First majestic silver ticker9/22/2023 ![]() Of course factoring in adjustments the loss widened. Cash flows from operations before movements in working capital and income taxes in the quarter totaled $8.4 million or $0.07 per share, compared to $16.4 million or $0.14 per share in the previous quarter. Net loss for the quarter was $1.8 million or $0.01 per share. All in all, the company is effectively cutting its costs.Ĭonsidering revenues and costs, the company nearly broke even. It would have been better this quarter but costs rose at Del Toro to $11.89 per payable ounce of silver compared to $6.97 in the prior quarter. All in sustaining costs for the quarter were $14.41 per ounce a slight improvement from the $14.49 per ounce in Q2 2015 and a strong 28% reduction compared to $19.89 per ounce Q3 2014. Compared to Q3 2014, cash cost per ounce decreased by 16% or $1.64 per ounce. Cash cost per ounce (after by-product credits) for the quarter was $8.77 per payable ounce of silver about flat with the $8.74 in Q2 2015. Those cuts resulted in severance payments totaling approximately $0.3 million, but will go a long way in saving cash. Further the company is cutting labor costs in this low silver price environment. Production costs for the quarter were $41.81 per ton, an 11% decrease from $46.80 in Q2 2015. First Majestic has had an optimization and restructuring plan that it has been working on for many months and it continues to make progress at reducing production costs. Overall, I think the production declines are temporary, and do not give me concern. There was increased production at La Guitarra and San Martin due to improved silver and gold grades, and a 33% increase in processed ore at La Encantada. Now it wasn't all bad news for the mines. Why such a drop in grade? Well in Q3 much of the mining occurred in a lower grade area of the Perseverancia mine and Lupita vein. The decrease at Del Toro was primarily due to a 23% decrease in tons milled in combination with 17% lower silver grades. Del Toro saw a 36% decrease in production. But why? Recall that Del Toro was having issues. This is a 6% decrease in production compared to Q2. Total production for the quarter was 2,593,309 ounces of silver, 4,434 ounces of gold, 8,743,453 pounds of lead and 3,122,498 pounds of zinc. That said, production declines were an issue quarter-over-quarter. This is not due just to reduced production or sales, but is due to a problem plaguing the sector: an 11% decrease is the average realized silver price. What is more, when we compare these results to the prior quarter, revenues decreased 18%. What the headline number doesn't address is that this is primarily due to the hold back of 934,000 ounces of silver sales last year which inflates the percent change year-over-year. The good news is that this is an increase of 10% compared to Q3 2014. In its quarterly report this morning we saw that the company generated revenues of $44.7 million in Q3 2015. ![]() Now let's talk about the first two items, production/revenues and costs. This is a huge benefit to a balance sheet that had been struggling, so this acquisition is critical. Further, acquisition will add about $30 million in cash and working capital to the company. With the addition of SilverCrest's flagship Santa Elena Mine, First Majestic has added a sixth producing silver mine helping to grow the company's asset base. Right now the company has 5 of its own operating mines that are producing silver and byproducts. The addition of SilverCrest's assets is really a large impact to the company. Given where SilverCrest was trading the cost of the acquisition was $104.2 million. It also offered up a small amount of cash. It did this by issuing 33,141,663 common shares of First Majestic stock and then another 2,647,147 in replacement stock options. Well, it is important to note that as of October 1, 2015, First Majestic had completed its acquisition of all of the issued and outstanding shares of SilverCrest. The company has been in the process of acquiring SilverCrest ( SVLC) for some time. In the case of First Majestic let me tackle the third item first. And third, is the company engaging in any sort of merger and acquisition activity? First, how is the company doing on production and revenues? Second, is the company able to keep its costs to a point where it is near breakeven in this rough operating climate. To me there are three key issues with any silver miner in this day and age. This morning I was asked about the name and was forced to give a generic answer about the sector trends in the precious metal miners, and then saying I'd need to take a look at how it was performing of late. ![]() ![]() First Majestic Silver ( NYSE: AG) is a name that I have followed for a bit, but have never covered here on Seeking Alpha. ![]()
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