Americas Gold and Silver Corporation (AMEX:USAS) Q1 2025 Earnings Call Transcript

Americas Gold and Silver Corporation (AMEX:USAS) Q1 2025 Earnings Call Transcript May 9, 2025

Operator: Good morning, and welcome to the Americas Gold and Silver First Quarter 2025 Conference Call. This call will be recorded and will be available for viewing from the Events’ page of our website later today. Now, without further ado, I’ll pass the call over to our Chairman and CEO, Paul Huet, so he can get started.

Paul Huet: Thank you, Maxim. Good morning, everyone. I’d like to welcome you to the first quarter conference call. Please note, we will be referencing a slide deck, which is being shared through the webcast of this call. Before I begin the presentation, I’d like to remind you to please review our cautionary statements regarding forward-looking statements and non-IFRS measures. These statements can be found in our first quarter MD&A, our news release, and within our presentation. With me on today’s call is Warren Varga, our Chief Financial Officer, who will take us through the financial highlights for the quarter. Also with me on the call is Oliver Turner, who is heading up our Corporate Development, and you will hear from Oliver as well.

I’ll start out by highlighting some key elements of our growth strategy before turning the call over to Warren. Let me start by sharing our optimism about where we are heading as a company and how we intend on getting there. In the last several months, the entire Americas team have been working diligently to methodically build the foundation for multiyear production and growth. As an organization, we are aligned in our efforts with the renewed focus on safely maximizing production from our existing asset base. Across our operations, we have been investing in our people and infrastructure, including the purchase of new mining equipment to modernize and grow our underground fleet and obviously, with the intent to become more productive. We have also been actively drilling to bring on new high-grade production areas and conducting exploration activities in underexplored zones near existing mining infrastructure with some very encouraging early results.

Hence, that 034 vein that we hit at Galena that was quite exciting. We’ve been very busy at the corporate level as well. In late 2024, we strengthened our balance sheet in conjunction with the Galena consolidation transaction via the $50 million bought deal financing, which allowed us to both invest in our operations and significantly reduce our liabilities. There is more to come. We are in the late stages of negotiating a rightsized debt facility to support the acceleration of our growth initiatives in 2025 and 2026, ensuring we have the financial flexibility required to execute our ambitious plans. Switching to production, on a consolidated basis, we produced 446,000 silver ounces. That’s about 80,000 ounce increase compared to the last quarter.

We expect to continue to see incremental silver production increases over the course of the year and beyond as we begin to fully implement our growth plan. Now, I’ll briefly focus on our progress and the path forward at the Galena Complex. Over to Slide 7. Building a culture that always prioritizes safety in everything we do is of the utmost importance to the Americas team. I’m proud of our team at Galena for taking this message to heart and demonstrating a strong trend of improving safety performance. I’d like to also congratulate the Galena team for a strong showing at the 2025 Enforcement Mine Rescue Competition, which took place in March. The Galena team’s results included a first place finish and two second place finishes with the various aspects — within various aspects of the competition.

Q&A Session

Well done to our entire team. Operating results at Galena were in line with our expectations for the first quarter with production of 314,000 silver ounces. Our Galena team is focused on mine development activities that are critical to our growth. And to that end, we’ve been making significant progress on important infrastructure projects that support the advance of the 55-179 decline. These projects will support our new and larger 20-ton haul trucks and the installation of the required ventilation upgrades. The 55-179 decline will provide access to higher grade silver-lead and silver-copper veins in the Central and Lower Country Lead Zones of the mine. The Galena Complex hosts multiple high-priority drill targets near existing infrastructure and vein systems that remain open for drill testing.

Our recent discovery of the high-grade silver-copper 034 vein that I just talked about earlier is an excellent example of near-term mining opportunity. The 034 vein has returned several high-grade intercepts, including 983 grams per tonne silver at over 3.44 meters. Based on 40 holes drilled to date, we’ve estimated an initial exploration target in that range of 1.2 million to 1.5 million silver ounces and between 750,000 to 800,000 pounds of copper. And what’s even better, this is absolutely just the beginning. The 034 vein remains completely open up pit and at depth. Over to Slide 10. Another great example of high priority target for 2025 at the Galena Complex is the core mine. Our drill plan will target 4 silver copper veins where we have high-grade intercepts from historical wide-space drilling.

The historical results include intercepts of 4,313 gram per tonne silver and 5% copper over 0.32 meters and 1,982 gram and 3.2% copper over 1.3% — sorry, 1.3 meters wide. And when you consider the last 15, 20 years of our careers, our team are experts at mining this narrow stuff. So, this narrow stuff, 1.3 meters wide, five feet wide, that is very exciting and encouraging for us with these types of grades. The core mine was previously developed down to the 3,700 level at much lower metal prices, but has seen very limited mining and remains completely open at depth. It is important to note that the targeted core veins all have significant antimony potential, which represents yet another important value driver for Americas shareholders. We look forward to providing updates on our drilling progress at the 034 vein and the core mine as the year progresses.

Beyond these near-term priorities, multiple, there are multiple blue sky opportunities that exist at the Galena Complex, including at depth, near surface and along strike. Let’s face it, this is just the beginning. We’ve been here just over 100 days. Over to Slide 11. Our coastal operations. At our coastal operations in Mexico, we have a highly skilled team led by our General Manager, Gabriel Soto, who consistently fosters a strong culture of safety and productivity. During the quarter, silver production was approximately 132,000 ounces, and zinc and lead were 6.7 million and 1.6 million pounds, respectively. Silver was lower than the same period last year as the majority of this — as the majority of the silver produced for the quarter was sourced from the San Rafael Main Central area, which is fully developed but contains lower grade silver with higher zinc values.

