First Majestic Silver Corp. ("First Majestic" or the "Company") is
pleased to announce the Company’s 2020 production and cost guidance
including capital investments and future growth initiatives. All
amounts are in U.S. dollars unless stated otherwise.
“For 2020, our focus remains on adopting new
innovation projects to modernize our processing plants to achieve
higher recoveries, improve efficiencies and reduce operating
costs,” said Keith Neumeyer, President & CEO. “We have
witnessed significant benefits from high-intensity grinding at our
Santa Elena operation in 2019 and we plan to install the same
technology at San Dimas in 2020. In addition, we continue to
advance underground development activities at the Ermitaño project
near Santa Elena to prepare the mine for initial production in
early 2021. Our increased investments in underground development
and innovation in 2020 is expected to result in significant
production growth in 2021 and beyond.”
The Company expects 2020 silver production to
range between 11.8 to 13.2 million ounces with total production
(including gold by-products) between 21.5 to 24.0 million silver
equivalent ounces. The Company’s guidance only assumes production
coming from its three largest mines: the San Dimas, Santa Elena and
La Encantada mines. The San Martin and La Parrilla mines are
expected to remain suspended throughout 2020 and the Del Toro mine
is being wound down with no production in 2020. By suspending
the Company’s highest cost lead and zinc mines, management is now
able to focus all of its efforts on cost reduction and innovation
at its most profitable silver and gold mines.
2020 Production and Cost Guidance
Highlights
- The Company plans to increase production at San Dimas by
restarting mining operations at the past-producing Tayoltita mine
by the end of the first quarter and expects to ramp up production
to 300 tpd by the end of 2020. The Tayoltita mine was the original
mining area at San Dimas and known to contain higher silver grades.
In addition, the Company plans to install a new 3,000 tpd
high-intensity grinding (“HIG”) mill circuit and an autogenous
(“AG”) grinding mill in the second half of 2020 to further improve
recoveries and reduce operating costs.
- Silver production at La Encantada is expected to increase to
between 2.9 to 3.3 million ounces due to continued improvements in
metallurgical recoveries and grades from the San Javier and La
Prieta sub-level caving areas. Furthermore, the Company is
preparing to bring the Milagros breccia into production in the
fourth quarter of 2020.
- The Company expects higher silver production at Santa Elena due
to improved metallurgical recoveries from the recently installed
HIG mill. The Company also plans to install an
autogenous/semi-autogenous (“AG/SAG”) grinding mill by the end of
2020 and plans to implement a dual-circuit flowsheet to separate
the ultra-fine and coarse particles prior to leaching to further
improve metallurgical recoveries and reduce energy costs.
Additionally, the Company plans to convert power generation
at Santa Elena from diesel to liquid natural gas in the fourth
quarter of 2020.
- The San Martin mine is expected to remain in temporary
suspension throughout 2020 due to security concerns as previously
announced in the Company's news release on July 15, 2019. The
Company continues to work with authorities to secure the area but
there is no indication of when a restart of the operation might
occur.
- Following an extensive review of the Del Toro operation, the
Company has decided to temporarily suspend mining and milling
operations in 2020 in order to improve operating cash flow and
profit margins while focusing on an expanded drill program in the
area. This expanded program will include approximately 22,450
metres of drilling to test near mine targets in an effort to
develop new resources necessary to support a potential reopening in
the future, subject to a sufficient improvement in economics to
justify a restart. In the meantime, the Company will continue
evaluating mining methods and metallurgical testwork on the San
Juan orebody which contains a large zinc mineral resource.
Additionally, the Company will continue supporting CSR projects and
activities to assist local stakeholders and partners in the
communities surrounding the La Parrilla and Del Toro mines. The Del
Toro mine produced 493,636 silver equivalent ounces which accounted
for approximately 2% of the Company’s total production in
2019.
A mine-by-mine breakdown of the 2020 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: $17.00/oz, gold: $1,450/oz,
MXN:USD 19:1.
Mine |
Silver Oz (M) |
Gold Oz (k) |
Silver Eqv Oz (M) |
Cash Costs ($) |
AISC ($) |
San Dimas |
6.5 – 7.2 |
81 – 90 |
13.4 – 14.9 |
2.47 – 3.62 |
8.28 – 10.10 |
Santa Elena |
2.4 – 2.7 |
33 – 36 |
5.2 – 5.8 |
6.67 – 8.29 |
9.80 – 11.77 |
La Encantada |
2.9 – 3.3 |
– |
2.9 – 3.3 |
12.27 – 13.29 |
14.96 – 16.29 |
Totals: |
11.8 – 13.2 |
114 – 126 |
21.5 – 24.0 |
$5.76 – $6.97 |
$13.37 – $15.46 |
*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 $2.61 to $2.90 per payable silver
ounce.
The Company is projecting its 2020 AISC, as
defined by the World Gold Council, to be within a range of $13.37
to $15.46 on a per consolidated payable silver ounce basis.
