Jon Cartu Announces Americas Gold and Silver Provides a Relief Canyon Construct... - Jonathan Cartu Residential & Industrial Construction Services
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Jon Cartu Announces Americas Gold and Silver Provides a Relief Canyon Construct…

Americas Gold and Silver Provides a Relief Canyon Construct...

Jon Cartu Announces Americas Gold and Silver Provides a Relief Canyon Construct…

TORONTO–()–Americas Gold and Silver Corporation (TSX: USA) (NYSE American: USAS) (“Americas” or the “Company”), a growing North American precious metals producer, provides a construction update on the Relief Canyon gold mine in Nevada. The Company also reports Q3, 2019 production and operating cost results on a consolidated and individual basis for its Cosalá Operations in Mexico and Galena Complex in Idaho. All figures are in U.S. dollars.

Third Quarter Highlights

  • Consolidated silver production of approximately 1.3 million silver equivalent1 ounces and 300,000 silver ounces, representing a decrease of 7% and 5%, respectively, compared to Q3, 2018.
  • Consolidated cash costs2 were approximately $12.83 per silver ounce and consolidated all-in sustaining costs (“AISC”) were approximately $23.01 per silver ounce, both representing an increase year-over-year and from the prior quarter. These increased costs were primarily the result of lower realized by-product prices and expected lower production at the Galena Complex in preparation for the re-capitalization plan.
  • The Relief Canyon mine development continues on budget and on time for first gold pour before the end of the year. Construction continues at a rapid pace and the Company remains fully funded to bring the Relief Canyon Mine into commercial production by the end of Q1, 2020.
  • Milled tonnage at the Cosalá Operations increased by 14% year-over-year resulting in production of approximately 1.0 million silver equivalent ounces, including approximately 129,000 silver ounces. Cash costs were approximately negative ($10.82) per silver ounce representing an increase of 41% when compared to prior quarter, and AISC were approximately negative ($1.49) per silver ounce, an 87% increase when compared to the prior quarter, largely due to lower by-product metal prices and higher treatment and refining charges.
  • On September 9, 2019, Americas announced a strategic joint venture agreement (the “Agreement”) with Mr. Eric Sprott to recapitalize the mining operations at the Galena Complex, effective October 1, 2019. The goal of the Agreement is to position the Galena Complex to significantly grow reserves and resources, and increase production while reducing operating costs at the mine over the next two years.
  • Gold equivalent reserves (including silver reserves) increased approximately 250% and increased by 90% on a per share basis year-over-year, including an additional 653,000 gold ounces and 11.5 million silver ounces, respectively.

“The third quarter was a busy and successful period for the Company. The Cosalá Operations continued its strong operational performance generating free cash flow, Relief Canyon construction significantly advanced toward first gold production this year and the Company increased its precious metal reserves by approximately 250% year over year,” said Americas President and CEO Darren Blasutti. “Furthermore, our creative transaction to joint venture the Galena Complex with Eric Sprott allowed us to couple Galena’s significant silver leverage with the necessary capital to grow silver reserves, increase silver production and reduce operating costs into a rising silver market over the next two years for the benefit of our shareholders.”

Relief Canyon Update

Re-development of the Relief Canyon open pit is advancing to support a smooth ramp-up in material movement. Efforts have focussed on pioneering of the ultimate high wall and initial waste movement from the pit area. Construction continues at a rapid pace as the Company prepares to pour gold before the end of the year. Leach pad construction is approximately 90% complete with approximately 3,000,000 square feet of liner now installed. Overliner crushing is complete and placement of the material is advancing with the liner deployment. The primary crusher has been set on its concrete pad and installation is progressing in parallel with that of the crushed ore reclaim tunnel and overland conveyor. All grasshopper conveyors have been delivered.

Initial ore placement is targeted for mid-November with solution application to begin shortly thereafter. The ADR plant is receiving its final upgrades including the installation of new mercury abatement equipment and a revamped electrowinning area. First gold pour is expected prior to year end with commercial production anticipated by the end of Q1, 2020.

Further information on the Relief Canyon development will be made available periodically on the Company’s website as construction progresses at www.americas-gold.com.

Strategic Joint Venture with Mr. Eric Sprott at the Galena Complex

Due to low silver prices and limited funding available from the capital markets for silver operational improvements since 2012, Americas has spent minimal funds at the Galena Complex to replace worn equipment, update aging infrastructure, complete stope development, and exploration drilling. In 2017 and 2018, the Company focused available capital on developing the San Rafael mine in Mexico which has become a significant free cash flow generating asset. Americas is currently allocating all of its available capital to re-start the Relief Canyon mine in Nevada, which is scheduled to begin producing gold in late Q4, 2019.

