I heard the same thing as you, either on the CDE or another conf call.
I am perplexed... I thought that all changes, be it royalty or depreciation, were effective Jan 1, 2014 and not before. I may request AG IR give a further explanation of this when I get a chance this week but behind on many other priority.
Both houses in Mexico have approved these changes but a Google search still reveals no final sign off by Mexican president which is the final step. Been gone all week so will search again for any final sign off.
If you find anything on final Mex president sign off, please post.
CDE sounds like the deal of the century. Now all they have to do is demonstrate they can make a profit!
I believe that's the message you may have heard more than once.
Sorry for the frank words, but any idiot knows that if PAAS had all-in costs at $16.25 and sold their silver for $22 which resulted in only a 6.6% profit margin, they could not possibly have an all-in cost at $16.25.
This defies reason... it defies logic.
I believe AG to be the absolute lowest silver producer in the entire industry.
For comparison, they had 1/3rd the revenue of PAAS but 3 times the profit margin of PAAS.
This might suggest that they had all-in costs substantially under $16... maybe as low as $10.
Do I believe AG' had all-in costs much lower than $16/ounce?? No!
You have to use common sense when you read a CEO's comments whether it be CDE talking about those amazing cost efficiencies at Rochester or the PAAS CEO.
Again, if PAAS had an all-in cost of $16.25 then AG was $10... but again, PAAS did not have an all-in cost of $16.25 period (not to be confused with, "If you like your health care plan you can keep it. Period").
IN SHORT, IF SOMEONE SAYS OR WRITES SOMETHING, IT DOESN'T MEAN IT'S TRUE.
The question was, does this make sense to you given the PAAS miniscule 6.6% profit margin?
If this makes sense to you, what do you suppose AG's all- in costs are? 10? 12?
I don't think so. Let's use some common sense.
You also posted on another MB this that PAAS had dropped it's all-in cost from $23 to $16.25 this quarter.
I believe someone commented to you that it was not possible for PAAS. Thinking about the argument, it went something like this:
PAAS revs= $217 million with net earnings of $12 million or a 6.6% net profit margin
On the other hand, AG had revs= $76 million with net earnings of $14 million or a net profit margin of 21% (33% if adjusted earnings used).
So if AG has revs that are only 35% of PAAS but a profit margin 3 times higher, then does this mean AG's
all-in costs are $10 or $11... I am a big proponent of AG efficiency but I don't think so!
Remember, just because somebody writes it down, it doesn't mean it's true.
With a 6.6% profit margin, the PAAS all-in costs are right around $20 if they sold silver for $22.
Now AG is likely around $16.
Um, so whatever type of silver (Silver Nitrate or plain old metallic silver or whatever), this is not derived from silver mining??? Also, there are backpacking water bottles w/silver element to kill off bacteria in water.
Also, I recall there have been several water purification systems implemented which also rely on silver.
Is this all a scam? Me thinks you have no idea what you're talking about. I've clipped this silver summary below to help you provide more informed posts in the future.. hope this helps:
"Silver is a chemical element with the chemical symbol Ag (Greek: άργυρος árguros, Latin: argentum, both from the Indo-European root *arg- for "grey" or "shining") and atomic number 47. A soft, white, lustrous transition metal, it possesses the highest electrical conductivity of any element and the highest thermal conductivity of any metal. The metal occurs naturally in its pure, free form (native silver), as an alloy with gold and other metals, and in minerals such as argentite and chlorargyrite. Most silver is produced as a byproduct of copper, gold, lead, and zinc refining.
Silver has long been valued as a precious metal, used in currency coins, to make ornaments, jewelry, high-value tableware and utensils (hence the term silverware) and as an investment in the forms of coins and bullion. Silver metal is used industrially in electrical contacts and conductors, in mirrors and in catalysis of chemical reactions. Its compounds are used in photographic film and dilute silver nitrate solutions and other silver compounds are used as disinfectants and microbiocides (oligodynamic effect). While many medical antimicrobial uses of silver have been supplanted by antibiotics, there are clinical data and historical documentation of efficacy as a healing agent throughout multiple human conflicts".
Where is higher ground?
The quarter's numbers are in.
Do you suggest that people ignore the data, analysis or other data comparisons?
Where the rabble aren't or where you ignore the data because the facts don't look so good?
Just another thought for the day!
Good info! Numbers appear accurate.
When I compared same numbers yesterday on PAAS to AG, I noted the following:
PAAS had to produce 3 times the revenue of AG in order to have 1/3 the profit margin.
Efficiency is everything!
Thanks for the convoluted explanation.
I mean they didn't just miss analysts estimates... They MISSED big.
You sound like management on the conference call with their ore grades, and metal costs and all the mining efficiencies they put in place.
Now just a simple question!
When the heck are they gonna make a profit???
"I did not have sexual relations with that woman, Monica Lewinsky" from a former president.
