First Majestic Silver Corp. (TSX: FR) (NYSE: AG) (FSE: FMV) announces that total production in the second quarter of 2021 from the Company’s four producing operations, the San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine, the La Encantada Silver Mine and the recently acquired Jerritt Canyon Gold Mine, reached 6.4 million silver equivalent ounces consisting of 3.3 million ounces of silver and 46,545 ounces of gold. The Company’s financial results for the second quarter of 2021 are scheduled to be released on Monday, August 16, 2021.
SECOND QUARTER HIGHLIGHTS
“The second quarter marked a major milestone for First Majestic,” stated Keith Neumeyer, President & CEO. “The acquisition of Jerritt Canyon not only gave us a new quarterly record in gold production, but it represents the Company’s first major investment outside of Mexico. The overall integration process of this new mine is going well and has included several site management changes designed to grow this important operation to production levels not seen for over 15 years. Similar to our turnaround story of San Dimas, we are planning to bring significant improvements to Jerritt Canyon but it will require time and investments to complete. Lastly, the exploration potential across Jerritt Canyon’s land package is extremely high for large, new discoveries and we are already planning to drill multiple exciting targets, such as Waterpipe II, over the next several quarters.”
PRODUCTION TABLE | Q2 | Q2 | Y/Y | Q1 | Q/Q |
2021 | 2020 | Change | 2021 | Change | |
Ore processed/tonnes milled | 826,213 | 333,559 | 148% | 614,245 | 35% |
Silver ounces produced | 3,274,026 | 1,834,575 | 78% | 2,908,024 | 13% |
Gold ounces produced | 46,545 | 15,764 | 195% | 23,873 | 95% |
Silver equivalent ounces produced | 6,435,023 | 3,505,376 | 84% | 4,540,296 | 42% |
QUARTERLY REVIEW
Total ore processed during the quarter at the Company’s mines amounted to 826,213 tonnes, representing a 35% increase compared to the previous quarter. The increase in tonnes processed was primarily due to the acquisition of the Jerritt Canyon operation on April 30, 2021 and a 26% increase in production rates at Santa Elena resulting from continued improvements in underground ore deliveries.
Consolidated silver and gold grades in the quarter averaged 137 g/t and 1.80 g/t, respectively. Gold grades increased significantly by 43% when compared to the prior quarter due to the addition of Jerritt Canyon and higher gold grades at Santa Elena and San Dimas in the quarter.
Consolidated silver and gold recoveries averaged 90% and 91%, respectively, during the quarter.
MINE BY MINE PRODUCTION TABLE
Mine | Ore Processed |
Tonnes per Day |
Ag Grade (g/t) |
Au Grade (g/t) |
Ag Recovery |
Au Recovery |
Ag Oz Produced |
Au Oz Produced |
AgEq Oz Produced |
San Dimas | 202,382 | 2,224 | 301 | 3.07 | 95% | 96% | 1,868,031 | 19,227 | 3,176,725 |
Jerritt Canyon | 146,611 | 2,365 | – | 4.03 | – | 84% | – | 18,762 | 1,270,398 |
Santa Elena | 234,381 | 2,576 | 81 | 1.17 | 93% | 96% | 565,453 | 8,453 | 1,140,398 |
La Encantada | 242,839 | 2,669 | 138 | 0.02 | 78% | 90% | 840,541 | 102 | 847,502 |
Total | 826,213 | 9,079 | 137 | 1.80 | 90% | 91% | 3,274,026 | 46,545 | 6,435,023 |
*Jerritt Canyon production was over a 62 day period from April 30, 2021 to June 30, 2021.
*Certain amounts shown may not add exactly to the total amount due to rounding differences.
*The following prices were used in the calculation of silver equivalent ounces: Silver: $26.26 per ounce, Gold: $1,794 per ounce.
At the San Dimas Silver/Gold Mine:
At the Jerritt Canyon Gold Mine:
At the Santa Elena Silver/Gold Mine:
At the La Encantada Silver Mine:
JERRITT CANYON OPTIMIZATION PLANS
Given its extensive 40-year production history in Nevada, Jerritt Canyon is one of the state’s most prominent gold mines. However, the operation has suffered from a lack of investment in exploration and development in recent years. First Majestic is planning to deploy capital towards exploration, underground development and plant optimization at the operation with the objective of increasing production rates, reducing costs and extending mine life of the asset.
