VANCOUVER, May 8, 2014 /CNW/ - Silver Standard Resources Inc. (NASDAQ:
SSRI) (TSX: SSO) ("Silver Standard") reports consolidated financial
results for the first quarter ended March 31, 2014.
"The first quarter of 2014 was significant for our future as we
initiated and have now completed the acquisition of the Marigold mine
in Nevada," said John Smith, President and CEO. "At Pirquitas we
maintained cost focus and at Marigold we are well through the
integration process. Both mines are driving forward with their plans
to improve margins, which will position us well for cash flow
generation and further growth. "
First Quarter 2014 Highlights:
(All figures are in U.S. dollars unless otherwise noted)
Delivered consistent mine production and sales: Produced 1.9 million ounces of silver and 8.8 million pounds of zinc, on
track to meet production guidance for the year. Sold 1.6 million ounces
of silver and 10.2 million pounds of zinc.
Maintained lower cost profile: Reported cash costs of $12.36 per payable ounce of silver sold, below
2014 guidance range.
Focused on cost discipline: Continued to focus on our cost reduction strategy throughout the
Created value through our portfolio: Completed the sale of the Challacollo project in Chile for total
consideration valued at $18.6 million, recording a gain of $7.5 million
Upgraded portfolio and production profile: Subsequent to quarter end, completed the acquisition of the Marigold
gold mine in Nevada, U.S. for $275 million in cash.
Pirquitas Mine, Argentina
Summary Mine Operating Statistics
Total material mined
Silver mill feed grade
Zinc mill feed grade
Zinc recovery (zinc con.)
Zinc produced (zinc con.)
Silver sold (1)
Zinc sold (zinc con.)
Realized silver price
Cash costs (2)
Total costs (2)
Silver sold in first quarter of 2014 was previously reported in press
release dated April 9, 2014 as 1.5 million silver ounces due to delayed
receipt of documentation enabling us to verify the recognition of one
shipment as a sale.
We report non-GAAP cost per payable ounce of silver sold to manage and
evaluate operating performance at the Pirquitas mine. See "Cautionary
Note Regarding Non-GAAP Measures". Information has been restated as
discussed in section 12 of the Management's Discussion and Analysis of
the Financial Position and Results of Operations for the year ended
March 31, 2014 ("MD&A").
The Pirquitas mine produced 1.9 million ounces of silver during the
first quarter of 2014, which is a 15.9% quarter-on-quarter decrease and
reflects lower average head grade and recovery as we had expected due
to rainy season conditions. The lower mill throughput is in line with
the life of mine plan and is expected to improve in the second half of
The Pirquitas mine produced 8.8 million pounds of zinc in zinc
concentrate in the first quarter of 2014, a 14.2% quarter-on-quarter
decrease reflecting a lower average head grade and recovery.
Approximately 406,000 tonnes of ore were milled during the first quarter
of 2014, compared to 420,000 tonnes in the fourth quarter of 2013. Ore
was milled at an average rate of 4,514 tonnes per day during the first
quarter of 2014, 13% above the mill's nominal design. This compares to
an average milling rate of 4,567 tonnes per day in the fourth quarter
of 2013. The lower total ore tonnes processed were a result of fewer
operating days in the first quarter of 2014.
Ore milled during the first quarter of 2014 contained an average silver
grade of 204 g/t, compared to 228 g/t reported in the fourth quarter of
2013. The average silver recovery rate of 72.1% was slightly lower than
the fourth quarter recovery rate of 73.9% due to the use of low grade
Mine operating costs
Cash costs per ounce and total cost per ounce are non-GAAP financial
measures. See "Cautionary Note Regarding Non-GAAP Measures"
Early in 2013, we commenced a cost reduction initiative at the Pirquitas
mine, which continued through the rest of the year and into 2014 as
part of a continuous improvement process. The main focus has been on
replacing third party contract services, reducing staffing and
implementing operational controls at the plant and mine to drive
Cash costs, which include cost of inventory (excluding adjustments for
write downs and one-off restructuring costs), treatment and refining
costs, and by-product credits, were $12.36 per payable ounce of silver
sold in the first quarter of 2014 compared to $11.75 per payable ounce
of silver sold in the fourth quarter of 2013. Cash costs in the first
quarter of 2014, even though slightly higher than in the previous
quarter, continued to reflect our cost management focus and are
marginally below our guidance for the current year.
