FIRST MAJESTIC SILVER CORP. (NYSE:AG)
(TSX:FR) (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, 2018. The full version of the
financial statements and the management discussion and analysis can
be viewed on the Company's web site 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 2018 HIGHLIGHTS
- Silver equivalent production amounted to 3.9 million
ounces
- Revenues for the quarter was $58.6 million
- Mine operating earnings of ($0.4) million
- Cash flow per share was $0.09 per share (non-GAAP)
- Cash costs were $7.83 per payable silver ounce (net of
by-product credits)
- All-in sustaining costs (“AISC”) were $16.01 per payable silver
ounce
- Net loss of $5.6 million (Basic loss per share of $0.03)
- Realized average silver price of $16.76 per ounce, relatively
consistent with the prior quarter
- During the quarter, the Company repurchased and cancelled
230,000 common shares in the open market for a total consideration
of $1.3 million through its normal course issuer bid
- Healthy balance sheet with $249.2 million in cash and cash
equivalents following the $156.5 million five-year, 1.875% interest
rate convertible debenture offering in January
2018
“In the first quarter, lower production rates
resulted in a slight decrease in revenues and cash flows compared
to the prior quarter,” stated Keith Neumeyer, President and CEO of
First Majestic. “This temporary decrease in production, which was
primarily due to lower head grades, naturally resulted in higher
cash costs per ounce. Nevertheless, we managed to beat our overall
cost guidance during the quarter due to strong gold production at
the Santa Elena, San Martin and La Guitarra operations. Looking
ahead, we plan to provide an updated production, costs and capital
expenditure guidance in July to reflect the integration of the San
Dimas operation. We remain focused on developing our key growth
projects, most importantly our roaster project, which is expected
to significantly increase silver production at La Encantada in the
second half of 2018.”
OPERATIONAL AND FINANCIAL
HIGHLIGHTS
Key Performance
Metrics |
|
2018-Q1 |
|
2017-Q4 |
Change Q1 vs Q4 |
|
2017-Q1 |
Change Q1 vs Q1 |
Operational |
|
|
|
|
|
|
|
|
Ore
Processed / Tonnes Milled |
|
|
809,775 |
|
|
|
736,684 |
|
10% |
|
|
|
822,336 |
|
(2%) |
|
Silver
Ounces Produced |
|
|
2,167,030 |
|
|
|
2,337,463 |
|
(7%) |
|
|
|
2,708,978 |
|
(20%) |
|
Silver
Equivalent Ounces Produced |
|
|
3,879,678 |
|
|
|
4,065,337 |
|
(5%) |
|
|
|
4,267,350 |
|
(9%) |
|
Cash
Costs per Ounce (1) |
|
|
$7.83 |
|
|
|
$6.76 |
|
16% |
|
|
|
$6.31 |
|
24% |
|
All-in
Sustaining Cost per Ounce (1) |
|
|
$16.01 |
|
|
|
$14.13 |
|
13% |
|
|
|
$11.85 |
|
35% |
|
Total
Production Cost per Tonne (1) |
|
|
$46.88 |
|
|
|
$50.81 |
|
(8%) |
|
|
|
$44.72 |
|
5% |
|
Average Realized Silver
Price per Ounce (1) |
|
|
$16.76 |
|
|
|
$16.61 |
|
1% |
|
|
|
$17.55 |
|
(5%) |
|
|
|
|
|
|
|
|
|
|
Financial (in
$millions) |
|
|
|
|
|
|
|
|
Revenues |
|
|
$58.6 |
|
|
|
$61.2 |
|
(4%) |
|
|
|
$69.1 |
|
(15%) |
|
Mine
Operating (Loss) Earnings |
|
|
($0.4) |
|
|
|
$1.4 |
|
(130%) |
|
|
|
$10.0 |
|
(104%) |
|
Net
(Loss) Earnings |
|
|
($5.6) |
|
|
|
($56.1) |
|
(90%) |
|
|
|
$2.7 |
|
(306%) |
|
Operating
Cash Flows before Working Capital and Taxes |
|
|
$15.6 |
|
|
|
$18.7 |
|
(17%) |
|
|
|
$26.6 |
|
(41%) |
|
Cash and
Cash Equivalents |
|
|
$249.2 |
|
|
|
$118.1 |
|
111% |
|
|
|
$127.6 |
|
95% |
|
Working Capital
(1) |
|
|
$235.6 |
|
|
|
$116.3 |
|
103% |
|
|
|
$136.8 |
|
72% |
|
|
|
|
|
|
|
|
|
|
Shareholders |
|
|
|
|
|
|
|
|
(Loss) Earnings per Share ("EPS") - Basic |
|
|
($0.03) |
|
|
|
($0.34) |
|
(90%) |
|
|
|
$0.02 |
|
(304%) |
|
Adjusted
EPS (1) |
|
|
$0.06) |
|
|
|
($0.04) |
|
53% |
|
|
|
$0.02 |
|
(372%) |
|
Cash Flow
per Share (1) |
|
|
$0.09 |
|
|
|
$0.11 |
|
(16%) |
|
|
|
$0.16 |
|
(42%) |
|
(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.
