NYSE - AG
TSX - FR
Frankfurt - FMV
VANCOUVER,
May 13, 2014 /CNW/ - FIRST
MAJESTIC SILVER CORP. (AG: NYSE; FR: TSX) (the "Company" or
"First Majestic") is pleased to announce the unaudited interim
consolidated financial results of the Company for the first quarter
ended March 31, 2014. The full
version of the financial statements and the management discussion
and analysis can be viewed on the Company's web site at
www.firstmajestic.com or on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov. All amounts are in U.S. dollars unless stated
otherwise.
FIRST Quarter 2014 FINANCIAL
Highlights
- Generated revenues of $65.3
million, a 3% decrease compared to Q1 2013.
- Net earnings after taxes amounted to $6.0 million or $0.05 earnings per share.
- Adjusted earnings per share (non-GAAP measure) of $0.06, after excluding non-cash and non-recurring
items.
- Cash flow per share (non-GAAP) of $0.22, representing a 44% decrease from Q1
2013.
- Mine operating earnings amounted to $16.6 million, a decrease of 52% from Q1 2013,
primarily due to the decrease in the silver price.
- Total cash cost, net of by-product credits, was $9.88 per ounce, up 4% compared to Q1 2013.
Excluding Del Toro, which is currently in ramp up stage, the
weighted average cash cost at the four remaining operations have
decreased 16% compared to Q1 2013.
- All-in sustaining cost ("AISC") was $18.71 per payable silver ounce. AISC is
projected to decrease to within the previous guidance of
$15.87 to $16.69 per ounce as Del
Toro and San Martin complete the
ramp up of their recent expansions.
- Corporate G&A spending decreased 33% compared to Q1
2013.
- Average realized silver price per ounce was $20.90, a decrease of 29% compared to Q1
2013.
- At the end of the quarter, the Company held cash and cash
equivalents of $41.5 million.
Subsequent to quarter end, the Company received $30.0 million from the forward sale on a portion
of the Company's future lead production.
Keith Neumeyer,
CEO and President of First Majestic, stated: "After three years of
aggressive capital spending to build and expand four of our silver
operations, the Company is planning to take a short breather to
focus on treasury growth and free cash flow. As the
expansionary capital investments at both Del Toro and San Martin come to an end, we look forward to
the increased production and improved efficiencies. We still have a
lot of work ahead of us to accomplish our next goal of reaching 20
million ounces of production per year; however, given the low
silver price environment focusing on further cost reductions and
treasury growth continues to be management's top priority."
FIRST QUARTER 2014 Highlights
|
First Quarter |
First Quarter |
|
Fourth Quarter |
|
HIGHLIGHTS |
2014 |
2013 |
Change |
2013 |
Change |
Operating |
|
|
|
|
|
Ore Processed / Tonnes Milled |
637,663 |
730,357 |
(13%) |
701,617 |
(9%) |
Silver Ounces Produced |
2,895,497 |
2,437,664 |
19% |
2,746,598 |
5% |
Silver Equivalent Ounces Produced |
3,631,672 |
2,731,792 |
33% |
3,421,161 |
6% |
Cash Costs per
Ounce(1) |
$9.88 |
$9.49 |
4% |
$9.66 |
2% |
All-in Sustaining Cost per
Ounce(1) |
$18.71 |
n/a |
n/a |
n/a |
n/a |
Total Production Cost per
Ounce(1) |
$11.93 |
$9.79 |
22% |
$11.11 |
7% |
Total Production Cost per
Tonne(1) |
$53.20 |
$31.79 |
67% |
$42.69 |
25% |
Average Realized Silver Price per
Ounce ($/eq. oz.)(1) |
$20.90 |
$29.63 |
(29%) |
$20.61 |
1% |
Financial |
|
|
|
|
|
Revenues ($ millions) |
$65.3 |
$67.1 |
(3%) |
$59.0 |
11% |
Mine Operating Earnings ($
millions)(2) |
$16.6 |
$34.6 |
(52%) |
$14.3 |
17% |
Net Earnings (Loss) ($
millions)(3) |
$6.0 |
$26.5 |
(77%) |
($81.2) |
(107%) |
Operating Cash Flows before
Movements in Working Capital
and Income Taxes ($ millions)(2) |
$25.4 |
$44.9 |
(43%) |
$20.4 |
24% |
Cash and Cash Equivalents ($ millions) |
$41.5 |
$110.1 |
(62%) |
$54.8 |
(24%) |
Working Capital ($
millions)(1) |
$18.7 |
$108.3 |
(83%) |
$32.8 |
(43%) |
Shareholders |
|
|
|
|
|
Earnings (Loss) per Share ("EPS") - Basic |
$0.05 |
$0.23 |
(78%) |
($0.69) |
(107%) |
Adjusted EPS(1) |
$0.06 |
$0.21 |
(74%) |
$0.05 |
12% |
Cash Flow per
Share(1) |
$0.22 |
$0.38 |
(44%) |
$0.17 |
27% |
Weighted Average Shares Outstanding for the
Periods |
117,227,432 |
116,895,218 |
