Canadian mining company on $209 million USD tax dispute with Mexico

First Majestic Silver (AG) has asked Canada’s Mexican ambassador to intervene in an escalating $209 million tax dispute, reports Reuters.

“We’ve been trying to get somebody to the table to finally put this behind us,” First Majestic CEO Keith Neumeyer told Reuters. The company owns seven silver mines in Mexico and wants ambassador Graeme Clark to set up a meeting with President Lopez Obrador so the dispute can be resolved.

According to Neumeyer, Mexican tax authorities have rejected three settlement offers, leading the Vancouver-based company to commence a trade challenge last month.

Meanwhile President Lopez Obrador recently stated that some Canadian miners are behind on their tax payments. He has asked the Canadian government to put pressure on these miners to prevent the matter proceeding to international tribunals.

Shares in AG have plunged 25% year-to-date, and analysts have a cautiously optimistic take on the stock’s outlook. Its Moderate Buy Street consensus breaks down into 3 buy ratings vs 5 holds, while the $10 average analyst price target indicates 8% upside potential lies ahead.

Speaking for the bulls, HC Wainwright analyst Heiko Ihle reiterated his First Majestic buy rating on June 12 with a $10.50 price target.

He made the call after AG announced an agreement to purchase a stream on 50% of payable silver from the Springpole project in Ontario, Canada for $22.5 million in cash and shares from First Mining Gold Corp.

Springpole maintains a compelling precious metal resource with long-term production potential and is located in a geopolitically safe jurisdiction, the analyst told investors.

“We believe that this acquisition provides First Majestic with a potentially de-risked revenue source, as the company has no ongoing operational obligations, and the transaction may ultimately yield incremental returns in an improving silver market” Ihle wrote.

Thanks to this new silver stream he now believes that First Majestic’s exposure to an upward trending silver price will span beyond its currently producing assets in Mexico. (See AG stock analysis on TipRanks).

Source: SmarterAnalyst

Comments

comments