IRST 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, 2017.
All amounts are in U.S. dollars unless stated otherwise.
FIRST QUARTER 2017 HIGHLIGHTS
(compared to Fourth Quarter 2016)
Silver equivalent production decreased 3% to 4.3 million ounces
Silver production decreased 4% to 2.7 million ounces
All-in sustaining costs (“AISC”) decreased 5% to $12.21 per payable silver ounce
Revenues increased 4% to $69.1 million
Realized average silver price increased 3% to $17.55 per ounce
Mine operating earnings increased 1% to $10.0 million
Net earnings increased 50% to $2.7 million (Basic EPS of $0.02)
Adjusted earnings, excluding non-cash and non-recurring items, totaled $3.7 million (Adjusted EPS of $0.02)
Operating cash flows before working capital and taxes increased 14% to $26.6 million or $0.16 per share (non-GAAP)
Cash costs increased 3% to $6.68 per payable silver ounce (net of by-product credits)
Cash and cash equivalents totaled $127.6 million at the end of the quarter
“Lower all-in sustaining costs and higher realized silver prices drove strong earnings and cash flows during the first quarter,” stated Keith Neumeyer, President and CEO of First Majestic. “We achieved our cost targets during the quarter due in part to higher by-product production at San Martin and the weaker Mexican Peso which helped to offset the unexpected increase in energy costs at the beginning of 2017. Over the remainder of the year, we anticipate gradual production improvements as exploration and development activities accelerate and additional mining levels are brought into production.”
OPERATIONAL AND FINANCIAL HIGHLIGHTS
Key Performance Metrics
2017-Q1 2016-Q4 Change Q1 vs Q4 2016-Q1 Change Q1 vs Q1
Ore Processed / Tonnes Milled 822,336 844,155 (3 %) 789,591 4 %
Silver Ounces Produced 2,708,978 2,819,708 (4 %) 3,074,173 (12 %)
Silver Equivalent Ounces Produced 4,267,350 4,380,477 (3 %) 5,083,095 (16 %)
Cash Costs per Ounce (1) $6.68 $6.49 3 % $5.00 34 %
All-in Sustaining Cost per Ounce (1) $12.21 $12.90 (5 %) $8.97 36 %
Total Production Cost per Tonne (1) $44.72 $42.13 6 % $42.72 5 %
Average Realized Silver Price per Ounce (1) $17.55 $17.10 3 % $15.08 16 %
Financial (in $millions)
Revenues $69.1 $66.2 4 % $66.5 4 %
Mine Operating Earnings (2) $10.0 $9.9 1 % $9.4 7 %
Net Earnings (Loss) $2.7 $1.8 50 % ($7.4 ) 137 %
Operating Cash Flows before Working Capital and Taxes (2) $26.6 $23.4 14 % $25.0 6 %
Cash and Cash Equivalents $127.6 $129.0 (1 %) $61.7 107 %
Working Capital (1) $136.8 $130.6 5 % $57.8 137 %
Earnings (Loss) per Share ("EPS") - Basic $0.02 $0.01 50 % ($0.05 ) 135 %
Adjusted EPS (1) $0.02 ($0.01 ) 325 % $0.03 23 %
Cash Flow per Share (1) $0.16 $0.14 13 % $0.16 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.
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.
The Company realized an average silver price of $17.55 per ounce during the first quarter of 2017, representing a 16% increase compared with the first quarter of 2016 and a 3% increase compared to $17.10 in the prior quarter.
Revenues generated in the first quarter totaled $69.1 million, an increase of $2.6 million or 4% compared to $66.5 million in the first quarter of 2016. The increase in revenue was primarily due to a 16% increase in average realized silver price, partially offset by 15% decrease in silver equivalent ounces sold.
Mine operating earnings were $10.0 million in the quarter compared to $9.4 million in the first quarter of 2016. The increase in mine operating earnings was driven by higher silver prices.
