Andean Precious Metals Turns Tactical: Deferred Sales Pay Off

A strategic hold on silver and gold production yields a >$18M gain on cost, masking a strong operational quarter.

APM.TO · Earnings Call · 2026-08-12

A Tactical Pivot in the Treasury

The second quarter of 2026 marked a notable departure from business-as-usual at Andean Precious Metals. Facing a dip in spot prices during June, management chose to hold a portion of finished production rather than selling into weakness. As CEO Alberto Morales explained, “The second quarter was defined by our decision to defer the sale of a portion of our production for strategic treasury management purposes.” — Alberto Morales, Executive Chairman and Chief Executive Officer · 2026-08-12 The move allowed the company to monetize later at materially better prices—$62.26 per silver ounce and $4,168 per gold ounce—generating gross proceeds of approximately $56.3 million, or $18.7 million above carrying cost. Notably, these realized prices exceeded those available at the end of June. In the Q&A, Morales elaborated on the rationale:

Well, as you remember, the spot prices and market condition at the end of -- or literally within the month of June were at their lowest portions... we will be trying to monetize on better market condition, which is exactly what happened.
Alberto Morales, Executive Chairman and Chief Executive Officer · 2026-08-12

This sales deferral is a fresh theme in the company's narrative. Prior quarterly keyword trajectories—spanning 2025 and early 2026—consistently emphasized "gold production," "operational execution," and "sustaining cost," but never a deliberate hold-and-sell strategy. The decision reflects both confidence in the balance sheet and a willingness to act opportunistically in the gold and silver markets.

Operational Strength Underneath

Despite the revenue drag from deferrals, the underlying business performed well. San Bartolome delivered a 31% year-over-year increase in silver equivalent production, benefiting from higher ore purchase volumes, grades, and throughput. Alongside that, the company generated year-to-date revenue of $230.8 million, up roughly 70%, and adjusted EBITDA of $86.6 million—both record first-half figures. The financial impact of the deferral was largely a working capital story. CFO Juan Carlos Sandoval clarified, “Free cash flow was an outflow of $55.5 million for the quarter and $16 million year-to-date. This is not a reflection of operating performance. It represents the investment in noncash working capital from the buildup of finished silver and gold inventory.” — Juan Sandoval, Chief Financial Officer · 2026-08-12 By quarter end, liquid assets stood at ~$171 million, and the subsequent sale of deferred inventory has already begun to replenish cash.

Catalysts on the Horizon

Beyond the deferral, several catalysts are lined up. The company expects to complete its technical report for Golden Queen in late September, with a full report due in Q4. Management highlighted an extension of mine life to around 2035. Additionally, Andean is progressing toward a New York Stock Exchange listing, expected within 2026, and has relaunched its normal course issuer bid, repurchasing roughly 2.1 million shares since July. Gold ounce and silver prices remain key drivers of margin, and the company's exposure to both metals is meaningful. While prior discussions flagged cost sensitivity to oil prices—“If oil prices remain above $100 per barrel, it will have an impact” — Juan Sandoval, CFO · 2026-03-25—the current elevated diesel prices are expected to stay within guidance. Management has also reiterated its appetite for acquisitions, a theme echoed in earlier calls. In May, CFO Juan Sandoval noted, “we are looking at additional acquisitions. We are not -- we have not stopped looking into opportunities.” — Juan Sandoval, Chief Financial Officer · 2026-05-13 With a strengthened balance sheet and a strategic hold yielding a tangible gain, Andean is positioning itself for growth while maintaining flexibility. The combination of a tactical treasury move, robust operational performance, and clear catalysts makes this quarter an important marker for shareholders. While the revenue dip may raise eyebrows, the underlying story is one of prudent capital allocation and growing optionality.