TORONTO--(BUSINESS WIRE)--Americas Silver Corporation (TSX: USA) (NYSE American: USAS) (“Americas Silver” or the “Company”) is pleased to announce production and operating cost results for fiscal 2017, 2018 production and cost guidance, and results from recent follow-up exploration drilling completed on its 100%-owned Zone 120 deposit. The Zone 120 deposit is part of the Cosalá Operations property in Sinaloa, Mexico and located adjacent to the San Rafael Mine. The Company declared commercial production at the San Rafael Mine as of December 19, 2017.
Consolidated 2017 Results and 2018 Guidance
- Guidance for 2018 is 1.6 - 2.0 million silver ounces and 7.2 - 8.0 million silver equivalent ounces at cash costs of negative $10.00 to negative $5.00 per silver ounce and all-in sustaining costs of negative $1.00 to $4.00 per silver ounce. The Company assumed $17.00 per ounce silver, $1.35 per pound zinc, $1.05 per pound lead, and an exchange rate of 18.5 Mexican pesos to US dollar for these guidance estimates.
- The Company drilled seven holes at the Zone 120 deposit in the fourth quarter of 2017 following the success of the spring 2017 drill program. Drill highlights include: ◦ Hole SR-415, containing 23.4 meters grading 259 g/t silver, 0.40 g/t gold and 0.5% copper (345 g/t silver equivalent) and 7.2 meters grading 335 g/t silver, 0.23 g/t gold and 0.55% copper (413 g/t silver equivalent);
- Hole SR-402, containing 16.9 meters grading 138 g/t silver, 0.23 g/t gold and 0.43% copper (204 g/t silver equivalent); and
- Hole SR-409, containing 2.0 meters grading 920 g/t silver, 0.40 g/t gold and 2.36% copper (1,218 g/t silver equivalent)
- The Board has approved a $4.0 million exploration program for the Cosalá Operations property, with the majority to be spent on expansion and in-filling drilling of the Zone 120 deposit.
- Consolidated silver and silver equivalent production1 for 2017 of approximately 2.1 million silver ounces and 4.7 million silver equivalent ounces, respectively, resulting in a 14% decrease in silver production and 4% increase in silver equivalent production compared to 2016.
- Consolidated cash costs2 and all-in sustaining costs2 for 2017 of $9.37 per silver ounce and $13.12 per silver ounce, respectively, resulting in a 6% decrease in cash costs and 3% increase in all-in sustaining costs compared to 2016.
- The Company had a cash balance of $9.3 million as at December 31, 2017.
“This year will be transformative for Americas Silver with the San Rafael Mine and mill ramping up to full capacity by the middle of the year,” said Americas Silver President and CEO Darren Blasutti. “We are expecting record free cash flow, earnings, and silver equivalent production for the Company as we become one of the lowest all-in sustaining cost producers in the silver industry.”
Mr. Blasutti continued, “Building on the exciting 2017 drilling success at Zone 120, we are well into a 12,000-meter drill program in the first half of 2018. San Rafael’s free cash flow will allow us to develop the potential high-grade, silver-copper targets at Zone 120-El Cajón without equity dilution to our shareholders.”
Consolidated 2017 Results and 2018 Guidance
Consolidated silver production for 2017 was approximately 2,060,000 ounces, which represents a decrease of 14% compared to 2016. Silver equivalent production was approximately 4,746,000 ounces, an increase of 4% compared to 2016. Consolidated cash costs improved by 6% to $9.37 per silver ounce compared to 2016. In addition, zinc and copper production increased 11% and 10% year-over-year, respectively, as a result of strong production from the Cosalá Operations.
| Table 1 2017 Consolidated Production Highlights |
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| 2017 | 2016 | Change | |
| Processed Ore (tonnes milled) | 690,498 | 671,616 | 3% |
| Silver Production (ounces) | 2,056,017 | 2,389,808 | -14% |
| Silver Equivalent Production (ounces) | 4,746,387 | 4,579,373 | 4% |
| Silver Grade (grams per tonne) | 104 | 126 | -18% |
| Cost of Sales ($ per silver equiv. ounce)1 | $10.19 | $10.08 | 1% |
| Cash Costs ($ per silver ounce)1 | $9.37 | $10.00 | -6% |
| All-in Sustaining Costs ($ per silver ounce)1 | $13.12 | $12.71 | 3% |
| Zinc Production (pounds) | 11,623,138 | 10,488,773 | 11% |
| Lead Production (pounds) | 25,392,619 | 29,067,673 | -13% |
| Copper Production (pounds) | 1,167,401 | 1,058,250 | 10% |
1 Cost of sales per silver equivalent ounce, cash costs per silver ounce, and all-in sustaining costs per silver ounce for 2017 excludes pre-production of 50,490 silver ounces and 435,323 silver equivalent ounces mined from San Rafael during its commissioning period, and excludes pre-production of 245,391 silver ounces and 360,530 silver equivalent ounces mined from El Cajón during its commissioning period. Pre-production revenue and cost of sales from San Rafael and El Cajón are capitalized as an offset to development costs.
