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 third quarter ended September 30, 2017. 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.
THIRD QUARTER 2017 HIGHLIGHTS(compared to
Second Quarter 2017)
- Silver equivalent production increased 3% to 4.0 million
ounces
- Silver production increased 6% to 2.4 million ounces
- Revenues increased 3% to $61.9 million
- Mine operating earnings increased 126% to $3.2 million
- Cash flow per share was $0.11 per share (non-GAAP), a decrease
of 2% from the prior quarter
- All-in sustaining costs (“AISC”) increased 8% to $15.73 per
payable silver ounce
- Cash costs increased 15% to $8.52 per payable silver ounce (net
of by-product credits)
- Net loss of $1.3 million (Basic loss per share of $0.01)
- Adjusted net loss, excluding non-cash and non-recurring items,
totalled $0.2 million (Adjusted loss per share of $0.00)
- Realized average silver price of $17.11 per ounce, relatively
consistent with the prior quarter
- Healthy balance sheet with $120.8 million in cash and cash
equivalents and only $34.7 million in debt facilities at the end of
the quarter
“In the third quarter, we delivered higher
production levels resulting in an increase in revenues and
operating earnings compared to the prior quarter,” stated Keith
Neumeyer, President and CEO of First Majestic. “In addition, we
successfully renegotiated our smelting and refining terms which
reflected in a significant 42% savings in treatment costs in the
quarter. However, lower lead production at Del Toro and La Parrilla
reduced by-product credits, and along with a stronger Mexican Peso,
resulted in a slightly higher AISC. We remain focused on developing
our key growth projects, most importantly our roaster project,
which is expected to significantly increase production levels at La
Encantada beginning in the second quarter of 2018.”
OPERATIONAL AND FINANCIAL
HIGHLIGHTS
Key Performance
Metrics |
|
2017-Q3 |
|
2017-Q2 |
Change Q3 vs Q2 |
|
2016-Q3 |
Change Q3 vs Q3 |
|
2017-YTD |
Operational |
|
|
|
|
|
|
|
|
|
|
Ore
Processed / Tonnes Milled |
|
|
730,652 |
|
|
|
691,833 |
|
6 |
% |
|
|
838,233 |
|
(13 |
%) |
|
|
2,244,822 |
|
Silver
Ounces Produced |
|
|
2,415,962 |
|
|
|
2,287,188 |
|
6 |
% |
|
|
3,114,627 |
|
(22 |
%) |
|
|
7,412,128 |
|
Silver
Equivalent Ounces Produced |
|
|
3,986,274 |
|
|
|
3,888,944 |
|
3 |
% |
|
|
4,524,619 |
|
(12 |
%) |
|
|
12,142,568 |
|
Cash
Costs per Ounce (1) |
|
$8.52 |
|
|
$7.41 |
|
15 |
% |
|
$5.84 |
|
46 |
% |
|
$7.51 |
|
All-in
Sustaining Cost per Ounce (1) |
|
$15.73 |
|
|
$14.58 |
|
8 |
% |
|
$10.52 |
|
50 |
% |
|
$14.10 |
|
Total
Production Cost per Tonne (1) |
|
$54.15 |
|
|
$51.53 |
|
5 |
% |
|
$43.11 |
|
26 |
% |
|
$49.89 |
|
Average Realized Silver
Price per Ounce (1) |
|
$17.11 |
|
|
$17.17 |
|
— |
% |
|
$19.72 |
|
(13 |
%) |
|
$17.29 |
|
Financial (in $millions) |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$61.9 |
|
|
$60.1 |
|
3 |
% |
|
$79.3 |
|
(22 |
%) |
|
$191.1 |
|
Mine
Operating Earnings (2) |
|
$3.2 |
|
|
$1.4 |
|
126 |
% |
|
$20.0 |
|
(84 |
%) |
|
$14.6 |
|
(Loss)
Earnings before Income Taxes |
|
($1.3 |
) |
|
($6.7 |
) |
(80 |
%) |
|
$13.4 |
|
(110 |
%) |
|
($5.4 |
) |
Net
(Loss) Earnings |
|
($1.3 |
) |
|
$1.4 |
|
(193 |
%) |
|
$8.1 |
|
(116 |
%) |
|
$2.8 |
|
Operating
Cash Flows before Working Capital and Taxes (2) |
|
$17.7 |
|
|
$18.0 |
|
(2 |
%) |
|
$35.4 |
|
(50 |
%) |
|
$62.3 |
|
Cash and
Cash Equivalents |
|
$120.8 |
|
|
$126.9 |
|
(5 |
%) |
|
$122.5 |
|
(1 |
%) |
|
$120.8 |
|
Working Capital
(1) |
|
$126.3 |
|
|
$130.9 |
|
(4 |
%) |
|
$143.8 |
|
(12 |
%) |
|
$126.3 |
|
Shareholders |
|
|
|
|
|
|
|
|
|
|
Earnings
(Loss) per Share ("EPS") - Basic |
|
($0.01 |
) |
|
$0.01 |
|
(193 |
%) |
|
$0.05 |
|
(116 |
%) |
|
$0.02 |
|
Adjusted
EPS (1) |
|
$0.00 |
|
|
($0.02 |
) |
(96 |
%) |
|
$0.07 |
|
101 |
% |
|
$0.00 |
|
Cash Flow
per Share (1) |
|
$0.11 |
|
|
$0.11 |
|
(2 |
%) |
|
$0.22 |
|
(51 |
%) |
|
$0.38 |
|
(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.(2) The Company reports additional GAAP measures which
include mine operating earnings and operating cash flows before
movements in working capital and income taxes. These additional
financial measures are intended to provide additional information
and do not have a standardized meaning prescribed by IFRS.