FINANCIAL REVIEW
The Company realized an average silver price of
$16.76 per ounce during the first quarter of 2018, representing a
5% decrease compared with the first quarter of 2017 and relatively
consistent compared to $16.61 in the prior quarter.
Revenues generated in the first quarter totaled
$58.6 million, a decrease of 15% compared to $69.1 million in the
first quarter of 2017 primarily due to an 11% decrease in silver
equivalent ounces sold and a 5% decrease in average realized silver
price compared to the same quarter of the prior year.
The Company reported a mine operating loss of
$0.4 million compared to mine operating earnings of
$10.0 million in the first quarter of 2017. The decrease in
mine operating earnings was primarily affected by the decrease in
revenue combined with higher labour and energy costs as a result of
a stronger Mexican peso which appreciated 10% compared to the same
quarter of the prior year.
Cash flow from operations before movements in
working capital and income taxes in the quarter was $15.6 million
($0.09 per share) compared to $26.6 million ($0.16 per share)
in the first quarter of 2017. Cash flows are expected to increase
in the second half of 2018 with the start up of the 2,000 tpd
roasting circuit at La Encantada and increased mine production from
the high-grade San Javier breccia.
The Company generated a net loss of $5.6 million
(loss per share of $0.03) compared to net earnings of $2.7 million
(EPS of $0.02) in the first quarter of 2017, primarily due to a
decrease in mine operating earnings. Excluding all non-cash and
non-recurring items, the Company generated an adjusted loss of
$10.1 million (adjusted loss of $0.06 per share) during the
quarter.
The Company maintains a strong treasury with
$249.2 million in cash and cash equivalents at the end of the
quarter, reflecting a 111% increase compared to the fourth quarter
of 2017. The increase in cash was driven by the $156.5 million
five-year convertible bond offering in January 2018 which will be
used primarily for repayment of Primero’s existing convertible
debentures, other costs related to the closing of the Arrangement
and general working capital purposes. Furthermore, the Company’s
working capital position increased 103% to $235.6 million compared
to $116.3 million at the end of the year.
OPERATIONAL HIGHLIGHTS
The table below represents the quarterly
operating and cost parameters at each of the Company’s six
producing silver mines.
First Quarter
Production Summary |
|
Santa Elena |
La Encantada |
La Parrilla |
Del Toro |
San Martin |
La Guitarra |
Consolidated |
Ore Processed / Tonnes Milled |
|
|
223,498 |
|
|
276,191 |
|
|
125,114 |
|
|
79,769 |
|
|
75,374 |
|
|
29,829 |
|
|
809,775 |
|
Silver Ounces Produced |
|
|
521,784 |
|
|
449,522 |
|
|
337,332 |
|
|
236,478 |
|
|
483,740 |
|
|
138,173 |
|
|
2,167,030 |
|
Silver Equivalent Ounces Produced |
|
|
1,543,776 |
|
|
452,420 |
|
|
615,541 |
|
|
437,743 |
|
|
574,838 |
|
|
255,359 |
|
|
3,879,678 |
|
Cash Costs per Ounce |
|
|
($4.74) |
|
|
$16.93 |
|
|
$11.02 |
|
|
$13.66 |
|
|
$8.04 |
|
|
$7.97 |
|
|
$7.83 |
|
All-in Sustaining Cost per Ounce |
|
|
($0.17) |
|
|
$20.97 |
|
|
$17.66 |
|
|
$20.61 |
|
|
$9.98 |
|
|
$15.76 |
|
|
$16.01 |
|
Total Production Cost per Tonne |
|
|
$54.31 |
|
|
$27.00 |
|
|
$48.12 |
|
|
$58.12 |
|
|
$68.06 |
|
|
$86.50 |
|
|
$46.88 |
|
Total production for the quarter was 3,879,678
silver equivalent ounces, consisting of 2,167,030 ounces of silver,
15,887 ounces of gold, 4,448,378 pounds of lead and 1,611,699
pounds of zinc. The most significant production increase occurred
at the Del Toro operations which recorded an 18% increase in silver
equivalents ounces produced as higher production rates were
achieved from the Dolores mine following ventilation upgrades.
