Q2 2020 Avino Silver & Gold Mines Ltd Earnings Call
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The conference operator, welcome to do you have you know silver and gold mines Q2 financial results Conference call.
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Thank you operator.
Morning, everyone and welcome to be Nols telephone calls submitted.
According to 2020, <unk> financial results conference call and webcast.
On the call today, we have to companies President and CEO David Wilson.
Our Chief Financial Officer Heart.
Hi, Chief operating Officer Carlos Rodriguez.
Technical services team.
Before we get started please note that certain statements made today on this call, but the management team.
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 actual results to be materially different from those expressed or implied by such forward looking statements.
The company does not intend to and does not assume any obligation to update such forward looking statements information other than as required by applicable.
For more information, we refer you to I detailed cautionary note in the presentation accompanying this call or on a press release of yesterday's states.
I would like to remind everyone that this conference call is being recorded and won't be available for replay later today replay information and the presentation slides accompanying this conference call and webcast will be available on the website. Thank you.
Now I'll turn the call over to have you noticed president and CEO, David Wilson David.
Thanks, Jim Good morning, everyone and welcome to pianos Q2, 2020, <unk> financial results Conference call webcast. Thank you for joining us.
Before we begin please note that the full financial statements and Mdna are now available on our website.
On today's call.
We will cover the highlights over second quarter 2020 financial and operating performance and then we will open it up for questions.
Please note that all figures are stated in the U.S. dollars unless otherwise noted.
I'd first like to thank our employees globally for their dedication and commitment to safety. During these challenging times, the health and wellness of all our employees and stakeholders continued to be imperative along with protecting our shareholders' interests.
I'm very appreciative of her team in Mexico, and the way they have handled the difficult challenges faced and because of our established crisis management plan. There have well executed response for stringent cope with 19 transmission prevention.
Similar to other mining companies are second quarter financial performance was impacted by the temporary mine shut down due to cope with 19.
Which also resulted in decreased production.
At the beginning of June the company announced a phased ramp up operational activities and production restart however, as we head into the second half the year the ramp up and our plans to commence the 2020 exploration program as well as connect the underground levels at the Athena might have been put on hold with the currency.
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The last three months I've been challenging and we're experience a time in history, we have never seen before.
However, in spite of the difficult months, we're optimistic about the rest of the year in the future the metal prices have broken out we haven't seen silver prices like this for some time and we have never seen the gold price levels, we're seeing lately.
Which is all very encouraging.
During the second quarter well operations were on hold we continue to explore the potential of dry stack tailings as mentioned earlier in the year as well as automation upgrades, which are still planned and budgeted for in addition, we were able to install equipment and mill circuit for that will help boost.
Metallurgical recovery on gold and to a lesser extent silver.
During the second quarter production results were from the of you know mine only in comparison to the if you know mine production in Q2 2019 silver equivalent production was 158000 ounces down 56% from 600000 ounces silver production was 51000 ounces.
Down 52% from 246000 ounces gold production was 404 ounces down 50% from 1600 nine ounces and copper production was 460000 pounds down 53% from 1.1 million pounds.
During Q2 mill feed into you know decreased by 58% compared to Q2, 2019, with silver gold and copper grades all slightly up by 4%, 6% and 4% respectively.
On a metal by metal basis feed grades were higher which in turn boosted recovery rates, which showed improvement compared with Q2 2019.
With increases of 11% for silver, 15% for gold and 6% for copper along with certain refinements to the metallurgy process.
We are encouraged by the higher recoveries achieved in the second quarter and the speed in which we were able to ramp up to full production in early June showing that we will be ready to continue the ramp up when the strike action is resolved.
Also during the quarter silver and gold prices steadily moved higher and at the ended the quarter. If the gold prices reached 1700, $82 and silver was just over 18.
Today, we have a gold price that has touched 2000 in recent days and silver price, finding a new home well above $25.
For Q2, 2020, our consolidated cash cost per silver payable equivalent ounce was virtually unchanged at $10, a 92 cents compared to $10. An 89 cents in Q2, 2019, and all in sustaining costs per payable silver equivalent ounces increased by 5% to six.
