, information
contained in this news release may not be comparable to similar
information made public by companies subject to the SEC’s reporting
and disclosure requirements
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, Americas Gold and
Silver’s expectations, intentions, plans, assumptions and beliefs
with respect to, among other things, estimated and targeted
production rates and results for gold, silver and other precious
metals, the expected prices of gold, silver and other precious
metals, as well as the related costs, expenses and capital
expenditures; the recapitalization plan at the Galena Complex,
including the expected production levels and potential additional
mineral resources thereat; the expected resolution of the illegal
blockade at the Company’s Cosalá Operations and the restart of
mining operations, including the expected timing thereof; the
Company’s production, development plans and performance
expectations at the Relief Canyon Mine and its ability to finance,
develop and operate Relief Canyon, including the Company’s
determination to proceeding with run-of-mine heap leaching
operations and the expected improvement of operations and overall
project economics in connection therewith, the timing and
conclusions of the data compilation and analysis occurring at
Relief Canyon and the potential for reassessment of the remaining
carrying value of the Relief Canyon asset; and anticipated offering
of Common Shares under the ATM Program and the anticipated use of
proceeds from the ATM Program, if any. Often, but not always,
forward-looking information can be identified by forward-looking
words such as “anticipate”, “believe”, “expect”, “goal”, “plan”,
“intend”, “potential’, “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 Americas Gold and Silver 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 Americas Gold and Silver to be materially different from those
expressed or implied by such forward-looking information. With
respect to the business of Americas Gold and Silver, these risks
and uncertainties include risks relating to widespread epidemics or
pandemic outbreak including the COVID-19 pandemic; the impact of
COVID-19 on our workforce, suppliers and other essential resources
and what effect those impacts, if they occur, would have on our
business, including our ability to access goods and supplies, the
ability to transport our products and impacts on employee
productivity, the risks in connection with the operations, cash
flow and results of the Company relating to the unknown duration
and impact of the COVID-19 pandemic; interpretations or
reinterpretations of geologic information; unfavorable exploration
results; inability to obtain permits required for future
exploration, development or production; general economic conditions
and conditions affecting the industries in which the Company
operates; the uncertainty of regulatory requirements and approvals;
fluctuating mineral and commodity prices; the ability to obtain
necessary future financing on acceptable terms or at all; the
ability to operate the Relief Canyon Project; and risks associated
with the mining industry such as economic factors (including future
commodity prices, currency fluctuations and energy prices), ground
conditions and 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 and construction expenditures, reclamation activities,
labor relations or disruptions, social and political developments
and other risks of the mining industry. The potential effects of
the COVID-19 pandemic on our business and operations are unknown at
this time, including the Company’s ability to manage challenges and
restrictions arising from COVID-19 in the communities in which the
Company operates and our ability to continue to safely operate and
to safely return our business to normal operations. The impact of
COVID-19 on the Company is dependent on a number of factors outside
of its control and knowledge, including the effectiveness of the
measures taken by public health and governmental authorities to
combat the spread of the disease, global economic uncertainties and
outlook due to the disease, and the evolving restrictions relating
to mining activities and to travel in certain jurisdictions in
which it operates. 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. Additional information
regarding the factors that may cause actual results to differ
materially from this forward‐looking information is available in
Americas Gold and Silver’s filings with the Canadian Securities
Administrators on SEDAR and with the SEC. Americas Gold and Silver
does not undertake any 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. Americas Gold and Silver
does not give any assurance (1) that Americas Gold and Silver will
achieve its expectations, or (2) concerning the result or timing
thereof. All subsequent written and oral forward‐looking
information concerning Americas Gold and Silver are expressly
qualified in their entirety by the cautionary statements above.
1 The Company’s profitability was impacted by non-reoccurring
and non-cash charges, specifically $55.6 million in impairment of
Relief Canyon’s net assets carrying amount and $23.0 million in
inventory write-downs from lowered leach pad gold recoveries. 2
Silver equivalent was calculated using metal prices of $20.00/oz
silver, $3.00/lb copper and $1.05/lb lead. 3 Meters represent “True
Width” which is calculated for significant intercepts only and is
based on orientation axis of core across the estimated dip of the
vein.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210517005486/en/
Stefan Axell VP, Corporate Development & Communications
Americas Gold and Silver Corporation 416-874-1708
Darren Blasutti President and CEO Americas Gold and Silver
Corporation 416‐848‐9503
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