USA.TO · 2020-08-17 12:00:00

Americas GOLD and Silver Corporation Reports Second Quarter 2020 Results and Provides Operations Update

Mine Development & Operations Financials

AMERICAS GOLD AND SILVER CORPORATION REPORTS SECOND QUARTER 2020 RESULTS AND

PROVIDES OPERATIONS UPDATE

TORONTO, ONTARIO—August 17, 2020—Americas Gold and Silver Corporation (TSX: USA) (NYSE

American: USAS) (“Americas” or the “Company”), a growing North American precious metals producer,

reported consolidated financial and operational results for the second quarter of 2020 along with an

operations update. A separate update for the Galena Complex was released on August 17, 2020.

This earnings release should be read in conjunction with the Company’s Management’s Discussion and

Analysis, Financial Statements and Notes to Financial Statements for the corresponding period, which have

been posted on the Americas Gold and Silver Corporation SEDAR profile at www.sedar.com, and on its

EDGAR profile at www.sec.gov, and which are also available on the Company’s website at www.americas‐

gold.com. All figures are in U.S. dollars unless otherwise noted.

Operational and Second Quarter Financial Highlights

● Revenue of $4.6 million and a net loss of $10.8 million for Q2‐2020 or a loss of ($0.09) per share.

● Year‐to‐date operating metrics were largely unchanged in Q2‐2020 from Q1‐2020 due to the illegal

blockade at the Cosalá Operations, suspension of operating metrics during the Galena Complex

recapitalization plan (“Recapitalization Plan”), and ongoing pre‐development at Relief Canyon.

● The illegal blockade at the Cosalá Operations has been resolved. Company personnel have re‐

entered the mine operations and the Company expects to have the operation restarted before the

end of Q3‐2020.

● The combination of higher silver prices and the re‐opening of the mine would allow the Company

to target the higher‐grade silver ores in the Upper Zone of San Rafael and develop the EC120 area

moving forward. Mining these higher‐grade areas of the Cosalá Operation is expected to

significantly increase silver production to 2.5‐3.0 million ounces per year starting in 2022.

● Relief Canyon continues to ramp up with tonnage and grade reconciling to the resource model.

Mining has progressed through the lower grade upper fringe portion of the deposit near the

historic North and Lightbulb pits but has now reached a more continuous and higher‐grade area.

Commercial production is expected to be delayed until Q4‐2020 due to various start‐up challenges

including equipment issues with the radial stacker, inconsistent operating practices, and variable

solution application rates. On August 4, 2020, the operation began stacking ore typical of the Main

Zone and initial leach solution grades are encouraging and consistent with feasibility expectations.

● Phil Dalke was hired as the General Manager of the Relief Canyon mine in June, 2020. Mr. Dalke

brings 30 years of extensive heap leach knowledge with experience at some of the largest heap

leach mines in the world including Chief Metallurgist at the Yanacocha Mine (joint venture

between Newmont, Buenaventura and Sumitomo), and General Manager of Escobal, La Arena and

Shahuindo (Tahoe Resources; now Pan American Silver) as well as Kori Kollo (Newmont).

● The Galena Complex Recapitalization Plan is proceeding on time and on budget. Please see our

separate press release dated August 17, 2020 for additional details regarding the increasing

production and exploration results.

● The Company provided notice to finalize the option payment for the San Felipe Project and agreed

to pay the remaining $3.75 million plus VAT obligation in common shares of the Company subject

to customary closing conditions. The San Felipe Project will be 100% owned by the Company and

contains a measured and indicated silver resource of over 9 million ounces and an inferred silver

resource of over 3 million ounces.

● The Company had a cash balance of $16.9 million as at June 30, 2020.

