Total production from dual-listed First Majestic’s seven operating silver mines reached a new company record of 5.1-million ounces of silver equivalent in the second quarter, comprising 2.8-million ounces of silver, 25 449 oz of gold, 3.9-million pounds of lead and 1.4-million pounds of zinc.
The addition of the San Dimas silver/gold mine, which was acquired in May, prompted the company to increase its 2018 silver production target to a new range of between 12-million ounces and 13.2-million ounces, or between 20.5-million to 22.6-million silver equivalent ounces.
This compares to the previous 2018 production guidance of between 10.6-million and 11.8-million ounces of silver, or between 15.7-million and 17.5-million silver equivalent ounces.
Integration of the newly-acquired San Dimas into the company’s Mexican portfolio was a primary focus during the quarter, said president and CEO Keith Neumeyer on Monday.
“The world-class San Dimas operation, which contributed only seven weeks of production in the second quarter, propelled the company to a new quarterly production record of 5.1-million silver equivalent ounces and has become our cornerstone asset and will remain a major focus for the next several quarters as we optimize the operation,” he commented.
In the short term, he explained that the company is focused on reducing underground dilution and implementing mill automation processes, including the installation of high intensity grinding technologies in order to increase efficiencies and reduce production costs.
Further, under the new streaming agreement, First Majestic is going back to mine numerous high-grade silver veins that were previously deemed uneconomic by the previous operator.
In 2018, all-in sustaining costs at San Dimas are projected to be between $6.99/oz and $8.19/oz, “making it our lowest cost and our largest producing mine”, Neumeyer said.
According to Neumeyer, at its La Encantada operation, the construction of the new roaster is in its final stages. Commissioning and startup procedures are expected to begin in late August before ramping up to commercial production by the end of the year.
QUARTERLY REVIEW
Total ore processed during the quarter at the company's seven operating silver mines, namely, San Dimas, Santa Elena, La Encantada, La Parrilla, Del Toro, San Martin and La Guitarra - amounted to 851 349 t, representing a 5% increase compared to the previous quarter.
The increase in tonnes was primarily owing to the addition of the San Dimas production, which was offset by a 14% decrease in throughput at La Encantada.
Consolidated silver grades in the quarter averaged 127 g/t compared to 111 g/t in the previous quarter. Meanwhile, the 14% increase in silver grades was primarily the result of the addition of seven weeks of production from San Dimas.
Consolidated silver recoveries averaged 79%, representing a 6% increase compared to the previous quarter.
First Majestic expects further improvements in recoveries with the anticipated installation and commissioning of the microbubble flotation columns at La Parrilla in the third quarter of 2018, followed by Del Toro in the first quarter of 2019.
In addition, delivery and installation of the high intensity grinding mills at Santa Elena and San Dimas are planned for October and November, respectively, followed by commissioning over the following quarter.
The benefits of this new technology, First Majestic elaborated, which would most notably be higher recoveries and lower operating costs, are expected to be realized after completing rampup to commercial production in the first half of 2019.
The company's underground development in the second quarter consisted of 17 838 m, reflecting a 20% increase compared to 14 914 m completed in the previous quarter.
Additional development contractors were brought in during the second quarter at La Encantada and Del Toro to focus on increasing development rates to support production. Development remains focused on opening new production areas, exploring high potential zones and new stope preparation.
During the quarter, up to 29 diamond drill rigs were active across the company’s properties.
A total of 298 drill holes were completed for a total of 73 899 m on the seven producing assets as well as the Plomosas silver project, representing a 65% increase in drilled metres compared to the previous quarter.
Primary exploration activities focused on replacement deposits at the Quebradillas mine and the epithermal vein system at Cerro de Santiago at La Parrilla; exploring extensions of the main Santa Elena vein, vein splays of Santa Elena and at the Ermitaño-West project at Santa Elena, exploring Santa Jessica, Santa Regina and Alexa veins in the Central block and Sinaloa Graben at San Dimas and exploring vein mineralization at the San Juan mine at the Plomosas silver project.