TSX.V: SCZ
FSE: 1SZ
VANCOUVER, May 2, 2017 /CNW/ - Santacruz Silver
Mining Ltd. (TSX.V:SCZ) (the "Company" or "Santacruz")
reports on its financial and operating results for the fourth
quarter of 2016 ("Q4") and for the 2016 fiscal year. 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
financial information is prepared in accordance with IFRS and all
dollar amounts are expressed in thousands of US dollars, except per
unit amounts, unless otherwise indicated.
Highlights:
- In 2016 silver equivalent production increased by 12% to
928,467 ounces from 832,283 ounces in 2015
- Year on year improvement in production cost per tonne of
$79.59 per tonne in 2016, compared to
$92.63 per tonne in 2015
- In 2016 the Company completed the restructuring of its silver
loan agreement with JMET, LLC ("JMET"). The restructuring amended
the agreement such that the Company no longer has any metal
delivery obligations to JMET and significantly reduced the debt
position on the Company
- Subsequent to 2016, the Company divested of two non-core
assets, the San Felipe Project and the El Gachi Property, in order
to monetize these assets and further reduce debt obligations
"The year 2016 was focused primarily on the re-structuring of
the Company's balance sheet," said Arturo Préstamo, President and
CEO. "With management's plan to focus on the producing assets, we
have executed on our plan to divest non-core assets and move
forward with our production plans accordingly."
2016 Information
- Selected operating and financial information for the three
months and years ended December 31,
2016 and 2015 is presented below:
|
Three months
ended
December 31,
|
Years
ended December
31,
|
|
2016
|
2015
|
2016
|
2015
|
Financial
|
|
|
|
|
Revenue
|
1,874
|
2,502
|
11,812
|
8,643
|
Mine Operations
Income (Loss) (6)
|
(1,896)
|
(402)
|
(51)
|
(2,039)
|
Net Loss
(1)
|
(3,646)
|
(18,035)
|
(18,506)
|
(24,232)
|
Net Loss Per Share –
Basic ($/share)
|
(0.02)
|
(0.17)
|
(0.14)
|
(0.23)
|
Adjusted EBITDA
(6)
|
(1,560)
|
(188)
|
580
|
(2,172)
|
Operating
(2)
|
|
|
|
|
Material Processed
(tonnes milled)
|
42,746
|
25,927
|
117,962
|
79,249
|
Silver Equivalent
Produced (ounces) (3)
|
200,122
|
268,319
|
928,467
|
832,283
|
Silver Equivalent
Sold (payable ounces) (4)
|
166,734
|
233,225
|
935,158
|
742,538
|
Production Cost per
Tonne (5) (7)
|
72.33
|
88.14
|
79.59
|
92.63
|
Cash Cost per Silver
Equivalent ($/oz.) (5) (7)
|
23.97
|
12.62
|
13.69
|
12.66
|
All-in Sustaining
Cost per Silver Equivalent ($/oz.) (5) (7)
|
26.15
|
15.88
|
16.82
|
16.34
|
Average Realized
Silver Price per Ounce ($/oz.) (5)
|
16.55
|
17.00
|
17.23
|
17.02
|
(1)
|
Included in the
reported results are impairment charges of $15,615 and $19,426
respectively in the fiscal years ended 2015 and 2016 related to the
San Felipe Project. Similarly, Included in the Q4 results for
2015 is an impairment charge of $19,426 while the Q4 2016 results
include an impairment reversal of $1,073, again related to the San
Felipe Project.
|
(2)
|
The Veta Grande
Project commenced commercial production effective October 1, 2016
and therefore is not included in the 2015 operating
results.
|
(3)
|
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 as
well as by the Veta Grande Project during the fourth quarter of
2016. Silver equivalent ounces produced in 2015 have been
calculated using prices of US$17.75/oz., US$1,250/oz., US$0.83/lb
and US$1.09/lb for silver, gold, lead and zinc respectively applied
to the metal content of the lead and zinc concentrates produced by
the Rosario Project.
|
(4)
|
Silver equivalent
sold ounces in the fourth quarter of 2015 have been calculated
using a realized silver price of US$17.00/oz., after giving effect
to price protection program that had been put in place in
connection with the Company's senior debt facility, and a realized
silver price of US$16.55/oz for the fourth quarter of 2016. The
annual figures have been calculated using a realized silver price
of US$17.23/oz for 2016 and US$17.02/oz for 2015. These prices are
applied to the payable metal content of the lead and zinc
concentrates sold from the Rosario Project as well as from the Veta
Grande Project in the fourth quarter of 2016.
|
(5)
|
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.
