FIRST MAJESTIC SILVER CORP. (AG: NYSE; FR: TSX)
(the "Company" or “First Majestic”) is pleased to announce the
consolidated financial results for the Company’s fourth quarter and
year ended December 31, 2018. The full version of the
financial statements and the management discussion and analysis can
be viewed on the Company's website at www.firstmajestic.com, on
SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts are in
U.S. dollars unless stated otherwise.
2018 HIGHLIGHTS
- Completed transformational acquisition of Primero Mining Corp.
and its world-class San Dimas Silver/Gold Mine on May 10, 2018,
creating one of the largest publicly traded silver companies in the
world.
- Produced 11.7 million ounces of silver, 111,084 ounces of gold,
16.1 million pounds of lead and 5.7 million pounds of zinc.
- Total production reached 22.2 million silver equivalent ounces,
achieving the 2018 total production guidance range of 20.5 million
to 22.6 million ounces, an increase of 37% over the prior
year.
- All-in Sustaining costs (“AISC”) of $14.95 per payable silver
ounce, in-line with the AISC guidance range of $14.53 to $15.83 per
ounce.
- Cash costs of $6.98 per payable silver ounce, beating the 2018
guidance range of $7.18 to $7.75 per ounce.
- Revenues totaled $300.9 million, representing a 19% increase
from 2017.
- Mine operating earnings of ($11.9) million compared to $16.0
million in 2017 primarily due to a $7.5 million inventory loss due
to the bankruptcy of Republic Metals Refining Corp. and a 9%
decrease in the average realized silver price per ounce.
- Operating cash flows before working capital and taxes of $61.6
million or $0.34 per share (non-GAAP).
- The Company recorded a net loss of $204.2 million ($1.11 per
share) in 2018, reflecting the impact of impairment pre-tax charges
totaling $199.7 million.
- Began commissioning of the new 2,000 tpd roasting facility at
La Encantada which is expected to increase silver production by 1.5
million ounces per year.
- Achieved annual consolidated silver recoveries of 80%, a new
Company record, due to ongoing investments in metallurgical
processing and innovation.
- Exercised option agreements on the Ermitaño and Cumobabi
projects in Sonora, Mexico with Evrim Resources Corp. for a 100%
earn-in for both projects.
- Ended 2018 with cash and cash equivalents of $57.0 million,
down from $118.1 million at the end of 2017.
- Subsequent to year end, the Company sold 2.25 million shares
through its at-the-market offering equity program on the NYSE for
net proceeds of $13.2 million.
Q4 2018 HIGHLIGHTS
- Produced 3.3 million ounces of silver, 34,487 ounces of gold,
3.3 million pounds of lead and 1.4 million pounds of zinc, for a
total of 6.5 million silver equivalent ounces.
- Revenues totaled $74.1 million, representing a 21% increase
compared to Q4 2017.
- Mine operating earnings of ($9.0) million compared to $1.4
million in Q4 2017.
- AISC of $12.83 per payable silver ounce, representing a 9%
decrease compared to Q4 2017.
- Cash costs of $6.06 per payable silver ounce, representing a
10% decrease compared to Q4 2017.
- Adjusted net loss of $10.5 million ($0.05 per share) after
excluding non-cash and unusual items.
- Operating cash flows before working capital and taxes of $11.0
million or $0.06 per share (non-GAAP).
CEO COMMENTS
“2018 was a bittersweet year for First Majestic
following the largest acquisition in the Company’s history of the
San Dimas mine paired with silver prices falling to a nine year
low,” said Keith Neumeyer, President and CEO of First Majestic.
“Nevertheless, First Majestic delivered a solid year with record
production and revenues of over $300 million, and an AISC of $14.95
per ounce. We also advanced numerous innovative projects in 2018
aimed at increasing shareholder value in 2019. We continue to lead
the industry as the purest silver producer and remain focused on
improving margins by adopting new technologies with high returns on
invested capital.”
