Americas Gold and Silver Corporation (TSX: USA) (NYSE American:
USAS) (“Americas” or the “Company”), a growing North American
silver producer, is pleased to announce the signing of a Credit and
Off-Take Agreement (the “Agreement”) with Trafigura PTE Ltd.
(“Trafigura”) for the development of the 100%-owned Zone 120 and El
Cajón silver-copper project (“EC120 Project”) at the Company’s
Cosalá Operations in Mexico. All figures are in U.S. dollars unless
otherwise noted.
Highlights
- The Agreement provides the Company with a secured credit
facility of up to $15 million to complete the pre-production
development of the EC120 Project at its Cosalá Operations to begin
producing high-grade silver-copper concentrate in Q3-2025. The
Company expects to draw only $10 million on the credit facility
initially subject to standard closing conditions.
- The 2019 Preliminary Feasibility Study (“PFS”) for the EC120
Project projected average annual metal production of 2.5 million
ounces of silver and 4.5 million pounds of copper at life of mine
cash cost [1] and all-in sustaining cost [1] estimated to be
$9.61/oz and $10.81/oz, respectively, with estimated annual average
cash flow of $15 million using $17.50 per ounce silver and $3.00
per ounce copper. At the current prices, the Company expects to
generate substantially greater cash flow over the life of the
project with lower capital, cash cost per silver and AISC per
silver ounce.
- Initial development access to the Zone 120 deposit began in
Q3-2023 and is expected to be fully completed in Q3-2025. The
Company has already processed close to 140,000 tonnes of EC120 ore,
30,000 tonnes of development ore from Zone 120, and 110,000 tonnes
of ore from El Cajón in 2017. Recoveries from processing this ore
have been within acceptable range of the PFS targets and Trafigura
off-take requirements.
- The EC120 Project is expected to increase the portion of total
Company revenue derived from silver to over 80% by the end of 2025,
positioning the Company as one of the foremost silver-focused
companies in politically stable jurisdictions.
“We are excited to partner with Trafigura to fully finance the
EC120 Project development,” stated Americas Executive Vice
President and CFO Warren Varga. “The Agreement provides
non-dilutive financing at competitive terms to complete this
brownfield project. At current market prices, the EC120 Project is
expected to generate significantly greater cash flow for the
Company which will be deployed to continue to derisk the Company’s
balance sheet. The significant increases in both silver production
and cash flow from both silver and copper are anticipated to have a
positive impact on the Company’s profitability moving forward.”
EC120 Project Overview
With the current silver and copper prices, the Company decided
to expedite the development of its 100%-owned EC120 Project at the
Cosalá Operations prior to the full depletion of the San Rafael
orebody. Zone 120 is located contiguous to the Company’s existing
San Rafael deposit and initial access occurred in Q3-2023 from the
San Rafael Upper Zone development. The EC120 Project will use the
existing Cosalá plant facilities, tailings, and equipment with
underground development costs representing the majority of the
capital for the project, which represents a significant decrease in
capital requirements compared to standalone project envisioned in
the PFS. Pre-production capital requirements for underground
development have also been reduced by $2 million due to
approximately 1,100 metres of already completed pre-production
capital development. The Company is expecting to continue to
operate San Rafael up to the commencement of commercial production
from the EC120 Project.
The PFS projected average annual metal production of 2.5 million
ounces of silver and 4.5 million pounds of copper with a total of
over 12 million ounces of silver and 23.0 million pounds of copper
over the planned five-year life of the project. Estimated cash cost
per ounce silver for the PFS were $9.61 per ounce and all-in
sustaining cost per silver ounce of $10.81 per ounce silver. The
PFS assumed metal prices $17.50 per ounce silver and $3.00 per
pound copper.
Both silver and copper prices have increased significantly since
the completion of the 2019 Preliminary Feasibility Study. At the
current prices, the Company expects to generate substantially
greater cash flow over the life of the project with both lower cash
cost and AISC per ounce and will evaluate the processing of
additional silver-copper ore that may now be economic at current
prices.
The Company has mined and processed close to 30,000 tonnes of
Zone 120 development ore with recoveries within acceptable range of
the PFS targets. The Company estimates that the EC120 Project will
reach commercial production in Q3-2025. Silver production from the
Cosalá Operations is expected to increase from less than 1 million
ounces per year to ~2.5 million ounces per year. Along with the
forecasted increase in silver production from the Company’s Galena
Complex in Idaho, the Company expects consolidated silver revenue
to increase to over 80% of total revenue by the end of H2-2025
making it one of the rare, North American-focused, primary silver
producers in the silver mining sector.
