New York - AG
Toronto – FR
Frankfurt – FMV
Mexico - AG
VANCOUVER, Nov. 12, 2014 /PRNewswire/ - 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 third quarter
ended September 30, 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.
Keith Neumeyer, CEO and President
of First Majestic, stated: "the Company's primary focus remains to
be cost cutting. Unfortunately, due to the lower production in the
third quarter, severance payouts and temporary lower throughput at
two of our mines, our costs were modestly higher in the quarter.
This trend is anticipated to reverse in the fourth quarter which
will benefit from a reduced workforce and lower energy and chemical
costs. Due to the fact that the silver price is dropping more
quickly than costs, diligence is required to remain focused on
bringing all cost structures down to 2006 levels. I'm confident
that the changes currently underway in our business will allow us
to produce profitable ounces in this lower metal price
environment."
THIRD Quarter 2014 FINANCIAL Highlights
- Generated revenues of $40.8
million, a 39% decrease compared to the previous quarter
primarily due to a temporary suspension of silver sales totalling
934,000 ounces.
- Net earnings after taxes amounted to a loss of $10.5 million or earnings per share of
($0.09).
- Adjusted earnings per share (a non-GAAP measure) of
($0.04), after excluding non-cash and
non-recurring items.
- Cash flow per share (a non-GAAP measure) of $0.08, representing a 53% decrease from the prior
quarter.
- Mine operating loss amounted to $1.8
million primarily due to a 39% decrease in revenue and 36%
decrease in cost of sales primarily attributed to the suspended
silver sales.
- Total cash cost, net of by-product credits, was $10.41 per ounce, up 8% from the prior quarter
primarily due to a 13% decrease in silver production during the
quarter.
- All-in sustaining cost ("AISC") was $19.89 per payable silver ounce, up 9% from the
prior quarter.
- Average realized silver price per ounce was $19.10, a decrease of 3% compared to the prior
quarter.
- Cash and cash equivalents of $34.7
million held at the end of the quarter plus the silver held
in inventory.
- Subsequent to quarter end, the Company sold all 934,000 ounces
of silver that it held over from the third quarter for an average
price of $17.29 per ounce increasing
the cash balance by $16.1
million.
THIRD QUARTER 2014 Highlights
|
Q3
|
Q2
|
Q/Q
|
Q1
|
Q4
|
Q3
|
HIGHLIGHTS
|
2014
|
2014
|
Change
|
2014
|
2013
|
2013
|
Operating
|
|
|
|
|
|
|
Ore Processed /
Tonnes Milled
|
621,196
|
671,024
|
(7%)
|
637,663
|
701,617
|
641,345
|
Silver Ounces
Produced
|
2,680,439
|
3,098,218
|
(13%)
|
2,895,497
|
2,746,598
|
2,689,237
|
Silver Equivalent
Ounces Produced
|
3,523,536
|
3,855,223
|
(9%)
|
3,631,672
|
3,421,161
|
3,370,457
|
Cash Costs per
Ounce(1)
|
$10.41
|
$9.63
|
8%
|
$9.88
|
$9.66
|
$8.84
|
All-in Sustaining
Cost per Ounce(1)
|
$19.89
|
$18.18
|
9%
|
$18.71
|
n/a
|
n/a
|
Total Production Cost
per Tonne(1)
|
$54.34
|
$51.81
|
5%
|
$53.20
|
$42.69
|
$43.49
|
Average Realized
Silver Price per Ounce ($/eq. oz.)(1)
|
$19.10
|
$19.59
|
(2%)
|
$20.90
|
$20.61
|
$21.58
|
Financial
|
|
|
|
|
|
|
Revenues ($
millions)
|
$40.8
|
$66.9
|
(39%)
|
$65.3
|
$59.0
|
$76.9
|
Mine Operating
Earnings ($ millions)(2)
|
($1.8)
|
$9.5
|
(119%)
|
$16.6
|
$14.3
|
$29.2
|
Net Earnings ($
millions)(3)
|
($10.5)
|
$7.6
|
(238%)
|
$6.0
|
($81.2)
|
$16.3
|
Operating Cash Flows
before Movements in Working Capital
|
$9.0
|
$19.0
|
(53%)
|
$25.4
|
$20.4
|
$37.2
|
|
and Income Taxes ($
millions)(2)
|
Cash and Cash
Equivalents ($ millions)
|
$34.7
|
$66.7
|
(48%)
|
$41.5
|
$54.8
|
$67.5
|
Working Capital ($
millions)(1)
|
$11.4
|
$46.1
|
(75%)
|
$18.7
|
$32.8
|
$69.6
|
Shareholders
|
|
|
|
|
|
|
Earnings per Share
("EPS") - Basic
|
($0.09)
|
$0.06
|
(249%)
|
$0.05
|
($0.69)
|
$0.14
|
Adjusted
EPS(1)
|
($0.04)
|
$0.02
|
(300%)
|
$0.06
|
$0.05
|
$0.22
|
Cash Flow per
Share(1)
|
$0.08
|
$0.16
|
(50%)
|
$0.22
|
$0.17
|
$0.32
|
Weighted Average
Shares Outstanding for the Periods
|
117,511,442
|
117,490,053
|
0%
|
117,227,432
|
117,030,825
|
116,903,753
|
|
|
|
|
|
|
|
(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.
|
(3)
|
Net loss in the
fourth quarter and year ended December 31, 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.
|
FINANCIAL REVIEW
The Company generated revenues of $40.8
million for the third quarter of 2014, a 39% decrease
compared to the previous quarter primarily due to a temporary
suspension of silver sales of approximately 934,000 silver ounces
to maximize profit in response to a 19% decline in the price of
silver during the quarter, and a 9% decrease in total
production.
