FIRST MAJESTIC SILVER CORP. (AG: NYSE; FR: TSX)
(the "Company" or “First Majestic”) is pleased to announce the
consolidated financial results for the Company’s fourth quarter and
year ended December 31, 2019. The full version of the financial
statements and the management discussion and analysis can be viewed
on the Company's website at www.firstmajestic.com, on SEDAR at
www.sedar.com and EDGAR at www.sec.gov. All amounts are in U.S.
dollars unless stated otherwise.
2019 HIGHLIGHTS
- Total production reached 25.6
million silver equivalent ounces, a 15% increase over 2018,
reaching the top end of the Company’s 2019 guidance range of 24.4
million to 26.0 million ounces.
- Silver production reached 13.2
million ounces of silver, a 13% increase over 2018, and inline with
the Company’s guidance range of 12.8 to 13.5 million ounces.
- Generated record revenues of $363.9
million, representing a 21% increase from 2018.
- Generated a record $140.0 million
of cash from operating activities.
- Mine operating earnings of $66.2
million compared to ($11.9) million in 2018 primarily due to higher
revenues, metal prices and lower cash costs.
- Operating cash flows before working
capital and taxes of $108.9 million or $0.54 per share.
- Adjusted net earnings of $7.3
million, or $0.04 per share, after excluding non-cash and unusual
items.
- All-in sustaining costs (“AISC”) of
$12.64 per payable silver ounce, representing a 15% decrease
compared to 2018, beating the 2019 guidance range of $12.98 to
$13.94 per ounce.
- Cash costs of $5.16 per payable
silver ounce, representing a 26% decrease compared to 2018, below
the 2019 guidance range of $5.62 to $6.18 per ounce.
- Successfully commissioned the new
3,000 tpd high-intensity grinding (“HIG”) mill at Santa Elena
making it the only whole-ore, hard-rock mining application of this
technology in Latin America.
- Commenced earthwork and ramp
development activities at Santa Elena’s Ermitaño project in advance
of initial production scheduled for early 2021.
- Achieved annual consolidated silver
recoveries of 86%, a new Company record, due to ongoing investments
in metallurgical processing and innovation.
- Ended 2019 with cash and cash
equivalents of $169.0 million, up from $57.0 million at the end of
2018.
Q4 2019 HIGHLIGHTS
- Produced 3.3 million ounces of
silver, 33,176 ounces of gold and 0.9 million pounds of lead for a
total of 6.2 million silver equivalent ounces.
- AISC of $12.25 per payable silver
ounce, representing a 5% decrease compared to Q4 2018.
- Cash costs of $3.73 per payable
silver ounce, representing a 38% decrease compared to Q4 2018.
- Revenues totaled $96.5 million,
representing a 30% increase compared to Q4 2018.
- Mine operating earnings of $23.9
million compared to ($9.0) million in Q4 2018.
- Adjusted net earnings $0.3 million,
or $0.00 per share, after excluding non-cash and unusual
items.
- Operating cash flows before working
capital and taxes of $32.9 million, or $0.16 per share
(non-GAAP).
CEO COMMENTS
“First Majestic had another strong year
generating record revenues and ending the year with the highest
cash balance in the Company’s 18-year history,” said Keith
Neumeyer, President and CEO of First Majestic. “Production also
achieved a new record of 25.6 million silver equivalent ounces
following grade and metallurgical recovery improvements at our
Santa Elena and La Encantada operations. These operational
improvements helped to drive a 15% reduction in our AISC for the
year to $12.64 per ounce, making it our lowest AISC per ounce since
2016 and a healthy beat to our annual cost guidance range of $12.98
to $13.94 per ounce. We continue to lead the industry as the purest
silver producer and remain focused on improving margins through the
adoption of new technologies.”
