SilverCrest Metals Inc (TSX:SIL). (SILV) has announced its third-quarter results for 2024, showcasing record revenue and mine operating earnings, alongside a significant increase in treasury assets. The company reported an impressive 29% growth in treasury assets from Q2, ending the quarter with nearly $160 million. SilverCrest also highlighted a 49% increase in free cash flow from the previous quarter. Additionally, the company has entered into an acquisition agreement with Coeur Mining (NYSE:CDE), offering an 18% premium for SilverCrest shareholders.
Key Takeaways
- Record revenue of $80.4 million and mine operating earnings of $47 million in Q3.
- Adjusted net earnings for the quarter were $26.3 million or $0.18 per share.
- Operating cash flow of $44.2 million, with free cash flow of $36.2 million.
- Treasury assets increased by 29% to $158.2 million.
- Bullion holdings grew by 56% to $37.4 million.
- Las Chispas plant processed 2.6 million ounces of silver equivalent at an average of 1,324 tons per day.
- Cash costs of $8.85 per ounce, with an expectation to end the year below guidance.
- All-in sustaining costs (AISC) of $13.72 per ounce, expected to finish below the lower end of annual guidance.
- Coeur Mining to acquire SilverCrest with an 18% premium to shareholders.
Company Outlook
- SilverCrest remains confident in meeting or exceeding its 2024 sales, cash cost, and AISC guidance.
- The company exited Q3 debt-free, reinforcing its strong balance sheet position.
- Anticipated closure of the Coeur Mining transaction in late Q1 2025.
Bearish Highlights
- Processed grades were lower than Q2 due to planned feed blending.
Bullish Highlights
- The company's balance sheet strength is underpinned by robust cash flow generation and increased bullion holdings.
- Las Chispas demonstrated operational flexibility and high recovery rates.
- The company celebrated a safety milestone of 500 days with no lost time incidents.
Misses
- There were no specific misses reported.
Q&A Highlights
- Potential tax synergies with Coeur's Mexican operations are being explored, but details are pending.
- Integration plans, including the appointment of a new director from SilverCrest to Coeur and management roles, are currently in development.
SilverCrest Metals (NYSE:SILV) Inc. has delivered a strong performance in the third quarter of 2024, with record financial results and a robust increase in treasury assets. The company's operational efficiency and strategic bullion purchases have contributed to its financial strength. Despite lower processed grades this quarter, SilverCrest has maintained cost control and is optimistic about its annual cost guidance. The anticipated acquisition by Coeur Mining is expected to offer value to shareholders, with the company working on integration plans for a smooth transition. As SilverCrest prepares for the upcoming transaction, it continues to focus on operational execution and sustainable practices, including the integration of solar power at Las Chispas in the near future.
InvestingPro Insights
SilverCrest Metals Inc.'s (SILV) strong third-quarter performance is further underscored by key financial metrics and insights from InvestingPro. The company's market capitalization stands at $1.42 billion, reflecting investor confidence in its growth trajectory.
SilverCrest's impressive revenue growth of 59.97% over the last twelve months as of Q2 2024 aligns with the record revenue reported in Q3. This growth is complemented by a robust gross profit margin of 69.45% and an operating income margin of 50.7%, indicating efficient cost management and operational excellence.
The company's P/E ratio of 13.32 suggests that it may be undervalued relative to its earnings potential, especially considering its PEG ratio of 0.42, which indicates that the stock could be trading at a discount relative to its expected growth rate. This aligns with one of the InvestingPro Tips, which notes that SilverCrest is "Trading at a low P/E ratio relative to near-term earnings growth."
Another InvestingPro Tip highlights that SilverCrest "Holds more cash than debt on its balance sheet," which is consistent with the company's reported debt-free status and increased treasury assets. This strong financial position is further reinforced by the tip indicating that "Liquid assets exceed short term obligations," providing the company with financial flexibility and stability.
The stock's performance has been noteworthy, with a 78.46% price total return over the past year and a 45.5% return year-to-date. These figures support the InvestingPro Tip of "High return over the last year," demonstrating SilverCrest's ability to generate value for shareholders.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. In fact, there are 5 more InvestingPro Tips available for SilverCrest Metals, providing a deeper understanding of the company's financial health and market position.
Full transcript - Silvercrest Metals Inc (SILV) Q3 2024:
Operator: Good morning, ladies and gentlemen. Welcome to the SilverCrest Metals Third Quarter 2024 Results Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions. [Operator Instructions] Also, today's call is being recorded. [Operator Instructions] Now at this time, I'll turn things over to Mr. Eric Fier, CEO and Director of SilverCrest Metals. Please go ahead, sir.
