Latest Qtr Financials Not Bad Considering State of PMs 2015-03-25 20:42 ET - News Release
Mr. Scott Drever reports
SILVERCREST ANNOUNCES 2014 FINANCIAL RESULTS -- CASH FLOW FROM OPERATIONS OF $13.8-MILLION ($0.12 PER SHARE) -- ADJUSTED EARNINGS OF $5.2-MILLION ($0.04 PER SHARE)
Silvercrest Mines Inc. has released its audited consolidated financial results for the fourth quarter and year ended Dec. 31, 2014. The fourth quarter and year-end 2014 financials results reflect a one-time non-cash impairment charge accounting adjustment of $4.96-million. All financial information is prepared in accordance with international financial reporting standards, and all dollar amounts are expressed in U.S. dollars unless otherwise specified. The information in this news release should be read in conjunction with the company's audited consolidated financial statements for the year ended Dec. 31, 2014, and associated management's discussion and analysis, which are available from the company's website and under the company's profile on SEDAR.
Fourth quarter financials conference call
A conference call to discuss the results for the fourth quarter and year-end 2014 financial results will be held on March 26, 2015. The call will be held at 10 a.m. PDT (1 p.m. EDT). To participate in the conference call, please dial the following:
Updated participant dial-in number(s):
Local/international: 647-427-3415
North American toll-free: 1-888-241-0551
A replay of the conference call will be archived for later playback on the company's website.
Scott Drever, chief executive officer and director, stated: "Two thousand fourteen was another challenging but successful year for Silvercrest, as we transitioned from an open-pit heap-leaching operation at Santa Elena to an underground mining and milling operation. By the start of the fourth quarter, we had successfully commissioned both the underground mine and the 3,000-tonne-per-day mill and processing facilities. Silvercrest achieved 93 per cent of its 2014 metal production guidance, in spite of the early closure of the open pit and short-term delays encountered with underground stope production. Low metal prices and one-time impairment charges totalling $4.96-million impacted our financial performance in 2014. Silvercrest generated cash flow from operations of $13.8-million (12 cents per share) in 2014 and is confident in Santa Elena's ability to generate positive cash flows in 2015, notwithstanding the lower precious metals price environment. Silvercrest expects annual production for 2015 to range between 4.0 million to 4.4 million ounces of silver equivalent (silver to gold: 66.7 to 1), a significant increase over 2014 production of 2.81 million AgEq ounces. Silvercrest continues to have a strong balance sheet through disciplined cost controls with $31.3-million in cash (at Dec. 31, 2014) and [an] undrawn credit facility of $15-million."
FINANCIAL AND OPERATING HIGHLIGHTS Q4 2014 Q4 2013 2014 2013 Cash flow from operations $ 1,791,041 $ 4,608,427 $ 13,768,201 $ 26,090,978 Cash flow from operations per share $ 0.02 $ 0.04 $ 0.12 $ 0.24 Cash operating cost per AgEq ounce sold $ 11.90 $ 7.68 $ 9.64 $ 7.78 All-in sustaining cash cost per AgEq ounce sold $ 17.98 $ 12.77 $ 14.35 $ 13.05 Revenues reported $ 16,406,592 $ 12,866,617 $ 45,132,599 $ 54,893,651 Cost of sales $ (11,427,777) $ (5,185,211) $ (23,596,973) $ (19,895,374) Depletion, depreciation and amortization $ (3,150,393) $ (1,618,884) $ (8,167,486) $ (6,134,532) Mine operating earnings $ 1,828,422 $ 6,062,522 $ 13,368,140 $ 28,863,745 Other net expenses $ (3,431,307) $ (3,950,208) $ (8,688,808) $ (9,596,160) Impairment charges $ (4,956,418) $ -- $ (4,956,418) $ -- Foreign exchange gain (loss) $ (395,025) $ 793,276 $ (462,889) $ 2,079,678 Tax recovery (expense) $ 1,415,000 $ (7,000,000) $ (776,000) $ (12,868,000) Net earnings (loss) $ (5,539,328) $ (4,094,410) $ (1,515,975) $ 8,479,263 Adjusted earnings (loss) $ (2,035,929) $ 1,621,246 $ 5,238,021 $ 16,147,593 Exchange (loss) on translation to U.S dollars $ -- $ (444,318) $ -- $ (1,989,460) Comprehensive earnings (loss) $ (5,539,328) $ (4,538,728) $ (1,515,975) $ 6,489,803 Earnings per share, basic $ (0.05) $ (0.04) $ (0.01) $ 0.08 Earnings per share, diluted $ (0.05) $ (0.04) $ (0.01) $ 0.08 Adjusted earnings (loss) per share $ (0.02) $ 0.01 $ 0.04 $ 0.15 Silver ounces sold 422,250 208,200 1,177,936 751,633 Gold ounces sold 8,968 8,220 28,678 30,487 Silver equivalent ounces sold 960,330 714,678 2,898,643 2,595,716 Ag:Au ratio 60.0:1 61.6:1 60.0:1 60.5:1