2019 ANNUAL AND FOURTH QUARTER
HIGHLIGHTS
|
|
|
Change |
|
|
|
Change |
Key Performance
Metrics |
2019-Q4 |
2018-Q4 |
Q4 vs Q4 |
|
2019 |
2018 |
'19 vs '18 |
Operational |
|
|
|
|
|
|
|
Ore
Processed / Tonnes Milled |
626,482 |
850,272 |
(26%) |
|
2,831,999 |
3,375,452 |
(16%) |
Silver
Ounces Produced |
3,348,424 |
3,250,816 |
3% |
|
13,241,118 |
11,679,452 |
13% |
Silver
Equivalent Ounces Produced |
6,233,412 |
6,485,761 |
(4%) |
|
25,554,288 |
22,243,071 |
15% |
Cash
Costs per Ounce (1) |
$3.73 |
$6.06 |
(38%) |
|
$5.16 |
$6.98 |
(26%) |
All-in
Sustaining Cost per Ounce (1) |
$12.25 |
$12.83 |
(5%) |
|
$12.64 |
$14.95 |
(15%) |
Total
Production Cost per Tonne (1) |
$78.62 |
$65.31 |
20% |
|
$75.05 |
$60.71 |
24% |
Average Realized Silver Price
per Ounce (1) |
$17.46 |
$14.47 |
21% |
|
$16.40 |
$15.53 |
6% |
|
|
|
|
|
|
|
|
Financial (in
$millions) |
|
|
|
|
|
|
|
Revenues |
$96.5 |
$74.1 |
30% |
|
$363.9 |
$300.9 |
21% |
Mine
Operating Earnings (Loss) |
$23.9 |
($9.0) |
NM |
|
$66.2 |
($11.9) |
NM |
Impairment of Non-current Assets |
($44.9) |
($168.0) |
73% |
|
($58.7) |
($199.7) |
71% |
Net
(Loss) Earnings |
($39.9) |
($164.4) |
76% |
|
($40.5) |
($204.2) |
80% |
Operating Cash Flows before Movements in Working Capital and
Taxes |
$32.9 |
$11.0 |
199% |
|
$108.9 |
$61.6 |
77% |
Cash
and Cash Equivalents |
$169.0 |
$57.0 |
196% |
|
$169.0 |
$57.0 |
196% |
Working Capital (1) |
$171.1 |
$108.1 |
58% |
|
$171.1 |
$108.1 |
58% |
|
|
|
|
|
|
|
|
Shareholders |
|
|
|
|
|
|
|
Earnings (Loss) per Share ("EPS") - Basic |
($0.19) |
($0.85) |
77% |
|
($0.20) |
($1.11) |
82% |
Adjusted EPS (1) |
$0.00 |
($0.05) |
103% |
|
$0.04 |
($0.21) |
117% |
Cash
Flow per Share (1) |
$0.16 |
$0.06 |
182% |
|
$0.54 |
$0.34 |
61% |
"NM" - Not meaningful |
|
|
|
|
|
|
|
(1) The Company reports non-GAAP measures which
include cash costs per ounce produced, all-in sustaining 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.
2019 FINANCIAL RESULTS
The Company ended 2019 with $169.0 million in
cash and cash equivalents compared to $57.0 million at the end of
2018. In addition, the Company ended the year with working capital
of $171.1 million compared to $108.1 million at the end of 2018.
The increase in cash and cash equivalents was primarily attributed
to a record $140.0 million generated from its operating activities,
$81.9 million raised through its “at-the-market distributions”
equity financing program, proceeds of $16.7 million from exercise
of stock options, net of $116.9 million spent on investing
activities primarily relating to mining interests and property,
plant and equipment.
Full year revenues totaled $363.9 million, a 21%
increase compared to 2018, primarily related to San Dimas' full
year of operations under First Majestic, a 92% increase in
production from La Encantada following a revised throughput
methodology which improved recoveries significantly, as well as
increased production at Santa Elena upon implementation of the HIG
mill in the second half of the year. Improvement in revenues was
also attributable to a 6% increase in average realized silver price
in 2019, which averaged $16.40 per ounce during the year but
improved significantly from an average of $15.26 per ounce in first
half of 2019 to $17.55 per ounce in the second half of 2019.
