Tag Archives: mexico

Armed Robbers Steal $8.5 Million of Gold From McEwen Mexico Mine

Bloomberg, April 8, 2015

rob_mcewen

Armed robbers walked away with an estimated 7,000 ounces of gold, worth $8.5 million at current prices, from a Canadian-owned mine in western Mexico.

The gold was contained in an estimated 900 kilograms (1,984 pounds) of gold-bearing concentrate, a partially processed form of ore, stolen from the refinery at McEwen Mining Inc.’s El Gallo 1 mine in Mexico’s Sinaloa state on Tuesday, the company said in a statement. While McEwen is insured, its policy won’t be enough to cover the entire expected loss, the Toronto-based miner said.

“The crime is being vigorously investigated by the Mexican authorities,” McEwen Mining said in the statement. “No employees were seriously injured and there was no material damage to any of the company’s facilities.”

 Mining and processing activities weren’t impacted and continue uninterrupted.

This isn’t the first violent incident affecting Canadian mining companies in Mexico this year. Last month, four Goldcorp Inc. workers in the troubled Guerrero state went missingin an apparent kidnapping, while contractors and an employee of Torex Gold Resources in the same region were kidnapped in February.

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NEWS: First Majestic Updates Mineral Reserve and Resource Estimates for Year End 2014 and Files Form 40-F Annual Report‏

Apr 1, 2015

FIRST MAJESTIC SILVER CORP. is pleased to announce its 2014 Mineral Reserve and Resource estimates for its existing mineral property assets in Mexico as of December 31, 2014. Silver metal content in the Proven and Probable Reserve category totaled 101.1 million ounces of silver, down 7% from 108.6 million as of December 31, 2013. Metal prices used to estimate the 2014 Reserve estimates were lowered compared to the prior year to: $20.00/oz of silver, $1,200/oz of gold, $0.95/lb of lead and $1.00/lb of zinc.

The following table shows the total tonnage mined from each of the Company’s five producing properties during 2014, including total ounces of silver and silver equivalent ounces produced from each property and the tonnage mined from delineated reserves and resources at each property.

2014 Production Table

(1) Silver-equivalent grade is estimated considering: metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the corresponding contract of each mine.

The Company completed over 44,000 metres of diamond drilling at its five operating mines in 2014, representing a 25% reduction in metres drilled compared to the prior year. For 2015, First Majestic is planning to drill approximately 50,000 metres to further define known mineralized ore bodies at its operating mines. A combination of surface and underground drill rigs will focus on assisting mining activities, definition drilling and to support future updates to the Company’s NI 43-101 Technical Reports.

Starting this year, First Majestic is reporting Mineral Resources inclusive of Mineral Reserves; readers are cautioned of this change since the Company had previously reported Mineral Resources exclusive of Mineral Reserves.

The largest change to Mineral Reserves occurred at La Encantada where the old tailings were downgraded from Proven and Probable Reserves to Inferred Resources after the Company’s decision to suspend the reprocessing of the old tailings due to the low metal price environment. This resulted in a 76% increase in the Reserves silver grade, a 57% decrease in total Reserve tonnes and a 24% decrease in Reserve silver metal content. However, the underground Proven and Probable Mineral Reserves increased by 56% to 3.2 million tonnes containing 28.4 million ounces of silver with average silver grade of 276 g/t.

Silver metal content in the Measured and Indicated Resource category totaled 152.4 million ounces. In addition, the silver metal content in the Inferred Resource totaled 170.4 million ounces, a decrease of 18% compared to the prior year due mainly to the impact of lower metal price assumptions, the adoption of the stricter CIM Definition Standards, and the subtraction of Resources for the Peñasco Quemado and La Frazada projects, which were disposed of during 2014.

