Thank you for standing by. This is the conference operator. Welcome to the First Majestic Silver Fourth Quarter Production And 2022 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. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Mr. Keith Neumeyer, President and Chief Executive Officer. Please go ahead, sir.
Thank you, operator, and thanks for everyone who's dialed into our first conference call of the year. It's been quite an interesting 2021, which I'm looking forward to talking about. We have a variety of people on the line from management spread around the world. We have Connie Lillico, our Corporate Secretary. We have Andrew Poon, our Interim Chief Financial Officer. We have Steve Holmes, our Chief Operating Officer. We have Todd Anthony, our Vice President of Corporate Development. We have Jill Arias, VP Marketing, and Ramon Mendoza, VP of Technical Services. Before I get into my presentation, I'd like to pass the call back to Connie Lillico.
Prior to us beginning today, I'll read our disclaimer on forward-looking statements. Certain statements contained in this conference call regarding the company and its operations constitute forward-looking statements in accordance with applicable Canadian and U.S. securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, objectives, assumptions or expectations of future performance constitute forward-looking statements. We caution you that such forward-looking statements involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements.
Such risks and uncertainties include the duration and effects of the coronavirus and COVID-19 and any other pandemic on our operations and workforce and its effects on global economics and society, fluctuations in precious metal prices, unpredictable results of exploration activities, uncertainties inherent in the estimation of mineral reserves and resources, fluctuations in the cost of goods and services, problems associated with exploration and mining operations, changes in legal, social or political conditions in the jurisdictions where the company operates, lack of appropriate funding and any other risk factors as discussed in the company's filings with the Canadian and U.S. securities regulatory agencies. Resources and production goals and forecasts may be based on data insufficient to support them. The company expressly disclaims any obligation to update any forward-looking statements. Back to you, Keith.
Thanks, Connie. Just getting into some of the Q4 highlights, as news released this morning, I'm hoping everyone on the call has had a chance to look at the company's news release. We did have a record fourth quarter, a record in the history of the company. We produced 8.6 million ounces of silver equivalent, which was a 17% increase. You know, that was made up of 3.4 million ounces of silver and 667,411 ounces of gold, which amounted to a 24% increase. The San Dimas mine had a record quarter, you know, quite honestly due to grades.
It produced 4 million silver equivalent ounces, you know, 2.2 silver ounces and 23, just under 24,000 ounces of gold, representing a 17% increase, which is very nice to see. Santa Elena, we were ahead of schedule getting Ermitaño online. You know, we had telegraphed to the market, you know, over the last year that Q1 was gonna be really the beginning of production there, but we were fortunate enough to be able to get some ounces produced from Ermitaño. It produced, well, the mine itself including Ermitaño produced 2 million silver equivalent ounces, including 426,000 ounces of silver and 19,800 ounces of gold. You know, 86% increase in production, you know, which is pretty amazing and unexpected.
You know, we didn't expect to see that come through that quickly. It was really refreshing, and it really sets up 2022 as a pretty fantastic year. A couple of other things we really needed to focus on was Jerritt Canyon, the tailings dam. You know, it was really necessary to get that built before winter came in, and we came in slightly under budget and right on time. It's now being operated as far as I know, but it's completed. Without that, you know, obviously the mine would have some challenges over the winter, but it was done. $13 million investment, you know, which did hit our costs, you know, during those couple of quarters. Those costs are now gone, of course.
We ended the year off with 21 drill rigs active throughout the entire company. Going into some highlights before we get into the question and answers for the year. We had a record year, as I said, you know, 12.8 million ounces of silver, which was an increase from 11.6 million ounces the year before. And then gold ounces, of course, is really the you know, the big increase. We saw 192,000 ounces of gold produced, compared to just over 100,000 ounces in 2020. We also successfully completed the acquisition of Jerritt Canyon, as many people know.
You know, it was our first investment outside of Mexico in the 19-year history of the company. You know, it's great to be in the state of Nevada. We've got, you know, a great mine there, which is gonna grow over time. You know, it used to be the largest mine in the state of Durango or in the state of Nevada. You know, we're expecting it's gonna, you know, grow substantially over the next couple of years with the proper type of investment and mostly focused on exploration and development. Also, the LNG plant at Santa Elena was converted over from diesel quite successfully. You know, it took some time to get that built.
