Santacruz Silver Mining Ltd (TSX-V:SCZ, OTC:SZSMF) recently saw its financial flexibility increase as it reported a stronger balance sheet by the end of the first quarter of 2024.
The company processed 470,749 tonnes of material, producing 4,478,122 silver equivalent ounces, and generated $52.59 million in revenue despite a $215,000 adjusted EBITDA loss. What’s more, Santacruz successfully restructured its debt with Glencore, further bolstering its financial position.
In this Q&A interview, Arturo Préstamo, executive chairman of Santacruz Silver Mining, discusses the company's recent first-quarter production numbers, the challenges they faced, and their promising outlook for the rest of the year. Préstamo elaborates on the significant steps Santacruz has taken to reinforce its balance sheet through a strategic debt restructuring deal with Glencore, as well as the positive impact of current metal price trends on their operations.
Proactive: The company recently put its first-quarter production numbers out, with some highlights and some challenges. Can you tell me a little bit about the first quarter in general?
Arturo Préstamo: The first quarter was a challenging one for us due to a few things. There was the census in Bolivia, where people cannot leave their houses until the census takes place. There was carnival season as well. And also, we have some safety awareness campaigns, especially at the Camarillo Blanco Group of mines. These three factors were the main reasons why our production slowed down from previous quarters. However, as we speak, the mines are back on track, and we should catch up on this shortage of production for Q1.
Even with those challenges, you still processed almost 500 tons of material and nearly 4.4 million worth of silver equivalent ounces. Was it still fairly productive?
Absolutely. Our mines are very strong assets and easy to reactivate. We believe that Q2, Q3, and Q4 will be stronger quarters, allowing us to catch up on the slow production we had in Q1.
Can you tell us about your deal with Glencore and the changes made that enable the company to clean up the balance sheet and provide some blue-sky space ahead?
Our balance sheet is now reinforced after this restructure. We split the restructure into two concepts. The first is a fixed payment of $10 million, starting on November 1st, 2025, for a total amount of $80 million. We can make an early repayment on that portion. If we repay early by November 1st, 2025, we would be paying around $40 million.
The second portion is under a CVR (conditional value right) concept. The condition is to get zinc north of $3,850 per ton, at which point we'll start making payments to amortize another $77 million. These two concepts combined allow us to have a stronger balance sheet and keep building our treasury as we experience strong cash flows from our operations.
How have the recent movements in metal prices, especially those you're currently working with, impacted your operations and what kind of bonus has this provided?
We've been preparing the mines to be ready for these moments. As we speak, we're building good cash flows and strengthening our treasury. It's a good moment for us and for all miners in the industry.
So the message that you're sending to everyone is that you're on track for the rest of this year, and things are progressing smoothly?
Absolutely, yes, we're on track. People will see the mines getting back on track in Q2 and beyond.
Quotes have been edited for style and clarity