Produces 3.5 Million Silver Eqv. Ounces in Q3; Postpones the Sale of 934K Silver Ounces of Inventory
October 14, 2014
First Majestic Silver Corp. (“First Majestic” or the “Company”) is
pleased to announce that total production at its five operating silver
mines in Mexico for the third quarter ending September 30, 2014 reached
3,523,536 equivalent ounces of silver, representing a 5% increase
compared to the same quarter in 2013.
Total silver production for the quarter consisted of 2,680,439 ounces of
silver, relatively unchanged compared to the same quarter in 2013. In
addition, 9,703,792 pounds of lead and 3,222,877 pounds of zinc were
produced, representing an increase of 14% and 44%, respectively,
compared to the same quarter of the previous year. Also produced were
2,781 ounces of gold, representing a 5% decrease compared to the third
quarter of 2013.
Keith Neumeyer, President & CEO of First Majestic, states, “the
Company’s primary focus remains to be cost cutting. Several successes
have been achieved while many challenges still remain. As management
gets accustomed to operating in a much lower silver price environment
many efficiencies are slowly showing up in the business, however, often
change comes slower than we wish. I would like to compliment management
for their efforts, yet persistence is required in this daily challenge
to achieve the highest levels of efficiencies possible”.
Consolidated Production Results:
Silver prices declined 19% in the third quarter representing the second
largest quarterly decline since the financial crisis in 2008. As a
result of this weakness, the Company decided to temporarily suspend
silver sales in an attempt to maximize future profits. This suspension
of sales will result in lower revenues and earnings for the third
quarter, however, it is likely that these inventories of unsold ounces
will instead be sold in the fourth quarter. As of September 30, 2014,
approximately 934,000 ounces of silver were held in inventory.
In an effort to further cut costs in the low metal price environment,
the Company has eliminated certain management and operational positions
in order to reduce its workforce without affecting future growth plans.
As a result, the total number of personnel in the workforce, including
contractors, now stands at approximately 3,800 representing a reduction
of 4% compared to the prior quarter and 11% compared to the same period
in 2013. The total workforce peaked at approximately 4,900 in January
2013. Due to severance payouts, the cost savings of these recent layoffs
will not be seen until the fourth quarter. Also, additional cost
savings are anticipated as the Company has recently informed all of its
suppliers and contractors to further reduce their costs from reductions
Further to the Company’s previous announcements regarding the
construction of the power line at Del Toro, the Company is pleased to
announce that the new high capacity power line began supplying the Del
Toro operation with power on September 29, 2014.
The total ore processed during the quarter at the Company’s five
operating silver mines: La Encantada, La Parrilla, Del Toro, San Martin
and La Guitarra, amounted to 621,196 tonnes, reflecting a 3% decrease
compared to the prior year and a 7% decrease from the previous quarter.
The decrease in tonnes compared to the prior quarter was primarily due
to lower throughput rates at Del Toro as mill availability decreased due
to the reconfiguration of the plant in order to expand the flotation
area due to the decision to process all ore through flotation, as well
as seasonal disruptions due to severe weather during the Mexican rainy
season which affected the La Parrilla, San Martin and Del Toro mines.
Average silver grades in the quarter for the five mines decreased by 3%
to 196 g/t compared to 202 g/t in the third quarter of 2013 and
decreased 7% compared with the previous quarter. Combined silver
recoveries averaged 68% during the quarter, up from 65% compared to the
same quarter in the prior year and consistent with the second quarter
average of 68%.
The Company’s underground development in the third quarter consisted of
12,546 metres, relatively unchanged compared to 12,497 metres completed
in the previous quarter.
During the quarter, 15 diamond drill rigs were operating at the
Company’s five operations. The Company completed 18,335 metres of
diamond drilling in the quarter compared to 12,508 metres in the prior
quarter, representing a 47% increase. A substantial portion of the
quarterly drilling occurred at Del Toro as the
Company focused on delineation and infill drilling to explore extensions of known underground structures.
The table below represents the operating parameters at each of the Company’s five producing silver mines.
