July 10 (Reuters) - Canada’s First Majestic Silver Corp said it would cut 10 percent of its workforce by the end of this year as it struggles with weak silver prices, which have fallen to their lowest in nearly three years.
Smaller rival Endeavour Silver Corp is also looking to prune costs further after it said in April it would defer 20 percent of its planned 2013 capex and cut jobs.
Silver prices fell to $18.39 an ounce in June, their lowest since August 2010, while spot gold tumbled to a near three-year low of $1,223.54 an ounce. Spot silver has fallen 36.5 percent so far this year to close at $19.23 per ounce on Tuesday.
Miners around the world have slashed spending to control runaway development budgets and many precious metal miners have shelved projects as they grapple with higher wages for workers and a rise in fuel prices.
First Majestic said on Wednesday most of its drilling contracts had been canceled due to the cost cutting.
It had about 3,588 employees as of Dec. 31, according to the company’s 2012 annual report. The company also said it plans to reduce the number of contractors.
First Majestic said it had suspended silver sales for a short while due to the slump in prices.
The suspension will result in lower revenue and profit for the second quarter, First Majestic said. The company held about 700,000 ounces of silver in inventory as at June 30.
The company, which lowered its full-year capital expenditure estimate in May, expects the inventory to be cleared in the third quarter.
First Majestic said its vice president of exploration, Guillermo Lozanohas, had resigned due to the budget cuts and personal reasons and that the position had been eliminated.
The company reaffirmed its production guidance of 12.3-13.0 million silver equivalent ounces for the year. Total production jumped 55 percent to 3,268,117 silver equivalent ounces in the second quarter.
Endeavour said silver production in the second quarter rose 48 percent to 1,535,873 ounces, but realized silver price fell 35 percent to $19.08 per ounce. Revenue rose 57 percent to $63.5 million.
Both the companies have mines in Mexico, with First Majestic operating five silver mines and Endeavour operating three in the country.
Hecla Mining Co, the No. 2 U.S. silver miner by output, cut its full-year capital spending plan by 5 percent in May and said it expects metal prices to extend their decline in the second quarter.
First Majestic shares rose more than 3 percent to C$12.07 on the Toronto Stock Exchange on Wednesday, while Endeavour Silver was down less than 1 percent at C$3.23.