“In 2012, Silver Standard delivered on its commitments to the market and positioned the Company for growth,” said
(All figures are in U.S. dollars unless otherwise noted)
- Reported strong financial performance: Generated annual sales revenue of
$241 million, a 63% increase over the $148 milliongenerated in 2011. Increased cash and cash equivalents to $367 millionfrom $329 millionat December 31, 2011.
- Delivered at Pirquitas: Produced 8.6 million ounces of silver at Pirquitas, exceeding the high-end of the 2012 guidance range. Reported direct mining costs of
$12.61per ounce of silver produced, down 8% from $13.65per ounce in 2011 and within the 2012 guidance range.
- Executed the sales strategy: Signed multiple long-term silver concentrate sales contracts with smelters, diversifying the customer base and reducing treatment and refining costs.
- Completed the Pitarrilla Feasibility Study: Completed the Pitarrilla Feasibility Study, defining a 32-year, high production project in
- Delivered organic growth: Increased the Company’s silver Mineral Reserve to 566 million ounces, approximately three-times the 189 million ounces reported at year-end, 2011. Increased Measured and Indicated Mineral Resources to 1,188 million ounces of silver, up 3% from 1,148 million ounces of silver reported at
December 31, 2011.
- Raised capital for mine development: Subsequent to year-end, closed a
$265 millionoffering of convertible notes, the proceeds of which are anticipated to be used to repurchase or redeem approximately $138 millionof the Company’s outstanding 2008 convertible notes and for general corporate purposes, which may include developing or advancing the project portfolio.
Director, John R. Brodie Passes Away
Silver Standard regrets to announce that director,
Summary Mine Operating Statistics (1)
|Q1 2012||Q2 2012||Q3 2012||Q4 2012||Full Year|
|Total material mined||Kt||4,297||4,483||4,333||4,415||17,528||17,480|
|Silver mill feed grade||g/t||221||219||214||212||217||253|
|Zinc mill feed grade||%||0.97||0.66||0.65||0.67||0.74||1.02|
|Silver produced||‘000 oz||2,172||2,021||2,163||2,268||8,624||7,056|
|Zinc produced||‘000 lbs||3,324||1,900||2,770||3,176||11,171||10,122|
|Silver sold||‘000 oz||1,536||1,859||2,770||3,218||9,383||4,846|
|Zinc sold||‘000 lbs||1,791||1,791||2,152||2,731||8,465||12,419|
|Realized silver price||US$/oz||32.20||30.06||29.37||32.69||31.13||33.58|
|Cost of inventory||US$/oz||14.79||14.42||14.99||14.81||14.78||15.19|
|(1)||The Company reports non-GAAP cash and total costs per ounce of silver produced to manage and evaluate |
operating performance at the Pirquitas mine. See ‘Cautionary Note Regarding Non-GAAP Measures.’
The Pirquitas mine produced 8.6 million ounces of silver during 2012, 22% more than the 7.1 million ounces produced in 2011. The higher 2012 production is the result of better mechanical availability in the plant and operational improvements that led to higher and more consistent throughput. The mine also produced 11.2 million pounds of zinc, 10% more than the 10.1 million pounds produced in 2011, again largely the result of higher throughput.
During the year, 1.6 million tonnes of ore were processed at an average milling rate of 4,433 tonnes per day, 11% above the plant’s nominal design. This compares to 1.1 million tonnes processed in 2011, at an average milling rate of 2,983 tonnes per day. The ongoing performance above design was the result of continuous improvement initiatives at the mine, including improved preventative maintenance.
The average silver grade of the ore milled in 2012 declined to 217 g/t from 253 g/t in 2011. The average silver recovery rate declined to 76.3% in 2012 from 79.5% in 2011, partly due to a temporary shortage in the desired reagents. Despite lower grades and recoveries, overall production improved due to the higher average milling rate.
