23
SAN JOSE MINE, MEXICO
DRIVING GROWTH FROM WITHIN
Silver production increased by 74% to 4.4 million ounces and gold production by 76% to 33,496 ounces over
the prior year. Higher throughput of 48% from a mine and processing plant expansion from 1,800 tpd to 2,000
tpd in April 2014 and higher head grade for silver and gold of 17% contributed to the increase in production.
Silver and gold production in 2014 exceeded annual guidance by 10% and 9% respectively.
Cash cost per tonne of processed ore was $62.99 or 12% below the cost in 2013 and 6% below annual
guidance. The cost reduction is due mainly to higher throughput, devaluation of the peso and lower mine
development costs. AISCC per payable ounce of silver, net of by-products, was $12.07 or 24% lower than in
2013 and 16% below annual guidance.
Metallurgical recoveries remained stable for silver at 89% and improved slightly for gold to 90%.
Capital expenditures were $29.0 million in 2014. The most significant of these were $4.8 million for mine
development, $6.0 million for brownfields exploration and $12.3 million for tailings dam expansion and
evaporation control.
Outlook for 2015
San Jose mill to expand by 50%
In light of the significant growth of mineral reserves
and resources, we are proceeding with two major
capital projects. The mill will be expanded from
2,000 to 3,000 tonnes per day by mid-2016 and a
dry stack tailings deposit and filter facility will be
completed in 2015.
3,000 tpd mill expansion highlights
• Annual production: 10 to 12 million silver
equivalent ounces
*
or 7 to 8 million ounces of
silver and 52 to 57 thousand ounces of gold
• AISCC
**
: $8 to $9 per ounce silver, net of by-
product gold
• Economics: 36% after-tax IRR
**
, with payback in
two years
* Silver equivalent production estimated using silver-to-gold ratio of 60:1
** AISCC and After-tax Internal Rate of Return (IRR) estimated using $16/oz
Ag and $1,200/oz Au
The capital cost estimate for the plant expansion is
$30 million, with $12.6 million budgeted for 2015
and the balance for 2016. The project is fully
permitted and commenced on schedule in the first
quarter of 2015. We expect to commission the mill
in mid-2016.
Mine development is well ahead of production, with a
2.8-year projection of developed reserves by the end
of 2015. As this is sufficient to source 3,000 tpd, no
major infrastructure projects are required at the mine.
The dry stack tailings and filter facility will shift the
San Jose Mine from conventional slurry tailings
disposal. The project was started in the fourth
quarter of 2014 and is expected to be completed in
the fourth quarter of 2015. Capital cost is estimated
at $32 million.
2014 Operating and Financial Highlights
