Q3/14 Operating Results Below Expectations
Some recent equity research from Daniel Earle finds recent impact to be negative.
First Majestic announced Q3/14 production results this morning, announcing production of 3.52 Moz AgEq, which were below Daniel Earle's forecasts of 3.96 Moz AgEq.
Silver production totaled 2.68 Moz (vs previous estimates of 3.35 Moz) compared to 3.1 Moz in Q2/14, due to lower throughput rates at Del Toro and disruptions due to weather during the Mexican rainy season which affected the La Parrilla, San Martin and Del Toro mines
First Majestic has indicated that it has elected to temporarily suspend silver sales, and the inventory of unsold ounces are expected to be sold in Q4/14, according to the company (as of September 30, approximately 934 koz Ag were held in inventory)
According to Daniel Earle, the production results are negative compared to recent production results. The company processed a total of 621,196 tonnes in the quarter, representing a 7% decrease from Q2/14 due to lower throughput rates at Del Toro and disruptions due to weather during the Mexican rainy season which affected the La Parrilla, San Martin and Del Toro mines.
The average head grade decreased to 196 g/t Ag from 212 g/t Ag (down 7%) in Q2/14, primarily due to lower grades at La Encantada and combined silver recoveries remained flat at 68%. In an effort to cut costs, the company continues to trim its workforce (including contractors), as total personnel decreased to 3,800 employees (down 4% from Q2/14) and costs savings are expected to be realized in Q4/14. |
