Silver Standard Resources (SSRI)
Q3 2012 Earnings Call
November 08, 2012 11:00 am ET
John Smith - Chief Executive Officer, President and Director
Larry Joe Phillips - Senior Vice President of Operations and Development
Ronald Burk - Vice President of Exploration
Gregory John Martin - Chief Financial Officer and Senior Vice President
Chris Lichtenheldt - UBS Investment Bank, Research Division
Andrew Kaip - BMO Capital Markets Canada
Previous Statements by SSRI
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Thank you, Stephanie. Good morning, ladies and gentlemen. Welcome to Silver Standard's Third Quarter 2012 Conference Call, during which we'll provide you with a review of our business, our financial performance and a general update. Joining me on the call this morning are Joe Phillips, our Senior Vice President, Operations and Development; Greg Martin, our CFO; and Ron Burk, our Vice President Exploration. Also present is John DeCooman, our Vice President Business Development and Strategy.
Our interim financial statements, management discussion and analysis and business updates have been filed on SEDAR and are also available on our website. To accompany our comments today, there is also an online webcast, and you'll find the information on this in our news release relating to the call. We will be making forward-looking statements today, and I refer you to the disclosure accompanying our slides, news release and also on SEDAR.
So now we will review the company's progress, positioning Silver Standard for success. As we promised the market at the beginning of the year, we are focused on delivering consistent results from our operations and projects and building value for our shareholders. We continue to deliver at Pirquitas, with sales this quarter exceeding production, as we sell into our 5 long-term contracts. This marketing strategy is agreed out on both commercially and from a risk management perspective.
Our operations team at Pirquitas continue to perform with another quarter of silver production delivering us -- which delivered, which positions us strongly to meet our full year guidance.
Exploration also remains a focus at Pirquitas with drilling continuing to intersect ore grade mineralization, which will add to the resource and allow us to evaluate mining of the material. Our costs are always a challenge in a high inflation environment, but our management team in Argentina evaluate all opportunities to contain the impacts of inflation by focusing on improvements such as metal process recoveries and location of waste dumps. We are working on completing the Pitarrilla feasibility study by the end of the year, and in the third quarter, substantial progress has been made towards this timeline. This feasibility study is based on a 16,000 tonnes per day open-pit project, which would position Pitarrilla as one of the world's largest primary silver mines with a life well in excess of 20 years.
At San Luis, we can report that in September we secured government approval for the EIA for the mine. Having completed this process and having an agreement with the Cochabamba community, it now allows us to focus on reaching agreement with the Ecash community with ultimate project timing remaining dependent on completing this agreement. The EIA, however, marks an important milestone for this project.
In exploration, our team continues to find resource adjacent to our open pit at Pirquitas, and Ron will cover this in his section. The drilling of the BP zone at San Luis in Peru is still targeted for the fourth quarter subject to receiving the only outstanding impairment. Exploration at San Agustin in Mexico will be a 2013 activity, as well as the work on evaluating mining potential.
Silver Standard is well positioned with funding and capability to deliver value with significant leverage to silver price improvements. We have the projects, people and the financial capability regardless of the macroeconomic environment to grow the value of our company. We're all committed to make this happen.
So now I'll hand over to Joe to take you through operations and development.
Larry Joe Phillips
Thanks, John, and good morning, everyone. I'd like to start this morning reporting on the strong operating results at our Pirquitas Mine. Our operations team has been successfully working over the past 2 years to make Pirquitas a reliable, steady-state silver mine with consistent quarter-on-quarter performance. I'm pleased to report that Pirquitas enjoyed its third consecutive quarter this year of over 2 million ounces, bringing year-to-date production for the mine to 6.4 million ounces. A production of 2.2 million ounces in the third quarter was just 7,000 ounces shy of the production record. This puts us on target to achieve our guidance for the year.
By product zinc production for the quarter was 2.8 million pounds, up by 46% versus the previous quarter, bringing our year-to-date zinc production to 8 million pounds. This is on pace to meet our zinc guidance for the year.
The Pirquitas mining operation continued to operate smoothly for the quarter, exceeding our forecast material movement for quarter and year-to-date. Our mine is approaching the completion of our Phase 1 mining pit towards the end of 2012. And we're already advancing the new mining benches on our Phase 2 pit. Our operations and maintenance personnel at the mine continue to maintain high availability and efficiency of the mining fleet in spite of challenging environments for importation and acquisition of parts supplied and components in Argentina.