REG - Guanajuato Silver Co - Q3 2023 Financial and Operating Results

Guanajuato SilverAnnouncement

24/11/2023 12:15

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RNS Number : 6328U  Guanajuato Silver Company Ltd.  24 November 2023

 

 
 

 

Guanajuato Silver Reports Q3 2023 Financial and Operating Results

Guanajuato Silver Company Ltd. (the "Company" or "GSilver")
(TSXV:GSVR)(OTCQX:GSVRF) has released financial and operating results for the
three and nine months ended September 30, 2023. All dollar amounts are in US
dollars (US$) and prepared in accordance with IFRS Accounting Standards (IFRS)
as issued by the International Accounting Standards Board. Production results
are from the Company's wholly owned El Cubo Mines Complex ("El Cubo"),
Valenciana Mines Complex ("VMC") and San Ignacio mine ("San Ignacio") in
Guanajuato, Mexico, and the Topia mine ("Topia") located in Durango, Mexico.

James Anderson, Chairman & CEO of Guanajuato Silver, said, "Guanajuato
Silver remains committed to achieving mid-tier producer status through a rapid
combination of accretive mine acquisitions and the optimization of our
existing mine portfolio. Over the third quarter we conducted a shift in
operating tactics as we adjusted mining operations to target higher grades at
Valenciana and El Cubo, and to achieve better efficiencies at Topia through an
entirely new business model. All of our mines continue to progress through the
ramp-up phase, and as we move our assets forward, we will continue to rely
heavily on the business and technical acumen of our 100% Mexican operating
team. The fourth quarter represents a turning point in our operations, and we
are already seeing better performance at all our mines; with the precious
metals market entering a new phase, we see tremendous opportunities to
significantly expand upon our production profile so that we are able to offer
investors direct exposure to silver and gold production."

 

Q3 2023 Highlights

·      Metals production during the quarter of 787,086 AgEq (silver
equivalent) ounces derived from 425,488 ounces of silver; 3,441 ounces of
gold; 935,738 pounds of lead; and 857,660 pounds of zinc (see footnote to
table below for assumptions regarding the calculation of silver equivalents).

·      Net loss decreased by 21% in Q3 to $7.0M compared to $8.5M in Q2;
revenue of $15.6M for the quarter was down 7% compared to Q2.

·      All-in sustaining cost ("AISC") 1  of $26.22 per AgEq ounce
produced was higher than $22.47 for Q2 2023 because of lower mined tonnage
during the quarter due to a reworking of stope rotation at El Cubo, the
initial capital costs in changing the business model at Topia, and a temporary
mine closure at San Ignacio; realized metal prices in Q3 were 3% lower for
silver, 3% lower for gold, 2% higher for lead, and 4% lower for zinc as
compared to Q2.

·      Tonnes mined and milled decreased 23% and 24% respectively from
Q2 to Q3; over the third quarter; a total of 134,865 tonnes were mined across
the four producing silver mines, and a total of 132,484 tonnes were milled.

·      Average silver and gold recoveries were 83.3% and 81.5%
respectively for Q3 as compared to 88.5% silver recovery and 86.3% gold
recovery in Q2, 2023.

 1 AISC is a non-IFRS financial measure with no standardized meaning under
IFRS, and therefore they may not be comparable to similar measures presented
by other issuers. For further information and detailed reconciliations of
non-IFRS financial measures to the most directly comparable IFRS measures see
"Non-IFRS Financial Measures" in this News Release.

1.     Silver equivalents are calculated using an 81.83:1 (Ag/Au), 0.04:1
(Ag/Pb) and 0.05:1 (Ag/Zn) ratio for Q3 2023, an 89.97:1 (Ag/Au), 0.05:1
(Ag/Pb) and 0.08:1 (Ag/Zn) ratio for Q3 2022; an 82.21:1 (Ag/Au), 0.04:1
(Ag/Pb) and 0.05:1 (Ag/Zn) ratio for YTD 2023 and an 82:22:1 (Ag/Au) ratio for
YTD 2022.

