TSX.V: SCZ
FSE: 1SZ
VANCOUVER, Nov. 28, 2017 /CNW/ - Santacruz Silver Mining
Ltd. (TSX.V:SCZ) (the "Company" or "Santacruz") reports
on the operating and financial results from the Rosario Project in
San Luis Potosi, Mexico and the
Veta Grande Project in Zacatecas,
Mexico for the third quarter of 2017. The full version of
the financial statements and accompanying management's discussion
and analysis can be viewed on the Company's website at
www.santacruzsilver.com or on SEDAR at www.sedar.com. All
amounts are in thousands of US dollars unless otherwise
indicated.
Q3 Highlights:
- Silver equivalent produced ounces of 231,162;
- Head grade of 201 Ag Eqv. g/t;
- In situ Veta Grande vein
material developed at Level 6 of the Garcia Mine with higher head
grades than the mineralized material from the Chorros.
"In the third quarter the Company dealt with production
equipment challenges at both the Rosario Project and Veta Grande
Project compounded by lower than expected head grades," stated
Arturo Préstamo, President and Chief Executive Officer of
Santacruz. "Importantly, at Veta
Grande we successfully reached Level 6 where we are
currently developing in situ mineralized material contained in
pillars located in the Veta Grande
vein. Preliminary assay results from chip samples collected
across of this material are indicating higher grades."
Prestamo continued, "At Rosario we reached Level 2 of the Membrillo
Prospect where we again are seeing higher grades from preliminary
assay results from chip samples collected across the main Membrillo
vein. We remain focused on developing these key projects with
anticipated improvement."
2017 Third Quarter Operational Highlights
Summary of
Production Results
|
2017 Q3
(2)
|
2017 Q2
(2)
|
2016 Q3
(3)
|
Material Processed
(tonnes milled)
|
46,940
|
57,685
|
24,744
|
Silver eqv. ounce
production (1)
|
231,162
|
270,659
|
164,924
|
Silver production
(ounces)
|
88,234
|
89,243
|
76,168
|
Gold production
(ounces)
|
394
|
472
|
86
|
Lead production
(tonnes)
|
148
|
238
|
121
|
Zinc production
(tonnes)
|
595
|
725
|
643
|
Average Head Grade
(g/t Ag Eqv.)
|
201
|
207
|
252
|
Rosario Project Operational Results
Summary of
Production Results
|
2017 Q3
(2)
|
2017 Q2
(2)
|
2016 Q3
(3)
|
Material Processed
(tonnes milled)
|
18,956
|
27,967
|
24,744
|
Silver eqv. ounce
production (1)
|
127,689
|
124,717
|
164,924
|
Silver production
(ounces)
|
26,274
|
33,181
|
76,168
|
Silver head grade
(g/t)
|
51
|
42
|
102
|
Silver recovery
(%)
|
85%
|
87.3%
|
94.2%
|
Gold production
(ounces)
|
328
|
298
|
86
|
Lead production
(tonnes)
|
49
|
40
|
121
|
Zinc production
(tonnes)
|
449
|
408
|
643
|
Average Head Grade
(g/t Ag Eqv.)
|
241
|
172
|
252
|
Veta Grande Project Operational Results
Summary of
Production Results
|
2017 Q3
(2)
|
2017 Q2
(2)
|
Material Processed
(tonnes milled)
|
27,984
|
29,718
|
Silver eqv. ounce
production (1)
|
103,473
|
145,942
|
Silver production
(ounces)
|
61,960
|
56,062
|
Silver head grade
(g/t)
|
107
|
102
|
Silver recovery
(%)
|
64.5%
|
63.8%
|
Gold production
(ounces)
|
66
|
174
|
Lead production
(tonnes)
|
99
|
198
|
Zinc production
(tonnes)
|
146
|
317
|
Average head grade
(g/t Ag Eqv.)
