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First Majestic Silver (NYSE:AG) is focused entirely on Mexico, one of the world's better mining jurisdictions. It is a young company (first mine operating 2004) with fast growth based on acquiring mature but abandoned or under-capitalized properties to develop and expand. In 2012 it produced 8.3 million oz pure silver (projecting 11.5 million oz in 2013) and 9.12 silver equivalent ounces. As by-products of its main operations, AG also produces notable amounts of lead, zinc and iron ore at its five operating mines one of which, Del Toro in West Central Mexico began producing in January and expects to add 2.5 million oz this year and 7.2 million in 2014 when it is expected to become the company's largest. AG also has two development properties, several exploration properties in Sonora State and mining rights in Jalisco held jointly with Sonora Resources (OTCPK:SURE).

The manager of each First Majestic mine is a Mexican national and it prioritizes hiring locally. It conceives of and implements its operations as community development and invests not only in infrastructure but people: it embraces the principle of becoming part of the community by working in and with it. So far the strategy is profitable and suited to growth in today's world. Moreover, its mines are 100% owned following its acquisitions of Silvermex in July 2012 and Normabec Mining in November 2009. It has nine years of increasing site-growth and provable reserves with large increases in revenues and earnings estimated for 2013 and still larger ones for 2014-17. It sells coins, medallions and bullion from its company store.

Declining silver prices in 2012 lowered revenues and earnings which by year's end produced a slide in the share price. Like nearly all miners, especially PM miners, AG suffered in the 1Q 2013 drop though its trough following the Goldman Sachs short-sell operation of mid April was less ferocious than other miners. As I will note in closing, analyst growth forecasts are for increases in EPS, revenue and production at multiples above today's levels.

Even more than its rapidly growing and low-cost production is the clarity and genius of its operational thesis: every site is not a mine but a community and AG pursues its development of metal resources in tandem with wealth enhancement for the surrounding region. It has won five straight (2008-12 inclusive) "Socially Responsible Business Awards" by building irrigation and sewage treatment facilities and re-cycling water used in mining. It creates in-class and online education initiatives, donates computer equipment, endows scholarships, local historical museums, sports facilities and generally brings opportunity to every area in which it operates.

First Majestic has made itself a model of the criteria of IFC-MIGA for any who look as it is honored often for its ethics and corporate governance. It won the 2012 "Clean Industry" Award from the Mexican Environmental Authority which cites First Majestic for its dedication to the social and environmental landscapes in which it operates and affirms AG's position as a leader in corporate social responsibility, transparency and stewardship.

I mention its motto, "one metal, one country, one team" because it seems to be totally organized around this concept, seeing site development and profitability as the core of community prosperity. Its COO, Ramon Davila won 2012 Miner of the Year Award from Mexico's Metallurgists, Geologists and Engineers Association. First Majestic's embrace of mine development as an aspect of community enhancement should enable it to thrive while companies like Barrick Gold (NYSE:ABX), Rio Tinto (NYSE:RIO) or Freeport McMoRan (NYSE:FCX) among many others struggle with pressure from international NGOs, local political pressures and resource nationalism. Its placement of development and profitability firmly within the matrix of community involvement and enhancement appears to be a win-win-win approach.

AG's five operating mines are La Encantada, La Parilla, San Martin, La Guitarra and Del Toro in Zacatecas State which by year's end will be the company's largest and low cost producer ($7.05/oz). La Guitarra, about 100 miles southwest of Mexico City produced 484k oz Ag in 2012 projected to more than double to 1.1 million oz in 2013 at cash cost of $15.94/oz, the price reflecting new floatation and ball mills. La Encantada, about 100 miles south of Big Bend in Texas will be AG's largest producer until Del Toro nears its capacity. In 2012 La Encantada produced 4 million pure oz Ag with 2013 estimated to mine 4.2 million oz at a cost of $8.46/oz. New veins of mineralization were discovered in 2012 that improve silver grade to 450g/ton.

