TORONTO (miningweekly.com) – The NYSE-listed stock of Canadian miner First Majestic Silver on Tuesday gained 6.55% to $3.58 apiece, despite the company missing analysts' second-quarter profit forecasts.
During the quarter ended June, First Majestic generated a net loss of $2.6-million, or $0.02 a share, compared with net earnings of $7.6-million, or $0.06 a share, in the second quarter of 2014.
However, Mexico-focused First Majestic explained that during the second quarter of 2014, the company had a one‐time tax-effected litigation gain of about $10.4-million, without which net earnings would have amounted to a net loss of $2.8-million, or $0.02 a share. Therefore, the company had effectively improved its net earnings relative to the second quarter of 2014 at a time when silver prices had fallen by 17% year-on-year.
However, excluding special items for the quarter under review, First Majestic reported an adjusted loss of $0.03 a share, falling a penny short of analyst expectations of an adjusted loss of $0.02 a share, based on revenue of $56.82-million.
Revenue for the three-month period declined 19% year-on-year to $54.2-million, mainly owing to a 13% decrease in the average realised silver prices. This compared with a 17% decrease in the average silver price on the Commodity Exchange – a division of the New York Mercantile Exchange – and compounded by a 3% decrease in silver-equivalent ounces sold.
Total output in the quarter was 3.8-million ounces of silver equivalent, a decrease of 3% quarter-over-quarter. This was mainly attributable to lower output from Del Toro, which encountered 16% lower silver grades and a decrease in silver recoveries, mining through a lower-grade area of the Perseverancia mine, as well as a 9% decrease in output at La Parrilla, owing to a return to normal zinc grades after encountering exceptionally high zinc grades within the Vacas mine last quarter.
The decreases in Del Toro and La Parrilla were partially offset by a 33% improvement in output at La Guitarra, owing to improved silver and gold grades.
Consolidated silver output was 2.71-million, comparable with the first quarter of 2015.
Cash costs an ounce rose 6% from $8.22 in the first quarter to $8.74 in the quarter under review. The increase was affected by lower by‐product credits at La Parrilla as a result of the decrease in zinc output, as well as quarterly productivity and annual union bonuses primarily at Del Toro, San Martin and La Parrilla. Cash costs at all other mines either improved or were consistent compared with the previous quarter.
All‐in sustaining costs an ounce in the current quarter was $14.49, an improvement of 20% on the $18.18 in the second quarter of 2014 and an increase of 4% on $13.88/oz in the first quarter of 2015.
On July 27, First Majestic entered into a definitive agreement to acquire all of the issued and outstanding shares of SilverCrest Mines for 0.2769 First Majestic common shares plus C$0.0001 in cash for each SilverCrest common share held. With this acquisition, SilverCrest’s Santa Elena mine would become First Majestic’s sixth producing silver mine, adding further growth potential to the company’s portfolio of Mexican projects. It would also add about C$30-million in cash and further enhance the company’s working capital position.