TSX.V: SCZ
FSE: 1SZ
VANCOUVER, Dec. 1, 2014 /PRNewswire/ - Santacruz
Silver Mining Ltd. ("Santacruz" or the "Company") (TSX.V:SCZ)
reports that it has amended the previously announced US$28.4 million Pre-paid Silver Purchase
Agreement with JMET, LLC ("JMET") wherein the Company had agreed to
sell 4,635,000 ounces of silver through August 2019, subject to certain adjustments
relating to metal prices. The original agreement was announced in a
news release on September 18,
2014.
In light of the volatility in both the precious metals and
equities markets, Santacruz has elected to delay the construction
decision on the San Felipe Project until better market conditions
exist. The Company will continue baseline studies, permitting
applications and in-house technical studies with respect to the San
Felipe Project, so as to continue to advance the development of the
project in the coming months. As such, the Company's cash
requirements have been reduced and accordingly the Company has
amended the agreement with JMET. In the near-term the Company will
focus on increasing both production and efficiencies at the Rosario
Mine and generating positive cash flow with the intention of
increasing its treasury.
The amended agreement reduces the contractual quantity of silver
to be sold to JMET and, accordingly, the Company has agreed to
repay JMET a portion of the original silver prepayment amount.
Pursuant to the amended agreement Santacruz will now sell to
JMET 2,600,000 ounces of silver at an agreed upon discount to the
spot price. The first delivery of silver to JMET is 52,000 ounces
in July 2015, and sales of an
additional 52,000 ounces shall occur each month through
August 2019, at which point the
contract will be fulfilled.
Pursuant to the original agreement the Company received an
upfront payment of US$28.4 million.
With the quantity of silver ounces to be delivered reduced to
2,600,000 ounces, the upfront payment has been commensurately
reduced to US$12.4 million.
Accordingly, Santacruz repaid JMET US$9.0
million upon execution of the amended agreement and has
agreed to repay the balance of US$7.0
million on or before April 1,
2015.
With the purpose of guaranteeing cash flow, the Company has
entered into a minimum price protection program ("PPP") to set a
floor price of US$17/ Ag ounce on its
silver production for 2015 and Q1 2016, and US$16/ Ag ounce for the balance of 2016, and has
also put in place a floor price for its gold, zinc and lead
production for 2015 and Q1 2016. For clarity, the PPP does not
limit the maximum price at which Santacruz may sell its production,
which will allow it to benefit from any increase in metal
prices. The Company has funded a portion of the PPP from its
treasury and JMET has funded a portion from the US$9 million payment made upon execution of the
amended agreement.
President Arturo Préstamo stated,
"With this amended agreement, we have set up the Company to be in a
stronger position during these volatile market conditions. The
Company will continue low cost but important and necessary
activities on the San Felipe Project, aiming to further de-risk the
project and advance all necessary permits and approvals to have
them in hand when timing is appropriate to make a construction
decision. We are now on the cusp of having the Rosario Mine at full
operational capacity of 450 – 500 tpd, and with the ability to
become a cash flow positive operation at today´s low metal prices."
Mr. Préstamo added, "By early first quarter 2015, Rosario´s milling
capacity is expected to be approximately 700 tpd, at which time we
plan to maximize the full capacity by augmenting production from
the Rosario Mine with third party ore, as we have done in the
past."
About Santacruz Silver Mining Ltd.
Santacruz is a Mexican-focused silver company with a producing
mine (Rosario); two advanced-stage
projects (San Felipe and
Gavilanes) and an early-stage
exploration project (El Gachi). 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, such as
the parties' obligations under the amended agreement, productions
plans and cash flow at Rosario and
development at San Felipe grades,
mine and mill development and the acquisition of mineralized
material from third parties, constitute "forward-looking
information" as such term is used in applicable Canadian securities
laws. Any forward-looking information that constitutes a financial
outlook is intended to provide information about management's
current expectations and plans relating to the future. Readers are
cautioned that reliance on such information may not be appropriate
for other purposes. 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, including, that the Company's financial condition and
development plans do not change as a result of unforeseen events,
that the Company obtains required regulatory approvals, that the
Company is able to obtain material from third parties on reasonable
terms, future metal prices and that the demand and market outlook
for metals do not decline significantly. 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, that
occurrences such as those referred to above are realized and result
in delays, or cessation in planned work, that the Company's
financial condition and development plans change, delays in
regulatory approval, risks associated with the interpretation of
data, 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 Annual Information Form
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.
SOURCE SantaCruz Silver Mining Ltd.