New York – AG
Toronto – FR
Frankfurt – FMV
Mexico – AG
VANCOUVER, Feb. 23, 2015 /PRNewswire/ - FIRST MAJESTIC
SILVER CORP. (AG: NYSE; FR: TSX) (the "Company" or "First
Majestic") is pleased to announce the consolidated financial
results for the Company's fourth quarter and year ended
December 31, 2014. The full
version of the financial statements and the management discussion
and analysis can be viewed on the Company's web site at
www.firstmajestic.com, on SEDAR at www.sedar.com and EDGAR at
www.sec.gov.
Q4 Highlights
- Silver equivalent production of 4.2 million ounces,
representing a 24% increase compared Q4 2013.
- Silver production of 3.1 million ounces, representing a 12%
increase compared to Q4 2013.
- All-in Sustaining costs of $14.43
per payable silver ounce, representing a significant 27% reduction
compared to the prior quarter.
- Revenues after smelting and refining costs amounted to
$72.5 million, representing a 23%
increase compared to Q4 2013.
- Adjusted net earnings (non-GAAP) normalized for non-cash items
was $4.2 million or $0.04 per share.
- Cash flow from operations of $21.1
million or $0.18 per share
(non-GAAP).
- Non-cash impairment charge of $102.0
million related to certain non-current assets at specific
mines resulting in a net loss of $64.6
million in Q4 2014.
2014 Highlights
- Silver equivalent production of 15.3 million ounces,
representing a 19% increase compared to 2013.
- Silver production of 11.7 million ounces, representing a 10%
increase compared to 2013.
- All-in Sustaining costs of $17.71
per payable silver ounce and expected to trend substantially lower
for 2015.
- Revenues were $245.5 million
representing a 2% decrease compared to 2013 despite a 19% decline
in average realized silver price.
- Adjusted net earnings were $7.9
million or $0.07 per share for
the year.
- Cash flow from operations of $74.4
million or $0.63 per
share.
- General and Administrative costs of $19.4 million, representing a 22% decrease
compared to 2013.
- Ended the year with cash and cash equivalents of $40.3 million, down from $54.8 million in 2013.
"In 2014, First Majestic delivered another year of record
production totaling 15.3 million silver equivalent ounces
representing a 19% increase from 2013," said Keith Neumeyer, President and CEO of First
Majestic. "Our Q4 financial results demonstrate that our cost
savings plan launched in 2013 is having a positive impact on
operating cash flows as well as significantly reducing our all-in
sustaining costs. The mines have shown tremendous operational
improvements over the past year. In particular, Del Toro has become
a shining star in our portfolio following the successful
reconfiguration of the mill in the second and third quarter and the
connection to the National power grid in late September 2014. San Martin is breaking production
records following its recent expansion as mining grades and plant
recoveries have exceeded expectations. For 2015, our focus will be
to continue to attack costs at every level of the business by
leaving no stone unturned and deliver to our shareholders another
solid year of operational improvements."
2014 ANNUAL AND FOURTH QUARTER Highlights
|
Fourth
Quarter
|
Fourth
Quarter
|
|
Year to
Date
|
Year to
Date
|
|
HIGHLIGHTS
|
2014
|
2013
|
Change
|
2014
|
2013
|
Change
|
Operating
|
|
|
|
|
|
|
Ore Processed /
Tonnes Milled
|
683,528
|
701,617
|
(3%)
|
2,613,411
|
2,741,717
|
(5%)
|
Silver Ounces
Produced
|
3,074,567
|
2,746,598
|
12%
|
11,748,721
|
10,641,465
|
10%
|
Silver Equivalent
Ounces Produced
|
4,247,527
|
3,421,161
|
24%
|
15,257,958
|
12,791,527
|
19%
|
Cash Costs per
Ounce(1)
|
$8.51
|
$9.66
|
(12%)
|
$9.58
|
$9.35
|
2%
|
All-in Sustaining
Cost per Ounce(1)
|
$14.43
|
n/a
|
n/a
|
$17.71
|
n/a
|
n/a
|
Total Production Cost
per Ounce(1)
|
$10.68
|
$11.11
|
(4%)
|
$11.68
|
$10.36
|
13%
|
Total Production Cost
per Tonne(1)
|
$47.15
|
$42.69
|
10%
|
$49.47
|
$39.29
|
26%
|
Average Realized
Silver Price per Ounce ($/eq. oz.)(1)
|
$16.30
|
$20.61
|
(21%)
|
$18.69
|
$23.08
|
(19%)
|
Financial
|
|
|
|
|
|
|
Revenues ($
millions)
|
$72.5
|
$59.0
|
23%
|
$245.5
|
$251.3
|
(2%)
|
Mine Operating
Earnings ($ millions)(2)
|
$5.8
|
$14.3
|
(59%)
|
$30.2
|
$92.3
|
(67%)
|
Net Loss ($
millions)
