Silver Standard Reports Fourth Quarter and Year-End 2016 Results
February 23, 2017 News Release 17-04
SILVER STANDARD REPORTS FOURTH QUARTER AND YEAR-END 2016 RESULTS
VANCOUVER, B.C. - Silver Standard Resources Inc. (NASDAQ: SSRI) (TSX: SSO) (“Silver Standard”) reports consolidated financial results for the fourth quarter and year ended December 31, 2016.
Paul Benson, President and CEO said, “We had a strong fourth quarter capping a year of records for Silver Standard, which included production of over 390,000 gold equivalent ounces at an AISC of less than $925 per ounce. Our focus on Operational Excellence has led not only to production and cost improvements at each site, it has allowed us to meet or exceed our annual guidance for the fifth straight year.”
“Importantly, we entered 2017 in a very strong position with over $325 million in cash and an additional $150 million in marketable securities, which predominantly reflects our near 10% stake in Pretium Resources. Last year, we continued to invest in our business, particularly with respect to exploration, and the success in growing reserves at both Marigold and Seabee is driving our increased brownfields exploration in 2017.”
Fourth Quarter and Year-End 2016 Highlights:
(All figures are in U.S. dollars unless otherwise noted)
- Strong financial performance: Generated cash from operations of $170.7 million in 2016 and increased our cash position by $115.3 million to $327.1 million. Generated net earnings of $65.0 million or $0.63 per share and adjusted net earnings of $100.3 million or $0.97 per share. Quarterly cash from operations of $74.1 million, net earnings of $12.1 million or $0.10 per share and adjusted net earnings of $30.8 million or $0.26 per share.
- Delivered on scale and margin: Record production of 393,325 gold equivalent ounces at cash costs of $653 and AISC of $923 per payable gold equivalent ounce sold for the full year 2016. Fourth quarter production was 110,130 gold equivalent ounces at cash costs of $625 and AISC of $845 per payable gold equivalent ounce sold.
- 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.
- Increased Mineral Reserves at Marigold and Seabee: Successful exploration activities in 2016 increased gold Mineral Reserves at our Marigold mine by 31% to 2.84 million ounces and at the Seabee Gold Operation by 50% to 0.36 million ounces.
- Enhanced our financial flexibility: Working capital totaled $559.9 million at year-end, an increase of $219.1 million from the end of 2015. Contributing to working capital are marketable securities valued at $148.9 million at December 31, 2016.
- Sustained efficiencies at Marigold: Production in the fourth quarter was strongest for the year at 59,945 ounces of gold, taking full year production to 205,116 ounces. Reported 2016 cash costs of $647 per payable ounce of gold sold. Fourth quarter cash costs were $585 per payable ounce of gold sold.
- Continued operational improvements at Seabee: Ore milling rates averaged 919 tonnes per day during the fourth quarter of 2016 contributing to annual record gold production of 77,640 ounces and low fourth quarter cash costs and AISC of $595 and $833 per payable gold ounce sold, respectively.
- Record operating performance at Pirquitas: Achieved record annual silver production of 10.4 million ounces at cash costs of $9.00 and AISC of $10.21 per payable silver ounce sold due in part to record average annual ore milling rates of 4,846 tonnes per day in 2016, a 14% improvement compared to 2015.
- Favorable resolution with Canada Revenue Agency: Settled in our favor the Notice of Reassessment with the CRA, which resulted in the repayment of our deposit of $18.2 million plus accrued interest.
- Created value from our portfolio: Completed the sale of the Parral properties in Mexico and the Diablillos project in Argentina for combined consideration of approximately $8 million in retained equity and undiscounted future cash payments of $15 million. Subsequent to yearend, we entered into an option agreement for the Candelaria project in the U.S. and announced the sale of the Berenguela project in Peru for approximately $1 million in equity and undiscounted future cash payments of $12 million and a 9.9% retained interest.
