Full Year 2023 Andean Precious Metals Corp Earnings Call
Good morning, welcome to M D and precious metals conference call to discuss the company's financial and operating results for the three and 12 months ended December 31st 2023.
As a reminder, this call is being recorded your host for today is Chris ran N D S. Vice President of Investor Relations. Mr. Moran. Please go ahead.
Chris Moran: Thank you and good morning, everyone before we get started I would like to point out that during today's call. We may make forward looking statements as defined under Canadian Securities Law Yeah.
Chris Moran: That you view, our slide presentation for cautionary language regarding forward looking statements and the risk factors pertaining to these statements.
Chris Moran: Our press release, MD&A and financial statements are available both on SEDAR Pla and on our corporate website Indian P. M Dot com.
Alberta Morality: With us on today's call is Alberta, morality Indians executive Chairman and CEO, Juan Carlos Sandra Bell, our Chief Financial Officer, and Susan or Yoga R. E V P finance.
Alberta Morality: Following managements formal remarks, we will then open the call to questions and now over to Alberto.
Alberto: Thank you Trish and welcome everyone.
Alberto: One to 'twenty three once a year of change and transformation in India.
Alberto: Our new leadership team has significantly advanced the company's corporate strategy.
Alberto: Meaningful step to reposition and grow Andy and enjoyed mid tier producer focused on the Americas.
Speaker Change: During 2023, and some bartholomew, which strengthen our focus on maximizing cash flow.
Speaker Change: We successfully transition our operating model to focus solely on processing.
Speaker Change: Finding on several large contracts for profitable third party material.
Speaker Change: Advancing the tailings silver recovery project.
Speaker Change: I am pleased to say that at somebody told me ended the year on a positive note.
Speaker Change: Meeting its 2023 revised production guidance.
Speaker Change: Throughout the year the facility did not report any lost time incidents or negative environmental issues.
Last spring became both Rmi and ISO certified.
Speaker Change: 2023 was also the year of our first acquisition.
Speaker Change: In late November we acquired Golden Queen a fully permitted gold and silver producing mine located in the mining friendly region of Kern County, California.
Speaker Change: In just over a little.
Speaker Change: One year since we assumed the leadership of ambien.
Speaker Change: We have built a well funded and sustainable platform for growth M&A and value creation, and some of the world's leading mining jurisdictions, including the United States.
Speaker Change: Building on this foundation and looking at the year ahead.
We're poised to materially increase our gold and silver production and hence cash flow generation.
Complete our sailboat tailings recovery project at San Bartolome.
Speaker Change: And a chief operations production and exploration milestones.
Speaker Change: On the corporate side.
Speaker Change: We have added multicultural lander.
Speaker Change: Chief operating officer, furthering strengthening our management team.
Speaker Change: Marcos has 35 years of experience as a mining engineer and operations leader in the Americas and Africa and he's a great addition to the M D and steam.
Speaker Change: As we have discussed.
Speaker Change: We are no longer mining our high cost low grade by yeah close in Bolivia.
Speaker Change: Stead, we are focused on processing better great third party material much of which is secured in larger volumes and under longer term contracts.
Over the course of 'twenty to 'twenty, three we signed agreements for about 1 million tons of higher margin third party material that will help increase profitability and drive cash flows going forward.
Speaker Change: These contracts include significant amount of materials from believe in deposit so just spike Oh.
Speaker Change: And to judge.
Speaker Change: We will also be adding our sibley tailings to the mix once the FDA project is complete.
Speaker Change: Right now we are targeting completion at the end of April.
Speaker Change: <unk> is expected to represent about 16% of somewhat talamo silver production in 2024.
Speaker Change: We recently put out our Ni 43, 101 technical report.
Repair by Sergei consulting it puts reserves on the book and extend the operating life of somewhat Tullow made by 4.6 years.
The report considers only are larger volume longer term contracts of the company's purchases and our F. D S materials.
Speaker Change: It excludes materials purchased from small independent third party miners.
