When you decide that you want to invest in silver, you have a variety of means to go about this activity. Two of the most popular silver investment vehicles are silver mining company stocks and silver exchange traded funds. There are many silver mining corporations that trade on the various major stock exchanges, but some of them are more viable than others.
In the paragraphs that follow, you will learn about one of the best opportunities in silver corporation stocks called First Majestic Silver Corporation, as well as what the difference is between this type of investment and the silver exchange traded funds.
Fundamentals of First Majestic Silver Corporation Stock
First Majestic Silver Corporation is a silver mining company with an incredible growth track record and impressive prospects for the future. For the third quarter of 2011, the company announced that it grew its revenues by a stunning eighty-eight percent versus its third quarter of 2010. Their silver production rose to 7.5 million ounces equivalent. They produced this silver for the cost of only $8.39 for each ounce, while their revenue for each ounce amounted to an average of $38.83.
First Majestic Silver Corporation has several different properties that produce silver. La Parrilla is their major Mexican silver mine that the company is expanding now. Once the project to expand the mine is finished, the silver ounces that they produce at this lucrative property will rise from 1.8 million silver ounces per year to 3.2 million ounces each year.
A second property that they own is La Endantada. This property has encountered some problems with manganese alloys in their silver that has impeded the silver ounces recovery. First Majestic is currently installing a pilot plant to dissolve this manganese so that silver can be more effectively and efficiently recovered from the current ore that they mine.
A third silver property that First Majestic Silver Corporation is building up is one that is next to their Del Toro property, called the Dolores mine that they recently bought for $1.5 million. First Majestic is merging this new property with their existing Del Toro mine. The end result will be a larger, more productive, more profitable silver mine at Del Toro, where the silver operation and output is expected to double in size.
Many silver and gold production companies pay out handsome dividends to you their share holders. First Majestic does not pay out such generous dividends. Instead, they use their free flow cash to purchase new projects and to pay for expansions to existing projects. The truth is that despite the lack of dividend payouts, the company is strong and can count on its revenues, productions, and cash flow to all grow substantially in the future years.
Greatest Strengths of the First Majestic Silver Corporation
Keith Neumeyer is the president of First Majestic Silver Corporation. He proudly points out the great strengths of this silver mining company. First, their silver production has increased by around fifty percent in just a year, largely because they constructed a new and improved facility at their La Encantada Silver Mine.
They also expect to see their La Parrilla Silver Mine production double in the year 2012. This will bring total silver production at this growing mine to a full three million ounces of silver per year, in addition to a significant quantity of zinc and lead that they will produce as highly marketable industrial metals byproducts.
Keith Neumeyer says that their fourth quarter will be even stronger. Beyond that, the first quarter of 2012 should outperform even this solid year. Their margins will increase, he says, even if silver prices remain at similar prices to where they are today. Production should also rise to ten million ounces of silver next year from this year’s seven and a half million ounces of silver, a thirty-three percent increase to production in only a year.
Their prospects for the future look even stronger, as they fully anticipate that the Del Toro mine will eventually become the largest silver producer that the corporation owns as early as the year 2014. With this growth in the Del Toro mine project, they anticipate that in 2014, they will produce in excess of sixteen million silver ounces. This represents a stunning one hundred percent silver ounces production increase in only the coming two years. This makes First Majestic Silver Corporation a solid mid tier silver producing company now.
President Keith Neumeyer attributes First Majestic’s long and impressive track record of consistent growth to their experienced team of people. Both the managers and the people who are on the ground are talented and hands on workers in the countries where they perform. This is a greater asset than any other the company possesses, he says.
First Majestic Consistently Recruits Top Talent for the Corporation
The biggest factor that First Majestic cites in its success is their ability to consistently recruit the best talent in the mining industry. Keith Neumeyer demonstrates this uncanny ability by saying that people who are looking for work in the mining business often come straight to them to inquire about a job before they go anywhere else.
First Majestic is not afraid to make jobs for veterans with thirty years of solid experience, and they have done this routinely. For the past five years, they have been willing to hire talent even if they did not have an immediate need or opening, and it has brought them the powerhouse of personnel that they boast today. The powerful appeal to work for First Majestic Silver Corporation is in no small part due to their incredible growth in production performance that they constantly display, year after year.
What is the Difference Between Silver Mining Stocks and Silver ETF’s?
Silver mining stocks like First Majestic can be tremendously successful if the underlying company consistently demonstrates an ability to deliver stable and high growth production of silver over time. This investment is very different from one in which you speculate on the price of silver though. With silver exchange traded funds, the price of the stock rises or falls more or less by the same percentage as silver moves. With silver mining company stock, there are many other factors involved besides merely the price of the underlying silver metal.
What can go wrong to depress the price of a good silver mining company, you might wonder? In the case of First Majestic, their La Endantada silver mine should give you pause for thought and caution. When they discovered substantial mixed in deposits of manganese in their silver ore output at the mine, the stock price took a beating. It did not matter that silver prices were pushing all time highs.
Similarly, a silver mining company can suffer from strikes by their labor force, an uncontrollable rise in production costs, earthquake or mudslide damage to their mines or production facilities, seizure of key properties by jealous third world governments, and a host of other complex and unforeseeable potential man made or natural disasters.
This is all on top of the risk that silver prices might move against you and actually decline. Because of these factors, if you want a more predictable vehicle by which to invest in silver, or any precious metal for that matter, you should seriously consider the relative safety and stability of exchange traded funds. Should you decide to go the silver mining company stock route though, remember First Majestic Silver Corporation.
Do you see advantages to silver mining company stocks that you do not have with silver exchange traded funds?
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