Andean Precious Metals Reports Q3 2022 Results and Updates Guidance
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ANDEAN PRECIOUS METALS REPORTS Q3 2022 RESULTS
AND UPDATES GUIDANCE
TORONTO, ON – November 9, 2022 – Andean Precious Metals Corp. (“Andean” or the
“Company”) (TSX-V: APM) (OTCQX: ANPMF) reports its operational and financial results for
the three and nine months ended September 30, 2022. All amounts are expressed in United
States dollars, unless otherwise noted.
This news release should be read together with Andean’s management’s discussion and
analysis (the “MD&A”) and condensed interim consolidated financial statements (the
“Financial Statements”) for the three and nine months ended September 30, 2022, which
are available under Andean’s profile on SEDAR (www.sedar.com).
Q3 2022 Highlights
• Silver equivalent production1 of 1.2 million ounces.
• Revenues of $23.6 million, with average quarterly silver prices declining by 21% year-
over-year to $19.23 per ounce.
• Cash operating costs (“ COC”) (by-product)2 of $18.76 per Ag ounce sold and all-in
sustaining costs (“AISC”) (by-product)2 of $21.72 per Ag ounce sold.
• Operating cash flow of $(2.5) million and free cash flow (“ FCF”)2 of $(3.3) million in
Q3 2022.
• Reported net loss of $2.8 million, or $0.02 per share, with adjusted earnings before
income tax, depreciation and amortization (“Adjusted EBITDA”)2, of $(3.1) million.
• Cash and cash equivalents of $84.7 million and $4.4 in marketable securities as at
September 30, 2022.
Company Guidance
• Andean continues to seek improvements to metallurgical performance at San
Bartolomé, despite improving recoveries since Q2 and achieving 80% recoveries in
August.
• New production contract signed for La Bolsa oxides adjacent to San Bartolomé with
production beginning in Q4.
• Revised production guidance for FY2022 of 5.0 to 5.3 million AgEq1 ounces, adjusted
down from our original guidance as a result of our metallurgical challenges. Revised
AISC2 guidance of $18.75 to $20.00 per Ag ounce sold (by -product), adjusted down
from our original guidance as a result of our lower production.
1 Silver equivalent ounces include gold ounces and are converted to a silver equivalent based on a ratio of realized silver and
gold prices during the periods discussed. Refer to the “Non-IFRS Measures” section of this press release.
2 FCF, COC, AISC, EBITDA, Adjusted EBITDA and available liquidity are measures of performance with no prescribed defini-
tion under IFRS. Refer to the “Non-IFRS Measures” section of this press release.
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Growth
• Andean remains active in evaluating and pursuing potential accretive transactions ,
leveraging its balance sheet strength.
The expansion study at San Bartolomé is now considering the dry-stack tailings
(“DSF”) in addition to the fines disposal facility (“FDF”) as a potential extractive source
of both silver and tin. The DSF was drilled and Andean expects to release an update
shortly.
CEO Commentary
“While we had a challenging quarter, our San Bartolomé operation continues to deliver
reliably on plant throughput and grade,” stated Simon Griffiths, President & CEO. “We are
working on improving recovery and while we are encouraged by the improvements seen in
Q3, the operational focus continues to centre on improving metallurgical recoveries and
lowering costs. Securing a new oxide production contract supports our Q4 2022 production
forecast and revised full year guidance. Our balance sheet is best -in-class with cash and
marketable securities of almost $90 million, giving us the resources to pursue our growth
strategy, despite an approximately 21% decline in year-over-year average silver prices.”
