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Americas Silver announces Q3 2018 financial results

Mining News - Published on Fri, 09 Nov 2018

Image Source: Business Wire
Americas Silver Corporation reported consolidated financial and operational results for the third quarter of 2018. 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 , on its EDGAR profile at , and are also available on the Company’s website at . All figures are in U.S. dollars unless otherwise noted.

Q3 Highlights
Production of 1.4 million consolidated silver equivalent ounces 1, an increase of 27% year-over-year, including 0.3 million silver ounces. Revenue of $11.7 million and net loss of $5.8 million for the quarter or ($0.13) per share, an increase in revenue of 20% and an increase in net loss of 109% compared to Q3-2017, including $3.3 million of negative provisional pricing adjustments. Consolidated zinc production of 7.9 million pounds and lead production of 7.5 million pounds, increases of 451% and 40%, respectively. Cost of sales of $9.08/oz. equivalent silver, by-product cash cost 2 of $4.95/oz. silver, and all-in sustaining cost 2 (“AISC”) of $15.94/oz. silver for the quarter, representing year-over-year decreases of 1% and 61%, and an increase of 1%, respectively. Cost of sales of $8.46/oz. equivalent silver, by-product cash cost of negative ($1.31/oz.) silver, and AISC of $9.03/oz. silver for the first nine months of 2018, representing year-over-year decreases of 16%, 114%, and 31%, respectively. San Rafael achieved its goal of sustaining a milling rate of over 1,700 tonnes per operating day. The Galena Complex resumed normal operations in mid-July following hoist repairs completed late in Q2-2018. The Company entered into a definitive agreement with Pershing Gold Corporation (“Pershing Gold”) to complete a business combination. The combination will add an attractive gold-silver development project in Nevada with significant precious metal growth to the Company’s production profile. The Company had a cash balance of $3.1 million and working capital balance of $3.3 million as at September 30, 2018.
During the quarter, cash cost, AISC and silver equivalent production were negatively impacted as the realized prices on sales of zinc and lead decreased by 22% and 18%, respectively, compared to the first half of 2018. Production at the Cosalá Operations for the quarter was negatively impacted by an unplanned mill repair at Los Braceros lasting approximately 10 days impacting one of the two mills, in addition to approximately 120 hours of lost operating time at the process plant due to periodic power outages stemming from delivery problems originating with the electricity provider. Galena Complex milled tonnage was lower as the mine resumed normal operations following hoist repairs completed late in Q2, 2018.

Mr Darren Blasutti, President & CEO of Americas Silver, said that “Despite the operational and weather-related challenges, and the low metal prices experienced in the third quarter, the Company continued to increase mill throughput at San Rafael through the quarter. As a result, the San Rafael mill is now consistently achieving over 1,700 tonnes per day. With capital development to reach the Main Zone nearing completion at San Rafael and Galena running smoothly since mid-July, we expect the fourth quarter to achieve the highest silver and silver equivalent production quarter of 2018.”

Mr Blasutti continued, “Shareholders of both companies have been enthusiastic in their support of the announced combination with Pershing Gold Corporation, expected to close in Q1, 2019. Pershing Gold will add a shovel-ready, low capital, gold-silver project in Nevada to the Company’s operating platform. When it is completed, it is expected to add 75,000 to 90,000 oz. of low-cost gold ounces, generate post-tax cash flow of approximately $25-30 million annually over expected seven-year the life of mine, and increase precious metal production by over 5 times to over 60% of silver equivalent production. This is a transformational transaction for our Company and we are looking forward to beginning development of our next mine now that our management team has completed the ramp-up of San Rafael.”

During Q3-2018, the Company produced 1.4 million consolidated silver equivalent ounces including 0.3 million silver ounces, compared to production of 1.1 million consolidated silver equivalent ounces including 0.6 million silver ounces during Q3-2017. Consolidated silver equivalent production increased due to the greater output of zinc and lead by-product metals from the San Rafael mine at the Cosalá Operations though tempered by lower silver-lead tonnage at the Galena Complex. Consolidated production was negatively impacted during the quarter at the Cosalá Operations by the unplanned mill repair and the periodic power outages. As previously announced on June 14, 2018, production at the Galena Complex was negatively impacted by two issues affecting the No.3 Shaft: a 10-day suspension of hoisting in late April to allow the repair of steel sets in the shaft, and a 17-day shutdown of the hoist in June to address a mechanical failure in the brake mechanism. Repairs were completed by the end of June 2018 and the Galena Complex resumed normal operations in Q3-2018 by mid-July losing roughly half a month’s production.

In Q3-2018, consolidated costs of sales were $9.08/oz. equivalent silver, by-product cash costs were $4.95/oz. silver, and AISC were $15.94/oz. silver, representing year-over-year decreases of 1% and 61%, and an increase of 1%, respectively. The improvement in cash costs was a result of the significant increase in zinc and lead production primarily from the San Rafael mine compared to Q3-2017 when the Company’s previous mine, Nuestra Señora, was in production. The base metal production increases were offset by decreases in the realized prices for zinc and lead during the period which negatively impacted by-product cash costs, and AISC.

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Posted By : Rabi Wangkhem on Fri, 09 Nov 2018
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