Andean Precious Metals Reports Q4/FY 2023 Results; Meets 2023 Revised Production Guidance

Rhea-AI Summary

Andean Precious Metals Corp. expects production to double in 2024 with the full-year inclusion of Golden Queen. The company reported significant progress in its growth strategy, including the acquisition of Golden Queen, adding a producing gold and silver mine. With a focus on increasing cash flow generation and operational efficiencies, Andean is poised for increased gold and silver production.

Production is expected to double in 2024 with full year inclusion of Golden Queen

Toronto, Ontario--(Newsfile Corp. - March 27, 2024) - Andean Precious Metals Corp. (TSXV: APM) (OTCQX: ANPMF) ("Andean" or the "Company") reported its operating highlights and financial results for the three and twelve months ended December 31, 2023. All amounts are expressed in United States dollars, unless otherwise noted (C$ refers to Canadian dollars).

This news release should be read together with Andean's management discussion and analysis ("MD&A") and audited consolidated financial statements for the three and twelve months ended December 31, 2023 (the "Financial Statements"), which are available under the Company's profile on SEDAR+ (www.sedarplus.ca) and on Andean's website www.andeanpm.com.

"In just twelve months, we have significantly advanced our growth strategy and taken meaningful steps to reposition the Company," said Alberto Morales, Executive Chairman and Chief Executive Officer. "In 2023, San Bartolomé successfully transitioned to an oxide processor focused on increasing cash flow generation. Last year we acquired Golden Queen, providing geographical diversification and adding a producing gold and silver mine with expected upside opportunities. With the addition of a second producing asset, we are poised to substantially increase our gold and silver production, while increasing our operating cash flow."

Mr. Morales continued, "While our team achieved significant milestones in 2023, we are just beginning to reap the rewards of our efforts. At Golden Queen, our focus is on optimizing mine operations, implementing a new mine plan, driving cost efficiencies, and delivering positive exploration results. Meanwhile, at San Bartolomé, our goal is to improve operating cash flow following the completion and commissioning of our FDF processing facility. As we think about 2024, our focus will be on streamlining and enhancing our operations in Bolivia and the United States while actively seeking additional acquisitions to sustain and accelerate our growth."

Q4 2023 and Full Year 2023 Highlights

• Met revised full year 2023 production guidance of between 4.6 and 4.8 Moz AgEq

  • The Company produced 4.7 Moz of silver equivalent ("AgEq")¹ in 2023, excluding Golden Queen's production of 0.5 Moz AgEq, or 6,528 oz gold equivalent ("AuEq")¹, from November 24, 2023 (the "Acquisition Date") to December 31, 2023. Production for the full year 2022 was 5.0 Moz AgEq.

  • Q4 2023 production was 1.2 Moz AgEq from San Bartolomé, excluding Golden Queen's production of 0.5 Moz AgEq, or 6,528 oz AuEq, from the Acquisition Date to December 31, 2023.

• Increased revenue; achieved record quarterly revenue in Q4 2023

  • In Q4 2023, the Company achieved record quarterly revenue of $48.8 million from the sale of 2.0 Moz AgEq at an average realized silver price of $24.42 per ounce, compared with Q4 2022 revenue of $25.7 million from the sale of 1.2 Moz AgEq at an average realized silver price of $21.19 per ounce.

  • For the year ended December 31, 2023, revenue was $125.3 million, $17.3 million higher than full year 2022. The increase of $17.3 million was primarily attributable to $13.3 million of incremental revenue from Golden Queen and $4.0 million from higher average realized silver prices offset by lower sales at San Bartolomé.

• Higher gross operating income: The Company recorded gross operating income of $5.1 million and $14.2 million for Q4 2023 and full year 2023, respectively, compared to $1.1 million and $9.7 million for Q4 2022 and full year 2022, respectively. Gross operating income for both Q4 2023 and full year 2023 included $0.3 million for Golden Queen from the Acquisition Date to December 31, 2023.

• Higher net income primarily due to $36.5 million gain recognized on bargain purchase ("Purchase Gain") of Golden Queen

  • For Q4 2023, the Company reported net income of $38.1 million, or $0.24 per basic share and $0.21 per diluted share for Q4 2023, compared to a net loss of $3.3 million, or $0.02 per basic and diluted share for Q4 2022.

  • For 2023, net income was $38.5 million, or $0.24 per basic and $0.22 per diluted share, compared with a net loss of $10.1 million, or $0.06 per basic and diluted share in 2022.

