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Silver Standard Resources (SSRI)
Q2 2013 Earnings Call
August 08, 2013 11:00 am ET
John Smith - Chief Executive Officer, President and Director
Alan N. Pangbourne - Senior Vice President of Projects
Gregory John Martin - Chief Financial Officer and Senior Vice President
W. John DeCooman - Vice President of Business Development and Strategy
Jorge M. Beristain - Deutsche Bank AG, Research Division
Brian Yu - Citigroup Inc, Research Division
Chris Lichtenheldt - Dundee Capital Markets Inc., Research Division
Andrew Kaip - BMO Capital Markets Canada
Previous Statements by SSRI
» Silver Standard Resources' CEO Hosts Annual and General Meeting (Transcript)
» Silver Standard Resources Management Discusses Q1 2013 Results - Earnings Call Transcript
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Thank you, Matt. Good morning, ladies and gentlemen. Welcome to Silver Standard's second quarter 2013 conference call, during which we will provide a review of our financial performance and give an update on our business.
Joining me on the call this morning is Greg Martin, our CFO; Alan Pangbourne, our Senior Vice President, Projects; and Carl Edmunds, our Chief Geologist. We welcome Carl to his first call. Also present is John DeCooman, Vice President, Business Development & Strategy.
Our financial statements and management's discussion and analysis have been filed on SEDAR. They're also available on our website. To accompany our comments today, there's also an online webcast and you'll find the information on this in our news release relating to this call. Now we will be making forward-looking statements today and I'll refer you to our disclosure accompanying our slides, news release and also on SEDAR.
Mining is a cyclical business. And given the state of the market and the price of silver, here at Silver Standard, we have taken significant steps to protect the value of our business. At our corporate office in Vancouver, we focused on cutting costs. We have eliminated over 25% of positions, including 2 executive positions. And we know this is difficult for our colleagues involved, but managing our costs is paramount to this part of the cycle.
When we released our first quarter results, we announced and outlined our restructuring program at Pirquitas aimed at repositioning the mine for the future. This means cost-reduction and throughput optimization to drive full value from all parts of our business, from mining to concentrate production.
To emphasize the importance of this program, Andrew Sharp, our Vice President of Technical Services is currently acting General Manager of Pirquitas, leading the changes with the mine management team.
We have progress so far. The program is scheduled to continue into early 2014.
Fighting the headwinds of inflation and bureaucracy in Argentina is a significant challenge in pursuit of this objective. However, it has been done in a systematic manner, managed as a discrete program with individual actions and assigned timelines. And we can see the promising initial signs of the change and our cost [indiscernible] results and relating to the full year cash cost guidance.
We have achieved headcount reductions to date of 10% and are implementing a plan for additional reductions in full-time contractors and employees. Third-party contract services are being reviewed for value and operational excellence is being pursued at the plant and the mine to drive efficiency and positively reposition the mine in the industry cost curve, an imperative for the business.
Pirquitas this year is also going through a major mining transition to widen and deepen the pit. And yet, even with the variability of all of these causes, we still produced 1.9 million ounces of silver this quarter, which I'll come back to shortly. We reduced expiration spend by $2.5 million by focusing only on Mexico for the second half of the year.
With respect to capital spending, we looked at what we can do and what could be canceled or deferred. The focus here was on Pirquitas and corporate activity. Though we reduced some capital activities at Pirquitas, we also approved the change from contractor to owner-operated mining fleet, which will lower our operating cost into the future. We're able to do this because of our strong balance sheet. And in addition, the re-phasing of Pitarrilla spend was reviewed. However, we need to deliver for the long term and when the cycle changes. Therefore, we will keep driving forward at both Pitarrilla and San Luis, and Alan will cover progress on these projects specifically.
The management team and with the support and guidance of the Board, I can assure that we will not fall short in taking actions that are necessary to preserve value and provide the company the springboard for when the cycle changes, as I surely believe it will. Most of us have lived through such times before and are equipped with experience and understanding to steer the business correctly. Hibernation is not an option, the decisions and steps that we take now set us up for when the market rebounds.
Now on operating results. Our management team at Pirquitas continues to focus on operational excellence. A task made more challenging this year with the variability in material coming from the mining transition.
In the plant, the ball mill was shut down to change our reliner on May 9, impacting production for 4.5 days. As part of restructuring Pirquitas for the future, management is systematically working through all processes from mining to concentrate and streamlining the management operating systems. Notwithstanding these activities, we delivered 1.9 million ounces of silver in line with our plan for the quarter.