Earnings call transcript: Americas Gold and Silver sees rising silver focus in 2025

Americas Gold and Silver Corporation (USA) reported its financial results for the full year of 2024, highlighting a 5% increase in revenue despite a net loss. The company is focusing on ramping up its silver production, aiming for 80% of its revenues from silver by the end of 2025. The company’s stock, represented by the Liberty All Star Equity Closed Fund (symbol: USA), showed a slight decline in its latest trading session, currently trading at $6.64. According to InvestingPro data, the stock offers an attractive dividend yield of 10.19% and has maintained dividend payments for 39 consecutive years.

Key Takeaways

• Full year revenue increased by 5% to $100.2 million.
• Net loss widened to $48.9 million from $38.2 million in 2023.
• Silver production is set to become a more significant revenue driver.
• The company plans to ramp up production at its Galena complex.
• A $15 million financing deal was signed with Trafigura.

Company Performance

Americas Gold and Silver’s performance in 2024 reflected a challenging environment but a strategic focus on increasing silver production. The company reported a net loss of $48.9 million, up from $38.2 million the previous year, primarily due to increased costs and investments in future growth. Despite these challenges, revenue grew by 5% to $100.2 million, driven by an uptick in silver equivalent production.

Financial Highlights

• Revenue: $100.2 million, a 5% increase from 2023.
• Net loss: $48.9 million, compared to $38.2 million in 2023.
• Adjusted EBITDA: Loss of $1.5 million.
• Silver equivalent production: 3.7 million ounces.
• Average silver price: $28.13 per ounce.
• All-in sustaining costs: $28.13 per ounce.

Outlook & Guidance

The company is optimistic about its future, with plans to issue production guidance in April 2025. It aims to increase production at its CoSLA operations in the second half of 2025 and produce higher-grade silver-copper concentrates by Q3 2025. The strategic focus is on maximizing silver production, with expectations to derive 80% of revenues from silver by the end of 2025. With a beta of 1.1, the stock shows moderate market sensitivity, while maintaining strong revenue growth of 11.65% in the last twelve months. For detailed analysis and valuation metrics, investors can access the comprehensive Pro Research Report available on InvestingPro.

Executive Commentary

CEO Paul Hewitt emphasized the company’s silver focus, stating, "We are a silver-focused company and expect to realize approximately 80% of our revenues from silver." He also highlighted the company’s growth potential, saying, "It is truly a great time to be growing as a silver producer."

Risks and Challenges

• Rising production costs could impact profitability.
• Market volatility in silver prices may affect revenue projections.
• The transition to higher-grade silver-copper ore could face operational challenges.
• The company’s ability to meet production targets is crucial for investor confidence.
• Global economic conditions could influence market demand for silver.

By focusing on increasing silver production and reducing liabilities, Americas Gold and Silver is positioning itself for growth in a bullish silver market. However, the company must navigate operational and market challenges to achieve its ambitious targets for 2025.

Full transcript - Liberty All Star Equity Closed Fund (USA) Q4 2024:

Conference Call Moderator: Hello, and welcome to the Americas Gold and Silver Fourth Quarter and Year End twenty twenty four Conference Call. This call will be recorded and will be available for watching from the Events page of our website at around 1PM Eastern Time or 10AM Pacific Time today. Now, without further ado, I’d like to pass it over to Paul Hewitt, the Chairman and CEO of Americas Gold and Silver, so that we can get started.

Paul Hewitt, Chairman and CEO, Americas Gold and Silver: Thank you, Maxim. Good morning, everyone. I would like to welcome you to the fourth quarter and year end twenty twenty four conference call. Please note, we will be referencing a slide deck, which is being shared through the webcast of this call. Over to Slide three.

Before I begin the presentation, I would like to remind you to please review our cautionary statements regarding forward looking information and non IFRS measures. These statements can be found in your year end MD and A, news release and in our presentation slides. Over to Slide four with the highlights. On today’s call with me is Warren Varga, our CFO, who will take us through the financial highlights for the fourth quarter and full year. Oliver Turner, who is heading up our corporate development is also on the call and you will hear from Oliver later.

But first, I will cover some recent highlights and then hand the call over to Warren to review the financial results. Let me start by sharing how excited I am about the significant transformation for the company that officially kicked off late last year, and we’ve been taking important steps forward ever since. Since I joined Americas Gold and Silver as Chairman and CEO, we have quickly taken steps to strengthen our Board and management that will provide a proven leadership and unlock the massive potential of our operations for our shareholders. I couldn’t be happier about the growing silver producer in what looks to be a very strong bull market for silver that has a lot of room to run from here. Last year, we moved very quickly to consolidate ownership of the Galena complex.