|
($64.6)
|
($81.2)
|
21%
|
($61.4)
|
($38.2)
|
(61%)
|
Operating Cash Flows
before Movements in Working Capital
and Income Taxes ($
millions)(2)
|
$21.1
|
$20.4
|
3%
|
$74.4
|
$137.3
|
(46%)
|
Cash and Cash
Equivalents ($ millions)
|
$40.3
|
$54.8
|
(26%)
|
$40.3
|
$54.8
|
(26%)
|
Working Capital ($
millions)(1)
|
($2.9)
|
$32.8
|
(109%)
|
($2.9)
|
$32.8
|
(109%)
|
Shareholders
|
|
|
|
|
|
|
Loss per Share
("EPS") - Basic
|
($0.55)
|
($0.69)
|
21%
|
($0.52)
|
($0.33)
|
(60%)
|
Adjusted
EPS(1)
|
$0.04
|
$0.05
|
(33%)
|
$0.07
|
$0.56
|
(88%)
|
Cash Flow per
Share(1)
|
$0.18
|
$0.17
|
3%
|
$0.63
|
$1.17
|
(46%)
|
Weighted Average
Shares Outstanding for the Periods
|
117,543,961
|
117,030,825
|
0%
|
117,444,276
|
116,935,325
|
0%
|
(1)
|
The Company reports
non-GAAP measures which include cash costs per ounce, all-in
sustaining cost per ounce, total production cost per ounce, total
production cost per tonne, average realized silver price per ounce,
working capital, adjusted EPS and cash flow per share. These
measures are widely used in the mining industry as a benchmark for
performance, but do not have a standardized meaning and may differ
from methods used by other companies with similar
descriptions.
|
(2)
|
The Company reports
additional GAAP measures which include mine operating earnings and
operating cash flows before movements in working capital and income
taxes. These additional financial measures are intended to
provide additional information and do not have a standardized
meaning prescribed by IFRS.
|
FINANCIAL RESULTS
The Company generated revenues of $72.5
million in the fourth quarter of 2014, an increase of
$13.5 million or 23% compared to
$59.0 million in the fourth quarter
of 2013. The increase in revenue was primarily due to the sale of
approximately 934,000 ounces of silver that were previously held as
inventory at the end of the third quarter. Revenues for the full
year 2014 were $245.5 million, a
decrease of $5.8 million compared to
2013, as record production in 2014 resulted in a 21% increase in
payable equivalent silver ounces sold but offset by a 19% decrease
in average realized silver price per ounce compared to 2013.
Mine operating earnings were $5.8
million in the fourth quarter of 2014 compared to
$14.3 million in the fourth quarter
of 2013. The Company recognized mine operating earnings of
$30.2 million in 2014, a decrease of
67% compared to $92.3 million in
2013. The decrease in mine operating earnings was primarily
attributed to a 19% decline in average realized silver price per
ounce during the year, higher production cost during the ramp up of
the Del Toro mine, and $17.1 million
increase in depletion, depreciation and amortization expense
primarily due to 123% increase in production from the new Del Toro
mine.
Net loss after taxes for the fourth quarter and year end 2014
was $64.6 million and $61.4 million respectively, compared to net
loss after taxes of $81.2 million and
$38.2 million in the comparative
periods of 2013. Net loss in the current period was
attributed to non-cash impairment charges totalling $102.0 million consisting of $58.7 million at La Guitarra, $21.7 million at San Martin and $21.6 million at Del Toro, before taxation
effects.
In the fourth quarter, operating cash flows before movements in
working capital and income taxes were $21.1
million ($0.18 per share),
compared to $20.4 million
($0.17 per share) in the fourth
quarter of 2013. The increase in cash flow per share was
primarily attributed to higher production, offset by a decrease in
mine operating earnings which were affected by a 21% decline in
average realized silver prices compared to the prior quarter.
For the full year 2014, operating cash flows decreased 46% from
$137.3 million ($1.17 per share) in 2013 to $74.4 million ($0.63 per share) in 2014 primarily due to lower
margins as a result of a 19% decrease in average annual realized
silver prices.
The Company ended 2014 with a healthy $40.3 million in cash and cash equivalents
compared to $54.8 million at the end
of 2013. The Company is currently in open discussions with various
financial partners to reduce or extend payments on certain current
liabilities in order to strengthen the working capital position.