Fourth quarter ended Dec. 31, 2014
Adjusted loss for the fourth quarter amounted to $2,035,929 (two cents per share, basic and diluted), compared with adjusted earnings of $1,621,246 (one cent per share, basic and diluted) in 2013. Net loss was $5,539,328 (five cents per share, basic and diluted) for the fourth quarter compared with $4,094,410 (four cents per share, basic and diluted) in 2013. The net loss in fourth quarter 2014 was primarily attributed to lower mine operating earnings generated at Santa Elena and non-cash impairment charges totalling $4.96-million. In fourth quarter 2013, the company recorded a one-time non-cash deferred tax charge of $5.8-million as a result of the enactment of the Mexican tax reform.
Silver and gold revenues totalled $16,406,592 (2013: $12,866,617) in the fourth quarter. Silver sales of 422,250 ounces (2013: 208,200) were a quarterly record and a 103-per-cent increase over the same period in 2013. The foregoing, combined with a 21-per-cent-lower average realized price of $16 (2013: $20.20) per ounce, resulted in only 61-per-cent-higher silver revenue. Total gold revenue reported in the fourth quarter increased 3 per cent compared with the same period in 2013. Total gold sales were 8,968 ounces (2013: 8,220), or 9 per cent higher than in the same period in 2013. The company sold 7,394 (2013: 6,576) ounces of gold at an average realized price of $1,185 (2013: $1,250) per ounce, a 5-per-cent decline. The company delivered 1,574 gold ounces (2013: 1,644) under the Sandstorm purchase agreement at $354 cash (2013: $350) per ounce.
Cost of sales amounted to $11,427,777 (2013: $5,185,211). Cash operating cost and all-in sustaining cash cost per AgEq ounce sold in fourth quarter 2014 were $11.90 and $17.98 (silver to gold: 60.0 to 1) per ounce, respectively, compared with $7.68 and $12.71 (Ag to Au: 61.6 to 1) per ounce in fourth quarter 2013. The increase in cash operating cost per AgEq ounce for fourth quarter 2014 is a result of additional direct production costs due to the transition of Santa Elena during 2014 from an open-pit heap-leach operation to an underground mining and milling operation. The increase in all-in sustaining cash operating cost per AgEq ounce for fourth quarter is a result of higher production costs and the inclusion of Santa Elena's sustaining underground development, infrastructure and equipment costs. The company anticipates operating cash cost to average $10 to $11 per AgEq ounce and all-in sustaining cash cost to average $14 to $15 per AgEq ounce for 2015 as underground production ramps up and reaches average budgeted levels of 1,320 tonnes per day.
Depletion, depreciation and amortization increased to $3,150,393 (2013: $1,618,884) with the incorporation of the quarterly deprecation charge for Santa Elena's new mill and CCD/MC processing facilities. General and administrative expenses decreased by 20 per cent to $2,321,740 (2013: $2,885,989) primarily due to a decrease in remuneration expense. Remuneration expense decreased by 41 per cent to $933,501 (2013: $1,581,482) primarily from the reduction in annual bonuses paid in fourth quarter to management and employees.
During fourth quarter 2014, the company recorded impairment charges totalling $4,956,418 (2013: nil) related to writedowns of property, plant and equipment, and mineral properties. The company recorded an impairment charge of $1,911,198 against crushing equipment no longer in use at Santa Elena and wrote off the book value of the Cruz de Mayo project ($2,875,168) and other exploration properties ($170,052).