2.     Cash cost per silver equivalent ounce include mining, processing,
and direct overhead. This is a non-IFRS financial measure with no standardized
meaning under IFRS, and therefore they may not be comparable to similar
measures presented by other issuers. For further information and detailed
reconciliations of non-IFRS financial measures to the most directly comparable
IFRS measures see "Non-IFRS Financial Measures" in this News Release.

3.     AlSC per Ag/Eq oz include mining, processing, direct overhead,
corporate general and administration expenses, on-site exploration,
reclamation, and sustaining capital. This is a non-IFRS financial measure with
no standardized meaning under IFRS, and therefore they may not be comparable
to similar measures presented by other issuers. For further information and
detailed reconciliations of non-IFRS financial measures to the most directly
comparable IFRS measures see "Non-IFRS Financial Measures" in this News
Release

4.     EBITDA and Adjusted EBITDA are non-IFRS financial measure with no
standardized meaning under IFRS, and therefore they may not be comparable to
similar measures presented by other issuers. For further information and
detailed reconciliations of non-IFRS financial measures to the most directly
comparable IFRS measures see "Non-IFRS Financial Measures" in this News
Release

5.     Cost per tonne and working capital are non-IFRS financial measures
with no standardized meaning under IFRS, and therefore they may not be
comparable to similar measures presented by other issuers. For further
information and detailed reconciliations of non-IFRS financial measures to the
most directly comparable IFRS measures see "Non-IFRS Financial Measures" in
this News Release.

6.     Based on provisional sales before final price adjustments, before
payable metal deductions, treatment, and refining charges.

7.     Mine operating cash flow before taxes is calculated by adding back
depreciation, depletion, and inventory write-downs to mine operating loss.
This is a non-IFRS financial measure with no standardized meaning under IFRS,
and therefore they may not be comparable to similar measures presented by
other issuers. For further information and detailed reconciliations of
non-IFRS financial measures to the most directly comparable IFRS measures see
"Non-IFRS Financial Measures" in this News Release.

 

This news release should be read in conjunction with the Company's condensed
interim consolidated financial statements for the six-month period ended June
30, 2023 and related Management's Discussion and Analysis ("MD&A")
available at www.sedarplus.com.

 

 

Technical Information

Reynaldo Rivera, VP of Exploration of GSilver, has approved the scientific and
technical information contained in this news release. Mr. Rivera is a member
of the Australasian Institute of Mining and Metallurgy (AusIMM - Registration
Number 220979) and a "qualified person" as defined by National Instrument
43-101, Standards of Disclosure for Mineral Projects.

 

 

For further information regarding Guanajuato Silver Company Ltd., please
contact:

 

JJ Jennex, Gerente de Comunicaciones, T: 604 723 1433

E: jjj@GSilver.com

Gsilver.com

 

VSA Capital - AQSE Corporate Adviser

T: +44 (0) 20 3005 5000

Simon Barton - Corporate Finance

Thomas Jackson - Corporate Finance

Andrew Monk - Corporate Broking

David Scriven - Corporate Broking

 

About Guanajuato Silver

GSilver is a precious metals producer engaged in reactivating past producing
silver and gold mines in central Mexico. The Company produces silver and gold
concentrates from the El Cubo Mine, Valenciana Mines Complex, and the San
Ignacio mine; all three mines are located within the state of Guanajuato,
which has an established 480-year mining history. Additionally, the Company
produces silver, gold, lead, and zinc concentrates from the Topia mine in
northwestern Durango. With four operating mines and three processing
facilities, Guanajuato Silver is one of the fastest growing silver producers
in Mexico.

 

Non-IFRS Financial Measures

The Company has disclosed certain non-IFRS financial measures and ratios in
this news release, as discussed below. These non-IFRS financial measures and
non-IFRS ratios are widely reported in the mining industry as benchmarks for
performance and are used by Management to monitor and evaluate the Company's
operating performance and ability to generate cash. The Company believes that,
in addition to financial measures and ratios prepared in accordance with IFRS,
certain investors use these non-IFRS financial measures and ratios to evaluate
the Company's performance. However, the measures do not have a standardized
meaning under IFRS and may not be comparable to similar financial measures
disclosed by other companies. Accordingly, non-IFRS financial measures and
non-IFRS ratios should not be considered in isolation or as a substitute for
measures and ratios of the Company's performance prepared in accordance with
IFRS.

