AG.TO · 2019-08-07 12:00:00

FR Frankfurt – FMV First Majestic Reports Second Quarter Financial Results and Updates 2019 Production and Cost Guidance

Financials

New York – AG August 7, 2019

Toronto – FR

Frankfurt – FMV

First Majestic Reports Second Quarter Financial Results and Updates 2019 Production

and Cost Guidance

Vancouver, BC, Canada ‐ FIRST MA JESTIC SILVER CORP. (AG: NYSE; FR: TSX) (the "Company" or “First Majestic”)

is pleased to announce the unaudited interim consolidated financial results of the Company for the second

quarter ended June 30, 2019. The full version of the financial statements and the management discussion and

analysis can be viewed on the Company's website at www.firstmajestic.com or on SEDAR at www.sedar.com and

on EDGAR at www.sec.gov. All amounts are in U.S. dollars unless stated otherwise.

SECOND QUARTER 2019 HIGHLIGHTS

(compared to Q2 2018)

 Silver equivalent production up 25% to 6.4 million ounces

 Pure silver production up 16% to 3.2 million ounces

 Revenue up 5% to $83.7 million primarily due to 13% increase in silver equivalent ounces, partially offset

by a 12% decrease in silver prices

 Mine operating earnings up 283% to $4.2 million

 Cash flow per share was $0.09 per share (non‐GAAP)

 Reduction in cash costs by 10% to $6.84 per payable silver ounce

 Reduction in AISC by 10% to $14.76 per payable silver ounce

 Net earnings of ($12.0) million

 Adjusted EPS of ($0.02) after excluding non‐cash and non‐recurring items

 Realized average silver price of $14.80 per ounce

 Strong balance sheet with $94.5 million in cash and cash equivalents

“In the second quarter, our stro ng production results were most ly offset by lower silver prices which impacted

revenues, earnings and cash flows compared to the same quarter of the prior year,” stated Keith Neumeyer,

President and CEO of First Majestic. “Continued strong producti on from our San Dimas and Santa Elena mines,

which together produced approximately 80% of the Company’s total production, generated mine operating

earnings of $14.2 million. At Santa Elena, we are already seeing improvements in metallurgical recoveries

following the installation of its new high‐intensity grinding m ill in the second quarter. This project has been a

success and a great example of how new technologies are changin g the mining industry.”

“In an effort to further improve margins and profitability, we made the difficult decision to temporarily suspend

mining operations at La Parrilla towards the end of 2019,” stated Neumeyer. “Year‐to‐date, the La Parrilla

complex of mines has produced approximately 7% of our total pro duction but unfortunately has struggled to

make a profit due to continued low silver and lead prices. Howe ver, we will continue to staff our Central lab at

La Parrilla and will revitalize the exploration program to test near mine targets in order to build enough Reserves

and Resources to justify a potential restart by early 2021.”

OPERATIONAL AND FINANCIAL HIGHLIGHTS

Key Performance Metrics 2019‐Q2 2019‐Q1

Change

Q2 vs Q1 2018‐Q2

Change

Q2 vs Q2 2019‐YTD

Operational

Ore Processed / Tonnes Milled 736,896 812,654 (9%) 851,349 (13%) 1,549,550

Silver Ounces Produced 3,193,566 3,331,388 (4%) 2,756,263 16% 6,524,954

Silver Equivalent Ounces Produced 6,410,483 6,273,677 2% 5,137,318 25% 12,684,160

Cash Costs per Ounce (1) $6.84 $6.34 8% $7.59 (10%) $6.58

All‐in Sustaining Cost per Ounce (1) $14.76 $12.91 14% $16.43 (10%) $13.82

Total Production Cost per Tonne (1) $77.93 $66.65 17% $61.04 28% $72.01

Average Realized Silver Price per Ounce (1) $14.80 $15.73 (6%) $16.74 (12%) $15.26

Financial (in $millions)

Revenues $83.7 $86.8 (4%) $79.7 5% $170.5

Mine Operating Earnings (Loss) $4.2 $10.3 (59%) ($2.3) 283% $14.5

Net (Loss) Earnings ($12.0) $2.9 (516%) ($40.0) 70% ($9.1)

Operating Cash Flows before Movements in

Working Capital and Taxes $17.7 $23.7 (25%) $14.2

25% $41.4

Cash and Cash Equivalents $94.5 $91.5 3% $109.2 (13%) $94.5

Working Capital (1) $129.5 $130.9 (1%) $141.4 (8%) $129.5

Shareholders

Earnings (Loss) per Share ("EPS") ‐ Basic ($0.06) $0.01 (505%) ($0.22) 73% ($0.05)

Adjusted EPS (1) ($0.02) ($0.01) (79%) ($0.07) 73% ($0.03)

Cash Flow per Share (1) $0.09 $0.12 (27%) $0.08 12% $0.21

(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.

