June 2nd, 2009:
First Majestic Silver Corp (FR-T)
Current Price: $2.72
www.firstmajestic.com
Our new stock suggestion is First Majestic Silver Corp. trading on the Toronto exchange under ticker symbol FR-T. It is currently trading at $2.72 per share with 83.3 mm shares outstanding.
FR-T is currently generating 90% of their revenues from silver and is committed to building a senior silver producing mining company based on the company's current portfolio of projects focused on silver in Mexico.
FR-T owns three producing silver mines, the La Parrilla Silver Mine, the San Martin Silver Mine & the La Encantada Silver Mine.
The La Parrilla is located conveniently outside the city of Durango and consists of over 53,000 hectares. FR-T commissioned a new 800 tpd mill in mid 2007 and expanded the operation to 850 tpd at the end of 2008. Production at La Parrilla in 2008 was 1.3 million ounces of silver and is expected to reach 1.5 million ounces.
FR-T's second operating mine, the San Martin Silver Mine was expanded to 1,000 tpd in 2009. Annualized production is approximately 1.25 million ounces of silver.
FR-T's third operating mine, the La Encantada Silver Mine, was recently expanded from 800 tpd to 1000 tpd. Production reached close to 2 million ounces of silver in 2008. This operation is FR-T's main focus right now and is presently being expanded to 3500 tpd. It is anticipated to be fully running at this new capacity in the second quarter of 2009, bringing annual production up to 4 million ounces!
To learn more about FR-T’s projects, please visit: http://www.firstmajestic.com/s/Projects.asp
FR-T’s exploration and development during 2008 resulted in total global reserves/resources reaching 300 million ounces of silver equivalent!
To learn more about FR-T’s reserves and resources, please visit: http://www.firstmajestic.com/s/ReservesResources.asp
FR-T's total annual production for 2008 increased by 18% over the prior year to 4,229,998 ounces of silver. FR-T generated gross revenue of $56.1 million compared to $45.8 million in 2007, an increase of 22.4%! At the end of 2008, the company was debt free with over $32 million in cash.
FR-T's primary focus in the first quarter of 2009 was reducing operating costs and completing the La Encantada mill expansion program. FR-T was successful in reducing operating costs across all of its mines. Direct cash costs per ounce of silver for the quarter ended March 31, 2009 decreased to US$4.94 per ounce of silver, compared to US$6.51 per ounce of silver for the quarter ended March 31, 2008, due to higher silver ounces produced in 2009 and reduction of mining expenses and indirect costs.
Due to low metal prices in the latter half of 2008, FR-T elected to carry 553,923 ounces of silver equivalent into the new year which is expected to be sold throughout 2009.
FR-T's net revenue (after smelting, refining, transportation charges and metals deductions) in the first quarter of 2009 was $14.4 million; an increase of 11% from the same quarter in the prior year!
In our opinion, not only will FR-T significantly increase cash flow in 2009 and 2010, we also believe the stage has been set for meaningful production growth in the years to come. We believe FR-T is a great opportunity at the current levels as their La Encantada expansion gets ready to commence operations this July! In our opinion, FR-T could be looked at as a perfect acquisition target by senior mining companies!
NIA believes based on historical ratios, silver is undervalued compared to gold and could significantly outperform gold during hyperinflation. FR-T could be the company which benefits most from rising silver prices during hyperinflation.
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