First Majestic Silver

First Majestic Silver is a Canadian silver mining company that operates in Mexico. Out of the four producing mines under its control La Encantada is by far the largest accounting for more than half of company production; the other two, San Martin and La Parrilla produce at similar rates. Unlike many of its competitors First Majestic produces and sells its own bullion rounds and bars (others like Pan American Silver Corp. produce and market bullion through private mints). All of the mines are underground operations. A fourth mine, Del Torro scheduled to open in 2012 could add another three million ounces to annual production (Del Torro is part of the La Parilla project which produced 1.8 million ounces of silver in 2010).

According to the company, silver equivalent production was 7.024 million ounces in 2010 (6.5 million of that pure silver), 62% higher than the 4.337 million produced the year before.^[1] In 2008 when it had a market cap of $215 million, it produced 3.7 million ounces of silver.^[2] In addition to silver the company also mines lead (6.4 million pounds in 2010), gold (2,152 ounces) and zinc (combined they make up 10% of revenue).^[1]

History

First Majestic was founded in 2002 by president and CEO Keith Neumeyer. 2006 was a big year for the company, in June it acquired First Silver Reserve Inc (initially just a controlling stake but within three months it purchased all remaining interest), owner of the San Martin silver property in central Mexico. Then in September it took control of Desmin, the owner/operator of La Encantada (Coahuila, Mexico) in a US$4.75 million deal (ownership of the mine was purchased through Desmin from Industrias Penoles for US$3.25 million). At the time La Encantada produced 800,000 ounces per year operating at 40% of capacity; the mine was First Majestic's third.^[3]

According to the stock chart on its website and the company's profile on the TSX Venture Exchange website, it is listed since 2002 (but the oldest part of the company goes back as far as 1984 (Brandy Resources Inc).

On March 5, 2009 it graduated to the Toronto Stock Exchange with an initial offering of Cdn$25 million.^[4] About a year and a half later it joined the New York Stock Exchange (Dec.23, 2010).

In 2009 First Majestic added a fourth silver project when it acquired Normabec Mining Resources Ltd (completed in September). Initially the deal was thought to have included both Mexico's Real de Catorce mine and Quebec's Pitt Gold Property however non Mexican assets (including Pitt Gold) were spun off into a new company called Bionor Resources Inc.^[5]

Projects

There are five in total, the largest three in order of size are

• La Encantada is located in the north within a couple hundred km of the Mexico-Texas border. It is within a 10,000 acre piece of land the company owns mining rights to. Initially about two thirds of production came from tailings left behind from 2009 construction, when the last phase of construction is complete production capacity will be about four million ounces per year. The site employees 500 full time workers (most from the immediate area which is an isolated region). The mill there opened in the summer of 2008 and reached commercial production in April 2010.
• La Parilla is primarily a zinc and lead property that currently (2010) produces silver as a byproduct. The two different types of ore, oxide and sulfide are processed separately. It is the company's second largest property in terms of both production and resource. At least four mineralized veins feed into the project (Zuluaga, La Blanca, Condesa and Rosario). Since 1983 the mine (operating continuously) has produced over 25 million ounces of silver (as of 2010).
• Del Torro, Chalchihuites, Zacatecas - Like La Parila it contains silver lead and zinc contained within two different types of ore. Though small (under 1000 acres) it consists of two mine sites; San Juan and Perseverancia.

References