Annual mine operating earnings totaled $66.2
million compared to ($11.9) million in 2018. The increase in
mine operating earnings was primarily driven by an increase in
revenues, higher silver and gold prices, as well as a decrease in
cash costs. Shifting a greater proportion of the Company's
production to its larger and lower cost operations, as well as a
decrease in depletion, depreciation and amortization upon
suspension of operations at La Guitarra, La Parrilla and San Martin
mines has contributed to lower overall average costs and higher
mine operating earnings.
Cash flows before movements in working capital
and taxes during the year was $108.9 million ($0.54 per share)
compared to $61.6 million ($0.34 per share) in 2018.
Adjusted earnings per share (“EPS”)(non-GAAP),
normalized for non-cash or unusual items such as impairment of
non-current assets, share-based payments and deferred income taxes
for the year ended December 31, 2019 was $0.04, compared to ($0.21)
in 2018.
FULL YEAR 2019 OPERATIONAL
RESULTS
Annual Production
Summary |
San Dimas |
Santa Elena |
La Encantada |
San Martin |
La Parrilla |
Del Toro |
Consolidated |
Ore Processed / Tonnes Milled |
691,576 |
|
875,435 |
|
890,008 |
|
101,362 |
|
167,535 |
|
106,083 |
|
2,831,999 |
|
Silver Ounces Produced |
6,305,672 |
|
2,435,604 |
|
3,083,410 |
|
555,595 |
|
557,603 |
|
303,234 |
|
13,241,118 |
|
Silver Equivalent Ounces Produced |
13,831,627 |
|
6,316,277 |
|
3,099,717 |
|
692,541 |
|
1,120,490 |
|
493,636 |
|
25,554,288 |
|
Cash Costs per Ounce |
$1.41 |
|
($0.51 |
) |
$11.89 |
|
$13.45 |
|
$15.59 |
|
$28.26 |
|
$5.16 |
|
All-in Sustaining Cost per Ounce |
$7.26 |
|
$3.02 |
|
$13.90 |
|
$18.73 |
|
$26.29 |
|
$37.77 |
|
$12.64 |
|
Total Production Cost per Tonne |
$131.90 |
|
$60.23 |
|
$40.06 |
|
$91.65 |
|
$78.99 |
|
$98.29 |
|
$75.05 |
|
(1) The San Martin operation was placed on
temporary suspension as previously announced on July 15, 2019.(2)
The La Parrilla operation was placed on temporary suspension as
previously announced on August 7, 2019.
Total production in 2019 reached 25.6 million
equivalent ounces of silver, representing a 15% increase over 2018,
and at the upper end of the Company’s guidance of 24.4 to 26.0
million silver equivalent ounces. Total production consisted of
13.2 million ounces of silver, 134,580 ounces of gold, 7.9 million
pounds of lead and 3.7 million pounds of zinc. The increase in
production was primarily attributed to the San Dimas mine, which
contributed 13.8 million silver equivalent ounces of production
during its first full year of operation under First Majestic, and a
92% increase in production from the La Encantada mine.
Cash cost per ounce in the year was $5.16, a
decrease of $1.82 per ounce compared to the previous year and below
the range of the Company's 2019 guidance of $5.62 to $6.18 per
ounce. The decrease in cash cost compared to the prior year was
primarily due to the addition of the San Dimas mine since May 2018,
which had a low cash cost of $1.41 per ounce, and the suspension of
operations at the Company's higher cost mines, including the La
Guitarra, La Parrilla and San Martin mines, over the past two
years.
AISC per ounce in 2019 was $12.64, a decrease of
$2.31 per ounce compared to the previous year and below the annual
guidance of $12.98 to $13.94 per ounce. The decrease in AISC per
ounce was attributed to lower cash costs as well as reduction in
sustaining capital expenditures as the Company shifts its focus
towards its most profitable operations.
