First Majestic cuts spending as silver prices fall
By Krithika Krishnamurthy
(Reuters) - Canada's First Majestic Silver Corp (FR.TO: Quote) (AG.N: Quote) cut its 2013 capital expenditure estimate and warned of further cuts later this year as it looks to blunt the effects of falling prices of silver, sending its shares down to a two-year low.
Miners around the world have slashed spending in an effort to control runaway development budgets. The world's No. 1 gold producer, Barrick Gold Corp (ABX.TO: Quote), said in April it planned to further cut capital spending.
"If silver prices do not improve prior to the third quarter, further cuts in capital commitments will be made," First Majestic said in a statement.
Silver prices have dropped 23 percent, while gold prices have fallen 15 percent this year.
Vancouver-based First Majestic cut its expenditure estimate by 16 percent to $162.3 million.
The company said the cut would not affect ongoing expansion projects, and backed its full-year production target of 11.1 million to 11.7 million silver ounces.
"We're certainly not in panic mode," said analyst Adam Graf of Cowen Securities.
Graf, who recommends buying precious metal stocks in the current environment, said miners are being conservative in their spending to counter any further drop in metal prices. Continued...