Earnings call transcript: Andean Precious Metals Q2 2025 revenue rises

Andean Precious Metals reported a 5.5% year-over-year increase in revenue for Q2 2025, reaching $73.7 million. Net income doubled from the previous year to $17.4 million, with earnings per share at $0.12. The company also reported a 68% increase in adjusted EBITDA to $28.9 million, while maintaining a positive cash flow and a strong balance sheet. Despite these strong results, the company’s stock price remained unchanged in the latest trading session. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculations, with a "GOOD" overall financial health score. The stock is currently trading near its 52-week high of $7.49, showing strong momentum over the past three months.

Key Takeaways

• Revenue increased by 5.5% year-over-year, reaching $73.7 million.
• Net income doubled compared to the previous year, hitting $17.4 million.
• Adjusted EBITDA rose by 68%, amounting to $28.9 million.
• The stock price remained stable, with no change in the latest session.

Company Performance

Andean Precious Metals demonstrated strong financial performance in Q2 2025, with significant improvements across key metrics. The company’s revenue growth and doubling of net income highlight its robust operational capabilities. This performance comes amid a favorable commodity price environment, with average silver and gold prices supporting the company’s profitability. InvestingPro data reveals the company operates with a moderate level of debt, maintaining a debt-to-equity ratio of 0.16, while analysts expect continued profitability this year. For deeper insights into Andean Precious Metals’ financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Revenue: $73.7 million (5.5% increase YoY)
• Net Income: $17.4 million (doubled YoY)
• Earnings per share: $0.12
• Adjusted EBITDA: $28.9 million (68% increase YoY)
• Free Cash Flow: $12.3 million
• Liquid Assets: $87.3 million

Outlook & Guidance

Andean Precious Metals provided guidance for the remainder of 2025, projecting production to increase in the second half of the year. The company expects cash operating margins at San Bartolome to range between $8 and $13 per ounce and production at Golden Queen to reach 52,200 to 60,600 gold equivalent ounces. Capital expenditures are anticipated to be between $28 million and $32 million.

Executive Commentary

CEO Alberto Morales described Q2 as "another milestone quarter for Andean," emphasizing the company’s financial strength and growth strategy. CFO Juan Carlos Sandoval stated, "We are well positioned to sustain financial strength while continuing to advance our growth strategy." President Johan Bouchard expressed optimism about future production, stating, "We strongly believe that gold is going to come out in the second half of the year."

Risks and Challenges

• Commodity Price Volatility: Fluctuations in gold and silver prices could impact profitability.
• Operational Costs: Rising costs in production and exploration could affect margins.
• Regulatory Changes: Changes in mining regulations may pose operational challenges.
• Market Competition: Increased competition in the mining sector could pressure market share.
• Macroeconomic Factors: Global economic conditions could influence demand for precious metals.

Q&A

During the earnings call, analysts inquired about the stability of ore grades at Golden Queen and the company’s leaching recovery strategies. They also explored potential mergers and acquisitions and discussed future capital expenditure plans. The timing of tax payments was another area of interest, reflecting concerns about cash flow management. InvestingPro subscribers have access to 11 additional exclusive ProTips about Andean Precious Metals, including detailed insights into the company’s cash flow yield and growth potential. The next earnings announcement is scheduled for August 29, 2025, providing investors with another opportunity to evaluate the company’s progress.

Full transcript - Andean Precious Metals Corp (APM) Q2 2025:

Conference Operator: Good morning, and welcome to Andean Precious Metals Second Quarter twenty twenty five Results Conference Call. As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Amanda Malo, Director, Investor Relations. Please go ahead.

Amanda Malo, Director, Investor Relations, Andean Precious Metals: Thank you, operator, and good morning, everyone. Before we get started, I would like to point out that during today’s call, we may make forward looking statements as defined under the Canadian Securities Law. I ask that you view our slide presentation for cautionary language regarding forward looking statements and the risk factors pertaining to these statements. Our press release, MD and A and financial statements are available on both SEDAR plus and on our corporate website, andianpm.com. With us on today’s webcast is Alberto Morales, Andean’s Executive Chairman and CEO Johan Bouchard, Andean’s President Juan Carlos Sandoval, our Chief Financial Officer and Dom Kizak, our VP of Finance.

Following management’s formal remarks, we will open the call to questions. And with that, I’ll turn the call over to Alberto.

