SILVER MINER SUSPENDS SALES: 35% Of Production Due To Low Prices

First Majestic Silver Producer

The first primary silver miner in the industry just announced that it suspended sales of silver during the 3rd quarter due to the low market price of silver.  First Majestic suspended sales of 35% of its Q3 silver production.  This was a significant amount as it was nearly 1 million oz of its 2.7 million oz production that quarter.

According to First Majestic’s recent new release:

Tue Oct 14, 2014:
Produces 3.5 Million Silver Eqv. Ounces in Q3; Postpones the Sale of 934K Silver Ounces of Inventory

First Majestic Silver Corp. (“First Majestic” or the “Company”) is pleased to announce that total production at its five operating silver mines in Mexico for the third quarter ending September 30, 2014 reached 3,523,536 equivalent ounces of silver, representing a 5% increase compared to the same quarter in 2013.

Total silver production for the quarter consisted of 2,680,439 ounces of silver, relatively unchanged compared to the same quarter in 2013. In addition, 9,703,792 pounds of lead and 3,222,877 pounds of zinc were produced, representing an increase of 14% and 44%, respectively, compared to the same quarter of the previous year. Also produced were 2,781 ounces of gold, representing a 5% decrease compared to the third quarter of 2013.

…..Silver prices declined 19% in the third quarter representing the second largest quarterly decline since the financial crisis in 2008. As a result of this weakness, the Company decided to temporarily suspend silver sales in an attempt to maximize future profits. This suspension of sales will result in lower revenues and earnings for the third quarter, however, it is likely that these inventories of unsold ounces will instead be sold in the fourth quarter. As of September 30, 2014, approximately 934,000 ounces of silver were held in inventory.

Here is a table showing First Majestic’s quarterly silver production:

Fiirst Majestic Production Table

First Majestic suspended the sales of 943,000 oz of silver in Q3 2014, which again was 35% of its 2,680,439 oz of production that quarter.  They may elect to sell this silver in Q4, if the prices are more favorable.

While this is only a small part of the primary silver mining industry’s overall production, at least First Majestic is trying to set a precedence by standing up to the manipulated low price of silver.   If other companies joined the band-wagon and held back sales of their silver production, this could send a clear message to the Bullion Banks… that FUTURE PHYSICAL SUPPLY shouldn’t be taken for granted.

Lastly, investors need to be prepared for the time that acquiring physical gold and silver will be virtually impossible.  It seems as if (and according to the speculation of many in the precious metal industry) the rise in the price or value of gold and silver will not occur as it did from 2009 to 2011.

This time around, the values of the precious metals will probably skyrocket virtually overnight… thus creating a huge panic for the public to FINALLY GET IT.  Unfortunately, it will be too late as physical metal will be in very short supply.  Which is why I believe, some of the mining stocks will be the NEXT BEST THING to own.

Please check back for new articles and updates at the SRSrocco Report.  You can also follow us at Twitter, Facebook and Youtube below:

Enter your email address to receive updates each time we publish new content.

I hope that you find SRSroccoReport.com useful. Please, consider contributing to help the site remain public. All donations are processed 100% securely by PayPal. Thank you, Steve

37 Comments on "SILVER MINER SUSPENDS SALES: 35% Of Production Due To Low Prices"

  1. Steve

    This is an important step. It tells the market that silver, at these prices, are unacceptable to the miners. That’s a critical part of how markets work. If the miners have no care or concern for prices then market players will figure out a price that works for them and screw the miners.

    If other miners step up they could see significant pricing power emerge for their products. True, they will take a short term hit to revenue and earnings, but that would be quickly dismissed as silver can and will be sold in the future.

    Tas

    • If other miners can afford the cash flow crunch of holding out for a few months until they can get better prices then they should. They should hold back as long as they can.

      Physical supply constraints are the ultimate trump card in this house of [manipulated] cards.

  2. “This time around, the values of the precious metals will probably skyrocket virtually overnight… thus creating a huge panic for the public to FINALLY GET IT. Unfortunately, it will be too late as physical metal will be in very short supply. Which is why I believe, some of the mining stocks will be the NEXT BEST THING to own.”

