Americas Silver Corporation (TSX: USA) (NYSE American: USAS)
(“Americas Silver” or the “Company”) today reported consolidated
financial and operational results for the first quarter of
2019.
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 Silver Corporation
SEDAR profile at www.sedar.com, on its EDGAR profile at
www.sec.gov, and are also available on the Company’s website at
www.americassilvercorp.com. All figures are in U.S. dollars unless
otherwise noted.
First Quarter Highlights
- Production of 1.8 million consolidated
silver equivalent ounces1, an increase of 9% year-over-year,
including 0.4 million silver ounces.
- Revenue of $17.8 million and net loss
of $2.8 million for the quarter or ($0.06) per share, a decrease of
$2.6 million in revenue and an increase in the net loss of $3.3
million compared to Q1-2018 due primarily to lower metal prices and
non-reoccurring expenses associated with the Pershing Gold
acquisition.
- Consolidated by-product production
totalling 11.3 million pounds of zinc and 8.2 million pounds of
lead, representing increases of 54% and 8%, respectively.
- Cost of sales of $7.11/oz. equivalent
silver, by-product cash cost2 of negative ($0.50)/oz. silver, and
all-in sustaining cost2 (“AISC”) of $5.54/oz. silver for the
quarter, representing year-over-year decreases of 13% and 10% in
cost of sales per equivalent silver ounce and AISC per ounce,
respectively, and an increase of 82% in by-product cash cost per
ounce.
- The Company had a cash balance of $3.4
million and working capital balance of $5.2 million as at March 31,
2019.
Subsequent to First Quarter
Highlights
- Completion of the acquisition of
Pershing Gold Corporation (“Pershing”) on April 3, 2019.
- Entered into financing agreements with
Sandstorm Gold Ltd. (“Sandstorm”) for gross proceeds of
approximately $42.5 million to fully fund the development of mining
and heap leaching operations at the Relief Canyon Project (“Relief
Canyon”).
- Board approval to commence construction
of the Relief Canyon with first gold pour expected in late
Q4-2019.
- Preliminary feasibility study and
initial mineral reserve estimate for a combined operation at its
100% owned El Cajón and Zone 120 silver-copper deposits highlighted
by a probable mineral reserve of 2.9 million tonnes containing 14.5
million ounces of silver and 26.5 million pounds of copper.
- The Company agreed to sell its option
for the right to acquire a 100% interest of the San Felipe property
to Premier Gold Mines Ltd. for total consideration of $10.8
million.
The Company’s net loss was impacted by lower silver, zinc and
lead prices and by non-reoccurring charges associated with the
Pershing Gold Acquisition, specifically transaction costs ($1.0
million), and incremental interest and financing costs related to
the convertible loans payable and promissory note ($0.5 million)
associated with the acquisition. Timing of metal sales relative to
production further contributed to the net loss compared to prior
year. The Company also had unrealized losses on non-hedge zinc
forward contracts ($1.2 million) during the quarter. Adjusting for
these items, the net loss would have been approximately $0.1
million. The Company generated cash from operating activities
before non-cash working capital items of $2.6 million for the first
quarter of 2019 compared to $3.7 million in the same period in
2018.
“The San Rafael mine had a record quarter due to improved
recovery, higher mill throughput, and increased grades, with
substantial increases in silver and by-product production,” said
Darren Blasutti, President & CEO of Americas Silver. “Earnings
are expected to improve in the second half of the year with the
remaining costs for the Pershing acquisition and Sandstorm
financing to be captured in the second quarter. Development of
Relief Canyon is beginning as expected with construction activities
ramping up on schedule.”
Consolidated Production and Operating
Costs
Consolidated Production and Cost Details
Q1 2019 Q1 2018 Total ore
processed (tonnes milled) 182,029
163,875 Silver produced (ounces) 393,824
397,035 Zinc produced (pounds) 11,263,623
7,332,978 Lead produced (pounds)
8,211,429 7,624,685 Silver equivalent produced
(ounces) 1,754,839 1,613,711 Silver
recovery (percent) 77.2 79.4 Silver
grade (grams per tonne) 87 95 Silver
sold (ounces) 380,163 404,649 Zinc sold
(pounds) 10,864,404 7,259,622 Lead sold
(pounds) 7,965,271 7,895,231 Cost of
sales ($ per silver equivalent ounce) $7.11
$8.14 Silver cash cost ($ per silver ounce)
($0.50) ($2.73) All-in sustaining cost ($ per silver
ounce) $5.54 $6.17
Consolidated silver equivalent production increased due to
record production results at the Cosalá Operations driven by
sustained improvements in mill throughput, grade, and metal
recovery to concentrate with San Rafael sustaining an average
milling rate of approximately 1,750 tonnes per operating day,
cumulatively resulting in 54% greater zinc and 73% greater lead
production. . The Galena Complex negatively impacted consolidated
production during the quarter as a result of unplanned mill
downtime, due to problems with the mill pinion bearing in January,
and the loss of two high-tonnage stopes in February and March,
resulting in a cumulative loss of approximately one month’s
production during Q1-2019. Performance at the Galena Complex is
slowly improving and should return to expected levels by the end of
Q2-2019. The increase in cash costs was primarily a result of the
operational challenges experienced at the Galena Complex along with
lower realized prices recognized on silver, zinc, and lead during
Q1-2019 compared to Q1-2018.
