First Majestic Silver Corp. ("First Majestic" or the "Company") is
pleased to announce the Company’s fourth quarter and full year 2018
production results, as well as production and cost guidance for
2019. The Company’s fourth quarter and full year 2018 financial
results are scheduled to be released on February 25,
2019.
Total production in 2018 reached 22.2 million
equivalent ounces of silver, representing a 37% increase over 2017,
and at the upper end of the Company’s guidance of 20.5 to 22.6
million silver equivalent ounces. Total production consisted of
11.7 million ounces of silver, 111,084 ounces of gold, 16.1 million
pounds of lead and 5.7 million pounds of zinc. Annual silver
production was slightly below the Company’s guidance of 12.0 to
13.2 million ounces primarily due to lower than expected silver
production at La Encantada in 2018. Total production in the fourth
quarter of 2018 totaled 6.5 million silver equivalent ounces
consisting of 3.3 million ounces of silver, 34,487 ounces of gold,
3.3 million pounds of lead and 1.5 million pounds of zinc.
The Company anticipates 2019 total production (including gold,
lead and zinc by-products) will range between 24.7 to 27.5 million
silver equivalent ounces including 14.2 to 15.8 million ounces of
pure silver. Based on the midpoint of the guidance range the
Company expects a 28% increase in silver production and an 18%
increase in total production when compared to 2018.
“First Majestic had a record year in 2018
producing 22.2 million silver equivalent ounces following the
successful acquisition and integration of the San Dimas Silver/Gold
mine,” said Keith Neumeyer, President & CEO. “The addition of
San Dimas effectively doubled our production profile and total
Mexican workforce overnight. Unfortunately, due to falling silver
prices in the second half of 2018, we needed to implement various
cost cutting measures including placing the La Guitarra mine on
care and maintenance, reducing our workforce by approximately 15%,
and scaling back capital investments by approximately 20%. These
cost cutting measures have been successful and we remain focused on
improving margins and will continue to react further if
necessary.”
“Looking ahead for 2019, we expect to reach
another new production record of between 24.5 and 27.5 million
silver equivalent ounces along with a much leaner cost profile
primarily due to a full year of production from San Dimas, the
start-up of the roaster at La Encantada and the installation of
high-intensity grinding (“HIG”) mills at the Santa Elena and La
Encantada operations. The combination of the HIG mill and
roaster at La Encantada is extremely encouraging as it has the
potential to re-establish the operation as a significant silver
producer of 4 to 5 million ounces per year once these mill upgrades
are completed.”
Production Details
Table:
|
Q4 |
Q4 |
Q/Q |
|
FY |
FY |
Y/Y |
|
|
2018 |
2017 |
Change |
Consolidated Production Results |
2018 |
2017 |
Change |
|
|
850,272 |
736,684 |
15 |
% |
Ore
processed/tonnes milled |
3,375,452 |
2,981,506 |
13 |
% |
|
|
6,485,761 |
4,065,337 |
60 |
% |
Total
production - ounces of silver equivalent |
22,243,071 |
16,207,905 |
37 |
% |
|
|
3,250,816 |
2,337,463 |
39 |
% |
Silver
ounces produced |
11,679,452 |
9,749,591 |
20 |
% |
|
|
34,487 |
17,344 |
99 |
% |
Gold
ounces produced |
111,084 |
62,991 |
76 |
% |
|
|
3,294,360 |
4,271,970 |
-23 |
% |
Pounds
of lead produced |
16,135,438 |
24,522,803 |
-34 |
% |
|
|
1,466,812 |
1,289,031 |
14 |
% |
Pounds of zinc produced |
5,695,657 |
3,944,232 |
44 |
% |
|
|
|
|
Quarterly Operational
Review:
Total ore processed during the quarter at the
Company's silver mines amounted to 850,272 tonnes, representing a
2% decrease compared to the previous quarter. The slight decrease
in tonnes processed compared to the prior quarter was primarily due
to placing the La Guitarra mine on care and maintenance on August
3, 2018.
Consolidated silver grades in the quarter
averaged 144 g/t compared to 152 g/t in the previous quarter. This
5% decrease was primarily the result of lower grades at La
Parrilla. Consolidated gold grades were relatively unchanged in the
quarter averaging 1.31 g/t compared to 1.33 g/t in the prior
quarter.
