FR Frankfurt – FMV First Majestic Reports Second Quarter Financial Results
New York – AG August 6, 2020
Toronto – FR
Frankfurt – FMV
First Majestic Reports Second Quarter Financial Results
Vancouver, BC, Canada ‐ FIRST MAJESTIC 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, 2020. 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 2020 HIGHLIGHTS
(compared to Q2 2019)
Revenues of $34.9 million, representing a 58% decrease due to limited operations during the quarter in
response to COVID‐19 and the decision to stockpile metal inventory in an effort to maximize future profits
At quarter end, the Company held approximately 970,000 ounces of silver and 6,000 ounces of gold in metal
inventory which were subsequently sold and will be recognized as revenue in the third quarter for $25.0
million
Reduced cash costs by 2% to $6.73 per payable silver ounce
All‐in sustaining costs (“AISC”) of $18.57 per payable silver ounce, representing a 26% increase primarily due
to higher fixed overhead costs being divided over less ounces produced due to the COVID‐19 related
shutdowns
Mine operating earnings of ($7.8) million after incurring $9.2 million in standby costs during the quarter,
compared to earnings of $4.2 million in Q2 2019
Net earnings of ($10.0) million was impacted due to the suspension of operations and the decision to
stockpile metal inventory
Adjusted EPS of ($0.10) after excluding non‐cash and non‐recurring items
Cash flow per share of ($0.08) (non‐GAAP)
Ended the quarter with $95.2 million in cash and cash equivalents; as of August 4, 2020, the Company held
$128.0 million in cash and cash equivalents
“Obviously the second quarter for many industries, including the mining sector in Mexico, was negatively
impacted by government mandated closures. We are glad most of these negative impacts are now behind us as
our operations regain pre‐COVID production rates,” stated Keith Neumeyer, President and CEO. “Our decision
to withhold a significant amount of silver and gold at quarter end proved to be the right decision. These
inventoried ounces noticeably impacted revenues, costs, cash flows and earnings in the second quarter.
However, the subsequent sale of these ounces will have a significant positive impact adding $25 million to our
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third quarter revenues. In addition, due to the multi‐year highs in the silver price and record gold prices, the
Company is reviewing opportunities to potentially restart some of our suspended mining operations.”
OPERATIONAL AND FINANCIAL HIGHLIGHTS
Key Performance Metrics
2020‐Q2
2020‐Q1
Change
Q2 vs Q1
2019‐Q2
Change
Q2 vs Q2
Operational
Ore Processed / Tonnes Milled 333,559 599,142 (44%) 736,896 (55%)
Silver Ounces Produced 1,834,575 3,151,980 (42%) 3,193,566 (43%)
Silver Equivalent Ounces Produced 3,505,376 6,195,057 (43%) 6,410,483 (45%)
Cash Costs per Ounce (1) $6.73 $5.16 30% $6.84 (2%)
All‐in Sustaining Cost per Ounce (1) $18.57 $12.99 43% $14.76 26%
Total Production Cost per Tonne (1) $78.78 $82.41 (4%) $77.93 1%
Average Realized Silver Price per Ounce (1) $17.33 $17.36 0% $14.80 17%
Financial (in $millions)
Revenues $34.9 $86.1 (59%) $83.7 (58%)
Mine Operating (Loss) Earnings ($7.8) $21.1 (137%) $4.2 NM
Net (Loss) Earnings ($10.0) ($32.4) 69% ($12.0) 17%
Operating Cash Flows before Movements in
Working Capital and Taxes ($16.4)
$23.3 (170%)
$17.7 (193%)
Cash and Cash Equivalents $95.2 $145.2 (34%) $94.5 1%
Working Capital (1) $114.2 $139.8 (18%) $129.5 (12%)
Shareholders
(Loss) Earnings per Share ("EPS") ‐ Basic ($0.05) ($0.15) 69% ($0.06) 20%
Adjusted EPS (1) ($0.10) $0.04 NM ($0.02) NM
Cash Flow per Share (1) ($0.08) $0.11 (170%) $0.09 (189%)
NM – Not meaningful
(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 2020 FINANCIAL RESULTS
The Company realized an average silver price of $17.33 per ounce during the second quarter of 2020,
representing a 17% increase compared to $14.80 in the second quarter of 2019 and remained relatively
unchanged compared to $17.36 in the prior quarter.
Revenues generated in the second quarter totaled $34.9 million compared to $83.7 million in the second quarter
of 2019. Revenues in the quarter were impacted by the temporary suspension of operations throughout most
of April and May in response to the COVID‐19 pandemic, as well as the withheld metal sales in anticipation of
realizing higher silver and gold prices in the second half of 2020. At quarter end, the Company had approximately
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970,000 ounces of silver and 6,000 ounces of gold in finished goods inventory (of which approximately 2,400
ounces of gold were committed under streaming agreements) which were sold and will be recognized as revenue
in the third quarter for $25.0 million.
The Company realized mine operating earnings of ($7.8) million compared with mine operating earnings of $4.2
million in the second quarter of 2019. Mine operating earnings in the quarter were affected by decreased
production as well as higher standby costs incurred during the temporary suspension of operations, as well as
deferral of metal sales into the next quarter.
