First Majestic Produces a New Quarterly Record of 3.27 Million Silver Eqv. Ounces
July 10, 2013
First Majestic Silver Corp. (“First Majestic” or the “Company”) is
pleased to announce that total production at its five operating silver
mines in Mexico for the second quarter ending June 30, 2013, reached a
new quarterly record of 3,268,117 equivalent ounces of silver,
representing a 55% increase compared to the same quarter in 2012.
Total silver production for the quarter consisted of 2,767,966 ounces of
silver, representing an increase of 44% compared to the same quarter in
2012. In addition, 5,946,539 pounds of lead and 2,898,093 pounds of
zinc were produced representing an increase of 98% and 104%,
respectively, compared to the same quarter of the previous year. Also,
1,995 ounces of gold were produced, representing an increase of 274%
compared to the second quarter of 2012.
Keith Neumeyer, President & CEO of First Majestic, states, “The
second quarter was somewhat bitter-sweet as total production achieved a
new quarterly record of over three million ounces for the first time in
the Company’s history while at the same time unfortunately experiencing
one of the most dramatic and violent drops in the price of silver. This
low silver price environment is creating a challenging environment for
many higher-cost primary producers. Our management team has responded
quickly to the situation by implementing prudent cash management
practices and disciplined cost reduction measures to ensure that First
Majestic’s profitability and future growth plans remain intact.”
Production Details Table:
|Consolidated Production Results
|Ore processed/tonnes milled
|Total production - ounces of silver equivalent
|Total silver ounces produced
|Silver Grade (g/t)
|Silver Recovery (%)
|Pounds of lead produced
|Equivalent ounces from lead
|Pounds of zinc produced
|Equivalent ounces from zinc
|Gold ounces produced
|Equivalent ounces from gold
|Tonnes of iron ore produced
|Equivalent ounces from iron
In order to manage in a lower silver price environment, additional budget changes were made, focusing on:
- Reduction of cash costs
- Increase of operating parameters and efficiencies
- Reduction of exploration and development programs
- Reduction of sustaining capital and all-in cash costs
- Reduction of general & administrative costs
- Reduction of warehouse inventories and operating supplies
As announced on May 15, 2013, the Company had cut over US$30.0 million
from its 2013 capital budget primarily in the areas of exploration and
development. Since then, management has cut an additional US$20.0
million, also focusing on reducing exploration and development and
postponing investments in non-critical areas that will not impact
The Company is reaffirming its 2013 production guidance of 11.1 to 11.7
million ounces of pure silver or 12.3 to 13.0 million silver equivalent
ounces. A full review of all expenditures companywide is ongoing and it
is felt that further cuts can be made without impacting future growth.
The Company is also reviewing all its third party contracts in order to
reduce the number of contractors and, conversely, bringing more of the
necessary and essential services in-house. Furthermore, a targeted
manpower reduction of 10% by year end is also underway.
As a result of the dramatic fall in silver prices in a very short
timeframe, the Company decided to suspend silver sales for a short while
in an attempt to maximize future profits. This suspension of sales will
result in lower revenues and profits for the second quarter, however,
it is likely that these inventories of unsold ounces will instead be
sold in the third quarter. As at June 30, 2013, approximately 700,000
ounces of silver were held in inventory.
The total ore processed during the quarter at the Company’s five
operating silver mines, La Encantada, La Parrilla, San Martin, La
Guitarra and Del Toro, amounted to 668,398 tonnes milled, representing a
decrease of 8% over the previous quarter, due to an optimization at the
La Encantada mine which resulted in lower throughput at the plant.
Silver grades in the quarter for the five mines increased by 11% over
the previous quarter to 201 g/t of silver. Combined silver recoveries
presented a notable increase from 57% to 64% in the quarter as a result
of improved recoveries at La Encantada and Del Toro’s first commercial
quarter of production.
The Company’s underground development in the second quarter consisted of
13,479 metres, a 13% decrease compared to 15,575 metres completed in
the previous quarter. This decrease is part of a planned reduction of
capex that began in the second quarter and is planned to further reduce
costs in the second half of 2013. However, as some of the Company’s
development programs are expansionary and focused on preparing
underground accesses and stopes for increased production rates over the
next two years, a careful review is being conducted in order that
development cutbacks do not impact future production guidance.
During the quarter, 13 diamond drill rigs were operating at the
Company’s five operations. The Company completed 25,469 metres of
diamond drilling in the quarter, compared to 16,962 metres in the prior
quarter, representing a 50% increase. However, as a result of cost
cutting, most of these drilling contracts have now been cancelled.
Budgeted exploration metres for the balance of the year, after the most
recent budget reductions, is 15,438 metres with much of these metres
planned to be drilled by the Company’s own equipment and personnel for
mining purposes only. Therefore, the number of active drill rigs at the
Company’s five operating mines will be reduced to eight Company owned
rigs for the remainder of the year.
