Greetings, and welcome to the Americas Silver Corporation Second Quarter Investors Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer Session. [Operator Instructions] As a reminder, this conference is being recorded Monday, August 12, 2019.I would now like to turn the conference over to Darren Blasutti, President and CEO. Please go ahead.

Thanks, Kevin. Thanks for joining us on such short notice, everyone. It's summer time, so our board and audit committee meetings were today. And Mr. Dell, our Chief Operating Officer, is already in Nevada at the Relief Canyon, and I'm off traveling tomorrow firstly tonight first thing. So we have to have a very-very compressed, so I apologize in advance.As we go through the presentation, I will be telling you a slider on for those of you who are not -- who are looking at the conference call slides. Moving to Slide 2, forward looking statements. So obviously, this presentation I'm going to make contain some forward looking information. I always say we do our best to predict the future but it can be very volatile based on metal prices. And mining, obviously, is not always as easy predicted but we base our forward looking information on the opinions and estimates. As of the date, such information is provided and is subject to known and unknown risk, uncertainties and other factors that may cause the actual results, level of activity performance, or achievements of Americas Silver to be certainly different from those expressed or implied by these statements.Moving over to Slide 2 or 3, our conference call overview. I don't think we need to be spend much time over here. But I will be going through each one of these slides.Slide 4. Our call participants with me in the boardroom here in Toronto are Warren Varga, our Chief Financial Officer and Shawn Wilson, our Vice President of Technical Services. And we've got Darren Dell live from Relief Canyon Lovelock, Nevada. As he's out obviously we're very excited about where the mine is going out at Relief Canyon, and he'll give you some color about what he's seeing out there.Over to…

Sure. As Darren mentioned earlier, we had our Board of Directors meeting earlier today, and I've got that group of people all fired up, because the progress we're making here at the project site. Most of the work has been centered around the leach pad, and getting that prepared for first ore placement. The earth works just about complete. By the end of the week, we should be close to 25% with getting the -- our liner down. Material for that work has been arriving on site, that's not going to slow us down at all.We've been in close contact with our major equipment suppliers. And we don't see any cause for concern and with delivery schedule on those items. We should have that equipment rolling onto site in September as we expected. So that should give us ample time to get it installed, begin stocking in November. And we're right on track for pouring gold before the end of the year.

That's perfect, thank you. And mine -- the net lead core, our mining that contract has been signed as Daren said. They're helping with the leach pad right now. And Daren, when do they go into start to mine, when will that happen?

They'll have some of their production equipment on site next week. The initial work will be more simply not in the pits, the existing pit, roadwork burn, stuff like that. But we will have our first ore coming out probably towards the end of September. We will be stockpiling that initially. So that it will be ready for feeding into the crusher once that's been assembled and ready for commissioning.

Great, and obviously, the information Daren said to the Board today is that the first gold for again is expected still in the Q4 2019, so we're very excited about that. It's coming rapidly as we're already halfway through August. And so we're excited about it.I'm going to turn you over the Slide 11. And we talk about where is this precious metal growth coming from, this is a slide from our presentation. And you know we are -- last year, we produced 1.4 million ounce of lower. We are going to produce closer to 1.6 million this year. And next year, when you ramp-up with Relief Canyon, and your know we're not going to be at 90,000 ounces because first gold pores at the end of the year. But you're going to expect that as we get through Q1, we'll be at full production kind of in Q2 timing. So we will have a good year next year that we'll really just -- the precious metal growth and then 2021, obviously, full production for the full year. So you see two years of high ramp up on the gold side. As well San Rafael, of course, we've been mining our main zone. And our main zone is around 50 to 55 grams of silver, and we've been -- but very good zinc and lead grades.But the upper zone, which we're developing in to now, has much higher silver grades, probably four or five times those 55 grams. And we've been leaving that in the ground, because we're hopeful of higher silver prices. And so the plan will be to starts at the end of the year getting into that upper zone. It will be slow as we start. But as we get developed in through the first quarter, we're going to start to see a very big ramp up in silver production next year from San Rafael. And so that will be exciting as we get into the upper zone. And the capital to get up there is very minor, I mean we're always worried about working capital differences where you're talking a couple of million dollars to get ramped up. We're probably, what Shawn, 30% done up, 40% getting developed up there already…

So the start of the bottom of the zone, yes.

