FIRST MAJESTIC SILVER CORP. | |
By: | |
/s/ Connie Lillico | |
Connie Lillico | |
Corporate Secretary | |
May 14, 2020 |
925 West Georgia Street, Suite 1800, Vancouver, B.C., Canada V6C 3L2 Phone: 604.688.3033 | Fax: 604.639.8873| Toll Free: 1.866.529.2807 | Email: info@firstmajestic.com www.firstmajestic.com |
![]() | ![]() | |
Keith Neumeyer | Raymond Polman, CPA, CA | |
President & CEO | Chief Financial Officer | |
May 13, 2020 | May 13, 2020 |
CONSOLIDATED FINANCIAL STATEMENTS | ||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
General | ||
Statements of (Loss) Earnings | ||
Statements of Financial Position | ||
Other items | ||
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) | |
FOR THE THREE MONTHS ENDED MARCH 31, 2020 and 2019 | |
Condensed Interim Consolidated Financial Statements - Unaudited | (In thousands of US dollars, except share and per share amounts) |
Three Months Ended March 31, | |||||||||
Note | 2020 | 2019 | |||||||
Revenues | $86,065 | $86,810 | |||||||
Mine operating costs | |||||||||
Cost of sales | 50,781 | 59,347 | |||||||
Depletion, depreciation and amortization | 14,169 | 17,210 | |||||||
64,950 | 76,557 | ||||||||
Mine operating earnings | 21,115 | 10,253 | |||||||
General and administrative expenses | 6,284 | 6,500 | |||||||
Share-based payments | 2,378 | 2,075 | |||||||
Mine holding costs | 4,779 | 808 | |||||||
Loss on sale of exploration project | 10,106 | — | |||||||
Foreign exchange gain | (2,826 | ) | (2,369 | ) | |||||
Operating earnings | 394 | 3,239 | |||||||
Unrealized loss on foreign currency derivatives | (22,654 | ) | — | ||||||
Investment and other (loss) income | (540 | ) | 2,018 | ||||||
Finance costs | (3,856 | ) | (3,705 | ) | |||||
(Loss) earnings before income taxes | (26,656 | ) | 1,552 | ||||||
Income taxes | |||||||||
Current income tax expense | 1,214 | 3,464 | |||||||
Deferred income tax expense (recovery) | 4,566 | (4,792 | ) | ||||||
5,780 | (1,328 | ) | |||||||
Net (loss) earnings for the period | ($32,436 | ) | $2,880 | ||||||
(Loss) earnings per common share | |||||||||
Basic | ($0.15 | ) | $0.01 | ||||||
Diluted | ($0.15 | ) | $0.01 | ||||||
Weighted average shares outstanding | |||||||||
Basic | 209,396,052 | 195,832,712 | |||||||
Diluted | 209,396,052 | 196,745,512 |
![]() | ![]() | |
Keith Neumeyer, Director | Douglas Penrose, Director |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 1 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |
FOR THE THREE MONTHS ENDED MARCH 31, 2020 and 2019 | |
Condensed Interim Consolidated Financial Statements - Unaudited | (In thousands of US dollars) |
Note | Three Months Ended March 31, | ||||||||
2020 | 2019 | ||||||||
Net (loss) earnings for the period | ($32,436 | ) | $2,880 | ||||||
Other comprehensive (loss) income | |||||||||
Items that will not be subsequently reclassified to net earnings (loss): | |||||||||
Unrealized gain on fair value of investments in marketable securities | 293 | 150 | |||||||
Remeasurement of retirement benefit plan | (455 | ) | — | ||||||
Other comprehensive (loss) income | (162 | ) | 150 | ||||||
Total comprehensive (loss) income | ($32,598 | ) | $3,030 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 2 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS | |
FOR THE THREE MONTHS ENDED MARCH 31, 2020 and 2019 | |
Condensed Interim Consolidated Financial Statements - Unaudited | (In thousands of US dollars) |
Three Months Ended March 31, | |||||||||
Note | 2020 | 2019 | |||||||
Operating Activities | |||||||||
Net (loss) earnings for the period | ($32,436 | ) | $2,880 | ||||||
Adjustments for: | |||||||||
Depletion, depreciation and amortization | 14,625 | 17,664 | |||||||
Share-based payments | 2,378 | 2,075 | |||||||
Income tax expense (recovery) | 5,780 | (1,328 | ) | ||||||
Finance costs | 3,856 | 3,705 | |||||||
Loss on sale of exploration project | 10,176 | — | |||||||
Unrealized loss on foreign currency derivatives | 22,654 | — | |||||||
Other | (3,720 | ) | (1,291 | ) | |||||
Operating cash flows before movements in working capital and taxes | 23,313 | 23,705 | |||||||
Net change in non-cash working capital items | (10,763 | ) | 10,246 | ||||||
Income taxes paid | (502 | ) | (1,236 | ) | |||||
Cash generated by operating activities | 12,048 | 32,715 | |||||||
Investing Activities | |||||||||
Expenditures on mining interests | (19,772 | ) | (19,835 | ) | |||||
Acquisition of property, plant and equipment | (12,016 | ) | (10,129 | ) | |||||
Deposits paid for acquisition of non-current assets | (1,518 | ) | (640 | ) | |||||
Proceeds from settlement of silver futures | — | 1,597 | |||||||
Cash used in investing activities | (33,306 | ) | (29,007 | ) | |||||
Financing Activities | |||||||||
Proceeds from ATM program, net of share issue costs | 13,792 | 32,458 | |||||||
Proceeds from exercise of stock options | 1,841 | 1,152 | |||||||
Repayment of lease liabilities | (1,779 | ) | (1,006 | ) | |||||
Finance costs paid | (1,956 | ) | (2,299 | ) | |||||
Repayment of Scotia debt facility | (10,000 | ) | — | ||||||
Shares repurchased and cancelled | (1,694 | ) | — | ||||||
Cash provided by financing activities | 204 | 30,305 | |||||||
Effect of exchange rate on cash and cash equivalents held in foreign currencies | (2,768 | ) | 431 | ||||||
(Decrease) increase in cash and cash equivalents | (21,054 | ) | 34,013 | ||||||
Cash and cash equivalents, beginning of the period | 169,009 | 57,013 | |||||||
Cash and cash equivalents, end of period | $145,187 | $91,457 | |||||||
Cash | $138,065 | $91,457 | |||||||
Short-term investments | 7,122 | — | |||||||
Cash and cash equivalents, end of period | $145,187 | $91,457 | |||||||
Supplemental cash flow information |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 3 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |
AS AT MARCH 31, 2020 AND DECEMBER 31, 2019 | |
Condensed Interim Consolidated Financial Statements - Unaudited | (In thousands of US dollars) |
Note | March 31, 2020 | December 31, 2019 | |||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $145,187 | $169,009 | |||||||
Trade and other receivables | 3,544 | 4,295 | |||||||
Value added taxes receivable | 28,598 | 29,637 | |||||||
Inventories | 33,414 | 30,517 | |||||||
Other financial assets | 9,007 | 7,488 | |||||||
Prepaid expenses and other | 4,268 | 2,033 | |||||||
Total current assets | 224,018 | 242,979 | |||||||
Non-current assets | |||||||||
Mining interests | 463,005 | 463,391 | |||||||
Property, plant and equipment | 238,469 | 236,639 | |||||||
Right-of-use assets | 13,508 | 12,034 | |||||||
Deposits on non-current assets | 2,275 | 2,189 | |||||||
Non-current income taxes receivable | 15,680 | 19,551 | |||||||
Deferred tax assets | 84,502 | 51,141 | |||||||
Total assets | $1,041,457 | $1,027,924 | |||||||
Liabilities and Equity | |||||||||
Current liabilities | |||||||||
Trade and other payables | $54,977 | $59,123 | |||||||
Other financial liabilities | 21,672 | — | |||||||
Unearned revenue | 257 | 4,486 | |||||||
Current portion of debt facilities | 437 | 1,175 | |||||||
Current portion of lease liabilities | 6,329 | 6,920 | |||||||
Income taxes payable | 520 | 149 | |||||||
Total current liabilities | 84,192 | 71,853 | |||||||
Non-current liabilities | |||||||||
Debt facilities | 146,305 | 154,643 | |||||||
Lease liabilities | 15,082 | 15,016 | |||||||
Decommissioning liabilities | 32,919 | 40,528 | |||||||
Other liabilities | 3,898 | 4,675 | |||||||
Deferred tax liabilities | 113,021 | 78,888 | |||||||
Total liabilities | $395,417 | $365,603 | |||||||
Equity | |||||||||
Share capital | 949,142 | 933,182 | |||||||
Equity reserves | 91,321 | 90,692 | |||||||
Accumulated deficit | (394,423 | ) | (361,553 | ) | |||||
Total equity | $646,040 | $662,321 | |||||||
Total liabilities and equity | $1,041,457 | $1,027,924 | |||||||
Commitments (Note 15; Note 23(c)); Subsequent event (Note 26) |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 4 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |
FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 | |
Condensed Interim Consolidated Financial Statements - Unaudited | (In thousands of US dollars, except share and per share amounts) |
Share Capital | Equity Reserves | Accumulated deficit | |||||||||||||||||||||||||||
Shares | Amount | Share-based payments(a) | Other comprehensive income(loss)(b) | Equity component of convertible debenture(c) | Total equity reserves | Total equity | |||||||||||||||||||||||
Balance at December 31, 2018 | 193,873,335 | $827,622 | $71,715 | ($2,849 | ) | $19,164 | $88,030 | ($321,079 | ) | $594,573 | |||||||||||||||||||
Net earnings for the period | — | — | — | — | — | — | 2,880 | 2,880 | |||||||||||||||||||||
Other comprehensive income | — | — | — | 150 | — | 150 | — | 150 | |||||||||||||||||||||
Total comprehensive income | — | — | — | 150 | — | 150 | 2,880 | 3,030 | |||||||||||||||||||||
Share-based payments | — | — | 2,075 | — | — | 2,075 | — | 2,075 | |||||||||||||||||||||
Shares issued for: | |||||||||||||||||||||||||||||
Exercise of stock options (Note 22(b)) | 289,641 | 1,422 | (270 | ) | — | — | (270 | ) | — | 1,152 | |||||||||||||||||||
Restructuring of streaming agreement (Note 4) | 5,250,000 | 32,458 | — | — | — | — | — | 32,458 | |||||||||||||||||||||
Shares cancelled | 1,661 | 7 | — | — | — | — | — | 7 | |||||||||||||||||||||
Balance at March 31, 2019 | 199,414,637 | $861,509 | $73,520 | ($2,699 | ) | $19,164 | $89,985 | ($318,199 | ) | $633,295 | |||||||||||||||||||
Balance at December 31, 2019 | 208,112,072 | $933,182 | $74,060 | ($2,532 | ) | $19,164 | $90,692 | ($361,553 | ) | $662,321 | |||||||||||||||||||
Net loss for the period | — | — | — | — | — | — | (32,436 | ) | (32,436 | ) | |||||||||||||||||||
Other comprehensive loss | — | — | — | (162 | ) | — | (162 | ) | — | (162 | ) | ||||||||||||||||||
Total comprehensive loss | — | — | — | (162 | ) | — | (162 | ) | (32,436 | ) | (32,598 | ) | |||||||||||||||||
Share-based payments | — | — | 2,378 | — | — | 2,378 | — | 2,378 | |||||||||||||||||||||
Shares issued for: | |||||||||||||||||||||||||||||
Exercise of stock options (Note 22(b)) | 295,816 | 2,549 | (708 | ) | — | — | (708 | ) | — | 1,841 | |||||||||||||||||||
At-the-Market Distributions (Note 22(a)) | 1,304,338 | 13,792 | — | — | — | — | — | 13,792 | |||||||||||||||||||||
Settlement of restricted share units (Note 22(c)) | 112,000 | 879 | (879 | ) | — | — | (879 | ) | — | — | |||||||||||||||||||
Shares repurchased and cancelled (Note 22(e)) | (275,000 | ) | (1,260 | ) | — | — | — | — | (434 | ) | (1,694 | ) | |||||||||||||||||
Balance at March 31, 2020 | 209,549,226 | $949,142 | $74,851 | ($2,694 | ) | $19,164 | $91,321 | ($394,423 | ) | $646,040 |
(a) | Share-based payments reserve records the cumulative amount recognized under IFRS 2 share-based payments in respect of stock options granted, restricted share units and shares purchase warrants issued but not exercised or settled to acquire shares of the Company. |
(b) | Other comprehensive income reserve principally records the unrealized fair value gains or losses related to fair value through other comprehensive income ("FVTOCI") financial instruments and re-measurements arising from actuarial gains or losses and return on plan assets in relation to San Dimas' retirement benefit plan. |
(c) | Equity component of convertible debenture reserve represents the estimated fair value of its conversion option of $26.3 million, net of deferred tax effect of $7.1 million. This amount is not subsequently remeasured and will remain in equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to share capital. Where the conversion option remains unexercised at the maturity date of the convertible note, the balance will remain in equity reserves. |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | ||
First Majestic Silver Corp. 2020 First Quarter Report | Page 5 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 6 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
