TORONTO,
Nov. 13, 2013 /CNW/ - U.S. Silver
& Gold Inc. (TSX: USA) (OTCQX:
USGIF) ("U.S. Silver & Gold" or the "Company") today reported
financial and operational results for the third quarter ending
September 30, 2013.
This earnings release should be read in
conjunction with the Company's MD&A, Financial Statements and
Notes to Financial Statements for the corresponding period, which
have been posted on SEDAR at www.sedar.com and are also
available on the Company's website at
www.us-silver.com.
Third Quarter Highlights
(All figures in U.S. dollars unless otherwise noted)
- Excluding severance costs related to implementation of the
Small Mine Plan ("SMP"), the Galena Mine Complex achieved an
operating profit of $0.7 million for
the quarter. The Company reported a net loss for the quarter
of ($3.5) million or ($0.06) per share, compared with a net loss of
($1.8) million or ($0.03) per share for the third quarter of
2012.
- The SMP implemented early in the third quarter to reduce costs
and focus on increasing mine cut-off grade is delivering positive
results:
-
- Cash costs for the quarter were down 13% year-over-year to
$17.67 per ounce silver and down 5%
year-to-date to $18.16.
- Average head grade rose 6% versus Q2 2013 to 11.84 ounces per
ton silver (comprising 36,359 tons grading 13.06 ounces per ton
silver from production areas and 4,387 tons of incremental
development muck grading 1.75 ounces per ton silver).
- October 2013 silver production
was approximately 175,000 ounces at an average ore grade of over 15
ounces per ton.
- Galena Complex production for the quarter was 464,850 ounces
(or 529,860 silver equivalent ounces1 and 1.67 million
ounces for the first nine months of 2013. This represents a
3% increase year-to-date and a decrease of 15% year-over-year for
the quarter. Consolidated production year-to-date rose 4% to 1.7
million ounces.
- Silver guidance for 2013 remains on track at 2.1 - 2.2 million
ounces with production at the Galena Mine Complex during the second
half of the year on track to deliver 850,000 - 1,000,000 ounces at
a cash cost of $15.50 - $17.50 per
ounce.
- The Company entered into an agreement with Royal Capital
Management Corporation for CDN $8.5
million to replace the previous debt of $7.9 million with Hale Capital Partners (please
see press release dated August 8,
2013) and completed a private placement for total proceeds
of CDN $5.78 million (please see
press release dated August 22,
2013).
- As of September 30, 2013, the
Company's cash and cash equivalents totaled $5.8 million and net working capital was
$11.3 million.
- On November 12, 2013, the Company
entered into an agreement to sell certain non-core and unpatented
mining claims to a third party for gross proceeds of approximately
$2.85 million to further strengthen
the balance sheet without share dilution.
_________________________________
1 Silver equivalent calculation is based on prices of
$22 per ounce silver, $0.90 per pound lead and $3.25 per pound copper.
"In 2013 we committed to making operational and
production improvements to reduce costs and allow mining of higher
grade ore. Despite a much lower silver price environment than
expected at the beginning of the year, we have advanced these
goals," said Darren Blasutti,
President and CEO of U.S. Silver & Gold. "We achieved
profitable operations at the Galena Mine Complex during the third
quarter through disciplined cost containment and a major reduction
in our workforce and expect Q4 to be our lowest cost quarter of the
year. We are mining higher grades at lower tonnage levels and
remain on track to deliver on our guidance of 2.1 - 2.2 million
ounces of silver for the year. During the quarter we also
took several prudent steps to protect the balance sheet and
increased working capital by almost $10
million."
Consolidated Production and Operating Costs
Table 1
Consolidated Production and Operating Costs |
|
Q3 2013 |
Q3 2012 |
YTD
2013 |
YTD
2012 |
Revenue (millions) |
$
13.9 |
$
33.4 |
$
53.6 |
$
69.4 |
Silver Produced (ounces) |
464,850 |
567,555 |
1,714,114 |
1,646,682 |
Gold Produced (ounces) |
- |
2,223 |
3,956 |
2,223 |
Lead Produced (pounds) |
705,665 |
1,429,449 |
5,114,010 |
3,860,542 |
Copper Produced (pounds) |
244,653 |
259,445 |
774,663 |
729,750 |
Cash Cost / Silver
Ounce2 |
$ 17.67 |
$ 18.72 |
$
18.87 |
$ 18.64 |
Net Loss (millions) |
$
(3.5) |
$
(1.8) |
$
(15.2) |
$
(1.2) |
Loss Per Share (basic
and diluted) |
$ (0.06) |
$ (0.03) |
$ (0.25) |
$ (0.02) |
As reported on October
22, 2013, the Company produced 464,850 ounces of silver
during the third quarter of 2013 at a grade of 11.843
ounces per ton and a by-product cash cost of $17.67 per ounce silver. Production
decreased by 18%; however, this was expected following a 30%
reduction in staffing which was implemented as part of the SMP to
reduce costs and increase grade to be profitable at current silver
prices, and closure of the Drumlummon Mine. The decrease was
partially offset by an 18% increase in average silver grade mined
for the quarter at the Galena Mine Complex.
