May 01, 2015

Santacruz Silver Reports Fourth Quarter / Year-End 2014 Financial Results

Vancouver, B.C. -- Santacruz Silver Mining Ltd. (TSX.V:SCZ) (the "Company" or "Santacruz") is pleased to announce the financial and operating results for the fourth quarter of 2014 ("Q4") and also the year end 2014. The full version of the financial statements and accompanying management discussion and analysis can be viewed on the Company's website at www.santacruzsilver.com or on SEDAR at www.sedar.com. All financial information is prepared in accordance with IFRS and all dollar amounts are expressed in US dollars unless otherwise indicated.

The Company had solid operational and financial performance in the fourth quarter 2014 to end the calendar year. With the Rosario Mine back in production in Q2 2015 after a shut-down in Q1 2015, the strong operational and financial performance is projected to continue and improve even further through the remainder of 2015.

Q4 HIGHLIGHTS:

  • Silver equivalent payable ounces of 263,300, representing a 40% increase compared to Q3 2014.
  • Continuous cost reductions on a cash cost per silver equivalent basis quarter on quarter and expected to trend lower as third ball mill is now fully online.
  • Revenues after smelting and refining cost amounted to $3.23 million representing a 2% increase compared to Q3 2014, as average realized silver price per ounce was 17% lower than previous quarter.
  • Cash cost per payable silver equivalent ounce sold of $15.08 maintaining continuous reduction quarter on quarter, representing a 17% reduction when compared to the prior quarter.
  • All-in sustaining cost of $20.68 per payable silver equivalent ounce sold, maintaining continuous reduction quarter on quarter. The Q4 2014 results represent a 14% reduction compared to the prior quarter and the trend lower is expected to continue as third ball mill is now fully online.
"The fourth quarter saw significant improvements at the Rosario Mine on a cash cost per payable silver equivalent ounce sold. The increase in mill throughput along with higher silver grades has allowed the mine to continually improve over the calendar year 2014," said Arturo Préstamo, President and CEO. "With the shut-down of Q1 2015 now behind us and the installation of the third ball mill completed we are now back on track to deliver at the Rosario Mine in 2015. We anticipate further cost reductions in 2015 that will put us in a strong position to generate cash this year."

Arturo Préstamo, President and CEO continued, "In addition, we appreciate the business relationship and support with JMET, LLC which has provided the Company with financial flexibility. As well, the minimum floor price of U$17/oz Ag we will receive through the calendar year 2015 and into Q1 2016 has protected the Company in the event of a further downturn in silver prices."

  Q4 Q3 Q2 Q1 Year ended Dec 31, 2014
Operating          
Ore Processed (tonnes milled) (1) 25,099 23,677 22,612 20,447 91,835
Silver Equivalent Produced (ounces) (2) 244,200 192,400 168,300 160,600 765,510
Silver Equivalent Sold (payable ounces) (3) 263,300 188,100 148,800 121,800 722,000
Production Cost per Tonne (4) (7) 116.50 97.81 128.75 110.94 113.46
Cash Cost per Silver Equivalent ($/oz.) (4) (7) 15.08 18.13 22.17 25.04 19.02
All-in Sustaining Cost per Silver Equivalent ($/oz.) (4) (7) 20.68 23.68 29.70 35.49 25.82
Average Realized Silver Price per Ounce ($/oz.) (4) (7) 16.15 19.55 19.76 20.55 18.52

Financial ($000’s except per share amounts)          
Revenue 3,226 3,167 2,302 1,931 10,626
Mine Operations Income (Loss)(5) (7) (292) 27 (895) (861) (2,021)
Net Loss (7) (8) (4,498) (1,054) (1,579) (1,575) (8,706)
Operating Cash Flows before Movements in Working Capital (810) (360) (485) (1,786) (3,441)
Net Loss Per Share -- Basic ($) (7) (0.04) (0.01) (0.01) (0.02) (0.08)
Adjusted EBITDA (5) (7) (595) (198) (1,066) (1,261) (3,120)
(1)   Ore processed includes 21,600, 4,025 and 11,453 tonnes respectively in the third, second and first quarter arising from third party ore purchased by the Company and processed through the milling facility.
(2)   Silver equivalent ounces produced in 2014 are calculated using prices of US$20.00/oz., US$1,250/oz., US$0.96/lb and US$0.90/lb for silver, gold, lead and zinc respectively applied to the metal content of the lead and zinc concentrates produced by the Rosario Mine.
(3)   Silver equivalent sold ounces in the fourth, third, second and first quarters of 2014 were calculated using realized silver prices of US$16.15/oz., US$19.55/oz., US$19.76/oz. and US$20.55/oz., respectively, applied to the payable metal content of the lead and zinc concentrates sold from the Rosario Mine.
(4)   The Company reports non-IFRS measures which include Production Cost per Tonne, Cash Cost per Silver Equivalent, All-in Sustaining Cost per Silver Equivalent and Average Realized Silver Price per Ounce. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See "Non-IFRS Measures" section for definitions.
(5)   The Company reports additional non-IFRS measures which include Mine Operations Income (Loss) and Adjusted EBITDA. These additional financial disclosure measures are intended to provide additional information. Refer to the "Non-IFRS Measures -- Additional Information" section for a reconciliation of Mine Operations Income (Loss) and Adjusted EBITDA to the 2014 Q1, Q2, Q3 and Annual Financial Statements.
(6)   Average realized silver price per ounce is prior to all treatment, smelting and refining charges.
(7)   During the second quarter of 2014 the Company took the decision to capitalize the expenditures incurred subsequent to December 31, 2013 to develop the Ramp. Accordingly, $735,096 was capitalized to Plant and Equipment during the second quarter. Included in this amount was $486,514 relating to the first quarter of 2014. For the purposes of this comparison the referenced 2014 first quarter and second quarter figures have been adjusted to reflect this change.
(8)   The Q4 and 2014 annual figures include a one-time charge of $2,322 as loss on settlement of a silver loan and a deferred income tax charge of $825.

