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SilverCrest Reports Third Quarter 2023 Results

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SilverCrest Reports Third Quarter 2023 Results

 

 

 

 

 

On Track to Meet 2023 Guidance

 

SilverCrest Metals Inc. (TSX: SIL) (NYSE American: SILV)  is pleased to announce its financial results for the third quarter of 2023. This release also provides additional operational results, expanding on the October 10, 2023 release of Q3, 2023 operational results from the Company’s Las Chispas operation located in Sonora, Mexico. All amounts herein are presented in United States Dollars (“US$”), unless otherwise stated. Certain amounts shown in this news release may not total to exact amounts due to rounding differences.

 

  1. Eric Fier, CEO, commented, “Las Chispas delivered another quarter of strong operational results and remains on pace to meet 2023 sales and cost guidance. Operating margins of nearly 60% contributed to significant free cash flow in the quarter, allowing for capital allocation flexibility which we used to opportunistically explore, buyback shares, and increase our bullion holdings. Reflecting the strength of our operations, our total treasury assets increased by 38% in the quarter to $81.7 million including $11.7 million of bullion. In the current market where the cost of and access to capital is challenging, our ability to remain flexible and opportunistic is a unique advantage.”

 

Q3, 2023 Highlights

  • Recovered 15,700 ounces of gold and 1.49 million ounces of silver, or 2.74 million silver equivalent ounces1.
  • Sold a total of 14,500 oz of gold and 1.53 million oz of silver at average realized prices2 of $1,931 per oz gold and $23.41 per oz silver for a total of 2.68 million oz AgEq sold.
  • Revenue of $63.8 million and cost of sales of $26.4 million, resulting in mine operating income of $37.5 million, which represents a 59% operating margin.
  • Income of $29.9 million or $0.20 per share.
  • Cash flow from operating activities before changes in non-cash working capital items of $40.9 million or $0.28 per share.
  • Net free cash flow of $33.4 million or $0.23 per share
  • Cash costs2 of $6.53 per oz AgEq sold and all-in sustaining cost (“AISC”)2 of $12.23 per oz AgEq sold are below the low end of H2, 2023 guidance primarily due to higher sales volumes, higher proportion of long hole stopes, and lower capital spend than planned.
  • $7.1 million spent under active Normal Course Issuer Bid in only 7.5 weeks, representing 20% of the allowable 7.4 million common share limit.
  • Ended the quarter debt free with treasury assets2 totaling $81.7 million (cash of $70.0 million and gold and silver bullion of $11.7 million).

 

_________________________
1  Silver Equivalent is based on an Ag:Au ratio of 79.51:1 calculated using $1,650/oz Au and $21/oz Ag, with average metallurgical recoveries of 97.9% Au and 96.7% Ag and 99.9% payable for both Au and Ag.
2  Average realized prices, net free cash flow, net cash, treasury assets, cash costs and cash costs per AgEq ounce sold, AISC, and AISC per ounce sold are non-IFRS financial measures. Non-IFRS financial measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other companies. Please refer to the “NON-IFRS FINANCIAL MEASURES” section of this news release for additional information.

 

 

Q3, 2023 Highlights Summary

 

Operational Highlights
Unit Q3, 2023 Q2, 2023 YTD, 2023
Ore mined tonnes 83,800 74,400 222,300
Ore milled(A) tonnes 114,500 107,900 326,900
Average daily mill throughput tpd 1,245 1,186 1,197
Gold (Au)
Average processed grade gpt 4.35 4.84 4.42
Process Recovery % 98.3 98.4 98.1
Recovered oz 15,700 16,500 45,600
Sold oz 14,500 13,400 42,100
Average realized price(B) $/oz 1,931 1,991 1,933
Silver (Ag)
Average processed grade gpt 413 449 427
Process Recovery % 98.1 97.9 96.1
Recovered million oz 1.49 1.53 4.31
Sold million oz 1.53 1.45 4.34
Average realized price(B) $/oz 23.41 24.36 23.60
Silver equivalent (AgEq) 
Recovered million oz 2.74 2.84 7.93
Sold million oz 2.68 2.52 7.69
Financial Highlights
Unit Q3, 2023 Q2, 2023 YTD, 2023
Revenue $ millions 63.8 62.0 183.8
Cost of sales $ millions (26.4) (23.7) (72.5)
Mine operating income $ millions 37.5 38.3 111.4
Income for the period $ millions 29.9 23.7 80.8
Income per share – basic $/share 0.20 0.16 0.55
Cash flow from operating activities before changes in non-cash working capital items $ millions 40.9 40.5 116.9
Net free cash flow(B)(C) $ millions 33.4 40.7 95.9
Cash costs(B) $/oz AgEq sold 6.53 7.39 6.81
AISC(B) $/oz AgEq sold 12.23 12.70 11.97
Unit September 30,
2023
June 30, 2023
Cash and cash equivalents $ millions 70.0 53.4
Bullion $ millions 11.7 5.6
Treasury assets(B) $ millions 81.7 59.0
Net cash $ millions 70.0 53.4
(A)        Ore milled includes material from stockpiles and ore mined.
(B)        Average realized prices, net free cash flow, net cash, treasury assets, cash costs and cash costs per AgEq ounce sold, AISC, and AISC per ounce sold are non-IFRS financial measures. Non-IFRS financial measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other companies. Please refer to the “NON-IFRS FINANCIAL MEASURES” section of this news release for additional information.
(C)        Net free cash flow for Q2, 2023 has been revised from the previously reported amount of $43.7 million to $40.7 million. Please see non-IFRS section below for more details

