Guanajuato Silver Reports Q3 2023 Financial and Operating Results
November 24, 2023 – Vancouver, British Columbia – 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.
1AISC 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.
| Three months ended | Nine Months ended | |||||
|---|---|---|---|---|---|---|
| Consolidated | September 30 | September 30 | % | September 30 | September 30 | % |
| 2023 | 2022 | Change | 2023 | 2022 | Change | |
| Operating |
| Tonnes mined | 134,865 | 107,379 | 26% | 463,152 | 278,762 | 66% |
| Tonnes milled | 132,484 | 107,009 | 24% | 456,460 | 287,509 | 59% |
| Silver ounces produced | 425,488 | 329,298 | 29% | 1,361,940 | 610,633 | 123% |
| Gold ounces produced | 3,441 | 3,226 | 7% | 12,573 | 7,267 | 73% |
| Lead produced (lbs) | 935,738 | 537,608 | 74% | 2,718,236 | 537,608 | 406% |
| Zinc produced (lbs) | 857,660 | 677,127 | 27% | 2,908,056 | 677,127 | 329% |
| Silver equivalent (“Ag/Eq”) ounces | 787,086 | 700,264 | 12% | 2,666,470 | 1,313,847 | 103% |
produced (1)
| Silver ounces sold | 423,855 | 311,754 | 36% | 1,361,726 | 605,875 | 125% |
| Gold ounces sold | 3,773 | 2,997 | 26% | 12,786 | 7,199 | 78% |
| Lead sold (lbs) | 884,204 | 504,408 | 75% | 2,670,212 | 504,408 | 429% |
| Zinc sold (lbs) | 827,101 | 273,327 | 203% | 2,940,818 | 273,327 | 976% |
| Ag/Eq ounces sold(1) | 808,742 | 628,256 | 29% | 2,679,817 | 1,266,085 | 112% |
| Cost per tonne ($)(5) | 121.82 | 90.37 | 35% | 105.77 | 72.89 | 45% |
| Cash cost per Ag/Eq ounce ($)(1)(2)(5) | 20.79 | 13.86 | 50% | 18.39 | 16.03 | 15% |
| AISC per Ag/Eq ounce ($)(1)(3)(5) | 26.22 | 19.53 | 34% | 23.35 | 22.03 | 6% |
Financial
| Revenue | 15,643,649 | 8,871,863 | 76% | 49,585,115 | 21,392,490 | 132% |
| Cost of Sales | 19,968,655 | 12,213,605 | 63% | 59,451,052 | 28,127,651 | 111% |
| Mine operating loss | (4,325,006) | (3,341,742) | 29% | (9,865,937) | (6,735,161) | 46% |
| Mine operating cashflow before taxes(7) | (1,576,212) | (350,164) | 350% | (994,721) | (329,608) | 202% |
| Net loss | (7,062,158) | (8,405,337) | (10%) | (24,318,773) | (16,865,880) | 44% |
| EBITDA(4)(5) | (3,029,670) | (4,192,955) | (18%) | (11,673,138) | (7,827,068) | 49% |
| Adjusted EBITDA(4)(5) | (3,612,172) | (2,684,927) | (6%) | (9,783,963) | (7,203,755) | 52% |
| Realized silver price per ounce(6) | 23.60 | 19.06 | 24% | 23.46 21.07 | 11% |
1,724.81 Realized gold price per ounce (6) 1,929.31 12% 1,935.76 1,809.21 7% 0.86
| Realized lead price per pound(6) | 0.99 | 15% | 0.97 | 0.86 | 13% | |
| Realized zinc price per pound(6) | 1.10 | 1.44 | (23%) | 1.25 | 1.64 | (24%) |
| Working capital(5) | (19,558,888) | (2,591,389) | 655% | (19,558,888) | (2,591,389) | 655% |
Shareholders
Loss per share – basic and diluted (0.02) (0.03) (33%) (0.07) (0.07) 173% Weighted Average Shares Outstanding 341,055,800 271,509,812 26% 330,510,136 240,872,526 2%
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.
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.
| 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. |
ON BEHALF OF THE BOARD OF DIRECTORS "James Anderson"
Chairman and CEO
For further information regarding Guanajuato Silver Company Ltd., please contact:
JJ Jennex, Gerente de Comunicaciones, T: 604 723 1433 E: [email protected] Gsilver.com
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
This news release contains certain forward-looking statements and information, which relate to future events or future performance including, but not limited to, the ramp-up at the Company’s four producing silver mines remaining on schedule; details regarding cost reductions and cost controls going forward; the ability of the Company to continue to increase production, tonnage and recoveries of mineralized material at San Ignacio, Valenciana, El Cubo and Topia in accordance with its objectives and timetable; the targeting of higher grade materials at Valenciana and El Cubo, better mine performance being on the horizon, the precious metals market entering a new phase, the Company’s future development and production activities; and GSilver’s status as one of the fasting growing silver mining company in Mexico.
