First Majestic Records 4Q Loss After Non-Cash Write-Downs
The net loss was pegged at $56.1 million, or 34 cents per share, compared to net earnings of $1.8 million, or a penny, in the fourth quarter of 2016. The company said the decrease of $57.9 million in net earnings was primarily due to $65.5 million non-cash impairment charge, or $42.4 million after taxes, for the Del Toro Silver Mine, plus a decline in mine operating earnings also decreased.
Revenues totaled $61.2 million, an 8% decrease from the year-ago quarter.
During the fourth quarter, the company produced 2.3 million ounces of silver, or 4.1 million silver-equivalent ounces. All-in sustaining costs were $14.13 per payable silver ounce, a year-on-year increase of 10%.
For the full year, the company met total production targets and achieved AISC cost guidance, said Keith Neumeyer, president and chief executive officer.
“2017 remained a catch-up year in underground development and exploration due to the lack of investment over the past three years,” Neumeyer said. “Nevertheless, we were still able to deliver the second-highest production level in the company’s 15-year history primarily due to the continued operational strength of the Santa Elena and San Martin mines.”
“Furthermore, the investments made in 2017 are expected to generate double-digit growth in silver production in 2018 primarily due to higher underground production rates at Santa Elena and Del Toro, higher silver grades from caving and the start-up of the new roasting circuit at La Encantada.”
First Majestic posted a net loss of $75.3 million for the full year, compared to a 2016 profit of $25.5 million.
During 2017, First Majestic produced 9.7 million ounces of silver, 62,991 ounces of gold, 24.5 million pounds of lead and 3.9 million pounds of zinc. This amounted to 16.2 million silver-equivalent ounces, down 13% from 2016 but within the guidance range of 15.7 million to 16.6 million ounces.
The company blamed the decline on the lack of underground development over the previous three years. However, officials also said the trend should start to reverse as a result of 2017 and 2018 investments in development and exploration. Production was also affected by work stoppages at three operations, including what the company termed an illegal strike at La Encantada, which resulted in 42 lost days in the second quarter, as well as two seismic events near La Guitarra in the third quarter.
AISC of $13.82 per silver ounce in 2017 beat the AISC guidance range of $14.40 to $15.50.