Q3 2023 SilverCrest Metals Inc Earnings Call
Speaker 1: Good morning, ladies and gentlemen, and welcome to the Silvercrest Report second quarter 2023 conference call.
Speaker 1: At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session.
Speaker 1: If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 9, 2021.
Speaker 1: I would now like to turn the conference over to Eric Feer. Please go ahead.
Speaker 2: Thank you, operator. Good morning and thanks everyone for joining. Today we'll be providing commentary on our Q3 2023 results, after which we'll be happy to take questions.
Speaker 2: The slide deck we'll be referring to is available on our website at SilverCrestMetals.com under the investor tab. Before we get started, I'd like to direct you to the forward-looking statement on slide two. All figures discussed this morning are in U.S. dollars unless otherwise stated. All of the ounce and per ounce references discussed will be based on silver equivalent ounces sold unless otherwise specified.
Speaker 2: Our silver equivalent reference are based on a gold to silver ratio of 79.51 to 1. On the call with me today is Chris Ritchie, President, and Pierre Boudoin.
Speaker 2: Chief Operating Officer, starting on slide three. Q3 marked another successful quarter for Las Chispas, and we remain on target to meet our 2023 sales and cost guidance.
Speaker 2: Our strong operating margins continued to substantial pre-cashable, to have substantial pre-cashable in the quarter.
Speaker 2: Las Chispas continues to perform well with gold sales of 14,500 ounces.
Speaker 2: and of gold and silver sales of 1.53 million ounces. Silver equivalent sales total 2.68 million ounces.
Speaker 2: bringing year-to-date sales to 7.69 million ounces, positioning us well to meet our annual guidance of 9.8 to 10.2 million ounces.
Speaker 2: All in sustaining costs in the quarter were better than expected and compares favorability to the annual guidance. Pierre will discuss the factors that led to this in his portion of this presentation. We remain debt free and our total treasury assets increased by nearly 40 percent from Q2 to $81.7 million.
Speaker 2: Our financial strength and resilience are unique attributes that deserve attention in the market where accessing capital is both difficult and expensive.
Speaker 2: Our robust free cash flow and healthy balance sheet provide us with significant capital allocation flexibility, which we use in the quarter to optimistically explore buyback shares and increase our bullion holdings.
Speaker 2: On the ESG front, we signed a collaboration agreement to work on agricultural infrastructure, sewage system, and water concessions for agricultural use for our nearby communities. This is another positive step in the company's five-year water stewardship plan.
Speaker 2: This agreement advances our continued efforts to help our communities secure state and federal funding for water-related infrastructure to protect their livelihoods and create long-term economic resilience.
Speaker 2: The benefits of these efforts are already being felt in the community. The improved access to water allows for a second planting season, creating an opportunity for increased household income for our local park.
Speaker 2: I will now pass on to Chris to discuss the financial results for the court.
Speaker 2: Thanks, Eric. Moving to slide four. The operational performance of Las Chispas was highlighted by our strong free cash flow and continued growth of our treasury assets.
Speaker 2: In the quarter, we generated revenue of $63.8 million. Our cost of sales were $26.4 million, reflecting a notable mine operating margin of 59%.
Speaker 2: Net income in the quarter was $29.9 million or $0.20 per share.
Speaker 2: Net free cash flow was $33.4 million or $0.23 per share.
Speaker 2: As in previous quarters in 2023, our net income and net free cash flow in the quarter benefited from financial items like the return of value-added taxes and the application of net operating losses which are commonly known as tax loss carry-forwards.
Speaker 2: Our net operating losses were fully utilized in Q3 and beginning in Q4 2023, we anticipate accruing income taxes at Mexico's corporate tax rate of 30%.
Speaker 2: Our 2023 income taxes, as well as the extraordinary and special mining duties, will be due and paid in Q1 2024, which will impact our income and cash flow in 2024.
Speaker 2: We will begin making quarterly income tax installments and annual payments for the extraordinary and special mining duties in 2024.
Speaker 2: Prudent capital allocation has always and continues to be an important area of focus for our team.
Speaker 2: As a single asset company, our first allocation priority is to maintain a defensive balance sheet that allows us to proactively manage risk, weather the uncertainties of our industry, while also being positioned to take advantage of the opportunities that arise in cyclical business.
Speaker 2: After the $7.1 million spent on the share buyback, we were still able to grow our treasury assets in the quarter by nearly 40% to $81.7 million.
Speaker 2: Our total treasury included $70 million of cash and $11.7 million of gold and silver bouillon.
Speaker 2: We remain debt-free with access to an undrawn $70 million revolving credit facility.
Speaker 2: We have also resumed our focus on growth. In Q3, we announced a $10 million exploration budget for Las Chisbeth that will run through the end of Q1 2024. This program is focused on both conversion of ounces and the discovery of new ounces.
Speaker 2: In the quarter, $2.8 million was spent on exploration.
Speaker 2: Opportunistically returning capital to our shareholders was a focus in the quarter. In the middle of the quarter, we announced and launched a share buyback that allows for the repurchase of up to 5% of our shares outstanding.
Speaker 2: In the seven and a half weeks that the buyback was active, we repurchased $7.1 million, or 20% of the allowable limit.
Speaker 2: We are also focused on increasing exposure to gold and silver for our investors by adding bullion to our balance sheet as another currency could be managed.
Speaker 2: In the quarter, we increased our bullion position by $6.1 million. We are actively managing this position through the utilization of an option strategy, which helps to manage both the upside and downside risk.
Speaker 2: Our objective is to earn a superior yield over our other balance sheet instruments while increasing exposure to our preferred store of value in a risk-adjusted manner.
Speaker 2: Subsequent to the quarter, we have continued to add to our bullion holdings.
Speaker 2: With that, I will now pass it on to Pierre to discuss operations at Las Chispas. Many thanks, Chris.
