Q1 2025 Andean Precious Metals Corp Earnings Call

Speaker Change: Good morning. Welcome to Andean Precious Metals First Quarter 2025 Results Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded.

Speaker Change: After the presentation, there will be an opportunity to ask questions. To join the question cue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator for pressing star than zero.

Speaker Change: Who now like to turn the conference over to Dom Kaisa, like VP Finance, please go ahead.

Dom Keizer: Thank you, operator, and good morning, everyone. Fortunately, Amanda Mallough's office is morning to turn Ellis, and I'm filling in as host for this call.

Before we get started...

Dom Keizer: I would like to point out that today's during today's call, we may make forward looking statements as defined.

Dom Keizer: Under Canadian Securities Law. I ask that you view our slide presentation for cautionary language regarding forward-looking statements and risk factors pertaining to these statements.

Dom Keizer: Our press release, MDNA, and financial statements are available both on Cedar Plus and on our corporate website, AndeanPM.com.

Dom Keizer: With us on today's webcast is Alberto Morales, Andean's Executive Chairman and CEO , Yohann Bouchard, Andean's President, and one Cardinal Sandoval, our Chief Financial Officer.

Dom Keizer: Following management's formal remarks, we will then open the call to questions

And now, over to Alberto.

Thank you, Dom, and welcome everyone.

Alberto Morales: I am pleased to report that Andean delivered a strong start to 2025, in the first quarter with generated consolidated revenue of 62 million, a 44% increase over Q1 of last year.

Alberto Morales: driven by higher realized gold and simple prices and a solid production performance across both of our operations.

Alberto Morales: We produce 21,361 gold equivalent ounces in the quarter, slightly ahead of Q-1 2024.

Alberto Morales: And more importantly, our growth operating income grew significantly to 23.1 million compared to just 0.3 million in the same period of last year.

Alberto Morales: These strong, perforating performance flow through the bottom of the line resulting in a net income of 14.6 million, or 10 cents per share on a valued basis.

Our balance sheet remains a real strength.

We ended the quarter with 75.7 million inaccuracies.

Up from 61.4 million a year ago.

Alberto Morales: while also reducing total liabilities compared to end of the year 2024 by $8.9 million.

Alberto Morales: In addition to these financial achievements, we continue to deliver on several strategic initiatives.

Alberto Morales: We completed our graduation to the TSX Main Board in January , reflecting the growing scale and maturity of our business.

We also announce positive exploration results at Golden Queen.

Speaker Change: Finally, we strengthen our leadership team with the incorporation and appointment of Yohann Bouchard as president of the company.

Speaker Change: Overall, it was a very strong start to the year and we are well positioned to continue building on this momentum.

Speaker Change: With that, I will now turn this over to Johan to walk you through the operational resource in more detail.

Well, thank you, Alberto, and good morning all.

Johan Bouchard: So, go the current production in Q1 was 21,361 ounces, a slight increase from the same period of last year.

Johan Bouchard: The production increase is driven by higher production at San Bartolome, which is partially upset by slightly lower goal equivalent production at Golden Queen.

Johan Bouchard: Revenue for Q1 2025 is $62m, a significant increase in comparison to $43.1m in Q1 2024, large deep ribbon by higher average realized gold and silver prices and increased sales volume.

Johan Bouchard: Debert Cash, Gross Operating Margin, Assange Batolemi, is driven by a favorable foreign exchange currency, better processing recovery, and higher throughput.

Johan Bouchard: Lower operating cash costs at Golden Queen in comparison to the same period of last year is due to the differ-stripping, which is allocated to the sustaining cat-ex and cost allocation to growth capital for the construction of an optimized main all-road.

Johan Bouchard: Higher on the same cost and comparison to the first quarter of last year is due to the stature, replacement cost, improvement to the pressure circuits, and overall on production

Johan Bouchard: Looking at our operations, I will begin by sharing some, by sharing an update on Sandoval Potomay, where we see notable increase of production and better costs.

Johan Bouchard: Historically, Q1 is the slowest quarter for Sun Bouchard and me due to the seasonal weather condition impacting the operations.

