TORONTO (miningweekly.com) – Mexico-focused miner First Majestic Silver has cut its capital budget by 18% as a result of the drop in the silver price, adding it could revise its capital budget again later this year should the price continue to slide.

On Wednesday, spot silver prices traded as low as $22.60/oz in New York, prompting First Majestic to slash its capital budget from $192.3-million to $162.3-million, noting that if silver prices did not improve before the third quarter, further cuts would be made.

Vancouver-based First Majestic said it would reduce exploration and development expenditures, noting that it would not affect its production outlook or ongoing expansion projects.

Global exploration funding was reduced by $12-million to $12.5-million, representing a 49% reduction; global mine development was reduced by $18-million to $68.2-million, representing a 21% reduction; and the total budgeted capital growth requirement, including priority construction and expansion activities at various mines, was now $162.3-million, representing a 16% reduction.

The Canadian company was now just one more of a number of companies that had taken deferred capital expenditures, as commodity prices continued to decline and project costs escalated.

First Majestic pointed out that the revised budget consisted of $81.6-million for plant expansions at Del Toro, San Martin, La Guitarra and the underground rail system of La Parrilla, and $80.7-million of discretionary exploration and development for all of the company's properties.

"Despite the recent fall in silver prices we remain committed to aggressively growing our business while at the same time monitoring our investments and our production costs.

“This year marks a pivotal year for First Majestic, with four major expansion projects under way simultaneously. These expansions remain on track and will set the stage for major growth in the coming years. However, we need to be sensitive to the current market conditions and be smart about our use of capital,” CEO Keith Neumeyer said.

The company expected to maintain silver output at between 11.1-million and 11.7-million ounces for the year.

First Majestic on Wednesday reported first-quarter net earnings for the period ended March 31, rose by 1% to $26.5-million.

Revenue rose by 16% to $67.1-million on a 33% increase in output to 2.4-million silver ounces in the quarter. Cash costs per ounce for the precious white metal rose 6% to $9.49/oz.

First Majestic’s Toronto-listed stock on Wednesday slid by almost 9% to trade at C$10.43 apiece in the afternoon.