First Majestic Posts 3Q Adjusted Loss As Silver Prices Fall
(Kitco News) - First Majestic Silver Corp. (NYSE: AG; TSX: FR) posted record production in the second quarter, although the company ended with an adjusted loss as silver prices fell, the company said Wednesday.
Net earnings were $5.9 million, or 3 cents per share, compared to a loss of $1.3 million, or a penny, in the same quarter of 2017. The increase was primarily due to a $15.5 million increase in deferred income-tax recovery driven by foreign exchange, partially offset by a decrease in operating earnings which in turn were affected by a 14% decrease in silver price, higher general and administrative expenses for integration of Primero Mining Corp. and higher financing costs associated with the convertible debentures issued in the first quarter.
Excluding all non-cash and non-recurring items, the company generated adjusted loss of $6.4 million, or 3 cents per share. This was zero cents a year ago.
Revenues generated in the quarter totaled $88.5 million, a year-on-year increase of 43%, which the company said was primarily due to a 69% increase in silver-equivalent ounces sold.
“During the third quarter, we delivered record silver production, resulting in higher revenues and cash flows compared to the previous quarter even when we experienced a nine-year low in average quarterly silver prices,” said Keith Neumeyer, president and chief executive officer.
First Majestic said the increase in production was primarily due to a full quarter of output from the San Dimas operation, as well as increases in consolidated silver and gold grades. Total quarterly production increased 69% year-on-year to a new record of 6.7 million silver-equivalent ounces. Total production consisted of a record 3.5 million ounces of silver, 35,260 ounces of gold, 4.4 million pounds of lead and 1.2 million pounds of zinc.
The company reported an average silver price of $14.66 per ounce, which was down 14% from the year-ago period. All-in sustaining costs were $15.12 an ounce.
“Consolidated cash costs and AISC decreased nicely to $6.85 and $15.12, respectively, due to improved economies of scale and higher production from San Dimas,” Neumeyer said. “Cost-cutting efforts remain a focus of the company by reducing capital investments at our smaller mines, innovation projects, layoffs and overall curtailment of spending.”