TORONTO, May 13, 2013 /CNW/ - U.S. Silver & Gold Inc. (TSX: USA, OTCQX:
USGIF) ("U.S. Silver & Gold" or the "Company") today reported financial
and operational results for the first quarter of 2013.
This earnings release should be read in conjunction with the Company's
MD&A, Financial Statements and Notes to Financial Statements for the
corresponding period, which have been posted on SEDAR at www.sedar.com and are also available on the Company's website at www.us-silver.com.
All figures are in U.S. dollars unless otherwise noted.
Highlights of First Quarter
First quarter production in line with expectations. 2013 guidance
re-forecasted to 2.6 to 3.0 million silver ounces at cash costs of $16
to $18 per ounce (from 2.7 to 3.0 million silver ounces at cash costs
of $17 to $19 per ounce).
Galena Complex revenues of $17.6 million and net income of $2.1 million.
Consolidated revenues of $22.9 million and net loss of $3.4 million or
$0.06 per share. The net loss is primarily attributable to
under-performance at the Drumlummon Mine, which is scheduled to be put
on care and maintenance during Q2, 2013 given current gold prices.
Consolidated production of 598,139 silver ounces. Strong Galena Complex
silver production of 577,095 ounces (a 4.7 percent increase over Q1,
2012) at a silver cash cost of $20.48 per ounce.
Realized silver price of $30.32 per ounce (a nine percent decrease
compared to Q1, 2012), copper price of $3.68 per pound and lead price
of $1.03 per pound.
Further review of exploration, capital projects and capital development
costs increased previously stated 2013 cost reduction targets from $10
to $12 million. Implementation of remaining cost-saving and
productivity measures at the Galena Complex and the corporate office,
and closure of the Drumlummon Mine underway.
Continuing strong exploration results in the Caladay Zone.
"On January 27, 2013 we completed implementation of a new 24/7 schedule
to increase productivity and profitability at the Galena Mine Complex.
We began seeing the benefit of that strategy in the first quarter of
2013 with a 3 percent increase in tonnage over the previous quarter. We
expect to see increased tonnage as well as budgeted grade over the
remainder of 2013, which will positively impact cash costs starting in
the second quarter," said Darren Blasutti, President and CEO of U.S.
Silver and Gold. "That, in combination with the immediate cost
reductions, the fast tracking of the Caladay Zone and a focus on
protecting our balance sheet, positions the Company well in an
increasing silver price environment."
Production and Operating Costs
As reported in the April 24, 2013 press release, the Company had strong
first quarter consolidated silver production totalling 598,139 ounces,
along with gold production of 2,161 ounces. Consolidated silver cash
costs were $22.20 per ounce (compared with $17.65 per ounce in the
fourth quarter of 2012) due primarily to the underperformance of the
Drumlummon Mine in Q1, 2013 and the expected mining of lower grade
material at the Galena Complex during the quarter.
A net loss of $3.4 million was recorded for the quarter, compared with
net income of $2.9 million in the first quarter of 2012. This decrease
was due to lower realized metal prices, higher cost of sales (primarily
at the Drumlummon Mine), higher general and administration expenses
(including post-merger costs and tax re-organization work) and higher
depreciation, depletion and amortization. Cost increases were partially
offset by higher year-over-year production and lower income tax expense
in connection with the tax re-organization.
The Galena Mine Complex delivered 577,095 ounces of silver during the
first quarter of 2013. Despite transitioning to the 24/7 shift
schedule one month into the quarter, a 4.7 percent increase in
production over Q1, 2012 resulted. Average grade increased three
percent to 9.6 ounces per ton silver, while the realized silver price
fell 8.7 percent to $33.29 per ounce. Please see Table 1 below for
Galena Production Details
Total Ore Processed (tons milled)
Silver - Copper
Silver - Lead
Silver produced (ounces)
Lead produced (pounds)
Copper produced (pounds)
Silver recoveries (percent)
Lead recoveries (percent)
Copper recoveries (percent)
Silver head grade (ounces per ton)
Silver - Copper
Silver - Lead
Lead head grade (percent)
Copper head grade (percent)
Silver sold (ounces)
Lead sold (pounds)
Copper sold (pounds)
Realized silver price ($ per ounce)
Realized lead price ($ per pound)
Realized copper price ($ per pound)
Silver cash costs ($ per ounce)1
1The Company reports the cash cost per ounce of silver produced, a
non-GAAP measure, in accordance with measures widely reported in the
silver mining industry as a benchmark for performance measurement.
These measures do not have any standardized meaning and may differ from
methods used by other companies with similar descriptions. The method
does not include depletion, depreciation, exploration or corporate
administrative costs and is therefore not directly reconcilable to
costs as reported under International Financial Reporting Standards
At $20.48, cash costs were higher during the first quarter of 2013 than
in the prior year. This is due to an increase in labour costs
following the addition of personnel to accommodate the new 24/7
schedule. Productivity increased as a result, and a subsequent rise in
March and April productivity has also been noted. This trend is
expected to positively impact ounce production and cash costs beginning
in the second quarter and continue throughout fiscal 2013.