Such forward-looking statements and information reflect management's current beliefs and are based on information currently available to and assumptions made by the Company; which assumptions, while considered reasonable by the Company, are inherently subject to significant operational, business, economic and regulatory uncertainties and contingencies. These assumptions include: the potential quantity, grade and metal content of the mineralized material at El Cubo, San Ignacio, VMC and Topia, the geotechnical and metallurgical characteristics of such material conforming to sampled results and metallurgical performance; available tonnage of mineralized material to be mined and processed; resource grades and recoveries; assumptions and discount rates being appropriately applied to production estimates; prices for silver, gold and other metals remaining as estimated; currency exchange rates remaining as estimated; availability of funds for the Company's projects and to satisfy current liabilities and obligations including debt repayments; capital, decommissioning and reclamation estimates; prices for energy inputs, labour, materials, supplies and services (including transportation) and inflation rates remaining as estimated; no labour-related disruptions; no unplanned delays or interruptions in scheduled construction and production; all necessary permits, licenses and regulatory approvals are received in a timely manner; and the ability to comply with environmental, health and safety laws. The foregoing list of assumptions is not exhaustive.
Readers are cautioned that such forward-looking statements and information are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results, level of activity, production levels, performance or achievements of GSilver to differ materially from those expected including, but not limited to, market conditions, availability of financing, currency rate fluctuations, high inflation and interest rates, geopolitical conflicts including wars, actual results of exploration, development and production activities, actual resource grades and recoveries of silver, gold and other metals from the Company’s existing mines including El Cubo, San Ignacio, VMC and Topia, availability of third party mineralized material for processing, unanticipated geological or structural formations and characteristics, environmental risks, future prices of gold, silver and other metals, operating risks, accidents, labor issues, equipment or personnel delays, delays in obtaining governmental or regulatory approvals and permits, inadequate insurance, and other risks in the mining industry. There are no assurances that GSilver will be able to continue to increase production, tonnage milled and recoveries rates, improve grades and reduce costs at El Cubo, San Ignacio, VMC and/or Topia to process mineralized materials to produce silver, gold and other concentrates in the amounts, grades, recoveries, costs and timetable anticipated. In addition, GSilver’s decision to process mineralized material from El Cubo, San Ignacio, VMC and Topia is not based on a feasibility study of mineral reserves demonstrating economic and technical viability and therefore is subject to increased uncertainty and risk of failure, both economically and technically. Mineral resources and mineralized material that are not Mineral Reserves do not have demonstrated economic viability, are considered too speculative geologically to have the economic considerations applied to them, and may be materially affected by environmental, permitting, legal, title, sociopolitical, marketing, and other relevant issues. There are no assurances that the Company's projected grades of gold and silver at El Cubo, San Ignacio, VMC and Topia and the anticipated level of production therefrom will be realized. In addition, there are no assurances that the Company will meet its production forecasts or generate the anticipated cash flows from operations to satisfy its scheduled debt payments or other liabilities when due or meet financial covenants to which the Company is subject or to fund its exploration programs and corporate initiatives as planned. There is also uncertainty about the continued spread and severity of COVID-19, the ongoing war in Ukraine and high inflation and interest rates and the impact they will have on the Company's operations, supply chains, ability to access mining projects or procure equipment, contractors and other personnel on a timely basis or at all and economic activity in general. Accordingly, readers should not place undue reliance on forward-looking statements or information. All forward-looking statements and information made in this news release are qualified by these cautionary statements and those in our continuous disclosure filings available on SEDAR+ at www.sedarplus.com including the Company’s annual information form for the fiscal year ended December 31, 2021. These forward-looking statements and information are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances save as required by law.
