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| | | First Majestic Raises The Bar Very High In Mexico | | First Majestic Raises The Bar Very High In Mexico
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Keith Neumeyer, chief executive of Canadian listed First Majestic Resources, the Mexican silver producer, was looking very pleased with life at his booth during the Mines & Money conference in London last week. And well he might. Everything seems to be moving in the right direction in terms of production, profitability and reserves and his company has no less than 14 rigs operating on its properties proving that finances are also in good shape. Even the share price is moving in the right direction, but as Keith says, "its still got some way to go to catch up with events." And the man is even thinking in terms of acquisitions which must mean that current operations are running smoothly and he is confident in the ability of management to apply its methods to other mines.
One of the secrets of the success of First Majestic in Mexico is the outstanding work carried out by Ramon Davila, the chief operating officer. A Mexican engineer with a Masters in Minerals Economics, he worked for Mexico's biggest silver producer, Industrias Penoles from 1978 to 1987. He then took charge of mining operations at Luismin before becoming president of a subsidiary of Pan American Silver where he was in charge of all aspects of production, exploration and administration for the Mexican operations. He is also a director of the Chamber of Mines in Mexico and is thus well known to the authorities who are doubtless impressed with the fact that the mining and exploration teams are all Mexican. "No gringos to be seen anywhere," as a Canadian friend put it.
Keith certainly knows how to pick 'em, and so he should as he founded First Quantum Minerals - note the word First in each - which is now a mid tier copper producer in Africa. He also knows how to raise money as when we last wrote about the company earlier this year he had just put C$34.4 million in the bank from a placement of special warrants to fund further expansion of the company's La Parrilla silver mine, the San Martin silver mine and La Encantada silver mine. Soon afterwards First Majestic came out with resource updates for all three mines which took the contained ounces of silver, including credits, in all categories to 128 million ounces. Good news also on production which was nearly 3 times higher in the second quarter of 2007 than in the same quarter of 2006 at 852,721 equivalent ounces thanks to a major boost from La Parrilla.
These figures will soon be overtaken in a major way as reserve and resource drilling is a priority. In October six rigs were operating at La Parrilla and the Chalchihuites areas, three rigs at San Martin and one rig at La Encantada. Sinc then two more have started work at San Martin and two at Le Encatada to make the full fourteen. As a result Keith expects to update all three resource estimates before the end of the year provided the assay laboratories come up to scratch. A reasonable expectation would be a total of 180 million ozs rising to 200 million ozs early next year.Drilling is taking place from underground and on new surface areas at San Martin to define additional oxide resources. A flotation circuit is being considered as this would allow the mill to take advantage of the large sulphide ore resource.
Thought is also being given to reprocessing the material in the tailings ponds at Le Encantada. Specialist drilling has taken place and the resource will feature in the next update. An internal study is also currently underway to evaluate the economics of adding a cyanidation circuit to the mill and what level of expansion would be most optimal. The permitting process has commenced and a final decision on expansion size will be made prior to year end. Meanwhile at La Parrilla a flotation circuit has been installed and has already boosted lead production and various other improvements should boost recoveries, head grade and tonnage and keep production moving ahead. The total for the September quarter reached another record level of 942,646 equivalent ounces and Keith is confident that First Majestic will be operating at an annual rate of 4 million ounces by the end of the year.
Not for a moment should it be thought that First Majestic's future depends on these three mines. Not long ago it acquired the San Jose and Perseverancia silver mines about 60 kms from La Parrilla. Ore production started at the Perseverancia in the latter half of the third quarter at a rate of 50 tonnes per week which is being direct-shipped to the smelter. In the future this ore will be shipped to the La Parrilla mill for mixing and processing. At the San Juan, mine ramp construction is continuing and 50 tonnes of oxide ore is being removed from the mine daily and trucked to the La Parrilla mill. Lastly, early stage exploration is ongoing at the Cuitaboca project which was acquired from First Silver Reserve last year along with San Martin. Already a system of six parallel veins hosting high grade silver, lead and zinc has been defined. First Majestic has certainly got the wind up its tail, and long may it stay there. |
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