Alberto Morales, Executive Chairman and CEO, Andean Precious Metals: Thank you, Amanda, and good morning, everyone. I am pleased to report that Andean delivered another strong quarter operationally and financially. We delivered record quarterly revenues of $73,700,000 supported by stronger realized metal prices and steady performance at both of our operations. Adjusted EBITDA rose to $28,900,000 the highest in the company’s history, while net income essentially doubled year over year to $17,400,000 or $0.12 per share. Our balance sheet strengthened significantly during the quarter.

Leveraging on our strong cash position, we made the strategic decision to fully repay all outstanding amounts under our revolving credit facility, reducing total debt and ending the quarter with $87,300,000 in liquid assets. The $25,000,000 revolving line of credit remains fully available, giving us significant additional financial flexibility. Operationally, San Bartolome delivered solid results with improved margins. On the back of strong silver prices, continued favorable foreign exchange rates and steady plant recoveries, we have revised our twenty twenty five margin metrics upward for cash gross operating margin and gross margin ratio. San Bartolome remains on track to meet full year guidance.

Golden Queen also remains in track to meet full year guidance with production expected to ramp up in the second half, supported by key capital projects completed during the quarter. We continue to advance our organic growth strategy. Exploration drilling at Golden Queen still ongoing following the encouraging results released in May and we see strong potential to extend mine life through near mine and regional targets. We expect to provide an update on results to the market in Q4. It was a strong first half of the year and we believe the momentum we have built sets up well for the remainder of the year 2025.

Johan Bouchard, President, Andean Precious Metals: With that, I will now turn it over to Johan to walk you through the operational results in more detail. Well, thank you, Alberto. So let me start with consolidated production, which totaled 24,341 gold equivalent ounces in Q2. As previously guided, production will be weighted toward the second half of the year and will remain on track to meet full year targets. At San Paso Do May, we produced 12,128 gold equivalent ounces during the quarter.

Our cash gross operating margin improved to $13.89 per ounces, benefiting from higher silver price, stable recoveries and foreign exchange rate. The gross margin ratio improved to 45.9%, up to 20% in Q2 last year. The processing rate averaged 110,000 tons per month in Q2 with a steady recovery of 83%. As a result, we’re pleased to have increased our cash gross operating margin and gross margin ratio full year guidance, reflecting the operation’s solid cost control performance, the most favorable foreign exchange rate and middle prices anticipated. We expect this trend to continue for the remaining of the year.

Following the exclusive long term purchase agreement of 7,000,000 tonne announcement, the company is collaborating with CONIBOL to obtain the required environmental permit and social licenses and to prepare the respective mines to begin operations. The company anticipates first ore in the 2026. The agreement provides the company with additional prospective upside deposits that will increase our sourcing for the year to come and ultimately leverage processing capacity, which is currently underutilized. Switching over to Golden Queen, we produced 12,213 gold equivalent ounces in Q2, while lower year over year, this was expected due to the mine sequencing and the hourly chain schedule. During Q2, gold in inventory on the leach pad increased due to the improved stacking performance.

Gold in inventory is anticipated to decrease in the upcoming quarters when the extra tons stacked will commence reporting to the Monroe Cove process. Key capital projects were completed during the quarter. Improvement to the main haul road was completed early June, reducing hauling distances and cycle time and is expected to improve the fleet productivity resulting in lower unit costs going forward. The eFleash pad stature was replaced with 158 foot telescopic superior stature with automated capacity, two additional 115 foot superior grasshopper and 160 foot superior indexing conveyor were purchased in Q2. Costs at Golden Queen are trending well with a cash cost of $17.17 dollars per ounce, which is in the range of the guidance and an all in sustaining cost of $2,245 per ounce, slightly above guidance due to the timing of capital investments.

We expect higher production and lower net cost in the second half of the year with Q3 and Q4 reflecting better stacking rate and a decrease in gold inventory on the leach pads. We continue to reaffirm our production and cost guidance for the year. Exploration drilling is underway and we remain encouraged by the results released in May. Our goal is to convert near pit targets to mineral resources and evaluate the upside across our 3,000 hectare land package. Before handing it over to J.

C, I’d like to reiterate our 2025 guidance. As planned, production remained weighted approximately 40 in the first half and 60% in the second half of the year. We are expecting production to ramp up quarter over quarter in the second half of the year with our best quarter being in Q4. At San Batolemais, based on a strong Q2 performance, we’re probably revising our full year margin metrics. Cash flow operating margin is now expected to be in the range of $8 to $13 per ounce and gross margin ratio is now expected to be in the range of 35 to 45% for the full year 2025.