Speaker 3: On the ground mining rate increased during the quarter average in slightly over 900 tons.
Speaker 3: This increase in mining rate is linked to a higher proportion of long-haul stoves and plants and, to a lesser extent, higher localized dilution in bobby-mained vehicles.
Speaker 3: In 2.4, it's expected that mining rates will be in the range of 8 to 900 tons per day, in line with the ramp-up rates.
Speaker 3: During Q3, lateral development averaged 34 meters per day in line with the plan.
Speaker 3: During the quarter, the Los Chistes portal was further advanced ahead of the mining in this area in 2020.
Speaker 3: We continue contract negotiation with mining contractors, including our current contractor.
Speaker 3: We're still targeting to complete these discussions in Q4 2023 for implementation in the first half of 2024.
Speaker 3: In the updated technical report, we made assumption to ask to the outcome of this negotiation, but the final details may defer.
Speaker 3: The lastest plant averaged 1,245 tons per day.
Speaker 3: slightly above what we were expecting for the quarter.
Speaker 3: It was originally anticipated that the plant would have lower availability in the quarter due to seasonal conditions impacting the power supply. However, this did not materialize, allowing for higher average mill throughput than planned.
Speaker 3: As expected, average process goal and sale were declined slightly from June of 2020.
Speaker 3: as well as some slight change to the scope, both on the ground and on surface.
Speaker 3: These delays are not material, and we're expecting to progress with capital spending in Q4. I will now pass it back to Eric to conclude the presentation.
Speaker 4: As noted earlier, we remain well positioned to execute our 2023 sales and cost guidance, as you can see on slide.
Speaker 4: Please note that our guidance is based on 20 to 1 Mexico peso to U.S. dollar exchange rate. We have seen a notable move in this rate to the levels of approximately 17 to 1 in Q3. We estimate about 40 to 50% of our costs are peso denominated.
Speaker 4: So what is next? My favorite subject? Exploration.
Speaker 4: Our exploration efforts will continue with $10 million of drilling budget through Q1 2024. The program is currently targeting $10 million higher grade inferred ounces proximal to current and planned operations for potential reserve replacements.
Speaker 4: We also look forward to exploring early stage opportunities with over 23 kilometers of underexplored veins at Los Chispas.
Speaker 4: We are in the process of year-end planning now, and as part of this, our exploration budget is being put together and our priorities for 2024 are being defined.
Speaker 4: This wraps up our formal commentary for today. Operator, please open the line for questions.
Speaker 1: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone.
Speaker 1: You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are read.
Speaker 1: you wish to decline from the polling process, please press star followed by the 2. If you are using a speaker phone, please...
Following the presentation, we will conduct a question and answer session.
At any time during this call you required immediate assistance. Please press star zero for the operator. This call is being recorded on Thursday November nine 2023, I would now like to turn the conference over to Eric Fear. Please go ahead.
Thank you operator, good morning, and thanks, everyone for joining.
Today, we will be providing commentary on our Q3 2023 results after which we'll be happy to take questions. The slide deck will be referring to is available on our website at silvercrest metals dot com under the Investor tab.
Good morning, ladies and gentlemen, and welcome to the Silvercrest reports second quarter 2023 conference call.
At this time all lines are in listen only mode. Following the presentation. We will conduct a question and answer session. If at any time. During this call you require immediate assistance. Please press star zero for the operator.
Before we get started I would like to direct you to the forward looking statement on slide two all figures discussed. This morning are in U S dollars unless otherwise stated all of the airlines and per ounce references discussed will be based on silver equivalent ounces sold unless otherwise specified.
This call is being recorded on Thursday November nine 2023, I would now like to turn the conference over to Erik <unk>. Please go ahead.
Thank you operator, good morning, and thanks, everyone for joining.
Five hour.
Our silver equivalent reference are based on a gold to silver ratio at $79 151 for one on the call with me today is Chris Ritchie President <unk> <unk>.
Today, we will be providing commentary on our Q3 2023 results after which we'll be happy to take questions. The.
The slide deck will be referring to is available on our website at silvercrest metals Dot com under the Investor tab before we get started I'd like to direct you to the forward looking statement on slide two.
Keep operating officer, starting on slide three.
Q3 marked another successful quarter.
<unk> and we remain on target to meet our 2023 sales and cost guidance.
All figures discussed this morning are in U S dollars unless otherwise stated all of the airlines and per ounce references discussed will be based on silver equivalent ounces sold unless otherwise specified outlets.
Our strong operating margins continued to.
Two substantial free cash flow to have Stan sustainable free cash flow in the quarter.
Our silver equivalent reference are based on a gold to silver ratio at $79 151 to one on the call with me today is Chris Ritchie President A&P RB one <unk>.
Whilst <unk> continues to perform well with gold sales of $14 500 ounces.
And.
And of gold and silver sales of 153 million ounces silver equivalent sales totaled $2 $6 8 million ounces, bringing.
<unk> operating officer, starting on slide three.
Q3 marked another successful quarter.
For last two space and we remain on target to meet our 2023 sales and cost guidance.
Bringing today year to date sales to 769 million ounces positioning us well to meet our annual guidance of nine 8% to $10 2 million ounces all in sustaining costs in the quarter were better than expected and compares favorably to two.
Strong operating margins continued to seek to substantial free cash flow curve standpoint, sustainable free cash flow in the quarter.
Whilst <unk> continues to perform well with gold sales of 14500 ounces.
The annual guidance Pierre will discuss the factors that led to this in his portion of this presentation, we remain debt free and our total treasury assets increased by nearly 40% from Q2 to $81 $7 million.
And.
And our gold and silver sales.
153 million ounces silver equivalent.
Sales totaled $2 $6 8 million ounces.
Bringing today year to date sales to 769 million ounces positioning us well to meet our annual guidance of nine 8% to $10 2 million ounces all in sustaining costs in the quarter were better than expected and compares.
