Santacruz Silver Reports Third Quarter 2018 Financial Results
TSX.V: SCZ
FSE: 1SZ
November 30, 2018
Santacruz Silver Reports Third Quarter 2018 Financial Results
Vancouver, B.C. – Santacruz Silver Mining Ltd. (TSX.V:SCZ) (the “Company” or “Santacruz”) reports on
the operating and financial results from the Veta Grande Project in Zacatecas, Mexico and the Rosario Project
in San Luis Potosi, Mexico for the third quarter of 2018. The full version of the financial statements and
accompanying management’s discussion and analysis can be viewed on the Company’s website at
www.santacruzsilver.com or on SEDAR at www.sedar.com. All amounts are in thousands of US dollars
unless otherwise indicated.
"During the third quarter we saw the beginning of the turnaround in our mining operations , as our quarter over
quarter revenues from mining operations and improved production cost s demonstrate." stated Arturo
Préstamo, Chief Executive Officer of Santacruz. “Although the positive changes to our production volumes and
operating costs were modest, as a result of our significant mine development this year and continued focus on
such at b oth Veta Grande and Rosario , we firmly b elieve that we are now positioned to se e improved
production volumes and increased grade of mineralized material being milled at both projects leading to lower
unit costs of production.”
Selected operating and financial information for the three-month periods ended September 30, 2018,
June 30, 2018 and June 30, 2017 is presented below:
2018 Q3 2018 Q2 2017 Q3
Financial
Revenue – Mining Operations 1,657 1,466 1,798
Revenue – Mining Services 569 3,569 -
Gross (Loss) Profit (4) (2,157) 1,287 (1,819)
Debt Forgiveness - 2,590 -
Impairment - - (4,350)
Net (Loss) Income (2,888) 3,297 (5,899)
Net Income (Loss) Per Share – Basic ($/share) (0.02) 0.02 (0.04)
Adjusted EBITDA (4) (2,739) 1,048 (1,628)
Operating
Material Processed (tonnes milled) 57,976 52,025 46,940
Silver Equivalent Produced (ounces) (1) 249,431 174,175 231,162
Silver Equivalent Sold (payable ounces) (2) 137,834 116,314 166,880
Production Cost per Tonne (3) ($/t) 58.32 66.12 62.91
Cash Cost per Silver Equivalent ($/oz.) (3) 27.40 32.54 23.65
All-in Sustaining Cost per Silver Equivalent ($/oz.) (3) 31.07 35.48 28.14
Average Realized Silver Price per Ounce ($/oz.) (2) (5) 14.31 16.55 16.85
(1) Silver equivalent ounces produced in 201 8 have been calculated using prices of US$1 7.00/oz., US$1, 295/oz., US$ 1.00/lb. and
US$1.35/lb. for silver, gold, lead and zinc respectively applied to the metal content of the lead and zinc concentrates produced by the
Company. Silver equivalent ounces produced in 2017 have been calculated using prices of US$16.00/oz., US$1,150/oz., US$1.00/lb.
and US$1.15/lb. for silver, gold, lead and zinc respectively applied to the metal content of the lead and zinc concentrates p roduced
by the Company.
(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 by the Company.
(3) The Company reports non -IFRS measures which i nclude Production Cost per Tonne, Cash Cost per Silver Equivalent, All -in
Sustaining Cost per Silver Equivalent and Average Realized Silver Price per Ounce. These measures are widely used in the mining
industry as a benchmark for performance, but do not h ave a standardized meaning and may differ from methods used by other
companies with similar descriptions.
(4) The Company reports additional non -IFRS measures which include Gross Profit (Loss) and Adjusted EBITDA. These additional
financial disclosure measures are intended to provide additional information.
(5) Average realized silver price per ounce is prior to all treatment, smelting and refining charges.
Financial Results
The Company realized an average silver price of $ 14.31 per ounce during Q 3 2018 which represents a n
approximate 15% decrease from Q2 and Q1 2018 as well as from Q3 2017.
