Silver Standard Reports Fourth Quarter and Year-End 2015 Results
February 25, 2016 News Release 16-04
SILVER STANDARD REPORTS FOURTH QUARTER AND YEAR-END 2015 RESULTS
VANCOUVER, B.C. - Silver Standard Resources Inc. (NASDAQ: SSRI) (TSX: SSO) (“Silver Standard”) reports consolidated financial results for the fourth quarter and year ended December 31, 2015.
Paul Benson, President and CEO said, “This was a quarter and a year of records for Silver Standard. Marigold exceeded our improved production and cash cost guidance and produced over 207,000 ounces of gold, a record in the mine’s 28-year history. Pirquitas also performed at the top end of guidance, driving total production to over 350,000 gold equivalent ounces at cash costs 11% lower than in 2014. We continued to invest in our future and generated significant exploration success at Marigold while also advancing our option to earn into the Chinchillas project, a potential satellite deposit for Pirquitas. At Marigold, despite using more conservative price assumptions we increased Mineral Resources and Mineral Reserve additions largely replaced depletion. Today we are also announcing an expansion to the size of the haul fleet at Marigold which increases our production and lowers our cash cost guidance at Marigold for 2016.”
“In addition to breaking records and investing in the future, we have importantly continued to add cash to the balance sheet. We ended the year in a strong position with $212 million in cash and $88 million in marketable securities. Thus, we enter 2016 with our mines performing at record levels, a strong balance sheet and a capable team, positioning us well to pursue new growth opportunities.”
Fourth Quarter and Full-Year 2015 Highlights:
(All figures are in U.S. dollars unless otherwise noted)
- Increased our cash position: Generated cash from operations of $74.1 million during 2015 and increased our cash position to $211.9 million, an improvement of $27.2 million.
- Record annual production: Produced 207,006 ounces of gold at Marigold in 2015, exceeding our increased gold production guidance, and 10.3 million ounces of silver at Pirquitas.
- Strong fourth quarter production: Produced 61,461 ounces of gold at Marigold, a 49% increase from the third quarter, and 2.6 million ounces of silver at Pirquitas, the second highest production quarter of 2015.
- Annual cash costs below guidance at Marigold: Reported 2015 cash costs of $692 per payable ounce of gold sold, lower than our cash costs guidance range. Fourth quarter cash costs were $727 per payable ounce of gold sold. Reported 2015 all-in sustaining costs of $895 per payable ounce of gold sold.
- Annual cash costs at low end of guidance at Pirquitas: Reported 2015 cash costs and all-in sustaining costs of $10.68 and $12.44 per payable ounce of silver sold, respectively. Fourth quarter cash costs were $10.96 per payable ounce of silver sold.
- Improved Marigold 2016 guidance: Increased gold production guidance to between 200,000 ounces and 210,000 ounces and reduced cash costs guidance to between $690 to $740 per payable ounce of gold sold due to the addition of three haul trucks.
- Mineral Resource growth at Marigold: Continued exploration success added 680,000 gold ounces of Indicated Mineral Resources, comprised of 350,000 gold ounces from the HideOut and 8 South areas, 250,000 gold ounces from the Assay Program and 80,000 gold ounces from the Basalt pit. Added 300,000 gold ounces of Inferred Mineral Resources from the Valmy property.
- Pursuing opportunity to extend operating life of the Pirquitas mine: Signed an agreement with Golden Arrow Resources Corporation to explore and evaluate the Chinchillas project, approximately 30 kilometers from the Pirquitas mine.
- Impairments impacted net loss: Adjusted income before tax of $2.1 million in 2015. Recorded impairments related to Pirquitas, including non-cash, pre-tax adjustments to stockpile and warehouse inventory to its net realizable value and severance provision, of $32.3 million, included in cost of sales, and assets impairment of an additional $48.4 million included in net loss. Reported net loss of $124.3 million in 2015.