Consolidated silver and gold recoveries averaged
83% and 96% in the fourth quarter of 2018 and consistent with the
previous quarter. The Company continues to expect further
improvements in recoveries associated with the installation of the
microbubble flotation cells and the HIG mills in 2019. The
microbubble flotation cells at La Parrilla are expected to be
delivered and installed in the first quarter and commissioning to
commercial production in the second quarter. In addition, the HIG
mill at Santa Elena is expected to be delivered in the first
quarter and installed and commissioned in the second quarter of
2019. The Company has also redirected its second HIG mill to La
Encantada following very positive metallurgical test results on
mineral samples which indicate that grinding ore to sub-50 microns
significantly improved silver recoveries even with the presence of
high-grade manganese that has historically limited the recovery of
silver through the Merrill Crowe process. The La Encantada HIG mill
is expected to be installed in the third quarter followed by
commissioning in the fourth quarter of 2019.
Mine by Mine Quarterly Production
Table:
Mine |
Ore
Processed |
Tonnes per
Day |
Silver Oz
Produced |
Gold Oz
Produced |
Pounds of
Lead |
Pounds of
Zinc |
Equivalent Silver
Ounces |
San Dimas |
172,641 |
1,877 |
1,367,028 |
20,839 |
- |
- |
3,127,871 |
Santa Elena |
221,945 |
2,412 |
567,754 |
12,081 |
- |
- |
1,587,396 |
La Encantada |
206,812 |
2,248 |
449,632 |
19 |
- |
- |
451,244 |
San Martin |
66,924 |
727 |
404,523 |
1,272 |
- |
- |
511,911 |
La Parrilla |
125,751 |
1,367 |
312,144 |
238 |
1,816,180 |
1,466,812 |
563,703 |
Del Toro |
56,200 |
611 |
149,734 |
38 |
1,478,180 |
- |
243,637 |
Total |
850,272 |
9,242 |
3,250,816 |
34,487 |
3,294,360 |
1,466,812 |
6,485,761 |
|
|
|
|
|
|
|
|
*Certain amounts shown may not add exactly to
the total amount due to rounding differences.*The following prices
were used in the calculation of silver equivalent ounces: Silver:
$14.54 per ounce; Gold: $1,226 per ounce; Lead: $0.89 per pound;
Zinc $1.19 per pound.
At the San Dimas Silver/Gold
Mine:
- During the quarter, San Dimas produced 1,367,028 ounces of
silver and 20,839 ounces of gold for a total production of
3,127,871 silver equivalent ounces, reflecting a 3% decrease
compared to the prior quarter.
- The mill processed a total of 172,641 tonnes with average
silver and gold grades of 262 g/t and 3.9 g/t, respectively. The
operation continued to process higher volumes from lower grade
stopes left behind as they were deemed uneconomical under the old
streaming agreement and have now become economical under the new
streaming agreement.
At the Santa Elena Silver/Gold
Mine:
- During the quarter, Santa Elena produced 567,754 ounces of
silver and 12,081 ounces of gold for a total production of
1,587,396 silver equivalent ounces, reflecting an 8% increase
compared to the prior quarter.
- The mill processed a total of 221,945 tonnes, consisting of
142,534 tonnes of underground ore and 79,410 tonnes from the above
ground heap leach pad.
- Silver and gold grades from underground ore averaged 120 g/t
and 2.4 g/t, respectively. Silver and gold grades from the above
ground heap leach pad averaged 36 g/t and 0.6 g/t,
respectively.
- Silver and gold recoveries averaged 88% and 96%, respectively,
during the quarter.
At the La Encantada Silver
Mine:
- During the quarter, silver
production reached 449,632 ounces representing a 19% increase from
the previous quarter. The increase in silver production was
primarily due to a 9% increase in silver recoveries and a 6%
increase in tonnes milled compared to the previous quarter.
- Silver grades and recoveries during
the quarter averaged 110 g/t and 61%, respectively. The increase in
silver grades was the result of higher tonnage from the San Javier
and La Prieta breccias which produced 104,651 tonnes with an
average silver grade of 125 g/t.
- Commissioning activities for the
roaster continued throughout the quarter including several test
campaigns rated at 30 tonnes of tailings material per hour being
fed into the roaster. In December, the furnace successfully
completed all commissioning procedures having reached sustainable
coal injection levels with the use of natural gas during ignition
procedures. Commissioning activities are continuing into the first
quarter with some modifications to the dryer lift system to reduce
the generation of fine material reporting to the dust collectors.
The final stage of commissioning remains to streamline the roasted
tailings pumping system. The roaster is now expected to be
operating at 2,000 tpd by the end of the first quarter.
