Casimir Capital maintained its "strong buy" rating on First Majestic - They set Target Price to $33
Casimir Capital maintained its "strong buy" rating on First Majestic (TSE:FR) after the silver producer announced a forward sales agreement with Bank of America Merrill Lynch on Wednesday on a portion of future base metal production.
The company sold 12,000 tonnes of lead at a fixed price of $2,236/tonne and 13,000 tonnes of zinc at a fixed price of $2,116/tonne, for total proceeds of $50 million.
The contract is valid from January 2013 to June 2016, though the first six months include a holiday option. Delivery can be made from any of the company’s operations.
According to First Majestic, the sales agreement covers 26 per cent of its estimated lead production and 33 per cent of its estimated zinc production over the period.
"Although the agreed price on the latter is 4% lower than our own price forecast for the metal, the company’s internal production projections far exceed our own consolidated projections over the affected period," notes Casimir analyst Stuart McDougall.
"Accordingly, we are leaving our estimates unchanged at this point and will adopt the terms when we update for Q4/12 preliminary operating results."
Casimir has a "strong buy" rating on First Majestic, and a target price of $33.0 per share - way up from its current trading price of around $20 in Toronto on Thursday.