It was slightly behind schedule due to COVID-19 situation, but it finally got up and running in April. We know now we can now just be quite proud that most of the energy from Santa Elena is actually now coming from LNG. We're actually looking to expand it even further, in order to take advantage of some of the power needs at Ermitaño. Another interesting tidbit of information for those who follow our retail store. You know, we do sell our own silver over our e-commerce website. People should go and have a look at the different products we sell. We had a record year. We actually revenues of $10.9 million through our e-commerce website.
Our average selling price for those ounces going out the door was $31.29. Quite a successful year for that department. Pat on the back to them, and we're looking forward to another pretty nice looking target with, you know, the Reddit anniversary coming up in the next few weeks. Look for a nice sale being announced, you know, over the e-commerce website. Going forward, you know, for 2022, we're expecting a record year. With what's happening at Ermitaño, with what's happening at Jerritt Canyon.
You know, we've guided today, you know, production between 32-35 million silver equivalent ounces, which consists of about, you know, 12.2-13.5 million silver ounces and 258-288 thousand gold ounces. So it's gonna be a pretty exciting year for the business and we're always looking for other ways to grow as well. There's a couple of major projects coming in. We are spending $207 million. The two projects, really, the biggest one is really the dual circuit processing system at Santa Elena, which will help us improve recoveries of the silver there, which is something that is obviously quite needed, you know, including the fine grinding technology.
The last thing before I get to questions is the drilling program. We had a record amount of meters drilled in 2021, 227,000 meters of drilling. That's a lot of drilling. A lot of people, a lot of rigs are involved in that program. This year, 2022, we're actually expecting about 320,000 meters of drilling, spread over all assets with a focus at Jerritt Canyon, of course, but also focusing on San Dimas and also some of the regional areas around the Santa Elena mill. Hopefully, finding another lookalike at Ermitaño over the next couple of years, which would be just wonderful for that asset. That's about it for my presentation. You know, why don't we go to questions?
Thank you. We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question comes from Heiko Ihle from H.C. Wainwright. Please go ahead.
Hi there. Thanks for taking my questions and a very warm welcome to Andrew.
Yeah. Thanks, Heiko.
Thank you. Let's talk a bit about Jerritt Canyon, and let me preface all of this with the fact that I think it's pretty cool you got nine rigs operating at site. Your production at Jerritt was down 10%, which in the grand scheme of things is obviously pretty much irrelevant. To clarify, the weather in January thus far seems to have been pretty good with limited snow. I actually just looked it up online. I assume these issues should subside. More importantly, maybe just provide a bit of color on the changes that you've made to site in the last couple of months, and just give a few examples of that.
Sure. The guidance for the year 2022 is an increase, as you can see in the news release, 116,000-129,000 ounces of gold. To get into specifics, I'll pass that question over to Steve.
Okay. Thank you, Keith. Yeah, Jerritt Canyon 2021, probably the biggest change that we made was the leadership team there. We brought in a large group with a lot of technical and management talent that is basically managing that asset, working pretty hard on two main areas. One is environmental compliance, which, you know, Jerritt has a history of, and we've made great progress on that. The other one is just the production improvements. The issues that we had mainly late in December, middle of December with the storms have been mostly all resolved. We were able to get the throughput up and back online in early January, and I think we're gonna be off to a good start to see this growth expansion in 2022.
Still gonna be a very busy year and a lot of investment in gas handling off the roaster to make sure we can take care of the mercury issues that we have there. We made a lot of progress, and we expect that team to continue to make progress in 2022.
The roaster was also down part of the quarter. The roaster comes down twice per year for approximately two weeks each time. We're hoping to reduce those downtimes in 2022, but the downtime did affect Q2 and Q3 by about two weeks. It was about a $5 million investment that we made. We've actually made during that shutdown, we were able to make a number of other improvements that is actually having quite the benefit now for us. It was quite the advantage, you know, to shut it down when we did. The pipes that were frozen due to the winter, these pipes were not properly protected. They weren't properly winterized. That is now all been mitigated.
Things were put in place to prevent those freezing situations from occurring in the future. If we do get another major weather event like that, we won't have the same impact.
Fair enough. I think you started answering my second question already in your answer to the first one. Just following up on that, though, a little bit. In your outlook, you have a $96 band between the high and the low end of guidance for all-in sustaining costs for Jerritt Canyon. As for SSX in particular, can you maybe just provide us a little bit of color on the factors that might sway it towards one end or the other?
Manny, are you there?
Yeah.
Do we have?