Total costs, which add silver export duties, depreciation, depletion and
amortization to cash costs, were $17.42 per payable ounce of silver
sold in the first quarter of 2014 comparable with $17.75 per payable
ounce of silver sold in the fourth quarter of 2013. Depletion,
depreciation and amortization was slightly lower on a per unit sold
basis in the first quarter of 2014 compared to the fourth quarter of
In the first quarter of 2014, we sold 1.6 million ounces of silver
compared to 2.5 million ounces in the fourth quarter of 2013, and 10.2
million pounds of zinc in the first quarter of 2014, compared to 14.2
million pounds sold in the fourth quarter of 2013. The higher sales in
the fourth quarter of 2013 resulted from a strategy to sell down
finished goods inventory that had resulted from high production levels
in the second half of 2013. In addition, scheduled deliveries of silver
concentrate through the first quarter of 2014 were below production
levels, however over the full year 2014 we expect silver sales to
approximate silver production.
Exploration at Pirquitas
At Pirquitas we are directing work towards replacing mineral reserves,
mineral resources and extending the mine life of the operation. In
support of these activities we continue mapping and sampling to develop
targets for drilling.
This section of the news release provides management's production and
cost estimates. Major capital and exploration expenditures are also
discussed. See "Cautionary Note Regarding Forward-Looking Statements."
We concluded the acquisition of the Marigold mine in Nevada, U.S. from
subsidiaries of Goldcorp Inc. ("Goldcorp") and Barrick Gold Corporation
on April 4, 2014. Marigold has been in continuous operation since 1988.
Ore is mined by conventional truck and shovel equipment and processed
via a large run-of-mine heap leach operation averaging 40,000 tonnes
per day. As disclosed by Goldcorp in its public disclosures, the mine
produced 162,000 ounces of gold in 2013 and has consistently produced
over 140,000 ounces of gold per year at gold recoveries in excess of
70%. Production at Marigold is subject to various net smelter returns
("NSR") royalties. In 2012 and 2013, significant investments were made
to purchase new, larger mining equipment which is expected to improve
the efficiency of future mining operations. The mine employs 360 people
including contractors, who manage and maintain the mine and plant to
world-class safety and environmental standards.
Nevada is among the world's most favorable exploration and mining
jurisdictions with a stable tax regime, robust legal framework,
streamlined permitting process and access to qualified labor.
Based upon Marigold's mine plan developed prior to our acquisition,
production and cost guidance for the Marigold mine from April 4, 2014,
through December 31, 2014, is:
Production and sales of between 105,000 and 115,000 ounces of gold.
Cash costs per payable ounce of gold sold of between $1,000 and $1,100.
Cash costs per payable ounce of gold sold exclude any non-cash
adjustments to restate heap leach pad inventory to fair value as
required under IFRS upon acquisition.
Capital expenditures and mineral reserve replacement drilling of $20
A number of activities have commenced at Marigold focused on improving
margins including the development of a revised mine plan and focused
mining efficiency projects to improve cost per tonne of material moved.
At Marigold, the second and third quarters of 2014 are expected to be
low gold production quarters due to mining within low grade areas of
the open pits with production during the second quarter forecast at
approximately 20,000 ounces of gold. Cash costs per payable ounce of
gold sold are expected to be consequently higher than average in the
second quarter due to low grade ore stacked over the last six months
and draw down of work-in-process inventory prior to the close of the
acquisition. Gold production is forecast to improve as mining
progresses into higher grade areas of the open pits with third quarter
production expected to be higher than the second quarter and the fourth
quarter forecast to be the highest production period in 2014.
Our annual guidance for Pirquitas, exploration and development
activities remains unchanged from that provided in our fourth quarter
2013 MD&A Outlook.
Annual wage negotiations with unionized staff at Pirquitas commenced in
late March. We had industrial action during the negotiating process
resulting in approximately three days of lost production in April. To
date negotiations have not concluded, but work at the mine currently
continues safely under normal conditions. We continue to negotiate
towards an agreement that is fair for the business and our employees.
During January 2014, the Argentine peso significantly devalued as the
government reduced intervention and relaxed capital controls. Since the
January devaluation the Argentine peso has been stable and, while
government actions have been taken to curb inflation, recent estimates
indicate it remains in the range of 2.5-3% per month. We continue to
evaluate the impacts of exchange and inflation rates on our forecasts
to our Pirquitas mine operations.
