FIRST MAJESTIC SILVER CORP. (AG: NYSE; FR: TSX;
FMV: FSE) (the "Company" or “First Majestic”) is pleased to
announce the unaudited interim consolidated financial results of
the Company for the second quarter ended June 30, 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 or on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov. All amounts are in U.S. dollars unless stated
otherwise.
SECOND QUARTER 2018 HIGHLIGHTS
- Record silver equivalent production of 5.1 million ounces, a
32% increase compared to Q1 2018
- Silver production of 2.8 million ounces, a 27% increase
compared to Q1 2018
- Revenues of $79.7 million, a 36% increase compared to Q1
2018
- Mine operating earnings of ($2.3) million
- Cash flow per share was $0.08 per share (non-GAAP)
- Cash costs were $7.59 per payable silver ounce (net of
by-product credits), a 3% decrease compared to Q1 2018
- All-in sustaining costs (“AISC”) were $16.43 per payable silver
ounce, a 3% increase compared to Q1 2018
- Realized average silver price of $16.74 per ounce, relatively
consistent with the prior quarter
- Recorded an impairment charge due to placing the La Guitarra
mine on care and maintenance of $31.7 million, or $20.5 million net
of tax
- Adjusted net loss of $11.8 million (adjusted loss per share of
$0.07)
- Invested $26.6 million on capital expenditures
- Ended the quarter with $109.2 million in cash and cash
equivalents
“During the 52 days since being acquired, San
Dimas made an immediate impact to our production profile and bottom
line by producing 808,923 ounces of silver plus 11,348 ounces of
gold and generated mine operating earnings of $5.1 million,” stated
Keith Neumeyer, President and CEO of First Majestic. “Additionally,
the AISC at San Dimas came in at $5.41 per ounce, making it our
lowest cost and largest producing mine. Silver grades at La
Encantada and Del Toro saw significant improvements at the end of
the second quarter and continue to date. As a result, total
production for the month of July reached a new monthly record of
2.2 million silver equivalent ounces. This production trend is
expected to continue throughout the remaining quarters of 2018 and
into the first half of 2019 following the installation of
microbubble columns at La Parrilla and Del Toro and the
installation of high intensity grinding mills at Santa Elena and
San Dimas.”
Mr. Neumeyer continued, “Looking ahead to the
second half of 2018, we expect higher operating margins along with
a significant reduction in our consolidated AISC to between $13.28
to $14.84 per ounce, primarily due to higher production rates from
the start-up of the 2,000 tpd roaster at La Encantada, higher
silver grades at La Encantada and Del Toro, increased production at
San Dimas and the decision to place La Guitarra on care and
maintenance.”
OPERATIONAL AND FINANCIAL
HIGHLIGHTS
Key Performance
Metrics |
|
2018-Q2 |
|
2018-Q1 |
Change Q2 vs Q1 |
|
2017-Q2 |
Change Q2 vs Q2 |
|
2018-YTD |
Operational |
|
|
|
|
|
|
|
|
|
|
Ore
Processed / Tonnes Milled |
|
|
851,349 |
|
|
|
809,775 |
|
5 |
% |
|
|
691,833 |
|
23 |
% |
|
|
1,661,124 |
|
Silver
Ounces Produced |
|
|
2,756,263 |
|
|
|
2,167,030 |
|
27 |
% |
|
|
2,287,188 |
|
21 |
% |
|
|
4,923,292 |
|
Silver
Equivalent Ounces Produced |
|
|
5,137,318 |
|
|
|
3,879,678 |
|
32 |
% |
|
|
3,888,944 |
|
32 |
% |
|
|
9,016,996 |
|
Cash
Costs per Ounce (1) |
|
$ |
7.59 |
|
|
$ |
7.83 |
|
(3 |
%) |
|
$ |
7.01 |
|
8 |
% |
|
$ |
7.70 |
|
All-in
Sustaining Cost per Ounce (1) |
|
$ |
16.43 |
|
|
$ |
16.01 |
|
3 |
% |
|
$ |
14.17 |
|
16 |
% |
|
$ |
16.25 |
|
Total
Production Cost per Tonne (1) |
|
$ |
61.04 |
|
|
$ |
46.88 |
|
30 |
% |
|
$ |
51.53 |
|
18 |
% |
|
$ |
54.14 |
|
Average Realized Silver
Price per Ounce (1) |
|
$ |
16.74 |
|
|
$ |
16.76 |
|
0 |
% |
|
$ |
17.17 |
|
(3 |
%) |
|
$ |
16.75 |
|
|
|
|
|
|
|
|
|
|
|
|
Financial (in
$millions) |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
79.7 |
|
|
$ |
58.6 |
|
36 |
% |
|
$ |
60.1 |
|
33 |
% |
|
$ |
138.3 |
|
Mine
Operating (Loss) Earnings |
|
($ |
2.3 |
) |
|
($ |
0.4 |
) |
(445 |
%) |
|
$ |
1.4 |
|
(264 |
%) |
|
($ |
2.7 |
) |
Net
(Loss) Earnings |
|
($ |
40.0 |
) |
|
($ |
5.6 |
) |
(616 |
%) |
|
$ |
1.4 |
|
(2,935 |
%) |
|
($ |
45.6 |
) |
Operating
Cash Flows before Working Capital and Taxes |
|
$ |
14.2 |
|
|
$ |
15.6 |
|
(9 |
%) |
|
$ |
18.0 |
|
(21 |
%) |
|
