SilverCrest Reports Fourth Quarter and 2023 Annual Financial Results
- SilverCrest Metals Inc. exceeded sales guidance and beat AISC guidance in Q4, 2023, with a 60% operating margin and $121.1 million in free cash flow.
- The company reported revenue of $61.3 million and net earnings of $35.9 million in Q4, 2023, showing significant growth compared to the same period in 2022.
- SilverCrest Metals Inc. ended 2023 with treasury assets totaling $105.2 million, a 107% increase from the prior year, and became debt-free by repaying $50.0 million in debt.
- The company's 2024 outlook focuses on ramping up mining rates at the Las Chispas operation, with targeted increases in production and cost management strategies.
- Exploration activities at Las Chispas continue with a budget of up to $14 million in 2024, aiming for resource conversion and growth.
- SilverCrest Metals Inc. maintained a strong financial position in 2023, with no debt and sustained capital expenditures on underground development and infrastructure.
- None.
Insights
The reported financial results from SilverCrest Metals Inc. demonstrate a robust year for the company, with several key financial indicators showing positive trends. The company's success in exceeding the high end of sales guidance and beating the low end of AISC guidance has led to a significant increase in treasury assets, which are crucial for assessing the company's liquidity and financial health. The operating margins of 61% and the generation of $121.1 million in free cash flow are particularly impressive, indicating strong operational efficiency and profitability.
Moreover, the strategic allocation of capital towards share buybacks, exploration and bullion holdings suggests a proactive approach to shareholder value enhancement and resource expansion. The repayment of $50.0 million in debt within the first half of 2023 is a testament to the company's financial management and its commitment to maintaining a healthy balance sheet. Investors may view these results favorably, as they reflect a company with solid financial foundations and the potential for sustainable growth.
The operational results from SilverCrest's Las Chispas operation indicate a successful ramp-up in production, with the mine achieving higher than anticipated sales volumes and lower than expected AISC. The transition to a new underground mining contractor, considered a key de-risking event, is noteworthy as it could lead to increased efficiency and cost savings in the long term. However, it's important to note that AISC is expected to rise in the first half of 2024 due to the costs associated with this transition.
The company's focus on dilution management, which resulted in decreased mining rates, reflects a strategic approach to maintaining ore quality and maximizing long-term value. Investors should consider the potential impact of the company's exploration efforts, which could lead to increased reserves and resources, thus extending the mine's life and contributing to future revenue streams.
When comparing SilverCrest's performance to its peers, it's important to highlight the company's leading treasury assets, which could provide a competitive advantage in terms of financial flexibility. The company's ability to increase its treasury assets by 107% from the prior year, despite industry-wide cost pressures, is noteworthy. This financial position could allow the company to capitalize on strategic opportunities or weather potential downturns in the silver market.
The projected slow down in cash build for 2024, due to tax payments and contractor-related charges, suggests a more conservative growth outlook for the short term. However, the expected consistency in silver equivalent sales throughout the year and stable production at low costs could reassure investors of the company's ability to maintain profitability and manage operational risks effectively.
2023 Sales and Corporate AISC Beat Guidance, Driving
TSX: SIL | NYSE American: SILV
N. Eric Fier, CEO, commented, "2023 marked a successful first full year of commercial production at Las Chispas, with the Operation exceeding the high end of sales guidance, beating the low end of AISC guidance, delivering impressive operating margins of
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1 Based on company filing for the period ended September 30, 2023 of silver peer companies, including Aya Gold & Silver Inc., Coeur Mining, Inc., Endeavour Silver Corp., First Majestic Silver Corp., Fresnillo plc., Fortuna Silver Mines Inc., Hecla Mining Company, MAG Silver Corp., and Silvercorp Metals Inc. |
Q4, 2023
- Recovered 14,100 ounces ("oz") of gold ("Au") and 1.34 million oz of silver ("Ag"), or 2.47 million oz of silver equivalent ("AgEq"2).
- Sold 16,100 oz of Au and 1.28 million oz of Ag, or 2.56 million oz of AgEq.