• | engages in business activities from which it may earn revenues and incur expenses; |
• | whose operating results are reviewed regularly by the entity’s chief operating decision maker; and |
• | for which discrete financial information is available. |
Three Months Ended March 31, 2020 and 2019 | Revenue | Cost of sales | Depletion, depreciation, and amortization | Mine operating earnings (loss) | Capital expenditures | ||||||||||||||||
Mexico | |||||||||||||||||||||
San Dimas | 2020 | $47,714 | $26,067 | $8,781 | $12,866 | $12,802 | |||||||||||||||
2019 | 40,885 | 23,382 | 6,272 | 11,231 | 8,197 | ||||||||||||||||
Santa Elena | 2020 | 22,589 | 13,928 | 2,791 | 5,870 | 7,402 | |||||||||||||||
2019 | 20,133 | 12,767 | 2,288 | 5,078 | 4,821 | ||||||||||||||||
La Encantada | 2020 | 15,294 | 9,318 | 2,140 | 3,836 | 2,791 | |||||||||||||||
2019 | 11,573 | 9,035 | 3,484 | (946 | ) | 2,850 | |||||||||||||||
Non-producing Properties | 2020 | 183 | 1,361 | 191 | (1,369 | ) | 2,095 | ||||||||||||||
2019 | 14,038 | 13,946 | 4,908 | (4,816 | ) | 6,252 | |||||||||||||||
Others | 2020 | 285 | 107 | 266 | (88 | ) | 4,966 | ||||||||||||||
2019 | 181 | 217 | 258 | (294 | ) | 6,590 | |||||||||||||||
Consolidated | 2020 | $86,065 | $50,781 | $14,169 | $21,115 | $30,056 | |||||||||||||||
2019 | $86,810 | $59,347 | $17,210 | $10,253 | $28,710 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 7 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
At March 31, 2020 and December 31, 2019 | Mining Interests | Property, plant and equipment | Total mining assets | Total assets | Total liabilities | ||||||||||||||||||||
Producing | Exploration | ||||||||||||||||||||||||
Mexico | |||||||||||||||||||||||||
San Dimas | 2020 | $197,703 | $8,883 | $115,886 | $322,472 | $395,143 | $58,592 | ||||||||||||||||||
2019 | 193,433 | 8,699 | 116,556 | 318,688 | 375,359 | 61,476 | |||||||||||||||||||
Santa Elena | 2020 | 49,569 | 19,112 | 47,199 | 115,880 | 139,611 | 22,858 | ||||||||||||||||||
2019 | 45,046 | 18,592 | 47,787 | 111,425 | 134,666 | 23,867 | |||||||||||||||||||
La Encantada | 2020 | 23,909 | 1,220 | 14,988 | 40,117 | 80,411 | 22,540 | ||||||||||||||||||
2019 | 23,091 | 1,104 | 14,736 | 38,931 | 71,255 | 21,563 | |||||||||||||||||||
Non-producing Properties | 2020 | 105,778 | 35,012 | 30,863 | 171,653 | 211,211 | 34,345 | ||||||||||||||||||
2019 | 105,778 | 32,938 | 31,050 | 169,766 | 213,061 | 36,261 | |||||||||||||||||||
Others | 2020 | — | 21,819 | 29,533 | 51,352 | 215,081 | 257,082 | ||||||||||||||||||
2019 | — | 34,710 | 26,510 | 61,220 | 233,582 | 222,436 | |||||||||||||||||||
Consolidated | 2020 | $376,959 | $86,046 | $238,469 | $701,474 | $1,041,457 | $395,417 | ||||||||||||||||||
2019 | $367,348 | $96,043 | $236,639 | $700,030 | $1,027,923 | $365,603 |
Three Months Ended March 31, | ||||||||||||
2020 | 2019 | |||||||||||
Gross revenue by material: | ||||||||||||
Doré | $86,595 | 100 | % | $80,363 | 91 | % | ||||||
Concentrate | 195 | — | % | 7,920 | 9 | % | ||||||
Gross revenue | $86,790 | 100 | % | $88,283 | 100 | % | ||||||
Gross revenue from payable metals: | ||||||||||||
Silver | $52,014 | 60 | % | $52,488 | 59 | % | ||||||
Gold | 34,702 | 40 | % | 32,031 | 36 | % | ||||||
Lead | 74 | — | % | 2,529 | 3 | % | ||||||
Zinc | — | — | % | 1,235 | 1 | % | ||||||
Gross revenue | 86,790 | 100 | % | 88,283 | 100 | % | ||||||
Less: smelting and refining costs | (725 | ) | (1,473 | ) | ||||||||
Revenues | $86,065 | $86,810 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 8 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |
(Tabular amounts are expressed in thousands of US dollars) |
(a) | Gold Stream Agreement with Sandstorm Gold Ltd. |
(b) | Gold Stream Agreement with Wheaton Precious Metals Corporation |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Consumables and materials | $9,920 | $12,424 | ||||||
Labour costs | 27,323 | 28,187 | ||||||
Energy | 7,778 | 9,261 | ||||||
Other costs | 4,361 | 4,285 | ||||||
Production costs | $49,382 | $54,157 | ||||||
Transportation and other selling costs | 522 | 807 | ||||||
Workers participation costs | 1,998 | 1,595 | ||||||
Environmental duties and royalties | 396 | 336 | ||||||
Inventory changes | (2,463 | ) | 2,452 | |||||
Standby Costs(1) | 946 | — | ||||||
$50,781 | $59,347 |
(1) | Effective from July 2019, the Company temporarily suspended all mining and processing activities at the San Martin operation due to a growing insecurity in the area and safety concerns for our workforce. The Company is working with authorities to secure the area and uncertain of a restart date. |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 9 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Corporate administration | $1,277 | $1,040 | ||||||
Salaries and benefits | 3,165 | 3,523 | ||||||
Audit, legal and professional fees | 1,047 | 1,161 | ||||||
Filing and listing fees | 155 | 133 | ||||||
Directors fees and expenses | 184 | 189 | ||||||
Depreciation | 456 | 454 | ||||||
$6,284 | $6,500 |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Del Toro | $2,182 | $— | ||||||
La Parrilla | 1,719 | — | ||||||
La Guitarra | 878 | 808 | ||||||
$4,779 | $808 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 10 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |
(Tabular amounts are expressed in thousands of US dollars) |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Net (loss) earnings for the period | ($32,436 | ) | $2,880 | |||||
Weighted average number of shares on issue - basic | 209,396,052 | 195,832,712 | ||||||
Impact of effect on dilutive securities: | ||||||||
Stock options | — | 912,800 | ||||||
Weighted average number of shares on issue - basic and diluted(1) | 209,396,052 | 196,745,512 | ||||||
(Loss) earnings per share - basic | ($0.15 | ) | $0.01 | |||||
(Loss) earnings per share - diluted | ($0.15 | ) | $0.01 |
(1) | For the period ended March 31, 2020, diluted weighted average number of shares excluded 8,763,331 (2019 - 7,680,435) options, 345,243 restricted and preferred share units (2019 - nil) and 16,327,598 (2019 - 16,327,598) common shares issuable under the convertible debentures (Note 20(a)) that were anti-dilutive. |
March 31, 2020 | December 31, 2019 | ||||||
Trade receivables | $2,804 | $3,503 | |||||
Other | 740 | 792 | |||||
$3,544 | $4,295 |
March 31, 2020 | December 31, 2019 | ||||||
Finished goods - doré and concentrates | $5,786 | $1,965 | |||||
Work-in-process | 2,844 | 3,229 | |||||
Stockpile | 1,199 | 2,130 | |||||
Silver coins and bullion | 402 | 291 | |||||
Materials and supplies | 23,183 | 22,902 | |||||
$33,414 | $30,517 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 11 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |
(Tabular amounts are expressed in thousands of US dollars) |
March 31, 2020 | December 31, 2019 | ||||||
First Mining Gold Corp. (TSX: FF) | $1,945 | $3,010 | |||||
Sprott Physical Silver Trust (NYSE: PSLV) | 2,092 | 2,616 | |||||
FVTPL marketable securities (a) | $4,037 | $5,626 | |||||
FVTOCI marketable securities (b) | 2,873 | 880 | |||||
Total marketable securities | $6,910 | $6,506 | |||||
Silver future derivatives (c) | 2,097 | — | |||||
Foreign currency derivatives (Note 19) | — | 982 | |||||
Total other financial assets | $9,007 | $7,488 |
(a) | Fair Value through Profit or Loss ("FVTPL") Marketable Securities |
(b) | Fair Value through Other Comprehensive Income ("FVTOCI") Marketable Securities |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 12 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
(Tabular amounts are expressed in thousands of US dollars) |
March 31, 2020 | December 31, 2019 | ||||||
Depletable properties | $376,959 | $367,348 | |||||
Non-depletable properties (exploration and evaluation costs) | 86,046 | 96,043 | |||||
$463,005 | $463,391 |
Depletable properties | San Dimas | Santa Elena | La Encantada | Non-producing Properties(1) | Total | ||||||||||||||
Cost | |||||||||||||||||||
At December 31, 2018 | $193,305 | $45,041 | $99,436 | $478,883 | $816,665 | ||||||||||||||
Additions | 24,596 | 6,813 | 5,995 | 9,088 | 46,492 | ||||||||||||||
Change in decommissioning liabilities | 301 | 2,338 | 500 | 6,161 | 9,300 | ||||||||||||||
Transfer from exploration properties | 2,456 | 7,462 | 5,659 | — | 15,577 | ||||||||||||||
At December 31, 2019 | $220,658 | $61,654 | $111,590 | $494,132 | $888,034 | ||||||||||||||
Additions | 5,569 | 1,306 | 1,299 | — | 8,174 | ||||||||||||||
Transfer from exploration properties | 3,645 | 4,229 | 472 | — | 8,346 | ||||||||||||||
At March 31, 2020 | $229,872 | $67,189 | $113,361 | $494,132 | $904,554 | ||||||||||||||
Accumulated depletion, amortization and impairment | |||||||||||||||||||
At December 31, 2018 | ($10,871 | ) | ($11,594 | ) | ($59,872 | ) | ($380,677 | ) | ($463,014 | ) | |||||||||
Depletion and amortization | (16,354 | ) | (5,014 | ) | (6,025 | ) | (7,677 | ) | (35,070 | ) | |||||||||
Impairment | — | — | (22,602 | ) | — | (22,602 | ) | ||||||||||||
At December 31, 2019 | ($27,225 | ) | ($16,608 | ) | ($88,499 | ) | ($388,354 | ) | ($520,686 | ) | |||||||||
Depletion and amortization | (4,944 | ) | (1,012 | ) | (953 | ) | — | (6,909 | ) | ||||||||||
At March 31, 2020 | ($32,169 | ) | ($17,620 | ) | ($89,452 | ) | ($388,354 | ) | ($527,595 | ) | |||||||||
Carrying values | |||||||||||||||||||
At December 31, 2019 | $193,433 | $45,046 | $23,091 | $105,778 | $367,348 | ||||||||||||||
At March 31, 2020 | $197,703 | $49,569 | $23,909 | $105,778 | $376,959 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | ||
First Majestic Silver Corp. 2020 First Quarter Report | Page 13 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
(Tabular amounts are expressed in thousands of US dollars) |
Non-depletable properties | San Dimas | Santa Elena | La Encantada | Non-producing Properties(1) | Exploration Projects(c) | Total | |||||||||||||||||
At December 31, 2018 | $3,705 | $14,316 | $5,660 | $24,841 | $33,440 | $81,962 | |||||||||||||||||
Exploration and evaluation expenditures | 7,450 | 11,738 | 2,164 | 8,097 | 1,032 | 30,481 | |||||||||||||||||
Change in decommissioning liabilities | — | — | — | — | 238 | 238 | |||||||||||||||||
Impairment | — | — | (1,061 | ) | — | — | (1,061 | ) | |||||||||||||||
Transfer to producing properties | (2,456 | ) | (7,462 | ) | (5,659 | ) | — | — | (15,577 | ) | |||||||||||||
At December 31, 2019 | $8,699 | $18,592 | $1,104 | $32,938 | $34,710 | $96,043 | |||||||||||||||||
Exploration and evaluation expenditures | 3,829 | 4,749 | 588 | 2,074 | 292 | 11,532 | |||||||||||||||||
Sale of exploration project | — | — | — | — | (13,183 | ) | (13,183 | ) | |||||||||||||||
Transfer to producing properties | (3,645 | ) | (4,229 | ) | (472 | ) | — | — | (8,346 | ) | |||||||||||||
At March 31, 2020 | $8,883 | $19,112 | $1,220 | $35,012 | $21,819 | $86,046 |
(a) | San Dimas Silver/Gold Mine, Durango State |
(b) | Santa Elena Silver/Gold Mine, Sonora State |
(c) | Plomosas Silver Project, Sinaloa, Mexico |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | ||
First Majestic Silver Corp. 2020 First Quarter Report | Page 14 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
(Tabular amounts are expressed in thousands of US dollars) |
Land and Buildings(1) | Machinery and Equipment | Assets under Construction | Other | Total | |||||||||||||||
Cost | |||||||||||||||||||
At December 31, 2018 | $177,864 | $430,862 | $35,673 | $23,410 | $667,809 | ||||||||||||||
Additions | — | 1,991 | 44,709 | 521 | 47,221 | ||||||||||||||
Transfers and disposals | 20,548 | 23,802 | (52,737 | ) | 507 | (7,880 | ) | ||||||||||||
At December 31, 2019 | $198,412 | $456,655 | $27,645 | $24,438 | $707,150 | ||||||||||||||
Additions | — | 835 | 9,407 | 108 | 10,350 | ||||||||||||||
Transfers and disposals | 216 | 2,094 | (3,797 | ) | 3 | (1,484 | ) | ||||||||||||
March 31, 2020 | $198,628 | $459,584 | $33,255 | $24,549 | $716,016 | ||||||||||||||