Our financial strength and resilience are unique attributes that deserve attention in the market.
Sure.
We're accessing capital is both difficult and expensive our robust free cash flow and healthy balance sheet provide us with significant capital allocation flexibility, which we use in the quarter to optimistically explore buyback shares and increase our bullion holdings.
Favorable to the annual guidance Peter will discuss the factors that led to this in his portion of this presentation, we remain debt free and our total treasury assets increased by nearly 40% from Q2 to $81 $7 million.
On the ESG front, we signed a collaboration agreement to work on agricultural infrastructure sewage system and water concessions for agricultural use for our nearby communities. This is another positive step in the company's five year water stewardship plan.
Our financial strength and the resilience are unique attributes that deserve attention in the market.
We're accessing capital is both difficult and expensive.
This agreement advances our continued efforts to help our communities secure state and federal funding for water related infrastructure to protect their livelihoods and create long term economic resilience.
Our robust free cash flow and healthy balance sheet provide us with significant capital allocation flexibility, which we use in the quarter to optimistically explore buyback shares and increase our bullion holdings.
The benefits of these efforts are already being felt in the community. The improved access to water allows for a second planting season, creating an opportunity for increased household income for our local partners.
On the ESG front, we signed a collaboration agreement to work on agricultural infrastructure sewage system and water concessions for agricultural use for our nearby communities. This is another positive step in the company's five year water stewardship plan.
I will now pass on to Chris to discuss the financial results for the quarter.
Thanks, Eric moving to slide four.
The operational performance of lost Chief This was highlighted by our strong free cash flow and continued growth of our treasury assets.
This agreement advances our continued efforts to help our communities secure state and federal funding for water related infrastructure to protect their livelihoods and create long term economic resilience. The benefits of these efforts are already being felt in the community the improved access to water.
In the quarter, we generated revenue of $63 $8 million, our cost of sales were $26 4 million, reflecting a notable mind.
9%.
Net income in the quarter was 20, $29 9 million or <unk> 20 per share.
<unk> allows for a second planting season, creating an opportunity for an increased household income for our local partners.
Net free cash flow was $33 $4 million or 23 per share.
I will now pass on to Chris to discuss the financial results for the quarter.
As in previous quarters in 2023, our net income and net free cash flow in the quarter benefited from financial items like the return of value added taxes and the application of net operating losses, which are commonly known as tax loss carryforwards.
Thanks, Eric moving to slide four the.
The operational performance of lost Chief This was highlighted by our strong free cash flow and continued growth of our treasury assets.
Our net operating losses were fully utilized in Q3 and beginning in Q4 2023, we anticipate accruing income taxes at Mexico's corporate tax rate of 30%.
In the quarter, we generated revenue of $63 $8 million, our cost of sales were $26 4 million, reflecting a notable mine operating margin of 59%.
Our 2023 income taxes as well as the extraordinary and special mining duties will be due and paid in Q1, 2024, which will impact our income and cash flow in 2024.
Net income in the quarter was 20, $29 9 million or <unk> 20 per share.
Net free cash flow was $33 $4 million or 23 per share.
As in previous quarters in 2023, our net income and net free cash flow in the quarter benefited from financial items like the return of value added taxes and the application of net operating losses, which are commonly known as tax loss carryforwards.
We will begin making quarterly income tax installments in annual payments for the extraordinary and special mining duties in 2024.
Now on slide five.
Prudent capital allocation has always and continues to be an important area of focus for our team.
Our net operating losses were fully utilized in Q3 and beginning in Q4 2023, we anticipate accruing income taxes at Mexico's corporate tax rate of 30%.
As a single asset company, our first allocation priority is to maintain a defensive balance sheet that allows us to proactively manage risk whether the uncertainties of our industry. While also being positioned to take advantage of the opportunities that arise in cyclical businesses.
Our 2023 income taxes as well as the extraordinary and special mining duties will be due and paid in Q1, 2024, which will impact our income and cash flow in 2024.
After the $7 $1 million spent on the share buyback, we were still able to grow our treasury assets in the quarter by nearly 40% to $81 7 million.
We will begin making quarterly income tax installments in annual payments for the extraordinary and special mining duties in 2024.
Our total treasury included $70 million of cash and $11 $7 million of gold and silver bullion.
Now on slide five.
Prudent capital allocation has always and continues to be an important area of focus for our team.
We remain debt free with access to an undrawn $70 million revolving credit facility.
As a single asset company, our first allocation priority is to maintain a defensive balance sheet that allows us to proactively manage risk whether the uncertainties of our industry. While also being positioned to take advantage of the opportunities that arise in cyclical businesses.
We have also resumed our focus on growth in Q3, we announced a $10 million exploration budget for <unk> that will run through the end of Q1 2020 for.
This program is focused on both conversion of ounces and the discovery of new ounces.
After the $7 $1 million spent on the share buyback, we were still able to grow our treasury assets in the quarter by nearly 40% to $81 7 million.
In the quarter $2 8 million was spent on exploration.
Opportunistically returning capital to our shareholders was a focus in the quarter in the middle of the quarter, we announced and launched a share buyback that allows for the repurchase of up to 5% of our shares outstanding.
Our total treasury included $70 million of cash and $11 $7 million of gold and silver bullion.
We remain debt free with access to an undrawn $70 million revolving credit facility.
In the $7 five weeks that the buyback was active we repurchased $7 1 million or 20% of the allowable limit.
We have also resumed our focus on growth in Q3, we announced a $10 million exploration budget for <unk> that will run through the end of Q1 2020 for.
We are also focused on increasing exposure to gold and silver for our investors by adding bolt into our balance sheet as another currency to be managed.
This program is focused on both conversion of ounces and the discovery of new ounces.
In the quarter, we increased our bullion position by $6 1 million.