$ |
29.9 |
|
Cash and
Cash Equivalents |
|
$ |
109.2 |
|
|
$ |
249.2 |
|
(56 |
%) |
|
$ |
126.9 |
|
(14 |
%) |
|
$ |
109.2 |
|
Working Capital
(1) |
|
$ |
141.4 |
|
|
$ |
235.6 |
|
(40 |
%) |
|
$ |
130.9 |
|
8 |
% |
|
$ |
141.4 |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders |
|
|
|
|
|
|
|
|
|
|
(Loss) Earnings per Share ("EPS") - Basic |
|
($ |
0.22 |
) |
|
($ |
0.03 |
) |
(555 |
%) |
|
$ |
0.01 |
|
(2,685 |
%) |
|
($ |
0.26 |
) |
Adjusted
EPS (1) |
|
($ |
0.07 |
) |
|
($ |
0.06 |
) |
(8 |
%) |
|
($ |
0.02 |
) |
(197 |
%) |
|
($ |
0.13 |
) |
Cash Flow
per Share (1) |
|
$ |
0.08 |
|
|
$ |
0.09 |
|
(17 |
%) |
|
$ |
0.11 |
|
(28 |
%) |
|
$ |
0.17 |
|
(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.
SAN DIMAS ACQUISITION
COMPLETED
On May 10, 2018, the Company completed its
acquisition of all of the issued and outstanding common shares of
Primero Mining Corp. for a total consideration of $187.0 million in
common shares of First Majestic. With the acquisition,
First Majestic is integrating a large, world-class, silver and
gold mine into its portfolio of operating mines. The San Dimas
Silver/Gold Mine, becoming First Majestic's seventh mine in Mexico,
will result in significant growth in the Company’s production
profile with an estimated doubling of silver equivalent ounces
produced.
In connection with the plan of arrangement, the
Company restructured the pre-existing silver purchase agreement
with Wheaton Precious Metals Corp. ("WPM"). Pursuant to the new
stream agreement, WPM will be entitled to receive 25% of the gold
equivalent production for ongoing payments equal to the lesser of
$600 per ounce (subject to a 1% annual inflation adjustment) and
the prevailing market price. The New Stream Agreement provides
for a number of value creation opportunities with alignment between
silver and gold production and increased post-stream cash flow at
San Dimas.
During the quarter, First Majestic also entered
into an amended $75.0 million senior secured revolving credit
facility, which will mature on its third anniversary date in May
2021 and interest will accrue at LIBOR plus an applicable range
which is dependent on certain financial parameters of First
Majestic. Proceeds from the credit facility were used to repay
First Majestic's pre-existing debt facilities as well as the $30.2
million revolving credit facility assumed from the Primero
acquisition.
FINANCIAL REVIEW
The Company realized an average silver price of
$16.74 per ounce during the second quarter of 2018, representing a
3% decrease compared with the second quarter of 2017 and relatively
consistent compared to $16.76 in the prior quarter.
Revenues generated in the second quarter totaled
$79.7 million in the quarter, an increase of 33% compared to $60.1
million in the second quarter of 2017 primarily due to a 43%
increase in silver equivalent ounces sold, partially offset by a 3%
decrease in average realized silver price compared to the same
quarter of the prior year.
The Company reported a mine operating loss of
$2.3 million compared to mine operating earnings of
$1.4 million in the second quarter of 2017. Despite the
addition of San Dimas, which contributed $5.1 million in mine
operating earnings during its 52 days of operations under First
Majestic management, consolidated mine operating earnings
underperformed the previous year due to a decline in production
from the Del Toro and La Encantada mines.
Cash flow from operations before movements in
working capital and income taxes in the quarter was $14.2 million
($0.08 per share) compared to $18.0 million ($0.11 per share)
in the second 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 and increased mine production from the high-grade
San Javier and La Prieta breccias at the La Encantada mine.
Due to the decision to place the La Guitarra
mine on care and maintenance, the Company was required under
International Financial Reporting Standards to take a one-time,
non-cash write-down of $31.7 million ($20.5 million net of tax)
resulting in a net loss of $40.0 million (loss per share of $0.22)
compared to net earnings of $1.4 million (EPS of $0.01) in the
second quarter of 2017. Other one-time expenses during the quarter
were related to acquisition costs of Primero and financing costs
associated with convertible debentures issued in the first quarter
of 2018.