Accumulated depreciation, amortization and impairment | |||||||||||||||||||
At December 31, 2018 | ($111,258 | ) | ($291,959 | ) | $— | ($13,508 | ) | ($416,725 | ) | ||||||||||
Depreciation and amortization | (4,980 | ) | (23,829 | ) | — | (2,122 | ) | (30,931 | ) | ||||||||||
Transfers and disposals | 271 | 5,189 | — | 459 | 5,919 | ||||||||||||||
Impairment | (13,073 | ) | (15,701 | ) | — | — | (28,774 | ) | |||||||||||
At December 31, 2019 | ($129,040 | ) | ($326,300 | ) | $— | ($15,171 | ) | ($470,511 | ) | ||||||||||
Depreciation and amortization | (1,168 | ) | (5,527 | ) | — | (625 | ) | (7,320 | ) | ||||||||||
Transfers and disposals | 51 | 210 | — | 23 | 284 | ||||||||||||||
March 31, 2020 | ($130,157 | ) | ($331,617 | ) | $— | ($15,773 | ) | ($477,547 | ) | ||||||||||
Carrying values | |||||||||||||||||||
At December 31, 2019 | $69,372 | $130,355 | $27,645 | $9,267 | $236,639 | ||||||||||||||
March 31, 2020 | $68,471 | $127,967 | $33,255 | $8,776 | $238,469 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | ||
First Majestic Silver Corp. 2020 First Quarter Report | Page 15 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
(Tabular amounts are expressed in thousands of US dollars) |
San Dimas | Santa Elena | La Encantada | Non-producing Properties(1) | Other | Total | ||||||||||||||||||
Cost | |||||||||||||||||||||||
At December 31, 2018 | $127,763 | $76,671 | $132,146 | $299,037 | $32,192 | $667,809 | |||||||||||||||||
Additions | 10,465 | 4,453 | 5,066 | 3,073 | 24,164 | 47,221 | |||||||||||||||||
Transfers and disposals | (1,925 | ) | 9,638 | 90 | (4,870 | ) | (10,813 | ) | (7,880 | ) | |||||||||||||
At December 31, 2019 | $136,303 | $90,762 | $137,302 | $297,240 | $45,543 | $707,150 | |||||||||||||||||
Additions | 3,404 | 1,347 | 904 | 21 | 4,674 | 10,350 | |||||||||||||||||
Transfers and disposals | 181 | (103 | ) | 868 | (992 | ) | (1,438 | ) | (1,484 | ) | |||||||||||||
At March 31, 2020 | $139,888 | $92,006 | $139,074 | $296,269 | $48,779 | $716,016 | |||||||||||||||||
Accumulated depreciation, amortization and impairment | |||||||||||||||||||||||
At December 31, 2018 | ($7,545 | ) | ($37,007 | ) | ($89,086 | ) | ($265,811 | ) | ($17,276 | ) | ($416,725 | ) | |||||||||||
Depreciation and amortization | (12,355 | ) | (6,989 | ) | (5,278 | ) | (4,378 | ) | (1,931 | ) | (30,931 | ) | |||||||||||
Transfers and disposals | 153 | 1,021 | 572 | 3,999 | 174 | 5,919 | |||||||||||||||||
Impairment | — | — | (28,774 | ) | — | — | (28,774 | ) | |||||||||||||||
At December 31, 2019 | ($19,747 | ) | ($42,975 | ) | ($122,566 | ) | ($266,190 | ) | ($19,033 | ) | ($470,511 | ) | |||||||||||
Depreciation and amortization | (4,199 | ) | (1,860 | ) | (687 | ) | (110 | ) | (464 | ) | (7,320 | ) | |||||||||||
Transfers and disposals | (56 | ) | 28 | (833 | ) | 894 | 251 | 284 | |||||||||||||||
At March 31, 2020 | ($24,002 | ) | ($44,807 | ) | ($124,086 | ) | ($265,406 | ) | ($19,246 | ) | ($477,547 | ) | |||||||||||
Carrying values | |||||||||||||||||||||||
At December 31, 2019 | $116,556 | $47,787 | $14,736 | $31,050 | $26,510 | $236,639 | |||||||||||||||||
At March 31, 2020 | $115,886 | $47,199 | $14,988 | $30,863 | $29,533 | $238,469 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | ||
First Majestic Silver Corp. 2020 First Quarter Report | Page 16 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
Land and Buildings | Machinery and Equipment | Other | Total | ||||||||||||
At December 31, 2018 | $— | $— | $— | $— | |||||||||||
Initial adoption | 2,624 | 1,036 | 22 | 3,682 | |||||||||||
Additions | 571 | 14,132 | — | 14,703 | |||||||||||
Remeasurements | 1,686 | 232 | — | 1,918 | |||||||||||
Depreciation and amortization | (674 | ) | (1,286 | ) | (7 | ) | (1,967 | ) | |||||||
Impairment | — | (6,302 | ) | — | (6,302 | ) | |||||||||
At December 31, 2019 | $4,207 | $7,812 | $15 | $12,034 | |||||||||||
Additions | 1,941 | 253 | — | 2,194 | |||||||||||
Remeasurements | 11 | — | — | 11 | |||||||||||
Depreciation and amortization | (213 | ) | (516 | ) | (2 | ) | (731 | ) | |||||||
At March 31, 2020 | $5,946 | $7,549 | $13 | $13,508 |
March 31, 2020 | December 31, 2019 | ||||||
Trade payables | $23,981 | $23,984 | |||||
Trade related accruals | 9,335 | 12,314 | |||||
Payroll and related benefits | 20,052 | 19,059 | |||||
Environmental duty | 359 | 1,483 | |||||
Other accrued liabilities | 1,250 | 2,283 | |||||
$54,977 | $59,123 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 17 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
Convertible Debentures (a) | Revolving Credit Facility (b) | Total | ||||||||||
Balance at December 31, 2018 | $130,807 | $18,705 | $149,512 | |||||||||
Finance costs | ||||||||||||
Interest expense | 2,975 | 1,498 | 4,473 | |||||||||
Accretion | 5,758 | 654 | 6,412 | |||||||||
Payments of finance costs | (2,933 | ) | (1,646 | ) | (4,579 | ) | ||||||
Balance at December 31, 2019 | $136,607 | $19,211 | $155,818 | |||||||||
Finance costs | ||||||||||||
Interest expense | 742 | 236 | 978 | |||||||||
Accretion | 1,498 | 164 | 1,662 | |||||||||
Repayments of principal | — | (10,000 | ) | (10,000 | ) | |||||||
Payments of finance costs | (1,468 | ) | (248 | ) | (1,716 | ) | ||||||
Balance at March 31, 2020 | $137,379 | $9,363 | $146,742 | |||||||||
Statements of Financial Position Presentation | ||||||||||||
Current portion of debt facilities | $1,043 | $132 | $1,175 | |||||||||
Debt facilities | 135,564 | 19,079 | 154,643 | |||||||||
Balance at December 31, 2019 | $136,607 | $19,211 | $155,818 | |||||||||
Current portion of debt facilities | $317 | $120 | $437 | |||||||||
Debt facilities | 137,062 | 9,243 | 146,305 | |||||||||
Balance at March 31, 2020 | $137,379 | $9,363 | $146,742 |
(a) | Convertible Debentures |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 18 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
(a) | Convertible Debentures (continued) |
(b) | Revolving Credit Facility |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 19 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
Finance Leases (a) | Operating Leases (b) | Equipment Financing (c) | Total | ||||||||||||
Balance at December 31, 2018 | $409 | $— | $5,438 | $5,847 | |||||||||||
Initial adoption of IFRS 16 | — | 3,682 | — | 3,682 | |||||||||||
Additions | — | 14,706 | — | 14,706 | |||||||||||
Remeasurements | — | 1,918 | — | 1,918 | |||||||||||
Finance costs | 18 | 789 | 335 | 1,142 | |||||||||||
Repayments of principal | (359 | ) | (2,395 | ) | (2,459 | ) | (5,213 | ) | |||||||
Payments of finance costs | (18 | ) | — | (379 | ) | (397 | ) | ||||||||
Foreign exchange loss | — | 251 | — | 251 | |||||||||||
Balance at December 31, 2019 | $50 | $18,951 | $2,935 | $21,936 | |||||||||||
Additions | — | 2,194 | — | 2,194 | |||||||||||
Remeasurements | — | 11 | — | 11 | |||||||||||
Finance costs | — | 365 | 38 | 403 | |||||||||||
Repayments of principal | (50 | ) | (1,114 | ) | (615 | ) | (1,779 | ) | |||||||
Payments of finance costs | — | — | (50 | ) | (50 | ) | |||||||||
Foreign exchange gain | — | (1,304 | ) | — | (1,304 | ) | |||||||||
Balance at March 31, 2020 | $— | $19,103 | $2,308 | $21,411 | |||||||||||
Statements of Financial Position Presentation | |||||||||||||||
Current portion of lease liabilities | $50 | $4,518 | $2,352 | $6,920 | |||||||||||
Lease liabilities | — | 14,433 | 583 | 15,016 | |||||||||||
Balance at December 31, 2019 | $50 | $18,951 | $2,935 | $21,936 | |||||||||||
Current portion of lease liabilities | $— | $4,390 | $1,939 | $6,329 | |||||||||||
Lease liabilities | — | 14,713 | 369 | 15,082 | |||||||||||
Balance at March 31, 2020 | $— | $19,103 | $2,308 | $21,411 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 20 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
(a) | Finance Leases |
(a) | Authorized and issued capital |
(b) | Stock options |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 21 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
(b) | Stock options (continued) |
Options Outstanding | Options Exercisable | ||||||||||||||||
Exercise prices (CAD$) | Number of Options | Weighted Average Exercise Price (CAD $/Share) | Weighted Average Remaining Life (Years) | Number of Options | Weighted Average Exercise Price (CAD $/Share) | Weighted Average Remaining Life (Years) | |||||||||||
4.69 - 5.00 | 789,916 | 4.79 | 0.76 | 789,916 | 4.79 | 0.76 | |||||||||||
5.01 - 10.00 | 4,239,490 | 8.48 | 8.14 | 1,560,509 | 8.52 | 7.24 | |||||||||||
10.01 - 15.00 | 2,672,102 | 11.40 | 3.69 | 2,034,602 | 11.07 | 1.87 | |||||||||||
15.01 - 20.00 | 916,928 | 15.94 | 8.48 | 100,000 | 16.06 | 1.40 | |||||||||||
20.01 - 126.01 | 144,895 | 53.85 | 1.43 | 144,895 | 53.85 | 1.43 | |||||||||||
8,763,331 | 10.57 | 6.04 | 4,629,922 | 10.59 | 3.47 |
Three Months Ended | Year Ended | ||||||||||
March 31, 2020 | December 31, 2019 | ||||||||||
Number of Options | Weighted Average Exercise Price (CAD $/Share) | Number of Options | Weighted Average Exercise Price (CAD $/Share) | ||||||||
Balance, beginning of the period | 7,583,439 | 10.57 | 9,266,098 | 10.76 | |||||||
Granted | 1,616,928 | 13.08 | 2,601,680 | 8.83 | |||||||
Exercised | (295,816 | ) | 8.10 | (2,918,518 | ) | 7.54 | |||||
Cancelled or expired | (141,220 | ) | 51.30 | (1,365,821 | ) | 14.31 | |||||
Balance, end of the period | 8,763,331 | 10.57 | 7,583,439 | 10.70 |
Three Months Ended | Year Ended | |||||
Assumption | Based on | March 31, 2020 | December 31, 2019 | |||
Risk-free interest rate (%) | Yield curves on Canadian government zero- coupon bonds with a remaining term equal to the stock options’ expected life | 1.38 | 2.01 | |||
Expected life (years) | Average of the expected vesting term and expiry term of the option | 5.84 | 5.80 | |||
Expected volatility (%) | Historical and implied volatility of the precious metals mining sector | 49.00 | 51.29 | |||
Expected dividend yield (%) | Annualized dividend rate as of the date of grant | — | — |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 22 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
(c) | Restricted Share Units |
Three Months Ended March 31, 2020 | Year Ended December 31, 2019 | ||||||||
Number of shares | Weighted Average Fair Value (CAD$) | Number of shares | Weighted Average Fair Value (CAD$) | ||||||
Outstanding, beginning of the period | 128,944 | 10.36 | — | — | |||||
Granted | 207,419 | 15.76 | 274,520 | 9.67 | |||||
Settled | (112,000 | ) | 10.32 | (145,576 | ) | 9.06 | |||
Forfeited | (1,695 | ) | 15.93 | — | — | ||||
Outstanding, end of the period | 222,668 | 15.37 | 128,944 | 10.36 |
(d) | Performance Share Units |
Three Months Ended March 31, 2020 | ||||
Number of shares | Weighted Average Fair Value (CAD$) | |||
Outstanding, beginning of the period | — | — | ||
Granted | 122,575 | 15.65 | ||
Outstanding, end of the period | 122,575 | 15.65 |
(e) | Share Repurchase Program |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 23 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
(a) | Fair value and categories of financial instruments | |
Financial instruments included in the consolidated statements of financial position are measured either at fair value or amortized cost. Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in an arm’s-length transaction between knowledgeable and willing parties. | ||
The Company uses various valuation techniques in determining the fair value of financial assets and liabilities based on the extent to which the fair value is observable. The following fair value hierarchy is used to categorize and disclose the Company’s financial assets and liabilities held at fair value for which a valuation technique is used: | ||
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. | ||
Level 2: All inputs which have a significant effect on the fair value are observable, either directly or indirectly, for substantially the full contractual term. | ||
Level 3: Inputs which have a significant effect on the fair value are not based on observable market data. |