In the quarter $2 8 million was spent on exploration.
We are actively managing this position through the utilization of an option strategy, which helps to manage both the upside and downside risks.
Opportunistically returning capital to our shareholders was a focus in the quarter in the middle of the quarter, we announced and launched a share buyback that allows for the repurchase of up to 5% of our shares outstanding.
Our objective is to earn a superior yield over our other balance sheet instruments, while increasing exposure to our preferred store of value and our risk adjusted manner.
In the $7 five weeks that the buyback was active we repurchased $7 1 million.
Subsequent to the quarter, we have continued to add to our bullion holdings.
Or 20% of the allowable limit.
With that I will now pass it on to peer to discuss operations at Los <unk>.
We are also focused on increasing exposure to gold and silver for our investors by adding bolt into our balance sheet as another currency to be managed.
Thanks, Chris.
I'm now on slide six.
Underground mining rates increased during the quarter, averaging slightly over 900 tonnes per day.
In the quarter, we increased our bullion position by $6 1 million.
This increase in mining rates is linked to a higher proportion of long haul stopes and plan and to a lesser extent higher localized dilution and Bob you maintain.
We are actively managing this position through the utilization of an option strategy, which helps to manage both the upside and downside risks.
Our objective is to earn a superior yield over our other balance sheet instruments, while increasing exposure to our preferred store of value and our risk adjusted manner.
In Q4, it's expected that mining rates will be in the range of 8% to 900 tonnes per day.
In line with the ramp up rates outlined in the technical report.
Subsequent to the quarter, we have continued to add to our bullion holdings.
During Q3, but they are under development averaged 34 meter per day in line with the plan.
With that I will now pass it on to peer to discuss operations at Los <unk>.
During the quarter, the last used to support or to advance ahead of the mining industry.
Thanks, Chris.
I'm now on slide six.
Underground mining rates increased during the quarter, averaging slightly over 900 tonnes per day.
2024.
We continue contract negotiation with mining contractors, including our June contractors, we're still targeting to complete these discussions in Q4 2023.
This increase in mining rates is linked to our higher proportion of long haul stopes and plan and to a lesser extent higher local lifestyle evolution and Bob you may begin.
For implementation in the first half of 2024.
In Q4, it's expected that mining rates will be in the range of 8% to 900 tonnes per day.
In the updated technical report, we made assumption as to the outcome of these negotiations, but the final details may differ.
In line with the ramp up rates outlined in the technical report.
The last is just supply has averaged 145 tons per day.
During Q3 lateral development averaged 34 meter per day in.
Yes.
In line with the plan.
Slightly above what we were expecting for the quarter.
During the quarter, the last use dysport or <unk>.
It was originally anticipated that the plant with a lower availability during the quarter due to seasonal conditions impacting the power supply. However.
The binding in this area in 2024.
We continue contract negotiation with mining contractors, including our term contractors, we're still targeting to complete these discussion with Q4 2023.
However, this did not materialize, allowing for higher average mill throughput and plant.
As expected average process Golden failed vertically declined slightly from Q2.
For implementation in the first half of 2024.
In the updated technical report we made assumptions.
2023.
Platte recovered $2 $74 million.
Some of these negotiations, but the final details may differ.
The last is to supply has averaged 145 tons per day.
The company continues to benefit from strategic stockpile used to supplement plant feed as the mine is gradually do blocked in tonnage right. It's expected that this benefit will remain a significant contributor to plant feed through in 2025.
Slightly above what we were expecting for the quarter.
It was originally anticipated that the plant with a lower availability in the quarter due to seasonal conditions impacting the power supply.
This did not materialize, allowing higher average mill throughput the implants.
Our corporate level, a sick in the quarter was $12 23 per ounce compare favorably to our annual guidance guidance.
As expected average processed Golden Seo vertically declined slightly from Q2 of <unk>.
<unk> was lower than expected due to higher sales volume decreased cash costs and lower capital spending plans.
2023.
The Platt recovered $2 $74 million.
Silver equivalent ounces and metallurgical recovery remains solid at approximately 98% for both metals.
Capital spending was below plan due to delays in procuring key underground material.
The company continues to benefit from strategic stockpiled used to supplement plant feed as the mine is gradually do block and tonnage ranked top it is expected that this benefit will remain a significant contributor to the plant feed through in 2025.
As well as some slight change to the scope both underground and on surface.
These delays are not material.
And we're expecting to progress with capital spending in Q4.
I will now pass it back to Erik to conclude the presentation.
Our corporate level as sick in the quarter was $12.23 per ounce compare favorably to our annual guidance guidance.
Thanks Pierre.
Moving to slide seven.
As noted earlier, we remain well positioned to execute our 2023 sales and cost guidance as you can see on slide seven.
<unk> was lower than expected due to higher sales volume decreased cash cost and lower capital spending plans.
Please note that our guidance is based on 21, Mexico peso to U S. Dollar exchange rate, we have seen a notable move in this rate to the levels of approximately 17 to one in Q3, we estimate about 40% to 50% of our costs are peso denominated.
Capital spending was below plan due to delays in procuring key underground material.
As well as some slight change to the scope both underground and on surface.
Delays are not material, yet and were expecting to progress with capital spending in Q4.
So what is next my favorite subject exploration.
I will now pass it back to Erik to conclude the presentation.
Our exploration efforts will continue.
Thanks Pierre.
Moving to slide seven.
$10 million of draining budget through Q1 2024.
As noted earlier, we will remain well positioned to execute our 2023 sales and cost guidance as you can see on slide seven please.
The program is currently targeting $10 million of higher grade inferred ounces proximal to current and planned operations for potential reserve replacement.
Please note that our guidance is based on 21, Mexico peso to U S. Dollar exchange rate, we have seen a notable move in this rate to the levels of approximately 17 to one in Q3, we estimate about 40% to 50% of our costs are peso denominated.
