U.S. Silver Corporation

U.S. Silver Corporation

April 30, 2008 14:41 ET

U.S. Silver Provides Operations Update and Fourth Quarter and 2007 Financial Results

TORONTO, ONTARIO--(Marketwire - April 30, 2008) - U.S. Silver Corporation (TSX VENTURE:USA) ("U.S. Silver" or the "Company") is pleased to announce its audited, consolidated financial results for the fiscal year-ended December 31, 2007 and fourth quarter-ended December 31, 2007. The audited, consolidated financial statements and Management's Discussion and Analysis ("MD&A") have been filed on SEDAR and can be viewed under the Company's profile at www.sedar.com.

Highlights and Milestones of 2007

- Increased proven and probable reserves by 61% to over 17 million oz of silver

- Production of approximately 1.2 million ounces of silver

- Revenues of over US$18.1 Million

- Initiated lead-silver production along with the start-up of the Coeur Mill

- Forward sale of 6 million lbs of 2008 lead production at US$ 1.55/lb

- Galena Shaft repair on schedule with completion expected in 4th Quarter 2008

- Completed over 70,000 ft of exploration and development drilling

- Completed over 8,000 ft of underground development drifting

- Raised over $38 million from an accelerated warrant exercise program and a private placement in December 2007

- Increased workforce by 102% since January 2007 to 208 full time employees plus over 60 contract miners

2007 Financial Results

The Company recorded revenues of $18,119,939 during the period January 1, 2007 through December 31, 2007 ($6,087,909 for approximately seven months in the prior year). Revenues were lower than anticipated due to ongoing infrastructure repairs and the shortage of skilled mining and professional labour. Higher mining costs led to a Net Loss of $6,441,205 which was partially mitigated by other comprehensive income derived from lead hedging, foreign exchange impacts and marketable securities gains. The resulting comprehensive loss was $ 2,188,247 for 2007. At December 31, 2007 total assets of $67,683,803 consisted primarily of mining assets of $23,616,962, cash of $28,540,280, accounts and notes receivable of $1,551,909, marketable securities of $3,598,520 and metal and supply inventories of $2,340,132 and $1,594,731, respectively. The Company expects that assets in the form of mineral reserves and property will grow in 2008 as the Company continues its reserve definition and development activities.

At December 31, 2007 current liabilities were $3,404,954 consisting primarily of accounts payable. Long-term liabilities consisted primarily of retirement benefit obligations of $4,004,417, mine reclamation obligations of $1,140,983 and future tax liabilities of $2,614,648. The Company does not expect any significant reduction in any of the foregoing long-term liabilities in 2008.

Revenue in 2007 of $18,119,939 increased significantly over revenue in 2006, even after adjustment for only 7 months of operations in 2006, This increase was due primarily to higher metal prices. After U.S. Silver acquired the property on June 1, 2006, production was reduced and revenue decreased significantly as part of current management's business strategy to focus on the redesign and improvement of mining practices as well as on rebuilding reserves. This strategy substantially reduced output from 600 to 200 tons per day for the period from June 1 to January 2007.
The Company has no long-term debt and had over $28 million in cash as at year-end 2007.

Operational Update - Analysis of Fiscal 2007

The Company's Galena mining operations achieved numerous significant milestones during 2007, including the production of approximately 1.2 million ounces of silver. Cost increases were higher than expected due to a number of factors, including extensive underground development, infrastructure repairs and materials cost pressure. The Company invested and continues to invest in capital improvements and exploration at the Galena mine complex with approximately $8.3 million spent in 2007. Large capital projects included the restart of the Coeur mill, the rehabilitation of the Galena shaft, exploration activities, and rehabilitation and development activities in multiple underground working areas. Development of new mining areas accounted for more than half the capital spent on the mine during 2007.

The Company commenced production of silver-lead ore during the fourth quarter of 2007 and restarted the Coeur mill to process silver-lead ores. Development activities were focused on the exploration and development of the multiple areas where silver-lead ores were identified in old workings or drill holes. Development activities led to production of silver-lead ores on the 3000 and 3700 levels at the Galena mine complex by the end of 2007. Management anticipates adding new production levels at the Galena mine complex in fiscal 2008.

Development of silver-copper ores continues on many levels, with the primary focus being on the 2400, 3400, 3700, 4600, and 4900 levels. Production began in areas of new discovery on the 3400 and 4600 levels during the year and will commence from new discoveries on the 2400, 3700, and 4900 levels in the second quarter of 2008.

Over the course of 2007, the output of silver-copper ore has been increased such that the mine is currently (at the date of this press release) operating at between 300 and 400 tons per day. Management expects to achieve production of 600-800 tons of silver-copper ore per day by the fourth quarter of 2008 upon completion of repairs to the Galena shaft.