Net earnings decreased to a loss of $10.5
million, or ($0.09) per share,
compared to earnings of $7.6 million,
or $0.06 per share in the previous
quarter. After excluding non-cash and non-recurring items, adjusted
net loss was $5.0 million (Adjusted
EPS of $(0.04)). Adjusted net loss in
the quarter was primarily due to the reduction in ounces sold
following the decision to suspend silver sales. The sale of the
934,000 silver ounces will now be realized in the fourth
quarter.
Mine operating earnings decreased to a loss of $1.8 million compared to earnings of $9.5 million in the previous quarter. The
decrease is primarily due to the suspended sales during the quarter
and lower silver prices.
Cash flows from operations before movements in working capital
and income taxes in the third quarter totaled $9.0 million or $0.08 per share, compared to $19.0 million or $0.16 per share in the previous quarter. The
decrease is primarily due a reduction in mine operating earnings
during the quarter.
OPERATIONAL REVIEW
Total production in the third quarter was 3,523,536 silver
equivalent ounces ("SEOs"), a decrease of 9% compared to the
previous quarter. The lower production was primarily due to 25%
decrease in production at La
Encantada following a change in the production sequence and
a 21% decrease in production from Del Toro caused by lower tonnage
due to the decision to reconfigure the plant 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.
In an effort to cut costs in the low metal price environment,
the Company has reduced its workforce from approximately 4,900 in
January 2013 to approximately 3,800
currently. The reduction was achieved by eliminating certain
management positions and cutting operational staff and contractors
in an effort to reduce its workforce without impairing future
growth plans. Due to severance payouts, the cost savings of these
most recent layoffs will not be realized until the fourth quarter
of 2014.
At La Encantada, the Company's
plan to expand the crushing and grinding area to allow for higher
production levels will begin in the first quarter of 2015 and is
scheduled to be completed by mid-2015. The $9.0 million investment, of which $3.4 million had been spent to-date, is estimated
to increase annual production to over 5.0 million ounces of silver.
The plant ramp up to 3,000 tpd is expected to occur in the second
half of 2015.
In October, the Company sold all 934,000 ounces of silver that
it held over from the third quarter for an average price of
$17.29 per ounce representing a small
gain over the closing spot price of silver on September 30, 2014.
COSTS AND CAPITAL EXPENDITURES
Cash costs per ounce in the third quarter were $10.41, an 8% increase from the previous quarter.
The increase in cash costs are primarily attributed to a temporary
reduction in production at La
Encantada due to a change in operational sequencing which
resulted in six weeks of lower grade production. This change was
completed during July and August and by September higher silver
grades returned.
AISC in the third quarter were $19.89 per payable silver ounce, a 9% increase
from the previous quarter. Future cost savings are anticipated as
the Company is negotiating with all of its suppliers and
contractors to further reduce their costs from reductions made
previously. Significant cost reductions are also expected to be
achieved during the fourth quarter following Del Toro's connection
to the new 115kV power line which occurred on September 29, 2014 and the resulting
discontinuance of the higher cost portable diesel power generators.
An important area of cost savings entered into in the quarter was
the signing of a new contract with a chemical supplier allowing for
first deliveries commencing in September. The Company expects to
consume the previous supplier's remaining inventory during the
fourth quarter and due to averaging of costs the Company
anticipates savings to begin immediately, but for the full savings
from the new contract to be achieved by January of 2015.
Capital expenditures in the third quarter were $29.0 million, including $8.2 million at Del Toro, $5.2 million at La
Encantada, $8.9 million at La
Parrilla, $3.1 million at
San Martin, $3.2 million at La
Guitarra and $0.4 million at
La Luz. Compared to the previous
quarter, capital expenditures increased 21% due to a $4.8 million increase in capital expenditures at
La Parrilla, primarily for investment in new mining equipment.
CONFERENCE CALL
The Company will be holding a conference call and webcast today
at 8 am PT (11 am ET). To
participate in the conference call, please dial the following:
Toll Free Canada
& USA:
|
1-800-319-4610
|
Outside of Canada
& USA:
|
1-604-638-5340
|
Toll Free
Germany:
|
0800 180 1954
|
Toll Free
UK:
|
0808 101 2791
|
Participants should dial in 10 minutes prior to the
conference.
Click on WEBCAST on the First Majestic homepage as a
simultaneous audio webcast of the conference call will be posted at
www.firstmajestic.com.
The conference call will be recorded and you can listen to an
archive of the conference by calling:
Canada & USA Toll
Free:
|
1-800-319-6413
|
Outside Canada &
USA:
|
1-604-638-9010
|
Pin
Code:
|
3928 followed by the
# sign
|
The replay will be available approximately one hour after the
conference and will available for 7 days following the
conference. The replay will also be available on the
Company's website for one month.
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.
FIRST MAJESTIC SILVER CORP.
"signed"
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.
SOURCE First Majestic Silver Corp.