Then we closed and oversubscribed $50,000,000 subscription receipt financing with the book filled in about, I don’t know, three to five minutes. Demand was extremely high. We could have easily raised $100,000,000 but we said no. At these levels, we didn’t want to take on more dilution than what was needed and we knew we could work with preferred lenders to get a strong debt solution in place to clean up the rest of the balance sheet. Now that original $50,000,000 it went to work at Galena, Cocella and to begin the process of tackling the liabilities on our balance sheet.

Warren will go into more details later. But since the consolidation transaction, we have reduced liabilities by approximately $43,000,000 a tremendous accomplishment both from operating cash flow and our bolster treasury. These wins just go to show our team’s relentless drive and hard work to build value. All this puts us in a great spot to grow from this. Before I turn to the operations, it is important to know that we are making great progress towards putting a place sorry, putting towards a substantial debt financial facility in place.

In the near future, we will strengthen our balance sheet and provide financial flexibility to bring our operations to the next level. I’m also pleased to let you know we will be issuing our full year production guidance April in the next few weeks, so that’s just a couple of weeks in April, so stay tuned for that. Now, I just want to discuss the Galena complex with everybody. Since we unified the asset in late ’twenty four, we’ve been laser focused on unlocking its full potential. And let me tell you, look, there’s tremendous opportunity here.

Our strategy is crystal clear. We’re breathing a new life into this high grade silver operation and delivering real value to our shareholders with a smart multifaceted game plan. So what did we accomplish in late ’twenty four? As previously mentioned, we unified ownership of the historic Galena, first huge step. We jumped right in, evaluated productivity rates and rolled up some quick win improvements that are already making a difference.

On the leadership front, we strengthened the Board, strengthened the management team and the senior executive team on-site, but we didn’t stop there. We brought in some top notch technical and operational talent that are really relevant to help us elevate things. Coupled with that, we ordered some brand new equipment. We ordered five brand new pieces of equipment that will help our safety and productivity rates. But here’s where it gets even better, we’re not slowing down.

Right now, we’re wrapping up an internal trade off study to establish the optimal path to ramp up the mining to our initial guidance or our targets, sorry, not our guidance, our target of around 1,200 tons a day. We’re also optimizing the hoist and shift schedules to drive efficiency, productivities, most importantly, safety. We’re introducing different mining methods like long haul versus underhand cut and fill to give us the best results in terms of safety, output and tremendous cost savings. On the equipment side, we’re taking a hard look at our fleet and planning upgrades to our loaders, trucks, jumbos to keep us at the cutting edge. In fact, we have five new pieces of equipment that have already been delivered to a port in Seattle.

They’re on our way to our operations this month, a great effort by the operations and procurement team. I’m extremely pleased at the outcome of how quickly that came together. We are also evaluating a new backfill system to make sure it’s running at peak performance. Meanwhile, exploration is firing on all cylinders. We’re doing infill drilling to lock in confidence for the next three to five years of our mine plan, updating our mineral resource and estimates to keep everything razor sharp and hitting the ground with surface exploration drilling.

The potential for new discoveries in this historic Silver District is significant. We’re just getting started at this thing. We’ve been here sixty five days. With all these exciting initiatives in motion and our incredibly motivated team pushing the needle, I’m absolutely confident that Galena Complex is going to stay the bedrock of our portfolio. We’re building some serious momentum here and I look forward to seeing what’s going to happen next at Galena.

I just want to talk a bit about over on Slide six, I want to give people a sense of some of the historical production at Galena because I think it’s all relevant. To illustrate some of the potential where we’re working or getting to unlock, turning over to Slide six Maxim, which shows the historical production from the Galena conflict. As you can see, in its peak year, Galena produced an impressive 5,300,000 ounces of silver at a run rate of around 600 tons per day. That’s a remarkable achievement and a testament to what this asset is actually capable of. Last year in ’twenty four, we mined about 300 tons a day, so about half of what that record was in 02/2002.

But with our current initiatives to ramp up to 1,200 tons a day, we’re setting our sights on even greater heights. In our past businesses at both Corora and Klondex, we’ve never failed to meet a metric someone else has already achieved. And I have every confidence that we will do the same year or even surpass it. Turning over to Slide seven, our CoSLA Mexican operations. This is an extremely important part of our story.

The operation sorry, jumping to Khosla, this is an operation where we have an extremely talented and experienced operating team that has demonstrated a strong safety culture under the leadership and General Manager of Gabriel Sotok. In 2024, Khosla delivered production of 2,400,000 silver equivalent ounces, roughly about 900,000 ounces of silver at a cash cost of $11 per ounce, basic just about US21.48 dollars per ounce. Looking ahead, we will see increased production from Kosola for twenty five as we transition from mining the San Rafael zone to the higher grade silver copper ore in the EC 120 areas. As with Galena, we expect the 2025 production increase to be weighted to the second half of the year as the transition to higher grade zones picks up steam. Overall, I’m extremely enthusiastic for another strong year of cash generation from our CoSLA operations led by Gabriel.

