Thank you for standing by. This is the conference operator. Welcome to the First Majestic Silver's second quarter production results and H2 2024 guidance conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. If you're participating through the webcast, you can submit a question in writing using the form in the lower section of the webcast frame. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Mr. Keith Neumeyer, President and Chief Executive Officer of First Majestic. Keith, please go ahead.
Thank you, operator, and welcome, everyone, to our mid-year conference call, which we do every July, and I'm surrounded by a number of our key staff today here in Vancouver. I just wanna quickly go through the names of each individual. We have Samir Patel, who's our General Counsel and Corporate Secretary. We also have David Soares, our CFO, Chief Financial Officer. We also have Mani Alkhafaji, VP Corporate Development and Investor Relations. We also have James Dickson, Director of Finance, Darrell Rae, Investor Relations Manager, Joel Faltinsky, Investor Relations Analyst, Mark Carruthers, Manager of Private Client Services, Corporate Development. Online, we're happy to have Steve Holmes, who's dialed in from afar. He's actually at our San Dimas mine in Mexico, joining us today.
Before I get into the call, I'm just gonna transfer over to Samir. Go ahead, Samir.
Thanks, Keith. Before we begin today's call, I would like to remind you that we will be referring to certain non-IFRS measures and making certain statements regarding First Majestic Silver and its operations that constitute forward-looking statements in accordance with applicable Canadian and U.S. securities laws. All statements that are not historical facts, such as statements regarding future estimates and plans or expectations of future performance, constitute forward-looking statements that reflect the company's current views with respect to future events. These statements are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the company, are inherently subject to significant business, economic, competitive, political, and social uncertainties and contingencies.
We encourage you to refer to the cautionary language included in our news release that was disseminated earlier this morning and the disclosure on non-IFRS measures in our most recently filed management's discussion and analysis, as well as the risk factors set out in our most recently filed annual information form. As a reminder, these documents, along with all of our continuous disclosure documents, are available on SEDAR+ and on EDGAR. Investors are cautioned against attributing undue certainty or reliance on any forward-looking statements made during today's call, and the company does not intend or assume any obligation to update these forward-looking statements or information other than as required by law. With that, I will turn the call back to Keith.
Thank you, Samir. I'm sure everyone online has seen our news release that was put out early, early this morning. Just as a headline, we produced 5.3 million silver equivalent oz, of which 2.1 was silver and just under 40,000 oz of gold, and we also updated our guidance for the balance of the year. Some highlights that you may not have noticed, due to the increased metal prices, we've decided to increase our CapEx slightly by 9%, we've increased our development expenses by 11%, primarily at San Dimas, by adding 3 km of additional development. We've also increased our exploration as well, primarily at San Dimas, by going from 95,000 m there to 115,000 m.
Nice increase in exploration at San Dimas. We've also just started on the exploration front at Jerritt Canyon this week. We've got three rigs being deployed, which was in our original forecast anyways, but I just wanted to add that for people that wanted to have questions regarding Jerritt Canyon. Our production and our guidance, gold or, pardon me, silver is up by 1%. Gold is down a little bit, really due to grade, and we've reduced our gold guidance by 3%, mostly San Dimas related. If you look at H2 only, because, you know, we did put out the consolidated guidance, you'll see an improvement on silver production of 26%, and an improvement in gold production of 7%.
So H2 is looking to be quite a robust half of the year compared to H1. La Encantada, we have a 38% increase in silver production, La Encantada, and we're expecting a 26% increase in silver equivalent production at San Dimas, and that's gonna be very heavily weighted in Q4. There is a slight increase in cost on a consolidated basis, about 3% cash costs and 4% all-in sustaining costs. But if you isolate out H2 on its own, you'll see a drop in cost at La Encantada by 16%, which is obviously nice to see. We were affected by the peso. We did guide in our January guidance of 18.25 : 1 against the US dollar for the peso.
The peso averaged 17.09 for H1, which is much stronger than what we anticipated, and that did affect us by over $10 million for H1. We're hoping to see the peso weaken in H2 once the new government takes over and, but, you know, we have a lot of uncertainty. We continually guide the peso at 18.25. And that's really it for my notes. So if we could open the call up to questions, we'd be happy to answer any questions that may come in.
Thank you, Keith. We will now begin the question and answer session. Once again, to join the question queue, you may press Star, then one on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press Star then two. If you're participating today through the webcast, you can submit your question in writing by using the form in the lower section of the webcast frame. Our first question is from Don DeMarco with National Bank Financial. Please go ahead.
Thank you for taking my call, operator. Good morning, Keith and team. Hey, a really strong performance out of Santa Elena. Great to see that continue in the second half. Looking at good grades and throughput, but can you comment on the recoveries? I know you had the HIG system installed there. Any read-through to kind of get the recoveries trending back up again to contribute a little bit more?
Well, thanks, Don, and, glad you were able to join us today. The recoveries you're probably referring to are related to the silver recoveries, I'm assuming. Gold recoveries have been, you know, quite stable, but the Hermitaño ore is, the silver is not as recoverable as the Santa Elena ore. So you're probably used to seeing this, silver recoveries at Santa Elena in the, in the low nineties. And, because the Hermitaño ore is very heavy gold and then, and somewhat lower grade silver, the recoveries are just simply lower on the silver. But, you know, the grade there is, you know, you know, it's, it's a lot of gold coming out of that area. I'm not sure if that answers your question.
Yeah, that answers my question. That's, that's good to hear. Yeah, looking at the silver in particular, although it is fairly gold weighted. And so looking at San Dimas, I mean, if you get San Dimas lined up, then you kind of have just all three assets firing together. Looks like grades have been trending a little bit lower. Can you tell us, can you give a little bit more color on the outlook or, or some of the, the challenges behind the lower grades?
