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First Majestic Silver Reports 3Q Loss; Cost-Cutting Efforts Include Personnel Cuts
Monday November 16, 2015 10:00

http://www.kitco.com/news/2015-11-16/First-Majestic-Silver-Reports-3Q-Loss-Cost-Cutting-Efforts-Include-Personnel-Cuts.html

(Kitco News) - First Majestic Silver Corp. (NYSE: AG; TSX: FR) reported a loss for the third quarter on Monday but also cited efforts to contain costs, including personnel cuts.

First Majestic listed a net loss for the quarter of $1.8 million, or a penny per share, an improvement from a loss of $10.5 million, or 9 cents, in the same period a year ago. The bottom line was also up from a net loss of $2.6 million, or 2 cents, in the second quarter of this year, with First Majestic saying the improvement came about as a decrease in mine operating earnings was offset by gains on foreign exchange and mark-to-market adjustments on prepayment facilities.

The adjusted loss was listed at $7.6 million, or 6 cents, compared to an adjusted loss of $3.1 million, or 3 cents, in the previous quarter. First Majestic reported the mine operating loss was $3.6 million, compared to earnings of $3.4 million in the prior quarter. The decrease in the adjusted loss and mine operating earnings was primarily driven by the decrease in silver prices and less silver-equivalent ounces sold, the company said.

The average realized selling price for silver was $15.16 per ounce, although First Majestic noted this was above the quarterly Comex average of $14.87.

“Our operational team continued to make positive steps in reducing input costs during the third quarter,” said Keith Neumeyer, president and chief executive officer of First Majestic. “Consolidated production costs decreased to $41.81 per tonne, which represents an 11% improvement when compared to the prior quarter and the lowest rate since the second quarter of 2013.

“More aggressive cost-cutting initiatives were launched in the quarter resulting in 180 layoffs, and additional personnel reductions are being completed in the fourth quarter. These difficult times are requiring difficult decisions; however, the company remains focused on free cash flow and producing ounces that are profitable at current metal prices.”

First Majestic reported that its total cash cost, net of by-product credits, was $8.77 per payable silver ounce. The all-in sustaining cost was $14.41, a 28% reduction compared to $19.89 per ounce in third quarter of 2014 and consistent with the previous quarter.

The company said total production for the quarter was 3,558,035 silver-equivalent ounces. This consisted of 2,593,309 ounces of silver, 4,434 ounces of gold, 8,743,453 pounds of lead and 3,122,498 pounds of zinc.

Production in the quarter was down 6% from the previous one primarily due to a decline in production at Del Toro, which in turn was the result of a decrease in tonnes milled and lower silver grades as mining occurred in a lower grade area of the Perseverancia mine and Lupita vein, First Majestic said. The decrease at Del Toro was partially offset by improvements in production at La Guitarra and San Martin due to improved silver and gold grades, and a 33% increase in processed ore at La Encantada due to the recent mill expansion.

“Management believes leaving higher cost ounces in the ground is a prudent choice for its shareholders until silver prices improve,” said First Majestic’s earnings released.

As a result of operational modifications, 2015 annual silver production is now estimated by the company to be within a new range of 11.0 to 11.2 million ounces, or 15.7 to 15.9 million silver-equivalent ounces. This previous annual production guidance was 11.8 to 13.2 million ounces of silver, or 15.3 to 17.1 million silver-equivalent ounces.

On Oct. 1, First Majestic completed its acquisition of SilverCrest Mines Inc. and the latter’s Santa Elena Mine.