Silver Standard Reports Second Quarter 2016 Results
August 10, 2016 News Release 16-20
SILVER STANDARD REPORTS SECOND QUARTER 2016 RESULTS
VANCOUVER, B.C. - Silver Standard Resources Inc. (NASDAQ: SSRI) (TSX: SSO) (“Silver Standard”) reports consolidated financial results for the second quarter ended June 30, 2016.
Paul Benson, President and CEO said, “In the second quarter of 2016 we completed the acquisition of Claude Resources, adding a third cash-flow generating mine to our portfolio. The combined production for our operations totaled nearly 100,000 gold equivalent ounces, including full quarter production at the Seabee Gold Operation and we are well-positioned to deliver a strong second half of the year."
"We have an enviable balance sheet, with cash and cash equivalents increasing to $233 million as a result of realizing $30 million cash flow, while investing in exploration and projects for the future. Additionally, our marketable securities stood at $193 million at the end of the quarter. Our financial strength along with excellent exploration potential and a seasoned team will enable us to enhance shareholder value."
Second Quarter 2016 Highlights:
(All figures are in U.S. dollars unless otherwise noted)
- Completed the acquisition of Claude Resources: Purchase of Claude Resources Inc. completed on May 31, 2016, through a share exchange transaction, adding the Seabee Gold Operation, a high quality, free cash generating gold operation in Canada.
- Generated net income and adjusted net income: Net income of $12.5 million and adjusted net income of $23.6 million, or $0.25 per share.
- Increased cash balance: Quarter-end balance increased by $15.0 million to $232.6 million. Cash generated by operating activities totaled $30.2 million. Value of marketable securities increased by $98.4 million, to $193.2 million.
- Cash costs guidance lowered at Marigold: Produced 47,195 ounces of gold at cash costs of $663 per payable ounce of gold sold. Lowered cash costs guidance to between $650 and $700 per payable ounce of gold sold.
- Improved cash costs and production guidance at the Pirquitas mine: Produced 2.5 million ounces of silver at cash costs of $8.87 per payable ounce of silver sold. Annual production guidance range was revised for the second time this year to between 9.0 and 10.0 million ounces of silver and annual cash costs guidance was reduced to between $9.00 and $10.00 per payable ounce of silver sold due to continued strong operating performance and effective cost controls.
- Established operating guidance for the second half of 2016 for the Seabee Gold Operation: Produced 17,524 ounces of gold in the second quarter, with 6,721 ounces produced from date of acquisition on May 31 to June 30, 2016. We expect to produce between 32,000 and 35,000 ounces of gold at cash costs of between $610 and $640 per payable ounce of gold sold during the second half of 2016 as we continue to increase ore mined from the Santoy mine complex.
- Advanced the Chinchillas project: Drilling program and metallurgical testing completed on schedule for a fourth quarter development decision.
- Continued exploration success: Positive exploration results at the Marigold mine and the Seabee Gold Operation. Increased exploration budget at Marigold by $2.1 million for 2016.
- Favorable resolution of tax dispute with CRA: On August 8, 2016, we announced the resolution in our favor of the Notice of Reassessment issued to us by the CRA in January 2015. The CRA is required to issue new notices of reassessment reversing the NOR, and refund the C$24.1 million ($19.2 million) we paid to the CRA to appeal, plus accrued interest from the date of payment.
Marigold mine, U.S.
