First Majestic Silver Corp T.AG

RE:Re:This seems like a huge win for all involved.....

[holographicbrea]

This isDon Durrets answer to my question on twitter - The premium seems low at 16%, but they are paying (are you sitting down?), around $11 per oz in the ground. I have Gatos currently at 50M oz for resources (that would be $18 oz), but their recent drill results point to at least 80M oz. If we divide 80M oz by their FD Mkt cap of $890M you get $11/oz. If use 100M oz, you still get $9 oz, which is high. They gambled on JC having exploration potential, and history seems to be rhyming. One more oddity. I have Gatos as a 6.5M oz AGEQ producer. They state in their NR today that production will rise to 30-32M oz AGEQ. However, they are currently at 22M oz. That would take them to 28.5M oz AGEQ. I'll send them an email for how they get to 30M oz. Now for the good news. This will increase their FCF, lower their costs, and improve their balance sheet (Gatos has $55M in cash and no debt). I own both. I thought about selling my Gatos because I have a large position in First Majestic ($AG). However, this gives $AG huge leverage. They should fly when silver runs from $30 to $50. For this reason, the risk-reward implies that I don't sell Gatos and hold $AG until $50 silver. I don't like this deal for one reason: it ryhmes too much with the JC deal (they assumed too much risk and overpaid). They should have acquired a less risky silver producer or developer. I would have preferred Silvercrest, GoGold, Abrasilver, or MAG silver. That said, I like the deal because they needed to change the negative tone of the company, and I think they achieved that. In my opinion, they are back and are no longer the runt of the litter.