VANCOUVER, May 1, 2018 /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 2017 and for the 2017 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.
"In order to address the operational challenges experienced
during 2017 the Company appointed Carlos
Silva in November as its COO. Mr. Silva is a well-known and
highly respected Mexican mining engineer with more than 30 years'
of experience working in the mining industry in Mexico, the last 17 years of which were in
senior management roles." said Arturo Préstamo, President and CEO.
"Under Carlos's leadership our focus in 2018 at both Veta Grande and Rosario will be to increase production
throughput and improve the head grade while concurrently completing
a surface drilling campaign of approximately 20,000 metres at the
Veta Grande Project and Zacatecas Properties. Initial steps
have been taken to deliver on these goals."
Selected operating and financial information for the three
months and years ended December 31,
2017 and 2016 is presented below:
|
Three months ended
Dec 31,
|
Years ended Dec
31,
|
|
2017
|
2016
|
2017
|
2016
|
Financial
|
|
|
|
|
Revenue – Mining
Operations
|
1,292
|
1,874
|
7,816
|
11,812
|
Revenue – Mining
Services
|
3,580
|
-
|
3,580
|
-
|
Gross Loss
(5)
|
(451)
|
(1,896)
|
(5,156)
|
(51)
|
Impairment
|
(10,445)
|
1,073
|
(20,079)
|
(15,615)
|
Net Loss
|
(10,012)
|
(3,646)
|
(22,906)
|
(18,506)
|
Net Loss Per Share –
Basic ($/share)
|
(0.06)
|
(0.02)
|
(0.14)
|
(0.14)
|
Adjusted EBITDA
(5)
|
(1,435)
|
(1,560)
|
(5,297)
|
580
|
Operating
(1)
|
|
|
|
|
Material Processed
(tonnes milled)
|
30,974
|
42,746
|
181,073
|
117,962
|
Silver Equivalent
Produced (ounces) (2)
|
139,670
|
200,122
|
865,459
|
928,467
|
Silver Equivalent
Sold (payable ounces) (3)
|
94,204
|
166,734
|
643,767
|
935,158
|
Production Cost per
Tonne (4)
|
86.49
|
72.33
|
63.74
|
79.59
|
Cash Cost per Silver
Equivalent ($/oz.) (4)
|
32.38
|
23.97
|
23.07
|
13.69
|
All-in Sustaining
Cost per Silver Equivalent ($/oz.) (4)
|
38.53
|
26.15
|
27.56
|
16.82
|
Average Realized
Silver Price per Ounce ($/oz.) (4)
|
16.73
|
16.55
|
17.06
|
17.23
|
(1)
|
The Veta Grande
Project commenced commercial production effective October 1, 2016
and therefore is not included in the first, second and third
quarter 2016 operating results.
|
(2)
|
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 by the Rosario Project as well as by
the Veta Grande Project. Silver equivalent ounces produced in 2016
have been calculated using prices of $14.50/oz., $1,100/oz.,
$0.76/lb and $0.71/lb for silver, gold, lead and zinc respectively
applied to the metal content of the lead and zinc concentrates
produced by the Rosario Project during the first, second, and third
quarters of 2016, and the Rosario Project as well as by the Veta
Grande Project during the fourth quarter of 2016.
|
(3)
|
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.
|
(4)
|
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. See ''Non-IFRS Measures''
section, below for definitions.
|
(5)
|
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 quarterly
financial statements.
|
(6)
|
Average realized
silver price per ounce is prior to all treatment, smelting and
refining charges.
|
2017 Corporate Highlights
- Settled in full the balance owing to JMET, LLC under the JMET
Note
- Amended the option agreement with Contracuña so that the
Company now has the right to acquire outright the Veta Grande
Project
- Entered a binding letter of intent (the "LOI") with Carrizal
Mining S.A. de C.V. ("Carrizal") wherein Carrizal may earn 20% of the Veta Grande
Project and Zacatecas Properties by, among other things, funding
the increase in milling capacity at the Veta Grande Project to 750
tpd as well as funding an exploration program at the Veta Grande
Project and Zacatecas Properties.
