On opening the First Majestic Silver (AG) (FR.to) 4q22 financials this evening and being met by an ungodly mess of numbers, it soon became clear to this desk the extent to which Eric Sprott pulled an almighty fast one on Keif at First Majestic (AG) (FR.to) in March 2021 by selling him the worst mine in Nevada, Jerritt Canyon. So it’s time for some arithmetic sums and math to find out how much this deal has cost AG so far:
Purchase price: U$470m. My stars, did Eric ever see him coming. But that’s just for starters, as Jerritt Canyon has been a money pit of impressive scale since then.
Operations: Here’s a chart:
With revenues over the seven quarters since AG bought the “asset” coming to a total of U$254.027m and mine site costs (i.e. not including any financing costs, corporate G&A, etc) of U$290.665m, the mine has been running at a loss almost since the getgo and the last few quarters have been eye-watering. But that’s not all, as Depreciation, Depletion and Amortization…
…has cost the company another U$92.74m over the seven quarters. That means a total Mine Operating Loss of U$129.378m and be clear, all the numbers on this page are not for AG as a whole, this is just Jerritt Canyon. But wait! There’s more! We need to factor in the capex AG has spent on this mine since it took ownership, which looks like this:
Another U$270.562m, which means that when you total it all up we’re just hair’s breadth away from a total loss of U$870m on the deal…so far. Compare that to AG’s market cap at U$1.865Bn this evening, which gives an idea of how much share equity has been flushed down the toilet by this crazy purchase. If AG buying Jerritt Canyon doesn’t rank as the dumbass mining deal of the decade, tell me which one I forgot.