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First Majestic Silver Corp. Message Board

  • kinks1981 kinks1981 May 24, 2013 9:10 AM Flag

    Silver Company Comparisons

    First Majestic was the last to report their 1st q, 2013 results. I've taken my own snapshot of the following companies for comparison: AG, PAAS, HL, GORO, SSRI, EXK, GPL and CDE.

    1st- As a lead in, Seeking Alpha post had the following most recent breakeven costs as:
    GORO $12.70, AG= 17.71, PAAS= 18.93, SSRI= 22.30, HL= 24.58, CDE= 26.05, EXK= 28.54, GPL=29.62
    I won't argue the validity of this assessment but only use it as a rough guideline to compare to 1st Q.

    2nd- The 3 criteria that I will use for an overall assessment are (1) cost of revs as % of revs (2) Income as % of revs and (3) current ttm PE. So here goes:
    a.) AG: cost of revs/revs 24/67= 37%; Income % revs= 26/67= 39%; PE= 14.
    b.) PAAS: 168/243= 69%; 20/243= 8% (* adj income= 40/243= 16%; PE=44
    *Note: shares out have increased from 104M to 154M since last year
    c.) HL: 37/76= 48%; 3.4/76= 4.4%; PE= 76
    d.) GORO: 17/42= 41%; 7/42= 17%; PE= 18
    Note: Included as silver miner based on approx. half gold half silver and lowest BE cost per Seeking Alpha
    e.) SSRI: 34/49= 70%; -5/49= -2%; PE= 11
    f.) EXK: 51/70= 73%; 15/70= 21%; PE= 12
    g.) GPL= 12.3/12.6= 98%; 1/13= 10%; PE= 50
    h.) CDE: 89/172= 52%; 12/172= 7%; PE=21

    Conclusion:
    Obviously, the details relative to debt, country of production/currency, capital expense, cash, cannot easily be reviewed here and it would be easy to question some of the above results. However, there are some basic conclusions to be drawn from 1st quarter results.
    1.) AG's cost of revenue is the lowest (ie best) at 37% (GORO is the only one close at 41%)
    2.) AG's Income as % of revenue is the highest (ie best) at 39% (note that they have ranged between 32 and 45% for several quarters).
    3.) If we assume that the average silver price for the 2nd Q 2013 will be approx. $24/oz , then I expect 4 of the 8 companies above to report negative earnings in 2nd Q.
    4.) AG's PE=13. that's low relative to others given the best income as % of revs + 50% increase in ozs out of ground by E/2014

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    • one thing kinks1981

      as I said before the seekingalpha person didn't factor in
      taxes.

      taxes go down the less profit you make.

      if you make nothing you pay nothing.

      unless I am mistaken about what taxes are taxes fluctuate
      according to revenue/profits

      as a result the break even cost of production can actually be lower than what seekingalpha author says it is.

      I am surprised no one mentions this on his blog

    • Thanks for the nice work done. I did not go through for the details, but I fully agree with your conclusion, that is: AG is the best ( #1, not one of the best) silver miner in this industry. when silver turns AG will leads. So for me I have no bother to look at other company's stock for long term hold.

    • I also like the simple comparison of cost of revs as % revs and net income as a % of revs.
      While these comparisons are not perfect, AG does seem to align with the SA article on low cost producer.

      A comment on revs for both 4th quarter and this 1st quarter. In both quarters the revs would have been about $10 million higher if not for the transportation and smelting operations at 2 of the mines. Note that by this time next year, all production mines will be capable of dore bar output thus eliminating these costs.

      In short, the low silver cost for the quarter is working against everyone but AG continues to address their highest cost issues which will drive that net income as a % of revenue higher than any other producer.

    • Good post and info!

      I agree that the "Cost of revenues" is one good indicator of company efficiency.
      There are some discrepancies in the SA Breakeven costs that have been debated here before. Ex: SSRI having a loss in 1st q but showing a relatively low BE cost. While I may debate what this means for the other company's that you've posted, I believe both confirm that AG is lowest cost producer (I was not aware that GORO was a large silver producer). There is no good explanation for 13 PE if you consider AG growth and efficiency compared to the others.

 
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