TSX.V: SCZ
FSE: 1SZ
VANCOUVER, May 2, 2019 /CNW/
- Santacruz Silver Mining Ltd. (TSX.V:SCZ) (the
"Company" or "Santacruz") reports on its financial and operating
results for the fourth quarter ("Q4") of 2018 and for the 2018
fiscal year. The full version of the financial statements and
accompanying management discussion and analysis can be viewed on
the Company's website at www.santacruzsilver.com or on SEDAR
at www.sedar.com. All financial information is prepared in
accordance with IFRS and all dollar amounts are expressed in
thousands of US dollars, except per unit amounts, unless
otherwise indicated.
"This past year was a period of both challenges and successes.
During 2018 the Company accelerated development work at
Veta Grande as evidenced by
completing 1,700 metres more of development work as compared with
2017. With the development work ongoing the Company continued to
rely on lower grade mill feed for the first half of the year with
improving head grades over the second half. This combination of
these factors led to sub-optimal performance in 2018. The
development work undertaken during the year is now providing us
with access to new production stopes and our expectations are for a
higher head grade in 2019 than 2018. Continued development expenses
are expected in 2019 as the Company ramps down towards higher grade
feed as indicated by drilling thereby providing access to higher
grade stopes in future months," said Arturo Préstamo, President and
CEO. He continued, "The successes relate to the significant
improvements undertaken at the Veta Grande Project that are just
beginning to take effect. The mining operations came under new
management late in Q4 2017 with the appointment of Carlos A. Silva as COO and as the year
progressed new members were added to the operations team. With the
change in team members, and appropriate leadership, came fresh
perspectives on how to improve operations and we are now seeing
improved head grades and metal recoveries at Veta Grande."
Selected operating and financial information for the three
months and years ended December 31, 2018 and 2017 is
presented below:
|
Three months ended
Dec 31,
|
Years ended Dec
31,
|
|
2018
|
2017
|
2018
|
2017
|
Financial
|
|
|
|
|
Revenue – Mining
Operations
|
1,258
|
1,292
|
5,134
|
7,816
|
Revenue – Mining
Services
|
1,466
|
3,580
|
8,017
|
3,580
|
Gross Loss
(4)
|
(3,073)
|
(451)
|
(4,060)
|
(5,156)
|
Impairment
|
(1,486)
|
(10,445)
|
(1,486)
|
(20,079)
|
Net Loss
|
(4,239)
|
(10,012)
|
(4,637)
|
(22,906)
|
Net Loss Per Share –
Basic ($/share)
|
(0.03)
|
(0.06)
|
(0.03)
|
(0.14)
|
Adjusted EBITDA
(4)
|
(2,404)
|
(1,435)
|
(3,468)
|
(5,297)
|
Operating
|
|
|
|
|
Material Processed
(tonnes milled)
|
53,396
|
30,974
|
211,465
|
181,073
|
Silver Equivalent
Produced (ounces) (1)
|
237,542
|
139,670
|
815,323
|
865,459
|
Silver Equivalent
Sold (payable ounces) (2)
|
106,757
|
94,204
|
420,553
|
643,767
|
Production Cost per
Tonne (3)
|
89.97
|
86.49
|
67.01
|
63.74
|
Cash Cost per Silver
Equivalent ($/oz.) (3)
|
48.32
|
32.38
|
36.76
|
23.07
|
All-in Sustaining
Cost per Silver Equivalent ($/oz.) (3)
|
56.19
|
38.53
|
37.23
|
27.56
|
Average Realized
Silver Price per Ounce ($/oz.) (3) (5)
|
14.40
|
16.73
|
15.30
|
17.06
|
(1)
|
Silver equivalent
ounces produced in 2018 have been calculated using prices of
US$17.00/oz., US$1,295/oz., US$1.00/lb. and US$1.35/lb. for silver,
gold, lead and zinc respectively applied to the metal content of
the lead and zinc concentrates produced at the Rosario Project and
the Veta Grande Project. Silver equivalent ounces produced in 2017
have been calculated using prices of $16.00/oz., $1,150/oz.,
$1.00/lb. and $1.15/lb. for silver, gold, lead and zinc
respectively applied to the metal content of the lead and zinc
concentrates produced at the Rosario Project and the Veta Grande
Project.
