Private Chat With First Majestic Silver’s CEO: $140 Silver?

I’m back from Mexico, where I toured two mines belonging to First Majestic Silver (NYSE: AG). I visited the company’s Santa Elena and San Martin silver mines. They’re the company’s two biggest producing mines.

You’ll remember that First Majestic has six working mines and three advanced projects.

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It was a whirlwind trip of waking up early and flying in small planes in roller-coaster winds over the mountains. The sometimes-white-knuckle rides were worth it. I came away with a much better sense of what First Majestic is doing at its mines, and I learned a lot of interesting things.

I’ll be telling you more about my trip in the next issue of Oxford Resource Explorer. In the meantime, I wanted to share something with you. It’s a video of a private chat I had with First Majestic CEO Keith Neumeyer.

I think you’ll enjoy Keith’s outlook on where First Majestic is going. And he makes his case for why he believes silver is on its way to $140 sooner rather than later. It’s very interesting. I strongly recommend you watch the whole video.

The trip was exhausting, but I enjoyed it. The most important thing to me is that I kept my promises to my wife:

• I came back alive.

• I didn’t lose any fingers or toes.

• I didn’t come home sick.

In fact, a couple people became under the weather on the trip, including one guy who said, “I never get sick.” That’s Mexico for you. But I stayed as healthy as a mule.

My secret: In Mexico, I sip a shot of tequila with every meal except breakfast. And then, I have only cooked eggs and coffee.

I saw lots of cool rocks and even brought some home. My wife and I worked out a compromise long ago. I like pretty rocks that contain copper, zinc, mica, gold and silver. She doesn’t want them cluttering the house. So, I put them outside in our “rock garden.”

One of my rocks from San Martin sampled more than 250 grams of silver per ton. Too bad I got only a small chunk of it, eh?

A Chart of Interest

Stay tuned for more on First Majestic in the next issue of Oxford Resource Explorer. Meanwhile, there is a chart I want to show you. And it’s not about silver.

I mean, there’s nothing wrong with silver. Heck, First Majestic is up more than 100% from our initial entry as I write this. Endeavour Silver (NYSE: EXK) is showing a double-digit percentage gain, and we got into that one only a little while ago. They both look poised to go higher.

No, the chart I want to show you is FMC Corp. (NYSE: FMC), our lithium play. It’s breaking out in a big way.

In February, I told you what could happen if FMC pushed above overhead resistance. It could blast off, and that’s just what it did. More recently, FMC took another pause, but it’s pushing above that, too.

My latest technical analysis gives me a target on this one of $60, and that roughly lines up with overhead price resistance. The way lithium is heating up, we could get there in a hurry.

So what’s the good news? Well, FMC plans to triple its lithium hydroxide production capacity in three phases. The first phase should be online by mid-2017. The final phase should be completed in 2019.

Meanwhile, industry experts say the price of lithium hydroxide should rise from $8,640 per ton in 2015 to $13,210 in 2025. Some experts predict higher prices, faster. That’s on top of the 20% rise in the price of lithium hydroxide last year.

It seems clear that lithium is going to become a more important part of the business for FMC, which also makes agricultural chemicals. We had a rough start to this one, but it’s on track now.

And we’ll take a look at other lithium producers on pullbacks.

[Editor’s Note: Earlier this week, Matthew Carr wrote an article in Energy & Resources Digest about the boom in lithium. In it, he talks about FMC and a few other lithium players. To read it, click here.]

Sasol Update

Sasol (NYSE: SSL) is another recommendation that you may have. Its earnings news on Monday wasn’t good. While oil and gas prices have recovered from the bottom, they’re still way down year over year. So, Sasol is taking a $770 million asset impairment. Ouch!

What’s more, the projected cost for the company’s Lake Charles, Louisiana, Chemical Complex has risen to $11 billion, up from a previous estimate of $8.9 billion.

Is there a bright side? Yes. The company has been through hard times before. And it plans for hard times with an eye on the long term.

It’s taking a massive write-down on its Montney Shale project in Canada now. But if energy prices go higher, that would put those assets back in play. The same goes for Sasol assets around the world.

And despite the bad news, Sasol seems to be stuck in the range between $28 and $34 that it has been in since March. So, the worst may be over. A further ramp-up in energy prices would help this stock substantially.

Plenty of Open Gains

That’s it for this week. Only two recommended positions in the regular portfolio are in the red, and not by much. If you bought at our recommended prices, you have plenty of open gains. These include 16%, 17%, 27%, 39% and that 100% on First Majestic that I mentioned earlier. Your own open gains will differ.

But you look poised to do very well in this market, when the S&P 500 is only up 3.4% year to date. And the future looks very bright indeed.

All the best,

Sean

New Portfolio Highs for the Week

Dave Recommends

Sunoco Logistics Partners L.P. (NYSE: SXL); Spectra Energy Corp. (NYSE: SE); TransCanada Corp. (NYSE: TRP)

Sean Recommends

Exxon Mobil (NYSE: XOM); Endeavour Silver Corp. (NYSE: EXK); Royal Gold (Nasdaq: RGLD); FMC Corp. (NYSE: FMC)