Financial Instruments Measured at Fair Value | Valuation Method | |
Trade receivables (related to concentrate sales) | Receivables that are subject to provisional pricing and final price adjustment at the end of the quotational period are estimated based on observable forward price of metal per London Metal Exchange (Level 2) | |
Marketable securities | Based on quoted market prices for identical assets in an active market (Level 1) as at the date of statements of financial position | |
Silver futures derivatives | ||
Foreign currency derivatives | ||
Financial Instruments Measured at Amortized Cost | Valuation Method | |
Cash and cash equivalents | Approximated carrying value due to their short-term nature | |
Trade and other receivables | ||
Trade and other payables | ||
Debt facilities | Assumed to approximate carrying value as discount rate on | |
these instruments approximate the Company's credit risk. |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 24 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
March 31, 2020 | December 31, 2019 | ||||||||||||||||||||||
Fair value measurement | Fair value measurement | ||||||||||||||||||||||
Carrying value | Level 1 | Level 2 | Carrying value | Level 1 | Level 2 | ||||||||||||||||||
Financial assets | |||||||||||||||||||||||
Trade receivables | $131 | $— | $131 | $1,182 | $— | $1,182 | |||||||||||||||||
Marketable securities (Note 14) | 6,910 | 6,910 | — | 6,506 | 6,506 | — | |||||||||||||||||
Silver futures derivatives (Note 14) | 2,097 | 2,097 | — | — | — | — | |||||||||||||||||
Foreign currency derivatives (Note 14) | — | — | — | 982 | 982 | — | |||||||||||||||||
Financial liabilities | |||||||||||||||||||||||
Foreign currency derivatives (Note 19) | 21,672 | 21,672 | — | — | — | — |
(b) | Capital risk management | |
The Company’s objectives when managing capital are to maintain financial flexibility to continue as a going concern while optimizing growth and maximizing returns of investments from shareholders. | ||
The Company monitors its capital structure and, based on changes in operations and economic conditions, may adjust the structure by repurchasing shares, issuing new shares, issuing new debt or retiring existing debt. The Company prepares annual budget and quarterly forecasts to facilitate the management of its capital requirements. The annual budget is approved by the Company’s Board of Directors. |
March 31, 2020 | December 31, 2019 | ||||||
Equity | $646,040 | $662,321 | |||||
Debt facilities | 146,742 | 155,818 | |||||
Lease liabilities | 21,411 | 21,936 | |||||
Less: cash and cash equivalents | (145,187 | ) | (169,009 | ) | |||
$669,006 | $671,066 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 25 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
(c) | Financial risk management |
The Company thoroughly examines the various financial instruments and risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, currency risk, commodity price risk, and interest rate risk. Where material, these risks are reviewed and monitored by the Board of Directors. | |
Credit Risk | |
Credit risk is the risk of financial loss if a customer or counterparty fails to meet its contractual obligations. The Company’s credit risk relates primarily to trade receivables in the ordinary course of business, value added taxes receivable and other receivables. | |
The Company sells and receives payment upon delivery of its silver doré and by-products primarily through three international customers. All of the Company's customers have good ratings and payments of receivables are scheduled, routine and fully received within 60 days of submission; therefore, the balance of trade receivables owed to the Company in the ordinary course of business is not significant. | |
The carrying amount of financial assets recorded in the consolidated financial statements represents the Company’s maximum exposure to credit risk. With the exception to the above, the Company believes it is not exposed to significant credit risk. |
Carrying Amount | Contractual Cash Flows | Less than 1 year | 2 to 3 years | 4 to 5 years | After 5 years | |||||||||||||||||||
Trade and other payables | $54,977 | $54,977 | $54,977 | $— | $— | $— | ||||||||||||||||||
Debt facilities | 146,742 | 178,370 | 3,717 | 16,686 | 157,967 | — | ||||||||||||||||||
Lease liabilities | 21,411 | 16,273 | 5,409 | 6,382 | 4,482 | — | ||||||||||||||||||
Other liabilities | 3,898 | 4,405 | — | — | — | 4,405 | ||||||||||||||||||
$227,028 | $254,025 | $64,103 | $23,068 | $162,449 | $4,405 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 26 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
Currency Risk |
The Company is exposed to foreign exchange risk primarily relating to financial instruments that are denominated in Canadian dollars or Mexican pesos, which would impact the Company’s net earnings or loss. To manage foreign exchange risk, the Company may occasionally enter into short-term foreign currency derivatives, such as forwards and options, to hedge its cash flows. |
March 31, 2020 | |||||||||||||||||||||||||||||||
Cash and cash equivalents | Trade and other receivables | Value added taxes receivable | Other financial assets | Trade and other payables | Foreign currency derivative | Net assets (liabilities) exposure | Effect of +/- 10% change in currency | ||||||||||||||||||||||||
Canadian dollar | $9,791 | $76 | $— | $1,945 | ($2,496 | ) | $— | $9,316 | $932 | ||||||||||||||||||||||
Mexican peso | 6,652 | — | 18,339 | — | (29,005 | ) | 78,050 | 74,036 | 7,404 | ||||||||||||||||||||||
$16,443 | $76 | $18,339 | $1,945 | ($31,501 | ) | $78,050 | $83,352 | $8,335 |
Commodity Price Risk | |
The Company is exposed to commodity price risk on silver and gold, which have a direct and immediate impact on the value of its related financial instruments and net earnings. The Company’s revenues are directly dependent on commodity prices that have shown volatility and are beyond the Company’s control. The Company does not use derivative instruments to hedge its commodity price risk to silver. |
March 31, 2020 | |||||||||||
Effect of +/- 10% change in metal prices | |||||||||||
Silver | Gold | Total | |||||||||
Silver future derivatives | $1,393 | $— | $1,393 | ||||||||
Metals in doré inventory | 424 | 484 | 908 | ||||||||
$1,817 | $484 | $2,301 |
Interest Rate Risk |
The Company is exposed to interest rate risk on its short-term investments, debt facilities and lease liabilities. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. The Company’s interest bearing financial assets comprise of cash and cash equivalents which bear interest at a mixture of variable and fixed rates for pre-set periods of time. |
As at March 31, 2020, the Company’s exposure to interest rate risk on interest bearing liabilities is limited to its debt facilities and lease liabilities. Based on the Company’s interest rate exposure at March 31, 2020, a change of 25 basis points increase or decrease of market interest rate does not have a significant impact on net earnings or loss. |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 27 |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Interim Consolidated Financial Statements - Unaudited | (Tabular amounts are expressed in thousands of US dollars) |
Three Months Ended March 31, | |||||||||
Note | 2020 | 2019 | |||||||
Adjustments to reconcile net earnings to operating cash flows before movements in working capital: | |||||||||
Unrealized foreign exchange gain and other | ($4,799 | ) | ($674 | ) | |||||
Unrealized loss (gain) from marketable securities and silver futures derivatives | 1,079 | (617 | ) | ||||||
($3,720 | ) | ($1,291 | ) | ||||||
Net change in non-cash working capital items: | |||||||||
Decrease (increase) in trade and other receivables | $751 | ($2,330 | ) | ||||||
Decrease in value added taxes receivable | 819 | 9,803 | |||||||
(Increase) decrease in inventories | (1,700 | ) | 4,554 | ||||||
Increase in prepaid expenses and other | (4,036 | ) | (1,712 | ) | |||||
Decrease in income taxes payable | (482 | ) | (1,935 | ) | |||||
(Decrease) increase in trade and other payables | (6,115 | ) | 1,866 | ||||||
($10,763 | ) | $10,246 | |||||||
Non-cash investing and financing activities: | |||||||||
Transfer of share-based payments reserve upon settlement of RSUs | $879 | $— | |||||||
Transfer of share-based payments reserve upon exercise of options | $708 | $270 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 28 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |
(Tabular amounts are expressed in thousands of US dollars) |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 29 |
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS | |
(Tabular amounts are expressed in thousands of US dollars) |
The accompanying notes are an integral part of the condensed interim consolidated financial statements | |
First Majestic Silver Corp. 2020 First Quarter Report | Page 30 |
925 West Georgia Street, Suite 1800, Vancouver, B.C., Canada V6C 3L2 Phone: 604.688.3033 | Fax: 604.639.8873| Toll Free: 1.866.529.2807 | Email: info@firstmajestic.com www.firstmajestic.com |
TABLE OF CONTENTS |
OVERVIEW OF OPERATING RESULTS | ||
OVERVIEW OF FINANCIAL PERFORMANCE | ||
OTHER DISCLOSURES | ||
First Majestic Silver Corp. 2020 First Quarter Report | Page 2 |
COMPANY OVERVIEW |
First Majestic Silver Corp. 2020 First Quarter Report | Page 3 |
2020 FIRST QUARTER HIGHLIGHTS |
Key Performance Metrics | 2020-Q1 | 2019-Q4 | Change Q1 vs Q4 | 2019-Q1 | Change Q1 vs Q1 | |||||||||||
Operational | ||||||||||||||||
Ore Processed / Tonnes Milled | 599,142 | 626,482 | (4 | %) | 812,654 | (26 | %) | |||||||||
Silver Ounces Produced | 3,151,980 | 3,348,424 | (6 | %) | 3,331,388 | (5 | %) | |||||||||
Silver Equivalent Ounces Produced | 6,195,057 | 6,233,412 | (1 | %) | 6,273,677 | (1 | %) | |||||||||
Cash Costs per Ounce (1) | $5.16 | $3.73 | 38 | % | $6.34 | (19 | %) | |||||||||
All-in Sustaining Cost per Ounce (1) | $12.99 | $12.25 | 6 | % | $12.91 | 1 | % | |||||||||
Total Production Cost per Tonne (1) | $82.41 | $78.62 | 5 | % | $66.65 | 24 | % | |||||||||
Average Realized Silver Price per Ounce (1) | $17.36 | $17.46 | (1 | %) | $15.73 | 10 | % | |||||||||
Financial (in $millions) | ||||||||||||||||
Revenues | $86.1 | $96.5 | (11 | %) | $86.8 | (1 | %) | |||||||||
Mine Operating Earnings | $21.1 | $23.9 | (12 | %) | $10.3 | 106 | % | |||||||||
Net (Loss) Earnings | ($32.4 | ) | ($39.9 | ) | 19 | % | $2.9 | NM | ||||||||
Operating Cash Flows before Movements in Working Capital and Taxes | $23.3 | $32.9 | (29 | %) | $23.7 | (2 | %) | |||||||||
Cash and Cash Equivalents | $145.2 | $169.0 | (14 | %) | $91.5 | 59 | % | |||||||||
Working Capital (1) | $139.8 | $171.1 | (18 | %) | $130.9 | 7 | % | |||||||||
Shareholders | ||||||||||||||||
(Loss) Earnings per Share ("EPS") - Basic | ($0.15 | ) | ($0.19 | ) | 20 | % | $0.01 | NM | ||||||||
Adjusted EPS (1) | $0.04 | $0.00 | NM | ($0.01 | ) | NM | ||||||||||
Cash Flow per Share (1) | $0.11 | $0.16 | (30 | %) | $0.12 | (8 | %) |
(1) | The Company reports non-GAAP measures which include cash costs per ounce produced, all-in sustaining cost per ounce, total production cost per tonne, average realized silver price per ounce sold, working capital, adjusted EPS and cash flow per share. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 25 to 30 for a reconciliation of non-GAAP to GAAP measures. |
First Quarter Production Summary | San Dimas | Santa Elena | La Encantada | Consolidated | ||||||||
Ore Processed / Tonnes Milled | 200,109 | 177,834 | 221,200 | 599,142 | ||||||||
Silver Ounces Produced | 1,677,376 | 550,133 | 924,472 | 3,151,980 | ||||||||
Gold Ounces Produced | 21,308 | 10,842 | 52 | 32,202 | ||||||||
Silver Equivalent Ounces Produced | 3,672,169 | 1,593,400 | 929,487 | 6,195,057 | ||||||||
Cash Costs per Ounce* | $3.08 | $2.12 | $10.77 | $5.16 | ||||||||
