FIRST MAJESTIC SILVER CORP. (NYSE:AG) (TSX:FR)
(the "Company" or “First Majestic”) is pleased to announce the
consolidated financial results for the Company’s fourth quarter and
year ended December 31, 2017. 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, on
SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts
are in U.S. dollars unless stated otherwise.
2017 Highlights
- Produced 9.7 million ounces of silver, 62,991 ounces of gold,
24.5 million pounds of lead and 3.9 million pounds of zinc.
- Total production reached 16.2 million silver equivalent ounces,
achieving the 2017 total production guidance range of 15.7 million
to 16.6 million ounces.
- All-in Sustaining costs (“AISC”) of $13.82 per payable silver
ounce, beating the 2017 AISC guidance range of $14.40 to $15.50 per
ounce.
- Revenues totaled $252.3 million, representing a 9% decrease
from 2016.
- Mine operating earnings of $16.0 million compared to $49.2
million in 2016.
- Operating cash flows before working capital and taxes of $81.0
million or $0.49 per share (non-GAAP).
- Started construction and assembly of the new 2,000 tpd roasting
facility at La Encantada which is expected to increase annual
silver production to over 4.0 million ounces beginning in Q2
2018.
- Achieved consolidated silver recoveries of 78%, a new annual
Company record, due to ongoing investments in metallurgical
processing and innovation.
- Invested $25.0 million in exploration activities and drilled
156,540 metres across seven assets resulting in numerous
significant discoveries that are expected to increase resources and
life of mine.
- Subsequent to year end, the Company repurchased 230,000 common
shares at an average price of CAD$7.04 per share.
Q4 2017 Highlights
- Produced 2.3 million ounces of silver, or 4.1 million silver
equivalent ounces.
- AISC of $14.13 per payable silver ounce, representing a 10%
increase compared to Q4 2016.
- Revenues totaled $61.2 million, representing an 8% decrease
compared to Q4 2016.
- Mine operating earnings of $1.4 million compared to $9.9
million in Q4 2016.
- Operating cash flows before working capital and taxes of $18.7
million or $0.11 per share (non-GAAP).
- Ended the year with cash and cash equivalents of $118.1
million, down from $129.0 million in 2016.
“First Majestic delivered another solid year,
meeting total production targets and achieving AISC cost guidance,”
said Keith Neumeyer, President and CEO of First Majestic. “2017
remained a catch up year in underground development and exploration
due to the lack of investment over the past three years.
Nevertheless, we were still able to deliver the second highest
production level in the Company’s 15 year history primarily due to
the continued operational strength of the Santa Elena and San
Martin mines.”
“Furthermore, the investments made in 2017 are
expected to generate double digit growth in silver production in
2018 primarily due to higher underground production rates at Santa
Elena and Del Toro, higher silver grades from caving and the
start-up of the new roasting circuit at La Encantada.”
2017 ANNUAL
AND FOURTH QUARTER HIGHLIGHTS
Key Performance
Metrics |
|
2017-Q4 |
|
2016-Q4 |
Change Q4 vs Q4 |
|
2017 |
2016 |
Change 2017 vs 2016 |
|
Operational |
|
|
|
|
|
|
|
|
|
|
Ore
Processed / Tonnes Milled |
|
736,684 |
|
|
844,155 |
|
(13 |
%) |
|
2,981,506 |
|
3,270,162 |
(9 |
%) |
|
Silver
Ounces Produced |
|
2,337,463 |
|
|
2,819,708 |
|
(17 |
%) |
|
9,749,591 |
|
11,853,438 |
(18 |
%) |
|
Silver
Equivalent Ounces Produced |
|
4,065,337 |
|
|
4,380,477 |