Yeah, yeah. Hi, Keith. Yeah. It's a factor of two things. Our denominator. You know, it's gonna be a lot of grade driven, so depending what the production is. Our divisor is gonna be fluctuating, and that's really the main driver of the range in the all-in sustaining. The investments going into all-in sustaining are really you know, some of the compliance projects that we have in the capital budgets. They're well-defined, so we're not expecting a lot of changes in those. Detail engineering and scopes have been put in the budget, so the projects should not have much deviation to the numbers in the capital budget right now.
Perfect. That's it for me. I'll get back to you. Thank you all very much, and stay well.
Okay. Thanks, Heiko.
The next question comes from Ryan Thompson from BMO. Please go ahead.
Hey, guys. Thanks for the update. Maybe I'll just start with a question on inventory. I think you had a fairly sizable buildup in Q3. Should we be plugging that inventory in as sales figures in Q4? Just how should we be thinking about that?
Manny, how about if I give that one to you as well?
Yeah. There was some inventory obviously from the downtime at Jerritt and just also timing of when some of these were sold. Yes, the answer is those would've been flushed out in Q4.
Same on the silver side of things?
Yeah. Keith also can confirm this, but I think most of the inventoried silver has been priced and flushed out in Q4.
Yeah. If you're talking about the actual silver held over the quarter, Ryan, yes, all of that silver was sold in Q4.
Okay. Perfect. That's helpful for our modeling purposes. Maybe just one other question on Jerritt Canyon. I know when you acquired the assets a few quarters ago now, there was some talk about maybe you know, potentially toll milling other material within the area. Could you just give us an update on what the latest thinking is there? Thanks.
We're still investigating it. It's not in our budget. We, you know, we haven't got any of our production in our guidance that is toll milled. The issue is, you know, we don't wanna be affecting our, you know, own production by bringing in ores that aren't compatible, you know, with our other ores. The sulfur content is quite critical. You know, we don't wanna be doing modifications to the mill, you know, just for the sake of, you know, having some other type of ore coming through it. You know, we are very much focused on filling this mill with our own ore. You know, that's why we joined the SSX mine and the Smith Mine underground. That is now completed.
That was, you know, full effort that took most of the year to accomplish. That's gonna really open up these two mines and make it much more efficient. Also, the drilling that is into some of the old open pits that were operated back in the 1990s has been quite successful. We're looking to bring at least one pit online in mid to late 2022. Hopefully, maybe even another one. The whole focus is working with our own, you know, property. This is a very large land package that's extremely underexplored and underdeveloped, and we think we can fill the mill ourselves with our own ore by 2024, and that's the focus.
If some other toll treating ore just happens to come along the way and fit into the mill's requirements, then we could do a deal, but there's nothing pending.
Okay. Thanks. That's helpful, and that's all I had. I will turn it over.
Okay. Thanks, Ryan.
The next question comes from Craig Hutchison from TD Securities. Please go ahead.
Hi, good morning, guys.
Hey, Craig.
A question on San Dimas. In terms of your guidance, you know, the 7.4-8.2 million ounces, can you give some context around grades? I know you had good grades in Q4. Can we expect sort of similar grades to 2022, or is it more like a reversion back to the reserve level?
Steve, do you wanna grab that one?
Yeah. The grades that we're looking are pretty similar, slightly higher on silver and slightly higher on gold, but they're pretty similar on the grades. We're gonna be doing most of our work in the Fernando area. We've kinda consolidated back to the Jessica, Victoria, Regina veins, which have some of the better grades and bigger slopes for longhole stoping. That's what's driving the outlook for 2022 for San Dimas.
Okay. It would be similar to Q4, I guess. How about throughput? Do you guys sort of expect to get back to around 2,400 tons a day, or kinda think more along the lines of 2,200?
Our intention is to go above 2,400 tons a day in 2022. Most of that is contingent, not so much on the plant, but it's really about the mine output, and that's where a lot of our effort is focused, improving the efficiencies of our longhole drilling, you know, going to the bigger veins that I just mentioned. That kind of activity, which is helping push up the ore deliveries and the ore flow. You know, we're targeting about 2,500 tons a day on ore flow in 2022.
Okay. Maybe a similar question at La Encantada. I know the second half of 2021, I think you guys are targeting close to 150 grams per ton for silver. Came in a little bit light in Q4. In terms of 2022, should we expect, you know, the production to be driven largely by higher throughputs, or do you guys expect to kinda get back closer to that H2 guidance around 150 grams per ton?