Marigold Mine, U.S.
| Three months ended December September June 30, March 31, Operating data 31, 2016 30, 2016 2016 2016 | Total 2016 2015 |
| Total material mined (kt) 19,559 19,558 18,685 17,291 Waste removed (kt) 13,123 14,741 12,005 11,611 Total ore stacked (kt) 6,436 4,817 6,680 5,680 Strip ratio 2.0 3.1 1.8 2.0 Mining cost ($/t mined) 1.52 1.48 1.55 1.45 Gold stacked grade (g/t) 0.48 0.42 0.44 0.47 Processing cost ($/t processed) 0.80 0.95 0.70 0.71 Gold recovery (%) 75.0 71.0 70.7 70.0 General and admin costs ($/t processed) 0.46 0.56 0.38 0.47 Gold produced (oz) 59,945 47,456 47,195 50,520 Gold sold (oz) 61,308 47,278 47,124 48,605 Realized gold price ($/oz) (1) 1,247 1,330 1,259 1,189 Cash costs ($/oz) (1) 585 636 663 719 AISC ($/oz) (1) 835 1,139 1,067 841 Financial data ($000s) | 75,093 74,592 51,480 54,054 23,613 20,538 2.2 2.6 1.50 1.56 0.45 0.45 0.78 0.81 72.0 70.6 0.46 0.51 205,116 207,006 204,315 206,338 1,255 1,151 647 692 960 895 |
| Revenue 77,047 62,831 59,197 57,742 Income from mine operations 28,648 23,156 17,641 11,227 Capital investments 3,271 8,310 10,154 8,796 Capitalized deferred stripping 10,171 13,787 7,231 1,435 Exploration expenditures (2) 1,276 1,145 1,597 1,102 | 256,817 237,296 80,672 57,539 30,531 22,595 32,624 12,543 5,120 6,204 |
(1) We report the non-GAAP financial measure of cash costs per payable ounce of gold sold, realized gold prices and all-in sustaining costs ("AISC") 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, please see “Non-GAAP and Additional GAAP Financial Measures” in section 13 of our management's discussion and analysis of the financial position and results of operations for the year ended December 31, 2016 (“MD&A”).
(2) Includes capitalized and expensed exploration expenditures.
Mine production
In the fourth quarter of 2016, the Marigold mine produced 59,945 ounces of gold, 26% higher than the previous quarter as expected, due to higher grade ore tonnes sourced from the deeper benches of the current Mackay pit phase during the third and fourth quarters of 2016. Higher grade ore was placed on the new leach pad, completed in the third quarter of 2016, which assisted in accelerated gold recovery.
A total of 19.6 million tonnes of material were mined in the fourth quarter of 2016, in line with material mined in the third quarter. Approximately 6.4 million tonnes of ore were delivered to the heap leach pads at a gold grade of 0.48 g/t. This compares to 4.8 million tonnes of ore delivered to the heap leach pads at a gold grade of 0.42 g/t in the third quarter of 2016. Gold grade mined in the fourth quarter was 14% higher than the third quarter. The strip ratio declined to 2.0:1 in the quarter, a 36% reduction compared to the previous quarter.
In 2016, the Marigold mine produced 205,116 ounces of gold, compared to 207,006 ounces of gold produced in 2015, achieving the mid-point of our improved 2016 production guidance.
Total material mined and ore stacked on leach pads of 75.1 million tonnes and 23.6 million tonnes, respectively, in 2016, were record amounts for the Marigold mine, due to the increased hauling capacity added to the fleet earlier in the year. The grade of the ore delivered to the leach pads in 2016 was 0.45 g/t and the average strip ratio was 2.2:1.
A total of 61,308 ounces of gold were sold at an average price of $1,247 per ounce during the fourth quarter of 2016, an increase of 30% from the 47,278 ounces of gold sold at an average price of $1,330 per ounce during the third quarter of 2016. The increase in sales was a function of increased gold production. Gold sales totaled 204,315 ounces in 2016.
