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First Majestic suspends mining activities at Jerritt Canyon due to ongoing challenges, aims to reduce overall costs

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(Kitco News) - First Majestic Silver (NYSE: AG; TSX: FR) announced today it is taking action to reduce overall costs by reducing investments, temporarily suspending all mining activities and reducing its workforce at Jerritt Canyon effective immediately.

In a statement, the company said that over the past 22 months since the acquisition of the Jerritt Canyon gold mine in Nevada, it has been focused on increasing underground mining rates in order to sustainably feed the processing plant at a minimum of 3,000 tpd in order to generate free cash flow as its plans suggested.

“Despite these efforts, mining rates have remained below this threshold and cash costs per ounce have remained higher than anticipated primarily due to ongoing challenges such as contractor inefficiencies and high costs, inflationary cost pressures, lower than expected head grades and multiple extreme weather events affecting northern Nevada, which have compounded conditions and caused material headwinds for the operation,” the company added.

President and CEO Keith Neumeyer stated, “The decision to temporarily suspend mining activities at Jerritt Canyon, which represented approximately 21% of the company’s 2022 revenue, was driven by our goal to produce profitable ounces across the company.

“While mining activities have temporarily stopped, processing of the remaining surface stockpiles will occur for the next couple of months. The company will continue exploring both near-mine and prospective regional greenfield targets to grow Jerritt Canyon’s resources, which we believe will significantly enhance the economics for the eventual restart of operations.”

During the suspension, the company intends to process approximately 45,000 tonnes of aboveground stockpiles through the plant. Exploration activities are expected to also continue throughout 2023.

“As a result of the suspension, the company’s previous production and cost guidance for Jerritt Canyon can no longer be relied upon. Guidance for the company’s Mexican operations remain current and a revised consolidated production and cost guidance, including capital investments, are expected to be published in July,” the company said.

First Majestic is a publicly traded mining company focused on silver and gold production in Mexico and the United States.

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