Revenues were $33.7 million in the first quarter of 2014, compared to
$49.1 million in the quarter ended March 31, 2013. Cost of sales was
$27.8 million, including $5.1 million non-cash depletion, depreciation
and amortization, in the quarter ended March 31, 2014. This compares
to cost of sales of $34.6 million and non-cash depletion, depreciation
and amortization of $9.1 million in the quarter ended March 31, 2013.
Mine operations at Pirquitas earned $5.9 million in the first quarter of
2014, compared to $14.4 million in the quarter ended March 31, 2013.
Net loss was $16.9 million, or $0.21 per share, in the first quarter of
2014, compared to net loss of $4.6 million or $0.06 per share in the
quarter ended March 31, 2013.
Cash and cash equivalents were $396.4 million at March 31, 2014,
compared to $415.7 million as of December 31, 2013. Working capital was
$587.0 million at March 31, 2014, compared to $584.1 million at
December 31, 2013. On April 4, 2014, we completed the acquisition of
the Marigold mine for cash consideration of $275 million and incurred
associated costs which reduced our cash position.
Selected Financial Data
(US$000's, except per share amounts)
This summary of selected financial data should be read in conjunction
with our MD&A, the unaudited condensed consolidated interim financial
statements for the three months ended March 31, 2014 and March 31,
2013, and the audited consolidated financial statements for the year
ended December 31, 2013.
Three Months Ended
March 31, 2014
Three Months Ended
March 31, 2013
Income from mine operations
Operating (loss) income
Net loss of the period
Basic loss per share
Cash generated by operating activities
Cash used by investing activities
Cash generated by financing activities
March 31, 2014
December 31, 2013
Cash and cash equivalents
Current assets - total
Current liabilities - total
Following the October 2013 enactment of significant changes to the
Mexican mining tax and royalty regime and given the reduction in metal
prices, in the fourth quarter of 2013 we deferred a construction
decision for the open pit mine at Pitarrilla and have placed all
project activities on hold. In addition, we have reduced our presence
on site, while continuing to honour our commitments to local
On February 14, 2014, we were advised that the Mexican Ministry of
Environment and Natural Resources did not approve the environmental
impact assessment ("EIA") for the Pitarrilla open pit mine, primarily
because sufficient water rights had not been secured. Our ability to
secure water rights is currently limited due to the temporary
moratorium on subterranean water exploitation imposed in April 2013 in
connection with uncontrolled and over exploited aquifers located
Capitalized expenditures at the Pitarrilla project during the first
quarter of 2014 amounted to $1.2 million compared to $2.1 million in
the same period of 2013.
The first quarter of 2014 work program was focused on surface rights
acquisition, reviewing options for re-submission of the open pit EIA
and progressing internal reviews of lower capital cost development
options for the Pitarrilla project.
Negotiations with surface rights holders have progressed during the
quarter. Surface land use agreements are now in place for all required
land for the open pit development, with the exception of one parcel
over which we are in active discussions with the title holders. We have
been notified of an appeal against the 30-year temporary occupation
order for a parcel of land located over the future open pit and this
process continued through the quarter.
Pitarrilla is an important development asset in our portfolio with
significant mineral resources and mineral reserves. However, with the
recent acquisition of the Marigold mine, our resources need to be
prioritized appropriately. Additionally, with extraneous factors such
as the new Mexican mining tax and royalty regime, prevailing metal
prices and the national moratorium on aquifer water drilling, we have
decided to postpone major project activity on Pitarrilla at this time.
We will consider advancing the project based upon priorities when
conditions are more supportive.
San Luis, Peru
Capitalized expenditures at our wholly-owned San Luis project located in
the Ancash Department, Peru, during the first quarter of 2014 amounted
to $1.2 million compared to $1.4 million in the first quarter of 2013.
The San Luis project comprises a 35,000 hectare area which includes
several vein systems across an area of land whose surface rights are
held by two separate communities, Ecash and Cochabamba. A feasibility
study was completed on the Ayelén vein and the EIA was approved in
2012. The execution of the project requires land access negotiations to
be completed with both communities. To date we have reached an
agreement with the Cochabamba community while we pursue an agreement
with the Ecash community. We have also identified an additional
potential high grade gold vein target, the Bonita Zone, which is
located entirely within the area held by Cochabamba and have a 5,000
metre drill program planned and budgeted for 2014.
In 2013, we signed a five-year extension agreement with the community of
Cochabamba granting us access rights to conduct exploration activities
on the community lands that cover the southwestern sector of the San
Luis mineral property. This extension enables us to complete
exploration work on the Bonita Zone. Exploration permits for the Bonita
Zone target have been received and, once a water permit is received, we
will commence exploration drilling in the second quarter of 2014, upon
the conclusion of the Peruvian rainy season.
