Santacruz Silver Reports Second Quarter Financial Results
TSX.V: SCZ
FSE: 1SZ
August 30, 2017
Santacruz Silver Reports Second Quarter Financial Results
Vancouver, B.C. – Santacruz Silver Mining Ltd. (TSX.V:SCZ) (the “Company” or “Santacruz”) reports on its
financial and operating results for the second quarter of 2017 (“Q2”). 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 IFRS and all dollar amounts are expressed in thousands of US dollars , except per unit
amounts, unless otherwise indicated.
Q2 HIGHLIGHTS:
Revenues of $2,641
Production cost per tonne of $63.38
Silver equivalent production increased 21% to 270,659 in Q2 from 223,968 in Q1
Net loss of $8,485 after reflecting impairment charge of $5,284 on the Gavilanes Property
Cash cost per silver equivalent ounce sold of $21.24
AISC per silver equivalent ounce sold of $24.62
“Our Q2 results reflect production equipment availability challenges that resulted from working capital
constraints,” said Arturo Préstamo, President and CEO. “ With the recent sale of the Gavilanes Project, we
have remedied this issue and have seen immediate improvement in production in terms of both tonnes of
production and grade that are in line with management’s expectations at the Rosario Project . At the Veta
Grande Project we are now accessing mineralized mater ial from Level 6 of the Garcia mine and again are
seeing an improvement in grade that is in line with management’s expectations.”
Second Quarter 2017 Financial Summary (Q2 2017 compared to Q1 2017 and Q2 2016)
Highlights Q2 2017 Q1 2017 Q2 vs Q1% change Q2 2016
Revenue $2,641 $2,085 27% $3,375
Mine Operations (Loss) Income1 $(1,827) $(1,059) -73% $597
Net (Loss) Income2 $(8,485) $1,490 - $(796)
Adjusted EBITDA1
$(1,390) $(848) -64% $670
Basic Loss per Share2 $(0.05) $0.01 - $(0.01)
1 The Company reports additional non-IFRS measures which include Mine Operations Income and Adjusted EBITDA. These
additional financial disclosure measures are intended to provide additional information.
2 The Q2 2017 net loss includes an impairment charge of $5,284 related to the Gavilanes Property while the Q1 2017 net income
includes a credit of $3,308 for a change in fair value of foreign currency derivative. Before taking these matters into account the Q2 net
loss was $3,201, or $0.02 per share, while the Q1 results were a net loss of $1,818, or $0.01 per share.
Second Quarter 2017 Mine Operations Summary (Q2 2017 compared to Q1 2017 and Q2 2016)
Highlights Q2 2017 Q1 2017 Q2 vs Q1 % change Q2 2016
Mill Production (tonnes) 57,685 45,474 27% 26,419
Silver Equivalent Production (ounces)(1) 270,659 223,968 21% 271,985
Silver Equivalent Sold (payable ounces)(2) 219,226 163,457 34% 251,189
Cash Cost per Silver Equivalent Sold ($/oz.)(3) $21.24 $19.55 9% $11.57
Production Cost ($/tonne)(3) $63.38 $52.87 20% $79.26
All-in Sustaining Cost per Silver Equivalent Sold ($/oz.)(3) $24.62 $24.56 0% $14.83
Average Realized Silver Price ($/oz.)(3) $17.17 $17.31 -1% $16.50
(1) Silver equivalent ounces produced in 2017 have been calculated using prices of $16.00/oz., $1,150/oz., $1.00/lb. and
$1.15/lb. for silver, gold, lead and zinc respectively applied to the metal content of the lead and zinc concentrates
produced by the Rosario Project as well as by the Veta Grande Project. . Silver equivalent ounces produced in 2016
have been calculated using prices of $14.50/oz., $1,100/oz., $0.76/lb and $0.71/lb for silver, gold, lead and zinc
respectively applied to the metal content of the lead and zinc concentrates produced by the Rosario Project during
the second quarter of 2016.
