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, 2020. 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 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 2020 HIGHLIGHTS (compared to Q1
2019)
- Revenues of $86.1 million, or 1% lower compared to Q1 2019,
primarily due to suspending sales in March in an attempt to
maximize future profits due to metals market volatility
- Postponed the sale of 292,000 ounces of silver and 700 ounces
of gold, worth approximately $5.3 million at the end of Q1 2020. As
of today, the Company holds 1,045,342 ounces of silver and 1,459
ounces of gold in inventory
- Reduced cash costs by 19% to $5.16 per payable silver ounce
beating previously suspended cost guidance
- All-in sustaining costs (“AISC”) of $12.99 per payable silver
ounce beating previously suspended cost guidance
- Mine operating earnings of $21.1 million, up 106% compared to
Q1 2019
- Net earnings of ($32.4) million due to accounting loss for the
sale of the Plomosas exploration project and an unrealized loss on
foreign currency derivatives
- Adjusted EPS of $0.04 after excluding non-cash and
non-recurring items
- Cash flow per share was $0.11 per share (non-GAAP)
- Repurchased 275,000 shares at a volume weighted average price
of CDN$8.56 per share during the quarter
- Ended the quarter with $145.2 million in cash and cash
equivalents
- Strong working capital position of $139.8 million and total
available liquidity of $204.9 million, including $65.0 million of
undrawn revolving credit facility
“As the COVID-19 pandemic sparked higher than
normal volatility in the metals market near the end of the quarter,
we temporarily suspended our silver and gold sales as paper prices
dropped significantly below true physical prices,” stated Keith
Neumeyer, President and CEO of First Majestic. “These inventoried
ounces have been carried over into the second quarter and will be
sold as prices improve. Nevertheless, strong production from each
of our three mines generated operating earnings of $21.1 million,
representing a 106% increase over the same quarter of 2019.”
Neumeyer continued, “Our operations and CSR
teams have been working diligently throughout the first quarter to
ensure all areas of our business are following appropriate policies
and procedures to prevent the spread of a potential COVID-19
outbreak. To date, I am pleased to report we have not experienced
any positive cases within any of our areas of operation. We are now
beginning to implement restart procedures across each of the mine
sites and expect full production to be reached in early July.
Finally, I would like to thank Wheaton Precious Metals and
Sandstorm Gold for their financial support towards the purchasing
of important medical supplies for the Tayoltita and Banámichi
communities in response to this pandemic.”
OPERATIONAL AND FINANCIAL
HIGHLIGHTS
Key Performance Metrics |
2020-Q1 |
|
2019-Q4 |
ChangeQ1 vs Q4 |
|
2019-Q1 |
|
ChangeQ1 vs Q1 |
|
Operational |
|
|
Ore Processed / Tonnes Milled |
599,142 |
|
626,482 |
|
(4% |
) |
812,654 |
|
(26% |
) |
Silver Ounces Produced |
3,151,980 |
|
3,348,424 |
|
(6% |
) |
3,331,388 |
|
(5% |
) |
Silver Equivalent Ounces Produced |
6,195,057 |
|
6,233,412 |
|
(1% |
) |
6,273,677 |
|
(1% |
) |
Cash Costs per Ounce (1) |
$5.16 |
|
$3.73 |
|
38% |
|
$6.34 |
|
(19% |
) |
All-in Sustaining Cost per Ounce (1) |
$12.99 |
|
$12.25 |
|
6% |
|
$12.91 |
|
1% |
|
Total Production Cost per Tonne (1) |
$82.41 |
|
$78.62 |
|
5% |
|
$66.65 |
|
24% |
|
Average Realized Silver Price per Ounce (1) |
$17.36 |
|
$17.46 |
|
(1% |
) |
$15.73 |
|
10% |
|
|
|
|
Financial (in $millions) |
|
|
Revenues |
$86.1 |
|
$96.5 |
|
(11% |
) |
$86.8 |
|
(1% |
) |
Mine Operating Earnings |
$21.1 |
|
$23.9 |
|
(12% |
) |
$10.3 |
|
106% |
|
Net (Loss) Earnings |
($32.4 |
) |
($39.9 |
) |
19% |
|
$2.9 |
|
NM |
|
Operating Cash Flows before Movements in Working Capital and
Taxes |
$23.3 |
|
$32.9 |
|
(29% |
) |
$23.7 |
|
(2% |
) |
Cash and Cash Equivalents |
$145.2 |
|
$169.0 |
|
(14% |
) |
$91.5 |
|
59% |
|
Working Capital (1) |
$139.8 |
|
$171.1 |
|
(18% |
) |
$130.9 |
|
7% |
|
|
|
|
Shareholders |
|
|
(Loss) Earnings per Share ("EPS") - Basic |
($0.15 |
) |