Mine operating costs
Cash costs per ounce and total cost per ounce are non-GAAP financial measures. See “Cautionary Note Regarding Non-GAAP Measures.”
Direct mining costs for 2012, as detailed under the Company’s previous presentation method for its non-GAAP financial measures were
During 2012, the Company changed its presentation of cash costs, a non-GAAP financial measure. Under the revised methodology, the Company reports “cash costs” and “total costs” on a “per payable ounce sold” basis. Silver concentrate export duties, that are being accrued but not paid, are included in total costs to reflect their non-cash nature. Previous disclosures have been restated to conform to the amended presentation.
Cost of inventory in 2012 was
Cash costs in 2012, which includes treatment and refining costs, freight and transportation, and by-product credits were
Total costs, which includes export duties, depreciation, depletion and amortization, were
At Pirquitas, the Company completed an extensive diamond drill program of 142 holes for approximately 53,000 metres. The program was extended beyond the planned campaign following positive drilling results and the discovery of certain geophysical anomalies to the east of the
|Cut-off Ag |
|Ag (g/t)||Zn (%)||Zn (Mlb)|
Jeremy D. Vincent, B.Sc. (Hons), P.Geo., Senior Geologist employed by the Company, is the Qualified Person for the reported Mineral Resources estimate.
- All Mineral Resource estimates have been classified in accordance with current
Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) definition standards.
- The above Mineral Resources are reported at a range of potentially economic silver cut-off grades to demonstrate sensitivity, whilst retaining reasonable prospects for economic extraction. The cut-off grade of 50 grams per tonne silver has not yet been demonstrated by a preliminary economic assessment or higher level mine study.
- Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. While the classification categories of Mineral Resources used in this news release are recognized and required under Canadian regulations, the
U.S. Securities and Exchange Commission(“SEC”) does not recognize them and U.S. companies are generally not permitted to disclose resources in documents they file with the SEC.
- The reported tonnes, grade, and metal content may not tally precisely due to rounding.
This section of the news release provides management’s production and cost estimates for 2013. Major capital and exploration expenditures are also discussed. See “Cautionary Note Regarding Forward-Looking Statements.”
The Company’s production and cost guidance for 2013 is:
- Produce and sell between 8.2 and 8.5 million ounces of silver.
- Produce over 20 million pounds of zinc.
- Cash costs between
$17.00 and $18.50per silver ounce.
- Capital expenditures of
$25 millionat Pirquitas, including approximately $15 millionfor a tailings facility expansion but excluding capitalized stripping costs.
- Expenditures of
$15 millionfor exploration across the Company’s portfolio.
- Expenditures of
$17 millionfor development.
At the Pirquitas mine the Company expects to produce between 8.2 and 8.5 million ounces of silver in 2013. The mine is currently transitioning from Phase 1 to Phase 2 of the
The Company is required to adopt the accounting standard IFRIC 20 “Stripping Costs in the Production Phase of a
Cash costs are a non-GAAP financial measure. See “Cautionary Note Regarding Non-GAAP Measures.” Note that the Company changed its “cash costs” and “total costs” disclosure methodology.
The Company plans to spend approximately
The Company expects to spend a minimum of
- Revenues were
$241.1 millionin the year ended December 31, 2012, versus $147.8 millionin the year ended December 31, 2011. Cost of sales was $195.0 million, including $44.7 millionnon-cash depletion, depreciation and amortization, in the year ended December 31, 2012. This compares to a cost of sales of $95.9 millionand non-cash depletion, depreciation and amortization of $16.5 millionin the year ended December 31, 2011.
- Mine operations at Pirquitas earned
$46.1 millionin the year ended December 31, 2012, compared to $51.9 millionin the year ended December 31, 2011.
- Net earnings of
$54.8 million, or $0.68per share, in the year ended December 31, 2012, compared to net earnings of $80.1 millionor $1.00per share in the year ended December 31, 2011.