    If I can’t get physical I’ll buy long storage food, a generator, a metal shed to store gasoline, etc., and other hardware. Don’t think I’ll mess with mining stocks. Not sure how they can’t be taken away in some manner.

    • No need to be too pessimistic. Further to what you say, if the government find out that you are hoarding food, gasoline, and a generator, whilst other folks have to go without, they will take these off you too, in order to quell the outcry of those who do not have what you have got.

  3. Nice news. FYI there’s a typo ‘FUTURE PHYSICAL SUPPLY shouldn’t be taken for grant it.’

    I know with each passing month the inventories will get depleted. As for the doomsday scenarios, they won’t happen. Definitely going to be a decline like the great depression, but without the mass death and Mad Max that the preppers believe in.

    • Don’t count on it George.

      In the great depression people embraced religion, morality, and decency. Now they loot, rape, and pillage. I’ve had long discussions with my parents about what it was like growing up in the great depression. Law and order is a very thin veneer over society right now. Look at Ferguson Missouri as a microcosm of what things will be like when people decide to take what they want from others.

      • I’m with you David. I’m 63. My mother was one of 9 kids. They traveled in an open car from Florida to Montana. A couple years later, to California. All 11 of them. They would travel most of the day, stop at a farm and all the kids knew the routine. Before the farmers would apologize and tell the Adden’s there was no help for them there, the Adden’s would be milking the cows, cleaning the place up and imposing as graciously as possible. Because the Adden’s ran to work, the farmers would end up shrugging, inviting them all to supper once all the chores were done and let the kids sleep in the barn or the home if there was room. Early morning the Adden’s had a couple gallons of milk and a couple of loaves of bread and be on their way. They were Christian, honest, hard working. Those values were common during the Great Depression. This time it will be very different. America might suffer very severely this time. Who lives on farms anymore anyway?

    • So uhh… why not ?

    • George,

      Thanks for the pointing out the TYPO. I don’t know if we will get the MAD MAX scenario… I doubt it, but there is a slight possibility. The biggest problem for mankind is the peak and decline of CHEAP OIL. This will destroy a way of life that many are not prepared.

      steve

  4. Steve,
    this is not the first time First Majestic suspended their silver sales.

    • Right – BUT AT LEAST THEY ARE DOING IT. IT’S HIGH TIME FOR THE REST OF THE SECTOR TO FOLLOW SUIT.

      P.S. It’s “granted,” not “grant it.” Rgds

      • Lore,

        Thanks… you and George get a thumbs up for that typo–I made the change. As I have stated many times, I am a butcher when it comes to writing. I don’t have an editor for the site and its not a good idea to copy edit one’s own work.

        steve

    • Andre,

      Correct… First Majestic also held back 700,000 oz in Q2 2013 after the big silver takedown in April & June 2013. Even with the huge takedown, the average price of silver First Majestic received in Q2 2013, was $22.19. Compare that to the average Kitco price for the Q3 2014 at $19.74. Or how about the current price at $17.50.

      First Majestic’s gamble in holding back their 700,000 oz of silver in Q2 2013 did not work out as they expected because they only received $21.58 in Q3 2013… 61 cents less than they could have sold if for if they did so in Q2 2013.

      For First Majestic to make out positively for holding that 934,000 oz in Q3 2014, we need to see silver prices up at least $2-$3 in Q4 2014.

      steve

  5. Intresting to note, while lead und zinc production increased strong in quantity, silver production stayed unchanged. Steve, could you please try to explain this to me, does something similar happen in other mining companies also ?

    Thanks ahead

    • GermanReader,

      We will have to wait until they bring out their Q3 2014 Financial-MD & A Report to get the details. I am assuming the increase in zinc & lead production over silver was due to higher percentages of zinc and lead ore. Again, we are just are going to have to wait for their Q3 2014 Report.

      steve

      • I assume that was a stupid question, I just looked up there home page, they have 5 producing mines so they must have 5 slightly different ores of course. They may concentrate the activities to low silver, high basemetal output.

  6. Most miners hold fiat cash on the books. First Majestic is just holding REAL money on the books. It makes no sense for a gold or silver miner to hold fiat paper beyond what they need for operations.