All-in Sustaining Cost per Ounce* | $9.02 | $6.03 | $13.31 | $12.99 | ||||||||
Total Production Cost per Tonne | $126.33 | $81.04 | $43.82 | $82.41 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 4 |
• | established a crisis management committee to evaluate ongoing concerns, risks and challenges with respect to COVID-19 across its operations in March 2020; |
• | implemented preventative control measures to protect the safety and health of our employees, contractors and the communities in which we operate, including social distancing, remote working, cancellation of any non-essential visits to the mines, comprehensive sanitation measures for the workplace and company transportation and pre-screening for virus symptoms; |
• | construction of a temporary camp at Santa Elena which can accommodate up to 310 workers; |
• | identifying and removing all “vulnerable” employees and contractors as defined by the Mexican Ministry of Health, including anyone 60 years of age or older, anyone with pre-existing conditions or a reduced immune system, new mothers nursing, and those considered obese. The Company continues to support these employees by continuing base pay, medical services as needed and in many cases sanitary care support while they are not working; |
• | managing metal sales and supply chain disruption risks by maintaining constant communication with major suppliers and contractors and increasing supplies inventory levels at all units; |
• | supporting local communities by sponsoring health professionals, medical equipment, personal protective equipment, medicine and health supplements; |
• | preserving treasury by suspending a substantial amount of discretionary capital expenditures; |
• | proactively engaging with local communities and other stakeholders to reduce the risk of COVID-19 from entering our host communities; and |
• | implementation of programs within our areas of influence to increase awareness about the virus, promote good hygiene and responsible social interactions to prevent and/or contain the spread of the virus. |
• | Total production in the first quarter was 6,195,057 silver equivalent ounces, consisting of 3.2 million ounces of silver and 32,202 ounces of gold, in line with the previous quarter. |
• | Achieved consolidated average silver recoveries of 89%, the highest in the Company’s 17-year history. Santa Elena continued to deliver strong silver and gold recoveries of 94% and 96%, respectively, following the installation of the 3,000 tpd high-intensity grinding ("HIG") mill. |
• | Cash cost per ounce for the quarter was $5.16 per payable ounce of silver, compared to $3.73 per ounce in the previous quarter. The increase in consolidated cash cost was primarily attributed to: |
◦ | lower by-product credits as a result of approximately 700 ounces of gold that were shipped but not yet sold at quarter end, which would have contributed an additional $1.4 million or $0.44 per ounce in by-product credits, as well as a 3% decline in gold production; and |
◦ | higher energy costs at the Santa Elena mine compared to the fourth quarter as the Mexican government eliminated the diesel credit in 2020 compared to $0.8 million credit recognized in the previous quarter. With the conversion |
First Majestic Silver Corp. 2020 First Quarter Report | Page 5 |
• | AISC in the first quarter was $12.99 per ounce compared to $12.25 per ounce in the previous quarter. The marginal increase was primarily attributed to higher cash costs, partially offset by small decreases in general and administrative costs as well as sustaining capital expenditures amidst travel restrictions related to COVID-19. |
• | At the Ermitaño project near Santa Elena, development activities are now approximately 600 metres away from reaching the first access point of the high-grade Ermitaño Splay ore body. |
• | In March 2020, the Company sold its subsidiary, Minera La Rastra, S.A. de C.V., which holds the Plomosas Silver Project, to GR Silver Mining Ltd. ("GR Silver") for total consideration of $1.7 million, consisting of 17,097,500 common shares of GR Silver, CAD$0.1 million in cash and a 2% net smelter return royalty with half of the NSR subject to a buy-back option for $1.0 million. |
• | In the first quarter, the Company generated revenues of $86.1 million, compared to $86.8 million in the first quarter of 2019. Despite the recent temporary suspension of three operating mines, total production in the quarter was consistent with the first quarter of 2019. However, due to the volatile decline in silver and gold prices near the end of the quarter, the Company decided to ship but not to sell approximately 292,000 ounces of silver and 700 ounces of gold at quarter end and retained those ounces in its finished goods inventory, which would have contributed an additional $5.3 million to revenues based on spot metal prices at the end of the quarter. |
• | The Company realized mine operating earnings of $21.1 million compared to $10.3 million in the first quarter of 2019. The increase in mine operating earnings in the quarter was attributed to a 10% increase in average realized silver price and lower cost of sales and depletion, depreciation and amortization due to the temporary suspension of lower margin mines in previous quarters. |
• | Net loss for the quarter was $32.4 million (EPS of $(0.15)) compared to net earnings of $2.9 million (EPS of $0.01) in the first quarter of 2019. Net loss for the quarter was attributed to an accounting loss of $10.1 million on the divesting of the Plomosas exploration project, to reduce annual holding costs, and an unrealized loss of $22.7 million on mark-to-market adjustment of its foreign currency derivatives as a result of a 25% depreciation of the Mexican pesos against the U.S. dollar during the quarter. |
• | Adjusted net earnings for the quarter, normalized for non-cash or unusual items such as the unrealized loss on mark-to-market adjustment of foreign currency derivatives, loss on sale of exploration project, share-based payments and deferred income taxes for the quarter ended March 31, 2020, was $8.2 million (Adjusted EPS of $0.04) compared to a net loss of $2.9 million (Adjusted EPS of ($(0.01)) in the first quarter of 2019. |
• | Cash flow from operations before movements in working capital and income taxes in the quarter was $23.3 million ($0.11 per share) compared to $23.7 million ($0.12 per share) in the first quarter of 2019. |
• | Cash and cash equivalents at March 31, 2020 were $145.2 million while working capital was $139.8 million. |
First Majestic Silver Corp. 2020 First Quarter Report | Page 6 |
OVERVIEW OF OPERATING RESULTS |
2020 | 2019 | 2018 | |||||||||||||||||||||||||
PRODUCTION HIGHLIGHTS | Q1 | Q4(5) | Q3(3)(4) | Q2 | Q1 | Q4 | Q3(2) | Q2(1) | |||||||||||||||||||
Ore processed/tonnes milled | |||||||||||||||||||||||||||
San Dimas | 200,109 | 182,265 | 173,679 | 172,368 | 163,264 | 172,641 | 176,884 | 85,765 | |||||||||||||||||||
Santa Elena | 177,834 | 196,640 | 229,094 | 229,761 | 219,941 | 221,945 | 225,873 | 228,054 | |||||||||||||||||||
La Encantada | 221,200 | 221,049 | 191,926 | 207,421 | 269,611 | 206,812 | 196,030 | 237,862 | |||||||||||||||||||
San Martin | — | — | — | 39,213 | 62,148 | 66,924 | 67,926 | 74,431 | |||||||||||||||||||
La Parrilla | — | — | 33,439 | 61,544 | 72,551 | 125,751 | 117,130 | 123,642 | |||||||||||||||||||
Del Toro | — | 26,528 | 27,829 | 26,587 | 25,138 | 56,200 | 65,323 | 65,879 | |||||||||||||||||||
La Guitarra | — | — | — | — | — | — | 14,891 | 35,715 | |||||||||||||||||||
Consolidated | 599,142 | 626,482 | 655,967 | 736,896 | 812,654 | 850,272 | 864,056 | 851,349 | |||||||||||||||||||
Silver equivalent ounces produced | |||||||||||||||||||||||||||
San Dimas | 3,672,169 | 3,516,117 | 3,502,102 | 3,641,139 | 3,172,270 | 3,127,871 | 3,225,352 | 1,698,382 | |||||||||||||||||||
Santa Elena | 1,593,400 | 1,592,397 | 1,859,170 | 1,461,345 | 1,403,364 | 1,587,396 | 1,475,635 | 1,407,880 | |||||||||||||||||||
La Encantada | 929,487 | 991,856 | 891,205 | 492,957 | 723,699 | 451,244 | 379,773 | 327,458 | |||||||||||||||||||
San Martin | — | — | — | 271,450 | 421,091 | 511,911 | 557,746 | 524,843 | |||||||||||||||||||
La Parrilla | — | — | 258,683 | 420,712 | 441,095 | 563,703 | 537,986 | 605,826 | |||||||||||||||||||
Del Toro | — | 133,042 | 125,557 | 122,879 | 112,158 | 243,637 | 427,218 | 323,714 | |||||||||||||||||||
La Guitarra | — | — | — | — | — | — | 136,605 | 249,214 | |||||||||||||||||||
Consolidated | 6,195,057 | 6,233,412 | 6,636,716 | 6,410,483 | 6,273,677 | 6,485,761 | 6,740,315 | 5,137,318 | |||||||||||||||||||
Silver ounces produced | |||||||||||||||||||||||||||
San Dimas | 1,677,376 | 1,658,721 | 1,639,481 | 1,603,016 | 1,404,454 | 1,367,028 | 1,445,918 | 808,923 | |||||||||||||||||||
Santa Elena | 550,133 | 619,321 | 632,216 | 596,872 | 587,195 | 567,754 | 598,693 | 535,015 | |||||||||||||||||||
La Encantada | 924,472 | 987,630 | 885,627 | 489,194 | 720,959 | 449,632 | 378,983 | 325,603 | |||||||||||||||||||
San Martin | — | — | — | 224,056 | 331,539 | 404,523 | 438,061 | 419,815 | |||||||||||||||||||
La Parrilla | — | — | 135,420 | 202,698 | 219,485 | 312,144 | 330,047 | 360,862 | |||||||||||||||||||
Del Toro | — | 82,752 | 74,997 | 77,729 | 67,757 | 149,734 | 231,350 | 167,591 | |||||||||||||||||||
La Guitarra | — | — | — | — | — | — | 82,292 | 138,454 | |||||||||||||||||||
Consolidated | 3,151,980 | 3,348,424 | 3,367,740 | 3,193,566 | 3,331,388 | 3,250,816 | 3,505,344 | 2,756,263 | |||||||||||||||||||
Cash cost per ounce | |||||||||||||||||||||||||||
San Dimas | $3.08 | $0.74 | $2.28 | $1.64 | $0.93 | $0.58 | ($0.40 | ) | $0.24 | ||||||||||||||||||
Santa Elena | $2.12 | ($1.40 | ) | ($7.24 | ) | $4.28 | $2.81 | ($1.06 | ) | $5.77 | $1.39 | ||||||||||||||||
La Encantada | $10.77 | $10.12 | $10.72 | $16.57 | $12.60 | $15.60 | $21.15 | $23.05 | |||||||||||||||||||
San Martin | $— | $— | $— | $16.52 | $11.35 | $10.40 | $9.78 | $9.68 | |||||||||||||||||||
La Parrilla | $— | $— | $16.27 | $14.13 | $16.58 | $13.80 | $16.29 | $10.42 | |||||||||||||||||||
Del Toro | $— | $28.62 | $29.83 | $27.29 | $27.20 | $27.69 | $13.07 | $18.01 | |||||||||||||||||||
La Guitarra | $— | $— | $— | $— | $— | $— | $6.99 | $12.89 | |||||||||||||||||||
Consolidated | $5.16 | $3.73 | $3.83 | $6.84 | $6.34 | $6.06 | $6.85 | $7.59 | |||||||||||||||||||
All-in sustaining cost per ounce | |||||||||||||||||||||||||||
San Dimas | $9.02 | $7.41 | $7.30 | $8.49 | $5.65 | $5.35 | $6.74 | $5.41 | |||||||||||||||||||
Santa Elena | $6.03 | $3.66 | ($5.17 | ) | $7.73 | $6.37 | $2.18 | $9.03 | $6.60 | ||||||||||||||||||
La Encantada | $13.31 | $12.67 | $12.67 | $18.87 | $13.72 | $18.70 | $27.25 | $30.81 | |||||||||||||||||||
San Martin | $— | $— | $— | $21.15 | $15.67 | $13.60 | $13.37 | $12.49 | |||||||||||||||||||
La Parrilla | $— | $— | $28.81 | $21.61 | $25.62 | $21.18 | $23.34 | $16.39 | |||||||||||||||||||
Del Toro | $— | $38.84 | $39.77 | $36.33 | $35.89 | $37.83 | $24.48 | $32.08 | |||||||||||||||||||
La Guitarra | $— | $— | $— | $— | $— | $— | $12.30 | $18.11 | |||||||||||||||||||
Consolidated | $12.99 | $12.25 | $10.76 | $14.76 | $12.91 | $12.83 | $15.12 | $16.43 | |||||||||||||||||||
Production cost per tonne | |||||||||||||||||||||||||||
San Dimas | $126.33 | $127.19 | $135.71 | $142.42 | $122.17 | $113.66 | $105.91 | $148.91 | |||||||||||||||||||
Santa Elena | $81.04 | $68.77 | $57.78 | $58.88 | $56.53 | $54.55 | $63.15 | $55.97 | |||||||||||||||||||
La Encantada | $43.82 | $43.92 | $47.86 | $38.29 | $32.71 | $33.20 | $40.20 | $31.09 | |||||||||||||||||||
San Martin | $— | $— | $— | $109.51 | $80.39 | $83.27 | $88.15 | $72.77 | |||||||||||||||||||
La Parrilla | $— | $— | $89.40 | $75.96 | $76.78 | $52.47 | $58.18 | $49.10 | |||||||||||||||||||
Del Toro | $— | $106.99 | $98.98 | $91.89 | $95.06 | $84.67 | $73.50 | $69.23 | |||||||||||||||||||