($0.19 |
) |
20% |
|
$0.01 |
|
NM |
|
Adjusted EPS (1) |
$0.04 |
|
$0.00 |
|
NM |
|
($0.01 |
) |
NM |
|
Cash Flow per Share (1) |
$0.11 |
|
$0.16 |
|
(30% |
) |
$0.12 |
|
(8% |
) |
|
NM – Not meaningful |
|
|
(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. |
SUSPENSION UPDATE RELATED TO
COVID-19
On March 31, 2020, the Mexican Ministry of
Health issued a decree outlining certain actions aimed at
mitigating and containing sanitary risks associated with COVID-19
(the "Decree"), requiring non-essential businesses, including
mining, to temporarily suspend activities until May 30, 2020. As a
result, operations at its San Dimas, Santa Elena and La Encantada
mines were ramped down in the month of April. In early May, First
Majestic delivered supportive letters from local mayors around each
of the Company’s operating mines to Mexico’s Under-Secretary of
Mining and the Ministry of Health indicating strong local support
for the restart of operations.
On May 13, 2020, the Mexican Government
officially confirmed in the Federal Registry that mining is now
deemed essential and can restart on May 18,,2020 As a result, the
Company is beginning to implement restart procedures across each of
its mine sites, while maintaining strict sanitary controls and
supporting our local communities, and expects full production rates
will be reached in early July. To date, First Majestic has not
experienced any incidents related to COVID-19 at its sites or
corporate offices.
First Majestic has promptly responded to the
threat of COVID-19 and undertaken significant measures,
including:
- implemented preventative control measures including social
distancing, remote working, cancellation of any non-essential
visits to the mines, comprehensive sanitation measures for the
workplace and company transportation, and pre-screening for virus
symptoms;
- construction of a temporary camp at Santa Elena which can
accommodate up to 310 workers;
- managing supply chain risk and disruption by maintaining
constant communication with major suppliers and contractors and
increasing supplies inventory levels at all units;
- supporting local communities by sponsoring health
professionals, medical equipment, personal protective equipment,
medicine and health supplements;
- deferring a substantial amount of discretionary capital
expenditures into 2021 to maintain a strong balance sheet.
Furthermore, the Company expects to release an updated 2020
production, cost and capital investments guidance in July;
- proactively engaging with local communities and other
stakeholders to reduce the risk of COVID-19 from entering our host
communities; and
- implementation of programs within our areas of influence to
increase awareness about the virus, promote good hygiene and
responsible social interactions to prevent and/or contain the
spread of the virus
Q1 2020 FINANCIAL RESULTS
The Company realized an average silver price of
$17.36 per ounce during the first quarter of 2020, representing a
10% increase compared to $15.73 in the first quarter of 2019 and a
1% decrease compared to $17.46 in the prior quarter.
Revenues generated in the first quarter totaled
$86.1 million compared to $86.8 million in the first quarter of
2019. Despite the recent temporary suspension of three operating
mines, total production in the quarter was consistent with the
first quarter of 2019 and 9% above the previously withdrawn 2020
guidance. However, due to the volatile decline in silver and gold
prices near the end of the quarter, the Company decided to withhold
pricing on approximately 292,000 ounces of shipped silver and 700
ounces of shipped gold and retained those ounces in its finished
goods inventory. Had these ounces been sold at the end of the
quarter, it would have contributed an additional $5.3 million to
revenues based on spot metal prices.
The Company reported mine operating earnings of
$21.1 million compared to $10.3 million in the first quarter of
2019. The increase in mine operating earnings in the quarter was
attributed to a 10% increase in average realized silver price and
lower cost of sales and depletion, depreciation and amortization
due to the temporary suspension of lower margin mines.