|
174
|
218
|
(1)
|
AgEqvOz=(Au*Pau)+(Ag*Pag)+(Pb*Ppb*2205)+(Zn*Pzn*2205)
|
|
|
(Pag)
|
|
|
|
|
(2)
|
Metal
Prices 2017: Ag $16.00, Au $1,150, Pb $0.90, Zn $1.15
|
|
(3)
|
Metal
Prices Q3 2016: Ag $14.50, Au $1,100, Pb $0.76, Zn $0.71
|
|
2017 Third Quarter Financial Highlights
|
2017
Q3
|
2017
Q2
|
2016
Q3
|
Financial
|
|
|
|
Revenue
|
$1,798
|
$2,641
|
$3,026
|
Mine Operations
Income (Loss) (4)
|
$(1,819)
|
$(1,827)
|
$786
|
Net Income
(Loss)
|
$(5,899)
|
$(8,485)
|
$(11,064)
|
Net Income (Loss) Per
Share – Basic ($/share)
|
(0.04)
|
(0.05)
|
(0.08)
|
Adjusted EBITDA
(4)
|
$(1,628)
|
$(1,390)
|
$869
|
Operating
(1)
|
|
|
|
Material Processed
(tonnes milled)
|
46,940
|
57,685
|
24,744
|
Silver Equivalent
Produced (ounces) (1)
|
231,162
|
270,659
|
164,924
|
Silver Equivalent
Sold (payable ounces) (2)
|
166,880
|
219,226
|
198,639
|
Production Cost per
Tonne (3)
|
62.91
|
59.15
|
69.47
|
Cash Cost per Silver
Equivalent ($/oz.) (3)
|
23.65
|
21.24
|
12.20
|
All-in Sustaining
Cost per Silver Equivalent ($/oz.) (3)
|
28.14
|
24.62
|
15.88
|
Average Realized
Silver Price per Ounce ($/oz.) (2) (5)
|
16.85
|
17.17
|
19.10
|
(1)
|
Silver equivalent
ounces produced in 2017 have been calculated using prices of
US$16.00/oz., US$1,150/oz., US$1.00/lb. and US$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 US$14.50/oz.,
US$1,100/oz., US$0.76/lb and US$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 third
quarter of 2016.
|
|
(2)
|
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
|
|
(3)
|
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.
|
|
(4)
|
The Company reports
additional non-IFRS measures which include Mine Operations Income
(Loss) and Adjusted EBITDA. These additional financial
disclosure measures are intended to provide additional
information.
|
|
(5)
|
Average realized
silver price per ounce is prior to all treatment, smelting and
refining charges.
|
|
|
|
|
Financial Results
The Company recorded a net loss of $5,899 in Q3 2017 compared to a net loss of
$11,064 in Q3 2016. The
decrease in net loss relates largely to an impairment charge of
$4,350 on the Rosario Project during
Q3 2017 as compared to an impairment charge of $16,688 recorded with respect to the San Felipe
Property offset by a gain on settlement of debt of $6,377 during Q3 2016.
Revenues in Q3 2017 decreased by $1,228 (41%) as compared to Q3 2016 primarily as
a result of a 24% decrease in the silver equivalent ounces sold
combined with a decrease in the realized silver price.
Production costs of $2,933 recorded during the current quarter
increased by $1,278 as compared to Q3
2016. The increase reflects $1,644 of production costs from the Veta Grande
Project in Q3 2017 (Q3 2016 - $nil) offset in part by a decrease in
production costs ($366) at the
Rosario Project due to lower production.
The operations for Q3 2017 resulted in a negative
gross margin of $1,819 (2016 –
positive gross margin of $786).
This decrease in gross margin is primarily the result of decreased
revenues during the current quarter as discussed above, along with
an increase in operating costs due to the addition of the Veta
Grande Project.
Operational Results and
Costs
Rosario Project
In Q3 2017 silver equivalent
production from the Rosario Project increased by 2% (2,972 ounces)
compared to Q2 2017 as a result of higher head grades offset by
lower mill throughput tonnage. Compared to Q3 2016 the silver
equivalent production decreased by 23% from 164,924 ounces to
127,689 ounces. The decrease reflects the 23% decrease in tonnes
milled.
