Silvermet Inc.
TSX VENTURE : SYI

Silvermet Inc.

November 05, 2012 17:00 ET

Silvermet Reports 2012 Third Quarter Results and Provides an Update on Turkish Operations Expansion Plan

TORONTO, ONTARIO--(Marketwire - Nov. 5, 2012) -

THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT AUTHORIZED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Silvermet Inc. ("Silvermet" or the "Company") (TSX VENTURE:SYI) is pleased to announce its Q3, 2012 results and provide an update of development activities in the Adana and Izmir regions of Turkey.

Highlights (in US$)

  • During Q3, 2012, Silvermet's BST joint venture continued to develop its two new projects in the Adana and Izmir regions of Turkey. Activities during the quarter included:
    • Environmental Impact Assessments ("EIA") for the Izmir and Adana plants are underway with EIA permits expected to be received during the first quarter of 2013.
    • Preliminary engineering has been completed and detailed engineering is continuing.
    • Long-term contracts for EAFD supply from steel producers are under negotiation, and expected to be signed in Q4, 2012.
    • An Engineering, Procurement and Construction ("EPC") contract is being negotiated and a final EPC contract is expected to be signed in Q1, 2013.
    • Tendering from local Turkish and international suppliers has commenced.
  • Silvermet is debt free, cash flow positive and profitable. At September 30, 2012, it has cash and credit facility receivable of $3.5 million, or $0.022 per common share. This cash position is after having paid a final settlement amount on the fixed and contingent liabilities that had remained owing to the original owners of the Iskenderun plant.
  • Q3, 2012 sales increased to 4,477 Dry Metric Tonnes ("DMT") of zinc concentrate, containing 6.5 million pounds of zinc, a 25% increase from the 5.2 million pounds of zinc sold in 2011. The cash cost1 has declined to $0.58 per pound in Q3, 2012, from $0.61 per pound in 2011.
  • EBITDA in Q3, 2012 increased by 26% to $0.96 million (at 100%) compared to $0.76 million in Q3, 2011, reflecting primarily increased zinc concentrate shipments.

1 Cash cost per pound is defined as "treatment & transportation costs + direct operating costs / pounds zinc sold".

The following table summarizes comparative quarterly results and reconciles net income, an IFRS measure, to EBITDA.

Three months ended September 30, Nine months ended September 30,
2012 2012 2011 2011 2012 2012 2011 2011
100% 49% 100% 49% 100% 49% 100% 49%
REVENUE $ 4,853,442 $ 2,378,187 $ 4,042,257 $ 1,980,706 $ 14,957,368 $ 7,329,110 $ 12,839,562 $ 6,291,385
EBITDA(1) $ 965,073 $ 434,927 $ 763,110 $ 317,294 $ 2,661,294 $ 1,115,986 $ 2,845,732 $ 1,366,522
NET INCOME $ 130,370 $ 114,429 $ 228,590 $ 727,825
(1) EBITDA is a non-IFRS measure, does not have a standardized meaning prescribed by IFRS and may not be comparable to similar terms and measures presented by other issuers. EBITDA comprises net income before income taxes, interest and financing expense (including accretion of liabilities), amortization expense and stock option expense. The Company believes it is appropriate to exclude stock option expense from EBITDA as a measure of operating performance that excludes non-recurring items.

Outlook

Silvermet continues to generate positive cash flows with a strengthening working capital balance, no debt, relatively stable zinc prices and lower smelter treatment charges. Performance at the Iskenderun plant continues to improve with fewer maintenance shutdowns, higher throughputs and better zinc recovery rates. Cash costs per pound of zinc should continue to decline and EBITDA improve.

The previously announced expansion plans in the Adana and Izmir regions of Turkey are progressing well. Each plant will have annual EAFD processing capacity of 110,000 DMT and is estimated to cost $60 million, for a total investment of $120 million. The two new facilities will have significantly higher EBITDA margins than the existing Iskenderun plant, with the use of improved technology. When all three facilities are in production, the total EAFD processing capacity will increase from the current 60,000 DMT per annum to 280,000 DMT and annual zinc concentrate production will increase to 90,000 DMT containing 134,000,000 pounds of zinc.

Project Financing

Indicative term sheets have been received from several senior lenders on project financing and discussions are on-going. The environmental permitting process is underway with a target of obtaining all necessary environmental and construction permits by March, 2013. Simultaneously, detailed engineering and costing is being completed. Construction of each plant is estimated to require 18 months. At present, it is anticipated that construction of the Adana plant will begin in Q2, 2013, with the Izmir plant to follow shortly thereafter.

With various announced zinc mine closures, most zinc industry analysts are forecasting a tightening of zinc concentrate supply in the coming years. The resulting downward pressure on smelter charges and upward pressure on zinc prices are expected to be felt at a time coincident with the commissioning of the new plants.

About Silvermet

Silvermet's principal business activity is the recycling of electric arc furnace dust ("EAFD") obtained from steel companies through a Waelz kiln to produce an oxide zinc concentrate that is sold to zinc smelters throughout the world. The Company owns 49% of BST, which operates a Waelz kiln facility located in Iskenderun, Turkey.

Additional Information

Additional information can be accessed at the Company's website www.silvermet.ca or through the Company's public filings at www.sedar.com.

Caution concerning forward-looking statements: The information in this release may contain forward-looking information under applicable securities laws. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those implied by the forward-looking information. Factors that may cause actual results to vary include, but are not limited to, inaccurate assumptions concerning the exploration for and development of mineral deposits, political instability, currency fluctuations, unanticipated operational or technical difficulties, changes in laws or regulations, the risks of obtaining necessary licenses and permits, changes in general economic conditions or conditions in the financial markets and the inability to raised additional financing. Readers are cautioned not to place undue reliance on this forward-looking information. The Company does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events except as may be required under applicable securities laws. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Neither 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.

Contact Information

  • Silvermet Inc.
    Stephen G. Roman
    Chairman, President & CEO
    1 (416) 203-8336
    info@silvermet.ca

    Silvermet Inc.
    Ian D. Atacan
    Chief Financial Officer
    1 (416) 203-8336
    iatacan@silvermet.ca

    Silvermet Inc.
    8 King St. East, Suite 1700,
    Toronto, ON, M5C 1B5, Canada