First Majestic’s silver focus pays off in 2019

The Del Toro silver mine in Mexico. Source: First Majestic Silver Corp.

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First Majestic Silver Corp. [FR-TSX; AG-NYSE; FMV-FSE] on Wednesday February 19 said 2019 was stellar year as the company generated record revenues and winding up with the highest cash balances in the company’s 18-year history.

First Majestic is a Mexico-focused mining company. It owns and operates six producing silver mines. They include the Parrilla, San Martin, La Encantada, Del Toro and Santa Elena silver mines.

Its asset portfolio also includes the San Dimas Mine following the acquisition of the site’s former owner Primero Mining Corp. in May 2018 for $187 million in common shares of First Majestic. Under a new streaming agreement, Wheaton Precious Metals Corp. [WPM-TSX, NYSE] is entitled to receive 25% of the gold equivalent production from San Dimas.

“Production [in 2019] also achieved a new record of 25.6 million silver equivalent ounces following grade and metallurgical recovery improvements at our Santa Elena and La Encantada operations,” said First Majestic CEO Keith Neumeyer.

“These operational improvements helped to drive a 15% reduction in our [all-in-sustaining costs] AISC for the year to US$12.64/oz, making it the lowest AISC per ounce since 2016 and a healthy beat to our annual cost guidance range of US$12.98 to US$13.94/oz,” Neumeyer said.

“We continue to lead the industry as the purest silver producer and remain focused on improving margins through the adoption of new technology.”

On Wednesday, First Majestic shares eased 8.5% or $1.15 to $12.31 on volume of 2.2 million. The shares trade in a 52-week range of $7.39 and $16.50.

First Majestic achieved total production of 25.6 million silver equivalent ounces, a 15% increase over 2018, and reaching the top end of the company’s 2019 guidance range of 24.4 million to 26.0 million ounces.

The company’s silver production reached 13.2 million ounces, a 13% increase over 2018. That number was in line with the company’s guidance range of 12.8 to 13.5 million ounces.

Revenue of US$363.9 million in 2019 was a record, and marked a 21% increase from 2018.

The company posted adjusted net earnings of US$7.3 million or $0.04 per share, after excluding non-cash and unusual items.

The 21% increase in full year revenue, compared to 2018, was attributable to a full year of operations at San Dimas under the ownership of First Majestic, plus a 92% increase in production from La Encantada following a revised throughput methodology which the company said improved recoveries significantly.

The increased revenue was also due to increased production at Santa Elena as well as a 6% increase in the realized silver price in 2019, which averaged US$16.40/oz for the year.  That compared to an average of US$15.26/oz in the first half of the year, and US$17.55 in the second half of 2019.

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