USA Q3 production numbers out. As I suspected traders worried about bad numbers allowed a good buying opportunity while in fact numbers are great improvements and point to a turn around with higher cash flows on the way. Additionally On October 19, 2016, USA commenced construction of the San Rafael Project with a ribbon cutting ceremony.
Q3 Numbers
600,000 silver ounces and 1.2 m AuEq up 7% and 12%, respectively, when compared to Q2, 2016.
Cash costs $10.00 per silver ounce, a reduction of 17% year-over-year,
AISC $12.86 per silver ounce, down 22% when compared to the same quarter last year.
The San Rafael Project in Mexico is projecting to be on schedule and under the capital budget. San Rafael will be a significant generator of operating cash flow going forward, fueling the Company's earnings and cash flow growth in late 2017 and beyond."
The Company expects to begin stockpiling ore at the mill at the end of the Q2, 2017 with commercial production in Q3, 2017.
As previously disclosed, the Project is expected to deliver average annual production of 1.0 million ounces of silver, 50 million pounds of zinc and 20 million pounds of lead over a 6-year, initial mine life at negative AISC based on current reserves. The estimated pre-tax IRR is greater than 80% using recent silver, zinc and lead prices.3 The Project is a brownfield development that will utilize certain existing infrastructure at the Cosalá Operations and is expected to have an initial capital cost of approximately $20 million using recent exchange rates. With $26M in cash, San Rafael construction should be on cruise control.
Company has strong ex Barric Mgt and is guiding for 2018 AISC at bet $7 - $8 and 7 - 8 million oz AGEq when San Rafael kicks in.
Mgt is also calling for a 1 for 10 RS to get the share count in line.
At $134M Market cap, it looks cheap and safe to me.
Checkmate28