Marigold Mine, U.S.
| Three months ended Operating data Dec 31, 2015 Sept 30, 2015 Jun 30, 2015 Mar 31, 2015 | Total 2015 2014 (1) |
| Total material mined (kt) 18,560 18,425 19,051 18,556 Waste removed (kt) 13,788 11,242 14,163 14,861 Total ore stacked (kt) 4,772 7,183 4,888 3,695 Strip ratio 2.9 1.6 2.9 4.0 Mining cost ($/t mined) 1.54 1.65 1.48 1.57 Gold stacked grade (g/t) 0.48 0.43 0.33 0.59 Processing cost ($/t processed) 0.86 0.66 0.79 1.09 Gold recovery (%) 69.9 69.7 67.6 74.7 General and admin costs ($/t 0.47 0.41 0.56 0.71 processed) Gold produced (oz) 61,461 41,262 48,685 55,598 Gold sold (oz) 62,827 39,525 48,121 55,865 Realized gold price ($/oz) (2) 1,084 1,110 1,205 1,210 Cash costs ($/oz) (2) 727 719 717 612 AISC ($/oz) (2) 799 998 870 953 Financial data ($000s) | 74,592 55,596 54,054 44,394 20,538 11,202 2.6 4.0 1.56 1.64 0.45 0.60 0.81 1.08 70.6 73.0 0.51 0.73 207,006 129,615 206,338 128,983 1,151 1,234 692 838 895 1,187 |
| Revenue 67,936 43,836 57,958 67,566 Income from mine operations 7,902 7,288 15,395 26,954 Capital investments 3,641 8,931 5,255 4,768 Capitalized deferred stripping — — — 12,543 Exploration expenditures (3) 731 1,944 1,978 1,551 | 237,296 158,929 57,539 38,836 22,595 11,157 12,543 28,882 6,204 4,478 |
(1) Data presented in this column is for the period April 1 to December 31, 2014, the period for which we were entitled to all economic benefits of the Marigold mine under the purchase and sale agreement dated February 3, 2014 entered into with subsidiaries of Goldcorp Inc. and Barrick Gold Corporation.
(2) We report the non-GAAP financial measure of cash costs per payable ounce of gold sold, realized gold prices and all-in sustaining costs ("AISC") to manage and evaluate operating performance at the Marigold mine. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income, please see “Non-GAAP Financial Measures” in section 13 of our management's discussion and analysis of the financial position and results of operations for the year ended December 31, 2015 (“MD&A”).
(3) Includes capitalized and expensed exploration expenditures.
Mine production
We produced 61,461 gold ounces in the fourth quarter of 2015, 49% higher than the third quarter production of 41,262 ounces, as higher grade ore tonnes were sourced from the deeper benches of the Mackay pit during the third and fourth quarters of 2015.
A total of 18.6 million tonnes of material were mined in the fourth quarter of 2015, compared to 18.4 million tonnes mined in the third quarter. During the quarter, approximately 4.8 million tonnes of ore were delivered to the heap leach pads at a gold grade of 0.48 g/t, containing approximately 51,100 recoverable ounces of gold. This compares to 7.2 million tonnes of ore delivered to the heap leach pads at a gold grade of 0.43 g/t in the third quarter of 2015, containing approximately 70,000 recoverable ounces of gold. Grade mined in the fourth quarter was 11.6% higher than the third quarter. Stripping of the next Mackay pit phase increased in the fourth quarter, leading to an increased strip ratio.
Gold production for 2015 totaled 207,006 ounces, a record for the Marigold mine since it began operating in 1988, exceeding the higher end of our increased annual production guidance range.
Total material mined and ore stacked on leach pads of 74.6 million tonnes and 20.5 million tonnes in 2015, respectively, were record amounts for the Marigold mine. More ore tonnes and gold ounces were mined in 2015 due to the increased mining rate and the continued identification of ore tonnes outside of existing Mineral Reserves. The grade of the ore delivered to the leach pads in 2015 was 0.45 g/t and the average strip ratio was 2.6 over this period, compared to 4.0 in 2014.
