Strong Free Cash Flow Continues, Supporting 29% Growth in Treasury Assets

SilverCrest Metals Inc. (TSX: SIL) (NYSE: SILV) is pleased to announce its financial results for the three months ended September 30, 2024. This release provides additional operational results to supplement the October 10, 2024 release of Q3 2024 operational highlights from the Company’s Las Chispas Operation located in Sonora, Mexico. All amounts herein are presented in United States Dollars, unless otherwise stated.

1. Eric Fier, CEO, commented, “We are pleased to deliver another quarterly record for both revenue and mine operating earnings, as well as one of our best quarters to date for both operating and free cash flow. Our results were supported by strong metal prices, impressive sales quantities and all-in sustaining costs that were well below the low end of our 2024 guidance. Mining rates continued to benefit from having two underground contractors, a dynamic we plan to maintain into Q1 2025 as part of our strategy to manage single asset risk and create additional operational flexibility. These results once again showcase the quality and consistency of our asset and operating team.

Free cash flow per share remains a strong testament of our performance, increasing 49% to $0.24 per share⁽¹⁾ from already strong levels in Q2 2024. This performance led to a 29%, or $35.9 million, increase in treasury assets⁽¹⁾ to end the quarter with $158.2 million. With this exceptional quarter, we remain firmly on track to perform inline or better than our 2024 annual guidance for sales, cash costs, and all-in sustaining costs.”

Q3 2024 Highlights

• Recovered 14,928 ounces gold and 1.4 million oz silver, or 2.6 million oz silver equivalent ⁽²⁾.
• Sold 15,204 oz Au and 1.5 million oz Ag (2.7 million oz AgEq) at average realized prices of $2,472 per oz Au⁽¹⁾ and $29.48 per oz Ag⁽¹⁾. Total sales of 7.9 million oz AgEq for the nine months ended September 30, 2024 positions the Company to meet or exceed the top end of 2024 sales guidance of 10.0 million to 10.3 million oz AgEq.
• Record quarterly revenue of $80.4 million which exceeded Q2 2024 revenue of $72.7 million.
• Record mine operating earnings of $47.0 million representing a 59% operating margin⁽¹⁾, exceeded the $41.5 million and 57% operating margin achieved in Q2 2024.
• Adjusted earnings⁽¹⁾ of $26.3 million, or $0.18 per share, which is largely consistent with the $24.9 million, or $0.17 per share in Q2 2024. Adjustments were largely related to deferred taxes, unrealized losses on derivative currency contracts, and transaction and integration costs.
• Net earnings were $9.5 million, or $0.06 per share, compared to $6.5 million, or $0.04 per share, in Q2 2024.
• Cash costs of $8.85 per oz AgEq⁽¹⁾ in Q3 2024 decreased from $8.87 in Q2 largely due to increased sales volume. Cash costs of $8.28 per oz AgEq YTD were below 2024 guidance of $9.25 to $9.75 per oz AgEq.
• All-in sustaining costs of $13.72 per oz AgEq⁽¹⁾ decreased from Q2 2024, due largely to planned lower sustaining capital expenditures. AISC of $14.50 per oz AgEq ⁽¹⁾ YTD is below the low end of guidance of $14.90 to $15.75 per oz AgEq.
• Mining rates increased to 1,350 tonnes per day, a 23% increase from Q2 2024, benefiting from the ongoing engagement of two mining contractors at site throughout the quarter.
• Average daily mill throughput increased to 1,324 tpd due to capacity testing performed in the quarter. With testing complete in August, throughput has returned to the range of 1,200 tonnes per day for the remainder of the year.
• Operating cash flow of $44.2 million, or $0.30 per share, increased from $39.6 million, or $0.27 per share, in Q2 2024 largely from higher metal prices. Operating cash flow before changes in working capital in the quarter was $37.8 million or $0.25 per share⁽¹⁾. Both figures are net of the payment of taxes and duties, which totaled $12.1 million.
• Free cash flow generation of $36.2 million, or $0.24 per share⁽¹⁾, for the quarter increased by $11.9 million from $24.3 million, or $0.16 per share, in Q2 2024.
• Ended the quarter with total treasury assets of $158.2 million⁽¹⁾ ($120.9 million cash and $37.4 million in bullion), an increase of 29% from $122.3 million at the end of Q2 2024. Gold and silver continued to be the best performing currencies in our treasury assets with a mark to market increase of $3.0 million in the quarter.

