Mr. Keith Neumeyer reports
FIRST MAJESTIC SILVER CORP.: 2010 AUDITED FINANCIAL RESULTS SHOW RECORD
EARNINGS & CASH FLOWS; A BREAKOUT YEAR FOR FIRST MAJESTIC
First Majestic Silver Corp. has provided the audited consolidated financial results for the company for the year ending and fourth quarter ending Dec. 31, 2010. The full version of the financial statements and the management discussion and analysis can be viewed on the company's website on SEDAR and on EDGAR.
2010 highlights
-
Cash flow per share (non-GAAP (generally accepted accounting principles)) of 62 cents per share representing a 676-per-cent
increase from 2009;
-
Earnings per share (basic) amounted to 39 cents representing a 410-per-cent increase over
2009;
-
Total cash cost was $7.94 (U.S.) per ounce, down 6 per cent compared with 2009;
-
Gross revenue of $132.2-million showing an 85-per-cent increase from 2009;
-
Net revenue of $120.8-million showing a 103-per-cent increase from 2009;
-
Mine operating earnings of $61.2-million showing an increase of 231 per cent
from 2009;
-
Net income after taxes amounted to $36.1-million, a 472-per-cent increase from
2009;
-
Silver-only production increases by 72 per cent to 6.53 million ounces compared
with 3.8 million ounces silver in 2009;
-
2011 guidance of 7.5 million ounces of silver or 8.0 million ounces of
silver equivalent production;
-
Fully unhedged to silver prices.
2010 ANNUAL AND FOURTH QUARTER HIGHLIGHTS
HIGHLIGHTS
Change from Change from
Fourth quarter fourth quarter Full year full year
HIGHLIGHTS 2010 2009 2010 2009
Gross revenue $42.4-million Up 98% $132.2-million Up 85%
Net revenue $40.1-million Up 118% $120.8-million Up 103%
Mine operating
earnings $23.9-million Up 195% $61.2-million Up 231%
Net income
after taxes $13.9-million Up 459% $36.1-million Up 472%
Cash flow per
share (a non-
GAAP measure) $0.23 per share Up 292% $0.62 per share Up 676%
Earnings per
share -- basic $0.15 per share Up 392% $0.39 per share Up 410%
Silver ounces
produced
(excluding
equivalent
ounces of gold,
zinc and lead) 1,757,332 oz Up 59% 6,529,325 oz Up 72%
Silver
equivalent
production 1,827,987 eq. oz. Up 46% 7,024,056 eq. oz. Up 62%
Silver
equivalent
ounces sold 1,690,741 eq. oz. Up 48% 6,482,637 eq. oz. Up 53%
Total cash
costs per ounce $8.16 (U.S.) Down 5% $7.94 (U.S.) Down 6%
Direct cash
costs per ounce $6.50 (U.S.) Up 14% $5.85 (U.S.) Up 4%
Average revenue
per ounce sold $24.74 (U.S.) Up 40% $19.79 (U.S.) Up 34%
Cash and cash
equivalents (as
at Dec. 31) $40.9-million Up 595% $40.9-million Up 595%
-
Generated gross revenue of $132.2-million for the year ended 2010
compared with $71.5-million in 2009, an increase of $60.6-million or 85 per cent;
- Generated gross revenue of $42.4-million for the fourth quarter of 2010
compared with $21.4-million in the fourth quarter of 2009, an increase of
$20.9-million or 98 per cent;
-
Generated net revenue (excluding smelting and refining changes) of $120.8-million for 2010, an increase of 103 per cent compared with $59.5-million for
2009. Smelting and refining charges and metal deductions decreased to
9 per cent of gross revenue in 2010 compared with 17 per cent of gross revenue in 2009.
Average smelting charges for dore in 2010 were 43 U.S. cents per equivalent
silver ounce whereas for concentrates they were $3.58 (U.S.) per equivalent
silver ounce;
-
Generated net revenue (excluding smelting and refining changes) of $40.1-million for the fourth quarter of 2010 compared with $18.4-million for the
fourth quarter of 2009, an increase of $21.7-million or 118 per cent;
-
Recognized mine operating earnings of $61.2-million for 2010 compared with $18.5-million for 2009, an increase of 231 per cent. The increase was
attributed to an increase in sales volume from 4.2 million ounces of
silver equivalent in 2009 to 7.0 million ounces of silver equivalent in
2010, combined with an increase in sales revenue per ounce from $16.89
($14.79 (U.S.)) in 2009 to $20.39 ($19.79 (U.S.)) in 2010;
-
Recognized mine operating earnings of $23.9-million for the fourth
quarter of 2010 compared with $8.1-million for the fourth quarter of 2009,
an increase of $15.8-million or 195 per cent;
-
Earned cash flows from operations of $58.4-million or 62 cents per share (a
non-GAAP measure) for 2010 compared with $6.7-million or eight cents per share
for 2009, an increase of 771 per cent;
-
Generated net income of $36.1-million for 2010 compared with net income of $6.3-million, for 2009;
-
Generated basic earnings per common share (EPS) after
current tax provision (a non-GAAP measure) of 50 cents for 2010. EPS for
2010 after current and future taxes was 39 cents, compared with EPS of eight cents
for 2009;
-
New La Encantada plant was not in commercial production until
April 1, 2010, under Canadian GAAP, revenues and production costs are
offset against the carrying value of the assets rather than being
recorded as income up to the date the plant achieves commercial
production. If the revenues and expenses of the new plant were recorded
as income rather than capital, then earnings would have been adjusted
upward in 2010 for the $2.3-million of capitalized net profits
resulting in 42 cents per share basic EPS, or 53 cents excluding the future