|
(2)
|
Silver equivalent
sold ounces have been calculated using the realized silver prices
stated in the table above, applied to the payable metal content of
the lead and zinc concentrates sold from the Rosario Project and
Veta Grande Project.
|
(3)
|
The Company reports
non-IFRS measures which include Production Cost per Tonne, Cash
Cost per Silver Equivalent, All-in Sustaining Cost per Silver
Equivalent and Average Realized Silver Price per Ounce. These
measures are widely used in the mining industry as a benchmark for
performance, but do not have a standardized meaning and may differ
from methods used by other companies with similar
descriptions.
|
(4)
|
The Company reports
additional non-IFRS measures which include Gross Profit (Loss) and
Adjusted EBITDA. These additional financial disclosure measures are
intended to provide additional information. Refer to the
''Non-IFRS Measures – Additional Information'' section for a
reconciliation of Mine Operations Income (Loss) and Adjusted EBITDA
to the annual and quarterly financial statements.
|
(5)
|
Average realized
silver price per ounce is prior to all treatment, smelting and
refining charges.
|
Financial Results
2018 Annual Results
The
Company recorded a net loss of $4,239
($0.03 per share) for the year ended
December 31, 2018 compared to a net
loss of $22,906 ($0.14 per share) for the year ended December 31, 2017. The net losses in each
year included significant impairment charges, $1,486 in 2018 and $20,079 in 2017, related to the carrying value of
the Rosario Project in both years and additionally in 2017 to
dispositions of certain mineral properties. The 2018 financial
results include revenues and cost of sales relating to the Mining
Services Agreement with Carrizal for the entire fiscal year whereas
in 2017 these items only became applicable in the fourth
quarter.
Revenues in 2018 of $13,151
include mining operations of $5,134
(2017 - $7,816) and mining services
of $8,017 (2017 - $3,580).
The 2018 mining operations revenue was generated as to 56% from
the Veta Grande Project (2017 - 47%) and 44% from the Rosario
Project (2017 - 53%). Management anticipates that as the
Company moves forward the Veta Grande Project will contribute an
increasing amount of total mining operations revenue as the result
of increased mill throughput, improved head grade and improved
metal recoveries.
The gross loss from mining operations in 2018 was $11,018 (2017 – $6,012) while the gross income from mining
services was $6,958 (2017 -
$856). The cost of sales in 2018 for
mining operations was $16,152 (2017 -
$14,408). The increase in the mining
operations cost of sales related to a 44% increase in cost of
operations at the Veta Grande Project which reflects a 47% increase
in tonnes processed. The cost of sales for mining services was
$1,059 in 2018 (2017 - $2,724). The revenues and cost of sales related
to the Mining Services reported in 2017 occurred in Q4 2017 whereas
the 2018 figures are for a full year of activities.
Q4 2018 Results
The Company recorded a net loss of
$3,073 ($0.03 per share) for the fourth quarter of 2018
compared to a net loss of $10,012
($0.06 per share) for 2017. The net
loss for Q4 2018 includes an impairment charge of $1,486 (2017 - $10,445) recorded against the carrying value of
the Rosario Project.
Revenues in 2018 of $2,724 include
mining operations of $1,258 (2017 -
$1,292) and mining services of
$1,466 (2017 - $3,580).
The 2018 Q4 mining operations revenue was generated as to
$828 (2017 - $482) from the Veta Grande Project and
$430 (2017 - $805) from the Rosario Project. The 2017 Q4 Veta
Grande Project revenue was impacted by the suspension of milling
activities for most of November as requested by SERMANAT.
