Mr. Darren Blasutti reports
AMERICAS SILVER REPORTS SECOND QUARTER PRODUCTION RESULTS AND RELIEF CANYON CONSTRUCTION UPDATE
Americas Silver Corp. has provided its Q2 2019 production and operating cost results on a consolidated and individual basis for its Cosala operations and Galena complex and a construction update on the Relief Canyon gold mine. All figures are in U.S. dollars.
Second quarter highlights
Consolidated silver production of approximately 1.7 million silver equivalent (i) ounces and 345,695 silver ounces, representing an increase of 15 per cent year over year to both silver and silver equivalent.
Consolidated cash costs (ii) were approximately $8.28 per silver ounce and consolidated all-in sustaining costs (AISC) were approximately $16.15 per silver ounce, both representing an increase year over year and from the prior quarter. These increased costs were primarily the result of lower realized prices for zinc and lead and lower production at the Galena complex.
For the first half of 2019, consolidated silver production of approximately 3.4 million silver equivalent ounces and 740,000 silver ounces with consolidated cash costs of approximately $3.60 per silver ounce and consolidated AISC of approximately $10.50 per silver ounce.
Guidance for 2019 remains unchanged at 1.6 million to 2.0 million silver ounces and 6.6 million to 7.0 million silver equivalent ounces at cash costs of $4 to $6 per silver ounce and AISC of $10 to $12 per silver ounce. The company expects to release its second quarter financial results on or before Aug. 14, 2019.
Construction is proceeding as expected at the Relief Canyon mine with leach pad activities progressing, mobilization of the mining contractor expected later this week, and all fabrication work on the crusher and conveyors progressing to meet scheduled delivery in the third quarter. First gold pour is expected in late Q4 2019.
Milled tonnage at the Cosala operations increased by 13 per cent year over year, with the San Rafael mine sustaining an average milling rate of approximately 1,750 tonnes per operating day during the quarter, resulting in production of approximately 1.3 million silver equivalent ounces, including approximately 145,000 silver ounces. Cash costs were approximately negative $18.27 per silver ounce and AISC were approximately negative $11.66 per silver ounce, representing increases of 70 per cent and 72 per cent, respectively, when compared with the prior year, largely due to lower zinc and lead prices and higher treatment and refining charges.
The Galena complex produced approximately 383,000 silver equivalent ounces, including approximately 200,000 silver ounces, representing decreases of 3 per cent and 9 per cent, respectively, when compared with Q2 2018. Cash costs were approximately $27.55 per silver ounce and AISC were approximately $36.35 per silver ounce, representing increases of 50 per cent and 36 per cent, respectively, when compared with the same period. These increases were largely due to a focus on development over production given low metals prices during the quarter.
"The company remains on target to achieve its full-year production and cost guidance despite the expected lower production from the Galena complex and lower realized metal prices in the quarter," said Americas Silver president and chief executive officer Darren Blasutti. "The second half of 2019 will be a very exciting period for our company as we expect not only higher silver production, but most importantly, first gold pour from the Relief Canyon mine."
Consolidated second quarter production details
Consolidated silver production for the second quarter of 2019 was 345,695 ounces and silver equivalent production was approximately 1.7 million ounces, an increase of 15 per cent year over year for both metrics. Consolidated cash costs increased 235 per cent to $8.28 per silver ounce year over year and AISC increased 199 per cent to $16.15 per silver ounce compared with year over year. Consolidated zinc production increased by 27 per cent year over year, while consolidated lead production increased by 16 per cent year over year.
CONSOLIDATED PRODUCTION HIGHLIGHTS
Q2 2019 Q2 2018 Q1 2019
Processed ore (tonnes milled) 186,310 164,313 182,029
Silver production (ounces) 345,695 301,711 393,824
Silver equivalent production (ounces) 1,683,358 1,462,170 1,754,839
Silver grade (grams per tonne) 76 77 87
Cost of sales ($ per equiv. ounce silver) $8.75 $8.20 $7.11
Cash costs ($ per ounce silver) $8.28 $(6.15) $(0.50)
All-in sustaining costs ($ per ounce silver) $16.15 $5.40 $5.54
Zinc production (pounds) 11,150,174 8,756,201 11,263,623
Lead production (pounds) 7,237,607 6,216,592 8,211,429
Cosala operations production details
The Cosala operations produced 145,410 ounces of silver during the second quarter of 2019 and 1.3 million ounces of silver equivalent during the same period at cash costs of negative $18.27 per silver ounce and AISC of negative $11.66 per silver ounce. Silver production increased by 54 per cent while silver equivalent production increased by 25 per cent over the prior year, respectively. Cash costs and AISC increased by 70 per cent and 72 per cent, respectively, compared with Q2 2018, despite significant increases in zinc and lead production.
