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SILVERCREST REPORTS Q2, 2012 FINANCIAL RESULTS
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SilverCrest Reports Q2, 2012 Financial Results
TSX-V: SVL OTCQX: STVZF
For Immediate Release
Dear Subscriber,
VANCOUVER, B.C.
August 15, 2012 – SilverCrest Mines Inc.
(the
“Company”) is pleased to announce its financial results for the second
quarter ended June 30, 2012 (all figures in U.S.
dollars unless
otherwise specified).
HIGHLIGHTS OF Q2, 2012 (Compared to Q2, 2011):
· Cash flow from operations ^(1) increased 148% to $7.2
million.
· Cash operating cost per silver equivalent ounce sold ^(2)
decreased 16% to $6.94.
· Revenues reported - IFRS ^(3) rose 87% to $16.0 million on
sales of 124,739 silver ounces and 8,679 gold ounces.
· Comprehensive earnings amounted to $9.2 million ($0.10 ps),
compared to $0.8 million ($0.01 ps).
· Working capital increased 64% to $29.6 million, up from $18.0
million.
· Cash and cash equivalents were $34.9 million (at June 30,
2012).
J.
Scott Drever, President stated; “We had a strong second quarter of
2012.
We sold 637,050 silver equivalent ounces ^(2), for gross revenues
of $16.0 million, with an average cash operating cost of $6.94 per
silver equivalent ounce.
The Santa Elena low cost, open pit heap leach
mine operations continue to perform well and generated cash flows of
$7.2 million which will contribute to the financing of the Santa Elena
Expansion plan and the development of our major polymetallic La Joya
Project.
Q2, 2012, production was consistent with our budget and cash
operating costs were below our budget of $8.20 per silver equivalent
ounce.
As a result, we are confident in meeting or exceeding our 2012
production guidance of 435,000 silver ounces and 33,000 gold ounces."
----------------------------------------------------------------------------
Financial and Operating Highlights: Q2 2012 Q2 2011
----------------------------------------------------------------------------
Cash flow from operations (1) $7,177,713 $2,898,739
Cash flow from operations (1) per share $0.08 $0.04
Cash operating cost per silver equivalent
ounce sold (2) $6.94 $8.27
Revenues (3)
Silver revenue $3,588,568 $2,737,801
Gold revenue - cash basis $9,012,344 $3,487,925
----------------------------------------------------------------------------
$12,600,912 $6,225,726
Gold revenue - non cash
- adjustment to market spot
price $2,729,657 $2,007,810
- amortization of deferred
revenue $651,462 $322,725
----------------------------------------------------------------------------
Revenues reported $15,982,031 $8,556,261
Cost of sales ($4,420,287) ($2,109,801)
Depletion, depreciation and accretion ($1,496,297) ($741,373)
----------------------------------------------------------------------------
Mine operating earnings $10,065,447 $5,705,087
Gain (loss) on derivative instruments $2,360,560 ($3,506,088)
Other net expenses ($1,657,126) ($1,466,301)
Tax expense ($1,243,000) -
Exchange (loss) gain on translation to US
Dollars ($360,236) $57,731
----------------------------------------------------------------------------
Comprehensive earnings $9,165,645 $790,429
Weighted average number of common shares
outstanding 89,736,379 75,821,542
Comprehensive earnings per share - basic $0.10 $0.01
----------------------------------------------------------------------------
Silver ounces sold 124,739 70,326
Gold ounces sold 8,679 4,300
Silver equivalent ounces sold (2) 637,050 255,182
Silver ounces produced 139,850 74,678
Gold ounces produced 8,584 5,476
Silver equivalent ounces produced (2) 646,553 310,090
Ag : Au Ratio (2) 59:1 43:1
----------------------------------------------------------------------------
(1) Cash flow from operations before changes in working capital items.
(2) This is a Non-IFRS performance measure.
Silver equivalent ounces consist
of the number of ounces of silver production plus the number of ounces
of gold production multiplied by the ratio of the spot gold price to the
spot silver price at the quarter end dates.
There are variances in produced and sold ounces due to carry forward
inventories from previous quarter.
(3) Per "IFRS 18 - Revenue", revenue should be recorded at its fair value,
which for gold and silver is the market spot price on the date revenue
is recognized.
Comparison of Q2, 2012, to Q2, 2011
Comprehensive earnings were $9.2 million ($0.10 per share) compared
with $0.8 million ($0.01 per share) for the same period in 2011.
The
significant increase in comprehensive earnings was largely driven by
higher silver and gold sales volumes and a positive marked-to-market
derivative impact, partially offset by lower realized silver and gold
prices, increases in income and deferred tax expense and a larger
exchange loss on translation to US Dollars.
In the second quarter 2012, silver and gold revenues totaled $16.0
million (2011 – $8.6 million), up 87% compared to the same quarter in
2011.
Silver and gold revenues include $12.6 million (2011 - $6.2
million) earned on a cash basis and $2.7 million (2011 – $2.0 million)
of non-cash revenues due to adjustments to gold spot market prices
related to hedge facility deliveries and $0.7 million (2011 - $0.3
million) related to amortization of deferred revenues associated with
the Sandstorm Agreement.