Operations Summary

Mill throughput in the fourth quarter increased by approximately 6% as compared to the third quarter at an average silver grade of 212 g/t exiting at approximately 273 tonnes per day (tpd) with head grades of 282 g/t silver; 0.6 g/t gold; 0.86% lead; and 3.06% zinc. In late November commissioning of the third ball mill commenced and was completed by end of December increasing grinding capacity to approximately 700 tpd.

Cash cost per silver equivalent ounce sold during the fourth quarter of $15.08/oz was approximately 17% less than in the third quarter. This improved performance arose in part from increased mill throughput tonnage and higher head grades of ore processed offset by increased operating costs as described below, in addition to the lower price of silver.

Cash cost of production per tonne during the fourth quarter of $116.50 was approximately 19% greater than in the third quarter primarily due to increased labour costs related to changes in staffing levels and from the year-end bonus paid to all workers pursuant to Mexican labour law, and from a one-time third party technical consulting fee.

Cash flow was negatively impacted by a 17.3% decrease in the average realized price of silver in the fourth quarter when compared to the third quarter.

Qualified Person

All technical information which is included in this statement has been reviewed and approved by Donald E. Hulse P.E. of Gustavson Associates LLC. Mr. Hulse is independent of the Company and a qualified person, pursuant to the meaning of such terms in National Instrument 43-101 Standards of Disclosure for Mineral Projects.

About Santacruz Silver Mining Ltd.

Santacruz is a Mexican focused silver company with a producing mine (Rosario); two advanced-stage projects (San Felipe and Gavilanes) and an early-stage exploration project (El Gachi). The Company is managed by a technical team of professionals with proven track records in developing, operating and discovering silver mines in Mexico. Our corporate objective is to become a mid-tier silver producer.

'signed'

Arturo Préstamo Elizondo,
President, Chief Executive Officer and Director

For further information please contact:

Neil MacRae
Santacruz Silver Mining Ltd.
Email: info@santacruzsilver.com
Telephone: (604) 569-1609

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward looking information

Certain statements contained in this news release, such as planned production and milling levels, costs, sales prices and efficiencies, constitute "forward-looking information" as such term is used in applicable Canadian securities laws. Forward-looking information is based on plans, expectations and estimates of management at the date the information is provided and is subject to certain factors and assumptions, including, that the Company's financial condition and development plans do not change as a result of unforeseen events, that third party ore to be milled by the Company has properties consistent with management's expectations, that the Company obtains all required regulatory approvals, and that future metal prices and the demand and market outlook for metals remains stable or improves. Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information. Factors that could cause the forward-looking information in this news release to change or to be inaccurate include, but are not limited to, the risk that any of the assumptions referred to prove not to be valid or reliable, which could result in lower revenue, higher cost, lower production levels, delays, and/or cessation in planned work, that the Company's financial condition and development plans change, delays in regulatory approval, risks associated with the interpretation of data (including in respect of the third party ore), the geology, grade and continuity of mineral deposits, the possibility that results will not be consistent with the Company's expectations, as well as the other risks and uncertainties applicable to mineral exploration and development activities and to the Company as set forth in the Company's Annual Information Form filed under the Company's profile at www.sedar.com. There can be no assurance that any forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader should not place any undue reliance on forward-looking information or statements. The Company undertakes no obligation to update forward-looking information or statements, other than as required by applicable law.

Financial outlook information contained herein about the Company's prospective costs of production and sales prices is based on assumptions about future events, as described above, based on management's assessment of the relevant information currently available. The purpose of such financial outlook is to provide information about management's current expectations as to the anticipated results of its proposed business activities for the coming quarters. Readers are cautioned that any such financial outlook information contained herein should not be used for purposes other than for which it is disclosed herein.

Rosario Mine

The decision to commence production at the Rosario Mine was not based on a feasibility study of mineral reserves demonstrating economic and technical viability, but rather on a more preliminary estimate of inferred mineral resources. Accordingly, there is increased uncertainty and economic and technical risks of failure associated with this production decision. Production and economic variables may vary considerably, due to the absence of a complete and detailed site analysis according to and in accordance with NI 43-101.