- Cash costs of
$7.45 $14.36 $13.75 $15.50 - Average realized price of
$1,979 $23.09 - Revenue of
$61.3 million $24.4 million $36.9 million 60% operating margin. - Net earnings of
$35.9 million $0.25 - Free cash flow of
$24.1 million $0.16 - Ended the quarter with treasury assets totaling
$105.2 million $86.0 million $19.2 million $23.4 million 29% increase from the prior quarter.
Year ended December 31, 2023
- Recovered 59,700 oz of Au and 5.65 million oz of Ag, or 10.40 million oz of AgEq.
- Sold 58,200 oz of Au and 5.62 million oz of Ag, or 10.25 million oz of AgEq, exceeding 2023 sales guidance of 9.8 to 10.2 million oz of AgEq.
- Cash costs of
$7.73 $7.50 $8.50 - AISC of
$12.58 $12.75 $13.75 - Average realized price of
$1,946 $23.48 - Revenue of
$245.1 million $96.8 million $148.3 million 61% operating margin. - Net earnings of
$116.7 million $0.79 - Free cash flow of
$121.1 million $0.82 - Financial position remained strong with no debt and treasury assets totaling
$105.2 million $86.0 million $19.2 million $54.4 million 107% increase from the prior year. - Fully repaid the
$50.0 million - Repurchased
$7.1 million 20% of the allowable 7.4 million common share purchase limit.
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2 Silver equivalent ("AgEq") ratio used in this news release of 79.51:1 based on the updated technical report for Las Chispas titled "Las Chispas Operation Technical Report" dated September 5, 2023 with an effective date of July 19, 2023 (the "2023 Technical Report"). |
2024 Outlook
The Las Chispas underground operation will continue its ramp-up through 2024 with mining rates expected to remain at or around Q4, 2023 levels in H1, 2024, as the new mining contractor mobilizes. Mining rates will increase in H2, 2024 with a targeted exit rate of 1,050 tonnes per day ("tpd"). The mine plan was created with a measured ramp-up, which when combined with balanced usage of surface stockpiles, reduces execution risk. The new mining contractor, a subsidiary of Dumas Contracting Ltd. ("Dumas"), arrived at site in early February 2024 to begin mobilization, which is expected to continue through Q3, 2024. Guidance for 2024 incorporates assumptions related to the transition of contractors and ramp-up of Dumas, including some one time costs.
In 2024, the processing plant will operate at an average of 1,200 tpd, except in Q1, 2024, due to planned maintenance downtime in February 2024. This work is now complete and is not expected to impact production in the quarter due to the flexibility afforded by the stockpile for ore blending. Silver equivalent sales are expected to be relatively consistent quarterly throughout 2024.
The Company announced its full year 2024 guidance on February 20, 2024 which highlighted stable production at low costs, despite continued industry cost pressures.
Guidance Metric | Unit | 2024 |
AgEq Ounces Sold | millions | 9.8 to 10.2 |
Cash Costs(1) | $/oz AgEq sold | 9.50 to 10.00 |
Corporate AISC(1) | $/oz AgEq sold | 15.00 to 15.90 |
Sustaining Capital(1) | $ millions | 40.0 to 44.0 |
Exploration | $ millions | 12.0 to 14.0 |
Notes: | ||||
1. | Cash Costs, AISC, and sustaining capital are non-GAAP measures. Please refer to the Non-GAAP Financial Measures section of this news release for further information on this measure. | |||
2 | General assumptions: a. Metal prices estimated at b. Annual average exchange rate from all costs based on Mexican peso to US dollar of 17:1. | |||
Estimated 2024 Corporate AISC of
In Q1, 2024 SilverCrest expects to make payments totaling approximately
In 2024, cash flows are also expected to be impacted by mobilization and demobilization costs, including a
Fourth Quarter and Annual Operating Performance
The following operating performance refers to free cash flow, cash costs, AISC, treasury assets and net cash which are described in more detail in the "Non-GAAP Financial Measures" section of this news release.