Q2 2019 FINANCIAL RESULTS

The Company realized an average silver price of $14.80 per ounc e during the second quarter of 2019,

representing a 12% decrease compared with the second quarter of 2018 and a 6% decrease compared to $15.73

in the prior quarter.

Revenues generated in the second quarter totaled $83.7 million, an increase of 5% compared to $79.7 million in

the second quarter of 2018 primarily due to the acquisition of the San Dimas mine, which resulted in a 13%

i n c r e a s e i n s i l v e r e q u i v a l e n t o u n c e s s o l d , p a r t i a l l y o f f s e t b y a 1 2 % d e c r e a s e i n a v e r a g e r e a l i z e d s i l v e r p r i c e

compared to the same quarter of the prior year.

The Company reported mine operating earnings of $4.2 million compared to ($2.3) million in the second quarter

of 2018. The increase in mine operating earnings in the quarter was attributed to the San Dimas and Santa Elena

mines, which generated mine operating earnings of $11.0 million and $3.2 million, respectively, offset by losses

at the other units due to scaled back production at San Martin, Del Toro and La Parrilla mines.

Cash flow from operations before movements in working capital and income taxes in the quarter was $17.7

million ($0.09 per share) compared to $14.2 million ($0.08 per share) in the second quarter of 2018.

The Company generated net earnings of ($12.0) million (EPS of ($0.06)) compared to ($40.0) million (EPS of

$(0.22)) in the second quarter o f 2018. Adjusted net earnings f or the quarter was

($3.6) million (adjusted EPS of $(0.02)), after excluding non‐cash and non‐recurring items.

Cash and cash equivalents at June 30, 2019 was $94.5 million, an increase of $3.0 million compared to the

previous quarter. In addition, working capital remained consistent to the previous quarter at $129.5 million. The

Company completed the $50.0 millio n "at‐the‐market" distributio n program announced in December 2018 by

selling a total of 8,039,363 common shares of the Company on the New York Stock Exchange for net proceeds of

$48.5 million of which $16.0 million was received in the second quarter.

OPERATIONAL HIGHLIGHTS

The table below represents the quarterly operating and cost parameters at each of the Company’s six producing

silver mines.

Production Summary San Dimas Santa Elena La Encantada San Martin La Parrilla Del To ro Consolidated

Ore Processed / Tonnes Milled 172,368 229,761 207,421 39,213 61,544 26,587 736,896

Silver Ounces Produced 1,603,016 596,872 489,194 224,056 202,698 77,729 3,193,566

Silver Equivalent Ounces Produced 3,641,139 1,461,345 492,957 271,450 420,712 122,879 6,410,483

Cash Costs per Ounce $1.64 $4.28 $16.57 $16.52 $14.13 $27.29 $6.84

All‐in Sustaining Cost per Ounce $8.49 $7.73 $18.87 $21.15 $21.61 $36.33 $14.76

Total Production Cost per Tonne $142.42 $58.88 $38.29 $109.51 $75.96 $91.89 $77.93

Total production in the second quarter 6,410,483 silver equival ents ounces, representing a 2% increase

compared to the prior quarter. Total production consisted of 3.2 million ounces of silver, 33,576 ounces of gold,

2.5 million pounds lead and 1.4 million pounds of zinc. In the first half of 2019, total production reached 12.7

million ounces, or approximately 49% of the Company’s previous guidance midpoint.

COSTS AND CAPITAL EXPENDITURES

Cash cost per ounce for the quarter was $6.84 per payable ounce of silver, an increase of 8% from $6.34 per

ounce in the first quarter of 2019. The increase in cash cost was primarily attributed to $2.3 million in severance

and retirement costs related to retirement and permanent reduction of 45 unionized workers at San Dimas plus

$0.9 million in retroactive adjustments to labour costs upon reaching a new collective bargaining agreement with

the union at San Dimas. Excluding these one‐time items, cash co st per ounce would have been approximately

$5.89 per payable ounce of silver during the quarter.

All‐in sustaining cost per ounce in the second quarter was $14.76 compared to $12.91 per ounce in the previous

quarter. The increase in AISC was primarily attributed to a $0. 62 per ounce increase in workers participation

costs and a $0.82 per ounce increa se in sustaining capital expe nditures due to certain major equipment

overhauls performed during the quarter.

Total capital expenditures in the second quarter were $29.7 mil lion, primarily consisting of $9.2 million at San

Dimas, $4.6 million at Santa Elena, $3.6 million at La Encantad a, $2.0 million at San Martin, $3.2 million at La

Parrilla, $1.1 million at Del Toro and $6.0 million for strategic projects.

