- First Majestic Silver (FR) has suspended mining activities at the Jerritt Canyon mine
- The suspension comes as a result of ongoing challenges and attempts to reduce overall costs
- First Majestic said challenges include contractor inefficiencies, inflationary cost pressures and lower-than-expected head grades, among others
- The company acquired Jerritt Canyon almost two years ago
- Shares of First Majestic (FR) are down 22.58 per cent to C$5.76 on Tuesday’s close
Shares of First Majestic Silver (FR) are in the red following the company’s announcement that it has temporarily suspended mining activities at its Jerritt Canyon Mine in Nevada.
In a press release issued on Monday, the company said the suspension comes as a result of ongoing challenges as it attempts to reduce overall costs.
First Majestic cited challenges such as contractor inefficiencies, inflationary cost pressures and lower-than-expected head grades have all contributed to reasons for the temporary mine closure.
“The decision to temporarily suspend mining activities at Jerritt Canyon, which represented approximately 21 per cent of the company’s 2022 revenue, was driven by our goal to produce profitable ounces across the company,” First Majestic Silver president and CEO Keith Neumeyer said in a release.
While operations at the mine remain suspended, the company has key plans to process roughly 45,000 tons of above-ground stockpiles through the plant. First Majestic also said that because of the suspension, previous production and cost guidance for Jerritt Canyon can no longer be relied upon.
Guidance for First Majestic’s Mexican operations remains current and a revised consolidated production and cost guidance, including capital investments, will be published in the summer.
First Majestic also said it will carry on with its 2023 plans, which include:
- Exploring for new regional discoveries and expanding current known reserves and resources
- Analyzing the optimization of bulk mining and cost-effective mining methods
- Reducing mining costs through the adoption of self-perform mining and improving contractor rates and terms
- Continuing to modernize the processing plant so that it can better withstand weather conditions
The Jerritt Canyon Mine
First Majestic Silver first acquired the Jerritt Canyon Mine almost two years ago.
Since acquiring the mine, First Majestic has focused on increasing underground mining rates so it can sustainably feed the processing plant a minimum of 3,000 tpd to generate free cash flow.
However, the company said that despite its efforts made cash costs per ounce have remained higher.
Neumeyer said in the statement that since the company acquired the mine in 2021, it still managed to execute several key projects, including rehabilitating and reopening the West Generator and Saval II underground mines.
The company also upgraded and modified the roaster and refinery off-gas handling systems.
First Majestic Silver (FR) closed Tuesday at $5.76, down 22.58 per cent dip over the course of the day.