Mine operating costs
Cash costs, total costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs, which include all costs of inventory, refining costs and royalties, of $727 per payable ounce of gold sold in the fourth quarter of 2015 were comparable to cash costs of $719 per payable ounce of gold sold in the third quarter of 2015. Cash costs decreased in 2015 to $692 per payable ounce of gold sold, compared to $838 per payable ounce of gold sold in the period from acquisition of the mine to December 31, 2014, due to higher production driven by an increase in the ratio of ore tonnes to total material mined combined with lower unit operating costs. Costs per tonne mined decreased in 2015 compared to 2014 as a result of improved efficiencies in our loading and hauling practices and lower fuel prices. Processing costs and general and administration unit costs were also lower in 2015 than in the comparative period principally due to higher ore tonnes. Operational excellence remains a core activity at Marigold particularly focused on maintenance processes and practices.
| AISC of | $895 | per payable ounce of gold sold in 2015 decreased from | $1,187 | in 2014, primarily due | |
| to significantly lower cash costs and lower capitalized stripping. This was partially offset by | |||||
| higher sustaining capital including the | new leach pad construction and increased exploration |
expenditures due to the positive results obtained at the 8 South areas.
Mine sales
A total of 62,827 ounces of gold was sold at an average price of $1,084 per ounce during the fourth quarter of 2015, an increase of 59% from the 39,525 ounces of gold sold at an average price of $1,110 per ounce during the third quarter of 2015. The increase in sales was a function of increased gold production. We achieved gold sales of 206,338 ounces for 2015, an annual record for the mine.
Exploration
There was no exploration drilling planned or completed at Marigold during the last quarter of 2015 as results from the work completed through the year were analyzed and integrated into the mine’s geological database. In 2015, we completed 36,710 meters of reverse circulation drilling in 134 drillholes in addition to approximately 2,360 meters in 37 sonic drillholes in the mineralized stockpiles. During the year, we identified two additional mineralized centers referred to as the 8D and HideOut areas, in addition to increasing Mineral Resources within the 8 South pit extension (8SX) area identified during the last quarter of 2014. As part of the project to explore for deep high grade sulphide mineralization, we completed 2,677 meters of diamond core drilling in four drillholes during the year.
During 2015, we undertook a program to re-assay historic samples ("Assay Program") with the objective of identifying low grade ore that was not included in the existing Mineral Reserves. We assayed a total of 97,950 samples from within the planned production areas through 2019. The results of the Assay Program during 2015 have added 250,000 gold ounces to Indicated Mineral Resources which are included in our 2015 Mineral Reserves and Mineral Resources statement. We anticipate re-assaying a further 90,000 samples in 2016 which cover the remainder of the current mine life. The Assay Program has allowed better spatial definition of the lower grade portions of the ore body to address the positive mine reconciliations that were experienced in 2015. Within the deposit areas completed, the Assay Program has resulted in an increase in ore tonnes of between 24% and 33% and an increase of gold ounces of approximately 13%.
On September 24, 2015, we completed the acquisition of the Valmy property from Newmont Mining Corporation ("Newmont") for $11.5 million. This 2,844 hectare land package, surrounding the Marigold mine to the east, south and west, historically produced 196,000 ounces of gold in the period between 2002 and 2005, as previously reported by Newmont in 2005. The addition of this property increases our total land holding at the Marigold mine by over 35% to 10,759 hectares.
Mineral Resource delineation and expansion during our 2015 exploration activities added a total of 680,000 gold ounces to our 2015 Mineral Resources estimate for Marigold despite a lower gold price assumption. This increase included the addition of: 80,000 gold ounces to Indicated Mineral Resources at the Basalt pit that were previously deemed inaccessible due to proximity to the Valmy property boundary; 350,000 gold ounces to Indicated Mineral Resources from the HideOut and 8 South areas; and 250,000 gold ounces to Indicated Mineral Resources from the results of the Assay Program.
We also completed a review of the drillhole information received from Newmont for the Valmy property and identified Inferred Mineral Resources of 300,000 gold ounces, which are included in our 2015 Mineral Reserves and Mineral Resources statement. In 2016, we plan to conduct exploration drilling on the Valmy property subject to obtaining the requisite permits and other approvals.