As a result, the Company announced a strategic joint venture agreement with Mr. Eric Sprott on September 9, 2019 to recapitalize the mining operations at the Galena Complex. The goal of the joint venture is to position the Galena Complex to significantly grow reserves and resources, increase production and reduce operating costs at the mine over the next two years. The strategic 60/40 joint venture will allow Americas to advance development, modernize infrastructure, purchase new mining equipment and target exploration potential away from current operating areas. Effective October 1, 2019, Mr. Sprott initially invested US$15 million to fund capital improvements and committed another $5M to fund operations for the first year to earn a 40% interest in the Galena Complex. Americas will invest an additional US$5 million to fund further capital improvements in late 2020. After the first year of operations under the Agreement, the parties will revert to their percentage ownership interests to fund capital projects and operations as required. Oversight of the joint venture will consist of two nominees from Americas and one nominee from Mr. Sprott. Americas will continue to manage the day-to-day operations so long as it retains an interest in the joint venture. Further guidance on the capital projects, operational funding and timing will be provided in the new year after the approval of annual budgets by the Oversight Committee. Americas intends to suspend further disclosure of certain operational metrics such as production, cash cost, and AISC for the Galena Complex until the recapitalization plan is substantially completed, estimated to be by the end of fiscal 2021.

As a result of the 40% divestment and lower silver production from the Galena Mine, the Company will be unable to make full year silver production guidance but is expected to make the lower end of silver equivalent production and cash cost ranges.

Consolidated Third Quarter Production Details

Consolidated silver production for the third quarter of 2019 was approximately 300,000 ounces and silver equivalent production was approximately 1.3 million ounces, a decrease of 13% and 20% year-over-year respectively. Consolidated cash costs increased 55% to $12.83 per silver ounce and AISC increased 42% to $23.01 per silver ounce, compared to the previous quarter. Consolidated zinc production increased by 28% year-over-year, while consolidated lead production decreased slightly by 7% compared to the previous quarter due to low throughput and grades at the Galena Complex.

Table 1

Consolidated Production Highlights

 

Q3 2019

Q3 2018

Change

Q2 2019

Change

Processed Ore (tonnes milled)

180,582

170,379

6%

186,310

-3%

Silver Production (ounces)

299,421

323,497

-7%

345,695

-13%

Silver Equivalent Production (ounces) 1

1,338,568

1,410,909

-5%

1,683,358

-20%

Silver Grade (grams per tonne)

69

77

-11%

76

-9%

Cost of Sales ($ per equiv. ounce silver)1

$11.06

$9.08

22%

$8.75

26%

Cash Costs ($ per ounce silver)2

$12.83

$4.95

159%

$8.28

55%

All-in Sustaining Costs ($ per ounce silver)2

$23.01

$15.94

44%

$16.15

42%

Zinc Production (pounds)

10,103,688

7,906,601

28%

11,150,174

-9%

Lead Production (pounds)

6,766,804

7,536,660

-10%

7,237,607

-7%

Cosalá Operations Production Details

The Cosalá Operations produced 128,779 ounces of silver during the third quarter of 2019 and 1.0 million ounces of silver equivalent during the same period at cash costs of negative ($10.82) per silver ounce and AISC of negative ($1.49) per silver ounce. Silver production increased by 26% while silver equivalent production increased by 13% over the prior year. Cash costs and AISC decreased by 41% and 87%, respectively, compared to Q2, 2019, due to lower base metal prices despite significant increases in zinc and lead production year-over-year.

Table 2

Cosalá Operations Highlights

 

Q3 2019

Q3 2018

Change

Q2 2019

Change

Processed Ore (tonnes milled)

151,248

132,902

14%

156,998

-4%

Silver Production (ounces)

128,779

102,521

26%

145,410

-11%

Silver Equivalent Production (ounces) 1

1,003,318

888,342

13%

1,300,009

-23%

Silver Grade (grams per tonne)

46

44

5%

49

-6%

Cost of Sales ($ per equiv. ounce silver)1

$8.07

$6.85

18%

$5.51

47%

Cash Costs ($ per ounce silver) 2

-$10.82

-$22.42

-52%

-$18.27

-41%

All-in…

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