|
(7 |
%) |
|
16,207,905 |
|
18,669,800 |
(13 |
%) |
|
Cash
Costs per Ounce (1) |
|
$6.76 |
|
|
$6.49 |
|
4 |
% |
|
$7.04 |
|
$5.92 |
19 |
% |
|
All-in
Sustaining Cost per Ounce (1) |
|
$14.13 |
|
|
$12.90 |
|
10 |
% |
|
$13.82 |
|
$10.79 |
28 |
% |
|
Total
Production Cost per Tonne (1) |
|
$50.81 |
|
|
$42.13 |
|
21 |
% |
|
$50.12 |
|
$43.22 |
16 |
% |
|
Average Realized Silver
Price per Ounce (1) |
|
$16.61 |
|
|
$17.10 |
|
(3 |
%) |
|
$17.12 |
|
$17.16 |
0 |
% |
|
Financial (in $millions) |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$61.2 |
|
|
$66.2 |
|
(8 |
%) |
|
$252.3 |
|
$278.1 |
(9 |
%) |
|
Mine
Operating Earnings (2) |
|
$1.4 |
|
|
$9.9 |
|
(86 |
%) |
|
$16.0 |
|
$49.2 |
(68 |
%) |
|
(Loss)
Earnings before Income Taxes |
|
($69.9 |
) |
|
$1.5 |
|
(4,760 |
%) |
|
($75.3 |
) |
$25.5 |
(395 |
%) |
|
Net
(Loss) Earnings |
|
($56.1 |
) |
|
$1.8 |
|
(3,192 |
%) |
|
($53.3 |
) |
$8.6 |
(719 |
%) |
|
Operating
Cash Flows before Working Capital and Taxes (2) |
|
$18.7 |
|
|
$23.4 |
|
(20 |
%) |
|
$81.0 |
|
$107.3 |
(25 |
%) |
|
Cash and
Cash Equivalents |
|
$118.1 |
|
|
$129.0 |
|
(8 |
%) |
|
$118.1 |
|
$129.0 |
(8 |
%) |
|
Working Capital
(1) |
|
$116.3 |
|
|
$130.6 |
|
(11 |
%) |
|
$116.3 |
|
$130.6 |
(11 |
%) |
|
Shareholders |
|
|
|
|
|
|
|
|
|
|
|
(Loss)
Earnings per Share ("EPS") - Basic |
|
($0.34 |
) |
|
$0.01 |
|
(3,167 |
%) |
|
($0.32 |
) |
$0.05 |
(703 |
%) |
|
Adjusted
EPS (1) |
|
($0.04 |
) |
|
($0.01 |
) |
344 |
% |
|
($0.04 |
) |
$0.12 |
(131 |
%) |
|
Cash Flow
per Share (1) |
|
$0.11 |
|
|
$0.14 |
|
(21 |
%) |
|
$0.49 |
|
$0.67 |
(27 |
%) |
|
|
|
|
|
(1) |
|
|
The Company reports
non-GAAP measures which include cash costs per ounce produced,
all-in sustaining 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. |
|
|
|
|
Full year revenues totaled $252.3 million, a
decrease of $25.8 million or 9% compared to 2016, primarily due
lower production from all mines except for San Martin which
increased 5% compared to 2016.
The Company realized an average silver price of
$17.12 per ounce in 2017, in line with the COMEX annual silver
price average of $17.15 per ounce and consistent compared to the
2016 realized average silver price of $17.16.
Annual mine operating earnings totaled $16.0
million compared to $49.2 million in 2016. The decrease in mine
operating earnings were attributed to lower production, higher
labour costs, as well as higher inflation in Mexico resulting from
the energy reforms which came into effect in early 2017.
Adjusted EPS (non-GAAP), normalized for non-cash
or unusual items such as impairment of non-current assets,
share-based payments and deferred income tax expense or recovery
for the year ended December 31, 2017 was a loss of $0.04, compared
to earnings of $0.12 in 2016. The Company was required to take an
impairment charge on the Del Toro Silver Mine due to the recently
updated NI 43-101 Technical Report. This charge amounted to $65.5
million, or $42.4 million net of tax, resulting in a total net loss
of $53.3 million (loss per share of $0.32) in 2017 compared to
net earnings of $8.6 million (earnings per share of $0.05) in
2016.
Cash flows before movements in working capital
and taxes during the year was $81.0 million ($0.49 per share)
compared to $107.3 million ($0.67 per share) in 2016.
The Company ended 2017 with $118.1 million in
cash and cash equivalents compared to $129.0 million at the end of
2016. In addition, the Company ended the year with a working
capital surplus of $116.3 million compared to $130.6 million at the
end of 2016.