Three months ended
| Operating data | June 30 | March 31 December September June 30 2016 31 2015 30 2015 2015 |
|---|---|---|
| 2016 | ||
| Total material mined (kt) Waste removed (kt) Total ore stacked (kt) Strip ratio Mining cost ($/t mined) Gold stacked grade (g/t) Processing cost ($/t processed) Gold recovery (%) General and admin costs ($/t processed) Gold produced (oz) Gold sold (oz) Realized gold price ($/oz) (1) Cash costs ($/oz) (1) AISC ($/oz) (1) Financial data ($000s) | 18,685 | 17,291 18,560 18,425 19,051 11,611 13,788 11,242 14,163 5,680 4,772 7,183 4,888 2.0 2.9 1.6 2.9 1.45 1.54 1.65 1.48 0.47 0.48 0.43 0.33 0.71 0.86 0.66 0.79 70.0 69.9 69.7 67.6 0.47 0.47 0.41 0.56 50,520 61,461 41,262 48,685 48,605 62,827 39,525 48,121 1,189 1,084 1,110 1,205 719 727 719 717 841 799 998 870 |
| 12,005 | ||
| 6,680 | ||
| 1.8 | ||
| 1.55 | ||
| 0.44 | ||
| 0.70 | ||
| 70.7 | ||
| 0.38 | ||
| 47,195 | ||
| 47,124 | ||
| 1,259 | ||
| 663 | ||
| 1,067 | ||
| Revenue Income from mine operations Capital investments Capitalized deferred stripping Exploration expenditures (2) | 59,197 | 57,742 67,936 43,836 57,958 11,227 7,902 7,288 15,395 8,796 3,641 8,931 5,255 1,435 — — — 1,102 731 1,944 1,978 |
| 17,641 | ||
| 10,154 | ||
| 7,231 | ||
| 1,597 |
(1) We report the non-GAAP financial measures of realized gold prices, cash costs and all-in sustaining costs ("AISC") per payable ounce of gold sold to manage and evaluate operating performance at the Marigold mine. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income (loss), please refer to “Non-GAAP and Additional GAAP Financial Measures” in section 12 of our management's discussion and analysis of the financial position and results of operation for the three and six months ended June 30, 2016 ("MD&A").
(2) Includes capitalized and expensed exploration expenses.
Mine production
We produced 47,195 ounces of gold in the second quarter of 2016, keeping the mine on target to meet its increased production guidance. Second quarter production was lower than in the first quarter due to planned ore stacking at higher elevations on the leach pads with irrigation of these areas starting later in the quarter. We expect the third and fourth quarter production to increase, relative to the first half of 2016, as the new leach pad is commissioned and the full impact of the additional haul trucks is realized.
Three additional 300-tonne class haul trucks commenced operating ahead of schedule early in the second quarter. A total of 18.7 million tonnes of material was mined in the second quarter, higher than the 17.3 million tonnes in the first quarter of 2016 due to the additional hauling capacity and to the start of stripping the next phase of the Mackay pit. Approximately 6.7 million tonnes of ore were delivered to the leach pads at a gold grade of 0.44 g/t, containing approximately 67,000 recoverable ounces of gold stacked during the quarter. The strip ratio declined to 1.8:1 in the second quarter, a 10% reduction compared to the previous quarter, and ore tonnes reconciliation continued to be positive. Gold recovery was 71% in the second quarter, slightly higher than the first quarter of 2016. In the second quarter, a premature failure of the swing bearing on one of our two hydraulic shovels occurred, which impacted total material mined. By quarter-end, this repair work was completed and the shovel was operating normally. Total material mined is expected to further increase in the third quarter as the additional haul trucks ramp up to full capacity.
The construction of a new leach pad, budgeted for 2016, is underway and, once completed in the third quarter, is anticipated to benefit production later in the year.
Mine operating costs
Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs, which include all costs of inventory, refining costs and royalties, of $663 per payable ounce of gold sold in the second quarter of 2016 were lower than costs of $719 per payable ounce of gold sold in the first quarter of 2016 primarily due to stacking 11% more recoverable ounces during the second quarter of 2016. Costs per tonne mined increased to $1.55 per tonne in the second quarter of 2016, 7% higher than in the first quarter of 2016 despite the increase in total tonnes mined. Unit mining costs were negatively impacted by higher diesel prices and utilizing higher cost loading gear in the period as a result of one hydraulic shovel being down for rebuild of its swing bearing. Processing unit costs were at the same level as in the first quarter of 2016. General and administrative unit costs were lower in the second quarter of 2016 than in the first quarter of 2016 as comparable costs were offset by higher ore tonnes mined. Our Operational Excellence program remains a core activity at Marigold, with a particular focus on maintenance processes and practices.
AISC of $1,067 per payable ounce of gold sold in the second quarter of 2016 increased from $841 in the first quarter of 2016 due to increased capitalized stripping and capital expenditures and lower payable ounces sold.
