Santacruz Silver Reports Third Quarter 2019 Financial Results
TSX.V: SCZ
FSE: 1SZ
December 2, 2019
Santacruz Silver Reports Third Quarter 2019 Financial Results
Vancouver, B.C. – Santacruz Silver Mining Ltd. (TSX.V:SCZ) (the “Company” or “Santacruz”) reports on
the operating and financial results from its Mexican mining operations for the third quarter of 2019. 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.
Q3 2019 Highlights
• Consolidated mining operations generated a gross profit of $102 including gross profit from Zimapan
of $992, and gross l osses from Rosario and Veta Grande of $672 and $511 respectively plus mine
services gross profit of $293;
• Net loss after taxes of $1,432;
• Consolidated cash cost per silver equivalent ounce sold $18.52 and AISC of $22.83
Carlos Silva, COO of Santacruz, stated, "The 50% acquisition of Carrizal Mining in early Q3 of 2019 made an
immediate impact to our prod uction profile and bottom line by producing 606,589 silver equivalent ounces and
generating mine operating earnings of $1 million. Further, consolidated production for Q3 2019 set a new
quarterly record of 952,832 silver equivalent ounces. Consolidated production for Q4 2019 is expected to
significantly increase as a result of Santacruz acquiring the rem aining 50% of Carrizal Mining i n early
October. Management is continuing discussions with Penoles with respect to reaching an ag reement for the
outright acquisition of the Zimapan mine prior to the expiry of the current mine lease agreement on December
31, 2020.”
Mr Silva continued, “Rosario was not as strong in Q3 as the results include a one -time charge for certain mine
related expenditures while at Veta Grande operating improvements continu ed. We expect Rosario to becom e
a consistent cash f low contributor by Q1 2020 and have changed the operating plan at Veta Grande with the
expectation of further operating improvements.“
Financial Results
Selected consolidate d financial information for the three-month periods ended September 30 and June
30, 2019, and September 30, 2018 is presented below:
Q3 2019 Q2 2019 Q3 2018
Revenue – Mining Operations(2) 11,439 3,247 1,657
Revenue – Mining Services 293 888 569
Gross Profit (Loss) (1) 102 251 (2,157)
Net (Loss) Income (1,432) (1,137) (2,888)
Net (Loss) Income Per Share – Basic ($/share) (0.01) (0.01) (0.02)
Adjusted EBITDA (1) (705) (113) (2,151)
(1) The Company reports additional non -IFRS measures which include Gross Profit (Loss) and Adju sted EBITDA.
These additional financial disclos ure measures are intended to provide additional information. See the Co mpany’s
MD&A filed on SEDAR o r its website for 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 as they are consolidated for financial
reporting purposes. Conversely, production metrics including material processed (tonnes), silver equivalent produced
(ounces) and silver equivalent sold (payable ounces) have been reported as to the Company ’s 50% pro portionate
interest in the Zimapan Mine for Q3 2019.
Selected Operati ng Unit financial information for the three-month periods ended September 30 and
June 30, 2019, and September 30, 2018 is presented below:
Q3 2019 Q2 2019 Q3 2018
Revenue – Mining Operations – Zimapan Mine(1) 8,488 - -
– Veta Grande Project 1,850 1,767 1,063
– Rosario Project 1,101 1,480 594
Gross Profit (Loss) – Zimapan Mine 992 - -
– Veta Grande Project (511) (691) (1,295)
– Rosario Project (672) 54 (890)
(1)Financial results from the Zi mapan Mine have been recorded on a 100% basis as they are con solidated for f inancial
reporting purposes. Conve rsely, production met rics including material processe d (tonnes), silver equivalent pro duced
(ounces) and silver equivalent sold (payable ounces) have been reported as to the Company’s 50% proportionate interest
in the Zimapan Mine for Q3 2019.
The Company realized an average silver price of $ 17.52 per ounce during Q3 2019 which represents a 22%
increase from Q3 2018 and a 20% increase from Q2 2019.
The Company recorded a net loss of $1, 432 in Q3 2019 compared to a net loss of $2,888 in Q3 2018 and a
net loss of $1, 137 in Q2 2019. The Company expects a continued improvement to operating results moving
forward at all three mines. At Veta Grande mineralized material fro m the Ga rcia mine and Armados vein is
now being milled individually on a campaign basis and not blended. It is anticipated that metal recoveries will
improve from this processing change and operating results improve.