Credit Facility Terms
The credit facility provides the Company with up to $15 million
available for the development of the EC120 Project though expects
to initially draw only $10 million, relying on both internally
generated cash in addition to funds advanced under the credit
facility to fund the development of the Project. The term is 36
months which includes a principal repayment grace period of 12
months and bears interest at Secured Overnight Financing Rate
(“SOFR”) plus 6% on the cumulative drawings up to $12 million and
6.5% on the outstanding principal amount thereafter. The credit
facility will be amortized in equal monthly installments of
$600,000 commencing after expiry of the grace period. The facility
will be secured by share and asset pledges of all the Company’s
material Mexican subsidiaries with the Company’s existing
convertible debenture creditors agreeing to subordinate existing
security. As part of the Agreement, Trafigura receives 100% of the
silver-copper concentrate production from the EC120 Project on
commercial terms.
About Americas Gold and Silver Corporation
Americas Gold and Silver Corporation is a high-growth precious
metals mining company with multiple assets in North America. The
Company owns and operates the Cosalá Operations in Sinaloa, Mexico,
manages the 60%-owned Galena Complex in Idaho, USA, and is
re-evaluating the Relief Canyon mine in Nevada, USA. The Company
also owns the San Felipe development project in Sonora, Mexico. For
further information, please see SEDAR+ or
www.americas-gold.com.
Technical Information and Qualified Persons
The scientific and technical information relating to the
Company’s material mining properties contained herein has been
reviewed and approved by Chris McCann, P.Eng., Vice President,
Technical Services of the Company. The Company’s current Annual
Information Form and the NI 43-101 Technical Reports for its
mineral properties, all of which are available on SEDAR+ at
www.sedarplus.ca, and EDGAR at www.sec.gov, contain further details
regarding mineral reserve and mineral resource estimates,
classification and reporting parameters, key assumptions and
associated risks for each of the Company’s material mineral
properties, including a breakdown by category.
All mining terms used herein have the meanings set forth in
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”), as required by Canadian securities
regulatory authorities. These standards differ from the
requirements of the SEC that are applicable to domestic United
States reporting companies. Any mineral reserves and mineral
resources reported by the Company in accordance with NI 43-101 may
not qualify as such under SEC standards. Accordingly, information
contained in this news release may not be comparable to similar
information made public by companies subject to the SEC’s reporting
and disclosure requirements.
Cautionary Statement on Forward-Looking Information:
This news release contains “forward-looking information” within
the meaning of applicable securities laws. Forward-looking
information includes, but is not limited to, Americas’
expectations, intentions, plans, assumptions and beliefs with
respect to, among other things, estimated and targeted production
rates and results for gold, silver, copper and other metals, the
expected prices of gold, silver, copper and other metals, as well
as the related costs, expenses and capital expenditures; production
from the Galena Complex and Cosalá Operations, including the
expected number of producing stopes and production levels; the
expected timing and completion of required development and the
expected operational and production results therefrom, including
the anticipated improvements to production rates and cash costs per
silver ounce and all-in sustaining costs per silver ounce; and
statements relating to Americas’ EC120 Project, including expected
approvals, prepayment financing availability, execution and timing
and capital expenditures required to develop such project and reach
production thereat, and expectations regarding its ability to rely
in existing infrastructure, facilities, and equipment. Guidance and
outlook references contained in this press release were prepared
based on current mine plan assumptions with respect to production,
development, costs and capital expenditures, the metal price
assumptions disclosed herein, and assumes no further adverse
impacts to the Cosalá Operations from blockades or work stoppages,
and completion of the shaft repair and shaft rehab work at the
Galena Complex on its expected schedule and budget, the realization
of the anticipated benefits therefrom, and is subject to the risks
and uncertainties outlined below. The ability to maintain cash flow
positive production at the Cosalá Operations, which includes the
EC120 Project, through meeting production targets and at the Galena
Complex through implementing the Galena Recapitalization Plan,
including the completion of the Galena shaft repair and shaft rehab
work on its expected schedule and budget, allowing the Company to
generate sufficient operating cash flows while facing market
fluctuations in commodity prices and inflationary pressures, are
significant judgments in the consolidated financial statements with
respect to the Company’s liquidity. Should the Company experience
negative operating cash flows in future periods, the Company may
need to raise additional funds through the issuance of equity or
