Photo by: Reuters
TORONTO (miningweekly.com) – Precious metals producer First Majestic Silver on Tuesday reported a 7.9% quarter-on-quarter drop in silver equivalent ounces (SEO) to 4.68-million ounces, as lower grades at key mines impacted on the company’s second-quarter performance.
Lower output from the Santa Elena mine, which produced 9.6% less at 1.56-million SEO, and La Encantada, which produced 623 070 SEO, 25.2% less than in the prior quarter, were the main drivers behind the declining output. However, the average silver grade of the company’s six Mexican mines also fell 8% quarter-on-quarter to 148 g/t.
Santa Elena saw production dip quarter-on-quarter on lower silver and gold grades from the heap-leached stockpiles and from underground. Santa Elena’s grades were above the reserve grade in the first quarter. The mill processed a combination of 51% fresh ore and the remainder from stockpiles.
According to First Majestic, La Encantada saw a significant decline in grades to an average of 169 g/t during the quarter, a 24% decrease compared with the prior quarter, mainly owing to the company blending lower-grade ore from previously mined stopes.
The company was currently developing Stope 291, a high-grade structure close to the San Javier breccia, in an effort to increase grades in the second half of 2016.
Meanwhile, First Majestic also confirmed a spill at La Encantada, which was caused by heavy rains, with most of the spill contained at the La Encantada property. Operations were not expected to be affected.
The company advised that it was advancing the roasting project and that engineering work had started. The initial capital estimate to construct the roaster was $8.8-million, with construction expected to take 12 months.
In addition, the company expected to get a further 1.5-million ounces of silver from the above-ground stockpiles with the roaster.
The San Martin mine produced 15.2% less quarter-on-quarter at 492 669 SEO, on the back of lower grades and tonnes milled. The company expected grades to increase over the next several quarters as output from the higher-grade Veladora vein rose to 250 t/d.
First Majestic expected to produce between 17.8-million and 19.8-million SEO in 2016, including 12-million to 13.3-million ounces of silver. Companywide all-in sustaining costs were expected to range between $12.29/oz and $13.36/oz silver.
The company’s TSX-listed stock had rallied 350% since the start of the year to C$21.55 apiece on Tuesday.