June 4, 2020 (MicroSmallCap via Comtex) — The US Federal Reserve continues to print money and cut interest rates in an effort to buoy the economy above the tides of the ongoing global pandemic. As a result, the dollar is declining at a gradually increasing rate. Historically, a weak dollar is a strong catalyst for precious metals, as it makes it easier for foreign buyers to afford. Newly confident investors, emboldened by the fact that the DOW is once again about 25,000, are divesting from the dollar. Accordingly, silver has blown past $18.00 and is starting to test resistance at $18.50. Adding to its momentum is the supply squeeze caused by a production shutdown at countless silver mines across America. Together, these factors could make key silver producers—such as First Majestic Silver Corp. (NYSE:AG) (TSX:FR), Silvercorp Metals Inc (TSX:SVM) (NYSE:SVM), Fortuna Silver Mines (NASDAQ:FSM) (TSX:FVI), Hecla Mining Company (NYSE:HL) and Pan American Silver Corp. (NASDAQ:PAAS) (TSX:PAAS)—the beneficiaries of a major silver rally.
First Majestic’s Industry-Leading Silver Revenue Percentage
Of the companies mentioned above, First Majestic Silver Corp (TSX:FR) (NYSE:AG) earns a greater percentage of its revenue from silver than any other. According to the company, silver sales account for approximately 60% of its total revenue.
According to its financial results for the three months ended March 31, First Majestic produced a total of 3,151,980 ounces of silver from its three producing silver mines, all located in Mexico. The cash cost per ounce that quarter was $5.16, while the company realized an average price of $17.36 per ounce.
In total, First Majestic produced 6.2 million equivalent ounces of silver in Q1 2020, a 109% increase from the same quarter last year. While the mining company lost approximately one full month of operations in Q2 2020 due to the ongoing pandemic, the Mexican government allowed mines to restart production as of May 18.
Accordingly, First Majestic is maintaining strict sanitary controls and supporting local communities around its three producing mines in Mexico. The company forecasts that full production rates will be achieved by early July.
Also worth noting is First Majestic Silver Corp (NYSE:AG) (TSX:FR) progress on its exploration and development projects. In Q1, the company completed 448 metres of development at its Ermitaño project, which is located just four kilometres southeast of its operating Santa Elena mine.
The high-grade Ermitaño project’s first access point, which will intersect the main orebody, is approximately 600 metres away from current development. First Majestic expects to reach the access point by the end of the third quarter of 2020.
In addition to the Ermitaño project, First Majestic has seven more exploration and development projects in Mexico that are wholly owned by the company.
Finally, as of the end of Q1, First Majestic has retained approximately 292,000 ounces of silver and 700 ounces of shipped gold at its finished goods inventory. The company opted not to sell these ounces in March due to the volatility of silver and gold prices during the COVID-inspired crash.
Fortunately, with silver prices already reaching their highest projections for the year, First Majestic (NYSE:AG) (TSX:FR) is expected to earn considerably more money as a result of withholding these ounces from the market.
More Silver Producers Well-Positioned for the Silver Rush
Just like First Majestic, Silvercorp Metals Inc (TSX:SVM) (NYSE:SVM) is a silver producer, but instead of Mexico it is based in China. Notably, Silvercorp is a profitable company, and will even be able to pay a dividend at the end of June. What’s more, for its last fiscal year, the company sold approximately 6.3 million ounces of silver, as well as 3,300 ounces of gold, earning total revenues of $158.8 million.
Fortuna Silver Mines (NASDAQ:FSM) (TSX:FVI) is a Canadian silver producer with projects across Latin America, including Mexico, Peru, and Argentina. In Q1 2020, the company produced 1.8 million ounces of silver, and sold 1.6 million ounces of so;ver at a price of $16.09 per ounce.
Hecla Mining Company (NYSE:HL) is a low-cost US silver producer with operating mines in Alaska, Idaho, and Mexico. In its first quarter of 2020, the company produced 3.2 million ounces of silver, while also selling 2.6 million ounces at an average price of $14.48 per ounce. By the end of the year, it plans to produce between 8.9 million and 9.3 million ounces of silver.
Pan American Silver Corp. (NASDAQ:PAAS) (TSX:PAAS) reported in the first quarter of 2020 that it produced 5.6 million ounces of silver. In addition, the company’s all-in sustaining cost came to $15.26 per silver ounce sold. As PAAS is now restarting activity across all its projects, the company expects to return to optimum operations within the next few weeks.
Other Factors That Could Affect Silver in the Near-Term
The authors of a January 2020 report by Scotiabank put $17.50 to $21.00 per ounce as the expected silver range for 2020. They predict a modest increase in industrial demand, mostly due to silver’s application in green energies, which could prompt further growth in the next few years.
There’s plenty of reason to believe that silver prices will not only trend towards the high estimates, but will exceed them as both solar panels and electric cars—two items which require silver—see increasing attention from investors, especially high profile ones like Elon Musk. That’s why First Majestic Silver Corp (NYSE:AG) (TSX:FR) and its contemporaries are worth watching as silver continues to climb.
To learn more about First Majestic Silver Corp. (NYSE:AG) (TSX:FR), click here.
Featured image: DepositPhotos © ras-slava
Disclosure:
1) The author of the Article, or members of the author’s immediate household or family, do not own any securities of the companies set forth in this Article. The author determined which companies would be included in this article based on research and understanding of the sector.
2) The Article was issued on behalf of and sponsored by First Majestic Silver Corp. Market Jar Media Inc. expects to receive from First Majestic Silver Corp.’s Digital Marketing Agency of Record (Native Ads Inc.) one hundred eighty eight thousand US Dollars for 30 campaign days (22 business days).
3) Statements and opinions expressed are the opinions of the author and not Market Jar Media Inc., its directors or officers. The author is wholly responsible for the validity of the statements. The author was not paid by Market Jar Media Inc. for this Article. Market Jar Media Inc. was not paid by the author to publish or syndicate this Article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Market Jar Media Inc. requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Market Jar Media Inc. relies upon the authors to accurately provide this information and Market Jar Media Inc. has no means of verifying its accuracy.
4) The Article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of the information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Market Jar Media Inc.’s terms of use and full legal disclaimer as set forth here. This Article is not a solicitation for investment. Market Jar Media Inc. does not render general or specific investment advice and the information on Microsmallcap.com should not be considered a recommendation to buy or sell any security. Market Jar Media Inc. does not endorse or recommend the business, products, services or securities of any company mentioned on Microsmallcap.com.
5) Market Jar Media Inc. and its respective directors, officers and employees hold no shares for any company mentioned in the Article.