Right. So we're 30% or 40% already just doing it sparingly as crude become available on the main zone. We're going to start ramping that up in the fourth quarter, third and fourth quarter to get up there and develop. And again, we expect to see first ore hopefully by the end of the year, and a big ramp up kind of starting the second quarter next year on silver. So that impacts the precious metal growth. And then of course if we get a complete change in silver prices, we can always look at the upper zone in EC 120. Again, EC 120 on its own produces 2.5 million ounce of silver. So again, we've got a lot of options at Mexico with respect to where we're going to go with the asset.And what we're going to do right now as zinc prices are higher, or have been high -- lead prices doing relatively well. And we've seen $1.50 move or since the bottom when we stopped production at Galena for a bit. We saw 14.30 silver at the bottom. We're almost at -- we're roughly just over 17. So that's been a good move. We think silver is going to move explosively and much higher, and we're going to be ready for that at the start of 2020. So we're excited about it and again, EC 120. So I think that's all great. You can see the value of Relief Canyon. You can see the value at San Rafael. The question that we get a lot about is, what are we going to do about Galena? It's been an asset, which has close to 54 million ounces of silver and all the categories. We're producing just over -- roughly a million ounces this year. In its past, it's…

Thank you [Operator instructions] And our first question is from Jake Sekelsky with ROTH Capital Partners. Please go ahead.

So just looking at Galena, I mean, production was intentionally lower there given where we were with silver prices early in Q2. And you guys focused on development for the longer term viability of the mine. And this is obviously a mine with a lot of leverage to silver prices. So I guess really my question is has the strategy changed at all here with the recent run-up in prices? And if we're not there yet, what would you be looking for to ramp up throughput?

So I mean, obviously, Jake, the first answer is where we are as a company, we're a bigger company with more access to capital. So that's the first thing is, has the outlook for Galena changed. Yes, I mean the outlook for Galena was, let's hang on and hold on to higher metal prices go, because it got lot of optionality. So I think first case is we think or we believe or we know in that order that that at depth our grades get better. And we've been mining most of our tonnage from 49 and 52. And as you know, we've been ramping up and down with equipment that's older and we've been doing all these things that cause issues, because we just didn't have any capital to spend.And so our view is, again, if we did the proper capital enhancements, if we did the proper development, and we did some drilling in front of that, we think this thing is not a 50 million ounce resource, it's a 100 million ounce resource, and we think the grades are higher. So that's what we know and believe about the assets. But we've never had any money to spend to make that a reality. And so this old mine, which was closed in 2005 that was stripped of all its components, no overlap, no development last, shafts in trouble. We bought it in 2011. We never in our wildest dreams thought silver was going to go to $13, and it was at $35. We have fixed the shop. We've got the mills operating. We got 1500 tons of capacity. And we're doing 500 times a day, five days a week.So the answer is until you put invest -- you got to prove to the board and to me, and…

That's fair and that's very helpful. Shifting gears quickly, obviously, you mentioned revenues negatively impacted by TCRCs during the quarter. Give any other color here? It sound like it's not specific to just you guys. Just trying to get a handle on this going forward and how it's going to impact revenue?

Sure. I'll let Warren to give you the details.

As it relates to the zinc economy and treatment charges on our zinc con, I don't think it should come as a surprise to anybody who is associated with that industry, or deals with other silver companies who created zinc con, because over the -- the course of the past year, the spot price has risen from $60 per ton or even less, sometimes $25 per ton to at times over $286 per ton on a spot basis. You can see that in with macro or the crude magazines, or industry publications as they come in on a monthly basis, as well as the price of the benchmark has gone from 140 up to 180. So this shouldn't come as a big surprise where we're going to hit with higher TC this year relative to last year, and the entire industry will be going through this.

