First Majestic sees 1% revenue drop as it holds on to silver stockpile
(Kitco News) - First Majestic Silver Corp's plan to stockpile its silverdidn't pan out as expected after the company reported a 1% drop in revenues inthe third quarter.
Thursday, ahead of the North American equity open, FirstMajestic reported a net loss of 18.4 million or 7 cents per share due to lowerrevenue because it held 1.4 million ounces of silver at the end of the quarter.The company said that it generated revenues of $124.6 million in the thirdquarter.
"Had the Company sold these ounces at the end of thequarter, it would have generated approximately $33.2 million in additionalrevenue using the quarterly average realized price of $23.10 per ounce,"the company said in the press release.
However, Keith Neumeyer, president and CEO of FirstMajestic, said that he expects the company's plan to pay out in the end.
"Our decision to inventory a significant amount ofsilver during the quarter obviously impacted our third quarter financialresults but those additional revenues and cash flows are expected to berealized in the coming quarters as prices improve," he said in astatement.
The company also reported a rise in all-in sustaining costsof $19.93 per silver ounce equivalent, up 42% compared to costs last year. Thecompany said that the increase in costs was related to its operations atJerritt Canyon.
"During the quarter, we also invested in twosignificant capital projects at Jerritt Canyon, which temporarily increased ourall-in sustaining costs at the site. With the majority of these investments nowcomplete, we expect a reduction in costs starting in the fourth quarter drivenby higher production, reduced capital costs and continued improvements inoperating efficiencies. At San Dimas, AISC costs decreased by 19% to $11.58 perounce due to higher production and higher consumption rates of low-cost energyfrom our hydro dam when compared to diesel or grid power," said Neumeyer.
At Santa Elena, the mill is preparing to begin test batchinglow-grade stockpiles from the Ermita??o deposit, which is expected to furtherdrive down costs and increase overall production. Finally, the company declaredits third-quarter dividend, which was also impacted by the lower quarterlyrevenues due to the withholding of the 1.4 million unsold ounces of silver;however, the upcoming future quarter dividends are expected to increase as thislarge inventory is divested," Neumeyer added.
The silver producer said that cash and cash equivalents atthe end of the quarter were $192.8 million; it added that working capitaltotaled $262.5 million.
The company also declared a dividend of 0.49 cents pershare.
By Neils ChristensenFor Kitco News
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