Vancouver, B.C. – Santacruz Silver Mining Ltd. (TSX.V:SCZ) (the “Company” or “Santacruz”) announces the financial and operating results for the first quarter of 2014 (“Q1”). The full version of the financial statements and the management discussion and analysis can be viewed on the Company’s website at www.santacruzsilver.com or on SEDAR at www.sedar.com. All financial information is prepared in accordance with IFRS and all dollar amounts are expressed in US dollars unless otherwise indicated.

“The focus during the first quarter of 2014 has been on the continued ramp up and development work associated with accessing Levels 2 and now Level 3 in order to provide additional working faces,” said Arturo Préstamo, President and CEO. “We have now achieved our goal to have those working faces operational as we move into the second quarter of 2014. As well, we have engaged with a third party mining efficiency engineering firm that has provided several significant positive recommendations which we have implemented which should result in less dilution and more focus on the grades as we move into the second half of 2014. We anticipate significantly reduced costs in the coming quarters as our mill through-put will increase rapidly in the coming months and we expect a strong 2nd half of 2014.”

First Quarter 2014 Financial Summary

First Quarter 2014 Mine Operations Summary

1. Ore Processed includes approximately 11,453 tonnes arising from third party ore purchased by the Company and processed through the milling facility.
2. Silver Equivalent Sold was calculated using prices of US$20.58/oz., US$1,290/oz., US$0.95/lb. and US$0.91/lb. for silver, gold, lead and zinc, respectively, applied to the payable metal content contained in the lead and zinc concentrates produced by the Rosario Mine.
3. The Company reports non-IFRS measures which include Cash Cost per Silver Equivalent, Production Cost, All-in Sustaining Cost per Silver Equivalent and Average Realized Silver Price. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions.

Operational Review

Mill throughput increased throughout the quarter and during May the average mill through-put was approximately 270 tonnes per day (tpd) with an average silver grade of 230 g/t, and starting in June through-put is anticipated to be 300 tpd while maintaining same silver grades. In addition, we keep building a significant stockpile at site as a prudent operational measure. Q1 silver equivalent production was approximately 11% less than the 2014 mine plan, due in large part to underground ore haul equipment problems. This matter was resolved by quarter end and production is currently on track to meet planned levels in the second quarter 23,000 tonnes processed and 165,000 payable silver equivalent ounces produced). Beginning in May all ore processed through the milling facility is from the Rosario Mine only and management is not planning on processing third party ore until the third ball mill is commissioned, bringing milling capacity to 700 tpd. This commissioning process will be completed during June. 

Mill recoveries in the quarter met or exceeded planned levels. Silver recoveries are expected to increase to approximately 90% over the duration of the Rosario Mine life as the silver contained in the ore feed increases to a currently projected mine life average grade of 230 g/t.

Cash cost per silver equivalent ounce during Q1 ($29.04) was approximately 15% greater than projected for the first quarter in the 2014 mine plan. This variance arose largely because payable silver production was negatively impacted by the ore haul equipment problems referenced above.

Operating costs for Q1 included certain one-time charges paid to a consulting firm that management engaged at the beginning of the quarter to assist in optimizing the mine operations. A number of adjustments to the mine operations are being implemented in the second quarter as a result of this process including changes to mining methods and the mine development plan due to better ground conditions. These changes are expected to increase mine production while lowering mining costs and improving grade control. The majority of the changes were completed during April and accordingly the role of the third party consulting firm will be significantly diminished with a consequent reduction in their consulting fees.

Development Plan for 2014

The Main Access Ramp (“the Ramp”) development is continuing and is expected to reach Level 3 by the end of June. Development of the Ramp will continue throughout the year with the expectation that Level 5 will be reached by year end. In accordance with the Company’s accounting policies, all development costs for the Ramp are recorded to mine operating expenses in the period incurred.

Production levels in the third quarter are expected to increase to approximately 450 tpd as a result of the increased milling capacity provided by the third ball mill which is expected to come online in June. The primary source of ore feed during the third quarter will continue to be the Rosario Mine. In the event that third party ore from local miners is available for purchase, up to 200 tpd of such ore could be processed through the milling facility in order to increase overall production and generate further cashflow from operations.

Qualified Person

All technical information which is included in this statement has been reviewed and approved by Donald E. Hulse P.E. of Gustavson Associates LLC. Mr. Hulse is independent of the Company and a qualified person, pursuant to the meaning of such terms in National Instrument 43-101 Standards of Disclosure for Mineral Projects.

About Santacruz Silver Mining Ltd. 

Santacruz is a Mexican focused silver company with a producing project (Rosario); two advanced-stage projects (San Felipe and Gavilanes) and an early-stage exploration project (El Gachi). The Company is managed by a technical team of professionals with proven track records in developing, operating and discovering silver mines in Mexico. Our corporate objective is to become a mid-tier silver producer.

‘signed’

Arturo Préstamo Elizondo,
President, Chief Executive Officer and Director

For further information please contact:

Neil MacRae
Santacruz Silver Mining Ltd. 
Email: [email protected]
Telephone: (604) 569-1609

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward looking information

Certain statements contained in this news release, such as planned production levels and cost, constitute “forward-looking information” as such term is used in applicable Canadian securities laws. Forward-looking information is based on plans, expectations and estimates of management at the date the information is provided and is subject to certain factors and assumptions, including, that the Company’s financial condition and development plans do not change as a result of unforeseen events, that the Company obtains regulatory approval, future metal prices and the demand and market outlook for metals. Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information. Factors that could cause the forward-looking information in this news release to change or to be inaccurate include, but are not limited to, the risk that any of the assumptions referred to prove not to be valid or reliable, that occurrences such as those referred to above are realized and result in delays, or cessation in planned work, that the Company’s financial condition and development plans change, delays in regulatory approval, risks associated with the interpretation of data, the geology, grade and continuity of mineral deposits, the possibility that results will not be consistent with the Company’s expectations, as well as the other risks and uncertainties applicable to mineral exploration and development activities and to the Company as set forth in the Company’s Annual Information Form filed under the Company’s profile at www.sedar.com. There can be no assurance that any forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader should not place any undue reliance on forward-looking information or statements. The Company undertakes no obligation to update forward-looking information or statements, other than as required by applicable law.

Financial outlook information contained herein about the Company’s prospective cash flows and financial position is based on assumptions about future events, as described above, based on management’s assessment of the relevant information currently available. The purpose of such financial outlook is to provide information about management’s current expectations as to the anticipated results of its proposed business activities for the coming quarters. Readers are cautioned that any such financial outlook information contained herein should not be used for purposes other than for which it is disclosed herein.

Rosario Mine

The decision to commence production at the Rosario Mine was not based on a feasibility study of mineral reserves demonstrating economic and technical viability, but rather on a more preliminary estimate of inferred mineral resources. Accordingly, there is increased uncertainty and economic and technical risks of failure associated with this production decision. Production and economic variables may vary considerably, due to the absence of a complete and detailed site analysis according to and in accordance with NI 43-101.