First Majestic Silver Corp

First Majestic Silver Corp - Highlights

  • Purest producing Silver miner in the world
  • Major producer (more than 10 million ounces per year)
  • On track for 24+ million Silver equivalent ounces of production in 2019
  • Six producing mines, all 100% owned
  • Operating exclusively in Mexico
  • Simple story: “One Metal, One Country”
  • Founded and led by a Silver Bull, Keith Neumeyer
  • US, Canadian, and German listings: NYSE: AG, TSX: FR, Frankfurt: FMV
  • Headquarters: British Columbia, Canada

Leverage to the Price of Silver

When you are seeking leverage to the price of Silver, First Majestic Silver Corp (FMS) is the go-to company. FMS is the purest producing Silver miner, and one of the few remaining primary Silver mining companies.

With Silver prices depressed for multiple years in a row, several primary Silver miners shifted their focus to Gold. Some of them even removed “Silver” from their names in acknowledgement that they were now Gold mining companies.

First Majestic Silver remained faithful to its heritage and, as a result, became THE premier Silver mining company.

As an outside observer, I would assume that First Majestic maintained their focus on Silver, at least in part, because of the Company’s asset base. With 100% ownership of 4 producing Silver mines and 100% ownership of 2 producing Silver/Gold mines, being a Silver miner is the path of least resistance.

There’s also the fact that First Majestic’s founder and CEO, Keith Neumeyer, is a raging Silver Bull. He is expecting $130 Silver in the current secular Bull Market, while acknowledging that prices could go higher than that.

Whether it is destiny, strategy, or just luck, First Majestic’s persistence throughout the long bear market, in combination with the changed focus of other primary Silver miners, has left them as the purest producing Silver mining company.

Investors seeking the diversity and leverage that Silver Mining stocks can add to a portfolio are going to want a position in First Majestic.

Keith Neumeyer

Keith Neumeyer founded First Majestic Silver in 2002.

He has a diverse background in the world of financial matters, beginning his career in this field back in 1984, working at a series of Canadian brokerage firms.

He then transitioned into senior management and directorship roles with publicly traded high tech and resource companies where he expanded his knowledge and experience in corporate finance, strategic planning, and business development.

Mr. Neumeyer gained experience in the areas of corporate finance, legal and regulatory compliance, and accounting by listing multiple companies on the Toronto Stock Exchange.

These skills are particularly relevant to investors in First Majestic Silver because they demonstrate his ability to lead and grow this dynamic company.

Mr. Neumeyer is a serial business builder and, based on results, he is quite adept at the process.

First Majestic President and CEO Keith Neumeyer 

(image source: 2018 Annual Report)

He played a key role in the development of First Quantum Minerals Ltd (TSX: FM) during the 1980s, serving as the founding President and paving the path for the company to become a multi-billion dollar corporation.

Mr. Neumeyer won public recognition of his business acumen in 2011 when he won the Earnst &Young Entrepreneur of the Year Award in the Metals and Mining category.

He founded First Mining Finance Corp in 2014 with the unique business model of acquiring undervalued mineral assets and holding them until market conditions were appropriate for advancing the properties towards production.

In 2018, after acquiring 25 properties, First Mining Finance became First Mining Gold Corp. (TSX: FF). This company now controls mineral-rich property with more than 7 million ounces of Resources, including the Springpole Project which is believed to be one of the largest undeveloped projects in Canada.

Today Mr. Neumeyer serves as the President and CEO of First Majestic Silver and Chairman of the Board at First Mining Gold.

One Metal, One Country

A main facet of Mr. Neumeyer’s leadership strategy for First Majestic is to keep the Company’s story simple: a mining company focused on Silver in Mexico – period.

As shareholders we don’t have to wonder if the Company is going to buy some mine in Outer-Mongolia or start mining for uranium or cobalt.

With Mr. Neumeyer at the helm, we can rest assured that any new acquisitions or expansions will involve Silver mines in Mexico.

Pure, 100% ownership

It doesn’t get any simpler than that

An important part of First Majestic’s simple story is that the Company owns 100% of all of its mines.

There are no joint ventures or partnerships.

Investors don’t have to worry about how some complicated legal or financial arrangement with another company affects the shares of First Majestic Silver – there are none of these agreements to evaluate – just pure, 100% ownership.

It doesn’t get any simpler than that.

Corporate Responsibility - Environmental Stewardship

First Majestic has been awarded the Centro Mexicano para la Filantropia (CEMEFI) Socially Responsible Business Distinction (Distintivo Empressa Socialmente Responsible) for nine years in a row (2008 to 2016).

This honor is given to corporations demonstrating a dedication to environmental stewardship and support of the communities in which they operate.

The Company has also received the Mexican Environmental Authority PROFEPA (Procuradoria Federal Proteccion al Ambiente) Clean Industry Certificate for voluntary environmental work at the La Parrilla Silver Mine (2009) and San Martin Silver Mine (2012).

FMS cares about the people living near their mining operations and demonstrates this concern by implementing:

  • Education programs for elementary, secondary, and college level students
  • Medical and dental assistance for local residents
  • Conservation measures to minimize the water used for mining and milling operations
  • Disaster relief programs
  • Programs to enhance and preserve local history, customs, and cultural heritage

First Majestic Silver Asset Base

There’s a saying I like to remember about Precious metals mining:

“A Gold mine is just a hole in the ground

with a liar standing at the top”

~loosely attributed to Mark Twain

As investors in the mining sector it is safest for us to assume that this saying is true until a mining company proves otherwise.