Since the acquisition announcement in January 2021, First Majestic has been developing a long-term mine and exploration plan for the future of the operation. The Company has identified numerous projects that will be implemented over the next 12 to 24 months to improve production and reduce costs at the mine and processing plant, including:
It should be noted that many of the anticipated benefits from these modifications are not yet reflected in the forecasted operating results below and are expected to take several quarters to materialize.
OUTLOOK
Following the acquisition of the Jerritt Canyon operation, the Company has revised its annual production guidance to incorporate the following operational adjustments:
As a result of these operational modifications, total production in 2021 is expected to increase to a range of 25.7 to 27.5 million silver equivalent ounces consisting of 13.0 to 13.8 million ounces of silver and 181,000 to 194,000 ounces of gold. This compares to the previous annual production guidance of 20.6 to 22.9 million silver equivalent ounces consisting of 12.5 to 13.9 million ounces of silver and 100,000 to 112,000 ounces of gold.
The Company is also providing guidance for the second half of 2021 on a mine-by-mine basis below. Cash costs and AISC are on a per payable silver equivalent ounce. Metal price and foreign currency assumptions for calculating silver equivalent ounces were updated to the following: $25.00/oz for silver (previously $22.50/oz), $1,800/oz for gold (unchanged), MXN:USD 20:1 (unchanged). As result of the lower silver-to-gold ratio used in the updated guidance, the Company has reduced its estimated 2021 production by 0.9 million silver equivalent ounces.
GUIDANCE FOR SECOND HALF 2021
Silver Oz (M) | Gold Oz (k) | Silver Eqv Oz (M) | Cash Cost | AISC | |
Silver: | ($ per AgEq oz) | ($ per AgEq oz) | |||
San Dimas, Mexico | 4.0 – 4.5 | 43 – 48 | 7.1 – 7.9 | 7.39 – 7.84 | 10.43 – 11.21 |
Santa Elena, Mexico | 1.2 – 1.4 | 14 – 16 | 2.3 – 2.5 | 14.07 – 14.91 | 17.72 – 18.97 |
La Encantada, Mexico | 1.5 – 1.7 | – | 1.5 – 1.7 | 13.29 – 14.08 | 15.57 – 16.60 |
Mexico Consolidated: | 6.7 – 7.6 | 57 – 64 | 10.9 – 12.1 | 9.81 – 11.29 | 14.86 – 16.86 |
Gold: | ($ per AuEq oz) | ($ per AuEq oz) | |||
Jerritt Canyon, USA | – | 54 – 60 | 3.9 – 4.3 | 1,365 – 1,447 | 1,816 – 1,949 |
Total Production | ($ per AgEq oz) | ($ per AgEq oz) | |||
Consolidated | 6.7 – 7.6 | 111 – 124 | 14.8 – 16.4 | 12.20 – 13.60 | 17.57 – 19.53 |
*Certain amounts shown may not add exactly to the total amount due to rounding differences.
* Cash Costs and AISC are non-GAAP measures. Consolidated AISC includes general and administrative cost estimates and non-cash costs of $1.31 to $1.41 per payable silver equivalent ounce.
*Jerritt Canyon Gold’s AISC includes the impact of $12.3 million investment in the TSF2 expansion lift, or $206 to $230 per AuEq ounce.
In the second half of 2021, the Company expects total production of between 14.8 to 16.4 million silver equivalent ounces consisting of 6.7 to 7.6 million ounces of silver and 111,000 to 124,000 ounces of gold. This represents a 44% increase to the midpoint of guidance when compared to 10.8 million silver equivalent ounces produced in the first half of 2021.
A mine-by-mine breakdown of the revised full year 2021 production guidance is included in the table below and assumes the same metal prices and foreign currency assumptions as stated previously.
GUIDANCE FOR FULL YEAR 2021
Silver Oz (M) | Gold Oz (k) | Silver Eqv Oz (M) | Cash Cost | AISC | |
Silver: | ($ per AgEq oz) | ($ per AgEq oz) | |||
San Dimas, Mexico | 7.6 – 8.1 | 80 – 85 | 13.2 – 14.0 | 8.51 – 8.82 | 12.04 – 12.56 |
Santa Elena, Mexico | 2.3 – 2.4 | 29 – 31 | 4.3 – 4.6 | 15.74 – 16.29 | 19.97 – 20.77 |
La Encantada, Mexico | 3.1 – 3.3 | – | 3.1 – 3.3 | 13.39 – 13.78 | 15.73 – 16.25 |
Mexico Consolidated: | 13.0 – 13.8 | 109 – 115 | 20.6 – 21.9 | 10.75 – 11.12 | 15.77 – 16.43 |
Gold: | ($ per AuEq oz) | ($ per AuEq oz) | |||
Jerritt Canyon, USA | – | 72 – 79 | 5.1 – 5.6 | 1,381 – 1,443 | 1,785 – 1,881 |
Total Production | ($ per AgEq oz) | ($ per AgEq oz) | |||
Consolidated | 13.0 – 13.8 | 181 – 194 | 25.7 – 27.5 | 12.52 – 12.96 | 17.86 – 18.63 |
*Certain amounts shown may not add exactly to the total amount due to rounding differences.