2018 ANNUAL AND FOURTH QUARTER
HIGHLIGHTS
Key Performance
Metrics |
|
2018-Q4 |
|
2017-Q4 |
Change Q4 vs Q4 |
|
2018 |
2017 |
Change 2018 vs 2017 |
|
Operational |
|
|
|
|
|
|
|
|
|
|
Ore Processed /
Tonnes Milled |
|
850,272 |
|
|
736,684 |
|
15 |
% |
|
3,375,452 |
|
2,981,506 |
13 |
% |
|
Silver
Ounces Produced |
|
3,250,816 |
|
|
2,337,463 |
|
39 |
% |
|
11,679,452 |
|
9,749,591 |
20 |
% |
|
Silver
Equivalent Ounces Produced |
|
6,485,761 |
|
|
4,065,337 |
|
60 |
% |
|
22,243,071 |
|
16,207,905 |
37 |
% |
|
Cash
Costs per Ounce (1) |
|
$6.06 |
|
|
$6.76 |
|
(10 |
%) |
|
$6.98 |
|
$7.04 |
(1 |
%) |
|
All-in
Sustaining Cost per Ounce (1) |
|
$12.83 |
|
|
$14.13 |
|
(9 |
%) |
|
$14.95 |
|
$13.82 |
8 |
% |
|
Total
Production Cost per Tonne (1) |
|
$65.31 |
|
|
$50.81 |
|
29 |
% |
|
$60.71 |
|
$50.12 |
21 |
% |
|
Average Realized Silver
Price per Ounce (1) |
|
$14.47 |
|
|
$16.61 |
|
(13 |
%) |
|
$15.53 |
|
$17.12 |
(9 |
%) |
|
Financial (in $millions) |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$74.1 |
|
|
$61.2 |
|
21 |
% |
|
$300.9 |
|
$252.3 |
19 |
% |
|
Mine
Operating (Loss) Earnings (2) |
|
($9.0 |
) |
|
$1.4 |
|
(744 |
%) |
|
($11.9) |
|
$16.0 |
(174 |
%) |
|
Impairment of non-current assets |
|
($168.0 |
) |
|
($65.5 |
) |
(156 |
%) |
|
($199.7 |
) |
($65.5) |
(205 |
%) |
|
Net
(Loss) Earnings |
|
($164.4 |
) |
|
($56.1 |
) |
(193 |
%) |
|
($204.2 |
) |
($53.3) |
(283 |
%) |
|
Operating
Cash Flows before Working Capital and Taxes (2) |
|
$11.0 |
|
|
$18.7 |
|
(41 |
%) |
|
$61.6 |
|
$81.0 |
(24 |
%) |
|
Cash and
Cash Equivalents |
|
$57.0 |
|
|
$118.1 |
|
(52 |
%) |
|
$57.0 |
|
$118.1 |
(52 |
%) |
|
Working Capital
(1) |
|
$108.1 |
|
|
$116.3 |
|
(7 |
%) |
|
$108.1 |
|
$116.3 |
(7 |
%) |
|
Shareholders |
|
|
|
|
|
|
|
|
|
|
|
(Loss)
Earnings per Share ("EPS") - Basic |
|
($0.85 |
) |
|
($0.34 |
) |
(151 |
%) |
|
($1.11 |
) |
($0.32) |
(247 |
%) |
|
Adjusted
EPS (1) |
|
($0.05 |
) |
|
($0.04 |
) |
(47 |
%) |
|
($0.21 |
) |
($0.04) |
(427 |
%) |
|
Cash Flow
per Share (1) |
|
$0.06 |
|
|
$0.11 |
|
(50 |
%) |
|
$0.34 |
|
$0.49 |
(32 |
%) |
|
(1) The Company reports non-GAAP measures
which include cash costs per ounce produced, all-in sustaining 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.
2018 FINANCIAL RESULTS
Full year revenues totaled $300.9 million, a 19%
increase compared to 2017, primarily due a 37% increase in
production offset by a 9% decrease in average silver prices. The
Company realized an average silver price of $15.53 per ounce in
2018, its lowest annual selling price since 2009 due to continued
market weakness.
Annual mine operating earnings totaled ($11.9)
million compared to $16.0 million in 2017. The decrease in mine
operating earnings was attributed to taking a $7.5 million
inventory loss due to the bankruptcy of Republic Metals Refining
Corp., one of three refineries used by the Company. At the time of
the Chapter 11 announcement, the Company had approximately 758,000
silver equivalent ounces of inventory that were in Republic's
possession for refining. The Company has been pursuing legal and
insurance channels to recover the value of this inventory, but
there is no assurance that some or any this inventory will be
recovered. As a result, the Company has written off the cost of
these inventories to cost of sales. The decrease in mine operating
earnings was also affected by tighter margins as a result of a 9%
decrease in the average silver price, higher production costs
attributed to increases in energy costs, and $2.1 million in
severance costs incurred during the year as part of the Company's
staff reduction initiative.
The Company was required to record an impairment
charge of $111.8 million and $56.3 million on its two concentrate
producing mines, La Parrilla and Del Toro, respectively due to a
reduction in estimated Reserves and Resources as a result of a
decline in long-term metal price forecasts, a decrease of
investment, and increase in operating costs. In addition, the
Company recognized an impairment charge of $31.7 million on La
Guitarra in the second quarter as a result of management's decision
to place the operation on care and maintenance effective August 3,
2018.
