First Majestic Posts Record Quarterly Output, Ups Guidance
(Kitco News) - FirstMajestic Silver Corp. (NYSE: AG; TSX: FR; FRANKFURT: FMV) late Monday upped its2018 output guidance after posting a company production record of 5.1 millionsilver-equivalent ounces in the second quarter following the acquisition of aseventh operating mine in May.
Second-quartersilver output rose 21% year-on-year to 2.78 million ounces, while goldproduction climbed 68% to 25,449 ounces. The company also produced 3.9 millionpounds of lead and 1.4 million pounds of zinc.
FirstMajestic increased its 2018 annual silver production to a new range of 12million to 13.2 million ounces, or 20.5 million to 22.6 millionsilver-equivalent ounces. Officials said this is primarily due to the additionof the San Dimas silver and gold mine that was acquired on May 10. Thisguidance is up from the previous range of 10.6 million to 11.8 million ouncesof silver, or 15.7 million to 17.5 million silver-equivalent ounces.
“Duringthe quarter, the integration of the newly acquired San Dimas mine into ourMexican portfolio was our primary focus,” said Keith Neumeyer, president andchief executive officer.
Severalother mines posted quarter-on-quarter declines in output, according to FirstMajestic. In fact, BMO Capital Markets said the producer missed BMO’sconsolidated guidance by some 20%.
SanDimas has become the company’s cornerstone asset and will remain a major focusfor the next several quarters as First Majestic works to optimize theoperation, the CEO said.Consolidated silver grades in the quarter rose to 127 grams per tonne from 111g/t in the previous quarter, which First Majestic said was primarily due to theaddition of production from San Dimas.
“Shortterm, we are focused on reducing underground dilution and implementing mill automationprocesses, including the installation of high-intensity grinding technologiesin order to increase efficiencies and reduce production costs,” Neumeyer said.
“Inaddition, under the new streaming agreement, we are going back to mine numeroushigh-grade silver veins that were previously deemed uneconomic by the previousoperator. In 2018, all-in sustaining costs at San Dimas are projected to bebetween $6.99 to $8.19 per ounce, making it our lowest-cost and our largestproducing mine.”
Meanwhile,Neumeyer reported that construction of a new roaster at La Encantada is in thefinal stages. Commissioning and start-up are expected to begin in late Augustbefore ramping up to commercial production by the end of the year, he said.
FirstMajestic also said it was putting the La Guitarra mine and mill under “care and maintenance” on Aug. 1and will review its options, including the potential sale of the operation. Thecompany said it was looking to reallocate capital and resources to projectsthat have “better economics” and internal rates of return, such as San Dimas.In the meantime, First Majestic said it will continue with current permittingactivities and remediation programs to prepare the operation for a potentialreopening in the future.
By Allen SykoraFor Kitco News
Follow @AllenSykora
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