Guanajuato Silver Reports 2nd Consecutive Quarter of Positive Mine Operating Income ~ Also 2nd Consecutive Quarter of Positive Adjusted EBITDA of US$892,277 ~
Guanajuato Silver Reports 2nd Consecutive Quarter of Positive Mine Operating Income
~ Also 2nd Consecutive Quarter of Positive Adjusted EBITDA of US$892,277 ~
November 22, 2024 – Vancouver, British Columbia – Guanajuato Silver Company Ltd. (the “Company” or
“GSilver”) (TSXV:GSVR)(OTCQX:GSVRF) is pleased to announce financial and operating results for the three
month and nine month periods ending September 30, 2024. All dollar amounts are in US dollars (US$) and
prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting
Standards Board. This news release should be read in conjunction with the Company’s unaudited condensed
consolidated interim financial statements for the period ended September 30, 2024 and Management’s
Discussion & Analysis (“MD&A”) thereon, which can be viewed under the Company’s profile at
www.sedarplus.ca. Production results are from the Company’s wholly-owned El Cubo Mines Complex (“El
Cubo”), Valenciana Mines Complex (“VMC”), Pinguico p roject (“Pinguico”), and San Ignacio mine (“San
Ignacio”) in Guanajuato, Mexico, the Horcon Project (“Horcon”) located in Jalisco, Mexico, and the Topia
mine (“Topia”) located in Durango, Mexico.
Selected Q3 2024 (Three Month Period) Highlights:
• Positive mine operating income of $ 515,576; Q3 represents the second consecutive quarter of
positive income from mining operations.
• All-in Sustaining Cost (“AISC”)* of $23.88 per silver-equivalent (“AgEq”) ounce; this represents a
7% improvement over the previous quarter.
• Cash cost per AgEq ounce was $18.78; this was a 6% improvement over the previous quarter. Over
the past 12-months, GSilver has made significant capex investments designed to improve operational
efficiencies at all four of the Company’s producing silver mines (Except as otherwise noted, see note
to table below for details regarding the Company’s AgEq calculations).
• Production for the quarter of 779,797 AgEq derived from 413,607 ounces of silver, 3,617 ounces of
gold, 806,945 pounds of lead and 926,056 pounds of zinc.
• Silver production of 413,607 ounces was an increase of 4% over the previous quarter. Silver
production accounted for 50% of Q3 revenue; 43% of revenue was generated by gold production.
Guanajuato Silver is a primary silver and gold producer with over 90% of revenues being derived from
the sale of precious metals. All lead and zinc production comes exclusively from the Company’s Topia
mine located in northwest Durango.
• During the quarter the Company confirmed an important production milestone - over 3,000,000
AgEq ounces had been produced at El Cubo since the restart of operations in late 2021. For this
purpose, AgEq has been calculated using an 82.77:1 (Ag/Au) ratio from October 1, 2021, until
September 20, 2024.
• In the quarter, the Company announced the complete repayment of its US$7,500,000 silver and
gold pre-payment facility to Swiss-based precious metals trading firm, OCIM Metals & Mining S.A.
(“OCIM”); this followed the Q2 repayment in full of the US$5,000,000 concentrate pre-payment
facility owed to Ocean Partners UK Limited (”Ocean Partners”).
• Total tonnes milled at the Company’s three production facilities was 144,537 tonnes, which was a
decrease of 10% from the previous quarter. The majority of this decrease is attributable to
outstanding fleet and mill maintenance requirements; during the quarter, the Company undertook
an enhanced maintenance and repairs program at all operations that is expected to continue into
Q4.
• Revenue for the quarter of $18.3M represented a 17% increase over Q3 2023, and a decrease of
11% over the previous quarter. Consolidated revenue for the quarter was generated by a realized
average price of $29.43 per silver ounce, $2,477 per gold ounce, $0.93 per pound of lead, and $1.25
per pound of zinc.