Speaker Change: We will continue to seek new sources of high margin and higher grade contracts during the course of 'twenty 'twenty four and beyond.
Speaker Change: As our growth strategy in Bolivia.
Speaker Change: The country has an exceptional mineral endowment that remains unexplored.
Speaker Change: Olivia has attracted a wide variety of mining and resource company and it relies heavily on mining positive economic impact and capacity to generate foreign revenue.
Speaker Change: We know the country, well and believes that it remains the jurisdiction in which we can do business and create value for our stakeholders.
Or where we see strong potential for further growth at somebody stolen.
Speaker Change: As mentioned upfront.
Speaker Change: We made our first acquisition in 2023.
Speaker Change: The Golden Queen acquisition take a lot of boxes for us.
Speaker Change: It offers a fully permitted open pit heap leach operation in a tier one jurisdiction.
Speaker Change: The acquisition advances our goal of becoming a mid tier producer in the Americas.
Speaker Change: And it removes the rates of being a single asset.
Speaker Change: Single metal producer and in a single jurisdiction.
Speaker Change: Most importantly, golden Queen and it sold it out mountain mine come with the opportunity to enable our team to do what we do best which is to create value from an undervalued asset.
Speaker Change: In January we released a new technical report an updated mineral resource and reserves estimate for shortly that mountain.
Speaker Change: That fully met our base case expectations.
Speaker Change: Now our priorities are focused on the opportunities ahead.
Speaker Change: Emily.
Speaker Change: Optimizing the mine plan.
Speaker Change: Moving more control or recovery in production.
Speaker Change: An increase in cash flows and cost per ounce.
Speaker Change: We are also finding and prioritizing exploration targets to help realize the potential upside at solely that mountain and add to the operation's life of mine.
Speaker Change: As you know.
Speaker Change: Had a fire at the secondary crusher in mid December.
Speaker Change: Following this incident Golden Queens operations were reduced for a period of approximately five weeks after which we resume full operation.
Speaker Change: As a result, there was minimal impact on our full year 2024 production forecast.
Speaker Change: We would like to recognize our team suppliers contractors and first responders for their exceptional efforts to return Golden quaint to regular operations and full production after the fire.
Speaker Change: We appreciate your a round the clock efforts that are truly grateful that everyone remains safe. Thank you all.
Speaker Change: Following the Golden Green acquisition, then it's a very different company.
Speaker Change: That it was just 12 months ago.
Speaker Change: We have developed a strong platform to support our five years in vision of becoming a mid tier precious metal producer in the Americas.
Speaker Change: We have years of available reserves as well as diversified asset base of gold and silver production.
Speaker Change: <unk> is expected to drive growth and cash flow and profitability going forward.
Speaker Change: Our production is expected to more than double.
Speaker Change: 2024.
Speaker Change: And if metal prices stay at current levels revenue will grow significantly as well.
Speaker Change: Further our operational expertise enable us to identify and act on future opportunities for growth through acquisitions.
Speaker Change: In short.
Speaker Change: We are in a strong position to grow both organically and through M&A.
Speaker Change: With that I will hand over the reins to one catalyst who will review our financials in more detail.
Catalyst: Thank you Alberto.
One Catalyst: To better understand our fourth quarter and for the year 2023 let's look at the impact on Golden Queens acquisition on our financial statements.
Going to slide 13.
With Golden Queen we acquired net assets when they preliminary fair value of $53 $5 million for accounting purposes. The aggregate purchase consideration for the acquired assets net of the liabilities is $7 million to $10 million. This.
One Catalyst: Clubs and initial cash payment of $5 million, plus 2.8 million in net working capital adjustments and towards deferred payments of $5 million each.
One Catalyst: And value of which is $9 2 million.
One Catalyst: Market conditions were in our favor during acquisition negotiations.
One Catalyst: Hope is that we recognized a bargain purchase gain of $36 5 million, mainly due to the difference between the fair value and the consideration paid as it relates to mineral property plant and equipment and inventory net of the associated deferred tax liabilities.
One Catalyst: Yeah.
