First Majestic Silver Corp. ("First Majestic" or
the "Company") (NYSE:AG) (TSX:FR) is pleased to
announce the Company’s fourth quarter and full year 2017 production
results, as well as production and cost guidance for 2018.
Production costs are scheduled to be released on February 28, 2018
with the Company’s full-year and fourth quarter 2017 financial
results.
Total production in 2017 reached 16.2 million
equivalent ounces of silver, representing a 13% decrease over 2016,
and in-line with the Company’s guidance of 15.7 to 16.6 million
silver equivalent ounces. Total production consisted of 9.7 million
ounces of silver, 62,991 ounces of gold, 24.5 million pounds of
lead and 3.9 million pounds of zinc. Annual silver production of
9.7 million ounces was 3% below the Company’s guidance of 10.0 to
10.6 million ounces of silver.
Total production in the fourth quarter of 2017
totaled 4.1 million equivalent ounces of silver consisting of 2.3
million ounces of silver, 17,344 ounces of gold, 4.3 million pounds
of lead and 1.3 million pounds of zinc.
As of December 31, 2017, the Company held
US$118.1 million of cash in its treasury.
Keith Neumeyer, President & CEO, stated,
“Santa Elena and San Martin were the star performers in 2017. In
2018, we expect higher grades, throughputs and recoveries to
improve the operations at La Encantada, La Parrilla, La Guitarra
and Del Toro due to the concerted investments in exploration and
development that commenced in late 2016. In addition, the
acquisition of the San Dimas mine comes at a great time with all
our other operations benefiting simultaneously from increased
investments. As a result, the business will benefit from improved
operating margins, increased cash flows and greater economies of
scale into the coming quarters.”
Production Details
Table:
|
|
|
|
|
|
|
Q4 |
Q3 |
Q/Q |
|
FY |
FY |
Y/Y |
2017 |
2017 |
Change |
Consolidated Production Results |
2017 |
2016 |
Change |
736,684 |
730,652 |
1 |
% |
Ore
processed/tonnes milled |
2,981,506 |
3,270,162 |
-9 |
% |
4,065,337 |
3,986,274 |
2 |
% |
Total
production - ounces of silver equivalent |
16,207,905 |
18,669,800 |
-13 |
% |
2,337,463 |
2,415,962 |
-3 |
% |
Total
silver ounces produced |
9,749,591 |
11,853,438 |
-18 |
% |
125 |
131 |
-5 |
% |
Silver
grade (g/t) |
131 |
149 |
-12 |
% |
79 |
78 |
1 |
% |
Silver
recovery (%) |
78 |
76 |
3 |
% |
17,344 |
15,414 |
13 |
% |
Gold
ounces produced |
62,991 |
62,436 |
1 |
% |
4,271,970 |
5,171,533 |
-17 |
% |
Pounds
of lead produced |
24,522,803 |
33,185,745 |
-26 |
% |
1,289,031 |
922,666 |
40 |
% |
Pounds of zinc produced |
3,944,232 |
10,577,967 |
-63 |
% |
|
Quarterly Operational
Review:
Total ore processed during the quarter at the
Company's six operating silver mines: Santa Elena, La Encantada, La
Parrilla, Del Toro, San Martin and La Guitarra, amounted to 736,684
tonnes, representing a 1% increase compared to the previous
quarter. The most significant improvement occurred at the La
Guitarra operation which recorded a 59% increase in mill throughput
as new areas in the Coloso mine were brought into production as
well as the processing of economical backfills from the La Guitarra
mine.
Consolidated silver grades in the quarter
averaged 125 g/t compared to 131 g/t in the previous quarter.
Higher silver grades were mined and processed at Santa Elena and
San Martin, however, consolidated silver grades were offset by
lower grades at La Encantada and La Parrilla.