We also look forward to exploring early stage opportunities with over 23 kilometers of under explored veins at <unk>.
We are in the process of year end planning now and as part of this our exploration budget is being put together and our priorities for 2024 are being defined.
So what is next my favorite subject exploration.
Our exploration efforts will continue with $10 million a drilling budget through Q1 2020 for the program.
This wraps up our formal commentary for today operator, please open the line for questions.
As currently targeting $10 million higher grade inferred ounces proximal to current and planned operations for potential reserve replacement.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the wondering your Touchtone phone you will hear three Tom prompt acknowledging your request and your question is will it be pulled in the order they are received.
We also look forward to exploring early stage opportunities with over 23 kilometers of under explored veins at <unk>.
Wish to decline from the polling process. Please press star followed by the two if you are using a speaker phone. Please lift the handset before pressing any Keith Your first question comes from Eric <unk> with Scotiabank. Please go ahead.
We are in the process of year end planning now and as part of this our exploration budget is being put together and our priorities for 2000 2024 are being defined.
Hi morning, Thanks for taking my question nice to see the stock OCA, Florida. This morning.
This wraps up our formal commentary for today.
Just I wanted to ask a quick question in the disclosure you talked about.
Operator, please open the line for questions.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the wondering your Touchtone phone, you'll hear three Tom prompt acknowledging your request and Youre question is will it be pulled in the order they are received.
Spending on Capex below plan from delays will be currently underground materials as well as some changes to scope any additional elaboration on that please.
Yeah. So.
Sure.
Can we.
Wish to decline from the polling process. Please press star followed by the two if you are using a speaker phone. Please lift the handset before pressing any keys to your first question comes from Eric <unk> with Scotiabank. Please go ahead.
We had some delays in procuring some of the electrical modernity young we need for the extension of the mine.
And also some plans that was for underground and we decided to change the scope of the hour our second furnace for the process plant.
Hi morning, Thanks for taking my question nice to see the stock Oh performance. This morning.
Just I wanted to ask a quick question in the disclosure you talked about.
But none of this is that as I noted on the script on the on the call.
Spending on Capex below plan some delays it would be currently underground materials as well as some changes to scope any additional elaboration on that please.
Great. Thanks, Peter very helpful.
Just another question on the share buyback. So obviously the company has been active on the buyback should we assume then youll continue through the rest of the year and sort of thresholds you look at our sort of rules, we should think of on the buyback.
Yeah. So it's.
<unk> speaking.
Speaking.
We had some delays in procuring some of the electrical Mcdonough young we need for the extension of the mine.
Also sometimes that was for underground and we decided to change the scope of the hour our second furnace for the process plant.
Thanks, Eric.
We look at the NCI is one of the tools in the toolkit. When we look at capital allocation exploration is a key focus buying back shares is a key focus adding <unk> to the balance sheet and the flexibility that our balance sheet and the asset provide us allow us to make those choices at the right moment.
None of this is Matt WNS as I noted on the script.
On the call.
Yes.
Great. Thanks, Peter very helpful.
That said, we do want to continue to return capital to shareholders.
Just another question on the share buyback. So obviously the company has been active on the buyback should we assume then youll continue through the rest of the year or any sort of thresholds you look at our sort of rules, we should think about the buyback.
We don't share the specific budget or price thresholds that the board has set for that.
But it is still a key focus for us going into the end of the year.
Thanks, Eric.
Your next question comes from David Mclaughlin.
We look at the NCI is one of the tools in the toolkit. When we look at capital allocation exploration is a key focus buying back shares is a key focus adding built into the balance sheet and the flexibility that our balance sheet and the asset provide us allow us to make those choices at the right moment.
Good morning.
Couple of quick.
Question, No where can I find what the special mining duty Bruce had rate is can you tell me.
Your tax rate at 30%, but is it 10% 15% on top.
That said, we do want to continue to return capital to shareholders.
Okay.
We don't share the specific budget or price thresholds that the board has set for that.
It is seven 5%.
Seven 5% okay.
But it is still a key focus for us going into the end of the year.
Are there any cartel obstruction.
<unk>, there any kind of weird.
Wanted to close you down unless we get a piece of the pie here.
Your next question comes from David Mclaughlin.
Yes.
We don't have these issue and.
Good morning.
In Sonora.
Couple of quick quick questions, no where can I find what the special mining duty.
We all go.
And.
And we can enjoy the work at night without any problems. So we are very nice.
Right is can you tell me.
The tax rate is 30%, but is it 10% 15% on top.
Don't hold it against me for asking because it could be a big issue I don't know that it is so if you just.
And it did seven 5%.
The answer I'd like I'd like to hear let's put it that way I think pretty much all shareholders would.
Seven 5% okay.
Are there any cartel obstruction youre experiencing there any kind of.
Do you have a man camp there and how many employees do you have and are they living in the local town are they hard to get if you need to staff up what's the labor situation there.
Want to close you down unless you know we get a piece of the pie here.
Yes.
We don't have these issues.
First of all first question, we have a 500 mountain camp.
In Sonora.
We all go.
But we we allow our employees to live in the community or at the comp.
<unk>.
And we can enjoy the work at night without any problems. So we are very nice.
Based on what they prefer.
Don't hold it against me for asking because it could be a big issue I don't know that it is so if you just that's the that's the answer I'd like I'd like to hear let's put it that way I think pretty much all shareholders would.
This campus has been a good tool for us to keep our turnover rate at low level last year, we experienced 8% turnover rate, which is amongst the best in the industry and with regards to the difficulty to get people the best ways to.
Do you have a man camp there and how many employees do you have any.
Are they living in the local town are they hard to get if you need to staff up what's the labor situation there.
Keep them obviously.
But also we are.
We have a contract with the mining contractor.
First of all first question, we have a 500 mountain camp.
