News

First Majestic Reports Second Quarter Financial Results


August 3, 2017

VANCOUVER, British Columbia, Aug. 03, 2017 (GLOBE NEWSWIRE) -- FIRST MAJESTIC SILVER CORP. (NYSE:AG) (TSX:FR) (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, 2017. 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 SED AR at www.sedar.com and on EDGAR at www.sec.gov. All amounts are in U.S. dollars unless stated otherwise.

SECOND QUARTER 2017 HIGHLIGHTS
(compared to First Quarter 2017)

  • Silver equivalent production decreased 9% to 3.9 million ounces
  • Silver production decreased 16% to 2.3 million ounces
  • All-in sustaining costs (“AISC”) increased 19% to $14.58 per payable silver ounce
  • Revenues decreased 13% to $60.1 million
  • Realized average silver price decreased 2% to $17.17 per ounce
  • Mine operating earnings decreased 86% to $1.4 million
  • Cash flow per share was $0.11 per share (non-GAAP), a decrease of 32% from the prior quarter
  • Cash costs increased 11% to $7.41 per payable silver ounce (net of by-product credits)
  • Net earnings of $1.4 million (Basic EPS of $0.01)
  • Adjusted net loss, excluding non-cash and non-recurring items, totaled $3.6 million (Adjusted loss per share of $0.02)
  • Strong treasury with cash and cash equivalentstotaling $126.9 million at the end of the quarter

“Our second quarter results were unfortunately burdened by a number of labour issues which have since been resolved,” stated Keith Neumeyer, President and CEO of First Majestic. “While weaker revenues and cash flows were realized as a result of these work stoppages and a strengthening Mexican Peso, our treasury remained relatively unchanged at a very healthy $126.9 million. Due to this unexpected weakness in cash flows, as a conservative measure, management has decided to reduce capital expenditures by $17.5 million for the year. Our focus in the second half of 2017 remains to be the construction of the new roaster system at our La Encantada mine which is on schedule for commissioning in the first quarter of 2018 as well as the renewed investments in underground development which has been lacking over the past few years. This increase in underground development, which started in mid-2016, will have a direct impact on improving production, however, the positive impacts of these types of investments are generally delayed by 12 to 24 months.”

OPERATIONAL AND FINANCIAL HIGHLIGHTS

Key Performance Metrics   2017-Q2   2017-Q1 Change
Q2 vs Q1
  2016-Q2 Change
Q2 vs Q2
  2017-YTD  
Operational                      
Ore Processed / Tonnes Milled     691,833       822,336   (16 %)     798,182   (13 %)     1,514,170    
Silver Ounces Produced     2,287,188       2,708,978   (16 %)     2,844,930   (20 %)     4,996,166    
Silver Equivalent Ounces Produced     3,888,944       4,267,350   (9 %)     4,681,608   (17 %)     8,156,294    
Cash Costs per Ounce (1)   $ 7.41     $ 6.68   11 %   $ 6.41   16 %   $ 7.02    
All-in Sustaining Cost per Ounce (1)   $ 14.58     $ 12.21   19 %   $ 10.97   33 %   $ 13.30    
Total Production Cost per Tonne (1)   $ 51.53     $ 44.72   15 %   $ 44.97   15 %   $ 47.83    
Average Realized Silver Price per Ounce (1)   $ 17.17     $ 17.55   (2 %)   $ 17.01   1 %   $ 17.37    
Financial (in $millions)                      
Revenues   $ 60.1     $ 69.1   (13 %)   $ 66.1   (9 %)   $ 129.2    
Mine Operating Earnings (2)   $ 1.4     $ 10.0   (86 %)   $ 9.9   (86 %)   $ 11.4    
(Loss) Earnings before Income Taxes   ($6.7 )   $ 2.6   (358 %)   $ 9.2   (173 %)   ($4.1 )  
Net Earnings (Loss)   $ 1.4     $ 2.7   (48 %)   $ 6.1   (77 %)   $ 4.1    
Operating Cash Flows before
Working Capital and Taxes (2)
  $ 18.0     $ 26.6   (32 %)   $ 23.5   (23 %)   $ 44.6    
Cash and Cash Equivalents   $ 126.9     $ 127.6   (1 %)   $ 108.2   17 %   $ 126.9    
Working Capital (1)   $ 130.9     $ 136.8   (4 %)   $ 119.1   10 %   $ 130.9    
Shareholders                      
Earnings (Loss) per Share ("EPS") - Basic   $ 0.01     $ 0.02   (48 %)   $ 0.04   (78 %)   $ 0.03    
Adjusted EPS (1)   ($0.02 )   $ 0.02   (198 %)   $ 0.03   174 %   $ 0.00    
Cash Flow per Share (1)   $ 0.11     $ 0.16   (33 %)   $ 0.15   (26 %)   $ 0.27    

