first majestic released its quarterly results today. the company's operations were affected by heavy rains in the past quarter, but the low market price of silver was more telling. their cash cost was $7.65/oz but as usual the devil is in the details. the company lost $0.4 million because they can't make money selling silver on the comex at the phony paper price.

a couple of items to note: first majestic had twenty-two (22) drill rigs in operation; now they have only four. without sufficient cash flow, they can't maintain the tempo of the exploration program. in addition, they are now minting and selling silver via their company web site. today's price is $14.00/oz and most of the bullion items are sold out or unavailable.

the effects of the suppressed silver price are beginning to ripple through the food chain. it isn't just base metal producers that are taking silver production off the market. even primary silver producers are cutting back on exploration, which will affect future silver supply.

this is not intended to knock first majestic in any way. their management is doing an excellent job in adapting to difficult market conditions, and in fact i bought some more shares earlier this week when it became a penny stock again.

http://biz.yahoo.com/iw/081114/04526...