FIRST MAJESTIC SILVER CORP. (AG: NYSE; FR: TSX; FMV: Frankfurt)
(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, 2020. 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 or on
SEDAR at www.sedar.com and on EDGAR at www.sec.gov. All amounts are
in U.S. dollars unless stated otherwise.
SECOND QUARTER 2020 HIGHLIGHTS
(compared to Q2 2019)
- Revenues of $34.9 million,
representing a 58% decrease due to limited operations during the
quarter in response to COVID-19 and the decision to stockpile metal
inventory in an effort to maximize future profits
- At quarter end, the Company held
approximately 970,000 ounces of silver and 6,000 ounces of gold in
metal inventory which were subsequently sold and will be recognized
as revenue in the third quarter for $25.0 million
- Reduced cash costs by 2% to $6.73
per payable silver ounce
- All-in sustaining costs (“AISC”) of
$18.57 per payable silver ounce, representing a 26% increase
primarily due to higher fixed overhead costs being divided over
less ounces produced due to the COVID-19 related shutdowns
- Mine operating earnings of ($7.8)
million after incurring $9.2 million in standby costs during the
quarter, compared to earnings of $4.2 million in Q2 2019
- Net earnings of ($10.0) million was
impacted due to the suspension of operations and the decision to
stockpile metal inventory
- Adjusted EPS of ($0.10) after
excluding non-cash and non-recurring items
- Cash flow per share of ($0.08)
(non-GAAP)
- Ended the quarter with $95.2
million in cash and cash equivalents; as of August 4, 2020, the
Company held $128.0 million in cash and cash equivalents
“Obviously the second quarter for many
industries, including the mining sector in Mexico, was negatively
impacted by government mandated closures. We are glad most of these
negative impacts are now behind us as our operations regain
pre-COVID production rates,” stated Keith Neumeyer, President and
CEO. “Our decision to withhold a significant amount of silver and
gold at quarter end proved to be the right decision. These
inventoried ounces noticeably impacted revenues, costs, cash flows
and earnings in the second quarter. However, the subsequent sale of
these ounces will have a significant positive impact adding $25
million to our third quarter revenues. In addition, due to the
multi-year highs in the silver price and record gold prices, the
Company is reviewing opportunities to potentially restart some of
our suspended mining operations.”
OPERATIONAL AND FINANCIAL
HIGHLIGHTS
Key Performance Metrics |
2020-Q2 |
2020-Q1 |
Change Q2 vs Q1 |
2019-Q2 |
ChangeQ2 vs Q2 |
Operational |
|
|
Ore Processed / Tonnes Milled |
|
333,559 |
|
|
599,142 |
|
(44 |
%) |
|
736,896 |
|
(55 |
%) |
Silver Ounces Produced |
|
1,834,575 |
|
|
3,151,980 |
|
(42 |
%) |
|
3,193,566 |
|
(43 |
%) |
Silver Equivalent Ounces Produced |
|
3,505,376 |
|
|
6,195,057 |
|
(43 |
%) |
|
6,410,483 |
|
(45 |
%) |
Cash Costs per Ounce (1) |
$ |
6.73 |
|
$ |
5.16 |
|
30 |
% |
$ |
6.84 |
|
(2 |
%) |
All-in Sustaining Cost per Ounce (1) |
$ |
18.57 |
|
$ |
12.99 |
|
43 |
% |
$ |
14.76 |
|
26 |
% |
Total Production Cost per Tonne (1) |
$ |
78.78 |
|
$ |
82.41 |
|
(4 |
%) |
$ |
77.93 |
|
1 |
% |
Average Realized Silver Price per Ounce (1) |
$ |
17.33 |
|
$ |
17.36 |
|
0 |
% |
$ |
14.80 |
|
17 |
% |
|
|
|
Financial (in $millions) |
|
|
Revenues |
$ |
34.9 |
|
$ |
86.1 |
|
(59 |
%) |
$ |
83.7 |
|
(58 |
%) |
Mine Operating (Loss) Earnings |
$ |
(7.8 |
) |
$ |
21.1 |
|
(137 |
%) |
$ |
4.2 |
|
NM |
|
Net (Loss) Earnings |
$ |
(10.0 |
) |
$ |
(32.4 |
) |
69 |
% |
$ |
(12.0 |
) |
17 |
% |
Operating Cash Flows before Movements in Working Capital and
Taxes |
$ |
(16.4 |
) |
$ |
23.3 |
|
(170 |
%) |
$ |
17.7 |
|
(193 |
%) |
Cash and Cash Equivalents |
$ |
95.2 |
|
$ |
145.2 |
|
(34 |
%) |
$ |
94.5 |
|
1 |
% |
Working Capital (1) |
$ |
114.2 |
|
$ |
139.8 |
|
(18 |
%) |
$ |
129.5 |
|
(12 |
%) |
|
|
|
Shareholders |
|
|
(Loss) Earnings per Share ("EPS") - Basic |
$ |
(0.05 |
) |
$ |
(0.15 |
) |
69 |
% |
$ |
(0.06 |
) |
20 |
% |
Adjusted EPS (1) |
$ |
(0.10 |
) |
$ |
0.04 |
|
NM |
|
$ |
(0.02 |
) |
NM |
|
Cash Flow per Share (1) |
$ |
(0.08 |
) |
$ |
0.11 |
|
(170 |
%) |
$ |
0.09 |
|
(189 |
%) |
NM – Not meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
Q2 2020 FINANCIAL RESULTS
The Company realized an average silver price of
$17.33 per ounce during the second quarter of 2020, representing a
17% increase compared to $14.80 in the second quarter of 2019 and
remained relatively unchanged compared to $17.36 in the prior
quarter.
