Santacruz Silver sees strong production numbers from its Mexican operations

Santacruz Silver reported Q1 2025 silver equivalent production of 3.69 million ounces, driven by strong performance from its Mexican operations, particularly the Zimapan mine. Standalone silver production reached 1.59 million ounces, supplemented by zinc, lead, and copper output. Bolivian operations experienced typical first-quarter seasonality, with Bolívar and Porco seeing declines in silver production, though the company reaffirmed its focus on maximizing silver output amid favorable pricing.

Analysis

Santacruz Silver Mining reported a robust start to 2025, producing 3.69 million silver equivalent ounces in the first quarter, primarily driven by strong and steady output from its Zimapan mine in Mexico. This performance, which included 1.59 million ounces of standalone silver alongside approximately 20,700 tonnes of zinc, 2,700 tonnes of lead, and 279 tonnes of copper, was characterized by CEO Arturo Préstamo as a result of steady production growth, solid mill throughput, and disciplined mine execution in its Mexican operations. The company's strategic emphasis on silver production is proving timely, given the current favorable silver price environment. However, Bolivian operations, encompassing Bolívar, Porco, and Caballo Blanco, experienced production declines attributed to typical first-quarter seasonality and specific operational factors. At Bolívar, while silver equivalent output fell 15% quarter-over-quarter, silver production was nearly unchanged year-over-year due to a significant 19% increase in head grades, which offset a 14% decrease in processed ore and weaker recoveries. Porco saw more pronounced silver production drops of 17% quarter-over-quarter and 32% year-over-year due to reduced ore volumes and lower head grades, though temporary equipment issues affecting throughput have since been resolved. Caballo Blanco's 17% quarter-over-quarter decline in silver equivalent output was in line with planned seasonal reductions. The San Lucas feed sourcing business provided a degree of operational flexibility, helping to mitigate head grade volatility and support profitability, according to the company. Santacruz reaffirmed its commitment to maximizing silver production and metallurgical recoveries across its portfolio, capitalizing on the constructive price backdrop for the metal.

Key Decisions for Investors

• Investors should acknowledge Santacruz's strong Q1 silver equivalent output driven by its Mexican assets, while closely monitoring for a rebound in Bolivian production in subsequent quarters as seasonal impacts subside and operational issues are addressed.
• Consider the company's leverage to the favorable silver price environment due to its strategic focus on silver, and assess how this is balanced by the operational performance across its geographically diverse asset base.
• Evaluate the ongoing contribution of the San Lucas feed sourcing business in mitigating production volatility and supporting margins, particularly in managing the variability from Bolivian operations.