We continue to pursue an agreement with the Ecash community in order to
reach alignment on a benefits and surface use agreement over the
remaining surface rights required for the Ayelén vein project. If we
are able to conclude a land access agreement, we will then be able to
submit permit applications and make a development decision.
Other Exploration Projects
We hold four mineral properties in the mining district of Parral in the
southern Chihuahua State, Mexico and are evaluating such properties for
their potential to yield economic silver deposits. Our ongoing
exploration of these properties has involved detailed geological
mapping and sampling of outcroppings that host silver-bearing quartz
veins and veinlets.
San Luis del Cordero, Mexico
During the first quarter of 2014, we completed a 15-hole, 5,500 metre
diamond drill program under an option agreement entered into in 2013 in
respect to the San Luis del Cordero property in Durango, Mexico.
Although mineralization was encountered, it was insufficient to justify
making the next option payment. We therefore terminated our option
agreement in March 2014.
The scientific and technical data contained in this news release has
been reviewed and approved by Andrew W. Sharp, B.Eng., FAusIMM, a
Qualified Person under National Instrument 43-101-Standards of
Disclosure for Mineral Projects and our Vice President, Technical
Risks and Uncertainties
For information regarding the risks and uncertainties affecting our
business, please refer to the section entitled "Risk Factors" in our
most recent Form 40-F and Annual Information Form filed with the SEC
and Canadian securities regulatory authorities, which is available at www.sedar.com, the EDGAR section of the SEC website at www.sec.gov, and on our website at www.silverstandard.com.
Management Discussion & Analysis and Conference Call
This news release should be read in conjunction with our unaudited
condensed consolidated interim financial statements and the MD&A as
filed with the Canadian Securities Administrators and available at www.sedar.com or our website at www.silverstandard.com.
Conference call and webcast: Friday, May 9, 2014, at 11:00 a.m. EDT.
The conference call will be archived and available at www.silverstandard.com.
Audio replay will be available for one week by calling:
Toll-free in North America:
+1 (855) 859-2056, replay conference ID 15899603
All other callers:
+1 (404) 537-3406, replay conference ID 15899603
Cautionary Note Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995 and
forward-looking information within the meaning of Canadian securities
laws (collectively, "forward-looking statements"). All statements,
other than statements of historical fact, are forward-looking
Generally, forward-looking statements can be identified by the use of
words or phrases such as "expects," "anticipates," "plans," "projects,"
"estimates," "assumes," "intends," "strategy," "goals," "objectives,"
"potential," or variations thereof, or stating that certain actions,
events or results "may," "could," "would," "might" or "will" be taken,
occur or be achieved, or the negative of any of these terms or similar
expressions. The forward-looking statements in this MD&A relate to,
among other things: our ability to successfully integrate the Marigold
mine acquisition; future production of silver, gold and other metals;
future costs of inventory and cash costs per payable ounce of silver
and gold; the prices of silver, gold and other metals; the effects of
laws, regulations and government policies affecting our operations or
potential future operations; future successful development of our
projects; the sufficiency of our current working capital, anticipated
operating cash flow or our ability to raise necessary funds; estimated
production rates for silver, gold and other payable metal produced by
us; timing of production and the cash and total costs of production at
the Pirquitas mine and the Marigold mine; the estimated cost of
sustaining capital; ongoing or future development plans and capital
replacement, improvement or remediation programs; the estimates of
expected or anticipated economic returns from our mining projects
including future sales of metals, concentrates or other products
produced by us; and our plans and expectations for our properties and
These forward-looking statements are subject to a variety of known and
unknown risks, uncertainties and other factors that could cause actual
events or results to differ from those expressed or implied, including,
without limitation, the following: uncertainty of production,
development plans and cost estimates for the Pirquitas mine, the
Marigold mine, the Pitarrilla project and the San Luis project; future
development risks, including start-up delays and operational issues;
our ability to replace Mineral Reserves; our ability to complete and
successfully integrate an announced acquisition, including the Marigold
mine acquisition; our ability to obtain adequate financing for further
exploration and development programs; commodity price fluctuations;
political or economic instability and unexpected regulatory changes;
currency fluctuations, particularly the value of the Argentine peso
against the U.S. dollar; the possibility of future losses; general
economic conditions; the recoverability of our interest in Pretium
Resources Inc. ("Pretium") and our other marketable securities,
including the price of and market for Pretium's common shares and such
other marketable securities; potential export duty on current and past
production of silver concentrate from the Pirquitas mine;
