Santacruz Silver Reports Second Quarter 2020 Financial Results and Resignation of Chief Financial Officer
TSX.V: SCZ
FSE: 1SZ
September 1, 2020
Santacruz Silver Reports Second Quarter 2020 Financial Results and Resignation of Chief
Financial Officer
Vancouver, B.C. – Santacruz Silver Mining Ltd. (TSX.V:SCZ) (the “Compa ny” or “Santacruz”) reports on
the operating and financial results Zimapan Mine in Zimapan Hidalgo Mexico and the Rosario Project in San
Luis Potosi, Mexico for the second quarter of 2020. The full version of the financial statements and
accompanying manag ement’s discussion and analysis can be v iewed on the Company’s website at
www.santacruzsilver.com or on SEDAR at www.sedar.com. All amounts are in thousan ds of US dollar s
unless otherwise indicated.
Q2 2020 Highlights
• Cash Cost per tonne decreased 34% from $62.80/t to $41.44/t as compared to Q2 2019;
• Gross Profit from mining operations of $796, notwithstanding the mine suspension period for 42 days
at the Zimapan Mine and a 40% personnel reduction at the Rosario Project;
• Consolidated cash cost per silver equivalent ounce sold $15.25/oz and AISC of $16.90/oz
Carlos Silva, CEO of Santacruz stated; "The global outbreak of COVID-19 and the steps necessary to mitigate
the impact of this disease on our operat ions has created a more agil e decision making process at all levels
and strong leadership to g uide these efforts as we strive to be more efficient and producti ve in these trying
times. Some of the operational and administrative adjustments undertaken in Q2 are here to stay, specifically
those aimed at the safety of our employees and our performance target metrics.” Mr. Silva continued; “We are
enjoying a solid third quarter, leaving behind the COVID-19 mandatory suspension and aiming to re-establish
our mines’ production targets and improved profitability with stronger metal prices.”
The Company also announces the resignation of Mr. Rob McMorran from the office of Chief Financial Officer
of the Company which he has held since the Company’s formation in April 2012. Mr. McMorran will remain as
an advisor to the Company´s Board of Directors . Arturo Prestamo, Executive Chairman, has be en appointed
Interim CFO while the Company finds an appropriate candidate for this position. The Company would like to
thank Mr. McMorran for his valuable service these past eight years. Mr. Arturo Prestamo, Executive Chairman
stated, “I would like to personally thank Rob for his significant contribution to the Company over the past years
and wish him well in his retirement”.
Financial Results
Selected financial information for the three-month periods ended June 30, 2020, March 31, 2020 and June
30, 2019 is presented below:
2020 Q2 2020 Q1 2019 Q2
Revenue – Mining Operations 5,939 7,816 3,247
Revenue – Mining Services - - 888
Gross Profit (Loss) (1) 796 (1,874) 251
Debt forgiveness 412 - -
Net Loss (636) (87) (1,137)
Net Loss Per Share – Basic ($/share) (0.00) (0.00) (0.01)
Adjusted EBITDA (1) 12 (2,909) (113)
(1) The Company rep orts additional non -IFRS measures which include Gross Profit (Loss) and Adju sted EBITDA.
These additional financial disclosure measures are int ended to provide additional information. See the Company’s
MD&A filed o n SEDAR o r its websit e fo r a reconcili ation of these amounts to the unaud ited interim financial
statements for the respective periods.
(2) Financial results from the Zimapan Mine have been recorded on a 100% basis in the Q2 and Q1 2020 figures but
not in the Q2 2019 as the Company did not acquire the lease rights to the Zimapan Mine until July 2019.
The Company realized an average silver price of $16.49 per ounce during Q2 2020, which represents an 12%
increase from Q2 2019 and a 1% decrease from Q1 2020.
The Company recorded a net loss of $ 636 ($0.00 per share) for the three -month period ended June 30, 2020
compared to a net loss of $1,137 ($0.01 loss per share) for the same period in 2019.
Revenues in 2020 of $5,939 arose entirely from mining operat ions whereas in 2019 $3,2 47 was generated by
mining operations and $888 by mining services. The signif icant increase in mining operati ons revenue is a
result of the acquisition of Carrizal Mining during 2019.
Silver equivalent production for Q2 2020 increased by 105% to 709,765 ounces as compa red to 346,021
ounces in Q2 2019. This increase is largely due to th e inclusion of production from the Zimapan Mine during
Q2 2020 (2019 – nil) offset by a 50% decrease in production at the Rosario Project and suspension of
operations at the Veta Grande Project.
