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EY: Metals Producers Seek Projects In 'Lower-Risk Havens'

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Metals producers are looking for new projects but want them in regions that are considered safe for investors, says EY, a global financial advisory service. A number of companies have run into issues trying to operate in nations such as Tanzania and the Democratic Republic of Congo, where officials have changed various mining laws, meaning an uncertain investment climate, EY says. In many instances, the government is seeking a bigger slice of the revenue. “As commodity prices continue to increase, appetite for investment in existing projects is expected to grow,” says Jim MacLean, EY’s Canadian mining and metals leader. “In an effort to improve balance sheets, companies are looking for lower-risk havens for investment and that means investing in proven assets.” In a report on risks facing the mining sector, EY says regulatory risk and social license to operate appear as two of the top 10.

By Allen Sykora of Kitco News; asykora@kitco.com

 

Mandalay Reports 3Q Loss; Cerro Bayo Still Shut Down

Thursday November 9, 2017 09:10

Mandalay Resources Corp. (TSX: MND) reports a loss in the third quarter as production fell when operations were suspended at Cerro Bayo in Chile. The net loss was $7.2 million, or 2 cents per share, compared to income of $549,000, or zero cents per share, in the same quarter a year ago. The adjusted loss, before special items, was $1.7 million, compared to a $1.1 million adjusted profit a year ago. The company produced 25,819 gold-equivalent ounces. Mandalay says it sold 23% fewer than in the same period a year ago. Coupled with the move in prices, revenue of $35.4 million was $13.1 million lower than in the third quarter of 2016. “Mandalay’s financial performance in the third quarter of 2017 was negatively affected by the operating suspension at Cerro Bayo in response to the June 9, 2017 flooding of the Delia NW mine,” says Mark Sander, president and chief executive officer. “Operations at Cerro Bayo remain suspended and under force majeure; as a consequence, there was no production at Cerro Bayo during the quarter.” The mine was moved to “care and maintenance” this fall in order to conserve cash as the company assesses the overall situation. “We expect ongoing care-and-maintenance costs to decline to a rate of approximately $1.5 million per quarter going forward.” Sander says. He adds that “with our two operating mines performing well in the third quarter,” the company is maintaining revised guidance for the full year of 114,000 to 128,000 gold-equivalent ounces.

By Allen Sykora of Kitco News; asykora@kitco.com

 

Silvercorp Metals Posts Profitable Quarter

Thursday November 9, 2017 09:10
 
Silvercorp Metals Inc.  (TSX, NYSE: SVM), a Canadian company with multiple mines in China, remained profitable in its fiscal second quarter of 2018 ending on Sept. 30. The company lists net income of $11.1 million, or 7 cents per share, compared to $12.4 million, also 7 cents, in the same quarter a year ago. Metal sold includes some 1.6 million ounces of silver, 16.9 million pounds of lead and 5.6 million pounds of zinc, compared to 1.8 million ounces of silver, 19.9 million pounds of lead, and 5.9 million pounds of zinc in the prior-year quarter. Officials report that less metal was sold than a year ago and realized prices for silver fell 7%, although they increased for lead and zinc. Officials say production was affected by downtime due to a power-grid upgrade, government inspections and explosive supply limitations due to a local-government safety measure, and typhoon conditions. A lower head grade was reported for the Ying Mining District. All-in sustaining costs per ounce of silver, net of by-product credits, were $2.26, compared to $3.15 in the prior-year quarter.

By Allen Sykora of Kitco News; asykora@kitco.com

 

Fortuna Silver Mines Remains Profitable In 3Q

Thursday November 9, 2017 09:10

Fortuna Silver Mines Inc. (NYSE: FSM; TSX: FVI) reports net income in the third quarter of $10.3 million, or 6 cents per share, compared to $10.2 million, or 8 cents, in the same period of 2016. The slightly higher net income was driven mostly by lower income-tax expense of $5.2 million since the effective tax rate for the third quarter was lower, the company says. Adjusted net income was $13.1 million, up from $10 million a year ago, mostly after adjusting for a $2.2 million loss on financial instruments for the most recent quarter. Silver and gold production was 2 million and 13,412 ounces, respectively. "We have had yet another quarter of strong operating and financial results at our operating mines in Peru and Mexico, positioning the company well on track to meet our annual production targets and financial objectives,” says Jorge A. Ganoza, president and chief executive officer.

By Allen Sykora of Kitco News; asykora@kitco.com

 

Torex Reports Continuation Of Blockade, 3Q Net Loss

Thursday November 9, 2017 09:10

Torex Gold Resources Inc. (TSX: TXG) reports a third-quarter loss and continuation of a blockade at its El Limón Guajes Mine in Mexico. The company lists a net loss of $1.6 million, or 2 cents per share, compared to a profit of $23.6 million, or 30 cents, in the third quarter of a year ago. The adjusted loss, excluding special items, was $1 million, or a penny per share. Gold output during the quarter totaled 67,337 ounces, down from 77,915 in the year-ago period.  The company reports that the blockage at the El Limón Guajes Mine is in its seventh day, with military personnel patrolling the area. The mine is back under care and maintenance. Fred Stanford, president and chief executive officer, says officials “expect the blockade to be resolved in the near term.” With the blockade, the company says it now expects to produce less than 300,000 ounces of gold for 2017, below its published guidance targets.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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