Cash flow from operations before movements in working capital and income taxes in the quarter was $26.6 million ($0.16 per share) compared to $25.0 million ($0.16 per share) in the first quarter of 2016.
The Company generated net earnings of $2.7 million (EPS of $0.02) in the first quarter compared to net loss of $7.4 million (loss per share of $0.05) in the first quarter of 2016. Excluding all non-cash and non-recurring items, the Company generated adjusted earnings of $3.7 million ($0.02 per share) during the quarter.
The Company held $127.6 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 increased 5% to $136.8 million compared to $130.6 million at the end of the prior quarter.
The table below represents the quarterly operating and cost parameters at each of the Company’s six producing silver mines.
First Quarter Production Summary
Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra
Ore Processed / Tonnes Milled 230,050 266,510 140,592 79,108 69,563 36,514 822,336
Silver Ounces Produced 581,425 707,479 479,875 340,958 410,082 189,159 2,708,978
Silver Equivalent Ounces Produced 1,369,875 708,959 667,431 682,219 522,672 316,195 4,267,350
Cash Costs per Ounce $1.54 $10.83 $9.96 $2.64 $6.42 $6.36 $6.68
All-in Sustaining Cost per Ounce $4.61 $12.07 $13.86 $7.95 $8.66 $11.83 $12.21
Total Production Cost per Tonne $52.90 $27.92 $43.22 $51.58 $61.28 $75.33 $44.72
Production in the quarter totalled 4.3 million silver equivalent ounces consisting of 2.7 million ounces of silver, 15,047 ounces of gold, 7.5 million pounds of lead and 0.9 million pounds of zinc. Compared to the previous quarter, total production decreased by 3% primarily attributed to a 3% decrease in tonnes milled due to a breakdown of one of the four power generators at Santa Elena causing a temporary reduction in the mill feed from the heap leach pad in the month of February. The generator was successfully replaced in late February allowing the heap leach pad to return to normal operations in March.
COSTS AND CAPITAL EXPENDITURES
Cash costs for the quarter were $6.68 per payable ounce of silver, representing a 3% increase compared to the prior quarter. The increase in cash cost per ounce was primarily due to higher energy costs attributed to Mexico's Energy Reforms, which first became law in August 2014, and the resulting gas deregulation effective January 2017 causing reduction in energy subsidies. Since the beginning of the year, diesel and electricity costs have increased by approximately 20% to 30%. Cash cost per ounce was also affected by lower silver production in the quarter.
Consolidated AISC for the quarter were $12.21 per ounce, representing a 5% decrease compared to the previous quarter and within the Company’s annual cost guidance of $11.96 to $12.88 per ounce. The decrease in AISC was primarily attributed to a decrease in sustaining capital expenditures due to a slower than expected initiation of exploration and development activities at the beginning of the year. Sustaining costs are expected to increase in the next quarter to meet program targets for 2017.
Total capital expenditures in the first quarter were $19.1 million, a decrease of 26% compared to the prior quarter, primarily consisting of $6.0 million at Santa Elena, $2.4 million at La Encantada, $2.9 million at La Parrilla, $1.8 million at Del Toro, $2.2 million at San Martin and $3.0 million at La Guitarra. The decrease in capital expenditures is the result of limited exploration and development activities in January due to a delayed start in negotiating annual land access agreements. However, exploration and development activities are expected to accelerate in the second quarter to meet annual budget targets by year end.
ABOUT FIRST MAJESTIC
First Majestic is a mining company focused on silver production in Mexico and is aggressively pursuing the development of its existing mineral property assets. The Company presently owns and operates six producing silver mines; the La Parrilla Silver Mine, the San Martin Silver Mine, the La Encantada Silver Mine, the La Guitarra Silver Mine, Del Toro Silver Mine and the Santa Elena Silver/Gold Mine. Production from these six mines is projected to be between 11.1 to 12.4 million ounces of pure silver or 16.6 to 18.5 million ounces of silver equivalents in 2017.
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.