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Summary of financial and operating results
In thousands of USD, For the three months ended For the nine months ended
except where noted September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Operating Highlights
Tonnes milled kdmt 404 440 1,217 1,291
Daily average throughput dmt 4,590 4,894 4,625 4,852
Average head grade Ag g/t 115 114 119 115
Silver recovery Ag % 77 85 77 85
Silver production koz 1,168 1,375 3,555 4,087
Gold production oz 577 1,864 2,376 4,682
Silver sales koz 1,170 1,375 3,568 4,126
Gold sales oz 650 1,997 2,221 4,575
Total silver equivalent ounces1
Produced AgEq koz 1,219 1,512 3,752 4,410
Sold AgEq koz 1,227 1,521 3,752 4,442
Average realized price1 $/oz 19.23 24.13 21.96 25.46
Financial Highlights
Total revenue $ 23,603 36,691 82,383 113,076
Cost of goods sold $ (23,051) (24,612) (68,231) (73,631)
Depreciation and depletion $ (1,982) (2,426) (5,546) (7,226)
General and administrative $ (3,545) (3,317) (9,967) (11,287)
Exploration and evaluation $ (1,253) (1,283) (3,157) (2,946)
Other loss $ (462) (2,683) (1,263) (3,321)
Finance costs $ (328) (300) (988) (907)
Reversal of loan receivable $ - - - 3,263
Gain on loan settlement $ - - - 557
Income tax recovery (expense) $ 4,178 (224) (19) (13,384)
Net loss for the period after tax $ (2,840) 1,846 (6,750) (4,194)
Basic and diluted profit / (loss)
per common share
$/share (0.02) 0.01 (0.04) 0.03
EBITDA2 $ (4,708) 4,796 (235) 25,711
Adjusted EBITDA2 $ (3,116) 9,137 4,495 32,097
Operating cash flow $ (2,503) 5,395 245 28,046
Free cash flow2 $ (3,292) 4,034 (1,713) 25,237
COC2 $/oz 18.76 15.34 17.99 15.90
AISC2 $/oz 21.72 17.94 20.66 18.08
(1) Silver equivalent ounces include gold ounces and are converted to a silver equivalent based on a ratio of realized silver and
gold prices during the periods discussed. Refer to the “Non-IFRS Measures” section of this press release.
(2) FCF, COC, AISC, EBITDA, Adjusted EBITDA and available liquidity are measures of performance with no prescribed
definition under IFRS. Refer to the “Non-IFRS Measures” section of this press release.
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Andean processed 0.4 million tonnes of material through the San Bartolomé plant in Q3 2022
and 1.2 million tonnes in YTD 2022 consistent year-on-year. Average head grade for all feed
sources is higher year-on-year at 119 g/t Ag.
Average metallurgical recovery of 77% resulted in 1.2 million AgEq ounces produced in Q3
and 3.8 million ounces AgEq ounces YTD 2022. Recoveries remain a focus: while Q3
recovery was 77% versus 75% in Q2, and the plant achieved recovery of 80% in August, this
remains short of Andean’s target recoveries of 82%. Metallurgical investigations to improve
recoveries and reduce costs are ongoing.
Andean generated revenue of $23.6 million in Q3 2022 from the sale of 1.2 million AgEq
ounces at an average realized price of $19.23 per ounce, and $82.4 million in YTD 2022 from
the sale of 3.8 million AgEq ounces at an average realized price1 of $21.96 per ounce in YTD
2022.
The Company generated a net loss of $(2.8) million or $(0.02) per share in Q3 2022 and a
net loss of $(6.8) million or $(0.4) per share in YTD 2022.
EBITDA totaled $(4.7) million in Q3 2022 and $(0.2) million in YTD 2022. Adjusted EBITDA
totaled $(3.1) million in Q3 2022 and $4.5 million in YTD 2022.
Total cash costs were $18.76 in Q3 2022 and $17.99 in YTD 2022. AISC was $21.72 in Q3
2022 and $20.66 in YTD 2022. Total cash costs and AISC are higher than anticipated due
primarily to lower silver production caused by lower metallurgical recoveries and lower by-
product gold content.
Operating cash flow was $(2.5) million in Q2 2022 and $0.2 million in YTD 2022. Free cash
flow was $(3.2) million in Q2 2022 and $(1.7) million in YTD 2022.
Financial Position
In thousands of USD
except where noted
September 30, 2022 December 31, 2021 December 31, 2020
$'000 $'000 $'000
Cash 84,674 87,276 38,537
Marketable securities 4,381 4,177 2,485
Total assets 139,050 140,293 115,783
Current liabilities 20,632 19,434 24,695
Non-current liabilities 21,124 18,301 16,844
Total liabilities 41,756 37,735 41,539
Shareholders' equity 97,294 102,558 74,244
The Company held cash and cash equivalents of $84.7 million with marketable securities of
$4.4 million as at September 30, 2022. Andean has accelerated the recovery of VAT
receivables with cash recoveries of $5.9 million during the first nine months of 2022, with
additional recoveries planned for Q4 2022. Andean has also begun sales of its marketable
securities during Q4 2022, further strengthening its liquidity position in anticipation of funding
business growth in the near-term.