The lower mill throughput tonnage realized in Q3 2017 reflects
reduced availability of certain production equipment due to working
capital constraints and a heavier than normal rainy season that
slowed mining operations in both August and September. With
the completion of the sale of the Gavilanes property in August the
Company was able to put all production equipment back in service by
quarter end.
The cash operating cost per tonne of mineralized material
processed ($68.68/t) was virtually
unchanged from Q2 2017 ($68.80/t).
The Q3 2017 unit costs were higher than expected due to the low
production volume. Compared to Q3 2016, cash cost of
production per tonne stayed consistent as the percentage decrease
in cash cost of production was matched by an equivalent percentage
decrease in production tonnage.
Cash cost of production per silver equivalent ounce sold
decreased by 17% in Q3 2017 to $20.40/oz as compared to $24.64/oz in Q2 2017. This change in unit
costs is due primarily to the 32% decrease in mineralized material
processed that resulted in in a decrease of production costs offset
by a higher head grade of silver, gold, lead, and zinc. Compared to
Q3 2016, cash cost of production per silver equivalent ounce
increased by 67% reflecting the significantly lower head grades of
silver, lead and zinc and lower recoveries of silver and lead
realized in Q3 2017.
All-in sustaining cash cost of production per silver equivalent
ounce sold decreased by 15% in Q3 2017 to $24.33/oz as compared to $28.69/oz in Q2 2017. This change in unit
costs is again due to the decrease (32%) in production costs during
the quarter offset by a 3% decrease in payable ounces sold.
Compared to Q3 2016, the all-in sustaining cash cost of production
per silver equivalent ounce increased by 53% reflecting
significantly lower head grades of silver, lead and zinc and lower
recoveries of silver and lead offset by a higher recovery of zinc
realized in Q3 2017.
Veta Grande Project
At the Veta Grande Project, silver equivalent production in Q3
2017 decreased by 29% to 103,473 ounces as compared to Q2
2017. The decrease reflects a 6% decrease in tonnes milled
combined with a 20% decrease in average silver equivalent head
grade. The throughput tonnage decrease occurred because of an
extensive maintenance period on one of the ball mills during
September (approximately three weeks). The decrease in head
grade reflects the results of mining lower grade Chorros as well as
experiencing reduced mill feed from the higher grade Armados
vein. In early November two sections of unmined Veta Grande vein at Level 6 were encountered,
both believed to be pillars left by previous mine operators.
Preliminary assay results from chip samples collected across the in
situ vein material in the pillars returned higher grades than
grades currently being realized from the Chorros. In
addition, the bulk density of the in situ vein material is expected
to be greater than the bulk density of the Chorros as the Chorros
are comprised of unconsolidated mineralized material and void
space.
The cash operating cost per tonne of mineralized material
processed increased by 18% in Q3 2017 to $59.07 as compared to $50.07 in Q2 2017 as the result of an 11%
increase in cash operating costs combined with a 6% decrease in
tonnes milled. The operating cost increase reflects a
combination of the foreign exchange impact of a strengthened
Mexican peso versus US dollar in Q3 2017 as well as increased costs
for stope development at the Armados vein.
Cash cost of production per silver equivalent ounce sold
increased by 50% in Q3 2017 to $27.77/oz as compared to $18.57/oz in Q2 2017. This change in unit
costs reflects in part the cash operating cost increase described
above as well as a 40% decrease in silver equivalent ounces sold
from lower head grades described above, offset by a decrease in
treatment, smelting and refining costs during the quarter.
All-in sustaining cash cost of production per silver equivalent
ounce sold increased by 54% in Q3 2017 to $32.98/oz as compared to $21.42/oz in Q2 2017. This change occurred for
the same reasons that the cash cost of production per silver
equivalent ounce sold increased.
About Santacruz Silver Mining Ltd.
Santacruz is a Mexican focused silver company with two producing
silver projects (Rosario,
including the Cinco Estrellas property and Membrillo Prospect, and
the right to operate the Veta
Grande silver project and milling facility); 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.
SOURCE SantaCruz Silver Mining Ltd.