The complete 2014 Mineral Reserve and Resource estimates for all metals, tonnage and grades are shown below in the following tables:


(1) Mineral Reserves have been classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI 43-101”).
(2) In all cases, metal prices considered for Mineral Reserves estimates were $20 USD/oz Ag, $1,200 USD/oz Au, $0.95 USD/lb Pb, and $1.00 USD/lb Zn.
(3) The Mineral Reserves information provided above for La Encantada, La Parrilla, Del Toro and San Martín is based on internal estimates prepared as of December 31, 2014. The information provided was reviewed and validated by the Company’s internal Qualified Person, Mr. Ramon Mendoza Reyes, P.Eng., who has the appropriate relevant qualifications, and experience in mining and reserves estimation practices.
(4) Mineral Reserve estimates for La Guitarra are based on the 2015 La Guitarra Silver Mine Technical Report compiled by First Majestic with contribution of Amec Foster Wheeler Americas Ltd.
(5) Silver-equivalent grade is estimated considering: metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the corresponding contract of each mine. Estimation details are listed in each mine section of the 2014 Annual Information Form.
(6) The cut-off grades and modifying factors used to convert Mineral Reserves from Mineral Resources are different for all mines. The cut-off grades are listed in each mine section of the 2014 Annual Information Form.


(1) Mineral Resources have been classified in accordance with CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101.
(2) In all cases, metal prices considered for Mineral Resource estimates were $22 USD/oz Ag, $1,350 USD/oz Au, $0.95 USD/lb Pb, and $1.00 USD/lb Zn.
(3) The Mineral Resources information provided above for La Encantada, La Parrilla, Del Toro and San Martín is based on internal estimates prepared as of December 31, 2014. The information provided was reviewed and validated by the Company’s internal Qualified Person, Mr. Jesus M. Velador Beltran, Ph.D. Geology, who has the appropriate relevant qualifications, and experience in mining and resource geology.
(4) Mineral Resource estimates for La Guitarra Silver Mine are based on the 2015 Technical Report compiled by First Majestic with contribution of Amec Foster Wheeler Americas Ltd.
(5) Silver-equivalent grade is estimated considering: metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the corresponding contract of each mine. Estimation details are listed in each mine section of the 2014 Annual Information Form.
(6) The cut-off grades for Mineral Resources are different for all mines. The cut-off grades are listed in each mine section of the 2014 Annual Information Form.
(7) Measured and Indicated Mineral Resources are reported inclusive of Mineral Reserves.
(8) The La Luz resource estimates are taken from the Real de Catorce Property Technical Report dated July 25, 2008 and the Real de Catorce Property Technical Report dated July 30, 2007. The Company’s Qualified Persons are working on applying similar economic inputs to the La Luz Silver Project to those applied to the other properties.


(1) Plomosas historical estimates are taken from Grupo Mexico’s estimates prepared in 2001.
(2) Tonnage is expressed in thousands of tonnes, metal content is expressed in thousands of ounces.
(3) The Company’s Qualified Persons have been coordinating the work for the verification of the information supporting the historical estimates at Plomosas. The historical estimates at Plomosas do not conform to NI 43-101 for reporting purposes; as such, the Company is not treating these historical estimates as current Mineral Reserves or Mineral Resources. Since the historical estimates do not have demonstrated current economic viability, these estimates should not be relied upon until the verification process and due diligence in progress by the Company’s Qualified Person is completed.
(4) In order to verify or upgrade the historical estimates, the Company will need to complete a diamond drilling program at the Rosario and San Juan mines. The drilling program is designed to confirm the historical estimates reported by Grupo Mexico and will allow the Company to plan a second exploration program focused on locating extensions of the known mineralization. Other work required to verify the historical estimates as current includes, but it is not limited to: re-survey of underground workings, re-survey of available exploration drill-hole monuments, review of drilling, sampling and assays databases, and the re-assessment of the estimates following CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines and CIM Definition Standards on Mineral Resources and Mineral Reserves.

The Company also announces that its 2014 audited financial statements have been filed on SEDAR. In addition, a Form 40-F report has been filed with the United States Securities and Exchange Commission and is available on EDGAR. Both documents are also available on the Company’s website at www.firstmajestic.com.

Shareholders may also receive a copy of First Majestic’s audited financial statements, without charge, upon request to First Majestic, Suite 1805 — 925 West Georgia Street Vancouver, B.C., Canada, V6C 3L2 or to info@firstmajestic.com.