$18.37 from $15.61 in Q2 2019.
I'll now ask Nathan hard Venus, Chief Financial Officer to present, the finance results for Q2 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 its during our presentation today.
During the second quarter of 2020, we generated revenues from mining operations, a 4.8 million, which was down 38% compared to the same period in 2019.
Despite lower revenues Vino reported higher mine operating income a point 8 million when compared to point Threemillion for the same period in 2019.
During the quarter, we reported a loss before interest taxes, depreciation and amortization point 8 million compared to earnings <unk> point Sixmillion in Q2 2019.
Adjusted EBITDA for Q2, 2020 was 2 million a significant increase compared to 24 million in Q2 2019.
Have you know reported net losses after taxes from continuing operations of 1.1 million compared to a net loss of 125000 in Q2 2019.
This translates to a loss per share of one said from continuing operations compared to nothing in Q2 of 2019.
Working capital at the end of Q2, 2020 was 13.8 million compared to 13.2 million at the end of 29 team and 8.7 million at the end of Q2 2019.
Our cash balance at the ended the quarter with 10.4 million compared to 3.4 million at the end of Q2 2019.
As David mentioned earlier, our second quarter consolidated cash costs were almost unchanged at 10 92 compared to 10 89 in Q2 2019, and our all in sustaining cash cost per payable silver equivalent ounces increased to 16, 37 ups and 15 61, an increase of 5% over Q2 2019.
Our revenues from mining operations of 4.8 million in Q2, 2020 were derived 31% from silver, 25% from gold and 44% in copper.
Capital expenditures for the first half of 20 21.7 million compared to 4.9 million in the first half of 2019, what the decrease due mostly to the timing of certain capital expenditures as well as a cautious approach regarding the current covered 19 pandemic.
This along with the fact that there were no braylon capital expenditures in the current period. Following the sale of 2019 contributed to the decrease.
We still expect this amount to increase later into 2020, a certain capital expenditures have been pushed into the latter half of the year and potentially further into 2021.
Let me know remains flexible both financially and operationally into adjusted the uncertainty surrounding told the 19 and the ongoing labor negotiations and we will continue to monitor and provide updates accordingly.
I'll now hand, it back over to David for discussions on our plans for the remainder of 2020 and into 2021.
Thank you made than our plans for the second half of this year.
Which are currently on hold continue to include connection between the underground levels at the amino mine and commencement of the 2020 exploration plans that will.
Target previously announced areas on the vino property.
As I stated earlier, we're going through a time right now that is unlike any other we have ever experienced before we're extremely fortunate that we do not have any cases of Cobiz 19, which is attributed to our rigorous health and safety procedures above all the health and wellness of our employees glow.
Finally, as our top priority.
We follow the orders given by the Mexican government on April 1st to temporarily suspend operations and by April 2nd we transitioned to a temporary closure plan on June 1st we started to ramp up to resume mining operations and then in July we faced strike action at the mine.
We reiterate that the company is receptive to having good faith discussions with representatives of the authorized union.
Before Kobe dying team 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 the San Gonzalo.
Within the Avino property.
I want to ensure our shareholders.
This focus hasn't changed only delayed for a time until we can resume our exploration plans.
Consequently, we are looking forward to building the full exploration department, which will be led by a senior level geologists. We're also organized and an independent evaluation of the structural controls on the property.
With that dozens of veins on the property, we recognize the importance of structural interpretation as it will provide better understanding in defining new targets and also to help determine where the optimum grades might be.
We're excited about the exploration on the Vienna property and look forward to starting up soon.
We thank you for your patience and understanding we remain optimistic for treatment and the vaccine for cobot 19, and return to business as usual.
And finally I'd like to say another thank you to the teams in both Canada and Mexico for their dedication hard work and contributions.
We'd now like to move the call to the question and answer portion operator.
Thank you.
We will now begin the question answer session to try and the question can you give me press Star then one on your telephone keypad.
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We will pause for a moment that's college trying to Q.
[noise]. The first question comes from HEICO Elaine from H.C. Wainwright. Please go ahead.
