Photo by: Bloomberg
TORONTO (miningweekly.com) – Dogged by falling grades at its largest mines and the continued weakness in metal prices, Mexico-focused miner First Majestic Silver is reviewing all its operating mine plans, which might result in reduced production targets at some of its operations to improve profitability.
“[Owing] to the continued weakness in metal prices, we are modifying our operations to ensure free cash flow is generated across the entire business. These changes include additional layoffs and mine plan revisions. Once these changes are fully implemented and with the addition of the newly acquired Santa Elena mine, the company is expected to benefit from improved operating margins, increased cash flows and greater economies of scale,” president and CEO Keith Neumeyer stated on Wednesday.
Management affirmed that it believed leaving higher-cost ounces in the ground was a prudent choice for its shareholders until silver prices improved. First Majestic left its current full-year guidance of 15.3-million to 17.1-million silver-equivalent ounces intact for now, but advised that it expected to provide further details when it published its third-quarter financial results on November 16.
Total output at its five operating silver mines in Mexico for the quarter ended September 30 reached 3.56-million silver-equivalent ounces, relatively unchanged compared with the same period in 2014. Total silver produced was 2.59-million ounces, down 3% year-over-year.
While lead and zinc output declined 10% to 8.74-million pounds and 3% to 3.12-million pounds, respectively, gold output jumped 59% to 4 434 oz, which was mainly attributable to higher grades at First Majestic's smallest operations – San Martin and La Guitarra.
The company's Del Toro mine produced 750 000 silver-equivalent ounces, 35% below the second-quarter result of 1.16-million ounces, as a result of a 23% decrease in throughput owing to ventilation issues and a 17% drop in silver grades.
The La Encantada silver mine produced 668 124 oz of silver, an 11% increase over the preceding quarter. This was driven by a 33% increase in throughput and 4% higher metallurgical recoveries, despite a 20% grade decline.
On a consolidated basis, mill throughput gains of 9%, yielding 675 032 t, were offset by a 15% drop in the average silver head grade, mainly at the company’s largest operations.
As of October 1, First Majestic assumed full operations at the Santa Elena mine, in Sonora, through its acquisition of SilverCrest Mines. The Santa Elena operation was now the company’s sixth operating mine and was expected to boost full-year silver-equivalent production by more than 25%.