The Company’s total capital expenditures in 2019
was $124.2 million, an increase of 16% or $17.0 million
compared to the prior year, consisting of $46.5 million for
underground development, $30.5 million in exploration and $23.0
million in property, plant and equipment, and $24.2 million in
innovation projects. Total investments in 2019, on a mine-by-mine
basis, primarily consisted of $42.5 million at San Dimas, $23.0
million at Santa Elena, $13.2 million at La Encantada, $10.5
million at La Parrilla, $4.9 million at Del Toro and $4.9 million
at San Martin.
Q4 2019 FINANCIAL RESULTS
Revenues generated in the fourth quarter of 2019
totaled $96.5 million, representing a 30% increase compared to
$74.1 million in the fourth quarter of 2018, primarily due to
a 21% increase in average realized silver price compared to the
same quarter of the prior year, plus a 6% increase in silver
equivalent ounces sold compared to the same quarter of 2018.
Mine operating earnings were $23.9 million
compared to ($9.0) million in the fourth quarter of 2018. The
increase in mine operating earnings in the quarter was attributed
to a combination of higher revenues and the costs reductions due to
the temporary suspension of activities at the La Parrilla and San
Martin mines which incurred operating losses in the same quarter of
the prior year.
The Company recorded net earnings of ($39.9)
million, or EPS of ($0.19), during the fourth quarter of 2019
primarily attributed to a $58.7 million non-cash impairment charge,
or $52.4 million net of tax, in relation to the La Encantada mine
primarily as the economics of the mine does not support its
carrying value.
Adjusted net earnings for the fourth quarter was
$0.3 million, or EPS of $0.00, after excluding
non-cash and non-recurring items.
Cash flows before movements in working capital
and income taxes were $32.9 million ($0.16 per share), compared to
$11.0 million ($0.06 per share) in the fourth quarter of 2018.
Q4 2019 OPERATIONAL RESULTS
Fourth Quarter
Production Summary |
San Dimas |
Santa Elena |
La Encantada |
Del Toro |
Consolidated |
Ore Processed / Tonnes Milled |
182,265 |
|
196,640 |
|
221,049 |
|
26,528 |
|
626,482 |
|
Silver Ounces Produced |
1,658,721 |
|
619,321 |
|
987,630 |
|
82,752 |
|
3,348,424 |
|
Silver Equivalent Ounces Produced |
3,516,117 |
|
1,592,397 |
|
991,856 |
|
133,042 |
|
6,233,412 |
|
Cash Costs per Ounce |
$0.74 |
|
($1.40 |
) |
$10.12 |
|
$28.62 |
|
$3.73 |
|
All-in Sustaining Cost per Ounce |
$7.41 |
|
$3.66 |
|
$12.67 |
|
$38.84 |
|
$12.25 |
|
Total Production Cost per Tonne |
$127.19 |
|
$68.77 |
|
$43.92 |
|
$106.99 |
|
$78.62 |
|
Total production in the fourth quarter of 2019
reached 6.2 million silver equivalent ounces, representing a slight
decrease compared to the previous quarter, consisting of 3.3
million ounces of silver, 33,176 ounces of gold and 0.9 million
pounds of lead. The slight decrease was primarily due to lower gold
grades and reduction in tonnes milled at Santa Elena in the month
of December due to heavy rains impacting ore and waste haulage and
the ability to produce from the heap leach pads.
Cash cost per ounce in the fourth quarter was
$3.73 compared to $3.83 in the previous quarter. The decrease in
cash cost was primarily attributed to a reduction of $3.8 million
in operating costs due to the temporary suspension of operating
activities at the higher cost La Parrilla mine.
AISC in the fourth quarter was $12.25 per ounce
compared to $10.76 per ounce in the previous quarter. The increase
was attributed to higher sustaining capital expenditures at San
Dimas for mine infrastructure improvements and advancement of
sustaining development activities at Santa Elena.
