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First Majestic (AG) Q4 Silver Equivalent Production Falls Y/Y

First Majestic Silver Corp. AG announced that its total production reached 7.6 million silver equivalent ("AgEq") ounces in the fourth quarter of 2022. The figure consists of 2.4 million silver ounces and 63,039 gold ounces.

On a year-over-year basis, silver production was down 29%, whereas gold production decreased 6.5%. Overall silver equivalent ounces declined 14% year over year in the quarter under review. The decrease was mainly due to lower production at San Dimas and Santa Elena. However, this was partially offset by higher gold production at Jerritt Canyon and higher silver production at La Encantada.

In the fourth quarter, Santa Elena produced 2.3 million AgEq ounces on strong metal production from the Ermitaño mine. However, the figure marks a 16% decline from the 2021 level. San Dimas produced 3,054,098 AgEq ounces, consisting of 1,392,506 ounces of silver and 20,257 ounces of gold, down 16% and 14%, respectively, from the previous-year quarter.

Jerritt Canyon produced 16,845 ounces of gold, aided by a 3% increase in gold grades and offset by lower-than-expected throughput. The reported figure represents a 3% increase from fourth-quarter 2021. Lastly, La Encantada produced 804,802 ounces of silver in the quarter, a 4% increase over the previous quarter. The rise was driven primarily by a 4% gain in silver recoveries.

2022 Performance

The company reported a record annual total production of 31.3 million AgEq ounces for 2022, up 16% from 2021. Annual silver production reached 10.5 million ounces. This compares to 12.8 million ounces in 2021. The output came in below AG’s guidance of 11.2-11.9 million ounces of silver. Annual gold production increased about 29% to a record 248,394 ounces but missed the guidance of 256,000-273,000 ounces.


In 2022, Santa Elena set an annual record of 9.1 million AgEq ounces, representing an 81% increase from the 2021 level.

2023 Guidance

Total production from the company's four operating mines is expected to reach a record 33.2-37.1 million AgEq ounces in 2023, comprised of 10.0-11.1 million ounces of silver and 277,000-310,000 ounces of gold. The mid-point of the guidance range suggests an increase of 12% from that reported in 2022. The all-in sustaining cost is anticipated between $18.47 and $19.72 per AgEq ounce.

While AG expects silver production to be consistent with the 2022 level, gold production is projected to increase 18% year over year.

The company anticipates an 84:1 silver-to-gold ratio for 2023, down from an 85:1 silver-to-gold ratio in its revised 2022 guidance. The company assumes a silver price of $21.50 per ounce and a gold price of $1,800 per ounce for the year.

Other Updates

The West Generator mine's secondary escape way's completion in November allowed for improved ore production. However, severe cold weather disruption in December hindered haulage and supplies to the plant. Gold production at Jerritt Canyon is anticipated to be between 119,000 and 133,000 ounces in 2023, owing to the additional ramping up of Smith Zone 10 and the restart of the Saval II mine.

In the fourth quarter, First Majestic finished commissioning the dual-circuit processing plant at Santa Elena, which comprises the new 3,000-ton-per-day filter press that will improve leaching performance and lower operating costs.

In the fourth quarter, the company completed 16,086 meters of drilling across its mines as part of its 2022 exploration program. In the quarter, 10 drill rigs were active, including four at San Dimas, two at Jerritt Canyon, three at Santa Elena, and one at La Encantada.

Price Performance

First Majestic's shares have declined 29.8% in the past year compared with the industry's fall of 19%.


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Zacks Investment Research

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Zacks Rank & Stocks to Consider

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

Some better-ranked stocks from the basic materials space are CalMaine Foods, Inc. CALM, Reliance Steel & Aluminum Co. RS and Franco-Nevada Corporation FNV. CALM and RS currently flaunt a Zacks Rank #1 (Strong Buy) and FNV carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CalMaine Foods’ fiscal 2023 earnings per share is pegged at $14.08, suggesting 417.7% growth from the year-ago reported figure. Earnings estimates have moved 73.8% north in the past 60 days. CALM has a trailing four-quarter earnings surprise of 15.3%, on average. Its shares have gained 31.4% in the past year.

The Zacks Consensus Estimate for Reliance Steel’s earnings per share is pegged at $28.65 for 2022, indicating a year-over-year growth rate of 29.5%. Earnings estimates have been revised 0.2% upward in the past 60 days. RS has a trailing four-quarter average surprise of 13.6%, on average. The company has gained 26.7% in a year.

The Zacks Consensus Estimate for Franco-Nevada’s 2022 earnings per share is pegged at $3.67, suggesting 4.3% growth from the year-ago reported figure. Earnings estimates have moved 4.2% north in the past 60 days. FNV has a trailing four-quarter earnings surprise of 1.3%, on average. Its shares have gained 8.1% in the past year.

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