Click to view brochureIMPACT Silver enjoyed an exceptional year in 2010, reaching important milestones in finance, production, development and exploration. Like all silver miners, we continued to benefit from a robust silver market that brought unusually high spot prices and keen interest in the mining equity market. As a result, we enter the coming year well-funded, generating increasing revenues and earnings, and expecting continued strong growth in 2011.
Record Revenues and Earnings
This Company has always focused on profitability, and with the higher metal prices in general and silver prices in particular, we achieved record revenues and earnings in 2010. Our fourth quarter performance was the leader with $6.8 million in revenues and $2.1 million in net earnings. Revenues for the year totaled $16.7 million, up 37% from 2009, with mine operating earnings reaching $7.4 million for the year or 79% higher than 2009. The Company's fourth quarter revenues equated to more than $200.00 per tonne. As a result the average value per tonne for the year rose to $126.97, up from $106.49 in 2009.
Fourth Quarter Financing Adds $15 million
With our improving performance and the equity markets responding very positively to silver prices, management took the opportunity to raise $15 million through a private placement financing in the fourth quarter. These funds will be dedicated to substantially expanding exploration in Mexico and bringing the Company's Capire Mine into production.
Noche Buena Achieves Full ProductionIn the Zacualpan District of Mexico we achieved full production at Noche Buena, our latest mine. Combined with feed from the San Ramon and Chivo mines, throughput at the Guadalupe plant increased to approximately 400 tonnes per day (tpd) and brought us closer to achieving full production of 500 tpd.
Production Costs Remain Low
Despite inflation and the associated costs of starting up the Noche Buena, the Company continued to operate with one of the lowest production costs for comparable mines in Mexico at $63 per tonne, up marginally from $60 in 2009.
Lowered Cut-Off Grades Will Provide More Ore
While mining costs per tonne did not increase significantly, the mine prudently reduced its cut-off grades in response to higher metal prices. As a result, direct costs per ounce mined less by-product credits rose approximately $1.30 to $5.76. Cut-off grades represent the lowest grade material that can be mined at a profit. As the price of metals has risen dramatically over the last year, the Company has been able to mine lower grades and still generate a profit. Reducing the cut-off grade means the mine will ultimately recover more ore, although at a slightly lower average grade.
Capire Mine to Open in Late 2011
Our key development achievement in 2010 was at the Capire Silver-Lead-Zinc Volcanogenic Massive Sulphide ("VMS") project located 16 kilometers southwest of the Guadalupe processing plant. Open pit production at Capire is expected to start in late 2011. We are presently constructing a 200 tpd pilot plant with expansion planned once production parameters are established. During the year the Company produced a revised 43-101 compliant report on the Capire deposit which included revised resource calculations. Measured and Indicated resources at Capire totaled 4.9 million tonnes with an average grade of 45.74 grams per tonne silver and 0.19 grams per tonne gold. With the recent financing, we ramped up development at the project with the acquisition of surface rights, permitting and condemnation drilling on the proposed sites for the plant, low grade dumps and tailings pond locations. Exploration drilling continues to test the possible extension of the Capire deposit to the west, south and east. We will subsequently begin testing a number of other VMS targets in the general area.
Another Year of Successful Exploration
Mine exploration continues to expand on a number of targets adjacent to our mining operations, while field exploration is evaluating targets identified by reconnaissance work. We completed more than 15,000 meters of surface exploration and resource drilling during the year, up from 11,600 meters in 2009. For 2011, we plan to drill over 20,000 meters in
Mexico with a goal of putting some of the other 2,000 compiled prospects in both the Zacualpan and Mamatla Districts on a faster track to potential production.
Well-Funded with $18.7 Million
We closed out the year well funded. Subsequent to the fourth quarter financing, the Company treasury held $18.7 million in cash. With the anticipated positive cash flow from operations, IMPACT has adequate funds for both the
Capire development and the extensive exploration planned for 2011.
Looking Ahead
A key goal for 2011 is to bring the 500 tpd Guadalupe Mill to near or full capacity operation. Mill feed will be sourced from the Ramon, El Chivo and Noche Buena mines. Exploration in the Zacualpan district will accelerate and include silver targets near the current mill as well as prospecting on a number of other precious metal targets in the district. At the Capire project we plan to bring the 200 tpd pilot plant and start-up pit into production by mid winter. Coincidental with development of the Capire mine, we expanding exploration on surrounding ground to test a number of other targets. At least 10,000 meters of drilling is planned for Capire alone.
Our Thanks to Everyone
An outstanding year such as 2010 would not be possible without an outstanding team. On behalf of the Board of
Directors I would like to thank our over 200 employees and consultants, both in Canada and Mexico, for their tireless work and dedication. I'm also most grateful to our loyal shareholders for their continuing support. We look forward to another exceptional year in 2011.
Frederick W. Davidson
President and CEO