“Although the Relief Canyon mine has taken longer to reach commercial production due to complications

related to the COVID‐19 pandemic, equipment challenges regarding the radial stacker and lower grade ore

in the upper fringes of the deposit, as we access, have placed and leached the first of the higher grade ore,

we continue to remain confident that these issues will be solved in the near term. These are typical start

up challenges when commissioning a new operation,” said Americas Gold and Silver President & CEO

Darren Blasutti. “We are pleased to have resolved the illegal blockade at the Cosalá Operations and are

eager to restart the operations. With the restart, we will benefit from the recent increase in silver price

and plan to accelerate development of the Upper Zone at San Rafael and the EC120 deposit which both

contain higher grade silver mineralization. The Galena Complex Recapitalization Plan is proceeding well

and the initial deep drilling of the 72 Vein has provided encouraging results. Additional drilling is planned

for the 72 Vein as well as the Triple Point and 360 Complex during the remainder of 2020 and into 2021.

The Company is excited that these targets will prove up as several high‐grade silver zones.”

Relief Canyon

Following the acquisition of Pershing Gold, the Company set an ambitious target of constructing the Relief

Canyon mine in under 9 months with an estimated budget range of US$28 to US$30 million. While the

Company was successful in meeting several important targets including initial construction capital and

planned mining rates, ore leaching has taken slightly longer than planned due to the characteristics of the

initial ore stacked on the leach pad. This situation was exacerbated by the impact of the COVID‐19

pandemic and the failure of the radial stacker used to stack ore. These are common issues faced during a

heap leach start up and the Company is confident these initial challenges have been mitigated with the

operation in greater position to benefit from the continued strong gold price.

To assist in the continued ramp up of Relief Canyon and facilitate the continued implementation of industry

best practices, Phil Dalke was hired as the General Manager of the Relief Canyon operation in June 2020.

Mr. Dalke brings 30 years of extensive heap leach expertise with experience at some of the largest heap

leach mines in the world including Chief Metallurgist at the Yanacocha Mine (joint venture between

Newmont, Buenaventura and Sumitomo), and General Manager of Escobal, La Arena and Shahuindo

(Tahoe Resources; now Pan American Silver) as well as Kori Kollo (Newmont).

Waste stripping has progressed ahead of plan and has now exposed higher grade portions of the deposit

which are more reflective of the overall reserve grade. This ore has been placed on a new section of the

leach pad and initial leach solution grades are encouraging given the higher grade gold as well as minor

improvements to stacking practices that have been gained as part of the initial phases of the operation.

The Company expects to recover the initial low‐grade ore stacked on the leach pad over the course of the

operation.

The Company’s radial ore stacker suffered a structural failure in Q2‐2020. A temporary stacker was

mobilized to site but can only support a throughput of approximately 8,000 tonnes per day versus 16,000

tonnes per day for the larger radial stacker. The Company anticipates that the radial stacker will be

repaired in time to coincide with increased stacking requirements in Q4‐2020.

With the challenges to date, the Company anticipates commercial production will be reached in Q4‐2020,

setting the operation up for a strong 2021.

Cosalá Operations

The Company is pleased to announce that the illegal blockade that has been in place at the Cosalá

Operations since the end of January 2020 has been resolved favourably without negotiation or compromise

with those responsible for the illegal action. Senior staff are currently on site and are assessing the status

of the site with the Company being confident that the operation can be restarted in September 2020. The

Company has worked with government authorities to secure a democratic election to ratify a legitimate

union to represent its workers which is now set for September 9, 2020.

Due to the illegal blockade, the Cosalá Operations did not operate during Q2‐2020 and operated for only

the first 26 days of calendar 2020. As a result, quarterly and year‐to‐date operating results are not

generally comparable with previous periods.

Spot silver prices have increased significantly from a low of almost $12.00 per ounce in March 2020 to over

$26.00 per ounce in August 2020. In 2019, the Company spent approximately $1.5 million on developing

into the Upper Zone of the San Rafael mine which contains significantly higher silver grades than the Main

Zone. With the development into the Upper Zone, the Company anticipates that it will be able to increase

silver production, allowing it to benefit from the significant increase in the silver price.