    • Jason Hamlin,

      Totally agree with you. Unfortunately, the COMEX still runs the paper show in determining the market price for silver. I actually applaud First Majestic for holding onto nearly 1 million oz silver in Q3 2014. However, as I stated to Andre, First Majestic will need to receive $2-$3 more than the current spot price in silver in Q4 2014 for their suspension plan to work.

      They did the same thing in Q2 2013, but when they sold in Q3 2013… they lost 61 cents an ounce. Again.. I applaud First Majestic for taking a stand.

      steve

      • “the COMEX still runs the paper show…” How true.

        Cutting off their nose to spite their face!

        Traders (technical funds) have sold 150,000 contracts (1,000 barrels of oil per contract) of NYMEX crude oil futures, since June. That means the tech funds have sold the equivalent of 150 million barrels of oil in the past 4 months! This in a market where one million barrels plus/minus daily, will markedly move the price.

        This is the derivative tail, wagging the market dog! On the bright side, the miners get a bit of a break on the cost of their energy overhead.

  7. production shutdowns or not, they’re just going to keep waiting for lower prices, like they have the past 3+ years.

    here’s the CaseyTard (one who absolutely deserves that name, & more) saying $800 gold coming in the coming deflation (says short, sharp 2 months, but how will anything be left open if it’s that bad?)!

    doesn’t mention silver not worth it i guess, but if the ratio goes back up to ca 90 like 2008, could see $10.

    Which tard to believe?….the Tard tard said a week ago at that $17 dip to BUY! LOL.

    I expect $10-$15 trillion in additional QE from the Fed, and for the other central banks of the world to do the same proportionally. They will do whatever it takes to stem the free-fall. Fiscal policy will play a role, but that response will be slower and come later.
    http://www.caseyresearch.com/cdd/gold-and-the-upcoming-deflation-cycle

  8. Go to your local PM dealer and ask him to fill a larger order for 100oz silver bars. Most likely he will have to search around to fill the order.

  9. Like all day.PM down.Who still believes the fairy tale from the save hafen PM?

  10. I’ve looked at silver before and I just don’t understand why so many people think the price is going to skyrocket. The only way that ever happens it seems to me is if there is ever a true “run on silver.” And that is quite the tail thesis, no?

    Otherwise, TPTB will just manipulate the prices, which you can see on a daily basis, to whatever they see fit. For example, sure, silver is below the cost of production for the silver producers. So sure they will let the price obviously rise a bit at some point. But why would TPTB ever let the price of silver rise very far from the cost of production for the silver miners?

    • Frank,

      You bring up a very important point to consider. I agree with you on the notion, “WHY WOULD THE ELITE ALLOW SILVER TO RISE ABOVE ITS COST OF PRODUCTION?”

      The answer to that question is complicated, but according to my research and analysis, it has to do with the PEAK & DECLINE OF CHEAP OIL… which peaked in 2005. Since then, prices have risen to over $110 from $25 in 2002. This allowed the expensive CRAP OIL to be brought onto the market.

      Frank, you must remember, Gold & Silver are competing with over $100+ Trillion in paper assets such as STOCKS, BONDS and INSURANCE FUNDS. These are not real assets, but rather future CLAIMS on future Energy production. We need a growing energy supply to allow Global GDP to grow. Once Peak Oil hits, GLOBAL GDP goes into the toilet.

      It is the collapse of the PERCEIVED VALUE of the $100+ trillion in paper assets that will be the fundamental cause to push the values of GOLD & SILVER To new highs… it has nothing to do with cost of producing the metal.

      The market prices paper assets (Stocks, Bonds & Insurance Funds) by what is known as NET PRESENT VALUE–which is forecasted future value calculated in the market today. When the world realizes PEAK OIL is finally here (probably 1-2 years), then they also understand that growth is over… THUS DESTROYING QUITE QUICKLY the VALUATION of MOST PAPER ASSETS.

      While the FED & Member Banks are doing what they can to CONTROL the BRAINWASHED Americans into continuing to funnel their Fiat Money into the Greatest Ponzi Scheme in history, Fundamentals always win in the end.

      There lies the RUB. Investors will be forced to move out of increasingly worthless paper assets and into physical ones, SUCH AS GOLD AND SILVER to protect wealth. This has nothing to do with a RUN ON SILVER, but rather a RUN AWAY FROM PAPER GARBAGE.