During the quarter, the Company incurred a total of $9.2 million in standby costs consisting of $7.2 million
related to COVID‐19 and $2.0 million related to the 13‐day union work stoppage at San Dimas. In addition, the
Company has granted paid leave to vulnerable employees as defined by the Mexican Ministry of Health,
consisting of a list of conditions including anyone 60 years of age or older, workers with pre‐existing conditions
or compromised immune systems. Vulnerable workers currently account for approximately 18% of the
Company's workforce at its three operating mines. The Company continues to support its vulnerable workers
with base pay and medical services as needed while they are not working.
Earnings for the quarter was ($10.0) million (EPS of ($0.05)) compared to earnings of ($12.0) million (EPS of
($0.06)) in the second quarter of 2019.
Adjusted net earnings for the quarter was ($20.7) million (Adjusted EPS of ($0.10)) compared to ($3.6) million
(Adjusted EPS of ($0.02)) in the second quarter of 2019, after excluding non‐cash and non‐recurring items such
as the standby costs related to the COVID‐19 suspensions.
Cash flow used in operations before movements in working capital and income taxes in the quarter was $16.4
million (($0.08) per share) compared to operating cash flow from operations of $17.7 million ($0.09 per share)
in the second quarter of 2019.
Cash and cash equivalents at June 30, 2020 were $95.2 million while working capital was $114.2 million. As of
August 4, 2020, the Company held $128.0 million in cash and cash equivalents.
OPERATIONAL HIGHLIGHTS
The table below represents the quarterly operating and cost parameters at each of the Company’s three
producing silver mines.
Second Quarter Production Summary San Dimas Santa Elena La Encantada Consolidated
Ore Processed / Tonnes Milled 114,390 89,590 129,579 333,559
Silver Ounces Produced 1,102,931 222,100 509,544 1,834,575
Gold Ounces Produced 12,042 3,677 45 15,764
Silver Equivalent Ounces Produced 2,395,633 595,651 514,092 3,505,376
Cash Costs per Ounce* $3.77 $15.10 $9.38 $6.73
All‐in Sustaining Cost per Ounce* $13.04 $24.71 $11.60 $18.57
Total Production Cost per Tonne $129.67 $74.50 $36.80 $78.78
*Cash Cost per Ounce and All‐in Sustaining Cost per Ounce are calculated on a per payable silver ounce basis.
Total production in the second quarter 3,505,376 silver equivalents ounces, representing a 43% decrease
compared to the prior quarter. Total production consisted of 1.8 million ounces of silver, 15,764 ounces of gold.
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In the first half of 2020, total silver equivalent production reached 9.7 million ounces, or approximately 44% of
the Company’s guidance midpoint.
COSTS AND CAPITAL EXPENDITURES
Cash cost per ounce for the quarter was $6.73 per payable ounce of silver, an increase of 30% from $5.16 per
ounce in the previous quarter. The increase in cash cost was primarily attributed to lower by‐product credits at
San Dimas and Santa Elena as a result of approximately 3,900 ounces of gold that were shipped but not yet sold
at quarter end. Had the gold been sold at spot metal prices at the end of the quarter, it would have contributed
an additional $4.1 million or $2.25 per ounce in by‐product credits. The impact of reduced by‐product credits on
cash costs was partially offset by lower production costs due to the weaker Mexican Peso against the U.S. Dollar,
of which the quarterly average rate decreased 18% compared to the previous quarter.
AISC in the second quarter was $18.57 per once compared to $12.99 per ounce in the previous quarter. The
increase in AISC per ounce was primarily due to the increased cash cost and an increase in fixed overhead costs,
such as general and administration expenses and annual workers participation benefits, being divided by 42%
less silver ounces produced during the quarter due to the COVID‐19 suspensions.
Total capital expenditures in the second quarter were $16.0 million, primarily consisting of $5.2 million at San
Dimas, $4.0 million at Santa Elena (including $1.6 million towards the Ermitaño project), $1.3 million at La
Encantada and $5.5 million for strategic projects.
ABOUT THE COMPANY
First Majestic is a publicly traded mining company focused on silver 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 and the La Encantada Silver Mine. Production
from these mines are projected to be between 11.0 to 11.7 million silver ounces or 21.4 to 22.9 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 relate to future events or the Company's future performance, business prospects or opportunities that
are based on forecasts of future results, estimates 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 of the development of new deposits; capital projects and exploration activities and the possible results thereof. Assumptions may prove to
be incorrect and actual results may differ materially from those anticipated. Consequently, guidance cannot be guaranteed. As such, investors are cautioned
not to place undue reliance upon guidance and forward‐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 mineral reserves and mineral resource estimates may also be deemed to constitute forward‐looking statements to the extent that they involve
estimates of the mineralization that will be encountered as and if the property is developed, and in the case of measured and indicated mineral resources
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or proven and probable mineral reserves, such statements reflect the 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 events
or performance (often, but not always, using words or phrases such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “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 forward‐looking statements. Forward‐looking statements are subject to known and unknown risks, uncertainties and other
factors that may cause actual results to materially differ from those expressed or implied by such forward‐looking statements, including but not limited to:
the duration and effects of the coronavirus and COVID‐19, and any other pandemics on our operations and workforce, and the effects on global economies
and society, 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 with local communities; changes in national or local
governments; changes in applicable legislation or application thereof; delays in obtaining approvals or financing or in the completion 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 coverage 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 in forward‐looking statements, 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.