0% |
117,030,825 |
0% |
(1) |
The Company reports non-GAAP measures which include cash costs
per ounce, all-in sustaining cost per ounce, total production cost
per ounce, total production cost per tonne, average realized
silver price per ounce, working capital, adjusted EPS and cash flow
per share. These measures are widely used in the mining industry as
a benchmark for performance, but do not have a standardized meaning
and may differ from methods used by other companies with similar
descriptions. |
(2) |
The Company reports additional GAAP measures which include mine
operating earnings and operating cash flows before movements in
working capital and income taxes. These additional financial
measures are intended to provide additional information and do not
have a standardized meaning prescribed by IFRS. |
(3) |
Net loss in the fourth quarter of 2013 includes an impairment
charge on goodwill and mining interests of $28.8 million and a
non‐cash charge of $38.8 million to deferred income tax expense in
relation to the Mexican Tax Reform enacted in December 2013. |
FINANCIAL REVIEW
The Company generated revenues of $65.3 million for the first quarter of 2014, a 3%
decrease compared to the first quarter of 2013, primarily due to a
29% decrease in the average realized silver price per ounce,
partially offset by 33% increase in production. Compared to
the previous quarter, revenues increased 11% primarily due to a 6%
increase in production.
Net earnings in the quarter were $6.0 million, or $0.05 per share, compared to $26.5 million, or $0.23 per share, in the first quarter of
2013. Cash flows from operations before movements in working
capital and income taxes in the first quarter increased by 24% to
$25.4 million or $0.22 per share, compared to $20.4 million or $0.17 per share in the fourth quarter of 2013,
but decreased by 43% compared to $44.9
million or $0.38 per share in
the first quarter of 2013 as a result of decrease in mine operating
earnings.
OPERATIONAL REVIEW
Silver equivalent production in the first
quarter increased to a record 3,631,672 ounces, an increase of 6%
compared to 3,421,161 ounces in the previous quarter.
Compared to the same quarter of the prior year, silver equivalent
production increased by 33% primarily attributed to higher
production contributed from the ramp up of the new Del Toro Silver Mine, an increase in overall head
grades, and an increase in recoveries at La Parrilla.
The overall average head grade for the first
quarter was 214 grams per tonne ("g/t"), an 18% increase compared
to 181 g/t in the first quarter of 2013 and 12% increase compared
to 191 g/t in the fourth quarter of 2013. The increase from
the same quarter of the prior year was primarily attributed to a
48% improvement in head grade at La Encantada to 312 g/t in the
first quarter of 2014, 27% improvement in head grades at Del Toro,
17% improvement in head grades at La Parrilla, offset by a 55%
decrease in silver grades at La
Guitarra. Compared to the fourth quarter of 2013, the La
Encantada mine had a 37% increase in head grade as the mine is
processing only fresh ore without blending old tailings.
La Guitarra was mining in areas
with lower silver grades but the ore feed contained higher gold
grades.
Total ore processed during the first quarter
amounted to 637,663 tonnes milled, representing a decrease of
63,954 tonnes or 9% compared to the previous quarter primarily
attributed to a reduction of tonnes milled at La Encantada due to
management's decision to process only fresh mined ore and suspend
the feed of old tailings in the current low silver price
environment.
COSTS
Cash costs per ounce in the first quarter were
$9.88, a 2% increase from the
previous quarter and a 4% increase compared to the first quarter of
2013. The increase in cash costs per ounce was primarily attributed
to temporary higher ramp up costs at Del Toro. Weighted average
cash costs for the remaining four mines improved noticeably,
declining 12% from the previous quarter and a 16% decrease compared
to the first quarter of 2013. La Encantada had the most significant
improvement in cash costs, declining 18% compared to the previous
quarter to $8.68 per ounce, due to
lower cyanide usage and lower diesel consumption.