Mine sales
A total of 47,124 ounces of gold were sold at an average price of $1,259 per ounce during the second quarter of 2016, a decrease of 3% from the 48,605 ounces of gold sold at an average price of $1,189 per ounce during the first quarter of 2016. The decrease in sales was a function of decreased gold production.
Exploration
Exploration activities in the second quarter of 2016 focused on drilling at each of the HideOut, Terry Zone North (“TZN”) and 8 South pit extension ("8SX") areas at the Marigold mine and on the adjacent Valmy property. The objective of these drilling activities is to convert Mineral Resources to Mineral Reserves and to expand Mineral Resources, in certain instances. Two trackmounted rigs completed 15,575 meters of reverse circulation drilling in 73 drillholes on our targets where previous results show potential for Mineral Resource additions. At TZN, mineralization is open to the south, while the 500-meter long corridor between the HideOut and the 8SX areas has only two drillholes and remains open to the north and south, respectively. At Valmy, mineralization is open to the south, and in the second half of 2016 we expect to drill outside of the current pit areas, including the eastern extension of the Basalt pit mineralization. During the second quarter 2016, we re-assayed 27,079 historical samples pursuant to our re-assay program (the "Assay Program") initiated in 2015. Our Assay Program was completed during the quarter with a total of 52,600 samples re-assayed in 2016. Results of the Assay Program in 2016 are broadly in line with results achieved in 2015 and provide better spatial definition of the lower grade portions of the Mackay pit.
Due to encouraging exploration results achieved during the first half of 2016, we approved an additional $2.1 million to continue both infill and exploration drilling at the Valmy, HideOut, 8SX and TZN areas to further target Mineral Resource conversion and expansion. The additional exploration spending will also fund two drillholes relating to our deep sulphide exploration program initiated in 2014. These two drillholes are targeting the favorable carbonate debris flow rock units intercepted in 2015 and further analysis of exploration drilling and geologic interpretations conducted during 2015 and 2016. The deep sulphide exploration program is targeting a high-grade style of mineralization similar to that found at the Turquoise Ridge mine located 56 kilometers north of the Marigold mine.
The results of the Mackay North area exploration activities and the Assay Program are being applied, where applicable, to the Marigold life of mine plan. Based on this work and considering other improvements to the operation, including the addition of three haul trucks, we expect to disclose longer dated production and cost outlook for the Marigold mine later in the third quarter of 2016.
Seabee Gold Operation, Canada
| Operating data | Three months ended June 30, 2016 (2) | |
|---|---|---|
| Period from Acquisition | ||
| to June 30, 2016 (1) | ||
| Total ore milled (t) Ore milled per day (t/day) Gold mill feed grade (g/t) Mining costs ($/t mined) Processing costs ($/t processed) Gold recovery (%) General and admin costs ($/t processed) Gold produced (oz) Gold sold (oz) Realized gold price (3) Cash costs ($/oz) (3,5) AISC ($/oz) (3,5) Financial data ($000s) | 18,856 | 71,218 783 7.97 N/A N/A 96.8 N/A 17,524 16,305 1,271 N/A N/A |
| 629 | ||
| 7.79 | ||
| 141 | ||
| 38 | ||
| 96.6 | ||
| 79 | ||
| 6,721 | ||
| 11,306 | ||
| 1,278 | ||
| 663 | ||
| 776 | ||
| Revenue Income from mine operations Capital investments Exploration expenditures (4) | 14,437 | N/A N/A N/A N/A |
| 1,216 | ||
| 1,140 | ||
| 117 |
(1) The data presented in this column is for the period from May 31, 2016, to June 30, 2016, the period for which we were entitled to all economic benefits of the Seabee Gold Operation following our acquisition of Claude Resources Inc. ("Claude Resources").
(2) The data presented in this column includes operating results for the Seabee Gold Operation for the entire second quarter of 2016, including the period from April 1 to May 30, 2016 prior to our acquisition of Claude Resources.
(3) We report the non-GAAP financial measures of realized gold prices, cash costs and AISC per payable ounce of gold sold to manage and evaluate operating performance at the Seabee Gold Operation. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income (loss), please refer to “Non- GAAP and Additional Financial Measures” in section 12 of our MD&A.
