La Encantada
First Majestic's largest operation, the La Encantada Silver Mine, was expanded several times since 2006. The current plant facilities consist of the newly completed 3500 tpd cyanidation mill and a fully functional1000 tpd flotation mill. The waste (tailings) from the flotation mill are pumped directly into the 3500 tpd cyanidation mill. Construction of the new 3500 tpd cyanide mill commenced in July 2008 and was completed in November 2009. The expansion is anticipated to add over 2.0 million ounces to the Company's production, bringing production to over 4.0 million ounces in the form of dore bars at La Encantada in 2010.
Some highlights from Q2 2010:
- The new 3,500 tpd cyanidation mill achieved commercial production effective April 1, 2010. Starting this quarter, all revenues and associated operating costs will be treated as commercial production rather than being capitalized, as was the case in the first quarter.
- Average throughput in the new cyanidation plant averaged 2,908 tpd in the second quarter.
- With the cyanidation plant operating at close to capacity a decision was made to suspend production of lead concentrate through the flotation circuit and focus on silver Doré production only, thereby dramatically reducing smelting and refining costs.
- As throughput reaches capacity in the third quarter and other efficiencies are achieved, higher production levels are anticipated.
https://sites.google.com/site/goldandsilver2012/company-reviews-by-goldstocksdaily-com/first-majestic-silver
La Parrilla
The Company's second mine, the La Parrilla is located outside the city of Durango. La Parrilla Silver Mine is 100% owned and comprises a complete 850 tpd mill and underground mine which began operations in October 2004. Production in 2009 was 1.3 million ounces of equivalent Silver.
The completion of a new three kilometre ramp at the Quebradillas mining area in the first quarter is now having a positive impact on current production levels. Due to a large high grade ore body that was discovered in 2006, this large sulphide area will allow for the eventual expansion of the La Parrilla mill which is now in the planning stages. This mill expansion will allow for the production of zinc concentrates in addition to the lead concentrate and Doré bars currently being produced.
San Martin
First Majestic's third operating mine, the San Martin Silver Mine, was acquired in June 2006 by purchasing a majority stake in First Silver Reserve Inc. The mine expanded to 950 tpd in late 2008. It currently produces about 1.3 million ounces of silver annually. The San Martín Silver Mine suffered from a lack of reinvestment for several years. First Majestic made several improvements to the mine operations after they took over. They also made the necessary investments in development and exploration in order to increase silver resources.
The 2010 drilling exploration program from surface commenced in the second quarter. The La Esperanza vein which was discovered and sampled in mid 2009 and runs parallel to the main Zuloaga vein returned high anomalous values of silver on surface and is a high priority target for San Martin.
Del Toro Silver Mine
Del Toro is a development stage silver mine owned by First Majestic. Its Measured and Indicated Resources represented about 21M ounces of silver eq. About 36M ounces of silver equivalent were estimated in Inferred Resources.
It is expected that Del Toro will become First Majestic's fourth producing silver mine. The resource estimates came in much higer that originally anticipated. According to First Majestic:
"it has become certain that Del Toro will become a new operating mine"
Anticipated to produce 3 million ounces of silver in 2012.
Real de Catorce Silver Project
The project was acquired by First Majestic in November 2009 as a result of the purchase of Normabec Mining. According to the lastest NI-43-101 from November 2008, the estimated total Resources in all categories was 46,787,527 ounces of silver.
First Majestic plans to launch an aggressive drilling and exploration program in the latter half of 2010 and is optimistic that total Resources will be expanded significantly.
Financials and Production
go tohttps://sites.google.com/site/goldandsilver2012/company-reviews-by-goldstocksdaily-com/first-majestic-silver
Q2 2010 highlights:
- Consolidated gross revenue was $31.8 million, compared to the first quarter ended March 31, 2010, consolidated gross revenue increased by $9.9 million or 45%
- Sold 1,623,844 ounces of silver equivalent at an average price of US$18.68 per ounce compared to 1,298,659 ounces of silver equivalents at an average price of US$16.23 per ounce in Q1 2010
- Produced 1,538,798 ounces of silver, compared to 1,409,825 ounces of silver in the first quarter of 2010
- Net income of $8.9 million in the second quarter of 2010, or earnings per common share ("EPS") of $0.10 compared to net income of $3.0 million in Q1 2010 resulting in EPS of $0.03. If the revenues and expenses of the new plant were deemed commercial in the first quarter (recorded as income rather than capital) an additional $2.3 million of capitalized profits would have increased EPS in the first quarter to $0.06
- Total cash costs per ounce (including smelting, refining, metal deductions, transportation and other selling costs, and by-product credits, which is a non-GAAP measure) for the second quarter of 2010 was $8.20 per ounce of silver compared to $8.11 per ounce in the first quarter of 2010
There are a total of 93 million shares outstanding, 107 million fully diluted.
First Majestic doesn't have a lot of cash on hand($16 million) because they spent $30 million on the recent La Encantada mine expansion. With their current expansions complete though, coupled with the increase in cash flow, it doesn't look like the company will need to raise money.
Silver production:
Purchase Silver directly from First Majestic
You can actually buy silver coins and bars directly from First Majestic. If you go to their website you will see a section on this. However, I'm not endorsing this. I'm not saying buy from them, and I'm not saying don't buy from them. I'm just saying they sell directly. Capiche?
Conclusion
When I first wrote this review back at the beginning of June 2010 this is what I said in the conclusion:
First Majestic is a growing silver producer focused on Mexico. It is on track to produce over 6 million oz of silver in 2010, and they are looking to increase this even more over the next few years. Their expansions are now complete, and production and earnings are growing. At a market cap of under $400 million, the company is clearly being overlooked here.
The company now currently has a market cap of almost $750 million using fully diluted shares. I don't think people are overlooking First Majestic anymore. It's clear now that the company is finally being rewarded with a market cap it deserves. But they plan to have Del Toro online in 2012 which will boost production by another 3 million oz of silver per year. So First Majestic will be producing over 10 million oz of silver in 2012. They earned $.10 a share last quarter, and that was on much lower silver prices. In other words earnings and cash flow are only going to get better.
go tohttps://sites.google.com/site/goldandsilver2012/company-reviews-by-goldstocksdaily-com/first-majestic-silver
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almamor
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