Santacruz Silver Reports Fourth Quarter/Year-End 2021 Financial Results
May 3, 2022
Santacruz Silver Reports Fourth Quarter/Year-End 2021 Financial Results
Vancouver, B.C. – Santacruz Silver Mining Ltd. (TSXV:SCZ) (“the Company” or “Santacruz”) reports on its financial and
operating results for the fourth quarter (“Q4”) of 2021 and for the year ended December 31, 202 1. The full version of the
financial statements and accompanying management discussion and analysis can be viewed on the Company’s website at
www.santacruzsilver.com or on SEDAR at www.sedar.com. All financial information is prepared in accordance with
International Financial Reporting Standards (“IFRS”) and all dollar amounts are expressed in thousands of US dollars, except
per unit amounts, unless otherwise indicated.
Carlos Silva, CEO of Santacruz, stated; “During 2021 the Zimapan and Rosario mines generated a gross profit of US$10.3
million as compared to US$1.0 million in 2020, however; a one -time administration expenses and Mexican income tax-
based adjustments resulted in an overall consolidated net loss of US$11. 6 million. Production for silver, zinc and copper,
increased in 2021 when compared to 202 0.” Mr. Silva continued; “During 2021, Zimapan AISC increased to US$22.45/oz
from US$19.03 which was primarily attributable to cost escalations related to the increased developments at the Lomo de
Toro, the Concordia and Escondida area, additional costs incurred for preventative maintenance on the mobile fleet and the
Mexican labour reform that came into effect during 2021”
Mr. Silva went on to say; “Placing our Rosario mine into care and maintenance during 2021 was a prudent decision which
has allowed us to start this year entirely focus on our more productive assets . In addition, the recently a cquired Bolivian
silver and zinc assets from Glencore will transform the Company into a solid producer in 2022 and beyond. We have started
a drilling campaign at the Santa Gorgonia exploration project which is adjacent to our Zimapan mine . We are anticipating
announcing the first drilling results by the end of the second quarter of 2022.”
Selected consolidated operating and financial information for the three months and year ended December 31, 2021, and
the three months and year ended December 31, 2020 is presented below.
Three months ended Dec 31, Years ended Dec 31,
2021 (1) 2020 2021 (1) 2020
Financial
Revenue 13,821 10,217 53,334 33,097
Gross profit 621 1,119 10,298 988
Net loss (10,450) (295) (11,565) (1,493)
Net loss per share - basic ($/share) (0.03) (0.00) (0.04) (0.01)
Adjusted EBITDA (loss) (2) (4,469) 1,402 713 (181)
Operating
Material processed (tonnes milled) 192,901 201,585 730,412 652,423
Silver equivalent produced (ounces) (3) 842,027 1,000,242 3,220,974 3,590,451
Silver production (ounces) 318,374 340,888 1,289,172 1,135,713
Gold production (ounces) 0 77 132 276
Lead production (tonnes) 1,012 1,022 3,747 3,828
Zinc production (tonnes) 3,442 2,954 12,518 10,868
Copper production (tonnes) 488 402 1,820 1,544
Average head grade (g/t Ag eq) 184 218 185 233
Development (metres) 2,865 2,891 9,951 8,255
(1) Operations at the Rosario Project were suspended with no production from August 2021. Certain assets of the Rosario Project were disposed of in
December 2021.
(2) The Company reports non-IFRS measures, which include Adjusted EBITDA. This measure is widely used in the mining industry as a benchmark for
performance but does not have a standardized meaning and may differ from methods used by other companies with similar descriptions. Refer to the
“Non-IFRS Measures” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) for a reconciliation
of Adjusted EBITDA to the annual and quarterly financial statements.