(4) Includes capitalized and expensed exploration expenses.
(5) The non-GAAP measure of cash costs from the Seabee Gold Operation was adjusted to eliminate the write-up of inventory to fair value as at the date of our acquisition of Claude Resources.
Mine production
The Seabee Gold Operation consists of the Seabee and Santoy underground mines, both of which feed a single processing facility. The mine produced 6,721 ounces of gold from May 31, 2016, the date of our acquisition of Claude Resources, to the end of the second quarter of 2016 (the “Period”).
A total of 18,856 tonnes of ore were milled at a gold grade of 7.79 g/t in the Period. Total mill throughput per day for the Period was 629 tonnes per day, while mill throughput per operating day during the same time averaged 820 tonnes per day. The total tonnes milled for the Period were impacted by an unplanned power outage which lasted a total of ten days. The ore tonnes reconciliation in the Period was positive and gold recovery was 96.61%.
During the second quarter of 2016, the Santoy mine represented approximately 72% of total ore milled, while the Seabee mine represented 28%.
Mine operating costs
Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs per payable ounce of gold sold, which include all costs of inventory, refining costs and royalties and exclude the effect of the fair value adjustment at acquisition, were $663 in the Period. Costs per tonne mined were at $141 per tonne in the Period. Processing unit costs were at $38 per tonne processed and general and administration unit costs were at $79 per tonne in the Period.
AISC per payable ounce of gold sold, which exclude the effect of the fair value adjustment at acquisition, were $776 in the Period, due to minimal capital expenditures in the Period.
Mine sales
A total of 11,306 ounces of gold were sold at an average price of $1,278 per ounce during the Period. The sales were from gold production during the Period and gold inventory acquired upon closing of the acquisition of Claude Resources.
Exploration
For 2016, Seabee Gold Operations planned 65,000 meters of underground drilling and 18,000 meters of surface drilling to increase and convert Mineral Resources. During the Period, we completed 3,348 meters of underground diamond drilling to upgrade Inferred Mineral Resources and explore further the extensions to the Santoy 8A and Santoy Gap deposits. At surface, preparations were made to re-start drilling to explore the down plunge extension of Santoy Gap 9A, 9B and 9C deposits.
As reported August 8, 2016, six drillholes in a new area down plunge from the Santoy 8A structure returned gold grades above Mineral Resource cut-off grade, and we intend to conduct further drilling in this area. At the Seabee mine, five drillholes of a planned seven-drillhole drill program were completed on the 15 Vein target, which is a mineralized structure offset along the 19 shear. At the Carr target, located near surface and four kilometers along strike to the north from the Santoy mine complex, we drilled approximately 2,500 meters in nine drillholes over a two-kilometer strike length. At the Herb West target, located 2,200 meters west-north-west of the Seabee mine, we drilled approximately 1,130 meters in four drillholes. Results from drillholes at these three targets revealed quartz-vein structures with gold-bearing mineralization and warrant follow-up drilling.
For the second half of 2016 at the Seabee Gold Operation, our focus will be on infill drilling at the Santoy Gap to convert Inferred Mineral Resources to Mineral Reserves. At surface, our drilling focus for the second half will be on exploring laterally and down plunge to extend mineralization at the Santoy mine complex.