Fortunately, First Majestic Silver has a proven track record and, based on results, there’s no reason to question Mr. Neumeyer’s veracity.

With that said, let’s take a quick tour of the Silver mining properties in First Majestic’s portfolio.

Listed by order of Silver equivalent output in Q2 2019, these are the mines that First Majestic owns:

  • San Dimas
  • Santa Elena
  • La Encantada
  • San Martin
  • La Parrilla
  • Del Toro
  • La Guitarra

San Dimas Silver Gold Mine - Highlights

Location: Durango, Mexico

Land package: 71,867 hectares (277 square miles) of mining claims

Mining methods: long-hole stoping, cut-and-fill

Ore processing facilities: 2,500 ton per day (tpd) mill, cyanidation and zinc precipitation circuit, Merrill-Crowe system, smelter

Output: Silver/Gold doré bars

Workforce: 1,800 people, primarily from the nearby town of Tayoltita (population 8,000)

Streaming agreements: Wheaton Precious Metals International (WPMI) receives 25% of the mine’s gold equivalent production

Quarterly production:   1,639,481 ounces Silver   21,534 ounces Gold

All-in sustaining costs (AISC): $8.49 per ounce of Silver

Look ahead for 2nd-Half 2019:

  • Higher than expected grades are being extracted from the Jessica and Victoria veins, leading to an increase in projected production.
  • Capital has been budgeted for a third HIG mill.

San Dimas

San Dimas Mine and Processing Plant

(image source: April 2014 Technical Report)

San Dimas is the flagship property for First Majestic Silver and a very recent acquisition, having joined the Company's asset base in May 2018.

This mine has been producing Silver and Gold for at least 250 years and, according to Mr. Neumeyer, the mine will continue producing Precious metals for at least another 100 years.

Due to depressed metals prices and an onerous streaming agreement between the mine’s previous owner, Primero Mining Corp, and Wheaton Precious Metals International (WPMI), very little investment had been made in San Dimas for several years leading up to 2018.

First Majestic acquired the property from Primero in May 2018, replaced the existing streaming agreement with WPMI, and ended up with a world-class asset that generates significant cash flow. Mr. Neumeyer describes the asset as a “cash cow”.

First Majestic is plucking the low-hanging fruit at San Dimas by implementing mill upgrades and mill automation. Improvements at the mine so far have focused on reducing operating costs and increasing production.

San Dimas Underground Mining Diagram

(image source: April 2014 Technical Report)

Stream the Gold, Keep the Silver

An interesting aspect of the new streaming agreement between First Majestic and WPMI is that it is based on Gold and not Silver.

WPMI receives 25% of the mine’s Gold production plus an additional amount of Gold equivalent to 25% of Silver production based on a fixed 70-to-1 exchange ratio for Gold to Silver. The agreed upon price is $600 per Gold equivalent ounce produced.

This unique arrangement allows First Majestic to benefit from the high-grade Gold deposits at San Dimas while remaining true to the Company's primary mission of being the purest Silver mining company in the world.

Geological Section across the San Dimas District

(image source: April 2014 Technical Report)

Processing Plant

In 1890 the San Luis Mining Company began modern operations in the San Dimas mining district.

The Tayoltita Mill at San Dimas was built in 1904 and had the distinction of being the first cyanide mill in Mexico.

In 2002 the property was acquired by Wheaton River Minerals Ltd (WRM) and the company expanded the Tayoltita Mill to 1,600 tpd in the following year. This expansion was undertaken to facilitate the closure of the nearby San Antonio mill.

In 2005 WRM merged with Goldcorp Inc and subsequently expanded the mill to 2,100 tpd.

Primero Mining Corp acquired San Dimas in 2010 and began an incremental expansion program targeting 2,500 tpd capacity. That goal was reached in 2014.

Going forward, we can expect that throughput and recovery rates at the Tayoltita mill will increase as FMS implements high-intensity grinding (HIG) and micro-bubble flotation cell technology at this strategic asset.

Las Truchas Hydro-Generation Facility

Mining is an energy-intensive undertaking. Drilling, scooping, hauling, crushing, grinding, pumping, circulating, transporting – all of these activities require energy, and lots of it.

The availability of energy and the cost to acquire it are major factors in the viability and profitability of any mining operation.

At San Dimas, some of the required energy is provided in a clean, renewable manner by the Company-owned Las Truchas hydro-electric plant, located approximately 42 km from the mine.

In its April 2014 Technical Report on the San Dimas mining operation, Primero stated that approximately 75% of its energy requirements came from Las Truchas during nine months of the year (the wet season). They further reported that construction was under way for a second generator with completion slated for Q3 2014.

Primero also stated that engineering for a second dam and generation plant at Las Truchas was in the works. This proposed facility could provide 100% of the energy required at San Dimas, and provide it year-round.

The hydro-electric generating station is connected to the national power grid, giving it the ability to sell excess energy to the Federal Power Commission Supply System (FPCSS).

According to third-party reports, Las Truchas also provides energy for 12 communities and two saw mills.

