Santacruz Silver Mining Ltd V.SCZ

Annualized production based on q1 numbers

[MacRellen]

Since they've released q1 production numbers, we should have a good idea of what annual production will be going forward. Still, I see different people come up with different numbers. I think some of the discrepancies are due to SCZ owning 45% of Bolivar and Porco, and also "production" from San Lucas. Anyway, here's my take (I basically mulitplied q1 production by 4 and subtracted COMIBOL's share of Bolivar and Porco):

Total annualized production of 9.47Moz AgEq of which 3.41Moz is silver.
 
Zimapan (100%): 3.60Moz AgEq (1.23Moz Ag).
Caballo Blanco (100%): 3.28Moz AgEq (1.25Moz Ag).
Bolivar (45%): 1.61Moz AgEq (0.66Moz Ag) (45% of 3.59Moz AgEq (1.48Moz Ag).
Porco (45%):  0.981Moz AgEq (0.27Moz Ag) (45% of 2.18Moz AgEq (0.59Moz Ag).
San Lucas (100%): 4.74Moz AgEq (1.46Moz Ag).

San Lucas is an ore sourcing and trading business, so I’m not sure what their “production results” refer to. For the most part I think they source ore from third parties to be delivered to Caballo Blanco, Bolivar and Porco for processing, so earnings should be less for those than for what is produced at the mines. For the years 2018-2021 they had a yearly EBITDA of around USD 5M. Therefore I don't count their numbers into annualized production. If you do, that would be 14.21Moz AgEq (of which 4.87Moz is silver).

And since the Bolivian assets didn't contribute to SCZ production until the middle of march, production numbers for 2022 will be a bit lower, roughly 8.7Moz AgEq (excluding San Lucas).

[Lifexprt]

Indeed production for full year will be lower because Bolivian assets weren't counted in Q1 (I will ignore the 13 days for simplicity) 45% of Illapa JV which produced 5.8 Moz AgEq is 2.6Moz AgEq on annual basis. Zimapan's production is increasing Q1 was .9 Moz and Q2 should be over 1 Moz (equipment moved from Rosario and higher grades) giving you about 4 Moz AgEq Caballo Blanco is 4.2 Moz

[MacRellen]

Yeah, based on current production and current zinc prices (even if they've come down a bit lately), the share price should be much higher, and I think the market will soon see that.

[Lifexprt]

The closer to Q2 results the higher this should drift. I am also hearing ewe may be getting analyst coverage at some point this year which should place us on the radar.

[Windtalker]

Lifeexpert. In response to your post on CEO.CA @Lifexprt Anyone familiar with Zimapan/Santa Giorgina mining area? We should have drill results by end of June. Could be something My understanding is that the company is excited about the potential inside those rocks at Santa Georgina. With it being adjacent to Zimapan, this could turn out to be a nice win. The transformation were witnessing with

[Lifexprt]

Arturo seemed rather optimistic about those. Hence the insider purchases maybe? I guess we will know soon. Can't wait for actual Q1 financials next week as those will shed some light on those assets. All I know costs in Mexico went down from Q4 which would be a positive sign of operational improvements

[Windtalker]

If Arturo was able to get Zimipan's AISC down to 18$ per oz that will be meaningful. Appreaciate your contributions LE

[Lifexprt]

Thanks, likewise. Based on my recent conversation with him there was definite improvement from Q4. I am more interested in cash flow projections from the Bolivian assets as he was convinced they can produce 60M in FCF anually. I think we have a good thing growing here, obviously things take time so patience is needed.

[Windtalker]

If we get 60million in FCF, we should be at a 300 million market cap minimum based on 5xFCF. My understanding is pure silver and gold miners are valued at 10-20xFCF while base metal miners like SCZ get 5xFCF. 

[Lifexprt]

I am thinking between 5 and 10x FCF especially if they increase their silver production once Sorcaya comes online. Either way at $100m US market cap they are between 3-6x undervalued. Expecting this to close that valuation gap over second half of 2022.

[Windtalker]

Let's sit tight and see what happens. I'm optimistic about the drilling results at SG. Hoping for high grades. The green field holdings in Bolivia are another potential win for the company. Lots of irons in the fire. My research has shown me that Bolivia is a sound jurisdiction for companies willing to play ball with the Bolivian govt. They want solid business relationships/partnerships

[Windtalker]

This would explain why the share price is where it is. Some are expecting SCZ to jump to a 1B market cap. Although I'd enjoy that very much that projection may be overly optimistic for a non-pure silver miner play. At the end of the day, SCZ goes higher regardless. Just may not meet the expectations of some

[Lifexprt]

Yeah that is a bit too optimistic unless metals really take off from here. Keep in mind fully diluted there are 400m + outstanding shares. $1+ share price Canadian is a win from here should everything go according to plan we should cross that level at some point in 22.

[Windtalker]

Im with you. 1$ canadian is a realistic goal. We just need improving macro conditions. Not convinced that is happening anytime soon but I have no idea. Just happy to be holding this one

[Lifexprt]

Right on. I like this because of that zinc angle, especially knowing the transaction was priced at $2,700 per tonne. As long as zinc holds up (there are various macro issues holding up the price) they have enough cash to drill Mexico and Bolivia, bring Sorcaya online (additional 4m AgEq) and pay off loans to Glencore. Arturo seems to know what he is doing and is a good fit.

[Windtalker]

. Very good life expert. Well ride this one together. Many people are not happy with Arturo in that he doesnt really say much to the public about whats going on. He keeps his head down and his profile low and focuses on the job at hand. I hope hell come out of his shell a little bit more after we get some earnings and allows for a few interviews. I think that would do the company good.

[Lifexprt]

Haha I hear you, his time will come once those assets are performing as planned. For time being I like under promise and over deliver, had enough hype during the cannabis craze a few years back. I am hearing there will be analyst coverage starting later this year once Q2 results are digested. Talk to you soon.

[Windtalker]

Cooy that. Remember our days in Emblem. Unreal how South that one went

[Lifexprt]

Wow that was eons ago. That entire sector took a tumble. But there was money to be made along the way. Now when I think back to it, a massive orchestrated pump and dump scheme.

[Windtalker]

Looking forward to the drill results at the end of this month. I'm very excited to see what comes up from those holes

[Lifexprt]

Coming in August https://ceo.ca/all?filters[terms]=Scz

[Windtalker]

The drill results I'm anticipating are from Santa G. in Mexico. Are you referencing same or are they also drilling on one of the Bolivian packages. Read that their drill program at Santa G. was concluding end of June so that is where my statement came from. 

[Lifexprt]

Same ones. August is the new date as they are on site now.

[Windtalker]

Thank you

[Windtalker]

Santa Gorgonia holds meaningful potential for the company as evidenced from an interview with Carlos Silva last fall. A relevant exerpt: "Q: Once it reaches full capacity, what are the next steps for the company? A: We have some exploration areas with a great deal of potential that we plan to develop further. We are going to start working with the Santa Gorgonia prospect in the next few

[Lifexprt]

Excellent find. Things are slowly coming together for a nice rally into the fall with Q2 results and drilling updates. Another month of waiting although I have a feeling we are making a bottom in metals this week.

[Windtalker]

And then we have Soracaya in Bolivia. Wow. This company has finally found it's footing. Hard work, determination and strong ethical values are now beginning to pay off. Respect