Americas Silver Corporation (TSX: USA) (NYSE “MKT”: USAS)
(“Americas Silver” or the “Company”) today announced consolidated
production and operating cost results for the first quarter of 2017
and individually for its Cosalá Operations and Galena Complex. All
figures are in U.S. dollars unless otherwise indicated.
First Quarter Highlights (compared to
Q1, 2016)
- Consolidated silver production of
approximately 524,000 silver ounces and 1.1 million silver
equivalent1 ounces, representing decreases of 22% and 13%,
respectively. Consolidated cash costs2 were approximately $10.49
per silver ounce, an increase of 7%, while consolidated all-in
sustaining costs2 were approximately $14.27 per silver ounce, an
increase of 19%.
- Cosalá Operations silver production of
approximately 250,000 silver ounces and 537,000 silver equivalent
ounces, representing decreases of 19% and 11%, respectively,
inclusive of El Cajón development ounces. Cash costs were
approximately $2.61 per silver ounce and all-in sustaining costs
were approximately $3.21 per silver ounce, down 63% and 63%,
respectively, exclusive of El Cajón development ounces and related
costs.
- Galena Complex silver production for
the quarter of approximately 273,000 silver ounces and 571,000
silver equivalent ounces representing decreases of 25% and 14%,
respectively. Cash costs were approximately $15.89 per silver ounce
and all-in sustaining costs were approximately $21.86 per silver
ounce up 31% and 47%, respectively, due to planned lower grade and
longer than expected mill repairs during the quarter.
- Guidance for 2017 remains unchanged at
2.0 - 2.5 million ounces in silver production and 5.5 - 6.0 million
ounces of silver equivalent 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.
- The San Rafael Project remains on
budget and on time for the start of production by the end of Q3,
2017 despite recent ramp development challenges with poor ground
conditions. The Company expects to be back into good ground by the
end of April.
- The Company purchased an option on the
San Felipe Project for total payment of $7.0 million (plus VAT) in
March 2017.
- At the end of the first quarter, the
Company drew fully upon the $15 million Glencore facility and fully
repaid its existing debt of approximately $8.0 million during the
quarter. The Company’s cash balance at March 31, 2017 was $17.6
million.
“As previously announced, the year began slowly at Galena with
expected lower grades and some necessary mill maintenance affecting
silver and lead production but we are encouraged for the rest of
the year with the lower grades, the mill liner changed and the
associated backfill challenges behind us,” said Americas Silver
President and CEO Darren Blasutti. “Development at San Rafael has
recently been slowed but measures have been taken to address the
poor ground conditions. We anticipate being able to resume our
targeted development rate once we are in more competent ground in
early May. We continue to expect to begin production from San
Rafael by the end of Q3, 2017 within budget. San Rafael will
transform the Company to a first-quartile cash cost producer and
generate substantial cash flow in 2018 and beyond.”
The Company expects to release its first quarter financial
results on or before May 11, 2017.
Consolidated First Quarter Production
Details
Consolidated silver production for the first quarter of 2017 was
523,747 ounces which represents a decrease of 7% over the previous
quarter and a decrease of 22% year-over-year. Silver equivalent
production was approximately 1.1 million ounces, down 7% over the
previous quarter and 13% year-over-year. Consolidated cash costs
increased 18% to $10.49 per silver ounce compared to the previous
quarter and 7% year-over-year, and all-in sustaining costs
increased 23% to $14.27 per silver ounce compared to the previous
quarter and 19% year-over-year. Consolidated production levels for
the remainder of the year are expected to improve and become
similar to fiscal 2016 production levels subsequent to the mill
repairs at the Galena Complex during the quarter.
Table 1
Consolidated Production
Highlights
Q1 2017 Q1 2016
Change Q4 2016 Change Processed
Ore (tonnes milled) 167,493 175,108 -4% 168,038 -1% Silver
Production (ounces) 523,747 672,074 -22% 564,475 -7% Silver
Equivalent Production (ounces) 1,107,460 1,269,120 -13% 1,190,381
-7% Silver Grade (grams per tonne) 107 135 -21% 116 -7% Cost of
Sales ($ per equiv. ounce silver)1 $9.91 $9.53 4% $10.02 -1% Cash
Costs ($ per ounce silver)1 $10.49 $9.82 7% $8.91 18% All-in
Sustaining Costs ($ per ounce silver)1 $14.27 $12.02 19% $11.57 23%
Zinc Production (pounds) 2,389,133 3,552,522 -33% 2,671,391 -11%
Lead Production (pounds) 6,160,732 7,121,573 -13% 7,277,346 -15%
Copper Production (pounds) 308,100 245,808 25% 260,018 18%
1 Cost of sales per silver equivalent ounce, cash costs per
silver ounce, and all-in sustaining costs per silver ounce in Q1,
2017 excludes pre-production of 62,714 silver ounces and 89,042
silver equivalent ounces mined from El Cajón during its
commissioning period. Pre-production revenue and cost of sales from
El Cajón are capitalized as development costs.