It will be interesting to see how First Majestic Silver integrates this unique asset into their business plans for the San Dimas operation.

Santa Elena Silver Gold Mine - Highlights

Location: Sonora, Mexico

Land package: 102,172 hectares (394 square miles) of mining concessions

Mining methods: long hole stoping, mechanized cut-and-fill (MCF), open pit, leach pad

Ore processing facilities: 3,000 tpd cyanidation circuit, Merrill-Crowe system, heap leach pad

Output: Silver/Gold doré bars

Workforce: approximately 300 from the nearby municipality of Banámichi (pop. 1,500 in 2005)

Streaming agreements:

1) Sandstorm Gold Ltd receives 20% of Gold equivalent production from the mine’s leach pad and a designated area of the underground operations

2) Wheaton Precious Metals International (WPMI) receives 25% of the mine's Gold equivalent production

Quarterly production:   632,216 ounces of Silver   14,154 ounces of Gold

All-in sustaining costs (AISC): $7.73 per ounce of Silver

Look ahead for 2nd-Half 2019:

  • Increased recovery rates are expected based on a new 3,000 tpd high-intensity grinding (HIG) mill completed in May 2019.
  • Full capacity at the mill is expected in Q3 2019.
  • Exploration budget for the Ermitaño project has been increased from 17,700 meters to 32,700 meters of drilling.
  • An underground portal into the Ermitaño ore body is scheduled for Q4.

Santa Elena

Santa Elena Silver Gold Mine and Processing Plant – source October 2015 Technical Report


Mining at Santa Elena started in the late-1800s and continued until the Mexican Revolution began in 1910. It is believed that the majority of the existing underground workings were developed during this time frame.

Several mining companies explored Santa Elena in the years after the Revolution, but it was the early-1980s before actual metal extraction occurred again. Tungsteno de Baviacora built a 50 tpd mill near Santa Elena and used it to process tungsten. Silver and Gold ore from an open cut at Santa Elena was used to supplement the tungsten ore which was mined at another location.

Tungsteno retained control of the mine until 2005 when SilverCrest entered into an option agreement to acquire the property. This acquisition was completed in August 2009 and SilverCrest began commercial production in July 2011.

First Majestic gained possession of Santa Elena in late-2015 by acquiring 100% of the issued and outstanding shares of SilverCrest, which then became a wholly-owned subsidiary of FMS.

At the time, the property included an underground mine, an open pit mine, a leach pad, and a 3,000 tpd processing facility.

Processing Plant

The 3,000 tpd continuous counter-current decantation (CCD) cyanidation and Merrill-Crowe processing plant was constructed between 2009 and 2010, and then expanded in 2013 and 2014. Commercial production from the plant began in August 2014.

The CCD/MC plant processes fresh ore from the open pit and underground mine, as well as partially leached ore from the heap leach pad. These two types of ore can be processed in any proportion, allowing flexibility in the choice of feeds used at any given time.

Streaming Agreements

There are two streaming agreements related to Gold production at Santa Elena.

Sandstorm Gold Ltd receives 20% of the Gold production from the leach pad and a limited area of the underground mine at $450 per ounce. Although the agreement runs for the life of the mine, it does not affect all production at the mine.

Wheaton Precious Metals International (WPMI) receives 25% of the Gold equivalent production from Santa Elena at $600 per ounce.

Like the streaming agreement for the San Dimas mine, the arrangements with Sandstorm and WPMI are based on Gold equivalent production which allows First Majestic to maximize its exposure to the price of Silver.

Ermitaño Project - source: First Majestic Projects Overview

Ermitaño Project

Immediately adjacent to the Santa Elena mine is the Ermitaño project which began as a joint venture between First Majestic and Evrim Resources Corp. First Majestic now owns Ermitaño outright after a $1.5 million payment to Evrim. Evrim will receive a 2% net smelter royalty from production at the property.

Ermitaño consists of 16,526 hectares (64 square miles) of mining concessions.

Initial drilling at Ermitaño has identified 49 million Silver equivalent ounces in the Inferred category and 8.8 million Silver equivalent ounces in the Indicated category.

The final permit needed to begin development of the property has been obtained and production is expected to begin in late-2020.

Here’s Keith Neumeyer speaking about Ermitaño:

“Our exploration results at the Ermitaño West project have been extremely successful over the past 18 months. They provide evidence of the regional potential across our vast 101,772 hectares of mining concessions to build additional resources in close proximity to our Santa Elena operation. Ermitaño will add several years of mine life at Santa Elena and will displace the reprocessing of the old heap-leach ore pad with fresh ore containing higher grades that are not subject to the Sandstorm streaming agreement.”

La Encantada Silver Mine - Highlights

Location: Coahuila, Mexico

Land package: 4,076 hectares (16 sq. miles) of mining rights, 1,343 hectares (5 sq. miles) of surface rights

Mining methods: overhand cut-and-fill, inclined caving

Ore processing facilities: 3,000 tpd crushing and grinding circuit; 4,000 tpd cyanidation leaching circuit; Merrill-Crowe system

Output: Silver doré

Workforce: 640 (as of Q4 2015)

Streaming agreements: none

Quarterly production:   885,627 ounces Silver   65 ounces Gold

All-in sustaining costs (AISC): $18.87 per ounce of Silver

Look ahead for 2nd-Half 2019:

  • Expected production from the roaster has been removed from guidance until the re-engineering process is completed. As a result, lower overall production at La Encantada is projected.
  • An engineering report detailing suggested changes for the roaster is expected in Q3.

