SilverCrest Metals (SILV) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company generated revenue of $58 million in Q1 2023, with a cost of sales of $22.4 million, resulting in a mine operating margin of 61% [34] - Net free cash flow was reported at $19.3 million, equating to $0.13 per share [5] - The company ended the quarter with $45.8 million in cash and cash equivalents, alongside an undrawn $70 million revolving credit facility [6] Business Line Data and Key Metrics Changes - The Las Chispas operation's processing plant averaged a daily throughput of 1,160 tonnes, processing a total of 104,000 tonnes during the quarter [37] - The plant recovered 2.44 million ounces of silver equivalent in Q1, with expectations for similar levels in Q2 2023 [37] - Approximately 40% of production feed was sourced from stockpiles during the quarter, which helped reduce risk and provide flexibility [15] Market Data and Key Metrics Changes - The corporate level All-In Sustaining Cost (AISC) was reported at $11.45 per ounce of silver equivalent, reflecting some inflationary impacts [38] - The company noted that inflationary pressures in Mexico have led to a 20% to 25% increase in costs over the last several quarters [44] Company Strategy and Development Direction - The company is focused on ramping up production and reducing operational and financial risk, with a strong emphasis on debt repayment [32] - An updated Technical Report is scheduled for release in late Q2 2023, which will include refreshed costs, updated resources, and a new life of mine plan [16] - The company is exploring opportunities for mergers and acquisitions, as well as holding bullion as part of its treasury strategy [60][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ramp-up of underground mining rates, which are expected to continue increasing over the next few years [36] - The situation regarding revised mining reforms in Mexico remains fluid, with ongoing discussions to assess potential impacts on concessions [18] - Management acknowledged the need to manage costs amid inflationary pressures but remains optimistic about operational performance [21] Other Important Information - The company has prepaid a total of $25 million in debt during Q1 2023, reducing total debt outstanding to $5 million [12] - The company received a notable ESG award in Mexico and is on track to deliver its inaugural ESG report in Q2 [33] Q&A Session Summary Question: Comments on strong quarter and rapid debt paydown - Management acknowledged the rapid debt repayment and noted that inflationary impacts have been significant, affecting costs [44] Question: Concerns about mine grade and stockpile levels - Management expressed satisfaction with the grade management and stockpile utilization, indicating that the updated Technical Report will provide further clarity [48] Question: Inquiry about mining veins and phases - Management confirmed that they are currently mining in the Babicanora Area and are satisfied with the number of phases being worked on [64] Question: Factors limiting capital development rates - Management indicated that timing and ventilation were the primary factors affecting the capital development rate [54] Question: Clarification on stockpile management and grade stabilization - Management explained that they are blending stockpiles from various sources to stabilize the grade fed to the plant, which helps control costs [67]