Americas Gold and Silver Corporation (USA) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. My name is Abby, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Americas Gold and Silver Crescent Silver Acquisition Conference Call. [Operator Instructions] Today's call is being recorded and will be available for replay from the Americas Gold and Silver website later today. Our speakers for today will be America's CEO and Chairman, Paul Huet; and EVP of Corporate Development, Oliver Turner. Without further ado, I will hand the call over to Paul.

Thank you. Good morning, everyone. Obviously, what an exciting day. We've been working on this for several months now, a number of months. We've been here already in Idaho or with Americas Gold and Silver for 11 months already. It's been a whirlwind exciting opportunity. But today, the company changes forever, and we're extremely excited for this opportunity. We won't find more accretive opportunities to fill our mill in stuff that's the exact same ore. So for us, we can't be more excited to get this deal across the finish line. If I'm a little tired, I apologize, we've been up all night trying to get this to our shareholders, and we finally got across the line. So very excited to talk about it. We've got a deck here in front of us. We're going to walk through those slides and explain to you exactly what we saw. I do want to say, look, I personally was able to get underground there more than 15 times with a very elite team underground operators and narrow vein miners to review this asset. We spent hours and hours on this DD with external people. But the summary is, look, we're going to walk through it here right now. It's 9 miles away from our existing mill here. So we -- again, we won't find anything more accretive. And with that, I'm going to turn it over to Oliver and Maxim to start going through the slides, and I'm going to be right here.