We're gonna continue to push volume there. We're seeing lower grades at La Encantada. Our targets are around the 140-145 gram per ton range for 2022. You know, La Encantada is, because of the block cave operation there, we're actually caving, you know, a lot of old workings and backfill and things like this. Being able to accurately model the grade and the quality of the ore, it's really challenging. One thing we are doing in La Encantada in 2022 is we're moving towards a new resource called the Willis. We expect to bring that in later in the year. It is a higher grade resource, but it does have some issues around recovery, so it's a bit of a trade-off, but certainly quite a bit higher grade.
You know, final answer, we're targeting the 140 to 145 gram per ton ore flow from La Encantada, but we will keep that throughput rate above 3,000 tons a day.
Okay, great. And maybe one last question from me, a follow-up to this question to something Keith mentioned earlier. I think you mentioned that you're looking to bring an old pit online in 2022 at Jerritt Canyon. Is that in your guidance already, or is that upside?
No, it's not a pit. It's actually an underground mine. It's called West Jim. In the second half of the year, the intention is to reactivate West Jim. We have to go through a permitting process and clearance by MSHA because it's a suspended older underground operation. We will continue to do some surface mining in areas that have the proper grade in the area. The main difference is we'll get ore from in the second half of the year from three sources, Smith, SSX, and then West Jim.
Okay, great. Thanks, guys.
Thank you.
Once again, if you have a question, please press star then one. Please press star then one now. The next question comes from Don DeMarco from National Bank Financial. Please go ahead.
Oh, hi. Good morning, gentlemen. My question has to do with Santa Elena. I'm just looking at the 2022 guidance and seeing costs improving. You know, this is a mine that's seen some volatility in the costs over the last year, so it's nice to see they're improving. Can you talk about the factors that contribute to these cost improvements? I mean, obviously Ermitaño plays into a factor, but if you could add a little bit more color to this, it'd be appreciated. Thank you.
Steve, why don't you grab that one as well?
Sure. For Santa Elena in 2022, the big impact is Ermitaño. The silver equivalent grade at Ermitaño is nearly double Santa Elena. Obviously, we're gonna bring in a volume of Ermitaño ores. The fixed cost structure at these mines, and Santa Elena is no exception, is such that these kind of divisor improvements, when you get your ounces up, has a profound effect on the cash costs, all-in sustaining costs, et cetera. That's the biggest factor for 2022, is just the quality of ore that's feeding into the plant is significantly better for Santa Elena, and thus the leverage on cash costs is quite good.
Great. Okay. I'm seeing in Q4, recoveries eased a little bit. I guess the quality of the ore just kinda overcomes that slight easing in recoveries.
Yeah.
Is that supposed to change in 2022?
Yeah. It's a great question. The Ermitaño ores compared to Santa Elena ores are different. The Ermitaño ores obviously have a lot more gold content, which is really nice because that's, you know, much more valuable. But to liberate the recoveries on those gold values and those silver values at Ermitaño, we actually have to grind finer, like around 30 microns. One of the things Keith mentioned earlier is we have a major project at Santa Elena this year that's well underway, which is called the Dual Circuit Project. We're gonna add a leach tank, another CCD, and we're gonna put in a new high capacity advanced Metso Outotec press filter for the tails. That investment should be up and operated by the fourth quarter of 2022.
It's gonna allow us to batch process Ermitaño ores and then flip over to Santa Elena ores. When we're batch processing Ermitaño, we're grinding finer. We reduce throughput 'cause we're finding that sweet spot in terms of value of throughput, recovery grade. When we do Santa Elena ores, we're gonna increase throughput. We're gonna open the grind up a bit and find the Santa Elena ores' sweet spot, if you wanna call it that. That's the plan for 2022. As we get into the Ermitaño ore body, as we develop more production levels, and our target is to get to five active major levels in Ermitaño, we'll dial in on how we process these two ore bodies through this single plant.
Okay. Thanks so much, Steve. Appreciate the color. That's all for me.
Okay. Thanks, Tom.
This concludes the question and answer session. I would like to turn the conference back over to Mr. Keith Neumeyer for any closing remarks.
Well, thanks, everyone, for joining today's call. I hope it was full of information and you learned something today. If there's additional questions or information you'd like to receive from the company, please feel free to contact us via email. You know, many of you know who we are anyways, but you know, Todd Anthony, Mark Carruthers, myself, or our website's full of information as well. Look forward to further communication with you throughout the year and you know, let's hope for a good 2022. Thanks again. Have a great day, everyone.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.