Eric Fier: Thank you, operator. Good. And thanks, everyone, for joining. Today, we'll be providing commentary on our Q3 2024 results. After which, we'll be happy to take questions. The slide deck we'll be referring to is available on our website at silvercrestmetals.com under the Investor tab. Before we get started, I'd like to direct you to the forward-looking statement on Slide 2. All figures discussed this morning are in U.S. dollars unless otherwise stated. All ounces and per ounce references discussed will be based on silver equivalent ounces sold unless otherwise indicated. Our silver equivalent reference are based on gold-to-silver ratio of 79.51:1. On the call with me today are Rob Doyle, Interim CFO; Chris Ritchie, President; and Cliff Lafleur, Vice President of Operations. Starting on Slide 3. Las Chispas continues to demonstrate its quality and flexibility with another quarter of stellar results, including record revenue and mine operating earnings, which continued to a large -- to increase to a large free cash flow. Operational and financial consistency has become our hallmark. And heading into the final quarter of the year, we are confident in our ability to meet or possibly beat our 2024 sales, cash cost and all-in sustaining cost guidance. Free cash flow is one of the truest tests of performance, and Q3 has been one of our best quarters to date. In the quarter, we had a 29% increase in our treasury assets from Q2, leaving us with one of the best balance sheets in the silver space. We exited the quarter debt-free with nearly $160 million in treasury assets, including a sizable jump in our bullion holdings, which continue to provide value to our shareholders. As you all know, shortly after the end of the quarter, we announced a transaction with Coeur Mining. The agreement with -- for Coeur to acquire SilverCrest represented an 18% premium on the announcement. We are excited about this transaction and which -- and what it means for our shareholders. I will now pass the call to Rob to discuss our financial results.
Rob Doyle: Thank you, Eric, and good morning, everyone. Moving to Slide 4. In the quarter, we generated record revenue of $80.4 million and record mine operating earnings of $47 million, for exceptional operating margins of 59%. Adjusted net earnings in the quarter were $26.3 million or $0.18 per share. We've made the decision this quarter to start reporting adjusted earnings per share in a manner consistent with many of our peers. Adopting this metric has allowed us to remove some of the noncash unrealized exchange rate impacts on our currency positions and deferred taxes, as well as for onetime transaction costs. For detailed information, please see Q3 MD&A posted on our website. Cash flow generation in the quarter was again robust with operating cash flow of $44.2 million or $0.30 per share, and free cash flow of $36.2 million or $0.24 per share, an impressive 49% increase from Q2. Las Chispas continues to demonstrate its ability to translate strong operational performance to our balance sheet strength, which Chris will speak to next. Over to you, Chris.
Chris Ritchie: Thanks, Rob. Now on Slide 5. Treasury assets increased by an impressive 29% or $35.9 million over the second quarter to end quarter at $158.2 million. During the quarter, we purchased an additional $10.3 million of gold and silver bullion. Our total bullion position also benefited from a $3 million mark-to-market increase due to strong metal prices. As a result, bullion holdings grew 56% to $37.4 million at the end of the quarter from $24 million at the end of Q2. Gold and silver continue to be the best performing currencies on our balance sheet, and we are pleased to be able to provide this additional leverage and exposure for our shareholders. With bullion prices in Q4 still comfortably higher than the Q3 averages, this positive performance looks set to continue. Our bullion holding strategy has not only created additional value for shareholders, but it has proven to be a useful addition to our treasury asset portfolio. We are happy to have added gold and silver as key instruments on our balance sheet given our belief that gold and silver are currencies that will outperform fiat. I will now hand the call to Cliff to discuss operations at Las Chispas.