OUTLOOK

The Company is revising annual guidance for 2019 to reflect cha nges in its operational plans during the second

half of the 2019 fiscal year. Details of the operational changes and their expected impacts are presented below:

1. Increased metallurgical recoveries at Santa Elena in the second half of 2019 due to the recent installation

of the High‐Intensity Grinding (“HIG”) mill.

2. Higher production at San Dimas primarily due to higher than expected grades from the Jessica and

Victoria veins.

3. Lower production at La Encantada related to the ongoing challenges with the roaster's material handling

system. During the reengineering process, production from the r oaster has been removed from 2019

guidance until the necessary modifications have been completed.

4. Following an extensive review of the La Parrilla operation, the C o m p a n y h a s d e c i d e d t o t e m p o r a r i l y

suspend mining operations towards the end of the year in order to improve the Company's operating

cash flow and profit margins while focusing on an expanded drilling program in the area. In addition, the

processing plant will be temporarily halted in mid‐September in order to build adequate surface

stockpiles to be used during the commissioning phase of the new high‐recovery microbubble flotation

cells. The Company has doubled the exploration budget at La Parrilla to approximately 24,000 metres to

test near mine targets in an effort to develop new Resources necessary to justify preparing the mine for

a potential reopening in the future, subject to a sufficient im provement in the economic situation to

justify a restart. In the meantime, the Company’s central ISO‐9 001 Laboratory located at La Parrilla will

remain fully staffed and operational. Additionally, the Company is in discussions with regional miners in

order to process ores as a toll treatment facility.

5. Lower production from the San Martin mine as a result of suspen ded operations as announced in the

Company's news release on July 15, 2019. The updated annual guidance assumes production will resume

before the end of the year.

As a result of these operational modifications, our 2019 total production remains relatively unchanged at 24.4

to 26.0 million silver equivalent ounces when compared to the p revious guidance of 24.7 to 27.5 million silver

equivalent ounces. Our 2019 annua l silver production has decrea sed slightly to an estimated range of 12.8 to

13.5 million ounces when compared to the previous annual produc tion guidance of 14.2 to 15.8 million ounces

of silver primarily due to the temporary suspension of production from the roaster at La Encantada. The Company

is also anticipating a reduction in annualized cash costs of approximately $1.00 per ounce of silver, or 14% from

the guidance mid‐point, due to continued improvements at San Di mas and throughput reductions at La Parrilla

and San Martin.

A mine‐by‐mine breakdown of the revised full year 2019 producti on guidance is included in the table below.

Cash cost and AISC guidance is shown per payable silver ounce. Silver and gold prices used for calculating silver

equivalent ounces were increased slightly compared to the previ ous budget to: silver: $16.00/oz, gold:

$1,400/oz, lead: $1.00/lb, zinc: $1.10/lb, MXN:USD 19:1.

GUIDANCE FOR FULL YEAR 2019

Mine Silver Oz (M) Silver Eqv Oz Cash Costs ($) AISC ($)

San Dimas 6.2 ‐ 6.6 13.5 ‐ 14.4 0.46 ‐ 0.95 6.67 ‐ 7.52

Santa Elena 2.4 ‐ 2.5 5.6 ‐ 6.1 3.76 ‐ 4.41 6.71 ‐ 7.53

La Encantada 2.4 ‐ 2.5 2.4 ‐ 2.5 13.84 ‐ 14.37 16.16 ‐ 16.81

San Martin 0.9 ‐ 0.9 1.1 ‐ 1.2 12.54 ‐ 12.95 16.45 ‐ 17.04

La Parrilla 0.5 ‐ 0.5 1.1 ‐ 1.1 18.58 ‐ 18.68 30.39 ‐ 30.72

Del Toro 0.4 ‐ 0.5 0.7 ‐ 0.7 17.61 ‐ 18.96 24.95 – 26.85

Consolidated 12.8 ‐ 13.5 24.4 ‐ 26.0 $5.62 ‐ $6.18 $12.98 ‐ $13.94

*Certain amounts shown may not add exactly to the total amount due to rounding differences.

*Consolidated AISC includes general and administrative cost estimates and non‐cash costs of $2.16 to $2.41 per payable silver ounce.

Annual cash costs are now expected to be within the range of $5.62 to $6.18 per ounce, compared to the

previous guidance of $6.39 to $7.37 per ounce, primarily due to higher gold by‐product credits at San Dimas and

Santa Elena. In addition, annual AISC are expected to remain co nsistent to within a range of $12.98 to $13.94

per ounce, compared to the previous guidance of $12.55 to $14.23 per ounce.

