Q1 2020 Earnings Call
Thank you for standing by this is the conference operator.
Welcome to the of you know silver and gold mines first quarter 2020 results conference call and webcast.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
To join the question Q you May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal operator by pressing star and zero I would now like to turn the conference over to Jennifer North manager of Investor Relations. Please go ahead.
Thank you operator, good morning, and welcome to the as you know silver and gold mines Limited first quarter 2020 financial results Conference call. My cast on the call today, we have the company's president and CEO, David Wilson, Our Chief Financial Officer, Nathan Hart, Our Chief operating Officer, Carlos Rodriguez, and our VP of Tech.
Well services Peter lot.
Before we get started please note that certain statements made today on this call, but the management team may include forward looking information within the meaning of applicable securities laws.
Forward looking statements are subject to known and unknown risks uncertainties and other factors that may cause <unk> actual results to be materially different than those expressed by or implied by such forward looking statements.
The company does not intend to and does not assume any obligation to update updates such forward looking statements or information other than as required by applicable law for more information. We refer you to our detailed cautionary note in the presentation accompanying this call or on our press release of yesterday's date.
I would like to remind everyone that this conference call is being recorded and will be available for replay later today replay information and the presentation slides accompanying this conference call webcast will be available on the website. Thank you.
Ill now turn the call over to be of he knows president and CEO, David Wolfin David.
Thanks, Jay and good morning, everyone and welcome to Vientos Q1, Twentytwenty financial results conference call and webcast. Thanks for joining us before we begin. Please note that the full financial statements and Mdna are now available on our website.
Today, we will cover the highlights of our first quarter 2020 financial and operating performance and then we'll open it up.
For questions. Please note that all figures are stated in us dollars unless otherwise noted.
As a first quarter of 2020 was winding down.
And production results were looking positive Cobiz 19 was rapidly changing the way that everyone around the world would be operating their business and personal lives.
On April 2nd 2020, Vino announced that it would temporarily suspend operations at the Vino mine and drank go Mexico to comply with the Mexican government order for all non essential businesses, including the mining industry.
Hello fight against the spread of conveyed 19.
At the mine site, we quickly adapted toward temporary closure plan to maintain critical activities to protect the mineworkers. The company also implemented remote work policies for employees in both Vancouver, and drank offices to ensure their health and safety.
During the first quarter of this year overall production results were higher compared to Q1 2019 due to the of Unum wind performing well.
From a grade throughput and mill availability perspective.
Hanging wall breccia material also contributed positively to the overall feed grade.
The decrease in silver production and consolidated silver grade in Q1 2020 compared to Q1 2018 is primarily attributed to the planned shutdown of the San Gonzalo mine in Q4 2019.
As reported in Q4, 2019 vino transition to full production from the of you know mine in Q1 2020.
Following our scheduled mine plan.
The advanced the advancement of the underground connection between the two portals a de Vito mine experienced some delays.
Due to training shortages for certain equipment.
This connection was to be completed during the first quarter 2020, however, due to covert 19 situation. The timeline for completion has been deferred until Mexican governments degree for the temporary suspension of non essential businesses are lifted prior to the ordered shut downs or.
Team in Mexico worked diligently to transport concentrate to the poor demands and Neil therefore, ensuring product would be cued up for delivery. We achieved revenues from mining operations of 7.1 million up 6% from Q1 2019.
Mine operating income was up <unk>.
Point 8 million, which was also up 1400 and 5% from Q1 2019 operating cash flow of point threemillion and to be to <unk> point Fourmillion.
During the quarter, both silver and gold prices fluctuated.
Gold prices, reaching 1700 announce and silver reaching $18 in the latter part of January only to fall just under just over $12 in mid March all due to the market uncertainty experience due to covert 19.
In the month of April the metal prices seem to be somewhat stabilized.
We remain optimistic the metal prices will continue to move up.
Consolidated basis silver equivalent production for the first quarter increased by 11% 684000 ounces compared to 615000 ounces in Q1 2019.
Silver production was down 1% to 267000 ounces from 268000 ounces gold production was down 21%.
To 1500, 31 ounces from 1800, 13 ounces and copper production was up 70% to 1.8 million pounds from 1.1 million pounds. In Q1, 2019, Vino mine produced a record 262238 ounce silver ounces the highest quarterly total achieved to date.
On a mine by mine basis overall silver equivalent production Devino.
Increased by 78% compared to Q1 2019.
This is primarily a result of significantly higher silver and copper grades during the quarter as well as increases in mill throughput and recoveries from all three metals.
The overall increase was slightly offset by a decline in gold feed grades during the quarter.
On a metal by metal basis production and Devino increased significantly in both silver and copper with increases of 133 and 88% respectively.