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. | |||
| September 30 December 31 2022 As at 2023 $ $ Current assets 20,916,040 27,182,590 Current liabilities 40,474,928 33,155,294 Working capital (19,558,888) (5,972,704) | As at | September 30 | December 31 2022 |
| 2023 |
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.
| Three months ended | |||||
|---|---|---|---|---|---|
| 30-Sep | 30-Jun | 31-Mar | 31-Dec | 30-Sep | 30-Jun |
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 |
| $ | $ | $ | $ | $ | $ | |
|---|---|---|---|---|---|---|
| Revenues | 15,643,649 | 16,823,042 | 17,118,424 | 15,487,714 | 8,871,863 | 6,133,989 |
| Production cost | (16,138,682) | (16,415,956) | (15,723,907) | (12,911,041) | (9,670,274) | (5,767,560) |
| Transportation and other support cost | (719,251) | (878,096) | (825,173) | (596,916) | (178,676) | (69,021) |
| Inventory changes | (361,927) | 865,285 | (382,130) | 387,765 | 626,923 | (289,485) |
| Mine operating cash flows before taxes | (1,576,212) | 394,276 | 187,214 | 2,367,522 | (350,164) | 7,923 |
| $ | $ | $ | $ | $ | $ | |
| Revenues | 49,585,115 | 33,941,466 | 17,118,424 | 36,880,204 | 21,392,490 | 12,520,627 |
| Production cost | (48,278,545) | (32,139,863) | (15,723,907) | (33,868,210) | (20,957,169) (11,350,715) | |
| Transportation and other support cost | (2,422,519) | (1,703,268) | (825,173) | (1,011,081) | (414,165) | (171,667) |
| Inventory changes | 121,228 | 483,155 | (382,130) | 37,001 | (350,764) | (977,688) |
| Mine operating cash flows before taxes | (994,721) | 581,490 | 187,214 | 2,037,914 | (329,608) | 20,557 |
| Cumulative as at the end of each period | |||||
|---|---|---|---|---|---|
| 30-Sep | 30-Jun | 31-Mar | 31-Dec | 30-Sep | 30-Jun |
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 |
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.
| Three months ended | |||||
|---|---|---|---|---|---|
| September 30 | June 30 | March 31, | December 31, | September 30, | June 30, |
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 |
$ $ $ $ $ $ Net loss per financial statements (7,062,158) (8,557,538) (8,699,078) (9,905,707) (8,405,337) (3,521,390) Depreciation and depletion – cost of sales 2,748,795 2,784,515 3,337,906 2,515,349 2,991,577 1,664,219 Depreciation and depletion – general and administration 116,383 70,544 56,782 59,208 57,210 70,542 Interest and finance costs
| (income), net | 1,167,308 | 1,126,420 | 1,210,414 | 1,452,284 | 1,045,309 | 654,350 |
| Current income tax | - | - | - | (118,287) | 118,287 | - |
| EBITDA | (3,029,670) | (4,576,059) | (4,093,976) | (5,997,153) | (4,192,955) | (1,132,279) |
| Share based compensation | 226,334 | 650,135 | 251,175 | 268,164 | 601,100 | 231,594 |
| (Gain) loss on derivatives | (455,394) | (239,601) | (134,138) | 1,677,253 | (754,358) | (1,220,275) |
ARO unrealized foreign exchange (gain) loss (596,485) 1,098,944 1,182,666 629,811 73,358 (105,211) Other finance items, net 191,707 - 450,619 115,212 80,150 (123,634) Transaction cost associated with the acquisition of MMR - - - 145,387 1,216,992 - Union payment associated with acquisition of "EL Cubo Mines Complex" - (477,232) - - 488,634 - Gain on change of fair value on gold contingent payments to Endeavour - - - (1,624) (516,824) - Loss on change of fair value on silver contingent payments to MMR - - - 269,478 - - Allowance on receivable amount
| from Great Panther | - | - | - | 1,300,000 | - | - | |||
| Other expenses | (64,671) | - | (118,287) | - | - | - | |||
| VAT write-off | 116,008 | 133,885 | 162,144 | 93,412 | 318,975 | - | |||
| Adjusted EBITDA | (3,612,172) | (3,409,928) | (2,299,797) | (1,500,059) | (2,684,927) | (2,349,805) | |||
| $ | $ | $ | $ | $ | $ | ||||
