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TSXV:SYI | TSX Venture | Common Stock |
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THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT AUTHORIZED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. Silvermet Inc. ("Silvermet" or the "Company") (TSX VENTURE:SYI) is pleased to announce its Q2, 2012 results and the signing of a collective bargaining agreement ending the strike by unionized employees. Highlights (in US$) The highlights of the Company's Q2, 2012 results include the following (operational figures expressed at 100%): -- Silvermet is debt free. At June 30, 2012, it has cash and credit facility receivable of $4.3 million, or $0.027 per common share. -- EAFD throughput increased by 24% to approximately 16,000 Dry Metric Tonnes ("DMT") from approximately 13,000 DMT in Q2, 2011. -- Sales volume increased by 69% to 4,693 DMT compared to 2,784 DMT in Q2, 2011, 27% higher than production increases, due to the timing of individual shipments in 2011. -- Revenues increased by 27% to $4.9 million (at 100%) compared to $3.8 million in Q2, 2011, as higher sales volume offset lower zinc prices. -- Direct operating costs increased by 63% to $2.9 million (at 100%) compared to $1.8 million in Q2, 2011, while unit cost of sales decreased to $657/DMT from $689/DMT in Q2, 2011 as a result of stable operations and higher recovery rates, offset in part by cost increases for labour, maintenance, freight and waste disposal. -- EBITDA decreased by 37% to $0.6 million (at 100%) compared to approximately $0.9 million in Q2, 2011 due to lower zinc prices. -- Under the Company's normal course issuer bid, Silvermet purchased and cancelled 1,317,000 common shares at an average price of $0.09 per share. -- On July 17, 2012 operations at the Iskenderun plant were halted due to a strike by unionized personnel. Subsequently on August 3, 2012, negotiations with the union were positively concluded with the signing of a collective bargaining agreement, which will be in effect until December 31, 2013. Full operations have since resumed. -- As previously disclosed, the Company's joint venture had a fixed payment obligation of $448,000 and a contingent payment obligation of up to $2,348,372 related to the acquisition of the Iskenderun plant. On July 24, 2012, the joint venture settled the liabilities with cash on hand, with the payment of a lump sum amount of $1,250,000 (Silvermet's share - $612,500). The following table summarizes comparative quarterly results and reconciles net income, an IFRS measure, to EBITDA. Both 2012 and 2011 figures reflect operational results at a proportionally consolidated level of 49%. ---------------------------------------------------------------------------- Three months ended June 30, 2012 2012 2011 2011 100% 49% 100% 49% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- REVENUE $ 4,877,898 $2,390,169 $ 3,833,901 $ 1,878,611 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- EBITDA(1) $ 586,660 $ 197,014 $ 935,114 $ 508,788 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- NET INCOME (LOSS) $ (187,496) $ 369,695 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Six months ended June 30, 2012 2012 2011 2011 100% 49% 100% 49% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- REVENUE $ 10,103,925 $ 4,950,923 $ 8,797,305 $ 4,310,679 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- EBITDA(1) $ 1,696,221 $ 681,059 $ 2,082,622 $ 1,049,228 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- NET INCOME (LOSS) $ 98,220 $ 613,396 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) EBITDA is a non-IFRS measure, does not have a standardized meaning prescribed by IFRS and may not be comparable to similar terms and measures presented by other issuers. EBITDA comprises net income (loss) before income taxes, interest and financing expense (including accretion of liabilities), amortization expense and stock option expense. The Company believes it is appropriate to exclude stock option expense from EBITDA as a measure of operating performance that excludes non-recurring items. Outlook: Silvermet continues to generate positive cash flows with strengthening working capital balance, no debt, relatively stable zinc prices and lower smelter treatment charges. Silvermet's Turkish joint venture BST is progressing with the previously announced expansion plans in the Adana and Izmir regions of Turkey. Subject to permitting and financing, BST plans to invest approximately US$120 million dollars to construct two plants, each with annual EAFD processing capacity of 110,000 DMT. When all three facilities are in production, the total EAFD processing capacity will increase from the current 60,000 DMT to 280,000 DMT and annual zinc concentrate production will increase to 90,000 DMT containing 134,000,000 pounds of zinc. Discussions on financing are progressing with senior lenders. The environmental permitting process is underway with a target of obtaining all necessary environmental and construction permits by early 2013. Simultaneously, detailed engineering and costing are being completed. Construction of the plants is estimated to require 18 months with start-up scheduled for the end of 2014. About Silvermet: Silvermet's principal business activity is the recycling of electric arc furnace dust ("EAFD") obtained from steel companies through a Waelz kiln to produce an oxide zinc concentrate that is sold to zinc smelters throughout the world. The Company owns 49% of BST, which operates a Waelz kiln facility located in Iskenderun, Turkey. Additional Information: Additional information can be accessed at the Company's website www.silvermet.ca or through the Company's public filings at www.sedar.com. Caution concerning forward-looking statements: The information in this release may contain forward-looking information under applicable securities laws. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those implied by the forward-looking information. Factors that may cause actual results to vary include, but are not limited to, inaccurate assumptions concerning the exploration for and development of mineral deposits, political instability, currency fluctuations, unanticipated operational or technical difficulties, changes in laws or regulations, the risks of obtaining necessary licenses and permits, changes in general economic conditions or conditions in the financial markets and the inability to raised additional financing. Readers are cautioned not to place undue reliance on this forward-looking information. The Company does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events except as may be required under applicable securities laws. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
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