Based on the Company's current operating plan, the Company believes
it has sufficient financial resources, combined with cash flows
from operations, to meet its ongoing requirements.
OPERATIONAL RESULTS
The Company achieved another quarterly production record
totaling 3,074,567 ounces of silver and 4,247,527 of silver
equivalent ounces. This compares to 2,746,598 ounces of silver and
3,421,161 of silver equivalent ounces in the fourth quarter of
2013, representing an increase of 12% and 24%, respectively. The
increase in production was primarily attributed to the ramp up of
the Del Toro mine and the mill expansion at San Martin; offset by a
decrease in production at La Encantada due to less tonnage
milled relating to the processing of only fresh mined ore versus a
blend with old tailings
Annual production in 2014 reached a record of 15,257,958 of
silver equivalent ounces, in line with the Company's previous
guidance of 14.8 million to 15.6 million ounces of silver
equivalents. On a year over year basis, annual production increased
19% compared to 12,791,527 silver equivalent ounces produced in
2013. Silver production also increased 10% to 11,748,721 ounces
compared to 10,641,465 ounces of silver in 2013. Higher production
for the year was primarily attributed to the ramp up of the Del
Toro Silver Mine, which increased
silver equivalent production by 90% compared to the prior year. In
addition, the San Martin Silver Mine, which completed the expansion
of its plant milling capacity in 2014, increased its silver
equivalent ounces by 55% compared to the prior year.
Del Toro, the Company's newest silver mine, achieved record
quarterly production of 817,754 silver ounces and 1,264,751 silver
equivalent ounces, an increase of 65% and 77%, respectively,
compared to the previous quarter. The mine had a challenging year
as it encountered numerous operational issues during ramp up such
as metallurgical issues with transitional ores, a delay in
connecting the new power line, and higher production costs due to
lower than expected production. With the decision to process all
ore through the flotation plant to improve economics, cost cutting
measures and successful completion of the power line at the end of
September, Del Toro is back on track and is estimated to produce
3.7 to 4.2 million equivalent silver ounces including 2.6 to 2.9
million silver ounces in 2015 at a cash cost per ounce of
$9.39 to $9.96 per ounce.
At San Martin, the Company completed its mill expansion in 2014
and achieved milling throughput of 1,051 tpd during the fourth
quarter of 2014. As a result of improvements in throughput, head
grade and recoveries, San Martin achieved a record production of
2,118,261 equivalent ounces in 2014, a 55% increase from the
1,370,890 equivalent ounces in the prior year.
COSTS AND CAPITAL EXPENDITURES
Consolidated cash costs per ounce in the fourth quarter were
$8.51 compared to $9.66 in the fourth quarter of 2013. The decrease
in cash cost per ounce compared to the prior year was primarily
attributed to economies of scale from higher production at the Del
Toro and San Martin mines. For the full year, cash costs increased
slightly to $9.58 per ounce compared
to $9.35 per ounce in 2013, or 5%
higher than annual guidance. The increase in cash costs was
primarily due to higher production costs at La Encantada due to the
increased extraction rate of high-grade underground mine ore
versus the mining costs associated with reprocessing low-grade old
tailings in the prior year. Also, additional diesel and generator
rental costs were incurred in the first nine months of the year at
Del Toro due to delays in the connection of the 115 kV power line
and higher than expected smelting and refining costs due to penalty
costs for impurities as the mill refined its metallurgical
process.
All-in Sustaining costs (AISC) for the fourth quarter and full
year 2014 were $14.43 and
$17.71 per ounce, respectively.
Quarter over quarter, consolidated AISC decreased to $14.43 per payable silver ounce, representing a
significant 27% reduction compared to $19.89 per ounce in the third quarter of 2014.
This major improvement is a result of economies of scale attributed
to production improvements from Del Toro, San Martin and La
Guitarra mines. In addition, the Company has started to see cost
savings materialized from the new power line at Del Toro and
ongoing re-negotiation with suppliers and contractors plus
continued lay-offs.
The following table is an AISC summary of the quarter over
quarter improvement by mine and full year 2014:
|
All-in Sustaining Costs (per Payable Silver
Ounce)
|
|
Mine
|
Q4
2014
|
Q3
2014
|
Q/Q
change
|
FY
2014
|
La
Encantada
|
$17.76
|
$17.32
|
3%
|
$15.50
|
La
Parrilla
|
$11.09
|
$11.77
|
-6%
|
$11.54
|
Del Toro
|
$10.16
|
$25.39
|
-60%
|
$18.79
|
San Martin
|
$9.54
|
$14.11
|
-32%
|
$14.01
|
La
Guitarra
|
$17.21
|
$27.74
|
-38%
|
$21.16
|
Total:
|
$14.43
|
$19.89
|
-27%
|
$17.71
|
Del Toro has shown significant improvements compared to the
previous quarter. During the fourth quarter, Del Toro's AISC was
reduced significantly to $10.16 per
ounce, representing a dramatic decrease of 60% compared to the
prior quarter, as the mine realized consistent and efficient energy
fully sourced from the new 115 kV power line. This has resulted in
lower costs, higher production and improved economics with the
decommissioning of portable diesel power generation units. In
addition, the use of new reagents and implementation of the new
regrinding circuit has dramatically improved metallurgical
recoveries for both silver and lead.