Silver sales were 124,739 ounces (2011 – 70,326) at an average realized
price of $29 (2011 - $39).
All silver production is unencumbered by
hedging arrangements and sold at spot prices.
Gold sales were 8,679 ounces (2011 – 4,300).
The Company sold 2,734
gold ounces (2011 – Nil) at market spot realized price of $1,649 (2011
- $Nil) per ounce.
Gold delivered into the Hedging Facility was 4,210
ounces (2011 – 3,440) at an average realized price of $925 (2011 –
$926).
The non cash amount reported of $2.7 million (2011 - $2.0
million) represents the difference between the market spot price at the
date of delivery for gold (at an average realized price of $1,574 (2011
- $1,510) per ounce) and the hedge price of $926.50 per ounce settled.
This non-cash revenue reported is required by IFRS accounting policies.
Gold delivered to Sandstorm was 1,735 ounces (2011 – 860) at an average
realized gold price of $725 (2011 - $725) for which the Company
recorded revenues of $1.3 million (2011 - $0.6 million) consisting of
$0.6 million (2011 - $0.3 million) in cash received and $0.7 million
(2011 - $0.3 million) from amortization of deferred revenue.
Cost of sales amounted to $4.4 million (2011 - $2.1 million).
Cash cost
per silver equivalent ounce sold amounted to $6.94 (2011 - $8.27).
The
decrease in cash cost per silver equivalent ounce over the same period
in prior year reflects a significant increase in production volumes,
crusher throughput and gold to silver ratio.
Under IFRS the Company’s derivative instruments are fair valued at the
financial position date, with the resulting gain or losses included in
the operating results for the period.
The derivative gain (loss)
relates to the incremental fair value of the MBL Hedging Facility,
which represents the difference between the market spot price of gold
at the quarter end and strike price of $926.50 per ounce.
Gain (loss)
on derivative instruments during the period amounted to $2.4 million
(2011 – ($3.5 million)) resulting from a change at the quarter end to
$1,606 (2011 - $1,518) in the gold forward price from $1,671 (2011 -
$1,456) in the previous quarter.
Comparison of Q2, 2012, to Q1, 2012
Comprehensive earnings were up 44% to $9.2 million ($0.10 per share),
from $6.3 million ($0.07 per share).
The increase in comprehensive
earnings was largely driven by a positive marked-to-market derivative
impact, partially offset by slightly lower sales volumes, lower
realized silver and gold prices, lower income tax expense and exchange
loss on translation to US Dollars.
Operating cash flows were down 41% to $7.2 million ($0.08 per share),
from $12.2 million ($0.14 per share) primarily due to lower realized
silver and gold prices and more gold deliveries into the Hedging
Facility.
The realized price of silver sales and gold spot sales were
down 12% and 4% respectively.
SilverCrest accelerated gold deliveries
into the Hedging Facility, 4,210 ounces were delivered into the Hedging
Facility during Q2 compared with 1,359 ounces in the previous quarter.
The financial information in this news release should be read in
conjunction with the Companys unaudited condensed consolidated interim
financial statements for the three and six months ended June 30, 2012
and associated MD&A which are available on the Companys website at
[2]www.silvercrestmines.com and under the Companys profile on SEDAR at
[3]www.sedar.com .
Links:
2.
http://www.silvercrestmines.com
3.
http://www.sedar.com
NON-IFRS PERFORMANCE MEASURES
The discussion of financial results in this press release includes
reference to cash operating cost per silver equivalent ounce sold,
which is a non-IFRS performance measure.
The Company uses this measure
to provide additional information regarding the Companys financial
results and performance.
Please refer to the Companys MD&A for the
three and six months ended June 30, 2012, for a reconciliation of this
measure to reported IFRS results.
OUTLOOK FOR REMAINDER OF 2012
SilverCrest’s immediate focus is to continue to efficiently operate its
flagship Santa Elena low cost open pit silver and gold mine, realize
the full potential and value of the Santa Elena mine by executing the
three year expansion plan to double metals production, and to rapidly
advance the delineation of our major polymetallic deposit at the La
Joya Property.
Specific targets for H2, 2012 are as follows:
Santa Elena Open Pit Production
· Meet or exceed estimated 2012 production, 33,000 gold ounces
and 435,000 silver ounces;
· Maintain cash operating cost at or below plan of $8.20 per
ounce silver equivalent sold (55:1 Ag:Au);
· Maintain operating cash flow in excess of $2 million per
month, based on current silver and gold prices
Santa Elena Expansion
· Complete underground decline development of main ramp,
approximately 550 metres complete with, 950 metres remaining;
· Secure long lead time items for mill and initiate tank
fabrication;
· Drill Santa Elena along strike and depth to expand
underground resources;
· Complete Pre-Feasibility Study on Expansion Plan (underground
and mill);
· Complete Pre-Feasibility Study on Cruz de Mayo satellite
deposit as part of the Expansion Plan;
· Continue site and regional exploration for further
discoveries;
La Joya Project
· Complete Phase II 80 hole drilling program (15 core and 20
reverse circulation drill holes remaining);
· Explore the Coloradito, Esperanza and Santo Nino targets
which are adjacent to the MMT;
· Complete further metallurgical test work to initially
determine amenability and potential polymetallic recoveries for Ag, Cu,
Au, Pb, Zn, W, Sn, and Mo;
· Complete revised resource estimation using Phase II results
by Q4 2012.
