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 third quarter ended September 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.
THIRD QUARTER 2018 HIGHLIGHTS
- Record silver equivalent production of 6.7 million ounces, a
31% increase compared to Q2 2018
- Record silver production of 3.5 million ounces, a 27% increase
compared to Q2 2018
- Revenues of $88.5 million, an 11% increase compared to Q2
2018
- Mine operating earnings of ($0.1) million
- Cash flow per share was $0.11 per share (non-GAAP)
- Cash costs were $6.85 per payable silver ounce (net of
by-product credits), a 10% decrease compared to Q2 2018
- All-in sustaining costs (“AISC”) were $15.12 per payable silver
ounce, an 8% decrease compared to Q2 2018
- Realized average silver price reached a nine year low of $14.66
per ounce, a 12% decrease compared to Q2 2018
- Adjusted net earnings of ($6.4) million or ($0.03) per
share
- Invested $34.7 million on capital expenditures
- Ended the quarter with $72.4 million in cash and cash
equivalents
“During the third quarter, we delivered record
silver production resulting in higher revenues and cash flows
compared to the previous quarter even when we experienced a nine
year low in average quarterly silver prices,” stated Keith
Neumeyer, President and CEO of First Majestic. “Consolidated cash
costs and AISC decreased nicely to $6.85 and $15.12, respectively,
due to improved economies of scale and higher production from San
Dimas. Cost cutting efforts remain a focus of the Company by
reducing capital investments at our smaller mines, innovation
projects, layoffs and overall curtailment of spending.”
OPERATIONAL AND FINANCIAL
HIGHLIGHTS
Key Performance
Metrics |
|
2018-Q3 |
|
2018-Q2 |
Change Q3 vs Q2 |
|
2017-Q3 |
Change Q3 vs Q3 |
|
2018-YTD |
|
2017-YTD |
Change |
Operational |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore Processed /
Tonnes Milled |
|
|
864,056 |
|
|
|
851,349 |
|
1 |
% |
|
|
730,652 |
|
18 |
% |
|
|
2,525,180 |
|
|
|
2,244,822 |
|
12 |
% |
Silver
Ounces Produced |
|
|
3,505,344 |
|
|
|
2,756,263 |
|
27 |
% |
|
|
2,415,962 |
|
45 |
% |
|
|
8,428,636 |
|
|
|
7,412,128 |
|
14 |
% |
Silver
Equivalent Ounces Produced |
|
|
6,740,315 |
|
|
|
5,137,318 |
|
31 |
% |
|
|
3,986,274 |
|
69 |
% |
|
|
15,757,310 |
|
|
|
12,142,568 |
|
30 |
% |
Cash
Costs per Ounce (1) |
|
$6.85 |
|
|
$7.59 |
|
(10 |
%) |
|
$8.15 |
|
(16 |
%) |
|
$7.34 |
|
|
$7.13 |
|
3 |
% |
All-in
Sustaining Cost per Ounce (1) |
|
$15.12 |
|
|
$16.43 |
|
(8 |
%) |
|
$15.36 |
|
(2 |
%) |
|
$15.78 |
|
|
$13.72 |
|
15 |
% |
Total
Production Cost per Tonne (1) |
|
$68.87 |
|
|
$61.04 |
|
13 |
% |
|
$54.15 |
|
27 |
% |
|
$59.17 |
|
|
$49.89 |
|
19 |
% |
Average Realized Silver
Price per Ounce (1) |
|
$14.66 |
|
|
$16.74 |
|
(12 |
%) |
|
$17.11 |
|
(14 |
%) |
|
$15.89 |
|
|
$17.29 |
|
(8 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial (in
$millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$88.5 |
|
|
$79.7 |
|
11 |
% |
|
$61.9 |
|
43 |
% |
|
$226.8 |
|
|
$191.1 |
|
19 |
% |
Mine
Operating (Loss) Earnings |
|
($0.1 |
) |
|
($2.3 |
) |
94 |
% |
|
$3.2 |
|
(105 |
%) |
|
($2.9 |
) |
|
$14.6 |
|
(120 |
%) |
Net
Earnings (Loss) |
|
$5.9 |
|
|
($40.0 |
) |
115 |
% |
|
($1.3 |
) |
547 |
% |
|
($39.7 |
) |
|
$2.8 |
|
(1,513 |
%) |
Operating
Cash Flows before Working Capital and Taxes |
|
$20.7 |
|
|
$14.2 |
|
45 |
% |
|
$17.7 |
|
17 |
% |
|
$50.6 |
|
|
$62.3 |
|
(19 |
%) |
Cash and
Cash Equivalents |
|
$72.4 |
|
|
$109.2 |
|
(34 |
%) |
|
