Impact Silver Corp (ISVLF)

[Lone Clone]

Impact Silver records big increase in Q2 silver output and revenues

Canadian junior and relatively small scale silver miner reports substantial rise in silver production and in revenues from its Royal Mines of Zacualpan operation in Mexico.
Author: Lawrence Williams
Posted: Friday , 28 Aug 2009

LONDON -

http://www.mineweb.com/mineweb/view/mineweb/en/page31?oid=88150&sn=Detail

Relatively small scale Mexican silver producer, Impact Silver (TSXV.IPT), has turned out strong Q2 figures with revenues up 94% despite being unable to sell two months worth of byproduct lead output because of a strike at a major customer and being unwilling to sell much of its zinc concentrate last year because of low prices. With zinc prices having recovered reasonably, Impact reckons to sell its remaining inventories in the second half which should give a further boost to revenue.

The main reason for the big revenue increase is a sharp rise in silver production which was up 80% year on year to 217,690 ounces which has come about largely because of the good grades at its relatively new and expanding Chivo mine which provided 90% of mill throughput during the quarter - as against 60% a year ago. The second lower adit being driven into the Chivo mine, which will open up additional areas in this relatively higher grade part of the operation, reached the main vein in the fourth quarter of 2008 and has now been connected to the first level. The first full production stope from the lower level came on stream during the second quarter of 2009. Chivo will continue to supply a significant amount of higher grade material to the mill.

Impact has a huge land position taking in the historic Royal Mines of Zacualpan and surrounding areas and while the old miners may have taken out much of the highest grade material, a considerable amount was left behind and new veins are being discovered all the time. Some of these have reasonable gold grades as well.

Because of the number of mining areas available, Impact can mine relatively selectively depending on the prices of the various metals it produces - and this also is carried through to blending and stockpiling at the concentrator. Mining makes use of much used and refurbished equipment and great efforts are made to keep costs down.

With the good revenue increase the company ended the half year with net working capital of $6.5 million including cash and cash equivalents of $4.0 million, despite spending $2.2 million on infrastructure and exploration over the period. Impact's working capital position is expected to remain strong through the second half of the year as cash flow from mining operations is forecast to be sufficient to fund ongoing exploration and development programs.

Mill enhancements are also under way and a new cone crusher was installed in June to help improve throughput and this will have had some small adverse impact on throughput in the second quarter.

If Impact can maintain grades and keep costs down current prices should enable it remain profitable while continuing its exploration activities in new areas which are seen as highly prospective. The flexibility of its operations is important in this respect although higher prices may tempt it to mine some lower grade material and thus dilute the overall tenor of the ore being milled, but it does help protect it against dramatic price falls like those we saw last year.