SilverCrest Metals (TSX:SIL) Inc. (NYSE:SILV) reported a robust second quarter in 2024, with significant increases in sales and a solid financial position. The company announced positive revisions to its annual guidance, citing strong operational performance as the driving force behind the optimistic outlook. SilverCrest's CEO, Eric Fier, highlighted the company's record revenue and mine operating earnings, as well as an increase in cash and bullion holdings. Interim CFO Rob Doyle expressed his enthusiasm about joining the team and noted the impact of the Mexican peso's volatility on net earnings.
Key Takeaways
- SilverCrest Metals Inc . revised its 2024 annual sales guidance upwards to 10-10.3 million ounces, from the previous 9.8-10.2 million ounces.
- The company reported record revenue of $72.7 million and mine operating earnings of $41.5 million for Q2.
- Cash costs are expected to be between $9.25 and $7.75, with all-in sustaining costs between $14.90 and $15.75 per ounce.
- Treasury assets increased by 34% to $122.3 million, including a 20% increase in gold and silver bullion holdings.
- The Las Chispas plant achieved a quarterly record with silver equivalent recoveries of 98.4%.
Company Outlook
- SilverCrest Metals is confident in meeting its improved 2024 guidance following strong H1 results.
- The company continues to focus on exploration at Las Chispas, aiming to convert high potential inferred resources to indicated resources and identify new targets.
- SilverCrest remains committed to its ESG initiatives, with a focus on water stewardship and community engagement in Sonora.
Bearish Highlights
- Q2 net earnings of $6.5 million were impacted by the weakened Mexican peso after the general election.
- The company observed unrealized foreign exchange losses of $2.8 million and a noncash deferred tax expense of $14.3 million due to the peso's depreciation.
Bullish Highlights
- Strong operational performance led to an increase in annual sales guidance.
- Record mine operating earnings and robust cash flow generation indicate a strong financial position.
- The company's balance sheet shows increased strength and flexibility with higher cash and bullion holdings.
Misses
- The aforementioned foreign exchange losses and noncash deferred tax expenses affected the company's net earnings for the quarter.
Q&A Highlights
- There were no questions from the phone audience during the Q&A session of the earnings call.
SilverCrest Metals Inc. has demonstrated a strong performance in Q2 2024, with the company's management expressing confidence in continued success. The company has made significant strides in its financial achievements, operational efficiency, and sustainability efforts, positioning itself well for the remainder of the year. Despite the challenges posed by exchange rate volatility, SilverCrest Metals maintains a positive outlook for its future endeavors.
InvestingPro Insights
SilverCrest Metals Inc. (SILV) has been a topic of interest among investors, especially following its impressive Q2 2024 performance. To provide further context to the company's financial health and potential for growth, a look at the real-time data and InvestingPro Tips can be enlightening.
InvestingPro Data reveals that SilverCrest Metals has a market capitalization of $1.14 billion, indicating its significant presence in the market. The company's P/E ratio, a measure of its current share price relative to its per-share earnings, stands at an attractive 9.41, suggesting that the stock may be undervalued compared to near-term earnings growth. Moreover, the company's revenue growth over the last twelve months is a staggering 147.1%, highlighting its ability to significantly increase sales.
From the InvestingPro Tips, two particularly notable points include:
1. SilverCrest holds more cash than debt on its balance sheet, which is a positive sign of financial stability and provides the company with flexibility to manage its operations and invest in growth opportunities.
2. The company's stock has experienced a considerable decline over the last week, which may present a buying opportunity for investors considering the company's solid fundamentals and recent performance.
These insights are just a glimpse into the comprehensive analysis available on InvestingPro, where users can find a total of 12 InvestingPro Tips for SilverCrest Metals Inc. at https://www.investing.com/pro/SILV. This valuable information could be instrumental for investors looking to make informed decisions about their investments in the metals and mining sector.
Full transcript - Silvercrest Metals Inc (SILV) Q2 2024:
Operator: Good day, everyone, and welcome to the SilverCrest Metals Second Quarter 2024 Results Conference Call. [Operator Instructions]. And it is now my pleasure to turn the floor over to CEO and Director, Mr. Eric Fier. Welcome, sir.
Eric Fier: Thank you, operator. Good morning, and thanks, everybody, for joining. Today, we'll be providing commentary on Q2 2024 results, after which, we'll be happy to take questions. The slide deck we'll be referring to is available on our website, silvercrestmetals.com under the Investor tab. Before we get started, I'd like to direct you to the forwarding statements on slide 2. All figures discussed this morning are in US dollars unless otherwise stated. All of the ounce and per ounce references discussed will be based on silver equivalent ounces sold, unless otherwise indicated. Our silver equivalent references are based on a gold-to-silver ratio of 79.5:1. On the call with me today is Rob Doyle, recently announced interim CFO; Chris Ritchie, President; and Cliff Lafleur, Vice President of Operations. Starting on slide 3, Q2 was another strong quarter for us, both operationally and financially. Given our strong performance in the first half of the year and to the start of H2, we have announced positive revisions to our annual sales, cash cost, and all-in sustaining cost guidance. These changes were all made under the same silver equivalent assumptions as our original guidance. Silver equivalent sales of 2.6 million ounces in Q2 and 5.2 million ounces in H1 provided us with the comfort to increase our annual sales guidance to 10 million to 10.3 million ounces from our original guidance of 9.8 million to 10.2 million ounces. With cash costs and all-in sustaining costs in the first half of the year coming below the bottom end of our original guidance, we have the confidence to revise our 2024 guidance for both. We now expect cash cost to be $9.25 to $7.75 and all-in sustaining cost to be $14.90 to $15.75 per ounce. Our balance sheet continues to demonstrate strength and flexibility with both cash and bullion holdings increasing notably in the quarter. On to slide 4, we are now pleased to be going into H2 with continued confidence in our execution. As I mentioned, we have improved our guidance for a total silver equivalent ounces sold, cash costs, and corporate all-in sustaining costs. Our exploration and sustaining capital remain unchanged. Before I pass the call to Rob to discuss our financial results in the quarter, I'd like to take a moment to officially welcome him to the team. We are thrilled to have Rob join as an interim CFO, bringing with him a wealth of experience. Welcome, Rob.
