ANDEAN PRECIOUS METALS REPORTS Q3 2023 RESULTS Company continues to pivot Bolivian operations into a processing facility focused on securing long-term material purchasing contracts, driving margins and cash flow
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ANDEAN PRECIOUS METALS REPORTS Q3 2023 RESULTS
Company continues to pivot Bolivian operations into a processing facility focused on securing
long-term material purchasing contracts, driving margins and cash flow
TORONTO, ON – November 29, 2023 – Andean Precious Metals Corp. (“Andean” or the
“Company”) (TSX-V: APM) (OTCQX: ANPMF) reported its operating highlights and unaudited
condensed interim financial results for the three and nine months ended September 30, 2023. All
amounts are expressed in United States dollars, unless otherwise noted (C$ refers to Canadian
dollars). This news release should be read together with Andean’s management discussion and
analysis (“MD&A”) and condensed interim consolidated financial statements for the three and nine
months ended September 30, 2023 (the “Financials”), which are available under the Company’s
profile on SEDAR+ (www.sedarplus.ca).
“This has been a transformative period for Andean. In September, we announced our exclusive
agreement with Silver Elephant to purchase up to 800,000 tonnes of oxide material from its Paca
Silver Project,” stated Alberto Morales, Andean’s Executive Chairman and Chief Executive Officer.
Mr. Morales added, “Earlier this week, we shared the exciting news of our acquisition of Golden
Queen Mining, LLC, which operates Soledad Mountain mine , strengthening our position as a
larger, more robust, and better diversified precious metals producer while maintaining our strong
liquid asset position. From the outset of 2023 we've been clear about our objectives: extend the
life of our Bolivian operations and grow our Company through acquisitions in the Americas. We
have now achieved both objectives.”
As part of Andean’s strategy to grow while improving margins and cash flow , the Company is
making strategic adjustments to optimize production in Bolivia and at Soledad Mountain in
California. In January 2024, Andean will release an updated NI 43 -101 reserve and resource
estimate for Soledad Mountain. This will be followed by a new mine plan, changes in the ore
control process as well as production and cost improvements. Meanwhile, at San Bartolomé, the
transition from a conventional mining operation is near complete , with the majority of ounces
produced arising from third party feedstock. By mid-2024, Andean anticipates that production from
the fines disposal facility (“FDF”) , together with third -party oxide material, will replace the low -
grade and high-cost tonnage from Pallacos.
Q3 2023 Highlights
• The Company produced approximately 1.2 million silver equivalent ounces (“Ag Eq oz”)1,
an increase of 2% compared to Q2 2023. The average head grade and recoveries were
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 -GAAP Financial Measures, Ratios and
Supplementary Financial Measures” section of this press release for further details.
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128 g/t Ag and 76% compared to 119 g/t Ag and 79% in Q2 2023. Based on 3.5 million
ounces of silver equivalent production to date, and expected production for the remainder
of the year, the Company is decreasing its 2023 silver equivalent production guidance
range to between 4.6 and 4.8 million ounces.
• Total revenue of $38.2 million, based on sales of 1.6 million Ag Eq oz at an average
realized price of $24.34 per ounce, compared with Q2 2023 total revenue of $15.3 million
from the sales of 0.6 million Ag Eq oz at an average realized price of $24.65 per ounce.
The total revenue increase of 150%, or $22.9 million, is due to the inclusion of 540,000 Ag
Eq oz classified as inventory as at the end of Q2 2023 as well as an increase in production.
• As of September 30, 2023, delayed sales of approximately 233,000 Ag Eq oz were valued
at $4.6 million and classified as inventory. Subsequent to September 30, 2023, the bullion
was sold for a total of $5.4 million based on an average realized silver price of $23.46 per
ounce.
• In Q3 2023, cost of sales was $30.9 million, an increase of 162%, when compared to Q2
2023, mainly due to the recognition of costs associated with 540,000 Ag Eq oz classified
as inventory in Q2 2023 and sold in Q3 2023.
• General and administrative expenses of $2.7 million were $0.4 million lower than Q2 2023
and an $0.8 million improvement over Q3 2022. The decrease over Q2 2023 was largely
due to lower share-based compensation expenses and management fees.