When compared to Q1 2019.
Further gold production increased by 38% when it came to Q1 2018. During Q1 2020 mill feed Intervener increased by 58% over Q1 2019.
With silver and copper grades up 39, and 18%, respectively and gold down 16%.
Recovery rates for Q1 20 to 20.
Showed improvements compared to Q1, 2019 with increases of 6% and silver, 4% in gold and 1% and copper.
As mentioned in our 2020 production outlook, we processed a small amount of ahab material in the first half of Q1 2020 before the transition to a 100% production from the of intertwined.
During Q1, 2020, silver and gold and copper grades decreased by three for 24, and 26% respectively compared to Q1 2019.
Accordingly for Q1, our consolidated cash cost per silver payable.
Payable equivalent ounce and all in sustaining cash cost per payable silver equivalent ounces decreased to $9, an 83 cents and $14 in 88 cents respectively.
Compared to $11.44 and $16.22 prospectively in Q1 29 team.
I will now asked.
Nice Nathan heart of he knows Chief financial Officer to present, the financial results for Q1 2020.
Thank you David it's my pleasure to be on the call and I would like to welcome everyone, who has joined us and as you enter presentation today.
During Q1, we generated revenues from mining operations of 7.1 million up 6% compared to Q1 2019.
Have you know also reported significantly higher mine operating income of point Eightmillion when compared to 56000 for the same quarter and 29 team as well as higher EBITDA and adjusted EBITDA point 4 million compared to 63000 15000, respectively in Q1 of 2019.
As you know reported net losses after taxes from continuing operations point 2 million compared to 2.5 million in Q1 and 2019.
This translated to a loss per share.
No or zero cents from continuing operations for the first quarter of 2020 compared to.
Loss per share of one said in Q1 2019.
Working capital at the end of Q1, 2020 was 10.8 million compared to 13.2 million at the end of 2019 and 10.5 million at the end of the first quarter 2019, and this includes cash of 6.7 million on hand.
As David mentioned earlier, our first quarter consolidated cash cost and all in sustaining cash cost per payable silver equivalent ounces decreased to $9, an 83 cents and $14, an 88 cents, respectively compared to $11.44 and $16.22 respectively for the first quarter 2019.
Our revenues from mining operations of 7.1 million in the first quarter were derived 32% from silver, 25% from gold and 43% from copper.
Capital expenditures for Q1, 2020 totaled half a million compared to 2.5 million in the first quarter 29 team with the decrease due mostly to the timing.
And expenditures and a cautious approach regarding the current covert 19 pandemic.
We do expect this amount to increase later into 2020 certain capital expenditures have been pushed into the latter half of the year.
We know remains flexible both financially and operationally to adjust to the changing situation as appropriate and we will continue to monitor the situation and provide updates accordingly.
I'll now hand, it back over to David for a discussion on our plans for 2020.
Thank you Nathan.
The only thing are rare in unsettling time, and we want to provide assurances that we are complying with health authorities in both Canada, and Mexico to ensure the health and safety of our employees.
And stakeholders as well as addressing what all this means for vino and its shareholders.
We followed orders put forth by the Mexican government on April 1st to temporarily suspend operations and by April 2nd we transitioned to a temporary closure plan.
We are extremely fortunate that we do not have any cases of covert 19, which is attributed to our rigorous health and safety procedures that were implemented weeks ago.
Above all the health and wellness of our employees globally is our top priority amidst this time of pandemic related upheaval.
We achieved quarterly results in Q1 that surpassed all corridors in 2019, which included record copper production and then one do acknowledge our hardworking team in Mexico.
Who were instrumental in helping to achieve this before cobot 19 and early in the first quarter.
We had announced a renewed focus on exploration in Mexico, and the search for another exciting high grade deposit similar to San Gonzalo within the Vino property.
I want to ensure our shareholders.
This focus hasn't change only delayed for a time until it's safe for operations to start up and exploration plans to go ahead.
Thank you for your patience in understanding we remain optimistic water treatment and vaccine.
And a corresponding returned to business as usual.
We will get through this together stay safe.
Finally, I would like to say thank you to the teams in both Canada and Mexico for their dedication hard work and contributions and for being able to quickly and efficiently transition to working remotely.
We would now like to move the call to the question and answer portion operator.
Thank you.
Due to technical difficulties. Please be aware the slides from today's presentation will be available on the website. We will now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request if you're using a speakerphone. Please pick up your hands.
Before pressing any keys.
To withdraw your question. Please press Star then too to join the question can you. Please press Star then one now our first question comes from HEICO Elaine of H.C. Wainwright. Please go ahead.
Yes, thanks for taking my questions.
I go.
