First Majestic Silver Sets Production Record in Q2

First Majestic Silver (TSX:FR,NYSE:AG) set a record in Q2, with total production from its seven operating silver mines reaching 5.1 million silver equivalent ounces, the company announced on Monday (July 16).

Total production for the period consisted of 2.8 million ounces of silver, 25,449 ounces of gold, 3.9 million pounds of lead and 1.4 million pounds of zinc.

The company has increased its 2018 annual silver production guidance from 10.6 to 11.8 million ounces to 12 to 13.2 million ounces, primarily due to the addition of the Mexico-based San Dimas silver-gold mine, which it acquired this past May.

“During the quarter, the integration of the newly acquired San Dimas mine into our Mexican portfolio was our primary focus,” said Keith Neumeyer, president and CEO of First Majestic.

“The world-class San Dimas operation, which contributed only seven weeks of production in the second quarter, propelled the company to a new quarterly production record of 5.1 million silver equivalent ounces and has become our cornerstone asset,” he added.

Neumeyer continued,  “under the new streaming agreement, we are going back to mine numerous high-grade silver veins that were previously deemed uneconomic by the previous operator. In 2018, all-in sustaining costs at San Dimas are projected to be between US$6.99 to US$8.19 per ounce, making it our lowest cost and our largest producing mine.”

During Q2, First Majestic processed 851,349 tonnes of ore at its seven operating silver mines: San Dimas, Santa Elena, La Encantada, La Parrilla, Del Toro, San Martin and La Guitarra. That represents a 5-percent increase compared to the previous quarter.

Consolidated silver grades averaged 127 g/t in comparison to the 111 g/t recovered in Q1. The company reported that the 14-percent increase in silver grades was mainly the result of the addition of seven weeks of production from San Dimas.   

Meanwhile, consolidated silver recoveries averaged 79 percent, up 6 percent from the previous quarter.

First Majestic’s underground development in the second quarter consisted of 17,838 meters, which was a 20-percent increase compared to the 14,914 meters completed in the last quarter.

Approximately 29 diamond drill rigs were active across all of the company’s properties during Q2. In total, 298 drill holes were completed for 73,899 meters on the seven producing assets, as well as the Plomosas silver project, resulting in a 65-percent increase in drilled meters compared to Q1.

Looking forward, the company said in the short term it will focus on reducing underground dilution and implementing mill automation processes, including the installation of high-intensity grinding technologies in order to increase efficiencies and reduce production costs.

Delivery and installation of the high-intensity grinding mills at Santa Elena and San Dimas are planned for October and November, respectively.

First Majestic expects further improvements in recoveries with the anticipated installation of microbubble flotation columns at La Parrilla during Q3 2018, followed by Del Toro in 2019.

Neumeyer also discussed the new roaster at La Encantada, stating,“[a]t La Encantada, the construction of the new roaster is in its final stages. Commissioning and start up procedures are expected to begin in late August before ramping up to commercial production by the end of the year. These are exciting times for the company, our employees and our stakeholders.”

As of 2:46 p.m. EST on Tuesday (July 17), First Majestic was trading at US$9.15.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.