Since December 31, 2017, First Majestic
repurchased and cancelled 230,000 common shares at an average price
of CAD$7.04 per share for a total consideration of CAD$1.6 million
through a normal course issuer bid in the open market as approved
by the Toronto Stock Exchange.
Also, after year end, the Company filed before
the Mexican National Banking and Securities Commission for the
delisting from the Mexican Stock Exchange due to low trading
volumes and high costs associated with regulatory compliance. On
February 21, 2018, the delisting authorization was obtained and the
Company was officially delisted.
Q4 2017 FINANCIAL RESULTS
Revenues generated in the fourth quarter of 2017
totaled $61.2 million, representing an 8% decrease compared to
$66.2 million in the fourth quarter of 2016.
The Company realized an average silver price of
$16.61 per ounce, relatively in line with the COMEX quarterly
silver price average of $16.66 per ounce and representing a 3%
decrease compared with the fourth quarter of 2016.
Mine operating earnings were $1.4 million
compared to $9.9 million in the fourth quarter of 2016. The
decrease was driven by a 7% decrease in production.
After non-cash write-downs, the Company
generated a net loss of $56.1 million (loss per share of $0.34)
compared to net earnings of $1.8 million (EPS of $0.01) in the
fourth quarter of 2016. The decrease of $57.9 million in net
earnings was primarily attributed to a $65.5 million non-cash
impairment charge, or $42.4 million net of tax, on the Del Toro
Silver Mine and the decrease in mine operating earnings.
Cash flows before movements in working capital
and income taxes were $18.7 million ($0.11 per share), compared to
$23.4 million ($0.14 per share) in the fourth quarter of 2016.
FULL YEAR 2017 OPERATIONAL
RESULTS
Annual
Production Summary |
|
Santa Elena |
La Encantada |
La Parrilla |
Del Toro |
San Martin |
La Guitarra |
Consolidated |
Ore Processed / Tonnes Milled |
|
927,737 |
|
825,486 |
|
543,985 |
|
278,204 |
|
278,252 |
|
127,842 |
|
2,981,506 |
|
Silver Ounces Produced |
|
2,282,182 |
|
2,178,032 |
|
1,730,383 |
|
1,124,992 |
|
1,822,297 |
|
611,705 |
|
9,749,591 |
|
Silver Equivalent Ounces Produced |
|
5,927,132 |
|
2,183,899 |
|
2,517,199 |
|
2,237,730 |
|
2,322,835 |
|
1,019,111 |
|
16,207,905 |
|
Cash Costs per Ounce |
|
($1.54) |
|
$12.74 |
|
$11.11 |
|
$5.49 |
|
$6.69 |
|
$11.53 |
|
$7.04 |
|
All-in Sustaining Cost per Ounce |
|
$2.22 |
|
$15.49 |
|
$16.22 |
|
$11.87 |
|
$9.06 |
|
$18.98 |
|
$13.82 |
|
Total Production Cost per Tonne |
|
$52.53 |
|
$32.76 |
|
$46.59 |
|
$61.94 |
|
$70.18 |
|
$90.35 |
|
$50.12 |
|
Total production in 2017 was 16,207,905 silver
equivalent ounces, in line with our 2017 guidance of 15.7 to 16.6
million silver equivalent ounces and represents a decrease of 13%
compared to the previous year. The decrease in metal production can
be attributed to lack of investment in underground development over
the previous three years, which has had a direct impact on
throughputs and grades. This trend is expected to begin to reverse
as a result of 2017 and 2018 investments in development and
exploration. The increase in development and exploration
investments represent 43% over 2015 and 31% over 2016. Production
was also affected this year by one-off illegal work stoppages at
three operations, including the illegal strike at La Encantada
which resulted in 42 lost days in the second quarter, as well as
two seismic events near La Guitarra in the third quarter.
The Company produced 9.7 million ounces of
silver in 2017, representing an 18% decrease compared to 11.9
million ounces produced in the previous year. The decrease in
production was primarily attributed to lower throughput as a result
of the work stoppages and lower head grades.