Mr. Ramon Mendoza Reyes, Vice President Technical Services for First Majestic, is a “qualified person” as such term is defined under National Instrument 43-101, and has reviewed and approved the technical information disclosed in this news release.

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.

FOR FURTHER INFORMATION contact info@firstmajestic.com, visit our website at www.firstmajestic.com or call our toll free number 1.866.529.2807 FREE.

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NEWS: First Majestic Announces New La Guitarra NI 43-101 Technical Report

Mar 31, 2015

FIRST MAJESTIC SILVER CORP. (the “Company” or “First Majestic”) is pleased to provide a new NI 43-101 Technical Report and the initial Mineral Reserve and Resource estimate for the La Guitarra Silver Mine located in the State of Mexico. All amounts are in U.S. dollars unless stated otherwise.

REPORTED HIGHLIGHTS

  • Proven and Probable Reserves totalling 11.8 million ounces of silver equivalent ounces, including 9.4 million ounces of pure silver
  • Measured and Indicated Resources of 15.2 million ounces of silver equivalent ounces, including 11.7 million ounces of pure silver
  • Inferred Resources totalling 6.3 million silver equivalent ounces, including 4.7 million ounces of pure silver
  • Average Reserve silver grade of 223 g/t; and an average gold grade of 1.06 g/t
  • Life of Mine (LOM) of 7.0 years producing an estimated total of 9.3 million ounce of silver and 45 thousand ounces of gold
  • LOM operating cost per tonne estimated at $48.31 per tonne, excluding G&A, sustaining costs and exploration

Keith Neumeyer, CEO and President, states: “since purchasing the La Guitarra mine over two years ago, our geological and technical teams have been working diligently examining over 900 historical drill holes and drilling several additional holes in order to create what is now our new base line Reserve and Resource estimate which now gives us a very good starting point to build on in the coming years. This large property has extremely exciting geological potential and this first Technical Report prepared by our team points to the reason why we first decided to buy this mine in 2012.”

The La Guitarra Silver Mine, located in historical Temascaltepec mining district in the State of Mexico, consisting of 43 mining concessions covering 39,714 hectares (98,135 acres). La Guitarra is comprised of two operating mines, La Guitarra and Coloso, and three past producing areas, the Nazareno, Mina de Agua and El Rincón, which are now considered as exploration areas.

The new Mineral Resource and Mineral Reserve estimates for La Guitarra are shown below and are classified in accordance with the CIM Definition Standards for Mineral Resources and Mineral Reserves (May 10, 2014). Please note, First Majestic is reporting Mineral Resources inclusive of Mineral Reserves.

(1) Mineral Reserves have been classified in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101.
(2) Cut-off grade considered for sulphides was 200 g/t Ag-Eq and is based on actual and budgeted operating and sustaining costs.
(3) Metallurgical recovery used was 85% for silver and 79% for gold.
(4) Metal payable used was 95% for silver and 95% for gold.
(5) Metal prices considered were $20 USD/oz Ag, $1,200 USD/oz Au.
(6) Silver equivalent grade is estimated as: Ag-Eq = Ag Grade + (Au Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).
(7) Tonnage is expressed in thousands of tonnes, metal content is expressed in thousands of ounces.
(8) Totals may not add up due to rounding.

(1) Mineral Resources have been classified in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101.
(2) Cut-off grade considered for sulphides was 180 g/t Ag-Eq and is based on actual and budgeted operating and sustaining costs.
(3) Metallurgical recovery used was 85% for silver and 79% for gold.
(4) Metal payable used was 95% for silver and 95% for gold.
(5) Metal prices considered were $22 USD/oz Ag, $1,350 USD/oz Au.
(6) Silver equivalent grade is estimated as: Ag-Eq = Ag Grade + (Au Grade x Au Recovery x Au Payable x Au Price) / (Ag Recovery x Ag Payable x Ag Price).
(7) Tonnage is expressed in thousands of tonnes, metal content is expressed in thousands of ounces.
(8) Totals may not add up due to rounding.
(9) Measured an Indicated Mineral Resources are reported inclusive or Mineral Reserves.