One Catalyst: As you review our financial statements. Please note that the preliminary fair value of the assets and liabilities are included in our year end balance sheet.
One Catalyst: $36 5 million purchase gain has been recognized in our P&L.
One Catalyst: However, I should highlight that we have one year from today to finalize the acquisition accounting.
One Catalyst: Moving to slide 14.
One Catalyst: Our yearend P&L also includes the impact of Goldman Queen for the stop period from November 24. The acquisition date of December 31st 2023, during which Golden Queen country muted $13 3 million in revenue and <unk> 4 million names.
One Catalyst: Pre tax income in 2023.
One Catalyst: It should be noted that the acquisition had been completed on January 1st Young refresh 2023 Golden Queens full year contribution to revenue would have been $91 3 million.
One Catalyst: This would have increased our constantly day to 'twenty three revenue to $216.7 million.
One Catalyst: This brings us to slide 15.
One Catalyst: Discuss our consolidated operating and financial performance.
One Catalyst: Regionally the fourth quarter was the strongest quarter of the year for somebody told him that propel.
One Catalyst: Propelling full year production to $4 7 million ounces of silver equivalent.
One Catalyst: Together with Golden Queens contribution up close to half a million silver equivalent ounces. Our consolidated full year production was approximately $5 2 million ounces.
One Catalyst: Our average realized silver price per ounce in 2021 'twenty $4.14.
One Catalyst: Performing the average market spot price by 4%.
One Catalyst: The result was a 16% increasing full year 2022 revenue.
One Catalyst: Part of the previous year, and a 46% increase in consolidated gross operating income.
G&A was down nearly 10% year over year, despite incurring one time acquisition costs of $4 6 million.
One Catalyst: Relating to external legal financial and advisory fees as well as due diligence cost.
One Catalyst: As discussed we recognized a $36 5 million purchase gain on the Golden Queen acquisition, which bolstered our bottom line to $38 5 million compared to like 10 million loss in 2022.
One Catalyst: Adjusted EBITDA, which excludes the purchase gain increased to $20 million up from $3 5 million in the previous year.
One Catalyst: Overall 2023 showed improvement.
One Catalyst: And we believe will continue in 2024.
One Catalyst: Moving on to our capital structure on slide 16.
Assaf December 31st 2023.
One Catalyst: Even with the acquisition of Golden Queen, which doubled the size of our company, we had liquid assets of nearly 73 million, including 65 million in cash.
One Catalyst: A negative net debt.
One Catalyst: And the $100 million of working capital.
One Catalyst: And provide further financial flexibility at the end of February.
One Catalyst: We obtained a $25 million secured line of credit.
One Catalyst: Our mandate is and will continue to be maintain our balance sheet to support future growth.
One Catalyst: Turning now to our 2024 guidance on slide 17.
Speaker Change: Please note that as we go through this section the numbers I provide for production.
Speaker Change: Cost and Capex should be considered estimates.
Speaker Change: Loss of minus 5%.
Speaker Change: On a silver equivalent basis, our 'twenty 'twenty four consolidated production is expected to double versus 2023.
Speaker Change: Somebody told a mess contribution through 'twenty 'twenty four production is anticipated to be 5 million ounces.
Speaker Change: Most of the material to be process will come from third party purchase materials. However, we will also start blending our tailings material was the F. D. A project is completed in Q2.
Speaker Change: We are estimating an average head grade of 144 grams per tonne and a calculated recover recovery rate of 78% the same as last year.
Goldman Queen: I'm Goldman Queen.
Goldman Queen: The impact of Decembers fire on the first quarter. The 'twenty 'twenty four production outlook is for 60000 ounces of gold equivalent.
Goldman Queen: This equates to about $5 4 million silver equivalent ounces.
Goldman Queen: To achieve 60000 ounces.
Goldman Queen: Total mine tonnage is estimated to be in the range of $26 8 million tons, including 3.9 tons of ore.
Goldman Queen: So be stacked on the leach pad.
And we saw things strip ratio is 5.9 to one.