• For Q3 2023 and Q2 2023, reported income from mine operations was $6.3 million and
$2.4 million, respectively. In Q3 2023, the Company reported net income of $0.1 million
compared to net income of $0.2 million in Q2 2023.
• Earnings before interest, taxes, depreciation and amortization (“EBITDA”)2 and adjusted
earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) 2
improved to $4.3 million and $6.8 million, respectively, compared with $3.7 million and $4.9
million in Q2 2023. The increase over Q2 2023 was largely due to higher revenues, lower
exploration and evaluation costs and general and administration costs, part ially offset by
higher operating expenses.
• Operating cash costs (“OCC”)2 per ounce of silver produced, net of by-product credits, was
$19.39, an increase of 1% over Q2 2023 primarily due to higher oxide material purchasing
costs.
• All-in sustaining costs (“AISC”)2 per silver ounce sold, net of by-product credits was $21.28,
2 AISC, OCC, EBITDA and Adjusted EBITDA are measures of financial performance with no prescribed definition under
IFRS. Refer to the “Non -GAAP Financial Measures, Ratios and Supplementary Financial Measures” section of this
press release for further detail, including a reconciliation of these metrics to the financial statements.
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a decrease of 10% when compared to Q2 2023 . Based on the Company’s nine -month
AISC of $22.60 per ounce sold, it is increasing its AISC guidance for 2023 to between
$22.50 and $22.90 per silver ounce sold.
• Positive net working capital of $ 86.1 million as of September 30, 2023, including liquid
assets of $88.1 million. Liquid assets were comprised of $76.8 million in cash, silver bullion
of $6.3 million, marketable securities of $4.3 million and VAT certificates receivable of $1.5
million. Liquid assets were $91.8 million as at December 31, 2022.
• Pursuant to its normal course issuer bid (“NCIB”), in Q3 2023 the Company repurchased
and cancelled 780,500 shares at an average purchase price of C$0.74 per share for a total
of $0.4 million (C$0.6 million). Since the inception of the NCIB in the fall of 2022, a total of
3,160,100 shares at an average purchase price of C$0.79 have been repurchased and
cancelled for a total of $1.9 million (C$2.5 million).
• Civil construction and procurement of the equipment required for the silver recovery project
at the Company’s FDF is progressing as scheduled. Delivery of the equipment has
commenced and is ongoing. Commissioning and commencement of production is targeted
for the first half of 2024.
• The Company signed an exclusive five-year agreement to purchase up to 800,000 tonnes
of oxide material from the Paca silver project in Bolivia. Paca is an undeveloped,
epithermal silver and base metal deposit in Bolivia located less than 200 km southwest of
Andean’s San Bartolomé mine and processing facilities near Potosí.
Environment, Social and Governance Summary Performance
Health and safety
• Lost time injury frequency rate (“LTIFR”) 3 was zero during Q3 2023 and the Company
achieved a significant safety milestone of approximately 514 days with no lost time injuries
(“LTI”). One of the Company’s goals is to maintain a safe and healthy working environment
for all, with a strong safety culture where everyone is continually reminded of the
importance of keeping themselves and their colleagues healthy and injury-free.
• The Company is committed to have all employees and contractors return home safe every
day. Regular safety awareness campaigns are conducted through external training
consultants for all personnel.
3 LTIFR refers to the number of lost time injuries occurring in a workplace per 1 million hours worked. While LTI include
all on-the-job injuries that require a person to stay away from work more than 24 hours or which result in death or
permanent disability.
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Environment
• Water management & tailings dams management: In Q3 2023, water consumption at San
Bartolomé was 51% compared to 53% in Q2 2023. The reduction in water consumption
was achieved by reusing 100% of water from the tailings dam, 47% water from the
wastewater treatment plant or rainwater collection and 2% fresh water for office and food
services. Monthly external monitoring was conducted on water and sediment for
surrounding lagoons. Piezometers and environmental wells are externally and internally
monitored as part of the Company’s water management.
• Climate action: Manquiri carries out the inventory of its greenhouse gas emissions for
scopes 1, 2 and 3. For scopes 1 and 2, objectives are in place with a goal to be carbon
neutral. Emissions monitoring in the refinery and waste incinerator are conducted monthly
to ensure clean air.
