Shares of First Majestic Silver (TSX: FR; NYSE: AG) were down 15% to $7.21 on the Toronto Stock Exchange at midday, after the company released second-quarter results showing an adjusted net loss of US$11.8 million ($0.07 per share).
The company recorded an impairment charge of US$31.7 million due to the placement of its La Guitarra silver mine in Mexico on care and maintenance. The company noted on its website that the reallocation of capital and resources to projects that have better economics and internal rates of return such as its newly acquired San Dimas silver-gold mine “are taking priority.” (The company completed the acquisition of Primero Mining Corp. in May—adding San Dimas, its seventh mine in Mexico.)
Silver production in the three months ended June 30 reached 2.8 million ounces, a 27% increase compared to the first quarter of 2018. Silver equivalent production reached 5.1 million ounces, a 32% increase over the first quarter.
All-in sustaining costs were US$16.43 per payable silver oz., a 3% decrease compared to the first quarter.
The company ended the second quarter with US$109.2 million in cash and equivalents.
“Looking ahead to the second half of 2018, we expect higher operating margins along with a significant reduction in our consolidated AISC to between US$13.28 to US$14.84 per ounce, primarily due to higher production rates from the start-up of the 2,000 tonne per day roaster at La Encantada, higher silver grades at La Encantada and Del Toro, increased production at San Dimas and the decision to place La Guitarra on care and maintenance,” First Majestic’s CEO Keith Neumayer, stated in a news release.
BMO Capital Markets’ analyst Ryan Thompson has lowered his target price on the stock from $9.25 per share to $8.75 per share.
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