OPERATIONAL | Unit | Q4, 2023 | Q4, 2022 | 2023 | 2022 |
Ore mined | tonnes | 78,600 | 64,700 | 300,900 | 201,000 |
Ore milled(a) | tonnes | 104,500 | 104,400 | 431,400 | 187,600 |
Average daily mill throughput | tpd | 1,136 | 1,135 | 1,182 | 877 |
Underground development | km | 3.6 | 2.3 | 13.2 | 8.1 |
Gold | |||||
Average grade | gpt | 4.28 | 3.67 | 4.39 | 3.05 |
Recovery | % | 98.3 % | 96.9 % | 98.1 % | 96.5 % |
Recovered | oz | 14,100 | 11,940 | 59,700 | 17,770 |
Sold | oz | 16,100 | 11,400 | 58,200 | 11,400 |
Silver | |||||
Average grade | gpt | 410 | 382 | 423 | 312 |
Recovery | % | 97.7 % | 93.3 % | 96.5 % | 92.5 % |
Recovered | million oz | 1.34 | 1.20 | 5.65 | 1.74 |
Sold | million oz | 1.28 | 0.98 | 5.62 | 1.12 |
Silver equivalent(b) | |||||
Average grade | gpt | 750 | 674 | 771 | 555 |
Recovery | % | 98.0 % | 94.7 % | 97.2 % | 94.2 % |
Recovered | million oz | 2.47 | 2.15 | 10.40 | 3.16 |
Sold | million oz | 2.56 | 1.89 | 10.25 | 2.03 |
(a) | Ore milled includes material from stockpiles and ore mined. | |||||
(b) | Q4, 2022 and 2022 AgEq figures were originally presented using a Ag:Au ratio of 86.9:1 but have been recast for consistency with the ratio of 79.51:1 being applied to current year figures based on the 2023 Technical Report. | |||||
FINANCIAL | Unit | Q4, 2023 | Q4, 2022 | 2023 | 2022 |
Revenue | $ millions | $ 61.3 | $ 40.8 | $ 245.1 | $ 43.5 |
Cost of sales | $ millions | $ (24.4) | $ (14.3) | $ (96.8) | $ (15.1) |
Mine operating income | $ millions | $ 36.9 | $ 26.5 | $ 148.3 | $ 28.4 |
Earnings for the period | $ millions | $ 35.9 | $ 5.2 | $ 116.7 | $ 31.3 |
Earnings per share (basic) | $/share | $ 0.25 | $ 0.03 | $ 0.79 | $ 0.21 |
Free cash flow | $ millions | $ 24.1 | N/A* | $ 121.1 | N/A* |
Cash costs | $/oz AgEq | $ 7.45 | N/A* | $ 7.73 | N/A* |
AISC | $/oz AgEq | $ 14.36 | N/A* | $ 12.58 | N/A* |
Units | As at Dec 31, 2023 | As at Dec 31, 2022 | |||
Cash and cash equivalents | $ millions | $ 86.0 | $ 50.8 | ||
Bullion | $ millions | $ 19.2 | $ — | ||
Treasury assets | $ millions | $ 105.2 | $ 50.8 | ||
Credit Facility Debt | $ millions | $ — | $ 49.6 | ||
Net cash | $ millions | $ 86.0 | $ 1.2 |
* This information was not available for 2022. |
Underground
Mining rates in Q4, 2023 averaged 855 tpd, a
In Q4, 2023, the Company completed 3.6 km of horizontal and vertical underground development. In 2023, the Company completed an additional 13.2 km of horizontal and vertical underground development, compared to 8.0 km in 2022.
Processing Plant
Average daily mill throughput was 1,136 tpd in Q4, 2023 and 1,182 tpd in 2023. Q4, 2023 throughput declined slightly from Q3, 2023 throughput of 1,245 tpd as the processing plant experienced some unplanned downtime.
Average processed gold and silver grades of 4.28 gpt Au and 410 gpt Ag, or 750 gpt AgEq, in Q4, 2023 were in line with Q3, 2023 (
Costs
During the quarter, cash costs averaged
AISC averaged
Sustaining Capital Expenditures
Sustaining capital expenditures totalled
Exploration Update
During 2023, the Company completed exploration work at Las Chispas, which is capitalized as growth capital.