La Parilla is a complex of 5 underground mines covering 69.5k hectares of land with mineral rights. It expanded in 2012 and expects continuing growth resulting from geological mapping and exploration of new ore veins. It recycles 80% of its mill waste water and produced 2.876 million oz pure Ag and 3.487 Ag equivalent oz in 2012 with 3.4 million silver equivalent oz projected for 2013 at a cost of $8.38/oz. AG's San Martin mine also re-circulates 80% of its water and its costs rose to $11.72/oz in 2012 with the installation of new induction furnaces and leaching tanks. In 2012 it produced 957k oz Ag and 1,232 oz Au with projected 2013 production of 1.45 million pure silver oz.

While geo-hydrological and metallurgical studies proceed at the La Luz site, First Majestic is building soccer and baseball fields, establishing a cultural park and funding jewelry-making and music classes for local children. Similar efforts are ongoing in the 16.3k hectares site at Plomosas in Sinaloa (West Central Mexico near the Pacific Ocean). The region has been mined for gold and silver since the 16th century. First Majestic has full camp infrastructure in place, a 20-year surface rights agreement and 30-year water use permit, a tailings dam, power line, assay lab, infirmary, offices and warehouses: i.e. it is ready to mine and produce the site which was worked 1986-2000 by Grupo Mexico. It correlates enhancement of ongoing sites with work to prepare and sustain growth over the next 2-3 decades.

AG is an appealing story with great properties and a strategic plan suited to contemporary views of industrial development. The pay off is in analyst views of AG's prospects. EPS for 2013 is estimated at .92/share doubling to $1.88/share by 4Q 2013. This indicates increased efficiencies and profitability as revenue is expected to increase 50% from $402 million in 2013 to $592 million in 2014. Growth for 2013 is estimated at 8.20% outpacing the mining industry at 5.4% and the S&P pegged at 8.10% which may disappoint those anticipating a 20% rise in the indices.

For 2014 analysts estimate AG doubling growth at 104% clip, outpacing the mining industry at 1%, the PM sector at 4.4% and the S&P which Canada yahoo finance analysts linked above anticipate growing 12.4% in 2014. AG's projected P/E at 12.99 is seen as tighter than its sector (17.42) and the S&P (2014 P/E estimated at 18.99 in line with rising asset prices above declining economic fundamentals). Analysts project AG for 23% annual growth for five years 2014-18, more than doubling expectations for the sector at 10.34% and 2.5x S&P average annual returns of 9.33%. Note that point: over the next 5 years, PM miners are expected to out-perform the S&P by 10%. The contrarian play in some cases aligns with fundamentals overlooked by those watching daily index moves.

Two lessons here: the mining industry and PM sector are projected for a comeback in 2014 and First Majestic is expected to greatly outperform its industry, sector and the S&P. Its vision, mission, progress and expanding sites look like one of the most promising plays in the market. The industrial utilities of silver are steadily increasing and its value as a currency substitute (Utah and Arizona already have laws and thirteen more are reviewing laws to allow commercial exchange via precious metals) are tailwinds to the intrinsic merits of First Majestic. It is likely that its approach to mining as a matrix of community building and skills' enhancement will be a template for permissible and steady development going forward.

The takeaway is to buy AG at today's bargain levels ($12.15 at May 3 close). Along with Eldorado Gold (NYSE:EGO), analysts project AG as a major growth story for the last half of 2013 and 2014. Indeed, absent major economic decline the currently despised basic materials and mining sectors will see substantial recovery in the next 18 -30 months. This may have begun last week as RIO, BHP Billiton (NYSE:BHP), Vale (NYSE:VALE) and Newmont (NYSE:NEM) surged. I will address this sector rotation in my next piece. While you can play AG via the silver miners ETF (NYSEARCA:SIL) in which it has a 4.66% weighting, its strong growth, strategic plan and highly positive analyst estimates mark it for out-performance in basic materials and precious metals and miners.

Source: First Majestic Silver: Strong Growth, Strategic Genius