Thank you, Paul, and good morning, everyone. Obviously, a very exciting time for Americas Gold and Silver shareholders, and we're happy to have everyone on this call listening in. Hopefully, by the end of this presentation, you're as excited as we are about what is a very accretive acquisition for us, and it provides immediate mill feed to our Galena mill right out of the gate, the kind of transaction that we really like to do as a management team. So we'll guide your attention to the forward-looking statements to read at your own discretion here whenever you have time, and we'll jump right into the highlights of the transaction. So as Paul mentioned, this is a highly strategic acquisition of a key asset in Idaho Silver Valley. The Crescent Mine is located just 9 miles away from us from the Galena Complex. We also have in this mine a very high-grade silver copper resource. It's about 23 million ounces, grading about 655 grams per ton. I'm going to run through some of the synergies that we can talk about a little bit later on the call, particularly when we talk about some of the mill -- spare mill capacity that we're going to be utilizing with this acquisition. But very importantly, this is on private land, fully permitted, able to restart it quickly, and we're talking about as soon as mid-2026, we'll be seeing tons from this operation. And then with all of our acquisitions, we're not buying it for what's on paper today, but what we think we can expand the asset into, and we see very significant potential for expanding the resource base at Crescent. So starting off with the financials of the transaction, reviewing the purchase this morning. There's a press release out this morning summarizing the key points of this deal. The purchase price is approximately USD 65 million. The consideration to the vendor is USD 20 million in cash, and 11.1 million common shares of Americas Gold and Silver, which as of the close yesterday is about $45 million. We expect to close the transaction very quickly, which is great for everyone involved in early December. Targeting on or about December 3, we expect to close the deal and the financing concurrently. Taking a look at Crescent on a page here. I mentioned some of these numbers previously. You've got a 23 million ounce resource, very, very high-grade resource at 655 grams per ton, as we said, located just 9 miles away from us. And most importantly, this asset is going to be amenable to the mining methods that we've been rolling out at Galena, particularly long-hole stoping, which is really turning around the Galena asset and helping us scale up to that 5 million ounce a year plus level that we've been targeting. So excited to get Crescent into the mill to contribute to that growth profile. In terms of the location, there's a plan map on Slide 7, for those of you following along. Slide 7 shows a plan map of the Silver Valley, where we have the Galena Complex circled in the blue dash line there. The Crescent Mine is located just 9 miles by road away from the Galena Complex, situated between the Sunshine and Bunker Hill mines. Very strategically located, obviously, a short trucking distance away to get that feed into our mill. And very importantly, part of that entire belt through the Silver Valley where we're all mining various parts of the same system. So really happy to be tucking this in, and it's right in our neighborhood. We'll be able to capitalize on a lot of the same workforce. Obviously, our excellent operating team at Galena as well as the workforce that's there in the Silver Valley, we'll be able to leverage them. Equipment purchasing, obviously, a variety of vendor strength. So really excited to take advantage of some of those synergies with an asset that's just so close away from where we're already operating and scaling. On Slide 8, I mentioned the magnitude of the resource grade at Crescent. Look, 655 grams per ton. When you start to look at silver assets globally, it's hard to find a higher grade silver deposit than that. You see it's right up there on the left-hand side up there with the best of them. 655 grams per ton, that is hosted in a tetrahedrite ore. And to keep things simple, a tetrahedrite ore is a silver, copper, antimony ore. That is the exact same type of ore that we are currently mining at Galena, where we also have silver, copper and antimony. So this type of ore will be able to mix perfectly in with our Galena feed into the Galena mill, and will behave very similarly from a metallurgical perspective, which is fantastic. Obviously, we'll have the added benefit of higher grades compared to the blended grade at Galena, where you see the blue column in the middle there, that's the current Galena Complex grade of 466 grams per ton. That is the blended grade of the two types of ore. We have two types of ore just on Slide 8 there, two types of ore at Galena. We have the silver copper ore, which grades around 200 grams per ton, and the -- sorry, the silver lead ore, which grades around 200 grams per ton silver, and the silver copper ore, which is north of 600 grams per ton. That's where you get that blended grade. So adding more high-grade feed to the mill with the same type of ore. And then very importantly, like we've been quite vocal about our ambitions in the antimony space, this Crescent Mine will contribute to our antimony byproduct credit and growth plan that we've been out there talking about with investors and in the media as well. So we have ambitions to scale antimony concurrently with silver. Remember, it's all in the same rock at Galena. The same will happen with Crescent, and we're looking forward to contributing this antimony feed to help satisfy the U.S. domestic mine supply shortage that we're all very aware of. So it puts us in an even stronger position and aligns very well with the strategy that we have at Galena already. Slide 9, in terms of the synergies we're looking at. I mentioned several of these earlier when we're talking about the workforce, we're talking about equipment, obviously, G&A synergies and vendor contracts. But I draw everyone's attention to the bottom right-hand part of this slide deck, where we have the milling capacity that is currently available and underutilized at our Galena Complex. The total capacity you see on the left-hand side there is around 1,500 short tons per day. That's comprised of the 750 ton per day mill at Galena, which has another ball mill that allows that to be expanded north of 1,000 tons per day in the future. We also have the 500 ton per day core mill. So that's where you get that combination of 1,500 short tons per day from. Shifting over to the bar chart on the right-hand side, you see in the dark blue there, our current utilization is about just under 410 short tons per day of milling capacity. That's the actual number from the third quarter that we just reported earlier this week, and that accounts for the 10-day shutdown -- planned shutdown that we had for rehab -- sorry, for upgrading the #3 shaft as part of our expansion plans at Galena. So 408 tons, that's up from about 300 tons per day over the last several years. So we are expanding at Galena. And of course, the mine is going to be catching up to the hoisting and the mill over the next several years. But we have all of this spare capacity, just over 1,000 tons per day of spare capacity and potential there that we want to be filling with ore as soon as we can, and that's what Crescent provides us. We're able to tuck feed from as early as halfway through 2026. We'll get some development ore into the Galena mill. And then obviously, as we've set up our mining at Crescent, we'll get more and more of that feed coming over. So just a tremendous way for us to capitalize on mill capacity that we're not currently using. I mentioned earlier -- on Slide 10, I mentioned earlier that it's all part of the same belt that we have in the Silver Valley here. This is a very historic mining area, well over 130 years of mining history in this district. The first workings happened at Galena actually before the year 1900. So a long history of mining, and this long section here certainly shows the tremendous amount of our development that's already in place across the Silver Valley with just huge resources in all of these mines that will continue to be mined for many decades to come. So we're excited to tuck in a second portion of this belt in the Crescent Mine on the left-hand side of the page there. And you can see the scale of the Galena Complex on the right-hand side there. We own the Coeur, Galena and Caladay altogether. One thing that is worth mentioning at the Crescent Mine, of course, is that this is not a new mine, this is another restart. Definitely the expertise that this management team is turning around existing operations and scaling up past producing operations. This mine has already produced over 25 million ounces at over 900 grams per ton silver. So again, a history of high-grade production, continued high-grade production with that strong resource that we mentioned earlier at 655 grams per ton. All of that will head over to the Galena Complex and complement our current operations there. So just a great nearby synergistic acquisition that we're very, very pleased about. Slide 11 shows an asymmetric view of the underground workings that were already and currently in place at Galena -- sorry, at the Crescent Mine. You've got three adits accessing the Crescent Mine. On the top, you've got the Countess, you've got the Big Creek, and you've also got the Hooper level on the bottom there. You see the two primary veins shown in green and in red. Those are the South vein and the Alhambra vein. Those two veins are the primary host for that 23 million ounces at 650 grams that I talked about. But there is significant potential via the drill bit to expand these veins in several different directions, and we're extremely excited to do it. I'll talk a little bit more about that on the next page. But lastly, on this page, what I do want to mention is part of our investment into Crescent in the first portion of this year is going to be putting drop raises in between these levels. We need secondary egress to commence mining activities, but we also want to put in drop raises. So we're able to get ore from the upper adit access in upper levels of the mine down to that Hooper level, trucking it out 9 miles down the road to Galena and be able to use gravity as our friend. As I mentioned, we are going to be implementing long-hole stoping at this mine, which we've had tremendous success with this year, and that is the future of Galena is transitioning to more and more long-hole stoping. So same mining method, same approach, same team and same strategy here at Galena, and we're excited to get those tons to the mill as soon as we can. Lastly, on the exploration upside, I mentioned that there is the potential to expand these two veins. On Slide 12, you see a planned view of those two veins, the Alhambra vein and the Southern vein in the Turquoise area, that is the Crescent Mine property. We've also got some additional claims outlined in the yellow on Slide 12, that show the potential for extending these two veins beyond that Turquoise area. So to the west there, on the left-hand side, you see some dotted lines. There is over 2,100 feet of untested potential there, and we think there's strong potential for those veins to be extended alongside. So the same mining depth is what's currently set up at Crescent as well as at depth. And then over to the right, of course, this is the potential that these are extensions from veins that are already on the Sunshine property. So all of this is part of the same system. We're going to be applying the same exploration approach that's driven some pretty phenomenal exploration success at Galena this year, particularly with the discovery of the 34 and 149 veins where we're hitting multi-kilogram silver hits. And we look forward to drilling out this system and seeing if we can extend it and potentially increase grades there. So with that, the rest of the deck is summarizing our resources, and there's also a summary of the 2015 Tetra Tech report that I would advise investors to read at their own leisure. You've got a production profile there that was projected to be over 1 million ounces of silver per year, in fact, about 1.4 million to 1.5 million ounces of silver per year. Of course, as we did with Galena, this team is going to take away the work. We're going to devise our own mine plan and get mining right away. We'll be updating the market next year on what we think Crescent can contribute over the course of this year. So with that, I think I'll turn the call back over to Paul for some comments, and then I believe we have a bit of time here for a few questions on the line.