(3) In the above table, silver equivalent produced (ounces) in 2021 have been calculated using prices of $25.00/oz., $1,925/oz., $0.85/lb., $1.05/lb. and
$3.00/lb. for silver, gold, lead, zinc and copper respectively applied to the metal content of the concentrat es produced by the Zimapan Mine and the
Rosario Project. Silver equivalent produced (ounces) in 2020 have been calculated using prices of $17.85/oz., $1,480/oz., $0.92/lb., $1.09/lb. and
$2.80/lb. for silver, gold, lead, zinc and copper respectively applied to the metal content of the concentrates produced by the Zimapan Mine and the
Rosario Project. Operations at the Veta Grande Project were suspended in Q1 2020 and to date have not resumed.
Financial Results
2021 Annual Results
The Company recorded a net loss of $11,565 ($0.04 loss per share) for the year ended December 31, 2021 compared to a
net loss of $1,493 ($0.01 loss per share) for the year ended December 31, 2020.
Revenues were $53,334 (2020 - $33,097) with the increase primarily due to increased metal prices in 2021 as compared to
2020 in addition to increased metal production. Mining operations at the Rosario Project were suspended in August 2021
and certain assets of the Rosario Project were sold in December 2021.
Mining operation cash cost of sales of $38,8 99 (2020 - $31,399) increased in part due to cost escalations, increased
maintenance expenditure, a non -recurring charge of $1,033 due to a Mexican labour reform that became effective
September 2021 and costs incurred reflective of a 12.0% increase in mineralized material processed at the Company’s
milling facilities.
Operating expenses of $17,067 (2020 - $7,144) increased due to severance payments related to the decision to place the
Rosario Mine on care and maintenance, management , consulting and various payments related to the Bolivian asset
acquisition, an increase in share -based compensation payments as a result of stock options granted to directors, officers,
employees and consultants during 2021 and a charge related to inflation adjustment, penalties and surcharges on certain
tax balances. Also, as a result of the taxable profitability of the Zimapan Mine, the Company is incurring additional employee
profit sharing expenses.
Q4 2021
The Company recorded a net loss of $ 10,450 ($0.03 loss per share) for the three months ended December 31, 20 21
compared to a net loss of $295 ($0.00 per share) for the three months ended December 31, 2020. Net loss in Q4 2021 was
impacted by an increase in finance expense ( due primarily to a decrease in IVA recovery of inflationary gain of $3,944 and
an increase in the decommissioning and restoration provision of $854) and the loss on disposition of certain assets of the
Rosario Project of $1,095.
Revenues amounted to $13,821 (2020 - $10,217), mining operation cash cost of sales of $ 10,086 (2020 - $9,173) and
operating expenses of $ 7,383 (2020 - $3,631). The increase in operating expenses reflects an increase in administrative
costs, share based compensation payments and charges related to inflation adjustment, penalties and surcharges on certain
tax balances, offset by a decrease in professional fees (owing in part to the reversal of a $1,000 accrual).
Operational Results and Costs
Zimapan Mine
Silver equivalent ounce production in 2021 decreased 5.6% to 3,113,264 ounces as compared to 3,298,899 ounces in 2020.
This decrease is due to the impact of using different metal price decks for the 2021 and 2020 fiscal years.
Cash cost of production per tonne of mineralized material processed increased 18 .3% in 2021 to $51.9 2/t as compared to
$43.88/t in 2020. This resulted from a 12% increase in tons milled which contributed to a 40% increase in total cash cost of
production, which was primarily driven by various cost escalations including a non-recurring charge of $1.49/t due to a
Mexican labour reform that came into effect during 2021.
As compared to Q4 2020, the Q4 2021 cash cost of production per tonne of mineralized material processed increased by
3.8% to $50.77/t. This result reflects an 18.3% increase in the cash cost of production due to a 7.2% decrease in the tonnes
of mineralized material processed during Q4 2021.
AISC per silver equivalent ounce sold increased 1 8.0% in 2021 to $2 2.45/oz as compared to $19.03/oz in 2020. AISC
increased 47.8%, which included a non -recurring charge of $0.36/oz due to a Mexican labour reform that came into effect
during 2021, offset by the aforementioned 25.2% increase in silver equivalent ounces sold.