Cash cost per ounce in the year was $7.04, an
increase of $1.12 per ounce compared to the previous year and at
the low range of the Company's 2017 guidance of $7.00 to $7.75 per
ounce. The increase in cash cost compared to the prior year was
primarily due to lower production and higher energy costs
attributed to the Mexican government's oil and gas deregulation
policies that came into effect in the first quarter of 2017,
partially offset by a decrease in smelting and refining costs as a
result of favourable contract negotiations and higher by-product
credits per ounce.
AISC per ounce in 2017 was $13.82, an increase
of $3.03 per ounce compared to the previous year and below the 2017
annual guidance of $14.40 to $15.50 per ounce. The increase in AISC
per ounce was attributed to higher cash costs and higher sustaining
capital expenditures as the Company began re-investing in
development and exploration at each unit.
The Company’s total capital expenditures in 2017
was $81.4 million, an increase of 24% compared to the prior
year, consisting of $32.7 million for underground development,
$25.0 million in exploration and $23.7 million in property, plant
and equipment. Total investments, on a mine-by-mine basis,
primarily consisted of $18.0 million at Santa Elena,
$12.5 million at La Encantada, $8.6 million at Del Toro, $15.3
million at La Parrilla, $10.8 million at San Martin and
$9.8 million at La Guitarra.
As previously announced, the Company plans to
invest a total of $125.4 million on capital expenditures in 2018
consisting of $51.0 million for sustaining requirements and $74.4
million for expansionary projects. The Company is preparing for
future production growth by developing additional mine production
levels at each of the mining units, completing the roasting circuit
and commencing block caving production at La Encantada, in addition
to the exploration work at Plomosas which is expected to result in
an initial resource estimate by the end of 2018. First Majestic
will remain nimble and ensure its capital investments are flexible
to account for changing commodity prices.
Q4 2017 OPERATIONAL RESULTS
Fourth Quarter
Production Summary |
|
Santa Elena |
La Encantada |
La Parrilla |
Del Toro |
San Martin |
La Guitarra |
Consolidated |
Ore Processed / Tonnes Milled |
|
232,575 |
|
198,845 |
|
138,124 |
|
56,753 |
|
72,503 |
|
37,885 |
|
736,684 |
|
Silver Ounces Produced |
|
582,789 |
|
486,514 |
|
401,090 |
|
185,695 |
|
514,678 |
|
166,698 |
|
2,337,463 |
|
Silver Equivalent Ounces Produced |
|
1,653,941 |
|
489,071 |
|
643,799 |
|
369,992 |
|
617,879 |
|
290,654 |
|
4,065,337 |
|
Cash Costs per Ounce |
|
($6.93 |
) |
$15.23 |
|
$11.21 |
|
$12.53 |
|
$7.55 |
|
$11.21 |
|
$6.76 |
|
All-in Sustaining Cost per Ounce |
|
($2.01) |
|
$19.20 |
|
$15.28 |
|
$25.48 |
|
$9.73 |
|
$17.77 |
|
$14.13 |
|
Total Production Cost per Tonne |
|
$47.13 |
|
$36.42 |
|
$48.00 |
|
$72.77 |
|
$73.14 |
|
$83.61 |
|
$50.81 |
|
Total production reached 4.1 million silver
equivalent ounces in the fourth quarter, representing a 2% increase
compared to the previous quarter, 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. The most significant production
increase occurred at the La Guitarra operation which recorded a 59%
increase in total silver equivalents as the mine recovered from
seismic issues in the previous quarter along with new areas in the
Coloso mine that were brought into production.
Cash cost per ounce in the quarter was $6.76, a
decrease of $1.39 per ounce compared to the previous quarter. The
decrease in cash cost per ounce was primarily attributed to higher
by-product credits from gold and zinc production as well as a
weaker Mexican peso which depreciated 6% against the U.S.
dollar.
All-in sustaining cost per ounce (“AISC”) in the
fourth quarter was $14.13, a decrease of $1.23 per ounce compared
to the previous quarter, primarily due to lower cash costs.
Capital expenditures in the fourth quarter were
$23.4 million, an increase of 3% compared to the prior quarter,
primarily consisting of $4.6 million at Santa Elena, $3.9 million
at La Encantada, $2.6 million at Del Toro, $4.6 million at La
Parrilla, $3.0 million at San Martin and $2.8 million at La
Guitarra.
ABOUT THE COMPANY
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
INFORMATION
This 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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