Selected operating information for the three-month periods ended June 30 , 20 20, March 31, 20 20 and
June 30, 2019 is presented below:
Operational Results and Costs
(1) Silver equivalent ounces produced in 2020 have been calculated using price s 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 applie d to the metal content of the concentrates produced
2020 2019
Q2 Q1 Q2
Material Processed (tonnes milled)
Zimapan Mine (5) 106,725 139,903 -
Veta Grande Project - 11,095 37,156
Rosario Project 10,074 17,497 20,789
Consolidated 116,799 168,495 57,945
Silver Equivalent Produced (ounces) (1) (4)
Zimapan Mine (5) 639,021 829,514 -
Veta Grande Project - 64,870 204,612
Rosario Project 70,744 73,251 141,409
Consolidated 709,765 967,635 346,021
Silver Equivalent Sold (payable ounces) (2)
Zimapan Mine (5) 461,324 626,984 -
Veta Grande Project - 47,854 149,898
Rosario Project 30,018 61,111 127,850
Consolidated 491,341 735,949 277,748
Cash Cost of Production per Tonne (3)
Zimapan Mine 40.67 48.15 -
Veta Grande Project - 148.36 59.59
Rosario Project 49.53 62.12 68.55
Consolidated 41.44 56.20 62.80
Cash Cost per Silver Equivalent Ounce (3)
Zimapan Mine 14.88 16.53 -
Veta Grande Project - 39.52 17.68
Rosario Project 21.45 23.47 14.23
Consolidated 15.25 18.60 16.09
All-in Sustaining Cash Cost per Silver Equivalent Oz (3)
Zimapan Mine 16.00 17.57 -
Veta Grande Project - 46.34 19.70
Rosario Project 31.91 29.01 16.59
Consolidated 16.90 20.39 18.27
Average Realized Silver Price per Ounce (3)
Zimapan Mine 16.47 16.38 -
Veta Grande Project 17.01 14.67
Rosario Project 16.89 16.38 14.65
Consolidated 16.49 16.66 14.66
by the Veta Grande Project, Rosario Project and the Zimapan Mine. Silver equivalent ounces produced in 2019 have been
calculated using prices of $15.25/oz., $1,281/oz., $0.94/lb, and $1.20/lb for silver, gold, lead and zinc respectively applied
to the metal content of the concentrates produced by the Veta Grande Project and the Rosario Project.
(2) The comparative figures for Q2 2019 have been restated from the originally disclosed amounts based on an i nternal review of past
metallurgical rep orting practice and the adoption by management of new procedures designed to more accurately cal culate the
relevant data.
(3) Silver equivalent sold ounces have been calculated using the realized silver prices stat ed in the table above, ap plied to the
payable metal content of the concentrates sold from the Veta Grande Project, Rosario Project and Z imapan Mine
respectively.
(4) The Company repo rts non -IFRS measures which include Cash Cost per Silver Equivalent, Al l-in Sustaining Cash Cost per
Silver Equivalent, Cash Cost of Production per Tonne, and Average Realized Silver Price per Ounce. These measures are
widely used in the mining industry a s a benchmark for performance, but do not have a standardized meaning a nd may
differ from methods used by other companies with similar descriptions.
(5) Amounts reported for th e Zimapan Mine reflect the Company’s 100% interest in the mine operations during Q1 and Q2
2020 but was nil% during Q2 2019 as the Company did not acquire the lease rights to the Zimapan Mine until July 2019
Cash cost of production per silver equivalent ounce so ld decreased by 5% i n Q2 2020 to $ 15.25/oz as
compared to $ 16.09/oz in Q2 2019. This change in u nit costs reflects the positive impact of t he inclusion of
the operating costs from the Zimapan Mine offset by a 51% increase in unit costs due to a 50% decrease in
the silver equivalent ounce produced at the Rosario Project. The increase in unit costs at the Rosario Project
is entirely due to the decreased production in Q2 2020 that oc curred as a re sult of reduced staffing levels in
connection with Covid-19 pandemic safety measures.
As compared to Q1 2020 the Q2 2020 unit costs decreased 18%. This change reflects a 10% decrease in unit
costs at the Zimapan Mine together with a 9% decrease at the Rosario Project. The consolidated cash cost of
sales for mining operations decreased by 41% while the amount of silver equivalent payable ounces sold
decreased by 28% due to the mine suspension period for 42 days at Zimapan and a 40% personnel reduction
at Rosario mine.
All-in sustaining cash cost of production per silver equivalent ounce sold decreased by 7% in Q2 2020 to
$16.90/oz as compared t o $18.27/oz in Q2 2019. As referenced above, thi s change i n unit costs reflects the
impact of the inclusion of the operat ing costs from the Zimapan Mine offset by the suspension of mining
activities at the Veta Grande Project, an d a 92% increase in unit c osts at the Rosario Pr oject due to a 50%
decrease in the silver equivalent ounces pr oduced. The co nsolidated a ll-in sustaining cost for mining
operations increased by 77% and there was a 91% increase in silver equivalent payable ounces sold.
As compared to Q1 2020 the Q2 2020-unit costs decreased 10%. This change reflects a 9% decrease in unit
costs at the Zimap an Mine and suspension of the Veta Grande Project, offset by a 10% increase at the
Rosario Project. The consolidated all -in sustaining cost for mining operations decreased by 40% with a 33%
decrease in silver equivalent payable ounces.
About Santacruz Silver Mining Ltd.