Mine by Mine Quarterly Production Table:
following prices were used in the calculation of silver equivalent
ounces: Silver: $19.76 per ounce; Gold: $1,283 per ounce; Lead: $0.99
per pound; Zinc $1.05 per pound and Iron $152 per tonne.
At the La Encantada Silver Mine:
At the La Parrilla Silver Mine:
- During the quarter, total production consisted of 806,055 silver
ounces representing a 25% decrease in silver production over the
previous quarter primarily due to a 15% decrease in the silver grade and
a 7% decrease in processed ore. The reduction in processed ore and
grades were a direct result of a change in the production sequence in
order to have consistent grades and tonnage in the coming quarters as
well as a shaft rehabilitation project that occurred during the months
of July and August.
- A total of 3,537 metres of underground development were completed in
the third quarter compared to 3,095 metres of development in the
- Four drill rigs were active underground at La Encantada during the
quarter. A total of 4,496 metres of exploration and definition drilling
was completed in the third quarter compared to 5,551 metres of drilling
in the previous quarter.
At the Del Toro Silver Mine:
- During the quarter, the flotation circuit processed 93,782 tonnes
having an average silver grade of 182 g/t and a 90% recovery while the
cyanidation circuit processed 84,471 tonnes with an average silver grade
of 117 g/t and a 67% recovery.
- In September, the Company increased the extraction of underground
oxide ore within the San Marcos mine. A total of 5,300 tonnes of ore
were extracted in September and the Company expects to reach full
production rates of 1,000 tpd from San Marcos by year end. As a result
of the transition from the lower grade Quebradillas open pit to
underground mining from San Marcos, the Company is projecting an
increase in oxide silver grades along with higher expected recoveries in
the cyanidation circuit.
- During the quarter, an additional 215 metres were completed at the
underground ore haulage level 11. To date, a total of 1.6 kilometres
have been completed on the 5.0 kilometre project.
- Underground development completed in the quarter totaled 2,315
metres compared with 2,033 metres developed in the previous quarter.
- Two underground drill rigs were active within the La Parrilla
property during the quarter. A total of 2,409 metres were drilled in the
third quarter compared to 2,247 metres in the previous quarter.
At the San Martin Silver Mine:
- On September 29th, the Company successfully connected the Del Toro
operation to the Mexican National power grid and the new 115kV power
line is supplying 100% of the required power to the mine, mill and
auxiliary buildings. As a result, power costs are now anticipated to
decrease dramatically in the fourth quarter with the decommissioning of
diesel power generation units.
- During the quarter, Del Toro processed 134,474 tonnes of ore through
flotation with an average silver grade of 170 g/t. Metallurgical
recoveries for silver averaged 68% for a total production of 495,714
silver ounces representing a decrease of 32% compared to the previous
quarter. The decrease in production was primarily due to a 23% reduction
in throughput following the Company’s decision to reconfigure the plant
to process all ore through flotation. In addition, one ball mill was
offline for a period of two weeks in August due to a storm which damaged
two of the power generators.
- As a result of the plant reconfiguration and addition of a
regrinding area, silver recoveries increased consistently throughout the
quarter, with silver recoveries averaging 64% in July, 66% in August
and 71% in September.
- Underground development completed in the quarter totaled 2,479
metres compared with 2,972 metres developed in the previous quarter.
- Three drill rigs consisting of two underground and one on surface
were active in the third quarter at Del Toro. Total exploration metres
drilled in the third quarter amounted to 5,181 metres compared to 1,108
metres drilled in the previous quarter.
At the La Guitarra Silver Mine:
- During the quarter, San Martin set another quarterly production
record of 509,046 silver ounces and 1,166 ounces of gold representing an
increase of 13% and 24%, respectively, compared to the previous
quarter. The increase in silver production was a result of higher silver
grades within the La Guitarrona, La Reyna and La Hedionda mining areas.
- Underground development completed in the third quarter totaled 2,333
metres compared with 2,599 metres of development in the previous
- Two underground drill rigs were active within the San Martin
property during the quarter. Total metres drilled in the third quarter
amounted to 2,968 metres compared to 1,377 metres of drilling in the
- During the quarter, total production consisted of 163,696 silver
ounces and 1,236 gold ounces. This represents a 27% increase in silver
production over the previous quarter primarily due to a 21% increase in
the silver grade.