Current income tax expense amounted to $632,000 (2013: $1.58-million). The decrease in tax expense in fourth quarter is primarily attributable to the company taking a 100-per-cent tax deduction for 2014 development costs incurred at Santa Elena. The foregoing, combined with lower operating margins, resulted in a lower current income tax charge compared with fourth quarter 2013.
Deferred tax recovery was $2,047,000 (2013 expense of $5.42-million) primarily as a result of the 2014 non-capital loss the company generated, which will be available to utilize against taxable income in future periods. The 2014 Mexican non-capital loss was partially offset by additional temporary differences recognized for financial statement carrying amounts and their respective Mexican tax book bases. Recognized within the fourth quarter recovery is $374,000 (2013: nil) drawn down from the $5.8-million deferred taxes recognized in fourth quarter 2013 due to the enactment of the Mexican tax reform.
Year ended Dec. 31, 2014
Adjusted earnings for fiscal 2014 amounted to $5,238,021 (four cents per share, basic and diluted), compared with $16,147,593 (15 cents per share, basic and diluted) in 2013. Net loss was $1,515,975 (one-cent loss per share, basic and diluted) for fiscal 2014, compared with earnings of $8,479,263 (eight cents per share, basic and diluted) in 2013. The loss recognized in fiscal 2014 was primarily driven by: (1) a decrease in revenues from lower realized prices, (2) an increase in direct production costs as Santa Elena transitioned during 2014 from an open-pit heap-leach operation to an underground mining and milling operation, and (3) fourth quarter non-cash impairment charges totalling $4.96-million.
Silver and gold revenues totalled $45,132,599 (2013: $54,893,651) for fiscal 2014. Silver sales amounted to 1,177,936 ounces (2013: 751,633), which include 206,323 (2013: 13,881) capitalized ounces, 57 per cent higher when compared with 2013. The foregoing, combined with a 21-per-cent-lower average realized price of $18.23 (2013: $22.97) per ounce, resulted in only 24-per-cent-higher silver revenue. Total gold revenue reported during fiscal 2014 decreased 16 per cent compared with the same period in 2013. Total gold sales were 28,678 ounces (2013: 30,487), which include 4,096 (2013: 409) capitalized ounces, or 6 per cent below the same period in 2013. The company sold 23,162 (2013: 24,389) ounces of gold at an average realized price of $1,256 (2013: $1,392) per ounce, a 10-per-cent decline. The company delivered 5,516 gold ounces (2013: 6,097) under the Sandstorm purchase agreement at $353 cash (2013: $350) per ounce.
Cost of sales amounted to $23,596,973 (2013: $19,895,374). Cash operating cost per AgEq ounce sold during the year was $9.64 (Ag to Au: 60.0 to 1) per ounce compared with $7.78 (Ag to Au: 60.5 to 1) per ounce in 2013. All-in sustaining cash cost per AgEq ounce sold in fiscal 2014 was $14.35 (Ag to Au: 60.0 to 1) per ounce compared with $13.04 (Ag to Au: 60.5 to 1) per ounce in 2013. The primary drivers for the increase in cash operating cost and all-in sustaining cash cost are the same as those outlined above in the fourth quarter comparison.
General and administrative expenses decreased by 6 per cent to $6,504,047 (2013: $6,951,892). The decrease is primarily from a reduction in remuneration as lower annual bonuses were paid in fourth quarter to management and employees.
Impairment charges totalled $4,956,418 (2013: nil), and current and deferred tax expense totalled $262,000 (2013: $5.45-million) and $514,000 (2013: $7,418,000), respectively. Refer to the fourth quarter comparison for explanations of the primary drivers.
Outlook for 2015
Silvercrest's immediate focus is to: (i) continue the efficient operation of its flagship Santa Elena low-cost silver and gold mine, (ii) increase underground ore production rates from current average rates of 1,200 tonnes per day to average rates of 1,500 tpd by the end of 2015 to achieve an average rate of 1,320 tpd for fiscal 2015, (iii) SEDAR file a technical report by March 31, 2015, to update the Santa Elena reserves, resource estimates and life-of-mine plan, (iv) expand resources and associated reserves at Santa Elena by continued systematic exploration of the deposit, (v) continue to evaluate and acquire low-cost exploration properties in proximity to Santa Elena, (vi) update the La Joya resource model for a new resource estimate in 2015, and (vii) manage a strong cash position to support growth while sustaining existing operations.