Goldman Queen: Our cost guidance is outlined on slide 18.
Goldman Queen: With the change in some bartolome business model and the focus on cash flow, we are adapting to new cost metrics.
Goldman Queen: The first is a cash cross operating margin, which in 'twenty 'twenty four is expected to be three point 88 for silver equivalent ounce compared to $2 71 in 2023.
Goldman Queen: The second new metric matrix is cross margin ratio anticipated to be 19, five in 20% in 'twenty 'twenty four.
Goldman Queen: Grade of 12, 4% in 2023.
Goldman Queen: For Golden Queen or 'twenty 'twenty four outlook is for operating cash cost per gold equivalent ounce produced of 1500.
Speaker Change: And ace it off.
17, 50 per gold equivalent ounce sold.
Speaker Change: Finally, turning to our Capex guidance on slide 19.
Speaker Change: Capex, which is expected to be in the range of 24 million.
Speaker Change: It will be fine lines from cash on hand cash flow from operations and third party financing.
Speaker Change: Much of the Capex spend it's a golden Queen.
Speaker Change: Since making the acquisition and becoming more familiar with the asset we have pinpointed significant opportunities to grow production create efficiencies and reduce long term costs and extend the mine life.
The money, we're spending instill ensure that we maximize the value of Golden Queen.
Speaker Change: It includes $9 5 million in growth capital for the procurement of six new haul trucks.
Speaker Change: These trucks are being financed under a five year arrangement and the cost benefit derived from the efficiencies and optimization far outweighed the costs to find them.
Speaker Change: Our capex of Golden Queen also includes $8 3 million of sustaining capital related to the major overhaul maintenance and we built off of equipment.
Speaker Change: Lastly, there is also 1 million earmarked for exploration.
Speaker Change: Approximately 2.7 included into some Bart San Bartolome, 'twenty 'twenty for sustaining Capex.
Speaker Change: Relates to the continued expansion of the tailings dam to the south and to the north to accommodate future storage.
Speaker Change: Now back to like that too.
Speaker Change: Yeah.
Speaker Change: Thank you Juan Carlos.
Speaker Change: 1023, with well with a productive and transformational year for Andy.
Speaker Change: Looking ahead to 2024, we.
Speaker Change: We have many key catalysts milestones to an opportunity on the horizon.
Speaker Change: Somebody told me.
Speaker Change: We will be working towards signing additional agreements to process high margin third party ore and completing our F. D F silver recovery project.
Speaker Change: Golden Queen.
Speaker Change: To materially increase our annual gold production.
Speaker Change: And leverage our experience and expertise to optimize operations and productions improve margins cash flows and costs.
Speaker Change: We also look forward to announcing drill an exploration results, while identifying promising targets for follow up and further discovery.
Speaker Change: Finally, we will continue to focus on growth and M&A prospects.
Speaker Change: Our board and management team are firm believers in the Andean story, and therefore as of Monday, We have purchased almost 8.5 million of our shares through our initial and current N C. I b programs.
Speaker Change: This concludes our remarks, we will now open the lines for question.
Speaker Change: Operator.
Speaker Change: Thank you.
Speaker Change: We will now begin the question answer session to join the question queue. You May Press Star then one on your telephone keypad.
Speaker Change: Rich on the imaging a request if youre using a speakerphone. Please pick up your handset before pressing any piece to be draw. Your question. Please press Star then two will foster a woman has closed trying to queue.
Speaker Change: The first question comes from Illinois Vinci S. C D resource Finance. Please go ahead.
Speaker Change: Good morning, and you all hear me okay.
Speaker Change: Oh, Yes can you speak a little louder. Please.
Speaker Change: Yes.
Speaker Change: I'll just switch off my headset I find that's probably a bit better.
Speaker Change: Yes, Yeah, we can hear you.
Speaker Change: Better yes, Okay wonderful I have a couple of questions first of all congratulations on a great quarter and.
Speaker Change: And yeah really showcasing.
Speaker Change: The quality of your assets here.
Speaker Change: The first question I had has to do with the guidance for Sun belt a backbone.