 

Underground

 

Mining rates in Q3, 2023 increased by 11% from Q2, 2023, averaging 911 tonnes per day. The increase was driven by a combination of more long hole stopes being available in cycle than planned and higher localized dilution in the Babicanora Main Vein. It is expected that mining rates in Q4, 2023 will be in the range of 800 to 900 tpd, which is in line with the ramp-up estimate outlined in the Updated Technical Report.

 

Underground mining contract negotiations continued during the quarter and are targeted to conclude in Q4, 2023, for implementation in H1, 2024.

 

Processing Plant

 

Average daily mill throughput increased to 1,245 tpd, above plan for the quarter. It was anticipated that the processing plant may have lower availability in the quarter due to seasonal conditions impacting the power supply, however, this did not materialize allowing for higher average mill throughput than planned. As planned, average processed gold and silver grades declined slightly (10% and 8% respectively) from Q2, 2023.

 

Financial Position

 

As of September 30, 2023, the Company had a treasury assets balance of $81.7 million, consisting of $70.0 million in cash and $11.7 million of bullion held at market value at the end of the quarter. The Company remains debt free with access to an undrawn revolving facility of $70.0 million.

 

During the quarter, $2.7 million in IVA was collected for a total of $16.0 million collected year-to-date. The timing of future IVA collection is uncertain and, as a result, can fluctuate in both size and pace.

 

Revenue

 

During Q3, 2023, the Company sold a total of 14,500 oz of gold and 1.53 million oz of silver, at average realized prices of $1,931 per oz gold and $23.41 per oz silver, generating revenue of $63.8 million (Q2, 2023 – $62.0 million). The 3% increase in revenue over Q2, 2023 was primarily attributed to higher sales volume. Total precious metal sales for the first nine months of 2023 of 7.69 million oz AgEq compares favourably to SilverCrest’s 2023 guidance of 9.8 to 10.2 million oz AgEq sold.

 

Costs

 

In the third quarter, total cost of sales was $26.4 million (Q2, 2023 – $23.7 million), an increase of 11% over Q2, 2023. This increase was primarily due to increased metal sales and the expected increase over time of the weighted average cost per silver equivalent ounce released from ore stockpiles.

 

During the quarter, cash costs averaged $6.53 per oz AgEq sold. This compares to cash costs of $7.39 per oz AgEq sold in Q2, 2023 and H2, 2023 cash cost guidance of $7.00 to $8.50 per oz AgEq sold. Cash costs decreased due to higher sales volume, higher proportion of long hole stopes, and lower development unit rates.

 

Corporate Level AISC which aligns with the World Gold Council definition of AISC averaged $12.23 per oz AgEq sold, compared to $12.70 per oz AgEq in Q2, 2023 and H2, 2023 guidance of $13.75 to $15.50 per oz AgEq sold. AISC decreased from Q2, 2023 due to higher sales volume, decreased cash costs and lower capital spending than planned. Capital spending was below plan due to timing of procurement and scope change.

 

Income

 

Income for Q3, 2023 was $29.9 million compared to $23.7 million in Q2, 2023, primarily driven by increased revenue from higher volumes and lower unrealized foreign exchange losses.

