First Majestic Reports First Quarter Financial Results
May 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 first quarter
ended March 31, 2014. 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
and on EDGAR at www.sec.gov
. All amounts are in U.S. dollars unless stated otherwise.
FIRST QUARTER 2014 FINANCIAL HIGHLIGHTS
- Generated revenues of $65.3 million, a 3% decrease compared to Q1 2013.
- Net earnings after taxes amounted to $6.0 million or $0.05 earnings per share.
- Adjusted earnings per share (non-GAAP measure) of $0.06, after excluding non-cash and non-recurring items.
- Cash flow per share (non-GAAP) of $0.22, representing a 44% decrease from Q1 2013.
- Mine operating earnings amounted to $16.6 million, a decrease
of 52% from Q1 2013, primarily due to the decrease in the silver price.
- Total cash cost, net of by-product credits, was $9.88 per
ounce, up 4% compared to Q1 2013. Excluding Del Toro, which is
currently in ramp up stage, the weighted average cash cost at the four
remaining operations have decreased 16% compared to Q1 2013.
- All-in sustaining cost (“AISC”) was $18.71 per payable silver
ounce. AISC is projected to decrease to within the previous guidance of
$15.87 to $16.69 per ounce as Del Toro and San Martin complete the ramp
up of their recent expansions.
- Corporate G&A spending decreased 33% compared to Q1 2013.
- Average realized silver price per ounce was $20.90, a decrease of 29% compared to Q1 2013.
- At the end of the quarter, the Company held cash and cash
equivalents of $41.5 million. Subsequent to quarter end, the Company
received $30.0 million from the forward sale on a portion of the
Company’s future lead production.
Keith Neumeyer, CEO and
President of First Majestic, stated: “After three years of aggressive
capital spending to build and expand four of our silver operations, the
Company is planning to take a short breather to focus on treasury growth
and free cash flow. As the expansionary capital investments at both
Del Toro and San Martin come to an end, we look forward to the increased
production and improved efficiencies. We still have a lot of work ahead
of us to accomplish our next goal of reaching 20 million ounces of
production per year; however, given the low silver price environment
focusing on further cost reductions and treasury growth continues to be
management’s top priority.”
FIRST QUARTER 2014 HIGHLIGHTS
|Ore Processed / Tonnes Milled || 637,663 || 730,357 ||(13%) || 701,617 ||(9%)|
|Silver Ounces Produced ||2,895,497 ||2,437,664 ||19% ||2,746,598 || 5% |
|Silver Equivalent Ounces Produced ||3,631,672 ||2,731,792 ||33% ||3,421,161 || 6% |
|Cash Costs per Ounce(1) ||$9.88 ||$9.49 || 4% || $9.66 || 2% |
|All-in Sustaining Cost per Ounce (1) ||$18.71 || n/a || n/a ||n/a || n/a|
|Total Production Cost per Ounce (1) ||$11.93 ||$9.79 ||22% || $11.11 || 7%|
|Total Production Cost per Tonne (1) ||$53.20 || $31.79 ||67% || $42.69 || 25%|
|Average Realized Silver Price per Ounce ($/eq. oz.) (1) ||$20.90 || $29.63 ||(29%) || $20.61 || 1%|
|Revenues ($ millions) || $65.3 || $67.1 || (3%)||$59.0 || 11% |
|Mine Operating Earnings ($ millions) (2)||$16.6 || $34.6 || (52%) || $14.3 || 17% |
|Net Earnings (Loss) ($ millions) (3)||$6.0 || $26.5 || (77%)|| ($81.2)|| (107%)|
|Operating Cash Flows before Movements in Working Capital|
and Income Taxes ($ millions) (2)
|$25.4 ||$44.9 ||(43%) ||$20.4 ||24% |
|Cash and Cash Equivalents ($ millions) ||$41.5 ||$110.1 ||(62%) ||$54.8 ||(24%) |
|Working Capital ($ millions) (1) ||$18.7 ||$108.3 ||(83%) ||$32.8 ||(43%) |
|Earnings (Loss) per Share (“EPS”) - Basic ||$0.05 ||$0.23 ||(78%) ||($0.69) ||(107%) |
|Adjusted EPS(1) ||$0.06 ||$0.21 ||(74%) || $0.05 ||12% |
|Cash Flow per Share(1) ||$0.22 ||$0.38 ||(44%) || $0.17 ||27%|
|Weighted Average Shares Outstanding for the Periods ||117,227,432 ||116,895,218 ||0% ||117,030,825 ||0%|
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.|
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.|
loss in the fourth quarter of 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 $65.3 million for the first quarter of
2014, a 3% decrease compared to the first quarter of 2013, primarily
due to a 29% decrease in the average realized silver price per ounce,
partially offset by 33% increase in production. Compared to the
previous quarter, revenues increased 11% primarily due to a 6% increase
Net earnings in the quarter were $6.0 million, or $0.05 per share,
compared to $26.5 million, or $0.23 per share, in the first quarter of
2013. Cash flows from operations before movements in working capital
and income taxes in the first quarter increased by 24% to $25.4 million
or $0.22 per share, compared to $20.4 million or $0.17 per share in the
fourth quarter of 2013, but decreased by 43% compared to $44.9 million
or $0.38 per share in the first quarter of 2013 as a result of decrease
in mine operating earnings.