• Environmental incidents rate : The reportable environmental incidents rate remain ed at
zero in the third quarter and year-to-date.
Community
Year to date, donations, medical support and infrastructure investments were provided to local
communities, including:
• 11 new homes were delivered to the Chalviri Baja and Phusuta communities to provide
housing for families in dire need of accommodation.
• Teachers and students of the Chalviri Educational Unit continued to receive training
through workshops and seminars.
• The Company participated in several community development initiatives, including
providing water purification materials for the Escuela Robertito community and 118
children who live and receive education on the slopes of Cerro Rico.
Summary of Operating and Financial Results
Operating Results Summary
Q3 Q2 Q3 Q3 YTD YTD
Units 2023 2023 Change 2023 2022 Change 2023 2022 Change
Tonnes mined (1) k dmt 390 468 (17%) 390 436 (10%) 1,291 1,455 (11%)
Average ROM mined ore
grade Ag g/t 42 43 (2%) 42 56 (25%) 46 60 (23%)
Average +8 mined ore
grade Ag g/t 78 75 4% 78 94 (18%) 74 98 (24%)
Tonnes purchased (2) k dmt 208 167 25% 208 113 85% 464 347 34%
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Average purchased grade Ag g/t 179 186 (4%) 179 230 (22%) 188 221 (15%)
Tonnes milled (3) k dmt 384 385 0% 384 404 (5%) 1,144 1,217 (6%)
Daily average throughput dmt 4,474 4,561 (2%) 4,474 4,590 (3%) 4,499 4,625 (3%)
Average head grade Ag g/t 128 119 8% 128 115 11% 118 119 (1%)
Silver recovery % 76 79 (3%) 76 77 (1%) 78 77 2%
Silver production k oz 1,190 1,189 0% 1,190 1,168 2% 3,357 3,555 (6%)
Gold production oz 640 396 62% 640 577 11% 1,270 2,376 (47%)
Silver equivalent
production (4) k oz 1,242 1,221 2% 1,242 1,219 2% 3,460 3,752 (8%)
Silver sales k oz 1,552 620 150% 1,552 1,170 33% 3,154 3,568 (12%)
Gold sales oz 200 - 100% 200 650 69% 415 2,221 (81%)
Silver equivalent sales (4) k oz 1,568 620 153% 1,568 1,227 28% 3,188 3,752 (15%)
Average realized silver
price (6) $/oz 24.34 24.65 (1%) 24.34 19.23 27% 24.00 21.96 9%
Average market silver price $/oz 23.57 24.13 (2%) 23.57 19.23 23% 23.40 21.92 7%
Silver Equivalent Production Breakdown by Source
Pallacos k oz 274 403 (32%) 274 394 (30%) 1,065 1,235 (14%)
Mine reclamation
stockpiles k oz 53 38 38% 53 166 (68%) 255 561 (55%)
Cachi Laguna k oz 137 125 9% 137 159 (14%) 383 576 (33%)
Oxide purchases k oz 777 655 19% 777 500 55% 1,757 1,380 27%
Total k oz 1,242 1,221 2% 1,242 1,219 2% 3,460 3,752 (8%)
Financial Results Summary
(in thousands except for Q3 Q2 % Q3 Q3 % YTD YTD %
per oz numbers) 2023 2023 Change 2023 2022 Change 2023 2022 Change
Revenue $38,174 $15,284 150% $38,174 $23,603 62% $76,503 $82,383 (7%)
Cost of sales 30,892 11,771 162% 30,892 23,051 34% 63,880 68,231 (6%)
Income from mine
operations
6,273 2,448 156% 6,273 (1,430) 539% 9,095 8,606 6%
Net income (loss) 76 169 (141%) 76 (2,840) 103% 464 (6,750) 105%
Net income (loss) per
share
-Basic 0.00 0.00 100% 0.00 (0.02) 100% 0.00 (0.04) 100%
-Diluted 0.00 0.00 100% 0.00 (0.02) 100% 0.00 (0.04) 100%
Net cash provided from
(used in) operating
activities
8,661 (5,293) 264% 8,661 (2,503) 446% (955) 245 (490%)
Free cash flow (5) 6,904 (5,588) 224% 6,904 (3,292) 310% (3,570) (1,713) 108%
EBITDA (5) 4,280 3,657 11% 4,280 (4,708) 186% 9,453 (235) 4031%
Adjusted EBITDA (5) 6,799 4,928 38% 6,799 (3,116) 318% 12,200 4,495 171%
Ending cash and cash
equivalents
76,823 70,427 9% 76,823 84,674 9% 76,823 84,674 (9%)
Capital expenditures 1,757 295 496% 1,757 789 123% 2,615 1,968 34%
Per ounce produced
OCC (by-product)(5) $19.39 $19.15 1% $19.39 $18.19 7% $19.94 $18.08 10%
Per ounce sold
OCC (by-product)(5) $19.65 $18.99 3% $19.65 $18.74 5% $20.00 $17.99 11%
AISC (by-product)(5) $21.28 $23.69 (10%) $21.28 $21.69 (2%) $22.60 20.66 12%
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(1) Material m ined during 2023 and 2022 includes material from the Company’s permitted areas, including Santa Rita,
Huacajchi, Antuco, El Asiento, Monserrat and Tatasi-Portugalete. Mined material is reported as Run-of-Mine (“ROM”).