La Encantada

La Encantada Silver Mine and Processing Plant – (image source: First Majestic Silver)


In 1956 the Mexican company Minera Los Angeles began exploration at La Encantada and developed an underground mine known at the time as El Plomo. New veins and mineralized areas were discovered and developed over subsequent years.

A joint venture between Peñoles and Minera La Encantada acquired the property in 1967 and installed a magnetic-separation plant in mid-1973. This plant was replaced five years later by a flotation processing plant.

Peñoles mined La Encantada through 2004 when the private Mexican company Desmin was granted a contract to operate all facilities at the property.

Desmin ran the mine and processing plant at a greatly reduced capacity through late-2006 when First Majestic Silver purchased all outstanding shares of Desmin.

FMS then acquired the outstanding shares of Minera La Encantada, subject to a 4% NSR (net smelter royalty) due to Peñoles. First Majestic was also granted the option to purchase the NSR outright.

FMS exercised the option during the acquisition process and, at closing, became the 100% owner of La Encantada with all underlying royalty agreements cancelled.

First Majestic refurbished the existing 1,000 tpd flotation plant and began production of silver-rich lead concentrates at their newly acquired Silver mine.

Pouring Doré Silver Bars (image source: First Majestic Silver)

Strategic Upgrades

As they have done at all of their mines, FM has strategically upgraded La Encantada since taking possession.

Planning for a 3,750 tpd cyanidation plant began almost immediately and construction started in July, 2008. The plant began commercial production in April, 2010 and was upgraded to 4,000 tpd in 2011.

With the cyanidation plant in operation, the legacy 1,000 tpd flotation plant was placed in care-and-maintenance, except for the crushing and grinding facilities.

In Q3 2015 the mill was expanded to 3,000 tpd which increased throughput by 33%. In this same quarter a contract was signed with a supplier of liquid natural gas to convert the mine’s power generation from diesel to LNG. This upgrade resulted in a 20% reduction in energy costs and served as the pilot project for implementing the same upgrade at other First Majestic mines.

High-Intensity-Grinding (HIG)

Ore from La Encantada includes very fine particles of Silver encapsulated in manganese.

During 2018, FMS performed studies to determine how fine and ultra-fine grinding of the ore affected metal recovery rates.

The studies showed that a significant increase in Silver recovery could be achieved with high-intensity-grinding (HIG). Engineering and construction of HIG technology is currently in progress with completion expected in Q3 2019, followed by commissioning in Q4 2019.

Mr. Neumeyer points at the HIG mill as “a great example of how new technologies are changing the mining industry.”

Tailings Pile and Roasting

One of the unique aspects of La Encantada is the historic tailings pile and the estimated 9.3 million ounces of recoverable Silver present there.

The bulk of these tailings are from historic mining operations dating back to the late 1970s when metal recovery rates were only 50-to-60%.

The low recovery rates can be, at least partly, attributed to the technology of the day.

Another factor, however, is the La Encantada ore which includes manganese encapsulated Silver, making the recovery of the metal more challenging.

FMS has evaluated several technologies for recovering Silver from the tailings, primarily roasting.

Roasting involves heating the tailings ore to 850 degrees Celsius (1,562 F) which releases the Silver from the manganese. The roasted ore is then processed through the cyanidation leaching circuit where up to 70% of the Silver is recovered.

Coal-Powered Roasting Plant Prototype (image source: First Majestic Silver)

Proof-of-Concept Tests Lead to Full-Scale, Coal-Powered Roaster

Proof-of-concept roasters of 50 tpd (early 2013, diesel powered) and 25 tpd (2015, propane powered) were constructed to evaluate potential roasting and leaching processes.

Diesel power was deemed uneconomical given Silver prices in 2015 but the propane roaster proved that significant Silver could be recovered from the tailings ore with a significant reduction in leaching time needed.

FMS also evaluated coal as a power source for the roaster. Coal is a readily available and inexpensive source of energy in Mexico and First Majestic proceeded with planning for a full-scale, coal-powered plant design with a 2,000 tpd capacity.

Construction has been completed on this roaster and commissioning tests began in Q4 2018.

Challenges with the roaster’s material handling systems led FMS to contract with an external engineering firm for recommendations on design improvements. This firm’s report is expected in Q3 2019 and production from the roaster has been suspended until necessary modifications are completed.

Community Service

To conserve water at La Encantada, FMS implemented a dry tailings filtration system which recycles 80% of the water used in the milling process.

This system produces dry tailings paste instead of the wet slurry typically resulting from milling operations.

A much smaller containment area is needed for tailings paste in comparison to wet tailing ponds, and the risk of contaminating groundwater is greatly reduced.

Due to the success of the dry tailings operation at La Encantada it has become policy at FMS to implement these systems at each of the Company’s mines.