Santacruz is a Mexican focused silver company that currently owns and operates the Rosario Project. The
Company also owns 100% of Carrizal Mining S.A. d e C.V. Carrizal Mining is a Mexican mining company that
holds a 20% wor king interest in the Company’s Zacatecas Project and has the right to operate the Zim apan
Mine until December 31, 2020 under a mining lease agreement. On July 28, 2020 the Com pany announced
that it had reached agreement with Minera Cedros, S.A. de C.V. (“Minera Cedros”), a wholly owned subsidiary
of IndustriasPeñoles, S.A.B. de C.V., to acquire outright the Zimapan Mine for US$20.0 million (plus applicable
IVA of US$3.2 million ), subject to a number of conditions, i ncluding receipt o f all ne cessary regulat ory
approvals including approval of the TSXV to the transaction which will constitute a "Fundamental Acquisition"
pursuant to TSXV Policy 5.3.
The Company also has rights to two exploration properties, the Minillas property and Zacatecas properties as
well as the Veta Grande Project where mining operations are currently suspended.
The C ompany is managed by a technical te am o f professionals with proven track records i n developi ng,
operating and discovering silver mines in Mexico. Our cor porate objectiv e is to b ecome a mid -tier si lver
producer.
Forward looking information
Certain state ments contained in this news release c onstitute "forward -looking information" as such term is
used in applicable Canadian securitie s l aws, including statem ents relating t o the Zimapan property the
agreement with Minera Cedros and the acquisition of the Zim apan Mine by the Company. Forward -looking
information is based on plans, expectations and estim ates of management at the date the i nformation is
provided and is subject to certain factors and assumptions. In making the forward-looking statements included
in this news release, the Company has applied several material assumptions, including that the Company's
financial condition and de velopment plans do not c hange as a resu lt of unfores een events, and that future
metal prices and t he demand and market outloo k for metals will remain stable or imp rove. Forward -looking
information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates
and act ual results to vary materially from those proj ected in such forward -looking informati on. 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; there can
be no assu rance that the Company wil l be successful in completing the acquisition o f the Zima pan Mine
(including obtaining the necessary funding); risk of delays or inability to obtain the approval of the TSXV to the
acquisition of the Zimapan Mine; market condition s and volatility and globa l economic conditions, including
increased volatility and potentially negative capital raisin g conditions resulting f rom the continu ed COVID-19
pandemic and risks relating to the extent and d uration of such pandemic and its impact on global markets; risk
of delay and/or cessation in planned work or cha nges in th e Company's financial condition and development
plans; risks associated wit h the interpr etation of data (including in respect of the t hird party mineralized
material) regarding the geology, grade and continuity of mineral deposits; the uncertainty of the geology, grade
and continuity of mine ral deposits and the ris k of unexpected variations i n mineral resources, grade and/or
recovery rates; risks related to gold, silver, base metal and other commodity price fluctuations; risks relating to
environmental regu lation and liability; the possibilit y t hat results will not be consistent w ith the Compa ny's
expectations, as well as the other risks and uncertainties applicabl e to mineral exploration and developme nt
activities and to the Company as set forth i n the Comp any's continuous disclosure filings filed under the
Company's profile at www.sedar.com. There ca n be no assurance that any forward-looking information will
prove to be accurate, as actual results and future e vents could differ materially from those antic ipated in such
statements. Accordingly, the reader s hould 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.
Zimapan Mine
Production at the Zimapan Mine is not supported by a feasibility study on mi neral reserves demonstratin g
economic and technical viability or any other independent economic study under NI 4 3-101. Accordingly, there
is increased uncerta inty and economic and te chnical risks o f failure ass ociated with production operations at
the Zima pan Mine. Production and ec onomic varia bles may vary considerably due to the absence of a
complete and detailed site analysis in accordance with NI 43-101.
Rosario Project
The decisions to commence production at the Rosario Mine , Cinco Estrellas Property and Membrillo Prospect
were not based on a feasibility study of mineral reserves demonstrating economic and technical viability, but
rather on a more prelimi nary estimate of inferred mineral resourc es. According ly, there is incre ased
uncertainty and economic and technical risks of fa ilure associated with this production decision. Production
and economic variables may vary considerably, due to the absence of a complete and detailed site analysis
according to and in accordance with NI 43-101.
Veta Grande Project
The decision to commence production at Veta Grande Project was not based on a feasibility study on mineral
reserves demonstrating economic and technical viability. Accordingly, th ere is increase d uncertainty and
economic and technical risks of failure associated with this product ion de cision. Production and economic
variables may vary considerably due to the absence of a complete and detailed site analysis in accordance
with NI 43-101.
‘signed’
Arturo Préstamo Elizondo,
Executive Chairman
For further information please contact:
Arturo Prestamo
Santacruz Silver Mining Ltd.
Email: [email protected]
Telephone: (604) 569-1609
Neither the TSX Venture Exchange nor its Regulation Services Provider (as th at term is defined in the policies
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.