The gross margin from mining services amounted to $1,466 (2017 - $856) while the gross loss from mining operations
was $4,539 (2017 – loss of
$6,012). The increase in cost of
sales in Q4 2018 for mining operations to $5,797 (2017 - $2,599) is due in part to processing more
mineralized material in the 2018 quarter (72% increase) and in part
to an emphasis in 2018 on mine development at the Veta Grande
Project
Operational Results and Costs
Veta Grande
Project
2018 Annual Results
The focus at the Veta
Grande Project during 2018 was to optimize operations, in
particular at the milling facility. Emphasis was placed on
increasing the production rate and grade of the mineralized
material processed at the milling facility by accessing newly
developed headings in the Veta
Grande vein, Armados vein, and La Flor vein.
During Q4 a technical study by a metallurgical consultant was
completed that has led to reconfiguring certain of the Veta Grande mill circuits and changing the
reagents utilized. Positive results have resulted in the form of
increased metal recoveries for gold, silver and zinc with decreased
costs for the reagents utilized.
In 2018 silver equivalent production from the Veta Grande
Project increased by 22% to 514,367 ounces as compared to 2017
production. The increase reflects a 47% increase in tonnes milled
during 2018 offset by lower grade material (27% lower head grade
for silver) being processed as compared to 2017.
In 2018 the cash cost of production per tonne of mineralized
material processed decreased by 2% to $56.19/t as compared to 2017. The 2018 cost of
operations includes 1,700 metres more of mine development than the
2017 cost of operations.
Cash cost of production per silver equivalent ounce sold
during 2018 increased by 58% to $38.70/oz as compared to $24.50/oz in 2017. As with the unit cost of
production per tonne the 2018 results include the costs associated
with additional 1,700 metres of mine development than in the 2017
costs. The 2018 average head grade was 27% lower than the 2017 head
grade. Most all of this difference related to the first half of
2018 with significant improvement occurring in the second half of
the year.
All-in sustaining cash cost of production per silver equivalent
ounce sold increased by 53% in 2018 to $44.88/oz as compared to $29.33/oz in 2017. This increase in unit
costs occurred largely for the same reasons as described above with
respect to the cash cost of production per silver equivalent ounce
sold with additional costs also arising from the increased mine
development costs.
Q4 2018 Results
In Q4 2018 silver equivalent
production from the Veta Grande Project increased by 170% to
175,488 ounces as compared to Q4 2017 production. The increased
production primarily reflects a 108% increase in tonnes milled and
a modest increase in silver equivalent head grade. Management
anticipates a continuing gradual increase in tonnage milled, head
grade and metal recoveries will continue through into 2019.
In Q4 2018 the cash cost of production per tonne of mineralized
material processed increased by 10% to $74,84/t as compared to Q4 2017. The Q4 2018 unit
cost includes a number of one-time accounting adjustments that
together with the increased mine development costs more than cover
this increase.
Cash cost of production per silver equivalent ounce sold during
Q4 2018 increased by 19% to $42.98/oz
as compared to $36.18/oz in 2017. As
with the unit cost of production per tonne the 2018 results include
the costs associated with 1,700 more metres of mine development
than the 2017 costs and are also negatively impacted by the
one-time accounting adjustments. The 2018 average head grade was
30% higher than the 2017 head grade.
All-in sustaining cash cost of production per silver equivalent
ounce sold increased by 18% in 2018 to $51.66/oz as compared to $43.62/oz in 2017. This increase in unit costs
occurred largely for the same reasons as described above with
respect to the cash cost of production per silver equivalent ounce
sold.
Rosario Project
2018 Annual Results
Silver
equivalent production in 2018 from the Rosario Project decreased by
32% to 300,956 ounces as compared to 442,329 in 2017. This decrease
reflects a 23% decrease in tonnes milled and lower head grade.
These decreases reflect in part the impact of the suspension of
operations at both the Rosario Mine and Cinco Estrellas Property in
Q4 2017.
Cash cost of production per tonne of mineralized material
processed increased by 29% in 2018 to $93.60/t as compared to $72.38/t in 2017. This is mainly due to the
23% decrease in tonnes milled during the quarter while the cash
cost of production was unchanged.
Cash cost of production per silver equivalent ounce sold
increased by 57% in 2018 to $34.28/oz
as compared to $21.83/oz in 2017.