(2) Silver equivalent sold ounces have been calculated using the realized silver prices stated in the table above, applied
to the payable metal content of the lead and zinc concentrates sold from the Rosario Project and Veta Grande Project
(3) The Company reports non-IFRS measures which include Cash Cost per Silver Equivalent, Production Cost, All -in
Sustaining Cost per Silver Equivalent and Average Realized Silver Price. These measures are widely used in the
mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from
methods used by other companies with similar descriptions.
Financial Results
The Company recorded a net loss of $8,485 in Q2 2017 compared to a net loss of $796 in 2016. The increase
in net loss in Q2 2017 relates largely to an impairment charge of $5,284 recorded with respect to the
Gavilanes Project and to a $2,424 decrease in mine operations income.
Revenues in Q2 2017 of $2,641 decreased 22% as compared to 2016 primarily as a result of a 13% decrease
in silver equivalent ounces sold combined with an approximate 7% increase in treatment and refining fees
offset by an increase in the realized silver price. The decrease in the silver equivalent ounces sold primarily
reflects lower head grades of silver and zinc at the Rosario Project during Q2 2017 combined with somewhat
lower head grades at the Veta Grande Project.
Production costs of $3,534 recorded during Q2 2017 increased by 66% as compared to 2016 reflecting the
inclusion of operating results from the Veta Grande Project in 2017 offset in part by the cost savings measures
initiated by management at the Rosario Project.
Operational Results and Costs
Rosario Project
At the Rosario Project, s ilver equivalent production decreased in Q2 2017 as compared to 2016 by 54% from
271,985 ounces to 124,717 ounces. The decrease arose primarily from a lower silver head grade in Q2 2017
combined with lower lead and zinc head grades, partially offset by a higher gold head grade,
The low metal grades occurred as a result of working capital constraints that prevented the timely repair and
maintenance of certain mine production equipment, primarily underground scooptrams. The reduced
availability of the s cooptrams delayed the completion of production stopes at both the Membrillo Vein and
Cinco Estrellas Property and resulted in a lower production rate for a significant part of the quarter consisting
mostly of development material.
With the completion of t he sale of the Gavilanes Project the Company has been able to complete the
necessary repairs to the scooptram fleet with all of the affected units now back in service thereby allowing the
Company to access mineralized material from production stopes while still continuing mine development.
Following these changes production at the Rosario Project has increased to approximately 350 tpd with further
increased production expected over the coming weeks.
The cash operating cost per tonne of mineralized materi al processed decreased by 13% to $68.80 in Q2 2017
as compared to 2016 reflecting better mining conditions at both the Cinco Estrellas Property and the Membrillo
Vein as well as management initiated cost savings. However, as a result of the decrease in head grades
realized in Q2 2017, the cash cost per silver equivalent ounce sold increased by 113% to $24.64. For the
same reason the all-in sustaining cost increased by 93% to $28.69 per silver equivalent ounce sold.
Veta Grande Project
At the Veta Grande Project, s ilver equivalent production in Q2 2017 increased by 34% to 145,942 ounces as
compared to Q1 2017. The increase reflects an 11% increase in tonnes milled combined with higher
recoveries for all metals as well as higher grades for gold, lead, and zinc.
The cash operating cost per tonne of mineralized material processed decreased by 10% in Q2 2017 to $50.07
as compared to $55.62 in Q1 2017 as a direct result of the 11% increase in tonnes milled.
The c ash cost of production per silver equivalent ounce sold decreased by 26% in Q2 2017 to $18.57 as
compared to $25.19 in Q1 2017. This positive change in unit costs reflects the 92% increase in silver
equivalent ounces sold, offset by an increase in both treatment, smelting and refining cos ts and production
costs during the quarter.