At Golden Queen, we are reaffirming our previously disclosed guidance. Full year production of 52,200 to 60,600 gold equivalent ounces, cash cost of $1,500 to $1,800 per ounce and all in sustaining cost of $19.50 dollars to $2,150 per ounce. Consolidated capital expenditure remains in the range of 28,000,000 to $32,000,000 for the full year. Now I will pass it over to JC to take you through the financials.

Juan Carlos Sandoval, Chief Financial Officer, Andean Precious Metals: Thank you, Johan. As noted, revenue for Q2 was $73,700,000 a 5.5% increase over Q2 twenty twenty four. This was driven by higher realized silver prices, which averaged $34.36 per ounce, gold prices averaged $3,316 per ounce and steady and operational performance at both assets. Gross profit increased 151% year over year to 29,400,000.0 driven by stronger commodity prices and margin expansion of San Bartolome. Net income practically doubled year over year to $17,400,000 or $0.12 per share.

Adjusted EBITDA of $28,900,000 was up 68% from Q2 last year. And our free cash flow for the quarter was 12,300,000.0 Turning to the balance sheet. During the quarter, as previously mentioned, we repaid all amounts outstanding under our revolving credit facilities and ended the quarter with $87,300,000 in liquid assets. The $25,000,000 revolver remains fully available, providing additional strategic flexibility. Total liabilities declined to $139,000,000 while total assets increased to $321,000,000 Capital expenditures totaled $8,200,000 in Q2, focused primarily on Bowling Green infrastructure.

With commodity prices remaining strong and our disciplined approach to capital and operating costs, we are well positioned to sustain financial strength while continuing to advance our growth strategy. Now, I’ll turn it back over to Alberto for closing remarks.

Alberto Morales, Executive Chairman and CEO, Andean Precious Metals: Thank you, JC. To wrap up, Q2 was another milestone quarter for Andean. We achieved record revenues, continued to generate strong free cash flow and significantly enhance our financial position. Both of our operations are performing as planned and well positioned for a stronger second half. We remain committed to developing on our 2025 guidance and executing our long term strategy to drive sustained value for our shareholders.

With a solid balance sheet, cash generating assets and an active exploration program, we are excited about the opportunities ahead. Thank you for your continued support. And with that, I will open the line for Q and A.

Conference Operator: Thank you. We will now begin the question and answer session. The first question comes from Justin Chan with SEP Resource Finance. Please go ahead.

Justin Chan, Analyst, SEP Resource Finance: Hi guys. Can you hear me? Just making sure I’m not muted.

Alberto Morales, Executive Chairman and CEO, Andean Precious Metals: We do Justin. Hello.

Justin Chan, Analyst, SEP Resource Finance: Alberto, congratulations on a good quarter and for all the progress, especially a nice tick up in the share price this quarter.

Ben Perry, Analyst, Atrium Research: Thank you.

Justin Chan, Analyst, SEP Resource Finance: My first question is just yes, thanks. So my first question is just on Golden Queen. It’s fairly big swing in grade and I guess the strip ratio also in Q2. I’m just curious, you mentioned higher stacking in the second half. In terms of grade, could you give us a sense of what you’re expecting in the second half?

Is it more like this quarter or somewhere in between Q1 and Q2?

Johan Bouchard, President, Andean Precious Metals: Justin, it’s Johan here. Thanks for the question. I mean, the grade is very, very stable at Golden Queen. So we finished the mine, the Pit one and we’re mining now the total pit. So we have all the equipment, I would say centralized which is improving productivity.

But overall regarding ton mine is going to be very consistent. We’re having, I would say a lower stripping ratio than what we saw in our compared to the budget because basically we found a bit more hold than what we thought which is a good news. So but overall basically I mean we don’t see like a major or drastic changes with grades quarter over quarter.

Justin Chan, Analyst, SEP Resource Finance: Okay, got you. So around that kind of point, let’s call it 0.75, is that where you see it in the second half?

Johan Bouchard, President, Andean Precious Metals: Yes, pretty much, yes.

Justin Chan, Analyst, SEP Resource Finance: Okay, thanks. That’s really helpful. Okay, that’s that on Golden Queen onset at St. Bart. The updated guidance is definitely helpful.

I think it’s definitely more in line with what you’ve been reporting. I’m just curious if I ask this question every quarter, but if prices and let’s say FX stay where they are, would your margins be similar to how they what they were in Q2 or would you expect them to revert more to the middle of guidance?

Juan Carlos Sandoval, Chief Financial Officer, Andean Precious Metals: I think they would remain the same, Justin. Obviously, it depends on where silver prices end up, but I mean, it’s fair to say that they would end

Dom Kizak, VP of Finance, Andean Precious Metals: up more or less the same.