Pirquitas Mine, Argentina
| Three months ended Operating data Dec 31, 2015 Sept 30, 2015 Jun 30, 2015 Mar 31, 2015 | Total 2015 2014 |
| Total material mined (kt) 2,712 2,746 3,087 3,355 Waste removed (kt) 1,966 2,219 2,320 2,585 Strip ratio 2.6 4.2 3.0 3.4 Silver mined grade (g/t) 187 188 172 184 Zinc mined grade (%) 0.23 0.33 0.69 0.73 Mining costs ($/t mined) 3.78 3.94 3.39 2.90 Ore milled (kt) 421 410 347 379 Silver mill feed grade (g/t) 237 238 262 267 Zinc mill feed grade (%) 0.35 0.57 0.69 0.89 Processing cost ($/t milled) 20.60 21.53 22.69 21.46 Silver recovery (%) 80.8 82.0 83.7 83.7 Zinc recovery (%) (1) 27.0 40.1 50.9 51.4 General and admin costs ($/t 8.09 8.13 10.62 8.39 milled) Silver produced ('000 oz) 2,588 2,576 2,443 2,732 Zinc Produced ('000 lb) (1) 865 2,076 2,674 3,837 Silver sold ('000 oz) 1,943 2,819 2,623 2,909 Zinc Sold ('000 lb) (1) 1,428 2,352 4,936 2,769 Realized silver price ($/oz) (2) 15.00 14.97 16.72 16.67 Cash costs ($/oz) (2) 10.96 11.02 9.45 11.25 AISC ($/oz) (2) 12.78 12.68 11.78 12.56 Financial Data ($000s) | 11,900 16,391 9,090 14,389 3.2 7.2 183 159 0.51 1.52 3.47 2.94 1,557 1,587 250 221 0.62 1.79 21.52 21.73 82.6 77.3 45.0 47.9 8.74 7.49 10,339 8,733 9,452 30,010 10,294 8,145 11,485 32,341 15.92 19.15 10.68 12.08 12.44 16.01 |
| Revenue 22,656 33,355 37,860 44,155 (Loss) income from mine operations (3) (28,387) (14,684) 924 3,448 Capital investments 2,305 2,500 2,962 1,552 Capitalized deferred — — — — stripping Exploration expenditures 234 1,124 1,912 1,283 | 138,026 141,193 (38,699) (2,636) 9,319 10,123 — 13,171 4,553 2,722 |
(1) Data for zinc production and sales relate only to zinc in zinc concentrate as any zinc metal within our silver concentrate does not generate revenue.
(2) We report the non-GAAP financial measures of cash costs per payable ounce of silver sold, realized silver prices and AISC to manage and evaluate operating performance at the Pirquitas mine. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our consolidated statements of comprehensive income, please see “Non-GAAP Financial Measures” in section 13 of our MD&A.
(3) (Loss) income from mine operations for the quarters ended December 31, 2015, September 30, 2015 and the annual periods ended December 31, 2015, and December 31, 2014, include $24.6 million, $7.7 million, $32.3 million and $11.3 million, respectively, of non-cash adjustments to stockpile and warehouse inventory at the Pirquitas mine to its net realizable value ("NRV") and severance provision.
Mine production
The Pirquitas mine produced 2.6 million ounces of silver during the fourth quarter of 2015, the same amount as in the third quarter of 2015, higher volumes of ore milled offsetting marginally lower recoveries. Mill feed in the fourth quarter was solely from ore mined from the open pit in the period while third quarter silver production benefited from higher grade stockpiled material. In the fourth quarter of 2015, zinc production declined as planned to 0.9 million pounds of zinc in zinc concentrate.