So Jake, one of the strategies is to figure out can we change our product mix to avoid, to make less zinc con or more lead con, for example, or can we go to the upper zone and will that help. And so, Shawn and Daren and their teams are evaluating how we do this, because we think this is some, I guess, it's not going to be gone in two-three months but it's not going to be here in three years. And so, it's very volatile. We did our reserve guide that we used $220 we've never changed the TC. We've always kind of used the long term view of it, and that's what they were. And again, as a result of a couple of smelters closing down and being retrofitted for environmental challenges, that's created -- in a very small market has created this kind of arbitrage. And so, you've got a lower zinc price and higher TCRCs.It's one of the reasons that we've hedged zinc forward, because again we didn't want to be in a position where we had higher TCRCs and lower zinc prices. And so ultimately, the trade war is creating -- Mr. Trump's trade war is creating many, many challenges for people as well. And so we're hoping that gets resolved at some point. But again, we're looking at our product mix. We're looking at ways to do it. But I don't think the rest of the year is going to change much as you look forward for your modeling.

Fair enough and one last quick one. I don't want to hop in queue, a high level question on Relief Canyon. With first gold expected in late Q4, as you mentioned do you guys have any concerns related to any impact from whether or anything related to that at all as you cross the finish line?

I will turn that over to our metallurgist, Mr. Dell.

I would say by the time we're done, so most of the work will be done by early November. I don't think there'll be any issue. It's not until later into the winter that you're start having to deal with snow and even then, we're in a bit of a banana belt here, I think we'll be able to escape the worst of winter.

[Operator Instructions] Next question is from Barry Allan with Laurentian Bank Securities. Please go ahead.

Just kind of a bit of a follow up maybe to the question just asked. So how do see your spend rate at Relief Canyon working out over the balance of the year? Are you going to say large part of the spend done by end of November, December?

Yeah, I think the way we look at it is the big -- and again, there's obviously -- once you pour gold, there's working capital. So we looked at it Barry as 28 to 30 as the capital, I don't think that shifted with the majority of that capital being spent by mid-November and then going into kind of a more of a regular kind of monthly spend. And we had anticipated up to $8 million of working capital, which includes no gold recoveries and we certainly didn't do it at $1,500 gold. So again, I think from our perspective, we were a little slow ramping up, because it's a different project. You're not mining the pit regularly right away to strip it. You're actually doing a leach pad and waiting for long lead ion equipment, because the pits basically stripped and already accessible.So we don't get that big spend from the mining operations starting to come. So as Daren said, mid-to-late August and then you start to see kind of that ramping up and that’s the major capital and then again you’re pouring gold in December. So again I think we're in good shape there. So nothing -- but it will be ramped up I'm guessing by kind of mid to end of August as higher monthly capital spend and then stabilizing kind of in November as it goes just to operations.

And next question is from Bhakti Pavani with Alliance Global Partners. Please go ahead.

Just wanted to get a little bit more clarity on Galena, I know Jake asked a bunch of questions about the development pipeline. Just wondering from the silver price standpoint, you did mention that the silver is at 17 or at 20. You would see a different kind of development at Galena, starting next year. At this point, just kind of curious with the increase in metal price, how much big of a capital development program are we talking about here, and is there any way to ramp-up at this point?

Yes. So again, I think the way we're thinking about it Bhakti is right now, we're doing only silver-lead. We're doing it only roughly 500 tons a day through the mill. I mean, we're doing roughly 12,000 to 15,000 tons in a month. And when you look at the capacity of the mine, it can do much, much more than that. So the challenges are we need some new equipment, we need to do some work on the Galena hoist, we need to develop. And so those three things and a little bit of exploration work is what we're looking to do kind of raise outside of the asset kind of keep producing where we're producing, but do bring new equipment in then fix the hoist and do that work. And that stuff is probably around $10 million to $15 million. And that is not going to come from us in the sense of funding it. We're looking for somebody to fund that, because they like the upside in silver price.And what that does is that gets us into more developed bigger -- more stopes developed that gives us the better grade stopes and it gets us into an ability where you got better equipment that's operating better. And you get it without having to go up and down big ramps that's really bad on equipment it's using that, lower part of the of the number three shaft. And so all of those things we think -- I mean again when you think about a new mine, if you were trying to add 50 million ounces of silver, what would it cost to develop that mine and how could a lot more than $10 million or $15 million. So what we're trying to do is figure out how to how…

Just switching gears. I mean, have you thought about hedging your silver production at this point, or do you think still premature?

