Resource World Magazine

46 www.resourceworld.com J U N E / J U L Y 2 0 1 6 SilvER SanTa ELEna minE acquisition in Sonora, mexico paying off FIRST MAjESTIC SILVER CORP. [FR-TSX; AG:NYSE] recently tabled impressive first quarter financial results for 2016 in spite of realizing a 12% lower silver price on production (US $15.08/oz). The company reported a 22% increase in revenues to US $66.5 million during the first quarter. This was mainly attributed to a 30% increase in total production as well as cost savings due to operational improvements. Earnings before income tax deductions for the quarter rang in at US $1.4 million, up from US $0.7 million from the comparable period last year. Production for the quarter tallied 5.1 million silver equivalent ounces consist- ing of 3.1 million ounces of silver, 16,870 ounces of gold, 8.6 million pounds of lead and 4.0 million pounds of zinc. Compared to the previous quarter, total pro- duction increased 5% primarily attributed to higher gold production at Santa Elena and higher silver grades at La Encantada. All in sustaining costs per ounce were reported to be US $8.97/oz, a 35% improvement over the first quarter of 2016. "Even with relatively flat silver prices compared to the previous quarter, we generated strong free cash flow due to lower operating costs and higher produc- tion at the mines," said Keith Neumeyer, President and CEO of First Majestic. "Our new mine, Santa Elena, had another great quarter and continues to exceed our expectations," he said. First quarter results highlight that the Santa Elena Mine had a negative cash cost of (US $3.34) per ounce, which contributed to the significant reduction in First Majestics consolidated cash cost. Cash costs were also benefited by an 8% weakening of the Mexican pesos against the US dollar. Neumeyer added, "Due to the significant cash flows now coming into the business combined with a recently announced CDN $50 million financing, we are beginning to evaluate internal growth projects, starting with increasing development and exploration at each of our operations in the coming quarters." In late April, First Majestic announced a CDN $50 million bought deal financ- ing from a syndicate of underwriters led by Cormark Securities and BMO Capital Markets at a price of $10.95 per share. Proceeds are for development and explo- ration across the company's six operating mines as well as general corporate and working capital expenses. High on the list of development projects is a mill and mine expansion at La Guitarra which produced 363,884 silver equivalent ounces during the first quar- ter at all in sustaining costs of US $12.91/oz. First Majestic intends to double mill capacity to 1,000 tpd. The company also plans to further advance the roasting analysis and testing at its La Encantada operations. First Majestic's market capitalization is CDN $2.1 billion with 156.4 million shares outstanding. n Eldorado Gold sells chinese mines Following an agreement to sell its Jinfeng mine, Eldorado Gold corp. [ELD-TSX; EGo-nySE] has agreed to sell its interest in the White mountain and Tanjianshan mines as well as the Eastern Dragon development project in china to an affiliate of Yintai resources co. ltd. [000975-ShSZ] for US $600 million in cash, subject to certain closing adjustments. The agreement provides for an rmB equivalent US $30 million deposit to be paid by the pur- chaser and forfeited under certain circumstances and a reverse break-fee of the same amount pay- able by Eldorado to the purchaser under certain circumstances. "We are pleased to have reached this agree- ment as this transaction recognizes immediate value to both companies and its shareholders. We are proud of our history and the accomplishments achieved by the hard work of all of our chinese employees. The proposed transaction provides yintai the opportunity to build on our achieve- ments in china," said paul Wright, president and cEo of Eldorado. "We look forward to closing the sale of both transactions and advancing our inter- nal project pipeline." The transaction is expected to close in Q3-Q4 2016 and is subject to regulatory and other approv- als, including yintai shareholder approval. Eldorado intends to redeploy net proceeds from the disposi- tion of its chinese assets to continue to grow its business based on long-lived, low cost assets. Eldorado is a low cost gold producer with min- ing, development and exploration operations in Turkey, china, Greece, romania and Brazil. yintai is engaged primarily in nonferrous metals mining and controls the polymetallic huaaobaote mine in inner mongolia and has a market capitalization of about US $2.5 billion. n

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