The Shared Benefits of Silver MiningMon, 10/21/2013 - 11:49
Keith Neumeyer first came to Mexico in 1984 when he visited Mazatlan as a tourist, and he was immediately impressed by what he saw. “I liked the people, the weather, and the great food, and I always wanted to do business in Mexico,” says Neumeyer, who almost three decades later is now the President and CEO of First Majestic Silver Corp., one of the most successful silver mining companies in the country. First Majestic was founded in 2002 after Neumeyer left First Quantum Minerals, a successful copper producing company that he had founded in 1992. First Majestic now represents both his firm belief in Mexico as a land of opportunity and his strong conviction that silver is the metal of the future.
His adherence to both of these premises is unshakable; when asked why he chose silver over copper he talks at length of his vision for the future of this element: “Silver is going through a re-rating right now and, in my opinion, the silver price is going to be much higher in the future. I feel that as long as we stay as pure as we can, First Majestic will benefit more than other companies that have less silver in their portfolio.” His certainty is reflected in First Majestic’s acquisition criteria: a deposit has to consist of more than THE SHARED BENEFITS OF SILVER MINING 70% pure silver in order to be considered for acquisition, and the company sometimes goes so far as to disregard other minerals in the mine in favor of focusing solely on the production of silver (as the company has done with the lead present on the La Encantada property). This commitment to high quality assets has led to First Majestic’s aim to increase silver production from 4.2 million ounces in 2011 to approximately 16 million ounces by 2014. The company is on track to achieve this growth based on production at its five core properties: La Encantada, La Parrilla, San Martín, La Guitarra, and Del Toro. With six additional properties in the company’s portfolio that have similarly been acquired either at the advanced exploration stage or once already in production, Neumeyer’s goal to continue growing even after the 2014 target has been reached will likely be realized.
Neumeyer says that one of the main success factors has been the company’s hiring policy: the company’s entire operations team is local Mexican talent and is based in Mexico. “I feel that having local people running the operations gives First Majestic a huge advantage over other foreign companies. Since we started the company we have attracted some of the best miners in Mexico, who want to work for us because of this different strategy.” The operations team is based in Durango and is complemented by the company’s head office in Vancouver. “First Majestic’s COO, Ramón Dávila, and I put the company together in 2003 by combining our talents: mine being in banking and the Canadian regulatory system and Ramón’s as one of the best operators in Mexico,” says Neumeyer.
Neumeyer states the company’s impact on the local level as its greatest achievement. Many of the company’s projects are old mines that have required some work in bringing them back into operation and turning them into modern, functioning mines. Hiring only Mexican staff, the company has relied on local talent in order to do so. “The employment we are generating is very important and exciting. When Dávila and I went through the town of La Parrilla in October 2003, there were only 300 people in that town and I can guarantee that there was not one person there between the ages of 10 and 60 - the people in that age group had left and were working in big cities elsewhere in Mexico, or in the US,” Neumeyer remembers. Now with a population of around 2,500 people, the town has also benefitted from various projects that First Majestic has funded - from paving roads to improving water and electricity infrastructure and improving healthcare facilities. “When I go to that town today, I get excited and feel very proud of what we have done in Mexico. These benefits are a demonstration of what mining can bring to Mexico. The wealth stemming from mining activities is creating wealth in Mexico and reducing poverty, and as this process continues over time the influence of drug cartels will decrease,” predicts Neumeyer. “There has been a lot of investment in Mexico, coming from major international corporations and hundreds of Canadian mining companies, and the country will continue to benefit from investment over the next five to 10 years. As long as the government allows continued opportunities for foreigners to invest in their industries in a way that makes sense for all parties concerned, Mexico’s growth will continue”.
If Neumeyer’s conviction that Mexico is an excellent place for mining operations is not yet evident, the importance of its role in the future of First Majestic Silver speaks volumes. “We do not have any ambitions to go beyond Mexico, because the potential of our assets here is tremendous and will keep us busy for many decades to come. We have no reason to look outside of Mexico,” he says.