Re: First Majestic: $27/share in 24 months?Let me explain the silver price assumptions I used for $18 silver at end of 2008. This does not mean that I think $18 is the highest price for silver in 2008 or that $27 will be the highest price for First Majestic shares that year. $18 silver is more like an average. I can imagine silver going to (or past) $25 an ounce but that doesn't mean the silver price will just stay suspended at that level. It could go past $25 an ounce and fall back to $15 an ounce in a correction. So, I used $18 an ounce as a sort of "split the difference" silver price, or like an average. For silver to end the year 2008 at $18 an ounce, it will likely be much higher at some point during the year, easily $25 or more. I know that these are conservative numbers with high likelihood of being achieved. I wanted to predict a price target that is meaningful and likely, not something wildly outlandish. This does not mean that silver cannot possibly reach outlandish levels ($50/ounce, $100/ounce) but I cannot predict such wild price spikes with any confidence or based upon past trends. Anyway, the odds for $18 or $25 silver are far higher than for $50 or $100 silver at any moment in the near future, and I wanted to come up with a target with high odds of being achieved. Needless to say, if silver ends the year 2008 much higher than $18 an ounce, the First Majestic stock price could end the year much higher than $27 a share as well (assuming, as before, that the company has also hit the 10 million ounce silver production level by that point).
Another thing I want to say here. If First Majestic does in fact reach the 10 million ounce level by end of 2008 it will likely be one of the fastest growing silver producers around. Their 2006 production is about 18% of that of Pan American Silver, but by the end of 2008 that percentage could increase to 40-50%. I have also compared the company's predicted production growth to that of Endeavor Silver, and once again First Majestic's growth rate is superior. If there are any other companies out there which will likely have over 400% growth of silver production in the next 24 months, I cannot find them. There are no guarantees in the mining business but I have looked at this company from every angle and I must say it looks like a real winner.