FINANCIAL REVIEW
The Company realized an average silver price of
$17.11 per ounce during the third quarter of 2017, representing a
13% decrease compared with the third quarter of 2016 and relatively
consistent compared to $17.17 in the prior quarter.
Revenues generated in the third quarter totaled
$61.9 million, a decrease of 22% compared to $79.3 million in the
third quarter of 2016 primarily due to a 13% decrease in average
realized silver price and an 11% decrease in silver equivalent
ounces sold.
Mine operating earnings were $3.2 million in the
quarter compared to $20.0 million in the third quarter of 2016. The
decrease in mine operating earnings was primarily affected by the
$17.4 million decrease in revenue, as mine operating costs remained
relatively consistent compared to the same quarter of the prior
year. Higher energy costs, labour costs and foreign exchange
contributed to lower operating earnings which would normally be
reduced with the decrease in production.
Cash flow from operations before movements in
working capital and income taxes in the quarter was $17.7 million
($0.11 per share) compared to $35.4 million ($0.22 per share)
in the third quarter of 2016.
The Company generated a net loss of $1.3 million
(loss per share of $0.01) in the third quarter compared to net
earnings of $8.1 million (EPS of $0.05) in the third quarter
of 2016. The decrease in net earnings was primarily attributed to:
1) $16.8 million decrease in mine operating earnings;
partially offset by: 2) a $3.3 million favourable variance in
foreign exchange gains; and 3) a $5.3 million decrease in income
tax expenses. Excluding all non-cash and non-recurring items, the
Company generated an adjusted loss of $0.2 million (adjusted loss
of $0.00 per share) during the quarter.
The Company maintains a strong treasury with
$120.8 million in cash and cash equivalents at the end of the
quarter, reflecting a 1% decrease compared to the third quarter of
2016. The Company’s working capital position decreased 12% to
$126.3 million compared to $143.8 million at the end of the
same quarter of the prior year.
OPERATIONAL HIGHLIGHTS
The table below represents the quarterly
operating and cost parameters at each of the Company’s six
producing silver mines.
Third Quarter
Production Summary |
|
Santa Elena |
La Encantada |
La Parrilla |
Del Toro |
San Martin |
La Guitarra |
Consolidated |
Ore Processed / Tonnes Milled |
|
|
232,662 |
|
|
212,092 |
|
|
132,389 |
|
|
60,501 |
|
|
69,113 |
|
|
23,896 |
|
|
730,652 |
|
Silver Ounces Produced |
|
|
560,054 |
|
|
609,138 |
|
|
424,358 |
|
|
233,015 |
|
|
471,893 |
|
|
117,504 |
|
|
2,415,962 |
|
Silver Equivalent Ounces Produced |
|
|
1,503,376 |
|
|
610,307 |
|
|
612,116 |
|
|
472,804 |
|
|
604,686 |
|
|
182,986 |
|
|
3,986,274 |
|
Cash Costs per Ounce |
|
$1.39 |
|
$12.47 |
|
$12.26 |
|
$6.41 |
|
$7.11 |
|
$19.02 |
|
$8.52 |
|
All-in Sustaining Cost per Ounce |
|
$4.65 |
|
$14.98 |
|
$18.85 |
|
$12.92 |
|
$10.03 |
|
$31.55 |
|
$15.73 |
|
Total Production Cost per Tonne |
|
$55.65 |
|
$34.77 |
|
$50.75 |
|
$71.80 |
|
$76.81 |
|
$120.09 |
|
$54.15 |
|
Production in the quarter totalled 4.0 million
silver equivalent ounces consisting of 2.4 million ounces of
silver, 15,414 ounces of gold, 5.2 million pounds of lead and
0.9 million pounds of zinc. Compared to the previous quarter, total
production increased by 3% primarily due to a 63% increase in total
production at La Encantada as production rates returned to normal
levels following the 42 day work stoppage, partially offset by a
34% decreased in production at Del Toro and a 20% decrease in
production at La Guitarra.
