Minor actions Gold and silver of the Americas (NYSEMKT: USAS) fell quickly and deeply this morning, dropping as much as 20% in the first half hour of trading. The news that precipitated the sharp declines was the release of the company’s first quarter 2021 results. Investors were clearly not happy.
The gold and silver miner reported income of $ 10.2 million in the quarter, but a net loss of $ 91.8 million, or $ 0.72 per share. This at a time when precious metal prices are at high levels, which is clearly not a good thing. Even after removing one-off items, the company bled $ 0.10 of red ink per share. That alone would be enough to put investors on the alert, but the really important facts here are in the one-off things that the “adjusted” loss removes.
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There were two large one-time charges during the quarter. One was a $ 55.6 million impairment charge taken on the company’s investment in Relief Canyon. The other was a $ 23 million write-down in inventory related to the project. While there are a number of complexities involved (including difficult mining conditions and lower than expected recoveries), the big picture is that the investment in Relief Canyon has not gone very well and does not produce the results expected by management. . While this does happen every now and then with large mining projects, investors appear to be slashing the share price to reflect the issues.
Today’s news was not all bad. Notably, it appears that a blockade at one of the company’s Mexican mines, which has lasted for over a year, is in the process of being resolved. That’s good, sure, but the negatives in this quarterly update obviously outweigh the positives today.
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