First Majestic Silver

Last modified by Asif Farooqui on 2022/12/28 12:34

Contents

First Majestic Silver
Summary
Recent Developments
Financial Highlights
- Q3 2022 Financial Results
Company Overview
References

Summary

First Majestic is a multinational mining company focused on primary silver and gold production in North America
The Company owns one producing mine in the USA, the Jerritt Canyon Gold Mine, three producing mines in Mexico: the San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine, the La Encantada Silver Mine
First Majestic Announces Proposed Sale of The La Parrilla Silver Mine for upto US$33.5 Million

First Majestic (TSX: FR, NYSE: AG) is a multinational mining company headquartered in Vancouver, Canada, focused on primary silver and gold production in North America, pursuing the exploration and development of its existing mineral properties and acquiring new assets. The Company owns one producing mine in the USA, the Jerritt Canyon Gold Mine, three producing mines in Mexico: the San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine, the La Encantada Silver Mine, four mines currently in care and maintenance in Mexico: the San Martin Silver Mine, the Del Toro Silver Mine, the La Parrilla Silver Mine and the La Guitarra Silver/Gold Mine.

Recent Developments

First Majestic Announces Closing Sale of Royalty Portfolio to Metalla¹

December 21, 2022; First Majestic Silver Corp. announce that it has closed its previously announced transaction to sell a portfolio of royalty interests to Metalla Royalty & Streaming Ltd. following the receipt of approval from the TSX Venture Exchange as well as the completion of other customary closing conditions. In consideration of the sale, First Majestic received 4,168,056 shares of Metalla at a deemed price of $4.7984 per share for an approximate value of US$20.0 million.

First Majestic Announces Proposed Sale of The La Parrilla Silver Mine for up to US$33.5 Million²

December 7, 2022; First Majestic Silver Corp. is pleased to announce that it has entered into an Asset Purchase Agreement dated December 7, 2022 to sell its 100% owned past producing La Parrilla Silver Mine located in the state of Durango, Mexico to Golden Tag Resources Ltd. for total consideration of up to US$33.5 million.

On closing of the Transaction, First Majestic will receive 143,673,684 Golden Tag shares at a deemed price of CDN$0.19 per share having an aggregate value of US$20.0 million (the "Consideration Shares") and representing approximately 40% of the outstanding shares in Golden Tag. First Majestic will receive up to US$13.5 million (see terms below) in the form of three milestone payments in either cash or shares in Golden Tag

Acquisition of Jerritt Canyon Canada Ltd³

On April 30, 2021, the Company completed the acquisition of 100% of the issued and outstanding shares of Jerritt Canyon Canada Ltd. from Sprott Mining Inc. in exchange for 26,719,727 common shares of First Majestic and five million common share purchase warrants, each exercisable for one common share of the Company at a price of $20 per share for a period of three years from the date of acquisition on April 30, 2021. Concurrent with closing of the acquisition, Sprott Mining also completed a private placement consisting of $30.0 million at a price of $17.59 per share for a total of 1,705,514 common shares of the Company.

Financial Highlights

Q3 2022 Financial Results

November 9, 2022; First Majestic Silver Corp. announce the release of the unaudited interim consolidated financial results of the Company for the third quarter ended September 30, 2022.⁴

As a result of the continued weakness in metal prices, the Company realized an average price of $19.74 per AgEq ounce during the third quarter of 2022, representing a 15% decrease compared to the third quarter of 2021 and an 18% decrease compared to the prior quarter.

Revenues generated during the quarter totalled $159.8 million, representing a 28% increase when compared to the third quarter of 2021. The increase in revenues was primarily attributed to higher production at San Dimas and Santa Elena and partially offset by the decrease in the average price per AgEq ounce sold and lower production at Jerritt Canyon due to the maintenance shut down.

Mine operating earnings totaled $3.3 million compared to $3.5 million in the third quarter of 2021. The marginal decrease in mine operating earnings is primarily attributed to lower metal prices, an increase in cost of sales and depreciation and depletion from San Dimas, Santa Elena and La Encantada, offset by an increase in silver equivalent ounces sold.

The Company reported net earnings of ($20.7) million (EPS of ($0.08)) compared to ($18.4) million (EPS of ($0.07)) in the third quarter of 2021. Adjusted net earnings for the quarter, normalized for non-cash or non-recurring items such as share-based payments, unrealized losses on marketable securities and non-recurring write-downs on mineral inventory for the quarter was ($22.6) million (adjusted EPS of ($0.09)) compared to ($18.1) million (adjusted EPS of ($0.07)) in the third quarter of 2021.

