U.S. Silver & Gold Reports Adjusted net income of $3.7 million
or $0.06 per share
TORONTO, Nov. 13, 2012 /PRNewswire/ - U.S. Silver &
Gold Inc. (TSX: USA, OTCQX: USGIF)
("U.S. Silver & Gold" or the "Company") today reported
financial and operational results for the third quarter ending
September 30, 2012.
This earnings release should be read in
conjunction with the Company's MD&A, Financial Statements and
Notes to Financial Statements for the corresponding period, which
have been posted on SEDAR at www.sedar.com and are also
available on the Company's website at
www.us-silver.com.
Third Quarter Highlights
(All figures in U.S. dollars unless otherwise noted)
- Adjusting for one-time charges which resulted from the business
combination of U.S. Silver Corporation and RX Gold & Silver
Inc., net income for the quarter was $3.7
million or $0.06 per
share. With the inclusion of these one-time charges, the
Company reported a third quarter net loss of $1.8 million or $0.03 per share, compared with net income of
$5.2 million or $0.08 per share for the third quarter of 2011.
Revenue increased from $14.7 million
in the second quarter of 2012 to $34.4
million in the third quarter of 2012.
- Galena Complex silver production was 544,104 ounces for the
quarter and 1.62 million ounces for the first nine months of 2012.
Drumlummon production since August 13,
2012 was 2,223 ounces of gold and 23,451 ounces of silver.
Adjusted Drumlummon production for the entire quarter was 4,421
ounces of gold and 64,176 ounces of silver and, for the first nine
months of 2012 was approximately 16,600 ounces of gold and 280,000
ounces of silver.
- Year-to-date combined production was 1.9 million ounces of
silver and 16,600 ounces of gold. The Company remains on target to
achieve its guidance of 2.6-2.8 million ounces of silver and 20,000
- 25,000 ounces of gold. The fourth quarter is expected to be the
highest silver production quarter.
- The new Management team of the recently created U.S. Silver
& Gold is focused on increasing the mining grade while
improving production in order to reduce operating costs.
Early in 2013 productivity at the Galena Complex will increase by
changing from a five-day work week to a 24/7 shift schedule.
In addition, the Drumlummon Mine will institute labour cost
reductions and maximize processing efficiencies by moving the
milling of gold and silver ore from a leased mill to the Galena
Complex.
- A new team, separate from operations, has been created to focus
on the development of the Lead Zone. As announced in the Company's
October 11, 2012 press release, the
newly-interpreted geometry of this world class silver / lead
mineralized zone suggests that alternative, lower-cost mining
methods may be utilized in this part of the Galena Complex.
- Management has eliminated approximately 90 percent of the
corporate cost duplication and expects to achieve $3 million per annum in corporate cost savings
through the business combination.
"The third quarter of 2012 progressed as
expected, with a profit achieved before one-time charges including
severance and other merger-related costs," stated Darren Blasutti, President and Chief Executive
Officer of U.S. Silver & Gold. "After assessing the
existing mining plans, the new Management team has shifted the
Company's focus from achieving arbitrary ounce production targets
to increasing the profitability of ounces mined. We are also
undertaking productivity improvements and cost reductions to allow
for greater earnings and cash flow per share going forward."
Key Statistics
|
Q3
2012 |
Adjusted
Q3 2012 |
Q3
2011 |
Adjusted
YTD 2012 |
YTD
2011 |
Revenue
(millions) |
$ |
34.4 |
$ |
35.5 |
$ |
28.3 |
$ |
91.8 |
$ |
78.2 |
Silver Produced (ounces) |
567,555 |
608,280 |
645,593 |
1,903,680 |
1,788,228 |
Gold Produced (ounces) |
2,223 |
4,421 |
- |
16,602 |
- |
Lead Produced (pounds) |
1,429,449 |
1,429,449 |
1,916,795 |
3,860,542 |
4,911,214 |
Copper Produced (pounds) |
259,445 |
259,445 |
317,127 |
729,750 |
898,252 |
Cash Cost / Silver Ounce |
$ |
20.53 |
$ |
21.57 |
$ |
17.57 |
$ |
18.61 |
$ |
16.89 |
|
|
|
|
|
|
Net Income (Loss)
(millions) |
$ |
(
1.8) |
$ |
3.7 |
$ |
5.2 |
$ |
5.3 |
$ |
15.9 |
Earnings Per Share (diluted) |
$ |
(0.03) |
$ |
0.06 |
$ |
0.08 |
$ |
0.08 |
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
Financial Results
Adjusting for one-time charges including
transaction costs related to the Company's business combination,
net income for the quarter was $3.7
million, or $0.06 per
share. With the inclusion of these charges, the Company had a
third quarter net loss of $1.8
million or $0.03 per share,
compared with net income of $5.2
million or $0.08 per share for
the third quarter of 2011. (Note: Due to much higher realized
silver prices, 2011 was a year of record revenue.)