$120.8 |
|
(40 |
%) |
|
$72.4 |
|
|
$120.8 |
|
(40 |
%) |
Working Capital
(1) |
|
$127.8 |
|
|
$141.4 |
|
(10 |
%) |
|
$126.3 |
|
1 |
% |
|
$127.8 |
|
|
$126.3 |
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) per Share ("EPS") - Basic |
|
$0.03 |
|
|
($0.22 |
) |
114 |
% |
|
($0.01 |
) |
482 |
% |
|
($0.22 |
) |
|
$0.02 |
|
(1,394 |
%) |
Adjusted
EPS (1) |
|
($0.03 |
) |
|
($0.07 |
) |
53 |
% |
|
$0.00 |
|
(3,241 |
%) |
|
($0.16 |
) |
|
$0.00 |
|
31,904 |
% |
Cash Flow
per Share (1) |
|
$0.11 |
|
|
$0.08 |
|
36 |
% |
|
$0.11 |
|
— |
% |
|
$0.28 |
|
|
$0.38 |
|
(26 |
%) |
|
- 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
During Q3 2018, the Company realized an average
silver price of $14.66 per ounce, representing a 14% decrease
compared with Q3 2017 and a 12% decrease compared to Q2 2018.
Revenues generated in the quarter totaled $88.5
million, an increase of 43% compared to $61.9 million in Q3 2017
primarily due to a 69% increase in silver equivalent ounces sold,
partially offset by the 14% decrease in average realized silver
price.
The Company generated net earnings of $5.9
million, or $0.03 per share, compared to net earnings of ($1.3)
million, or ($0.01) per share, in Q3 2017. The increase in net
earnings was primarily due to a $15.5 million increase in deferred
income tax recovery driven by foreign exchange, partially offset by
decrease in operating earnings which were affected by a 14%
decrease in silver price, higher general and administrative
expenses for integration of Primero Mining Corp. and higher
financing costs associated with the convertible debentures issued
in Q1 2018. Excluding all non-cash and non-recurring items, the
Company generated adjusted earnings of ($6.4) million, or ($0.03)
per share, during the quarter.
The Company reported mine operating earnings of
($0.1) million in Q3 2018 compared to mine operating earnings of
$3.2 million in Q3 2017. Despite the addition of San Dimas,
which contributed $13.0 million in mine operating earnings from a
full quarter of production, mine operating earnings were lower
compared to the same quarter of the previous year due to lower
silver prices and a decline in production from La Parrilla, La
Encantada, Del Toro and La Guitarra.
Cash flow from operations before movements in
working capital and income taxes in the quarter was $20.7 million,
or $0.11 per share, compared to $17.7 million, or $0.11 per
share, in the Q3 2017.
The Company maintains a healthy treasury with
$72.4 million in cash and cash equivalents at the end of the
quarter, a decrease of $36.8 million compared to $109.2 million at
the end of Q2 2018. The decrease was primarily attributed to
movements in working capital items in relation to the Primero
acquisition, including a $5.9 million decrease in trade and other
payables as First Majestic began paying down overdue liabilities
assumed from the Primero acquisition and a $12.0 million increase
in value added taxes receivable as a result of delays in recovery
from the Mexican tax authority, the Servicio de Administracion
Tributaria ("SAT"), as Primero was 18 months behind on its filings
when First Majestic acquired the San Dimas mine. Since acquisition,
the Company has accelerated its filings and all filings have since
been filed as of the end of October. The Company has been supplying
additional information requested by SAT as part of the review
process and the Company expects the amounts to be refunded or
offset against future income tax payments.