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 $585 per payable ounce of gold sold in the fourth quarter of 2016 were lower than cash costs of $636 per payable ounce of gold sold in the third quarter of 2016 due to higher number of ounces stacked lowering the unit costs of inventory. Cash costs decreased in 2016 to $647 per payable ounce of gold sold, compared to $692 per payable ounce of gold sold in 2015, due to the higher number of ounces stacked, improved mining costs and an increase in the proportion of operating costs capitalized to stripping. Costs per tonne mined decreased in 2016 to $1.50 per tonne compared to $1.56 per tonne in 2015 as a result of our increased capacity and improved efficiencies in our loading and hauling practices as well as a lower diesel unit cost. Processing and general and administration unit costs also declined by 4% and 10%, respectively, in 2016 compared to the comparative period, principally due to higher ore tonnes stacked. Operational Excellence remains a core activity at Marigold, particularly focused on maintenance processes and practices.
| AISC decreased in the fourth quarter of 2016 to | $835 | per payable ounce | of gold sold | from | $1,139 | |||||
| in the third quarter of 2016 due to lower capitalized stripping and lower investments in capital. | ||||||||||
| AISC of | $960 | per payable ounce of gold sold in 2016 increased from | $895 | in 2015, | primarily due |
to higher capital investments, including the construction of a new leach pad, and higher capitalized stripping.
Exploration
During the fourth quarter Marigold drilled 14,289 meters in 54 reverse circulation (“RC”) drillholes using two RC drills. One core drillhole was completed as part of the deep sulphide exploration program. In 2016, we drilled 55,147 meters in 231 RC drillholes, 955 meters in one core drillhole and assayed 55,073 samples as a part of our program to re-assay historic drill samples (the “Assay Program”). Drill activities for 2016 focused on Mineral Resources to Mineral Reserves conversion around the 8 South pit, Terry Zone North, HideOut, Mud and Valmy pits and Mineral Resources discovery at the Crossfire, East Basalt and Battle Cry targets. The results of this successful exploration program are discussed in the Mineral Reserves and Mineral Resources section. Drilling in the fourth quarter of 2016 centered on Mineral Resources expansion.
During 2016, we completed the Assay Program, which had the objective of identifying low grade ore that was not included in the existing Mineral Reserves. The samples from the Assay Program are from the planned life of mine production areas. The 2016 Assay Program added 130,000 gold ounces to Indicated Mineral Resources, which are included in our 2016 Mineral Reserves and Mineral Resources statement.
Mineral Resources expansion drilling has exceeded expectations in the East Basalt pit area, where 14 drillholes were completed during the fourth quarter of 2016, with the majority intersecting mineralization at or above Mineral Resources average grade. In addition, drilling adjacent to the dormant Valmy pit continues to demonstrate the presence of higher grade structural trends beyond the south east corner of the pit.
Seabee Gold Operation, Canada
Three months Period from Period from Operating data Three months ended ended December Acquisition to Acquisition to September 30, 2016
31, 2016 December 31, 2016 (2) June 30, 2016 (1)
| Total ore milled (t) | 84,526 | 82,756 | 18,856 | 186,138 |
| Ore milled per day (t/day) | 919 | 900 | 629 | 870 |
| Gold mill feed grade (g/t) | 7.40 | 7.40 | 7.79 | 7.44 |
| Mining costs ($/t mined) | 62 | 58 | 110 | 65 |
| Processing costs ($/t | 19 | 19 | 29 | 20 |
| Gold recovery (%) | 97.0 | 96.5 | 96.6 | 96.7 |
General and admin costs ($/t 44 37 61 43 processed)
| Gold produced (oz) | 19,711 | 20,142 | 6,721 | 46,574 |
| Gold sold (oz) | 17,229 | 21,911 | 11,306 | 50,446 |
| Realized gold price ($/oz)(3) | 1,230 | 1,334 | 1,278 | 1,271 |
| Cash costs ($/oz)(3,5) | 595 | 661 | 663 | 639 |
| AISC ($/oz)(3,5) | 833 | 840 | 776 | 823 |
Financial data ($000s)
| Revenue | 21,175 | 29,214 | 14,437 | 64,826 |
| Income from mine operations | 2,864 | 4,126 | 1,216 | 8,206 |
| Capital investments | 1,010 | 579 | 337 | 1,926 |
| Capitalized development | 2,432 | 2,104 | 803 | 5,339 |
| Exploration expenditures(4) | 829 | 1,206 | 117 | 2,152 |
(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 is for the period from May 31, 2016, to December 31, 2016, the period for which we were entitled to all economic benefits of the Seabee Gold Operation following 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, please see “Non-GAAP and Additional GAAP Financial Measures” in section 13 of our MD&A.
