TSX - FR
NYSE - AG
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Mexico - AG
VANCOUVER,
Oct. 14, 2014 /PRNewswire/ - First
Majestic Silver Corp. ("First Majestic" or the "Company") is
pleased to announce that total production at its five operating
silver mines in Mexico for the
third quarter ending September 30,
2014 reached 3,523,536 equivalent ounces of silver,
representing a 5% increase compared to the same quarter in
2013.
Total silver production for the quarter
consisted of 2,680,439 ounces of silver, relatively unchanged
compared to the same quarter in 2013. In addition, 9,703,792 pounds
of lead and 3,222,877 pounds of zinc were produced, representing an
increase of 14% and 44%, respectively, compared to the same quarter
of the previous year. Also produced were 2,781 ounces of gold,
representing a 5% decrease compared to the third quarter of
2013.
Keith Neumeyer,
President & CEO of First Majestic, states, "the Company's
primary focus remains to be cost cutting. Several successes have
been achieved while many challenges still remain. As management
gets accustomed to operating in a much lower silver price
environment many efficiencies are slowly showing up in the
business, however, often change comes slower than we wish. I would
like to compliment management for their efforts, yet persistence is
required in this daily challenge to achieve the highest levels of
efficiencies possible".
Consolidated Production Results:
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Q3 |
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Q3 |
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Y/Y |
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Q2 |
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Q/Q |
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2014 |
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2013 |
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Change |
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2014 |
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Change |
Ore processed/tonnes milled |
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621,196 |
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641,345 |
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-3% |
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671,024 |
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-7% |
Total production - ounces of silver equivalent |
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3,523,536 |
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3,370,457 |
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5% |
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3,855,224 |
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-9% |
Total silver ounces produced |
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2,680,439 |
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2,689,237 |
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0% |
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3,098,218 |
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-13% |
Silver grade (g/t) |
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196 |
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202 |
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-3% |
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212 |
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-7% |
Silver recovery (%) |
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68 |
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65 |
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5% |
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68 |
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0% |
Pounds of lead produced |
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9,703,792 |
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8,543,551 |
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14% |
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9,131,149 |
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6% |
Pounds of zinc produced |
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3,222,877 |
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2,232,881 |
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44% |
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2,637,967 |
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22% |
Gold ounces produced |
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2,781 |
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2,942 |
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-5% |
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2,801 |
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-1% |
Tonnes of Iron ore produced |
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629 |
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5,203 |
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-88% |
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515 |
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22% |
Silver prices declined 19% in the third quarter
representing the second largest quarterly decline since the
financial crisis in 2008. As a result of this weakness, the Company
decided to temporarily suspend silver sales in an attempt to
maximize future profits. This suspension of sales will result in
lower revenues and earnings for the third quarter, however, it is
likely that these inventories of unsold ounces will instead be sold
in the fourth quarter. As of September 30,
2014, approximately 934,000 ounces of silver were held in
inventory.
In an effort to further cut costs in the low
metal price environment, the Company has eliminated certain
management and operational positions in order to reduce its
workforce without affecting future growth plans. As a result, the
total number of personnel in the workforce, including contractors,
now stands at approximately 3,800 representing a reduction of 4%
compared to the prior quarter and 11% compared to the same period
in 2013. The total workforce peaked at approximately 4,900 in
January 2013. Due to severance
payouts, the cost savings of these recent layoffs will not be seen
until the fourth quarter. Also, additional cost savings are
anticipated as the Company has recently informed all of its
suppliers and contractors to further reduce their costs from
reductions made previously.
Further to the Company's previous announcements
regarding the construction of the power line at Del Toro, the
Company is pleased to announce that the new high capacity power
line began supplying the Del Toro operation with power on
September 29, 2014.
Operational Review:
The total ore processed during the quarter at
the Company's five operating silver mines: La Encantada, La Parrilla, Del Toro,
San Martin and La Guitarra, amounted to 621,196 tonnes,
reflecting a 3% decrease compared to the prior year and a 7%
decrease from the previous quarter. The decrease in tonnes compared
to the prior quarter was primarily due to lower throughput rates at
Del Toro as mill availability decreased due to the reconfiguration
of the plant in order to expand the flotation area due to the
decision to process all ore through flotation, as well as seasonal
disruptions due to severe weather during the Mexican rainy season
which affected the La Parrilla, San
Martin and Del Toro mines.
Average silver grades in the quarter for the
five mines decreased by 3% to 196 g/t compared to 202 g/t in the
third quarter of 2013 and decreased 7% compared with the previous
quarter. Combined silver recoveries averaged 68% during the
quarter, up from 65% compared to the same quarter in the prior year
and consistent with the second quarter average of 68%.
