FIRST MAJESTIC SILVER CORP. (NYSE:AG) (TSX:FR) is pleased to announce the unaudited interim consolidated financial results of the Company for the third quarter ended September 30, 2020. The full version of the financial statements and the management discussion and analysis can be viewed on the Company’s website at www.firstmajestic.com or on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. All amounts are in U.S. dollars unless stated otherwise.
THIRD QUARTER 2020 HIGHLIGHTS
(compared to Q3 2019)
“During the third quarter, our industry-leading silver purity as a percentage of revenue increased to 67% as a result of strong silver production at La Encantada and an improved silver to gold ratio,” stated Keith Neumeyer, President and CEO. “We generated record quarterly revenues, cash flows and earnings as a result of higher metal prices, improved production rates, good cost control management and the decision to delay the sale of inventory from the prior quarter. Along with our record cash and working capital position, the Company is poised to close out 2020 as one of its strongest years in the Company’s 18-year history.”
OPERATIONAL AND FINANCIAL HIGHLIGHTS
|Key Performance Metrics||2020-Q3||2020-Q2||Change
Q3 vs Q2
Q3 vs Q3
|Ore Processed / Tonnes Milled||655,920||333,559||97||%||655,967||0||%||1,588,621|
|Silver Ounces Produced||3,158,866||1,834,575||72||%||3,367,740||(6||%)||8,145,421|
|Silver Equivalent Ounces Produced||5,201,085||3,505,376||48||%||6,636,716||(22||%)||14,901,518|
|Cash Costs per Ounce (1)||$2.49||$6.73||(63||%)||$3.83||(35||%)||$4.48|
|All-in Sustaining Cost per Ounce (1)||$9.94||$18.57||(46||%)||$10.76||(8||%)||$13.07|
|Total Production Cost per Tonne (1)||$71.56||$78.78||(9||%)||$78.87||(9||%)||$77.18|
|Average Realized Silver Price per Eqv. Ounce (1)||$22.58||$17.33||30||%||$17.63||28||%||$19.74|
|Financial (in $millions)|
|Mine Operating Earnings (Loss)||$48.0||($7.8||)||NM||$27.8||73||%||$61.4|
|Net Earnings (Loss)||$30.9||($10.0||)||NM||$8.6||NM||($11.5||)|
|Operating Cash Flows before Movements in Working Capital and Taxes||$52.2||($16.4||)||NM||$34.6||51||%||$59.1|
|Cash and Cash Equivalents||$232.4||$95.2||144||%||$118.6||96||%||$232.4|
|Working Capital (1)||$266.7||$114.2||134||%||$149.2||79||%||$266.7|
|Earnings (Loss) per Share (“EPS”) – Basic||$0.14||($0.05||)||NM||$0.04||NM||($0.05||)|
|Adjusted EPS (1)||$0.12||($0.10||)||NM||$0.06||105||%||$0.06|
|Cash Flow per Share (1)||$0.24||($0.08||)||NM||$0.17||43||%||$0.28|
NM – Not meaningful
Q3 2020 FINANCIAL RESULTS
The Company realized an average silver price of $22.58 per equivalent ounce during the third quarter of 2020, representing a 28% increase compared the third quarter of 2019 and a 30% increase compared to the prior quarter.
Revenues generated in the third quarter reached a new quarterly record of $125.9 million compared to $97.0 million in the third quarter of 2019. Revenues in the quarter benefited from the sale of $25.0 million worth of withheld inventory from the second quarter of 2020, as well as a 28% increase in average realized silver price.
The Company realized record mine operating earnings of $48.0 million compared to $27.8 million in the third quarter of 2019. Strong operating earnings were primarily attributed to higher metal prices combined with the sale of withheld metal inventory.
Net earnings reached a new quarterly record of $30.9 million (EPS of $0.14) compared to $8.6 million (EPS of $0.04) in the third quarter of 2019.
Adjusted earnings for the quarter was $25.7 million (Adjusted EPS of $0.12) compared to $11.9 million (Adjusted EPS of $0.06) in the third quarter of 2019, after excluding non-cash and non-recurring items.
Cash flow used in operations before movements in working capital and income taxes in the quarter was $52.2 million ($0.24 per share) compared to $34.6 million ($0.17 per share) in the third quarter of 2019.