- Entered an agreement (the "Mining Services Agreement") with
Carrizal for the provision of
certain mine development, metallurgical and geological consulting
services as well as other administrative services. Management
expects that the Mining Services Agreement will generate
approximately $0.75 million of net
cash flow to the Company on a monthly basis.
"Although the two agreements made with Carrizal occurred in Q4 2017 the benefits of
these agreements are being realized as we enter Q2 2018. The
Veta Grande milling facility now
has a capacity of 750 tpd and we have cash on hand of approximately
$2.7 million." stated Arturo
Préstamo, President and CEO.
Financial Results
2017 Annual Results
The
Company recorded a net loss of $22,906 ($0.14 per
share) for the year ended December 31,
2017 compared to a net loss of $18,506 ($0.14 per
share) for the year ended December
31, 2016. The net losses in both years included
significant impairment charges, $20,079 in 2017 and $15,615 in 2016, related in both years to
dispositions of certain mineral properties and in 2017 to a charge
($14,975) to the carrying value of
the Rosario Project. The 2017 financial results include
revenues and cost of sales relating to the Mining Services
Agreement with Carrizal. There were no such revenues and cost
of sales in 2016.
Revenues in 2017 of $11,396
include mining operations of $7,816
(2016 - $11,812) and mining services
of $3,580 (2016 - $nil).
The 2017 mining operations revenue was generated in approximate
equal amounts from the Veta Grande Project (47%) and Rosario
Project (53%) whereas in 2016 mining operations revenue related
mostly to the Rosario Project ($10,922). The decreased Rosario Project
revenue is primarily the result of less tonnes milled, lower silver
and zinc head grade and lower silver recovery. During Q4
management took the decision to suspend mining operations at the
Cinco Estrellas Property and Rosario Mine and is focusing ongoing
mining activity at the Rosario Project on the Membrillo
Prospect. Moving forward through Q2 of 2018 management
expects that the Membrillo Prospect will operate at approximately
350 tpd.
With respect to the Veta Grande Project, revenues were lower
than expected as the head grade of the material sent to the milling
facility was largely sourced from mineralized material produced
from previously mined stopes which proved to have inconsistent
grade and an overall lower grade than anticipated.
The gross loss from mining operations in 2017 was $6,012 (2016 – loss of $51) while the gross income from mining services
was $856 (2016 - $nil). The
cost of sales in 2017 for mining operations was $13,828 (2016 - $11,863). The increase in the mining
operations cost of sales is largely a result of a full year of
operations at the Veta Grande mine
as compared to three months in 2016 as it commenced commercial
production in the fourth quarter of 2016. The cost of sales for
mining services was $2,724 in 2017
(2016 - $nil). All of the revenues and cost of sales related
to the Mining Services reported in 2017 occurred in Q4 2017.
Q4 2017 Results
The Company recorded a net loss of
$10,012 ($0.06 per share) for the fourth quarter of 2017
compared to a net loss of $3,646
($0.02 per share) for 2016. The
net loss for Q4 2017 includes an impairment charge of $10,445 recorded against the carrying value of
the Rosario Project.
Revenues in 2017 of $4,872 include
mining operations of $1,292 (2016 -
$1,874) and mining services of
$3,580 (2016 - $nil).
The 2017 mining operations revenue was generated as to
$482 from the Veta Grande Project and
$805 from the Rosario Project.
The Veta Grande Project revenue was impacted by the suspension of
milling activities for most of November as requested by SERMANAT
and by lower grade mill feed than expected. The Rosario
Project revenue is primarily the result of lower grade silver
material being fed to the mill.
The gross margin from mining services amounted to $856 (2016 - $nil) while the gross loss from
mining operations was $1,307 (2016 –
loss of $1,896). The cost of
sales in Q4 2017 for mining operations was $2,599 (2016 - $3,770) is largely due to processing less
mineralized material in the 2017 quarter. There were no
mining services revenues or cost of sales in 2016.
Operational Results and Costs
Veta Grande
Project
Due to the fact that the Veta Grande Project only
commenced commercial production on October
1, 2016 the following discussion compares Q4 2017 to Q4 2016
as a year-over-year comparison would not be relevant.
In Q4 2017 silver equivalent production from the Veta Grande
Project decreased by 35% (35,386 ounces) compared to Q4 2016.