income tax provision (non-GAAP measures);
-
Net income after taxes of $13.9-million for the fourth quarter of 2010
compared with $2.5-million for the fourth quarter of 2009, an increase of
$11.4-million or 459 per cent;
-
Increased production from 4,337,103 silver equivalent ounces in 2009 to
7,024,056 silver equivalent ounces in 2010, an increase of 62 per cent;
-
Increased production from 1,249,568 silver equivalent ounces in the
fourth quarter of 2009 to 1,827,987 silver equivalent ounces in the
fourth quarter of 2010, an increase of 46 per cent;
-
Direct cash costs per ounce of silver (a non-GAAP measure) for 2010
increased $5.85 (U.S.) per ounce of silver, compared with $5.61 (U.S.) per ounce
of silver for 2009 due to an appreciation of the Mexican peso relative
to the U.S. dollar and inflationary pressures;
-
Direct cash costs per ounce of silver for the fourth quarter of 2010
increased $6.50 (U.S.) per ounce of silver, compared with $5.69 (U.S.) per ounce
of silver for the fourth quarter of 2009 due to a 6-per-cent appreciation in the
value of the Mexican peso relative to the U.S. dollar and other increased
costs due to inflationary pressures;
-
Total cash costs per ounce (a non-GAAP measure) reduced by 6 per cent to
$7.94 (U.S.) in 2010 from $8.49 (U.S.) in 2009 due to a reduction in smelting and
refining costs associated with higher dore production at the La
Encantada mine;
-
Total cash costs per ounce for the fourth quarter of 2010 reduced by
5 per cent to $8.16 (U.S.) compared with $8.61 (U.S.) in the fourth quarter of 2009;
-
Cash and cash equivalents compared with 2009 increased $35.1-million to
$40.9-million and improved working capital by $43.3-million to $48.1-million;
-
Repaid all of the company's debt facilities with cash flows from mining
operations to reduce interest expense;
-
New cyanidation process plant at the La Encantada silver mine
achieved commercial production effective April 1, 2010, and reached full
production capacity of 3,750 tonnes per day (tpd) by the end of the
year. With the expansion of the La Encantada, production at the mine
increased from 1.44 million ounces of silver equivalent in 2009 to 4.0
million ounces of silver equivalent in 2010.
2011 production outlook
The company would like to provide the following forward-looking estimates regarding its production outlook for 2011. Production in 2011 is expected to increase by 13 per cent from 2010 levels as the 3,750 tpd La Encantada mill experiences a full year of commercial production and the expansion currently under way at La Parrilla is anticipated to begin to ramp up in the third quarter from 850 tpd to 1,600 tpd by year-end.
Estimated production on a mine-by-mine basis for 2011, and associated anticipated operating costs, are included in the table. These figures are based on existing installed capacity at the company's operations in the La Encantada and the San Martin mines, and increasing capacities at the La Parrilla mine for the second half of 2011. Pricing assumptions for equivalent silver production from gold, lead and zinc are provided along with the table.
Anticipated
operating
parameters La Encantada La Parrilla San Martin 2011 outlook
Total tonnes
processed 1,144,125 346,032 252,450 1,742,607
Ag ounces from
production 4,414,133 1,947,047 1,153,887 7,515,067
Ag equivalent
ounces (Au, Pb,
Zn) - 332,200 81,533 413,733
Total
equivalent
ounces
production(i) 4,414,133 2,279,247 1,235,420 7,928,800
Ag grade (g/t)
flotation - 246 - 246
Ag recovery %
flotation - 80% - 80%
Ag grade (g/t)
cyanidation 200 193 178 196
Ag recovery %
cyanidation 60% 70% 80% 64%
Lead
concentrate
(tonnes) - 7,815 - 7,815
Zinc
concentrate
(tonnes) - 1,922 - 1,922
Total cash
costs $6.64 $7.44 $8.47 $7.09
Direct mining
cost per
silver
ounce $6.09 $7.05 $8.63 $6.73
Direct mining
cost per
equivalent
silver ounce $6.09 $6.02 $8.06 $6.38
Direct mining
cost per
tonne $23.51 $39.66 $39.46 $29.03
(i) Assumptions:
Operating days 339 331 330
Price of silver $22.00 per ounce, gold $1,300 per ounce, lead $1 per pound,
zinc $1 per pound.
In summary
First Majestic has experienced a breakout year in 2010 due to the overlapping effect of a 72-per-cent increase in silver production and a 34-per-cent increase in average silver prices compared with 2009. Further silver price increases and an anticipated production increase in 2011 bode well for continued earnings growth and robust cash flows for fiscal 2011.
"This past year has clearly been a watershed year for First Majestic, and we're continuing to push aggressively forward in expanding our silver production into 2011 and beyond. I would like to extend my personal thanks and appreciation to all of our employees, managers, and our board of directors for everyone's support in working together in achieving such a fantastic year. We are proud of our growth and our ability to continue growing each and every year since founding this company. We will continue to focus on an aggressive growth strategy combined with minimizing costs as we move First Majestic toward becoming a senior silver producer," commented Keith Neumeyer, president and chief executive officer of First Majestic.
We seek Safe Harbor.
© 2025 Canjex Publishing Ltd. All rights reserved.