Excluding non-cash items, the Company anticipates its 2020 AISC to
be within a range of $12.54 to $14.53 per payable silver ounce. An
itemized AISC cost table is provided below:
All-In Sustaining Cost Calculation (1) |
FY 2020($ /Ag oz) |
Total Cash Costs per
Payable Silver Ounce (2) |
5.76 – 6.97 |
General and
Administrative Costs |
1.78 – 1.98 |
Sustaining Development
Costs |
2.09 – 2.33 |
Sustaining Property,
Plant and Equipment Costs |
1.88 – 2.10 |
Sustaining Exploration
Costs |
0.04 – 0.04 |
Profit Sharing |
0.60 – 0.66 |
Lease Payments |
0.40 – 0.45 |
Share-based Payments
(non-cash) |
0.65 – 0.72 |
Accretion of Reclamation Costs (non-cash) |
0.18 – 0.20 |
All-In
Sustaining Costs: (WGC definition) |
$13.37 – $15.46 |
All-In Sustaining Costs: (WGC excluding non-cash
items) |
$12.54 – $14.53 |
- 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 $0.10 per
ounce.
Innovation Remains a Key Focus in
2020
As a result of significant improvements in
metallurgical recoveries at Santa Elena following the installation
of the 3,000 tpd HIG mill circuit in 2019, the Company has elected
to install HIG mill technology at its San Dimas and La Encantada
mines in 2020 and 2021, respectively.
At San Dimas, the Company plans to install a new
3,000 tpd HIG mill circuit in 2020 to further improve recoveries
and reduce operating costs. The delivery of the HIG mill is
expected in the first quarter of 2020 followed by installation and
commissioning in the second half of 2020. Furthermore, milling at
San Dimas will be converted into a single AG grinding mill thereby
eliminating the use of the three standard ball mills currently in
operation. This AG conversion is expected to reduce energy
consumption, eliminate steel grinding media, improve metallurgical
recoveries and streamline maintenance and mill practices.
At Santa Elena, the Company plans to implement a
dual-circuit flowsheet to separate the ultra-fine and coarse
particles prior to leaching to further improve metallurgical
recoveries and reduce operating costs. Separating the different
sized particles allows for more effective use of available
retention time, decreased reagent consumption and improved
filtration circuit performance. Additionally, a new AG/SAG
mill circuit is expected to be commissioned by the end of 2020.
At La Encantada, the Company plans to invest in
several plant modernizations in 2020 intended to improve processing
efficiencies including, but not limited to: upgrading the tailings
filter presses and belt conveyors; replacing the main gear and
rakes for two thickeners; as well as completing the detailed
engineering design in the second half of 2020 for a new 3,000 tpd
HIG mill circuit, which is expected to be installed and
commissioned in 2021.
Capital Investments for Future
Growth
In 2020, the Company plans to invest a total of
$171.5 million on capital expenditures consisting of $52.6 million
for sustaining investments and $118.9 million for expansionary
projects. This represents a 24% increase compared to the revised
2019 capital budget and is aligned with the Company’s future growth
strategy of investments in HIG mill technology, processing plant
modernizations and underground development of the Ermitaño project
to prepare the mine for production in early 2021.
The 2020 annual budget includes total capital
investments of $62.9 million to be spent on underground
development; $32.9 million towards property, plant and equipment;
$28.2 million in exploration; and $47.5 million towards corporate
automation and efficiency projects. Additionally, the Company has
been working on reducing its general and administration costs to
rightsize the business due to the suspension of operations at Del
Toro and La Parrilla. 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 plans to complete a total of
approximately 38,650 metres of underground development in 2020
compared with 54,517 metres completed in 2019. This 29% decrease is
primarily due to the recent suspension of mining activities at the
San Martin, La Parrilla and Del Toro mines. The 2020 development
program consists of approximately 23,750 metres at San Dimas; 6,100
metres at Santa Elena; 4,450 metres at La Encantada; 3,800 metres
at the Ermitaño project near Santa Elena; and 550 metres at Del
Toro.
The Company also plans to complete approximately
192,900 metres of exploration drilling in 2020 compared to 204,371
metres completed in 2019. The 2020 drilling program consists of
approximately 84,750 metres at San Dimas intended to add new
mineral resources with a focus on the West, Central, and Tayoltita
blocks; 30,500 metres at Santa Elena to continue exploring the Main
and America veins and test greenfield targets around Los Hernandez;
21,200 metres at La Encantada with an emphasis on exploring the
mineral potential of several brownfield targets; 15,000 metres at
the Ermitaño project intended to increase resource confidence and
add new mineral resources; and 22,450 metres at Del Toro and 19,000
metres at La Parrilla intended to test new brownfield and near mine
targets.
Mr. Ramon Mendoza Reyes, Vice President
Operations and 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, January 21, 2020 at 8:00 am PT
(11:00 am ET) to discuss the quarterly production results as
well as its 2020 production, cost and capital guidance. To
participate in the conference call, please dial the following:
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Toll Free Canada & USA: |
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1-800-319-4610 |
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Outside of Canada & USA: |
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1-604-638-5340 |
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Toll Free Germany: |
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0800 180 1954 |
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Toll Free UK: |
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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:
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Canada & USA Toll Free: |
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1-800-319-6413 |
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Outside Canada & USA: |
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1-604-638-9010 |
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Access Code: |
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3930 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 and the La Encantada Silver Mine.
Production from these mines are projected to be between 11.8 to
13.2 million silver ounces or 21.5 to 24.0 million silver
equivalent ounces in 2020.
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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