Consolidated production was negatively impacted by expected
lower silver and lead grades in the first quarter and an earlier
than scheduled mill liner replacement at the Company’s Galena
Complex. The associated impact to the mine’s backfill cycle as a
secondary result of this replacement also affected production. At
the end of December 2016, the Company observed that the mill liner
at the Galena Mill would require replacement prior to the scheduled
timing in late January 2017. Local management implemented temporary
measures until the liners were replaced though the measures
resulted in reduced capacity in January and early February.
Backfill to the underground operations was reduced in both January
and February as a result of the reduced mill capacity impacting
production during the quarter. The liner replacement was completed
in early February however stope cycles affected production output
in the higher grade, mechanized stopes deeper in the mine as a
result of backfill shortages. In March 2017, the Company saw a
return to the planned milling capacity and grades, and does not
expect this situation to impact the results for the remainder of
the year. Offsetting this impact was greater than expected output
from the Nuestra Señora mine at the Cosalá Operations as it
continues to outperform expectations ahead of the scheduled mine
closure in Q2, 2017.
During the first quarter, the Company obtained a low-interest,
$15.0 million concentrate pre-payment facility with a subsidiary of
Glencore PLC to fund a portion of the project costs for San Rafael.
At the end of the quarter, the facility was drawn in full and the
Company fully repaid its previously outstanding debt of
approximately $8.0 million during the quarter. In addition, the
Company made a payment of approximately $7.0 million for purchase
of the option to acquire 100% interest of the San Felipe property
located in Sonora, Mexico. The cash balance as at March 31, 2017
was $17.6 million and the Company expects to be able to fully fund
the development of San Rafael.
Cosalá Operations Production
Details
The Cosalá Operations produced 250,296 ounces of silver during
the first quarter of 2017 and 536,838 ounces of silver equivalent
inclusive of pre-production material from El Cajón. Excluding the
El Cajón material, the Cosalá Operations produced 187,582 ounces of
silver during the first quarter of 2017 and 447,796 ounces of
silver equivalent during the same period at cost of sales of $7.17
per silver equivalent ounce, cash costs of $2.61 per silver ounce
and all-in sustaining costs of $3.21 per silver ounce. Silver and
silver equivalent production decreased 19% and 11%, respectively,
compared to Q1, 2016. Cash costs improved by 46% compared to the
previous quarter and decreased 63% year-over-year while all-in
sustaining costs improved 33% compared to the previous quarter and
decreased 63% year-over-year.
Table 2
Cosalá Operations Highlights
Q1 2017 Q1 2016
Change Q4 2016 Change Processed
Ore (tonnes milled) 128,577 131,063 -2%
127,224 1% Silver Production (ounces) 250,296 307,580
-19% 211,075 19% Silver Equivalent Production (ounces)
536,838 605,774 -11% 495,471 8% Silver Grade
(grams per tonne) 70 88 -20% 63 11% Cost of
Sales ($ per equiv. ounce silver) 1 $ 7.17 $ 8.19 -12% $ 9.09 -21%
Cash Costs ($ per ounce silver) 1 $ 2.61 $ 7.12 -63% $ 4.83 -46%
All-in Sustaining Costs ($ per ounce silver) 1 $ 3.21 $ 8.59 -63% $
4.77 -33% Zinc Production (pounds) 2,389,133
3,552,522 -33% 2,671,391 -11% Lead Production (pounds)
1,124,464 1,510,053 -26% 1,218,151 -8% Copper
Production (pounds) 308,100 245,808 25%
260,018 18%
1 Cost of sales per silver equivalent ounce, cash costs per
silver ounce, and all-in sustaining costs per silver ounce in Q1,
2017 excludes pre-production of 62,714 silver ounces and 89,042
silver equivalent ounces mined from El Cajón during its
commissioning period. Pre-production revenue and cost of sales from
El Cajón are capitalized as development costs.
In fiscal 2017, the Company planned to operate its Nuestra
Señora mine through the end of Q1, 2017, then transition to the El
Cajón mine through to the commencement of production from San
Rafael. During Q1, 2017, the Nuestra Señora mine exceeded
expectations by significantly reducing cash costs, benefiting from
its mix of precious and base metals, and higher by-product prices
relative to last year. Further material has been identified in the
mine to extend its life to June 2017 after which plant feed is
expected to transition to El Cajón ore. This extension of Nuestra
Señora should result in better than expected costs in the second
quarter.
