First Majestic Silver Corp.: Second Quarter Financial Results
August 15, 2008
MAJESTIC SILVER CORP. (FR-T) (the “Company”) is pleased to announce the
unaudited financial results for the Company’s second quarter ending
June 30, 2008. The full version of the financial statements can be
viewed on the Company’s web site at www.firstmajestic.com
or on SEDAR at www.sedar.com
2nd Quarter Highlights
Mine Operating Earnings
Cash Cost per ounce
Silver Equivalent Production
Silver Equivalent Oz. Sold
- Sales revenues for the quarter (after smelting charges) were
$11.4 million; an increase of 6% compared to $10.8 million for the
quarter ended June 30, 2007. Gross revenues for the quarter, prior to
smelting charges were $15.9 million.
- A marked improvement to direct cash costs per ounce of
silver produced during the quarter ended June 30, 2008 was achieved
primarily due to the improvements underway at the San Martin Silver Mine
which amounted to US$4.84 per ounce compared to the previous quarter
ended March 31, 2008 of US$6.51.
- Mine operating earnings for the quarter amounted to $2.2 million, compared to $1.1 million for the quarter ended June 30, 2007.
- Smelting charges for the quarter increased
significantly to $4.47 million as a result of a new agreement signed
with Peñoles. The most impacted mine was the La Encantada as 100% of its
production is in the form of concentrates. The present expansion
program underway at La Encantada is converting the mill from concentrate
production to doré production which will come into effect in early
2009. As a result of higher charges affecting all mining companies in
Mexico who sell their concentrates to Peñoles, management is reviewing
its alternatives to mitigate the smelting charges going forward. The
adoption of new technologies which may affect the amounts and qualities
of concentrates produced are being investigated as well as establishing
new buyers for concentrate production.
- Total quarterly production consisted of 1,271,141
ounces of silver equivalents, including 1,109,821 ounces of silver, 482
ounces of gold, and 1,987,551 pounds of lead. The Company shipped
892,406 payable ounces of silver equivalent in the quarter resulting in
an increase of 11% over the 801,324 payable ounces of silver equivalent
sold in the quarter ended June 30, 2007. The remaining silver produced
in the quarter was in inventory at the end of the period.
- The Company realized a price of US$17.38 (CDN$17.82)
per ounce of silver sold in the quarter which is higher than the average
trading price of US$17.17 per ounce.
- The Company generated an operating loss of $0.6 million
for the quarter, compared to an operating loss of $1.5 million for the
quarter ended June 30, 2007.
- The Company generated a net loss of $0.3 million for
the quarter ended June 30, 2008, compared to a loss of $0.7 million for
the quarter ended June 30, 2007. The net income for this quarter was
after deducting a non-cash stock-based compensation expense of $670,616
(2007 - $ 775,532).
- The Company has been extracting ore from the Del Toro
Silver Mine (formerly referred to as the Chalchihuites Group of
Properties) over the past two quarters. As a result of the material
volumes being extracted during this quarter and as is anticipated going
forward, Del Toro is now considered to be in the early stage of
production. The ore extracted is being shipped, processed and blended at
the La Parrilla mill. For the second quarter ending June 30, 2008,
15,261 tonnes were extracted from Del Toro, resulting in production of
117,120 ounces of silver equivalents, and allowing quarterly production
to increase at La Parrilla to 72,650 tonnes (95% of capacity).
Production and the resulting costs associated with mining activity at
Del Toro are included in La Parrilla’s costs and operating results.
- The Company currently has more than $46 million in its
treasury, is generating significant cash flows from operations, and has
sufficient capital to support its operating and current requirements and
current expansion plans.
- During the quarter, the Company invested $12,096,777 in
capital expenditures on mill expansions, mine development, exploration
and equipment throughout its operations and projects.
The Company continues to focus its efforts on production growth,
Resource and Reserve growth and reducing costs in order to improve
profitability. Mill expansions are presently underway at each operation
with the largest expansion program taking place at the La Encantada
Silver Mine. Management is very much focused on executing its business
plan by continuing the ongoing improvements at each mine, and achieving
production and resource targets going forward. In addition to
increasing production and improving profitability, continued increases
in NI 43-101 compliant silver Resources is a key goal. As at the latest
NI 43-101 Reports, the Company has defined a global Resource of 184
million ounces of Silver equivalents. Twenty two drill rigs are
presently focused on further Resource development. Each of the Company’s
NI 43-101 Reports will be updated by year end and are expected to show
substantial increases. The Company’s primary focus is to build long term
sustainable and profitable mining operations.
