Take physic, pomp

First Majestic (FR.to) (AG): The Great Rock’n’Roll Swindle

When we last caught up with Keif’s First Majestic (AR) (FR.to) it had just posted its 2022 financials, the trainwreck called Jerritt Canyon was sticking out like the veritable sore thumb and we said as much, in the post First Majestic (AG) (FR.to) and the price it has paid for Jerritt Canyon dated February 23rd 2023. We ran the numbers, did a few pretty colours in charts and showed how Jerritt Canyon had already cost the company over U$870m, all due to the way the Otto West of the mining world had fallen for Eric Sprott’s soft-soaping and decided to expand his empire by moving into the Nevada gold business. Here’s how the post ended:

If AG buying Jerritt Canyon doesn’t rank as the dumbass mining deal of the decade, tell me which one I forgot.”

That should be clear enough. And indeed, as the conversation in the comments section noted Eric Sprott quickly went about the task of dumping his FR.to shares and gettin’ outta Dodge, he knew the reality of what he’d just sold to Keif while FR went about its task of incinerating even more cash at the mine. Even when its 2022 numbers came in as bad as they did, FR.to still insisted on its capex plan to turn around the asset (term used as loosely as humanly possible, of course) and said it would turn a profit this year. Here’s the 2023 guidance, as published by the company on February 23rd 2023:

Jerritt Canyon was slated to produce 30% of FR’s output this year and while the forecast AISC was nothing to write home about, the company line was that things would improve as its laundry list of infrastructure improvements were checked off and that First Majestic’s move into the gold business would be consolidated. In their own words in the MD&A, “The increase in forecast gold production is primarily due to improvements in mine production at Jerritt Canyon resulting in an expected 74% increase in gold ounces in 2023 when compared to the prior year.”

It’s worth reflecting that Keif and FR published that less than one calendar month ago. Last night, this:

Vancouver, British Columbia–(Newsfile Corp. – March 20, 2023) – FIRST MAJESTIC SILVER CORP. (NYSE: AG) (TSX: FR) (the “Company” or “First Majestic”) announces today it is taking action to reduce overall costs by reducing investments, temporarily suspending all mining activities and reducing its workforce at Jerritt Canyon effective immediately.

Continues here

So what happened? Well folks, as this is the same company that has raised U$200m by selling ATM shares to the open market for the last two years in order to avoid a cash crunch and as at end 2022, its books looked like this…

…this desk’s best guess is that the delusional Keif has been read the Riot Act by corporate creditors, maybe even his board has told him to sit down and shut up for once. Be clear, these days First Majestic is in the business of selling paper to fools in order to stay afloat, its metals desk is now a sideline and a loss-making one, at that. So with the ATM window closed until July 2023 (even this company bows to SEC rules) it was beginning to face the potential of a corporation-wide cash crunch and that would not have gone down well with the debt holders or with Keif’s BDSM meister at Wheaton, Randy Smallwood. There’s only so much promotional and marketing stupidity available to mask the creaking edifice of First Majestic, Keif’s social media squawking about $200/oz silver only fools the dumbest of the dumb money and sadly for him, those people don’t tend to have access to the seven, eight, nine digit money his company now requires to dig itself out of a hole created out of nothing by Keif, his imagined world and his out-sized ego. In other words, yesterday reality bit him firmly on the backside. About time, too.


    […] IKN cuts to the chase: It’s management. […]

    Tim Brompton Cemetery. Chelsea 25/03/23 3:28 am

    Bravo my friend. The mining world needs more Mark. ATM is the right abbreviation for that nonsense which should be banned.


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