Pirquitas mine, Argentina Three months ended
| Operating data | June 30 | March 31 December 31 September 30 June 30 2016 2015 2015 2015 |
|---|---|---|
| 2016 | ||
| Total material mined (kt) Waste removed (kt) Ore mined (kt) Strip ratio Silver mined grade (g/t) Zinc mined grade (%) Mining costs ($/t mined) Ore milled (kt) Silver mill feed grade (g/t) Zinc mill feed grade (%) Processing cost ($/t milled) Silver recovery (%) Zinc recovery (%) (1) General and admin costs ($/t milled) Silver produced ('000 oz) Zinc produced ('000 lb) (1) Silver sold ('000 oz) Zinc sold ('000 lb) (1) Realized silver price ($/oz) (2) Cash costs ($/oz) (2) AISC ($/oz) (2) Financial Data ($000s) | 2,543 | 2,520 2,712 2,746 3,087 1,726 1,966 2,219 2,320 794 746 527 766 2.2 2.6 4.2 3.0 181 187 188 172 0.37 0.23 0.33 0.69 2.97 3.78 3.94 3.39 418 421 410 347 247 237 238 262 0.44 0.35 0.57 0.69 13.58 20.60 21.53 22.69 79.7 80.8 82.0 83.7 24.1 27.0 40.1 50.9 5.68 8.09 8.13 10.62 2,639 2,588 2,576 2,443 381 865 2,076 2,674 3,223 1,943 2,819 2,623 — 1,428 2,352 4,936 14.94 15.00 14.97 16.72 8.93 10.96 11.02 9.45 9.67 12.78 12.68 11.78 |
| 1,814 | ||
| 729 | ||
| 2.5 | ||
| 189 | ||
| 0.19 | ||
| 3.54 | ||
| 425 | ||
| 238 | ||
| 0.21 | ||
| 15.10 | ||
| 77.6 | ||
| — | ||
| 6.22 | ||
| 2,526 | ||
| — | ||
| 2,594 | ||
| 798 | ||
| 16.52 | ||
| 8.87 | ||
| 10.03 | ||
| Revenue Income (loss) from mine operations (3) Capital investments Capitalized stripping Exploration expenditures | 45,141 | 47,711 22,656 33,355 37,860 12,071 (28,387) (14,684) 924 1,578 2,305 2,500 2,962 — — — — 22 234 1,124 1,912 |
| 25,205 | ||
| 2,057 | ||
| — | ||
| 25 |
(1) Data for zinc production and sales relate only to zinc in zinc concentrate as any zinc metal within our silver concentrate does not generate revenue.
(2) We report the non-GAAP financial measures of realized silver prices, cash costs and AISC per payable ounce of silver sold to manage and evaluate operating performance at the Pirquitas mine. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income (loss), please refer to “Non-GAAP and Additional GAAP Financial Measures” in section 12 of our MD&A.
(3) Income (loss) from mine operations for the quarters ended December 31, 2015, and September 30, 2015, include $24.6 million and $7.7 million, respectively, of non-cash adjustments to stockpile, warehouse inventory and severance provision at the Pirquitas mine.
Mine production
The Pirquitas mine produced 2.5 million ounces of silver during the second quarter of 2016, marginally lower than production in the first quarter of 2016, due to slightly lower silver mill feed grade and silver recovery. There was no zinc production in the second quarter of 2016, as planned, due to lower zinc grade mined. Starting in the third quarter of 2016 we will discontinue disclosing zinc data.
Ore was milled at a record average rate of 4,668 tonnes per day in the second quarter of 2016, a quarterly record for the mine since it began operating due to our ongoing Operational Excellence program. Ore milled contained an average silver grade of 238 g/t, lower than the 247 g/t reported in the first quarter of 2016. We continue to encounter additional tonnes of ore in the bottom benches of the San Miguel open pit. The stockpiled lower and medium grade material will be processed as cessation of open pit mining activities is now expected in the first quarter of 2017. The average recovery rate for silver in the second quarter of 77.6% was lower than the 79.7% in the previous quarter.
Mine operating costs
Cash costs and AISC per payable ounce of silver sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs, which include cost of inventory, treatment and refining costs and by-product credits, decreased marginally to $8.87 per payable ounce of silver sold in the second quarter of 2016 from $8.93 per payable ounce of silver sold in the first quarter of 2016. Mining costs per tonne increased due primarily to longer hauls and higher diesel prices. Processing costs per tonne increased due to higher plant throughput.
| AISC of $10.03 | per payable ounce of silver sold were higher in the second quarter of 2016 than |
| the |
maintenance for haul trucks.
Mine sales
We recognized sales of 2.6 million ounces of silver, lower than the 3.2 million in the first quarter, as concentrate shipments that were delayed in December 2015 were recognized in the first quarter of 2016. We also sold 0.8 million pounds of zinc in the second quarter of 2016 as most of the zinc inventories were sold.