Again, our view is we don't have silver or gold. We think it's why people buy us at the optionality to tell you about 500% increase in production. And we want that again -- and we want that even when silver was low. I don't think that's the right option. Again, I think we're going to hedge lead and zinc for sure, and copper if we produce it. But I think for silver and gold, we want to non-hedge it. I would -- again, I think in precious metal investors' bias because of the optionality of these prices. And the reason that we've performed reasonably well about in that capital markets is because they're seeing that optionality on the 800,000 ounces of gold and the 100 million ounces of silver we got on the balance sheet. And that we have more than most companies, a lot more companies at our site that leverage, and that's that people are buying us for. So we're never -- I don't think, I don't want to say never say never. But I won't be the CEO when we had silver.

Just to follow up on lead and zinc. At what price, would you feel comfortable hedging the production?

Well, again, we hedged I think zinc, Warren, at what -- what's the hedge on the floor, about 20 or so?

Yes…

So we saw that as a price. It's very hard with every tweak causing a 5% move up or down in zinc prices and lead. And so -- I mean, we saw copper come from 2.99 to 2.55. We have seen -- lead has actually performed quite well at one point yesterday it was almost $0.96. So it's all over the map. So again I think $0.95 lead would be a good price for us to hedge, I think and I think we want to see greater than $1.15 zinc at this point. And again, I think all of those mindsets, Bhakti, will change once Relief comes on, because right now, Mexico is a big moneymaker right now. It's a great first half of the year. Relief will change that, because it will make -- it makes a lot of money if the costs are around $800 basic for the life of the mine, at $1,500 that's going to produce a lot of cash. So right now, I think that's our mindset for hedging. Those prices we've locked in a $1.20 for how much, Warren, 30% of production?

Roughly 50%.

Yes, roughly 50% of production has $1.20. So that kind of gives you where we think about the level for that. And again, we're hoping -- it's funny when you produce the basket of commodities, you go, oh, well I hope in September, the trade war escalates because I don't like gold go up. And then we're like, oh, that will make zinc and lead go down. So we're kind of half hedging for one or the other on it, what announcements going to happen on September 1st, but we remain very bullish for silver and gold, and lead and zinc I think is in a very volatile place. I think we both think if the trade war was over, both lead and zinc could be materially higher than where they are today. So that's our challenge on hedging today.

Just last one from the housekeeping standpoint, I know you did mentioned that the development expenses for Relief Canyon is going to increase from August through November. Just wanted to get my hand around the math, what is the expected cost we talking about?

I will turn that over to -- the monthly run rate cost.

So when we're at full operation or during capital, Bhakti?

No, during the capital, when you are ramping up [Multiple Speakers]?

It depends on month and when the deliveries are received from long lead items, but you're looking at roughly from $5 million to $10 million, you probably more along the lines that $5 million and $6 million per month as we go forward into and then coming off the end of the year. The next few months will be a little bit more, it's little bit heavier as a result of maybe everything is coming a bit too ahead right now, so over the next few months and maybe a bit higher.

So from August to November, we're talking about, right, the $5 million $6 million?

Yes, August will be $5 million or $6 million -- September-October-November will be $5 million or $6 million. Little bit shifting more to the front of that period, and little bit less again in that period.

Yes, because you got all the long lead items hitting in September, or you've got the mining contractor up in September. So again it’s kind of a different -- normally projects are mining first and doing all those other step after where the long leak items are not the pit. So they all -- they kind of all hit in September Bhakti. So September-October-November will be very capital intensive. And as many of you know, we’re having an analyst trip on 8th of September, so you'll be out there and you'll see it so.

There are no further questions. I'll turn the call back to you.

Great, thanks Kevin. Well, listen everybody thank you very much for sitting through the call on such short notice. We appreciate that. If there’s any questions, please call Andrew, Jack or I, we’re available depending on who you normally talk to. Again, the tough quarter, expect the rest of the year to be better and we’re very excited about the rapidly rising gold price. And we think the silver price will follow. And again, we've been working hard to make sure that we can get more of that silver out and get that gold poured, and that’s our focus for the rest of the year. So with that, appreciate your call and thank you very much.

That does conclude your conference call for today. We thank you for your participation and you may now disconnect.