That gets its manpower.
But we we allow our employees to live in the community or at the cap.
In the lower part of Mexico, So so far it's been.
Based on what they prefer.
It's been very good on our site.
Well, that's a good thing too for sure.
This campus has been.
A good tool for us to keep our turnover rate.
Labor problems.
Companies today are big problem I think.
At low level last year, we experienced 8% turnover rate, which is amongst the best in the industry and with regards to the difficulty to get people the best ways to keep them obviously.
Way too often.
Yes.
I really think you've done a great job since for the six years I've owned your stock.
Your drilling and your exploration and Mr. Borgwarner.
The video of the plant that you built was amazing okay. So I think you guys are good enough credit for building.
But also we are.
We have a contract with the mining contractor.
High percentage recovery plant.
Getz manpower.
A huge tons tonnage, maybe not huge but significant.
In the lower part of Mexico, So so far it's been.
And.
And stockpiling with the.
It's been very good on our site.
Well, that's a good thing too for sure.
Yes.
No the grades the grades dropped a little bit this quarter.
Labor problems.
Companies today are big problem I think.
I think thats.
A trend that we're going to continue to see because maybe you knew where the.
Too often.
Yes.
I really think you've done a great job since for the six years I've owned your stock and your drilling and your exploration and Mr. <unk> <unk>.
Strongest mineralization wasn't your stockpile in your first couple of quarters.
Well ill tell you that.
The video of the plant that you built was amazing okay. So thank you.
The stockpile is something that we monitor very closely we consider depth of our best stopes and it's on surface.
You guys are good enough credit for building such a.
High percentage recovery plant.
And so this is something that we monitor against the value that we have in our model and at this point I can say that we are very.
Huge tons tonnage, maybe not huge but significant.
And.
And stockpiling with the.
I don't know the grades the grades dropped a little bit this quarter.
We're very happy with the level of our stockpile at with regards to the start of your question.
Do you think that.
A trend that we're going to continue to see because maybe.
The.
With regards to the question on grade in the plant.
Strongest mineralization wasn't your stockpile in your first couple of quarters.
I'm just going to say that this is for design, we expected the grade to be lower in this quarter.
Well I'll tell you that.
The stockpile is something that we monitor very closely we considered that as our best stopes and it's on surface.
And.
We should not read anymore into this we still have to plan to produce between $9 eight and $10 2 million ounces for the year and we're well on.
So this is something that we monitor against the value that we have in our model and at this point I can say that we're very well.
On our way to complete that.
Okay, well, thanks for taking my questions and thanks for doing such a good job I appreciate it.
We're very happy with the level of our stockpile at with regards to the start of your question.
Ladies and gentlemen, as a reminder, should you have a question. Please press star followed by the one your next question comes from Alicia.
With regards to the question on grade in the plant.
Im just going to say that this is per design, we expected the grade to be lower in this quarter.
Yes Hello.
I'm pleased with the success of the company I wanted to know if the company right now is looking.
And.
We should not read anymore into this we still have to plant two.
Actively at other projects or mines.
In the area.
Produce between $9, eight and $10 2 million ounces for the year and we're well on.
We're in the world.
Thank you.
Yes. This is Eric.
On our way to complete that.
Our our growth plan is in three paths.
Okay, well, thanks for taking my questions and thanks for doing such a good job I appreciate it.
One is exploration priority one continued exploration at Los <unk>, we have a lot of value I believe is still to come and still to see it last year. So we will be spending dollars there.
Ladies and gentlemen, as a reminder, should you have a question. Please press star followed by the one your next question comes from Alex Telecom.
So have a regional program that we're working on.
Yes Hello.
Im pleased with the success of the company.
I wanted to know if the company.
That's within haulage distance of the mill at Los <unk>.
Right now as we're looking at.
The other projects or mines.
That is continuing and that will continue for years to come as we look at projects that are earlier stage that still need to be drilled and mapped in samples so that feeds the.
The area or in the world.
Thank you.
Yes. This is Eric.
Our growth plan is in three paths.
One is exploration that's priority one continued exploration at Los <unk>, we have a lot of value I believe is still to come and still to see it last year. So we will be spending dollars. There. We also have a regional program.
Some of the exploration appetite for discoveries.
And our third path is M&A and we continue to look at M&A projects.
We're being a bit selective.
To be in the Americas, that's our target North America is a great place to play right now so yeah. There's lots of things to do there is not we don't have a big team to be running out. So we have to watch our resources as far as what we select and where we go with it so.
We're working on.
That's within haulage distance of the mill at Las <unk>.
That is continuing and it will continue for years to come as.
We look at projects that are earlier stage that still need to be drilled.
And mapped in samples so that feeds the.
Thank you.
Some of the exploration appetite for discoveries.
Your next question comes from Garrett Gold gym with Stanford Research.
And our third path is M&A and we continue to look at M&A projects, we're being a bit selective.
Okay.
Hey, guys can you hear me okay.
Yes, yes.
Good great quarter, it's been a while since I've seen.
To be in the Americas, that's our target North America is a great place to play right now so yeah. There's lots of things to do there is not we don't have a big team to be running out. So we have to watch our resources.
Cash flow generation like that in the silver industry.
On capital allocation you guys are doing a great job I'd love to see the share buyback.
Are you thinking about paying a dividend because if you just stacked 20 million bucks that would be close to 3% utilized in the midstream.
<unk> is what we select and where do we go with it.
Thanks, Gary it's Chris here.
Thank you.
When we evaluate the difference between the share buyback and the dividends in the first thing. We did was look at other companies.
Your next question comes from Garrett Gold gym with Stansberry research.
Single asset companies and there was only two to three in the world that we're actually paying a dividend.
Hey, guys can you hear me okay.
Yes, yes.
Yes.
Okay great.
Great quarter, its been a lot of since I've seen.