At the San Martin Silver
Mine:
- During the quarter, San Martin produced 404,523 ounces of
silver and 1,272 ounces of gold for a total production of 511,911
silver equivalent ounces, reflecting an 8% decrease compared to the
prior quarter. The decrease in production was primarily attributed
to lower silver and gold grades of 5% and 16%, respectively.
- Silver grades and recoveries averaged 212 g/t and 89%,
respectively, during the quarter. In addition, gold grades and
recoveries averaged 0.6 g/t and 93%, respectively.
At the La Parrilla Silver
Mine:
- During the quarter, the flotation circuit processed 74,910
tonnes (814 tpd) with an average silver grade of 94 g/t and a 74%
recovery while the cyanidation circuit processed 50,841 tonnes (553
tpd) with an average silver grade of 114 g/t and a 77% recovery for
total production of 563,703 silver equivalent ounces.
- The lead circuit processed an average lead grade of 1.5% with
recoveries of 72% for total lead production of 1.8 million pounds,
representing a 23% increase compared to the previous quarter.
- The zinc circuit processed an average zinc grade of 1.7% with
recoveries of 53% for total zinc production of 1.5 million pounds,
representing a 19% increase compared to the previous quarter.
At the Del Toro Silver
Mine:
- During the quarter, Del Toro produced a total of 243,637 silver
equivalent ounces reflecting a 43% decrease compared to the prior
quarter primarily due to a 50% decrease in lead production and a
35% decrease in silver production. The decrease in production
was primarily related to lower silver and lead recoveries due to
processing higher volumes of low-grade transitional ore from the
San Juan ore body.
- Silver grades and recoveries during the quarter averaged 132
g/t and 63%, respectively.
- Lead grades and recoveries averaged 2.6% and 46%, respectively,
producing a total of 1.5 million pounds of lead representing a 50%
decrease compared to the previous quarter.
- Del Toro will reduce mill throughputs in 2019 to 270 tpd to
selectively mine and process higher quality sulphides in order to
improve head grades and recoveries while the Company continues to
drill and develop new Resources. Mill upgrades have been postponed
until 2020 as part of the Company’s overall cost cutting measures.
The Company has also initiated a staff reduction of approximately
250 employees at Del Toro as a result of the lower production rate
and reduced investments.
2019 Production Outlook and Cost
Guidance:
The Company anticipates 2019 silver production
will range between 14.2 to 15.8 million ounces with total
production (including gold, lead and zinc by-products) between 24.7
to 27.5 million silver equivalent ounces. Based on the midpoint of
the guidance range the Company expects a 28% increase in silver
production and an 18% increase in total production when compared to
2018. The increases are primarily due to having a full year of
production from San Dimas, the start-up of the new roasting circuit
at La Encantada offset by lower production at Del Toro and La
Parrilla.
A mine-by-mine breakdown of the 2019 production
guidance is included in the table below. Cash cost and all-in
sustaining cost per ounce (“AISC”) guidance is shown per payable
silver ounce. Metal price and foreign currency assumptions for
calculating equivalents are: silver: $15.00/oz, gold: $1,250/oz,
lead: $1.00/lb, zinc: $1.10/lb, MXN:USD 19:1.
Mine |
Silver Oz (M) |
Silver Eqv Oz (M) |
Cash Costs ($) |
AISC ($) |
San Dimas |
5.5 - 6.1 |
11.9 - 13.2 |
0.89 - 1.81 |
7.58 – 9.27 |
Santa Elena |
2.3 - 2.6 |
5.2 - 5.8 |
5.33 - 6.59 |
8.99 – 10.66 |
La Encantada |
3.2 - 3.6 |
3.2 - 3.6 |
12.41 - 13.22 |
13.87 – 14.85 |
San Martin |
1.9 - 2.1 |
2.2 - 2.4 |
9.81 - 10.60 |
12.39 – 13.47 |
La Parrilla |
0.9 - 1.0 |
1.6 - 1.8 |
9.97 - 11.14 |
14.76 – 16.49 |
Del Toro |
0.4 |
0.6 - 0.7 |
17.43 - 19.51 |
23.87 – 26.69 |
Totals: |
14.2 - 15.8 |
24.7 - 27.5 |
$6.39 - $7.37 |
$12.55 - $14.23 |
*Certain amounts shown may not add exactly to
the total amount due to rounding differences. *Consolidated
AISC includes Corporate General & Administrative cost estimates
and non-cash costs of $1.84 to $2.05 per payable silver
ounce.