La Parrilla Silver Mine
As part of the ongoing improvements at the La Parrilla, during the
quarter within the mill, two new filter presses were delivered and
installed. Also, construction of two new leaching tanks and one
additional thickener tank commenced. Recoveries and capacity are
expected to improve once these new tanks come online in the third
quarter. At the mine, preparation of the lower levels within the
Rosarios area and the addition of a long hole drilling machine is now
allowing for an increase in production and improved grades from the
sulphides area. Seven drill rigs are presently active which are focusing
on drilling out NI 43-101 compliant Resources. A new updated NI 43-101
report is expected to be released prior to year end.
San Martin Silver Mine
At San Martin during the quarter the primary focus was a change in
mining methods that has resulted in productivity improvements and
reduction in costs. The changes have allowed for a reduction of
development and improvement in the use of the underground fleet of
equipment. In addition, a new portable screen was installed at the mine
in order to take advantage of some of the backfill and dumps left from
previous years of operation. Another focus has been; in order to achieve
certification as a “clean industry” at the mill, reinforcement of older
leaching tanks is in process, construction of a complete spillage
control system was completed, a new dust collector within the crushing
area was installed and a fumes control system was installed within the
smelter area. Also, the flotation circuit continues to be expanded and
improved with the installation of the two new thickeners and filters.
Once completed, it is anticipated that a higher quality concentrate will
be produced. Nine drill rigs are presently exploring and developing
Resources at San Martin. An updated NI 43-101 is expected to be released
prior to year end.
La Encantada Silver Mine
Construction of the new 3500tpd cyanidation mill is going well at the La
Encantada. Three flat bed trucks of equipment have arrived since
construction commenced and 17 trailers are presently waiting at the US
border. In addition to this major construction project, several
additional pieces of underground equipment were added to the operations
and improvements in the underground electric installations were
completed. Three drill rigs commenced drilling during the quarter from
underground and are showing good signs of early successes. In addition
to exploration successes during the quarter, development has been going
well with several new areas within the mine being opened for production.
Within the mill, the replacement of the secondary crusher was completed
and an upgrade to the flotation cells has allowed a better quality of
the lead concentrate production which has helped to compensate the
increase the increase in smelting costs. An updated NI 43-101 is
expected to be released prior to year end.
Equally as important to increasing production is costs savings. 2008
still represents a year of high expenses as a result of the present
growth underway. In addition, the Company was negatively impacted from
higher smelting costs during the quarter. Management is pleased by the
many improvements in costs which can be seen in the second quarter,
however, further improvements in profitability can be made and are
expected going forward as smelting costs are reduced and expenses come
down. It’s important to note that one of the primary drivers of costs
savings is the use of new equipment. The Company is now in the third
year of a major fleet expansion and replacement program with Sandvik. In
order to increase mining efficiencies and tonnages, 21 pieces of
underground equipment were ordered for 2008. Nine pieces have been
received of which three were delivered in this quarter. These new pieces
of equipment include scoop-trams, underground trucks and jumbos. These
same efficiencies can be seen in mill operations as new components
replace older components.
Other developments that are either underway or in the planning stage,
include: an extensive regional geophysics program was completed at the
La Encantada during the 2nd quarter; expansion of the crushing area
within the San Martin mill is in the final planning stage; the Del Toro
Silver Mine (previously referred to as Chalchihuites) is undergoing an
extensive underground development program including diamond drilling in
order to release the first NI 43-101 compliant Resource estimate in the
third quarter; also, at the Cuitaboca project the exploration and
development program is continuing which is also anticipated to result in
the release of a NI 43-101 Report.
First Majestic is a producing silver company focused in Mexico and is
aggressively pursuing its business plan to become a senior silver
producer through the development of its existing assets and the pursuit
through acquisition of additional assets that contribute to achieving
its corporate growth objectives.
FOR FURTHER INFORMATION contact firstname.lastname@example.org
, visit our website at www.firstmajestic.com
or call our toll free number 1.866.529.2807.
FIRST MAJESTIC SILVER CORP.
Keith Neumeyer, President & CEO
This press release includes certain “Forward-Looking Statements”
within the meaning of section 21E of the United States Securities
Exchange Act of 1934, as amended. All statements, other than statements
of historical fact, included herein, including without limitation,
statements regarding potential mineralization and reserves, exploration
results and future plans and objectives of First Majestic Silver Corp.
are forward-looking statements that involve various risks and
uncertainties. There can be no assurance that such statements will prove
to be accurate and actual results and future events could differ
materially from those anticipated in such statements.