TORONTO (miningweekly.com) – Vancouver-based First Majestic Silver earned C$1-million in the second quarter of 2009, compared with a C$0,3-million net loss in the same period a year ago.

The company, which operates three mines in Mexico, produced 957 936 silver-equivalent ounces, compared with 1,3-million ounces in the second quarter of 2008.

Second-quarter 2009 production included 827 720 oz of silver, 746 oz of gold and 1,5-million pounds of lead.

However, it sold more metal than it produced, with sales of 1,07-million silver-equivalent ounces, including 103 867 oz of coins, ingots and bullion.

Net sales revenue for the quarter, after smelting and refining charges and metals deductions, rose 14%, to C$13-million.

Smelting and refining charges declined after the company revised some agreements at year end, and entered into new smelting and refining deals in February and May this year.

However, First Majestic's direct cash costs an ounce of silver for the quarter ended June 30, 2009, increased to $6,31/oz, compared with $4,84/oz in the same period last year, because of reduced silver production at the La Encantada mine, lower by-product credits, lower average head grades and lower recoveries.

PROJECT COST RISES

At La Encantada, the firm is building a new 3 500-t/d cyanidation plant, which is scheduled to start commissioning in September and should be fully operational by year end.

Earlier this year, the company said it expected to finish construction on the project by June.

Once completed, the new plant is anticipated to produce over four-million ounces of silver a year, in the form of dore bars.

However, First Majestic said on Friday it now expects the project to cost $27,5-million, up from the previous figure provided of $24,5-million, mainly because of a decision to revise the tailings pond design to a paste-and-filter design, which will result in lower power and water consumption, once the plant starts up.

Production at the company's two other mines, La Parrila and San Martin, was in line with forecasts in the second quarter, but La Encantada missed expectations.

As a result of delays in completing the new La Encantada plant, First Majestic has revised its full-year production forecast to five-million silver-equivalent ounces.

First Majestic shares slid 3,85% on Friday, to C$2,25 apiece by 15:06 in Toronto.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.