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First Majestic stock tumbles on Q2 results

14th August 2018

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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Mexico-focused First Majestic on Tuesday reported a second-quarter net loss of $40-million, prompting investors in Toronto to sell the company’s stock, which tumbled nearly 15% to its lowest level in six months.

The net loss compares with net earnings of $1.4-million in the second quarter of 2017 and is the result of a one-time, non-cash write-down of $31.7-million relating to the decision to place the La Guitarra mine on care and maintenance.

The firm’s adjusted loss amounted to $11.8-million, or $0.07 a share.

Revenue increased by 33% year-on-year to $79.7-million, as silver-equivalent production hit a record 5.1-million ounces, following the integration of the newly-acquired San Dimas into the company’s Mexico portfolio.

All-in sustaining cash costs (AISC) increased to $16.43/oz, compared with $16.01/oz in the first quarter and $14.17/oz in the prior-year period.

First Majestic realised an average silver price of $16.74/oz in the second quarter, which is in line with the price achieved in the March quarter, but slightly below the $17.17/oz realised in the second quarter of 2017.

“During the 52 days since being acquired, San Dimas made an immediate impact to our production profile and bottom line by producing 808 923 oz of silver plus 11 348 oz of gold and generated mine operating earnings of $5.1-million,” stated First Majestic president and CEO Keith Neumeyer.

He added that the AISC at San Dimas came in at $5.41/oz, making it the company’s lowest cost and largest producing mine.

“Silver grades at La Encantada and Del Toro saw significant improvements at the end of the second quarter and continue to date. As a result, total production for the month of July reached a new monthly record of 2.2-million silver equivalent ounces. This production trend is expected to continue throughout the remaining quarters of 2018 and into the first half of 2019 following the installation of microbubble columns at La Parrilla and Del Toro and the installation of high intensity grinding mills at Santa Elena and San Dimas,” said Neumeyer.

First Majestic expects a significant reduction in its consolidated AISC between $13.28/oz to $14.84/oz, primarily owing to higher production rates from the start-up of the 2 000 t/d roaster at La Encantada, higher silver grades at La Encantada and Del Toro, increased production at San Dimas and the decision to place La Guitarra on care and maintenance.

The company last month increased its 2018 silver production target to a new range of between 12-million ounces and 13.2-million ounces, or between 20.5-million and 22.6-million silver equivalent ounces.

Shares in First Majestic traded at C$7.23 each on Monday, down from the previous closing price of C$8.50 a share.

Edited by Creamer Media Reporter

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