Metal Prices Boost Guanajuato Silver’s Revenue In Q3 2024
Guanajuato Silver (TSXV: GSVR) has released its financial results for the third quarter of 2024, marking the company’s second consecutive period of positive mine operating income, signaling progress in operational efficiencies. However, substantial hurdles remain as the company continues to grapple with liquidity pressures and declining quarterly revenues.
The company generated $18.3 million in revenue for Q3 2024, a 17% increase over the $15.6 million recorded in the same period of 2023. This improvement was largely driven by stronger realized prices for silver and gold, with silver fetching an average price of $29.43 per ounce—a 25% year-over-year increase—and gold averaging $2,477 per ounce, a 28% jump.
Compared to the prior quarter, however, revenue declined by 11% from $20.5 million in Q2 2024, a setback attributed to a 10% reduction in tonnage milled as the company implemented a maintenance program across its facilities. While management emphasized the importance of these repairs for long-term efficiency, the immediate impact on production was evident, with tonnage processed dropping to 144,537 tonnes from 161,534 in the preceding quarter.
Silver generated 50% of revenue in Q3 2024, compared to 55% in the same period last year, as gold’s share rose from 36% to 43% due to stronger gold prices and stable production. Lead and zinc, produced exclusively at the Topia mine, accounted for the remaining 7% of revenue.
The company’s mine operating income of $515,576 for Q3 2024 stands out as a milestone, marking the second consecutive quarter of positive contributions from mining operations. This compares favorably to the $1.6 million operating loss reported in Q3 2023 and underscores the tangible benefits of Guanajuato Silver’s investments in improving operational efficiency. However, the figure is down sharply from the $947,433 recorded in Q2 2024, reflecting the impact of reduced production volumes.
The company’s net loss for the quarter was $4.8 million, an improvement over the $7.1 million loss posted in Q3 2023 but a decline from the $2.7 million loss recorded in Q2 2024. While this quarter’s loss includes nearly $1.66 million in non-cash derivative losses tied to a gold loan, the ongoing trend of negative earnings underscores the challenges Guanajuato Silver faces in achieving sustained profitability.
Adjusted EBITDA, however, was a notable bright spot, coming in at $892,277, a significant turnaround from the $3.6 million adjusted EBITDA loss in Q3 2023, although it marked a decline from the $1.9 million achieved in Q2 2024.
In Q3 2024, Guanajuato Silver produced 779,797 silver equivalent ounces, an increase of 1% compared to the 787,086 silver equivalent ounces in Q3 2023. The company’s output included 413,607 ounces of silver, 3,617 ounces of gold, 806,945 pounds of lead, and 926,056 pounds of zinc. Compared to the previous quarter, total silver equivalent production fell by 5% from 823,679 ounces, reflecting the operational slowdown caused by maintenance activities.
The all-in sustaining cost per silver-equivalent ounce fell to $23.88, a 9% improvement compared to $26.22 in Q3 2023 and a 7% reduction from $25.55 in Q2 2024, and relatively high compared to the realized silver price of $29.43. Cash costs per silver equivalent ounce similarly decreased to $18.78, down from $20.79 in Q3 2023 and $19.93 in Q2 2024.
Debt reduction was another area of focus in the quarter, with Guanajuato Silver completing the repayment of a $7.5 million silver and gold prepayment facility with OCIM Metals & Mining S.A. This follows the Q2 repayment of a $5 million concentrate prepayment facility owed to Ocean Partners UK Limited.
As of September 30, 2024, Guanajuato Silver reported just $1.6 million in cash and cash equivalents and negative working capital of $20.4 million, a drop from the $19.6 million deficit reported at the end of 2023. Subsequent to the quarter’s end, the company raised $8.72 million through an equity financing.
Looking ahead, Guanajuato Silver aims to stabilize and enhance its production capacity by completing ongoing maintenance and repairs. The company has signaled that its operations are well-positioned to capitalize on continued strength in silver and gold markets, with rising spot prices serving as a tailwind.
Guanajuato Silver last traded at $0.20 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