The Company's underground development in the
third quarter consisted of 12,546 metres, relatively unchanged
compared to 12,497 metres completed in the previous quarter.
During the quarter, 15 diamond drill rigs were
operating at the Company's five operations. The Company completed
18,335 metres of diamond drilling in the quarter compared to 12,508
metres in the prior quarter, representing a 47% increase. A
substantial portion of the quarterly drilling occurred at Del Toro
as the Company focused on delineation and infill drilling to
explore extensions of known underground structures.
The table below represents the operating
parameters at each of the Company's five producing silver
mines.
Mine by Mine Quarterly Production
Table:
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Mine |
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Ore
Processed |
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Tonnes
per Day |
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Silver
Grade
(g/t) |
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Silver
Recovery % |
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Silver Oz
Produced |
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Gold Oz
Produced |
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Pounds
of
Lead |
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Pounds
of
Zinc |
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Tonnes
of
Iron |
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Equivalent
Silver Ounces |
La Encantada |
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169,659 |
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1,844 |
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260 |
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57% |
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806,055 |
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43 |
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- |
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- |
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629 |
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813,701 |
La Parrilla |
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178,252 |
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1,938 |
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152 |
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81% |
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705,928 |
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235 |
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5,526,546 |
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3,222,877 |
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- |
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1,168,240 |
Del Toro |
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134,474 |
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1,462 |
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170 |
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68% |
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495,714 |
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101 |
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4,177,246 |
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- |
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- |
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712,860 |
San Martin |
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92,498 |
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1,005 |
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237 |
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72% |
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509,046 |
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1,166 |
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- |
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- |
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- |
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584,822 |
La Guitarra |
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46,313 |
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503 |
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132 |
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83% |
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163,696 |
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1,236 |
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- |
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- |
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- |
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243,913 |
Total |
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621,196 |
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6,752 |
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196 |
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68% |
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2,680,439 |
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2,781 |
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9,703,792 |
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3,222,877 |
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629 |
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3,523,536 |
The following prices were used in the
calculation of silver equivalent ounces: Silver: $19.76 per ounce; Gold: $1,283 per ounce; Lead: $0.99 per pound; Zinc $1.05 per pound and Iron $152 per tonne.
At the La Encantada Silver Mine:
- During the quarter, total production consisted of 806,055
silver ounces representing a 25% decrease in silver production over
the previous quarter primarily due to a 15% decrease in the silver
grade and a 7% decrease in processed ore. The reduction in
processed ore and grades were a direct result of a change in the
production sequence in order to have consistent grades and tonnage
in the coming quarters as well as a shaft rehabilitation project
that occurred during the months of July and August.
- A total of 3,537 metres of underground development were
completed in the third quarter compared to 3,095 metres of
development in the previous quarter.
- Four drill rigs were active underground at La Encantada during the quarter. A total
of 4,496 metres of exploration and definition drilling was
completed in the third quarter compared to 5,551 metres of drilling
in the previous quarter.
At the La Parrilla Silver Mine:
- During the quarter, the flotation circuit processed 93,782
tonnes having an average silver grade of 182 g/t and a 90% recovery
while the cyanidation circuit processed 84,471 tonnes with an
average silver grade of 117 g/t and a 67% recovery.
- In September, the Company increased the extraction of
underground oxide ore within the San
Marcos mine. A total of 5,300 tonnes of ore were extracted
in September and the Company expects to reach full production rates
of 1,000 tpd from San Marcos by
year end. As a result of the transition from the lower grade
Quebradillas open pit to underground mining from San Marcos, the Company is projecting an
increase in oxide silver grades along with higher expected
recoveries in the cyanidation circuit.
- During the quarter, an additional 215 metres were completed at
the underground ore haulage level 11. To date, a total of 1.6
kilometres have been completed on the 5.0 kilometre project.
- Underground development completed in the quarter totaled 2,315
metres compared with 2,033 metres developed in the previous
quarter.
- Two underground drill rigs were active within the La Parrilla
property during the quarter. A total of 2,409 metres were drilled
in the third quarter compared to 2,247 metres in the previous
quarter.
At the Del Toro Silver
Mine:
- On September 29th, the Company
successfully connected the Del Toro operation to the Mexican
National power grid and the new 115kV power line is supplying 100%
of the required power to the mine, mill and auxiliary buildings. As
a result, power costs are now anticipated to decrease dramatically
in the fourth quarter with the decommissioning of diesel power
generation units.
- During the quarter, Del Toro processed 134,474 tonnes of ore
through flotation with an average silver grade of 170 g/t.
Metallurgical recoveries for silver averaged 68% for a total
production of 495,714 silver ounces representing a decrease of 32%
compared to the previous quarter. The decrease in production was
primarily due to a 23% reduction in throughput following the
Company's decision to reconfigure the plant to process all ore
through flotation. In addition, one ball mill was offline for a
period of two weeks in August due to a storm which damaged two of
the power generators.