Consolidated silver recoveries averaged 79%,
relatively consistent with the previous quarter. During the
quarter, the Company continued testing microbubble flotation
technology at its Central Lab at La Parrilla. Test work continues
to show successful metallurgical improvements in the treatment of
sulphide ore within the silver/lead and zinc circuits at La
Parrilla. The Company has placed orders for two full-scale
microbubble flotation cells and expects delivery and installation
to begin in the second half of 2018.
The Company's underground development in the
fourth quarter consisted of 14,279 metres, reflecting a 4% decrease
compared to 14,931 metres completed in the previous quarter.
Development remains focused on opening new production areas,
exploring high potential zones and new stope preparation.
During the quarter, up to 24 diamond drill rigs
were active across the Company’s properties. A total of 49,832
metres in 210 drill holes were completed on the seven properties,
representing a 2% increase in drilled metres compared to the
previous quarter. The most significant increase in drilled metres
was at La Guitarra where two additional rigs were added in
September to increase drilling in the Nazareno, Nazareno de Ancas
and the Coloso areas.
Mine by Mine Quarterly Production
Table:
|
|
|
|
|
|
|
|
|
|
|
Mine |
OreProcessed |
Tonnesper
Day |
Silver
Grade(g/t) |
SilverRecovery
(%) |
Silver
OzProduced |
Gold
OzProduced |
Pounds
ofLead |
Pounds
ofZinc |
EquivalentSilver
Ounces |
|
Santa Elena |
232,575 |
2,528 |
88 |
89 |
% |
582,789 |
14,005 |
- |
- |
1,653,941 |
|
La Encantada |
198,845 |
2,161 |
112 |
68 |
% |
486,514 |
33 |
- |
- |
489,071 |
|
La Parrilla |
138,124 |
1,501 |
118 |
76 |
% |
401,090 |
270 |
1,609,303 |
1,289,031 |
643,799 |
|
Del Toro |
56,753 |
617 |
138 |
74 |
% |
185,695 |
60 |
2,662,667 |
- |
369,992 |
|
San Martin |
72,503 |
788 |
257 |
86 |
% |
514,678 |
1,354 |
- |
- |
617,879 |
|
La Guitarra |
37,885 |
412 |
173 |
79 |
% |
166,698 |
1,622 |
- |
- |
290,654 |
|
Total |
736,684 |
8,007 |
125 |
79 |
% |
2,337,463 |
17,344 |
4,271,970 |
1,289,031 |
4,065,337 |
|
|
|
|
|
|
|
|
|
|
|
|
*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:
$16.73 per ounce; Gold: $1,275 per ounce; Lead: $1.13 per pound;
Zinc $1.48 per pound.
At the Santa Elena Silver/Gold
Mine:
- During the quarter, Santa Elena
produced 582,789 ounces of silver and 14,005 ounces of gold for a
total production of 1,653,941 silver equivalent ounces, reflecting
a 10% increase compared to the prior quarter and the highest
quarterly production rate of 2017.
- The mill processed a total of
232,575 tonnes, consisting of 133,042 tonnes of underground ore and
99,533 tonnes from the above ground heap leach pad.
- Silver and gold grades of
underground ore increased 12% and 21%, respectively, during the
quarter averaging 125 g/t and 2.9 g/t, respectively. The increase
in grades are due to higher tonnage of ore being sourced from the
high-grade Alejandra vein. Silver and gold grades from the above
ground heap leach pad averaged 39 g/t and 0.7 g/t,
respectively.
- A total of 2,698 metres of
underground development was completed in the fourth quarter
compared to 2,724 metres of development in the previous
quarter.
- A total of 7,463 metres of
exploration drilling was completed in the fourth quarter compared
to 7,406 metres of drilling in the previous quarter.
At the La Encantada Silver
Mine:
- For the quarter, silver production
reached 486,514 ounces representing a 20% decrease over the
previous quarter. The decrease in silver production was due to a 6%
decrease in tonnes milled and an 18% decrease in silver grades
compared to the prior quarter.