During Q4, 2023, 17,947 metres of drilling was completed at Las Chispas, with
During 2023, 50,233 metres of drilling was completed and
Selected Fourth Quarter Financial Results
Fourth Quarter and Annual Consolidated Income Statements
(unaudited, in thousands of USD)
Three months ended | Year ended | |||
2023 | 2022 | 2023 | 2022 | |
Revenue | $ 61,320 | $ 40,791 | $ 245,130 | $ 43,510 |
Cost of sales | ||||
Production costs | (17,555) | (13,006) | (74,108) | (13,758) |
Depreciation | (6,328) | (1,073) | (21,348) | (1,116) |
Royalties | (490) | (216) | (1,368) | (216) |
(24,373) | (14,295) | (96,824) | (15,090) | |
Mine operating earnings | 36,947 | 26,496 | 148,306 | 28,420 |
General and administrative expenses | (6,534) | (4,365) | (15,756) | (9,746) |
Exploration and project expenses | (99) | (775) | (726) | (5,444) |
Foreign exchange gains (losses) | 630 | (4,493) | (7,247) | 27,913 |
Earnings from operations | 30,944 | 16,863 | 124,577 | 41,143 |
Interest income | 1,448 | 886 | 4,035 | 2,811 |
Interest and finance expense | (334) | (6,397) | (2,713) | (6,589) |
Other expense | 507 | — | (2,653) | — |
Earnings before income taxes | 32,565 | 11,352 | 123,246 | 37,365 |
Income tax expense | 3,352 | $ (6,121) | (6,526) | $ (6,064) |
Net earnings | 35,917 | 5,231 | 116,720 | 31,301 |
Other comprehensive income | ||||
Currency translation adjustment | — | 5,399 | 10,255 | (27,987) |
Total comprehensive earnings | $ 35,917 | $ 10,630 | $ 126,975 | $ 3,314 |
Net earnings attributable to common shareholders | ||||
Basic earnings per share | $ 0.25 | $ 0.03 | $ 0.79 | $ 0.21 |
Diluted earnings per share | $ 0.24 | $ 0.04 | $ 0.79 | $ 0.21 |
Weighted average shares outstanding (in 000's) Basic | 146,334 | 146,646 | 146,882 | 146,164 |
Weighted average shares outstanding (in 000's) Diluted | 146,972 | 152,403 | 147,539 | 152,190 |
Revenue
During Q4, 2023, the Company sold a total of 16,100 oz Au and 1.28 million oz Ag at average realized prices of
During 2023, the Company sold a total of 58,200 oz Au and 5.62 million oz Ag at average realized prices of
Income
Q4, 2023 net earnings of
During 2023, the Company generated net earnings of
Fourth Quarter and Annual Consolidated Statements of Cash Flows
(unaudited, in thousands of USD)
Three months ended | Year ended | |||
2023 | 2022 | 2023 | 2022 | |
Operating activities | ||||
Net earnings for the year | $ 35,917 | $ 5,231 | $ 116,720 | $ 31,301 |
Income tax (recovery) expense | (3,352) | 6,121 | 6,526 | 6,064 |
Depreciation | 5,957 | 1,894 | 21,348 | 1,937 |
Share-based compensation expense | 2,333 | 1,391 | 4,190 | 2,398 |
Unrealized foreign exchange losses | 842 | 3,579 | 7,942 | (21,868) |
Interest income | (1,448) | (886) | (4,035) | (2,811) |
Interest expense | (4,010) | 6,374 | 1,461 | 6,566 |
Interest paid | 190 | (1,619) | (1,461) | (7,568) |
Interest received | 1,251 | 974 | 4,035 | 2,715 |
Income taxes paid | 10 | — | (977) | — |
Other operating activities | (242) | — | (242) | — |
Net change in non-cash working capital items | (1,352) | (3,630) | 2,754 | (28,644) |
$ 36,096 | $ 19,429 | $ 158,261 | $ (9,910) | |
Investing activities | ||||
Payments for mineral properties, plant and equipment | (17,327) | (16,409) | (51,257) | (68,489) |
Purchase of bullion | (6,655) | — | (18,674) | — |
Proceeds from derivatives | 264 | — | 264 | — |
$ (23,718) | $ (16,409) | $ (69,667) | $ (68,489) | |
Financing activities | ||||
Common share proceeds | 2,878 | 1,084 | 3,131 | 2,467 |
Common share repurchases | (6) | — | (7,145) | — |
Proceeds from debt | — | 49,583 | — | 49,583 |
Repayment of debt | — | (92,860) | (50,000) | (92,860) |
Payments of equipment leases | (30) | (39) | (112) | (159) |
$ 2,842 | $ (42,232) | $ (54,126) | $ (40,969) | |
Effects of exchange rate changes on cash and cash equivalents | 765 | 1,396 | 735 | (6,386) |
