Overview of First Majestic Silver
Current Position:
- Debt: $201 million.
- Break-even Costs: Expected to drop from $25-$26 per oz to around $24 by year-end.
- 2024 Production: Approximately 22 million oz of silver equivalent, with 50% from silver and 50% from gold.
Key Projects:
- Producing Mines: Three in Mexico and Jerritt Canyon (Nevada, currently on care and maintenance).
- Recent Acquisition: Gatos Silver, expected to enhance free cash flow (FCF) and lower costs.
Financial Projections at Higher Metal Prices
- Production Potential Post-Acquisition:
- With the Gatos acquisition, First Majestic’s production could increase to 30 million oz at a projected AISC of $20.
- Free Cash Flow Projections:
- At $50 Silver: FCF=Production×(Price−AISC)=30,000,000×(50−20)=30,000,000×30=900,000,000 USD\text{FCF} = \text{Production} \times (\text{Price} - \text{AISC}) = 30,000,000 \times (50 - 20) = 30,000,000 \times 30 = 900,000,000 \text{ USD}FCF=Production×(Price−AISC)=30,000,000×(50−20)=30,000,000×30=900,000,000 USD
- At $100 Silver: FCF=Production×(Price−AISC)=30,000,000×(100−20)=30,000,000×80=2,400,000,000 USD\text{FCF} = \text{Production} \times (\text{Price} - \text{AISC}) = 30,000,000 \times (100 - 20) = 30,000,000 \times 80 = 2,400,000,000 \text{ USD}FCF=Production×(Price−AISC)=30,000,000×(100−20)=30,000,000×80=2,400,000,000 USD
- Market Cap Valuation:
- Assuming a 10x multiple on FCF at $100 silver:
- Stock Price Calculation:
- Assuming approximately 200 million shares outstanding:
Conclusion
If silver reaches $100 per oz, First Majestic Silver could potentially see its stock price rise to approximately $120 per share. This projection is highly dependent on the successful management of costs, resolution of tax issues, and the restart of Jerritt Canyon, but it illustrates significant upside potential if the company can execute its strategy effectively.
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Disclaimer
The user RockeTeller has a position in TSX:AG. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