La Guitarra | $— | $— | $— | $— | $— | $— | $68.47 | $83.68 | |||||||||||||||||||
Consolidated | $82.41 | $78.62 | $78.87 | $77.93 | $66.65 | $65.31 | $68.87 | $61.04 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 7 |
CONSOLIDATED | 2020-Q1 | 2019-Q4 | 2019-Q1 | Change Q1 vs Q4 | Change '20 vs '19 | |||||||||||
Ore processed/tonnes milled | 599,142 | 626,482 | 812,654 | (4 | %) | (26 | %) | |||||||||
Average silver grade (g/t) | 185 | 189 | 153 | (2 | %) | 21 | % | |||||||||
Average gold grade (g/t) | 1.74 | 1.71 | 1.26 | 2 | % | 38 | % | |||||||||
Silver recovery (%) | 89 | % | 88 | % | 83 | % | 1 | % | 7 | % | ||||||
Gold recovery (%) | 96 | % | 97 | % | 96 | % | (1 | %) | 0 | % | ||||||
Production | ||||||||||||||||
Silver ounces produced | 3,151,980 | 3,348,424 | 3,331,388 | (6 | %) | (5 | %) | |||||||||
Gold ounces produced | 32,202 | 33,176 | 32,037 | (3 | %) | 1 | % | |||||||||
Pounds of lead produced | — | 914,370 | 2,661,088 | (100 | %) | (100 | %) | |||||||||
Pounds of zinc produced | — | — | 1,265,438 | 0 | % | (100 | %) | |||||||||
Total production - ounces silver equivalent | 6,195,057 | 6,233,412 | 6,273,677 | (1 | %) | (1 | %) | |||||||||
Cost | ||||||||||||||||
Cash cost per ounce | $5.16 | $3.73 | $6.34 | 38 | % | (19 | %) | |||||||||
All-In sustaining costs per ounce | $12.99 | $12.25 | $12.91 | 6 | % | 1 | % | |||||||||
Total production cost per tonne | $82.41 | $78.62 | $66.65 | 5 | % | 24 | % | |||||||||
Underground development (m) | 10,888 | 11,775 | 15,947 | (8 | %) | (32 | %) | |||||||||
Diamond drilling (m) | 40,458 | 57,830 | 37,716 | (30 | %) | 7 | % |
• | lower by-product credits as a result of approximately 700 ounces of gold that were shipped but not yet sold at quarter end, which would have contributed an additional $1.4 million or $0.44 per ounce in by-product credits, as well as a 3% decline in gold production; and |
First Majestic Silver Corp. 2020 First Quarter Report | Page 8 |
• | higher energy costs at the Santa Elena mine compared to the fourth quarter as the Mexican government eliminated the diesel credit in 2020 compared to $0.8 million credit recognized in the previous quarter. With the conversion from diesel to Liquefied Natural Gas power generation later in the year, Santa Elena is expected to significantly reduce energy costs. |
First Majestic Silver Corp. 2020 First Quarter Report | Page 9 |
San Dimas | 2020-Q1 | 2019-Q4 | 2019-Q1 | Change Q1 vs Q4 | Change '20 vs '19 | ||||||||||
Total ore processed/tonnes milled | 200,109 | 182,265 | 163,264 | 10 | % | 23 | % | ||||||||
Average silver grade (g/t) | 280 | 305 | 287 | (8 | %) | (2 | %) | ||||||||
Average gold grade (g/t) | 3.44 | 3.83 | 4.18 | (10 | %) | (18 | %) | ||||||||
Silver recovery (%) | 93 | % | 93 | % | 93 | % | 0 | % | 0 | % | |||||
Gold recovery (%) | 96 | % | 97 | % | 96 | % | (1 | %) | 0 | % | |||||
Production | |||||||||||||||
Silver ounces produced | 1,677,376 | 1,658,721 | 1,404,454 | 1 | % | 19 | % | ||||||||
Gold ounces produced | 21,308 | 21,713 | 21,095 | (2 | %) | 1 | % | ||||||||
Total production - ounces silver equivalent | 3,672,169 | 3,516,117 | 3,172,270 | 4 | % | 16 | % | ||||||||
Cost | |||||||||||||||
Cash cost per ounce | $3.08 | $0.74 | $0.93 | 316 | % | 231 | % | ||||||||
All-In sustaining costs per ounce | $9.02 | $7.41 | $5.65 | 22 | % | 60 | % | ||||||||
Total production cost per tonne | $126.33 | $127.19 | $122.17 | (1 | %) | 3 | % | ||||||||
Underground development (m) | 7,100 | 6,763 | 5,669 | 5 | % | 25 | % | ||||||||
Diamond drilling (m) | 22,087 | 23,905 | 16,191 | (8 | %) | 36 | % |
First Majestic Silver Corp. 2020 First Quarter Report | Page 10 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 11 |
SANTA ELENA | 2020-Q1 | 2019-Q4 | 2019-Q1 | Change Q1vs Q4 | Change '20 vs '19 | ||||||||||
Total ore processed/tonnes milled | 177,834 | 196,640 | 219,941 | (10 | %) | (19 | %) | ||||||||
Underground tonnes | |||||||||||||||
Tonnes milled | 125,529 | 129,833 | 136,984 | (3 | %) | (8 | %) | ||||||||
Average silver grade (g/t) | 130 | 142 | 121 | (8 | %) | 7 | % | ||||||||
Average gold grade (g/t) | 2.48 | 2.52 | 1.87 | (2 | %) | 33 | % | ||||||||
Heap leach tonnes | |||||||||||||||
Tonnes milled | 52,305 | 66,807 | 82,957 | (22 | %) | (37 | %) | ||||||||
Average silver grade (g/t) | 36 | 32 | 47 | 13 | % | (23 | %) | ||||||||
Average gold grade (g/t) | 0.73 | 0.61 | 0.78 | 20 | % | (6 | %) | ||||||||
Silver recovery (%) | 94 | % | 94 | % | 89 | % | 0 | % | 6 | % | |||||
Gold recovery (%) | 96 | % | 96 | % | 95 | % | 0 | % | 1 | % | |||||
Production | |||||||||||||||
Silver ounces produced | 550,133 | 619,321 | 587,195 | (11 | %) | (6 | %) | ||||||||
Gold ounces produced | 10,842 | 11,391 | 9,735 | (5 | %) | 11 | % | ||||||||
Total production - ounces silver equivalent | 1,593,400 | 1,592,397 | 1,403,364 | 0 | % | 14 | % | ||||||||
Cost | |||||||||||||||
Cash cost per ounce | $2.12 | ($1.40 | ) | $2.81 | 251 | % | (25 | %) | |||||||
All-In sustaining costs per ounce | $6.03 | $3.66 | $6.37 | 65 | % | (5 | %) | ||||||||
Total production cost per tonne | $81.04 | $68.77 | $56.53 | 18 | % | 43 | % | ||||||||
Underground development (m) | 1,940 | 1,951 | 2,277 | (1 | %) | (15 | %) | ||||||||
Diamond drilling (m) | 9,474 | 11,729 | 11,291 | (19 | %) | (16 | %) |
First Majestic Silver Corp. 2020 First Quarter Report | Page 12 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 13 |
LA ENCANTADA | 2020-Q1 | 2019-Q4 | 2019-Q1 | Change Q1vs Q4 | Change '20 vs '19 | ||||||||||
Ore processed/tonnes milled | 221,200 | 221,049 | 269,611 | 0 | % | (18 | %) | ||||||||
Average silver grade (g/t) | 165 | 176 | 126 | (6 | %) | 31 | % | ||||||||
Silver recovery (%) | 79 | % | 79 | % | 66 | % | 0 | % | 20 | % | |||||
Production | |||||||||||||||
Silver ounces produced | 924,472 | 987,630 | 720,959 | (6 | %) | 28 | % | ||||||||
Gold ounces produced | 52 | 49 | 33 | 6 | % | 58 | % | ||||||||
Total production - ounces silver equivalent | 929,487 | 991,856 | 723,699 | (6 | %) | 28 | % | ||||||||
Cost | |||||||||||||||
Cash cost per ounce | $10.77 | $10.12 | $12.60 | 6 | % | (15 | %) | ||||||||
All-In sustaining costs per ounce | $13.31 | $12.67 | $13.72 | 5 | % | (3 | %) | ||||||||
Total production cost per tonne | $43.82 | $43.92 | $32.71 | 0 | % | 34 | % | ||||||||
Underground development (m) | 1,024 | 1,293 | 1,426 | (21 | %) | (28 | %) | ||||||||
Diamond drilling (m) | 4,565 | 4,114 | 2,279 | 11 | % | 100 | % |
First Majestic Silver Corp. 2020 First Quarter Report | Page 14 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 15 |
OVERVIEW OF FINANCIAL PERFORMANCE |
First Quarter | First Quarter | |||||||||||
2020 | 2019 | Variance % | ||||||||||
Revenues | $86,065 | $86,810 | (1 | )% | (1) | |||||||
Mine operating costs | ||||||||||||
Cost of sales | 50,781 | 59,347 | (14 | )% | (2) | |||||||
Depletion, depreciation and amortization | 14,169 | 17,210 | (18 | )% | (3) | |||||||
64,950 | 76,557 | (15 | )% | |||||||||
Mine operating earnings | 21,115 | 10,253 | 106 | % | (4) | |||||||
General and administrative expenses | 6,284 | 6,500 | (3 | )% | ||||||||
Share-based payments | 2,378 | 2,075 | 15 | % | ||||||||
Mine holding costs | 4,779 | 808 | NM | (5) | ||||||||
Loss on sale of exploration project | 10,106 | — | 100 | % | (6) | |||||||
Foreign exchange gain | (2,826 | ) | (2,369 | ) | 19 | % | ||||||
Operating earnings | 394 | 3,239 | 88 | % | ||||||||
Unrealized loss on foreign currency derivatives | (22,654 | ) | — | (100 | )% | (7) | ||||||
Investment and other (loss) income | (540 | ) | 2,018 | (127 | )% | (8) | ||||||
Finance costs | (3,856 | ) | (3,705 | ) | 4 | % | ||||||
(Loss) earnings before income taxes | (26,656 | ) | 1,552 | NM | ||||||||
Current income tax expense | 1,214 | 3,464 | (65 | )% | ||||||||
Deferred income tax expense (recovery) | 4,566 | (4,792 | ) | (195 | )% | |||||||
Income tax expense (recovery) | 5,780 | (1,328 | ) | NM | (9) | |||||||
Net (loss) earnings for the period | ($32,436 | ) | $2,880 | NM | (10) | |||||||
(Loss) earnings per share (basic and diluted) | ($0.15 | ) | $0.01 | NM | (10) |
1. | Revenues in the quarter was consistent with the same quarter of the previous year primarily attributed to: |
• | an 11% decrease in payable equivalent silver ounces sold at market prices compared to the same quarter of the prior year, resulting in a $8.8 million decrease in revenues; |
• | a 10% increase in average realized price per ounce of silver sold of $17.36 compared to $15.73 in the first quarter of 2019, resulting in a $9.0 million increase in revenues; and |
First Majestic Silver Corp. 2020 First Quarter Report | Page 16 |
• | due to the volatile decline in gold and silver prices near the end of the quarter, the Company decided to ship but not to sell approximately 292,000 ounces of silver and 700 ounces of gold in its finished goods inventory, which would have contributed an additional $5.3 million to revenues based on spot metal prices at the end of the quarter. |
2. | Cost of sales in the quarter decreased 14% or $8.6 million compared to the same quarter of the previous year as a result of the following factors: |
• | a $12.6 million decrease in cost of sales attributed to planned temporary suspension of operating activities at the Del Toro, La Parrilla and San Martin mines; |
• | a $3.0 million or 13% increase in cost of sales at the San Dimas mine, primarily due to a 23% increase in tonnes milled compared to the first quarter of 2019 as the Company has been gradually ramping up throughput at the mine over the past year; and |
• | a $1.2 million or 9% increase in cost of sales at the Santa Elena mine, primarily due to higher energy and labour costs compared to the same quarter of the prior year. |
3. | Depletion, depreciation and amortization in the quarter decreased $3.0 million or 18% compared to the same quarter of the previous year primarily as a result of: |
• | a $4.7 million decrease related to planned temporary suspension of operating activities at the Del Toro, La Parrilla and San Martin mines; and |
• | a $1.3 million decrease at the La Encantada mine due to an impairment charge on non-current assets taken in the fourth quarter of 2019; |
• | a $2.5 million increase at the San Dimas mine as a result of increase in tonnes milled compared to the first quarter of 2019. |
4. | Mine operating earnings during the quarter increased by $10.9 million to $21.1 million compared to $10.3 million in the first quarter of 2019. The increase was primarily attributable to decreases in cost of sales and depletion, depreciation and amortization due to the planned temporary suspension of operating activities at mines with lower operating margins. |
5. | Mine holding costs increased by $4.0 million compared to the same quarter of 2019, primarily due to the planned temporary suspension of operating activities at the Del Toro, La Parrilla and San Martin mines over the past year. |
6. | Loss on sale of exploration project of $10.1 million in the first quarter of 2020 relates to the sale of the Plomosas project to GR Silver Mining Ltd. in March 2020. |
7. | Unrealized loss on foreign currency derivatives of $22.7 million in the first quarter of 2020 relates to mark-to-market adjustments on the Company's foreign currency derivatives. The Company utilizes foreign currency options and swaps to hedge cash flows relating to mining operations, exploration and evaluation activities and corporate expenses in Mexican pesos within the next 12 months. As at March 31, 2020, these derivatives allow the Company to purchase Mexican pesos with notional value of $78.1 million at USD:MXN rates ranging from 19.50 to 21.00 and with expiry dates between April to December 2020. Due to the recent volatility in the USD:MXN exchange rate where the Mexican pesos depreciated 25% against the U.S. dollar during the quarter, these foreign currency derivatives resulted in an unrealized loss at the end of the quarter. |