- Silver recoveries averaged 68%
during the quarter, a 3% increase compared with the prior
quarter.
- Mine production was temporarily halted on October 1st due to
the previously reported fatal accident involving four underground
miners. Following inspections by the Company and federal
authorities, the mine was given clearance to resume operations on
October 6th.
- The roasting project advanced in the fourth quarter with
approximately 95% of the major components now manufactured. At the
end of December, approximately 61% of the major component equipment
modules had successfully arrived on site and the remaining module
deliveries are expected on site by the end of February. The Company
began installation of the dust collectors and rotary dryer in early
January and anticipates the main drive, roasting furnace and
cooling system to begin installation in early March.
- Vertical ventilation raises in the San Javier area were
completed in the fourth quarter. The Company anticipates initial
production from the San Javier breccia to commence in March with
ramp up to full production of approximately 600 tpd by the end of
June. The San Javier area is known to contain silver grades ranging
between 150 to 200 g/t.
- A total of 742 metres of underground development were completed
in the fourth quarter compared to 1,173 metres of development in
the previous quarter.
- A total of 2,874 metres of exploration drilling was completed
in the fourth quarter compared to 6,793 metres of drilling in the
previous quarter.
At the La Parrilla Silver
Mine:
- During the quarter, the flotation circuit processed 74,750
tonnes (812 tpd) with an average silver grade of 112 g/t and a 80%
recovery while the cyanidation circuit processed 63,374 tonnes (689
tpd) with an average silver grade of 125 g/t and a 73% recovery for
total production of 643,799 silver equivalent ounces.
- The lead circuit processed an average lead grade of 1.3% with
recoveries of 75% for total lead production of 1.6 million pounds,
representing a 9% increase compared to the previous quarter.
- The zinc circuit processed an average zinc grade of 1.4% with
recoveries of 55% for total zinc production of 1.3 million pounds,
representing a 40% increase compared to the previous quarter.
- Underground development completed in the quarter totaled 3,067
metres compared to 3,186 metres developed in the previous
quarter.
- A total of 8,467 metres of exploration drilling was completed
in the fourth quarter compared to 9,138 metres of drilling in the
previous quarter.
At the Del Toro Silver
Mine:
- During the quarter, Del Toro produced a total of 369,992 silver
equivalent ounces reflecting a 22% decrease compared to the prior
quarter primarily due to a 6% decrease in throughput, 8% decrease
in silver grades and a 15% decrease in lead grades.
- Silver grades and recoveries during the quarter averaged 138
g/t and 74%, respectively.
- Lead grades and recoveries averaged 3.4% and 62%, respectively,
producing a total of 2.7 million pounds of lead representing a 28%
decrease compared to the previous quarter.
- Underground development completed in the quarter totaled 2,741
metres compared to 2,989 metres developed in the previous
quarter.
- Total exploration metres drilled in the quarter amounted to
5,215 metres compared to 6,673 metres of drilling in the previous
quarter.
At the San Martin Silver
Mine:
- During the quarter, San Martin
produced 514,678 ounces of silver and 1,354 ounces of gold for a
total production of 617,879 silver equivalent ounces, reflecting a
2% increase compared to the prior quarter and the highest quarterly
production rate of 2017. The increase in production was attributed
to higher tonnage and silver grades.
- Silver grades and recoveries
averaged 257 g/t and 86%, respectively, during the quarter. In
addition, gold grades and recoveries averaged 0.6 g/t and 91%,
respectively.
- Underground development completed
in the quarter totaled 3,211 metres compared with 2,781 metres of
development in the previous quarter.
- Total exploration metres drilled in
the quarter amounted to 6,828 metres compared to 7,763 metres of
drilling in the previous quarter.
At the La Guitarra Silver
Mine:
- During the quarter, La Guitarra
produced 166,698 ounces of silver and 1,622 ounces of gold for a
total production of 290,654 silver equivalent ounces reflecting a
59% increase compared to the prior quarter. The increase in
production was primarily due to a 59% increase in throughput as new
areas in the Coloso mine were brought into production as well as
the processing of economical backfills from the La Guitarra
mine.