The Company started mining silver-lead ore in late 2007. Some of the silver-lead ore bodies are mineral systems newly discovered through an intensive exploration program which began on the property after the acquisition of the mining assets. Ore is now hoisted and milled at a rate of 200-300 tons per day at the nearby Coeur facility located about a mile and a half west of the Galena mine. Management expects lead-silver production to reach approximately 400 tons a day by the third quarter of 2008.

Total production from both ore types at the time of writing is between 500-600 tons per day with monthly silver production at approximately 125,000 ounces. Total production levels are anticipated to increase to over 1000 tons per day by the fourth quarter 2008.

Production Statistics Q1 07 Q2 07 Q3 07 Q4 07 Q1 08
Total tonnage 19,858 19,234 18,852 27,107 35,724
Tons per day 310 300 299 444 558
Total ounces of silver 328,984 302,188 265,547 283,423 352,246
Ounces of silver per day 5,140 4,722 4,215 4,646 5,510
Total copper production - lbs 211,382 319,964 184,965 160,665 178,269
Total lead production - lbs N/A N/A N/A 451,163 822,634
Estimated cash costs $10.16 $10.63 $12.62 $14.69 $12.10

The principal reason for the rising cost trend in 2007 was the increasing levels of repair and development activity in anticipation of increased production volumes. Higher fourth quarter costs largely reflect the activities related to the commencement of silver-lead ore production. High levels of repair and development remain ongoing into 2008; however, an increase in the volume of tonnage and metal production is beginning to offset these costs. Management anticipates that the trend of increasing metal production will continue through 2008.

Staffing levels increased dramatically in 2007. In January, 2007 the Galena operations employed a total of 135 people, including surface staff and contractors. At year-end, 2007, over 180 people were employed at the operation. Today there are 208 full-time employees as well as approximately 65 contract personnel. Current staffing levels are considered adequate for achieving production levels forecasted for later this year. The Company will continue to expand its workforce and to continue towards the successful turnaround of the Galena Mine complex.

Management also focused on improving grade control at the Galena mine. The long-term historical silver grades for the Galena Mine silver-copper ores were over 22 ounces per ton. These grades had declined significantly in the several years prior to mid 2006 to below 12 ounces per ton. The decline was largely a result of excessive dilution caused by less than optimal mining practices and depletion of high quality reserves. Management believes that a number of initiatives, including the re-activation of the Galena shaft and establishing new development practices, will allow access to higher grade resources and, thereby, enabling the mine to return to the long term historical average ore grade. Ore grades were recently negatively impacted by the high levels of development ore being processed in the mill. As the developments are completed and the stopes begin normal mining operations, ore grades are expected to improve through 2008.

The rehabilitation of the Galena Shaft began in late 2007. Approximately 10 years ago a large section of the Galena mine shaft collapsed which resulted in the inability to use the shaft for its full length. The main repair area of the Galena mine shaft is projected to be completed by the fourth quarter of 2008 allowing for the hoisting of men, materials, and rock through the shaft. This will significantly increase overall hoisting capacity at the mine. Additionally, access to a number of key high grade silver-lead and silver-copper resources will be enhanced once the Galena shaft is restored to full functionality.

Quarterly Summary

During the fourth quarter of 2007 U.S. Silver recorded an after tax loss of $1.3 million as the Company continued to invest in infrastructure improvements, build its reserve base, and train employees. Production costs for the quarterly period ending December 31, 2007 and 2006 were $7.0 million and $5.6 million, respectively. Costs were significantly higher in 2007 due to ongoing repairs of shafts, haulage ways, and stopes. Additionally, high levels of development activity, designed to increase production levels later in 2008, increased costs in the quarter.

The Company anticipates the first quarter of 2008 will show only modest improvements in operating results as compared with the fourth quarter of 2007. Management expects further operating improvements in the second quarter of 2008, and substantial improvements in the remaining two quarters of the fiscal year as production volumes of both silver-copper ore and silver-lead ore are anticipated to increase to approximately 1000 tons per day of combined production. Management remains focused on continual improvements to the operational performance of the Company's mining assets.


U.S. Silver, through its wholly owned subsidiaries, owns and operates the Galena, Coeur, and Caladay silver-lead-copper mines in Shoshone County, Idaho, with the Galena mine being the second most prolific silver producer in U.S. history. Total silver production from U.S. Silver's mining complex has exceeded 210 million ounces of silver production since 1953. U.S. Silver controls a land package now totaling approximately 18,000 acres in the heart of the Coeur d'Alene Mining District. U.S. Silver is focused on expanding its production from existing operations as well as exploring and developing its extensive holdings in the Coeur d'Alene Mining District.

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulators, which filings are available at www.sedar.com.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • U.S. Silver Corporation
    Bruce Reid
    Chief Executive Officer
    (416) 848-0858
    U.S. Silver Corporation
    Vance Loeber
    Investor Relations
    (604) 805-3530
    Website: www.us-silver.com