Capital expenditures in the fourth quarter were $24.4 million, primarily consisting of
$9.8 million at La Encantada,
$7.1 million at Del Toro,
$2.9 million at La Parrilla,
$2.9 million at La Guitarra and
$1.1 million at San Martin. Compared
to the previous quarter, capital expenditures decreased 18% due to
cost cutting measures.
Throughout 2014, the Company's total capital expenditures were
$113.5 million which consisted
of mine development, exploration, construction and expansion
projects and acquisitions of new mining equipment. As previously
announced, the Company plans to invest a total of $75.6 million in 2015 on sustaining and
expansionary capital. The 2015 annual budget implies an
estimated 33% reduction in total capital expenditures following the
completion of numerous capital intensive growth projects in
2014.
2015 GUIDANCE
In 2015, First Majestic aims to maintain its status as one of
silver industry's purest and highest margin producers. The focus of
the Company will be on operational efficiency and cash flow
generation to ensure profitability in a low silver price
environment. Based on the fourth quarter results and managements
improved outlook, the Company is projecting its 2015 AISC to be
within a range of $13.96 to $15.48
per ounce, or $13.50 to $14.96 per
ounce after excluding non-cash items such as share-based payments
and accretion of reclamation costs. Annual silver production is
expected to increase to a new record range of 11.8 million to 13.2
million ounces (or 15.3 million to 17.1 million silver equivalent
ounces), due to the following:
- Del Toro is expected to reach 3.7 to 4.2 million silver
equivalent ounces with improvements to optimize throughput and
metallurgical recoveries, compared to 3.7 million silver equivalent
ounces in 2014;
- An upgrade and expansion of the crushing and grinding area at
La Encantada is expected to increase operations to 3,000 tpd and
production to 4.0 to 4.5 million silver equivalent ounces; and
- At La Guitarra, the underground development of the El Coloso
area is expected to result in higher silver grades to be extracted
and processed in 2015.
The following is a summary of the Company's 2015 outlook by
producing mines:
Anticipated
Operating Parameters
|
La
Encantada
|
La
Parrilla
|
Del
Toro
|
San
Martin
|
La
Guitarra
|
Total
|
Tonnes processed
('000s)
|
839 -
938
|
645 -
721
|
556 -
622
|
347 -
388
|
160 -
179
|
2,547 -
2,848
|
|
|
|
|
|
|
|
Silver ounces
('000s)
|
4,028 -
4,502
|
2,624 -
2,933
|
2,555 -
2,856
|
1,774 -
1,982
|
794 -
887
|
11,775 -
13,160
|
Gold
ounces
|
-
|
595 - 662
|
-
|
3,909 -
4,368
|
5,030 -
5,622
|
9,534 -
10,652
|
Pounds of lead
('000s)
|
-
|
15,142 -
16,924
|
21,014 -
23,486
|
-
|
-
|
36,156 -
40,410
|
Pounds of zinc
('000s)
|
-
|
13,515 -
15,105
|
-
|
-
|
-
|
13,515 -
15,105
|
Silver equivalent
ounces ('000s)
|
4,028 -
4,502
|
4,326 -
4,835
|
3,733 -
4,172
|
2,049 -
2,291
|
1,149 -
1,284
|
15,285 -
17,084
|
|
|
|
|
|
|
|
Average silver grade
(g/t)
|
249
|
156
|
199
|
209
|
182
|
205
|
Average recoveries
(%)
|
60%
|
79%
|
72%
|
76%
|
85%
|
71%
|
|
|
|
|
|
|
|
Cash cost per
ounce
|
$8.73 -
$9.11
|
$5.72 -
$6.36
|
$9.39 -
$9.96
|
$9.43 -
$10.15
|
$8.18 -
$9.83
|
$8.29 -
$9.22
|
Sustaining capital
per ounce
|
$2.25 -
$2.51
|
$5.34 -
$5.96
|
$2.94 -
$3.29
|
$3.25 -
$3.63
|
$5.11 -
$5.72
|
$3.49 -
$3.91
|
Expansionary
capital per ounce
|
$1.90 -
$2.13
|
$2.41 -
$2.69
|
$2.24 -
$2.50
|
$1.70 -
$1.90
|
$5.97 -
$6.67
|
$2.41 -
$2.70
|
Production cost
per tonne
|
$39.07 -
$40.89
|
$40.29 -
$42.66
|
$51.28 -
$53.76
|
$58.74 -
$62.36
|
$53.48 -
$61.22
|
$45.63 -
$49.82
|
*Metal average price assumptions for calculating
equivalents: Silver $17.00/oz,
Gold $1,200/oz, Lead $0.95/lb, Zinc $1.02/lb
CONFERENCE CALL AND WEBCAST
A conference call and webcast will be held Wednesday, February 25, 2015 at 11:00 a.m. PST (2:00 p.m.