Justin Chan, Analyst, SEP Resource Finance: Okay, great. That’s really helpful. And then maybe just the last one, do you have anything to note in regards to I guess working capital or tax payable timing to be aware of in the second half of the year?

Johan Bouchard, President, Andean Precious Metals: Tax payments? Hey, Justin. It’s Dom here. Yes. We have about $6,000,000 of tax payments going out in Q3.

But otherwise, we don’t expect to anticipate any significant working capital dispersion

Dom Kizak, VP of Finance, Andean Precious Metals: for each for the second half.

Justin Chan, Analyst, SEP Resource Finance: Okay. So maybe just slight you could say slightly more tax paid than maybe income tax on the income statement. Is that just because of timing on payments? Is that my understanding correctly? Yes, you got say right.

Juan Carlos Sandoval, Chief Financial Officer, Andean Precious Metals: I think we

Dom Kizak, VP of Finance, Andean Precious Metals: reflected approximately the tax payments for H2 were reflected in our Q2 P and L, but it was just timing on payment that’s going on. But it’s going to be approximately less than our income statement.

Justin Chan, Analyst, SEP Resource Finance: Okay. So a little bit less cash tax than income statement tax? Absolutely. Okay. Then presumably you’ll pay the second half income tax in the first half of next year.

Is that right? That is correct. Okay, great. Thanks very much. I have

Juan Carlos Sandoval, Chief Financial Officer, Andean Precious Metals: a couple more, but I’ll

Justin Chan, Analyst, SEP Resource Finance: free up the line and then see if there’s time later. Thanks very much guys.

Conference Operator: Thank you. The next question is from the line of Alison Carson with Desjardins. Please go ahead.

Alison Carson, Analyst, Desjardins: All right. Good morning, and team and thank you for taking my questions today. My first question is just about Golden Queen. As you mentioned, we’re seeing lower leaching recoveries compared to last year. Are these expected to last and how should we think about this going forward?

Johan Bouchard, President, Andean Precious Metals: I’ll turn the next question here. Yohan here. So basically, we did is based on the I would say on the Kinetic, I mean, we did have a lower recovery in Q2, but we did increase as well our stacking in the same period. As you know, leaching is not occurring the week after. So I mean, on that additional tons, I mean, we believe that the extra ton that’s been put on the pad going to leach in Q3 and Q4 and the following quarter.

So I think we’re in good shape. I mean, if you look at the mining, I mean, we put much more, I would say ounces on leach pad than what we leach. And with the strategy in place, we strongly believe that that goal is going to come out in the second half of the year.

Alison Carson, Analyst, Desjardins: So should we just expect higher stacking rates going forward and then we’ll start to see those leaching rates sort of stabilize over time?

Johan Bouchard, President, Andean Precious Metals: Absolutely, yes. So that’s the goal. I mean, with the new equipment that we bought, I mean, we saw a massive increase with our stacking. So when we also I mean, from the tips, what we do, we have the opportunities now, I mean, to we have we’re mining a little bit more more ore. So we increase our stockpile as well and we have the ability to segregate lower grade and higher grade and sending the higher grade to leach pad.

And I mean, leaching is not a process. It’s a bit more tricky than conventional processing plant. But I would say that the goal

Juan Carlos Sandoval, Chief Financial Officer, Andean Precious Metals: will

Johan Bouchard, President, Andean Precious Metals: come out, but it can take some time is a little tricky. And we also have to consider that the pad is getting higher and so to reach aligner and to go to the MERITRO, I mean the timing increased by about let’s say about ten to fifteen days per bench. So it takes some more time. So and maybe we missed that during our planning, but I’m very confident that the goal will come Okay. Recovery will increase.

Perfect.

Alison Carson, Analyst, Desjardins: Thank you. And then just as in Bartolome, can you give us a little bit more guidance on how the new agreement with Combio will affect production in 2026? And maybe how we should think about grade and grade variability with the new agreement?

Johan Bouchard, President, Andean Precious Metals: I I would say, I mean, started the work I mean, just to go back on that a little bit, mean, we signed the agreement, I mean, that was quite good. And right away, I mean, we would collaborate with Comeyball the next week to take actions to put those in production as soon as possible. I think that we have good intelligence on those places. We know where to look with Comeyball. And I mean, we’re reviewing that schedule on monthly basis with the team and we have been seeing on all fronts.

Basically based on what we see, I’m really I mean, it seems like we’re on the right track, I mean, to deliver first ore sometime, I would say, beginning of the second half of next year. Maybe a little bit, I would say, before that, but I would say for a meaningful quantity, think that’s going to be more in second half of next year.

