FR Frankfurt – FMV First Majestic Announces 2020 Production and Cost Guidance
FIRST MAJESTIC SILVER CORP.
Suite 1800 – 925 West Georgia Street
Vancouver, B.C., Canada V6C 3L2
Telephone: (604) 688-3033 Fax: (604) 639-8873
Toll Free: 1-866-529-2807
Web site: www.firstmajestic.com; E-mail: [email protected]
NEWS RELEASE
New York – AG J anuary 21, 2020
Toronto – FR
Frankfurt – FMV
First Majestic Announces 2020 Production and Cost Guidance
Vancouver, BC, Canada ‐ First Majestic Silver Corp. ("First Maj estic" or the "Company") is pleased to announce
the Company’s 2020 production and cost guidance including capit al investments and future growth initiatives.
All amounts are in U.S. dollars unless stated otherwise.
“For 2020, our focus remains on adopting new innovation projects to modernize our processing plants to achieve
higher recoveries, improve efficiencies and reduce operating costs,” said Keith Neumeyer, President & CEO. “We
have witnessed significant benefits from high‐intensity grinding at our Santa Elena operation in 2019 and we plan
to install the same technology a t San Dimas in 2020. In additio n, we continue to advance underground
development activities at the Ermitaño project near Santa Elena to prepare the mine for initial production in early
2021. Our increased investments i n underground development and innovation in 2020 is expected to result in
significant production growth in 2021 and beyond.”
The Company expects 2020 silver production to range between 11.8 to 13.2 million ounces with total production
(including gold by‐products) between 21.5 to 24.0 million silver equivalent ounces. The Company’s guidance only
assumes production coming from its three largest mines: the San Dimas, Santa Elena and La Encantada mines.
The San Martin and La Parrilla mines are expected to remain suspended throughout 2020 and the Del Toro mine
is being wound down with no production in 2020. By suspending the Company’s highest cost lead and zinc mines,
management is now able to focus all of its efforts on cost redu ction and innovation at its most profitable silver
and gold mines.
2020 Production and Cost Guidance Highlights
The Company plans to increase pr oduction at San Dimas by restar ting mining operations at the past‐
producing Tayoltita mine by the end of the first quarter and ex pects to ramp up production to 300 tpd
by the end of 2020. The Tayoltita mine was the original mining area at San Dimas and known to contain
higher silver grades. In addition, the Company plans to install a new 3,000 tpd high‐intensity grinding
(“HIG”) mill circuit and an autogenous (“AG”) grinding mill in the second half of 2020 to further improve
recoveries and reduce operating costs.
Silver production at La Encantada is expected to increase to be tween 2.9 to 3.3 million ounces due to
continued improvements in metallurgical recoveries and grades f rom the San Javier and La Prieta sub‐
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level caving areas. Furthermore, the Company is preparing to bring the Milagros breccia into production
in the fourth quarter of 2020.
The Company expects higher silver production at Santa Elena due to improved metallurgical recoveries
from the recently installed HIG mill. The Company also plans to install an autogenous/semi‐autogenous
(“AG/SAG”) grinding mill by the end of 2020 and plans to implement a dual‐circuit flowsheet to separate
the ultra‐fine and coarse particles prior to leaching to further improve metallurgical recoveries and
reduce energy costs. Additionally, the Company plans to convert power generation at Santa Elena from
diesel to liquid natural gas in the fourth quarter of 2020.
The San Martin mine is expected to remain in temporary suspensi on throughout 2020 due to security
concerns as previously announced in the Company's news release on July 15, 2019. The Company
continues to work with authorities to secure the area but there is no indication of when a restart of the
operation might occur.
F o l l o w i n g a n e x t e n s i v e r e v i e w o f t h e D e l T o r o o p e r a t i o n , t h e C ompany has decided to temporarily
suspend mining and milling operations in 2020 in order to improve operating cash flow and profit
margins while focusing on an expanded drill program in the area . This expanded program will include
approximately 22,450 metres of drilling to test near mine targe ts in an effort to develop new resources
necessary to support a potential reopening in the future, subje ct to a sufficient improvement in
economics to justify a restart. In the meantime, the Company wi ll continue evaluating mining methods
and metallurgical testwork on the San Juan orebody which contain s a l a r g e z i n c m i n e r a l r e s o u r c e .