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Outlook and Revised FY2022 Guidance
Andean will continue to process ore from (i) its NI 43-101 compliant surface deposits (termed
“pallacos”) at San Bartolomé, (ii) reclaimed silver-bearing mine waste stockpiles at Tatasi-
Portugalete, and (iii) purchased ore from its community mining partners.
Andean is actively continuing to assess oxide production opportunities in Bolivia as part of its
strategy to extend the life of its operations at San Bartolomé. During Q3, Andean negotiated
with a Bolivian cooperative to add La Bolsa property to its mining operations, beginning
operations in early Q4. La Bolsa is located 5 km from the San Bartolomé plant and contains
over 200 thousand tonnes of mineralized material available to feed into the current mill.
Andean expects that material from La Bolsa will be processed throughout the rest of the year
and supports the Company’s revised guidance.
At San Bartolomé, Andean continues to evaluate options in respect of the Expansion Study
which is evaluating the feasibility of re-processing tailings and mineralized stockpiles at San
Bartolome. Drilling at the DSF was recently completed and the Company expects to release
results shortly. Andean is now considering the merits for a combined FDF/DSF tin recovery
project together with oxide leaching of the silver. Prevailing tin prices are considerably lower
than when the Company initiated these studies, though the long-term outlook for tin remains
strong.
During Q3 2022, the Company acquired the Jiwaki II area, comprising of 200 hectares north
of its current claims at the San Pablo gold exploration property. Recent surface sampling
indicates continuity of mineralization to the north, expanding project potential significantly for
the future.
The following table sets out Andean’s year-to-date results against its original full year 2022
production and AISC guidance as well as 2022 revised full year production and AISC
guidance:
YTD 2022 Actual 2022 Guidance(1) 2022 Revised Guidance(2)
Silver equivalent production 3.8M oz 5.3M to 5.8M oz 5.0M to 5.3M oz
AISC (by-product) $20.66/Ag oz $17.25 to $18.75/Ag oz $18.75 to $20.00/Ag oz
1 Andean’s commodity price assumptions supporting this estimate are $23.00/ounce silver and $1,750/ounce gold.
2 Andean’s commodity price assumptions supporting this estimate are $21.50/ounce silver and $1,750/ounce gold.
Subsequent to Quarter End
Andean announced a corporate reorganization whereby its main corporate functions will be
located in Monterrey, Mexico. The restructuring of the executive team includes Executive
Chairman, Alberto Morales replacing Simon Griffiths as CEO and Jeff Chan stepping down
as CFO with Juan Carlos Sandoval assuming the CFO role.
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Notice of Conference Call and Webcast
Management will host a conference call to discuss the Company’s Q3 2022 financial and
operating results. A question-and-answer session will follow management's prepared
remarks, at which time the operator will provide instructions for qualified equity analysts to
submit questions. Details of the call are as follows:
Date & Time Thursday, November 10, 2022 at 8:30 a.m. ET
Telephone Toll-free in Canada and the US +1-866-696-5894
Local or International +1-416-406-0743
Participant passcode is 2891712#
Please allow up to 10 minutes to be connected to the conference call.
Webcast A live audio webcast of the earnings call will be available at
https://bit.ly/Q32022APM. Please connect at least 10 minutes prior to
the call start time to ensure adequate time for any software download
that may be required to join the webcast.
Replay An archived replay of the webcast will be available for 90 days on the
Company’s website at www.andeanpm.com.
Qualified Person Statement
The scientific and technical content disclosed in this press release was reviewed and
approved by Donald J. Birak, Independent Consulting Geologist to the Company, a Qualified
Person as defined by Canadian National Instrument 43-101, Registered Member, Society for
Mining, Metallurgy and Exploration (SME), Fellow, Australasian Institute of Mining and
Metallurgy (AusIMM).
Non-IFRS Measures
Certain non-IFRS measures have been included in this news release. The Company believes
that these measures, in addition to measures prepared in accordance with International
Financial Reporting Standards (“IFRS”), provide readers with an improved ability to evaluate
its underlying performance and to compare it to information reported by other companies.