Adjusted EPS (non-GAAP), normalized for non-cash
or unusual items such as impairment of non-current assets,
share-based payments and deferred income taxes for the year ended
December 31, 2018 was a loss of $0.21, compared to a loss of $0.04
in 2017.
Cash flows before movements in working capital
and taxes during the year was $61.6 million ($0.34 per share)
compared to $81.0 million ($0.49 per share) in 2017.
The Company ended 2018 with $57.0 million in
cash and cash equivalents compared to $118.1 million at the end of
2017. In addition, the Company ended the year with a working
capital surplus of $108.1 million compared to $116.3 million at the
end of 2017. The decrease in cash and cash equivalents was
primarily attributed to movements in working capital items in
relation to the Primero acquisition, including a $6.4 million
decrease in trade and other payables as First Majestic began paying
down overdue liabilities assumed from the Primero acquisition and
absorbed a $17.2 million increase in value added taxes (“VAT”)
receivable as a result of delays in recovery from the Mexican tax
authority, the Servicio de Administracion Tributaria ("SAT").
Primero was 18 months behind on its VAT filings when First Majestic
acquired the San Dimas mine, however, since acquisition the Company
has accelerated its filings and as at December 31, 2018, has
recovered $4.5 million of the outstanding amount. Subsequent to
December 31st, the Company has recovered a further $7.0 million
related to its Primero VAT filings.
FULL YEAR 2018 OPERATIONAL
RESULTS
Annual
Production Summary |
San Dimas(1) |
Santa Elena |
La Encantada |
San Martin |
La Parrilla |
Del Toro |
La Guitarra |
Consolidated |
Ore Processed /
Tonnes Milled |
435,289 |
|
899,370 |
|
916,894 |
|
284,656 |
|
491,637 |
|
267,170 |
|
80,435 |
|
3,375,452 |
|
Silver Ounces Produced |
3,621,868 |
|
2,223,246 |
|
1,603,740 |
|
1,746,139 |
|
1,340,385 |
|
785,154 |
|
358,919 |
|
11,679,452 |
|
Silver Equivalent Ounces Produced |
8,051,605 |
|
6,014,687 |
|
1,610,895 |
|
2,169,338 |
|
2,323,056 |
|
1,432,312 |
|
641,179 |
|
22,243,071 |
|
Cash Costs per Ounce |
$0.11 |
|
$0.50 |
|
$18.80 |
|
$9.42 |
|
$12.83 |
|
$17.10 |
|
$9.79 |
|
$6.98 |
|
All-in Sustaining Cost per Ounce |
$5.92 |
|
$4.54 |
|
$23.82 |
|
$12.28 |
|
$19.57 |
|
$27.49 |
|
$16.13 |
|
$14.95 |
|
Total Production Cost per Tonne |
$117.46 |
|
$57.01 |
|
$32.28 |
|
$77.66 |
|
$51.88 |
|
$70.20 |
|
$81.91 |
|
$60.71 |
|
1) San Dimas production was from the period May
of 10, 2018 to December 31, 2018
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. The increase in
metal production can be attributed to the addition of the San Dimas
mine, which contributed 3.6 million ounces of silver and 54,098
ounces of gold (or 8.1 million silver equivalent ounces) of
production since being acquired on May 10, 2018.
Cash cost per ounce in the year was $6.98, a
decrease of $0.06 per ounce compared to the previous year and below
the range of the Company's 2018 guidance of $7.18 to $7.75 per
ounce. The decrease in cash cost compared to the prior year was
primarily due to the addition of San Dimas, which had a cash cost
of $0.11 per ounce, partially offset by $2.1 million in
severance costs incurred during the year as part of the Company's
cost reduction initiative and staff level optimization as well as
increase in energy costs due to a 30% rate hike by Mexico's Federal
Electricity Commission and higher diesel costs.
AISC per ounce in 2018 was $14.95, an increase
of $1.13 per ounce compared to the previous year and within the
annual guidance of $14.53 to $15.83 per ounce. The increase in AISC
per ounce was attributed to higher sustaining capital expenditures
as the Company increased investments in development and
exploration.
The Company’s total capital expenditures in 2018
was $107.2 million, an increase of 32% or $25.8 million
compared to the prior year, consisting of $45.7 million for
underground development, $27.8 million in exploration and $33.7
million in property, plant and equipment. Total investments, on a
mine-by-mine basis, primarily consisted of $20.5 million at San
Dimas, $18.9 million at Santa Elena, $16.9 million at La
Encantada, $9.3 million at San Martin, $14.2 million at La
Parrilla, $11.6 million at Del Toro and $5.3 million at La
Guitarra.
