TORONTO,
May 13, 2013 /CNW/ - U.S. Silver
& Gold Inc. (TSX: USA, OTCQX:
USGIF) ("U.S. Silver & Gold" or the "Company") today reported
financial and operational results for the first quarter of
2013.
This earnings release should be read in
conjunction with the Company's MD&A, Financial Statements and
Notes to Financial Statements for the corresponding period, which
have been posted on SEDAR at www.sedar.com and are also
available on the Company's website at
www.us-silver.com.
All figures are in U.S. dollars unless
otherwise noted.
Highlights of First Quarter
- First quarter production in line with expectations. 2013
guidance re-forecasted to 2.6 to 3.0 million silver ounces at cash
costs of $16 to $18 per ounce (from
2.7 to 3.0 million silver ounces at cash costs of $17 to $19 per ounce).
- Galena Complex revenues of $17.6
million and net income of $2.1
million.
- Consolidated revenues of $22.9
million and net loss of $3.4
million or $0.06 per
share. The net loss is primarily attributable to
under-performance at the Drumlummon Mine, which is scheduled to be
put on care and maintenance during Q2, 2013 given current gold
prices.
- Consolidated production of 598,139 silver ounces. Strong Galena
Complex silver production of 577,095 ounces (a 4.7 percent increase
over Q1, 2012) at a silver cash cost of $20.48 per ounce.
- Realized silver price of $30.32
per ounce (a nine percent decrease compared to Q1, 2012), copper
price of $3.68 per pound and lead
price of $1.03 per pound.
- Further review of exploration, capital projects and capital
development costs increased previously stated 2013 cost reduction
targets from $10 to $12 million. Implementation of remaining
cost-saving and productivity measures at the Galena Complex and the
corporate office, and closure of the Drumlummon Mine underway.
- Continuing strong exploration results in the Caladay Zone.
"On January 27,
2013 we completed implementation of a new 24/7 schedule to
increase productivity and profitability at the Galena Mine Complex.
We began seeing the benefit of that strategy in the first quarter
of 2013 with a 3 percent increase in tonnage over the previous
quarter. We expect to see increased tonnage as well as budgeted
grade over the remainder of 2013, which will positively impact cash
costs starting in the second quarter," said Darren Blasutti, President and CEO of U.S.
Silver and Gold. "That, in combination with the immediate
cost reductions, the fast tracking of the Caladay Zone and a focus
on protecting our balance sheet, positions the Company well in an
increasing silver price environment."
Production and Operating Costs
As reported in the April
24, 2013 press release, the Company had strong first quarter
consolidated silver production totalling 598,139 ounces, along with
gold production of 2,161 ounces. Consolidated silver cash costs
were $22.20 per ounce (compared with
$17.65 per ounce in the fourth
quarter of 2012) due primarily to the underperformance of the
Drumlummon Mine in Q1, 2013 and the expected mining of lower grade
material at the Galena Complex during the quarter.
A net loss of $3.4
million was recorded for the quarter, compared with net
income of $2.9 million in the first
quarter of 2012. This decrease was due to lower realized
metal prices, higher cost of sales (primarily at the Drumlummon
Mine), higher general and administration expenses (including
post-merger costs and tax re-organization work) and higher
depreciation, depletion and amortization. Cost increases were
partially offset by higher year-over-year production and lower
income tax expense in connection with the tax re-organization.
Galena Complex
The Galena Mine Complex delivered 577,095 ounces of silver during
the first quarter of 2013. Despite transitioning to the 24/7
shift schedule one month into the quarter, a 4.7 percent increase
in production over Q1, 2012 resulted. Average grade increased
three percent to 9.6 ounces per ton silver, while the realized
silver price fell 8.7 percent to $33.29 per ounce. Please see Table 1 below for
further detail.