This negative variance reflects the increased cost of production
per tonne processed and a 10% decrease in silver equivalent head
grade which together with the 23% decrease in tonnes milled led to
a 47% decrease in silver equivalent ounces sold.
All-in sustaining cash cost of production per silver equivalent
ounce sold increased by 51% in 2018 to $39.39/oz as compared to $26.03/t in 2017. This change in unit costs
occurred largely for the same reasons as the cash cost of
production per silver equivalent ounce sold decrease as described
above.
Q4 2018 Results
As compared to Q4 2017 the Q4 2018
cash cost per tonne of production increased by 11%. This change
reflects a 25% increase in tonnes processed accompanied by a 39%
increase in cash cost of production.
As compared to Q4 2017 the Q4 2018 cash cost per silver
equivalent ounce sold increased by 96%. The increase reflects the
increased cost per tonne processed combined with processing lower
grade material, particularly with respect to the silver and zinc
grades.
As compared to Q4 2017 the Q4 2018 all-in sustaining unit costs
increased 85%. This change in unit costs occurred largely for the
same reasons as for the increase in the cash cost of production
per silver equivalent ounce sold described above.
About Santacruz Silver Mining Ltd.
Santacruz is a Mexican focused silver company with two producing
silver projects (Rosario and
Veta Grande) and two exploration
properties including the Minillas
property and Zacatecas properties.
The Company is managed by a technical team of professionals with
proven track records in developing, operating and discovering
silver mines in Mexico. Our
corporate objective is to become a mid-tier silver producer.
'signed'
Arturo Préstamo Elizondo,
President, Chief Executive
Officer and Director
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward looking information
Certain statements contained in this news release constitute
"forward-looking information" as such term is used in applicable
Canadian securities laws. Forward-looking information is based on
plans, expectations and estimates of management at the date the
information is provided and is subject to certain factors and
assumptions. In making the forward-looking statements included in
this news release, the Company has applied several material
assumptions, that the Company's financial condition and development
plans do not change as a result of unforeseen events, that third
party mineralized material to be milled by the Company will have
properties consistent with management's expectations, that the
Company will receive all required regulatory approvals, and that
future metal prices and the demand and market outlook for metals
will remain stable or improve. Forward-looking information is
subject to a variety of risks and uncertainties and other factors
that could cause plans, estimates and actual results to vary
materially from those projected in such forward-looking
information. Factors that could cause the forward-looking
information in this news release to change or to be inaccurate
include, but are not limited to, the risk that any of the
assumptions referred to prove not to be valid or reliable, which
could result in lower revenue, higher cost, or lower production
levels; delays and/or cessation in planned work; changes in the
Company's financial condition and development plans; delays in
regulatory approval; risks associated with the interpretation of
data (including in respect of the third party mineralized material)
regarding the geology, grade and continuity of mineral deposits;
the possibility that results will not be consistent with the
Company's expectations, as well as the other risks and
uncertainties applicable to mineral exploration and development
activities and to the Company as set forth in the Company's
continuous disclosure filings filed under the Company's profile at
www.sedar.com. There can be no assurance that any forward-looking
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, the reader should not place any undue
reliance on forward-looking information or statements. The Company
undertakes no obligation to update forward-looking information or
statements, other than as required by applicable law.
Rosario Project
The decisions to commence production at the Rosario Mine,
Cinco Estrellas Property and Membrillo Prospect were not based on a
feasibility study of mineral reserves demonstrating economic and
technical viability, but rather on a more preliminary estimate of
inferred mineral resources. Accordingly, there is increased
uncertainty and economic and technical risks of failure associated
with this production decision. Production and economic variables
may vary considerably, due to the absence of a complete and
detailed site analysis according to and in accordance with NI
43-101.
Veta Grande Project
The decision to commence production at Veta Grande Project
was not based on a feasibility study on mineral reserves
demonstrating economic and technical viability. Accordingly, there
is increased uncertainty and economic and technical risks of
failure associated with this production decision. Production and
economic variables may vary considerably due to the absence of a
complete and detailed site analysis according to and in accordance
with NI 43-101.
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SOURCE Santacruz Silver Mining Ltd.