Adjusting for one-time charges as outlined
above, net income for the first nine months of 2012 would have been
$5.3 million, or $0.08 per share. With the inclusion of
these charges, the Company had a net loss for the first nine months
of 2012 of $1.2 million, or
$0.02 per share. This compares
with net income of $15.9 million or
$0.25 per share during the first nine
months of 2011 and net income of $1.5
million for the same period in 2010.
Production and Operating Costs |
|
|
|
|
|
|
|
|
|
Galena
Complex |
Q3 2012 |
YTD
2012 |
YTD
2011 |
|
Tons Milled |
56,488 |
170,899 |
180,922 |
|
Average Silver Head Grade (ounces per ton) |
10.02 |
9.91 |
10.21 |
|
Silver Recoveries (percent) |
96.1 |
95.9 |
96.3 |
|
Silver Produced (ounces) |
544,104 |
1,623,231 |
1,788,228 |
|
Silver Sold (ounces) |
602,401 |
1,703,761 |
1,898,545 |
|
Realized Silver Price (per ounce) |
$ |
27.68 |
$ |
29.63 |
$ |
38.09 |
|
Cash costs (per ounce) |
$ |
22.27 |
$ |
20.90 |
$ |
16.89 |
Year-to-date ore production was 170,899 tons
versus 180,922 tons milled during the first nine months of 2011 and
cash costs increased to $20.90 per
ounce. Tonnage was negatively impacted by the termination of
highly-paid contract-mining crews in early 2012, which resulted in
development, repair and exploration crews taking on production
roles that require a different skill set. In August 2012 this situation was improved by the
addition of 60 full-time employees, which will enable the Galena
Complex to move from the current five-day-a-week schedule to a 24/7
schedule on January 1, 2013.
The new Management team is committed to
increasing profitable production and ensuring a cash flow positive
operation in fiscal 2013 and beyond. The hiring ramp-up and
new-employee training raised labour costs in the quarter. However,
the increase in productivity that is expected to result from an
appropriate staffing complement and the switch to a
seven-day-a-week schedule, should positively impact ounce
production and cash costs starting in early 2013.
Realized silver prices in the quarter were
$2 per ounce lower than the third
quarter 2012 average spot silver price primarily due to the timing
of Xstrata contracts on the copper/silver ore, which defers pricing
on concentrate shipments by one month. Average head grade
year-to-date was 9.91 compared to 10.21 during the first nine
months of 2011.
|
Drumlummon Mine |
|
Q3 2012 |
Adjusted
Q3 2012 |
Adjusted
YTD 2012 |
Tons Milled |
|
8,734 |
19,434 |
73,741 |
Average Gold Head Grade (ounces per ton) |
|
0.27 |
0.25 |
0.25 |
Average Silver Head Grade (ounces per ton) |
|
3.11 |
3.91 |
4.50 |
Gold Recoveries (percent) |
|
94.0 |
92.4 |
91.5 |
Silver Recoveries (percent) |
|
86.4 |
84.5 |
84.5 |
Gold Produced (ounces) |
|
2,223 |
4,421 |
16,602 |
Silver Produced (ounces) |
|
23,451 |
64,176 |
280,449 |
Gold Sold (ounces) |
|
4,450 |
4,585 |
14,772 |
Silver Sold (ounces) |
|
82,027 |
85,988 |
240,449 |
Realized Gold Price (USD per ounce) |
|
$ |
1,624.53 |
$ |
1,631.57 |
$ |
1,594.33 |
Realized Silver Price (USD per ounce) |
|
$ |
28.28 |
$ |
28.30 |
$ |
28.55 |
Cash Cost Gold - By Product (USD per ounce) |
|
$ |
1,164.13 |
$ |
1,216.89 |
$ |
1,123.21 |
Cash Cost Silver - By Product (USD per ounce) |
|
$ |
(29.23) |
$ |
12.14 |
$ |
4.82 |
During the third quarter of 2012 mining
personnel were reassigned to enable development of diamond drilling
stations for exploration on the Northstar and Frankie veins.
Although this meant accessing smaller high-grade vein areas and
consequently decreasing production tonnage in the quarter and into
the fourth quarter, it will enable development of additional mining
areas for 2013 production.
Approximately 30 percent of Drumlummon's total
operating costs result from milling at a leased mill in
Philipsburg, Montana.
