Guanajuato Silver Reports Q3 2023 Financial and Operating Results
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 c ombination 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 1 34,865 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.
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.
Three months ended Nine Months ended
Consolidated
September 30
2023
September 30
2022
%
Change
September 30
2023
September 30
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
produced (1)
787,086
700,264
12%
2,666,470
1,313,847
103%
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%
Realized gold price per ounce (6) 1,929.31 1,724.81 12% 1,935.76 1,809.21 7%
Realized lead price per pound (6) 0.99 0.86 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%
3
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 min es 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 p rocessing
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
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
4
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 a re 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,
co
sts 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, socio-
political, 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.
5
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 r atios 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.
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.
As at September 30
2023 December 31 2022
$ $
Current assets 20,916,040 27,182,590
Current liabilities 40,474,928 33,155,294
Working capital (19,558,888) (5,972,704)
6
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
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
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
$ $ $ $ $ $
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
7
Three months ended
September 30
2023
June 30
2023
March 31,
2023
December 31,
2022
September 30,
2022
June 30,
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)
Cumulative as at the end of each period
September 30
2023
June 30
2023
March 31,
2023
December 31,
2022
September 30,
2022
June 30,
2022
$ $ $ $ $ $
Net loss per financial statements (24,318,773) (17,256,616) (8,699,078) (26,771,585) (16,865,880) (8,460,542)
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)
8
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 di fferently 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. AIS C
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.