The Company recorded a net loss of $2,888 in Q3 2018 compared to net income of $3,297 in Q2 2018 and a
net loss of $5,899 in Q3 2017. The Q2 2018 net income was po sitively impacted by a one -time adjustment of
$2,590 relating to the forgiveness of certain trade debt by Carri zal while mine services revenue decreased in
Q3 2018 leading to a gross margin of $ 28. Management expects that mining services revenues will increase
in Q4 2018 and generate a more significant gross margin than in Q3. The net loss for Q3 2017 was negatively
impacted by an impairment charge of $4,350.
Revenues in Q 3 2018 of $2,156 include mining operations of $ 1,657 (Q3 2017 - $1,798; Q2 2018 - $1,466)
and mining services of $ 569 (Q3 2017 - $nil; Q2 2018 - $3,569). The decreased mining services reven ues
recorded in Q3 2018 reflect decreased service requirements from Carrizal during the quarter. Management
anticipates that increased service requirements will occur during Q4.
The Company recorded a gross loss of $2,157 during Q3 2018 (Q3 2017 – loss of $1,819; Q2 2018 – profit of
$1,287). The gross loss recorded in Q 3 2018 and gross profit reported in Q2 2018 reflect the combined
results of the Company’s mining operations and mining services activities. During these periods the mining
operations resulted in gross losses of $2, 185 and $2,225 for Q3 2018 and Q2 2018 respectively while mining
services resulted in gross profits of $28 and $3,452 for the same periods.
Operational Results and Costs
Cash cost per ounce in Q3 2018 was $27.40 per payable ounce of silver sold, an increase of 16% from $23.65
per ounce in Q3 2017 and a decrease of 16% from $ 32.54 per ounce in Q 2 2018. Cash cost per ounce was
higher in Q3 2018 as compared to Q 3 2017 primarily due to lower head grades in the quarter arising from
management’s decision to focus on mine development at both t he Veta Grande and Rosario Projects .
Conversely cash cost per ounce was lower in Q 3 2018 as compared to Q 2 2018 due to higher grade
mineralized material being mined and processed in Q3 2018 at the Veta Grande Project.
All-in Sustaining Cost per ounce in Q3 2018 was $31.07 per payable ounce of silver sold , an increase of 14%
from $27.14 per ounce in Q3 2017 and a decrease of 12% from $35.48 per ounce per ounce in Q2 2018. The
changes occurred for the same reasons as those relating to the cash cost per ounce changes referenced
above.
About Santacruz Silver Mining Ltd.
Santacruz is a Mexican focused silver company with two pr oducing silver projects ( Veta Grande Project and
Rosario Project) and two exploration properties (Minillas Property and Zacatecas Properties). The Company is
managed by a technical team of professionals with proven track records in developing, operating and
discovering silver mines in Mexico. Our corporate objective is to becom e a mid-tier silver producer.
‘signed’
Arturo Préstamo Elizondo,
President and CEO
For further information please contact:
Arturo Prestamo
Santacruz Silver Mining Ltd.
Email: [email protected]
Telephone: (011) (52) 81 8378 5707
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 s tatements contained in this ne ws release 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 man agement at the date the informati on 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, that the Company's financial c ondition and development plans do not
change as a result of unforeseen events, that third party mineralized material to be milled by the Company will
have properties consistent with management's expectations, that the Company will receive all required
regulatory approvals, and that future metal prices and the demand a nd 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 a nd actual results to vary materia lly from those projected in su ch
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 o f the assumptions referred to prove
not to be valid or reliable , which could result in lower revenue, higher cost, or lower production levels; delays
and/or cessation in planned work; changes in the Company's financial condition and development plans;
delays in regulatory approval; risks associated with the interpreta tion of data (including in respect of the third
party mineralized material) regarding 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 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.
Rosario Project
The decisions to commence production at the Ro sario 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 preliminary estimate of inferred min eral resources. Accordingly, ther e 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 an alysis
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, ther e 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.