debt securities. Often, but not always, forward-looking information
can be identified by forward-looking words such as “anticipate”,
“believe”, “expect”, “goal”, “plan”, “intend”, “potential’,
“estimate”, “may”, “assume” and “will” or similar words suggesting
future outcomes, or other expectations, beliefs, plans, objectives,
assumptions, intentions, or statements about future events or
performance. Forward-looking information is based on the opinions
and estimates of Americas as of the date such information is
provided and is subject to known and unknown risks, uncertainties,
and other factors that may cause the actual results, level of
activity, performance, or achievements of Americas to be materially
different from those expressed or implied by such forward-looking
information. With respect to the business of Americas, these risks
and uncertainties include risks relating to widespread epidemics or
pandemic outbreak, actions that have been and may be taken by
governmental authorities to contain such epidemic or pandemic or to
treat its impact and/or the availability, effectiveness and use of
treatments and vaccines (including the effectiveness of boosters);
interpretations or reinterpretations of geologic information;
unfavorable exploration results; inability to obtain permits
required for future exploration, development or production; general
economic conditions and conditions affecting the industries in
which the Company operates; the uncertainty of regulatory
requirements and approvals; potential litigation; fluctuating
mineral and commodity prices; the ability to obtain necessary
future financing on acceptable terms or at all; the ability to
operate the Company’s projects; and risks associated with the
mining industry such as economic factors (including future
commodity prices, currency fluctuations and energy prices), ground
conditions, illegal blockades and other factors limiting mine
access or regular operations without interruption, failure of
plant, equipment, processes and transportation services to operate
as anticipated, environmental risks, government regulation, actual
results of current exploration and production activities, possible
variations in ore grade or recovery rates, permitting timelines,
capital and construction expenditures, reclamation activities,
labor relations or disruptions, social and political developments,
risks associated with generally elevated inflation and inflationary
pressures, risks related to changing global economic conditions,
and market volatility, risks relating to geopolitical instability,
political unrest, war, and other global conflicts may result in
adverse effects on macroeconomic conditions including volatility in
financial markets, adverse changes in trade policies, inflation,
supply chain disruptions and other risks of the mining industry.
Although the Company has attempted to identify important factors
that could cause actual results to differ materially from those
contained in forward-looking information, there may be other
factors that cause results not to be as anticipated, estimated, or
intended. Readers are cautioned not to place undue reliance on such
information. Additional information regarding the factors that may
cause actual results to differ materially from this forward‐looking
information is available in Americas’ filings with the Canadian
Securities Administrators on SEDAR+ and with the SEC. Americas does
not undertake any obligation to update publicly or otherwise revise
any forward-looking information whether as a result of new
information, future events or other such factors which affect this
information, except as required by law. Americas does not give any
assurance (1) that Americas will achieve its expectations, or (2)
concerning the result or timing thereof. All subsequent written and
oral forward‐looking information concerning Americas are expressly
qualified in their entirety by the cautionary statements above.
_________________________ 1 This metric is a non-GAAP financial
measure or ratio. The Company uses the financial measures “Cash
Cost”, “Cash Cost/Ag Oz Produced”, “All-In Sustaining Cost”, and
“All-In Sustaining Cost/Ag Oz Produced” in accordance with measures
widely reported in the silver mining industry as a benchmark for
performance measurement and because it understands that, in
addition to conventional measures prepared in accordance with IFRS,
certain investors and analysts use this information to evaluate the
Company’s underlying cash costs and total costs of operations. Cash
costs are determined on a mine-by-mine basis and include mine site
operating costs such as mining, processing, administration,
production taxes and royalties which are not based on sales or
taxable income calculations, while all-in sustaining costs is the
cash costs plus all development, capital expenditures, and
exploration spending. A full reconciliation of these non-GAAP
financial measures can be found in the Technical Report on the San
Rafael Mine and the EC120 Preliminary Feasibility Study, Sinaloa,
Mexico available on the Company’s website.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240814616373/en/
For more information: Stefan Axell VP, Corporate
Development & Communications Americas Gold and Silver
Corporation 416-874-1708
Darren Blasutti President and CEO Americas Gold and Silver
Corporation 416‐848‐9503
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