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First Majestic Silver Corp says silver production "robust" in first quarter

Silver production was "robust" during the three months to March 31, the firm said, with 1,826,803 ounces being produced - 3 per cent more than the 1,769,208 ounces in Q1 last year

Silver producer First Majestic Silver Corp (TSE:FR, NYSE:AG) said it remained on track to meet production guidance for 2012 as it reported a solid first quarter.

Silver production was "robust" during the three months to March 31, the firm said, with 1,826,803 ounces being produced -  3 per cent more than the 1,769,208 ounces in Q1 last year.

Silver production was "robust" during the three months to March 31, it added, with 1,826,803 ounces being produced -  3 per cent more than the 1,769,208 ounces in Q1 last year.

Overall, total production in the period saw a 10 per cent increase - with silver equivalent ounces coming in at 2,007,219 ounces versus 1,825,366 ounces in the first three months of 2011.

The higher production totals led to revenues of $57.8 million for the quarter -  an increase of $2.5 million, or 5 per cent, compared to $55.3 in the first quarter last year.

Net earnings after tax amounted to $26.4 million -  a 10 per cent increase from the first quarter last year - while the total production cost per tonne was $29.24 -  a decrease of 3 per cent from Q1 last year.

The company now has cash and equivalents of $85.3 million and working capital of $108.3 million.

President and chief executive Keith Neumeyer said the first quarter was another successful period for the firm as it continued its growth aims.

"Our strong financial position ensures the timely construction of our Del Toro mine with the goal of initial production scheduled in the fourth quarter of this year. Also, an updated NI 43-101 and preliminary economic assessment (PEA) on Del Toro is scheduled to be released in the coming weeks.

"While cost inflation continues to be a strong headwind for the mining industry, First Majestic's operational team has done an exceptional job maintaining costs."

Neumeyer also highlighted that year-over-year, the firm's total production costs have been reduced by 3 per cent to an industry-leading $29.24 per tonne.

"First Majestic remains on track to meet its production guidance for 2012 and management plans to provide further guidance regarding the Silvermex acquisition once the deal closes over the coming months."

Last month, the company revealed it had agreed to buy Silvermex Resources (TSX:SLX) in a deal valued at $175.4 million.

Under the offer, Silvermex shareholders will receive 0.0355 common shares of First Majestic and $0.0001 in cash per Silvermex common share.

That values each Silvermex security at around $0.60, representing a premium of approximately 33 percent to the closing price as at April 2, 2012 and approximately 43 percent to the 30-day volume weighted average price.

Under the transaction, Silvermex shareholders will own 8.3 percent of First Majestic.

In 2012, First Majestic has said it expects to produce between 8.81 million ounces and 9.3 million ounces of silver equivalent. 

That outlook includes between 8.3 million ounces and 8.7 million ounces of silver, between 1.26 million ounces and 1.33 million ounces of gold, between 13.4 million and 14.1 million pounds of lead, and between 4.3 million and 4.5 million pounds of lead. 

First Majestic said the recent acquisition will strengthen its position as a world-leading silver producer, as it will add a fourth producing mine to its portfolio of silver assets in Mexico.

The company currently owns three producing silver mines and two development projects through four separate wholly owned Mexican subsidiaries.