Ore was milled at an average rate of 4,579 tonnes per day in the fourth quarter of 2015. The average silver grade of ore milled was 237 g/t, comparable to the 238 g/t reported in the third quarter. The average recovery rate for silver in the fourth quarter decreased marginally to 80.8% from 82.0% in the previous quarter. Zinc recovery to zinc concentrate was 27%, representing a 33% decrease over the previous quarter due to the planned decrease in zinc head grade. The zinc circuit was in operation for only 35 days in the fourth quarter of 2015.
In 2015, the Pirquitas mine produced a record 10.3 million ounces of silver, higher than the 8.7 million ounces produced in 2014 and nearing the upper end of our increased annual production guidance range. During the year, silver mined grade of 183 g/t and silver mill feed grade of 250 g/t increased 15% and 13%, respectively, compared to the silver grades realized in 2014. The mine achieved higher sustained silver recovery of 82.6%, compared to 77.3% in 2014, as we accessed higher quality sulphide ore and process control improvements positively impacted plant operating performance.
In 2015, Pirquitas also produced 9.5 million pounds of zinc in zinc concentrate, below the 30.0 million pounds of zinc in 2014, in line with the mine plan and the significantly lower zinc feed grade of 0.62% compared to 1.79% in 2014.
Mine operating costs
Cash costs, total costs and AISC per payable ounce of silver sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs, which include cost of inventory, treatment and refining costs, and by-product credits, were $10.96 per payable ounce of silver sold in the fourth quarter of 2015 comparable to $11.02 per payable ounce of silver sold in the third quarter of 2015.
Cash costs per payable ounce of silver sold in 2015 decreased to $10.68 from $12.08 in 2014 as stronger production more than offset significantly lower zinc by-product credits. By-product credits were lower in 2015 compared to 2014 due to expected lower zinc production resulting from lower zinc grades in ore zones mined and lower zinc prices.
AISC of $12.44 per payable ounce of silver sold were lower in 2015 than the $16.01 per payable ounce of silver sold in 2014 due to lower cash costs and lower deferred stripping capital, partially offset by increased exploration related to underground drilling during 2015.
Mine sales
Silver sales totaled 1.9 million ounces in the fourth quarter of 2015, a 31% decrease from the third quarter of 2015, and lower than production in the fourth quarter of 2014, as two shipments planned for December 2015, left the port in early January 2016.
We sold 10.3 million ounces of silver in 2015, a 27% increase compared to the 8.1 million ounces sold in 2014. We also sold 11.5 million pounds of zinc in 2015, significantly lower than the 32.3 million pounds sold in 2014, due to the reduction in zinc production and consistent with the mine plan.
Exploration
As reported in our news release dated September 21, 2015, we completed underground drilling programs beneath the San Miguel open pit at the Pirquitas mine. High grade silver mineralization was intersected on three veins explored, known as Chocaya, Oploca North and Oploca South veins. The underground drill program at the Pirquitas mine targeted the expansion and upgrade of Mineral Resources underlying the San Miguel open pit.
Mineral Reserves declined at Pirquitas in 2015 due to depletion and a lower metal price assumption of $16.00 per ounce of silver, a decrease from $19.00 per ounce of silver in 2014.
Chinchillas project, Argentina
On September 30, 2015, we signed an agreement (the "Agreement") with Golden Arrow Resources Corporation ("Golden Arrow") to explore and evaluate the Chinchillas silver-lead-zinc project, which is situated approximately 30 kilometers from the Pirquitas mine. For details of the Agreement please see our MD&A.
By the end of 2015, Golden Arrow completed 10,390 meters of diamond drilling in 80 core holes and initial geotechnical, hydrological and metallurgical studies. Golden Arrow has also commenced environmental baseline studies and community engagement programs. In total we spent approximately $3.5 million. By the end of 2016, we expect to be in a position to decide whether to exercise our option to develop the Chinchillas project.
Export duties
We entered into a fiscal stability agreement with the Federal Government of Argentina in 1998 for production from the Pirquitas mine. In December 2007, the National Customs Authority of Argentina (Dirección Nacional de Aduanas) levied an export duty of approximately 10% from concentrate for projects with fiscal stability agreements pre-dating 2002 and the Federal Government has asserted that the Pirquitas mine is subject to this duty. We have challenged the legality of the export duty applied to silver concentrate and the matter is currently under review by the Federal Court (Jujuy) in Argentina. Please see our MD&A for additional details.
