SilverCrest earns $2.86-million (U.S.) in Q2

2013-08-15 08:22 ET - News Release

Mr. J. Scott Drever reports

SILVERCREST REPORTS Q2, 2013 FINANCIAL RESULTS

SilverCrest Mines Inc. has released its financial results for the second quarter ended June 30, 2013. All financial information is prepared in accordance with IFRS (international financial reporting standards), and all dollar amounts are expressed in U.S. dollars unless otherwise specified. The 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, 2013, and associated management discussion and analysis (MD&A) which are available from the company's website and under the company's profile on SEDAR.

J. Scott Drever, chairman and chief executive officer, stated: "As with most of the industry, second quarter financial results for SilverCrest were less robust when compared to previous quarters. However, we were able to sell a record amount of silver, and in spite of persistent metal price declines and volatility, we were able to generate both positive cash flow and net earnings. Our operating team continues to focus on controlling operating costs which resulted in an average cash operating cost of $7.80 per silver equivalent ounce for the quarter, which was substantially better than our corporate guidance of $8.50 per silver equivalent ounce. Our operating team continues to optimize production to ensure we meet our market production guidance of 675,000 ounces of silver and 33,000 ounces of gold for 2013."

Financial highlights of second quarter 2013 compared with second quarter 2012

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• Silver price fell 24 per cent to $22 per ounce and gold price fell 17 per cent to $1,365 per ounce.

Three months ended June 30, 2013, compared with the three months ended June 30, 2012

Net earnings were $2,866,080 (three cents per share basic) for the second quarter compared with $9,525,882 (11 cents per share basic) in 2012. The decrease in net earnings was primarily driven by a decrease in revenue resulting from lower gold sales, lower average realized prices and absence of marked-to-market derivative impact from hedge facility deliveries.

Silver and gold revenues totalled $13,028,258 (2012 -- $15,982,031) in the second quarter, which includes $12,474,785 (2012 -- $12,600,912) received on a cash basis. Silver sales were a quarterly record of 181,398 ounces (2012 -- 124,739), 45 per cent higher than the same period in 2012. The average realized price was 24 per cent lower at $22 (2012 -- $29) per ounce.

Total gold sales were 7,375 ounces (2012 -- 8,679) or 15 per cent below 2012. The company sold 5,900 (2012 -- 2,733) ounces of gold at an average realized price of $1,365 (2012 -- $1,650) per ounce, a 17-per-cent decline in realized price. The company delivered 1,475 gold ounces (2012 -- 1,736) under the Sandstorm Gold Ltd. purchase agreement at $350 per ounce.

Cost of sales amounted to $5,047,895 (2012 -- $4,420,287). Cash cost per silver equivalent ounce sold amounted to $7.80, Ag:Au -- 63.2:1 (2012 -- $6.94, (Ag:Au -- 59.0:1). Corporate market guidance estimate for 2013 continues at $8.50 per silver equivalent ounce (Ag:Au -- 55:1). The increase in cash cost per silver equivalent ounce sold is driven generally by higher operating costs, with increases in mining contractor costs, higher crusher operating costs from increases in operating time, and salary increases for mine site personnel. The overall cash cost per silver equivalent ounce increased, despite a decrease of approximately 25 cents per silver equivalent ounce attributed to a higher gold to silver price ratio during the second quarter compared with the same quarter in 2012.

General and administrative expenses increased by 31 per cent to $1,599,892 (2012 -- $1,219,878) primarily due to an increase in remuneration, regulatory and Mexico corporate expenses. Remuneration increased to $503,137 (2012 -- $386,844) with the addition of new corporate personnel and increased compensation for management and other employees effective January, 2013. Regulatory fees and expenses increased to $77,819 (2012 -- $21,996) with additional fees relating to Ontario Securities Commission, TSX Venture Exchange and the New York Stock Exchange. SilverCrest commenced trading on the NYSE MKT in August, 2012. Mexico corporate expenses increased to $231,890 (2012 -- $177,128), and were related to an increase in professional activities.

Deferred tax expense amounted to $1,443,000 (2012 -- $291,000) primarily from recognizing an income tax deduction on Santa Elena exploration drilling and related costs and a reduction in the Mexican tax basis compared with the carrying book value from the strengthening of the U.S. dollar at the quarter-end. The company's Mexican tax basis was converted at $1 (U.S.) to 12.344 pesos at March 31, 2013, and $1 (U.S.) to 13.193 pesos at June 30, 2013.

Exchange loss on translation to U.S. dollars amounted to $1,126,190 (2012 -- $360,236) due to the weakening in the second quarter of the Canadian dollar against the U.S. dollar. The financial results of the company's Canadian operations were translated at $1 (U.S.) to $1.0156 (Canadian) at March 31, 2013, and $1 (U.S.) to $1.0512 (Canadian) at June 30, 2013.

                     FINANCIAL AND OPERATING HIGHLIGHTS

                                                        Q2 2013        Q2 2012

Cash flow from operations                            $5,587,251     $7,177,713
Cash flow from operations per share                        0.05           0.08
Cash operating cost per silver equivalent
ounce sold                                                 7.80           6.94
All-in sustaining cash costs per silver
equivalent ounce sold                                     13.26          11.48
Revenues
Silver revenue                                        3,905,836      3,588,568
Gold revenue -- cash basis                            8,568,949      9,012,344
                                                     12,474,785     12,600,912
Gold revenue -- non-cash
Adjustment to market spot price                               -      2,729,657
Amortization of deferred revenue                        553,473        651,462
Revenues reported                                    13,028,258     15,982,031
(Cost) of sales                                     (5,047,895)    (4,420,287)
Depletion, depreciation and
accretion (loss)                                    (1,704,025)    (1,496,297)
Mine operating earnings                               6,276,338     10,065,447
Gain on derivative instruments                                -      2,360,561
Other net (expenses)                                (1,350,258)    (1,657,126)
Tax (expense)                                       (2,060,000)    (1,243,000)
Net earnings                                          2,866,080      9,525,882
Exchange (loss) on translation
to U.S. dollars                                     (1,126,190)      (360,236)
Comprehensive earnings                                1,739,890      9,165,646
Silver ounces sold                                      181,398        124,739
Gold ounces sold                                          7,375          8,679
Silver equivalent ounces sold                           647,504        568,380

Outlook

SilverCrest's immediate focus is to continue to efficiently operate its flagship Santa Elena low-cost open-pit silver and gold mine and complete the construction of the new 3,000-tonne-per-day mill facility on schedule and on budget. The company will also advance the large silver, copper, gold deposit at the La Joya property by completing a preliminary economic assessment (PEA). Depending on the results of the PEA, further evaluation and infill drilling of the resource area may be completed in late 2013. Other exploration targets in its vicinity of La Joya are under review.

Santa Elena open-pit production targets

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• Complete construction of new conventional 3,000 tpd CCD processing facility on schedule and on budget;
• Capital assigned for 2013 is $53.2-million (six months: $34.2-million committed, of which $18.6-million incurred);
• Complete underground decline development of main ramp to 1,500 metres to enable physical access to ore underground for direct mill feed in 2014;
• Capital assigned for 2013 of $7.8-million (six months: $1.9-million incurred).

La Joya project targets

The qualified person under National Instrument (NI 43-101) -- standards of disclosure for mineral projects -- for this news release is N. Eric Fier, CPG, PEng, president and chief operating officer for SilverCrest Mines, who has reviewed and approved its contents.