AISC were $18.71
per payable silver ounce due to the higher ramp up costs at Del
Toro and San Martin. Looking
ahead, management projects AISC will decrease towards the
previously guided range of $15.87 to
$16.69 per payable silver ounce due to the anticipated
increase in silver production and cost reductions at Del Toro.
Production costs were $53.20 per tonne in the first quarter, an
increase of 25% from the previous quarter. Compared to the
first quarter of 2013, production cost per tonne increased from
$31.79, or 67%, primarily due to
higher production costs per tonne at the Del Toro mine and the
elimination of production from old tailings in favour of fresh mine
ore at the La Encantada mine.
MINE OPERATIONS
La Encantada Silver Mine
A total of 1,046,224 equivalent ounces of silver
were produced by the La Encantada plant during the quarter.
Production increased by 9% compared to the 962,505 equivalent
ounces of silver produced in the previous quarter and decreased by
8% compared to the 1,136,603 equivalent ounces of silver
produced in the first quarter of 2013.
Due to the elimination of blending old tailings,
the average silver head grade increased significantly to 312 g/t,
an increase of 37% compared to the previous quarter. Recoveries
have also increased to 57% compared to 52% in the prior quarter due
to less manganese content in the fresh ore compared to the old
tailings. The Company is in the planning stage to upgrade and
expand the crushing and grinding areas to allow for an increase in
throughput of fresh mine ore. This expansion will include the
installation of a new 24' x 14' ball mill, which is currently on
site, along with the installation of new primary and secondary
crushers. The plan will include the initial ramp up to 3,000
tpd of fresh ore from the current level of 2,300 tpd. A
decision will be announced pending budgeting.
La Parrilla Silver
Mine
During the quarter, total production at La
Parrilla was 1,203,337 equivalent ounces of silver, an increase of
4% compared to 1,151,728 equivalent ounces in the previous quarter
due to an increase in grade and recoveries of silver.
Cash costs were $6.21 per ounce, a 4% decrease compared to
$6.45 per ounce in the previous
quarter and a 16% decrease compared to $7.36 per ounce in the first quarter of
2013. The reduction in cash costs at La Parrilla is primarily
attributed to improvements in mill automation allowing for higher
recoveries in both silver and zinc.
Del Toro Silver
Mine
Total production at Del Toro was 801,460
equivalent ounces of silver, a 16% increase compared to 693,561
equivalent ounces in the previous quarter due to higher throughput
levels. For the month of April 2014,
the dual circuit mill averaged 2,297 tpd (984 tpd in cyanidation
and 1,314 tpd in flotation) compared to the first quarter average
of 1,609 tpd (735 tpd in cyanidation and 874 tpd in
flotation). The production ramp up of the cyanidation circuit
to 2,000 tpd continues as equipment additions to the mill are
installed to improve recoveries.
Cash costs per ounce were $16.50, an increase of 36% compared to
$12.16 in the previous quarter. The
increase was primarily attributed to the additional diesel and
generator rental costs due to delays in the construction of the
power line, additional smelting and refining costs due to
impurities and milling inefficiencies related to the early stage
operation. In mid-March, the Company temporarily connected to the
Mexican national power grid with a 34kV power line which allowed
five of the seven generators to come offline at the end of
March. With only two diesel generators remaining active, the
Company anticipates a substantial reduction in cash costs for the
remainder of the year as a result of lower electrical costs.
San Martin Silver Mine
During the quarter, total production was 324,137
ounces of silver equivalent, an increase of 3% compared to the
313,834 ounces of silver equivalent produced in the previous
quarter, and 17% higher than the 276,442 equivalent ounces of
silver produced in the first quarter of 2013.
Cash costs per ounce were $12.94, a 7% decrease compared to $13.96 per ounce in the previous quarter and
$13.87 per ounce in the first quarter
of 2013.
Over the past 15 months ending March 31, 2014, the Company invested $13.1 million to expand the mill capacity from
900 tpd to 1,300 tpd to take advantage of the new Reserves and
increased mine life announced in May
2013. The mill expansion was completed in the fourth quarter
of 2013 and is now in the ramp up stage. For the month of
April 2014, the mill operated at
1,016 tpd compared to the first quarter average of 872 tpd. At full
capacity, now expected in the second quarter of 2014, San Martin is projected to produce
approximately 1.75 million to 1.85 million ounce of silver per
year, plus modest amounts of gold.