Yes. So good job, Oliver. Thank you for the summary. So look, as I mentioned early on, our team have been working aggressively at getting Galena uptake into a pattern where we get it back to that 5 million ounces per year. What this does is it allows us to fill the mills quicker, much sooner alongside us as we continue that growth at Galena. And when you start looking at three adits, I think of some of the things we've done in the past in our own lives, we could be mining 500 tons from each of these adits. So to think what could it be, could this be 2 million ounces a year sustaining? Absolutely, it can be. We're working on the heels of the former PEA. We did engage, obviously, some consultants to put together some mine plans. We're excited to get in there and drill and then reopen this mine early in 2026 right after this thing closes. So very exciting time for Americas Gold and Silver shareholders. The company is not standing still for the last 10, 11 months we've been here. We're quite excited to take this thing over. So we will take over a couple of questions and turn it over to the operator.

[Operator Instructions] And our first question comes from the line of Heiko Ihle with H.C. Wainwright.

With the financing, there's a decent amount of excess funds. I mean can you provide like a little bit of color on what exactly -- on dollar amounts, what do you expect to spend? How is the equipment at site? And any color on the value of this addition, please?

Yes. Heiko, look, at the moment, there is not a whole lot of equipment on site. We will be bringing in a contractor early on. There are two scoops and two jumbos and one truck. The reality is part of the plan that we have will be bringing in a contractor, but a lot of the dollars are going to be specifically for reopening the mine. There's not a lot of rehab to do. It will be about drilling immediately and then doing those raises that Oliver talked about. Putting in the secondary egress to allow us to be in full production because at the moment, without secondary egresses in the United States, you can't be in full production. You can be under exploration, which is what we will be doing. But putting in those raises, we need a couple of Alimak raises to connect the Countess to the Big Creek, and then the Big Creek to the Hooper, and then we can truck right out of the rail. So there's not a whole lot of equipment, but we are going to be using a contractor out of the gate, and I gave you a summary of where we're going to be spending the dollars for...

Looks like you wouldn't be willing to quantify any of these, correct?

Yes. Look, we're not going to get into those details here on this call, Heiko. It's a little too granular for this call.

And our next question comes from the line of Justin Chan with SCP Resource Finance.

Congrats. Definitely exciting to see you guys expand your footprint. Just a couple of questions. One, in the long term, can you give us a sense of how you see the bottlenecks at Crescent? Is it moving material? Is it mining methods? Just maybe talk us through what you see the long-term potential as being there. I see you mentioned 250 tons a day. But just maybe is that a medium-term goal? Or is that the long-term potential?