First Majestic Silver Announces Q3 Production, Job Cuts

First Majestic Silver Corp. (TSX:FR,NYSE:AG) announced its Q3 2015 production results, commenting that total output from its five Mexico-based silver mines came in at 3,558,035 silver equivalent ounces. That’s comparable to the year-ago period.
Despite that performance, the company will be making some operational changes to ensure that it generates free cash flow. Those will include job cuts.
As quoted in the press release:

The total ore processed during the quarter at the Company’s five operating silver mines: La Encantada, La Parrilla, Del Toro, San Martin and La Guitarra, amounted to 675,032 tonnes, representing a 9% increase compared to the third quarter of the prior year and a 2% increase from the previous quarter. The increase in tonnes compared to the prior quarter was primarily due to a 33% increase in throughput rates at La Encantada following the completion of the plant expansion to 3,000 tpd, however, offset by a 23% decrease in throughput rates at Del Toro which was affected by ventilation issues during the quarter.
Average silver grades in the quarter for the five mines decreased to 167 g/t compared to 196 g/t in the third quarter of 2014 and decreased 8% compared with the previous quarter. Combined silver recoveries averaged 72% during the quarter, up from 68% in the same quarter of the prior year and above the second quarter average of 70%.
The Company’s underground development in the third quarter consisted of 8,231 metres, a 20% decrease compared to 10,259 metres completed in the previous quarter.
During the quarter, 13 diamond drill rigs were operating at the Company’s five operations. The Company completed 8,586 metres of diamond drilling in the quarter compared to 16,268 metres in the prior quarter, representing a 47% decrease primarily due to a cost reduction strategy in response to the low and volatile silver price environment.

Keith Neumeyer, president and CEO of First Majestic, commented:

Our third quarter results saw overall improvements in silver recoveries and throughput rates primarily due to the recent expansion of the La Encantada plant to 3,000 tonnes per day. At San Martin and La Guitarra, we continue to encounter high grades of silver and gold which resulted in record quarterly production at both operations. However, due to the continued weakness in metal prices, we are modifying our operations in order to ensure free cash flow is generated across the entire business. These changes include additional layoffs and mine plan revisions. Once these changes are fully implemented, and with the addition of the newly acquired Santa Elena Mine, the Company is expected to benefit from improved operating margins, increased cash flows and greater economies of scale.

Click here to read the full First Majestic Silver Corp. (TSX:FR,NYSE:AG) press release.