8. | Investment and other income for the quarter decreased $2.6 million compared to the same quarter of 2019 primarily due to an unrealized loss on investment in marketable securities of $1.4 million in the current quarter compared to a gain of $1.2 million in the same quarter of the prior year. |
9. | During the quarter, the Company recorded an income tax expense of $5.8 million compared to an income tax recovery of $1.3 million in the first quarter of 2019. The increase in income tax expense was attributed primarily to a decrease in value of tax loss carryforwards and the foreign exchange impact on the Company's Mexican Peso denominated future income tax liability balances. |
10. | As a result of the foregoing, net loss for the quarter was $32.4 million (EPS of ($0.15)) compared to net gain of $2.9 million (EPS of $0.01) in the same quarter of the prior year. |
First Majestic Silver Corp. 2020 First Quarter Report | Page 17 |
SUMMARY OF QUARTERLY RESULTS |
2020 | 2019 | 2018 | |||||||||||||||||||||||||
Selected Financial Information | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |||||||||||||||||||
Revenue | $86,065 | $96,476 | $96,989 | $83,669 | $86,810 | $74,128 | $88,521 | $79,687 | |||||||||||||||||||
Cost of sales | $50,781 | $55,033 | $54,994 | $62,772 | $59,347 | $56,230 | $63,966 | $59,285 | |||||||||||||||||||
Depletion, depreciation and amortization | $14,169 | $17,502 | $14,181 | $16,691 | $17,210 | $26,925 | $24,701 | $22,706 | |||||||||||||||||||
Mine operating earnings (loss) | $21,115 | $23,941 | $27,814 | $4,206 | $10,253 | ($9,027 | ) | ($146 | ) | ($2,304 | ) | ||||||||||||||||
Net (loss) earnings after tax | ($32,436 | ) | ($39,946 | ) | $8,559 | ($11,967 | ) | $2,880 | ($164,443 | ) | $5,904 | ($40,033 | ) | ||||||||||||||
(Loss) Earnings per share - basic | ($0.15 | ) | ($0.19 | ) | $0.04 | ($0.06 | ) | $0.01 | ($0.85 | ) | $0.03 | ($0.22 | ) | ||||||||||||||
(Loss) Earnings per share - diluted | ($0.15 | ) | ($0.19 | ) | $0.04 | ($0.06 | ) | $0.01 | ($0.85 | ) | $0.03 | ($0.22 | ) |
LIQUIDITY, CAPITAL RESOURCES AND CONTRACTUAL OBLIGATIONS |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Cash flow | ||||||||
Cash generated by operating activities | 12,048 | 32,715 | ||||||
Cash used in investing activities | (33,306 | ) | (29,007 | ) | ||||
Cash generated by financing activities | 204 | 30,305 | ||||||
(Decrease) increase in cash and cash equivalents | (21,054 | ) | 34,013 | |||||
Effect of exchange rate on cash and cash equivalents held in foreign currencies | (2,768 | ) | 431 | |||||
Cash and cash equivalents, beginning of the period | 169,009 | 57,013 | ||||||
Cash and cash equivalents, end of period | $145,187 | $91,457 |
• | Cash provided from operating activities of $12.0 million, primarily due to: |
First Majestic Silver Corp. 2020 First Quarter Report | Page 18 |
• | $23.3 million in operating cash flows from operating activities before movements in working capital and taxes; net of: |
• | $10.8 million in net change in non-cash working capital items during the period. |
• | Cash used in investing activities of $33.3 million, primarily related to: |
• | $19.8 million spent on mine development and exploration activities; |
• | $12.0 million spent on purchase of property, plant and equipment; and |
• | $1.5 million spent on deposits on non-current assets. |
• | Cash provided from financing activities of $0.2 million, primarily consists of the following: |
Contractual Cash Flows | Less than 1 year | 2 to 3 years | 4 to 5 years | After 5 years | |||||||||||||||
Trade and other payables | $54,977 | $54,977 | $— | $— | $— | ||||||||||||||
Debt facilities | 178,370 | 3,717 | 16,686 | 157,967 | — | ||||||||||||||
Lease liabilities | 16,273 | 5,409 | 6,382 | 4,482 | — | ||||||||||||||
Other liabilities | 4,405 | — | — | — | 4,405 | ||||||||||||||
Purchase obligations and commitments | 37,466 | 37,466 | — | — | — | ||||||||||||||
$291,491 | $101,569 | $23,068 | $162,449 | $4,405 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 19 |
MANAGEMENT OF RISKS AND UNCERTAINTIES |
The Company thoroughly examines the various financial instruments and risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, currency risk, commodity price risk, and interest rate risk. Where material, these risks are reviewed and monitored by the Board of Directors. |
Credit Risk |
Credit risk is the risk of financial loss if a customer or counterparty fails to meet its contractual obligations. The Company’s credit risk relates primarily to trade receivables in the ordinary course of business, value added taxes receivable and other receivables. |
The Company sells and receives payment upon delivery of its silver doré and by-products primarily through three international customers. All of the Company's customers have good ratings and payments of receivables are scheduled, routine and fully received within 60 days of submission; therefore, the balance of trade receivables owed to the Company in the ordinary course of business is not significant. |
The carrying amount of financial assets recorded in the consolidated financial statements represents the Company’s maximum exposure to credit risk. With the exception to the above, the Company believes it is not exposed to significant credit risk. |
Liquidity Risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they arise. The Company manages liquidity risk by monitoring actual and projected cash flows and matching the maturity profile of financial assets and liabilities. Cash flow forecasting is performed regularly to ensure that there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and our holdings of cash and cash equivalents. |
The Company believes it has sufficient cash on hand, combined with cash flows from operations, to meet operating requirements as they arise for at least the next 12 months. If the Company needs additional liquidity to meet obligations, the Company may consider drawing on its debt facility, securing additional debt financing and/or equity financing. |
Currency Risk |
The Company is exposed to foreign exchange risk primarily relating to financial instruments that are denominated in Canadian dollars or Mexican pesos, which would impact the Company’s net earnings or loss. To manage foreign exchange risk, the Company may occasionally enter into short-term foreign currency derivatives, such as forwards and options, to hedge its cash flows. |
March 31, 2020 | |||||||||||||||||||||||||||||||
Cash and cash equivalents | Trade and other receivables | Value added taxes receivable | Other financial assets | Trade and other payables | Foreign exchange derivative | Net assets (liabilities) exposure | Effect of +/- 10% change in currency | ||||||||||||||||||||||||
Canadian dollar | $9,791 | $76 | $— | $1,945 | ($2,496 | ) | $— | $9,316 | $932 | ||||||||||||||||||||||
Mexican peso | 6,652 | — | 18,339 | — | (29,005 | ) | 78,050 | 74,036 | 7,404 | ||||||||||||||||||||||
$16,443 | $76 | $18,339 | $1,945 | ($31,501 | ) | $78,050 | $83,352 | $8,335 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 20 |
The Company is exposed to commodity price risk on silver and gold, which have a direct and immediate impact on the value of its related financial instruments and net earnings. The Company’s revenues are directly dependent on commodity prices that have shown volatility and are beyond the Company’s control. The Company does not use derivative instruments to hedge its commodity price risk to silver. |
March 31, 2020 | |||||||||||
Effect of +/- 10% change in metal prices | |||||||||||
Silver | Gold | Total | |||||||||
Metals subject to provisional price adjustments | $1,393 | $— | $1,393 | ||||||||
Metals in doré and concentrates inventory | 424 | 484 | 908 | ||||||||
$1,817 | $484 | $2,301 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 21 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 22 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 23 |
OTHER FINANCIAL INFORMATION |
First Majestic Silver Corp. 2020 First Quarter Report | Page 24 |
ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES |
NON-GAAP MEASURES |
First Majestic Silver Corp. 2020 First Quarter Report | Page 25 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 26 |
(expressed in thousands of U.S. dollars, | Three Months Ended March 31, 2020 | |||||||||||
except ounce and per ounce amounts) | San Dimas | Santa Elena | La Encantada | Consolidated | ||||||||
Mining cost | $11,298 | $4,737 | $2,625 | $18,660 | ||||||||
Milling cost | 5,493 | 6,988 | 4,382 | 16,862 | ||||||||
Indirect cost | 8,489 | 2,686 | 2,685 | 13,861 | ||||||||
Total production cost (A) | $25,279 | $14,411 | $9,692 | $49,382 | ||||||||
Add: transportation and other selling cost | 296 | 72 | 89 | 522 | ||||||||
Add: smelting and refining cost | 395 | 134 | 184 | 725 | ||||||||
Add: environmental duty and royalties cost | 257 | 109 | 33 | 397 | ||||||||
Total cash cost before by-product credits (B) | $26,227 | $14,726 | $9,998 | $51,026 | ||||||||
Deduct by-product credits attributed to: | ||||||||||||
Gold by-product credits | (21,063 | ) | (13,560 | ) | (79 | ) | (34,702 | ) | ||||
Lead by-product credits | — | — | — | (74 | ) | |||||||
Total by-product credits | ($21,063 | ) | ($13,560 | ) | ($79 | ) | ($34,776 | ) | ||||
Total cash cost (C) | $5,164 | $1,166 | $9,919 | $16,250 | ||||||||
Workers’ participation | 1,682 | 55 | 74 | 1,998 | ||||||||
General and administrative expenses | — | — | — | 5,828 | ||||||||
Share-based payments | — | — | — | 2,378 | ||||||||
Accretion of decommissioning liabilities | 149 | 78 | 126 | 623 | ||||||||
Sustaining capital expenditures | 8,000 | 1,964 | 1,498 | 12,659 | ||||||||
Operating lease payments | 127 | 51 | 642 | 1,143 | ||||||||
All-In Sustaining Costs (D) | $15,122 | $3,314 | $12,259 | $40,879 | ||||||||
Payable silver ounces produced (E) | 1,676,537 | 549,583 | 920,774 | 3,146,894 | ||||||||
Tonnes milled (F) | 200,109 | 177,834 | 221,200 | 599,142 | ||||||||
Total cash cost per ounce, before by-product credits (B/E) | $15.64 | $26.79 | $10.86 | $16.21 | ||||||||
Total cash cost per ounce (C/E) | $3.08 | $2.12 | $10.77 | $5.16 | ||||||||
All-in sustaining cost per ounce (D/E) | $9.02 | $6.03 | $13.31 | $12.99 | ||||||||
Production cost per tonne (A/F) | $126.33 | $81.04 | $43.82 | $82.41 |
First Majestic Silver Corp. 2019 Annual Report | Page 27 |
(expressed in thousands of U.S. dollars, | Three Months Ended March 31, 2019 | ||||||||||||||||||||
except ounce and per ounce amounts) | San Dimas | Santa Elena | La Encantada | San Martin | La Parrilla | Del Toro | Consolidated | ||||||||||||||
Mining cost | $7,986 | $4,274 | $1,987 | $1,891 | $2,318 | $892 | $19,348 | ||||||||||||||
Milling cost | 4,802 | 5,964 | 4,719 | 1,775 | 1,867 | 666 | 19,793 | ||||||||||||||
Indirect cost | 7,159 | 2,196 | 2,114 | 1,329 | 1,386 | 832 | 15,017 | ||||||||||||||
Total production cost (A) | $19,947 | $12,434 | $8,821 | $4,996 | $5,570 | $2,389 | $54,157 | ||||||||||||||
Add: transportation and other selling cost | 317 | 76 | 68 | 53 | 190 | 50 | 807 | ||||||||||||||
Add: smelting and refining cost | 349 | 153 | 163 | 85 | 588 | 136 | 1,474 | ||||||||||||||
Add: environmental duty and royalties cost | 168 | 93 | 23 | 30 | 15 | 7 | 336 | ||||||||||||||
Total cash cost before by-product credits (B) | $20,781 | $12,756 | $9,075 | $5,164 | $6,363 | $2,582 | $56,774 | ||||||||||||||
Deduct: By-product credits attributed to | |||||||||||||||||||||
Gold by-product credits | (19,469 | ) | (11,105 | ) | (25 | ) | (1,404 | ) | (28 | ) | — | (32,031 | ) | ||||||||
Lead by-product credits | — | — | — | — | (1,698 | ) | (831 | ) | (2,529 | ) | |||||||||||
Zinc by-product credits | — | — | — | — | (1,235 | ) | — | (1,235 | ) | ||||||||||||
Total by-product credits | ($19,469 | ) | ($11,105 | ) | ($25 | ) | ($1,404 | ) | ($2,961 | ) | ($831 | ) | ($35,795 | ) | |||||||
Total cash cost (C) | $1,312 | $1,651 | $9,050 | $3,760 | $3,402 | $1,751 | $20,979 | ||||||||||||||