Operational Results and Costs
Selected operating information for the three-month periods ended September 30 and June 30, 2019, and
September 30, 2018 is presented below:
2019 2019 2018
Q3 Q2 Q3
Material Processed (tonnes milled)
Zimapan Mine (5) 82,242 - -
Veta Grande Project 43,999 37,156 42,011
Rosario Project 22,048 20,789 15,965
Consolidated 148,289 57,945 57,976
Silver Equivalent Produced (ounces) (1) (4)
Zimapan Mine (5) 606,589 - -
Veta Grande Project 214,282 204,612 134,788
Rosario Project 131,961 141,409 64,256
Consolidated 952,832 346,021 199,044
Silver Equivalent Sold (payable ounces) (2)
Zimapan Mine (5) 346,490 - -
Veta Grande Project 114,705 149,898 88,462
Rosario Project 65,139 127,850 49,372
Consolidated 526,334 277,748 137,834
Cash Cost of Production per Tonne (3)
Zimapan Mine 41.89 - -
Veta Grande Project 47.67 59.59 51.68
Rosario Project 82.10 68.55 75.79
Consolidated 49.58 62.80 58.32
Cash Cost per Silver Equivalent Ounce (3)
Zimapan Mine 16.32 - -
Veta Grande Project 19.79 17.68 26.28
Rosario Project 27.96 14.23 29.39
Consolidated 18.52 16.09 27.40
(1) Silver equivalent ounces produced in 201 9 have been calculated using prices of $1 5.25/oz., $1, 281/oz., $ 0.94/lb,
$1.20/lb and $2.92 for silver, gold, lead, zinc and copper respectively applied to the metal content of the lead and zinc
concentrates produced by the Veta Grande Proje ct and the Rosario Project for all three quarters and 50% of the lead,
zinc and copper concentrates produced by the Zimapan Mine in Q3 respectively. Silver equivalent ounces produced
in 2018 have been calculated using prices of $17.00/oz., $1,295/oz., $1.00/lb and $1.35/lb for silver, gold, lead and zinc
respectively applied to the met al content of the lead and zinc c oncentrates produced by the Veta Grande Project and
Rosario Project.
(2) Silver equivalent sold ounces have been calculated using the rea lized silver prices stated in the table above, applied to
the payable metal content of the lead and zinc concentrate s sold from the Veta Grande Project, Rosario Project in all
respective quarters referenced above and 50% of the lead, zinc and copper concentrates produced by the Zimapan
Mine in Q3 2019.
(3) The Company reports non-IFRS measures which include Cash Cost per Silver Equivalent, All-in Sustaining Cash Cost
per Silver Equivalent, Cash Cost of Production per Tonne, and Average Realized Silver Pr ice per Ounce. These
measures are widely used in the m ining industry as a benchmar k for performance, but do not hav e a standardized
meaning and may differ from methods u sed by other companies with similar descriptions. See the Company’s MD&A
filed on SEDAR or its website for a reconciliation of these amounts to the unaudited interim financial statements for the
respective periods.
(4) The comparative figures for Q1 and Q2 2019 and for Q3 and Q4 2018 have been restated from the originally disclosed
amounts based on an internal review of past metallurgical reporting practice and the ad option by management of new
procedures designed to more accurately calculate the relevant data.
(5) Amounts reflect Santacruz’s 50% proportional ownership of PCG during Q3.
Cash cost per ounce in Q3 2019 was $18.52 per payable ounce of silver sold, a decrease of 32% from $27.40
per ounce in Q3 2018 and an increase of 15% from $16.09 per ounce in Q 2 2019. The change in unit costs
as compared to Q2 2019 reflects the addition of the Zimapan Mine production at $16.32/ oz and to a lesser
extent reflects increases in unit costs of 12% at the Veta Grande Project and 97% at the Rosario Project. The
Rosario increased unit cost is largely the result of a one-time charge for certain mine operations expenditures.
Management is confident that Rosario will now begin to show improved operating results moving forward.