The Company produced 2.1 million silver ounces and 4.7 million silver equivalent ounces which are within the 2.0 - 2.5 million silver ounces and slightly below the 5.0 - 5.5 million silver equivalent ounces 2017 guidance estimates. The shortfall to silver equivalent guidance was due to lower than expected tonnage and grade from the Galena Complex as both silver and lead production were below expectations. In addition, guidance to the market was estimated on the San Rafael Mine declaring commercial production early in the fourth quarter of 2017 instead of later in the quarter. As a result, silver equivalent production was lower than expected due to delay in by-product metal production expected from the high concentration of zinc and lead in the Lower Zone of the San Rafael Mine.
| Table 2 Consolidated Results and Guidance |
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| 2017 Actual | 2018 Guidance* | |
| Silver Production (ounces) | 2.1M oz. | 1.6 - 2.0M oz. |
| Silver Equivalent Production (ounces) | 4.7M oz. | 7.2 - 8.0M oz. |
| Cost of Sales ($ per silver equiv. ounce) | $10.19/oz. | $7.00 - $8.00/oz. |
| Cash Costs ($ per silver ounce) | $9.37/oz. | $(10.00) - $(5.00)/oz. |
| All-in Sustaining Costs ($ per silver ounce) | $13.12/oz. | $(1.00) - $4.00/oz. |
* The Company assumed $17.00 per ounce silver, $1.35 per pound zinc, $1.05 per pound lead, and an exchange rate of 18.5 Mexican pesos to US dollar for these guidance estimates
The Company declared commercial production at its San Rafael Mine in December 2017. The mine was constructed for approximately $17 million, 25% lower than the initial pre-feasibility estimate. Mine production, mill throughput and metal recoveries are expected to ramp-up to internal targets through the first half of 2018. Capital development is expected to be highest in the first quarter of 2018 as development into the deepest levels of the Main Zone progress and the remainder of the mine’s capital development and equipment purchases are finalized. The Company is expected to invest a consolidated $18-19 million in its operating mines in 2018.
Silver production is expected to be lower in the first 18 months of the mine’s production due to mine sequencing within San Rafael. The initial development in the San Rafael ore body was into the area closest to the portal where the silver grade is approximately half of the reserve silver grade. The Main and the Upper Zones of the ore body are estimated to have higher silver grades. Silver equivalent production is expected to increase significantly, and cash costs and all-in sustaining costs are expected to decrease due to the significant increase in lead and zinc projected to be produced from the San Rafael mine. At current spot prices, the mine is expected to generate significant free cash flow in 2018 and with further growth in 2019 as capital requirements decrease and the silver grade improves.
Zone 120 Exploration Results
The Company is pleased to release results from its ongoing drill program on the Zone 120 deposit. Exploration drilling resumed at the Cosalá Operations property in 2017 for the first time since 2014. Starting in April, an initial 4,000-meter diamond drill program at Zone 120 will commence focused on upgrading the existing resource3 as well as expanding the footprint of mineralization to the southeast. Following up on the success of step-out Hole SR-396, the Company drilled 3,260 meters in seven holes to further test continuity, concentration, and extent of the silver-copper mineralization.
| Table 3 Q4 2017 Zone 120 Selected Drill Results |
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| Hole | From (m) | To (m) | Width (m)* | Ag (g/t) | Au (g/t) | Cu % | AgEg (g/t)** |
| SR-402
including |
371.3
389.2 |
406.1
406.1 |
34.8
16.9 |
91
138 |
0.15
0.23 |
0.29
0.43 |
136
204 |
| SR-409 | 228.0 | 230.0 | 2.0 | 920 | 0.40 | 2.36 | 1,218 |
| SR-410 | 163.6 | 174.3 | 10.7 | 97 | 0.16 | 0.24 | 136 |
| SR-415
including |
257.0
268.3 276.3 279.0 |
280.4
269.4 277.5 280.4 |
23.4
1.1 1.2 1.4 |
259
1,460 839 623 |
0.40
2.61 0.61 0.59 |
0.50
2.55 1.13 1.35 |
345
1,940 1,012 820 |
| SR-415 | 291.1 | 305.9 | 14.8 | 75 | 0.25 | 0.16 | 111 |
| SR-415 | 416.2 | 426.3 | 10.1 | 120 | 0.08 | 0.13 | 141 |
* True width varies from 85-92% of interval.
** The AqEq was calculated using $18/oz Ag, $1300/oz Au and $3.00/lb Cu.
The Company also drilled three holes between El Cajón and Zone 120 to test for mineralization in the corridor separating two known resources with similar host rocks, mineralogical characteristics and structural controls, All three holes encountered short intervals of significant silver and copper values and have provided important structural and lithological information which will be valuable in targeting extensions and the potential connection in the one kilometer distance between El Cajón and Zone 120.
Detailed exploration results from the 2017 drill program and 2018 targets can be found on the Company’s website and investor presentation at www.americassilvercorp.com.
The Company is moving forward with a $4 million, 20,000-meter exploration program focused on the Zone 120 deposit and its regional land position. Approximately 14,000 meters of the drilling will be focused on Zone 120 and the corridor between Zone 120 and El Cajón. The drilling is expected to be completed by mid-second quarter 2018 with results to be released late in Q2, 2018 for inclusion in the Company’s mid-year resource update. Funding for the program is expected to be provided from internally-generated, operating cash flow from the Company’s San Rafael Mine.
Drill core samples are prepared at the Company’s secure facility in Cosalá, Sinaloa. Assaying was done by ALS Chemex Labs in Hermosillo, Mexico. The Company has a QA/QC program supervised by a Qualified Person.
About Americas Silver Corporation
Americas Silver is a silver mining company focused on growth in precious metals from its existing asset base and execution of targeted accretive acquisitions. It owns and operates the Cosalá Operations in Sinaloa, Mexico and the Galena Mine Complex in Idaho, USA. The Company has acquired an option on the San Felipe development project in Sonora, Mexico.
Daren Dell, Chief Operating Officer and a Qualified Person under Canadian Securities Administrators guidelines, has approved the applicable contents of this news release. For further information please see SEDAR or americassilvercorp.com.