Cash flow from operations before movements in working capital and income taxes in the quarter was $27.7 million compared to $22.6 million in the third quarter of 2021 due to the increase in revenue of $35.2 million, partially offset by an increase in cost of sales.

As of September 30, 2022, the Company had cash and cash equivalents of $148.8 million and restricted cash of $101.2 million totalling $250.0 million. During the quarter, the Company received payments totalling $44.1 million which were previously held as cash bonds related to Jerritt Canyon by the Nevada Division of Environmental Protection and United States Forest Service.

Cash cost for the quarter was $13.34 per AgEq ounce, compared to $14.12 per AgEq ounce in the previous quarter. The decrease in cash costs per AgEq ounce was primarily attributed to an increase in AgEq production at the San Dimas and Santa Elena operations. Production at San Dimas increased 24% compared to the prior quarter, due to increased ore shipments from the Jessica and Regina veins along with the commencement of production from the Perez vein in July. Production at Santa Elena increased by 22%, compared to the prior quarter, as a result of processing a higher percentage of Ermitaño's ore containing higher gold grades than Santa Elena's Main Vein ore. Additionally, the Company has implemented comprehensive cost saving measures to combat inflation impacts primarily in energy, reagents, and other major consumables.

Total capital expenditures in the third quarter were $58.1 million, primarily consisting of $11.6 million at San Dimas, $9.6 million at Santa Elena, $2.2 million at La Encantada, $28.6 million at Jerritt Canyon and $6.1 million for strategic projects. Capital investments for the LNG powerplant expansion and the dual circuit project at Santa Elena are nearly complete as final commissioning activities for both projects remain on schedule for the fourth quarter of 2022.

Company Overview

First Majestic owns 100% of four producing mines: the San Dimas Silver/Gold Mine, the Jerritt Canyon Gold Mine, the Santa Elena Silver/Gold Mine and the La Encantada Silver Mine.⁵

The San Dimas Silver/Gold Mine is located approximately 130 km northwest of Durango, Durango State, Mexico and consists of 71,868 hectares of mining claims located in the states of Durango and Sinaloa, Mexico. San Dimas is one of the country’s most prominent silver mines and the largest producing underground mine in the state of Durango with over 250 years of operating history. The San Dimas operating plan involves processing ore from several underground mining areas with a 2,500 tpd capacity milling operation which produces silver/gold doré bars. The mine is accessible via a 40-minute flight from the Durango International Airport to the private airstrip in the town of Tayoltita.

The Jerritt Canyon Gold Mine is located in Elko County, Nevada. Jerritt Canyon was discovered in 1972 and has been in production since 1981 having produced over 9.7 million ounces of gold over its 40-year production history. The operation has one of three permitted gold processing plants in Nevada that uses roasting in its treatment of ore. The processing plant has a capacity of 4,000 tpd and is currently operating at an average rate of approximately 2,500 tpd due to limited ore production from two underground mines. The property consists of a large, underexplored land package consisting of 30,821 hectares (119 square miles). First Majestic has identified several opportunities to enhance both the cost and production profile of Jerritt Canyon as well as near-term brownfield potential between the SSX and Smith mines and long-term property wide exploration potential.

The Santa Elena Silver/Gold Mine is located approximately 150 kilometres northeast of the city of Hermosillo, Sonora, Mexico, and controls mining concessions totaling 102,244 hectares. The operating plan for Santa Elena involves the processing of ore in a 3,000 tpd cyanidation circuit from a combination of underground reserves from the Santa Elena complex and the newly commissioned Ermitaño mine which is located only 4km southeast of the mill.

The La Encantada Silver Mine is an underground mine located in the northern México State of Coahuila, 708 kilometres northeast of Torreon. La Encantada has 4,076 hectares of mineral concessions and surface land ownership of 1,343 hectares. La Encantada also has a 4,000 tpd cyanidation plant, a camp with 180 houses as well as administrative offices, laboratory, general store, hospital, airstrip, and all infrastructure required for such an operation. The mine is accessible via a two-hour flight from the Durango International Airport to the mine’s private airstrip, or via an improved road from the closest city, Muzquiz, Coahuila State, which is 225 kilometres away.