This CEO interview was recorded on July 8, 2021.
Keith Neumeyer gives me an update on one of my (personal) holdings – First Majestic Silver. I asked him about the ongoing lawsuit with the Mexican government, the acquisition and future of the recently acquired Jerritt Canyon gold mine and he even gave me a quick update on the special dividend that First Mining Gold will be paying soon.
I invited Keith Neumeyer (no, this is not a sponsored presentation) to talk about how the silver market works (and doesn’t) and also to talk about First Majestic Silver, as they have been rather calm lately, and their cash position is growing, even after the acquisition of the Jerritt Canyon mine.
So, Keith gave me an update on the acquisition and told me that First Majestic Silver went through a 14% share dilution, to increase its top line by 30%, which he said is a good deal. They will increase their bottom line by venturing into the Nevada gold business, with the acquisition of the Jerritt Canyon mine, which was previously owned by Eric Sprott and in its prime produced around 300,000 oz of gold.
Keith Neumeyer told me that he mainly bought that mine for its exploration potential, and when I asked him whether he thinks First Majestic Silver may have overpaid for the Jerritt Canyon mine, he told me that he doesn’t think so, mainly because of how much this could improve their business, essentially doubling their production by 2024, if I understood correctly.
As a (cheapskate) shareholder of First Majestic Silver, I was mainly concerned about the increase in expenses that this mine will bring to the table, and Keith Neumeyer told me that it is indeed an issue, on which they are working. No further update was given on their expenses. One other reason for the acquisition of the Jerritt Canyon mine was diversification, according to First Majestic’s CEO, Keith Neumeyer. He told me that the political risk in Mexico is on the rise, and we would like to diversify away from it.
When he said “diversify away from Mexico”, I asked Keith Neumeyer whether he may be looking over in Australia, or whether he’d prefer to stay over in the Western Hemisphere. He told me that while they have looked over in Australia, they don’t have immediate plans to move there, as there are a few interesting projects in Nevada that First Majestic thinks are worth the look.
So, the $200+ in cash that First Majestic has on its balance sheet, will likely be used for more acquisitions, and helping the company to double its production even quicker. Keith Neumeyer also told me that he would like to increase First Majestic’s dividend to 3% or even 5% from their revenue, whereas now they pay a very small dividend, which equals 1% of their revenue – great for large shareholders, but I would like to see that dividend grow over time.
As to the $250M+ lawsuit that is currently ongoing in Mexico, Keith Neumeyer told me that First Majestic Silver thinks the government is not being reasonable in their claims for taxes, and that they will fight the case until they win it. Of course, nobody knows what will happen in the future, but Keith told me that he would like to be done with it as the lawsuit is costing them money, time and energy – all valuable commodities that are better used elsewhere.
At the end, Keith gave me an update on the special dividend that First Mining Gold will pay very soon. First Mining will distribute 23,3M common shares and 11,6M warrants of Treasury Metals. Each warrant is exercisable, on a cashless basis only, for one common share of Treasury Metals at an exercise price of $1.50 per share until August 7, 2023. Record date: July 14 Payable: July 15
00:00 Important notes
00:30 First Majestic Silver update
03:30 Production will go up 30%, how much will the SG&A go up by?
05:30 Did FMS overpay for Jerritt Canyon?
09:00 Did FMS buy JC for the exploration potential?
10:45 $200M in cash, what’s the plan?
12:10 Will FMS move to Australia or invest more in the west?
13:30 $250M+ lawsuit update (Mexico)
18:20 First Majestic’s summer plans
20:40 First Mining Gold to pay a special dividend
25:00 Closing thoughts
The publisher of this video owns shares of First Majestic Silver (NYSE: AG) (TSE: FR) and will benefit by an increased interest in that company. Although the purpose of this video is informational in nature and does not invite any individuals to trade any products, the publisher and guest should be considered biased. You must always do your own due diligence and/or contact a licensed financial and/or investment advisor. Antonio Atanasov nor Keith Neumeyer are registered financial advisors. You must read and understand the full disclaimer at the beginning of the video. If you cannot afford to comply with it, you are obligated to terminate your visit of this video.
This CEO interview was recorded on July 8, 2021.