First Majestic Silver Corp.: First Quarter Marks 5th Consecutive Quarter of Net Income
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 05/13/10 -- FIRST MAJESTIC SILVER CORP. (TSX: FR)(OTCQX: FRMSF)(FRANKFURT: FMV)(WKN: A0LHKJ) (the 'Company') is pleased to announce the unaudited financial results for the Company's first quarter ending March 31, 2010. 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 or on SEDAR at www.sedar.com.
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First Quarter 2010 Highlights ($CAD)
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Gross Revenue $21.9 million
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Net Revenue $18.2 million
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Mine Operating Earnings $7.4 million
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Net Income after taxes $3.0 million
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Earnings Per Share $0.03
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Silver Equivalent Production(1) 1,619,403 oz. Ag eq.
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Silver Equivalent Ounces Sold(2) 1,298,659 oz. Ag eq.
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Total Cash Costs per ounce US$8.11
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Direct Cash Costs per ounce US$4.94
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Average Revenue per ounce sold $16.89 (US$16.23)
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(1) includes pre-commercial production of 261,193 silver ounces during the
quarter ended March 31, 2010.
(2) excludes the net margin of $2.3 million of pre-commercial production in
connection with the sale of 262,403 silver ounces during the quarter
ended March 31, 2010.
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FINANCIAL PERFORMANCE AND HIGHLIGHTS
-- Consolidated gross revenue (prior to smelting, refining and metal
deductions) for the quarter ended March 31, 2010 was $21,935,712
compared to $17,464,137 for the quarter ended March 31, 2009 for an
increase of $4,471,575 or 26%. Consolidated gross revenue for the
quarter ended March 31, 2010 increased by 2% compared to the prior
quarter ended December 31, 2009.
-- In the first quarter of 2010, the Company shipped (sold) 1,298,659
ounces of silver equivalent at an average price of $16.89 per ounce
(US$16.23) compared to 996,595 ounces in the first quarter of 2009 at an
average price of $17.52 per ounce (US$14.07), representing an increase
of 30% in shipments over the same quarter in 2009 and a 13% increase
over Q4 of 2009. In the fourth quarter of 2009, the Company shipped
1,145,562 ounces of silver equivalents at an average price of $18.71
(US$17.72) per ounce.
-- Total production for the first quarter of 2010 increased 30% from the
prior quarter and 56% from the same quarter of the prior year to
1,619,403 ounces of silver equivalents consisting of 1,409,825 ounces of
silver, 857 ounces of gold and 2,542,071 pounds of lead. This compares
to the 1,040,117 ounces of silver equivalents produced in the first
quarter of 2009, which consisted of 929,964 ounces of silver, 491 ounces
of gold, 1,828,739 pounds of lead. In the fourth quarter of 2009, the
Company produced 1,249,568 ounces of silver equivalents consisting of
1,103,840 ounces of silver, 701 ounces of gold and 1,571,819 pounds of
lead.
-- Net sales revenue (after smelting and refining charges and metals
deductions) for the quarter ended March 31, 2010 was $18.2 million, an
increase of 27% compared to $14.4 million for the first quarter of 2009.
Net sales revenue for the quarter ended March 31, 2010 was virtually
unchanged compared to $18.4 million for the fourth quarter of 2009.
Smelting and refining charges and metal deductions decreased marginally
to 17% of gross revenue in the first quarter of 2010 compared to 18% of
gross revenue in the first quarter of 2009. Average smelting charges for
dore in the first quarter of 2010 were US$0.52 per equivalent silver
ounce whereas for concentrates they were US$4.05 per equivalent silver
ounce.
-- The Company generated net income in the first quarter of 2010 of $3.0
million, or earnings per common share ('EPS') of $0.03 compared to a net
income in the first quarter of 2009 of $0.9 million or EPS of $0.01. Net
income for the first quarter of 2010 was after deducting non-cash stock-
based compensation expense of $0.7 million and an income tax provision
of $1.1 million. As the new La Encantada plant was not in commercial
production until April 1, 2010, generally accepted accounting principles
require the revenues and production costs to be recorded as capital
costs against the plant rather than being recorded in the Statement of
Income for the first quarter of 2010. If the revenues and expenses of
the new plant were recorded as income rather than capital, the $2.3
million of capitalized profits would have been adjusted upwards to $0.06
per share rather than $0.03 per share.