The Company reported net earnings of ($32.4)
million (EPS of ($0.15)) compared to earnings of $2.9 million (EPS
of $0.01) in the first quarter of 2019. The decrease in earnings
was attributed to an accounting loss of $10.1 million on the
divesting of the Plomosas exploration project, to reduce annual
holding costs, and an unrealized loss of $22.7 million on
mark-to-market adjustment of its foreign currency derivatives
holdings as a result of a 25% depreciation of the Mexican pesos
against the U.S. dollar during the quarter.
Adjusted net earnings for the quarter was $8.2
million (Adjusted EPS of $0.04) compared to ($2.9)
million (Adjusted EPS of ($(0.01)) in the first quarter of 2019,
after excluding non-cash and non-recurring items.
Cash flow from operations before movements in
working capital and income taxes in the quarter was $23.3 million
($0.11 per share) compared to $23.7 million ($0.12 per share) in
the first quarter of 2019.
Cash and cash equivalents at March 31, 2020
was $145.2 million, up $53.7 million compared to the first quarter
of 2019. In addition, the Company had strong working capital of
$139.8 million and total available liquidity of $204.9 million,
including $65.0 million of undrawn revolving credit facility.
OPERATIONAL HIGHLIGHTS
The table below represents the quarterly
operating and cost parameters at each of the Company’s three
producing silver mines during the quarter.
First Quarter Production Summary |
San Dimas |
Santa Elena |
La Encantada |
Consolidated |
Ore Processed / Tonnes Milled |
200,109 |
177,834 |
221,200 |
599,142 |
Silver Ounces Produced |
1,677,376 |
550,133 |
924,472 |
3,151,980 |
Gold Ounces Produced |
21,308 |
10,842 |
52 |
32,202 |
Silver Equivalent Ounces Produced |
3,672,169 |
1,593,400 |
929,487 |
6,195,057 |
Cash Costs per Payable Silver Ounce |
$3.08 |
$2.12 |
$10.77 |
$5.16 |
All-in Sustaining Cost per Payable Silver Ounce |
$9.02 |
$6.03 |
$13.31 |
$12.99 |
Total Production Cost per Tonne |
$126.33 |
$81.04 |
$43.82 |
$82.41 |
Total production in the first quarter was
6,195,057 silver equivalents ounces, representing a 1% decrease
compared to the prior quarter. Total production consisted of
3,151,980 ounces of silver and 32,202 ounces of gold, in line with
the previous quarter and 9% above the previously withdrawn
guidance.
COSTS AND CAPITAL
EXPENDITURES
Cash cost per ounce for the quarter was $5.16
per payable ounce of silver, compared to $3.73 per ounce in the
previous quarter. The increase in consolidated cash cost was
primarily attributed to lower by-product credits as a result of
approximately 700 ounces of gold that were shipped but unpriced at
quarter end, which would have contributed an additional $1.4
million or $0.44 per ounce in by-product credits, as well as a 3%
decline in gold production. In addition, Santa Elena experienced
higher energy costs compared to the previous quarter as the Mexican
government eliminated the diesel credit in 2020 which equated to a
$0.8 million credit recognized in the previous quarter. The Company
continues to anticipate significant energy cost savings at Santa
Elena with the completion of its conversion from diesel to
liquefied natural gas power generation by the end of 2020.
AISC in the first quarter was $12.99 per ounce
compared to $12.25 per ounce in the previous quarter. The marginal
increase was primarily attributed to higher cash costs, partially
offset by small decreases in general and administrative costs as
well as sustaining capital expenditures amidst travel
restrictions.
Total capital expenditures in the first quarter
were $30.1 million, primarily consisting of $12.8 million at San
Dimas, $7.4 million at Santa Elena (including $2.3 million towards
the Ermitaño project), $2.8 million at La Encantada, $5.0 million
for strategic projects and $2.1 million at non-producing
properties.
ABOUT THE COMPANY
First Majestic is a publicly traded 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.
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:
the duration and effects of the coronavirus and COVID-19, and any
other pandemics on our operations and workforce, and the effects on
global economies and society, 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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