Johan Bouchard: Gold Equivalent Production for Q1 2025 was 10,172 ounces driven by Ayer Miltruput.

Johan Bouchard: Iyer Silver Recovery and Iyer Gold, Great Preciody of Said by Lower Civil Great in Comprehensive the same period of last year.

Johan Bouchard: while pretty expenses were positively impacted by several foreign exchange-reflecting lower cost of sales.

Johan Bouchard: Revenue increased significantly compared to Q1 2024 largely due to higher average relies silver price and the gold and silver production increase.

Johan Bouchard: Net inventory movement in Q1 2025 can be explained by the timing of gold and timber sales at the beginning and the end of the period.

Johan Bouchard: Capital expenditure or lower due to the completion of the finds, the budget's facility construction in the first half of 2024.

Johan Bouchard: Overall, we continue to demonstrate strong cash operating performance with an increase in cash growth operating margin and growth margin ratio, reflecting higher civil price and better operating costs.

Now turning to Golden Queen.

Johan Bouchard: So, Gold equivalent production for Q1 2025 was 11,189 ounces, which is aligned with the first quarter of 2024.

Johan Bouchard: On an operational perspective, Tolton's mind is lowered in the center of last year while the stacking rate is higher, which is due to the mining sequence and the stacking capacity.

Johan Bouchard: The factor was replaced at the end of the quarter, and increasing stacking performance is anticipated over the next couple of quarters.

Johan Bouchard: In the first quarter, Golden Ventory increased at the Leach Pad, which is expected to be recovered in the upcoming quarters.

Johan Bouchard: Riven you increase over Q1 2024, driven by higher average-realized gold and silver prices, more than upsetting higher capital expenses in comparison to the first quarter of last year.

Johan Bouchard: As mentioned previously, lower operating cash cost can be explained by different stripping costs, and costs allocated to grow capital regarding the construction of the optimized always road, which should be complete in the second water.

Johan Bouchard: The new all-road will significantly decrease the cycle time and subsequently the all-in cost.

Johan Bouchard: The Eier Ongensis Seining Coss is used at a statter replacement cost, and pining relative to the maintenance on six and mobile equipment with the objective of decreasing operating costs.

Johan Bouchard: On the following slide, I would like to touch on our 2024 exploration activities at Golden Queens in our plans for 2025.

Johan Bouchard: As we share on May 1st, 2025, we're pleased with the progress on our exploration programs as we look to extend the lives of mine at our Golden Queen

Johan Bouchard: Or, expression-focused remains on expanding the current mining zone on the south side of the open pit with the ultimate objective of increasing the life of mine.

Johan Bouchard: The TI lights from a 2024 Exploration Program or the following.

We complete.

Johan Bouchard: 29 Shuttle in Field Reversed Recreation Rule All, totaling 4,617 meters, disincluded, worked in the Silver Queen, South, East, Trent, and Alpha Sun, confirming the surgical model and deviating or approach for the next phase of court drilling.

Johan Bouchard: We drill 23 core holes, totaling 4123 meters and successfully intersect gold and silver in all 23 holes.

Johan Bouchard: The objectives were to increase mineral resource and reserve in the Silver Queen Saudis and Alpha Centuria, as well as to test the Ilta Geological Continuity.

Here are some notable results.

Johan Bouchard: At Silver Queen Saudis, 12-cold-old extended demoralization by 100 meters on strike, including O.S. Q24-06 with 1.67 ground-button of gold over 5.5 meters.

Johan Bouchard: At Al Sassan, 7 corals including AL 24-02 intersecting 0.88 grams per gram of gold over 93 meters.

Johan Bouchard: And finally, At Hilltops, Folkall Oles, Inc. SQ-24-12, which returned 1.67 gram per ton of gold over 6 meters, starting at only 18 meters from surface.

Johan Bouchard: We are very pleased with the IlToperia which provide short-term mining flexibility. In fact, we anticipate first or from IlToperia in Q3 2020-25.

Johan Bouchard: Alpha 2025, we have allocated a initial budget of $2.8 million to continue with the Explorations Strategy, focusing on the reserve and resources development.

The Programming Toots

Johan Bouchard: 4,267 meters of drilling in the Silver Queen Solidities Extension, Ailtop and Alpha Sanarea.

