However, what peaked my interest wasn’t San Dimas, that should make money unless you are truly incompetent, it was the disconnection between what they mine at the various operations and the published reserve grades at their various mines.
It is something that I had berated Pretium for at Brucejack, but First Majestic, with 6 operating mines (excluding San Dimas as it is new), you would expect that with many years of operation experience that they would be fairly good operators, and excluding a blip or two, be within 10% of the reserve grades on average.
For the charts below I’m using:
- Compiled production figures for 2016, 17, and 18 (to date) from FM’s MD&A’s
- Reserve grades from the Form 40-F. and from the First Majestic Website (link).
Let us start with the good:
The stand-out mine, since the start of 2016 they have mining higher grades than reserves, which are skewed by a bit of very low grade oxide material.
|A mine that works.....|
However, we can see in 2018 they either got into an expected high-grade area or are high-grading the shit out of the deposit to keep themselves cash flow positive with sub-$15/oz silver prices. Will this screw them in a few years?
One of their oldest and smallest operation producing ~2Moz Ag per annum.
|A mine that almost works, goddammit!!!|
But consistently within 10% of the reserve grades...
and now the wheels start to wobble.
|Will they recover in 2018/19?|
It has generally been ok, but the wheels fell of the wagon this year, with mine grades plunging by an ounce. It will be interesting if they can get the mine back on track.
La GuitarraTheir smallest and generally worse mine.
|A general decline...|
Always been crap, but a nice spike at the end to show that they were in panic-mode to keep the mine operating.
Del Toro, more like La Vaca Muerta.
Funny how they keep dropping the reserve grades every year, yet the mine keep churning away at ~150 g/t Ag.
La ParrillaThe original mine, probably getting long in the tooth, probably best to take it out back and shoot it in the head.
|Wow, what a piece of shit|
It look like at their mines, and in particular Del Toro and La Parrilla, that First Majestic have a fundamental problems with the resource calculations. I could understand missing but a little bit (plus or minus 10%), but to consistently not make the grade at virtually all of your mines consistently over the last 2.75 years takes a special type of company. Christ, if you got any worse, you'll be Coeur....
When you looked a bit closer, you actually see that it isn't First Majestic rescuing San Dimas, it is San Dimas that will rescue First Majestic. Santa Elena is saving them at the moment, but with the high-grading going on, will the mine be fucked in a few years?