As compared to Q4 2020, the Q4 2021 AISC per silver equivalent ounce sold decreased 1.7% to $ 25.38/oz. This result
reflects a 56.0% increase in AISC and a 53.4% increase in silver equivalent ounces sold in Q4 2021.
Rosario Mine
On October 5, 2021, the Company announced it was suspending operations at the Rosario Mine and placing it on care and
maintenance. In December 2021, the Company completed the sale of certain assets of the Rosario Project. In view of
these events, the Company has determined not to provide any comparison of unit production or results of operations to prior
periods as such comparisons are significantly impacted by the suspension of operations and subsequent transfer of certain
net assets of the Rosario Project as part of the sale of certain tax losses, making comparison of limited value.
About Santacruz Silver Mining Ltd
The Company is engaged in the operation, acquisition, exploration and development of mineral properties in Latin America,
with a primary focus on silver and zinc, but also including lead and copper. The Company currently has four producing
projects which include the Zimapan Mine and recently the acquired Bolivian assets, Caballo Blanco mine, Bolivar mine (45%
interest) and Porco mine (45% interest) in addition to the San Lucas ore sourcing and trading business (100% interest). The
Company holds three exploration properties in its mineral property portfolio, the La Pechuga Property (Mexico), the Santa
Gorgonia Prospect (Mexico) and the Soracaya Prospect (Bolivia).
‘signed’
Arturo Préstamo Elizondo,
Executive Chairman
For further information please contact:
Mars Investor Relations
Telephone: (778) 999 4653
Arturo Prestamo
Santacruz Silver Mining Ltd.
Email: [email protected]
Telephone: (604) 569-1609
Neither the TSX Venture Exchange nor its Regulation Services Provid er (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 information
Certain statements contained in this news release constitute "forward-looking information" as such term is used in applicable
Canadian securities laws, including statements relating to production at the Zimapan Mine and the Company's plans to grow
it.
Forward-looking information is based on plans, expectations and estimates of management at the date the information is
provided and is subject to certain factors and assumptions. In making the forward-looking statements included in this news
release, the Com pany has applied several material assumptions, including that the Company's financial condition and
development plans do not change as a result of unforeseen events and that future metal prices and the demand and market
outlook for metals will remain stable or improve. Forward-looking information is subject to a variety of risks and uncertainties
and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-
looking information. Factors that could cause the forward -looking information in this news release to change or to be
inaccurate include, but are not limited to : the risk that any of the assumptions referred to above prove not to be valid or
reliable; market conditions and volatility and g lobal economic conditions, including increased volatility and potentially
negative capital raising conditions resulting from the continued , or escalation of the COVID-19 pandemic and risks relating
to the extent and duration of such pandemic and its impact on global markets; controls or regulations and political or
economic developments in Bolivia; risk of delay and/or cessation in planned work or changes in the Company's financial
condition and development plans; risks associated with the Company’s plan to undertake certain post-closing reorganization
steps in respect of the target entities; the uncertainty of the geology, grade and continuity of mineral deposits and the risk of
unexpected variations in mineral resources, grade and/or recovery rates; risks related to gold, silver, base metal and other
commodity price fluctuations; employee relations; relationships with and claims by local communities and indigenous
populations; availability and increasing costs associated with mining inputs and labour; the speculative nature of mineral
exploration and development, including the risks of obtaining necessary licences and permits and the presence of laws and
regulations that may impose restrictions on mining; risks relating to environmental regulation and liability; the possibility that
results will not be consistent with the Company's expectations, as well as the other risks and uncertainties applicable to
mineral exploration and development activities and to the Company as set forth in the Company's continuous disclosure
filings filed under the Company's profile at www.sedar.com.
There can be no assurance that any forward-looking information will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements. Accordingly, the reader should not place any undue reliance
on forward-looking information or statements. The Company undertakes no obligation to update forward-looking information
or statements, other than as required by applicable law.