 

Non-IFRS financial measures are defined in National Instrument 52-112 -
Non-GAAP and Other Financial Measures Disclosure ("NI 52-122") as a financial
measure disclosed that (a) depicts the historical or expected future financial
performance, financial position or cash flow of an entity, (b) with respect to
its composition, excludes an amount that is included in, or includes an amount
that is excluded from, the composition of the most directly comparable
financial measure disclosed in the primary financial statements of the entity,
(c) is not disclosed in the financial statements of the entity, and (d) is not
a ration, fraction, percentage or similar representation.

 

A non-IFRS ratio is defined by 52-112 as a financial measure disclosed that
(a) is in the form of a ratio, fraction, percentage, or similar
representation, (b) has a non-IFRS financial measure as one or more of its
components, and (c) is not disclosed in the financial statements.

 

WORKING CAPITAL

 

Working capital is a non-IFRS measure that is a common measure of liquidity
but does not have any standardized meaning. The most directly comparable
measure prepared in accordance with IFRS is current assets and net of current
liabilities. Working capital is calculated by deducting current liabilities
from current assets. Working capital should not be considered in isolation or
as a substitute from measures prepared in accordance with IFRS. The measure is
intended to assist readers in evaluating the Company's liquidity.

 

 

MINE OPERATING CASH FLOW BEFORE TAXES

 

Mine operating cash flow before taxes is a non-IFRS measure that does not have
a standardized meaning prescribed by IFRS and therefore may not be comparable
to similar measures presented by other issuers.  Mine operating cash flow is
calculated as revenue minus production costs, transportation and selling costs
and inventory changes.  Mine operating cash flow is used by management to
assess the performance of the mine operations, excluding corporate and
exploration activities, and is provided to investors as a measure of the
Company's operating performance.

 

 

 

 

 

 

 

 

 

EBITDA AND ADJUSTED EBITDA

 

EBITDA is a non-IFRS financial measure, which excludes the following from net
earnings: (i) Income tax expense; (ii) Finance costs; and (iii) Amortization
and depletion.

 

Adjusted EBITDA excludes the following additional items from EBITDA: (i) Share
based compensation; (ii) Non-recurring impairments (reversals); (iii) Loss
(gain) on derivative; and (ii) Significant other non-routine finance items.

 

Adjusted EBITDA per share is calculated by dividing Adjusted EBITDA by the
basic weighted average number of shares outstanding for the period.

 

Management believes EBITDA is a valuable indicator of the Company's ability to
generate liquidity by producing operating cash flow to fund working capital
needs, service debt obligations, and fund capital expenditures. Management
uses EBITDA for this purpose. EBITDA is also frequently used by investors and
analysts for valuation purposes whereby EBITDA is multiplied by a factor or
"EBITDA multiple" based on an observed or inferred relationship between EBITDA
and market values to determine the approximate total enterprise value of a
Company. Management believes that Adjusted EBITDA provides useful information
to investors and others in understanding and evaluating our operating results
because it is consistent with the indicators management uses internally to
measure the Company's performance, and is an indicator of the performance of
the Company's mining operations.

 

EBITDA is intended to provide additional information to investors and
analysts. It does not have any standardized definition under IFRS and should
not be considered in isolation or as a substitute for measures of operating
performance prepared in accordance with IFRS. EBITDA excludes the impact of
cash costs of financing activities and taxes, and the effects of changes in
operating working capital balances, and therefore is not necessarily
indicative of operating profit or cash flow from operations as determined by
IFRS. Other companies may calculate EBITDA and Adjusted EBITDA differently.