Johan Bouchard: We plan to release more exploration results in the second half of 2025 and we will update our Golden Queen Technical Report in the second quarter of 2026.

Johan Bouchard: With that, I will not turn the call over to GSC to see if you prove the financial highlights, do you see?

Speaker Change: Thank you, Yohann. Good morning, everyone. Let's go over the key financial highlights for the first quarter of 2025.

Speaker Change: Revenue for Q1 2025 total $62 million, a 44% increase from 43.1 in Q1 2024, driven by higher average realized golden silver prices and the increased production.

Speaker Change: Cost of sales decreased by 10% to $36 million from $40.1 million in Q1 2024, mainly due to the disciplined cost management, improved productivity, and favorably exchanged rates of

Speaker Change: Gross operating income increase significantly to $23 million from $312,000 in Q1 2024, reflecting the higher revenue and improved cost structure.

Speaker Change: Net income for the quarter was 14.6 million, or 10 cents per share, compared to a net loss of $76,000, or $0 per share in Q-120-24.

Speaker Change: Adjusted EBDA was 21.9 million, up from just 1 million in the prior year, reflecting strong operating performance.

Speaker Change: Free cash flow improved the negative $1.5 million, and improved them from negative $8.1 million in Q1 2024. Thanks to better operating cash flows partly offset by higher capital expenditures.

Speaker Change: Capital Expenditures were 9.4 million, up from 3.4 million in Q1 2024, as we continue to reinvest in our operations, particularly at Golden Queen.

Speaker Change: Cash and Cash Equivalents were 53.1 million at the end of the quarter, up from 41.5 million year over year, reflecting strong cash flows from corporations.

Speaker Change: We continue to demonstrate a very strong balance during Q1 2025. We made improvements in our net asset and net liability positions with significant accounts available in tax payments, all while maintaining a strong cash and liquidity position.

Speaker Change: Liquid assets are metric when looking at our total cash and investments less are line of credit, with $75.6 million as of Q1 2025, versus $61.4 million at the end of Q1 2024.

Alberto Morales: And now I'll hand it over to Alberto for closing remarks.

Thank you, J.C.

Alberto Morales: As we discussed earlier, exploration remains a critical pillar of our strategy.

Alberto Morales: We are encouraged by the progress of our 2024 drilling campaign at Goldenfreen, where we've seen promising results that could significantly expand our resource space and enhance the

Alberto Morales: Our exploration team continues to target high potential areas and we are committed to advancing this efforts 2020-25.

Our approach to capital allocation remains disciplined.

Alberto Morales: with a clear focus on investments that drive long-term growth and improve operational efficiency.

Alberto Morales: who are prioritizing the continued development of Golden Queen in San Bartolome, as well as key exploration projects that present the highest return potential.

Alberto Morales: Looking ahead, we expect production to ramp up in Q2 with steady and sustainable production levels in the second half of the year.

as previously communicated.

Alberto Morales: We are maintaining our full-year guidance and we anticipate stronger results in the later half of 2025.

Alberto Morales: A key part of our growth strategy includes seeking strategic M&A opportunities to further enhance our portfolio.

Alberto Morales: We are evaluating potential acquisitions that align with our long-term goals and can add significant value to the company.

Alberto Morales: This opportunity could enable us to expand our resource space and improve our operational footprint.

Alberto Morales: All while continuing to maintain our discipline approach to capital allocation.

Alberto Morales: With that, I now would like to turn the call over to the operator and open the floor for questions.

Operator

Alberto Morales: Thank you. To join the question cue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two.

Moderator: The first question comes from Justin Chan with SCP Resource Finance. Please go ahead.

Justin Chan: Hi guys, thanks very much for the update. My first question is just regarding, so I think this year, this 2-1 was pretty in line on operating metrics, it was just...

Speaker Change: Some difference between, let's say, EBITDA and operating cash register on working cap, could you could you talk us through I guess the changes there on inventory and pay abilities and do you expect that to unwind through the year or is your current working capital levels where you expect them to stay?