The decrease reflects a 32% decrease in tonnes milled largely
caused by the temporary milling suspension imposed by PROFEPA in
November 2017. As compared to silver equivalent production in
Q3 2017, the Q4 2017 production decreased by 37%, again largely due
to the temporary milling
In Q4 2017 the cash cost of production per tonne of mineralized
material processed decreased by 8% to $67.85/t as compared to Q4 2016. The Q4
2017 unit cost would have been lower if not for the temporary
suspension of milling operations for most of November 2017 pursuant to an order from
PROFEPA.
Cash cost of production per silver equivalent ounce sold during
Q4 of 2017 increased by 22% in 2017 to $36.18/oz as compared to $29.66/oz in 2016. As with the unit cost of
production per tonne the Q4 2017 results were negatively impacted
by the temporary suspension of milling activities in November
pursuant to an order from PROFEPA. Further, the cash cost of
production per silver equivalent ounce sold also reflects a
combination of lower grade zinc and lead mineralized material being
processed in Q4 2017 together with lower metal recoveries for gold,
lead and zinc being realized as compared to 2016. The primary
source of mill feed in Q4 2017 was mineralized material from
previously mined stopes. This material ultimately proved to
have an inconsistent head grade resulting in an overall lower head
grade than expected.
All-in sustaining cash cost of production per silver equivalent
ounce sold increased by 38% in Q4 2017 to $43.62/oz as compared to $31.65/oz in 2016. 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
2017 Annual Results
In 2017
silver equivalent production from the Rosario Project decreased by
47% (385,765 ounces) compared to 2016. The decrease reflects
a 14% decrease in tonnes milled combined with a 66% decrease in
silver head grade. The decreased tonnage milled reflects
inconsistent availability of mining equipment due to mechanical
failures that were not remedied on a timely basis because of
working capital constraints. The decreased head grade is the result
of greater than anticipated mining dilution at the Cinco Estrellas
Property and an extended period during which development material
was the primary source of mineralized material being fed to the
mill from the Membrillo Prospect. Currently sufficient development
has been completed that mineralized material sent to the milling
facility will be sourced from mining stopes. The mining
dilution experienced at the Cinco Estrellas Property led to
management's decision to suspend operations there during Q4
2017. Similarly, management suspended operations in Q4 at the
Rosario Mine pending further exploration programs to develop
additional resources.
Cash cost of production per tonne of mineralized material
processed decreased by 11% in 2017 to $72.38/t as compared to $81.17/t in 2016. This positive change in
unit costs reflects cost savings measures implemented by management
during 2017.
Cash cost of production per silver equivalent ounce sold
increased by 79% in 2017 to $21.83/oz
as compared to $12.18/oz in
2016. This change in unit costs reflects in part a decrease
of 66% in the silver grade of the mineralized material processed
offset by a 28% reduction in cash costs of production. The
decrease in head grade is for the reasons referenced above.
All-in sustaining cash cost of production per silver equivalent
ounce sold increased by 69% in 2017 to $26.03/oz as compared to $15.42/t in 2016. This change in unit costs
occurred largely for the same reasons as the cash cost of
production per silver equivalent ounce sold increases as described
above.
Q4 2017 Results
Cash cost of production per tonne of
mineralized material processed increased in Q4 2017 to $111.21/t as compared to $69.67/t in 2016. This change in unit costs
reflects a loss of economies of scale from processing fewer tonnes
of mineralized material plus costs incurred in connection with the
suspension of mining activities at the Cinco Estrellas
Property.
Cash cost of production per silver equivalent ounce sold
increased by in the Q4 2017 to $29.80/oz as compared to $18.60/oz in 2016. This change in unit
costs reflects a lower silver grade (35%) and a lower silver
recovery (11%) offset by a 5% decrease in cash costs of
production.
All-in sustaining cash cost of production per silver equivalent
ounce sold increased in the fourth quarter of 2017 to $35.09/oz as compared to $20.96/t in 2016. This change in unit costs
occurred largely for the same reasons as the cash cost of
production per silver equivalent ounce sold increases as 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.
View original
content:http://www.prnewswire.com/news-releases/santacruz-silver-reports-fourth-quarter--year-end-2017-financial-results-300640477.html
SOURCE Santacruz Silver Mining Ltd.