Relief Canyon Update
On April 3, 2019, the Company announced the closing of the
Pershing acquisition after receiving notification that CFIUS
completed its review. The Company also announced a financing
package of $42.5 million secured from Sandstorm Gold Ltd. to fully
fund the development of Relief Canyon and Board approval for
construction commencement at the Project with the intention of
pouring gold before year end. Since that time, orders have been
placed for long-lead items such as the crusher and conveyor system
and negotiations have commenced on the leach pad construction and
mining contracts. Expected start dates are late-May and mid-June
respectively. Further information on the Relief Canyon development
will be made available periodically on the Company’s website as
construction progresses at www.americassilvercorp.com.
Further information concerning the consolidated and individual
mine operations is included in the Company’s first quarter
Condensed Interim Consolidated Financial Statements for the three
months ended March 31, 2019 and Management’s Discussion and
Analysis for the three months ended March 31, 2019.
Q1-2019 Earnings Conference
Call
Discussions on Q1-2019 earnings will be covered by President
& CEO Darren Blasutti at the Annual and Special Meeting of
Americas Silver scheduled for 3pm (EDT) on Wednesday May 15, 2019
at Vantage Venues, 150 King St. West, Toronto, Ontario. A recording
of the presentation will be available on the Company’s website
subsequent to the meeting.
Additional information concerning the annual and special meeting
can be found in the Management Information Circular dated April 18,
2019. An electronic copy of the Circular is available online under
the Company’s profile at www.sedar.com or at
www.americassilvercorp.com.
About Americas Silver Corporation
Americas Silver is a precious metal mining company focused on
growth 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. The
Company expects to begin producing gold in the fourth quarter of
2019 at its fully funded for development Relief Canyon Project, in
Nevada, USA which is currently in construction following completion
of the Pershing acquisition in April 2019. For further information,
please see SEDAR or EDGAR 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, Americas Silver’s
expectations, intentions, plans, assumptions and beliefs with
respect to, among other things, Americas Silver’s financing
efforts; construction, production, and development plans at the
Relief Canyon Project and performance expectations for the Relief
Canyon Project and impact on Americas Silver’s financial
performance; and the estimated construction timeline and costs for
the Relief Canyon Project; the estimated timeline for environmental
approvals for the second phase of the Relief Canyon Project; and
the impact of the Pershing acquisition on the liquidity of the
Company’s shares. 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 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 Silver to be materially different from those expressed or
implied by such forward-looking information. With respect to the
Sandstorm financing, risks and uncertainties include the ability of
the Company and its subsidiaries to fulfill the conditions to
drawing the available funds under the definitive agreements with
Sandstorm, as applicable, and the potential for, and consequences
of, default thereunder. With respect to the business of Americas
Silver, these risks and uncertainties include 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 develop, complete construction and 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,
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. Additional information regarding the factors that may
cause actual results to differ materially from this forward‐looking
information is available in Americas Silver’s filings with the
Canadian Securities Administrators on its profile at www.sedar.com
or with the SEC at www.sec.gov/edgar, including its annual
information form for the year ended December 31, 2018 and its
management information circular dated December 4, 2018. Americas
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
Silver does not give any assurance (1) that Americas Silver will
achieve its expectations, or (2) concerning the result or timing
thereof. All subsequent written and oral forward‐looking
information concerning Americas Silver, the Sandstorm financing
package, or other matters attributable to Americas Silver or any
person acting on its behalf are expressly qualified in their
entirety by the cautionary statements above.
1 Silver equivalent production throughout this press release was
calculated based on silver, zinc, and lead 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 2018 year-end and quarterly MD&A.
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version on businesswire.com: https://www.businesswire.com/news/home/20190513005768/en/
Darren BlasuttiPresident and CEOAmericas Silver
Corporation416‐848‐9503
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