First Majestic Silver Corp.: First Quarter Financial Results
May 14, 2009
FIRST MAJESTIC SILVER CORP.
(FR-T) (the “Company”) is pleased to announce the unaudited financial
results for the Company’s first quarter ending March 31, 2009. 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
1st Quarter Highlights
Mine Operating Earnings
Net Profit after taxes
Direct Cash Costs per ounce
Silver Equivalent Production
1,040,117 oz. Ag eq.
Silver Equivalent Oz. Sold
996,595 oz. Ag eq.
- Total production for the quarter ended March 31, 2009 was 1,040,117
ounces of silver equivalents consisting of 929,964 ounces of silver, 491
ounces of gold and 1,828,739 pounds of lead. This compares to the
1,061,720 ounces of silver equivalents produced in the quarter ended
March 31, 2008, which consisted of 895,358 ounces of silver, 240 ounces
of gold, 1,857,897 pounds of lead and 318,539 pounds of zinc. Total
production for the quarter ended December 31, 2008 was 1,056,219 ounces
of silver equivalents which included 930,120 ounces of silver, 403
ounces of gold and 2,093,988 pounds of lead.
- Gross revenue for the quarter ended March 31, 2009, prior to
smelting, refining, transportation charges and metal deductions, was
$17.5 million compared to $16.2 million in the same quarter of 2008; an
increase of 8%. In the quarter ended March 31, 2009, the Company
shipped 996,595 silver equivalent ounces including 67,620 ounces of
coins, ingots and bullion at an average price of $17.52 per ounce
(US$14.07) compared to 1,019,490 equivalent ounces in the quarter ended
March 31, 2008 at an average price of $15.94 (US$15.87) per ounce. The
Company has been successful in realizing an average selling price of
US$14.07, higher than the average trading price of silver in the quarter
of US$12.61 per ounce (Source - London Bullion Marketing Association).
Compared to the quarter ended December 31, 2008, the Company increased
shipped ounces by 20% compared to the 827,845 ounces of silver
equivalent previously shipped, at an average price of $14.15 per ounce
- The Company generated net income after taxes of $0.9 million
for the first quarter ended March 31, 2009 compared to net income after
taxes of $1.1 million for the quarter ended March 31, 2008, and a net
loss after taxes of $5.5 million for the fourth quarter ended December
31, 2008. The net income after taxes for this quarter was after
recording non-cash stock-based compensation expense of $0.9 million, a
foreign exchange loss of $1.0 million and an income tax recovery of $0.1
- Sales revenue (after smelting, refining, transportation charges
and metals deductions) for the quarter ended March 31, 2009 was $14.4
million; an increase of 11% compared to $13.0 million for the quarter
ended March 31, 2008. Smelting, refining, transportation charges and
metal deductions decreased by 3.3% of gross revenue to $3.1 million in
the quarter ended March 31, 2009 compared to $3.3 million in the quarter
ended March 31, 2008, and $2.6 million in the quarter ended December
31, 2008. This was attributed to the revised smelting and refining
agreements renegotiated effective December 1, 2008; as well as the new
smelting and refining relationships entered into in February 2009.
Average smelting and transportation charges for doré in the quarter
ended March 31, 2009 were US$0.51 per equivalent ounce whereas for
concentrates were US$3.23 per equivalent ounce. The smelting rates for
concentrate were higher than expected as final settlements of
concentrates occur 60 days after shipment, therefore the settlement lag
resulted in older shipments of November and December settling in Q1-2009
under previous smelting agreements.
- Direct cash costs per ounce of silver for the quarter ended
March 31, 2009 decreased to US$4.94 per ounce of silver, compared to
US$6.51 per ounce of silver for the quarter ended March 31, 2008, due to
higher silver ounces produced in 2009 and reduction of mining expenses
and indirect costs. Direct cash costs for the quarter ended December 31,
2008 were US$6.37 per ounce.
- Mine operating earnings for the quarter ended March 31, 2009
were $4.5 million, a decrease of $0.2 million or 4% compared to mine
operating earnings of $4.7 million for the quarter ended March 31, 2008,
and a mine operating loss $1.1 million for the quarter ended December
- The Company had operating income of $1.8 million for the first
quarter ended March 31, 2009 compared to operating income of $1.5
million for the quarter ended March 31, 2008, an increase of $0.3
million or 23%. Operating loss for the fourth quarter ended December 31,
2008 was $3.8 million.
