first majestic silver

A Silver Producer And Explorer In Mexico

Technical Analyst, Precious Metal Investor & Author
December 27, 2006

First Majestic, (FR.V - TSX, FMJRF on the pink sheets and AOLHKJ at Frankfurt), is a well managed silver miner, intending on becoming a senior producer through acquisitions and by adding reserves via the drill bit.

CEO Keith Neumeyer has been active in investment circles and the mining industry for the past 21 years. He founded First Quantum Minerals, (a company that became a producer of gold in Zambia and which now trades at 61.00 a share).

Mr. Neumeyer likes Mexico because it allows 100% foreign capital, and offers political and financial stability. He has assembled a highly qualified team of mining experts, including C.O.O. Ramon Davila who is a Mexico native, with an Engineering degree and a masters degree in Minerals Economics.

The company has just purchased its third silver mine: La Encantada, currently producing 800,000 ounces of silver per annum. The mill at La Encantata processes 250 tpd, which is but 40% of its capacity. Management is planning to increase production to the mills full capacity. The ore at La Encantata is very rich, up to 500 gpt! In addition, the surrounding area of 700 hectares represents excellent exploration and development potential with several targets of immediate interest already defined.

The other two silver mines, La Parilla and San Martin each produce 2 million ounces of silver per annum.

At La Parilla a new 800 ton/day mill is nearing completion which will increase production at that mine. The projected silver output for the company in 2007 is 5 million ounces of silver.

In addition to the three producing mines, First Majestic owns a number of other advanced stage silver properties and previous mining operations including: La Verda where 2 rigs are currently drilling, and La Perseverancia Mine, San Juan Mine, Las Cotorras Mine, Magistral Mine. All of these properties will be developed at some point in the future, but for now management is concentrating on maximizing production at the three main mines, while continuing to shop for underpriced silver properties in the area.

On November 28th/06 FR.V completed a private placement which was oversubscribed, and which added 16 million C$ to the treasury.

Management understands the tremendous potential of silver at this time, with silver consumption overtaking silver production.

This is the daily bar chart for silver, (charts courtesy

In June and September we saw similar chart patterns to the one we see today. The vertical lines connect lows in price, RSI and MACD. Silver rose about 3.00 - 4.00 on each of the previous occasions. The blue arrows point out the fact that the 200DMA has offered support throughout this rise. The target for this next rise is 15.00

First Majestic website: , information: [email protected] , 1-866-529-2807

Shares issued: 49,442,132 ; Fully diluted 61,532,679 at 4.52 = $278,127,770.00

In September First Majestic's shares completed 5 months of a price correction, from 7.00 where the stock price had moved too far above the 200DMA, to 2.50 where the stock was clearly underpriced. During this correction the 200 DMA remained in uptrend (which is bullish), and the 50DMA (blue line) is heading for a positive crossover with the 200 DMA, (also bullish).

Please do your own diligence, I am not responsible for your trading decisions.

Peter Degraaf is a successful on-line trader who sends out occasional E-mail alerts. He offers a 60 day free trial. He also sends out a free E-mail message to people who are confused by some of the terms used. It is called: Explaining the terminology. Contact him at [email protected]

Peter Degraaf became interested in silver and gold when the Governments of the US and Canada proceeded to remove silver coinage from circulation in the mid 1960s.

He noticed the effect of Gresham’s law:  “Bad money drives out good.” He became a coin dealer, attending coin shows all over The US and Canada. In 2001 he semi-retired from coin sales and concentrated on investing in precious metals. He mastered the art of technical analysis and applies this to his investments. In 2001 he started publishing a daily and weekly market report.  His website is at

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