as part of our
We first met with Keith Neumeyer, President and CEO at a Silver
Summit in London a good few years ago and from that meeting we
decided to watch the development of First Majestic Silver
Corporation (FR:TSX || AG:NYSE) with the view to making an
investment. As our interest grew we were fortunate enough to get an
exclusive interview with Keith along with Todd Anthony, MBA,
Investments Relationships Manager and Jill Arias, VP of Marketing.
Following this interview we took the plunge and made our first
purchase for a cost of $13.13, which was back in February 2011.
A few days ago we managed to catch up with Todd regarding the
startup of Del Toro, this is what he had to say:
"We are excited to announce Del Toro's recent production
startup and look forward to the next few quarters as the mine
ramps up to it's full throughput rate of 4,000 tonnes per day. At
this rate, Del Toro is expected to become First Majestic's
largest mine producing approximately 6M ounces of silver per
Given the current weakness in the equity market, along with
the added downward pressure resulting from the arbitrage trade
from the Orko acquisition, investors now have an opportunistic
window to look for an entry point into First Majestic as an
investment vehicle for higher silver prices."
As we see it this is a very exciting milestone which has been
achieved and it certainly bodes well for future production,
turnover and profits.
The following is an excerpt from a recent AG
Underground development within the three mines which comprise
the Del Toro Silver Mine (San Juan, Perseverancia/San Nicolas and
Dolores) has produced 97,700 tonnes of stockpiled ore which is
currently supplying feed to the processing plant. Commercialization
of the 1,000 tonnes per day (tpd) flotation circuit is anticipated
by April 1, 2013. Further development in the first half of 2013
will be focused on preparing the mines for phase two of production,
which will include the addition of a 1,000 tpd cyanidation circuit.
Phase two start-up is expected by July 1, 2013, at which time, the
mill is expected to be running at a combined throughput rate of
2,000 tpd (1,000 tpd flotation and 1,000 tpd cyanidation).
The Company also remains on schedule for the third and final
phase of production (2,000 tpd flotation and 2,000 tpd cyanidation)
by the third quarter of 2014 at which time Del Toro is expected to
become the Company's largest operation and is projected to produce
at an annualized rate of approximately 6 million ounces of silver
per year, and significant amounts of lead and zinc.
It is well known that First Majestic is committed to building a
senior silver producing mining company through an aggressive
development and acquisition strategy so the production from these
five mines of between 12.3 to 13.0 million ounces of silver
equivalents or 11.1 to 11.7 million ounces of pure silver in 2013
looks to be in reach.
First Majestic Chart:
Taking a quick look at the chart we would draw your attention to
the RSI, which has recently traded below the '30′ level suggesting
that this stock is oversold. We have highlighted the three
occasions when this has happened and each time it has been followed
by a rally to higher price levels. Technical indicators are far
from perfect but this does suggest that a rally from here could be
on the cards. This is something that the company also noted in a
recent missive sent to us by Todd Anthony. Please note that you can
also receive updates directly from AG, just go their Home Page and
enter your email address.
Silver prices will remain rather volatile in our opinion, so do
be prepared for the fortunes of AG to oscillate accordingly.
When considering an acquisition we try to find silver producers
that we believe will prosper and grow based on their own ability,
management skills and experience in this tiny sector. Having
quality properties in a mining friendly jurisdiction, in this case
Mexico is also very important. First Majestic now has a track
record stretching back some 10 years which is commendable as there
a great many new comers in the silver space who in our humble
opinion have yet to prove themselves. A handful of these companies
will be successful, but many of them will fall by the wayside so
you really do need to do the work in terms of due diligence.
First Majestic Corporation has a market capitalization of $2.13
billion, a P/E ratio of 23.28, a 52 week trading range of $12.12 to
$24.20, an EPS of $0.79, with an average volume of around 800
thousand shares traded per day. First Majestic trades in Toronto
under the symbol of FR and on the NYSE under the symbol of AG, for
European investors it also trades on the Frankfurt Stock Exchange
under the symbol of FMV. First Majestic closed recently on the NYSE
We wish you all a successful and profitable year ahead.
Disclaimer: www.gold-prices.biz or
makes no guarantee or warranty on the accuracy or completeness of
the data provided. Nothing contained herein is intended or shall be
deemed to be investment advice, implied or otherwise. This letter
represents our views and replicates trades that we are making but
nothing more than that. Always consult your registered adviser to
assist you with your investments. We accept no liability for any
loss arising from the use of the data contained on this letter.
Options contain a high level or risk that may result in the loss of
part or all invested capital and therefore are suitable for
experienced and professional investors and traders only. Past
performance is not a guide nor guarantee of future success.