RE:Q3 loss of -$.07 per shareAlfTanner,
Your conclusion is incorrect. The main risk affecting this stock was the execution risk of putting the new San Rafael mine into production, and whether they had made the plant modifications necessary to accomodate the higher zinc grades coming from San Rafael, and whether their ore grades were up to the grades predicted in the mining plan.
On page 3 of the MD&A, Americas Silver management reported that:
- Completed intitial processing of ore from San Rafael development stockpiles in September 2017 and at the end of October 2017 confirmed the circuit performance from the newly modified Los Braceros mill as assumed in the April 2016 San Rafael Pre-Feasibility Study
- Revenue of $9.8 million USD and net loss of $2.8 million USD for the quarter or ($0.07) (EXCLUDING El Cajon and San Rafael pre-production revenue).
So in these two bullets, management is telling you that they did much better than what they reported in their financial statements, because the El Cajon and San Rafael revenue is not included in the financial report. So when you add back in $3.4 million in revenue from El Cajon and another $0.4 million from San Rafael pre-production ore, Americas Silver revenue would have been $14 million instead of the $9.8 million reported.
So let's look at the production statistics for zinc:
134,273 metric tons times 1.39 percent zinc times 71.8 % zinc recovery equates to 1340 metric tons of zinc production. That is 2,953,517 pounds of zinc produced.
But reported production from Nuestra Senora was only 1,433,961 pounds. El Cajon ore does not contain zinc, so the difference would have had to come from San Rafael pre-production stockpiles.
That difference is 1.52 million pounds of zinc or 689 metric tons.
What the company reported is that they processed 6000 tons of San Rafael ore which at 4 percent head grades and 84 percent recovery would have produced 200 metric tons of zinc.
So that leaves us with the opposite problem--489 metric tons of excess zinc production nowhere to be found on the balance sheet, and yet it implies a much higher throughput of San Rafael ore than the reported 6000 ton "trial run." The bottom line is that Americas Silver had a successful quarter at Cosala, IMHO.