- In September, the newly developed and higher grade Jessica area
began production at a rate of 134 tpd for a total of 4,014 tonnes. Mine
production within the El Coloso area also delivered 21,156 tonnes during
the quarter or 46% of total production. Following the recent advances
in mine development, the Company now expects these two high grade areas
will supply the processing plant with 100% of the required ore by early
- Continued improvements in dilution and grade control as well as the
advances in laboratory procedures have supported the increase of silver
grade during the quarter.
- A total of 1,882 metres of development were completed in the third
quarter compared to 1,798 metres of development in the previous quarter.
- Four drill rigs consisting of three underground and one on surface
were active in the third quarter within the La Guitarra property. Total
metres drilled in the quarter amounted to 3,281 metres compared to 2,225
metres drilled in the previous quarter.
To date, the Company has produced a total of 8.7 million ounces of
silver (11.0 million silver equivalent ounces). After adjusting for the
recent quarter and the reduced expectations for the fourth quarter due
to: a delay in accessing the higher grade El Colosso area at La Guitarra
and additional planned maintenance at San Martin, the Company has
revised its 2014 annual production guidance to within a range of 11.5 to
11.7 million silver ounces (14.6 to 14.9 silver equivalent ounces).
First Majestic is a mining company focused on silver production in
Mexico and is aggressively pursuing the development of its existing
mineral property assets and the pursuit through acquisition of
additional mineral assets which contribute to the Company achieving its
corporate growth objectives.
FOR FURTHER INFORMATION contact firstname.lastname@example.org
, visit our website at www.firstmajestic.com
or call our toll free number 1.866.529.2807.
FIRST MAJESTIC SILVER CORP.
President & CEO
Cautionary Note Regarding Forward Looking Statements
This press release contains “forward-looking statements”, within
the meaning of the United States Private Securities Litigation Reform
Act of 1995 and applicable Canadian securities legislation, concerning
the business, operations and financial performance and condition of
First Majestic Silver Corp. Forward-looking statements include, but are
not limited to, statements with respect to the future price of silver
and other metals, the estimation of mineral reserves and resources, the
realization of mineral reserve estimates, the timing and amount of
estimated future production, costs of production, capital expenditures,
costs and timing of the development of new deposits, success of
exploration activities, permitting time lines, hedging practices,
currency exchange rate fluctuations, requirements for additional
capital, government regulation of mining operations, environmental
risks, unanticipated reclamation expenses, timing and possible outcome
of pending litigation, title disputes or claims and limitations on
insurance coverage. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as “plans”,
“expects” or “does not expect”, “is expected”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates” or “does not
anticipate”, or “believes”, or variations of such words and phrases or
state that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved”. Forward-looking
statements are subject to known and unknown risks, uncertainties and
other factors that may cause the actual results, level of activity,
performance or achievements of First Majestic Silver Corp. to be
materially different from those expressed or implied by such
forward-looking statements, including but not limited to: risks related
to the integration of acquisitions; risks related to international
operations; risks related to joint venture operations; actual results of
current exploration activities; actual results of current reclamation
activities; conclusions of economic evaluations; changes in project
parameters as plans continue to be refined; future prices of metals;
possible variations in ore reserves, grade or recovery rates; failure of
plant, equipment or processes to operate as anticipated; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion of
development or construction activities, as well as those factors
discussed in the section entitled “Description of the Business - Risk
Factors” in First Majestic Silver Corp.’s Annual Information Form for
the year ended December 31, 2013, available on
and Form 40-F on file with the United States Securities and Exchange
Commission in Washington, D.C. Although First Majestic Silver Corp. has
attempted to identify important factors that could cause actual results
to differ materially from those contained in forward-looking
statements, there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that such
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements. First Majestic Silver Corp. does not
undertake to update any forward-looking statements that are incorporated
by reference herein, except in accordance with applicable securities