(4) Includes capitalized and expensed exploration expenses.
(5) The non-GAAP financial measure of cash costs per payable ounce of gold sold from the Seabee Gold Operation was adjusted to eliminate the adjustment 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. In the fourth quarter, the Seabee Gold Operation produced 19,711 ounces of gold, largely in line with the 20,142 ounces of gold produced during the third quarter of 2016. Production during the second half of the year of 39,853 ounces of gold exceeded our second half 2016 production guidance range of 32,000 to 35,000 ounces of gold.
A record 84,526 tonnes of ore were milled at an average gold grade of 7.40 g/t and recovery of 97.0% during the fourth quarter. This compares to a total of 82,756 tonnes of ore milled at an average gold grade of 7.40 g/t and recovery of 96.5% in the third quarter.
During the fourth quarter, the mill was maintained at a higher throughput of 919 tonnes per day, a record quarterly performance. The Santoy complex mined approximately 92% of total ore milled, with the remainder mined from Seabee. Mining continued to transition to long hole stope ore from Santoy and we are reviewing the mine plan to determine the feasibility of higher, sustainable production rates.
During the period since acquisition, from May 31, 2016 to December 31, 2016, the Seabee Gold Operation produced a total of 46,574 ounces of gold.
A total of 17,229 ounces of gold were sold at an average price of $1,230 per ounce during the fourth quarter of 2016. This compares to 21,911 ounces of gold sold in the third quarter of 2016 at an average realized price of $1,334 per ounce.
In the period from acquisition to December 31, 2016, we sold 50,446 ounces of gold at an average price of $1,271 per payable gold ounce sold.
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”.
Cost of sales and income from mine operations includes the effects of non-cash amortization charges related to purchase price accounting upon our acquisition of Claude Resources in 2016.
Cash costs per payable ounce of gold sold, which include all costs of inventory, refining costs and royalties, were $595 in the fourth quarter of 2016, lower than the $661 in the third quarter of 2016 due to timing of inventory costing and higher capital development. Cash costs for the period from acquisition to December 31, 2016, were $639 per payable ounce of gold sold.
AISC per payable ounce of gold sold were $833 in the fourth quarter of 2016, comparable to $840 in the third quarter of 2016, while capital spending remained modest, and higher exploration spending consistent with our objective of adding Mineral Reserves and Mineral Resources at the mine, offset the lower cash costs. AISC for the period from acquisition to December 31, 2016, were $823 per payable ounce of gold sold.
Exploration
For 2016, the Seabee Gold Operation planned 65,000 meters of underground drilling and 18,000 meters of surface drilling with the objective to increase and convert Mineral Resources to Mineral Reserves. During the fourth quarter of 2016, we completed 21,705 meters of underground diamond drilling to upgrade Inferred Mineral Resources and explore further the extensions to the Santoy 8A and Santoy Gap deposits. From surface, we completed 7,702 meters of drilling to upgrade the up plunge extension of the Santoy Gap 9A, 9B and 9C Mineral Resources and to complete deeper infill drilling on the Santoy 8A Inferred Mineral Resources. The results of this successful exploration program are discussed in the Mineral Reserves and Mineral Resources section.
On October 6, 2016, we announced an option agreement to acquire up to an 80% interest in the adjacent Fisher property which lies south on strike from the ore deposits at Santoy Gap and Santoy 8A. This agreement doubles our prospective land position at the Seabee Gold Operation and planning for our 2017 exploration work is underway with surface exploration drilling expected in the second half of the year.