Cliff Lafleur: Thanks, Chris. I'm now on Slide 6. Quarter three underground mining rates increased to approximately 1,350 tons per day, which is above plan and is based on the deployment of two mining contractors at the operation. We intend to keep both contractors through the end of Q1 2025 to manage single-asset risk by maintaining additional operational flexibility. The Las Chispas plant averaged 1,324 tons per day for the quarter, which is higher than Q2, due to testing of the plant's estimated throughput. As a single-asset company, knowing the operational capability of the plant is prudent, and this quarter had the ideal conditions to carry out a test. Plant throughput is planned to remain to 1,200 tons per day for the remainder of 2024. The plant recovered 2.6 million ounces of silver equivalent, processed grades of 674 grams per ton and impressive recoveries at 98.4%. Processed grades were lower than Q2 due to planned feed blending. The Company's success in controlling costs is evident, with third quarter cash cost of $8.85 per ounce closely aligning with Q2's costs. Our year-to-date cash cost of $8.28 per ounce reinforces our expectation that annual cash costs will fall below the low end of 2024 cash cost guidance of $9.25 to $9.75 per ounce. Corporate all-in sustaining costs in the quarter of $13.72 per ounce decreased from Q2, as expected, due to lower planned sustaining capital and some shift of sustaining capital expenditures into Q4. Year-to-date AISC of $14.50 per ounce also positions us below the low end of guidance of $14.90 to $15.75 per ounce. Sustaining capital expenditures have totaled $33.4 million through quarter three and are expected to finish this year closer to the top end of the 2024 guidance of $40 million to $44 million. I would like to take a moment to recognize some other truly inspiring results which occurred in October. I'm very proud to say that on October 29, through dedication and hard work, our site team achieved a milestone of 500 tons -- 500 days with no lost time incidents at the plant, an incredibly 3 million hours worked across the site with no lost time incidents. I'm eager to see the continued growth of this remarkable safety culture fostered by our committed and caring team. I'll now pass it back to Eric to conclude the presentation.
Eric Fier: Thanks, Cliff. We are very proud of the safety milestone and how inspiring it has been to watch our teams at Las Chispas truly embrace a culture of safety. I'd also like to add a congratulations to Héctor Araiza, our General Manager in Mexico, who has been recognized by the International Mining Congress in the state of Sonora for an outstanding career in mining, a testament to his dedication and impact on the mining industry. Now on to Slide 7. Our exploration teams to work -- continues to work on resource growth with ongoing drilling at Las Chispas split between conversion drilling and near-mine targets, as well as continued regional target evaluation. Year-to-date expenditures of $11.5 million positions us to finish the year at the top end of our 2024 guidance range of $12 million to $14 million spent. During the quarter, we released our second annual ESG report, which highlighted our approach to sustainability. Building on established relationships, we continue to foster trust and collaboration with others in the community local to Las Chispas, to partner and execute on initiatives that deliver meaningful impact to our shareholders. Our Water Stewardship Plan is in its third year and is actively addressing water scarcity issues faced by local farmers and ranchers. This work has helped to boost resilience and the economic potential for the community members. The permitting process is currently underway to incorporate solar power at Las Chispas' operation. We look forward to providing an update on this in the coming months, with the expectation that we'll be able to integrate solar power at Las Chispas in Q1 2025. As discussed earlier, we are excited about the next chapter for Las Chispas and the potential value the Coeur transaction can deliver to stakeholders. I'd like to take this opportunity again to thank our Mexico corporate team -- our Mexico and corporate teams and the many stakeholders and partners who help support this incredible accomplishment. We couldn't have done this without all of you. Our team remains focused on executing at our operations and all transaction-related activities. This circular is expected to be available later this quarter, with the transaction expected to close in late Q1 2025. That wraps up our formal commentary for today. Operator, please open the line for questions.
Operator: [Operator Instructions] We do have a question this morning from [David McAusland].
Unidentified Analyst: Two questions. First, do you anticipate any tax cost savings in the Coeur transaction relative to possibly consolidating Coeur's Mexican mine, the Palmarejo mine, so that you can decrease the percentage of the profits that is going out in taxes, okay? Is there any possible cost savings there that you've looked at? And number two, who is the director on SilverCrest, the additional director, that's going to go over to the Coeur consolidation of the two companies? And is major management of SilverCrest, which has shown itself to be amazing in the ability to build and operate a plant, are some of these people are going to become much more active in Coeur so that we can expect those kind of operational efficiencies in the new amalgamated company?
Eric Fier: Yes, this is Eric. We're working on an integration plan right now over the next few months along with Coeur in cooperation with addressing who the next director will be and management moving forward. So we don't have an answer for you right now. We'll stay tuned.
Rob Doyle: Yes. And this is Rob Doyle here, David. The same really applies for the tax synergies that you alluded to. It's premature for us to comment on that. Certainly, I believe those opportunities may exist, but that's ultimately going to be the focus of integration work that Eric talked about over the next few months.
Operator: [Operator Instructions] And gentlemen, it appears we have no further questions at this time. Mr. Fier, I'd like to turn things back to you, sir, for any closing comments.
Eric Fier: Yes, everybody. Thanks for attending the call, and have a great day.
Operator: Thank you, Mr. Fier. Again, ladies and gentlemen, that will conclude the SilverCrest Metals third quarter earnings call. Again, thanks so much for joining us, and we wish you all a great day. Goodbye.
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