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First Majestic Silver: Thoughts On Q2 Results


First Majestic Silver has released its second-quarter results.

The company reported strong cash flow and earnings, as expected.

I give my thoughts on whether or not investors sitting on gains should take profits.

First Majestic Silver (NYSE:AG)

AG data by YCharts

First Majestic Silver has released its second-quarter 2016 financial results, and it was a strong quarter as expected, with average silver prices rising just above $17 per ounce. The company also benefited from strong production and lower cash costs. However, that doesn't necessarily mean shares should be bought here, as I'll explain below.

In the quarter, First Majestic reported silver equivalent production of 4.7 million ounces, a pretty large increase of 23% compared to Q2 2015. All-in sustaining costs fell by a wide margin to $10.97 per silver ounce, a 24% reduction. This is partly due to the company's acquisition of SilverCrest Mines and the Santa Elena mine, which reported AISC under $2 per ounce when you factor in gold production from the mine.

For the first half of 2016, Santa Elena has produced 3.3 million silver equivalent ounces at $1.74 AISC, and it has been First Majestic's best-producing mine. Another strong performer in the first half of this year was the La Parrilla mine (1.9 million ounces at $8.27 AISC) and the San Martin mine (1.1 million ounces at $8.75...