EST) to review and discuss the financial results. To
participate in the conference call, please dial the following:
Toll Free Canada
& USA:
|
1-800-319-4610
|
Outside of Canada
& USA:
|
1-604-638-5340
|
Toll Free
Germany:
|
0800 180 1954
|
Toll Free
UK:
|
0808 101 2791
|
Participants should dial in 10 minutes prior to the
conference.
Click on WEBCAST on the First Majestic homepage as a
simultaneous audio webcast of the conference call will be posted at
www.firstmajestic.com.
First Majestic is a mining company focused on silver production
in México 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.
FIRST MAJESTIC SILVER CORP.
"signed"
Keith Neumeyer,
President & CEO
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This news release includes certain "Forward-Looking Statements"
within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and applicable Canadian securities
laws. When used in this news release, the words "anticipate",
"believe", "estimate", "expect", "target", "plan", "forecast",
"may", "schedule" and similar words or expressions, identify
forward-looking statements or information. These forward-looking
statements or information relate to, among other things: the price
of silver and other metals; the accuracy of mineral reserve and
resource estimates and estimates of future production and costs of
production at our properties; estimated production rates for silver
and other payable metals produced by us, the estimated cost of
development of our development projects; the effects of laws,
regulations and government policies on our operations, including,
without limitation, the laws in Mexico which currently have significant
restrictions related to mining; obtaining or maintaining necessary
permits, licences and approvals from government authorities; and
continued access to necessary infrastructure, including, without
limitation, access to power, land, water and roads to carry on
activities as planned.
These statements reflect the Company's current views with
respect to future events and are necessarily based upon a number of
assumptions and estimates that, while considered reasonable by the
Company, are inherently subject to significant business, economic,
competitive, political and social uncertainties and contingencies.
Many factors, both known and unknown, could cause actual results,
performance or achievements to be materially different from the
results, performance or achievements that are or may be expressed
or implied by such forward-looking statements or information and
the Company has made assumptions and estimates based on or related
to many of these factors. Such factors include, without limitation:
fluctuations in the spot and forward price of silver, gold, base
metals or certain other commodities (such as natural gas, fuel oil
and electricity); fluctuations in the currency markets (such as the
Canadian dollar and Mexican peso versus the U.S. dollar); changes
in national and local government, legislation, taxation, controls,
regulations and political or economic developments in Canada, Mexico; operating or technical difficulties in
connection with mining or development activities; risks and hazards
associated with the business of mineral exploration, development
and mining (including environmental hazards, industrial accidents,
unusual or unexpected formations, pressures, cave-ins and
flooding); risks relating to the credit worthiness or financial
condition of suppliers, refiners and other parties with whom the
Company does business; inability to obtain adequate insurance to
cover risks and hazards; and the presence of laws and regulations
that may impose restrictions on mining, including those currently
enacted in Mexico; employee
relations; relationships with and claims by local communities and
indigenous populations; availability and increasing costs
associated with mining inputs and labour; the speculative nature of
mineral exploration and development, including the risks of
obtaining necessary licenses, permits and approvals from government
authorities; diminishing quantities or grades of mineral reserves
as properties are mined; the Company's title to properties; and the
factors identified under the caption "Risk Factors" in the
Company's Annual Information Form, under the caption "Risks
Relating to First Majestic's Business".
Investors are cautioned against attributing undue certainty to
forward-looking statements or information. Although the Company has
attempted to identify important factors that could cause actual
results to differ materially, there may be other factors that cause
results not to be anticipated, estimated or intended. The Company
does not intend, and does not assume any obligation, to update
these forward-looking statements or information to reflect changes
in assumptions or changes in circumstances or any other events
affecting such statements or information, other than as required by
applicable law.
SOURCE First Majestic Silver Corp.