Mr. Vadim Ilchuk reports
SILVER BEAR FILES 2018 FOURTH QUARTER AND YEAR FINANCIAL RESULTS
Silver Bear Resources PLC has filed its financial results for the year ended Dec. 31, 2018, including development highlights from its Mangazeisky silver project in Far East Russia.
For complete details of the audited consolidated financial statements and associated management discussion and analysis, please refer to the company's filings on SEDAR or the company's website.
Received the licence for usage and storage of hazardous chemical materials for its Mangazeisky silver project, allowing it to begin hot commissioning activities;
Achieved first silver precommercial production as a result of its commissioning activities in April, 2018;
Produced a total of 594,921 ounces of silver for the nine-month period ended Dec. 31, 2018;
Sold a total of 433,095 ounces of silver totalling precommercial production revenue of $6.4-million (U.S.) for the 12-month period ended Dec. 31, 2018;
Mined a total of 80,831 tonnes of ore at an average grade of 780 grams per tonne silver for the 12-month period ended Dec. 31, 2018;
The company had a total comprehensive loss for the year of $33,154,722 and an accumulated deficit of $172,464,363; the net assets have turned to a deficit of $30,022,985;
Secured additional tranche for a new $8-million (U.S.) loan under its existing facilities agreement, which included a reduction in interest rate to 10 per cent per year from 15 per cent per year; subsequently the major shareholders have agreed to reduce the facilities agreement interest rate further to 9 per cent per year;
Appointed Vadim Ilchuk as president and chief executive officer of the group in November, 2018, to lead the group through its next phase as a silver producer and appointed Alexey Sotskov as deputy chief executive officer in July, 2018;
Implemented major cost reductions in the company's corporate structure and services as well as reagent consumption and fuel and energy costs reductions at its Mangazeisky silver project.
Vadim Ilchuk, president and chief executive officer, commented: "We are pleased that we met our objective of achieving first silver production through our commissioning activities in April, 2018. The progress we have made over the year is testament to the extraordinary hard work and professionalism of the entire team at Silver Bear Resources and our wholly owned Russian company AO Prognoz. Over the coming year, our primary objectives are to ramp up to full commercial production at Vertikalny, further optimize operating costs and improve operational efficiencies, and to identifying additional resources and development opportunities."
Operational results 2018
The company achieved first precommercial silver production in April, 2018, through its commissioning activities at the Mangazeisky silver project as construction of the processing plant and associated infrastructure was completed. Ramp-up of the precommercial production continued during the third and fourth quarters with increasing productivity in the mining and processing being realized month over month. The company expects to reach commercial production in 2019 once its mining and extracting rates, along with processing plant silver recoveries, reach the feasibility study assumptions consistently over a sustained period of time.
Construction of the Mangazeisky project is effectively completed during the fourth quarter of 2018, with only the completion of the leisure centre in the mine camp postponed until the company has sustained full commercial production.
During the three-month period ended Dec. 31, 2018, the group mined 25,266 tonnes of ore from its Vertikalny open pit and milled 18,127 tonnes of ore, producing approximately 259,691 ounces of silver contained in dry powder (before smelting losses and refinery adjustment). As at Dec. 31, 2018, as a result of precommercial production activities, the company mined a total of 80,831 tonnes and milled 51,147 tonnes of ore at an average silver grade of 705 grams per tonne silver for a total of approximately 594,921 ounces silver contained in the dry powder (before smelting losses and refinery adjustment). As of Dec. 31, 2018, the company sold approximately 433,095 ounces of silver at a realized price of $14.78 (U.S.) per ounce silver.
Three months ended 12 months ended
March 31, June 30, Sept. 30, Dec. 31, Dec. 31,
2018 2018 2018 2018 2018
Ore mined (tonnes) 2,791 18,646 34,128 25,266 80,831
Ore processed (tonnes) 2,236 11,848 18,936 18,127 51,147
Head grade (g/t Ag) 1,023 622 732 691 705
Recovery (%) 0.0% 48.8% 55.7% 59.3% 54.6%
Silver ounces produced - 72,307 262,923 259,691 594,921
Silver ounces sold - 10,471 177,321 245,302 433,095
Average realized silver price (US$/oz) - $16.31 $14.96 $14.58 $14.78
Precommercial production revenues - $170,786 $2,652,729 $3,576,298 $6,399,813
Financial results 2018
The group's net loss for the year after tax amounted to $36,671,744, as compared with $8,824,740 in the same period in 2017. The group's net loss for the year includes foreign exchange loss amounting to $26,617,667, mainly resulted from Prognoz level from appreciation of the Russian ruble and one-off inventory write-off expenses amounted to $1,050,146. The total assets of the group at Dec. 31, 2018, amounted to $139,654,043, as compared with $135,711,414 in the same period in 2017, and net assets of $30,107,463 compared with $358,311 in 2017. Considering precommercial stage of the project, the financial position of the group presented in the consolidated financial statements are considered satisfactory.
In order to finance development operations and maintain rights under licences and agreements, the group has secured financing in the form of long-term loans, of which the principal totals $132,732,390, and the group may be dependent on securing additional financing until such time that it generates sufficient operating cash flow to meet its liabilities.
Following the initiation of silver production in the second quarter of 2018, as a result of precommercial production commissioning activities, the company's priorities for 2019 are as follows:
Successful completion of remaining commissioning activities paving the way for full commercial silver production;
Continue to monitor all operations to further optimize operating costs and improve operational efficiencies;
Continue to build up operational capabilities and staffing and introduce new systems for production monitoring and management accounting;
Compile 2018 exploration program results that target extension of existing deposits and new areas of significance with the intent to grow the project resources and establish future drilling programs.
Jacques du Toit, PrEng, MScEng, PMP, of Tetra Tech is a qualified person under National Instrument 43-101 and has reviewed the scientific and technical information in this release.
About Silver Bear Resources PLC
Silver Bear is focused on the development of its wholly owned Mangazeisky silver project, covering a licence area of approximately 570 square kilometres that includes the high-grade Vertikalny deposit (amongst the highest-grade silver deposits in the world), located 400 kilometres north of Yakutsk in the Republic of Sakha within the Russian Federation. The company was granted a 20-year mining licence for the Vertikalny deposit in September, 2013, and filed an updated feasibility study in August, 2017. Project construction and permitting are advancing, with first silver production targeted for 2018.
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