On February 12, 2016, the Federal Government of Argentina announced the removal of export duties on mineral concentrates. From that date we are no longer recording an accrual in cost of sales for export duties on silver concentrates sold or incurring export duties on zinc concentrates sold from our Pirquitas mine. We are assessing the implications of this announcement on our financial reporting position related to the historical liability recorded. Changes in our assessment of this matter could result in material adjustments to our consolidated statement of loss.
Outlook
This section of the news release provides management's production and cost estimates for 2016. Major capital, exploration and development expenditures are also discussed. See "Cautionary Note Regarding Forward-Looking Statements."
For the full year 2016, we expect:
| Operating Guidance | Marigold mine | Pirquitas mine | |||
|---|---|---|---|---|---|
| Gold Production | oz | 200,000 - 210,000 | — | ||
| Silver Production | Moz | — | 8.0 - 10.0 | ||
| Zinc Production(1) | Mlb | — | 0.0 - 5.0 | ||
| Cash cost per payable ounce sold(2) | $/oz | 690 - 740 | 10.50 - 12.50 | ||
| Capital Expenditures | $M | 32 | 5 | ||
| Capitalized Stripping Costs | $M | 30 | — |
(1) When processing low zinc grade material, the optimum financial result may be to curtail the zinc circuit to maximize payable silver recovery. This is a plant optimization decision that is made on an ongoing basis, leading to a wide range of zinc production guidance.
(2) We report the non-GAAP financial measure of cash costs per payable ounce of gold and silver sold to manage and evaluate operating performance at the Marigold mine and the Pirquitas mine. See “Cautionary Note Regarding Non-GAAP Measures”.
Marigold production and capital guidance has been revised upward from that announced January 14, 2016. Upon review of operating performance through 2015, we have determined that, with improvements in loading equipment performance, haul truck capacity was limiting total material mined. As a result, Marigold is purchasing three used 300 tonne haul trucks, one of which replaces a rental unit, taking the haul truck fleet to 21-300 tonne haul trucks. The units are expected to be in production in the second half of 2016 whereby average material mining capacities are expected to increase from approximately 200,000 tonnes per day to 220,000 tonnes per day.
Marigold production is expected to stay strong in 2016 with quarterly and annual variations driven by Mackay pit phase sequencing. Capital expenditures include approximately $7 million for used haul trucks, $6 million for additional leaching capacity as construction has been accelerated due to the increased ore tonnes mined, $16 million for maintenance and capitalized spares for mining equipment, and $3 million for permitting. As expected, 2016 is projected to be a year of higher capitalized stripping as the next phase of the Mackay pit commences.
At the Pirquitas mine, annual silver production is expected to decline relative to 2015 due to the anticipated completion of the Phase 2 pit during the fourth quarter and the associated cessation of San Miguel open pit mining activities. We are conducting engineering and economic studies to determine the viability of the limited deepening of the Phase 2 pit. Lower grade stockpile processing is expected to commence upon cessation of open pit mining activities and the duration will be dependent on metal prices in late 2016. Mine life extension remains a priority for Pirquitas as demonstrated by 2016 planned expenditures at the Chinchillas project and the on-going evaluation of underground mining options at the Pirquitas mine.
Exploration and development expenditures are forecast at $15 million for 2016. Planned expenditures related to the Pirquitas mine include $7.5 million at the Chinchillas project on predevelopment activities, including exploration, mine planning, metallurgical studies, permitting and engineering studies. Expenditures at Marigold are forecast at $4 million to continue Mineral Resource discovery and conversion at the 8 South area, complete the Assay Program over the Mackay pit for the remainder of the pit mine life and commence exploration on the Valmy property acquired in 2015. Approximately $1.5 million is planned for greenfields U.S. exploration activities. The remainder of the expenditures are attributable to property holdings being maintained in good standing with limited programs expected within our exploration and development portfolio.