Hey, guys. Thanks for taking my questions can you hear me all right.
Yes, hi, good morning.
Hey, good quarter nice to see the stock up today.
And again, thanks for taking my questions.
Yes.
And a lot of time on this call talking about circuit number four.
Curiosity, how much would you say and this might be and they question how much would you say yes.
Spend on it in total thus far are like spend on invested.
And they should we expect any more maintenance capex meaningful maintenance capex throughout the remainder of the year.
Yeah.
I think overall to date.
Including the original build cost.
Seven 8 million.
Not expecting much additional capex when we talk about some of the improvements made these are pretty small or.
I guess more minor expenditure.
Really improve metallurgical recoveries.
Yeah hopes of getting more gold and silver and copper.
To be sold.
Just to clarify that seventh or eighth Canadian or millions, a Canadian or U.S.U.S. and that most of that would spend on the original built I think a under seven cents on.
Upgrade and we are still planning some minor automation work as we talked about earlier as well.
New comp.
Given current spot pricing and I I know what gives us a tricky question.
Given current spot pricing what do you see your budgeting with your balance sheet 80 ended the year and is there ever going to be this overprice, where you might consider hedging out with a part of your.
Production at least in the near term.
Hi, called I guess I'll take that one as well.
It's something we talk about a lot.
No we do see a lot of volatility specifically over.
At this time, we're not we're always exploring hedging opportunities, but we're not it's not something that we're looking at that would materially affect our financial position right now I think a lot of our shareholders appreciate optionality in silver.
And I concur with you I mean, it just speed I guess, a little bit of certainty right.
No I fully understand that and.
At the finance Guy I'm always cognizant of making sure that our balance sheet is looking fairly strong so yes I appreciate that.
Next I'll go back. Thank you. Thank you guys.
Thanks.
[laughter].
Thank you.
The next question comes from Matthew O'keefe from Cantor Fitzgerald.
Go ahead.
Thanks, operator, and good morning team. Thanks for taking my call here I'm just.
Just some a question here first off we got a couple of here first on the on the Union negotiations.
I'm sorry, you mentioned that there you are receptive to having good pace negotiations are you meeting with them regularly or I mean is this a back and forth ongoing are you still waiting for for the right people to come to the table, maybe you could give us a little bit of color on that as much as you can.
Yeah, there's regular meetings.
Well here that the.
People at the front game has dwindled down to a few painful so it looks like.
Hopefully this will be resolved.
Okay. So so there's no it's not really I mean, you know when we look when we hear about.
Things happening in Mexico, depending where you are it couldn't be it can be.
Somewhat I wouldn't say aggressive, but you know, it's sometimes it can be a bit hostile but it doesn't sound like that's the case here, it's more of a maybe there.
Opportunistic in a sense that the silver prices very high and so good time to be.
Asking for more.
Exactly.
Okay. Okay.
Okay. So we'll hope to see that resolved soon and then just well. We're you know we've had this cold shutdown I guess, you're hearing are you back obviously on that dealing with the union here now, but there's an opportunity here with the mine being shut down there just to be clear everything shutdown right Theres no mining there is no processing there's no.
There's no there's no exploration, there's nothing going on.
Maintenance and de watering of the Mike.
Okay. So well that's good southern nothing is getting the way that.
With me so one of the big opportunities here is exploration I mean, it there's nothing standing in a way of doing exploration. During this this union issue is that.
Well, yeah, we can send and.
Our managers and drill team to do anything so.
That's all.
All right in mind, there's a regional component as well as that is that something that was planned for later or is that.
Could you could you be doing that or is that all sort of all we have we have the structural geologists and independent a geologists doing desktop work and geological planning.
Behind the scenes.
Okay. So when when you get back in there you alluded to that earlier in the call here that you expect to be jumping in on exploration and stepping that up shortly is that correct. Absolutely I mean that says we can get in there we could be drilling pretty quick.
But.
Just about drilling we want to actually able to target, where we think to high grade zones will be because they're swarms of games all over the properties.