• Positive adjusted EBITDA* of $892,277; the second consecutive quarter of positive adjusted EBITDA
confirms that cash flow from mining operations is improving.
• Net loss for the quarter of $4.8M . Non-cash items accounted for nearly 40% of this loss ; as an
example, the non-cash derivative loss related to the Company’s gold loan with Ocean Partners was
$1.66M. Importantly, as the gold spot price rises, derivative losses are more than off-set by higher
revenue from the sale precious metals concentrates.
• As of September 30, 2024, the Company had cash and cash equivalents of $1.6M and negative
working capital of $20.4M; subsequent to the end of the quarter, the C ompany closed an equity
financing on October 30 for C$8.72M.
*EBITDA, (Earnings Before Interest, Taxes, Depreciation and Amortization) Adjusted EBITDA, AISC 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.
OPERATING AND FINANCIAL HIGHLIGHTS
Commercial production at the El Cubo Mines Complex (“CMC”) commenced on October 1, 2021. The
Valenciana Mines Complex (“VMC”), the San Ignacio mine (“San Ignacio”) and the Cata mill facility, and the
Topia Mines Complex (“Topia”) were acquired on August 4, 2022. Topia had continuous production
throughout the acquisition. The San Ignacio mine recommenced production in August 2022 and production
at the Valenciana mine also began in August 2022. Recommissioning of the Cata plant began in December
2022 with processing commencing in January 2023.
The following table summarizes the Company’s consolidated operating and financial results for the three
and nine months ended September 30, 2024 and 2023:
1. Silver equivalents are calculated using 84.04:1 (Ag/Au), 0.03:1 (Ag/Pb) and 0.04:1 (Ag/Zn) ratio for Q3 2024; an
81.83:1 (Ag/Au), 0.04:1 (Ag/Pb) and 0.05:1 (Ag/Zn) ratio for Q3 2023; an 84.34:1 (Ag/Au), 0.04:1 (Ag/Pb) and 0.05:1
(Ag/Zn) ratio for YTD 2024; and an 82.21:1 (Ag/Au), 0.04:1 (Ag/Pb) and 0.05:1 (Ag/Zn) ratio for YTD 2023,
respectively.
2. Cash cost per silver equivalent ounce includes mining, processing, and direct overhead. See Reconciliation to IFRS
in the Non-IFRS Financial Measures section of this news release.
3. AlSC per AgEq oz includes mining, processing, direct overhead, corporate general and administration expenses, on-
site exploration, reclamation, and sustaining capital. See Reconciliation to IFRS in the Non-IFRS Financial Measures
section of this news release.
4. See Reconciliation of earnings before interest, taxes, depreciation, and amortization in the Non-IFRS Financial
Measures section of this news release.
5. Mine Operating Cashflow Before Taxes, Cash cost per silver equivalent, cost per tonne, AISC per AgEq ounce,
EBITDA, Adjusted EBITDA and working capital 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 the Non-IFRS Financial Measures section of 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. See Reconciliation to IFRS in the Non-IFRS Financial Measures section of this news
release.
NON-IFRS FINANCIAL MEASURES
The Company has disclosed certain non-IFRS financial measures and ratios in this MD&A, 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 ratio, fraction, percentage or similar
representation.
A n
on-IFRS ratio is defined by NI 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 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 for measures prepared in
accordance with IFRS. The measure is intended to assist readers in evaluating the Company’s liquidity.
As at
September 30,
2024
December 31,
2023
$ $
Current assets 19,396,804 20,658,097
Current liabilities 39,869,863 39,099,110
Working capital (20,473,059) (18,441,013)
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.
EBITDA
EBITDA is a non-IFRS financial measure, which excludes the following from net earnings:
• Income tax expense;
• Finance costs;
• Amortization and depletion.
Adjusted EBITDA excludes the following additional items from EBITDA:
• Share based compensation;
• Non-recurring impairments (reversals);
• Loss (gain) on derivative;
• 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.
Cash Cost per AgEq Ounce, All-In Sustaining Cost per AgEq 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.
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.