Well, it's a transition. San Dimas is going through a transition right now. The primary production was really from the vein called Jessica. And that's, you know, we're dealing with mother nature, of course, right? So you're, you know, Jessica is a very robust, very large structure. It's been our primary feed for the mill for five years, and that vein is now coming to end of its life, and we're moving into a variety of other veins. Exploration is going extremely well, as you know, by our previous annozment about a month ago at San Dimas. But, you know, we're not projecting higher grades at San Dimas, at least for another couple of quarters. So, you know, look for, you know, similar grades that you've seen in this quarter.
It's really a throughput issue. You know, we still have some challenging issues on site, with the union workforce, and we're working diligently to resolve that problem. We need to get more ore into the mill, and that's really what the biggest challenge is. It's not so much grade.
Okay, great. Well, listen, that's all for me, and congratulations and good luck on a back-end weighted year. Thank you.
Thanks, Don.
Once again, if you have a question, please press star then one. While we wait for others to join, I'd like to pass the floor over to Mr. Darrell Rae, Manager of Investor Relations at First Majestic Silver, to take us through questions that have been submitted through the webcast.
Hey, thanks, Gaylene. So we've had a few questions from the webcast team. Why don't we start? I think you, you talked a little bit about this, but kind of following on the last question is, what are the exploration catalysts for First Majestic, say, in the next 12 months?
Well, we've got a huge budget in exploration. I think we're spending almost close to $40 million on exploration. It'll be quite exciting to see the news coming out of Jerritt Canyon over the next 12 months. It's our first spend in exploration, actually our first spend period, since we shut Jerritt Canyon down. So, you know, our geo team led by Gonzalo Mercado is pretty excited by what he's thinking is a, you know, elephant there. You know, we'll see if, you know, our geological theories are correct. You know, Jerritt Canyon still has 3.9 million oz of silver refined and 43-101, so it's. There's a lot of gold there.
But, we are looking for, you know, that big elephant under, you know, one of those big caps that have never been historically drilled. That's really what I've kind of got my eyes on, but the continued success at Santa Elena is pretty outstanding. We have some news, I think, coming out in the next month or so, on drill results at Santa Elena. Just, you know, a month ago, we put drill results out on San Dimas. You know, we're, we're- we've got over 20 rigs active, you know, throughout the business, so, you know, we don't make a regular habit of coming out with, drill holes. You know, I, I think people are more concerned, at least what I hear from investors, are more concerned about what we're producing versus what we're drilling.
But, you know, we are a mining company, and we do tend to, you know, every, you know, maybe six months, we put out an update on our exploration programs. But, you know, our staff has, you know, got, you know, 300 geologists that work for the company, and, you know, that's a, a lot of people focused on, you know, getting oz defined and then, you know, getting them out and then developing those oz and getting those oz into the mill to increase mine life and, increase production.
Okay, thanks, Keith. The second question that we have is about First Mint. How is the First Mint coming along?
Well, it's. I think everyone internally is pretty excited about it. We just came back from Rick Rule's conference in Florida. Most of our team was there. And I can tell you, you know, just from people that I met and the dozens and dozens and dozens of shareholders that came up to me and complimented us for, you know, being the first mining company in the world to have our First Mint, it was quite encouraging. We started production in March of this year, and we're still not up to full throughput, but we're getting there. We're still installing machines today. Our inaugural opening ceremony is scheduled for September, and all the machines should be in place at that time.
You know, currently, we're producing 5-oz, 10-oz, and 1-kg bars. Hopefully by September or October, we'll be producing coins, and we're expecting to see production there, you know, increase, you know, quite nicely over the next several quarters.
Okay, great. And we have one more in the queue here. Before I hand it back to Gaylene, see if you want to pull for more questions. We've had two questions, and I just summarized them. You've talked a little bit about them before, but it's, "Can you give an update on Jerritt Canyon beyond maybe what you've said already?
Sure. Well, Jerritt Canyon, you know, it, it's still, you know, we, we need to make some investments there. It's quite, quite clear. The, the mill needs upgrading. You know, the winter that hit us in, in December, January of 2022 to 2023 was pretty hard on that mill. It needs to be winterized. We don't want to go through another situation whereby that mill is so badly affected by weather. So it will take some time and, and some money, some investment there. But drilling is really key. So there's two focuses. One is, actually, three focuses. One is, rebuilding the mine plan, you know, to, to bring that 3.9 million oz of gold out of the ground in an economic fashion. That is underway.
Coming up with a rebuild of the mill, we're still planning. We know what needs to be done. It's not currently in our budget. I don't think it'll be in our budget, likely, until probably 2026. So we're going to spend the next 18 months really focused on drilling. We want to see if that elephant does exist, and if our geological team is correct in their viewpoint. And if they are, then that's really going to be the impetus for us to really start to look at turning Jerritt Canyon on, towards the end of 2026 or into 2027.
Okay, thanks, Keith. I have no more questions in my queue. I'll hand it over to Gaylene.
Once again, if you have a question, please press star, then one.
Okay, well, it...
you have a question.
No, no, it appears that obviously, we're right in the depths of summer and 30 degrees here in Vancouver, and I'm sure a lot of you are on vacation at the beach or wherever the hell heck you might be. But, anyways, thanks for those of you who joined us today, and this is recorded. If there are any individuals that are listening to this after the fact, please feel free to contact any of our people, Mani or Darrell or Joel, you know, or Mark. You know, feel free to call us at any time or send an email at info@firstmajestic.com if you have other questions for us. Thanks again for joining us.
This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.