Speaker Change: Of U S 388, an ounce for the operating margin I know this is a new metric as parents more recent discussion, but I was just wondering.
Speaker Change: Is this considered basically it's the cashflow cost before capex and tax or how is this.
Speaker Change: I guess how is this metric are determined basically.
Speaker Change: Yeah.
Speaker Change: Thank you very much.
Speaker Change: We mentioned D C new metrics draws a this does not include and taxis.
On the Capex.
Speaker Change: This is purely from taking the magic question I'll seize on adding.
Speaker Change:
Speaker Change: Excuse me.
Speaker Change: <unk> not been cost that's oh.
Speaker Change: Oh, okay, Okay perfect.
Speaker Change: And then the second question I had has to do with the silver that guidance.
Speaker Change: I'm just wondering what the implied silver grade is within the Sharepoint eight five gram per ton gold equivalent head grade them on both the meld and for mind.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: But it seemed like a great is.
Speaker Change: How about.
Speaker Change: 11 grams per tonnes, but do you see that grade absolutely that.
Speaker Change: Okay.
Speaker Change: And that's for both mind and milk.
Speaker Change: No no no. He is different are they too are passed you know us and Bachelor degrees wrong is P. O N E.
Speaker Change: Zero production with you so I want to be wrong.
Zero production on our operations and they aren't be good yeah I agree. It is a volatile depending on the kind of materials that we purchase from the from the TARP Archie I would see us I asked three around 54 grams per tonne.
Speaker Change: As low as one <unk> to 116 times protons.
Speaker Change: Okay, but for the Golden clean I set itself I just noticed in the more recent.
Speaker Change: There was a the gold ounces or sorry, the gold grade and then the gold head grade reported but not for silver.
Speaker Change: I was just wondering we had about nine I think grams per tonne for gold, but I was just wondering what the line and.
Speaker Change: Gold grades were trickled in clean.
Speaker Change: Yeah, I just want to clarify something for you suddenly started out good mine is purely God I'm pretty sure I.
Speaker Change: So you're right. It's just your buyer pool darts are we are forecasting less than actually meet on ounces, our CEVA for less yeah, sorry, you see very very minor in our operations and good inquiry.
Speaker Change: Yes for sure Yeah. It was just we had just model it based on the studies I just wanted to see I will have to just kind of re jig our model.
Speaker Change: In and around nine crowds.
Speaker Change: I believe on that.
Speaker Change: Yeah, we would get back to you on the on these two are great.
Speaker Change: Gunshot Ghansham asked before we will provide.
Speaker Change: Right right out to you shortly.
Speaker Change: Okay, great. Thank you I really appreciate that and I have where I'm hogging. The line here, but I just have one more question related to that well for their recoveries for Goldman clean what were they around for this past quarter.
Speaker Change: I don't think I saw that he said, it's roughly about 60 as you see it are producing record week.
Speaker Change: Wonderful.
Speaker Change: And I'll see if I have I actually had one last one I was just curious on the royalties the royalties split between payments I guess between the two assets I know, that's a pretty granular detail, but I'm. Just curious if you've kind of had that are top of mind by any chance.
Speaker Change: Yeah, So it's mostly related to Golden Queen and its between two five and two.
Speaker Change: Two 8% more or less.
Speaker Change: Okay.
Speaker Change: And but for the total royalty payments in the last quarter.
Speaker Change: Do you have the breakdown of what what the costs would have been her each asset.
Speaker Change: Yeah, we can get that to you.
We don't right now we don't have to break the breakdown by asset, but you can certainly get that for you.
Speaker Change: Okay, Great I think those are all my questions sorry for really getting into the nitty gritty here at that time, I really appreciate that feedback and and thanks again.
Speaker Change: And and great job I got on a corner.
Speaker Change: Thank you Adena.
Speaker Change: Any further questions.
Speaker Change: Once again, if you have a question. Please press Star then one.
Speaker Change: As there are no further questions. This concludes the question and answer session and today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Speaker Change: [music].