N.
Eric Fier, CPG, P.Eng.
and Chief Operating Officer for SilverCrest
Mines Inc.
and Qualified Person for this news release has reviewed and
approved its contents.
SilverCrest Mines Inc.
(TSX-V: SVL; OTCQX: STVZF) operates in Mexico
and is a low cost precious metals producer with its headquarters based
in Vancouver, BC.
SilverCrest’s flagship property is the 100%-owned
Santa Elena Mine, which is located 150 km northeast of Hermosillo, near
Banamichi in the State of Sonora, México.
The mine is a high-grade,
epithermal gold and silver producer, with an estimated life of mine
cash cost of US$8 per ounce of silver equivalent (55:1 Ag:Au).
SilverCrest anticipates that the 2,500 tonnes per day facility should
recover approximately 4,805,000 ounces of silver and 179,000 ounces of
gold over the 6.5 year life of the open pit phase of the Santa Elena
Mine.
A three year expansion plan is underway to double metals
production at the Santa Elena Mine and exploration programs are rapidly
advancing the definition of a large polymetallic deposit at the La Joya
property in Durango, Mexico.
FORWARD-LOOKING STATEMENTS
This news release contains “forward-looking statements” within the
meaning of Canadian securities legislation and the United States
Securities Litigation Reform Act of 1995.
Such forward-looking
statements concern the Company’s anticipated results and developments
in the Company’s operations in future periods, planned exploration and
development of its properties, plans related to its business and other
matters that may occur in the future.
These statements relate to
analyses and other information that are based on expectations of future
performance, including silver and gold production and planned work
programs.
Statements concerning reserves and mineral resource estimates
may also constitute forward-looking statements to the extent that they
involve estimates of the mineralization that will be encountered if the
property is developed and, in the case of mineral reserves, such
statements reflect the conclusion based on certain assumptions that the
mineral deposit can be economically exploited.
Forward-looking statements are subject to a variety of known and
unknown risks, uncertainties and other factors which could cause actual
events or results to differ from those expressed or implied by the
forward-looking statements, including, without limitation: risks
related to precious and base metal price fluctuations; risks related to
fluctuations in the currency markets (particularly the Mexican peso,
Canadian dollar and United States dollar); risks related to the
inherently dangerous activity of mining, including conditions or events
beyond our control, and operating or technical difficulties in mineral
exploration, development and mining activities; uncertainty in the
Company’s ability to raise financing and fund the exploration and
development of its mineral properties; uncertainty as to actual capital
costs, operating costs, production and economic returns, and
uncertainty that development activities will result in profitable
mining operations; risks related to reserves and mineral resource
figures being estimates based on interpretations and assumptions which
may result in less mineral production under actual conditions than is
currently estimated and to diminishing quantities or grades of mineral
reserves as properties are mined; risks related to governmental
regulations and obtaining necessary licenses and permits; risks related
to the business being subject to environmental laws and regulations
which may increase costs of doing business and restrict our operations;
risks related to mineral properties being subject to prior unregistered
agreements, transfers, or claims and other defects in title; risks
relating to inadequate insurance or inability to obtain insurance;
risks related to potential litigation; risks related to the global
economy; risks related to the Company’s status as a foreign private
issuer in the United States; risks related to all of the Company’s
properties being located in Mexico and El Salvador, including
political, economic, social and regulatory instability; and risks
related to officers and directors becoming associated with other
natural resource companies which may give rise to conflicts of
interests.
Should one or more of these risks and uncertainties
materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those described in the forward-looking
statements.
The Company’s forward-looking statements are based on
beliefs, expectations and opinions of management on the date the
statements are made.
For the reasons set forth above, investors should
not place undue reliance on forward-looking statements.
The information provided in this news release is not intended to be a
comprehensive review of all matters and developments concerning the
Company.
It should be read in conjunction with all other disclosure
documents of the Company.
The information contained herein is not a
substitute for detailed investigation or analysis.
No securities
commission or regulatory authority has reviewed the accuracy or
adequacy of the information presented.
“J.
Scott Drever”
J.
Scott Drever, President
For further information, please contact:
Fred Cooper
570 Granville Street, Suite 501
Vancouver, BC V6C 3P1
Telephone: (604) 694-1730
Fax: (604) 694-1761
Email: [4]
Website: [5]www.silvercrestmines.com
Toll Free: 1-866-691-1730 (Canada & USA)
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Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
SilverCrest Mines Inc.
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SilverCrest Mines Inc.
- 570 Granville St., Suite 501 V6C 3P1,
Vancouver BC
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