SilverCrest Metals (SILV) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2023, the company reported a net income of $23.7 million or $0.16 per share, which included an unrealized foreign currency loss of $8.6 million [18] - Net free cash flow for the quarter was $43.7 million or $0.30 per share, an increase from $21.8 million in Q1 2023 [18] - The company ended the quarter with $59 million in treasury assets, including approximately $53 million in cash and $6 million in bullion [18] Business Line Data and Key Metrics Changes - The Las Chispas operation sold 13,400 ounces of gold and 1.45 million ounces of silver in Q2 2023, aligning with estimates [4] - The average mining rate increased to 818 tons per day, a 16% increase from Q1 2023 [4] - The processing plant achieved an average daily throughput of 1,186 tons per day and recovered 2.84 million silver equivalent ounces in Q2 [9] Market Data and Key Metrics Changes - The company expects to produce between 4.8 million ounces to 5.2 million ounces in H2 2023, with cash costs projected between $7 to $8.50 per ounce sold [22] - Full year 2023 guidance is set at 9.8 million ounces to 10.2 million ounces at all-in sustaining costs between $12.75 to $13.75 per ounce sold [22] Company Strategy and Development Direction - The company is focused on maintaining a defensive balance sheet while being opportunistic in capital allocation [7] - A $10 million drilling budget has been approved for exploration efforts through Q1 2024, targeting high-grade silver resources near current operations [11] - The company aims to add bullion to its balance sheet as a hedge against inflation and to enhance its valuation [36] Management Comments on Operating Environment and Future Outlook - Management highlighted the importance of executing the development plan and expects sustaining costs to increase as mine output ramps up [38] - The company is aware of the challenges in discovering, permitting, financing, building, and operating a mine, and sees the share buyback as a way to reinvest in its assets [19] Other Important Information - The company delivered its inaugural ESG report and received recognition as a socially responsible company in Mexico for 2023 [5] - The updated technical report was released, reflecting a production and cost profile aligned with the current operating environment [16] Q&A Session Summary Question: Regarding the stockpile accounting and costs - Management noted that higher cost stockpiles were used in the quarter, which drove up unit costs, and emphasized the need to ramp up mine output [24][42] Question: Exploration budget allocation - The majority of the $10 million exploration budget will focus on near-mine exploration, with no current budget for El Picacho due to pending permits [29]