One of the more important items that I consider before becoming a shareholder is that the company have competent management. Our management is excellent. For instance, they are being very pro active in cost cutting giving the swoon in metal prices. More importantly, they started the process by reducing their own compensation by ten per cent. Wow, that's a rarity in today's world. This effort to reduce cost isn't something that they was just initiated. Note the increase in recovery rates reported in Q1 accompanied by managements remark that they intended to focus efforts on increasing this number. Since I consider them to be one hundred per cent credible, I was glad to see that they fully intended to deliver the production increase for 2013 as projected. Incidentally, I remain confident that the company will deliver 8.5 million SEO as opposed to the 7.5 projected by management especially since they reported that the new El Cubo plant will be fully operational within four weeks. All we need now is for the El Cubo mine to produce enough ore to fully utilize the mill. Should metal prices firm up, we'll be in great shape.
I respectfully disagree.
I think ALL Precious Metal Miners have terrible management. They as a group let the Bansters manipulate their own product. They (as a group) need to make a stand, form a organization and sell directly to producers, investors and central banks. Cut out the COMEX that is stealing from the whole sector.
Until management becomes pro active in getting silver to bypass the corrupted system in place I give them all a failing grade.
I have been involved with this sector for over a decade and the time has long been past that everyone knows how corrupt the system is. Management has no incdentive to really get off their behinds as long as they pull in compensation of $$millions per year. Why rock the boat?
Agreed. great company. just live first majestic. But I have to say that my gains in miners recently are from the short side. Unless you are buying and not looking at for 1-2 years.. don't confuse fundamentals with stock performance! Sad but true. And be careful about listening to those too bullish. I hold EXK puts in addition to shares.
Carefulnow- You're right, First Majestic appears to be a great, fast growing company and just like EZK it's getting it's butt kicked by Mr Market. You're also correct in stating that those of us focused on fundamentals have been paying the price by fighting the tape.
Happy to hear that you've been able to make money on this sector despite being seemingly bullish on some of the companies.
Excellent post. I had previously posted that EXK cost (mined) per ounce of silver was close to10.00 and total cost was 19.99 which includes indirect costs, but not all deductions. Brad has just came out today and said that it's 9 -10 an ounce (a direct cost). I also had posted that not all cash costs recorded as production costs and gave details. That was in a post that you liked. I have no concerns with EXK costs per ounce. A little more information is below, inline with my numbers from the Seeking Alp. comment section.
"Cash costs are NOT all in production costs. SG&A expenses are left out of cash costs along with other things like transporting the metal, etc. There is not an industry wide version of what is included in cash costs and miners pick and choose what to leave in and leave out. Many leave out a lot of important costs out of their cash costs. The industry really needs to include every single expense for running the company and come up with better all in cost guidelines for companies to use. If EXK's all in costs were only $10/oz they would have generated $20/oz in free cash flow in 2012 since Silver prices still averaged around $30/oz. They produced 4.5 million oz of Silver in 2012. They should have had about $90 million in potential free cash flow at $30/oz average Silver prices in 2012 if their all in costs were truly that low. Instead, they had only $76 million in OCF and their maintenance capex was sky high. Net income was only $42 million. Endeavour is one of the best run primary silver miners, but their net income suggests their all in production costs were actually very close to $20/oz or higher and not the cash costs they report."
Newscentral- We're both on the same page regarding the inclusive cost at $19-$20 per ounce for 2012. Had they not included costs at El Cubo, $35 plus, that figure would have been significantly lower. The purchase of El Cubo has been a drag through 2012 but will become a huge positive going forward.
I would like to see corporate do something for shareholders, a dividend for starters. Second, it would be nice if they would set-up a retail purchasing program of silver for investors. Also maybe more inside buying over their corporate option plan.