(2) Purchased material includes oxidized material purchased from local mining cooperatives as well as through the Company’s
contract with RALP Compañia Minera S.R.L. (“RALP”).
(3) Tonnes milled is reported as +8 mesh. The acronym “dmt” means dry metric tonnes.
(4) Silver equivalent production and silver equivalent sales include gold production and sales, respectively. Equivalent ounces
are calculated using the Company’s average realized gold and silver prices during the referenced period. Refer to the “Non-
GAAP Financial Measures, Ratios and Supplementary Financial Measures” section of this news release for further detail.
(5) FCF, EBITDA, Adjusted EBITDA, OCC, costs per tonnes and AISC are measures of financial performance with no prescribed
definition under IFRS. Refer to the “Non-GAAP Financial Measures, Ratios and Supplementary Financial Measures” section
of this news release for further detail, including a reconciliation of these metrics to the financial statements.
(6) This supplementary financial measure within the meaning of NI 52-112 is calculated as a ratio of revenue from the
consolidated financial statements and units of metal sold.
2023 Outlook Update and Guidance
In 1987, the City of Potosí, including the Cerro Rico Mountain, was declared a World Heritage site
by UNESCO. Twenty-seven years later, in 2014, the Ministry of Mining and Metallurgy of Bolivia
issued Ministerial Resolution, which regulates all mining operations on the Cerro Rico Mountain.
The Company agrees that protecting the Cerro Rico Mountain and City of Potosí while preserving
the livelihoods of local mining cooperatives is very important.
In 2017, at the request of the Ministry of Mining & Metallurgy and the Departmental Federation of
Mineral Cooperatives, COMIBOL defined new areas for the future relocation of miners working at
an elevation of more than 4,400 metres. In response, Manquiri shifted its mining operations from
above 4,400 metres to focus on mining its Pallacos located below 4,400 metres . O nly partial
progress has been achieved relocating mining cooperatives and privately held mining companies.
As the Company has accelerated the transition from mining its nearly depleted high-cost Pallacos
to processing its lower cost FDF material, the Company has agreed to negotiate with COMIBOL
a reduction of the Pallacos in exchange for new oxide deposits. As part of the negotiation, during
Q3 2023, COMIBOL requested the Company provisionally suspend mining of its low -grade
Pallacos until a final resolution is issued. The Company anticipates a resolution with COMIBOL
shortly.
To bridge the gap between now and the anticipated commencement of the FDF production in H1
2024, the Company intends to increase the purchase of third -party oxides and processing of
material from the recently signed contracts for the Alta Vista and Paca deposits. To date in 2023,
silver equivalent ounces produced from third parties represents more than 78% of total ounces
produced in Q3 2023 and 69% for the nine months ended September 30, 2023.
Following the completion of the FDF project by mid -2024, management is anticipating that
production from the FDF and third-party oxide material will replace low -grade and high -cost
tonnage from Pallacos.
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Based on the first nine months of production at its Bolivian operations and the government
restrictions on mining activities at Pallacos, the Company is decreasing its 2023 silver equivalent
production guidance range to between 4.6 and 4.8 million ounces.