As previously announced, the Company plans to
invest a total of $137.4 million on capital expenditures in 2019
consisting of $61.1 million for sustaining requirements and $76.3
million for expansionary projects. The Company is preparing for
future production growth by developing additional mine production
levels at each of the mining units, 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. First Majestic will
remain nimble and ensure its capital investments are flexible to
account for changing commodity prices.
Q4 2018 FINANCIAL RESULTS
Revenues generated in the fourth quarter of 2018
totaled $74.1 million, representing a 21% increase compared to
$61.2 million in the fourth quarter of 2017.
The Company realized a nine-year low quarterly
average silver price of $14.47 per ounce, representing a 13%
decrease compared to $16.61 per ounce in the fourth quarter of
2017.
Mine operating earnings were ($9.0) million
compared to $1.4 million in the fourth quarter of 2017. The
decrease was primarily due to the $7.5 million inventory loss due
to the bankruptcy of Republic Metals, tighter margins as a result
of a 13% decrease in average silver price and $1.0 million in
severance costs incurred during the quarter as part of the
Company's staff reduction initiative.
The Company recorded a net loss of $164.4
million (EPS of ($0.85)) during the fourth quarter of 2018 compared
to $56.1 million (EPS of ($0.34)) in the fourth quarter of 2017.
The $108.3 million decrease in net earnings was primarily
attributed to a $168.0 million non-cash impairment charge, or
$130.6 million net of tax, on the La Parrilla and Del Toro mines
and the decrease in mine operating earnings.
Adjusted net loss for the quarter was
$10.5 million (adjusted loss per
share of $0.05), after excluding non-cash and
non-recurring items.
Cash flows before movements in working capital
and income taxes were $11.0 million ($0.06 per share), compared to
$18.7 million ($0.11 per share) in the fourth quarter of 2017.
Q4 2018 OPERATIONAL RESULTS
Fourth Quarter
Production Summary |
San Dimas |
Santa Elena |
La Encantada |
San Martin |
La Parrilla |
Del Toro |
Consolidated |
Ore Processed / Tonnes Milled |
172,641 |
|
221,945 |
|
206,812 |
|
66,924 |
|
125,751 |
|
56,200 |
|
850,272 |
|
Silver Ounces Produced |
1,367,028 |
|
567,754 |
|
449,632 |
|
404,523 |
|
312,144 |
|
149,734 |
|
3,250,816 |
|
Silver Equivalent Ounces Produced |
3,127,871 |
|
1,587,396 |
|
451,244 |
|
511,911 |
|
563,703 |
|
243,637 |
|
6,485,761 |
|
Cash Costs per Ounce |
$0.58 |
|
($1.06 |
) |
$15.60 |
|
$10.40 |
|
$13.80 |
|
$27.69 |
|
$6.06 |
|
All-in Sustaining Cost per Ounce |
$5.35 |
|
$2.18 |
|
$18.70 |
|
$13.60 |
|
$21.18 |
|
$37.83 |
|
$12.83 |
|
Total Production Cost per Tonne |
$113.66 |
|
$54.55 |
|
$33.20 |
|
$83.27 |
|
$52.47 |
|
$84.67 |
|
$65.31 |
|
Total production reached 6.5 million silver
equivalent ounces in the fourth quarter of 2018, representing a 4%
decrease compared to the previous quarter, consisting of 3.3
million ounces of silver, 34,487 ounces of gold, 3.3 million pounds
of lead and 1.4 million pounds of zinc. The slight decrease in
production was primarily due to a 5% decrease in consolidated
silver grade and 2% decrease in tonnes milled.
Cash cost per ounce in the quarter was $6.06, a
decrease of 12% or $0.79 per ounce compared to the previous
quarter. The decrease in cash cost per ounce was primarily
attributed to an increase in by-product credits which was partially
offset against a $1.0 million in severance costs incurred during
the quarter as part of the Company's cost reduction initiative.
AISC in the fourth quarter was $12.83 per ounce,
a decrease of $2.29 per ounce compared to the previous quarter,
primarily attributed to lower sustaining capital expenditures as
the Company wound down its development and exploration projects
near the end of the year after completing respective budget
programs.
Capital expenditures in the fourth quarter were
$25.8 million, a decrease of 26% compared to the prior quarter,
primarily consisting of $7.4 million at San Dimas, $3.7 million at
Santa Elena, $3.0 million at La Encantada, $2.4 million at San
Martin, $3.4 million at La Parrilla and $2.0 million at Del
Toro.
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 San
Martin Silver Mine, the La Parrilla 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
SPECIAL NOTE REGARDING FORWARD-LOOKING
INFORMATION
Cautionary Note Regarding Forward
Looking StatementsThis 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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