| Net loss per financial statements | (24,318,773) | (17,256,616) | (8,699,078) | (26,771,585) | (16,865,880) | (8,460,542) |
| Cumulative as at the end of each period | |||||
|---|---|---|---|---|---|
| September 30 | June 30 | March 31, | December 31, | September 30, | June 30, |
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 |
Depreciation and depletion – cost of sales 8,871,216 6,122,421 3,337,906 8,920,902 6,405,553 3,413,976 Depreciation and depletion – general and administration 270,277 153,894 56,782 238,145 180,508 121,727 Interest and finance costs
| (income), net | 3,504,142 | 2,336,834 | 1,210,414 | 3,786,748 | 2,334,464 | 1,289,155 | |
| Current income tax | - | - | - | - | 118,287 | - | |
| EBITDA | (11,673,138) | (8,643,467) | (4,093,976) | (13,825,789) | (7,827,068) | (3,635,684) | |
| Share based compensation | 1,127,644 | 901,310 | 251,175 | 1,511,071 | 1,242,907 | 641,807 | |
| (Gain) loss on derivatives | (829,133) | (373,739) | (134,138) | (54,567) | (1,731,820) | (977,462) | |
| Unrealized foreign exchange loss | 1,685,125 | 2,281,610 | 1,182,666 | 805,937 | 176,125 | 102,767 | |
| Other finance items, net | 165,094 | - | 450,619 | (137,489) | (252,701) | (332,851) |
Transaction cost associated with the acquisition of MMR - 461,622 - 1,362,379 1,216,992 - Union payment associated with acquisition of "EL Cubo Mines Complex" (488,634) (488,235) - 488,634 488,634 - Gain on change of fair value on gold contingent payments to Endeavour - - - (518,448) (516,824) - Loss on change of fair value on silver contingent payments to MMR - - - 269,478 - - Allowance on receivable amount
| from Great Panther | - | - | - | 1,300,000 | - | - |
| Other expenses | (182,958) | (118,287) | (118,287) | |||
| VAT write-off | 412,037 | 296,029 | 162,144 | 412,387 | - | - |
| Adjusted EBITDA | (9,783,963) | (5,683,156) | (2,299,797) | (8,386,408) | (7,203,755) (4,138,726) |
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.
| Three months ended September 30, 2023 | |||
| El Cubo | VMC | Topia | Consolidated |
| Three months ended September 30, 2022 | |||
| El Cubo | VMC | Topia | Consolidated |
% Change
| Cost of sales(5) | 7,154,236 | 6,870,958 | 5,930,560 | 19,955,754 | 8,153,266 | - 4,060,339 | 12,213,605 | 63% |
| Transportation and selling cost(5) | (177,839) | (48,154) | (480,361) | (706,354) | (178,677) | - | - (178,677) | 295% |
| Inventory changes | (443,448) | (321,927) | 403,448 | (361,927) | 556,391 | - 70,532 | 626,923 | (158%) |
| Depreciation | (1,099,989) | (1,296,630) | (352,175) | (2,748,795) | (2,121,772) | - (869,803) | (2,991,577) | (8%) |
| Production cost | A 5,432,960 | 5,204,246 | 5,501,473 | 16,138,678 | 6,409,208 | - 3,261,067 | 9,670,274 | 67% |
Add (subtract):
Government royalties and mining 49,424 (11,659) 185,683 223,448 35,170 - - 35,170 taxes 535%
Total cash cost B 5,482,384 5,192,587 5,687,156 16,362,126 6,444,378 - 3,261,067 9,705,444 69% General and administrative -
- - - 2,093,962 - - 2,524,386
corporate (17%) Operating lease payments 333,143 154,935 28,711 516,789 292,563 - 170,775 463,338 12% 479,006 424,444 760,125 1,663,576 738,319 - 244,896 983,215 Sustaining capital expenditures 69%
| Total All-in sustaining cash cost | C | 6,294,533 | 5,771,967 | 6,475,993 | 20,636,454 | 7,475,260 | - 3,676,738 | 13,676,383 | 51% |
| 62,742 | 53,129 | 16,613 | 132,484 | 95,380 | - 11,629 | 107,009 | |||
| Tonnes milled | D | 24% | |||||||
| Silver equivalent ounces produced | E | 192,664 | 290,216 | 304,206 | 787,086 | 492,432 | - 207,832 | 700,264 | 12% |
| 86.59 | 97.95 | 331.16 | 121.82 | 67.20 | - 280.43 | 90.37 | |||
| Production cost per tonne | A/D | 35% | |||||||