- As a result of the plant reconfiguration and addition of a
regrinding area, silver recoveries increased consistently
throughout the quarter, with silver recoveries averaging 64% in
July, 66% in August and 71% in September.
- Underground development completed in the quarter totaled 2,479
metres compared with 2,972 metres developed in the previous
quarter.
- Three drill rigs consisting of two underground and one on
surface were active in the third quarter at Del Toro. Total
exploration metres drilled in the third quarter amounted to 5,181
metres compared to 1,108 metres drilled in the previous
quarter.
At the San Martin Silver Mine:
- During the quarter, San Martin
set another quarterly production record of 509,046 silver ounces
and 1,166 ounces of gold representing an increase of 13% and 24%,
respectively, compared to the previous quarter. The increase in
silver production was a result of higher silver grades within the
La Guitarrona, La Reyna and La
Hedionda mining areas.
- Underground development completed in the third quarter totaled
2,333 metres compared with 2,599 metres of development in the
previous quarter.
- Two underground drill rigs were active within the San Martin property during the quarter. Total
metres drilled in the third quarter amounted to 2,968 metres
compared to 1,377 metres of drilling in the previous quarter.
At the La Guitarra Silver Mine:
- During the quarter, total production consisted of 163,696
silver ounces and 1,236 gold ounces. This represents a 27% increase
in silver production over the previous quarter primarily due to a
21% increase in the silver grade.
- In September, the newly developed and higher grade Jessica area
began production at a rate of 134 tpd for a total of 4,014 tonnes.
Mine production within the El Coloso area also delivered 21,156
tonnes during the quarter or 46% of total production. Following the
recent advances in mine development, the Company now expects these
two high grade areas will supply the processing plant with 100% of
the required ore by early 2015.
- Continued improvements in dilution and grade control as well as
the advances in laboratory procedures have supported the increase
of silver grade during the quarter.
- A total of 1,882 metres of development were completed in the
third quarter compared to 1,798 metres of development in the
previous quarter.
- Four drill rigs consisting of three underground and one on
surface were active in the third quarter within the La Guitarra property. Total metres drilled in
the quarter amounted to 3,281 metres compared to 2,225 metres
drilled in the previous quarter.
Outlook:
To date, the Company has produced a total of 8.7
million ounces of silver (11.0 million silver equivalent ounces).
After adjusting for the recent quarter and the reduced expectations
for the fourth quarter due to: a delay in accessing the higher
grade El Colosso area at La
Guitarra and additional planned maintenance at San Martin, the Company has revised its 2014
annual production guidance to within a range of 11.5 to 11.7
million silver ounces (14.6 to 14.9 silver equivalent ounces).
First Majestic is a mining company focused on
silver production in Mexico 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.
FIRST MAJESTIC SILVER CORP.
"signed"
Keith
Neumeyer
President & CEO
Cautionary Note Regarding Forward Looking Statements
This press release contains "forward-looking
statements", within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and applicable Canadian
securities legislation, concerning the business, operations and
financial performance and condition of First Majestic Silver
Corp. Forward-looking statements include, but are not limited
to, statements with respect to the future price of silver and other
metals, the estimation of mineral reserves and resources, the
realization of mineral reserve estimates, the timing and amount of
estimated future production, costs of production, capital
expenditures, costs and timing of the development of new deposits,
success of exploration activities, permitting time lines, hedging
practices, currency exchange rate fluctuations, requirements for
additional capital, government regulation of mining operations,
environmental risks, unanticipated reclamation expenses, timing and
possible outcome of pending litigation, title disputes or claims
and limitations on insurance coverage. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might"
or "will be taken", "occur" or "be achieved". Forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, performance or achievements of First Majestic Silver
Corp. to be materially different from those expressed or
implied by such forward-looking statements, including but not
limited to: risks related to the integration of acquisitions; risks
related to international operations; risks related to joint venture
operations; actual results of current exploration activities;
actual results of current reclamation activities; conclusions of
economic evaluations; changes in project parameters as plans
continue to be refined; future prices of metals; possible
variations in ore reserves, grade or recovery rates; failure of
plant, equipment or processes to operate as anticipated; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities, as well as those factors
discussed in the section entitled "Description of the Business -
Risk Factors" in First Majestic Silver Corp.'s Annual
Information Form for the year ended December
31, 2013, 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 Silver Corp. 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. There can be no
assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should
not place undue reliance on forward-looking
statements. First Majestic Silver Corp. does not
undertake to update any forward-looking statements that are
incorporated by reference herein, except in accordance with
applicable securities laws.
SOURCE First Majestic Silver Corp.