(1) 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.
(2) 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.

FINANCIAL REVIEW

The Company realized an average silver price of $17.17 per ounce during the second quarter of 2017, representing a 1% increase compared with the second quarter of 2016 and a 2% decrease compared to $17.55 in the prior quarter.

Revenues generated in the second quarter totaled $60.1 million, a decrease of 9% compared to the second quarter of 2016 primarily due to a 13% decrease in silver equivalent ounces sold, which resulted from lost production due to the illegal work stoppages at the La Encantada, La Parrilla and Santa Elena mines and lower grades due to the lack of investment in underground development over the past few years.

Mine operating earnings were $1.4 million in the quarter compared to $9.9 million in the second quarter of 2016. The decrease in mine operating earnings was primarily affected by lost revenue from the La Encantada illegal strike, where $1.4 million in standby costs continued to be incurred, and $0.2 million in severance costs that were paid out.

Cash flow from operations before movements in working capital and income taxes in the quarter was $18.0 million ($0.11 per share) compared to $23.5 million ($0.15 per share) in the second quarter of 2016. The decrease was primarily attributed to lower mine operating earnings impacted by the mine stoppages in the quarter.

The Company generated net earnings of $1.4 million (EPS of $0.01) in the second quarter compared net earnings of $6.1 million (EPS of $0.04) in the second quarter of 2016. The decrease of $4.7 million was primarily attributed to: 1) $8.5 million decrease in mine operating earnings as a result of mine stoppages; 2) $6.0 million decrease in investment and other income, mainly attributed to market price volatility on the Company's holdings in marketable securities; partially offset by 3) an income tax recovery of $8.1 million in the second quarter due to the impact of foreign exchange on deferred tax liabilities. Excluding all non-cash and non-recurring items, the Company generated an adjusted loss of $3.6 million (adjusted loss of $0.02 per share) during the quarter.

The Company maintains a strong treasury with $126.9 million in cash and cash equivalents at the end of the quarter, reflecting a 1% decrease compared to the prior quarter. The Company’s working capital position decreased 4% to $130.9 million compared to $136.8 million at the end of the prior quarter.

OPERATIONAL HIGHLIGHTS

The table below represents the quarterly operating and cost parameters at each of the Company’s six producing silver mines.

Second Quarter Production Summary   Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra Consolidated
Ore Processed / Tonnes Milled     232,451       148,039       132,880     81,843       67,073       29,547       691,833  
Silver Ounces Produced     557,914       374,901       425,060     365,323       425,645       138,345       2,287,188  
Silver Equivalent Ounces Produced     1,399,940       375,563       593,852     712,714       577,598       229,276       3,888,944  
Cash Costs per Ounce   $ 2.86     $ 13.59     $ 11.15   $ 3.99     $ 5.43     $ 12.65     $ 7.41  
All-in Sustaining Cost per Ounce   $ 6.64     $ 17.95     $ 17.12   $ 7.93     $ 7.53     $ 19.51     $ 14.58  
Total Production Cost per Tonne   $ 54.44     $ 33.65     $ 44.54   $ 57.16     $ 69.37     $ 93.49     $ 51.53  

Production in the quarter totalled 3.9 million silver equivalent ounces consisting of 2.3 million ounces of silver, 15,186 ounces of gold, 7.6 million pounds of lead and 0.9 million pounds of zinc. Compared to the previous quarter, total production decreased by 9% primarily due to unusual efforts by unionized workers to illegally disrupt mining activities which caused labour issues, including