      Many say the ELITE are in control of the whole situation. THEY ARE… REALLY? Tell me that the ELITE controlled the COLLAPSE OF THE ROMAN EMPIRE. Why on earth would the ELITE back in ancient Rome allow the empire to collapse when all their wealth was TIED INTO ITS CONTINUED SUCCESS??

      IMPORTANT POINT: Many precious metal analysts focus on shorter term HYPE such as RUN ON SILVER, COLLAPSE OF SUPPLY, RUN ON COMEX.. etc and etc. These are all nice speculations, but they are still S-P-E-C-U-L-A-T-I-O-N-S. The coming death of PAPER ASSETS is not a speculation.. its a fundamental truth just patiently waiting for the world to catch on.

      Peak Oil will destroy a way of life many are not prepared. While most paper assets and many physical ones will continue to lose value in a PEAK OIL ENVIRONMENT, Gold and Silver will be some of the safest assets to protect wealth.

      steve

    • Because the future economy and wealth lies in Asia. They see it differently, they want the real thing.

  11. “Frank, you must remember, Gold & Silver are competing with over $100+ Trillion in paper assets such as STOCKS, BONDS and INSURANCE FUNDS. These are not real assets, but rather future CLAIMS on future Energy production. We need a growing energy supply to allow Global GDP to grow. Once Peak Oil hits, GLOBAL GDP goes into the toilet.”

    That is a wonderful explanation. Thank you. What if there isn’t peak oil? Do you think the future claims on a growing economy could be instead derailed by the debt overhand instead?

    Wow! I ididn’t think I would get an answer back let alone such a detailed one. Great work.

    • Frank,

      I spent some time replying to your question because it’s an IMPORTANT ONE for investors to consider. Many precious metals investors have become bearish about gold and silver and believe the MANIPULATION can go on and on forever. I do not agree.

      Lastly… your question, “WHAT IF THERE ISN’T PEAK OIL?” is another good question that I spend a lot of time discussing on this site. PEAK OIL is already HERE. The real question is… HOW BAD WILL BE THE COMING DECLINE?

      steve

      • Steve,

        Thanks again. I’ll start reading your website. I just discovered it on a link at Goldsilver.com.

        You don’t have to answer this but I keep hearing how we are “energy independent” and have become one of the largest producers in the world today–even to the point we are exporting crude and foreign companies are starting to set-up manufacturing plants in the U.S. because of the cheap gas. That is the only reason I questioned the peak oil assertion.

        It just seems to me that the debt will be the killer to future growth as well.

        • lastmanstanding | October 18, 2014 at 9:15 am | Reply

          WE…are exporting crude because we have to pay for our indebtedness. The Bakken shale oil is put on trains and it heads to the port of Seattle. I know smart people who work in that area and they see it daily…their claim is that it is headed to China. Leaving behind, destruction, pollution, immorality, crime, etc. but hey wgaf.

          Foreign companies set up because they can bring in slave labor and cut their costs and because they are allowed…again because of our indebtedness.

          One of the big Chins made the comment a few years back about buying our treasuries/bonds/our printing of dollars.

          “Please don’t devalue our investment in your country.” That seems very clear.

          They want real shit…not printed paper to settle the account. Those in charge of the USA don’t give a flying fuck about what is to come of it.

          “don’t go down without one helluva fight”

  12. Exters pyramid. Created by a former Fed chairman. This is why precious metals rise when Equities fall

  13. Neumeyer reminds me of the only kid on the playground who had the spine to stand up to the bully. Some years ago, Silver Standard bought just under 2MOZ silver bullion—and never disclosed to shareholders where it was stored. I had an IR fellow with them tell me that I don’t disclose where my silver is. Not a comparison—I am not a public company. Earl Anthony Wayne, current U.S. ambassador to Mexico, was a special assistant in 1972-1974 to gold and silver price suppressor George P. Shultz (Pilgrims Society). Shultz appears in assorted photos with Obama. Has Wayne conferred with governors where First Majestic operates? USA diplomacy is deeply opposed to silver.

  14. I have heard that China’s silver supply will run out in Nov. so if a few million oz’s are held back out of the market, could this cause a shortage, or at least a squeeze on supplies? I suppose we’ll see come the new year..

Leave a comment

Your email address will not be published.


*