Despite the loss, the profitability of the company focused on silver mining clearly improved from a year ago. The amount of silver production increased, and the production guidance for this year was kept unchanged.
A junior mining company headquartered in Sweden Sotkamo Silver reported its results for the beginning of the year on Tuesday.
In January–March, the company made an operating loss of SEK 1 million on a turnover of SEK 85 million.
In the comparison period a year ago, the company made an operating loss of 9.7 million kroons with a turnover of 67.2 million kroons.
The only one following the company Inderes the analyst predicted a turnover of 99.1 million kroner and an operating profit of 5.3 million kroner for the company.
The company’s EBITDA increased to 17 million kroner in the quarter from 6 million kroner in the comparison period.
Silver production increased
The company’s turnover was increased by higher silver production volumes, a higher average silver content and the favorable development of the silver price. The company says sales of zinc and lead have decreased mainly due to the lower price and concentrations of zinc.
Profitability improved due to higher average silver grade, higher silver price and improved efficiency of mining operations.
“The decrease in profitability compared to the previous quarter was mainly due to the lower silver content, the effect of inflation on the contract prices and the preparatory work done in the underground mine for the coming quarters,” the company says in a press release.
The company’s production in the quarter was approximately 309,000 ounces of silver (207,000 a year ago), 717 ounces of gold (516), 197 tons of lead (232) and 338 tons of zinc (515) in concentrates.
Inderes forecasts had a slightly higher silver production of 0.34 million ounces.
The company says the silver content is 91 grams per ton, which was at the lower end of the predicted 90-110 gram range.
The company kept its production guidelines unchanged. Sotkamo Silver has previously given a production guidance of 1.45–1.55 million silver ounces for the current year.
In addition, the guidelines estimate the annual EBIT margin to be at least 28 percent and the ratio of net debt to EBITDA is estimated to be less than two at the end of the year.
The company expects profitability to remain at a good level in 2024. Profitability is supported by improved operational efficiency, but weakened by inflation and rising costs. The company’s profitability is significantly affected by external factors, such as metal prices, exchange rates and inflation. According to the company, achieving the guideline requires a nice rise in metal prices and the euro/dollar exchange rate remaining roughly at the level at the time the guideline was announced (February 14, 2024).