• Increased net cash flow provided from operating activities: Net cash flow provided from operating activities was $5.1 million for Q4 2023 and $4.2 million for full year 2023, compared with net cash flow used in operating activities of $3.0 million and $2.7 million for Q4 2022 and full year 2022, respectively.

• Earnings before interest, taxes, depreciation and amortization ("EBITDA")²: EBITDA was $40.7 million and $50.2 million for Q4 2023 and full year 2023, respectively, compared to negative EBITDA of $1.3 million and $1.6 million for Q4 2022 and full year 2022, respectively. The increase was mainly due to the $36.5 million Purchase Gain recognized on the acquisition of Golden Queen, an increase in sales volumes and a higher average realized silver price per ounce sold.

• Adjusted EBITDA²: Adjusted EBITDA recognized for Q4 2023 and full year 2023 were $7.9 million and $20.1 million, respectively, compared to negative $1.0 million and $3.5 million for Q4 2022 and full year 2022, respectively. The increase was primarily due to growth in sales volumes and a higher average realized silver price per ounce sold and partially offset by an increase in non-recurring corporate development costs.

• Executing on Growth Initiatives

• Acquired a 100% interest in Golden Queen and its Soledad Mountain mine and heap leach operation from Auvergne Umbrella LLC.

  • The Company's consolidated financial statements include $13.3 million in revenue and $0.4 million in net income before income tax from Golden Queen from the Acquisition Date to December 31, 2023. Had the transaction been completed on January 1, 2023, Golden Queen would have contributed revenue of $91.3 million for the period of January 1, 2023 to December 31, 2023, and the Company's full year 2023 consolidated revenue would have been $216.7 million.

  • Commenced post-acquisition plans to optimize operations of Golden Queen that are expected to increase production, improve costs, and extend the mine life.

• San Bartolomé has fully transitioned to a material processing operation with a focus on sourcing high-grade, high margin material. Additionally, the Company expects to commence processing tailings material from its fines disposal facility ("FDF") in the first half of 2024. During 2023, San Bartolomé signed several long-term contracts for oxidized material, including:

  • In June 2023, signed a 24-month agreement to purchase 170,000 tonnes of high-grade (average silver grade of 354 g/t) from the Alta Vista project owned by Empresa Minera Bedrock S.R.L.

  • In September 2023, signed an agreement with Silver Elephant Mining Corp. granting Manquiri an exclusive right to purchase up to 800,000 tonnes (average silver grade of 223 g/t) of oxide material from Silver Elephant's Paca Silver Project until January 31, 2029, or upon receiving the specified quantity.

• A Preliminary Feasibility Study Technical Report for San Bartolomé Mine Bolivia, which was filed on SEDAR+ on February 16, 2024, included an updated mineral resource and mineral reserve estimate; San Bartolomé's life of operation is 4.6 years based on a recoverable proven and probable reserve of 11.95 Moz with an average grade of 93 g/t Ag.

• A Feasibility Study Update Technical Report on the Soledad Mountain Heap Leach Project was filed on SEDAR+ on January 31, 2024. Golden Queen's new life of mine average annual production is expected to include up to 65,000 oz of gold and 466,000 oz of silver for 5 years.

• Balance sheet maintained for ongoing strategic growth

  • The Company had total liquid assets of $72.8 million as at December 31, 2023, including cash of $64.9 million, accounts receivable of $0.9 million, VAT certificates of $1.8 million and $5.2 million of marketable securities. This compares with $90.4 million of total liquid assets as at December 31, 2022, which included cash of $80.7 million, accounts receivable of $0.2 million, VAT certificates of $4.1 million and $5.3 million in marketable securities, translating into negative net debt. The reason for the decrease in liquid assets is primarily due to the acquisition of Golden Queen, including an upfront cash payment, debt repayment and capital expenditures.

  • There were zero-cost collar contracts in place at December 31, 2023 for 300,000 ounces of silver associated with San Bartolomé's production. The zero-cost collar contracts were written at an average put strike price of $23 per ounce of silver and an average call strike price of $30 per ounce of silver, for 100,000 ounces per month for the period January-March 2024.

  • As at December 31, there were zero-cost collar contracts in place for 12,000 ounces of gold relating to Golden Queen's production. The zero-cost collar contracts were written at an average put strike price of $2,000 per ounce of gold and an average call strike price of $2,212 per ounce of gold, for 2,000 ounces per month for the period January-June 2024.