- Silver grades and recoveries
averaged 173 g/t and 79%, respectively, during the quarter. In
addition, gold grades and recoveries averaged 1.7 g/t and 79%,
respectively.
- A total of 1,818 metres of
development were completed in the fourth quarter compared to 1,976
metres of development in the previous quarter.
- Total exploration metres drilled in
the quarter amounted to 11,030 metres compared to 6,345 metres
drilled in the previous quarter. This significant 74% increase was
due to two additional rigs arriving on site in September to
increase drilling in the Nazareno, Nazareno de Ancas and the Coloso
areas.
2018 Production Outlook and Cost
Guidance:
The following 2018 outlook and cost guidance
excludes the proposed acquisition of Primero Mining Corp. as
announced on January 12, 2018. First Majestic is expected to
incorporate the San Dimas operation into its annual guidance
following the closing of the transaction which is expected by the
end of March.
The Company anticipates 2018 silver production
will range between 10.6 to 11.8 million ounces. Based on the
midpoint of the guidance range the Company expects a 15% increase
in silver production compared to 2017, primarily due to higher
silver grades from caving and the start-up of the new roasting
circuit at La Encantada. In addition, total production in 2018 is
estimated to range between 15.7 to 17.5 million silver equivalent
ounces, representing a slight increase from 2017, primarily due to
higher silver production at La Encantada offset by less gold
by-product credits at Santa Elena.
A mine-by-mine breakdown of the 2018 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: $16.50/oz, gold: $1,250/oz,
lead: $1.10/lb, zinc: $1.40/lb, MXN:USD 19:1.
Mine |
Silver Oz (M) |
Silver Eqv Oz (M) |
Cash Costs ($) |
AISC ($) |
Santa Elena |
2.2 – 2.4 |
4.9 – 5.5 |
2.08 – 2.96 |
6.58 – 7.66 |
La Encantada |
3.0 – 3.3 |
3.0 – 3.3 |
11.58 – 12.39 |
14.89 – 15.98 |
La Parrilla |
1.5 – 1.7 |
2.3 – 2.6 |
9.78 – 10.40 |
15.02 – 16.01 |
Del Toro |
1.1 – 1.3 |
2.2 – 2.4 |
7.11 – 8.04 |
14.31 – 15.54 |
San Martin |
2.0 – 2.2 |
2.2 – 2.5 |
8.52 – 9.14 |
11.08 – 11.92 |
La Guitarra |
0.8 –
0.9 |
1.1 – 1.2 |
11.86 – 12.81 |
18.30 – 19.52 |
Totals: |
10.6 – 11.8 |
15.7 – 17.5 |
$8.30 – $9.09 |
$15.21 – $16.56 |
*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 $2.43 to $2.70 per payable silver ounce.
The Company is projecting its 2018 AISC, as
defined by the World Gold Council, to be within a range of $15.21
to $16.56 on a per payable silver ounce consolidated basis.
Excluding non-cash items, the Company anticipates its 2018 AISC to
be within a range of $14.40 to $15.66 per payable silver ounce. An
itemized AISC cost table is provided below:
All-In Sustaining Cost Calculation (1) |
FY 2018($ /Ag oz) |
Total Cash Costs per Payable Silver Ounce (2) |
8.30 – 9.09 |
General and Administrative Costs |
1.64 – 1.81 |
Sustaining Development Costs |
1.99 – 2.01 |
Sustaining Property, Plant and Equipment Costs |
2.17 – 2.42 |
Sustaining Exploration Costs |
0.16 – 0.18 |
Profit sharing |
0.13 – 0.15 |
Share-based Payments (non-cash) |
0.73 – 0.81 |
Accretion of Reclamation Costs (non-cash) |
0.08 – 0.08 |
All-In Sustaining Costs: (WGC definition) |
$15.21 – $16.56 |
All-In Sustaining Costs: (WGC excluding non-cash
items) |
$14.40 – $15.66 |
1. 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.2. Total cash cost per payable silver
ounce includes estimated royalties and 0.5% Mining Environmental
Fee of $0.10 per ounce.