Third Quarter Operating Performance

The following operating performance refers to adjusted earnings, operating cash flow per share (basic), free cash flow, free cash flow per share (basic), cash costs, AISC, and treasury assets which are described in more detail in the “Non-GAAP Financial Measures” section of this news release.

Mine

In the quarter, a total of 124,229 tonnes were mined from the underground. Mining rates in Q3 2024 averaged 1,350 tpd, a 23% increase from Q2 2024, and above the originally targeted 2024 exit rate of 1,050 tpd. The Company completed 4.4 km of horizontal and vertical underground development, 0.7 km ahead of plan. Mining rates continued to benefit from having two mining contractors working simultaneously at site, a dynamic the Company plans to maintain through the end of Q1 2025 as part of a continued strategy to manage single asset risk and create additional operational flexibility.

Plant

Process plant throughput averaged 1,324 tpd in Q3 2024, benefiting from successful capacity testing of the plant in its current configuration at 1,500 tpd for 20 days.

Mill throughput returned to planned rates of 1,200 tpd by the end of the quarter and is expected to continue to run at this level for the remainder of the year. Process plant availability was 97.0% for the quarter, better than plan.

Average processed grades of 3.87 gpt Au and 366 gpt Ag, or 674 gpt AgEq compared to Q2 2024 grades of 4.36 gpt Au and 418 gpt Ag, or 765 gpt AgEq. As planned, grades in the quarter were lower than in Q2 2024 to balance increased throughput while maintaining consistent recovered ounces.

Average process recoveries in Q3 2024 were 98.5% Au and 98.3% Ag, or 98.4% AgEq, consistent with Q2 2024 and above design estimates.

Production

The Company produced 2.6 million oz AgEq in Q3 2024, largely in line with the 2.7 million oz AgEq in Q2 2024.

Sustaining Capital

Sustaining capital expenditures totaled $7.9 million in Q3 2024, which as expected, declined from $15.3 million in Q2 2024. Sustaining capital has totaled $33.4 million YTD and is expected to finish this year towards the top end of the 2024 guidance of $40.0 million to $44.0 million.

Cash Costs and AISC

During the quarter, cash costs averaged $8.85 per oz AgEq,  in line with Q2 2024 cash costs of $8.87 per oz AgEq.

Cash costs YTD 2024 averaged $8.28 per oz AgEq, positioning the Company below the low end of 2024 cash cost guidance of $9.25 to $9.75 per oz AgEq.

AISC averaged $13.72 per oz AgEq in Q3 2024, 19% lower than in Q2 2024 ($16.88 per oz AgEq) as a result of lower planned sustaining capital expenditures.  AISC YTD of $14.50 per oz AgEq, positions the Company below the low end of annual AISC guidance of $14.90 to $15.75 per oz AgEq.

Exploration

During Q3 2024, the Company continued drilling activities at Las Chispas to support mineral resource growth with approximately 12,500 metres completed between conversion drilling (60%) and near mine targets (40%). In addition, efforts continued with regional field-based evaluation of greenfield targets.

Program expenditures of $2.5 million and $11.5 million for Q3 2024 and YTD 2024, respectively, put the Company in line to finish the year at the top end of the 2024 guidance range of $12.0 million to $14.0 million.

Selected Q3 2024 Financial Results

Revenue

During Q3 2024, the Company sold a total of 15,204 oz Au and 1.5 million oz Ag at average realized prices of $2,472 per oz Au and $29.48 per oz Ag, generating another quarter of record revenue of $80.4 million. During Q2 2024, the Company sold a total of 14,500 oz Au and 1.4 million oz Ag at average realized prices of $2,237 per oz Au and $27.84 per oz Ag, generating revenue of $72.7 million. The Company achieved record revenue in Q3 2024 due to higher metal prices and sales quantities relative to Q2 2024.

Net Earnings

Q3 2024 net earnings of $9.5 million, or $0.06 per share, increased compared to net earnings of $6.5 million, or $0.04 per share in Q2 2024. Similarly to Q2 2024, net earnings in the quarter were negatively impacted by declines in the Mexican peso. Income tax expense of $25.8 million recorded in the quarter was similar to $26.2 million in Q2 2024, with both quarters impacted by non-cash deferred tax expenses resulting from declines in the Mexican peso. Q3 2024 net earnings were also impacted by transaction and integration costs of $3.4 million.