La Guitarra Silver Mine
Total production at La
Guitarra was 256,514 equivalent ounces of silver during the
first quarter, a 14% decrease compared to the 299,533 ounces
produced in the previous quarter and a 9% increase compared to the
236,060 ounces in the first quarter of 2013.
Cash costs were $2.14 per ounce, a decrease of 48% compared to
$4.08 per ounce in the previous
quarter and an 87% decrease from the first quarter of 2013.
The decrease was primarily attributed to an increase in gold
by-product credits and reduction of smelting and refining
costs.
The permitting of a 1,000 tpd cyanidation
processing facility is currently in the planning and evaluation
stage. It is anticipated that permit applications will be
submitted to the Mexican authorities in early 2015. Once this
new processing facility is permitted and fully constructed,
production of silver doré bars is anticipated to replace the
production of silver/gold concentrates.
ABOUT FIRST MAJESTIC
First Majestic is a mining company focused on
silver production in México and is aggressively pursuing the
development of its existing mineral property assets and the pursuit
through acquisition of additional mineral assets which contribute
to the Company achieving its corporate growth objectives.
FIRST MAJESTIC SILVER CORP.
"signed"
Keith Neumeyer,
President & CEO
SPECIAL NOTE REGARDING FORWARD-LOOKING
INFORMATION
This news release includes certain
"Forward-Looking Statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995 and
applicable Canadian securities laws. When used in this news
release, the words "anticipate", "believe", "estimate", "expect",
"target", "plan", "forecast", "may", "schedule" and similar words
or expressions, identify forward-looking statements or information.
These forward-looking statements or information relate to, among
other things: the price of silver and other metals; the accuracy of
mineral reserve and resource estimates and estimates of future
production and costs of production at our properties; estimated
production rates for silver and other payable metals produced by
us, the estimated cost of development of our development projects;
the effects of laws, regulations and government policies on our
operations, including, without limitation, the laws in Mexico which currently have significant
restrictions related to mining; obtaining or maintaining necessary
permits, licences and approvals from government authorities; and
continued access to necessary infrastructure, including, without
limitation, access to power, land, water and roads to carry on
activities as planned.
These statements reflect the Company's current
views with respect to future events and are necessarily based upon
a number of assumptions and estimates that, while considered
reasonable by the Company, are inherently subject to significant
business, economic, competitive, political and social uncertainties
and contingencies. Many factors, both known and unknown, could
cause actual results, performance or achievements to be materially
different from the results, performance or achievements that are or
may be expressed or implied by such forward-looking statements or
information and the Company has made assumptions and estimates
based on or related to many of these factors. Such factors include,
without limitation: fluctuations in the spot and forward price of
silver, gold, base metals or certain other commodities (such as
natural gas, fuel oil and electricity); fluctuations in the
currency markets (such as the Canadian dollar and Mexican peso
versus the U.S. dollar); changes in national and local government,
legislation, taxation, controls, regulations and political or
economic developments in Canada,
Mexico; operating or technical
difficulties in connection with mining or development activities;
risks and hazards associated with the business of mineral
exploration, development and mining (including environmental
hazards, industrial accidents, unusual or unexpected formations,
pressures, cave-ins and flooding); risks relating to the credit
worthiness or financial condition of suppliers, refiners and other
parties with whom the Company does business; inability to obtain
adequate insurance to cover risks and hazards; and the presence of
laws and regulations that may impose restrictions on mining,
including those currently enacted in Mexico; employee relations; relationships with
and claims by local communities and indigenous populations;
availability and increasing costs associated with mining inputs and
labour; the speculative nature of mineral exploration and
development, including the risks of obtaining necessary licenses,
permits and approvals from government authorities; diminishing
quantities or grades of mineral reserves as properties are mined;
the Company's title to properties; and the factors identified under
the caption "Risk Factors" in the Company's Annual Information
Form, under the caption "Risks Relating to First Majestic's
Business".
Investors are cautioned against attributing
undue certainty to forward-looking statements or information.
Although the Company has attempted to identify important factors
that could cause actual results to differ materially, there may be
other factors that cause results not to be anticipated, estimated
or intended. The Company does not intend, and does not assume any
obligation, to update these forward-looking statements or
information to reflect changes in assumptions or changes in
circumstances or any other events affecting such statements or
information, other than as required by applicable law.
SOURCE First Majestic Silver Corp.