With sustained higher silver prices, the Company is planning to advance development into the EC120 Zone.

The Company published a pre‐feasibility study in April 2019 outlining a mine plan that would produce an

average of 2.5 million ounces of silver and 2.6 million pounds of copper over a 5‐year mine life. The

Company is currently updating the assumptions of this study in order to optimize production considering

the recent increase in silver prices.

By combining the increased production from the Upper Zone at San Rafael and the production expected

from EC120, the Company estimates that silver production from the Cosalá Operations can increase to

2.5‐3.0 million ounces per year starting in 2022.

Galena Complex

The Recapitalization plan at the Galena Complex continues to benefit the overall operation. All equipment

purchases are now fully functioning and operating underground which has resulted in increased

productivity. Drift refurbishment on the 4300 level and 5500 level has provided necessary drill stations to

begin testing deeper targets below historical working. Please see our separate release dated August 17,

2020 for additional details.

San Felipe

The Company finalized the earn‐in agreement for the San Felipe project with Minera Hochschild Mexico

S.A. de C.V. (“Hochschild”) by providing notice and agreeing to pay the remaining the $3.75 million plus

VAT obligation in common shares of the Company.

Subject to certain customary closing conditions, the Company will own 100% of the San Felipe project,

which is located 130 km northeast of Hermosillo, Sonora, Mexico. Based on independent technical report

by Mine Development Associates in May 2018, the San Felipe project has an indicated resource containing

4.7 million tonnes grading 5.42% zinc, 60.6 g/t silver and 2.48% lead. In addition, the inferred resource is

estimated to contain 2.0 million tonnes grading 3.57% zinc, 48.2 g/t silver and 1.43% lead.

Consolidated Financial and Consolidated Production Results

Consolidated operating results from Q2‐2020 were generally not comparable to Q2‐2019 due to the illegal

blockade at the Cosalá Operations, and the Recapitalization Plan at the Galena Complex. The Cosalá

Operations were put on care and maintenance in response to the illegal blockade at the end of January

2020. Consolidated gross revenue decreased by $10.3 million during Q2‐2020 compared to Q2‐2019

primarily due to the illegal blockade preventing all access to the Cosalá Operations.

Further information concerning the consolidated and individual mine operations is included in the

Company’s second quarter Condensed Interim Consolidated Financial Statements for the three months

and six months ended June 30, 2020 and Management’s Discussion and Analysis for the three months and

six months ended June 30, 2020.

About Americas Gold and Silver Corporation

Americas Gold and Silver Corporation is a high‐growth precious metals mining company with multiple

assets in North America. The Company’s newest asset, the Relief Canyon mine in Nevada, USA, has poured

first gold and is expected to ramp up to full production over the course of 2020. The Company also owns

and operates the Cosalá Operations in Sinaloa, Mexico and manages the 60%‐owned Galena Complex in

Idaho, USA. The Company has completed the outstanding option acquisition agreement for the San Felipe

development project in Sonora, Mexico, subject to closing conditions. For further information, please see

SEDAR or www.americas‐gold.com.

For more information:

Stefan Axell Darren Blasutti

VP, Corporate Development & Communications President and CEO

Americas Gold and Silver Corporation Americas Gold and Silver Corporation

416‐874‐1708 416‐848‐9503

Qualified Persons

Darren Dell, P.Eng., Chief Operating Officer, who is an employee of the Company and a “qualified person”

under National Instrument 43‐101, has approved the applicable contents of this news release.

Cautionary Statement on Forward‐Looking Information:

This news release contains “forward‐looking information” within the meaning of applicable securities laws.

