Bear Creek Mining Corporation

For Q1 2023, Mercedes produced 12,038 ounces of gold and 40,241 ounces of silver, sold 9,304 ounces of gold, and delivered 3,182 ounces under streaming arrangements. Cash cost per ounce of gold sold and streamed was $1,386, and all-in sustaining cost was $1,670 per ounce. The company realized $24.3 million of gold revenue, had $14.4 million of cost of goods sold, and reported a gross loss of $1.3 million at Mercedes. On a consolidated basis, Bear Creek reported a comprehensive net loss of $11.6 million, or $0.08 per share. At March 31, 2023, net working capital deficiency was $60 million. Management said 2023 annual gold production guidance remains 65,000 to 75,000 ounces, and that Q2 is still a transitional quarter; AISC came in below guidance, and lower operating costs are expected to begin late in Q2 as mining-method changes are implemented.

The CEO was unable to join the call, so the main strategic commentary came from Catherine McLeod-Seltzer. Her tone was cautiously confident: she acknowledged that the path to significant free cash flow has taken longer than expected, but said the “end game is still in sight.” She emphasized continued confidence in Mercedes’ ability to produce more gold at lower cost, generate robust free cash flow, and potentially host additional mineralization and new deposits.

Eric Caba highlighted that Q1 production was within guidance and that AISC came in below the range, even though cash costs were slightly higher than expected. He cited $24.3 million of revenue, $14.4 million of cost of goods sold, a $1.3 million gross loss at Mercedes, and a $11.6 million comprehensive net loss, or $0.08 per share; he also noted a $60 million net working capital deficiency at quarter-end. He said the Equinox restructuring should reduce the net current working capital deficit by about 40% once finalized, while the amended Sandstorm agreement adds $5 million cash and extends the 600-ounce monthly stream by seven months to 49 months.

Analysts focused on whether the move to caving methods would require more capex or create technical risk, and Eric Caba said it should actually take less capital development than the prior cut-and-fill plan, with development costs dropping by two-thirds for the same production level. On geotechnical risk, he said initial calculations and early indications around ore flowability were encouraging and that he saw nothing but encouraging signs so far. Questions also centered on Q2 production and the second-half ramp; management declined to give a firm Q2 forecast but said the methodology and control changes are improving costs and that San Martin should become a much larger contributor later in the year. On Corani, management said Peru political disruptions delayed site access and community work, and they could not yet provide a solid update or revised capex timing, telling investors to “stay tuned.”