REVISED CAPITAL BUDGET

The Company has updated its annual 2019 capital budget to includ e t h e r e a l l o c a t i o n o f d e v e l o p m e n t a n d

exploration expenditures across its operations and investments in innovative projects. As a result, the Company

plans to invest a total of $138.2 million (consistent with prev ious guidance of $137.4 million) on capital

expenditures consisting of $56.9 million of sustaining investme nts and $81.3 million of expansionary

investments. The Company plans to reallocate capital to higher return projects including:

• HIG technology, including a third HIG mill for San Dimas, and microbubble technology;

• increasing the Santa Elena 2019 ex ploration budget at Ermitaño to approximately 32,700 metres,

representing an 85% increase from the original 2019 budget of 17,700 metres;

• developing an underground portal in Q4 2019 to be able to drift into the Ermitaño ore body;

• increasing the La Parrilla 2019 exploration budget to approxima tely 24,000 metres, representing a 98%

increase from the original 2019 budget of 12,120 metres.

The 2019 annual budget includes total capital investments of $55.0 million on underground development, $27.9

million towards property, plant and equipment, $26.6 million on exploration and $28.7 million towards

automation and efficiency projects.

In the first half of 2019, the Company completed 31,477 metres of underground development and 92,294 metres

of exploration drilling. Under the revised 2019 budget, the Com pany is planning to complete a total of 58,100

metres of underground development, representing a 10% decrease compared to the original budget of 64,610.

In addition, the Company is planning to complete a total of approximately 209,000 metres of exploration drilling

in 2019, representing an 11% increase compared to the original budget.

RENEWS ATM OFFERING EQUITY PROGAM

The Company announces it has entered into an equity distributio n agreement dated August 7, 2019 (the “Sales

A g r e e m e n t ” ) w i t h B M O C a p i t a l M a r k e t s C o r p . ( t h e “ A g e n t ” ) p u r s u ant to which the Company may, at its

discretion and from time‐to‐time until December 5, 2020 under t he term of the Sales Agreement, sell, through

the Agent, such number of common shares of the Company (“Common Shares”) as would result in aggregate

gross proceeds to the Company of up to US$50.0 million (the “Offering”). Sales of Common Shares will be made

through “at‐the‐market distributions” as defined in the Canadia n Securities Administrators’ National

Instrument 44‐102‐Shelf Distributions, including sales made directly on the New York Stock Exchange (the

“NYSE”), or any other recognized marketplace upon which the Com mon Shares are listed or quoted or where

the Common Shares are traded in the United States. The sales, i f any, of Common Shares made under the Sales

Agreement will be made by means of ordinary brokers’ transaction s o n t h e N Y S E a t m a r k e t p r i c e s , o r a s

otherwise agreed upon by the Company and the Agent. No offers o r sales of Common Shares will be made in

Canada on the Toronto Stock Exchange (the “TSX”) or other trading markets in Canada.

The Offering will be made by way of a prospectus supplement dated August 7, 2019 to the base prospectus

included in the Company’s existing US registration statement on Form F‐10 (the “Registration Statement”) and

Canadian short form base shelf prospectus (the “Base Shelf Pros pectus”) dated November 5, 2018. The

prospectus supplement relating to the Offering has been filed w ith the securities commissions in each of the

provinces of Canada (other than Québec) and the United States Securities and Exchange Commission (the "SEC").

The US prospectus supplement (together with the related base prospectus) will be available on the SEC's website

(www.sec.gov) and the Canadian pr ospectus supplement (together with the related Base Shelf Prospectus) will

be available on the SEDAR website maintained by the Canadian Se curities Administrators at www.sedar.com.

Alternatively, the Agent will provide copies of the US prospect us and US prospectus supplement upon request

by contacting the Agent (c/o BMO Capital Markets Corp., Attention: Equity Syndicate Department, 3 Times

Square, New York, NY 10036, or by telephone at (800) 414‐3627, or by email: [email protected]).

The Company expects to use the net proceeds of the Offering, if any, together with the Company’s current cash

resources, to develop and/or improve the Company's existing mines and to add to the Company's working

capital.

This press release does not constitute an offer to sell or the solicitation of an offer to buy securities, nor will

there be any sale of the securities in any jurisdiction in whic h such offer, solicitation or sale would be unlawful

prior to the registration or qualification under the securities laws of any such jurisdiction.

ABOUT THE COMPANY

First Majestic is a publicly traded mining company focused on s ilver production in Mexico and is aggressively

pursuing the development of its existing mineral property assets. The Company presently owns and operates the

San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine, the La Encantada Silver Mine, the La Parrilla Silver

Mine, the San Martin Silver Mine and the Del Toro Silver Mine. Production from these mines are projected to be

between 12.8 to 13.5 million silver ounces or 24.4 to 26.0 million silver equivalent ounces in 2019.

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;

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.

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