-- Total cash costs per ounce (includes smelting, refining, metal
deductions, and by-product credits and is a non-GAAP measure) for the
first quarter of 2010 was US$8.11 per ounce of silver compared to
US$7.60 per ounce of silver in the first quarter of 2009 and US$8.61 per
ounce in the fourth quarter of 2009.
-- Direct cash costs per ounce of silver (a non-GAAP measure) for the first
quarter of 2010 were US$4.94, consistent with the first quarter of 2009
at US$4.94 per ounce of silver. This compares to the direct cash costs
of US$5.69 per ounce of silver in the fourth quarter of 2009.
-- Mine operating earnings for the first quarter of 2010 increased by 62%
to $7.4 million, compared to mine operating earnings of $4.5 million for
the first quarter of 2009, due to an increase in net revenue during the
first quarter of 2010. Mine operating earnings for the first quarter of
2010 decreased by 9% when compared to mine operating earnings of $8.1
million for the fourth quarter of 2009, due to additional depletion
expenses recorded in the current quarter. An additional $2.3 million of
profits were capitalized due to the pre-commercial nature of the
precipitate sales at the La Encantada cyanidation plant in the first
quarter and therefore were excluded from the $7.4 million mine operating
earnings reported above.
-- Operating income increased by 155%, or $2.8 million, to $4.7 million for
the quarter ended March 31, 2010, from an operating income of $1.8
million for the quarter ended March 31, 2009. Operating income increased
by 137%, for the quarter ended March 31, 2010, when compared to an
operating income of $2.0 million for the fourth quarter ended December
31, 2009.
-- The new cyanidation process plant at the La Encantada Silver Mine
achieved commercial production effective April 1, 2010 with current
throughput at approximately 2,700 tonnes per day and is expected to
reach full production by the end of the second quarter and producing at
an annualized rate of over four million ounces of silver. Total
capitalized construction in progress at La Encantada at March 31, 2010
consisted of $35.9 million (US$35.3 million).
-- During the quarter ended March 31, 2010, the Company invested $3.4
million in its mineral properties and a further $1.4 million in
additions to plant and equipment on a cash basis. This compares to $1.8
million invested in its mineral properties and a further $1.6 million in
additions to plant and equipment on a cash basis in the first quarter
ended March 31, 2009.
In Summary
First Majestic has now had five consecutive quarters of net income and consistent advancements in production and cash flows due to continuing growth in production resulting from the expansion of operations, the most recent being the completion of the new plant at the La Encantada Silver Mine. As this new plant at La Encantada reached commercial production on April 1, 2010, the net earnings on the sale of silver will now be recorded in the Company's statement of income rather than being capitalized, as it was in the first quarter of 2010. Had the Company included the additional $2.3 million of profit in the first quarter, mine operating earnings would have been $9.7 million rather than $5.4 million resulting in an EPS of $0.06 instead of $0.03.
Due to the production of dore bars at La Encantada versus the production of concentrates, we are expecting significant reductions in smelting and refining costs and similar reductions in total cash costs going forward as dore is about one tenth the cost of concentrates to treat.
First Majestic is a producing silver company focused in Mexico and is aggressively pursuing its business plan to become a senior silver producer through the development of its existing assets and the pursuit through acquisition of additional assets that contribute to achieving its corporate growth objectives.
FIRST MAJESTIC SILVER CORP.
Keith Neumeyer, President & CEO
This press release includes certain 'Forward-Looking Statements' within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization and reserves, exploration results and future plans and objectives of First Majestic Silver Corp. are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.
Contacts:
First Majestic Silver Corp.
Keith Neumeyer
President & CEO
(604) 688-3033 or Toll Free: 1-866-529-2807
(604) 639-8873 (FAX)
info@firstmajestic.com
www.firstmajestic.com