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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture. Strong cash flow, increased silver and gold sales, and a robust cash position are positives. However, decreased net income, increased costs, and production concerns at Ying, coupled with unclear guidance, balance out the positives. The Q&A reveals uncertainties and management's hesitance to commit to guidance, suggesting a cautious outlook. The lack of a new partnership or significant guidance change keeps the sentiment neutral. Without market cap data, the stock's sensitivity to these factors remains uncertain, supporting a neutral prediction.
Revenue $81.3 million, up 13% from last year. This increase was driven by a 5% and 95% increase in silver and gold sold during the quarter, respectively, combined with a 12% and 45% rise in the selling prices of silver and gold compared to Q1 of last year.
Cash Flow from Operating Activities $48.3 million, up 21% from last year. This was driven by increased sales and higher selling prices of silver and gold.
Net Income $18.1 million or $0.08 per share, down from $21.9 million or $0.12 per share in Q1 of fiscal 2025. The decrease was due to a noncash $5 million accounting charge on the fair value of derivative liabilities related to convertible notes and warrants.
Adjusted Net Income $21 million or $0.10 per share, compared to $20.6 million or $0.12 per share in the comparative quarter. The per-share figures were lower due to an additional 38.8 million shares issued for the acquisition of Adventus Mining.
Free Cash Flow $22.5 million, after investing $18.8 million in operations in China and $7.6 million in Ecuador.
Cash Position $377.1 million, up $8 million from March. This does not include investments in associates and other companies valued at $72.2 million as of June 30.
Silver Production 1.8 million ounces, up 6% from last year.
Gold Production Just over 2,000 ounces, up 79% from last year.
Lead Production 16 million pounds, up 1% from last year.
Zinc Production 5 million pounds, down 19% from last year.
Production Costs at Ying $83 per tonne, down 8% from last year due to higher volumes of ore mined and milled.
Consolidated Cash Cost per Ounce of Silver (net of by-product credits) $1.11, compared to a negative $1.67 in the prior year quarter. The increase was driven by a $6 million increase in production costs due to a 16% increase in ore processed, while silver production grew by only 6% due to lower grades at Ying. It was also impacted by a $1.5 million increase in mineral rights royalties in China, partially offset by a $1 million increase in byproduct credits.
All-in Sustaining Cost per Ounce (net of by-products) $13.49 per ounce, up 37% from the prior year quarter. This was due to a $1 million increase in G&A expenses and factors impacting cash costs.
Silver and Gold Sales: Silver sales increased by 5% and gold sales by 95% compared to Q1 of last year. Selling prices for silver and gold rose by 12% and 45%, respectively.
Production Metrics: Produced 1.8 million ounces of silver, over 2,000 ounces of gold, 16 million pounds of lead, and 5 million pounds of zinc. This represents increases of 6%, 79%, and 1% for silver, gold, and lead, respectively, while zinc production decreased by 19%.
Ecuador Expansion: Invested $7.6 million in Ecuador to advance the El Domo construction and the Condor exploration plan. El Domo mine construction is progressing steadily with over 370,000 cubic meters of materials moved.
Kuanping Project: Mine construction began with $481 million spent on ramp development and exploration tunneling.
Cost Management: Production costs averaged $83 per tonne at Ying, down 8% from last year. Consolidated cash cost per ounce of silver net of by-product credits was $1.11, up from a negative $1.67 in the prior year.
Safety Measures: An accident at the HZG mine led to a fatality. Regulatory investigations resulted in temporary closures of certain mining areas, potentially causing a 20%-25% production shortfall for the current quarter. Safety protocols are being strengthened.
Trackless System Transition: Invested $8 million at Ying for ramp and tunnel development to phase out shafts in favor of a trackless system.
Condor Gold Project: Drilled over 2,000 meters and released an updated mineral resource estimate. A PEA focusing on an underground gold operation is targeted for completion by year-end.
Fatality at HZG mine: A fatality occurred at the HZG mine in the Ying Mining District due to a contractor's violation of safety protocols. This led to a government investigation, temporary closure of certain mining areas, and potential production shortfalls of 20%-25% for the current quarter.
Increased production costs: Production costs rose by $6 million due to a 16% increase in ore processed, while silver production only grew by 6% due to lower grades at Ying. This also led to higher cash costs and all-in sustaining costs.
Regulatory delays: Regulatory sign-offs for reopening closed mining areas have been delayed, potentially impacting production timelines and operational efficiency.
Mineral rights royalties in China: A $1.5 million increase in mineral rights royalties was implemented in China in Q3 of fiscal 2025, adding to operational costs.
Legal challenges in Ecuador: Although dismissed, a lawsuit seeking to void the environmental license for the El Domo project in Ecuador highlights potential legal and regulatory risks for the project.
Production Shortfall: The company disclosed a potential production shortfall of up to 20% to 25% for the current quarter due to regulatory delays in reopening certain mining areas after a safety incident. However, recent clearance to reopen some areas has been received.
Ying Mining District Development: $8 million invested in Q1 for ramp and tunnel development to enhance underground access and materials handling, aiming to phase out shafts in favor of a trackless system. This program is ongoing.
Kuanping Satellite Project: Mine construction has started with $481 million spent on ramp development and exploration tunneling in Q1.
El Domo Project in Ecuador: Mine construction is progressing steadily with over 370,000 cubic meters of materials moved to date. Legal challenges to the environmental license have been dismissed at all levels.
Condor Gold Project: Over 2,000 meters drilled in Q1 with an updated mineral resource estimate released. A Preliminary Economic Assessment (PEA) focusing on an underground gold operation is targeted for completion by year-end.
The selected topic was not discussed during the call.
The earnings report shows mixed results: strong revenue growth and positive cash flow but a net loss due to noncash charges. Production costs are up, yet production metrics are mixed. The Q&A revealed uncertainties around project timelines and guidance. Despite some positive developments, risks and uncertainties, especially in regulatory and production aspects, balance the outlook. Without market cap data, but considering the mixed signals, a 'Neutral' sentiment is appropriate.
The earnings call presents a mixed picture. Strong cash flow, increased silver and gold sales, and a robust cash position are positives. However, decreased net income, increased costs, and production concerns at Ying, coupled with unclear guidance, balance out the positives. The Q&A reveals uncertainties and management's hesitance to commit to guidance, suggesting a cautious outlook. The lack of a new partnership or significant guidance change keeps the sentiment neutral. Without market cap data, the stock's sensitivity to these factors remains uncertain, supporting a neutral prediction.
The company's financial performance is strong, with significant revenue growth and improved cash flow. Despite a net loss due to a non-cash charge, the adjusted net income is positive. Production and cost guidance are stable, and strategic projects are progressing. Risks are present, but the market may view the positive financial metrics and strategic initiatives favorably, leading to a positive stock price movement.
The earnings call showed mixed results: a rise in net income and cash flow, but a decrease in adjusted earnings and an increase in costs. The Q&A revealed no major risks but highlighted tax and cash distribution concerns. Despite some positive financial metrics, the lack of strong guidance and increased costs suggest a neutral market reaction.
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