Pirquitas Mine, Argentina
| Three months ended December September June 30, March 31, Operating data 31, 2016 30, 2016 2016 2016 | Total 2016 2015 |
| Total material mined (kt) 1,694 2,385 2,543 2,520 Waste removed (kt) 1,193 1,584 1,814 1,726 Ore mined (kt) 501 801 729 794 Strip ratio 2.4 2.0 2.5 2.2 Silver mined grade (g/t) 168 190 189 181 Mining costs ($/t mined) 4.84 3.80 3.54 2.97 Ore milled (kt) 476 455 425 418 Silver mill feed grade (g/t) 194 264 238 247 Processing cost ($/t milled) 14.17 14.78 15.10 13.58 Silver recovery (%) 74.5 79.0 77.6 79.7 General and admin costs ($/t 6.19 5.84 6.22 5.68 milled) Silver produced ('000 oz) 2,210 3,047 2,526 2,639 Silver sold ('000 oz) 2,633 2,947 2,594 3,223 Realized silver price ($/oz) (1) 17.14 19.64 16.52 14.94 Cash costs ($/oz) (1) 9.80 8.48 8.87 8.93 AISC ($/oz) (1) 11.47 9.87 10.00 9.67 Financial Data ($000s) | 9,142 11,900 6,317 9,090 2,825 2,810 2.2 3.2 183 183 3.69 3.47 1,774 1,557 235 250 14.41 21.52 77.8 82.6 5.99 8.74 10,422 10,339 11,397 10,294 17.05 15.92 9.00 10.68 10.21 12.44 |
| Revenue 29,095 51,336 45,141 43,771 (Loss) income from mine (4,056) 31,908 25,205 12,071 operations (2) Capital investments 3,467 3,158 2,057 1,578 Exploration expenditures 11 7 25 22 | 169,343 138,026 65,128 (38,699) 10,260 9,319 65 4,553 |
(1) We report the non-GAAP financial measures of cash costs per payable ounce of silver sold, realized silver prices and AISC 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, please see “Non-GAAP and Additional GAAP Financial Measures” in section 13 of our MD&A.
(2) (Loss) income from mine operations for the quarter and year ended December 31, 2016, both include $5.7 million of severance provision and a non-cash write-down of supplies inventory and value added tax ("VAT") receivable of $3.7 million. Loss from mine operations for the annual period ended December 31, 2015, includes $32.3 million of non-cash adjustments to stockpile and supplies inventory at the Pirquitas mine to its NRV, and severance provision.
Mine production
In the fourth quarter of 2016, Pirquitas production declined relative to the third quarter, as expected, producing 2.2 million ounces of silver.
Ore was milled at an average rate of 5,175 tonnes per day in the fourth quarter, 5% higher than the previous quarter and a record quarterly result. Additionally, the average milling rate was 29% above the mill's nominal design of 4,000 tonnes per day, which is the result of a successful 14month Operational Excellence project. Ore milled in the fourth quarter of 2016 contained an average silver grade of 194 g/t, 27% lower than the 264 g/t reported in the third quarter as the availability of ore in the lower benches of the San Miguel open pit was reduced, resulting in medium grade stockpile ore supplementing mill feed.
The average silver recovery in the fourth quarter was 74.5%, lower than the 79.0% recovery in the previous quarter, in line with reduced silver mill feed grade that resulted from the increasing proportion of stockpiled material in the mill feed.
In 2016, the Pirquitas mine produced a record 10.4 million ounces of silver, close to the upper end of our increased annual production guidance range. This was largely the result of achieving a 14% increase in daily milling rate during the year. Silver mined grade of 183 g/t was in line with that realized in 2015, while silver mill feed grade was 6% lower than the previous year, in line with expectations as medium grade stockpiled ore supplemented the mill feed. Silver recovery of 77.8% was lower compared to 2015, due to a combination of closing down the zinc circuit in January 2016 and lower silver grade throughout the year. Silver sales totaled 11.4 million ounces in 2016.
Detailed planning and consultation with the workforce, union, communities and government for the cessation of open pit mining was undertaken and mining ceased in January 2017. It is expected that medium grade stockpile material will be processed through the plant in 2017. Low grade stockpiles may be processed in late 2017, and potentially in early 2018, depending on prevailing economic conditions.
