TORONTO--(BUSINESS WIRE)--U.S. Silver Corporation (USA.–TSXV) (“U.S. Silver” or the “Company”), announces that as of April 30, 2009 it has filed its 2008 audited Consolidated Financial Statements for the Years Ended December 31 2008 and 2007 and the Management Discussion and Analysis thereof, at www.sedar.com.
2008- A Year of Transition
The first nine months of the year saw the completion of 15,000 feet of underground development and exploration drilling and over 2,500 feet of underground drifting.
All but 140ft. of the 800 feet of Galena shaft rehabilitation has been completed.
Silver production averaged approximately 140,000 oz of Ag per month
Investment in infrastructure led to over $15 million in upgrading mining equipment and assets.
Significant management changes saw the departure of the COO, CEO and Chairman
Bobby Cooper became Chairman, Tom Parker joined as CEO, President and Director.
Three new, independent Directors, John Brock, Gordon Pridham and Wade Black joined the Board to replace four Directors stepping down
New Strategic and 2009 Operational Mine Plans were created leading to restructuring of costs, reduction of the Galena mine workforce, the termination of contract workers, suspension of most capital projects including Galena Shaft repair and the cessation of most exploration drilling.
10% wage and salary cuts were implemented and one mill was put on flexible standby
New mining equipment was commissioned and non-essential equipment orders cancelled
Renegotiation of an onerous smelter contract was completed
Safety was maintained as 565 out of 566 days were worked without loss time injury
December production rose to over 240,000 ounces of silver
Production in the 1st Qtr. Of 2009 totalled 634,791 ounces
Proven & Probable Reserves increased to over 21,000,000 oz of silver
The Company expects the leadership changes and cost cuts in the last part of 2008 will have a very positive impact on the production and profitability of the Company in 2009
Analysis of Fiscal 2008
The Company’s net loss decreased $5.0 million from $6.4 million in 2007 to $1.4 million in 2008. The $10.6 million decrease resulted from 58.6% higher revenues as a result of selling 42.1% more silver ounces at a 14.5% higher average price per ounce, an $8.3 million increase in foreign exchange gain from greater changes in United States dollar-Canadian dollar exchange rates, $4.1 million of derivative income from lead hedging agreements; which collectively were partly offset by 61.5% higher operating expenses and higher costs related to infrastructure repairs, shortages of skilled mining and professional labour, and a $2.4 million decrease in assumed tax benefits related to lower net income. The realized gain in foreign exchange of $7.3 million was more than offset by the increase in unrealized loss on foreign exchange which is included in Other Comprehensive Income as detailed below.
The Comprehensive Loss was $14.4 million in 2008 compared to $2.2 million in 2007, an increase of $12.2 million. The $12.2 million difference was due to an $11.3 million negative change in unrealized foreign exchange, the 2008 realization of a loss on derivatives designated as cash flow hedges which was unrealized in 2007 (a $4.9 million change) and an increase in the unrealized loss on available for sale financial assets of $1.1 million. The outlook for the first 3 months of 2009 is for a significant improvement in operating and net results as result of the significant changes in the Company as outlined below, on page 2.
Total assets decreased 18.8% from $67.7 million at December 31, 2007 to $54.9 million at December 31, 2008. The $12.8 million decrease was primarily due to decreases in cash and cash equivalents of $25.9 million and marketable securities of $1.5 million; partly offset by an increase in mining assets of $11.5 million and property, plant and equipment of$3.7 million. In 2008, cash was deployed in productive assets when $21.6 million of cash was used for investing activities, primarily made at the Galena mine and mill. The Company expects that mining assets and property will grow at a lower rate in 2009 than 2008 as it focuses more attention on: decreases in cost per ounce and increases in production.
Total liabilities increased 0.8% or $0.1 million from $11.2 million to $11.3 million due to normal working capital fluctuations. The Company does not expect total liabilities to change significantly in 2009.
In light of significant delays in achieving production and cost targets, many significant changes took place in the last part of 2008. The first nine months of the year saw the completion of 15,000 feet of underground development and exploration drilling and over 2,500 feet of underground development drifting. Also completed were 550 of the 800 feet of Galena shaft rehabilitation begun in late 2007. Production averaged approximately 140,000 oz of Ag per month, while continued investment in infrastructure led to over $15 million in upgrading mining equipment and assets. However, by the end of the third quarter of 2008, significant changes began with the departure of the Chief Operating Officer, Mr M. Hartmann. In the fourth quarter of 2008, Bobby Cooper assumed the role of Chairman and Tom Parker replaced Bruce Reid as CEO. Mr. Hartmann, Mr. Reid and Mr. Munro resigned from Board and three new, independent Directors, John Brock, Gordon Pridham and Wade Black joined the Board.
Following these significant leadership changes, new Strategic and 2009 Operational Mine Plans were created. Implementation of the plans, beginning in the fourth quarter of 2008 and continuing into the first quarter of 2009, led to the restructuring and reduction of the Galena mine workforce, the termination of most contract workers, suspension of most capital projects including Galena Shaft repair, and the cessation of most exploration drilling. Other important cost saving measures included 10% wage and salary cuts and the consolidation of two mill concentrators into one, more efficient operation. Some new mining equipment was commissioned and non-essential equipment was cancelled or deferred. However, prior to the suspension of the Galena shaft repair, an additional 110 feet of shaft was rehabilitated, leaving 140 feet yet to be done.
The Company faced onerous production shortfall penalties under its main smelter contract for copper-silver concentrates. Therefore, a renegotiation of its Copper-Silver smelter contract was successfully completed by the end of 2008.
Despite the dramatic and numerous changes, safe working conditions were maintained and the workforce achieved 565 out of 566 days without loss time injury while at the same time, boosting December production to over 240,000 ounces of silver.