 

Year to date income has benefited from the application of net operating losses (tax loss carryforwards) of $71.0 million, which were fully utilized in Q3, 2023. The Company anticipates accruing for income taxes in Q4, 2023 with income going forward subject to Mexico’s corporate tax rate of 30%. Payment of the 2023 income taxes, together with Extraordinary and Special Mining Duties, will be due and paid in Q1, 2024. In 2024 and beyond, the Company expects to make quarterly income tax installments and annual payments for the Extraordinary and Special Mining Duties in the first quarter following the year end.

 

During Q3, 2023, the Company changed the functional currency of its parent entity from Canadian Dollars to US$. The Company determined that the US$ better represents the primary economic environment in which the parent entity operates. This change has been accounted for prospectively, which means starting Q3, 2023, the parent entity’s functional currency is now the same as the presentation currency of US$ and there is no longer a need to record exchange gain and losses to foreign currency translation reserve as of July 1, 2023.

 

Sustaining Capital Expenditure

 

During Q3, 2023, sustaining capital expenditure of $9.8 million was a decrease from Q2, 2023 of $0.3 million and below plan for the quarter. The majority of the decrease from plan can be attributed to delays in procuring key underground materials as well as some slight changes to scope. During the quarter a surface mobile maintenance facility was constructed by SilverCrest to address ongoing mobile maintenance challenges encountered by its underground contractor. The construction of the facility is part of a work plan to improve equipment availability, which is expected to take some time to improve.

 

The Company anticipates its capital spending at Las Chispas to increase in Q4, 2023 relative to Q3, 2023 and remain within 2023 AISC guidance.

 

Exploration Update

 

During the quarter, 14,183 metres of exploration drilling was completed at Las Chispas, with 83% of the metres focused on infill drilling of Inferred Resources (see Updated Technical Report) for conversion to Indicated Resources and ultimately consideration for reserve conversion. The remaining drilling (2,455 metres) was for new vein targets. The exploration budget remains $10 million from Q3, 2023 through the end of Q1, 2024. In Q3, 2023, the Company spent $2.8 million on exploration at Las Chispas.

 

ESG

 

In September 2023 the Company signed a collaboration agreement with Comisión Estatal del Agua (CEA) and the municipality of Arizpe to work on agriculture infrastructure, sewage system and water concessions for agricultural use for the local communities, a positive step in the Company’s  water stewardship plan. This agreement advances continued efforts to help the local communities secure state and federal funding for water related infrastructure to protect livelihoods and create long-term economic resilience.

 

Subsequent to the end of the quarter, the Company was awarded two recognitions from the Confederation of Industrial Chambers of the United Mexican States (CONCAMIN) in the areas of Outstanding Practices in the Industry and Ethics and Values.

 

Guidance

 

SilverCrest’s 2023 production and cost guidance remains unchanged. The Company remains on track to achieve 9.8 to 10.2 million ounces sold for 2023 at average all in sustaining costs within the expected range of $12.75 to $13.75 per oz AgEq sold.

 

Appointment of Vice President of Financial Reporting and Controller

 

The Company is pleased to announce the appointment of Sean Deissner as Vice President of Financial Reporting and Controller, effective November 9, 2023. Before joining SilverCrest, Mr. Deissner spent more than seven years at Pan American Silver Corp in various finance roles, until ultimately serving as Senior Director of Financial Reporting. During his tenure at Pan American, he successfully led the financial reporting team and oversaw its financial reporting strategy. Mr. Deissner brings with him 15 years of experience in the mining industry, which he gained from his roles at Pan American, Veris Gold Corp, Silvermex Resources Inc, and BDO Canada. Mr. Deissner is a designated Chartered Professional Accountant and is a graduate of Royal Roads University with a Bachelor of Commerce degree in Entrepreneurial Management.

 

Qualified Persons Statement

 

The Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral Projects for this news release is N. Eric Fier, CPG, P.Eng, and CEO for SilverCrest, who has reviewed and approved its contents.

 

ABOUT SILVERCREST METALS INC.

 

SilverCrest is a Canadian precious metals producer headquartered in Vancouver, BC, with an ongoing initiative to increase its asset base by expanding current resources and reserves, acquiring, discovering and developing high value precious metals projects and ultimately operating multiple silver-gold mines in the Americas. The Company’s principal focus is its Las Chispas Operation in Sonora, Mexico. The Company is led by a proven management team in all aspects of the precious metal mining sector, including taking projects through discovery, finance, on time and on budget construction, and production.

 

 

 

Posted November 9, 2023

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