Increase (decrease) in cash and cash equivalents | 15,985 | (37,816) | 35,203 | (125,754) |
Cash and cash equivalents at the beginning of the period | 69,979 | 88,577 | 50,761 | 176,515 |
Cash and cash equivalents at the end of the period | $ 85,964 | $ 50,761 | $ 85,964 | $ 50,761 |
Cash Flow
In Q4, 2023, the cash flow generated from operating activities was
Q4, 2023 free cash flow was
Financial Position
As at December 31, 2023, the Company had treasury assets of
ESG
In 2023, SilverCrest published its inaugural full ESG report following the success of the Task Force for Climate-Related Disclosures ("TCFD") and Water Stewardship Report disclosures in 2022, collectively available on our website at www.silvercrestmetals.com. This further formalizes the Company's commitment to diligent management of ESG issues within its own operations and the local community.
SilverCrest continues to execute on its commitment to invest in initiatives that support water stewardship in communities local to Las Chispas. In 2023, SilverCrest allocated
The Company's ESG practices and community engagement earned recognition in
Fourth Quarter 2023 Conference Call
A conference call to discuss the Company's Q4, 2023 operational and financial results will be held Monday, March 11, 2024 at 7:00 a.m. PT / 10:00 a.m. ET. To participate in the conference call, please dial the numbers below.
Date & Time: | Monday March 11, 2024 at 7:00 a.m. PT / 10:00 a.m. ET |
Telephone: | |
North America Toll Free: 1-888-259-6580 | |
Conference ID: 58528537 | |
Webcast: | https://silvercrestmetals.com/investors/presentations/ |
ABOUT SILVERCREST METALS INC.
SilverCrest is a Canadian precious metals producer headquartered in
Non-GAAP Financial Measures
Management believes that the following non-GAAP financial measures will enable certain investors to better evaluate the Company's performance, liquidity, and ability to generate cash flow. These measures do not have any standardized definition under IFRS, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate these measures differently.
Average realized gold and silver price
Average realized gold and silver price per ounce is calculated by dividing the Company's gross revenue from gold or silver sales for the relevant period by the gold or silver ounces sold, respectively. The Company believes the measure is useful in understanding the metal prices realized by the Company throughout the period. The following table reconciles revenue and metal sold during the period with average realized prices:
Q4, 2023 | 2023 | 2022 | ||
Revenues from financial statements | $ 61,320 | $ 245,130 | $ 43,510 | |
Ag sales | (29,452) | (131,867) | (23,784) | |
Au sales | A | 31,868 | 113,263 | 19,726 |
Au oz sold during the period | B | 16,100 | 58,200 | 11,400 |
Average realized Au price per oz sold | A/B | $ 1,979 | $ 1,946 | $ 1,730 |
Revenues from financial statements | $ 61,320 | $ 245,130 | $ 43,510 | |
Au sales | (31,868) | (113,263) | (19,726) | |
Ag sales | A | 29,452 | 131,867 | 23,784 |
Ag oz sold during the period | B | 1,275,300 | 5,616,300 | 1,105,700 |
Averaged realized Ag price per oz sold | A/B | $ 23.09 | $ 23.48 | $ 21.51 |
Capital expenditures
Capital expenditures are classified into sustaining capital expenditures or non-sustaining capital expenditures depending on the nature of the expenditure. Sustaining capital expenditures are those required to support current production levels. Non-sustaining capital expenditures represent the capital spending at new projects and major, discrete projects at existing operations intended to increase production or extend mine life. Management believes this to be a useful indicator of the purpose of capital expenditures and this distinction is an input into the calculation of AISC.