All-in Sustaining Cost per ounce in Q3 2019 was $22.83 per payable ounce of silver sold , a decrease of 27%
from $31.07 per ounce in Q3 2018 and an increase of 24% from $18.37 per ounce per ounce in Q2 2019. The
changes occurred for the same reasons as those relati ng to the cash cos t per oun ce changes referenced
above.
About Santacruz Silver Mining Ltd.
Santacruz is a Mex ican focused silver company with two producing silver projects, Veta Gran de and Rosario,
and two exploration propert ies, the Minillas property a nd Z acatecas properties. T he Company also owns
effective October 4, 2019, 100% of Carrizal Mining S.A. de C.V . Carrizal Mining is a private Mexican mining
company that holds a 20% working interest in the Company’s Veta Gr ande Pr oject and has the right to
operate the Zimapan Mine until December 31, 2020 under a mining lease agreement.
The Company is managed by a tec hnical team of professionals with proven track records in developing,
operating and discovering silver mines in Mexi co. Our corporate objective is t o become a mid -tier sil ver
producer.
All-in Sustaining Cash Cost per Silver Equivalent Ounce (3)
Zimapan Mine 18.56 - -
Veta Grande Project 26.77 19.70 29.62
Rosario Project 38.63 16.81 33.68
Consolidated 22.83 18.37 31.07
Average Realized Silver Price per Ounce (3)
Zimapan Mine 17.45 - -
Veta Grande Project 17.64 14.67 14.30
Rosario Project 17.65 14.65 14.34
Consolidated 17.52 14.66 14.31
‘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 statements contained in this news release con stitute "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. 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 development plans
do not change as a result of unforeseen events, and that fu ture metal prices and the demand and market
outlook for metals will remain stable or improve. Forward -looking information is subject to a varie ty of risks
and uncertainties and other factors that could cause plans, estimates and actual results to vary mat erially from
those projected in such forward -looking information. Factors that coul d cause the forward -looking information
in this news release to change or to be inaccur ate 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 assurance that the Company
will be successful in either negotiating an extension to th e lease of the Zimapan Mine or acquiring outright the
Zimapan Mine (including obtaining the necessary funding for the purchase price thereof), and therefore there
is a risk that the allocation to the Company of production from t he Zimapan Mine will discont inue after
December 31, 20 20, which would result in a significant reduction to future production results as compared to
the results contained in this news release ; delays and/or cessation in plann ed work; changes in the
Company's financial condition and de velopment plans; risks asso ciated with the interpretation of data
(including in respect of the third party miner alized material) regarding the geology, grade and continuity of
mineral deposits; the uncertainty of th e geology, gr ade and continuity of minera l deposits and the risk of
unexpected variations in mineral resources, grade and/or recovery rates; market condi tions and volatility and
global economic condition s; risks related to gold, silver, base metal and othe r commodity p rice fluctuations;
risks relating to environmental regu lation and liability; the possibility that results will not be consistent with the
Company's expectations, as well as the other risks a nd uncertainties applicable to min eral exploration an d
development activities and to the Compa ny as set forth in the Comp any'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 t o be accurate, as actual res ults and future events coul d differ materially from those
anticipated in such statements. Accordingly, the reade r should not place any undue reliance on forward -
looking information or statements. The Company underta kes no obliga tion 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 tech nical viability, but
rather on a more preliminary estimate of inferred m ineral resour ces. Accordingly, ther e i s i ncreased
uncertainty and economic and technical risks of failure associate d with this pr oduction decisi on. Productio n
and economic variables ma y vary consi derably, 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 demo nstrating economic and technical viability. Accordingly, th ere is incre ased uncertainty and
economic and techn ical risks of failure associated with this pr oduction decision. Production an d e conomic
variables may vary considerably due to the absence of a complete and detailed site analysis according to and
in accordance with NI 43-101.
Zimapan Mine
Production at the Zimapan Mine is not supported by a feasibi lity study on mine ral reserves de monstrating
economic and technical viability or any other independent economic study under NI 43-101. Accordingly, there
is increased uncer tainty and economic and technical risks of failur e associated with production operations at
the Zimapa n Mine . Product ion and economic variables may vary considerably due t o the absence of a
complete and detailed site analysis according to and in accordance with NI 43-101.