San Martin Silver Mine - Highlights

Location: Jalisco, Mexico

Land package: mining concessions on 37,560 hectares (145 sq. miles), application to acquire mining concessions on an additional 24,723 hectares (95 sq. miles), 800 hectares (3 sq. miles) of surface land

Mining methods: cut-and-fill

Ore processing facilities: 1,300 tpd cyanidation processing plant, Merrill-Crowe system

Output: Silver doré

Workforce: approximately 800 from San Martin de Bolanos (pop. 5,900 in region) – FMS is the largest employer and most employees live close enough to walk to work

Streaming agreements: none

Quarterly production:   temporarily n/a

All-in sustaining costs (AISC): temporarily n/a

Look ahead for 2nd-Half 2019:

  • Mining operations have been temporarily suspended due to insecurity in the district. FMS expects to resume production before year end. As a result, lower production is being projected for San Martin.

San Martin

San Martin Silver Mine and Processing Plant (image source: First Majestic Silver)


Mining of Silver, Gold, lead, and zinc in the Bolaños district where San Martin is located dates back to the early-1500s (Spanish Colonial period).

By the mid-1700s, about 25% of the Silver being produced in New Spain was coming from the Bolaños district.

Viceroyalty of New Spain (image source:

Land disputes, repeated flooding, and the rising cost of mercury used for smelting negatively impacted mining operations in the Bolaños district and by 1798 the region was mostly abandoned.

After Mexico gained its independence from Spanish rule in 1821, British miners entered the district, bringing an influx of capital and experienced miners. This brief mining boom ended in the early 1840s after a series of accidents, one of which took the lives of 150 miners.

The next known mining activities began in 1962 when the Dávila Santos family acquired property in the Bolaños district and formed Minerales de Nuevo Bolaños which became Minera El Pilón around 1982.

In 1997 First Silver Reserve (FSR) acquired all shares of Minera El Pilón via a reverse takeover.

At the time FSR took control the property consisted of a 600 tpd mill, underground workings, and a land package of approximately 5,000 hectares. Silver production was about 1.5 million ounces per year and FSR estimated that the property contained as much as 60 million ounces of recoverable Silver.

First Majestic Silver acquired San Martin in late-2006 by purchasing all outstanding and issued shares of FSR. The acquisition included the historic mill, the underground mine, and a land package of approximately 7,800 hectares.

As the Company has done with all of their mines, FSM immediately began refurbishing and improving the milling operation in conjunction with underground projects to increase grades and reduce dilution.

San Martin Leaching Circuit (image source: December 2016 Technical Report)

Processing Plant

The mill at San Martin in 2006 consisted of an 800 tpd cyanidation leaching circuit designed to process oxide ore.

Historic activity at the property had focused on oxide ore in the upper levels of the underground mine, while sulfide ore from deeper levels of the mineralized veins was mostly left in place.

In late-2007, First Majestic began construction of a 500 tpd flotation circuit to process the sulfide ore and produce silver-rich lead and zinc concentrates. The new circuit was completed in February 2008, and fully commissioned by May 2008.

In July of 2008 FMS began an expansion project intended to increase capacity at the historic mill to 1,200 tpd by April 2009. The plan included additional leaching tanks, thickeners, and a third ball mill.

Due to market conditions in 2008, the expansion plan was placed on hold in November.

In mid-2012 FMS began an expansion project to increase production at San Martin to 1,300 tpd by early-2014. The plan included implementing the upgrades originally slated for 2008, replacing the old 8.5’ x 12’ ball mill with a 9.5’ x 12’ ball mill, adding new induction furnaces, new storage tanks, and two tailing filters.

Strategic Upgrades

In June 2012 First Majestic acquired 29,676 hectares of mineral rights, expanding the Company’s land package at San Martin to more than 37,000 hectares.

In 2017 the Company installed a dry tailings filter-press system like the one at La Encantada.

Community Service

During the drought of 2012, the Bolaños River dried-up, leaving the community of San Martin de Bolaños in a desperate state. In response, the Company built a 6-mile long water pipeline to supply the town from a spring near the mine. This pipeline remains in place, acting as a backup, if needed in the future.

FMS also completed an abandoned sewage treatment facility for the municipality, which ended the dumping of raw sewage into nearby rivers and streams.

Mining Operations Temporarily Suspended

In early July 2019 FMS temporarily suspended operations at San Martin over concern for the safety of mine workers due to insecurity in the surrounding area.

At least one Mexican news outlet has suggested that the insecurity is actually a conflict between the local mining union and mine management over a profit-sharing agreement.

The San Martin Silver mine is a major employer in the region, providing 800 jobs in an area with a population of less than 6,000. The suspension of operations will have a significant impact on the local economy.

La Parrilla Silver Mine - Highlights

Location: Durango, Mexico

Land package: 69,478 hectares (268 sq. miles) of mining concessions, 167 hectares (0.6 sq. miles) surface rights

Mining methods: mechanized cut-and-fill (MCF), long hole stoping (trial basis as of Dec 2016)

Ore processing facilities: 2,000 tpd sequential circuit (1000 tpd sulfide flotation, 1000 tpd cyanidation), Merrill-Crowe system

Output: Silver doré, silver-rich lead and zinc concentrates

Workforce: <500 from nearby Nombre de Dios, Vicente Guerrero, and Suchil (cumulative pop. 50,000) and Durango (pop. 1.7 million, a one hour drive from the mine)

Streaming agreements: none

Quarterly production:   135,420 ounces Silver   17 ounces Gold   1,005,300 pounds lead   1,026,739 pounds zinc

All-in sustaining costs (AISC): $21.61 per ounce of Silver

Look ahead for 2nd-Half 2019:

  • Mining operations at La Parrilla have been temporarily suspended. The suspension will increase the Company’s operating cash flow and profitability.
  • The budget for exploration at La Parrilla has been doubled.
  • Opportunities are being explored to leverage the processing plant's micro-bubble technology.