Chinchillas project, Argentina
During the second quarter of 2016, Golden Arrow Resources Corporation ("Golden Arrow") released a revised Mineral Resources estimate and technical report for the Chinchillas project following an infill drilling program of 115 core drillholes comprising 15,142 meters of drilling. As part of the continuing engineering studies, a program of condemnation drilling commenced beneath areas selected for major infrastructure, such as the waste rock facility. During the quarter, 12 core drillholes for 3,679 meters and 11 reverse circulation drillholes for 1,680 meters were completed to investigate the presence of near surface mineralization underlying and proximal to the proposed waste rock facility. In addition to this work, geotechnical, hydrological, metallurgical and environmental baseline studies, along with community engagement programs, continued. In the second quarter of 2016, we funded approximately $1.5 million for work on the Chinchillas project, bringing total expenditures to date to $7.6 million.
We expect to complete the relevant engineering studies to determine the economic viability of the Chinchillas project as a satellite mine feeding the Pirquitas plant and extending the life of the operation. We expect to be able to make a decision as to whether we will exercise our option and move forward with the project in the fourth quarter of this year.
Export duties
The Federal Court (Jujuy) granted an injunction in our favor effective September 29, 2010, that prohibited the National Customs Authority of Argentina (Dirección Nacional de Aduanas) from withholding the 10% export duty on silver concentrate (the “Injunction”), pending the decision of the courts with respect to our challenge of the legality of the application of the export duty. On June 21, 2016 the Federal Court (Jujuy) ruled that the Injunction would remain in place subject to certain conditions, including the provision by August 5, 2016, of a guarantee by Silver Standard against liabilities arising from export duties and applicable interest as well as security from Mina Pirquitas LLC on certain assets at the Pirquitas mine. We are challenging the requirement of the parent guarantee through the court process and are in discussions with the Federal Tax Authority and other government officials to agree on acceptable alternative security and a potential resolution of the claim. If we are unsuccessful in those discussions, the Federal Tax Authority may make further application to the court to have the Injunction lifted and, upon that initiate proceedings to collect the accrued export duties and its claimed interest. The lifting of the Injunction does not impact our underlying challenge of the legality of the application of export duties nor remedies available under the fiscal stability agreement. Changes in our assessment of this matter could result in material adjustments to our consolidated statements of income (loss).
Outlook
This section of the news release provides management's production and cost estimates. See "Cautionary Note Regarding Forward-Looking Statements."
We completed the acquisition of Claude Resources which owns the Seabee Gold Operation in northern Saskatchewan, Canada, on May 31, 2016. The operation has been in continuous production since 1991 and consists of two operating mines (the Seabee mine and Santoy mine complex), a central milling facility, camp facilities and important regional exploration targets. We also acquired the 40,400 hectare Amisk gold project in northeastern Saskatchewan.
From July 1, 2016 to December 31, 2016, we expect to produce between 32,000 and 35,000 ounces of gold at the Seabee Gold Operation at cash costs of between $610 and $640 per payable ounce of gold sold. Through the second half of 2016, the Seabee Gold Operation continues to increase tonnes mined from the higher grade, wider Santoy deposits and decrease tonnes mined from the Seabee deposit. We are investing $8 million in capital development as we continue to advance the Santoy ramp deeper to provide access to Mineral Resources and establish exploration drill stations.
At the Marigold mine, annual cash costs guidance is also being reduced to between $650 and $700 per payable ounce of gold sold from previous guidance of between $690 and $740 per payable ounce of gold reflecting continued lower diesel prices and the overcall of mined ounces from the Mackay open pit.
Exploration guidance has increased by $4.6 million to $14.6 million reflecting an increase of $2.1 million in exploration at the Marigold mine due to continued success through the first half of the year, $1 million from the addition of the Seabee Gold Operation and $1.5 million to accelerate activities at the Chinchillas project.
Annual silver production guidance for the Pirquitas mine has been revised to between 9.0 and 10.0 million ounces from previous guidance of between 8.0 and 10.0 million ounces due to additional ore tonnes being mined from the lower benches of the San Miguel open pit. Additionally, for the second time this year, cash costs guidance is being reduced to between $9.00 and $10.00 per payable ounce of silver sold reflecting lower diesel prices, continued stronger operating performance and effective cost control.
