First Majestic Silver Q1 earnings rise on higher silver price

JOHANNESBURG (miningweekly.com) – Precious metals producer First Majestic Silver increased its first-quarter net earnings by 50% quarter-on-quarter to $2.7-million, or earnings a share of $0.02, helped by a higher silver price and lower all-in sustaining costs (AISC).

The Vancouver-based miner, which operates six mines in Mexico, increase revenue by 4% to $69.1-million, as a higher silver price helped to offset a decrease in silver-equivalent ounces sold.

The company realised an average silver price of $17.55/oz in the first quarter of 2017, representing a 16% increase compared with the first quarter of 2016 and a 3% increase compared with $17.10/oz in the prior quarter.

Production for the quarter totalled 4.3-million ounces, consisting of 2.7-million ounces of silver, 15 047 oz of gold, 7.5-million pounds of lead and 0.9-million pounds of zinc. Compared with the fourth quarter of 2016, the production is 3% lower, mainly owing to fewer tonnes milled as a result of a breakdown of one of four power generators at the Santa Elena mine. The breakdown caused a temporary reduction in the mill feed from the heap leach pad in February, but normal operations resumed in March after the generator was successfully replaced.

President and CEO Keith Neumeyer said in a press release on Thursday that First Majestic Silver had achieved its cost target during the quarter, lowering its AISC to within the yearly guidance of A$11.96/oz to $12.88/oz.

AISC for the quarter fell to $12.21/oz, from $12.90/oz in the fourth quarter, mainly owing to a decrease in sustaining capital expenditures as a result of a slower-than-expected initiation of exploration and development activities at the beginning of the year. Sustaining costs, however, are expected to increase in the next quarter to meet programme targets for 2017.

Cash costs increased by 3% quarter-on-quarter to $6.68/oz, as a result of higher energy costs and lower silver production. Since the beginning of the year, First Majestic Silver’s diesel and electricity costs have increased by about 20% to 30%.

The miner expects production from its six mines to be between 11.1-million ounces and 12.4-million ounces of pure silver, or 16.6-million ounces to 18.5-million ounces of silver equivalent, in 2017.