Andean Precious Metals held 732,000 oz silver and 2,585 oz gold in Q2 inventory at $37.6M cost, deferring sales into a stronger silver market near $37/oz.
Alpha Score of 44 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
Andean Precious Metals Corp. (APM:CA) posted record silver production for the second quarter but chose to defer sales on roughly 732,000 ounces of silver and 2,585 ounces of gold, carrying the finished inventory on the balance sheet at a combined cost of $37.6 million.
The Toronto-listed miner made the treasury management decision to hold the metal rather than sell into the spot market, CEO Alberto Morales said on Tuesday's earnings call. The 732,000 ounces of silver alone would be worth about $27 million at current spot prices near $37 an ounce, implying a significant portion of quarterly output was warehoused.
Revenue recognition will depend on when Andean releases that inventory. The company carries finished goods at cost, so the $37.6 million carrying value sits well below current market value. That gap means a deferred revenue and profit event whenever the metal moves, CFO Juan Sandoval said. Sandoval framed the strategy as giving Andean flexibility to time sales into stronger silver price environments.
Silver has rallied roughly 25% year to date, trading near $37 an ounce. Andean has not hedged its production, Sandoval added.
Victor Flores, SVP of Exploration, Operations and Growth, said the San Bartolome plant in Bolivia is running at steady throughput rates. The company is also advancing exploration at its San Pedro and Golden Queen projects, though Flores gave no specific timeline for when the warehoused ounces would reach the market.
Allison Carson of Desjardins Securities pressed on whether Andean would hold the metal through year-end. Morales said the company would evaluate market conditions quarter by quarter.
Riley Venton of Atrium Research asked about cost inflation at the Bolivian operations. Sandoval said all-in sustaining costs remained within guidance, though he did not provide a specific AISC figure for the quarter.
Andean ended the quarter with no debt and working capital of roughly $60 million, Sandoval said.
The deferred revenue from the inventory build will show up in Q3 or Q4 results, depending on when Andean decides to sell. The balance sheet now carries a $37.6 million cost basis that could translate into a significant revenue swing when the metal moves.
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