First Majestic suspends mining at Jerritt Canyon as costs climb

First Majestic Silver (NYSE:AG) -17.2% post-market Monday after saying it has temporarily suspended all mining activities and cut its workforce at the Jerritt Canyon gold mine in Nevada effective immediately, citing higher than expected costs.

Jerritt Canyon represented ~21% of First Majestic's (AG) 2022 revenue, and the company said previous production and cost guidance for the mine can no longer be relied upon.

First Majestic (AG) said since the acquisition of the Jerritt Canyon mine in April 2021, it has tried to raise underground mining rates in order to sustainably feed the processing plant at a minimum of 3K tons/day in order to generate free cash flow.

"Despite these efforts, mining rates have remained below this threshold and cash costs per ounce have remained higher than anticipated primarily due to ongoing challenges such as contractor inefficiencies and high costs, inflationary cost pressures, lower than expected head grades and multiple extreme weather events affecting northern Nevada, which have compounded conditions and caused material headwinds for the operation," the company said.

First Majestic (AG) said it plans to process ~45K metric tons of aboveground stockpiles through the plant during the suspension, and it expects exploration activities will continue throughout 2023.

First Majestic Silver (AG) said earlier Monday it received regulatory approval to extend its stock buyback program.