Atrium Research Corporation - Santacruz Silver Mining (SCZ.) SCZ: Demonstrating its Leverage to the Silver Price

Report

Atrium Research Corporation

Ben Pirie

SCZ: Demonstrating its Leverage to the Silver Price

What you need to know:
• SCZ reported Q4 and 2024 financial results that beat our estimates due to the increased silver price.
• Santacruz reported Q4 revenue of $81.7M (+42% YoY) vs. our estimate of $77.0M and adjusted EBITDA of $23.0M (+300% YoY) beating our estimate of $20.0M.
• Despite rallying 150% YTD, SCZ still only trades at 3.3x 2025E OCF and remains set up for another record year in 2025.

Yesterday after market close, Santacruz Silver (SCZ:TSXV) announced Q4 and 2024 earnings that beat our expectations due to the increased silver price. Most notably, adjusted EBITDA for 2024 came in at $52.6M compared to our estimate of $44.5M, representing 200% YoY growth. Cash costs and AISC were above our estimates, but the increased silver price more than made up for it. We remain bullish on SCZ as it remains undervalued compared to its cash flow generation. We are maintaining our BUY rating and our target price of C$0.90/share on SCZ.

Financial Highlights
• Revenue for the quarter came in at $81.7M (+42% YoY) vs. our estimate of $77.0M. Revenue for 2024 was $283.0M (+13% YoY) vs. our $278.3M.
• Gross margin for Q4 came in at 31% compared to our estimate of 35%. Gross margin for the full year came in at 20% vs. our expectation of 21%.
• Cash cost for the quarter was $22.4/oz vs. our estimate of $19.6/oz. Cash cost for the year was $21.9/oz vs. our estimate of $21.4/oz.
• AISC for the quarter was $27.8/oz compared to our estimate of $25.3/oz. AISC for the year came in at $26.1/oz vs our estimate of $25.5/oz.
• Adj. EBITDA in Q4 was $23.0M (+300% YoY), beating our estimate of $20.0M. Adj. EBITDA for 2024 was $52.6M (+200% YoY) vs. our $44.5M.
• OCF (before WC) was $32.4M for Q4 and $95.8M for 2024.
• Net income for Q4 was $21.1M, smashing our estimate of $7.8M due to an FX gain. 2024 net income came in at $164.5M vs. our estimate of $142.5M.
• SCZ ended the quarter with $35.7M in cash and $64.4M in debt.

29/05/2025 1 EN

Underlying

Santacruz Silver Mining

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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CA80280U1066 Canada

Provider

Atrium Research Corporation

Atrium Research provides institutional quality issuer paid research on North American public equities using deep fundamental analysis. Our research reports are disseminated through Bloomberg, FactSet, Capital IQ, Reuters and many more, as well as through our social media and email distribution lists.

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Analysts

Ben Pirie

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SCZ: Demonstrating its Leverage to the Silver Price

Mining Monthly: April Edition

Q1/25 Recap: All Our Research in One Place!

BQE: Monster Q1 Beat on Technical Services Outperformance

OMG: Strong Drill Results from Wenot; MRE in 2-3 Months

FISH: Solid Q1; Catalyst-Rich Road Ahead

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