The following table reconciles payments for mineral properties, plant and equipment, and equipment leases to sustaining and non-sustaining capital expenditures:
Q4, 2023 | 2023 | |
Payments for mineral properties, plant and equipment | $ 17,327 | $ 51,257 |
Payments for equipment leases | 30 | 112 |
Total capital expenditures | 17,357 | 51,368 |
Less: Non-sustaining capital expenditures | (5,332) | (14,224) |
Sustaining capital expenditures | $ 12,025 | $ 37,144 |
Free cash flow
Free cash flow, a non-GAAP financial metric, subtracts sustaining capital expenditures from net cash provided by operating activities, serving as a valuable indicator of our capacity to generate cash from operations post-sustaining capital investments. The following table reconciles this non-GAAP financial measure to the most directly comparable IFRS measure.
Q4, 2023 | 2023 | ||
Net cash provided by operating activities | $ 36,096 | $ 158,261 | |
Less: sustaining capital expenditures | (12,025) | (37,145) | |
Free cash flow | $ 24,071 | $ 121,116 | |
Free cash flow per share (basic) | $ 0.16 | $ 0.82 | |
Weighted average shares outstanding (basic) | 146,334 | 146,882 |
Treasury assets
SilverCrest calculates treasury assets as cash and cash equivalents plus bullion as reported in the consolidated statements of financial position. Management believes that treasury assets provide a useful measure of the Company's most liquid assets that can be used to settle short-term obligations or provide liquidity. Treasury assets are calculated as follows:
2023 | 2022 | |
Cash and cash equivalents | $ 85,964 | $ 50,761 |
Bullion | 19,191 | — |
Treasury assets | $ 105,155 | $ 50,761 |
Cash costs
Cash costs are a non-GAAP financial metric which includes production costs, royalties and minesite general and administrative costs. Management uses this measure to monitor the performance of its mining operation and ability to generate positive cash flow on a site basis.
AISC
All-in sustaining costs, a non-GAAP financial measure, starts with cash costs and includes all other general and administrative costs, reclamation accretion expense and sustaining capital expenditures. Management uses this measure to monitor the performance of its mining operation and ability to generate positive cash flow on an overall company basis.
Cash costs and AISC are calculated as follows:
Q4, 2023 | 2023 | |
Production costs | $ 17,555 | $ 74,108 |
Royalties | 490 | 1,368 |
General and administrative expenses, minesite | 999 | 3,703 |
Total cash costs | 19,044 | 79,179 |
General and administrative expenses, other | 5,500 | 12,053 |
Reclamation accretion expense | 139 | 493 |
Sustaining capital expenditures | 12,025 | 37,145 |
Total AISC | $ 36,708 | $ 128,870 |
Silver equivalent ounces sold (koz) | 2,555 | 10,244 |
Cash costs (per AgEq sold) | $ 7.45 | $ 7.73 |
AISC (per AgEq sold) | $ 14.36 | $ 12.58 |
Net cash
SilverCrest calculates net cash by deducting debt from cash and cash equivalents as reported in the consolidated statements of financial position. The Company believes that in addition to conventional measures prepared in accordance with IFRS, net cash is useful to evaluate the Company's and liquidity and capital resources.
2023 | 2022 | |
Cash and cash equivalents | $ 85,964 | $ 50,761 |
Debt | — | (49,591) |
Net cash | $ 85,964 | $ 1,170 |
Forward-Looking Statements
This news release contains "forward-looking statements" and "forward-looking information" (collectively "forward-looking statements") within the meaning of applicable Canadian and
Qualified Persons Statement
The Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral Projects for this news release is N. Eric Fier, CPG, P.Eng, CEO for SilverCrest, who has reviewed and approved its contents.
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SOURCE SilverCrest Metals Inc.
FAQ
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