Full Year 2023 Andean Precious Metals Corp Earnings Call
Yeah.
Speaker Change: 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.
Speaker Change: As a reminder, this call is being recorded.
Speaker Change: Host for today is Chris ran N D S Vice President of Investor Relations Ms. 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.
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 and in P. M Dot com.
Speaker Change: With us on today's call is Alberto morality Indians executive Chairman and CEO, Juan Carlos Santa Bell, Our Chief Financial Officer, and Susan R. <unk> R. E V P finance.
Speaker Change: 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 that Andy.
Alberto: Our new leadership team has significantly advanced the company's corporate strategy.
Alberto: Meaningful step to reposition and grow and again into a mid tier producer focused on the Americas.
Speaker Change: During 2023, and some Bartholomew, which strengthen our focus on maximizing cash flow, 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 tailing silver recovery project.
Speaker Change: I am pleased to say that at some bartolomei ended the year on a positive note meeting its 2023 revised production guidance.
Speaker Change: Throughout the year the facility did not report any lost time incidents were negative environmental issues.
Speaker Change: 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.
Speaker Change: 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 are poised to materially increase our gold and silver production and hence cash flow generation.
Speaker Change: Complete our sailboat tailings recovery project at San Bartolome.
Speaker Change: And achieve operations production and exploration milestones.
Speaker Change: On the corporate side 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.
We are no longer minding, our high cost low grade by Atlas in Bolivia.
Speaker Change: We are focused on processing better great third party material much of which is secured in larger volumes and under longer term contracts.
Speaker Change: Over the course of 'twenty to 'twenty, three we signed agreements for about 1 million tons of higher margin third party material, but it will help increase profitability and drive cash flows going forward.
These contracts include significant amount of materials from Bolivian 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.
Right now we are targeting completion at the end of April.
Speaker Change: D. As it's expected to represent about 16% of somebody told him with silver production in 2024.
Speaker Change: We recently put out our Ni 43, 101 technical report.
Speaker Change: Repair by Sergei consulting it puts reserves on the book and extend the operating life of somewhat taller made by 4.6 years.
Speaker Change: The report considers only are larger volume longer term contracts of the company's purchases and our SDF 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 for our growth strategy in Bolivia.
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 flooring 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.
Speaker Change: Forward, we see strong potential for further growth at somewhat taller.
Speaker Change: As mentioned upfront.
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 a single metal producer and in a single jurisdiction.
Speaker Change: Most importantly, Golden Queen and it's solid 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.
Speaker Change: 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, namely optimizing the mine plan improve.
Speaker Change: Improving more control or recovery in production in.
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 solid at mountain and add to the operation's life of mine.
Speaker Change: As you know we.
Speaker Change: We 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.
Speaker Change: Through which we resumed full operations.
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.
Speaker Change: You all.
Speaker Change: Following the Golden Green acquisition deal, it's a very different company.
Speaker Change: It was just 12 months ago.
Speaker Change: We have developed a strong platform to support our five years ambition 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 that is expected to drive growth and cash flow and profitability going forward.
Speaker Change: Our production is expected to more than double in 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 Carlos who will review our financials in more detail.
Carlos: Thank you Alberto.
Carlos: To better understand our fourth quarter and for all year 2023, let's look at the impact of Golden Queens acquisition on our financial statements.
Carlos: Going to slide 13.
Carlos: With Golden Queen we acquired net assets with a preliminary fair value of $53 $5 million for accounting purposes. The aggregate purchase consideration for the acquired assets net of the liabilities is $17 million. This in.
Carlos: An initial cash payment of $5 million, plus 2.8 million net working capital adjustments and towards deferred payments of $5 million each.
Carlos: <unk> value, which is $9 2 million.
Carlos: Market conditions were in our favor during acquisition negotiations that.
Carlos: The result 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.
Carlos: Ladies.
Carlos: 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.
Carlos: The $36 5 million purchase gain has been recognized in our P&L.
Carlos: However, I should highlight that we have one year from today to finalize the acquisition accounting.
Carlos: Moving to slide 14.