COSTS AND CAPITAL
EXPENDITURES
Cash cost per ounce for the quarter was $7.83
per payable ounce of silver, an increase of 16% from $6.76 per
ounce in the fourth quarter of 2017. Cash cost per ounce was higher
primarily due to lower head grades in the quarter and also the
year-end recognition of $2.4 million in diesel credits in the
fourth quarter of 2017. Cash costs at La Encantada are expected to
decrease in the second half of 2018 with the anticipated increase
in silver grades as higher production rates are achieved from the
San Javier breccia. The San Javier area is expected to reach
production rates of 600 tpd by mid-2018 and produce silver grades
between 150 to 200 g/t.
AISC in the first quarter was $16.01, an
increase of 13% or $1.88 per ounce compared to the previous
quarter, primarily attributed to an increase in cash costs and
higher general and administrative expenses due to corporate
transformation training focusing on high performance teams and
operational efficiency.
Total capital expenditures in the first quarter
were $20.1 million, primarily consisting of $4.8 million at Santa
Elena, $3.5 million at La Encantada, $3.1 million at La Parrilla,
$2.4 million at Del Toro, $2.1 million at San Martin and $2.2
million at La Guitarra.
CORPORATE UPDATE
On May 7, 2018, the Company received application
approval from the Comisión Federal de Competencia Económica
(“COFECE”) related to the Mexican anti-trust ruling on the
acquisition of Primero Mines. The anti-trust decision was the final
approval required to close the transaction. Having received the
final government approval, the Company now expects closing to occur
as early as May 10, 2018.
Together with First Majestic's existing six
operating silver mines in Mexico, the combined company is expected
to approximately double its production of silver equivalent ounces
per year. Following the closing of the transaction, First
Majestic will provide an updated 2018 guidance report which will
include production, cost and capital expenditure estimates for the
San Dimas mine as well as updated estimates for the six current
producing operations.
PROJECTS UPDATE
At the end of the quarter, the construction of
the roaster project at the La Encantada Silver Mine was 79%
complete. During the quarter, the mounting of the roasting furnace,
rotary dryer, cyclones, grate cooler and fans were completed. A new
metallurgical lab is currently being constructed to support the
roasting plant operation. Commissioning remains on schedule for the
end of the second quarter and ramping up to commercial production
by the end of the third quarter. Once at full capacity, annual doré
production at La Encantada is expected to exceed 4.0 million ounces
of silver, or an increase of approximately 1.5 million ounces of
silver per year.
During the quarter, the manufacturing of the
full-scale microbubble flotation cells for La Parrilla began and is
expected to take approximately seven months to complete.
Delivery and installation of the cells is expected in the fourth
quarter of 2018 followed by commissioning and ramp up to commercial
production by year end. By using microbubble technology, the
Company expects to achieve higher metallurgical recoveries in the
treatment of sulphide ore within the flotation circuit at La
Parrilla.
The Company's underground development in the
first quarter consisted of 14,914 metres, reflecting a 4% increase
compared to 14,279 metres completed in the previous quarter.
Underground development continued to focus on opening new
production areas at La Parrilla, opening new faces at La Guitarra,
new stopes at Del Toro, and developing into higher grade zones at
La Encantada as a way to increase production in the coming
quarters.