Hey, guys there since the just the bid a confusion in the market with the reopening of Mexico, I mean, I've heard a variety of states and that may or may 17th May 18.
Obviously, there is at least a little bit up influx, but can you just walk us through I mean your area I assume in theory at least would make you eligibles reopen the 18th correct.
David here.
It's hard to say.
We're hearing the 18.
But I.
I think they're saying it.
Areas are not affected the 18th is is the date, but we're unsure there are few cases and Durango.
Not near mine, but.
So Carlos is waiting to hear from the local government.
I mean at this point the 18th is 11 days all how many days would you actually need from getting the Greenlight too you know pulling all the war.
It's.
Probably going to take a few weeks to ramp up Peter do you want to take that one.
Yeah sure Heiko.
The question is.
Bringing it went back to the night part is that.
You know all of our workers are living in the adjacent towns there so bringing them back to work is that the issue.
As far as ramping up.
Production that will take take a few days, but as soon as we get the Green light. We can have everyone back at site and doing the work again I think it pretty short order.
Very good comp.
And then can you just venture a guess on Gionee savings during the second quarter and the rest of the year I mean, we've essentially stopped travel we've stopped conference attendance I've seen a couple of shows Goldberg role, but even that is at a lower price for the attendees hold meaningful is all of that and holds Dana will do you think those cost savings or.
I think that one's for Nate.
Yeah. Thanks, David Thanks, Ike, though it's a good question I mean.
A lot of the DNA savings that people see I don't know they could be quite a significant some people might think only there from an investor relations perspective as a lot of these conferences like you said wed virtual.
And there are still some cost associated with that and making sure that it's still bringing in the same investor base or even a new investor base.
As we are saying new people come into the market.
And I mean in our office everyone's still working albeit remotely we're working in a collaborative fashion.
Next up teams or whatever the appropriate.
[noise] platform, it but everyone still working in there's still a lot of work to do so we think there'll be some savings, but I don't.
Being overly significant at this time.
It might be later, thank you doing one sorry, yes. There was three calls yes, you won but.
There shouldn't be any thing.
They are very well, thank you Gary I'll get back in Q.
Thanks Heiko.
Our next question comes from Joseph Reagor of Roth Capital Partners. Please go ahead.
Hello, Joe warning.
Hi, guys. Thanks to my questions.
A couple of things.
Hi, guys already hit on the main question the startup so.
Maybe digging into numbers a little bit instead.
In Q1.
Sure.
I want to sold versus ounces produced was like 84% is that indicative that there was.
Maybe a shipment that went out at the ended the quarter about that registered as Q2.
<unk> revenue standpoint.
Peter do you want to talk about the shipments.
Yes, I actually think this is probably a question for you as far as the accounting of that yes sure.
Pete can David Thanks, Joe It's a good question in general there they usually a difference between our ounces produced and payable ounces sold.
Due to I mean, obviously, the payability factor that come in comes into effect longer sign concentrate.
And that ratio I mean, it's similar to previous quarters, especially if you compare to the first quarter 2019 right there.
Being at this correlated increases in production ounces sold is about the same Billy 10 and 11% each.
So obviously with coated coming into effect.
We did a few.
I guess aren't.
It takes smarter operational things, where we made sure that we do have concentrate at port for the next few months.
But I don't think it's really cut off or timing thing, where we are expecting you know an extra hundred thousand ounces to come through in the first couple of weeks in April its more just it's more just that the payability factor that you're saying there.
Okay.
I mean, I think historically the payability is.
Born in the mid Ninetys and that looks like something.
84% range just quick math.
But you're saying it.
That was also the step up in production and that kind of we should see at normal payability going forward.
Yes, that's correct.
Okay, and then second item on on the revenue front treatment charges were about.
Almost 20% of revenue in Q1.
Was there any specific thing driving that I mean, historically they are more mid teens to low teens and that seems like a bit of.
End of a jump there.
Yeah. So that's fair question.
We did have.
A couple of penalty that were higher than usual just from some.
Some of the grade variation that'd be know, we're expecting that to normalize, but we did see that you second the latter half for the quarter.
But we are hopefully expecting that to come back down to levels in kind of saw the teams you talked about.
We saw throughout most of 2019.
Okay, but it sounds like it's possible that might have a slight impact on Q2 as well.
Possible, but I don't think you'll see it quite a significant as what we saw it.
The first quarter.
Okay.
And then.
Just expanding on what HEICO was asking about the may 18th date.
How much communication you guys, having with the government about.
When can you restart.
Really conversation a weekly conversation.
Yeah, just to give us an idea of how much.
Movement, there might be on that date.
Carlos is in contact with the Governor's office.
Every few days checking in with them.
But there's no new.
As of yet no non.
I believe.
Yes, we are waiting for all fee show you know.
