First Majestic Reports Second Quarter Financial Results
August 13, 2014
FIRST MAJESTIC SILVER CORP.
(AG: NYSE; FR: TSX) (the “Company” or
“First Majestic”) is pleased to announce the unaudited interim
consolidated financial results of the Company for the second quarter
ended June 30, 2014. The full version of the financial statements and
the management discussion and analysis can be viewed on the Company’s
web site at
or on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov
. All amounts are in U.S. dollars unless stated otherwise.
Keith Neumeyer, CEO and President of First Majestic, stated: “Production
in the second quarter, marking another record, increased for the ninth
consecutive quarter. Costs continue to improve and remain a primary
focus. The bulk of our capital intensive projects are winding down; some
by design and some by choice in order to preserve cash during these
“Looking forward over the coming quarters, we anticipate a continued
steady pace of growth with a focus on increasing efficiencies through
automation and reduction of input costs throughout our operations.”
SECOND QUARTER 2014 FINANCIAL HIGHLIGHTS
SECOND QUARTER 2014 HIGHLIGHTS
- Generated revenues of $66.9 million, a 3% increase compared to the previous quarter.
- Net earnings after taxes amounted to $7.6 million or earning per share of $0.06.
- Adjusted earnings per share (non-GAAP measure) of $0.02, after excluding non-cash and non-recurring items.
- Cash flow per share (non-GAAP) of $0.16, representing a 27% decrease from the prior quarter.
- Mine operating earnings amounted to $9.5 million, a decrease of 43%
from Q1 2014, primarily due to the decrease in the silver price and
higher depreciation, depletion and amortization expense at Del Toro, and
a non-cash write-down of inventories at La Encantada.
- Total cash cost, net of by-product credits, was $9.63 per ounce, down 3% from the prior quarter.
- All-in sustaining cost (“AISC”) was $18.18 per payable silver ounce, down 3% from the prior quarter.
- Average realized silver price per ounce was $19.59, a decrease of 6% compared to the prior quarter.
- Cash and cash equivalents of $66.7 million held at the end of the quarter.
- Repurchased 40,000 common shares at an average price of CDN$9.96 on TSX under its Normal Course Issuer Bid.
- 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.
- 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.
- Net loss in the fourth quarter and year ended December 31, 2013
includes an impairment charge on goodwill and mining interests of $28.8
million and a non-cash charge of $38.8 million to deferred income tax
expense in relation to the Mexican Tax Reform enacted in December 2013.
The Company generated revenues of $66.9 million for the second quarter
of 2014, a 3% increase compared to the previous quarter primarily due to
a 6% increase in production.
Net earnings increased $1.6 million to $7.6 million, or $0.06 per share,
compared to $6.0 million, or $0.05 per share in the previous quarter.
Mine operating earnings decreased $7.1 million to $9.5 million compared
to the previous quarter. The decrease is primarily due to a $2.5 million
write-down of over-valued work in process inventories, a 6% decrease in
average realized silver price per ounce and 10% increase in depletion,
depreciation and amortization.
Cash flows from operations before movements in working capital and
income taxes in the second quarter totaled $19.0 million ($0.16 per
share), compared to $25.4 million ($0.22 per share) in the previous
quarter. The decrease is primarily due a reduction in mine operating
earnings and foreign exchange loss.
Total production in the second quarter increased to a record 3,855,223
silver equivalent ounces (“SEOs”), an increase of 6% compared to the
previous quarter. The production growth was primarily due to higher
throughput rates at Del Toro and San Martin following each of their
The consolidated average head grade for the second quarter was 212 grams
per tonne (“g/t”), relatively unchanged compared to the previous
Total ore processed during the second quarter amounted to 671,024
tonnes, representing a 5% increase compared to the previous quarter
primarily driven by higher throughputs at Del Toro (+21%) and San Martin
COSTS AND CAPITAL EXPENDITURES
Cash costs per ounce in the second quarter were $9.63, a 3% decrease
from the previous quarter. The reduction in cash costs are primarily
attributed to economies of scale from increased production and lower
costs at Del Toro and San Martin.
AISC in the second quarter were $18.18 per payable silver ounce, a 3%
decrease from the previous quarter. AISC is expected to further decline
throughout the second half of 2014 as Del Toro and San Martin continue
to improve operationally following their recent plant expansions.
Production costs were $51.81 per tonne in the second quarter, a 3%
decrease from the previous quarter.
Capital expenditures in the second quarter were $24.2 million, including
$6.9 million at Del Toro, $6.8 million at La Encantada, $4.1 million at
La Parrilla, $3.2 million at San Martin and $2.5 million at La
Guitarra. Compared to the previous quarter, capital expenditures
decreased 31% as the construction activity at Del Toro and San Martin
near completion. In the second half of 2014, the Company is planning to
invest a total of $29.0 million on sustaining capital for current
operations and $30.1 million for expansionary capital.