Revenues generated in the second quarter totaled
$34.9 million compared to $83.7 million in the second quarter of
2019. Revenues in the quarter were impacted by the temporary
suspension of operations throughout most of April and May in
response to the COVID-19 pandemic, as well as the withheld metal
sales in anticipation of realizing higher silver and gold prices in
the second half of 2020. At quarter end, the Company had
approximately 970,000 ounces of silver and 6,000 ounces of gold in
finished goods inventory (of which approximately 2,400 ounces of
gold were committed under streaming agreements) which were sold and
will be recognized as revenue in the third quarter for
$25.0 million.
The Company realized mine operating earnings of
($7.8) million compared with mine operating earnings of $4.2
million in the second quarter of 2019. Mine operating earnings in
the quarter were affected by decreased production as well as higher
standby costs incurred during the temporary suspension of
operations, as well as deferral of metal sales into the next
quarter.
During the quarter, the Company incurred a total
of $9.2 million in standby costs consisting of $7.2 million related
to COVID-19 and $2.0 million related to the 13-day union work
stoppage at San Dimas. In addition, the Company has granted paid
leave to vulnerable employees as defined by the Mexican Ministry of
Health, consisting of a list of conditions including anyone 60
years of age or older, workers with pre-existing conditions or
compromised immune systems. Vulnerable workers currently account
for approximately 18% of the Company's workforce at its three
operating mines. The Company continues to support its vulnerable
workers with base pay and medical services as needed while they are
not working.
Earnings for the quarter was ($10.0) million
(EPS of ($0.05)) compared to earnings of ($12.0) million (EPS of
($0.06)) in the second quarter of 2019.
Adjusted net earnings for the quarter was
($20.7) million (Adjusted EPS of ($0.10)) compared to ($3.6)
million (Adjusted EPS of ($0.02)) in the second quarter of 2019,
after excluding non-cash and non-recurring items such as the
standby costs related to the COVID-19 suspensions.
Cash flow used in operations before movements in
working capital and income taxes in the quarter was $16.4 million
(($0.08) per share) compared to operating cash flow from operations
of $17.7 million ($0.09 per share) in the second quarter of
2019.
Cash and cash equivalents at June 30, 2020 were
$95.2 million while working capital was $114.2 million. As of
August 4, 2020, the Company held $128.0 million in cash and cash
equivalents.
OPERATIONAL HIGHLIGHTS
The table below represents the quarterly
operating and cost parameters at each of the Company’s three
producing silver mines.
Second Quarter Production Summary |
San Dimas |
Santa Elena |
La Encantada |
Consolidated |
Ore Processed / Tonnes Milled |
|
114,390 |
|
89,590 |
|
129,579 |
|
333,559 |
Silver Ounces Produced |
|
1,102,931 |
|
222,100 |
|
509,544 |
|
1,834,575 |
Gold Ounces Produced |
|
12,042 |
|
3,677 |
|
45 |
|
15,764 |
Silver Equivalent Ounces Produced |
|
2,395,633 |
|
595,651 |
|
514,092 |
|
3,505,376 |
Cash Costs per Ounce* |
$ |
3.77 |
$ |
15.10 |
$ |
9.38 |
$ |
6.73 |
All-in Sustaining Cost per Ounce* |
$ |
13.04 |
$ |
24.71 |
$ |
11.60 |
$ |
18.57 |
Total Production Cost per Tonne |
$ |
129.67 |
$ |
74.50 |
$ |
36.80 |
$ |
78.78 |
|
|
|
|
|
|
|
|
|
*Cash Cost per Ounce and All-in Sustaining Cost per Ounce are
calculated on a per payable silver ounce basis.
Total production in the second quarter 3,505,376
silver equivalents ounces, representing a 43% decrease compared to
the prior quarter. Total production consisted of 1.8 million ounces
of silver, 15,764 ounces of gold. In the first half of 2020,
total silver equivalent production reached 9.7 million ounces, or
approximately 44% of the Company’s guidance midpoint.
COSTS AND CAPITAL
EXPENDITURES
Cash cost per ounce for the quarter was $6.73
per payable ounce of silver, an increase of 30% from $5.16 per
ounce in the previous quarter. The increase in cash cost was
primarily attributed to lower by-product credits at San Dimas and
Santa Elena as a result of approximately 3,900 ounces of gold that
were shipped but not yet sold at quarter end. Had the gold been
sold at spot metal prices at the end of the quarter, it would have
contributed an additional $4.1 million or $2.25 per ounce in
by-product credits. The impact of reduced by-product credits on
cash costs was partially offset by lower production costs due to
the weaker Mexican Peso against the U.S. Dollar, of which the
quarterly average rate decreased 18% compared to the previous
quarter.
AISC in the second quarter was $18.57 per once
compared to $12.99 per ounce in the previous quarter. The increase
in AISC per ounce was primarily due to the increased cash cost and
an increase in fixed overhead costs, such as general and
administration expenses and annual workers participation benefits,
being divided by 42% less silver ounces produced during the quarter
due to the COVID-19 suspensions.
Total capital expenditures in the second quarter
were $16.0 million, primarily consisting of $5.2 million at San
Dimas, $4.0 million at Santa Elena (including $1.6 million towards
the Ermitaño project), $1.3 million at La Encantada and $5.5
million for strategic projects.
ABOUT THE COMPANY
First Majestic is a publicly traded 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
11.0 to 11.7 million silver ounces or 21.4 to 22.9 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
Cautionary Note Regarding Forward Looking
Statements
This 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:
the duration and effects of the coronavirus and COVID-19, and any
other pandemics on our operations and workforce, and the effects on
global economies and society, 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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