VANCOUVER, BRITISH COLUMBIA - August 15, 2012 (Investorideas.com Mining Stocks Newswire) SilverCrest Mines Inc. (
TSX-V:SVL)(
OTC.BB:STVZF)
(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."
(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 Company's 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 Company's website at
www.silvercrestmines.com and under the Company's profile on SEDAR at
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 Company's financial results
and performance. Please refer to the Company's 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. (SVL.V) (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, Mexico. 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, President
SILVERCREST MINES INC.
Neither TSX Venture Exchange nor its Regulation Services Provider
(as defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Contact:
SilverCrest Mines Inc.
Fred Cooper
(604) 694-1730 ext. 108
Toll Free: 1-866-691-1730
(604) 694-1761 (FAX)
info@silvercrestmines.comwww.silvercrestmines.com
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