First Majestic Silver Posts Q1 Profit Despite Lower Output
First Majestic Silver Corp. (NYSE: AG; TSX: FR) reported a net profit in the first quarter, helped by higher prices even though production fell.
The company listed net earnings of $2.7 million, or 2 cents per share, compared to a net loss of $7.4 million, or 5 cents, in the first quarter of 2017. Excluding all non-cash and non-recurring items, the company generated adjusted earnings of $3.7 million, or 2 cents, during the January-March period.
Quarterly production totaled 4.3 million silver-equivalent ounces, consisting of 2.7 million ounces of silver, 15,047 ounces of gold, 7.5 million pounds of lead and 0.9 million pounds of zinc. Silver-equivalent output was 5.1 million ounces in the first quarter of 2016.
Compared to the previous quarter, output decreased by 3% primarily attributed to a 3% decrease in tonnes milled due to a breakdown of one of the four power generators at Santa Elena, causing a temporary reduction in the mill feed from the heap leach pad in the month of February. First Majestic said the generator was successfully replaced in late February, allowing the heap leach pad to return to normal operations in March.
“Lower all-in sustaining costs and higher realized silver prices drove strong earnings and cash flows during the first quarter,” said Keith Neumeyer, president and chief executive officer. “We achieved our cost targets during the quarter due in part to higher by-product production at San Martin and the weaker Mexican peso, which helped to offset the unexpected increase in energy costs at the beginning of 2017.”
For the remainder of 2017, he continued, the company anticipates gradual improvement in output as exploration and development activities accelerate and additional mining levels are brought into production.
The company realized an average silver price of $17.55 per ounce during the first quarter of 2017, a year-on-year increase of 16% increase. This helped the company generate revenue of $69.1 million, an increase of 4% from $66.5 million in the first quarter of 2016.
Consolidated all-in sustaining costs for the quarter were $12.21 per ounce, which was a 5% decrease from the previous quarter and within annual cost guidance of $11.96 to $12.88 per ounce.