Flexibility or lack of flexibility that a dividend creates is something we were definitely cognizant of given that we do want to allocate capital for future growth.
Free cash flow generation like that in the silver industry.
Capital allocation you guys are doing a great job I'd love to see the share buyback.
So we thought that the share buyback was a better option.
Are you thinking about paying a dividend because if you just spent 20 million box that would be close to 3% you are highest in the industry.
Because it allows us to be more aggressive at the right times in the cycle and that flexibility is something that's quite unique for us. So we thought the share back buyback was just.
Thanks, Gary it's Chris here.
She has to be more aggressive.
When we evaluate the difference between the share buyback and a dividend.
And flexible.
I agree in the future.
First thing we did was look at other companies.
That's down the road, that's something we'd like to be able to consider.
Glass set companies and there was only two or three in the world that we're actually paying the dividend.
The share buyback is the best way to do it at lower share value increases earnings per share grabbing share price higher.
So the flexibility or lack of flexibility that a dividend creates is something we were definitely cognizant of given that we do want to allocate capital for future growth.
<unk>.
Your capital allocation.
<unk> drilling and internal growth.
That's where you see your life of mine, we have extended primarily at this point right.
So we thought that the share buyback was a better option.
Because it allows us to be more aggressive at the right times in the cycle and that flexibility is something that's quite unique for us. So we thought the share back buyback was just.
Okay.
Or expanded.
Hey, Joe.
I mean, we.
So as I said in the talk there and it's in the news release.
She has to be more aggressive.
And flexible.
So $10 million.
I agree in the future.
Just under $3 million of that so far to get to Q1, we're really focused on inferred resources that didn't get converted to indicated and considered for reserve conversion for the updated Tech report.
It's down the road, that's something we'd like to be able to consider.
The share buyback is the best way to do it lower shares out increases earnings per share of <unk> share price higher.
So.
Your capital allocation looking at drilling and internal growth.
So.
It's to get through that.
That's where you see your life might be an extended primarily at this point right.
Alright.
Sure.
Get some new reserves back into the to the pipeline.
Okay.
That's near infrastructure and as were doing that we will be spending money at last used us to look at.
<unk>.
Hey, Joe.
So I mean, we got as I said on the talk there and it's in the news release Gareth.
23 kilometers of other vein thats under explored so.
$10 million.
Just under $3 million, so far to get to Q1.
Sure.
Some some interesting things right now.
We're really focused on inferred resources that didn't get converted to indicated and considered for reserve conversion for the updated Tech report.
Cross my fingers and hope we can get some news out on exploration for the end of the year, we'll see okay.
What area with some lift perspective for you guys.
So.
It's to get through that.
Eric as far as unless keeps us.
Alright.
Get some new reserves back into the to the pipeline.
Yes.
Yes, okay.
There's more work as you are familiar with the math when you call up the treasure map or working on Bobby sure, which is in the south.
That's near infrastructure and as were doing that we will be spending money at Los <unk> to look at.
And some extension of that.
<unk> three kilometers of other vein thats under explored so.
And we're looking to depth now.
We're seeing some some interesting things right now.
Per the Barbican remain vein going to depths.
Cross my fingers and hope we can get some news out on exploration for the end of the year, we'll see okay.
So quite encouraged as what we're seeing it in the last piece of this area.
What area with the most perspective for you guys.
If you recall, we haven't been back to last year since the.
Eric it's far unless piece for us.
The.
2020, so it's been pretty much on the shelf we're working on.
Yes.
Okay.
On the.
So there is more work and you are familiar with the math and we call. It the treasure map or working on Bobby sure, which is in the south.
Technical report and doing the infill drilling mostly around <unk>. So so okay.
And some mix extension that batch or looking to depth now.
Yes, there are some new some new opportunities that we're seeing at Los <unk>, we will see how they come to fruition okay.
The barbican or a main vein.
To depths.
Okay, and then last question.
So quite encouraged as what we're seeing it in the last piece of this area.
How many.
How many basis Youre working now and where is the oil primarily coming from.
If you recall, we haven't been back to last year since the beauty.
Pesos.
We have we.
We maintained all the time we maintained between.
2020, so it's been pretty much on the shelf we're working on.
12, and 16 faces.
And.
The.
Our limit at this point is certainly not the faces, but more hour of our drilling capacity, which we're working actively with contractors to expand.
Technical report and doing the infill drilling mostly around Bobby Conoco. So so it's okay.
Yes, there is some new there are some new opportunities that we're seeing at Los <unk>, we will see how they come to fruition okay.
Okay, and then where is that we're primarily coming from Windstream.
Mainly in and Bobby Bobby North and Bobby Destock.
Okay, and then last question.
How many how many phases you are working now and where is that we're primarily coming from.
Okay. Okay. Thanks, guys.
Your next question comes from Matthew <unk> with <unk>.
Pesos.
Have we.
We maintained all the time we maintained between.
Hey, Chris Eric peer.
12, and 16 faces.
That's on the quarter.
And.
Well done.
Our limit at this point is certainly not the faces, but more hour of our drilling capacity, which we're working actively with contractors to Exxon.
As a long term shareholder since 2018.
This is why I wanted to be involved with the project. So it seems like it's finally coming to fruition with.
Okay, and then where is that we're primarily coming from which means.
Yes that throwing off a significant amount of cash.
So pleased with that.
Mainly in and Bob <unk>, Bob <unk>, North and <unk> stuff.
Wanted to follow up.
With some of the previous questions on exploration. So we had a 13% reduction of roughly 10 million ounces from the TR.
Okay. Good thank you guys.
Your next question comes from Matthew <unk> with <unk>.
If im not mistaken.
Obviously myself and my investors.
Hey, Chris Erick can peer.
We're excited that you're getting back to growth mode, and Eric I like that you said.
That's on the quarter.
