GSilver aims to offset impact of surging Mexican peso

Guanajuato Silver Co. Ltd. [GSVR-TSXV] said it is implementing a number of cost-cutting measures in a bid to offset the impact of a recent surge in the value of the Mexican peso.

“Over the past 12 months, we have made great strides in bringing our newly purchased mining assets back into optimal production,’’ said Guanajuato Chairman and CEO James Anderson.

However, he said the business is not immune to inflationary pressures and extraordinary market volatility – most notably the remarkable rise of the Mexican peso, which has appreciated approximately 20% against the U.S. dollar over the past year.

“Our Q2 cash flows have been impacted as approximately 75% of our expenditures are denominated in Mexican pesos – we have therefore implemented a number of cost reductions, including some staff reductions, and will continue to prioritize cost controls going forward,” Anderson said.

Guanajuato is a precious metals producer engaged in reactivating past producing silver and gold mines in central Mexico. The company produces silver and gold concentrates from the El Cubo Mine, Valenciana Mines Complex (VMC) and San Ignacio mine. All three are located in the state of Guanajuato, which has an established 480-year mining history.

Additionally, the company produces silver, gold, lead and zinc concentrates from the Topia mine in northwestern Durango. The portfolio includes four operating mines and three processing facilities.

In the second quarter of 2023, the company reported record production of 941,338 silver equivalent ounces (AgEq) derived from 477,650 ounces of silver and 4,719 ounces of gold, 875,802 pounds of lead and 897,258 pounds of zinc.

However, all-in-sustaining costs (AISC) of US$22.47 per silver equivalent ounce (AgEq) produced were slightly higher than $21.83 in the first quarter of 2023. This was due to the strong Mexican currency, the company said.

Meanwhile the company said significant infrastructure investments have been made since August of last year, including the rehabilitation of the Cata shaft at VMC; the installation of new locomotive haulage system and the establishment of an environmentally superior backfill system at VMC; the installation of new Falcon concentrators at both of our Guanajuato processing facilities; and the development of new mining areas at Santa Cecilia, San Ignacio and Topia.

These capital expenditure investments are now poised to deliver improved efficiencies as we head into the second half of the year, Anderson said. The company has previously said its 2023 exploration budget is pegged at $5.2 million.

On Friday, Guanajuato Silver shares ease 7.7% or $0.025 to 30 cents on volume of 252,230. The shares are currently trading in a 52-week range of 65 cents and 29 cents.

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