Management believes cost savings of roughly $30 - 40 per ton can be achieved by milling ore
at the Galena Complex beginning in the first quarter of 2013.
The Company is already seeing benefits at the Galena Complex from
reduced inventory, warehousing, shared services, personnel and
equipment and exploration synergies.
Exploration Update
The Company's Board of Directors has approved a
$3 million exploration drill program
for the remainder of the current fiscal year based on the success
of our recent exploration drilling (see October 11, 2012 press release). The focus
of this program will be as follows:
Galena Complex
- Extend and better define the Lead Zone.
- Develop immediate and near term minable resources in veins
close to existing infrastructure.
- Convert resources to reserves at the Coeur Mine.
- Aggressively follow a plan to increase the rate of underground
and surface exploration diamond core drilling in order to define
reserves, upgrade resources and identify viable new silver and lead
veins.
As of December 31,
2011 the Galena Complex contained 23.2 million ounces of
proven and probable silver reserves. The exploration program
continues to be cost-effective in adding reserves and resources at
modest expenditure levels. The Company expects the expanded
exploration program to continue to increase reserves and
resources.
Drumlummon and Belmont Mines
- Explore the newly-discovered Frankie
Zone to immediately develop minable resources.
- Better define ore shoots discovered in 2012 and previous
drilling on the Northstar zone with immediate mining
potential.
- Confirm historic resources at the newly acquired Belmont Mine
through surface drilling to test the more significant veins by
"twinning" some of the existing holes drilled by others and confirm
the presence of mineralization. Mining is anticipated by early
2014.
2012 Outlook
U.S. Silver & Gold affirms its 2012 anticipated production
of 2.6 - 2.8 million ounces of silver and 20,000 - 25,000 ounces of
gold. This outlook is based on a number of assumptions that the
Company believes are reasonable at the time of this earnings
release.
Conference Call at 4:30 pm on
Tuesday, November 13, 2012
Financial and operating results will be discussed during an analyst
and investor conference call with senior management today
November 13th at 4:30 pm ET. A question and answer session will
follow management's presentation.
Dial-In Numbers: |
647-427-7450 (Toronto) |
|
1-888-231-8191 (Toll-free) |
A live audio webcast of the conference call will be available at
www.us-silver.com and www.newswire.ca.
A replay of the call will be available until November 20, 2012 by calling 416-849-0833 or
1-855-859-2056, reference number 64243671.
About U.S Silver & Gold
U.S. Silver & Gold Inc. is a newly formed
silver and gold mining company focused on growth from its existing
asset base and the execution of targeted accretive acquisitions.
U.S. Silver & Gold owns and operates the Galena Mine Complex in
the heart of the Silver
Valley/Coeur d'Alene Mining District, Shoshone County, Idaho and the Drumlummon Mine
Complex in Lewis and Clark County,
Montana. Within the Galena Mine Complex, the Galena mine
produces high-grade silver and is the second most prolific silver
mine in U.S. history, delivering over 200 million ounces to date,
the Coeur mine is under late re-development and the Lead Zone is
being evaluated for bulk mining development. The Drumlummon mine
currently produces high-grade gold and silver with historical
production of 1 million ounces of gold and 12 million ounces of
silver and has never been fully exploited or explored. Visit
www.us-silver.com.
Mr. Jim Atkinson
, Vice President, Exploration and a Qualified Person under Canadian
Securities Administrators guidelines has approved the applicable
contents of this news release.
Some of the potential quantities and grades
disclosed in this news release are conceptual in nature. At the
current stage of exploration, there is insufficient drilling to
determine the extent of continuity of the mineralization required
to define a mineral resource for all mineralization at the Galena
Mine Complex and Drumlummon Mine. It is uncertain if further
exploration will result in certain exploration targets being
delineated as a mineral resource.
Please see SEDAR or www.us-silver.com for the
43-101 compliant Technical Report and Resource Estimate on the
Drumlummon Mine Project dated April 9,
2012 and the Galena Project dated March 19, 2012.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Certain information in this press release may contain
forward-looking statements. This information is based on current
expectations that are subject to significant risks and
uncertainties that are difficult to predict. Actual results might
differ materially from results suggested in any forward-looking
statements. The Company assumes no obligation to update the
forward-looking statements, or to update the reasons why actual
results could differ from those reflected in the forward
looking-statements unless and until required by securities laws
applicable to the Company. Additional information identifying risks
and uncertainties is contained in filings by the Company with the
Canadian securities regulator available at
www.sedar.com.
SOURCE U.S. Silver & Gold Inc.