- At the La Encantada Silver Mine, construction is progressing
according to plan on the US$21.6 million, 3,500 tonnes per day (“tpd”)
cyanidation plant. The plant is scheduled to commence operations in
July 2009. Once completed, the new plant is anticipated to produce over
four million ounces of silver annually in the form of doré bars. Total
capitalized construction in progress consisted of $12.9 million with a
further $1.4 million being un-capitalized advances to contractors.
- During the quarter ended March 31, 2009, the Company invested
$1.8 million on its mineral properties and a further $1.6 million on
additions to plant and equipment on a cash basis. This compares to $4.6
million invested on its mineral properties, and a further $3.0 million
on additions to plant and equipment in the quarter ended March 31, 2008,
and $0.7 million invested on its mineral properties, and a further $0.4
million on additions to plant and equipment in the quarter ended
December 31, 2008.
- On March 5, 2009, the Company completed a public offering with a
syndicate of underwriters who purchased 8,487,576 units at an issue
price of $2.50 per unit for gross proceeds to the Company of
The primary focus in the first quarter of 2009 was reducing operating
costs and completing the La Encantada mill expansion program. As shown
in the financial results, the Company has been successful in reducing
operating costs across all of its mines. Presently, only two drill rigs
are operating compared with 23 drill rigs in the third quarter of 2008.
In addition, underground mine development is being financed from cash
flow versus capital as was the case in 2008. These scaled back
exploration and development measures will remain in force for the
balance of 2009.
Prior to the decision to reduce the Company’s exploration program, the
Company met its target on Resource development. The Company released two
NI 43-101 Reports on both the La Parrilla Silver Mine and the San
Martin Silver Mine in the first quarter which substantially increasing
previously released estimates. As at the latest NI 43-101 Reports
published in Q1, the Company has defined a global Resource of 300
million ounces of silver equivalents in all categories.
La Parrilla Silver Mine
At the La Parrilla mine, production continued from the Rosarios/La
Blanca and Quebradillas areas. The flotation circuit was operating more
efficiently and recoveries are now closer to the target of 75%, however,
at the cyanidation circuit recoveries had been affected by the mix of
ores and short leaching times. Efforts are being made in order to
improve the recoveries by increasing leaching time increasing the
oxygenation in the cyanidation circuit.
During the quarter, the La Parrilla mine received the Clean Industry
Certification from PROFEPA (Procuradoria Federal de Protecion al
Ambiente). This certification resulted from a concerted effort over a
period of more than two years.
San Martin Silver Mine
During the quarter the production at the San Martin was focused on
improving head grades and reducing operating costs. Management was very
pleased with the progress at this operation as can be seen by the cost
reductions achieved in the quarter. These improvements were largely
achieved due to a better mix of ore produced from the mine and the
recovery of some backfills and dumps, which allowed the mine to operate
in a more efficient way which resulted in a cost reduction of 61%
compared to the first quarter of 2008.
La Encantada Silver Mine
At the La Encantada mine, a special effort is underway to improve the
recoveries at the flotation plant which had been affected in the last
few quarters by the mix of ore from the Azul y Oro vein which was found
to contain manganese. Several new reagents and different mixes of ores
are being tested in order to improve recoveries. In addition a new
washing screen has been installed in order to wash the dump material
which is anticipated to increase the grades of the recovered ore. This
new process is expected to be operational during the last part of May.
Construction of the new 3500 tpd cyanidation mill continues to be the
primary focus at the La Encantada and is proceeding well. All the
leaching tanks and CCD thickeners are constructed with the installation
of the mechanisms now underway. New pieces of equipment are arriving
regularly and the plant is still anticipated to be commissioned in July.
Once this new circuit is completed, the silver precipitates produced
from the concentrates will be shipped to the La Parrilla mill for the
production of doré bars.
Equally important to increasing silver production is further cost
reductions where possible. The 2009 operating plan thus far represents a
year of reduced operating costs as a result of the Company’s pursuit of
aggressive growth based on the expansion of its operations and
Resources. Management is pleased with the many cost cutting measures
underway, and it is believed that further improvements in profitability
can be achieved with additional improvements expected going forward.
Finally, in this turbulent financial and commodity environment, First
Majestic has been reacting by cutting costs wherever possible. The
Company is continuing to analyze various options to reduce operating
costs and to squeeze out the most optimum margins possible. During the
quarter a new smelting agreement was executed for the sale of all the
lead concentrates produced in 2009, and a new agreement was also signed
for the sale of all doré produced by the Company in 2009. Both these
agreements include terms better than previous agreements and are
expected to go a long way in improving profitability.
First Majestic is a producing silver company focused in México 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.