- Cash and cash equivalents were
$366.9 millionat December 31, 2012, compared to $329.1 millionas of December 31, 2011. Working capital was $379.0 millionat December 31, 2012, compared to $399.1 millionat December 31, 2011.
|Selected Financial Data|
This summary of selected financial data should be read in conjunction with the Management Discussion and Analysis of the Financial Position and Results of Operations and the audited consolidated financial statements of the Company for the years ended
|Income (loss) from mine operations||16,640||(3,270)||46,112||51,919|
|Operating income (loss)||6,026||(7,137)||9,748||22,565|
|Net income for the period||23,848||2,584||54,826||80,128|
|Basic earnings per share||0.30||0.03||0.68||1.00|
|Cash generated by (used in) operating activities||13,305||(7,223)||5,410||5,679|
|Cash generated by (used in) investing activities||203||(20,507)||31,864||70,980|
|Cash generated by financing activities||||882||618||20,085|
|Cash and cash equivalents||366,947||329,055|
|Current assets – total||593,771||476,676|
|Current liabilities – total||214,812||77,588|
|Total assets||1,316,912||1,276,102 |
A total of
In a news release dated
- Probable Mineral Reserves of 479 million ounces of silver, approximately 5.2 times greater than the 91.7 million ounces of Probable Mineral Reserves reported previously.
- A 32-year project life producing an average of approximately 15 million ounces of silver per year during the first 18 years of production.
- An after-tax NPV of
$737 millionat base case metal prices using a 5% real discount rate and $1.7 billionat spot prices. An after-tax IRR of 12.8% at base case metal prices using a discount of 5% and 21.2% at spot prices.
- Estimated average cash costs of
$10.01per payable ounce of silver over the life of the project.
- Total pre-production capital of
$741 million, including $157 millionof pre-production operating costs and $131 millionof pre-operating revenue.
- Standard truck-and-shovel open-pit mining methods and well-established flotation and leach processing methods.
The feasibility study evaluates the development and construction of an open-pit mine, processing facilities, a tailings storage facility and supporting infrastructure. Pitarrilla is expected to be one of the largest silver mines in
Pitarrilla is expected to use a standard truck and shovel open-pit mining method, with a fleet of trucks that is expected to haul an average of over 175,000 tonnes of material per day over 20 years. The plant will use standard grind, float and agitated leach circuits to process 16,000 tonnes per day of flotation/leach ore or 12,000 tonnes per day of direct leach ore. The plant will produce lead and zinc concentrates and a silver doré.
Pitarrilla is located approximately 160 kilometres north-northwest of the city of Durango. A paved roadway extends to within 47 kilometres of the plant site. The Company has been advised by the
During 2012, the Company completed 34 in-fill drill holes totaling 3,400 metres in the upper zones of the oxide deposit, and 33 closely-spaced drill holes totaling 8,914 metres for geostatistical studies to refine the Mineral Resource model in support of the feasibility study. The Company also successfully closed certain land access rights and continues to negotiate for the remaining few parcels of land. It also received approval for the
In connection with the technical report dated
1 Base case metal prices:
A total of
During the year, the Company received approval for an exploration
A total of
Mineral Reserves and Resources
Fiscal stability agreement and Argentine regulatory environment
The Pirquitas mine has a fiscal stability agreement with the government of
Until the order to cease payment was granted in 2010, the Pirquitas mine had paid
In addition, the regulatory environment in
Management Discussion & Analysis and Conference Call
This news release should be read in conjunction with Silver Standard’s Consolidated Financial Statements and Management’s Discussion and Analysis of the Financial Position and Results of Operations for the Year Ended
- Conference call and webcast:
Friday, March 1, 2013, at 11:00 a.m. EST.