• Responsible operations: The Company reported no lost-time incidents and no negative environmental issues during 2023.

• Normal Course Issuer Bid ("NCIB")

  • Pursuant to an NCIB commencing October 4, 2022 and expiring on October 3, 2023, the Company repurchased and cancelled a total of 3,160,100 shares at an average purchase price of C$0.79 per share for a total of $1.9 million (C$2.5 million).

  • On December 21, 2023, the Company renewed its NCIB. As of March 25, 2024, the Company has repurchased 5,333,291 common shares at an average purchase price of C$0.70 per share for a total of $2.8 million (C$3.7 million).

  • Since the inception of its NCIB in the fall of 2022, the Company has repurchased 8,493,391 common shares at an average purchase price of C$0.73 per share for a total of $4.6 million (C$6.2 million).

Summary of Financial and Operating Results

(In thousands except per share and per oz)			Q4 20233			Q4 2022			Change			FY 20233			FY 2022			Change
Financial performance
Revenue	$		48,821		$	25,666			90%		$	125,324		$	108,049			16%
Cost of sales			42,012			22,902			83%			105,892			91,133			16%
Depreciation and depletion			1,703			1,666			2%			5,231			7,212			(27%)
Gross operating income			5,106			1,098			365%			14,201			9,704			46%
Purchase Gain - Golden Queen			36,512			-			100%			36,512			-			100%
Net income (loss) after tax			38,076			(3,341)			1,240%			38,540			(10,091)			482%
Net income (loss) per share
̶ Basic			0.24			(0.02)			1,237%			0.24			(0.06)			482%
̶ Diluted			0.21			(0.02)			1,095%			0.22			(0.06)			439%
Net cash provided from (used in) operating activities			5,121			(2,985)			272%			4,166			(2,740)			252%
Free cash flow4			1,719			(3,381)			151%			(1,851)			(5,094)			64%
EBITDA4			40,718			(1,348)			3,121%			50,171			(1,583)			3,269%
Adjusted EBITDA4			7,863			(956)			922%			20,063			3,539			467%
Capital expenditures			3,402			246			1,283%			6,017			2,204			173%
Ending cash and cash equivalents			64,907			80,729			(20%)			64,907			80,729			(20%)
(In thousands except metal price per oz)			Q4 20233			Q4 2022			Change			FY 20233			FY 2022			Change
Operating highlights
Gold ounces produced
Golden Queen (oz)			5,108			-			100%			5,108			-			100%
San Bartolomé (oz)			710			184			286%			1,980			2,560			(23%)
Consolidated gold ounces produced (oz)			5,818			184			3,062%			7,088			2,560			177%
Gold ounces sold
Golden Queen (oz)			5,849			-			100%			5,849			-			100%
San Bartolomé (oz)			1,441			120			1,100%			1,856			2,341			(21%)
Consolidated gold ounces sold (oz)			7,290			120			5,975%			7,705			2,341			229%
Average realized gold price ($/oz)	$		2,028		$	1,750			16%		$	2,023		$	1,814			12%
Average market gold price ($/oz)	$		1,974		$	1,727			14%		$	1,942		$	1,801			8%
Silver ounces produced
Golden Queen (koz)			51			-			100%			51			-			100%
San Bartolomé (koz)			1,194			1,233			(3%)			4,511			4,788			(5%)
Consolidated silver ounces produced (koz)			1,245			1,233			1%			4,602			4,788			(4%)
Silver ounces sold
Golden Queen (koz)			57			-			100%			57			-			100%
San Bartolomé (koz)			1,336			1,201			11%			4,490			4,769			(6%)
Consolidated silver ounces sold (koz)			1,393			1,201			16%			4,547			4,769			5%
Average realized silver price ($/oz)	$		24.42

FAQ

What is Andean Precious Metals Corp.'s expectation for production in 2024?

Andean Precious Metals Corp. expects production to double in 2024 with the full-year inclusion of Golden Queen.

What significant steps did Andean take to reposition the company?

Andean significantly advanced its growth strategy in 2023, transitioning San Bartolome to an oxide processor and acquiring Golden Queen for geographical diversification.

What are the goals for Golden Queen and San Bartolome according to Alberto Morales?

Alberto Morales aims to optimize mine operations, drive cost efficiencies, and deliver positive exploration results at Golden Queen, while improving operating cash flow at San Bartolome.