The Company is projecting its 2019 AISC, as
defined by the World Gold Council, to be within a range of $12.55
to $14.23 on a per consolidated payable silver ounce basis.
Excluding non-cash items, the Company anticipates its 2019 AISC to
be within a range of $11.97 to $13.59 per payable silver ounce. An
itemized AISC cost table is provided below:
All-In Sustaining Cost Calculation (1) |
FY 2019 ($ /Ag oz) |
Total Cash Costs per Payable Silver Ounce (2) |
6.39 – 7.37 |
General and Administrative Costs |
1.26 – 1.40 |
Sustaining Development Costs |
2.41 – 2.69 |
Sustaining Property, Plant and Equipment Costs |
1.39 – 1.55 |
Sustaining Exploration Costs |
0.06 – 0.07 |
Profit sharing |
0.46 – 0.51 |
Share-based Payments (non-cash) |
0.48 – 0.54 |
Accretion of Reclamation Costs (non-cash) |
0.09 – 0.11 |
All-In Sustaining Costs: (WGC definition) |
$12.55 – $14.23 |
All-In Sustaining Costs: (WGC excluding non-cash
items) |
$11.97 – $13.59 |
- AISC is a non-GAAP measure and is calculated based on guidance
provided by the World Gold Council (“WGC”) in June 2013. AISC is
used as a comprehensive measure for the Company’s consolidated
operating performance. WGC is a not a regulatory industry
organization and does not have the authority to develop accounting
standards for disclosure requirements. Other mining companies
may calculate AISC differently as a result of differences in
underlying accounting principles, the definition of “sustaining
costs” and the distinction between sustaining and expansionary
capital costs.
- Total cash cost per payable silver ounce includes estimated
royalties and 0.5% mining environmental fee of $0.11 per
ounce.
In 2019, the Company plans to invest a total of
$137.4 million on capital expenditures consisting of $61.1 million
for sustaining investments and $76.3 million for expansionary
projects. This represents a 20% increase compared to the revised
2018 capital budget and is aligned with the Company’s future growth
strategy of developing additional mine production levels at each of
the Company’s operations, investments in high-intensity grinding
mills and microbubble flotation cells, in addition to the
exploration work at the Ermitaño West project in order to advance
the project towards a production decision.
The 2019 annual budget includes total capital
investments of $64.5 million to be spent on underground
development, $23.8 million towards property, plant and equipment,
$26.2 million in exploration and $22.9 million towards corporate
automation and efficiency projects. Management may revise the
guidance and budget during the year to reflect actual and
anticipated changes in metal prices or to the business.
The Company is planning to complete a total of
64,610 metres of underground development in 2019, representing a 5%
decrease compared to 68,307 metres completed in 2018. In addition,
the Company is planning to complete a total of 188,000 metres of
exploration drilling in 2019, representing a 12% decrease compared
to 211,697 metres completed in 2018.
The 2019 drilling program will consist of
approximately 11,600 metres of sustaining diamond drilling intended
to support the conversion of Resources to Reserves at the six
operating mines; approximately 168,000 metres of expansionary
diamond drilling intended to increase confidence and add new
Measured & Indicated or Inferred Resources with a focus on the
Santa Elena Main Vein, the Ermitaño West project near Santa Elena
and the Central Block at San Dimas; and drill approximately 8,400
metres intended to test greenfield targets at Santa Elena and Del
Toro.
Mr. Ramon Mendoza Reyes, Vice President
Technical Services for First Majestic, is a "Qualified Person" as
such term is defined under National Instrument 43-101, and has
reviewed and approved the technical information disclosed in this
news release.
Conference Call
The Company will be holding a conference call
and webcast today, Monday, January 14, 2019 at 10 am PT
(1 pm ET).
To participate in the conference call, please
dial the following:
Toll
Free Canada & USA: |
1-800-319-4610 |
Outside of Canada & USA: |
1-604-638-5340 |
Toll
Free Germany: |
0800 180 1954 |
Toll
Free UK: |
0808 101 2791 |
Participants should dial in 10 minutes prior to
the conference.
Click on WEBCAST on the First Majestic homepage
as a simultaneous audio webcast of the conference call will be
posted at www.firstmajestic.com.