Consolidated Financial Summary
Three Months Year
Selected Financial Data (1) Ended December 31 Ended December 31 2015 2014 2015 2014
90,592 375,322
| Revenue | 122,830 | 300,122 | ||
| (Loss) income from mine operations(2) | (20,485) | 12,996 | 18,840 | 36,200 |
| Operating loss(2) | (46,819) | (41,317 ) | (71,063) | (52,497 ) |
| Net loss for the period | (66,722) | (86,222 ) | (124,302) | (126,393 ) |
(0.83) (1.54)
| Basic loss per share | (1.07 ) | (1.57 ) | ||
| Adjusted (loss) income before tax(3) | (8,266) | 4,164 | 2,123 | (16,500 ) |
| Adjusted net loss(3) | (7,232) | (3,068 ) | (8,198) | (22,385 ) |
| Adjusted basic loss per share | (0.09) | (0.04 ) | (0.10) | (0.28 ) |
| Cash generated by operating activities | 20,549 | 62,866 | 74,109 | 68,833 |
(10,576) (44,342)
| Cash used in investing activities | (17,930 ) | (298,700 ) | |
| Cash generated by financing activities | 1,893 5,922 | 244 | 5,922 |
| Financial Position | December 31, 2015 | December 31, 2014 | |
| Cash and cash equivalents | 211,862 | 184,643 | |
| Current assets - total | 476,734 | 491,818 | |
| Current liabilities - total | 135,851 | 122,870 | |
| Working capital | 340,883 | 368,948 | |
| Total assets | 871,677 | 986,249 |
(1) All values are presented in thousands of US dollars, except per share values. This summary of selected financial data should be read in conjunction with our MD&A and our audited consolidated financial statements for the years ended December 31, 2015 and December 31, 2014.
(2) The quarters ended December 31, 2015 and 2014 and the years ended December 31, 2015 and 2014, include non-cash provisions to (loss) income from mine operations of $24.6 million, $11.3 million, $32.3 million and $11.3 million, respectively, and additional impairment charges to operating loss of $13.9 million, $40.3 million, $48.4 million, and $40.3 million, respectively.
(3) We report non-GAAP measures including adjusted income before- and after-tax, to manage and evaluate our operating performance. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Annual financial summary
In 2015, we recognized revenues of $375.3 million, compared to $300.1 million in 2014, as we recognized a full year of revenue from the Marigold mine and Marigold production was at a significantly higher annualized rate compared to 2014 due principally to an increase in the ratio of ore tonnes to tonnes mined. Ounces sold from the Marigold mine and the Pirquitas mine increased by 60% and 26%, respectively, in 2015 compared to 2014. These increases were partially offset by lower realized prices of gold and silver by 7% and 17%, respectively.
Cost of sales per unit were lower at both mines in 2015 than in 2014 due, principally, to higher production levels at both mines. This improvement in underlying cost performance was offset by higher non-cash adjustments to of the stockpile and warehouse inventories of $27.6 million in 2015 compared to the $11.3 million recognized in 2014 at the Pirquitas mine to its net realizable value ("NRV"). In 2015, the loss from mine operations was also impacted by a $4.7 million severance provision related to the Pirquitas mine.
In addition to the above, operating loss and net loss in both years were impacted by non-cash impairments at the Pirquitas mine of $48.4 million in 2015 and $40.3 million in 2014.
Net loss in 2014 was positively impacted by the gain on the sale of the Challacollo project of $15.9 million, partially offset by business acquisition costs of $5.4 million related to the Marigold mine. There were no such transactions in 2015.
Adjusted income before tax was $2.1 million in 2015 compared to a loss of $16.5 million in 2014 as cost of sales improvements at our mines more than offset the decline in metal prices.
In 2015, cash generated from operating activities of $74.1 million was higher than 2014 due to higher sales from Marigold and lower cash costs at both operations. In 2015, cash used in investing activities declined compared to 2014 due to lower deferred stripping capital, which was partially offset by higher investments in plant and equipment. In 2014, cash used in investing activities was significantly impacted by our $275 million cash purchase of Marigold.