The non-IFRS measures are intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared in
accordance with IFRS. These measures do not have any standardized meaning prescribed
under IFRS, and therefore may not be comparable to similar measures presented by other
companies.
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Average Realized Price
The Company uses the average realized price per ounce of silver and gold sold to better
understand the silver and gold price and, once applicable, cash margin realized throughout
a period. Average realized price is calculated as revenue divided by ounces sold.
The following table reconciles this non-IFRS measure to the most directly comparable IFRS
measure disclosed in the Financial Statements and MD&A.
In thousands of USD, For the three months ended For the nine months ended
except where noted September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Silver revenue $ 22,449 33,167 78,348 105,028
Silver sold k oz 1,170 1,375 3,568 4,126
Average realized price $/oz 19.23 24.12 21.96 25.46
In thousands of USD, For the three months ended For the nine months ended
except where noted September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Gold revenue $ 1,104 3,524 4,035 8,047
Gold sold oz 650 1,997 2,221 4,575
Average realized price $/oz 1,698 1,764 1,817 1,759
Total Cash Costs
The Company reports total cash costs on a per silver ounce sold basis. In addition to
measures prepared in accordance with IFRS, such as revenue, the Company believes this
information can be used to evaluate its performance and ability to generate operating
earnings and cash flow from its mining operations. The Company uses this metric to monitor
operating cost performance. Total cash costs include cost of sales such as mining,
processing, mine support services, royalties, treatment and refining charges, and changes in
inventories, less gold revenue divided by silver ounces sold to arrive at total cash costs per
ounce of silver sold.
The following table reconciles this non-IFRS measure to the most directly comparable IFRS
measure disclosed in the Financial Statements and MD&A.
In thousands of USD, For the three months ended For the nine months ended
except where noted September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Silver sold k oz 1,170 1,375 3,568 4,126
Total cash cost reconciliation
Cost of sales $ 23,051 24,612 68,231 73,631
Less: by-product gold credits $ (1,104) (3,523) (4,035) (8,047)
Total cash costs $ 21,947 21,089 64,196 65,584
Cash costs per oz of silver sold $/oz 18.76 15.34 17.99 15.90
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All-in Sustaining Costs
The Company believes that AISC more fully defines the total costs associated with producing
silver. AISC is calculated based on the definitions published by the World Gold Council
(“WGC”). The Company calculates AISC as the sum of total cash costs (as described above),
sustaining capital expenditures (excluding significant projects considered expansionary in
nature), accretion on decommissioning provisions, payments on lease obligations, and
corporate administrative costs less any share-based payments and corporate development
costs considered expansionary in nature, all divided by silver ounces sold during the period
to arrive at a per ounce amount. Other companies may calculate this measure differently as
a result of differences in underlying principles and policies applied. Differences may also arise
due to a different definition of sustaining versus expansion capital.
The following table reconciles this non-IFRS measure to the most directly comparable IFRS
measure disclosed in the Financial Statements and MD&A.
In thousands of USD, For the three months ended For the nine months ended
except where noted September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Silver sold k oz 1,170 1,375 3,568 4,126
All-in sustaining cost reconciliation
Total cash costs $ 21,947 21,089 64,196 65,584
Sustaining capital expenditures $ 742 1,361 1,823 2,809
Accretion on rehabilitation provision $ 278 237 842 714
Payments on lease obligations $ 47 - 135 -
Sustaining exploration and evaluation $ - 12 - 31
Corporate administrative costs $ 2,402 1,962 6,734 5,441
Total all-in sustaining costs $ 25,416 24,661 73,730 74,579
AISC per oz of silver sold $/oz 21.72 17.94 20.66 18.08
EBITDA and Adjusted EBITDA
The Company uses EBITDA and Adjusted EBITDA to better understand its ability to generate
liquidity by producing operating cash flow to fund working capital needs, service debt
obligations, and fund capital expenditures. EBITDA is defined as net earnings before interest
and finance expense/income, current and deferred income tax expenses and depreciation
and depletion. EBITDA is also adjusted for non-recurring or non-sustaining transactions such
as the change in fair value in marketable securities, corporate development expenses and
certain exploration and evaluation expenses.
The following table reconciles this non-IFRS measure to the most directly comparable IFRS
measure disclosed in the Financial Statements and MD&A.