Carlos: Our yearend P&L also includes the impact from Goldman Queen for the stop period from November 24, the acquisition date.
Carlos: December 31st 2023.
Carlos: Which golden Queen country muted.
Carlos: Jean <unk> 3 million in revenue.
Carlos: <unk> 4 million in pre tax income in 2023.
Carlos: It should be noted that the acquisition had been completed on January 1st Young refreshed 2023 Golden Queens full year contribution to revenue would have been $91 3 million.
Carlos: This would have increased our constantly data twenty-three revenue to $216 $7 million.
Carlos: This brings us to slide 15.
Carlos: Discuss our consolidated operating and financial performance.
Carlos: Regionally the fourth quarter was the strongest quarter of the year for San Bartolome.
Carlos: Propelling full year production to four 7 million ounces of silver equivalent.
Carlos: 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.
Carlos: Our average realized silver price per ounce in 2021 'twenty $4.14.
Carlos: Performing the average market spot price by 4%.
Carlos: The result was a 16% increasing full year 2022 revenue.
Carlos: Prior to the previous year, and a 46% increase in consolidated cross operating income.
Carlos: G&A was down nearly 10% year over year, despite incurring one time acquisition costs of $4 6 million.
Relating to external legal financial and advisory fees as well as due diligence cost.
Carlos: As discussed we recognized a $36 5 million purchase gain on the Golden Queen acquisition, which bolstered our bottom line to $38 5 million comparatively 10 million loss in 2022.
Carlos: Adjusted EBITDA, which excludes the purchase gain increased to $20 million up from $3 5 million in the previous year.
Carlos: Overall 2023 showed improvement.
Carlos: And we believe will continue in 2024.
Carlos: Moving on to our capital structure on slide 16.
Carlos: As at December 31st 2023.
Carlos: Even with the acquisition of Goldman Queen, which doubled the size of our company, we had liquid assets of nearly 73 million, including $65 million in cash.
Carlos: A negative net debt.
And the $100 million of working capital.
Carlos: And provide further financial flexibility at the end of February.
Carlos: To obtain a $25 million secured line of credit.
Carlos: Our mandate is and will continue to be maintain our balance sheet to support future growth.
Carlos: Turning now to our 2020 for your guidance on slide 17.
Speaker Change: Please note that as we go through this section the numbers I provide for production.
Speaker Change: Costs 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 2024 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. F project is completed in Q2.
Speaker Change: We are estimating an average head grade of 144 grams per tonne and they calculated recover recovery rate of 78% the same as last year.
Speaker Change: I'd Golden Queen.
The impact of Decembers fire on the first quarter. The 'twenty 'twenty four production outlook is for 60000 ounces of gold equivalent.
Speaker Change: This equates to about $5 4 million silver equivalent ounces.
Speaker Change: To achieve 60000 ounces.
Speaker Change: Total mine tonnage is estimated to be in the range of $26 8 million tons, including 3.9 tonnes of war.
Speaker Change: So be stuck to the leach pad.
Speaker Change: The resulting strip ratio is 5.9 to one.
Speaker Change: Our cost guidance is outlined on slide 18.
Speaker Change: With the change in some bartolome business model and the focus on cash flow, we are adopting to real cost metrics.
Speaker Change: The first is a cash cross operating margin, which in 'twenty 'twenty four is expected to be $3 88 per silver equivalent ounce compared to $2 71 in 2023.
Speaker Change: The second new metric matrix is cross margin ratio anticipated to be 19, five in 20% in 'twenty 'twenty four.
Speaker Change: At 12, 4% in 2023.
Speaker Change: From Goldman Queen or 'twenty 'twenty four outlook is for operating cash cost per gold equivalent ounce produced of 1500.
Speaker Change: And a sick of.
Speaker Change: 17, 50 per gold equivalent ounce sold.
Speaker Change: Finally, turning to our Capex guidance on slide 19.
Capex, which is expected to be in the range of $24 million.
We'll be fine lines from cash on hand.
Speaker Change: Cash flow from operation and third party financing.
