First Majestic Silver Corp. (NYSE:AG) Q4 2019 Earnings Conference Call - Final Transcript
Jan 21, 2020 • 11:00 am ET
do with San Dimas over 2020 and 2021 with the successes we had at Santa Elena.
At La Encantada, we've had some pretty great successes with Q3 and Q4 being the most silver that that mine has produced in over five years. We are projecting a little bit higher costs at La Encantada in 2020, and the reason why that is is because this is a caving process and it's difficult to really predict with any real certainty what the grades are going to be.
Over the last couple of quarters, we've been very, very lucky and have had some great grades and that mine has been making some substantial profits in the last couple of quarters. But in 2020 we're being a little bit conservative. We've dialed back the grades a little bit and also dialed back production a little bit. So that's why it looks like it's slightly higher cost, because it's just us being conservative. Of course, the geos and all the engineers inside her are hoping to maintain Q3 and Q4 grades, but when it comes to public disclosure and guidance, we have to shy upon the conservative.
Another thing that investors and shareholders should know is three years ago we had seven mines operating. And as we had very successful acquisitions of our two last purchases, the Santa Elena and San Dimas mines, those two mines are really generating the majority of the production and most of the profits and it just makes business sense to really focus our efforts on those two mines. And unfortunately, the smaller mines which were producing only really around 1 million ounces or less each, insignificant really in the whole scheme of things, it just didn't make sense to continually pushing silver out of those mines and losing money on those ounces.
So, we made a couple of tough choices. We did shut down the La Guitarra mine in 2018. We shut down the La Parrilla mine in late 2019. Del Toro is now also in its wind-down mode and will be shut down in the next couple of months. So we will be reporting any lead or zinc production in 2020. All our production will be from the three mines: San Dimas, Santa Elena and La Encantada. Of course, San Dimas and Santa Elena are significant gold producers. So we'll be producing from those three mines just gold and silver in the form of dore bars which obviously is a fantastic thing.
Other things we're going to be focusing on: with the success we had at Santa Elena, we are going to continue that innovation projects with a focus at San Dimas sites. The HIG mill just arrived in Mexico a couple of weeks ago. It will be transported to site. The engineering is almost done. We hope it'll be breaking ground in the next couple of months. So, on the rebuilding of this mill, it hasn't had any investment for likely 30 years. So it's likely it