Improved net income. I fully expect to see a much higher silver price shortly. SMF069

Q2 turnaround for Impact Silver

Vancouver-headquartered Mexican silver miner, Impact Silver, has reported improved Q2 financials as it continues to build its operations with two new mines in its huge concession area near Zacualpan.

Author: Lawrence Williams
Posted: Thursday , 23 Aug 2012

LONDON (MINEWEB) -

Small-scale Mexican silver miner,Impact Silver, which controls a huge concession area in the historic mining district of Zacualpan, about 3 hours drive from Mexico City, has reported a good turnaround in Q2 earnings after making a small loss in Q1, despite lower revenues and production. Net income amounted to $0.3 million, up from a loss of $0.1 million in the first quarter of 2012.

Impact currently operates four underground silver mines (Chivo, San Ramon, Noche Buena and Gallega) and is building two new mines within the 100%-owned, 623 square kilometer (241 square miles) land package in Mexico. The new mines being constructed are the high-grade, underground silver Oscar Mine (which will replace the Chivo Mine) and the open-pit, poly-metallic Capire Mine, both of which are on schedule and on budget. The commencement of production at the new mines will represent the next phase of growth with the stated aim to establish Impact as a multi-million ounce silver producer.

Q2 revenues amounted to $3.6 million, compared to $4.5 million the first quarter of 2012 and mine operating earnings for the quarter were $1.3 million, compared to $1.6 million in the first quarter of 2012 but were coupled with a substantial decreased in operating costs by 25% to $1.9 million from $2.5 million in the first quarter of 2012. Cash flows from operations before changes in non-cash working capital increased 78% to $1.2 million for Q2 from $0.7 million in Q1.

Working capital for the quarter was $29.5 million, compared to $32.1 million in the first quarter of 2012.

Silver production for the quarter was 154,406 ounces, down marginally from 164,758 ounces in the first quarter of 2012. Lead production was 139 tonnes, compared to 149 tonnes Q1. Q2 zinc production was 205 tonne as against 260 tonnes in the prior period.

Average mill throughput for the quarter was 438 tonnes per day compared with 455 tonnes per day in Q1.

The company reports that production in the second quarter continued at modest but profitable levels as the transition from mining at the Chivo Mine to the new high grade Oscar Mine continued. Oscar is scheduled to begin production before year end and result in higher silver production from the higher grade mineralization.

Meanwhile simultaneous construction of the new Capire Mine continues with first concentrate shipments anticipated this winter. Capire represents a new production centre in the south portion of the property. Initial production will be from a 200 tonne/day pilot plant (which Impact purchased some time back) and is now being brought into use. This will be utilised to optimize the metallurgy and mining methods, with future plans to construct a much larger plant.

Impact also maintains a strong exploration program across the huge concession area. Of particular interest at the moment is the Carlos Pacheco gold-silver-copper project where some very promising drilling results have been achieved. The Carlos Pacheco Project is located within the Valle de Oro Gold Sector, only some 200m from Impacts' producing Noche Buena silver mine in the Royal Mines of Zacualpan Silver District. Within the Valle de Oro gold sector, high-grade gold and copper mineralization has been observed in the deeper valleys (at depths of 300 meters or 1,000 feet) and drill holes which support the concept of gold-copper mineralization lying at depth below the silver mineralization in the Zacualpan District. Exploration drilling in this area will continue to test the potential of adding gold and copper to Impact's future production profile.