U.S. Silver reports record earnings
OSBURN - U.S. Silver reported record earnings for the 2011 first quarter, the company announced last week.
Those record earnings include a 100 percent increase in cash flow operations, it said Friday.
"Revenue, profit and cash flow reached record levels in the first quarter," said Tom Parker, CEO and president of U.S. Silver, on Friday.
Cash flow from operating activities was $7.2 million, up from $3.5 million in 2010 - an increase of 106 percent. Pre-tax net income totaled $6.1 million, up from $0.8 million in 2010.
Silver production totaled 494,363 ounces, including 145,000 ounces that was not received at the smelter until a few days after the end of the quarter because of weather delays.
After an impressive quarter for U.S. Silver, cash at hand for the company is currently around $15 million, opening for discussion possibilities that would have been previously infeasible.
"Having this level of cash flow is a different set of circumstances," Parker said.
"One we extremely enjoy," he added.
The increase brings up the possibility of stock buy-backs, although U.S. Silver's board has not yet discussed that option. Another item up for debate would be minting silver coins, as a response to high silver prices, but next year's budget hasn't be set, he said.
Silver averaged $32 in the first quarter, with a cash per ounce production cost of $17.97 after by-product credits. That's $14.03 in the bank from every ounce U.S. Silver produced.
Production was down for first quarter as drift repair prevented mining higher-grade stopes, but reports for the second quarter look promising, according to the company.
The second quarter revenue will also include the 145,000 ounces of delayed ore, and the company is extremely hopeful of a high sales quarter.
U.S. Silver also announced that they are receiving contracts for a surface drilling program at the Galena Mine. Exploration at the Coeur Mine has expanded to three drill shifts, with another planned to begin June 20 for a total of four. The drilling exploration program should be complete by mid-August.
U.S. Silver expects the Coeur Mine to add half a million ounces to their annual production - roughly $7 million at current prices and production costs.
Hedge losses for first quarter were $610,000 (at $27.50) and the company has no plan for further hedges.
"Our job is to keep this company in business, not to speculate on the price of silver," U.S. Silver CFO Chris Hopkins said, adding that the company is bullish on long-term silver markets.
"Continued attention, focus and diligence toward safe and efficient production will enhance this trend," Parker said. "We remain confident that we will deliver annual production in excess of 2.4 million ounces of silver in 2011 as previously communicated."