The conference call will be recorded and you can
listen to an archive of the conference by calling:
Canada & USA Toll Free: |
1-800-319-6413 |
Outside Canada & USA: |
1-604-638-9010 |
Access Code: |
2864 followed by the # sign |
The replay will be available approximately one
hour after the conference and will available for 7 days following
the conference. The replay will also be available on the
Company’s website for one month.
About the Company
First Majestic is a mining company focused on
silver production in Mexico and is aggressively pursuing the
development of its existing mineral property assets. The Company
presently owns and operates the San Dimas Silver/Gold Mine, the
Santa Elena Silver/Gold Mine, the La Encantada Silver Mine, the La
Parrilla Silver Mine, the San Martin Silver Mine and the Del Toro
Silver Mine. Production from these mines are projected to be
between 14.2 to 15.8 million silver ounces or 24.7 to 27.5 million
silver equivalent ounces in 2019.
FOR FURTHER INFORMATION contact
info@firstmajestic.com, visit our website at www.firstmajestic.com
or call our toll free number 1.866.529.2807.
FIRST MAJESTIC SILVER CORP."signed"Keith
Neumeyer, President & CEO
Cautionary Note Regarding Forward Looking
Statements
This press release contains “forward‐looking
information” and "forward-looking statements” under applicable
Canadian and U.S. securities laws (collectively, “forward‐looking
statements”). These statements relate to future events or the
Company's future performance, business prospects or opportunities
that are based on forecasts of future results, estimates of amounts
not yet determinable and assumptions of management made in light of
management's experience and perception of historical trends,
current conditions and expected future developments.
Forward-looking statements include, but are not limited to,
statements with respect to: the Company’s business strategy; future
planning processes; commercial mining operations; cash flow;
budgets; the timing and amount of estimated future production;
recovery rates; mine plans and mine life; the future price of
silver and other metals; costs of production; costs and timing of
the development of new deposits; capital projects and exploration
activities and the possible results thereof. Assumptions may
prove to be incorrect and actual results may differ materially from
those anticipated. Consequently, guidance cannot be guaranteed. As
such, investors are cautioned not to place undue reliance upon
guidance and forward-looking statements as there can be no
assurance that the plans, assumptions or expectations upon which
they are placed will occur. All statements other than statements of
historical fact may be forward‐looking statements. Statements
concerning proven and probable mineral reserves and mineral
resource estimates may also be deemed to constitute forward‐looking
statements to the extent that they involve estimates of the
mineralization that will be encountered as and if the property is
developed, and in the case of measured and indicated mineral
resources or proven and probable mineral reserves, such statements
reflect the conclusion based on certain assumptions that the
mineral deposit can be economically exploited. Any statements that
express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives or future
events or performance (often, but not always, using words or
phrases such as “seek”, “anticipate”, “plan”, “continue”,
“estimate”, “expect”, “may”, “will”, “project”, “predict”,
“forecast”, “potential”, “target”, “intend”, “could”, “might”,
“should”, “believe” and similar expressions) are not statements of
historical fact and may be “forward‐looking statements”.
Actual results may vary from forward-looking
statements. Forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause
actual results to materially differ from those expressed or implied
by such forward-looking statements, including but not limited to:
risks related to the integration of acquisitions; actual results of
exploration activities; conclusions of economic evaluations;
changes in project parameters as plans continue to be refined;
commodity prices; variations in ore reserves, grade or recovery
rates; actual performance of plant, equipment or processes relative
to specifications and expectations; accidents; labour relations;
relations with local communities; changes in national or local
governments; changes in applicable legislation or application
thereof; delays in obtaining approvals or financing or in the
completion of development or construction activities; exchange rate
fluctuations; requirements for additional capital; government
regulation; environmental risks; reclamation expenses; outcomes of
pending litigation; limitations on insurance coverage as well as
those factors discussed in the section entitled "Description of the
Business - Risk Factors" in the Company's most recent Annual
Information Form, available on www.sedar.com, and Form 40-F on file
with the United States Securities and Exchange Commission in
Washington, D.C. Although First Majestic has attempted
to identify important factors that could cause actual results to
differ materially from those contained in forward-looking
statements, there may be other factors that cause results not to be
as anticipated, estimated or intended.
The Company believes that the expectations
reflected in these forward‐looking statements are reasonable, but
no assurance can be given that these expectations will prove to be
correct and such forward‐looking statements included herein should
not be unduly relied upon. These statements speak only as of the
date hereof. The Company does not intend, and does not assume any
obligation, to update these forward-looking statements, except as
required by applicable laws.
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