Silver Lake Resources Experiences Over 20% Decline On Quarterly Report

Key Highlights:

• Silver Lake Resources experienced a significant decline of over 20% in its operations during the June 2023 quarter.
• The company achieved its FY23 production and sales guidance, with 261,604 ounces of gold and 1,483 tonnes of copper sold at an average price of AU$2,697/oz.
• Looking ahead to FY24, Silver Lake Resources set its sales guidance for Australian operations at 210,000 to 230,000 ounces of gold at an AISC of AU$1,850 to AU$2,050 per ounce.

Source: Kapitales Research

Silver Lake Resources Limited (ASX: SLR) has seen a significant decline of more than 20% in its share price today as the company reported record quarterly gold and copper production, with 81,616 ounces of gold and 642 tonnes of copper (84,158 ounces gold equivalent). However, despite strong sales of 83,540 ounces of gold and 606 tonnes of copper at an average price of AU$2,874/oz, the all-in sustaining cost (AISC) reached AU$1,598/oz.

FY23 production for SLR totaled 261,604 ounces of gold and 1,483 tonnes of copper (267,478 ounces gold equivalent), meeting sales guidance with 260,372 ounces of gold and 1,325 tonnes of copper sold at an average price of AU$2,697/oz. However, the AISC for the entire financial year reached AU$1,941/oz.

Key Factors Impacting Decline

Deflector Mine

The company experienced record quarterly gold production of 44,614 ounces and 642 tonnes of copper. But operations faced challenges, with the quarterly AISC at AU$1,219/oz, leading to record annual gold production of 127,069 ounces and 1,483 tonnes of copper (132,943 ounces gold equivalent) at an AISC of AU$1,497/oz.

Mount Monger

Quarterly gold production stood at 28,847 ounces with sales of 30,713 ounces at an AISC of AU$1,598/oz. The FY23 production totaled 95,559 ounces with sales of 97,181 ounces at an AISC of AU$2,104/oz.

Sugar Zone

The company faced disruptions in Q4 due to Ontario wildfires, leading to a three-week suspension of mining and processing activities. Quarterly gold production reached 8,155 ounces with sales of 9,523 ounces at an AISC of AU$3,324/oz. The FY23 production stood at 38,976 ounces with sales of 38,639 ounces at AU$2,966/oz.

Corporate and Finance

Silver Lake reported strong cash and bullion of AU$332 million at the end of the quarter, excluding AU$20.1 million of gold in circulation and concentrate on hand. The CFO, Mr. Diniz Cardoso, is set to retire in August 2023, and Mr. Struan Richards will replace him.

Outlook for FY24

Despite the decline, the company has set its FY24 sales guidance for Australian operations at 210,000 to 230,000 ounces of gold at an AISC of AU$1,850 to AU$2,050 per ounce. However, activities at Sugar Zone will pivot towards investment in drill data acquisition and idling of mining and processing activities to facilitate improved mining practices and site logistics network, aiming to support higher margins and a long-life operation.

In conclusion, Silver Lake Resources faces challenges in its mining operations and cost management. The company's pivot towards data acquisition and a focus on higher-margin operations may determine its future success in the mining industry.

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