| Cash cost per AgEq ounce produced | B/E | 28.46 | 17.89 | 18.70 | 20.79 | 13.09 | - 15.69 | 13.86 | 50% |
All-in sustaining cash cost per AgEq
| ounce produced | C/E 32.67 | 19.89 | 21.29 | 26.22 | 15.18 | - | 17.69 | 19.53 | 34% |
| Mining cost per tonne | 40.93 | 65.04 | 254.79 | 77.42 | 34.97 | - | 183.66 | 51.13 | 51% |
| Milling cost per tonne | 26.29 | 15.99 | 47.73 | 24.85 | 19.35 | - | 43.84 | 22.01 | 13% |
| 19.37 | 16.94 | 28.64 | 19.55 | 12.87 | - | 52.93 | 17.23 |
Indirect cost per tonne 13%
Production cost per tonne 86.60 97.96 331.16 121.82 67.20 - 280.43 90.37 35%
2,568,228 3,455,346 4,232,753 10,256,327 3,335,786 - 2,135,727 5,471,514 Mining 87% 1,649,796 849,428 792,900 3,292,125 1,845,505 - 509,772 2,355,276 Milling 40% Indirect 1,214,936 899,472 475,819 2,590,227 1,227,917 - 615,568 1,843,484 41%
Production Cost 5,432,960 5,204,246 5,501,472 16,138,679 6,409,208 - 3,261,067 9,670,274 67%
| Nine months ended September 30, 2023 | |||
| El Cubo | VMC | Topia | Consolidated |
| Nine months ended September 30, 2022 | |||
| El Cubo | VMC | Topia | Consolidated |
% Change Cost of sales (5) 22,695,055 17,499,108 19,171,767 59,365,930 24,067,312 - 4,060,339 28,127,651 111% (511,124) (252,949) (1,573,324) (2,337,397) (414,165) - - (414,164)
Transportation and other selling cost (5) 464%
| Inventory changes | (816,051) | 444,236 | 493,042 | 121,228 | (421,297) | - | 70,532 | (350,765) | (135%) |
| Depreciation | (4,125,446) | (3,047,729) | (1,698,040) | (8,871,216) | (5,535,748) | (869,803) | (6,405,553) | 38% | |
| Production cost | A 17,242,434 | 14,642,666 | 16,393,446 | 48,278,546 | 17,696,102 | - | 3,261,067 | 20,957,169 | 130% |
Add (subtract):
Government royalties and mining 126,129 27,072 608,494 761,695 98,991 - - 98,991 taxes 669%
Total cash cost B 17,368,563 14,669,738 17,001,940 49,040,241 17,795,093 - 3,261,067 21,056,160 133% General and administrative -
- - - 7,328,258 - - 5,086,006
consolidated 44% Operating lease payments 749,510 347,823 103,576 1,200,910 292,563 - 170,775 463,338 159% 1,551,061 1,292,120 1,857,873 4,701,054 2,096,685 - 244,896 2,341,581 Sustaining capital expenditures 101%
| Total All-in sustaining cash cost | C | 19,669,134 | 16,309,681 | 18,963,389 | 62,270,462 | 20,184,341 | - | 3,676,738 | 28,947,085 | 115% |
| Tonnes milled | D | 234,986 | 166,376 | 55,095 | 456,457 | 275,880 | - | 11,629 | 287,509 | 59% |
| Silver equivalent ounces produced | E | 818,488 | 940,015 | 907,968 | 2,666,470 | 1,106,021 | - | 207,832 | 1,313,853 | 103% |
| Production cost per tonne | A/D | 73.38 | 88.01 | 297.55 | 105.77 | 64.14 | - | 280.43 | 72.89 | 45% |
| Cash cost per AgEq ounce produced | B/E | 21.22 | 15.61 | 18.73 | 18.39 | 16.09 | - | 15.69 | 16.03 | 15% |
All-in sustaining cash cost per AgEq
| ounce produced | C/E 24.03 | 17.35 | 20.89 | 23.35 | 18.25 | - | 17.69 | 22.03 |
| Mining cost per tonne | 32.88 | 54.82 | 221.08 | 63.59 | 31.86 | - | 183.66 | 38.00 67% |
| 24.25 | 16.27 | 46.48 | 24.02 | 19.28 | - | 43.84 | 20.28 |
6%
Milling cost per tonne 18%
| Indirect cost per tonne | 16.25 | 16.92 | 29.99 | 18.15 | 13.00 | - | 52.94 | 14.61 | 24% |
| Production cost per tonne | 73.38 | 88.01 | 297.55 | 105.77 | 64.14 | - | 280.44 | 72.89 | 45% |
| Mining | 7,725,847 | 9,121,457 | 12,180,320 | 29,027,623 | 8,790,775 | - | 2,135,727 | 10,926,502 | 166% |
| Milling | 5,698,920 | 2,706,358 | 2,560,639 | 10,965,918 | 5,320,137 | - | 509,772 | 5,829,908 | 88% |
| Indirect | 3,817,667 | 2,814,851 | 1,652,487 | 8,285,005 | 3,585,190 | - | 615,569 | 4,200,759 | 97% |
| Production Cost | 17,242,435 | 14,642,666 | 16,393,446 | 48,278,546 | 17,696,102 | - | 3,261,068 | 20,957,169 | 130% |
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.