Q3 2024 adjusted earnings of $26.3 million, or $0.18 per share, increased compared to adjusted earnings of $24.9 million or $0.17 per share in Q2 2024. This increase was primarily related to $5.5 million in higher mine operating earnings, partially offset by $4.4 million in higher current tax expense.

Cash Flow

In Q3 2024, cash flow generated by operating activities was $44.2 million, or $0.30 per share, an increase compared to $39.6 million, or $0.27 per share, in Q2 2024.  Operating cash flow before changes in working capital was $37.8 million or $0.25 per share which compares to $31.8 million or $0.22 per share in Q2 2024.

During the quarter, the Company remitted $12.1 million in tax installments that will be attributable to 2024 payable income taxes. YTD tax payments totaled $52.7 million. Guidance for total tax payments in 2024 (including payments for 2023 taxes) was $56.0 to $63.0 million based on metal prices of $1,850 per oz Au and $22.80 per oz Ag and Mexican peso to US dollar of 17:1. With higher realized metal prices throughout the year, the Company expects total tax payments to be in the upper end or exceed this guidance.

During the quarter, the Company made payments of $10.4 million for mineral properties, plant and equipment, of which $7.9 million was related to sustaining capital expenditures and the remainder related to non-sustaining brownfield exploration capital expenditures at Las Chispas.  This compares with $19.5 million of payments made for mineral property, plant and equipment in Q2 2024.

Q3 2024 free cash flow of $36.2 million, or $0.24 per share, increased 49% from $24.3 million, or $0.16 per share, in Q2 2024 as a result of increased operating cash flow and a planned reduction in sustaining capital expenditures.

Financial Position

As at September 30, 2024, the Company had treasury assets of $158.2 million ($120.9 million cash and $37.4 million in bullion), an increase of $35.9 million from $122.3 million at the end of Q2 2024 ($98.3 million cash and $24.0 million bullion). The Company remains debt free with access to an undrawn $70.0 million revolving facility.

Bullion assets increased by $13.3 million, or 56%, during the quarter as a result of $10.3 million in bullion purchases plus $3.0 million in mark-to-market increases from improved metal pricing.

The Company’s working capital was $190.4 million on September 30, 2024, reflecting a $22.3 million increase from June 30, 2024.  This growth is attributed to continued increases of cash and bullion balances, driven by strong operating cash flow resulting from strong operating performance.

Environmental, Social and Governance

In Q3 2024, SilverCrest completed the latest phase of the reconstruction of the local sewage system in Arizpe with a total of 700 meters of new pipe installed. Work on other water related infrastructure projects in communities local to Las Chispas was paused, as planned, during the quarter due to seasonable rain and has since resumed.

During the quarter, the Company released its second annual ESG Report. The 2023 ESG Report offered further insight into SilverCrest’s continued commitment to working with stakeholders to identify areas where contribution and Company lead initiatives can make the most meaningful impact.

Efforts to integrate renewable solar power at Las Chispas are progressing. With the permitting process underway SilverCrest expects to transition to using solar power in Q1 2025.

Subsequent Events

On October 4, 2024, SilverCrest and Coeur Mining Inc. announced that they have entered into a definitive agreement whereby Coeur will acquire all of the issued and outstanding shares of SilverCrest pursuant to a plan of arrangement (the “Transaction”). Pursuant to the Transaction, SilverCrest shareholders will receive 1.6022 Coeur common shares for each SilverCrest common share. The special meeting and management information circular relating to the Transaction is expected to be available in Q4 2024, with the Transaction expected to close in late Q1 2025.

As a result of the Transaction and quarter end reporting, a blackout was in place which prevented the exercise of some expiring options, including 149,800 held by executives and Board of Directors.  It is expected that these options, along with 163,750 expiring in late December 2024, will be exercised and the maximum number of shares sold will be those needed to cover the cost of the options and any tax obligations. with the remainder locked up as per the Transaction.

ABOUT SILVERCREST METALS INC.

SilverCrest is a Canadian precious metals producer headquartered in Vancouver, BC.  The Company’s principal focus is its Las Chispas Operation in Sonora, Mexico.  SilverCrest has 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 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.