All other callers: (970) 315-0481
- The conference call will be archived and available at www.silverstandard.com. Audio replay will be available for one week by calling:
All other callers: (404) 537-3406, replay conference ID 91329431
Cautionary Note Regarding Forward-Looking Statements:
Statements in this news release are 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 statements. 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 news release relate to, among other things: future production of silver and other metals; future mining costs and cash costs per ounce of silver; the price of silver and other metals; the effects of laws, regulations and government policies affecting the Company’s operations or potential future operations; future successful development of the Company’s projects; the sufficiency of the Company’s current working capital, anticipated operating cash flow or the Company’s ability to raise necessary funds; estimated production rates for silver and other payable metal produced by the Company; timing of production and the cash and total costs of production at the Pirquitas mine; the estimated cost of sustaining capital; ongoing or future development plans and capital replacement, improvement or remediation programs; the anticipated use of proceeds from the Company’s 2013 convertible notes offering; the Company’s planned changes to the presentation of non-GAAP financial measures; and the estimates of expected or anticipated economic returns from the Company’s mining projects including: future sales of the metals, concentrates or other products produced by the Company; and the Company’s plans and expectations for its properties and operations.
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 and cost estimates for the Pirquitas mine, the Pitarrilla project and the
This list is not exhaustive of the factors that may affect the Company’s forward-looking statements. The Company’s forward-looking statements are based on what the Company’s management considers to be reasonable assumptions, beliefs, expectations and opinions based on the information currently available to it. 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. Assumptions have been made regarding, among other things, the Company’s ability to carry on its exploration and development activities, the Company’s ability to meet its obligations under its property agreements, the timing and results of drilling programs, the discovery of mineral resources and mineral reserves on the Company’s 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 the Company produces, the costs of operating and exploration expenditures, the Company’s ability to operate in a safe, efficient and effective manner and the Company’s ability to obtain financing as and when required and on reasonable terms and its ability to continue operating the Pirquitas mine. You are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. The Company’s forward-looking statements reflect current expectations regarding future events and operating performance and speak only as of the date hereof and the Company does 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 forward-looking statements.
Cautionary Note to U.S. Investors:
This new release includes Mineral Reserves and Mineral Resources classification terms that comply with reporting standards in
This news release uses the terms “Proven Mineral Reserves” and “Probable Mineral Reserves.” U.S. investors are advised that the definitions of these terms under NI 43-101 differ from the definitions in SEC Industry Guide 7. Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under
This news release also uses the terms “Mineral Resources,” “Measured Mineral Resources,” “Indicated Mineral Resources” and “Inferred Mineral Resources” to comply with reporting standards in
Cautionary Note Regarding Non-GAAP Measures:
This new release includes certain terms or performance measures commonly used in the mining industry that are not defined under Canadian GAAP or IFRS, including direct mining cost, total cash cost and total production cost per ounce of silver. The Company believes that, in addition to conventional measures prepared in accordance with Canadian GAAP and IFRS, certain investors use this information to evaluate its 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 Canadian GAAP and IFRS. These non-GAAP and non-IFRS measures should be read in conjunction with the Company’s financial statements. For more information, please see Item 14 of the Management’s Discussion and Analysis of the Financial Position and Results of Operations for the Year Ended
Table 1. Mineral Reserves and Resources
|MEASURED AND INDICATED MINERAL RESOURCES (INCLUSIVE OF RESERVES):|
|Pitarrilla||Measured – Ag||20.3||95.4||62.3|
|Indicated – Ag||240.0||81.9||632.2|
|Indicated – Pb/Zn||260.3||0.32||0.72|
|INFERRED MINERAL RESOURCES:|
|* Stockpiles are Probable Mineral Reserves.|
|** Stockpiles are Indicated Mineral Resources.|
Notes to Mineral Reserves and Resources Table:
All estimates of Mineral Reserves and Mineral Resources in Table 1 have been prepared in accordance with NI 43-101 under the supervision of a Qualified Person named below for the respective properties. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. Mineral Resources and Mineral Reserves figures have been rounded to the nearest 0.1 million tonnes and the nearest 0.1 million ounces for silver and the 0.01 million ounces for gold. Exact totals can be found in the corresponding NI 43-101 Technical Report for each property.