And now coming on.
So only you know some real more strong multiple people reminding people bought the market will be show so we.
We'll see Shelly.
Yep.
Right Okay.
Alright, Thanks, guys I'll turn it over.
Thank you.
Yep.
Our next question comes from Matthew O'keefe of Cantor Fitzgerald. Please go ahead.
Hi, Good morning, just a question for me on I know things are still influx, but.
You had some mix exploration plans and some capital some capital plans.
You see that these are going to be modified.
Because of the shutdown and can you speak to kind of what.
What kind of impact that might have on your on your budgeting and your and your plants.
Well explorations gonna be pushed out.
Because we're not allowed to do anything there right now.
Net you want to talk about the budget.
Sure. Thanks, David Yeah Mack good questions obviously.
As mentioned on the call, we're taking a cautious approach with some of the larger capital expenditures.
It does look like Theres the potential preopening sooner than later IR. So we would put those things back in the play a fairly quickly.
The timing of our Capex.
As far as on the mine equipment side was later into 2020 anyway.
The lower amount in Q1 was I mean is a bit lower than.
And we originally expected, but not overly too much lower than than what you know LIBOR the mechanical right.
But you don't you're not losing kind up your spot in line or or any you're not nothing.
Nothing's really know area as it were okay, no doubt that we're not yet.
Okay, I guess, what this all [laughter] anxiously await the big announcement, where everyone can get back to work. Thanks.
Thanks, Matt.
Thank you Matt.
Once again, if you ever question. Please press Star then one.
Our next question comes from Bhakti Pavani of Alliance Global Partners. Please go ahead.
Good morning, guys. Thank you for taking my question.
My background.
I just wanted to dig a little but on the production side you know given that it's in London.
With regards to opening up and better than expected you know ramp up time frame. So just wondering do you have any had material on slide that can be quickly profit when you open up.
Yes, Oh, how does.
The inventory look like at this point.
Carlos to take that one.
We're sort of.
Hi.
You just couple of here.
Yes.
Of course, we haven't broken or underground at different levels.
Also we have some you know some tarnish on Cpms are.
So the overall the overall Cornish.
Ill.
So what do you won.
2000 boss, Oh, Oh broken already two will be process.
And can swing.
He is leases we will in fact, we supported for long term.
And ER.
In different places.
Yeah.
And back to you just to clarify there that's broken aura of each immaterial not the not the heck material, we still do have some a heck material just to answer your question there but.
We're focused on the E G and we do have some some broken or inventory as Carlos just mentioned.
Okay perfect.
Do you.
Do you know, placing them under maintenance and what's kind of be estimate that broadly on a monthly basis.
So I guess I backed getting balance more for me I'm sorry, So is the expected burn rates at the moment or you're going forward.
At the moment at the moment chair in the problem.
So.
At the moment, obviously, we've switched to care and maintenance our staff has been reduced by I would say close to 80 or 90% at the if you know mine. So the overhead is quite low and including Vancouver, where it's about half a million right now per month and that covers overhead for Vancouver, Durango and all.
Any other marketing and other assets that were going right now.
Okay and just last.
Got you did mention that.
Hi, good spend in the later half of the year.
The question is do you still expect domain Oh, you know your guidance or do you think it wouldn't be the wise to be wrinkles.
I think it depends on when were able to return to normal operations.
Obviously were going up we might you know if it had lots of June one months you know there's talks of may 18th and May thirtyth, but nothing's really beneficial yet if that is extended we'll have to push a few things back in likely into 2021 and we would.
To come up with the revised.
That's a number for 2020 at that time.
For now I would expect it to come down slightly but not overall materially as the shutdown is really has only lasted about a month to month and a half at this point.
Got it.
Thank you very much that's it from my side.
Thank you expected.
Thank you.
This concludes the question and answer session I would like to turn the conference back over to Mr., David Wilson for closing remarks.
Thanks, operator, I'd like to thank you all for your continued support Cobot 19 has created a lot of uncertainty for the for that.
World [noise].
But when we get back mining.
It looks like we're heading into a perfect storm with low fuel costs and higher metal prices.
Despite the challenges of Kobe 19 created.
That's been pairing.
For the future by focusing on strengthening our balance sheet.
Meaning our downside risk by farming out noncore assets and establishing a platform for growth.
We have brownfields exploration on the of you know property.
We're building a new exploration division.
The larger emphasis on the of you know property to extend the mineral resources organically.
We will not only look at building resources, but we're also looking for a high grade discovery to replace the San Gonzalo mine.
I'd like to wish you all a healthy happy and prosperous 2020 operator.
Thank you.
This concludes today's conference call you may disconnect your lines.
Thank you for participating and have a pleasant day.
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