Shares of miner Americas Gold and Silver (NYSEMKT:USAS) fell quickly and deeply this morning, dropping by as much as 20% in the first half-hour of trading. The news precipitating the steep declines was the company's first-quarter 2021 earnings release. Obviously, investors weren't pleased.
The gold and silver miner reported revenue of $10.2 million in the quarter, but a net loss of $91.8 million, or $0.72 per share. This at a time when prices of precious metals are at elevated levels, which is clearly not a good thing. Even after taking out one-time items, the company bled $0.10 of red ink per share. This alone would be enough to put investors on edge, but the really important facts here are found in the one-time items that the "adjusted" loss removes.
There were two big one-time charges in the quarter. One was an impairment charge of $55.6 million taken over the company's Relief Canyon investment. The other was a $23 million writedown of inventory related to the project. Although there are a number of complexities involved (including difficult mining conditions and lower-than-projected recoveries), the big picture is that the Relief Canyon investment just hasn't been going very well and isn't producing the results that management had expected. Although this happens with big mining projects from time to time, investors appear to be reducing the stock's price to reflect the troubles.
The news today wasn't all bad. Notably, it appears that a blockade at one of the company's Mexican mines, which has been going on for more than a year, is on the way to be settled. That's good, for sure, but the negatives in this quarterly update are obviously outweighing the positives today.