All Technical Reports referenced below are available under the Company’s profile in SEDAR or on the Company’s website at www.silverstandard.com.
- Mineral Reserve and Mineral Resource estimates are reported below the as-mined surface as at
December 31, 2012. The Mineral Reserves estimate was completed by Andrew W. Sharp FAusIMM and Trevor J. Yeomans, P.Eng., ACSM, as Qualified Persons in accordance with the standards of NI 43-101. Mineral Reserves are presented at a cut-off of US$35.52per tonne net smelter return (“NSR”), using US$25.00per troy ounce silver and US$2,403.00per tonne zinc; these values remain the same as used in the 2011 Pirquitas Technical Report. Mineral Resources for the Mining Area (includes San Miguel, Potosi, and Oploca zones) were estimated by Dr. Warwick S. Board, P.Geo., as a Qualified Person in accordance with the standards of NI 43-101 in the 2011 Pirquitas Technical Report. The Mineral Resources estimate of the Cortaderas Area was completed by Jeremy D. Vincent, P.Geo., as a Qualified Person in accordance with the standards of NI 43-101. Mineral Resources are reported above a cut-off grade of 50 grams per tonne silver and are reported inclusive of Mineral Reserves. All Measured Mineral Resources are situated in the Mining Area. Indicated Resources in the Mining Area comprise 15.9 million tonnes, totalling 72.8 million ounces of silver. Stockpile material comprises 1.4 million tonnes of mined material, totalling 6.1 million ounces of silver. Inferred Resources in the Mining Area comprise 0.03 million tonnes, totalling 0.1 million ounces of silver. For a complete description of the key assumptions, parameters and methods used to estimate the Mineral Reserves and Mineral Resources, please refer to the 2011 Pirquitas Technical Report.
- Mineral Reserve and Mineral Resource estimates are as at
December 4, 2012and are contained in the 2012 Pitarrilla Technical Report. The Mineral Reserves estimate was completed by Andrew W. Sharp, FAusIMM, as a Qualified Person in accordance with the standards of NI 43-101. The Mineral Reserves estimate uses a NSR calculation to determine cut-off using US$25.00per troy ounce silver, US$0.90per pound lead and US$0.95per pound zinc. The Mineral Reserves contain two ore types-direct leach ore and flotation/leach ore. The constant cut-off value for direct leach ore is US$16.38/tonne and for flotation/leach ore is US$16.40/tonne. The NSR calculation method varies for the two ore types. For the two ore types combined, the overall average process recovery of silver, lead, and zinc are 69.6%, 57.4%, and 61.3%, respectively. The Mineral Resources estimate is as at December 4, 2012, was completed by Jeremy D. Vincent, P.Geo., as a Qualified Person in accordance with the standards of NI 43-101. Mineral Resources are reported above a cut-off grade of 30 grams per tonne silver and are reported inclusive of Mineral Reserves. No mining activity has occurred on the property from December 4, 2012to December 31, 2012. Silver (Ag) was estimated using Localised Uniform Conditioning (LUC). Lead (Pb) and Zinc (Zn) were estimated using Ordinary Kriging (OK).
- Mineral Reserve and Mineral Resource estimates are as at
June 4, 2010and are contained in the San Luis Feasibility Study. The Mineral Reserves estimate was completed by Steve L. Milne, P.E., a Qualified Person in accordance with the standards of NI 43-101. Mineral Reserves are reported at a cut-off grade of 6.9 grams per tonne gold equivalent, based on US$800.00per troy ounce gold, US$12.50per troy ounce silver, and recoveries of 94% gold and 90% silver, as presented in the San LuisFeasibility Study. Mineral Resources estimate was completed by Michael J. Lechner, P.Geo., and Donald F. Earnest, P.G., as Qualified Persons in accordance with the standards of NI 43-101. Mineral Resources are reported above a gold-equivalent cut-off grade of 6.0 grams per tonne based on US$600.00per troy ounce gold and US$9.25per troy ounce silver. Mineral Resources are reported inclusive of Mineral Reserves. Inferred gold resources are less than 0.005 million ounces and are presented as 0.00 million ounces due to rounding. No mining activity has occurred on the property from June 4, 2010to December 31, 2012.