"If you like your current healthcare plan, then you can keep it. Period." from a current president
" the 4th quarter will be better" from CDE CEO
Mexico royalty tax adoption at 8% + $700 million to develop mine sure puts a damper on the future here!
Hope there's a good plan from conference call if that's included with 3rd quarter results!
Thanks for the objective response. In fairness, I'll give CDE till this time next year to provide results.
Those results can be measured either as "cost of revenue as a % of total revenue" or more ideally as net profit margin which is "net income as % of total revenue". So you're not carrying the baggage of prior quarters, let's measure CDE relative to 2nd quarter 2014 and not trailing 12 months.
In return, I simply ask that you also compare those figures to AG.
My point being that while CDE should make a tremendous profit at say $30/ ounce, the profit margin at AG when silver at $30/ounce will be staggering.
I suspect what kinks said is correct. Unemployment with royalty tax and $22/ounce is not a good recipe. Therefore, the royalty tax may not be implemented until silver price moves higher... however, I qualify that by stating that we are dealing with politicians who generally have no business sense.
That must tie into your primary holding in CDE ( yeah I read all silver miner MB's for new info a see that you post quite often).
When AG bid for Orko, they knew their primary holding was one of the world's largest silver deposits. However, they also knew the grading was low at 125g/t. When CDE overbid for Orko, the price of silver was in the high 20's. I think you've probably figured out that if the silver price moves higher, that will likely be when a royalty tax is implemented. So CDE, which has not yet demonstrated that they are a cost efficient producer,
will likely need a silver price well above $30/ounce before they begin mining plan for Orko assuming that a royalty tax will kick in then. Until that occurs, you are likely sitting on $300 million of dead money until silver price rises above $30.
Hey my song,
If you're holding a Mexican silver miner based on whether or not they'll implement an 8% potential royalty tax,
then you should find a different investment. I personally place the odds at 50/50. It doesn't matter.
If you bought AG intelligently then you are likely holding for one or all of the following reasons:
(1) Mexico has historically been a stable country environment for PM companies (recent layoffs due to lower PM prices may delay royalty taxes since several governors in Mexico have also expressed a concern with royalty tax)
(2) AG is one of the lowest cost producers in the industry (at least $5- $12/ ounce lower than PAAS, CDE, HL)
* If you're producing in US or Canada, your labor , regulation and environmental costs will always result an added cost of operation relative to Mexico. If you're in Argentina, Chile, Venezuela, Bolivia and Peru, then you've also seen the headlines from each of these countries on the high political risks.
(3) Within Mexico, if you've read the individual mine activity at AG, then you've also noted that management continues to hammer down costs at each and every mine. This includes eventually achieving dore bar final output at all the mines, water recycling, continuous replacement of older equipment, etc to achieve maximum efficiency with little down time.
(4) Or you may have been impressed with the numerous environmental awards received by AG in Mexico.
During a recent drought, AG at internal cost to themselves built a 6k water pipeline to a nearby town due to water shortage situation... You actually see this type of community activity at each and every AG mine site.
In short, whether the price of silver stays at $22/ounce or gets back into the $30's, AG is the best positioned.
The heck with your cash costs, your all in costs, your gold offset costs, your base metal costs or any other camouflage goobblygook cost you want to forward.
You've already told us that Krebbs has assembled an amazing team to achieve these lowest costs and how production is way up. Ok?
What is your expectation for the CDE profit margin (revs/net income) in the 3rd quarter??????????
In the words of the Beatles, " All we are saying, is give POSITIVE EARNINGS a chance".
... choose your measurement: earnings, net margin (revs/net income which is my favorite), return on assets.
We'll all know soon (ie within 3 weeks) whether Mr.Krebbs delivers or if the move to Chicago and it's disco clubs have kept him on the dance floor too long!!
Are you just a super twit. if silver gets to $25 per ounce as you project, what do you think will happen to those miners now producing $2 to $7 an ounce below where CDE is now??
Are you even aware of these low cost producers such SVLC, EXK and AG??
I hope we do get to $25/ounce, and soon, but whether we stay in the low $20's or move to $25, you want to be holding one of those guys. They will provide a profit at either price!
My only question for CDE management is which mine they'll have to close if the price stays at $22/ounce??
Go see what? That SSRI has to come up with more than half a billion dollars to fund the start up of their primary resource?
You'll be waiting for years before the profits ever roll in on SSRI. That's a fools investment.
To your point, AG had a 39% net income as a percentage of revenues in 1st quarter 2013 when silver was around $30 per share. At that point in time, they were financing a huge capital expenditure for Del Toro for 2013 ($187 million with change down to $147 million with low silver price).
With that mostly behind them, it will be interesting to see what this % can be in the 3rd and 4th quarter
with silver at $22/ounce. We'll know the 3rd q result in mid November.