First Majestic Silver Posts Loss In Second Quarter
(Kitco News) - FirstMajestic Silver Corp. (NYSE: AG; TSX: FR) Monday reported a loss in the secondquarter despite record silver-equivalent output, with the company takingspecial charges for an impairment and acquisition of Primero Mining Corp.
The net loss was $40 million, or 22 cents per share, compared tonet earnings of $1.4 million, or a penny, in the second quarter of 2017.
Due to a decision to place the La Guitarra mine on care andmaintenance, the company took a one-time, non-cash write-down of $31.7 million($20.5 million net of tax). Other one-time expenses included costs for thePrimero acquisition and financing costs associated with convertible debentures,the company said.
Excludingspecial items, the company listed an adjusted net loss of $11.8 million, or 7 cents a share.
Revenuerose 33% year-on-year to $79.7 million, helped by a 43% jump insilver-equivalent ounces sold, the company said. Also, the average realizedsilver price rose 3% from a year ago to $16.74 an ounce.
All-in sustaining costs in the second quarter were$16.43, up from $14.17 a year ago and also a 3% increase compared to theprevious quarter. The company cited higher general and administrative expensesand sustaining capital expenditures tied to the acquisition of Primero andintegration of San Dimas into the company's portfolio of mines. AISC per ouncewere also higher due to lower production from La Encantada and Del Toro.
However, First Majestic said, AISC should decreasein the second half of 2018 to between $13.28 to $14.84 due to the expectedoperational improvements at La Encantada, Del Toro, and San Dimas.
First Majestic said the San Dimas mine,acquired in May, had an immediate impact on the company’s production and bottomline.
“Additionally, the AISC at San Dimas came in at$5.41 per ounce, making it our lowest cost and largest producing mine,” saidKeith Neumeyer, president and chief executive officer. “Silver grades at LaEncantada and Del Toro saw significant improvements at the end of the secondquarter and continue to date. As a result, total production for the month ofJuly reached a new monthly record of 2.2 million silver-equivalent ounces.
“This production trend is expected to continuethroughout the remaining quarters of 2018 and into the first half of 2019following the installation of microbubble columns at La Parrilla and Del Toroand the installation of high intensity grinding mills at Santa Elena and SanDimas.”
FirstMajestic last month upped its 2018 output guidance and reported company-recordproduction 5.1 million silver-equivalent ounces in the second quarter. 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.
By Allen SykoraFor Kitco News
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