News

April 22, 2008

If Everything Continues To Go To Plan First Majestic Could Be A Dividend Payer in 2010

By Charles Wyatt

When Keith Neumeyer, chief executive of First Majestic Silver, was announcing record silver production for the last quarter of 2007, he may have reflected that he’d made a shrewd move leaving First Quantum back in 2000. This is the African-based copper producer, of which he was the original and founding president, and also instrumental in the acquisition of the Bwana Mkubwa mine in Zambia. Since then he has grown First Majestic to the stage where it produced just over a million ounces of silver equivalent (silver plus lead) in the last quarter of 2007, while First Quantum is forced to contemplate its navel as Zambia introduces its new tax regime on mining and the authorities in DRC are review all contracts with the state mining company. On top of this First Quantum has apparently disclosed that it is suing its investment adviser, HSBC Bank over asset-backed commercial paper – the polite term for sub-prime mortgage rubbish - in which it invested US$11.3 million on the advice of the bank in July 2007.

First Majestic has no such problems as it operates in Mexico which is mining friendly and has resisted any temptation to try to boost investment income. The company has three producing Silver Mines Silver Mines in Mexico - La Parrilla, San Martin and La Encantada - and has forecast that production from them will rise to 5.5 million ounces this year and that there will be a further significant increase next, and even more in 2010.  And just to emphasize the fact that it has no sub-prime...