2008-01-17 11:48 ET - News Release
Mr. Keith Neumeyer reports
FIRST MAJESTIC SILVER CORP.: ANOTHER RECORD QUARTER OF SILVER PRODUCTION
First Majestic Silver Corp.'s production in the fourth quarter ended Dec. 31, 2007, increased again to a record 1,008,299 equivalent ounces of silver, representing a 7-per-cent increase over the prior quarter production and an increase of 76 per cent over the same quarter in the prior year.
The equivalent silver production for the quarter consisted of 868,354 ounces of silver, an increase of 7 per cent over the previous quarter, and 1,107,154 pounds of lead, which represents a 17-per-cent increase over the previous quarter. The large increase in lead production was as a result of improvements to the flotation circuit at the La Parrilla silver mine. Production of gold in the quarter amounted to 490 ounces representing a 12-per-cent increase compared with the prior quarter.
During the quarter, the combined recoveries of silver at the three different mills also showed an increase from 71 per cent to 77 per cent. The overall average silver head grade, in the quarter, also improved for the three mines, increasing by 12 per cent over the previous quarter to 240 grams per tonne of silver over all.
The ore processed during the quarter, at the company's three operating silver mines, the La Parrilla silver mine, the San Martin silver mine and the La Encantada silver mine, amounted to 146,798 tonnes, representing an 11-per-cent decrease and an increase of 56 per cent over the same quarter of 2006.
An aggressive development program continues at all three mines. This activity is continuing for the purpose of opening up additional stopes, grade control, resource development and exploration. A total of 5,346 metres of underground development was completed in the quarter, which for the year 2007 totalled 20,279 m. This compares with 7,719 m developed in the previous calendar year, representing an increase of 163 per cent. This program is important in giving access to new areas within the different mines for preparation of mining, in order to continue the growth of silver production in 2008.
Reserve and resource development remains to be a high priority for the company. Presently, 10 drill rigs are operating on a permanent basis: six rigs at La Parrilla and the Chalchihuites areas, three rigs at San Martin and one rig at La Encantada. Two additional rigs are being added at the San Martin and two additional rigs are arriving shortly at the La Encantada, bringing the total to 14 rigs operating on the company's properties, by the end of the first quarter. Also, in line with the company's aggressive resource development strategy, 9,778 m of diamond drilling was completed during the quarter, covering 43 holes. During the year ended Dec. 31, 2007, a total of 37,176 m of diamond drilling was completed, which compares with 28,283 m drilled in 2006, representing an increase of 31 per cent.
Total production during 2007 reached 3,561,171 ounces of silver equivalent, representing an increase of 176 per cent compared with the previous year's 1,289,234 ounces of silver equivalent. Even though management is pleased with the substantial increase in silver production compared with 2006, production for the year was lower than originally estimated. The higher tonnages feed through the mills at the La Parrilla and La Encantada resulted in a number of failures of old equipment, which thus required replacement or rehabilitation. Also, at the San Martin, maintaining optimal head grade was the primary challenge, which required management to decide to reduce tonnage rates to give the present development program time to prepare areas within the mine.
Keith Neumeyer, president and chief executive officer, stated: "The year 2007 marked a year of consolidation of our three producing operations under the First Majestic umbrella. As can be expected, many challenges were experienced managing the dramatic growth of our business. This substantial achievement resulted in increases in silver production of 176 per cent, year over year, and increases in defined NI 43-101-compliant silver resources of 133 per cent. As a result of the work completed in 2007, and the significant additions to our management team and the many improvements made at each of our three silver mines, we are targeting to reach 5.5 million ounces of silver production for 2008 and continued increases of defined silver resources can also be expected."
In summary, some of the production improvements and advances made during the year include:
At the La Parrilla silver mine:
* The completion of the new 800 tpd cyanidation/flotation mill in May, 2007.
* A new primary and secondary crushing system was acquired in April, 2007.
* CCD thickener added, filtration area upgrades and oxygen injection system was installed (July through November, 2007).
* Construction of the new tailings dam was completed in November, under budget and on time, giving the La Parrilla an additional 10 years of mine life.
At the La Encantada silver mine:
* A new 1,500-kilowatt power plant was acquired and installed, and a complete upgrade of the 2,000-kilowatt power plant was completed (June through October, 2007).
* A new screening plant was added in February, 2007, to take advantage of the above ground stockpiles of ore.
At the San Martin silver mine:
* Construction began in November, 2007, of a 500 tpd flotation circuit, to take advantage of the large sulphide ore resource, present at the San Martin.
* A new discovery is being defined at the Rosarios-Condesa (Cinco Senores) vein system, which is parallel to the main Zuloaga vein, where intersections of high-grade silver ore are occurring.
In 2008, improvements are expected to include the completion of the flotation circuit at the San Martin, the replacement of the secondary crusher at the La Encantada, new filter presses at the La Parrilla, and the expansion of the primary and secondary crushing system at the La Parrilla. In addition, an evaluation is presently under way to expand the La Encantada mill by adding a cyanidation circuit. A final decision on size and timing of this expansion is expected to be announced prior to the end of the first quarter.
In addition to the above, and in line with company's program of underground equipment replacement launched with Sandvik in 2006, a total of 12 pieces of underground equipment was delivered in 2007, which added to the six pieces of equipment delivered in 2006. In 2008, the third year of this program, 20 additional pieces of underground equipment are expected to be delivered. These deliveries will include scooptrams, underground trucks and jumbos, intended to provide for improved and more efficient underground operations.
We seek Safe Harbor.