Speaker Change: Much of the Capex spend instead 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 cost and extend the mine life there.
Speaker Change: The money, we're spending easterly 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 on their five year arrangement.
Speaker Change: And the cost benefit derived from the efficiencies and optimization.
Speaker Change: Outweighed the costs to finance.
Speaker Change: Our Capex had 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 in the some Bart San Bartolome 'twenty 'twenty for sustaining Capex.
Speaker Change: It 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.
Speaker Change: Yeah.
Speaker Change: Thank you Juan Carlos.
Speaker Change: 2023 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 and.
Speaker Change: And leverage our experience and expertise to optimize operations and productions.
Speaker Change: Improved margin 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: And 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.
Speaker Change: Therefore as of Monday, we had.
Speaker Change: Have purchased almost $8 5 million of our shares through our initial and current and CIB programs.
This concludes our remarks, we will now open the lines for questions.
Speaker Change: Operator.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
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Youre using a speakerphone please pick up your handset before pressing any keys to withdraw 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.
Speaker Change: 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 is 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 bought back home.
Speaker Change: Of U S 388, an ounce for the operating margin I know this isn't new metric.
Speaker Change: More recent discussion, but I was just wondering.
Speaker Change: Is this considered basically it's the cash flow cost before capex and tax or how is this.
Speaker Change: I guess how is this metric determined basically.
Speaker Change: Yeah.
Speaker Change: Thank you very much.
Speaker Change: As we mentioned on our D C. New metrics draws a this does not include.
Speaker Change: Taxes.
Speaker Change: On the Capex.
Speaker Change: This is purely taking D no magic.
Speaker Change: The cost saves on adding.
Speaker Change: The business Julian.
Speaker Change: There are not being cost that's all.
Speaker Change: 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 Ah.
Speaker Change: <unk> five gram per tonne.
Speaker Change: Gold equivalent head grade them on both the milk and for mind.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Great.
Speaker Change: Hmm.
Speaker Change: How about.
Speaker Change: 11 grams per tonnes.
Speaker Change: Are you seeing that great absolutely that.
Speaker Change: Okay.
Speaker Change: And that's for both mind and milk.
Speaker Change: No no no he is different too.
Speaker Change: No same backdrop Reis Rockies Piceance I E.
Speaker Change: Zero production.
Speaker Change: Iraq.
Speaker Change: Zero production on our operations, Andy I'd be good yeah, I agree it is a volatile depending on the kind of my two has gone with branches from the from the TARP Archie I would see US I asked three around 54 grams per tonne.
Speaker Change: Laura Assam one.
Speaker Change: 180 to 116 comms protons.
Speaker Change: Okay.
Andy: But for the Golden Queen asset itself I just noticed in the more recent report there was that the gold ounces or sorry, the gold grade and then the gold head grade reported but not for silver.
Andy: I was just wondering we had about nine I think grams per tonne for gold, but I was just wondering what the ninth.
Andy: And now the gold grades were strictly within clean.
Speaker Change: Yeah, I just want to clarify something for you suddenly started out good mine is purely God pretty sharp.
Speaker Change: Just your buyer pool darts are we are forecasting less than actually a million ounces of silver for next year are usually very very minor in our operations.
Speaker Change: Good inquiry.
Speaker Change: Yes for sure Yeah. It was just we had just modeled it based on the studies. So I just wanted to see perhaps but just kind of re jig. Our model we had put in around nine.
Speaker Change: Great Okay.
Speaker Change:
Speaker Change: Yeah, we would get back to you on the Oh, These who are great at that time.
Speaker Change: <unk> got you are asking for a week.
Speaker Change: Well I'm glad that you shop at.
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 the recoveries for Goldman clean what were they around for this past quarter.
Speaker Change: Yeah.
Speaker Change: I don't think I saw that.
Speaker Change: Roughly about 60 as you see it are you saying recovery.
Speaker Change: Wonderful.
Speaker Change: And I'll see if I have I actually had one last one.
Speaker Change: 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.
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 great quarter.
Speaker Change: Thank you Adena.
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: Okay.
Speaker Change: [music].