- Mineral Resources estimate was completed by
Gilles Arseneau, Ph.D., P.Geo., a Qualified Person, in accordance with the standards of NI 43-101, in a technical report completed by Wardrop, a TetraTech company, entitled “Technical Report on the Diablillos Property-Salta and Catamarca Provinces, Argentina” dated July, 2009. Mineral Resources are reported above a recoverable metal value (RMV) cut-off value of US$10RMV based on metal prices of US$11.00per troy ounce silver and US$700.00per troy ounce gold using metal recoveries of 40% and 65%, respectively.
- Mineral Resources estimate was completed by
Gilles Arseneau, Ph.D., P.Geo., a Qualified Person, in accordance with the standards of NI 43-101, in a technical report completed by Wardrop, a TetraTech company, entitled “San Agustin Resources Estimate” dated March, 2009. Mineral Resources are reported within an optimized pit-shell above RMV cut-off values of US$3.40RMV in oxide mineralization and US$6.25in sulphide mineralization using metal prices of US$11.63per troy ounce silver, US$631.97per troy ounce gold, US$0.78per pound lead, and US$1.11per pound zinc, using a RMV formula as follows: (Au g/t * 14.63) + (Ag g/t *0.28) + (Pb% * 8.59) + (Zn% * 15.12). Recovery rates were 72% for gold, 74% for silver, 50% for lead and 62% for zinc.
- Mineral Resources estimate was completed by
James A. McCrea, P.Geo., a Qualified Person, in accordance with the standards of NI 43-101, in a technical report dated October 4, 2005. Mineral Resources are reported above a 50 gram per tonne silver cut-off.
- Mineral Resources estimate was completed by the Company in accordance with the standards of NI 43-101. Mineral Resources are reported above a 50 gram per tonne silver cut-off.
C. Stewart Wallis, P.Geo., a Qualified Person, reviewed and confirmed the estimation methodology and classification of Indicated and Inferred Mineral Resources in a report dated September 17, 2003.
- Mineral Resources estimate was completed by
Mark G. Stevens, P.G., a Qualified Person, in accordance with the standards of NI 43-101, in a technical report completed by Pincock Allen & Holtand dated May 24, 2001. Mineral Resources are reported above a 0.5 troy ounces per ton cyanide soluble silver cut-off.
- We currently hold a 55% interest in the
Maverick Springs Projectthrough a joint venture. Our 55% interest in the Maverick Springs Projectentitles the Company to all silver produced from the project while the Company’s joint venture partner is entitled to all gold produced from the project. Mineral Resources estimate was completed in accordance with the standards of NI 43-101 by Snowden Mining Industry Consultants Inc.under the supervision of Neil Burns, P.Geo., a Qualified Person, in a technical report dated April 13, 2004. Mineral Resources are reported above a 1 ounce per tonne silver equivalent cut-off using metal prices of US$327.00per ounce gold and US$4.77per ounce silver. The silver equivalent grade was determined as follows: Ag g/t + (Au g/t * 68.46).
- Mineral Resources estimate was prepared by the Company in accordance with the standards of NI 43-101 and confirmed by
C. Stewart Wallis, P. Geo., a Qualified Person, in a technical report dated October 15, 2002. Mineral Resources are reported above a 30 gram per tonne silver cut-off.
- Mineral Resources estimate was completed in accordance with the standards of NI 43-101 by
C. Stewart Wallis, P.Geo., of Roscoe Postle Associates Inc., a Qualified Person, in a technical report dated September 3, 2003. Mineral Resources are reported above a 30 gram per tonne silver cut-off.