First Majestic holds back 700,000 oz. in 2Q silver sales, citing low prices
The decision to suspend the sale of 700,000 ounces of silver in the second quarter because of low silver prices was partly responsible for plunging First Majestic Silver’s net income by 99% to $200,000 in the second quarter of the year.
However, First Majestic’s silver production and silver equivalent production soared by 44% and 55%, respectively, during the second quarter.
“The silver price fell 31% during the second quarter which is equal to the largest quarterly drop during the 2008 financial crisis and the third largest quarterly drop in the past 50 years,” said First Majestic Silver CEO Keith Neumeyer. “As such management decided to suspend a portion of silver sales to await a rebound in prices. While the suspension had a negative impact on this quarter’s revenue and earnings, we are confident that the silver price will revert back to the mean in the near future. In the meantime, regular sales are no taking place in order to allow silver inventories to return to normal levels.”
This move is admirable, of course...and First Majestic has done this before. But it doesn't alter the fact that every silver mining company should hold a decent proportion of their companies ongoing free cash flow in silver bullion...and keep it off the market until this JPMorgan-led price management scheme is finally broken...and Keith Neumeyer is intimately familiar with the situation. If the ten largest silver producers did that, it would all be over in no time at all...and they'd be selling this silver into the market at a 3-digit price. Now that would make shareholders happy, but it's not going to happen because it's in the shareholders best interests...and virtually all of the large silver producers are strong with the dark side of The Force.
I hold AG, too. It wouldn't hurt my feelings at all were they to cut sales to the bone, enough so that they are able to cover current operating expenses while stacking the rest. Maybe the silver producers will for a cartel. Wouldn't that be a hoot?
moses AG=total genius, I LOVE it....besides if SLW did sell what makes everyone think that they could nnot egotiate better prices for themselves...the lows were insane and not realistic.....seems like no noe thought about that!!