Workers’ participation | 1,226 | 66 | 78 | 81 | 75 | 68 | 1,595 | ||||||||||||||
General and administrative expenses | — | — | — | — | — | — | 6,046 | ||||||||||||||
Share-based payments | — | — | — | — | — | — | 2,075 | ||||||||||||||
Accretion of decommissioning liabilities | 186 | 52 | 148 | 60 | 71 | 55 | 605 | ||||||||||||||
Sustaining capital expenditures | 5,196 | 1,932 | 566 | 1,270 | 1,693 | 412 | 11,137 | ||||||||||||||
Operating lease payments | 18 | 33 | 12 | 19 | 17 | 25 | 292 | ||||||||||||||
All-In Sustaining Costs (D) | $7,938 | $3,734 | $9,854 | $5,190 | $5,258 | $2,311 | $42,729 | ||||||||||||||
Payable silver ounces produced (E) | 1,403,752 | 586,608 | 718,075 | 331,207 | 205,228 | 64,369 | 3,309,239 | ||||||||||||||
Tonnes milled (F) | 163,264 | 219,941 | 269,611 | 62,148 | 72,551 | 25,138 | 812,654 | ||||||||||||||
Total cash cost per ounce, before by-product credits (B/E) | $14.80 | $21.74 | $12.64 | $15.59 | $31.01 | $40.12 | $17.16 | ||||||||||||||
Total cash cost per ounce (C/E) | $0.93 | $2.81 | $12.60 | $11.35 | $16.58 | $27.20 | $6.34 | ||||||||||||||
All-in sustaining cost per ounce (D/E) | $5.65 | $6.37 | $13.72 | $15.67 | $25.62 | $35.89 | $12.91 | ||||||||||||||
Production cost per tonne (A/F) | $122.17 | $56.53 | $32.71 | $80.39 | $76.78 | $95.06 | $66.65 |
First Majestic Silver Corp. 2019 Annual Report | Page 28 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenues as reported | $86,065 | $86,810 | |||||
Add back: smelting and refining charges | 725 | 1,473 | |||||
Gross revenues | 86,790 | 88,283 | |||||
Less: Sandstorm gold revenues | (999 | ) | (682 | ) | |||
Less: Wheaton gold revenues | (6,883 | ) | (6,906 | ) | |||
Gross revenues, excluding Sandstorm, Wheaton (A) | $78,908 | $80,695 | |||||
Payable equivalent silver ounces sold | 5,556,937 | 6,061,389 | |||||
Less: Payable equivalent silver ounces sold to Sandstorm | (216,393 | ) | (127,257 | ) | |||
Less: Payable equivalent silver ounces sold to Wheaton | (795,050 | ) | (805,727 | ) | |||
Payable equivalent silver ounces sold, excluding Sandstorm and Wheaton (B) | 4,545,494 | 5,128,405 | |||||
Average realized price per ounce of silver sold (A/B)(1) | $17.36 | $15.73 | |||||
Average market price per ounce of silver per COMEX | $16.89 | $15.55 |
(1) | Average realized price per ounce of silver sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one month after delivery to the customer, based on the market price at that time. The mark-to-market adjustments do not apply to doré sales. |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Operating Cash Flows before Working Capital and Taxes | $23,313 | $23,705 | |||||
Weighted average number of shares on issue - basic | 209,396,052 | 195,832,712 | |||||
Cash Flow per Share | $0.11 | $0.12 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 29 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net (loss) earnings as reported | ($32,436 | ) | $2,880 | ||||
Adjustments for non-cash or unusual items: | |||||||
Deferred income tax expense (recovery) | 4,566 | (4,792 | ) | ||||
Share-based payments | 2,378 | 2,075 | |||||
Loss (gain) from investment in derivatives and marketable securities | 1,368 | (617 | ) | ||||
Unrealized loss on foreign currency derivatives | 22,654 | — | |||||
Recovery of mineral inventory | (443 | ) | (2,481 | ) | |||
Loss on sale of exploration project | 10,106 | — | |||||
Adjusted net earnings (loss) | $8,193 | ($2,935 | ) | ||||
Weighted average number of shares on issue - basic | 209,396,052 | 195,832,712 | |||||
Adjusted EPS | $0.04 | ($0.01 | ) |
March 31, 2020 | December 31, 2019 | ||||||
Current Assets | $224,018 | $242,979 | |||||
Less: Current Liabilities | (84,192 | ) | (71,853 | ) | |||
Working Capital | $139,826 | $171,126 | |||||
Available Undrawn Revolving Credit Facility | 65,031 | 55,031 | |||||
Available Liquidity | $204,857 | $226,157 |
ADDITIONAL GAAP MEASURES |
First Majestic Silver Corp. 2020 First Quarter Report | Page 30 |
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING |
• | maintain records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company; |
• | provide reasonable assurance that transactions are recorded as necessary for preparation of financial statements in accordance with IFRS as issued by IASB; |
• | provide reasonable assurance that the Company’s receipts and expenditures are made only in accordance with authorizations of management and the Company’s Directors; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements. |
First Majestic Silver Corp. 2020 First Quarter Report | Page 31 |
CAUTIONARY STATEMENTS |
First Majestic Silver Corp. 2020 First Quarter Report | Page 32 |
First Majestic Silver Corp. 2020 First Quarter Report | Page 33 |
1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of First Majestic Silver Corp. (the “issuer”) for the interim period ended March 31, 2020. |
2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim filings, for the issuer. |
5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end |
(a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
(i) | material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and |
(ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
(b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is COSO’s 2013 Internal Control – Integrated Framework. |
5.2 | ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end |
(a) | a description of the material weakness; |
(b) | the impact of the material weakness on the issuer’s financial reporting and its ICFR; and |
(c) | the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness. |
6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2020 and ended on March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: | May 13, 2020 | |
“Keith Neumeyer” | ||
Keith Neumeyer | ||
Chief Executive Officer |
1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of First Majestic Silver Corp. (the “issuer”) for the interim period ended March 31, 2020. |
2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim filings, for the issuer. |
5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end |
(a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
(i) | material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and |
(ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
(b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is COSO’s 2013 Internal Control – Integrated Framework. |
5.2 | ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end |
(a) | a description of the material weakness; |
(b) | the impact of the material weakness on the issuer’s financial reporting and its ICFR; and |
(c) | the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness. |
6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2020 and ended on March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: | May 13, 2020 | |
“Raymond Polman” | ||
Raymond Polman | ||
Chief Financial Officer |
New York - AG | May 14, 2020 |
Toronto – FR | |
Frankfurt – FMV | |
• | Revenues of $86.1 million, or 1% lower compared to Q1 2019, primarily due to suspending sales in March in an attempt to maximize future profits due to metals market volatility |
• | Postponed the sale of 292,000 ounces of silver and 700 ounces of gold, worth approximately $5.3 million at the end of Q1 2020. As of today, the Company holds 1,045,342 ounces of silver and 1,459 ounces of gold in inventory |
• | Reduced cash costs by 19% to $5.16 per payable silver ounce beating previously suspended cost guidance |
• | All-in sustaining costs (“AISC”) of $12.99 per payable silver ounce beating previously suspended cost guidance |
• | Mine operating earnings of $21.1 million, up 106% compared to Q1 2019 |
• | Net earnings of ($32.4) million due to accounting loss for the sale of the Plomosas exploration project and an unrealized loss on foreign currency derivatives |
• | Adjusted EPS of $0.04 after excluding non-cash and non-recurring items |
• | Cash flow per share was $0.11 per share (non-GAAP) |
• | Repurchased 275,000 shares at a volume weighted average price of CDN$8.56 per share during the quarter |
• | Ended the quarter with $145.2 million in cash and cash equivalents |
• | Strong working capital position of $139.8 million and total available liquidity of $204.9 million, including $65.0 million of undrawn revolving credit facility |
Key Performance Metrics | 2020-Q1 | 2019-Q4 | Change Q1 vs Q4 | 2019-Q1 | Change Q1 vs Q1 | |||||||||||
Operational | ||||||||||||||||
Ore Processed / Tonnes Milled | 599,142 | 626,482 | (4 | %) | 812,654 | (26 | %) | |||||||||
Silver Ounces Produced | 3,151,980 | 3,348,424 | (6 | %) | 3,331,388 | (5 | %) | |||||||||
Silver Equivalent Ounces Produced | 6,195,057 | 6,233,412 | (1 | %) | 6,273,677 | (1 | %) | |||||||||
Cash Costs per Ounce (1) | $5.16 | $3.73 | 38 | % | $6.34 | (19 | %) | |||||||||
All-in Sustaining Cost per Ounce (1) | $12.99 | $12.25 | 6 | % | $12.91 | 1 | % | |||||||||
Total Production Cost per Tonne (1) | $82.41 | $78.62 | 5 | % | $66.65 | 24 | % | |||||||||
Average Realized Silver Price per Ounce (1) | $17.36 | $17.46 | (1 | %) | $15.73 | 10 | % | |||||||||
Financial (in $millions) | ||||||||||||||||
Revenues | $86.1 | $96.5 | (11 | %) | $86.8 | (1 | %) | |||||||||
Mine Operating Earnings | $21.1 | $23.9 | (12 | %) | $10.3 | 106 | % | |||||||||
Net (Loss) Earnings | ($32.4 | ) | ($39.9 | ) | 19 | % | $2.9 | NM | ||||||||
Operating Cash Flows before Movements in Working Capital and Taxes | $23.3 | $32.9 | (29 | %) | $23.7 | (2 | %) | |||||||||
Cash and Cash Equivalents | $145.2 | $169.0 | (14 | %) | $91.5 | 59 | % | |||||||||
Working Capital (1) | $139.8 | $171.1 | (18 | %) | $130.9 | 7 | % | |||||||||
Shareholders | ||||||||||||||||
(Loss) Earnings per Share ("EPS") - Basic | ($0.15 | ) | ($0.19 | ) | 20 | % | $0.01 | NM | ||||||||
Adjusted EPS (1) | $0.04 | $0.00 | NM | ($0.01 | ) | NM | ||||||||||
Cash Flow per Share (1) | $0.11 | $0.16 | (30 | %) | $0.12 | (8 | %) |
• | implemented preventative control measures including social distancing, remote working, cancellation of any non-essential visits to the mines, comprehensive sanitation measures for the workplace and company transportation, and pre-screening for virus symptoms; |
• | construction of a temporary camp at Santa Elena which can accommodate up to 310 workers; |
• | managing supply chain risk and disruption by maintaining constant communication with major suppliers and contractors and increasing supplies inventory levels at all units; |
• | supporting local communities by sponsoring health professionals, medical equipment, personal protective equipment, medicine and health supplements; |
• | deferring a substantial amount of discretionary capital expenditures into 2021 to maintain a strong balance sheet. Furthermore, the Company expects to release an updated 2020 production, cost and capital investments guidance in July; |
• | proactively engaging with local communities and other stakeholders to reduce the risk of COVID-19 from entering our host communities; and |
• | implementation of programs within our areas of influence to increase awareness about the virus, promote good hygiene and responsible social interactions to prevent and/or contain the spread of the virus |
First Quarter Production Summary | San Dimas | Santa Elena | La Encantada | Consolidated | ||||||||
Ore Processed / Tonnes Milled | 200,109 | 177,834 | 221,200 | 599,142 | ||||||||
Silver Ounces Produced | 1,677,376 | 550,133 | 924,472 | 3,151,980 | ||||||||
Gold Ounces Produced | 21,308 | 10,842 | 52 | 32,202 | ||||||||
Silver Equivalent Ounces Produced | 3,672,169 | 1,593,400 | 929,487 | 6,195,057 | ||||||||
Cash Costs per Ounce | $3.08 | $2.12 | $10.77 | $5.16 | ||||||||
All-in Sustaining Cost per Ounce | $9.02 | $6.03 | $13.31 | $12.99 | ||||||||
Total Production Cost per Tonne | $126.33 | $81.04 | $43.82 | $82.41 |
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