Speaker Change: Thank you, Justin. I think from a working capital perspective, I think for pretty much in line. I think that's what we expect to see throughout the year. And I guess with respect to the inventory levels, I guess the same, same, same pretty much stable. We can get back to you on that, but I would assume they would remain pretty much stable as they are right now.

Speaker Change: Okay, gotcha, thanks. And then just in terms of the improvement through the year.

Speaker Change: I guess, because you just maybe talked through, I guess it's Zen, Zen Bartolome, is that?

Speaker Change: Are there any key factors driving that there, or is San Bartello amazed more steady through the year, and then at Golden Queen? Is that mainly driven by the great profile?

Justin Chan: Yeah, I got answered that, Justin. At Sunbart, the increase in production is mostly driven by grade over quarter of quarter, and at Sunbart is by, I would say, stacking.

Sacky Performance Performance.

Speaker Change: Gotcha, so Sandbar is going to be more about grades, and Golden Queen is more about the stacking performance. Sorry about that.

Speaker Change: Okay, yeah, that makes sense. I was trying to mentally wrap up like stacking at St. Bart as maybe any sort of rethink the operation. Okay, so it's going to be volume driven, essentially more volume through the ear going clean and at St. Bart, more great driven.

That's correct.

Speaker Change: Gotcha, thanks. And then in terms of updating your resource, your mind plan, what's for it? I guess, you know, based on your current exploration budget, what's your thinking on timing there?

Speaker Change: Yeah, so what's it is, basically, is we compiled the drilling campaign of 2024 in our new model. It all goes down, but we're evaluating it now.

Speaker Change: Hopefully we're going to do what we're trying to fast-track, call Exploration Campaign this year to ink to, I would say, add much more as we can in formation for the new Resurven Resources update.

Speaker Change: that were planning to start the beginning of September to have it ready by year end.

Speaker Change: But yeah, overall, everything is advancing well and based on that, we're looking at producing a technical report.

Speaker Change: So, but yeah, I'm really pleased with the results that we have. So, I mean, the vehicle aspect is, doesn't seem really well. And actually, on the operational aspect as well, I mean, we're making good progress at Golden Queen.

Speaker Change: got you so effectively that the cutoff date for drilling will be maybe something like September and then.

Speaker Change: Yeah, we were planning to close the data based on September 1st and after that do the work and have everything ready to have everything with the technical report aligned with our UN Reserve and Resources.

Speaker Change: Gotcha, and from what you see, how sensitive is it to pricing and how much of a consideration is that as you kind of look at what the update.

Speaker Change: We're not there yet. We're not there yet. We're still working on what we're doing now. We're using pretty much the same gold and silver price as we have before. And we're going to just all that in time.

Allison Carson: The next question comes from Alison Carson with Desjardins. Please go ahead.

Allison Carson: Thanks. Good morning, everyone. Thanks so much for taking my questions today. My first question is on CAPEX at Golden Queen. In terms of spending for the remainder of the year, CAPEX expect us to be later NH2 or should it be pretty even over the remaining three quarters.

Speaker Change: Yeah, we're sticking out of that dimension. We're sticking to our guidance, which is between 28 and 32 million dollars. Most of it will be headed to Golden Queen.

Allison Carson: of which around 12 to 14 on sustaining and 9 to 11 on growth.

Speaker Change: Yes, it's mostly front-ended, as you've probably seen. We already invested $9 million this quarter. So I think for specifically on Golden Queen, it'll be roughly around $4 million in sustaining Capix per quarter for the rest of the year.

Speaker Change: Okay, great. And then in terms of exploration of Golden Queen, are there any areas you're particularly excited about for the 2025 program and because your initial budget be increased based on drilling success?

Speaker Change: And then just finally, how are you thinking about exploration beyond the revised technical report next year? Will drilling be focused more just on reserve replacement or do you expect to do more exploration based drilling as well on an annual basis?

Speaker Change: I think that the idea is ready to focus on Alpha Sun, and I would see all the southern section to extend the deposits in that direction. We saw that the hilltop zone is expanding the current pit to about 100 meters in strike.

All the all, I'm in the hit.

Speaker Change: So we're going to continue to explore that zone with the objective of increasing reserves. That's the main idea, increasing life of mine. And starting, ready by, I would say nearby, by the already, I would sort of to design ideas and extending on a south side.