Forward‐looking information includes, but is not limited to, Americas Gold and Silver’s expectations,

intentions, plans, assumptions and beliefs with respect to, among other things, estimated production rates

and results for gold, silver and other precious metals, as well as the related costs, expenses and capital

expenditures, the Company’s construction, production, development plans and performance expectations

at the Relief Canyon Mine, its ability to finance, develop and operate Relief Canyon, including the

anticipated timing of commercial production at Relief Canyon, the resumption of mining and processing

operations at the Company’s Cosalá Operations following the end of the illegal blockade and expected

silver production levels at the Cosalá Operations, the effect of temporary restrictions on all non‐essential

businesses in Mexico resulting from the COVID‐19 pandemic on the Company’s Cosalá Operations, the

Company’s plans with respect to the EC120 zone and the completion of the Company’s purchase of the

remaining interest in the San Felipe Project from Hochschild. Often, but not always, forward‐looking

information can be identified by forward‐looking words such as “anticipate”, “believe”, “expect”, “goal”,

“plan”, “intend”, “potential’, “estimate”, “may”, “assume” and “will” or similar words suggesting future

outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions, or statements about

future events or performance. Forward‐looking information is based on the opinions and estimates of

Americas Gold and Silver as of the date such information is provided and is subject to known and unknown

risks, uncertainties, and other factors that may cause the actual results, level of activity, performance, or

achievements of Americas Gold and Silver to be materially different from those expressed or implied by

such forward‐looking information. With respect to the business of Americas Gold and Silver, these risks

and uncertainties include risks relating to widespread epidemics or pandemic outbreak including the

COVID‐19 pandemic; the impact of COVID‐19 on our workforce, suppliers and other essential resources

and what effect those impacts, if they occur, would have on our business, including our ability to access

goods and supplies, the ability to transport our products and impacts on employee productivity, the risks

in connection with the operations, cash flow and results of the Company relating to the unknown duration

and impact of the COVID‐19 pandemic; interpretations or reinterpretations of geologic information;

unfavorable exploration results; inability to obtain permits required for future exploration, development

or production; general economic conditions and conditions affecting the industries in which the Company

operates; the uncertainty of regulatory requirements and approvals; fluctuating mineral and commodity

prices; the ability to obtain necessary future financing on acceptable terms or at all; the ability to develop,

complete construction, bring to production and operate the Relief Canyon Project; and risks associated

with the mining industry such as economic factors (including future commodity prices, currency

fluctuations and energy prices), ground conditions and other factors limiting mine access, failure of plant,

equipment, processes and transportation services to operate as anticipated, environmental risks,

government regulation, actual results of current exploration and production activities, possible variations

in ore grade or recovery rates, permitting timelines, capital and construction expenditures, reclamation

activities, labor relations or disruptions, social and political developments and other risks of the mining

industry. The potential effects of the COVID‐19 pandemic on our business and operations are unknown at

this time, including the Company’s ability to manage challenges and restrictions arising from COVID‐19 in

the communities in which the Company operates and our ability to continue to safely operate and to safely

return our business to normal operations. The impact of COVID‐19 on the Company is dependent on a

number of factors outside of its control and knowledge, including the effectiveness of the measures taken

by public health and governmental authorities to combat the spread of the disease, global economic

uncertainties and outlook due to the disease, and the evolving restrictions relating to mining activities and

to travel in certain jurisdictions in which it operate. Although the Company has attempted to identify

important factors that could cause actual results to differ materially from those contained in forward‐

looking information, there may be other factors that cause results not to be as anticipated, estimated, or

intended. Readers are cautioned not to place undue reliance on such information. Additional information

regarding the factors that may cause actual results to differ materially from this forward‐looking

information is available in Americas Gold and Silver’s filings with the Canadian Securities Administrators on

SEDAR and with the SEC. Americas Gold and Silver does not undertake any obligation to update publicly

or otherwise revise any forward‐looking information whether as a result of new information, future events

or other such factors which affect this information, except as required by law. Americas Gold and Silver

does not give any assurance (1) that Americas Gold and Silver will achieve its expectations, or (2)

concerning the result or timing thereof. All subsequent written and oral forward‐looking information

concerning Americas Gold and Silver are expressly qualified in their entirety by the cautionary statements

above.

← Back to feed