The all-in sustaining cash cost of production per silver equivalent ounce sold decreased by 33% in Q2 2017 to
$21.42 as compared to $31.79 in Q1 2017. This positive change occurred for the same reasons that the cash
cost of production decreased.
Outlook
During the first half of 2017 management continued with its key objective of de- risking the Company’s
operations by assigning/selling the Company’s interest in the Gavilanes Property, the San Felipe Project and
the El Gachi Property. The gross proceeds realized from these transactions, inclusive of the applicable IVA
payments, amounted to $19,140 of which approximately $7,357 was paid to JMET , LLC to settle in full the
amount owing to them . In addition the Company made payments, inclusive of IVA, to the underlying vendors
of the properties, of $3,480, with the residual funds retained for working capital purposes.
Further, in May the Company entered into the Membrillo Agreement pursuant to which it acquired the
Exclusive Mining Right to explore, develop and mine the Membrillo Vein. This transaction will provide further
diversification of mineralized feed to the Rosario Project’s mill thereby providing management much greater
flexibility in developing and executing its operations plan at its Rosario Projec t. The Company expects that
once full mining operations are achieved at the Membrillo Vein the combined daily production from the
Membrillo Vein and the Cinco Estrellas Property will range from 450 to 500 tpd with an additional 100 to 150
tpd of mineralized material being delivered to the Rosario Project mill facility from the Rosario Mine.
The Company's focus for the duration of 2017 will be to continue the systematic improvement and production
increase of mining and milling operations at the Veta Grande Project and Rosario Project .
About Santacruz Silver Mining Ltd.
Santacruz is a Mexican focused silver company with two producing silver projects (Rosario Project, including
the Rosario Mine, Cinco Estrellas Property and Membrillo V ein, and the right to operate the Veta Grande
Project and milling facility); and two exploration properties, the Minillas Property and Zacatecas properties.
Santacruz is managed by a technical team of professionals with proven track records in developing, operating
and discovering silver mines in Mexico with a corporate objective to become a mid-tier silver producer.
‘signed’
Arturo Préstamo Elizondo,
President, Chief Executive Officer and Director
For further information please contact:
Neil MacRae
Santacruz Silver Mining Ltd.
Email: [email protected]
Telephone: (604) 569-1609
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 information
Certain statements contained in this news release, such as planned production and milling levels, costs, sales
prices and efficiencies, constitute "forward- looking information" as such term is used in applicable Canadian
securities laws. 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, including, that the
Company's financial condition and development plans do not change as a result of unforeseen events, that
third party ore to be milled by the Company has properties consistent with management's expectations, that
the Company obtains all required regulatory approvals, and that future metal prices and the demand and
market outlook for metals remains stable or improves. 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 prove not to be valid or reliable, which could result in lower revenue, h igher
cost, lower production levels, delays, and/or cessation in planned work, that the Company's financial condition
and development plans change, delays in regulatory approval, risks associated with the interpretation of data
(including in respect of the third party ore), the geology, grade and continuity of mineral deposits, 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 ac tivities 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.
Financial outlook information contained herein about the Company's prospective costs of production and sales
prices is based on assumptions about future events, as described above, based on management's
assessment of the relevant information currently available. The purpose of such financial outlook is to provide
information about management's current expectations as to the anticipated results of its proposed bus iness
activities for the coming quarters. Readers are cautioned that any such financial outlook information contained
herein should not be used for purposes other than for which it is disclosed herein.
Rosario Project
The decisions to commence production at the Rosario Mine, Cinco Estrellas Property and Membrillo Vein
were not based on a feasibility study of mineral reserves demonstrating economic and technical viability, but
rather on a more preliminary estimate of inferred mineral resources. Accordingly, there is increased
uncertainty and economic and technical risks of failure 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, there is increased uncertainty and
economic and technical risks of failure associated with this production decision. Production and eco nomic
variables may vary considerably due to the absence of a complete and detailed site analysis according to and
in accordance with NI 43-101.