recoverability and tightened controls over the VAT collection process
in Argentina; counterparty and market risks related to the sale of our
concentrates and metals; differences in U.S. and Canadian practices for
reporting Mineral Reserves and Mineral Resources; uncertainty in the
accuracy of Mineral Reserves and Mineral Resources estimates and in our
ability to extract mineralization profitably; uncertainty in acquiring
additional commercially mineable mineral rights; lack of suitable
infrastructure or damage to existing infrastructure; delays in
obtaining or failure to obtain governmental permits, or non-compliance
with permits we have obtained; governmental regulations, including
health, safety and environmental regulations, increased costs and
restrictions on operations due to compliance with such regulations;
reclamation requirements for our exploration properties; unpredictable
risks and hazards related to the development and operation of a mine or
mine property that are beyond our control; compliance with
anti-corruption laws and increased regulatory compliance costs;
complying with emerging climate change regulations and the impact of
climate change; uncertainties related to title to our mineral
properties and the ability to obtain surface rights; recoverability of
deferred consideration to be received in connection with recent
divestitures; our insurance coverage; civil disobedience in the
countries where our properties are located; operational safety and
security risks; actions required to be taken by us under human rights
law; our ability to access, when required, mining equipment and
services; competition in the mining industry for properties; our
ability to attract and retain qualified personnel and management and
potential labour unrest, including labour actions by our unionized
employees at the Pirquitas mine; shortage or poor quality of equipment
or supplies; conflicts of interest that could arise from some of our
directors' and officers' involvement with other natural resource
companies; claims and legal proceedings, including adverse rulings in
current or future litigation against us and/or our directors or
officers, and assessments; potential difficulty in enforcing judgments
or bringing actions against us or our directors or officers outside
Canada and the United States; certain terms of our convertible notes;
and those other various risks and uncertainties identified under the
heading "Risk Factors" in our most recent Form 40-F and Annual
Information Form filed with the SEC and Canadian securities regulatory
This list is not exhaustive of the factors that may affect any of our
forward-looking statements. Our forward-looking statements are based on
what our management considers to be reasonable assumptions, beliefs,
expectations and opinions based on the information currently available
to it. Assumptions have been made regarding, among other things, our
ability to carry on our exploration and development activities, our
ability to meet our obligations under our property agreements, the
timing and results of drilling programs, the discovery of Mineral
Resources and Mineral Reserves on our mineral properties, the timely
receipt of required approvals and permits including obtaining the
necessary surface rights for the lands required for successful project
permitting, construction and operation of the Pitarrilla project, the
price of the minerals we produce, the costs of operating and
exploration expenditures, our ability to operate in a safe, efficient
and effective manner, our ability to obtain financing as and when
required and on reasonable terms and our ability to continue operating
the Pirquitas mine and the Marigold mine. You are cautioned that the
foregoing list is not exhaustive of all factors and assumptions which
may have been used. We cannot assure you that actual events,
performance or results will be consistent with these forward-looking
statements, and management's assumptions may prove to be incorrect. Our
forward-looking statements reflect current expectations regarding
future events and operating performance and speak only as of the date
hereof and we do not assume any obligation to update forward-looking
statements if circumstances or management's beliefs, expectations or
opinions should change other than as required by applicable law. For
the reasons set forth above, you should not place undue reliance on
Cautionary Note Regarding Non-GAAP Measures
This news release includes certain terms or performance measures
commonly used in the mining industry that are not defined under
International Financial Reporting Standards ("IFRS"), including cost of
inventory, cash costs and total costs per payable ounce of silver sold
and adjusted net income (loss) and adjusted basic earnings (loss) per
share. We believe that, in addition to conventional measures prepared
in accordance with IFRS, certain investors use this information to
evaluate our performance. The data presented is intended to provide
additional information and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance with
IFRS. These non-GAAP measures should be read in conjunction with our
consolidated financial statements.
W. John DeCooman, Jr.
Vice President, Business Development and Strategy
Silver Standard Resources Inc.
N.A. toll-free: +1 (888) 338-0046
All others: +1 (604) 689-3846
SOURCE: Silver Standard Resources Inc.
For further information:
W. John DeCooman, Jr.
Vice President, Business Development and Strategy
Silver Standard Resources Inc.
N.A. toll-free: +1 (888) 338-0046
All others: +1 (604) 689-3846