COSTS AND CAPITAL
EXPENDITURES
Cash cost per ounce in the quarter was $8.52, an
increase of 15% compared to the previous quarter. The increase in
cash cost per ounce was primarily attributed to lower by-product
credits from lower lead production and a stronger Mexican peso
which appreciated 4% against the U.S. dollars, partially offset by
a 42% savings in smelting and refining costs per ounce as a result
of renegotiated concentrate agreements that were effective on July
1, 2017.
For the first nine months of 2017, cash costs
have averaged $7.51 per ounce and remain in line with the Company’s
annual cash cost guidance of $7.00 to $7.75 per payable silver
ounce. In addition, as at September 30, 2017, the Company has
fulfilled the 50,000 ounce threshold under the gold streaming
agreement with Sandstorm Gold Ltd. (“Sandstorm”). As a result, the
selling price to Sandstorm has increased to $450 per ounce from
$350 per ounce.
AISC per ounce in the quarter was $15.73, an
increase of 8% compared to the previous quarter. The increase in
AISC was primarily due to the higher cash costs. For the first nine
months of 2017, AISC have averaged $14.10 per ounce which is below
the Company’s annual AISC cost guidance of $14.40 to $15.50 per
payable silver ounce.
Total capital expenditures in the third quarter
were $22.6 million, an increase of 39% compared to the prior
quarter, primarily consisting of $4.0 million at Santa Elena, $3.4
million at La Encantada, $4.6 million at La Parrilla, $2.6 million
at Del Toro, $3.2 million at San Martin and $2.6 million at La
Guitarra. The increase in capital expenditures is primarily
the result of a 67% increase in exploration drilling across all
assets. Exploration efforts are focused on expanding resources in
known structures and exploring for new deposits, including a new
6,800 metre drill program targeting the Santa Ana and San Judas
veins on the Cumobabi property located south of Santa Elena. As of
September 30, 2017, the Company had completed 74% of the 145,000
metres of the revised annual exploration
program. PROJECTS UPDATE
At the end of the quarter, the construction of
the roaster project at the La Encantada Silver Mine was 74%
complete. The project remains on budget with 64%, or $5.7 million
of the estimated $8.9 million in total capital investments, having
already been spent. During the quarter, detail designs for the ore
and reagent feeding systems, the roasted ore discharge system and
coal storage were completed. Site preparations, including
excavations and pouring of concrete pads for foundations were 90%
complete at quarter end. Shipment of component modules to site and
the installation of the dryer and dust collection systems are
expected to commence in the fourth quarter. The 2,000 tpd roaster,
which is scheduled for start-up in the second quarter of 2018, is
designed to increase the metallurgical recoveries of the existing
tailings material by decoupling silver from manganese and other
refractory minerals prior to entering the cyanidation process. Once
at full capacity, annual doré production at La Encantada is
expected to increase by approximately 1.5 million ounces of silver
per year.
The Company also began testing microbubble
flotation technology at its Central Lab at La Parrilla during the
third quarter. Ore samples from La Guitarra were shipped to site
and tested in a six-inch diameter pilot microbubble column.
Preliminary results show metallurgical recoveries improved by up to
4% in addition to producing higher concentrate grades. Ore samples
from La Parrilla are expected to undergo microbubble pilot testing
in the fourth quarter of 2017, followed by Del Toro samples in the
first quarter of 2018. Pending successful results, the Company
hopes to begin installing full scale microbubble columns for the
cleaning circuits at the various operations throughout 2018.
Underground development in the third quarter
focused on opening a new production area at La Parrilla (located
below Quebradillas) called the Borregos area, 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. The most significant increase in underground
development occurred at La Encantada to target areas of the mine
known to have higher grades, most notably the San Javier and 990
areas, as well as the San Francisco dyke. Development and
reinforcement for caving in the San Javier area have been completed
and vertical raises are planned to be completed in the fourth
quarter. The San Javier area is expected to begin initial
production by mid-2018 and produce silver grades ranging between
150 to 200 g/t. As of September 30, 2017, the Company had
completed 67% of the 64,720 metres of the revised underground
development planned for 2017.
At the Plomosas Silver project, three drill rigs
were active on site completing 4,520 metres of diamond drilling
during the third quarter, compared to 2,675 metres in the previous
quarter. Surface exploration drilling is focused around the San
Juan mine area. The development program continued to advance on the
crosscuts for three underground drill stations and has completed
488 of the planned 520 metres. Drilling and development programs
are designed to provide geological and analytical data in order to
prepare a Technical Report with resource estimates and a
Preliminary Economic Assessment in late 2018.
ABOUT FIRST MAJESTIC
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 10.0 to 10.6 million ounces of
pure silver or 15.7 to 16.6 million ounces of silver equivalents in
2017.
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 Aug 2024 to Sep 2024
First Majestic Silver (NYSE:AG)
Historical Stock Chart
From Sep 2023 to Sep 2024