Before I turn the call over to Warren, I just want to share with you my excitement about not only realizing the full potential of our asset, but also the exposure we have to the great bull market for silver. We are a silver focused company and we expect to realize approximately 80% of our revenues from silver as we increase production from higher grade zones at both Galena and Coesola. It is truly a great time to be growing as a silver producer. With that, I’ll turn the call over to Warren, who’s going to go over some of the financial highlights.

Warren Varga, CFO, Americas Gold and Silver: Thank you, Paul, and good morning, everyone. This morning, we issued a news release with our Q4 and full year ’20 ’20 ’4 financial results. Our audited financial statements and MD and A for the period ended 12/31/2024, have been filed and are available on our website and under Americas Gold and Silver’s profile on SEDAR Plus. For the full year, our revenue increased to $100,200,000 up 5% from $95,200,000 in 2023. This growth was due to higher realized metal prices with silver averaging $28.13 per ounce and zinc at $1.26 per pound.

Alongside this, we achieved consolidated attributable production of 1,700,000 ounces with approximately 3,700,000 ounces of silver equivalent, including 31,500,000 pounds of zinc and 15,800,000 pounds of lead. Our cost of sales per silver equivalent ounce produced averaged $18.12 while cash costs and all in sustaining costs per silver ounce produced were 17 point $0.41 and $28.13 respectively. On the earning front, we reported a net loss of $48,900,000 for 2024 compared to a net loss of $38,200,000 in 2023. This was primarily due to several factors, including higher cost of sales, increased depletion and amortization and higher exploration costs, but we did see some offset from the higher revenue we already noted. Our adjusted earnings for the year were a loss of $33,700,000 and adjusted EBITDA was a loss of $1,500,000 We’re very optimistic about the future.

Silver production is expected to increase steadily as we progress with EC 120 project at our coastal operations. In fact, preproduction sales from EC 120 already contributed $3,700,000 to our revenue in 2024. To support this project, we signed a $15,000,000 secure financing with Trafigura in 2024 with a goal of producing higher grade silver copper concentrates by Q3 twenty twenty five. I’ll now turn the call over to Oliver Turner.

Oliver Turner, Corporate Development, Americas Gold and Silver: Thank you, Warren, and good morning to everyone as well. So the first ninety days at America Gold and Silver has certainly been an active period for everyone on the team, from closing our transformational consolidation transaction to adding to the Board of Directors and management team, ordering new equipment, making significant changes to improving operations and pushing forward on the final piece of the puzzle, our debt facility, has been a fast paced first three months. On the market side, we’ve been more active than ever. I’m proud to say that after delivering over 100 institutional pitch meetings since we closed the transaction, we have now institutionalized over 50% of our shareholder register, a tremendous achievement. At our previous business, Carora Resources, this level of institutional ownership took us over two point five years to accomplish.

In fact, if you include management, over 60% of USA shares qualify as tightly held, a very strong position for us to move forward with. Well done to everyone. Along with new investors, we’re generating new market attention with the launch of research coverage by Nick Dione of Core Mark Securities. This bodes very well for additional coverage from other groups as we move forward. Since the announcement of the October transactions, USA shares have outperformed the Silver Group with 85% return besting the peer group average by over 50%.

Despite this, USA shares still have a long way to go on a valuation basis and it represents an extremely compelling investment for new potential shareholders listening to this call today. With over 80% exposure to silver by the end of twenty twenty five, which is second only to IAG Gold and Silver in the silver producing universe, we still trade at a significant discount to peers at 0.6 times NAV versus a peer group average over one times NAV. As a former equity research analyst myself for many years, this is certainly an exciting proposition. To that end, we will continue to pitch investors globally at several upcoming conferences, including the Zurich Gold Show next week, the TD Silver Day in London, Mining One:one in London and many, many more over the course of the summer and the remainder of the year. As a team, we are making Sharelist strong value and growth proposition is well understood by investors and analysts so that we can do what we do best, deliver on our plan and deliver on shareholder returns.

So with that, I’ll turn the call back over to Paul.

Paul Hewitt, Chairman and CEO, Americas Gold and Silver: Thanks, Oliver and Warren. Listen, honestly, it’s hard not to be excited when you start listening to some of the accomplishments in such a really, really short time. I just want to take a moment and say thank you to everyone for joining us today on this call and I will reiterate that we are just starting. There’s no doubt we have a lot of work ahead of ourselves, but we’ve never been afraid of doing the work and getting dirty ourselves. This is probably one of the greatest environments in this silver market, what a bull market we have in front of ourselves.

Personally, I couldn’t be more encouraged. So, I just want to say thank you to all of our supporters, all our shareholders, and our team on the ground that are doing all the work in both Mexico at CoSLA and in Idaho at Galena and in Nevada. So I want to thank all of everyone for your hard work, your efforts. And everyone else, have a blessed day and thank you for joining us here today and we look forward to updating you with the guidance very soon. Have a great day.

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