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First Majestic (AG) Q1 Production Down Q/Q Due to Severe Weather

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First Majestic Silver Corp. (AG - Free Report) recently announced that total production in first-quarter 2021 reached 4.5 million silver equivalent ounces comprising 2.9 million ounces of silver and 23,873 ounces of gold. Compared to the record-setting performance in fourth-quarter 2020, silver and gold production declined 16% and 9%, respectively. This was primarily due to a severe winter ice storm in the month of February. On a year-over-year basis, silver and gold production were down 8% and 26%, respectively.

The company processed total ore of 614,245 tons during the quarter under review, which reflected a sequential decline of 2% as the storm temporarily reduced plant throughput rates at La Encantada. However this was somewhat negated by improved underground ore deliveries and plant production rates at Santa Elena.

Consolidated silver and gold grades averaged 166 g/t and 1.26 g/t, in the quarter compared with 194 g/t and 1.37 g/t, respectively, in the previous quarter. The decline was mainly due to lower ore grades at the La Encantada and San Dimas mines.

In first-quarter 2021, the La Encantada mine’s silver production slumped 32% sequentially to 738,354 ounces. The winter ice storm elevated maintenance levels and temporarily reduced plant throughput rates.

San Dimas produced 1,716,143 ounces of silver and 17,448 ounces of gold — indicating a sequential decline of 12% and 13%, respectively. Santa Elena produced 453,528 ounces of silver and 6,327 ounces of gold, representing an increase of 8% and 1%, respectively, compared with fourth-quarter 2020. Underground ore production at the mine reached the highest quarterly rate in over a year as a result of the multiple improvement initiatives undertaken at the mine over the past nine months.

Other Updates

During the quarter, the Liquid Natural Gas ("LNG") facility at Santa Elena successfully was successfully commissioned and by quarter end, it was supplying approximately 85% of power requirements to the Santa Elena operation.

The company stated that underground development activities at the Ermitaño project near Santa Elena advanced another 1,453 metres during the quarter. First Majestic plans to start test stope mining in June, and expects to extract between 50,000 tons and 60,000 tons of material over the next six months.

As of Mar 31, 2021, 19 exploration drill rigs were active across the company’s mines and projects comprising 10 rigs at San Dimas, seven rigs at Santa Elena and two rigs at La Encantada.

Earlier on Mar 12, 2021, First Majestic announced that it has signed a definitive agreement to acquire the Jerritt Canyon Mine located in Nevada from Sprott Mining. The buyout is expected to be completed this month. The mine currently operates as an underground mine and has one of three permitted gold processing plants in Nevada that uses roasting in its treatment of ore. This processing plant has a capacity of 4,500 ton per day (“tpd”).

Average gold price during the first quarter was $1,794 per ounce, indicating an increase of 13% from the prior-year quarter. Silver prices averaged at $26.26 per ounce, 55% higher year over year. The impact of lower production numbers are likely to be offset by higher gold and silver prices. This is likely to get reflected in the company’s first-quarter 2020 results. First Majestic is expected to report third-quarter 2021 results on May 6, 2021. The Zacks Consensus Estimate for quarter’s earnings is pegged at 11 cents, suggesting an improvement of 175% from the prior-year reported figure. The estimate has gone up 22% over the past 60 days.
Silver production from the company’s three mines is expected between 12.5 million ounces and 13.9 million ounces in 2021 or 20.6 to 22.9 million silver equivalent ounces in 2021.

Share Price Performance

In a year’s time, First Majestic’s shares have soared 119.1% compared with the industry’s rally of 92.6%.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Impala Platinum Holdings Limited (IMPUY - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and BHP Group (BHP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Impala Platinum has an expected earnings growth rate of 197% for the current fiscal year. The company’s shares have surged 199% in the past year.

Fortescue has a projected earnings growth rate of 105% for the current fiscal year. The company’s shares have soared 126% in a year’s time.

BHP Group has an estimated earnings growth rate of 77.6% for the current fiscal year. The company’s shares have appreciated 89% over the past year.

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