* Cash Costs and AISC are non-GAAP measures. Consolidated AISC includes general and administrative cost estimates and non-cash costs of $1.26 to $1.32 per payable silver ounce.
*Jerritt Canyon Gold’s AISC includes the impact of the $12.3 million investment in the TSF2 expansion lift, or $157 to $170 per AuEq ounce.
Annual cash costs are now expected to be within the range of $12.52 to $12.96 per ounce, compared to the previous guidance of $9.52 to $10.10 per ounce, primarily due to the addition of the Jerritt Canyon operation and higher development costs at Santa Elena. In addition, annual all-in sustaining costs are now expected to be within a range of $17.86 to $18.63 per ounce, compared to the previous guidance of $14.81 to $15.99 per ounce. Many of the anticipated cost benefits at Jerritt Canyon are not yet reflected in the forecasted operating results above and is expected to take several quarters to materialize.
REVISED CAPITAL BUDGET
The Company has updated its 2021 capital budget to include the Jerritt Canyon operation as well as the reallocation of capital for development and exploration across its operations. As a result, total capital investments for 2021 are now estimated at $205.3 million, consisting of $84.2 million for sustaining requirements and $121.1 million for expansionary projects. This represents a 22% increase compared to the original 2021 capital budget of $168.4 million primarily due to the inclusion of the Jerritt Canyon operation and additional investments in underground development at Santa Elena. The revised budget includes $92.2 million to be spent on underground development, $52.9 million towards property, plant and equipment, $35.1 million in exploration and $25.2 million towards corporate projects. On a mine-by-mine basis, capital expenditures in the second half of 2021 are estimated to be $23.0 million at San Dimas, $34.4 million at Jerritt Canyon, $36.6 million at Santa Elena (includes $22.7 million at Ermitaño) and $6.1 million at La Encantada.
Revised 2021 Capital Budget ($millions) | Sustaining | Expansionary | Total |
Underground Development | 47.1 | 45.1 | 92.2 |
Exploration | 0.5 | 34.6 | 35.1 |
Property, Plant and Equipment | 33.7 | 19.2 | 52.9 |
Corporate Projects | 3.0 | 22.2 | 25.2 |
Total | $84.2 | $121.1 | $205.3 |
*Certain amounts shown may not add exactly to the total amount due to rounding differences.
Under the revised 2021 budget, the Company is now expecting to complete a total of 50,495 metres of underground development, representing a 7% increase compared to the original budget of 47,000 metres. In addition, the Company is now planning to complete a total of approximately 217,600 metres of exploration drilling in 2021, representing a 18% increase compared to the original budget of 184,150 metres, primarily due the addition of approximately 52,800 metres of exploration drilling planned at Jerritt Canyon.
APPOINTMENT OF NEW DIRECTOR
The Board of Directors have appointed Colette Rustad as a Director of the Company effective July 1, 2021.
Ms. Rustad is an international financial expert with over 30 years of diverse financial and operational experience, including mergers and acquisitions, project construction, risk management and advisory expertise in the mining, financial services, energy and technology sectors.
She currently serves as a director of the Sanford Housing Society, previously served as a director for Terrane Metals and held executive positions at Barrick Africa, VP & CFO; Goldcorp Inc, Senior Vice-President Treasurer and Controller; EY Toronto, Senior Manager and Alio Gold, EVP & CFO. She is a Chartered Professional Accountant (CA) and has a Bachelor of Commerce from the University of Calgary and completed the Advanced Management Program from the Wharton Graduate School of Business, University of Pennsylvania.
Q2 EARNINGS AND DIVIDEND ANNOUNCEMENT
The Company is planning to release its second quarter 2021 unaudited financial results, and to announce the second quarter dividend payment, and shareholder record and payable dates on Monday, August 16, 2021.
ABOUT First Majestic Silver
First Majestic is a publicly traded mining company focused on silver and gold production in Mexico and the United States and is aggressively pursuing the development of its existing mineral property assets. The Company presently owns and operates the San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine, the La Encantada Silver Mine and the Jerritt Canyon Gold Mine.
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