A total of 20 diamond drill rigs were active
across the Company's properties and completed 44,827 metres of
diamond drilling in the quarter, representing a 10% decrease
compared to the prior quarter. The most significant results were
obtained at Cerro de Santiago in La Parrilla where two holes
intercepted the Santiago epithermal vein at 480 metres at depth.
Hole SLP-CS-18-01 intercepted 0.6 metres of estimated
true-thickness (ETT) with 440 g/t of Ag and 1.1 g/t of Au and 3.1
metres (ETT) with 490 g/t of Ag and 1.2 g/t of Au. Additionally,
hole SLP-CS-18-02 intercepted 2.8 metres (ETT) of mineralized
epithermal vein approximately 150 metres south of hole 01 but
grades are still not available. Other significant results were
obtained in Santa Elena were hole EW-18-12 intercepted the Ermitaño
vein with 8.0 metres (ETT) and hole EW-18-15 intercepted the Aitana
vein with 7.1 metres (ETT).
ABOUT FIRST MAJESTIC
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 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
SPECIAL NOTE REGARDING FORWARD-LOOKING
INFORMATIONThis news release includes certain "Forward-Looking
Statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and applicable Canadian
securities laws. When used in this news release, the words
“anticipate”, “believe”, “estimate”, “expect”, “target”, “plan”,
“forecast”, “may”, “schedule” and similar words or expressions,
identify forward-looking statements or information. These
forward-looking statements or information relate to, among other
things: the price of silver and other metals; the accuracy of
mineral reserve and resource estimates and estimates of future
production and costs of production at our properties; estimated
production rates for silver and other payable metals produced by
us, the estimated cost of development of our development projects;
the effects of laws, regulations and government policies on our
operations, including, without limitation, the laws in Mexico which
currently have significant restrictions related to mining;
obtaining or maintaining necessary permits, licences and approvals
from government authorities; and continued access to necessary
infrastructure, including, without limitation, access to power,
land, water and roads to carry on activities as planned.
These statements reflect the Company’s current
views with respect to future events and are necessarily based upon
a number of assumptions and estimates that, while considered
reasonable by the Company, are inherently subject to significant
business, economic, competitive, political and social uncertainties
and contingencies. Many factors, both known and unknown, could
cause actual results, performance or achievements to be materially
different from the results, performance or achievements that are or
may be expressed or implied by such forward-looking statements or
information and the Company has made assumptions and estimates
based on or related to many of these factors. Such factors include,
without limitation: fluctuations in the spot and forward price of
silver, gold, base metals or certain other commodities (such as
natural gas, fuel oil and electricity); fluctuations in the
currency markets (such as the Canadian dollar and Mexican peso
versus the U.S. dollar); changes in national and local government,
legislation, taxation, controls, regulations and political or
economic developments in Canada, Mexico; operating or technical
difficulties in connection with mining or development activities;
risks and hazards associated with the business of mineral
exploration, development and mining (including environmental
hazards, industrial accidents, unusual or unexpected formations,
pressures, cave-ins and flooding); risks relating to the credit
worthiness or financial condition of suppliers, refiners and other
parties with whom the Company does business; inability to obtain
adequate insurance to cover risks and hazards; and the presence of
laws and regulations that may impose restrictions on mining,
including those currently enacted in Mexico; employee relations;
relationships with and claims by local communities and indigenous
populations; availability and increasing costs associated with
mining inputs and labour; the speculative nature of mineral
exploration and development, including the risks of obtaining
necessary licenses, permits and approvals from government
authorities; diminishing quantities or grades of mineral reserves
as properties are mined; the Company’s title to properties; and the
factors identified under the caption “Risk Factors” in the
Company’s Annual Information Form, under the caption “Risks
Relating to First Majestic's Business”.
Investors are cautioned against attributing
undue certainty to forward-looking statements or information.
Although the Company has attempted to identify important factors
that could cause actual results to differ materially, there may be
other factors that cause results not to be anticipated, estimated
or intended. The Company does not intend, and does not assume any
obligation, to update these forward-looking statements or
information to reflect changes in assumptions or changes in
circumstances or any other events affecting such statements or
information, other than as required by applicable law.
First Majestic Silver (NYSE:AG)
Historical Stock Chart
From Apr 2024 to May 2024
First Majestic Silver (NYSE:AG)
Historical Stock Chart
From May 2023 to May 2024