Yahoo Finance First Majestic (AG) Closes the Sale of La Guitarra Silver Mine
First Majestic Silver AG recently announced the closure of the previously announced sale of its fully-owned past-producing La Guitarra Silver Mine in Mexico to Sierra Madre Gold & Silver Ltd. for approximately $35 million. The company had put the mine under care and maintenance in August 2018.
The total consideration of $35 million consists of 69,063,076 Sierra Madre shares. First Majestic now holds approximately 48.4% of Sierra Madre's issued and outstanding common shares.
In December 2022, First Majestic Silver announced an agreement to sell its fully-owned past-producing La Parrilla Silver Mine in Durango, Mexico to Golden Tag Resources Ltd. for $33.5 million. The silver, gold, lead and zinc operation had been placed under care and maintenance by AG in September 2019.
First Majestic will receive 143,673,684 shares in Golden Tag shares for a total value of $20 million. This represents approximately 40% of the outstanding shares in Golden Tag. Per the deal, AG will also receive up to $13.5 million as three milestone payments in either cash or shares in Golden Tag.
First Majestic currently owns the San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine, the La Encantada Silver Mine and the Jerritt Canyon Gold Mine. The company recently announced its decision to temporarily suspend all mining operations and lower its workforce at Jerritt Canyon Mine (which generated about 21% of AG's 2022 revenues). This is due to several ongoing challenges, including inflationary cost pressures, contractor inefficiencies, lower-than-expected head grades and multiple extreme weather events. The decision is in sync with the company’s aim to produce profitable ounces across all businesses.
Since acquiring the Jerritt Canyon Gold Mine in 2021, AG has attempted to raise underground mining rates to sustainably feed the processing plant at a minimum of 3,000 tons per day in order to generate a free cash flow. However, mining rates remained below the target, while cash costs per ounce remained higher than anticipated. This was mainly driven by ongoing challenges like contractor inefficiencies and high costs, inflationary cost pressures and extreme weather conditions in northern Nevada.
Even though mining operations are being ceased, effective immediately, the remaining surface stockpiles will be processed over the next few months. First Majestic will keep exploring near-mine and potential regional greenfield targets to expand Jerritt Canyon's resources and potentially improve the economics for the eventual restart of operations. The company expects to continue exploration activities throughout 2023.
During the suspension, First Majestic intends to explore new regional finds and increase known reserves and resources. It plans to further analyze the optimization of bulk mining and cost-effective mining techniques.
In the fourth quarter of 2022, the company reported an adjusted loss per share of 7 cents, wider than the Zacks Consensus Estimate of a loss of 4 cents, mainly due to lower prices. Revenues plunged 28% year over year to $148 million in the quarter.
Shares of the company have fallen 46.9% in the past year compared with the industry's 27.7% decline.
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Zacks Rank & Stocks to Consider
First Majestic currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Olympic Steel, Inc. ZEUS, Steel Dynamics, Inc. STLD and Linde plc LIN. ZEUS and STLD sport a Zacks Rank #1 (Strong Buy), while LIN currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Olympic Steel’s shares have gained 33% in the past year. The Zacks Consensus Estimate for ZEUS’ current-year earnings has been revised 61% upward in the past 60 days. It topped the Zacks Consensus Estimate in all the last four quarters and delivered a trailing four-quarter earnings surprise of 26.2% on average.
Steel Dynamic’s shares have gained 32.4% in the past year. The Zacks Consensus Estimate for STLD’s current-year earnings has been revised 37.2% upward in the past 60 days. It topped the Zacks Consensus Estimate in all the last four quarters and delivered a trailing four-quarter earnings surprise of 11.3% on average.
Linde’s shares have gained 9.5% in the past year. The company has an earnings growth rate of 8.1% for the current year. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 25% upward in the past 60 days.
LIN topped the Zacks Consensus Estimate in all the last four quarters and delivered a trailing four-quarter earnings surprise of 6% on average.
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