COSALA OPERATIONS HIGHLIGHTS
Q2 2019 Q2 2018 Q1 2019
Processed ore (tonnes milled) 156,998 138,708 152,605
Silver production (ounces) 145,410 94,231 173,169
Silver equivalent production (ounces) 1,300,009 1,041,246 1,322,045
Silver grade (grams per tonne) 49 42 57
Cost of sales ($ per equiv. ounce silver) $5.51 $5.36 $4.34
Cash costs ($ per ounce silver) $(18.27) $(60.13) $(30.48)
All-in sustaining costs ($ per ounce silver) $(11.66) $(41.66) $(25.85)
Zinc production (pounds) 11,150,174 8,756,201 11,263,623
Lead production (pounds) 4,052,559 2,982,316 4,626,233
Strong results were driven by sustained improvements in grade, mill throughput and metal recovery as mining and milling operations generally expanded at San Rafael in Q2 2019 compared with Q2 2018. Ore production from the Main zone benefited from additional working headings providing greater operational flexibility.
Silver and lead head grades in Q2 2019 were lower compared with Q1 2019 with steady zinc grades consistent with the mining plan though expected to be slightly lower in the second half of 2019. Any potential reduction in head grades over the remainder of the year are expected to be largely offset by further gains in mill throughput and metal recovery as additional flotation capacity was installed during the second quarter with increased recoveries.
The increase in cash costs and AISC was largely the result of higher treatment and refining charges and lower market prices for both zinc and lead during the quarter. Operating costs and capital expenditures remain in line with management expectations.
Development of the incline ramp toward the Upper zone continues to advance with the expectation of accessing the area prior to the end of the year.
Galena complex production details
As previously noted in Q1 2019, two high-tonnage stopes were impacted by separate ground falls in late Q1 2019 with follow-on impact in Q2 2019. The remaining active stopes were unable to replace the tonnage loss associated with the impacted areas. Due to these issues, the Galena complex produced 200,285 ounces of silver during Q2 2019 and 383,349 ounces of silver equivalent at cash costs of $27.55 per silver ounce and AISC of $36.35 per silver ounce. Silver and silver equivalent production decreased by 9 per cent and 11 per cent, respectively, compared with the prior quarter, and 3 per cent and 9 per cent, respectively, year over year. Both cash costs and AISC represented an increase of 20 per cent due to the noted lower production and lower lead prices during the quarter.
In order to improve mining flexibility, the Galena team prioritized underground development and gained over 1,600 feet of advance during the quarter. New production areas were established on the 2400 and 3200 levels. In addition, continuing exploration activities continue to yield encouraging results which could benefit production in the near term. Specifically, drilling on the 4900 level has identified new zones of mineralization (129 and 130 veins) near existing infrastructure and further extended the strike and vertical extent of known resources (137, 146, 167, 168 and 168HW veins).
GALENA COMPLEX HIGHLIGHTS
Q2 2019 Q2 2018 Q1 2019
Processed ore (tonnes milled) 29,312 25,605 29,424
Silver production (ounces) 200,285 207,480 220,655
Silver equivalent production (ounces) 383,349 420,924 432,794
Silver grade (grams per tonne) 220 263 242
Cost of sales ($ per equiv. ounce silver) $19.75 $15.24 $15.55
Cash costs ($ per ounce silver) $27.55 $18.36 $23.03
All-in sustaining costs ($ per ounce silver) $36.35 $26.77 $30.17
Lead production (pounds) 3,185,048 3,234,276 3,585,196
Relief Canyon update
Construction is advancing well at the fully financed Relief Canyon mine. Preparation of the leach pad is approximately 80 per cent complete and installation of the liner has started. Mobilization of the mining contractor is expected later this week. Work at the existing processing plant has started where upgrades will be made to the refinery and emissions controls.
Further information on the Relief Canyon development will be made available periodically on the company's website as construction progresses.
About Americas Silver Corp.
Americas Silver is a precious metal mining company focused on growth from its existing asset base and execution of targeted accretive acquisitions. It owns and operates the Cosala operations in Sinaloa, Mexico and the Galena complex in Idaho, United States. The company expects to begin producing gold in the fourth quarter of 2019 at its fully financed Relief Canyon mine in Nevada, which is currently in construction. The company also holds an option on the San Felipe development project in Sonora, Mexico.
Daren Dell, chief operating officer and a qualified person under Canadian Securities Administrators guidelines, has approved the applicable contents of this news release.
(i) Silver equivalent production throughout this press release was calculated based on silver, zinc and lead realized prices during each respective period.
(ii) Cash cost per ounce and all-in sustaining cost per ounce are non-IFRS (international financial reporting standards) performance measures with no standardized definition. For further information and detailed reconciliations, please refer to the company's 2018 year-end and quarterly management's discussion and analysis. The performance measures for the quarter ended June 30, 2019, are preliminary throughout this press release subject to refinement from the company's second quarter financial results to be released on or before Aug. 14, 2019.
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