The Company maintains a healthy treasury with
$109.2 million in cash and cash equivalents at the end of the
quarter, a decrease of $8.9 million compared to $118.1 million at
December 31, 2017. During the quarter, the Company used $135.0
million of its treasury towards the repayment of debt and other
costs associated with the Primero acquisition.
OPERATIONAL HIGHLIGHTS
The table below represents the quarterly
operating and cost parameters at each of the Company’s seven
producing mines.
Second Quarter
Production Summary |
San Dimas |
Santa Elena |
La Encantada |
La Parrilla |
Del Toro |
San Martin |
La Guitarra |
Consolidated |
Ore Processed / Tonnes Milled |
|
85,765 |
|
|
228,054 |
|
|
237,862 |
|
|
123,642 |
|
|
65,879 |
|
|
74,431 |
|
|
35,715 |
|
|
851,349 |
|
Silver Ounces Produced |
|
808,923 |
|
|
535,015 |
|
|
325,603 |
|
|
360,862 |
|
|
167,591 |
|
|
419,815 |
|
|
138,454 |
|
|
2,756,263 |
|
Silver Equivalent Ounces Produced |
|
1,698,382 |
|
|
1,407,880 |
|
|
327,458 |
|
|
605,826 |
|
|
323,714 |
|
|
524,843 |
|
|
249,214 |
|
|
5,137,318 |
|
Cash Costs per Ounce |
$ |
0.24 |
|
$ |
1.39 |
|
$ |
23.05 |
|
$ |
10.42 |
|
$ |
18.01 |
|
$ |
9.68 |
|
$ |
12.89 |
|
$ |
7.59 |
|
All-in Sustaining Cost per Ounce |
$ |
5.41 |
|
$ |
6.60 |
|
$ |
30.81 |
|
$ |
16.39 |
|
$ |
32.08 |
|
$ |
12.49 |
|
$ |
18.11 |
|
$ |
16.43 |
|
Total Production Cost per Tonne |
$ |
148.91 |
|
$ |
55.97 |
|
$ |
31.09 |
|
$ |
49.10 |
|
$ |
69.23 |
|
$ |
72.77 |
|
$ |
83.68 |
|
$ |
61.04 |
|
Total quarterly production increased 32%,
compared to the prior quarter, to a new record of 5,137,318 silver
equivalent ounces. Total production consisted of 2,756,263 ounces
of silver, 25,449 ounces of gold, 3,949,410 pounds of lead and
1,382,760 pounds of zinc. The increase in production was primarily
due to the addition of the San Dimas mine, which contributed 52
days of production during the quarter, producing 808,923 ounces of
silver and 11,348 ounces of gold, or 1,698,382 silver equivalent
ounces. The increase in production was partially offset by
decreases of 28% and 26% in silver equivalents production at La
Encantada and Del Toro, respectively.
COSTS AND CAPITAL
EXPENDITURES
Cash cost per ounce for the quarter was $7.59
per payable ounce of silver, representing a 3% decrease from the
first quarter of 2018. Cash cost per ounce was lower than the
previous quarter primarily due to the addition of San Dimas, which
was producing at a cash cost of $0.24 per ounce, offset by higher
cash cost per ounce incurred at La Encantada and Del Toro due
to declines in production. The Company expects cash costs to
improve to between $6.63 to $7.54 per ounce in the second half of
2018 primarily due to higher silver grades at La Encantada and Del
Toro, the start-up of the 2,000 tpd roaster at La Encantada in the
third quarter, higher production from San Dimas and the placement
of La Guitarra on care and maintenance as of August 3, 2018.
AISC in the second quarter was $16.43,
representing a 3% increase compared to the previous quarter,
primarily attributed to higher general and administrative expenses
and sustaining capital expenditures pursuant to the acquisition of
Primero and the integration of San Dimas into the Company's
portfolio. AISC per ounce was also higher due to lower production
from La Encantada and Del Toro. AISC are expected to decrease
in the second half of 2018 to between $13.28 to $14.84 per ounce
due to the expected operational improvements at La Encantada, Del
Toro, and San Dimas.
Total capital expenditures in the second quarter
were $26.6 million, primarily consisting of $4.0 million at San
Dimas, $4.4 million at Santa Elena, $4.9 million at La Encantada,
$3.3 million at La Parrilla, $3.2 million at Del Toro,
$2.2 million at San Martin and $2.2 million at La Guitarra,
representing a 32% increase compared to the prior quarter primarily
due to the addition of the San Dimas mine. During the quarter, the
Company invested $10.5 million on underground development, $6.3
million on exploration, $7.2 million on property, plant and
equipment and $2.6 million on corporate projects.
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 the San Dimas Silver/Gold Mine, the
Santa Elena Silver/Gold Mine, the La Encantada Silver Mine, the La
Parrilla Silver Mine, the San Martin Silver Mine, the Del Toro
Silver Mine and the La Guitarra Silver Mine (currently on care and
maintenance). Production from these seven mines is projected to be
between 12.0 to 13.2 million ounces of pure silver or 20.5 to 22.6
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.
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