SilverCrest Metals Boosts Revenue By 26% Amid Strong Metal Prices Ahead Of Coeur Mining Merger
SilverCrest Metals (TSX: SIL) reported a record-breaking third quarter for 2024, benefiting significantly from strong metal prices and optimized production operations at its Las Chispas mine in Sonora, Mexico. The company’s quarterly revenue reached $80.4 million, a 26% increase from Q3 2023’s $63.8 million and a 10.6% rise over Q2 2024’s $72.7 million.
This surge can be attributed to both increased sales volume and the advantageous average realized prices for gold and silver, which stood at $2,472 per ounce and $29.48 per ounce, respectively. These figures reflect substantial growth from Q3 2023, where average realized prices for gold were $1,931 per ounce and silver prices were $23.41 per ounce.
The company’s mine operating earnings in Q3 2024 climbed to $47.0 million, a solid 25% increase compared to the same quarter last year, where mine operating earnings were reported at $37.5 million. This quarterly result also surpassed Q2 2024’s mine operating earnings of $41.5 million.
SilverCrest maintained an operating margin of 59%, consistent with Q3 2023, even as it faced rising production expenses. Operating cash flow was another notable figure, rising to $44.2 million in Q3 2024, compared to $43.8 million in the prior year.
Free cash flow for Q3 2024 reached $36.2 million, a 49% jump from $24.3 million in Q2, but when comparing year-over-year results, it reflects only a slight improvement over the $34.0 million recorded in Q3 2023.
The free cash flow increase from Q2 to Q3 is largely attributable to SilverCrest’s deliberate scaling back of sustaining capital expenditures. These expenditures totaled $7.9 million this quarter, down from $15.3 million in Q2. Year-to-date, the company has spent $33.4 million on sustaining capital, with full-year projections expected to fall between $40 million and $44 million. Compared to Q3 2023’s sustaining capital of $9.8 million, this year’s allocation reflects a disciplined approach to capital efficiency in response to market conditions and the company’s operating strategy.
In terms of production, SilverCrest reported total output of 2.6 million ounces of silver equivalent (AgEq) for the quarter. This figure represents a slight dip from the 2.7 million ounces in Q2 2024 and is lower than expected given the company’s target rates. Gold and silver production at Las Chispas were reported at 14,928 ounces and 1.4 million ounces, respectively, with mining rates benefiting from a dual-contractor system that achieved a 23% increase in daily tonnage compared to Q2.
On the cost side, SilverCrest reported cash costs of $8.85 per ounce AgEq, up from $7.47 per ounce in Q3 2023, a 19% year-over-year increase. All-in sustaining costs were reported at $13.72 per ounce AgEq for Q3 2024, slightly lower than Q2’s $16.88 but 12% higher than the $12.23 reported in Q3 2023. Lower sustaining capital expenditures in Q3 2024 helped reduce AISC temporarily, but the overall upward trend in AISC could signal future challenges in cost management, especially as metal price volatility continues.
Net earnings for Q3 2024 came in at $9.5 million, translating to $0.06 per share, a noticeable decrease from $29.9 million, or $0.20 per share, in Q3 2023. Despite the strong operational results, this decline in net earnings reflects a combination of non-cash deferred tax expenses and transaction-related costs, which weighed heavily on the company’s bottom line.
Currency-related challenges also played a role, with a notable impact from the devaluation of the Mexican peso, a trend that has continued to affect SilverCrest’s financial performance across multiple quarters. Adjusted earnings, which exclude one-time items, were reported at $26.3 million, or $0.18 per share, slightly below the $28.5 million, or $0.19 per share, recorded in Q3 2023.
SilverCrest’s balance sheet shows improvement, with treasury assets totaling $158.2 million at the end of Q3 2024, up from $122.3 million in Q2 2024 and a substantial increase from $105.2 million at the end of 2023.
However, this buildup of liquid assets also raises questions about the company’s capital allocation strategy, particularly as it prepares for a merger with Coeur Mining Inc. (NYSE: CDE). The forthcoming acquisition, expected to close by Q1 2025, will see each SilverCrest share exchanged for 1.6022 shares of Coeur.
SilverCrest Metals last traded at $13.92 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to these organizations. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