Capital expenditures in the fourth quarter were
$37.2 million, an increase of 30% compared to the prior quarter,
primarily consisting of $14.1 million at San Dimas, $7.8 million at
Santa Elena, $3.3 million at La Encantada, $1.8 million at La
Parrilla, $1.7 million at Del Toro, $0.1 million at San Martin and
$8.4 million for innovation projects.
ABOUT THE COMPANY
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 the San Dimas Silver/Gold Mine, the
Santa Elena Silver/Gold Mine and the La Encantada Silver Mine.
Production from these mines are projected to be between 11.8 to
13.2 million silver ounces or 21.5 to 24.0 million silver
equivalent ounces in 2020.
FOR FURTHER INFORMATION contact
info@firstmajestic.com, visit our website at
www.firstmajestic.com or call our toll free number
1.866.529.2807.
FIRST MAJESTIC SILVER CORP.“signed”Keith Neumeyer, President
& CEO
SPECIAL NOTE REGARDING FORWARD-LOOKING
INFORMATION
Cautionary Note Regarding
Forward-Looking StatementsThis press release contains
“forward‐looking information” and "forward-looking statements”
under applicable Canadian and U.S. securities laws (collectively,
“forward‐looking statements”). These statements relate to future
events or the Company's future performance, business prospects or
opportunities that are based on forecasts of future results,
estimates of amounts not yet determinable and assumptions of
management made in light of management's experience and perception
of historical trends, current conditions and expected future
developments. Forward-looking statements include, but are not
limited to, statements with respect to: the Company’s business
strategy; future planning processes; commercial mining operations;
cash flow; budgets; the timing and amount of estimated future
production; recovery rates; mine plans and mine life; the future
price of silver and other metals; costs of production; costs and
timing of the development of new deposits; capital projects and
exploration activities and the possible results
thereof. Assumptions may prove to be incorrect and actual
results may differ materially from those anticipated. Consequently,
guidance cannot be guaranteed. As such, investors are cautioned not
to place undue reliance upon guidance and forward-looking
statements as there can be no assurance that the plans, assumptions
or expectations upon which they are placed will occur. All
statements other than statements of historical fact may be
forward‐looking statements. Statements concerning proven and
probable mineral reserves and mineral resource estimates may also
be deemed to constitute forward‐looking statements to the extent
that they involve estimates of the mineralization that will be
encountered as and if the property is developed, and in the case of
measured and indicated mineral resources or proven and probable
mineral reserves, such statements reflect the conclusion based on
certain assumptions that the mineral deposit can be economically
exploited. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives or future events or performance (often, but not always,
using words or phrases such as “seek”, “anticipate”, “plan”,
“continue”, “estimate”, “expect”, “may”, “will”, “project”,
“predict”, “forecast”, “potential”, “target”, “intend”, “could”,
“might”, “should”, “believe” and similar expressions) are not
statements of historical fact and may be “forward‐looking
statements”.
Actual results may vary from forward-looking
statements. Forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause
actual results to materially differ from those expressed or implied
by such forward-looking statements, including but not limited to:
risks related to the integration of acquisitions; actual results of
exploration activities; conclusions of economic evaluations;
changes in project parameters as plans continue to be refined;
commodity prices; variations in ore reserves, grade or recovery
rates; actual performance of plant, equipment or processes relative
to specifications and expectations; accidents; labour relations;
relations with local communities; changes in national or local
governments; changes in applicable legislation or application
thereof; delays in obtaining approvals or financing or in the
completion of development or construction activities; exchange rate
fluctuations; requirements for additional capital; government
regulation; environmental risks; reclamation expenses; outcomes of
pending litigation; limitations on insurance coverage as well as
those factors discussed in the section entitled "Description of the
Business – Risk Factors" in the Company's most recent Annual
Information Form, 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 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.
The Company believes that the expectations
reflected in these forward‐looking statements are reasonable, but
no assurance can be given that these expectations will prove to be
correct and such forward‐looking statements included herein should
not be unduly relied upon. These statements speak only as of the
date hereof. The Company does not intend, and does not assume any
obligation, to update these forward-looking statements, except as
required by applicable laws.
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