|
(6)
|
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.
|
|
Q1 2015 there was a
temporary halt in operations from January 2 to March 25 following a
malfunction in the tailings dam dewatering pipe. As such the Q1
2015 operating results are considered abnormal and have not been
included in the calculation of the annual 2015 per unit costs as
there was nominal production during this time.
|
(7)
|
During Q1 2015 there
was a temporary halt in operations from January 2 to March 25
following a malfunction in the tailings dam dewatering pipe. As
such the Q1 2015 operating results are considered abnormal and have
not been included in the calculation of the annual 2015 per unit
costs as there was nominal production during this time.
|
Veta Grande Outlook
During the fourth quarter of 2016, significant mine development
at Veta Grande was completed,
including approximately 1,400 metres of level development and 480
metres of main access ramp development completed at the Guadalupana
mine, and approximately 350 metres of level development in addition
to 120 metres of main haulage ramp development completed at the
Garcia mine. As a consequence of this development work
a substantial amount of the millfeed during the fourth quarter was
from lower grade development material. Importantly, during the
fourth quarter mineralized material from previously mined stopes
("Choros") within the Veta Grande
vein was identified and accessed from old workings below Level 3 at
the Garcia mine. During the first quarter of 2017,
approximately 26,700 tonnes of material was processed at the Veta
Grande Project, largely sourced from the Choros, with an estimated
head grade of 117 g/t Ag, 0.83% Zn, 0.48% Pb and 0.24 g/t Au.
Management expects that these grades will improve in the coming
weeks as more Choros are accessed.
Mineralized material from the Choros will be a primary source of
millfeed to the Veta Grande
milling facility in 2017, combined with mineralized material from
other mine working faces recently developed at the Garcia mine. In
connection with this matter during the first half of 2017 the
Company plans to drive an access ramp for a vertical depth of 120
metres from the current workings at the Veta Grande vein, the largest of the vein
systems contained within the Garcia mine.
Rosario
Outlook
During the fourth quarter, the Company also advanced development
of the Cinco Estrellas Property so as to complement the mill feed
from the Rosario Mine. During the fourth quarter approximately
2,855 tonnes were mined from this property with an estimated
average head grade of 3.3 g/t Au and 88 g/t Ag. To date in
2017, approximately 4,841 tonnes of mineralized material has been
mined and processed from the property. The mineralized material
mined in the fourth quarter and to date in 2017 has been sourced
from mine development workings. Importantly, development of
the first production stope has just been completed. The stope
is located between levels 2 and 3, and is approximately 18 metres
high. Geological mapping and chip sampling of the vein over a
150 meter strike length on levels 2 and 3 indicate the vein widths
in this stope range from 1.5 to 3.0 metres. Assay results of
chip samples collected from the top of the stope (level 2) range
from trace up to 6.0 g/t Au and 120 g/t Ag as compared to the
bottom of the stope (level 3) that range from trace up to 19 g/t Au
and 220 g/t Ag.
The Company is assessing other mineral prospects located in
proximity to the Rosario Mine with a view to further increasing
high-grade feed to the Rosario
mill. Management believes such a strategy will strengthen the
Rosario Project operations by providing greater mining flexibility
as well as utilizing the available mill capacity.
Sampling and Laboratory
The reported head grades have been estimated from assay results
of samples collected from stockpiles of mined mineralized material.
The reported stope grades are of assay results of underground chip
samples collected across the vein and at an average interval of
three meters along the strike length of the vein. Blanks, standards
and duplicate control samples are not utilized in the sampling
procedure.
Samples collected from the Rosario and Veta
Grande projects are assayed at the Rosario and Veta
Grande laboratories, respectively. Both laboratories are
owned and operated by Santacruz and the facilities are meant to
serve the mining operations at the projects. The Rosario and Veta
Grande laboratories are not independent of the Company and
do not hold ISO certification. Samples are prepared by drying,
crushing, rifle splitting and pulverizing to <75 microns passing
200-mesh. Samples are analyzed by 3-acid digestion and Atomic
Absorption Spectrometry. Gold and silver are further analyzed by
fire assay with gravimetric finish.
Qualified persons
The technical information contained in this news release has
been reviewed and approved by Van Phu
Bui, B.Sc., P. Geo., who is independent of the Company and a
"qualified person" under National Instrument 43-101.
About Santacruz Silver Mining Ltd.
Santacruz is a Mexican focused silver company with two producing
silver projects (Rosario,
including the Cinco Estrellas property, and the right to operate
the Veta Grande silver project and
milling facility); and three exploration properties including the
Gavilanes property, 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 and
Cinco Estrellas Property 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.