Well done.
Your favorite things exploration that warms my heart.
As a long term shareholder since 2018.
I wanted to ask you about these 23 kilometers of veins.
This is why I wanted to be involved with the project. So it seems like it's finally coming to fruition with the.
And just I'm just trying to again understand there as there was back in 2019 or 2020, there was a new section of the property newly defined section of the property I believe it was called one eight.
Yes that throwing off a significant amount of cash.
So pleased with that.
Wanted to follow up.
With some of the previous questions on exploration. So we had a 13% reduction of roughly 10 million ounces from the TR.
Is that part of the list just as section that you have not really spent so much time on them.
If I'm not mistaken.
Over the last few years in terms of exploration is that or is that one.
Obviously myself and my investors.
Different part of the property.
We're excited that you are getting back to growth mode, and Eric I like that you said.
118.
Your favorite things exploration that warms my heart.
Zone.
As part of the last <unk> main vein.
I wanted to ask you about the 23 kilometers of veins.
Okay. Okay.
So it's below the underground workings.
I'm just I'm just trying to again understand theres. There was back in 2019 or 2020, there was a new section of the property newly defined section of the property I believe it was called the <unk>.
We're just starting back in that area right now to do further exploration work. We're just returning after four years.
Of being over in the <unk> area.
Is that part of the list just as section that you have not really spent too much time on.
And how many how many rigs are drills are are being.
Over the last few years in terms of exploration is that or is that one.
Utilized at the moment on the property.
Different part of the property.
At the end of the quarter Q3, I'll speak to that.
118.
Zone.
Had between 7% to eight I got one rig a floating there because it likes to do the operational work too.
<unk> is part of the last <unk> main vein.
Okay.
Alright.
It's below the underground workings.
Hey, Jonathan extra duration. So so at the end of Q3, we had 708 barrels.
We're just starting back in that area right now to do further exploration work. We're just returning after four years.
That's great.
In terms of communicating that the results from that from the market I know there was like lab backlogs and things like that.
Of being over in the <unk> area.
And how many how many rigs are drills are are being.
Covid delays and such are you seeing.
Utilize at the moment on the property.
The processing time from what you guys are finding on site, having like a lab analyze the results of your drill findings is that is that lag time decrease. So like you said you were hoping to have communication to the market by the end of this year.
At the end of the quarter Q3, I'll speak to that.
We had between seven to eight I got one rig floating there because it likes to do.
Operational work too.
Is that is that are you seeing.
Hey, Jonathan from extra duration. So so at the end of Q3, we had seven to eight.
Klein in that and that lag obviously investors are big growth investors.
And we're happy again that we're getting back to that level now that.
That's great and in.
In terms of communicating that the results from that from the market I know.
The mill is operating as.
As expected and the financial health of the company is very strong so.
There was like lab backlogs and things like that due to COVID-19 delays and such are you seeing.
Just curious on that and what are you seeing from that side of things.
The processing time from what you guys are finding on site, having like a lab analyze the results of your drill findings is that is that lag time decrease. So like you said you were hoping to have communication to the market by the end of this year.
Yes, we used two labs, AOS cemex and SGS.
Speak of AOS Cemex and exploration.
Samples that are going there for assays and then I'll turn it over to Pierre and economic about STS. Okay. So our lab turnover is decent right now it's three to four weeks.
Is that is that are you seeing.
A decline in that and that lag obviously investors are big growth investors.
And we're happy again that we're getting back to that level now that the.
It was during Covid.
Does everybody scurried home.
The mill is operating as.
Double that but it's a decent right now.
Expected in.
And the financial health of the company is very strong so.
So we use <unk> and there are other hemisphere in north Vancouver, So Pierre if you can talk about <unk>.
I'm just curious on that and what are you seeing from that side of things.
Yes, we used to labs, AOS cemex and SGS.
So if you look at our technical report.
We actually build our own lab.
Speak of AOS Cemex and exploration.
Yes.
That was part of our ESG efforts to return some work in the <unk>.
Samples that are going there for assays and then I'll turn it over to Peter and he can talk about STS. Okay. So our lab turnover is decent right now it's three to four weeks.
<unk> and this land.
We contracted it out too SGS.
It was during Covid.
<unk> is in the process of getting the slab certified they've been working on it now for more than a year and we expect to this lab is going to be certified within before the end of the year and when this happens.
Does everybody scurried home.
It will double that but it's a decent right now.
So we use Alex and there are other Hermes CEO in North Vancouver, So Pierre if you can talk about SGS.
Actually all the samples from the company are going to go to the slab and the turnover is going to go from essentially four weeks down to probably days, because it's going to be our own certified facility.
So if you look at our technical report.
We actually build our own lab.
That's.
That was part of our ESG efforts to return some work.
That's great. Thanks for answering the questions. The last comment I want to make is that a question just Chris keep buying back that stock I appreciate it.
In the municipality and this land.
We contracted it out too SGS and SGS is in the process of getting the slab certified <unk> been working on now for more than a year.
Thanks for that.
There are no further questions at this time. Please proceed.
And we expect to this lab is going to be certified within.
Before the end of the year.
Thank you everyone for attending the Silvercrest Q3 2023 results call.
When this happens.
All the samples from the company are going to go to the slab and the turnover is going to go from essentially four weeks down to probably days, because it's going to be our own certified facility.
Have a great day.
Yes.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating enough that you. Please disconnect your lines.
That's great. Thanks for answering the questions. The last comment I want to make is that a question just Chris keep buying back that stock I appreciate it.
Oh, yes.
Thanks, Matt.
Yes.
There are no further questions at this time. Please proceed.
Thank you everyone for attending the Silvercrest Q3, 2023 results call have a great day.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating enough that you. Please disconnect your lines.
Okay.
Thanks.
Yes.
Okay.
Yes.
Okay.
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Food.
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