Since taking control of the property in July 2012, to the effective date of December 31, 2014 used for the Mineral Resources and Mineral Reserve estimates, First Majestic has led an aggressive exploration program at La Guitarra which has included an extensive 35,575 metres of diamond drilling over 262 holes. The Company also commenced a plan to expand the operation from 200 tonnes per day (tpd) to 520 tpd in late 2012. This expansion was completed in May 2013 following the installation of a spare ball mill from the La Parrilla Silver Mine and some spare flotation tanks from the La Encantada Silver Mine.

The LOM plan is based on an annual processing rate of 190,000 tonnes of plant feed, corresponding to approximately 520 tpd. Considering the Mineral Reserves presented above it represents a mine life of 7 years producing an estimated 9.3 million ounces of silver plus 45 thousand ounces of gold.

LIFE OF MINE


In late 2013, the Company started the development of the Coloso mine incurring in expansionary capital expenditures in the areas of mine development, mine infrastructure and a 5 km power line. Sustaining capital expenditures throughout the projected life of mine are assumed to average $4.26 million per year, including maintenance of the processing plant, equipment replacement in the mine, mine development, for tailings facility expansions and infill exploration.

The sustaining capital budget includes an allocation of an estimate of $1.0 million for the development of an 800 metre tunnel to connect the Coloso mine with the Nazareno area, in addition, an estimate of $1.5 million for mine developing and preparation in Nazareno to bring this mine into production as a replacement of the La Guitarra mine production after the depletion of current reserves in this area.

The Company’s Qualified Persons recommend going forward with infill exploration works required for Nazareno and the permitting and exploration works required for Mina de Agua in order to upgrade current resources and generate additional resources. The Company’s Qualified Persons are of the opinion that La Guitarra property has the potential for hosting additional resources laterally at the Guitarra vein, at depth at Coloso and laterally and at depth at, Nazareno, Mina de Agua and El Rincón. Further exploration at Nazareno and Coloso areas may result in a near term increase in the recognized resources from this area.

Furthermore, the Mina de Agua and El Rincón areas are highly prospective given the history of production from these areas. In the 18th century, the Mina de Agua mine and surrounding areas were one of México’s largest silver producers, generating approximately 10% of the country’s total mineral wealth. The Company’s Qualified Persons recommend the development of a 2 km tunnel from Mina de Agua to El Rincón plus a comprehensive exploration program to develop the resources and potentially increase the delineation of resources and reserves in these areas.

In addition, a series of conceptual studies have been conducted to investigate the potential of increasing the throughput capacity of the current La Guitarra processing plant to 1,000 tpd. Preliminary estimates indicate a potential reduction of the operating costs driven by the economy of scale, mainly in the processing and general and administration areas; however, the economics of the mine capacity expansion and the plant expansion have not been completed. An increase in the annual throughput could reasonably be expected to increase the total costs but to reduce unit operating costs. The Company’s Qualified Persons recommend continuing the conceptual studies and progressing to an internal pre-feasibility level study to assess the economic viability of this expansion.

Mineral Resources for the Coloso area have been estimated by Amec Foster Wheeler Americas Ltd. under the supervision of Greg Kulla, P.Geo. Mineral Resources for La Guitarra, Nazareno and Mina de Agua areas have been estimated by First Majestic. Mineral Reserves for La Guitarra, Coloso and Nazareno areas have been estimated by First Majestic under the supervision of Jesus M. Velador Beltran, PhD Geology. Mineral Reserves for La Guitarra, Coloso and Nazareno areas have been estimated by First Majestic under the supervision of Ramon Mendoza Reyes, P.Eng. Mr. Ramon Mendoza Reyes, Vice President Technical Services for First Majestic, is a “qualified person” as such term is defined under National Instrument 43-101, and has reviewed and approved the technical information disclosed in this news release.

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.

FOR FURTHER INFORMATION contact info@firstmajestic.com, visit our website at www.firstmajestic.com or call our toll free number 1.866.529.2807  FREE.

Full release

NEWS: First Majestic Announces Financial Results for Q4 and Year End 2014

Feb 23, 2015

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

  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:

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:

*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.

Full release