Over to Slide 12, please. The team at Cosalá is focused on several initiatives, including development of the EC120 to the bottom upper west block of the 120 deposits. Starting the development and the rehab of the El Cajón mine with a contractor, bringing in a raise for a contractor to complete ventilation raises and completing the infill drilling program to support the life of mine plan. We expect to ramp up to full production rate expectations by probably right around mid-June, July, which will drive quarterly production increases over the course of the year as more EC120 ore is processed through our own milling facility. Pre-production sales of silver, copper concentrate from EC120 have already contributed $2.3 million to our revenue in Q1 2025 with approximately 59,000 ounces of silver produced from the project this quarter.

We remain on track to reach commercial production at EC120 by the end of 2025, which will significantly boost our silver output and our free cash flow. While EC120 is ramping up, we will continue to mine the remaining developed stopes at the San Rafael mine, which are able to cover all our fixed costs at our operations. That’s quite a unique situation that we find ourselves in. A quick summary. Overall, I’m extremely pleased with the advancements we’re making across our portfolio, including the significant progress made at Galena, where we’re driving operational efficiencies and production growth. With both operations positioned to capitalize on strong silver prices, we’re well placed to deliver value in this exciting silver market. I’ll now turn the call over to Warren to go over some of the financial highlights.

Warren Varga: Thank you, Paul and good morning everyone. This morning, we released our Q1 2025 financial results, our unaudited condensed interim consolidated financial statements and MD&A for the three months ended March 31st, 2025, are available on our website and on SEDAR+. In the first quarter this year, revenue increased by 12% to $23.5 million compared to $20.9 million in Q1 2024. This growth was driven by higher realized metal prices with silver averaging just over $32 per ounce and zinc at $1.27 per pound. We’ve produced 446 ounces of silver and approximately 838,000 ounces of silver equivalent — ounces of silver equivalent, including 6.7 million pounds of zinc and 3.8 million pounds of lead. Our cost metrics for the quarter included cost of sales per silver equivalent ounce produced of $25.23, cash costs at just over $25 per silver ounce and all-in sustaining costs at $35.67 per silver ounce.

We anticipate ongoing reductions in unit costs as silver production increases at both operations over the next several quarters. We recorded a net loss of $19 million for Q1 2025 compared to a net loss of $16 million last year. The increased loss was primarily due to the impact of metal prices on our metal-based liabilities and higher corporate G&A expenses. These were partially offset by higher net revenue, lower care and maintenance costs, foreign exchange gains and a gain on disposal of assets. Adjusted earnings for the quarter were a loss of $11.5 million and adjusted EBITDA was a loss of $5.5 million. Turning to our balance sheet. We’ve made significant strides since the December transaction, reducing total liabilities by approximately $34 million due to repayments of metal liabilities, royalties, the promissory note and transaction-related payables.

The full conversion of our convertible debenture into common shares has also streamlined our capital structure. Looking ahead, we expect silver production to grow as we progress with the EC120 project at Cosalá and implement operational improvements at the Galena Complex. We’re confident in our ability to strengthen our financial position and deliver on our growth objectives. With that, I’ll turn the call over to Oliver Turner.

Oliver Turner: Thank you, Warren and hello and good morning everyone. Certainly, some great financial highlights there. So, I’m pleased on my behalf to share some significant developments in our corporate strategy that are enhancing Americas’ visibility in the market and positioning us for continued growth in the investment community. So, as we announced last month and as of May 1st, 2025, Americas Gold and Silver was included in the Solactive Global Miners Silver Total Return Index, commonly known as the SIL, a leading silver miner ETF. This inclusion resulted in the ETF of acquiring approximately 11.2 million shares of Americas Gold and Silver, significantly increasing our visibility amongst large institutional investors who focus on index constituents.

Being part of the SIL underscores our growing prominence as a silver-focused producer and validates the strategic progress we’ve made. Looking ahead to later this year, we see strong potential for inclusion in the VanEck Junior Gold Miners ETF or the GDXJ, which will be another big milestone for our company. So, these developments are critical steps in strengthening our shareholder base and exposing us to much larger institutions that only purchase companies that are part of these indexes. So since closing of the Galena Complex consolidation transaction in December, we’ve significantly expanded our investor base. In just four months, Americas’ percentage of tightly held shares has grown from about 8% to over 60%, with large institutions such as Merk, Delbrook, Konwave, CQS, Mackenzie, and many others building substantial positions.

Many of these groups are strong past supporters, sharing the successes of Karora and Klondex, and we’re encouraged by their continued support here in Americas Gold and Silver. Looking ahead, we are continuing our aggressive investor marketing campaign in earnest. We will be attending the 121 Mining Investment Conference in London next week, where we have a fully booked schedule of U.K.-based institutional and high net worth investors. This will be our first concentrated effort in London since the consolidation transaction and we’re looking forward to connecting with new and reconnecting with prior shareholders. So, with that, I’ll turn the call back over to Paul for some closing remarks.

Paul Huet: Look, what can I say? This is really just the beginning. We’ve been here for approximately 100 days, firing on all cylinders. We must remain laser-like focused on delivering our plan as we continue to grow. There’s still a lot of work ahead of ourselves. But we’re not afraid to roll up our sleeves and do that work, as most of you are aware. I just want to thank Oliver and Warren. I want to thank all our employees at both our operations in Mexico, at Galena. And most importantly, I want to say thank you to our shareholders, those who believe us, and all the analysts that cover us. And thank you very much and have a great day to everyone. Thanks for taking the time to join us on this call.

End of Q&A: