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01/09 22:53
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A indicate a positive outlook. The company maintains strong production guidance for silver and gold, with strategic initiatives like the MAG Silver acquisition and La Colorada Skarn project partnerships in progress. Despite operational challenges, confidence in Q4 gold guidance remains. Lower costs and positive market conditions for silver support the outlook. The Q&A revealed management's proactive strategies and analyst sentiment was generally optimistic. These factors suggest a positive stock price movement, assuming a small to mid-cap market cap.
Attributable free cash flow $251.7 million in Q3, a record achievement. This was driven by increased silver and gold prices and solid cost performance.
Attributable revenue $884.4 million in Q3, a record figure. This increase reflects the positive impact of higher silver and gold prices and the contribution from the Juanicipio mine acquisition.
Net earnings $169.2 million or $0.45 basic earnings per share. This includes a $21.7 million loss from the sale of a subsidiary and $16.3 million of income from Juanicipio. The loss was primarily due to a $28.6 million reduction in a previously booked gain related to the sale of La Arena, partially offset by a $6.8 million gain from the sale of La Pepa.
Adjusted earnings $181 million or $0.48 basic adjusted earnings per share. This reflects adjustments for non-recurring items.
Attributable cash flow from operations $323.6 million, a record figure. This was supported by strong operational performance and higher commodity prices.
Cash and short-term investments $910.8 million at the end of Q3, plus $85.8 million of cash at Juanicipio for the 44% interest. This is after spending $409.3 million on the MAG acquisition.
Attributable silver production 5.5 million ounces in Q3, including 580,000 ounces from Juanicipio's 1-month contribution. Production was impacted by lower grades at Huaron but benefited from improved conditions at La Colorada.
Silver segment cash costs $10.41 per ounce, with all-in sustaining costs at $15.43 per ounce. These costs are lower than Q2 2025, reflecting the positive impact of Juanicipio and high by-product gold production at Cerro Moro.
Attributable gold production 183,500 ounces in Q3. Production was affected by technical issues at Cerro Moro, Peñon, Timmins, and Minera Florida.
Gold segment cash costs $1,325 per ounce, with all-in sustaining costs at $1,697 per ounce. These costs reflect operational challenges and adjustments.
Juanicipio mine acquisition: Completed acquisition of MAG Silver, gaining a 44% interest in the Juanicipio mine in Mexico. This acquisition has already contributed to lowering costs and improving margins.
La Colorada exploration: Continued exploration and equipment investments to expand access to high-grade zones in the Candelaria ore zone. Added 52.7 million ounces of silver to inferred mineral resources.
Silver and gold price impact: Benefited from increased silver and gold prices, contributing to record attributable free cash flow of $251.7 million in Q3.
Dividend increase: Board approved an increase in dividend to $0.14 per common share for Q3 2025.
Operational efficiencies at Jacobina: Optimization study identified opportunities to improve mine life, production, and operational efficiencies, including tailings filtration, mine paste backfill, and process plant streamlining.
Cost improvements from Juanicipio: Silver segment cash costs reduced to $10.41 per ounce and all-in sustaining costs to $15.43 per ounce, partly due to Juanicipio's contribution.
Strategic leadership changes: Steve Busby transitioned to Special Adviser to the CEO, and Scott Campbell appointed as new Chief Operating Officer.
Phased development at La Colorada Skarn: Announced a two-phase development approach for La Colorada Skarn project, combining vein mine development with cave mine expansion to enhance project value.
Silver production impacted by lower grades at Huaron: Lower silver grades at Huaron have reduced stope ore mining rates, impacting production. This is expected to affect production stability and reliability until mid-2027.
Technical issues at multiple mines: Technical issues at Cerro Moro, Peñon, Timmins, and Minera Florida have negatively impacted gold and silver production, with lingering effects into Q3 2025.
Royalty expense at La Colorada: A royalty expense of $8.3 million in Q3, payable to a third party as part of a profit-sharing agreement, has increased costs at La Colorada.
Escobal consultation process delays: The ILO 169 consultation process for the Escobal mine in Guatemala remains incomplete, with no timeline provided by the Ministry of Energy and Mines, creating uncertainty for future operations.
Tailings capacity limitations at Jacobina: Long-term tailings capacity limitations at Jacobina require significant optimization projects, including tailings filtration and backfill plant projects, to ensure operational efficiency and mine life extension.
Attributable silver production guidance: Raised to 22 million to 22.5 million ounces for 2025, incorporating Juanicipio's contribution.
Silver segment all-in sustaining costs: Lowered to $14.50 to $16 per ounce for 2025, reflecting the positive impact of Juanicipio.
La Colorada Skarn project: A phased development approach is being considered, with a PEA for this approach expected in Q2 2026. This includes enhanced vein mining and potential synergies with shared infrastructure.
Jacobina optimization projects: Several optimization projects are underway, including tailings filtration, mine paste backfill, and process plant streamlining. Detailed designs, schedules, and cost estimates are being developed, with updates expected over the next year.
Escobal consultation process: Active discussions are ongoing with the Guatemalan Ministry of Energy and Mines and the Xinka Parliament, but no timeline for completion has been provided.
Dividend Increase: The Board has approved an increase to the dividend to $0.14 per common share with respect to Q3 2025.
Share Repurchase: No shares were repurchased in Q3 2025 due to the blackout associated with the MAG acquisition. However, the company remains prepared to act opportunistically in the future.
Shareholder Returns: During the first 9 months of 2025, $146.9 million was returned to shareholders through dividends and share repurchases. An additional $59.1 million will be added with the dividend payment approved for Q3 2025.
The earnings call summary and Q&A indicate a positive outlook. The company maintains strong production guidance for silver and gold, with strategic initiatives like the MAG Silver acquisition and La Colorada Skarn project partnerships in progress. Despite operational challenges, confidence in Q4 gold guidance remains. Lower costs and positive market conditions for silver support the outlook. The Q&A revealed management's proactive strategies and analyst sentiment was generally optimistic. These factors suggest a positive stock price movement, assuming a small to mid-cap market cap.
The earnings call showed strong financial performance with record earnings and cash flow, a dividend increase, and share buybacks. Despite some operational challenges, management's confidence in meeting guidance and ongoing strategic initiatives, like the Skarn project, provide a positive outlook. The Q&A revealed some uncertainties, but the overall sentiment remains positive given the financial strength and strategic plans.
The earnings call reflects strong financial performance with record revenue and cash generation, improved cost metrics, and effective shareholder returns. Despite some operational challenges and regulatory uncertainties, the company's solid profitability and liquidity position, coupled with optimistic guidance, are likely to positively influence the stock price. Additionally, the Q&A section did not reveal significant negative sentiment from analysts, supporting a positive outlook.
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