Del Toro: A $150-million investment.

KN: So the 50:1 price ratio makes no sense; it just can’t stay that way; and it will change. I expect we’ll overshoot to something in the order of 10:1, ultimately. It won’t probably stay there for long, but I think longterm we’ll get quite used to silver trading in the 15:1 to 20:1 range. It will stay there for decades, and that will be the new norm. But we have to obviously get through the current market. I don’t have a crystal ball, but I think that it’s reasonable to suggest that we’re seeing a change occurring. We’re seeing the repricing of a commodity in front of our eyes as a result of supply and demand.

Eighty percent of silver gets consumed, and most of it gets dumped into waste dumps never to be seen again. I think silver is a strategic commodity; I don’t look at it as a precious metal at all. I think silver is actually the single most important metal in our current environment. I’m very bullish on silver, and I wouldn’t be surprised at all to see it trading at over $100 in the next couple of years.

RW: Can you comment on the recent changes in your share valuation?

KN: The stock has come under pressure due to the Orko transaction. It’s a very common occurrence. It happened when we bought Silvermex in April 2012. What happens is you get these arbitrage funds that short your stock and go long on the company you’re acquiring. That difference between the spread, they call it the arbitrage trade, between the two stocks is their profit. It’s a for-sure profit, unless for some reason the transaction doesn’t occur, but they’re on top of that. In most cases, these transactions do finalize, and these institutions walk away with their profits.

Unfortunately, what happens is it puts an enormous amount of pressure on the buyer’s stock, particularly in an environment like now. The Orko acquisition was announced in December, and there are very trading volumes at the end of any year. So you get this arbitrage trade being taken on in a very low-volume environment, and the attitude towards equities has been quite poor as well. Many mine stocks have been quite weak over the last several weeks. But over the last week or so, we’re seeing some stability in the mine sector, which is nice to see.

We’re seeing some stability return to First Majestic’s stock, but I don’t think you’ll see it return to its normal levels until the Orko transaction is completed. But this does create a buying opportunity for new investors looking to buy a company which is basically on sale.

RW: To sum up?

KN: Things are going really well, and the expansion is going quite well. We closed the Silvermex acquisition July 3, and the costs at La Guitarra have come down quite nicely. In July, costs were over $105 a tonne, and now they’re closer to $60 a tonne. So in a matter of six months we’ve been almost able to cut costs in half as a result of making some improvements and modernizing the facility.

At press time, First Majestic had 116.8 million shares trading at $18.40 for a market cap of $2.15 billion.