Speaker Change: And I would say El Pasoani is quite interesting as well. This is kind of a new zone. We do have some resources there, but it seems like...

Speaker Change: I mean, the drilling, the campaign that we designed brings some really good results, so we're really happy about that But I would say to increase reserves, we're going to more focus on extending the south side of the open pits

Speaker Change: Okay, great. Thanks so much for taking my questions and the additional color.

Thank you. Thank you.

Ben Peery: The next question comes from Ben Pirie with Atrium Research, please go ahead.

Ben Peery: Kyle Burdo, and J.C., and Captain Great Quarter, being our estimates.

Ben Peery: pretty broadly across the board. Most of my questions have been answered, but just on golden and queen with regard to the operating cash costs.

Ben Peery: coming lower than Ben Pirie's participation. Should we expect this to continue into Q2 and the rest of the year? You sort of mentioned it had to do primarily with the stack or being replaced. And so I would assume that that's going to continue over the next few quarters here.

Ben Peery: Okay, great. Thank you. And moving over to St. Bart, you know, obviously, or Sandberg, excuse me.

Speaker Change: Obviously, the gold price is still continuing higher. How do you expect your ore sourcing to change? Will you be receiving lower grade material now that the prices are higher? And therefore, will margins compress?

Ben Peery: or how do you expect margins to continue throughout the year as gold continues higher here?

Yes, let me respond to that.

In San Bartolome, we're actually pursuing different sites.

that our exploration team is looking at.

So that we...

are trying to look for higher grade zones.

Ben Peery: It is one of our main purposes of some art that it was explained before by Yohann that the results in some art is going to be mostly driven by higher average silver grates.

Ben Peery: So, we're focusing on that. Obviously, having said that to the extent that we still find or...

Ben Peery: that it's not as high as we were expecting, the higher...

Ben Peery: Current spot prices also certainly would motivate us to continue increasing the truth put in there as we can now be more flexible on getting maybe some lower grades that we wouldn't have otherwise taken.

Ben Peery: But it is our intent to focus primarily on flying secure, higher creator by sending our exploration and geology team to search for new areas around the vicinity of the plant.

Speaker Change: Okay, thank you, and sort of jump back to Golden Cream, but if your <expletive> is quickly just

Speaker Change: on what Justin sort of touched on and how production ramps pretty significantly from Q1 through into the back half of the year. You mentioned to me the volume driven

Speaker Change: in terms of that wrap. Do we expect that to continue into Q1 of next year, or will things sort of settle back down to what we sort of saw in Q1 of this year from a production standpoint?

Speaker Change: What we see based on our mind plan is we see our ramping up in Q2 and Q3 to stabilize in Q4 and going forward. That's what we see in our mind plan.

Okay, amazing. Thank you guys, that's all I had to do.

Okay.

Speaker Change: We have a follow-up question from Justin Chan with SCP Research. Please go ahead.

Hi, guys. Just one on San Bartolome, as is.

Speaker Change: and quite frequently the case. Your margins are running well above your guidance. I'm just curious, if everything stays the same on pricing and effects, what is your thinking there?

Speaker Change: Would your current margins in Q1 be what you would expect to stay?

Speaker Change: Justin, it's dependent on two things, prices, and then the Boliviano has an important impact on our margins, so it will depend mostly on that, I would say.

Speaker Change: is your margin to you on a fairly representative number? Oh, yes. Yes, I agree. I think it's a good, good average if you want to take it like that. Yes.

Speaker Change: Okay, all right. Great. Thanks very much. That's all I had. Thanks guys.

Speaker Change: This concludes the question and answer session. I would like to turn the conference back over to Alberto Morales for any closing remarks. Please go ahead.

Alberto Morales: Thank you, Operator, and thanks you all for joining us today.

We are very pleased with RQ-1 2025 results

Alberto Morales: With a strong balance sheet, an experienced leadership team now in place, and a clear growth strategy to drive the business forward, we are well positioned to pursue our vision of transformational growth into a nature producer.

Thanks again for joining and have a great day.

Alberto Morales: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.