Rob Doyle: Thank you, Eric, and good morning, everyone. I am delighted to be joining such a high-quality company with an incredible asset and a talented management team. I'm very much looking forward to rolling up my sleeves in my new role. Moving to slide 5, in the quarter, we generated record revenue of $72.7 million and record mine operating earnings of $41.5 million. Cash flow generation in the quarter was robust with operating cash flow of $39.6 million or $0.27 per share. We also recorded strong free cash flow of $24.3 million or $0.16 per share, which came after investing $15.3 million in sustaining capital. Net earnings in the quarter of $6.5 million or $0.04 per share were impacted by a weakened peso following the results of the Mexican general election. It is important to note that we report earnings per share on a non-adjusted basis, which can result in some noise quarterly, particularly when we observed more notable exchange rate movements. The depreciation of the peso at the end of the quarter resulted in unrealized foreign exchange losses of $2.8 million and largely drove the noncash deferred tax expense of $14.3 million. This aspect of our tax is reflected in Note 18 of our financial statements, but in simple terms, reflects the change in our anticipated tax attributes over the life of the mine due to changes in the FX. If the recent volatility in the Mexican peso persists, we would expect that these noncash mark-to-market items will continue to be a feature of future earnings, both positive and negative. Current taxes of $11.8 million were higher than the prior period as a result of the utilization of all of our Mexican tax loss carryforwards in 2023, following strong operating performance since commercial production was achieved in Q4 2022. Our net earnings for the quarter added to the retained earnings on our balance sheet, something that we are very proud of as a young company. As students of the industry will know, retained earnings is a very rare achievement in our business. I'm now going to pass the call to Chris to speak to the treasury assets on our pristine balance sheet.
Christopher Ritchie: Thanks, Rob. Now on slide 6, treasury assets increased by 34% or $31.2 million to end the quarter at $122.3 million. We added 20% to our gold and silver bullion holdings and benefited from a $3.1 million mark-to-market increase as a result of strong metal prices in the quarter. As a result, bullion holdings grew to $24 million at the end of the quarter. Our bullion holding program continues to prove its merits with further additions expected in the second half of the year. I will now hand the call to Cliff to discuss operations at Las Chispas.
Cliff Lafleur: Thanks, Chris. I'm now on slide 7. Underground mining rates increased to approximately 1,100 tonnes per day, higher than our planned exit rate at the end of the year of 1,050 tonnes per day. This increase in productivity is due to the strong collaboration of our site team with our two mining contractors heading into H2 2024. The Las Chispas plant averaged 1,216 tonnes per day, and it is expected that throughout will average 1,200 tonnes per day as planned through the remainder of 2024. The plant recovered 2.7 million ounces with processed grades of 765 grams per tonne silver equivalent. The plant had yet another quarterly record with silver equivalent recoveries of 98.4%. We continue to use our stockpiles to optimize plant production, and this has allowed us to continue our strong process recoveries, a key driver in our consistent silver equivalent sales in the six quarters since declaring commercial production. Corporate all-in sustaining costs in the quarter of $16.88 per ounce increased from quarter one as expected due to increased production and development with two mining contractors on site as well as a $1 million write-down of warehouse inventory in the quarter. Our first-half all-in sustaining cost of $14.89 per ounce gave us confidence to adjust our annual guidance for 2024. I'll now pass it back to Eric to conclude the presentation.
Eric Fier: Thanks, Cliff. On to slide 8, looking forward to the rest of 2024, the results of the first half of the year position us well to meet our improved 2024 guidance. We remain committed to work on our exploration program at Las Chispas with drilling in the quarter, focusing on converting high potential inferred resources to indicated resource with additional focus being put on identifying new targets regionally and at Las Chispas. Subsequent to the end of the quarter, we released our second annual ESG report. We are proud to have a very common-sense approach to sustainability. As someone who has spent the past 20 years building relationships in the communities around Las Chispas, ESG is more than data. It's finding ways to truly make a difference, and it's done through constant engagement and collaboration with local and government stakeholders. Our local communities rely heavily on agriculture and ranching for their livelihoods and are directly impacted by water scarcities in Sonora. In the second year of our water stewardship plan, local farmers and ranchers saw a significant improvement in water access reliability. This has allowed some community members to establish a second planting seasons, boosting income potential and developing agricultural resilience. As we continue to execute on this plan, we look to further expand the reach and impact of our programs. That wraps up our formal commentary for today. Operator, please open the line for questions.
Operator: [Operator Instructions]. Gentlemen, we have no signal from our phone audience.
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Eric Fier: Thanks, everyone, for attending our results call. Have a good day.
Operator: Ladies and gentlemen, this does conclude today's teleconference, and we do thank you all for your participation. You may now disconnect your lines.
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