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First Majestic Silver Posts Loss In Second Quarter

Kitco News

(Kitco News) - First Majestic Silver Corp. (NYSE: AG; TSX: FR) Monday reported a loss in the second quarter despite record silver-equivalent output, with the company taking special charges for an impairment and acquisition of Primero Mining Corp.

The net loss was $40 million, or 22 cents per share, compared to net earnings of $1.4 million, or a penny, in the second quarter of 2017.

Due to a decision to place the La Guitarra mine on care and maintenance, the company took a one-time, non-cash write-down of $31.7 million ($20.5 million net of tax). Other one-time expenses included costs for the Primero acquisition and financing costs associated with convertible debentures, the company said.

Excluding special items, the company listed an adjusted net loss of $11.8 million, or 7 cents a share.

Revenue rose 33% year-on-year to $79.7 million, helped by a 43% jump in silver-equivalent ounces sold, the company said. Also, the average realized silver price rose 3% from a year ago to $16.74 an ounce.

All-in sustaining costs in the second quarter were $16.43, up from $14.17 a year ago and also a 3% increase compared to the previous quarter. The company cited higher general and administrative expenses and sustaining capital expenditures tied to the acquisition of Primero and integration of San Dimas into the company's portfolio of mines. AISC per ounce were also higher due to lower production from La Encantada and Del Toro.

However, First Majestic said, AISC should decrease in the second half of 2018 to between $13.28 to $14.84 due to the expected operational improvements at La Encantada, Del Toro, and San Dimas.

First Majestic said the San Dimas mine, acquired in May, had an immediate impact on the company’s production and bottom line.

“Additionally, the AISC at San Dimas came in at $5.41 per ounce, making it our lowest cost and largest producing mine,” said Keith Neumeyer, president and chief executive officer. “Silver grades at La Encantada and Del Toro saw significant improvements at the end of the second quarter and continue to date. As a result, total production for the month of July reached a new monthly record of 2.2 million silver-equivalent ounces.

“This production trend is expected to continue throughout the remaining quarters of 2018 and into the first half of 2019 following the installation of microbubble columns at La Parrilla and Del Toro and the installation of high intensity grinding mills at Santa Elena and San Dimas.”

First Majestic last month upped its 2018 output guidance and reported company-record production 5.1 million silver-equivalent ounces in the second quarter. Second-quarter silver output rose 21% year-on-year to 2.78 million ounces, while gold production climbed 68% to 25,449 ounces. The company also produced 3.9 million pounds of lead and 1.4 million pounds of zinc.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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