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Silver Standard Resources Inc. Q1 2010 Earnings Call Transcript

Silver Standard Resources Inc. Q1 2010 Earnings Call Transcript

Silver Standard Resources Inc. (SSRI)

Q1 2010 Earnings Call

May 12, 2010 11:00 am ET


Michael Anglin - President and CEO

Tom Yip - CFO

George Paspalas - SVP, Operations

Joe Ovsenek - SVP, Corporate Development


Anupum Kaiton - Scarsdale Equities

Andrew Kaip - BMO Capital Markets

Haytham Hodely - Salman Partners

Jorge Beristain - Deutsche Bank

Kwan Lunz-Intaglo - Scotia Capital

Chris Lichtenheldt - UBS

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Good day everyone and welcome to the first quarter 2010 financial results and project update conference call. This call is being recorded. At this time for opening remarks and introductions, I’d like to turn the call over to Silver Standards President and CEO, Mr. Michael Anglin. Mr. Anglin please go ahead.

Michael Anglin

Thank you. Good morning ladies and gentlemen. Welcome to Silver Standard first quarter 2010 conference call, reviewing our financial performance and updating our projects. On the call this morning we have George Paspalas, Senior Vice President Operations; Joe Ovsenek, Senior Vice President Corporate Development; Tom Yip, Chief Financial Officer; Kristen Riddell, Vice President, Corporate Secretary and General Counsel; Ken McNaughton, Vice President Exploration.

Our financial statements as well as our management discussion analysis together with project updates, have been filed on SEDAR and are available on our website. We have a webcast accompanying our comments today and it can be found at a web location referenced in the yesterday’s news release. We’ll be making forward looking statements on the call today and I advise you to refer to our forward-looking disclosure accompanying our news releases out on SEDAR.

Our focus in the first quarter was a continuing ramp-up to the Pirquitas mill complex where we achieved commercial production on November 1. We are now starting to process sulphide ore to the mill, for which it is designed. We are starting to see results in the numbers from the mine. George Paspalas our Senior Vice President Operations will describe Pirquitas in more detail in his presentation.

Among the highlights the first quarter with the sale of the non conservative property in British Columbia was $15 million. Silvertip sales, is part of the on going rationalization of our portfolio. These funds will augment our exploration and development activities and help to ensure that we are well funded to achieve the objectives of our strategic plan to grow the company.

Returning to the primary services call, our first quarter 2010 results I’d like to turn the call over to Tom Yip our CFO, who’ll speak through our first quarter financial results. Tom?

Tom Yip

Thanks Mike. For the quarter we recorded a net loss of $7.6 million or $0.10 per share, versus a net loss of $2.5 million or $0.04 per share in 2009. This was a first full quarter of operations and as Mike has mentioned we continue to wrap up the mill facilities processing for phosphate and sulphide ores encountered in the pit. Or our operating costs spent our Pirquitas are in line with our expectations. The lower production has resulted in a high cost per ounce of silver produced.

During the quarter we produced 609,000 ounces of silver, and with a drop down of our finished goods inventory from December we sold 907,000 ounces on an average price of $17.43 per ounce. Of the transportation deductions and refining costs, revenues were $11.5 million. Copper sales were $20.04 million and depreciation and amortization were 7.8, for a loss from mine operations of $16.7 million.

G&A costs were $5.3 million, the increase over the prior years relates to additional employees that were added throughout 2009. Severance, recruiting and bonuses are repaid in the quarter. Sulphide compensation was $2 million, similar to the prior year as we continue to amortize the Black-Scholes value of previously-granted options. Interest expense of $2.4 million relates to the convertible debenture, which was previously capitalized to the Pirquitas construction, that is now charged to the P&L. Often in these expenses during the quarter as Mike has mentioned, we sold the Silvertip property in Northern BC for a gain of $13.1 million as well as selling a portion of our share investments for a gain of 2.4. And lastly we had a $6.1 million recovery of future income taxes related to the loss from mine operations.

Turning to the cash flow, we began the year with $27 million and during the quarter we had a net increase of $76 million in our cash balance. For financing activities we sold $6.7 million common shares at a price of $17 per share for growth proceeds of a $114 million and after deducting fees and expenses we netted $108 million.

We used $16.2 million for operating activities, which was primarily the cash loss from mine operations of $9 million, G&A costs of $5.3 million and interest of $3.4. Investing activities include exploration and project spending of $4.8 million. At Pirquitas we paid down construction bills of $16.4 million. During the quarter we spent $3.9 million for refundable value added tax and in early April we filed our first applications with the tax authorities to begin the process of recovering our debt receivable. As I mentioned we sold the Silvertip property and share investments and received cash proceeds of $9.3 million.

We ended the quarter with $103 million in cash so as we continue optimizing our Pirquitas mine we are well positioned to advance our other key projects.

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