While cash costs increased slightly over the
previous quarter due to the workforce reduction, associated
severance payments and short-term productivity losses, they remain
significantly below cash costs during the third quarter and the
first nine months of 2012. Consolidated cash costs for the first
nine months of the year were higher largely due to the
underperformance of the Drumlummon Mine during the first half of
2013, leading to its closure.
_________________________________
2 During 2012, the Company changed its presentation of
cash costs to report under a payable ounces basis to conform to
presentation used by other comparable entities within the silver
mining industry. Previous disclosures have been restated to conform
with the amended presentation.
3 Comprises 36,359 tons of production ore grading 13.06
ounces per ton silver and 4,387 tons of development material
grading 1.75 ounces per ton silver.
A consolidated net loss of ($3.5) million was recorded for the quarter
compared with a net loss of ($1.8)
million for the three months ended September 30, 2012. The increased loss is a
result of lower silver prices and $1.7
million in severance paid on implementation of the SMP. A
net loss of ($15.2) million was
recorded for the nine months ended September
30, 2013 compared with a net loss of ($1.2) million for the first nine months of
2012. The increased loss for the year is primarily
attributable to lower realized metal prices and an impairment
charge related to the Drumlummon Mine as well as lower sales from
production, higher cost of sales, higher depreciation, depletion,
amortization, finance and care and maintenance costs.
Galena Complex Production and Operating
Costs
Table 2
Galena Complex Production and Operating Costs |
|
Q3 2013 |
Q3 2012 |
YTD 2013 |
YTD 2012 |
Tons Milled |
40,746 |
56,488 |
162,157 |
170,899 |
Average Silver
Head Grade (ounces per ton)4 |
11.84 |
10.03 |
10.71 |
9.91 |
Silver Recovery (percent) |
96.4 |
96.1 |
96.3 |
95.9 |
Silver Produced (ounces) |
464,850 |
544,104 |
1,671,172 |
1,623,231 |
Silver Sold (ounces) |
505,613 |
602,401 |
1,735,070 |
1,703,761 |
Realized Silver Price (per
ounce) |
$ 21.40 |
$ 27.68 |
$ 25.06 |
$ 29.63 |
Cash costs (per ounce) |
$ 17.67 |
$ 20.29 |
$ 18.16 |
$ 19.17 |
The Galena Complex mined 162,157 tons of ore
year-to-date to produce 1.7 million ounces of silver versus 170,899
tons of ore milled during the first nine months of 2012 to produce
1.6 million ounces of silver. Cash costs fell 5% to
$18.16 per ounce. Excluding costs of
$1.7 million in severance related to
the workforce reduction as a result of the SMP implementation, an
operating profit of $0.7 million was
achieved for the quarter.
Corporate Update
Management continues to look for opportunities
to further reduce costs and increase profitable production.
This includes evaluating cooperative arrangements within the
Silver Valley whereby others may
be able to utilize the Company's unused processing capacity or mine
infrastructure. In addition, the Company has entered into an
agreement to sell selected non-core mining claims to a third party
for gross proceeds of approximately $2.85
million on November 12, 2013.
The closing is subject to customary conditions and is expected to
occur within the week.
_________________________________
4 Comprises 36,359 tons of production ore grading 13.06
ounces per ton silver and 4,387 tons of development material
grading 1.75 ounces per ton silver.
Exploration Update
Given current metal prices and economic conditions, the Galena
Mine Complex exploration budget was reduced to $0.7 million for the second half of 2013 and
drilling was transitioned from third party to in-house resources.
Exploration work is focused on the following:
- Further expanding the Caladay Zone close to areas of existing
infrastructure;
- Block modelling and evaluation of drill results from the first
half of the year; and
- Developing immediate and near term minable high-grade silver
resources in proximity to existing infrastructure to support the
SMP.