Capital expenditure guidance at Pirquitas has increased to $12 million due to the planned construction of an additional tailings facility lift to enable the processing of both additional ore being mined from the San Miguel open pit and previously stockpiled ore due to the improvement in silver prices and cost structure of the mine. The open pit is now expected to operate until the end of the first quarter of 2017 with processing of stockpiles until the end of 2017.
Operating Guidance Marigold mine Seabee Gold Operation(2) Pirquitas mine
| Gold Production | oz 200,000 - 210,000 | 32,000 - 35,000 | — | ||
| Silver Production | Moz | — | — | 9.0 - 10.0 | |
| Cash costs per payable ounce sold(1) $/oz | 650 - 700 | 610 - 640 | 9.00 - 10.00 | ||
| Capital Expenditures | $M | 32 | 2 | 12 | |
| Capitalized Stripping Costs | $M | 30 | 6 | — |
(1) We report the non-GAAP financial measure of cash costs per payable ounce of gold and silver sold to manage and evaluate operating performance at the Marigold mine, the Seabee Gold Operation and the Pirquitas mine. See “Non-GAAP and Additional GAAP Financial Measures” in section 12 of our MD&A.
(2) Guidance for the Seabee Gold Operation is for the period from July 1, 2016 to December 31, 2016, and is estimated based on an exchange rate of 1.30 CAD/USD.
Consolidated Financial Summary
Selected Financial Data (1)
Three months ended June 30 Six months ended June 30
| 2016 | 2015 | 2016 | 2015 | |
| $ | $ | $ | $ | |
| Revenue | 118,775 | 95,818 | 220,288 | 207,539 |
| Income from mine operations | 44,062 | 16,319 | 67,360 | 46,721 |
| Operating income | 24,237 | 5,214 | 38,851 | 26,489 |
| Net income (loss) for the period | 12,482 | (7,327 ) | 14,783 | 1,836 |
| Basic income (loss) per share | 0.13 | (0.09 ) | 0.17 | 0.02 |
| Adjusted income before tax(2) | 26,661 | 1,633 | 38,261 | 18,471 |
| Adjusted net income (loss)(2) | 23,622 | (2,028) | 31,664 | 3,976 |
| Adjusted basic income (loss) per share | 0.25 | (0.03) | 0.36 | 0.05 |
| Cash generated by operating activities | 30,162 | 21,897 | 43,487 | 52,562 |
| Cash (used in) generated by investing activities | (2,796) | 21,594 | (8,640) | (16,478) |
(12,329) (13,999)
Cash (used in) generated by financing activities (1,649 ) (1,649)
Financial Position
June 30, 2016 December 31, 2015
| Cash and cash equivalents | 232,619 | 211,862 |
| Current assets - total | 669,748 | 476,734 |
| Current liabilities - total | 139,552 | 135,851 |
| Working capital | 530,196 | 340,883 |
| Total assets | 1,432,263 | 871,677 |
(1) All values are presented in thousands of U.S. dollars, except per share values.
(2) We report non-GAAP measures including adjusted income before- and after-tax, to manage and evaluate our operating performance. Please see "Cautionary Note Regarding Non-GAAP Measures".
Quarterly financial summary
The increase in quarterly revenue compared to the second quarter of 2015 was due to 5% higher realized prices of gold combined with 21% more ounces of gold sold due to sales from the newly acquired Seabee Gold Operation. Additionally, sales of silver were marginally higher than in the same quarter of 2015 at comparable prices, however, as a result of the high silver price at the end of the quarter, the valuation adjustment on silver sales had a significant positive impact on revenue. This was partially offset by significantly lower zinc sales.
Income from mine operations in the second quarter of 2016 generated a gross margin of 37%, significantly higher than the 17% in the second quarter of 2015 due to the higher precious metals price environment in addition to lower cost of sales, particularly at the Pirquitas mine. Operating income in the second quarter of 2016 was four times the comparable quarter despite being negatively impacted by higher cash-settled share based compensation costs of $8.2 million due to our significantly higher share price and by business acquisition costs of $3.9 million incurred in the acquisition of Claude Resources.
Cash generated by operating activities increased by 38% compared to the second quarter of 2015 to $30 million. The higher price of gold had a direct impact on cash generated from operating