Table 1
Galena Production Details |
|
Q1 2013 |
Q1 2012 |
Total Ore Processed (tons milled) |
62,826 |
61,073 |
Silver - Copper |
44,887 |
42,346 |
Silver - Lead |
17,939 |
18,727 |
Silver produced (ounces) |
577,095 |
551,228 |
Lead produced (pounds) |
1,772,256 |
1,584,143 |
Copper produced (pounds) |
261,618 |
232,478 |
Silver recoveries (percent) |
96.2 |
96.0 |
Lead recoveries (percent) |
92.7 |
92.0 |
Copper recoveries (percent) |
95.9 |
96.1 |
Silver head grade (ounces per ton) |
9.55 |
9.40 |
Silver - Copper |
10.83 |
11.25 |
Silver - Lead |
6.34 |
5.21 |
Lead head grade (percent) |
5.33 |
4.60 |
Copper head grade (percent) |
0.30 |
0.29 |
Silver sold (ounces) |
568,401 |
569,027 |
Lead sold (pounds) |
1,769,304 |
1,639,121 |
Copper sold (pounds) |
259,728 |
238,226 |
Realized silver price ($ per ounce) |
$30.40 |
$33.29 |
Realized lead price ($ per pound) |
$1.03 |
$0.95 |
Realized copper price ($ per pound) |
$3.68 |
$4.12 |
Silver cash costs ($ per ounce)1 |
$20.48 |
$19.37 |
1The Company reports the cash cost
per ounce of silver produced, a non-GAAP measure, in accordance
with measures widely reported in the silver mining industry as a
benchmark for performance measurement. These measures do not
have any standardized meaning and may differ from methods used by
other companies with similar descriptions. The method does not
include depletion, depreciation, exploration or corporate
administrative costs and is therefore not directly reconcilable to
costs as reported under International Financial Reporting
Standards
At $20.48, cash
costs were higher during the first quarter of 2013 than in the
prior year. This is due to an increase in labour costs
following the addition of personnel to accommodate the new 24/7
schedule. Productivity increased as a result, and a subsequent rise
in March and April productivity has also been noted. This
trend is expected to positively impact ounce production and cash
costs beginning in the second quarter and continue throughout
fiscal 2013. Additionally, production and development miners from
the Coeur mine were re-deployed late in the first quarter in order
to achieve what the Company expects will be more profitable
production from the higher grade Caladay areas by the third quarter
of the year.
Drumlummon Mine
The Drumlummon Mine produced 2,161 ounces of gold and 21,044 ounces
of silver during the first quarter of the year at a by-product cash
cost of $2,289.73 per ounce gold.
As previously announced, given current gold
prices and recent mine performance, production at Drumlummon is
being discontinued and the mine will be put on care and
maintenance. A small, ongoing exploration program will be
maintained and the Company will move the remaining equipment,
materials inventory, and supplies to the Galena Complex in
Idaho.
Exploration Update
As per the Company's April 24, 2013
press release, recent drilling in the Caladay Zone at the Galena
Complex has uncovered higher grade silver-lead mineralization and
extended silver-copper veins on the 4900 and 5200 levels along
strike and down dip. Over the remainder of 2013, the
exploration drill program will extend and better define these areas
and focus on: 1) developing resources that are close to existing
infrastructure; 2) continuing underground exploration diamond core
drilling in the Caladay Zone; 3) defining additional reserves; 4)
adding to resources; and, 5) identifying viable new silver veins
within the greater Galena Complex.
Financial Position
U.S. Silver & Gold's cash and cash equivalents at March 31, 2013 totaled $11.0 million compared to $18.9 million at December
31, 2012, while net working capital totaled $11.7 million compared to $16.0 million for the same dates, respectively.
The decrease in net working capital primarily reflects net cash
inflows from operations less drilling, underground development, and
exploration costs, purchase of property, plant and equipment,
rehabilitation and access development activity, and other changes
in non-cash working capital.
Adjusting for the Company's credit facility of $7.9 million, the Company's working capital was
$20 million as at March 31, 2013. Management is currently reviewing
options for refinancing the debt.
About U.S. Silver & Gold Inc.
U.S. Silver & Gold Inc. is a newly formed silver and gold
mining company focused on growth from its existing asset base and
the execution of targeted accretive acquisitions. It owns and
operates the Galena Mine Complex in the heart of the Silver Valley/Coeur d'Alene Mining District,
Shoshone County, Idaho. It
produces high-grade silver and is the second most prolific silver
mine in U.S. history, delivering over 200 million ounces to date.
The Caladay Zone is being evaluated for bulk mining development.
U.S. Silver & Gold Inc. also owns the Drumlummon Mine
Complex in Lewis and Clark County,
Montana.
Mr. Jim Atkinson,
Vice President, Exploration and a Qualified Person under Canadian
Securities Administrators guidelines, has approved the contents of
this news release.
For further information please see SEDAR or
www.us-silver.com for the NI 43-101 compliant Technical Report on
the Galena Project dated March 22,
2013.
Cautionary Statement Regarding 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, and beliefs with respect
to, among other things, the Galena Complex and the Drumlummon Mine.
Often, but not always, forward‐looking information can be
identified by forward‐looking words such as "anticipate",
"believe", "expect", "goal", "plan", "intend", "estimate", "may",
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 at which 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 Galena and
Drumlummon properties, risks associated with the mining industry
such as economic factors (including future commodity prices,
currency fluctuations and energy prices), failure of plant,
equipment, processes and transportation services to operate as
anticipated, environmental risks, government regulation, actual
results of current exploration 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 U.S.
Silver and Gold 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.
SOURCE U.S. Silver & Gold Inc.