The Company ended the quarter with cash and cash equivalents of $232.4 million, up $137.2 million from the prior quarter, while working capital increased to $266.7 million. The increase in cash and cash equivalents was attributed to strong cash generation from operations, $112.4 million in proceeds from prospectus offerings, including the $58.3 million investment by Eric Sprott, and $7.3 million in proceeds from exercised stock options. Subsequent to September 30, 2020, the Company repaid its revolving credit facility balance of $9.7 million in full. Subsequent to the repayment, the revolving credit facility has an undrawn balance of $75.0 million.
The table below represents the quarterly operating and cost parameters at each of the Company’s three producing silver mines.
|Third Quarter Production Summary||San Dimas||Santa Elena||La Encantada||Consolidated|
|Ore Processed / Tonnes Milled||189,918||204,577||261,425||655,920|
|Silver Ounces Produced||1,678,075||502,375||978,416||3,158,866|
|Gold Ounces Produced||18,268||7,428||76||25,771|
|Silver Equivalent Ounces Produced||3,125,662||1,091,026||984,397||5,201,085|
|Cash Costs per Ounce*||($1.50||)||$0.85||$10.14||$2.49|
|All-in Sustaining Cost per Ounce*||$4.09||$6.37||$12.11||$9.94|
|Total Production Cost per Tonne||$120.60||$71.44||$36.04||$71.56|
*Cash Cost per Ounce and All-in Sustaining Cost per Ounce are calculated on a per payable silver ounce basis.
Total production in the third quarter was 5,201,085 silver equivalents ounces, representing a 48% increase compared to the prior quarter, and consisted of 3.2 million ounces of silver and 25,771 ounces of gold. In the first nine months of 2020, total production has reached 8.1 million ounces of silver and 73,738 ounces of gold, or approximately 72% and 67%, respectively, of the Company’s 2020 silver and gold guidance midpoints.
Following the temporary COVID-19 suspensions in the second quarter, all three of the Company’s operations have resumed normal operations. Worker availability is a challenge amidst the COVID-19 pandemic but has been gradually improving and is being mitigated by increasing the use of temporary workers and contractors to replace vulnerable workers.
The Company continues to grant paid leave to “vulnerable employees”, as defined by the Mexican Ministry of Health, if any of the following list of conditions are identified: anyone 60 years of age or older, workers with pre-existing conditions or compromised immune systems. Vulnerable employees currently account for approximately 11% of the Company’s workforce at its three operating mines, an improvement from 18% at the end of the previous quarter. The Company continues to support its vulnerable employees with base pay and medical services as needed while they are not working. The Company is also supporting local communities by sponsoring health professionals, medical equipment, personal protective equipment, medicine and health supplements.
The Company is also in the process of constructing Polymerase Chain Reaction laboratory test facilities on site at San Dimas and partnering with test labs at Santa Elena to speed up testing capabilities at its mine sites. Preventative control measures to protect the safety and health of our employees, contractors and communities in which we operate, including social distancing, remote working, cancellation of any non-essential visits to the mines, comprehensive sanitation measures for the workplace and company transportation, as well as pre-screening for virus symptoms remain in effect.
COSTS AND CAPITAL EXPENDITURES
Cash cost per ounce for the quarter was $2.49 per payable ounce of silver, compared to $6.73 per ounce in the previous quarter. The decrease in consolidated cash cost per ounce was attributed to increased production levels, as well as higher by-product credits as a result of higher gold sales from finished goods inventory that rolled over from the second quarter, which contributed an additional $7.4 million or $2.34 per ounce in by-product credits to the current quarter. The impact of increased by-product credits was partially offset by higher production costs due to an increase in ore development activities to catch up on lost production, additional mining contractor costs to replace vulnerable workers, and a 5% stronger Mexican Peso against the U.S. Dollar compared to the previous quarter.
AISC in the third quarter was $9.94 per ounce compared to $18.57 per ounce in the previous quarter. The decrease in AISC per ounce was primarily due to the higher production levels following the temporary COVID-19 suspensions in the previous quarter.
Capital expenditures in the third quarter totalled $35.3 million and primarily consisted of $11.6 million at San Dimas, $8.5 million at Santa Elena (including $4.1 million towards the Ermitaño project), $3.1 million at La Encantada, $5.6 million on strategic projects and $4.4 million towards the acquisition of the Springpole Silver Stream.
About First Majestic Silver Corp
First Majestic is a publicly traded mining company focused on silver production in Mexico 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 and the La Encantada Silver Mine. Production from these mines are projected to be between 11.0 to 11.7 million silver ounces or 21.4 to 22.9 million silver equivalent ounces in 2020.
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