Alison Carson, Analyst, Desjardins: Okay, great. And then just one final question on M and A. We’ve seen both strong silver and gold prices this year. When you’re looking at potential acquisitions, do you have a preference on whether you’d want a silver primary or a gold primary asset?

Juan Carlos Sandoval, Chief Financial Officer, Andean Precious Metals: As we have always said, I mean, we’re looking at everything. We’re whether it’s gold and silver, I think we’re that’s what I can say right now. So we’re looking at everything.

Alison Carson, Analyst, Desjardins: All right. Well, that’s all for me. Thanks for answering my questions and congratulations on a strong quarter.

Johan Bouchard, President, Andean Precious Metals: Thank you, Anderson. The

Conference Operator: next question comes from Ben Perry with Atrium Research. Please go ahead.

Ben Perry, Analyst, Atrium Research: Good morning, Alberto, Jason and team. Congrats on another great quarter. Good start to the year and obviously gold prices and silver is helping accelerate this. So diving into a couple of things here. Just in terms of production weighting, you mentioned it’s ramping through Q2, Q3 and then into Q4.

What can we expect in Q1? And can you just explain the sort of reason for this production ramp throughout the year?

Alberto Morales, Executive Chairman and CEO, Andean Precious Metals: You mean 2026, right?

Dom Kizak, VP of Finance, Andean Precious Metals: Yes. Yes, sorry.

Johan Bouchard, President, Andean Precious Metals: I would say that the what we’re going on, I mean, we’re going to start our budgeting process in a couple of weeks. So I would say I would be just reluctant to answer that question for now, but I think that we overall we see a stable production year over year and some improvements and I would say, I mean we may see some improvement in that I would say in the production profile based on perhaps throughput a better recovery, but I guess we’re going to close that bridge when we get there. But at this moment in time, it’s a bit I would say early to talk about that. We’re not have we don’t have that information right away. Mean, so it’s going to be in two weeks and two months from now.

Ben Perry, Analyst, Atrium Research: Okay. Okay. No problem. And then at Golden Queen, obviously, a lot of the infrastructure upgrades you’ve made over the last year or so have taken place. What can we expect from a CapEx standpoint for the back half of the year and then into and I know that’s in guidance, but are we going to see CapEx start to drop down into 2026?

Juan Carlos Sandoval, Chief Financial Officer, Andean Precious Metals: Thank you, Ben. Over the next few weeks, we will be working on our next year What I can say, I mean, should be probably lower. Yes, this last year and this year have been is the bulk of our main CapEx plan. There are some investments that still need to be made.

We need to expand on the leach pad for example. So I guess over the next few weeks, we’ll come up with a new plan for next year’s CapEx, but I believe it should be a bit lower at least than what we done for this year.

Ben Perry, Analyst, Atrium Research: Thank you. And then at Sandbart, you’ve spoken a lot about this common goal ore coming online in the back half of next year. You mentioned the plant capacity is currently underutilized. Is there anything that you guys can do over the next year, more near term initiatives to bring online and sort of meet that capacity?

Johan Bouchard, President, Andean Precious Metals: I think that I mean the action that we’re taking now I mean they are I mean the main focus for sure is going to be to increase that I mean to utilize that full capacity. I don’t think there’s nothing much we can do. I mean, we need to be, I would say a little bit more efficient. I mean, we’re also operating helping to put five different projects. So we are, I would say unlocking, I would say all the transportation logistics and improving, would say mining in some of the project.

And in addition, I would say by adding more, I would say, zones or those commie ball project is going to also help, I would say get to that target. But I’m glad that you recognize that, I mean, is a low and green fruit there that can be that we can leverage. And you can be sure that our objective is really to increase and reach that full processing capacity and hopefully at one point being polished and to build a stockpile near the processing plant.

Ben Perry, Analyst, Atrium Research: Right, right. Understood. Okay. Yes, I had a couple more as well, but again, we’ll turn it back to you guys if there’s anyone else in the queue. Thank you.

Thanks.

Conference Operator: Thank you. This concludes the question and answer session. I would like to turn the conference back over to Alberto Morales for any closing remarks.

Alberto Morales, Executive Chairman and CEO, Andean Precious Metals: Thank you, operator. We want to thank everybody for its continued support. Q2 was a strong quarter. We are pleased by the results and look forward to the next second half of the year as we have stated in our documents and throughout the call. So thank you very much.

And with that, we’ll conclude our earnings call for today.

Conference Operator: Thank you. This brings to a close for today’s conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.

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