Due to budget cuts and personal reasons, Guillermo Lozano has resigned
from his position and the VP of Exploration position has been
eliminated. The Company would like to thank Guillermo for his hard work
and expertise over his short stay with the Company. Jesus Velador has
been promoted to the position of Regional Manager of Exploration.
At the Del Toro Silver Mine:
At the La Guitarra Silver Mine:
- The newly commissioned 1,000 tpd flotation mill achieved commercial
production on April 1, 2013. Beginning in the second quarter, all
revenues and associated operating costs will be treated as commercial
production rather than being capitalized, as was the case in the first
quarter of 2013.
- Throughput in the new flotation mill averaged 905 tpd in the second
quarter with head grades of 216 g/t silver, 3.4% lead and 3.3% zinc.
- Phase 2 of production, which will include the addition of a 1,000
tpd cyanidation circuit for the production of silver doré bars, is
scheduled to begin late in the third quarter of 2013. This represents
approximately a two month delay due to delays created by the late
delivery of some critical equipment such as the precipitates filters
presses that are now scheduled to arrive on-site in late July.
- The installation of the 12’ by 14’ oxide ball mill for the
cyanidation circuit commenced in early June and is expected to be
completed by August. The new leaching tanks have been constructed and
the installation of the pumps, motors and other mechanisms is underway
and are also expected to be completed by late August.
- The construction of the 45 km, 115,000 kW power line from the state
of Durango is scheduled to be completed by the end of August.
- The tailings filter area is progressing well with all four filters
now on site. Filter Nos. 1 and 2 for the flotation circuit are fully
operational. Filter No. 3, for the 1,000 tpd cyanidation circuit is
being installed and will be tested by the end of July. Filter No. 4
will be installed later in 2013 for Phase 3 implementation (2,000 tpd
- Total metres drilled in the second quarter amounted to 6,579 metres,
compared to 1,195 metres drilled in the previous quarter. In addition,
3,194 metres of development were completed in the second quarter of
2013, compared to 3,972 metres of development in the previous quarter.
During the quarter four drill rigs were active at Del Toro, two
underground and two on surface. For the rest of the year and due to the
reduction of the exploration program the number of rigs will be reduced
to two rigs, one underground and one in surface.
At the La Encantada Silver Mine:
- As previously announced on May 2, 2013, the Company successfully
completed the mill expansion from 350 tpd to 500 tpd. This newly
expanded mill averaged 520 tpd for the second quarter.
- During the quarter, a new smelter agreement was signed for the sale
of the silver-gold concentrates allowing the Company to discontinue
concentrate shipments to the La Parrilla mine for further refining into
doré. On June 6, 2013, the first shipment of concentrate was shipped to
the smelter under these new terms. The Company expects to see a
reduction in treatment charges and transportation costs going forward as
a result of this new agreement.
- A total of 1,324 metres of development were completed in the second
quarter, compared to 1,042 metres of development in the previous
quarter. The underground development at the El Coloso area has now
reached the Joya Larga structure which is known to contain higher grades
of silver and gold and is planned to be in production by the end of the
- Three underground drill rigs were active in the second quarter
within the La Guitarra property. Total metres drilled in the second
quarter amounted to 6,552 metres compared to 3,357 metres drilled in the
previous quarter. For the remainder of 2013, the exploration program
at La Guitarra has been reduced to include two drill rigs that will
continue to assist underground mining activities and further define
Reserves and Resources to support an updated NI 43-101 Technical Report
scheduled to be released in the middle of 2014, which is a delay of
approximately six months due to budget cuts.
At the La Parrilla Silver Mine:
- During the quarter the mix of fresh ore to tailings processed
through the mill was altered by reducing the tailings feed by almost 50%
while slightly increasing the feed of fresh ore. The result was a 29%
reduction in total throughput in the quarter with an average of 3,171
tpd consisting of 1,740 tpd of fresh mine ore and 1,430 tpd of tailings
material. The increase of fresh mine ore in the blend from 38% of the
throughput to 55% of the throughput, had a resulting 17% positive impact
on head grades which averaged 247 g/t during the quarter, compared to
the 211 g/t of the previous quarter, and also caused a 16% increase in
recoveries which increased from 45% to 52% compared to the prior
- A new portable crushing unit was acquired and installed in the
quarter to allow the primary crushing circuit to be upgraded for the
planned production increase of fresh ore in 2014 without having to shut
down the milling operation.
- Underground development continues to be focused on new areas within
the mine defined by the latest exploration program. Currently, the
primary areas of focus are the surrounding ore bodies of the Milagros
and San Javier breccia pipes. Additionally, mine development and
production continue from the San Francisco vein and the recently
discovered “990” and “990-2” chimneys. At the newly discovered Regalo
vein, a new area was prepared for long-hole drilling aimed at increasing
the production of fresh ore to a rate of 2,000 tpd next year.