Silver equivalent production in the first quarter increased to a record
3,631,672 ounces, an increase of 6% compared to 3,421,161 ounces in the
previous quarter. Compared to the same quarter of the prior year,
silver equivalent production increased by 33% primarily attributed to
higher production contributed from the ramp up of the new Del Toro
Silver Mine, an increase in overall head grades, and an increase in
recoveries at La Parrilla.
The overall average head grade for the first quarter was 214 grams per
tonne (“g/t”), an 18% increase compared to 181 g/t in the first quarter
of 2013 and 12% increase compared to 191 g/t in the fourth quarter of
2013. The increase from the same quarter of the prior year was
primarily attributed to a 48% improvement in head grade at La Encantada
to 312 g/t in the first quarter of 2014, 27% improvement in head grades
at Del Toro, 17% improvement in head grades at La Parrilla, offset by a
55% decrease in silver grades at La Guitarra. Compared to the fourth
quarter of 2013, the La Encantada mine had a 37% increase in head grade
as the mine is processing only fresh ore without blending old tailings.
La Guitarra was mining in areas with lower silver grades but the ore
feed contained higher gold grades.
Total ore processed during the first quarter amounted to 637,663 tonnes
milled, representing a decrease of 63,954 tonnes or 9% compared to the
previous quarter primarily attributed to a reduction of tonnes milled at
La Encantada due to management’s decision to process only fresh mined
ore and suspend the feed of old tailings in the current low silver price
Cash costs per ounce in the first quarter were $9.88, a 2% increase from
the previous quarter and a 4% increase compared to the first quarter of
2013. The increase in cash costs per ounce was primarily attributed to
temporary higher ramp up costs at Del Toro. Weighted average cash costs
for the remaining four mines improved noticeably, declining 12% from the
previous quarter and a 16% decrease compared to the first quarter of
2013. La Encantada had the most significant improvement in cash costs,
declining 18% compared to the previous quarter to $8.68 per ounce, due
to lower cyanide usage and lower diesel consumption.
AISC were $18.71 per payable silver ounce due to the higher ramp up
costs at Del Toro and San Martin. Looking ahead, management projects
AISC will decrease towards the previously guided range of $15.87 to
$16.69 per payable silver ounce due to the anticipated increase in
silver production and cost reductions at Del Toro.
Production costs were $53.20 per tonne in the first quarter, an increase
of 25% from the previous quarter. Compared to the first quarter of
2013, production cost per tonne increased from $31.79, or 67%, primarily
due to higher production costs per tonne at the Del Toro mine and the
elimination of production from old tailings in favour of fresh mine ore
at the La Encantada mine.
La Encantada Silver Mine
A total of 1,046,224 equivalent ounces of silver were produced by the La
Encantada plant during the quarter. Production increased by 9% compared
to the 962,505 equivalent ounces of silver produced in the previous
quarter and decreased by 8% compared to the 1,136,603 equivalent ounces
of silver produced in the first quarter of 2013.