La Parrilla

La Parrilla Mine and Processing Plant (image source: First Majestic Silver)


La Parrilla is another FMS-owned Silver mine that dates back to Spanish Colonial times (early 1500s).

Modern exploration and development of the property was performed by small-scale miners prior to 1956 when the first underground silver-gold-lead mine and 180 tpd flotation plant was established by Mexican company Minera Los Rosarios (MLR) and the Comision de Fomento Minero (CFM) (Commission of Mining Promotion).

MLR operated the mine and plant until 1999 when low Silver prices caused the company to place the operation in care and maintenance.

First Majestic Silver acquired the mining rights, underground mine, and processing plant from Minera Los Rosarios in mid-2004 and La Parilla became the Company’s first mine.

As the new 100% owner of the property, FMS began re-commissioning the 180 tpd mill, commenced underground development operations, and embarked on an exploration drilling program.

Commercial production at La Parrilla began in 2005.

In 2006 First Majestic acquired mining rights to the nearby and interconnected Quebradillas, El Recuerdo, La Luz, Las Vacas, and Viboras mines from Grupo México. The acquisition included 3,126 hectares of mining concessions surrounding the La Parrilla mine.

Processing Plant

Both oxide and sulfide ores are present at La Parrilla. These polymetallic ores contain Silver, lead, zinc, and Gold.

In early-2006 First Majestic began construction of an 800 tpd mill with a 400 tpd cyanidation leach circuit for oxide ore and a 400 tpd flotation circuit for sulfide ores.

The leaching circuit uses the Merrill-Crowe process to produce Silver doré bars, while the flotation circuit produces silver-rich lead and zinc concentrates.

FMS began a major expansion of the mill in late-2010, increasing capacity of each of the circuits to 1,000 tpd. The goal of this project was to raise silver-equivalent production at La Parrilla from 1.5 million ounces per year to 4.0 million ounces.

Commercial production from the new flotation circuit was achieved in October 2011, with commercial production from the leaching circuit commencing in March 2012.

Mining activities were expanded at La Parrilla to feed the new mill. A new open pit at Quebradillas and the underground operations at the San Marcos mine provided oxide ore for the expanded leaching circuit. Sulfide ore for the flotation circuit came from the Rosarios, Intermedia, and Vacas underground mines.

Throughput at the mill’s expanded capacity of 2,000 tpd continued through mid-2015 when the Quebradillas open pit approached end-of-life. After this point, throughput of oxide ore was decreased to approximately 500 tpd while throughput of sulfide ore increased to roughly 1,100 tpd.

In 2017, FMS began testing high recovery micro-bubble technology with the goal of increasing recovery rates for Silver, lead, and zinc. Test results were positive and the go-ahead was given to install full-scale micro-bubble columns at La Parrilla, Del Toro, San Martin and La Guitarra. As of June 2019, installation work at La Parrilla is approximately 75% complete.

La Parrilla Ball Mills (image source: First Majestic Silver)

Strategic Upgrades

La Parrilla consists of five individual mines, some interconnected through their underground workings, and some connected only by gravel roads on the surface.

In 2013 First Majestic began construction of an underground ore transportation system with the objective of connecting all of the mines in order to increase the efficiency of the overall mining operation.

The project has two key aspects:

  • A 2,000 tpd hoisting shaft at Rosarios, which is closest to the processing plant
  • A five-kilometer-long electric rail system at the 11 level of the Rosarios mine, connecting all five mines to the hoisting shaft

There are a number of benefits expected from this planned system:

  • Reduced cost for hauling ore to the processing plant
  • Increased efficiency in haulage as the underground workings move deeper
  • Significant reduction in diesel exhaust fumes from underground haulage vehicles
  • Reduced load on the mine ventilation system achieved by reducing diesel exhaust fumes

This project was placed on hold in 2014 due to low Silver prices.

Mining Operations Temporarily Suspended

In a news release dated August 7 2019 First Majestic reported that mining operations at La Parrilla would be suspended temporarily in Q4 2019 to improve the Company’s cash flow and profitability.

Based on the AISC numbers in the Q2 Report, La Parrilla is the most expensive mine that FMS operates, so the shutdown makes sense from a strictly financial perspective.

The news release also states that La Parrilla’s processing plant will be temporarily shut down in mid-September in order to stockpile ore for the commissioning phase of the new micro-bubble flotation cells.

While this news release could be viewed as a negative development, there are actually several positive aspects to this situation:

  • Opportunities are being evaluated for milling ore from third-party mining operations at the processing plant.
  • Shipping a new bulk concentrate from the FMS-owned Del Toro mine to La Parrilla (10 miles away) for further processing in the micro-bubble flotation cells is being considered.
  • The exploration budget for La Parrilla has been doubled in order to test nine targets near the mine. 24,000 meters of drilling is planned with the objective of developing new Resources that would justify a potential reopening of the mine in early-2021.

Measured and Indicated Resources at the La Parrilla Mine

Of all the First Majestic mines currently in operation, La Parrilla has the lowest Measured and Indicated Resources.