We want to have a better understanding of the structural controls. We've brought in the same team worked out for gray lawn work and sort of Blanco foreclosed on the a really good team has done a fantastic work and we're excited to work with them.
Well that does that should be great. When we get we start seeing those results. So presumably 'em, we should see some.
Updates on exploration in the second half.
Well I'm between now and the entity or maybe get some results is that is at a fair what's your expectation.
Yes, yes, that's the expectation right now.
Okay great.
And then okay, well, that's I think that's it yeah, it's just a bit.
Prices, where they are it's kinda.
You must be a kind of frustrated not being able to produce but I understand this is to sell part of mining.
So anyway, well, we'll look forward to some a a better Q3. Thank you.
Thank you.
Thank you.
Once again, if you have a question. Please press Star then one.
The next question comes from Bhakti Pavani from online Global partners. Please go ahead.
Oh good morning, guys. Thank you for taking my questions.
Yeah, Mike I think.
That's what I do understand why positively.
Oh, one once you get a game segment and Youre ready to get go Oh, you know could you maybe go why does.
I'll, let into what levels of inventory do you have all on any stockpile.
Any process and the production can be quick you ramped up.
Peter.
Yes regarding production, we do have some concentrate on site.
I can't say, how much at this time, but but we do have some material on site that where we will be able to ship out.
We do have some production stockpiles as well, but I will take a bit of time, there to turn the Milan again and ramp up again.
[noise] fighting now.
You know maybe maybe.
If you could talk Oh, Oh. This is good for quite some color.
Good options on Black Friday, and do you expect weeks or do you think it would be very quick enough.
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Yes, I mean, I can tell you what happened with with the covert wrap up so we were shut down for two months there and it took US 10 days before we were running at full capacity again, so I'm really proud of the guys in Mexico with with how fast they did that what it looks like this time, obviously it depends on the length of the shutdown for that for the strike.
But I believe that you know if if if we solved all the issues there that we would take a similar amount of time to get back to full production.
Fair enough and talking about.
Animation update you did mention you know improving the properties on gold could you maybe provide some additional color into what improvement and all take all the improvements that are you expecting Oh, you know going forward.
I'm sorry are you looking for just the type of equipment that we're using or the type of predicted Ricardo improvements that we might get out of that.
Actually both.
Equipment, and although improvement in better comedy.
Okay, well I mean, we saw you know about a 3% increasing.
And gold recovery there a with just the addition in circuit three and that's something that we talked about in the last couple of calls.
So we're doing the same were essentially mirror mirroring that circuit on circuit for so I'm, hoping for a similar increase in recovery, if that's reasonable and regarding the specific type of equipment, maybe we can take that offline and I can described in detail how that equipment works and with the purpose of it is.
Sure So now.
Last one from my side I would be Capex expectation I know everything that's been put them boys.
Well the second half of what is your expectation in terms of Capex and how should we think about.
For the next <unk>.
Sure back the making here.
I think.
Obviously, if the steaming is there a little bit in flux right now, but we do expect to spend a fairly significant amount on exploration.
Additional upgrades, we're looking at some things for for tailings management. So I would expect right now as things stand we wouldn't be spending still around 3 million by the end of the year.
And again, a little bit that can be pushed into 2021 as we have seen you know obviously at the beginning of the year, we were expecting six in the six to seven range for the full year.
So some of that will be pushed in 2021, but I expect right now I think.
Another 3 million status by the end of year.
Got it thank you very much price.
Thank you back to thank you.
Thank you.
This concludes the question answer session I would like to turn the conference back over to Mr., David Wilson for any closing remark.
Thank you operator, thank you everyone for your interest today and the vino.
There are very happy that you've taken the time to call in and listen to our Q2.
Earnings call.
Vino.
It's been a public company for 52 years, we've been in Mexico. All this time and we're very excited about potential and the exploration.
Targets, we're going to go after we plan to be there for many decades to come and so we're very excited about that and hopefully we'll have a resolution real quick ones the strike and we'll be able to resume exploration. Thanks, again and stay safe everyone.
Thank you.
Concludes today's conference call you may disconnect your lines.
Thank you for participating and have a pleasant day.
[music].