SCZ: Accelerated Debt Payment Plan with Glencore
What you need to know:• Santacruz announced that it plans to accelerate its debt payments to Glencore, saving $40M and cleaning up the balance sheet.
• SCZ paid Glencore $10M yesterday and will making bi-monthly payments of $7.5M to Glencore until it reaches a total of $40M by the end of October 2025.
• We recently initiated coverage on SCZ, read the report here.
• Despite rallying 80% YTD, SCZ still only trades at 2.8x 2025E OCF.
Yesterday afternoon, Santacruz Silver (SCZ:TSXV) announced that it has structured and implemented a new plan to exercise its option to accelerate its payments to Glencore. By doing this, SCZ is positioned to save $40M, as the debt is reduced from $80M to $40M if paid off by November 2025. Additionally, this will clean up the Company’s balance sheet making SCZ more attractive to investors. We are maintaining our BUY rating and our target price of C$0.90/share on SCZ.
SCZ has announced a structured plan to exercise its Acceleration Option for the Base Purchase Price owed to Glencore, aiming to save $40M. The savings come from there being a lower interest burden on the Company and the structure of the deal, highlighting that SCZ could pay Glencore $80M over time or $40M if paid off before November 1st, 2025. The Company made an initial payment of $10M on March 20th, 2025, and will continue with bi-monthly payments of $7.5M starting May 2025, totaling $40M by October 31, 2025.
The Company acquired Glencore's Bolivian mining assets in a deal announced in October 2021. Santacruz's operations include the Bolivar, Porco, and Caballo Blanco Group mines in Bolivia, San Lucas ore sourcing and trading business, as well as the Zimapan mine in Mexico. Specifically, the acquisition from Glencore included a 45% stake in the producing Bolivar and Porco mines, a 100% interest in the Sinchi Wayra business operating the Caballo Blanco mining complex, the Soracaya exploration project, and the San Lucas ore sourcing and trading business.
Santacruz Silver Mining is engaged in the operation, acquisition, exploration and development of mineral properties in Mexico, with a primary focus on silver, but also including gold, zinc and lead. Co. is focused on meeting and maintaining its primary production objective of producing approximately 1.5 million silver equivalent ounces on a yearly basis at its producing property, the Rosario Mine. In addition, Co. is exploring three other mineral properties, being the San Felipe Project (an advanced stage project), the Gavilanes Project (an exploration project), and the El Gachi Property (an early stage exploration project).
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