Based on the Company’s December 2018 estimates, there are approximately 11.4 million silver-equivalent ounces remaining at La Parrilla.

For comparison, La Encantada has 34.8 million, Santa Elena has 43.4 million, and San Dimas has 130.1 million.

The combination of being the most expensive mine with the lowest Resources is further justification for suspending operations.

Del Toro Silver Mine - Highlights

Location: Zacatecas, Mexico

Land package: 2,130 hectares (8 sq. miles) of mining concessions, 219 hectares (0.8 sq. miles) of surface rights

Mining methods: cut-and-fill stoping, shrinkage stoping, long hole stoping (some areas of the mine), overhand drift-and-fill

Ore processing facilities: 2,000 tpd flotation circuit and 2,000 tpd cyanidation circuit (cyanidation circuit is in care and maintenance)

Output: Silver doré

Workforce: mostly from the nearby village of Chalchihuites

Streaming agreements: none

Quarterly production:   74,997 ounces Silver   902,005 pounds lead

All-in sustaining costs (AISC): $36.33 per ounce of Silver

Look ahead for 2nd-Half 2019:

  • Potential announcement of results from greenfield drilling program.
  • Potential results of a study evaluating the shipment of Del Toro bulk concentrates to La Parrilla for further processing.
  • Potential announcement of the re-engineered mine plan for Del Toro.

Del Toro

Del Toro Mine and Processing Plant

(image source: December 2016 Technical Report)


First Majestic Silver started exploration and development in the Chalchihuites district in late-2004 under option agreements with the owners of the historic San Juan and Perseverancia Silver Mines. Silver extraction from these mines began during the Spanish Colonial period.

First Majestic chose to exercise the option agreement, making the Company 100% owner of the properties. FMS applied for, and obtained, additional mining claims for the areas around the existing mines.

During a three-year period, FMS developed the existing underground workings at San Juan and Perseverancia, shipping the Silver ore to the FMS-owned La Parrilla mill 60 km (10 miles) away.

 Aggressive exploration was conducted to define the Resource base and determine if the property could support an on-site milling operation.

In late-2011 First Majestic acquired the nearby producing Dolores mine.

Today's Del Toro Mine is the consolidation of the historic San Juan, Perseverancia, and Dolores Silver Mines.

Del Toro Consolidates Three Historic Silver Mines

(image source: December 2016 Technical Report)

Processing Plant

In early-2011 FMS began construction of a 1,000 tpd flotation processing plant at the property. Planning and construction quickly expanded to include a 1,000 tpd cyanide leaching circuit.

Del Toro is a polymetallic mine with Silver, lead, and zinc present in two types of ore: oxide and sulfide. First Majestic designed the processing plant to produce silver-rich lead and zinc concentrates from the oxide ore in a flotation circuit, and Silver doré from sulfide ore in a leaching circuit.

Commercial production from the flotation circuit was achieved in April 2013, with the cyanidation circuit achieving the same milestone in early-2014.

During 2014, a series of upgrades and optimizations were implemented at the plant, bringing Silver recovery rates up to 80%.

Production of zinc was stopped at this time because of low recovery rates (under 20% vs the planned 60%) from the oxide ore and better profitability from focusing on production of Silver and lead from the sulfide ore in the flotation circuit. The cyanidation circuit was placed in care and maintenance based on this decision.

Optimization of the flotation circuit paid off, raising Silver recovery rates from 69% in 2014 to over 80% by 2016.

Strategic Upgrades

There are two key resources needed for a successful underground mining and milling operation: energy and water.

To address energy needs, First Majestic constructed a 45-kilometer long, 115-kilovolt power line which connected Del Toro to the Mexican national power grid in 2014. The line supplies 100% of the power needed at the mine.

Water for Del Toro comes from a sewage treatment facility constructed by FMS for the town of Chalchihuites. The facility provides grey water for the 4,000 tpd mill and processes raw sewage from the community which had previously been released into the environment untreated.

La Guitarra Silver Mine - Highlights

Location: state of Mexico, Mexico

Land package: 39,714 hectares (153 sq. miles) of mining claims

Mining methods: overhand cut-and-fill, long hole stoping

Ore processing facilities: 520 tpd flotation plant

Output: bulk Silver/Gold concentrate

Workforce: approx. 400 in Mar 2015  (primarily from the Temascaltepec municipality, pop. 33,000)

Streaming agreements: none

Quarterly production: none

All-in sustaining costs (AISC): n/a

Look ahead for 2nd-Half 2019:

  • In care and maintenance as of August 2018, FMS is reviewing options for this property, including a potential sale.

La Guitarra

San Rafael Mine Portal at La Guitarra Mine (image source: March 2015 Technical Report)

Current Status

La Guitarra is currently under care and maintenance as of August, 2018.

First Majestic is considering strategic options for the property, including a potential sale.

FMS intends to maintain the current permits at La Guitarra, allowing the Company to reopen the mine if economic conditions improve.


La Guitarra is located in Temascaltepec, Estado de Mexico (Mexico State), Mexico.

Mining began in Temascaltepec in the mid-1500’s, during the Spanish colonial era.

Historic records suggest that very high grades of Silver and Gold were mined at La Guitarra during this period. Silver grades of several kilograms (multiple pounds) per ton and Gold grades of several 10s of grams (multiple ounces) per ton are documented.