OPERATIONAL HIGHLIGHTS
The table below represents the quarterly
operating and cost parameters at each of the Company’s mining
operations.
Production
Summary |
San Dimas |
Santa Elena |
La Encantada |
La Parrilla |
Del Toro |
San Martin |
La Guitarra(1) |
Consolidated |
Ore Processed /
Tonnes Milled |
|
176,884 |
|
|
225,873 |
|
|
196,030 |
|
|
117,130 |
|
|
65,323 |
|
|
67,926 |
|
|
14,891 |
|
|
864,056 |
|
Silver Ounces Produced |
|
1,445,918 |
|
|
598,693 |
|
|
378,983 |
|
|
330,047 |
|
|
231,350 |
|
|
438,061 |
|
|
82,292 |
|
|
3,505,344 |
|
Silver Equivalent Ounces Produced |
|
3,225,352 |
|
|
1,475,635 |
|
|
379,773 |
|
|
537,986 |
|
|
427,218 |
|
|
557,746 |
|
|
136,605 |
|
|
6,740,315 |
|
Cash Costs per Ounce |
($0.40 |
) |
$5.77 |
|
$21.15 |
|
$16.29 |
|
$13.07 |
|
$9.78 |
|
$6.99 |
|
$6.85 |
|
All-in Sustaining Cost per Ounce |
$6.74 |
|
$9.03 |
|
$27.25 |
|
$23.34 |
|
$24.48 |
|
$13.37 |
|
$12.30 |
|
$15.12 |
|
Total Production Cost per Tonne |
$105.91 |
|
$63.15 |
|
$40.20 |
|
$58.18 |
|
$73.50 |
|
$88.15 |
|
$68.47 |
|
$68.87 |
|
|
- La Guitarra was placed on care and maintenance on August 3,
2018.
Total quarterly production increased 31%,
compared to the prior quarter, to a new record of 6,740,315 silver
equivalent ounces. Total production consisted of 3,505,344 ounces
of silver, 35,260 ounces of gold, 4,443,290 pounds of lead and
1,234,385 pounds of zinc. The increase in production was primarily
due to a full quarter of production from the San Dimas operation,
as well as increases in consolidated silver and gold grades of 19%
and 35%, respectively.
COSTS AND CAPITAL
EXPENDITURES
Cash cost per ounce for the quarter was $6.85
per payable ounce of silver, a decrease of 10% from $7.59 per ounce
in Q2 2018. Cash cost per ounce was lower than the previous quarter
primarily attributed to increased silver production and gold
by-product credits from a full quarter of production by the San
Dimas mine, partially offset by higher energy costs as electricity
and diesel rates both increased during the quarter.
AISC in Q3 2018 was $15.12, a decrease of 8% or
$1.31 per ounce compared to Q2 2018, primarily attributed to
improved economies of scale attributed to an increase of payable
silver ounces produced from the San Dimas mine.
Total capital expenditures in the third quarter
were $34.7 million, primarily consisting of $9.1 million at San
Dimas, $5.9 million at Santa Elena, $5.6 million at La Encantada,
$4.4 million at La Parrilla, $4.1 million at Del Toro,
$2.7 million at San Martin and $0.9 million at La
Guitarra.
As a result of the continued weakness in metal
prices, the Company has updated its 2018 capital budget program and
has reduced investments by $33.9 million to $114.8 million
consisting of $55.7 million for sustaining investments and $59.1
million for expansionary projects. This represents a 23% decrease
compared to the previous capital budget of $148.7 million. The
revised annual budget includes capital investments totaling $56.5
million to be spent on underground development, $27.5 million
towards property, plant and equipment, $22.7 million in exploration
and $8.1 million towards corporate automation and innovation
projects. Total capital expenditures in the first three quarters of
2018 totalled $81.4 million, representing approximately 71% of
the $114.8 million revised budget.
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 and the Del Toro
Silver Mine. Production from these mines are projected to be
between 12.0 to 13.2 million silver ounces or 20.5 to 22.6 million
silver equivalent ounces 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 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. 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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