Additionally, production and development miners from the Coeur mine
were re-deployed late in the first quarter in order to achieve what the
Company expects will be more profitable production from the higher
grade Caladay areas by the third quarter of the year.
The Drumlummon Mine produced 2,161 ounces of gold and 21,044 ounces of
silver during the first quarter of the year at a by-product cash cost
of $2,289.73 per ounce gold.
As previously announced, given current gold prices and recent mine
performance, production at Drumlummon is being discontinued and the
mine will be put on care and maintenance. A small, ongoing exploration
program will be maintained and the Company will move the remaining
equipment, materials inventory, and supplies to the Galena Complex in
As per the Company's April 24, 2013 press release, recent drilling in
the Caladay Zone at the Galena Complex has uncovered higher grade
silver-lead mineralization and extended silver-copper veins on the 4900
and 5200 levels along strike and down dip. Over the remainder of 2013,
the exploration drill program will extend and better define these areas
and focus on: 1) developing resources that are close to existing
infrastructure; 2) continuing underground exploration diamond core
drilling in the Caladay Zone; 3) defining additional reserves; 4)
adding to resources; and, 5) identifying viable new silver veins within
the greater Galena Complex.
U.S. Silver & Gold's cash and cash equivalents at March 31, 2013 totaled
$11.0 million compared to $18.9 million at December 31, 2012, while net
working capital totaled $11.7 million compared to $16.0 million for the
same dates, respectively. The decrease in net working capital primarily
reflects net cash inflows from operations less drilling, underground
development, and exploration costs, purchase of property, plant and
equipment, rehabilitation and access development activity, and other
changes in non-cash working capital.
Adjusting for the Company's credit facility of $7.9 million, the
Company's working capital was $20 million as at March 31, 2013.
Management is currently reviewing options for refinancing the debt.
About U.S. Silver & Gold Inc.
U.S. Silver & Gold Inc. is a newly formed silver and gold mining company
focused on growth from its existing asset base and the execution of
targeted accretive acquisitions. It owns and operates the Galena Mine
Complex in the heart of the Silver Valley/Coeur d'Alene Mining
District, Shoshone County, Idaho. It produces high-grade silver and is
the second most prolific silver mine in U.S. history, delivering over
200 million ounces to date. The Caladay Zone is being evaluated for
bulk mining development. U.S. Silver & Gold Inc. also owns the
Drumlummon Mine Complex in Lewis and Clark County, Montana.
Mr. Jim Atkinson, Vice President, Exploration and a Qualified Person
under Canadian Securities Administrators guidelines, has approved the
contents of this news release.
For further information please see SEDAR or www.us-silver.com for the NI 43-101 compliant Technical Report on the Galena Project
dated March 22, 2013.
Cautionary Statement Regarding Forward Looking Information:
This news release contains "forward‐looking information" within the
meaning of applicable securities laws. Forward‐looking information
includes, but is not limited to, the Company's expectations intentions,
plans, and beliefs with respect to, among other things, the Galena
Complex and the Drumlummon Mine. Often, but not always, forward‐looking
information can be identified by forward‐looking words such as
"anticipate", "believe", "expect", "goal", "plan", "intend",
"estimate", "may", and "will" or similar words suggesting future
outcomes, or other expectations, beliefs, plans, objectives,
assumptions, intentions, or statements about future events or
performance. Forward‐looking information is based on the opinions and
estimates of the Company as of the date at which such information is
provided and is subject to known and unknown risks, uncertainties, and
other factors that may cause the actual results, level of activity,
performance, or achievements of the Company to be materially different
from those expressed or implied by such forward looking information.
This includes the ability to develop and operate the Galena and
Drumlummon properties, risks associated with the mining industry such
as economic factors (including future commodity prices, currency
fluctuations and energy prices), failure of plant, equipment, processes
and transportation services to operate as anticipated, environmental
risks, government regulation, actual results of current exploration
activities, possible variations in ore grade or recovery rates,
permitting timelines, capital expenditures, reclamation activities,
social and political developments and other risks of the mining
industry. Although U.S. Silver and Gold has attempted to identify
important factors that could cause actual results to differ materially
from those contained in forward‐looking information, there may be other
factors that cause results not to be as anticipated, estimated, or
intended. Readers are cautioned not to place undue reliance on such
information. By its nature, forward‐looking information involves
numerous assumptions, inherent risks and uncertainties, both general
and specific, that contribute to the possibility that the predictions,
forecasts, and projections of various future events will not occur. The
Company undertakes no obligation to update publicly or otherwise revise
any forward‐looking information whether as a result of new information,
future events or other such factors which affect this information,
except as required by law.
SOURCE: U.S. Silver & Gold Inc.
For further information:
President and CEO