Mine sales
Silver sales totaled 2.6 million ounces in the fourth quarter of 2016, an 11% decrease from the third quarter of 2016, due to availability of inventory following lower production in the fourth quarter of 2016. Additionally, we recorded a negative period-end price adjustment for unsettled ounces of $9.2 million, or $3.49 per ounce, compared to a positive adjustment of $0.7 million in the third quarter of 2016.
We sold 11.4 million ounces of silver in 2016, an 11% increase compared to the 10.3 million ounces sold in 2015. Sales of our silver concentrate were also impacted by period-end price adjustments for unsettled ounces which had a negative impact of $1.6 million cumulatively in 2016, compared to the negative impact of $10.6 million in 2015.
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”.
Cost of sales and income from mine operations in the fourth quarter of 2016 were impacted by non-cash provisions related to the pending cessation of mine operations. We recorded a severance provision of $5.7 million and a non-cash write-down of supplies inventory and VAT of $3.7 million.
Cash costs, which include cost of inventory, treatment and refining costs, and by-product credits, were $9.80 per payable ounce of silver sold in the fourth quarter of 2016, higher than the $8.48 per payable ounce of silver sold in the third quarter of 2016 due to medium grade stockpile ore grade supplementing mined ore and reduced mining efficiency on the lowest benches of the open pit.
Cash costs per payable ounce of silver sold in 2016 decreased to $9.00 from $10.68 in 2015 as our stronger production more than offset the cessation of the zinc recovery circuit which saved cost but lowered overall silver recovery.
| AISC per payable ounce of silver sold in the fourth quarter of 2016 were higher at | $11.47 | than in | ||
| the third quarter at | $9.87 | due to higher cash costs and capital investment in the planned phase 5 | ||
| tailings lift. AISC of $10.21 per payable ounce of silver sold were lower in 2016 than the $12.44 | ||||
| per payable ounce of silver sold in 2015 due to lower cash costs while capital investments | ||||
| remained modest. |
Exploration
There was no exploration activity at the Pirquitas mine during 2016 as we focused on advancing the Chinchillas project.
Chinchillas Project, Argentina
During the fourth quarter, hydrology and geotechnical drilling was completed for final feasibility studies. In addition to this work, metallurgical and environmental baseline studies, along with community engagement programs, continued. In the fourth quarter of 2016, we funded approximately $1.6 million for work on the Chinchillas project, bringing total expenditures to date to $12.1 million.
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.
We are undertaking 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. Our option agreement with Golden Arrow requires the notice of exercise of the option to be given by March 30, 2017. A decision with regards to such notice is subject to the remaining technical evaluation, which is scheduled for completion in the first quarter of 2017, as well as our assessment of market conditions and country risks, including the status of our export duty litigation.
Export duties
We entered into a fiscal stability agreement (the “Fiscal Agreement”) with the Federal Government of Argentina in 1998 for production from the Pirquitas mine. In December 2007, the National Customs Authority of Argentina (Dirección Nacional de Aduanas) ("Customs") levied an export duty of approximately 10% from concentrate for projects with fiscal stability agreements pre-dating 2002 and Customs has asserted that the Pirquitas mine is subject to this duty. We have challenged the legality of the export duty applied to silver concentrate and the matter is currently under review by the Federal Court (Jujuy) in Argentina.
The Federal Court (Jujuy) granted an injunction in our favor effective September 29, 2010, that prohibited Customs 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 appealed the condition to provide the parent guarantee. On November 17, 2016 the Appeal Court in Salta ruled in favour of the Federal Tax Authority and lifted the Injunction. Our subsequent request for appeal of this ruling to the Supreme Court was approved by the Appeal Court in Salta on December 27, 2016 and the suspension of payment under the Injunction remains in effect. We are also continuing discussions with the Federal Tax Authority and other government officials for potential resolution of the claim. We cannot predict the outcome of the court proceedings and those discussions. If we do not reach a successful resolution of the matter, the Federal Tax Authority may make further application to the court to have the Injunction lifted and 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 or remedies available under the Fiscal Agreement. Changes in our assessment of this matter could result in material adjustments to our consolidated statements of income (loss).