 

 

 

Cash Cost per Ag/Eq Ounce, All-In Sustaining Cost per Ag/Eq Ounce and
Production Cost per Tonne

 

Cash costs per silver equivalent oz and production costs per tonne are
measures developed by precious metals companies in an effort to provide a
comparable standard; however, there can be no assurance that the Company's
reporting of these non-IFRS measures and ratios are similar to those reported
by other mining companies. Cash costs per silver equivalent ounce and total
production cost per tonne are non-IFRS performance measures used by the
Company to manage and evaluate operating performance at its operating mining
unit, in conjunction with the related IFRS amounts. They are widely reported
in the silver mining industry as a benchmark for performance, but do not have
a standardized meaning and are disclosed in addition to IFRS measures.
Production costs include mining, milling, and direct overhead at the operation
sites. Cash costs include all direct costs plus royalties and special mining
duty. Total production costs include all cash costs plus amortization and
depletion, changes in amortization and depletion in finished goods inventory
and site share-based compensation. Cash costs per silver equivalent ounce is
calculated by dividing cash costs and total production costs by the payable
silver ounces produced. Production costs per tonne are calculated by dividing
production costs by the number of processed tonnes. The following tables
provide a detailed reconciliation of these measures to the Company's direct
production costs, as reported in its consolidated financial statements.

 

All-in Sustaining Costs ("AISC") is a non-IFRS performance measure and was
calculated based on guidance provided by the World Gold Council ("WGC"). WGC
is not a regulatory industry organization and does not have the authority to
develop accounting standards for disclosure requirements. Other mining
companies may calculate AISC differently as a result of differences in
underlying accounting principles and policies applied, as well as differences
in definitions of sustaining capital expenditures. AISC is a more
comprehensive measure than cash cost per ounce and is useful for investors and
management to assess the Company's operating performance by providing greater
visibility, comparability and representation of the total costs associated
with producing silver from its current operations, in conjunction with related
IFRS amounts. AISC helps investors to assess costs against peers in the
industry and help management assess the performance of its mine.

 

AISC includes total production costs (IFRS measure) incurred at the Company's
mining operation, which forms the basis of the Company's total cash costs.
Additionally, the Company includes sustaining capital expenditures, corporate
general and administrative expense, operating lease payments and reclamation
cost accretion. The Company believes this measure represents the total
sustainable costs of producing silver and gold concentrate from current
operations and provides additional information of the Company's operational
performance and ability to generate cash flows. As the measure seeks to
reflect the full cost of silver and gold concentrate production from current
operations, new projects capital at current operation is not included. Certain
other cash expenditures, including share-based payments, tax payments,
dividends and financing costs are also not included.

 

The following tables provide detailed reconciliations of these measures to
cost of sales, as reported in notes to the Company's consolidated financial
statements.

 

 

 

1.         Silver equivalents are calculated using an 81.33:1 (Ag/Au),
0.04:1 (Ag/Pb) and 0.05:1 (Ag/Zn) ratio for Q2 2023, and an 83.4:1 (Ag/Au)
ratio for Q2 2022, respectively.

2.         Cash cost per silver equivalent ounce include mining,
processing, and direct overhead.

3.         AlSC per oz include mining, processing, direct overhead,
corporate general and administration expenses, on-site exploration,
reclamation, and sustaining capital.

4.         Production costs include mining, milling, and direct
overhead at the operation sites.

5.         Consolidated amount for the three months ended September
30, 2023, excludes $12,901 in relation to silver bullion transportation and
selling cost from cost of sales.

 

 

1.         Silver equivalents are calculated using an 82.51:1 (Ag/Au),
0.04:1 (Ag/Pb) and 0.06:1 (Ag/Zn) YTD 2023 and an 82:22:1 (Ag/Au) ratio for
YTD 2022, respectively.

2.         Cash cost per silver equivalent ounce include mining,
processing, and direct overhead.

3.         AlSC per oz include mining, processing, direct overhead,
corporate general and administration expenses, on-site exploration,
reclamation, and sustaining capital.

4.         Production costs include mining, milling, and direct
overhead at the operation sites.

5.         Consolidated amount excludes $85,122 in relation to silver
bullion transportation and selling cost from cost of sales.

 

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