In 2018, the Company plans to invest a total of
$125.4 million on capital expenditures consisting of $51.0 million
for sustaining investments and $74.4 million for expansionary
projects. This represents an 18% increase compared to the revised
2017 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, completing the roasting circuit and block
caving at La Encantada, investments in microbubble and
fine-grinding technologies, in addition to the exploration work at
Plomosas which is expected to result in an initial resource
estimate by the end of 2018.
The Company is planning to complete a total of
72,477 metres of underground development in 2018, representing a
25% increase compared to 57,902 metres completed in 2017. In
addition, the Company is planning to complete a total of 183,000
metres of exploration drilling in 2018, representing a 17% increase
compared to 156,539 metres completed in 2017 which consisted of 823
drill holes.
The 2018 drilling program will consist of
approximately 25,000 metres of diamond drilling intended to upgrade
Resources to Reserves at the six operating mines; approximately
136,000 metres of diamond drilling intended to increase or add new
Measured & Indicated or Inferred Resources at the six operating
mines, with a focus at Cerro de Santiago in La Parrilla, Nazareno
in La Guitarra and the Ermitaño West project in Santa Elena; and
drill approximately 22,000 metres at the Plomosas Silver
Project.
The 2018 annual budget includes capital
investments totaling $49.0 million to be spent on underground
development, $38.1 million towards property, plant and equipment,
$27.4 million in exploration and $11.0 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.
About the Company
First Majestic is a mining company focused on
growing primary silver production in Mexico and is aggressively
pursuing the development of its existing mineral property assets.
The Company presently owns and operates six producing silver mines;
the La Parrilla Silver Mine, the San Martin Silver Mine, the La
Encantada Silver Mine, the La Guitarra Silver Mine, Del Toro Silver
Mine and the Santa Elena Silver/Gold Mine. Production from these
six mines is projected to be between 10.6 to 11.8 million ounces of
pure silver or 15.7 to 17.5 million ounces of silver equivalents in
2018.
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
statements", within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and applicable Canadian
securities legislation, concerning the business, operations and
financial performance and condition of First Majestic Silver
Corp. Forward-looking statements include, but are not limited
to, statements with respect to the future price of silver and other
metals, the estimation of mineral reserves and resources, the
realization of mineral reserve estimates, the timing and amount of
estimated future production, costs of production, capital
expenditures, costs and timing of the development of new deposits,
success of exploration activities, permitting time lines, hedging
practices, currency exchange rate fluctuations, requirements for
additional capital, government regulation of mining operations,
environmental risks, unanticipated reclamation expenses, timing and
possible outcome of pending litigation, title disputes or claims
and limitations on insurance coverage. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might"
or "will be taken", "occur" or "be achieved". Forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, performance or achievements of First Majestic Silver
Corp. to be materially different from those expressed or
implied by such forward-looking statements, including but not
limited to: risks related to the integration of acquisitions; risks
related to international operations; risks related to joint venture
operations; actual results of current exploration activities;
actual results of current reclamation activities; conclusions of
economic evaluations; changes in project parameters as plans
continue to be refined; future prices of metals; possible
variations in ore reserves, grade or recovery rates; failure of
plant, equipment or processes to operate as anticipated; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities, as well as those factors
discussed in the section entitled "Description of the Business -
Risk Factors" in First Majestic Silver Corp.'s Annual
Information Form for the year ended December 31, 2016, 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 Silver Corp. 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. There can be no
assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should
not place undue reliance on forward-looking
statements. First Majestic Silver Corp. does not
undertake to update any forward-looking statements that are
incorporated by reference herein, except in accordance with
applicable securities laws.
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