Your Questions, Our Answers

A: First and foremost, our decision to ramp down production at El Cubo to care and maintenance late this year was driven by our policy that each mine should be profitable whatever the silver price is. El Cubo was a high cost mine when we bought it in 2012, but the silver price at that time was over $30 per oz. We thought we could drive the costs down substantially to make money at $20 per oz if we invested in modernizing and expanding the entire operation. We successfully completed that plan on time and budget, but by then silver had fallen below $20 per oz so we executed a Phase 2 mine expansion last year to reduce all-in costs even further.

The good news is that our operating group successfully drove the all-in sustaining costs at El Cubo from more than $40 per oz in 2012 to less than $20 per oz in Q4, 2015. The bad news is that the silver price crashed down to $14 per oz where it is now. Therefore, we made the difficult but right decision to reduce production at El Cubo down to care and maintenance, make some profits at the mine this year, and keep the ounces in the ground for future production at higher silver prices. Our other two mines at Guanaceví and Bolañitos have been profitable for years and continue to generate free cash flow even at $14 per oz silver.

I cannot speak for other silver miners, but we run our business to generate short-term positive cash flow and long-term growth of profits, which ultimately drives accretive growth and substantial returns for our shareholders.