Additionally, the Company will continue supporting CSR projects a n d a c t i v i t i e s t o a s s i s t l o c a l
stakeholders and partners in the communities surrounding the La Parrilla and Del Toro mines. The Del
Toro mine produced 493,636 silver equivalent ounces which accounted for approximately 2% of the
Company’s total production in 2019.
A mine‐by‐mine breakdown of the 2020 production guidance is included in the table below. Cash cost and all‐in
sustaining cost per ounce (“AISC”) guidance is shown per payable silver ounce. Metal price and foreign currency
assumptions for calculating equivalents are: silver: $17.00/oz, gold: $1,450/oz, MXN:USD 19:1.
Mine Silver Oz (M) Gold Oz (k) Silver Eqv Oz (M) Cash Costs ( $) AISC ($)
San Dimas 6.5 – 7.2 81 – 90 13. 4 – 14.9 2.47 – 3.62 8.28 – 10.1 0
Santa Elena 2.4 – 2.7 33 – 36 5.2 – 5.8 6.67 – 8.29 9.80 – 11.7 7
La Encantada 2.9 – 3.3 – 2.9 – 3.3 12.27 – 13.29 14.96 – 16.29
Totals: 11.8 – 13.2 114 – 126 21.5 – 24.0 $5.76 – $6.97 $13.37 – $15.46
*Certain amounts shown may not add exactly to the total amount due to rounding differences.
*Consolidated AISC includes Corporate General & Administrative cost estimates and non‐cash costs of $2.61 to $2.90 per payable silver
ounce.
The Company is projecting its 2020 AISC, as defined by the World Gold Council, to be within a range of $13.37 to
$15.46 on a per consolidated payable silver ounce basis. Exclud ing non‐cash items, the Company anticipates its
2020 AISC to be within a range of $12.54 to $14.53 per payable silver ounce. An itemized AISC cost table is
provided below:
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1. AISC is a non‐GAAP measure and is calculated based on guidance provided by the World Gold Council
(“WGC”) in June 2013. AISC is used as a comprehensive measure f or the Company’s consolidated
operating performance. WGC is a not a regulatory industry organization and does not have the
authority to develop accounting standards for disclosure requirements. Other mining companies
may calculate AISC differently as a result of differences in underlying accounting principles, the
definition of “sustaining costs” and the distinction between sustaining and expansionary capital costs.
2. Total cash cost per payable silver ounce includes estimated royalties and 0.5% mining environmental
fee of $0.10 per ounce.
Innovation Remains a Key Focus in 2020
As a result of significant improvements in metallurgical recoveries at Santa Elena following the installation of the
3,000 tpd HIG mill circuit in 2019, the Company has elected to install HIG mill technology at its San Dimas and La
Encantada mines in 2020 and 2021, respectively.
At San Dimas, the Company plans to install a new 3,000 tpd HIG mill circuit in 2020 to further improve recoveries
and reduce operating costs. The delivery of the HIG mill is expected in the first quarter of 2020 followed by
installation and commissioning in the second half of 2020. Furt hermore, milling at San Dimas will be converted
into a single AG grinding mill thereby eliminating the use of t he three standard ball mills currently in operation.
This AG conversion is expected to reduce energy consumption, el iminate steel grinding media, improve
metallurgical recoveries and streamline maintenance and mill practices.
At Santa Elena, the Company plans to implement a dual‐circuit f lowsheet to separate the ultra‐fine and coarse
particles prior to leaching to further improve metallurgical recoveries and reduce operating costs. Separating the
different sized particles allows for more effective use of avai lable retention time, decreased reagent
consumption and improved filtration circuit performance. Additionally, a new AG/SAG mill circuit is expected to
be commissioned by the end of 2020.
At La Encantada, the Company plans to invest in several plant modernizations in 2020 intended to improve
processing efficiencies including, but not limited to: upgrading the tailings filter presses and belt conveyors;
replacing the main gear and rakes for two thickeners; as well a s completing the detailed engineering design in
the second half of 2020 for a new 3,000 tpd HIG mill circuit, which is expected to be installed and commissioned
in 2021.