La Encantada Silver Mine
A total of 1,079,122 SEOs were produced by the La Encantada plant during
the quarter. This represents an increase of 3% compared the previous
Cash costs were $8.67 per ounce, unchanged compared to the previous quarter.
The Company’s plan to increase production levels to 3,000 tpd has been
postponed due to budget cuts. The $9 million investment, originally
scheduled to begin in July 2014, is now planned to begin in the first
quarter of 2015. This expansion will include the installation of a new
24’ x 14’ ball mill, which is currently on site, along with the
installation of new primary and secondary crushers. The expansion is
anticipated to be completed in mid-2015, however, remains subject to
budget constraints in the current market. Expected silver production at
La Encantada for the full year remains unchanged in the range of 4.1 to
4.3 million ounces due to higher head grades offset by the mill feed
La Parrilla Silver Mine
A total of 1,142,433 SEOs were produced at La Parrilla during the
quarter. Production decreased by 5% compared to the previous quarter due
to an 8% reduction in ore processed.
Cash costs were $5.76 per ounce, a 7% decrease compared to the previous
quarter. The reduction in cash costs at La Parrilla is primarily
attributed to an increase in by-product credits from higher lead and
Del Toro Silver Mine
Total production at Del Toro was 899,710 SEOs, a 12% increase compared to the previous quarter due to higher throughput levels.
Cash costs per ounce were $14.70, a decrease of 11% compared the
previous quarter. The decrease was primarily attributed to higher
production levels and the decrease of diesel energy generation and the
associated generator rental costs due to the connection of the temporary
34kV power line. Cash cost per ounce is expected to further decline in
second half of 2014 when the larger 115kV power line is completed and
the milling and metallurgical processes stabilize. The construction of
the 115kV power line from the State of Durango is expected to be
completed and fully tested by September 2014. Once completed, the Del
Toro operation will be fully connected to the Mexican power grid
allowing for further cost reductions.
San Martin Silver Mine
A total of 510,697 SEOs were produced at San Martin during the quarter.
Production increased by 58% compared to the previous quarter and set a
new quarterly production record.
Cash costs were $10.02 per ounce, a 23% decrease compared to the
previous quarter. The reduction in cash costs are attributed to higher
grades and production levels following the recent plant expansion.
La Guitarra Silver Mine
A total of 223,262 SEOs were produced at La Guitarra during the quarter.
Silver production increased by 13% to 128,912 ounces largely due to
higher head grades but not enough to offset a 13% reduction in total
production compared to the previous quarter. The decrease in total
equivalent production was primarily due to lower gold credits.
Cash costs were $9.48 per ounce, an increase of 29% compared to the
previous quarter. The increase was primarily attributed to a decrease in
gold by-product credits.
The Company is maintaining its previously announced 2014 production
guidance of 12.7 to 13.3 million ounces of silver (14.8 to 15.6 million
SEOs). Due to the revised timing of the La Encantada expansion project,
the Company is modifying its expected cost guidance for 2014. Full year
cash cost are expected to remain in line with the previous annual
guidance of $8.67 to $9.12 per payable silver ounce. However, sustaining
costs are expected to increase from the original guidance range of
$4.66 to $4.90 per ounce to the revised range of $5.40 to $5.56 per
ounce. Including some improvements in general and administration costs
and lower share-based payments, the revised AISC per ounce is now
expected to be in the range of $16.66 to $16.96, compared to the
previous guidance of $15.87 to $16.69.
To date, the Company has produced 6.0 million ounces of silver (or 7.5
million SEOs) at an average cash cost of $9.75 per silver ounce (net of
by-products) and AISC of $18.46 per payable silver ounce.
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held today, August 13, 2014 at
11:00 a.m. PDT (2:00 p.m. EDT) to review and discuss the second quarter
results. To participate in the conference call, please dial the
Toll Free Canada & USA: 1-800-319-4610
Outside of Canada & USA: 1-604-638-5340
Toll Free Germany: 0800 180 1954
Toll Free UK: 0808 101 2791
Participants should dial in 10 minutes prior to the conference.
Click on WEBCAST on the First Majestic homepage as a simultaneous audio webcast of the conference call will be posted at www.firstmajestic.com.
ABOUT FIRST MAJESTIC
First Majestic is a mining company focused on silver production in
México and is aggressively pursuing the development of its existing
mineral property assets and the pursuit through acquisition of
additional mineral assets which contribute to the Company achieving its
corporate growth objectives.
FOR FURTHER INFORMATION contact email@example.com, 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
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.