El Cajón development was completed at the end of the first
quarter including blasting of the slot raise to allow long hole
production to begin. Processing of development ore provided
approximately 30,000 tonnes of mill feed during the quarter.
Management will be monitoring ore requirements closely leading up
to the anticipated commencement of San Rafael production and
efforts will be made to maximize cash flow and minimize working
capital invested in stockpiles through the transition.
Development at the Company’s San Rafael deposit and improvements
at the Los Braceros plant continues to progress towards the start
of production by the end of Q3, 2017. In mid/late February, ramp
development encountered an isolated area of poor ground conditions
associated with several faults and karst zones. As a result,
development slowed significantly as local management identified
different options for progressing through these areas. A
geotechnical consultant was engaged to identify appropriate ground
support methods to develop through these zones. In March 2017, the
Company implemented the recommended ground support and continued to
advance slowly through the affected area. The Company expects to be
back in good ground conditions by the end of April. Optimization of
the mine’s development design has reduced the overall development
meters required to access the initial ore zone, which will help to
offset the current delays with ramp development. Mill modifications
are progressing well with work expected to be completed by
mid-July. Despite these current challenges, the Company expects to
deliver production from San Rafael on budget by the end of Q3,
2017.
An exploration budget of $2 million has been approved for the
Cosalá Operations. Work will focus on upgrading and extending
existing resources in the San Rafael/El Cajón corridor with an
emphasis on testing the southeast extension of San Rafael's Zone
120. This drilling is the first exploration drilling at the Cosalá
Operations in over 4 years. The Company expects to update the
market on its drilling results at both Cosalá and Galena Complex
before the end of the second quarter.
Galena Complex Production
Details
The Galena Complex produced 273,451 ounces of silver during the
first quarter of 2017 and 570,622 ounces of silver equivalent
during the same period at cost of sales of $12.05 per silver
equivalent ounce, cash costs of $15.89 per silver ounce and all-in
sustaining costs of $21.86 per silver ounce. Silver and silver
equivalent production decreased 23% and 18%, respectively, compared
to the previous quarter. Cash costs were up 40% compared to the
previous quarter and 31% year-over-year and all-in sustaining costs
were up 40% compared to the previous quarter and 47%
year-over-year.
Table 3
Galena Complex Highlights
Q1 2017 Q1 2016
Change Q4 2016 Change Processed
Ore (tonnes milled) 38,916 44,045 -12% 40,814
-5% Silver Production (ounces) 273,451 364,494 -25%
353,400 -23% Silver Equivalent Production (ounces)
570,622 663,346 -14% 694,910 -18% Silver Grade (grams
per tonne) 230 276 -17% 280 -18% Cost of Sales
($ per equiv. ounce silver) $ 12.05 $ 10.75 12% $ 10.69 13% Cash
Costs ($ per ounce silver) $ 15.89 $ 12.10 31% $ 11.35 40% All-in
Sustaining Costs ($ per ounce silver) $ 21.86 $ 14.92 47% $ 15.63
40% Lead Production (pounds) 5,036,268 5,611,520 -10%
6,059,195 -17%
As previously noted, management budgeted for lower grades in the
quarter, however the cumulative impact stemming from the Galena
mill liner replacement resulted in a decreased level of production
from the higher grade, deeper mechanized stopes as backfill
availability was constrained by the mill shutdown. These issues
were rectified by the end of the quarter and the Company expects
the rest of the year to return to the budgeted plan including
significantly decreased cash and all-in sustaining costs per ounce
compared to the first quarter of 2017.
SEC Filing
The Company has filed its Form 40-F which includes the Audited
Consolidated Financial Statements, related Management’s Discussion
and Analysis and its Annual Information Form for the year ended
December 31, 2016, with the Securities and Exchange Commission
(“SEC”) on EDGAR on March 31, 2017.
An electronic copy of each document is available on Americas
Silver website at www.americassilvercorp.ca and on Americas Silver
Corporation SEDAR profile at www.sedar.com. Shareholders may
request a hard copy of the complete audited financial statements
free of charge upon request.
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 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 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 spot 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
March 31, 2017 are preliminary throughout this press release
subject to refinement from the Company’s first quarter financial
results to be released on or before May 11, 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170426006738/en/
Americas Silver CorporationDarren Blasutti,
416‐848‐9503President and CEO
Americas Gold and Silver (AMEX:USAS)
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