Caladay Zone
Production from silver/copper areas adjacent to
the Caladay Zone commenced as scheduled in the third quarter of
2013. Although installation and commissioning of additional
cooling capacity temporarily impacted mining activities early in
September production resumed in late October. Consistent production
rates are expected to be achieved before year-end and the Company
continues to target a production rate of 100 tons per day.
The Company drilled 58,511 feet underground at
the Galena Complex to the end of the third quarter of 2013. The
exploration and expansion of the Caladay Zone in the areas of known
mineralization defined between the 4900 and 5200 levels continued
with over 3,700 feet completed in the third quarter. Over
23,550 feet of drilling has been completed in this area so far this
year.
While drilling in the Caladay Zone continues,
going forward the Company will focus on implementing the SMP and
increasing the grade mined to be profitable at current silver
prices. However, the resulting decrease in personnel has
created a backlog of core which current mine staff are continuing
to log. Results from the drilling program completed since
December 2012 is being incorporated
into an updated resource estimate.
2013 Outlook
U.S. Silver & Gold affirms its 2013
anticipated production of 2.1 - 2.2 million ounces of silver at a
cash cost of $15.50 - $17.50 per
ounce. Management expects the fourth quarter to be the lowest cost
quarter of the year. This outlook is based on a number of
assumptions that the Company believes are reasonable at the time of
this earnings release.
Conference Call at 4:30 pm on Wednesday,
November 13, 2013
Financial and operating results will be
discussed during an analyst and investor conference call with
senior management today, November
13th at 4:30 pm ET. A question
and answer session will follow management's presentation.
Dial-In Numbers: |
647-427-7450 (Toronto) |
|
1-888-231-8191 (Toll-free) |
A live audio webcast of the conference call will be available at
www.us-silver.com and www.newswire.ca.
A replay of the call will be available until November 20, 2013 by calling 416-849-0833 or
1-855-859-2056, reference number 98597026.
About U.S Silver & Gold
U.S. Silver & Gold is a silver and gold
mining company focused on growth from its existing asset base and
execution of targeted accretive acquisitions. It owns and operates
the Galena Mine Complex in the heart of the Silver Valley/Coeur d'Alene Mining District,
Shoshone County, Idaho which
produces high-grade silver ore and is the second most prolific
silver mine in U.S. history, delivering over 200 million ounces to
date. The Caladay Zone is being evaluated for bulk mining
development. U.S. Silver & Gold also owns the Drumlummon Mine
Complex in Lewis and Clark County,
Montana.
Mr. Jim Atkinson,
Vice President, Exploration and a Qualified Person under Canadian
Securities Administrators guidelines has approved the applicable
contents of this news release.
Some of the potential quantities and grades
disclosed in this news release are conceptual in nature. At the
current stage of exploration, there is insufficient drilling to
determine the extent of continuity of the mineralization required
to define a mineral resource for all mineralization at the Galena
Mine Complex and Drumlummon Mine. It is uncertain if further
exploration will result in certain exploration targets being
delineated as a mineral resource.
For further information please see SEDAR or
www.us-silver.com for the NI 43-101 compliant Technical Report on
the Galena Project dated March 22,
2013.
Cautionary Statement Regarding
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, the
Company's expectations intentions, plans, and beliefs with respect
to, among other things, the Galena Complex and the Drumlummon Mine.
Often, but not always, forward-looking information can be
identified by forward-looking words such as "anticipate",
"believe", "expect", "goal", "plan", "intend", "estimate", "may",
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 the Company
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 the Company to be materially different from those expressed or
implied by such forward-looking information. This includes the
ability to develop and operate the Galena and Drumlummon
properties, risks associated with the mining industry such as
economic factors (including future commodity prices, currency
fluctuations and energy prices), failure of plant, equipment,
processes and transportation services to operate as anticipated,
environmental risks, government regulation, actual results of
current exploration activities, possible variations in ore grade or
recovery rates, permitting timelines, capital expenditures,
reclamation activities, social and political developments and other
risks of the mining industry. Although U.S. Silver and Gold 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. By
its nature, forward-looking information involves numerous
assumptions, inherent risks and uncertainties, both general and
specific those contribute to the possibility that the predictions,
forecasts, and projections of various future events will not occur.
The Company undertakes no 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.
SOURCE U.S. Silver & Gold Inc.