First Majestic (AG) Q2 Production Up on Jerritt Canyon Addition

First Majestic Silver Corp. AG recently announced that total production in second-quarter 2021 reached 6.4 million silver equivalent ounces comprising 3.3 million ounces of silver and a record 46,545 ounces of gold. Compared to the first quarter, silver and gold production increased 13% and 95%, respectively. This was owing to a 14% increase in silver equivalent production from its three operating Mexican mines (Santa Elena, San Dimas and La Encantada) and the inclusion of production from the Jerritt Canyon operation in May and June. On a year-over-year basis, silver and gold production were up 83% and 195%, respectively.

On Apr 30, 2021, First Majestic completed the acquisition of the Jerritt Canyon Gold Mine in Nevada from Sprott Mining. It is one of the state's most prominent gold mines and marks the company’s first major investment outside of Mexico. First Majestic has been developing a long-term mine and exploration plan for the operation and has identified numerous projects that will be implemented over the next 12 to 24 months to improve production and reduce costs at the mine and processing plant.

Since First Majestic has taken control of the Jerritt Canyon mine in April, it has produced 18,762 ounces of gold. In second quarter, the La Encantada mine processed 242,839 tons of ore and produced 840,541 ounces of silver. San Dimas produced 1,868,031 ounces of silver and 19,227 ounces of gold. Santa Elena produced 565,453 ounces of silver and 8,453 ounces of gold. The company processed total ore of 826,213 tons during the quarter, which reflected a sequential increase of 35% due to the acquisition of Jerritt Canyon and a 26% increase in production rates at Santa Elena. Consolidated silver and gold grades averaged 137 g/t and 1.80 g/t, in the quarter compared with 166 g/t and 1.26 g/t, respectively, in the first quarter.

Other Updates

During the quarter, the Liquid Natural Gas ("LNG") facility at Santa Elena successfully reached full capacity. Santa Elena is now the First Majestic’s second operation that has been fully converted from diesel to low-cost LNG power.

As of Jun 30, 2021, 26 exploration drill rigs were active across the company’s mines and projects comprising 13 rigs at San Dimas, six at Santa Elena, five at Jerritt Canyon and two at La Encantada.

Hikes 2021 Production Outlook

First Majestic expects total production in 2021 to be 25.7-27.5 million silver equivalent ounces consisting of 13.0-13.8 million ounces of silver and 181,000-194,000 ounces of gold. This is higher than its previous production guidance of 20.6 to 22.9 million silver equivalent ounces primarily due to the addition of the Jerritt Canyon mine.

For the second half of 2021, total production is expected to range between 14.8 and 16.4 million silver equivalent ounces consisting of 6.7 to 7.6 million ounces of silver and 111,000 to 124,000 ounces of gold. The mid-point of the guidance indicates a 44% increase from the first half of 2021.

Annual cash costs are now expected to be within the range of $12.52 to $12.96 per ounce, up from the prior projection of $9.52 to $10.10 per ounce, primarily due to the addition of the Jerritt Canyon operation and higher development costs at Santa Elena. Annual all-in sustaining costs are now expected to be $17.86-$18.63 per ounce, compared with the previous guidance of $14.81 to $15.99 per ounce.

First Majestic has updated its 2021 capital budget to $205.3 million to include the Jerritt Canyon operation, and reallocation of capital for development and exploration across its operations. This is 22% higher than its original 2021 capital budget.

Share Price Performance

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In a year’s time, First Majestic’s shares have gained 33.1% compared with the industry’s growth of 10.1%.

Zacks Rank & Stocks to Consider

First Majestic carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Nucor Corporation NUE, Olin Corporation OLN and Commercial Metals Company CMC, all of which currently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nucor has a projected earnings growth rate of around 381.6% for the current year. The company’s shares have soared 129% in a year.

Olin has an expected earnings growth rate of around 506.7% for the current year. The company’s shares have skyrocketed 249% in the past year.

Commercial Metals has an projected earnings growth rate of around 22% for the current year. The company’s shares have appreciated 49% in the past year.

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By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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