First Majestic Silver Reports Initial Reserve & Resource Estimate Report

After market closed, First Majestic Silver Corp (NYSE:AG) delivered a preliminary reserve & resource forecast and NI43-101 technical report for the La Guitarra mine. We rate First Majestic “Sector Perform” with a $7.00 12 months target price while risk assessment remains “High”.

The long-awaited technical report provides a comprehensive overview of the La Guitarra project that was originally acquired through the $175 million Silvermex transaction in July 2012. While prior operators had envisaged a combined OP & UG operation, First Majestic is planning only underground production targeting higher-grade Ag/Au zones.

Under the new seven-year mine plan, production is estimate at 520 tpd (190kt/yr) producing an average of 1.33 million oz Ag/yr  with LoM avg grades of 226 g/t Ag (or 282 g/t Ag-eqv) with Ag recoveries of 85%. Production costs are forecasted at an average of $48/t with sustaining capex of $4.3 million /yr.

We have revised our financial model to incorporate the new mining parameters at La Guitarrra as outlined. The net effect of these changes sees a minor surge in our net asset value per share (to $3.85 versus $3.84 old). The La Guitarra project represents 10% of our net asset value.

Multiple contractions, commodity prices, technical and operational risks, and geopolitical risks are major risks to be considered while trading.


Amy Sue, CFA, is equity analyst and reports Basic Materials, Financial & REIT and Industrial Goods sectors. Prior joining Broadway Leader, Amy Sue worked with Wells Fargo. If you have a great story idea for Amy Sue, you can write at [].


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