Due to the elimination of blending old tailings, the average silver head
grade increased significantly to 312 g/t, an increase of 37% compared
to the previous quarter. Recoveries have also increased to 57% compared
to 52% in the prior quarter due to less manganese content in the fresh
ore compared to the old tailings. The Company is in the planning stage
to upgrade and expand the crushing and grinding areas to allow for an
increase in throughput of fresh mine ore. 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 plan will include the initial ramp up to 3,000 tpd of fresh ore
from the current level of 2,300 tpd. A decision will be announced
La Parrilla Silver Mine
During the quarter, total production at La Parrilla was 1,203,337
equivalent ounces of silver, an increase of 4% compared to 1,151,728
equivalent ounces in the previous quarter due to an increase in grade
and recoveries of silver.
Cash costs were $6.21 per ounce, a 4% decrease compared to $6.45 per
ounce in the previous quarter and a 16% decrease compared to $7.36 per
ounce in the first quarter of 2013. The reduction in cash costs at La
Parrilla is primarily attributed to improvements in mill automation
allowing for higher recoveries in both silver and zinc.
Del Toro Silver Mine
Total production at Del Toro was 801,460 equivalent ounces of silver, a
16% increase compared to 693,561 equivalent ounces in the previous
quarter due to higher throughput levels. For the month of April 2014,
the dual circuit mill averaged 2,297 tpd (984 tpd in cyanidation and
1,314 tpd in flotation) compared to the first quarter average of 1,609
tpd (735 tpd in cyanidation and 874 tpd in flotation). The production
ramp up of the cyanidation circuit to 2,000 tpd continues as equipment
additions to the mill are installed to improve recoveries.
Cash costs per ounce were $16.50, an increase of 36% compared to $12.16
in the previous quarter. The increase was primarily attributed to the
additional diesel and generator rental costs due to delays in the
construction of the power line, additional smelting and refining costs
due to impurities and milling inefficiencies related to the early stage
operation. In mid-March, the Company temporarily connected to the
Mexican national power grid with a 34kV power line which allowed five of
the seven generators to come offline at the end of March. With only
two diesel generators remaining active, the Company anticipates a
substantial reduction in cash costs for the remainder of the year as a
result of lower electrical costs.
San Martin Silver Mine
During the quarter, total production was 324,137 ounces of silver
equivalent, an increase of 3% compared to the 313,834 ounces of silver
equivalent produced in the previous quarter, and 17% higher than the
276,442 equivalent ounces of silver produced in the first quarter of
Cash costs per ounce were $12.94, a 7% decrease compared to $13.96 per
ounce in the previous quarter and $13.87 per ounce in the first quarter
Over the past 15 months ending March 31, 2014, the Company invested
$13.1 million to expand the mill capacity from 900 tpd to 1,300 tpd to
take advantage of the new Reserves and increased mine life announced in
May 2013. The mill expansion was completed in the fourth quarter of 2013
and is now in the ramp up stage. For the month of April 2014, the mill
operated at 1,016 tpd compared to the first quarter average of 872 tpd.
At full capacity, now expected in the second quarter of 2014, San Martin
is projected to produce approximately 1.75 million to 1.85 million
ounce of silver per year, plus modest amounts of gold.
La Guitarra Silver Mine
Total production at La Guitarra was 256,514 equivalent ounces of silver
during the first quarter, a 14% decrease compared to the 299,533 ounces
produced in the previous quarter and a 9% increase compared to the
236,060 ounces in the first quarter of 2013.
Cash costs were $2.14 per ounce, a decrease of 48% compared to $4.08 per
ounce in the previous quarter and an 87% decrease from the first
quarter of 2013. The decrease was primarily attributed to an increase
in gold by-product credits and reduction of smelting and refining costs.
The permitting of a 1,000 tpd cyanidation processing facility is
currently in the planning and evaluation stage. It is anticipated that
permit applications will be submitted to the Mexican authorities in
early 2015. Once this new processing facility is permitted and fully
constructed, production of silver doré bars is anticipated to replace
the production of silver/gold concentrates.
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.