Quarterly financial summary
The decrease in quarterly revenue was due to the lower realized prices of gold and silver and lower volumes of gold, silver and zinc sold in the fourth quarter of 2015 compared to the fourth quarter of 2014. The realized prices of gold and silver were 10% and 13% lower, respectively, than in the fourth quarter of 2014, and volumes of gold and silver sold decreased by 9% and 30%, respectively. Silver sales were lower than production in the fourth quarter as two shipments, planned for December 2015, left the port in early January 2016.
Loss (income) from mine operations in the fourth quarter of 2015 and 2014 was impacted by noncash write-downs of stockpile inventory at the Pirquitas mine to its NRV by $7.7 million and $11.3 million, respectively. In the fourth quarter of 2015, loss (income) from mine operations also includes a $12.2 million of non-cash provision against warehouse inventory and a $4.7 million severance provision related to the Pirquitas mine.
The operating loss and net loss in the fourth quarters of 2015 and 2014, in addition to the above, were impacted by non-cash impairments of plant and equipment at the Pirquitas mine of $13.9 million and $40.3 million, respectively.
The lower prices of gold and silver have a direct impact on cash generated from operating activities, which was lower in the fourth quarter of 2015 than in the same period of 2014. Volumes of gold and silver sold were also lower in the fourth quarter of 2015 than in the comparative period. In the fourth quarter of 2014, cash collections of value added tax in Argentina were higher and changes in working capital had a more positive impact than in the fourth quarter of 2015. Cash used in investing activities was lower in the fourth quarter of 2015 than in the fourth quarter of 2014 due to lower deferred stripping in the current period, which was partially offset by lower investments in plant and equipment in the comparative period.
Mineral Reserves and Mineral Resources
At December 31, 2015, total Proven and Probable gold Mineral Reserves were 2.46 million ounces and total Proven and Probable silver Mineral Reserves were 31.5 million ounces. Mineral Reserves estimates for the Marigold and Pirquitas mines have been determined based on prices of $1,100 per ounce of gold and $16.00 per ounce of silver. These price levels are a decrease from prices of $1,200 per ounce of gold and $19.00 per ounce of silver used to determine our Mineral Reserves estimate for the Marigold and Pirquitas mines as at December 31, 2014 reflecting market conditions and our focus on margin.
At Marigold, Mineral Resources increased by 10% as a result of our exploration success, while Mineral Reserves declined by only 6% utilizing more conservative price assumptions. Measured and Indicated Mineral Resources (inclusive of Mineral Reserves) at Marigold increased to 4.58 million gold ounces and include 350,000 gold ounces from the HideOut and 8 South areas, 80,000 gold ounces from the Basalt pit and 250,000 gold ounces from the partially completed Assay Program. Additionally, 300,000 gold ounces were added to Inferred Mineral Resources as a result of acquiring the Valmy property. Mineral Reserves at Marigold total 2.17 million gold ounces.
At Pirquitas, Mineral Reserves declined to 24.2 million silver ounces principally due to mining depletion and silver price reduction. Exploration activities are focused on Mineral Resource delineation at Golden Arrow’s Chinchillas deposit which has the potential to provide additional feed material to the Pirquitas mill.
Our total Measured and Indicated Mineral Resources (inclusive of Mineral Reserves) were 5.52 million gold ounces and 756.6 million silver ounces at December 31, 2015. Mineral Resources estimates have been determined based on prices of $1,400 per ounce of gold and $22.50 per ounce of silver. Measured and Indicated Mineral Resources at the Pitarrilla project were reduced to 526.1 million silver ounces primarily due to the lower metal price assumption and using additional pit constraints. At December 31, 2015, Inferred Mineral Resources totaled 0.55 million gold ounces and 44.9 million silver ounces.
Details on Mineral Reserves and Mineral Resources by project including tonnes, grades, ounces and notes, are presented in the table below.