Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- First Majestic Silver Corp (AG, Financial) produced 5.3 million silver equivalent ounces in Q2 2024, including 2.1 million ounces of silver and nearly 40,000 ounces of gold.
- The company has increased its CapEx by 9% and development expenses by 11%, primarily at the San Dimas mine.
- Exploration activities have been ramped up, with an increase from 95,000 meters to 115,000 meters at San Dimas and the initiation of exploration at Jerritt Canyon.
- H2 2024 is expected to be robust, with a projected 26% increase in silver production and a 7% increase in gold production.
- La Encantada mine is expected to see a 38% increase in silver production and a 16% reduction in costs in H2 2024.
Negative Points
- Gold production guidance has been reduced by 3% due to lower grades, primarily at the San Dimas mine.
- There is a slight increase in consolidated costs, with a 3% rise in cash costs and a 4% rise in all-in sustaining costs.
- The stronger-than-expected Mexican peso negatively impacted the company by over $10 million in H1 2024.
- San Dimas is facing challenges with lower grades and union workforce issues, affecting ore throughput.
- The Jerritt Canyon mill requires significant investment for upgrades and winterization, which is not budgeted until possibly 2026.
Q & A Highlights
Q: Can you comment on the recoveries at Santa Elena, particularly with the AG system installed?
A: The silver recoveries at Santa Elena are lower due to the Ermitaño ore, which has a lower grade of silver but is heavy in gold. The gold recoveries have been stable, but the silver recoveries are lower compared to the Santa Elena ore.
Q: Can you provide more color on the outlook or challenges behind the lower grades at San Dimas?
A: San Dimas is transitioning from the Jessica vein, which has been the primary feed for the mill for five years, to other veins. We are not projecting higher grades at San Dimas for another couple of quarters. The main challenge is throughput, not grade, and we are working to resolve issues with the union workforce to get more ore into the mill.
Q: What are the exploration catalysts for First Majestic in the next 12 months?
A: We have a significant exploration budget of nearly $40 million. Key areas include Jerritt Canyon, where we are looking for a large deposit, and continued success at Santa Elena and San Dimas. We have over 20 rigs active and plan to release updates on our exploration programs every six months.
Q: How is the First Mint coming along?
A: The First Mint started production in March 2024 and is still ramping up. We are currently producing 5-ounce, 10-ounce, and 1-kilo bars, and expect to start producing coins by September or October. The inaugural opening ceremony is scheduled for September.
Q: Can you give an update on Jerritt Canyon?
A: Jerritt Canyon needs investments, particularly in upgrading the mill and winterizing it. We are focusing on drilling to explore potential large deposits. The plan is to rebuild the mine plan and potentially turn Jerritt Canyon back on towards the end of 2026 or into 2027.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