All‐In Sustaining Cost Calculation (1) FY 2020
($ /Ag oz)
Total Cash Costs per Payable Silver Ounce (2) 5.76 – 6.97
General and Administrative Costs 1.78 – 1.98
Sustaining Development Costs 2.09 – 2.33
Sustaining Property, Plant and Equipment Costs 1.88 – 2.10
Sustaining Exploration Costs 0.04 – 0.04
Profit Sharing 0.60 – 0.66
Lease Payments 0.40 – 0.45
Share‐based Payments (non‐cash) 0.65 – 0.72
Accretion of Reclamation Costs (non‐cash) 0.18 – 0.20
All‐In Sustaining Costs: (WGC definition) $13.37 – $15.46
All‐In Sustaining Costs: (WGC excluding non‐cash items) $12.54 – $14.53
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Capital Investments for Future Growth
In 2020, the Company plans to invest a total of $171.5 million on capital expenditures consisting of $52.6 million
for sustaining investments and $118.9 million for expansionary projects. This represents a 24% increase
compared to the revised 2019 capital budget and is aligned with the Company’s future growth strategy of
investments in HIG mill technology, processing plant modernizations and underground development of the
Ermitaño project to prepare the mine for production in early 2021.
The 2020 annual budget includes total capital investments of $6 2.9 million to be spent on underground
development; $32.9 million towards property, plant and equipment; $28.2 million in exploration; and $47.5
million towards corporate automa tion and efficiency projects. A dditionally, the Company has been working on
reducing its general and administration costs to rightsize the business due to the suspension of operations at Del
Toro and La Parrilla. Management may revise the guidance and budget during the year to reflect actual and
anticipated changes in metal prices or to the business.
The Company plans to complete a total of approximately 38,650 m etres of underground development in 2020
compared with 54,517 metres completed in 2019. This 29% decreas e is primarily due to the recent suspension
of mining activities at the San Martin, La Parrilla and Del Toro mines. The 2020 development program consists of
approximately 23,750 metres at Sa n Dimas; 6,100 metres at Santa Elena; 4,450 metres at La Encantada; 3,800
metres at the Ermitaño project near Santa Elena; and 550 metres at Del Toro.
The Company also plans to complete approximately 192,900 metres of exploration drilling in 2020 compared to
204,371 metres completed in 2019. The 2020 drilling program con sists of approximately 84,750 metres at San
Dimas intended to add new mineral resources with a focus on the West, Central, and Tayoltita blocks; 30,500
metres at Santa Elena to continue exploring the Main and Americ a veins and test greenfield targets around Los
Hernandez; 21,200 metres at La Encantada with an emphasis on exploring the mineral potential of several
brownfield targets; 15,000 metres at the Ermitaño project inten ded to increase resource confidence and add
new mineral resources; and 22,450 metres at Del Toro and 19,000 metres at La Parrilla intended to test new
brownfield and near mine targets.
Mr. Ramon Mendoza Reyes, Vice President Operations and Technica l 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.
Conference Call
The Company will be holding a conference call and webcast today, January 21, 2020 at 8:00 am PT (11:00 am ET)
to discuss the quarterly production results as well as its 2020 production, cost and capital guidance. 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.
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Click on WEBCAST on the First Majestic homepage as a simultaneo us audio webcast of the conference call will
be posted at www.firstmajestic.com.
The conference call will be recorded and you can listen to an archive of the conference by calling:
Canada & USA Toll Free: 1‐800‐319‐6413
Outside Canada & USA: 1‐604‐638‐9010
Access Code: 3930 followed by the # sign
The replay will be available approximately one hour after the c onference and will available for 7 days following
the conference. The replay will also be available on the Company’s website for one month.
About the Company
First Majestic is a mining company focused on silver production in Mexico and is aggressively pursuing the
development of its existing mineral property assets. The Compan y presently owns and operates the San Dimas
Silver/Gold Mine, the Santa Elena Silver/Gold Mine and the La E ncantada Silver Mine. Production from these
mines are projected to be between 11.8 to 13.2 million silver o unces or 21.5 to 24.0 million silver equivalent
ounces in 2020.
