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First Majestic Silver Corp. Message Board

  • pm_guru_1 pm_guru_1 Oct 9, 2013 10:05 AM Flag

    Best of breed silver no matter how you slice it

    You'd have to be crazy to not like a 15-16M oz producer going to 20M in the next 4 years with low costs and organic growth. Watch the Denver Gold presentation it is easy to find. 2014 and beyond are free cash flow accumulation period for AG and becoming a dividend payer. Keith has always said dividend is coming but he didn't want to do it before Del Toro was up to speed.

    Check out Endeavor Silver's quarter. Silver and gold production are WAY up and revenues and cash flows are strong despite the govt/bankster smackdown in silver. These companies are going to be more than fine. They will be great again.

    Sentiment: Strong Buy

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    • Per your reference to Endeavor Silver, they have reported a realized silver price for the 3rd quarter of $22.60.
      They will report their 3rd q earnings on Nov 6th. As mentioned by another, AG should their production results any day now with earnings before mid- November.

      While all of the silver companies seem to have some variance amount each other, AG usually comes in on the higher side. So here is one estimate of revenues and earnings:
      Revenue: 2,900,000 ounces for 3rd q + 700,000 ounces carry over from 2nd q.
      Note: KN reported those700,000 ounces not sold in June were sold later for $3 above June price
      So, assuming AG silver sales price is same as EXK at $22.40 then revs will. Approx $80 million.
      Given KN's ROBUST comment for 3rd q, I assume income will be 0.20 as % of revs
      Or income at $16 million or roughly an eps of $0.15.

      • 2 Replies to marvin_lsd
      • I don't know how accurate your eps estimate will be but AG has not had a loss in any quarter for years. No other silver miner can say that. Until the silver price dropped to $20, AG had net income above 30% as a % of revenues for 3 prior quarters... no one else came close and many had losses even when silver was at $30/oz.

        If AG is able to digest one more quarter, then the major capital spending on Del Toro will have been completed with only $40 million more req'd in 2014 (already spent $140 million on Del Toro). All then will be in place for all mines to hit 16 million ounces by end of 2014.
        The net income as a percent of revs should creep back above 30% even at $22/oz silver.

        So worst FORWARD earnings case when AG silver production hits 4 million oz per quarter @ $22/oz will be:
        $22/oz: Revs= 22 x 16 million x 0.3= 106 million... ; w/115 million shares out then $0.92 full year eps
        or at current PE of 17 the AG price would be $15.64

        However, with little capital expenditure in 2014, if silver is $25/oz then % will move closer to 40% (it reached
        44% in one quarter last year). Therefore, @ $25/oz, the revs= 25 x 16 million x 0.4= $160 million;
        w/115 million shares out then eps= $1.39 or AG price = $23.60 assuming PE remains at 17.

        But the PE will move up if silver price/oz moves up. For those who remember FRMSF in 2009 (First Majestic before move to NYSE trading under $1), the PE was above 60. Not saying we will have a 60 PE again but if silver begins a move toward $30/oz then AG will announce a dividend and PE could easily go to 30. Then the AG price should exceed $50.

        Yeah there's a lotta, lotta in all the above but the numbers should be there.
        Therefore, 1st step is for the average silver price/ounce to settle in above @25 which is beyond AG's control.

      • not a bad ballpark figure marv. I won't say regardless, but this is getting beat down for a reason, and likely a good one...I expect a fairly big pop at some point. Perhaps it is just the CFTC being out to lunch, which seems almost cliche.

        Sentiment: Buy

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