Based on (i) the hardness of third -party purchased oxide material, (ii) the increase in third-party
purchases, and (iii) an increase in the cost of consumables, the Company is increasing its AISC
guidance for its Bolivian operations by approximately 4% (based on the top end of revised AISC
guidance provided in the Q2 2023 MD&A) to a range of $22.50 to $22.90 per silver ounce sold.
The following table sets out Andean’s year -to-date results for its Bolivian operations against its
original full year 2023 guidance and its revised 2023 guidance:
YTD 2023 Actual Original
2023 Guidance(1)
Revised
2023 Guidance(2)
Silver equivalent production 3.5 million AgEq oz 4.8 million to 5.2 million oz 4.6 million to 4.8 million oz
AISC (by-product) / Ag oz sold $22.60/Ag oz $19.50 to $20.30/Ag oz $22.50 to $22.90/Ag oz
Capital expenditures $1.2 million $8 million to $10 million $6.5 million to $8.5 million
(1) Andean’s commodity price assumptions supporting this estimate are $21/oz silver.
(2) Andean’s commodity price assumptions supporting this estimate are $22/oz silver.
Q3 2023 Webcast
Management will host a webcast tomorrow morning to discuss the Company’s Q3 2023 financial
and operating results. A question -and-answer session will follow management ’s prepared
remarks. Details of the webcast are as follows:
Date and time: Thursday, November 30, 2023 at 9:00 a.m. ET / 6:00 a.m. PT
Conference call: Canada/USA Toll Free: 1-800-319-4610
Toronto Toll: +1-416-915-3239
International Toll: +1-604-638-5340
Webcast: A live audio webcast of the earnings call will be available at
https://www.gowebcasting.com/13100
Notes: To access the live webcast, please connect at least 15 minutes prior to
the 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 at
https://www.gowebcasting.com/13100 and on Andean’s website:
www.andeanpm.com.
Qualified Person Statement
The scientific and technical content disclosed in this press release was reviewed and approved
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by Donald J. Birak, Independent Consulting Geologist to the Company, a Qualified Person as
defined by National Instrument 43-101 – Standards for Disclosure for Mineral Projects, Registered
Member, Society for Mining, Metallurgy and Exploration (SME), Fellow, Australasian Institute of
Mining and Metallurgy (AusIMM). Mr. Birak has visited Manquiri’s various sites frequently , most
recently in September 2023.
About Andean Precious Metals
Andean is a growing precious metals producer focused on top-tier jurisdictions in the Americas.
The Company owns and operates the San Bartolomé project in Potosí, Bolivia and the Soledad
Mountain mine in Kern County, California, and is well-funded to act on future growth opportunities.
Andean’s leadership team is committed to creating value; fostering safe, sustainable and
responsible operations; and achieving our ambition to be a multi-asset, mid-tier precious metals
producer.
For more information, please contact:
Trish Moran Anna Speyer
VP Investor Relations NATIONAL Capital Markets
[email protected] [email protected]
T: +1 416 564 4290 T: +1 416 848 1376
Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Caution Regarding Forward-Looking Statements
Certain statements and information in this release constitute “forward-looking statements” within
the meaning of applicable U.S. securities laws and “forward -looking information” within the
meaning of applicable Canadian securities laws, which we refer to collectively as “forward-looking
statements”. Forw ard-looking statements are statements and information regarding possible
events, conditions or results of operations that are based upon assumptions about future
economic conditions and courses of action. All statements and information other than statements
of historical fact may be forward-looking statements. In some cases, forward-looking statements
can be identified by the use of words such as “seek”, “expect”, “anticipate”, “budget”, “plan”,
“estimate”, “continue”, “forecast”, “intend”, “believe”, “predict”, “potential”, “target”, “may”, “could”,
“would”, “might”, “will” and similar words or phrases (including negative variations) suggesting
future outcomes or statements regarding an outlook.
Forward-looking statements in this release include, but are not limited to, statements and
information regarding: the timing of the NI 43 -101 reserve and resource estimate for Soledad
Mountain, the Company's production outlook and capital expenditure expectations for 2023, the
timing of commissioning and commencement of production at the FDF, and the Company’s plans
for growth through exploration activities, acquisitions or otherwise. Such forward -looking
statements are based on a number of material factors and assumptions, including, but not limited