- A total of 2,140 metres of exploration drilling was completed in the
second quarter, compared to 4,156 metres of drilling in the previous
quarter, representing a decrease of 48%. In addition, a total of 3,597
metres of underground development were completed in the second quarter,
compared to 4,130 metres of development in the previous quarter,
representing a decrease of 13%.
- Two diamond drill rigs are active underground at La Encantada, with
the objective of defining additional Reserves and Resources in the newly
discovered areas in addition to assisting in mining activities.
Commencing in the fourth quarter, only one underground rig will remain
- The Company’s original plan of having an updated NI 43-101 Technical
Report released prior to year end will be delayed until the first half
of 2014 due to budget cuts.
At the San Martin Silver Mine:
- The construction of three new leaching tanks is progressing well and
expected to be completed by mid- August to allow longer leaching times
with the objective of further increasing recoveries.
- Underground development completed in the quarter totaled 3,088
metres compared with 3,714 metres developed in the previous quarter.
- Three diamond drill rigs were operating during the quarter and one
will remain active for the remainder of the year following the recent
budget cuts. Total metres drilled in the quarter amounted to 4,064
metres, compared to 6,483 metres drilled in the previous quarter. The
focus of the current exploration program has been at the Rosarios,
Quebradillas, Vacas, San Marcos, La Intermedia and La Blanca mines, as
well as the Viboras, San Nicolas and the newly discovered La Estrella
vein areas. The results from this exploration program are expected to be
included in an updated NI 43-101 Technical Report originally scheduled
to be released in the second half of 2013, however, due to budget cuts
will be delayed until the first half of 2014.
- The mill expansion from 900 tpd to 1,300 tpd is now 75% complete
with planned ramp-up scheduled in September. The remaining items
scheduled for delivery over the next few weeks are the mechanics for two
of the new leaching tanks and the electrical equipment for the new
- Exploration and development in the Rosarios/Huichola and La Lima
vein areas continue to return positive results in the quarter as the
average silver head grade increased by 32% to 166 g/t when compared to
the previous quarter.
- Underground development completed in the second quarter totaled
2,276 metres, compared with 2,717 metres of development in the first
quarter of 2013. This mine development was primarily focused at the new
Rosarios area where four production areas are now in production.
- Three drill rigs were active within the San Martin property during
the quarter, two underground and one on surface. Total metres drilled
in the second quarter amounted to 6,133 metres, compared to 1,771 metres
of drilling in the previous quarter. The exploration program has been
reduced to one underground rig for the remainder of 2013.
- On May 28, 2013, an updated NI 43-101 Technical Report was released
indicating an increase to the life of mine (LOM) to 9.5 years at the
higher throughput of 1,300 tpd.
First Majestic is a mining company focused on silver production in
México and is aggressively pursuing its business plan of becoming a
senior silver producer through the development of its existing mineral
property assets and the pursuit through acquisition of additional
mineral assets which contribute to the Company achieving its aggressive
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
Cautionary Note Regarding Forward Looking Statements
This press release contains “forward-looking statements”, within the
meaning of the United States Private Securities Litigation Reform Act of
1995 and applicable Canadian securities legislation, concerning the
business, operations and financial performance and condition of First
Majestic Silver Corp. Forward-looking statements include, but are not
limited to, statements with respect to the future price of silver and
other metals, the estimation of mineral reserves and resources, the
realization of mineral reserve estimates, the timing and amount of
estimated future production, costs of production, capital expenditures,
costs and timing of the development of new deposits, success of
exploration activities, permitting time lines, hedging practices,
currency exchange rate fluctuations, requirements for additional
capital, government regulation of mining operations, environmental
risks, unanticipated reclamation expenses, timing and possible outcome
of pending litigation, title disputes or claims and limitations on
insurance coverage. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as “plans”,
“expects” or “does not expect”, “is expected”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates” or “does not
anticipate”, or “believes”, or variations of such words and phrases or
state that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved”. Forward-looking
statements are subject to known and unknown risks, uncertainties and
other factors that may cause the actual results, level of activity,
performance or achievements of First Majestic Silver Corp. to be
materially different from those expressed or implied by such
forward-looking statements, including but not limited to: risks related
to the integration of acquisitions; risks related to international
operations; risks related to joint venture operations; actual results of
current exploration activities; actual results of current reclamation
activities; conclusions of economic evaluations; changes in project
parameters as plans continue to be refined; future prices of metals;
possible variations in ore reserves, grade or recovery rates; failure of
plant, equipment or processes to operate as anticipated; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion of
development or construction activities, as well as those factors
discussed in the section entitled “Description of the Business - Risk
Factors” in First Majestic Silver Corp.’s Annual Information Form for
the year ended December 31, 2012, 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 Silver Corp. 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. There can be no assurance that such
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements. First Majestic Silver Corp. does not
undertake to update any forward-looking statements that are incorporated
by reference herein, except in accordance with applicable securities