FOR FURTHER INFORMATION contact [email protected], visit our website at www.firstmajestic.com or call
our toll free number 1.866.529.2807.
FIRST MAJESTIC SILVER CORP.
"signed"
Keith Neumeyer, President & CEO
Cautionary Note Regarding Forward Looking Statements
This press release contains “forward‐looking information” and " forward‐looking statements” under applicable Canadian and U.S. securities laws
(collectively, “forward‐looking statements”). These statements r e l a t e t o f u t u r e e v e n t s o r t h e Company's future performance, business prospects or
opportunities that are based on forecasts of future results, es timates of amounts not yet determinable and assumptions of management made in light of
management's experience and perception of historical trends, current conditions and expected future developments. Forward‐looking statements include,
but are not limited to, statements with respect to: the Company’s business strategy; future planning processes; commercial mining operations; cash flow;
budgets; the timing and amount of estimated future production; recovery rates; mine plans and mine life; the future price of silver and other metals; costs
of production; costs and timing o f the development of new depos its; capital projects and explor ation activities and the possib le results
thereof. Assumptions may prove to be incorrect and actual result s m a y d i f f e r m a t e r i a l l y f r o m t hose anticipated. Consequently, guidance cannot be
guaranteed. As such, investors are cautioned not to place undue reliance upon guidance and forwar d‐looking statements as there can be no assurance
that the plans, assumptions or expectations upon which they are placed will occur. All statements other than statements of historical fact may be forward‐
looking statements. Statements concerning proven and probable min era l r e s er v e s a n d m in e r a l re s o ur c e e s tim a te s m a y a ls o be d ee med to constitute
forward‐looking statements to the extent that they involve esti mates of the mineralization that will be encountered as and if the property is developed,
and in the case of measured and indicated mineral resources or proven and probable mineral reserves, such statements reflect t he conclusion based on
certain assumptions that the mineral deposit can be economically exploited. Any statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives or future e v e n t s o r p e r f o r m a n c e ( o f t e n , b u t n o t a l w a y s , u s i n g w o r d s o r phrases such as “seek”,
“anticipate”, “plan”, “continue”, “ e s t i m a t e ” , “ e x p e c t ” , “ m a y ” , “will”, “project”, “predict”, “forecast”, “potential”, “target”, “intend”, “could”, “might”,
“should”, “believe” and similar expressions) are not statements of historical fact and may be “forward‐looking statements”.
Actual results may vary from for ward‐looking statements. Forward‐looking statements are subject to known and unknown risks, un certainties and other
factors that may cause actual results to materially differ from those expressed or implied by suc h forward‐looking statements, including but not limited
to: risks related to the integration of acquisitions; actual results of exploration activities; conclusions of economic evaluations; changes in project
parameters as plans continue to be refined; commodity prices; variations in ore reserves, grade or recovery rates; actual performance of plant, equipment
or processes relative to specifications and expectations; accidents; labour relations; relations w i t h l o c a l c o m m u n i t i e s ; c h a n ges in national or local
governments; changes in applicable legislation or application t hereof; delays in obtaining approvals or financing or in the co mpletion of development or
construction activities; exchange rate fluctuations; requirements for additional capital; government regulation; environmental risks; reclamation expenses;
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outcomes of pending litigation; limitations on insurance covera ge as well as those factors discussed in the section entitled " Description of the Business ‐
Risk Factors" in the Company's most recent Annual Information Form, available on www.sedar.com, and Form 40‐F on file with the United States Securities
and Exchange Commission in Washington, D.C. Although First Majestic has attempted to identify important factors that could cause actual results to differ
materially from those contained i n f o r w a r d ‐ l o o k i n g s t a t e m e n t s , there may be other factors that cause results not to be as anticipated, estimated or
intended.
The Company believes that the expectations reflected in these forward‐looking statements are reasonable, but no assurance can be given that these
expectations will prove to be correct and such forward‐looking statements included herein should not be unduly relied upon. These statements speak only
as of the date hereof. The Company does not intend, and does not assume any obligation, to update these forward‐looking statements, except as required
by applicable laws.