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Wednesday, 15 May 2013
SilverCrest Mines Q1 results impacted by lower prices, gold sales, though operating costs come in below target
SilverCrest Mines (CVE:SVL)(NYSE MKT:SVLC)(AMEX:SVLC) reported Wednesday first quarter results that it says were impacted by lower metal prices and less ore processed, though operating costs still came in below guidance as net profit remained steady year-on-year.
For the three months to March 31, the company, which operates the Santa Elena mine in Mexico where a major expansion is underway, said net earnings were relatively similar at $6.0 million, or 6 cents per share, compared to $6.1 million, or 7 cents per share, a year ago.
Cash flow from operations, a key metric in the industry, declined 28 per cent to $8.8 million, or 8 cents per share.
Revenues decreased 22 per cent to $15.3 million from $19.6 million in the same quarter a year ago, as prices declined and gold sale volumes were down.
Metal sales of 157,088 ounces of silver rose 12 per cent, while sales of 7,370 ounces of gold fell 25 per cent. The average realized price for silver fell 12 per cent to $30 an ounce, while the realized gold price fell 5 per cent to $1,626 an ounce.
Cash operating costs also bit into profits at a challenging time for the entire mining industry, rising 10 per cent to $7.69 per silver equivalent ounce, but still making it far below its guidance of $8.50 an ounce.
"We are pleased with the steady start to 2013, for which operating costs and production were consistent with budget and mine plan, however, our financial performance in comparison to the extraordinary stellar first quarter of 2012, was impacted by lower metal prices and our decision to accelerate waste removal resulting in less ore processed and ultimately fewer ounces of gold sold," said president J. Scott Drever in a statement released Wednesday.
He said the company's operating team continues to tightly control costs, and is comfortable that as the strip ratio at the mine declines during the second half of the year and the ore grades in the pit increase, it will meet its full year guidance for output of between 625,000 ounces of silver and 33,000 ounces of gold.
It also stood by its corporate guidance for 2013 of cash costs at $8.50 per silver equivalent ounce.
The silver miner pre-released its production results for the first quarter in late April, when Stonecap Securities analyst Christos Doulis stood by his buy rating and $3.55 price target on the back of his belief that the accelerated removal of waste material should lead to strong production over the remainder of the year.
SilverCrest ended the quarter with cash and equivalents of $41.1 million, with working capital of $48.9 million, having budgeted $53.2 million of capital for the year for the new processing facility at its flagship mine.
It is aiming to complete the construction of a new 3,000 tonne per day processing facility at Santa Elena on schedule and on budget for the first quarter of 2014 as a means to double output. It spent $10.7 million on the project in the latest period.
An updated resource and reserve estimate at the mine is expected in May.
The company is also rapidly advancing the delineation of a large polymetallic deposit at La Joya, where in March it filed an NI 43-101 compliant technical report for the resource update. A preliminary economic assessment is planned for the property.