Mining in the Temascaltepec district stopped in the early 1800’s when flooding of the underground mine works overcame the pumping technology of the day. Political upheaval caused by the 1810 Mexican War of Independence contributed to the cessation of mining. 

Modern mining at La Guitarra began in 1990 with a 30 tpd mill. In 1993, milling capacity at the mine was increased to 320 tpd.

In 2010, the entire Temascaltepec mining district, including the La Guitarra mine, was controlled by Silvermex Resources Inc.

First Majestic took over the La Guitarra Mine in 2012 by acquiring all issued and outstanding shares of Silvermex.

Ball Mill at La Guitarra (image source: First Majestic Silver)

Strategic Upgrades

As is typical of First Majestic Silver, upgrades at La Guitarra began immediately after the property was acquired.

The 320 tpd processing plant was expanded to 520 tpd with the addition of a spare ball mill from FSM’s La Parrilla mine and some spare flotation tanks from La Encantada.

Underground operations were expanded to match the new plant’s capacity, and by May of 2013, the expansion was complete.

Cash Cost and AISC per Ounce of Silver

Numbers in the table below are from the 2019 Q2 Quarterly Report.


Q2 cash cost per oz

Q2 AISC per oz

H2 AISC per oz

Full year AISC per oz

San Dimas





Santa Elena





La Encantada





San Martin





La Parrilla





Del Toro





La Guitarra *





* based on Q2 2018 report (final report before the mine was transitioned to care and maintenance)

There are several observations we can make based on the cash cost and AISC at each of First Majestic’s mines.

First, the difference between a “low-cost mine” and everything else becomes obvious. Just compare AISC between San Dimas, Santa Elena, and the other mines.

Keep in mind that the “by-product” Gold from San Dimas and Santa Elena is the driving factor behind the low cost for Silver at these mines, which highlights the second observation we can make.

Mining for Precious metals is an expensive endeavor and with metal prices depressed for several years, mining for Silver has mostly been a losing proposition. That explains why multiple primary Silver miners shifted their focus onto Gold in recent years.

Life of Mine (LOM)

The end-of-life dates in the table below are based on the Reserves reported as of the date of the referenced Technical Report. These dates do not imply that the property will be mined-out at that point in time.

For example, end-of-life at San Dimas was projected as 2036 in the Technical Report prepared for Primero in 2014. In recent interviews, Mr. Neumeyer has suggested that the actual end-of-life for San Dimas is at least 100 years in the future.


Q2 cash cost per oz

Q2 AISC per oz

H2 AISC per oz

Full year AISC per oz

San Dimas





Santa Elena





La Encantada





San Martin





La Parrilla





Del Toro





La Guitarra *





First Majestic is continually expanding Reserves through infill and step out drilling programs. The Company is an aggressive driller with as many as 23 drilling rigs operating at any given time, strategically expanding Reserves at each of the Company's mines.

The table below shows the meters of drilling completed in the years 2013 through 2019, and the drilling budgeted for H2 2019. When new Technical Reports are prepared for First Majestic's mines this extensive drilling should substantially extend the projected end-of-life dates.

Time period

Meters drilled













2019 H1


2019 H2

116,706 (budgeted)

Besides drilling programs, these factors also affect the life of any given mine:

  • The type of ore being mined at any given time. Mineralized veins tend to have oxide ores near the surface and then transition to sulfide ore as the vein goes deeper. The two types of ore require different processing methods, and it is typically harder to reach the deeper sulfide ore. At some mines the sulfide ore has been left in place so LOM can be extended by mining deeper and adding processing capacity specifically for the sulfide ore.
  • LOM is based on the economically-viable cut-off-grade (COG) of the ore being mined. For example, in the 2015 TR for La Encantada, a COG of 140 grams/ton based on a Silver price of $17.50/ounce was used to determine LOM. As the price of Silver increases, the economically-viable COG decreases, which means that previously ignored low-grade ore can be added to a mine's Resources, extending the end-of-life date.
  • LOM can be dramatically increased through acquisition or discovery of new ore bodies like the Ermitaño West project at Santa Elena. First Majestic controls large areas of prospective ground around all of the Company's mines, and much of this land has never been explored using modern prospecting methods.


The attractiveness of First Majestic Silver as an Investment is both a blessing and a challenge.

As one of the premier Silver stocks to own, when Investors focus on Precious metals and Mining stocks, many of them want to buy First Majestic.

As a result, the Company's share price tends to climb relentlessly higher without correcting. This behavior makes it challenging to pick a conservative entry point.

Investors sitting on the sidelines may look at the big moves that FMS has already made and fear they have missed out.

In the 2016 bull market price moved progressively higher with only a few sideways pauses, and nothing resembling a correction.

Conservative investors waiting for a pullback watched in vain as First Majestic powered relentlessly higher.

So what is the Investor on the sidelines supposed to do? Hold their nose and buy? Take a small initial position and hope for a pullback to buy more?

The answers to those questions depend on each Investor's personal circumstances, objectives, and tolerance for risk.

If you would like personal guidance building a portfolio of Mining stocks send us an email at contact @

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I've been investing in the Precious metals and mining stocks since 2002 when I realized that Gold is the only real money on the planet.

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