NEW YORK ( TheStreet ) -- First Majestic ( AG) is quickly approaching a speed bump that will likely rattle its results for the year, but the road beyond looks clear of any impediments to its growth.

After announcing third quarter production of 1.8 million silver equivalent ounces, 17% below some analysts expectations, the fast growing silver miner probably won't meet its 2011 production target.

"I would think that would be a number that is sort of a bit high to reach at this point," says CEO Keith Neumeyer. First Majestic was hoping to produce 8 million silver equivalent ounces but that would mean delivering 2.5 million ounces in the fourth quarter.

"Two point five million is aggressive ... we would need La Parrilla to be up and running fully and the expansion at La Parrilla won't be finished until mid-November." La Parrilla is waiting for a new cyanidation circuit, a common tool used in gold or silver extraction. But Neumeyer refuses to lower production guidance until the company releases earnings in November.

Instead Neumeyer is hoping investors will look at four potential catalysts over the next year.

First is the new circuit at La Parrilla which Neumeyer actually categorized as a major milestone. It is "going to allow us to double the production of dore bars at La Parrilla, so that would give the La Parrilla 3 million ounces of production in silver excluding lead and zinc in 2012."

Next, First Majestic is preparing to release a feasibility study for Del Toro, a 500 year old mine. The feasibility study will show economic numbers on what the mine is going to look like over the next 5 years.

Del Toro will start producing 500,000 ounces of silver in 2012 and then be at full production capacity in 2014, which will be pivotal in helping the company double production to 16 million ounces by 2014. "Quite honestly, I think that is going to be quite a milestone for us as well," says Neumeyer .

Then Neumeyer will beef up First Majestic's entire resource base. The company will update its 43-101, which basically serves as a check and balance system for miners to make sure they don't report fraudulent information. In it Neumeyer says the company will announce an updated resource base, which is currently 350 million ounces of silver.

First Majestic is spending $12.5 million on exploration this year and the budget is still being hammered out for 2012, but Neumeyer hinted that each property will grow. "We do have an internal target to reach by the end of 2012 but the regulatory environment doesn't allow us to comment on non-compliance ounces, so we can't really tell you what our target is until we actually get there."

And the icing on the cake for investors will be a potential dividend. Neumeyer said there is a 50/50 chance the company will initiate a payout next year. The company ended the second quarter with $105 million in cash. It costs $8.32 an ounce to produce an ounce of silver, so even with price volatility First Majestic is still seeing big profit margins.

"There is a debate going on whether we should pay a dividend in 2012 or 2013 once the major capex at Del Toro $60 million for 2012 is spent ... What you don't want to do is announce or launch a dividend and have to pull it back later ... when we decide to do it, it will be something that can be maintained for the long term and hopefully something that we can increased over the long term as well."

One thing Neumeyer hinted the company might do with its cash is buy another silver mine or publically-traded silver company. "There are a few situations we like that we have our eyes on but we're not in a situation where we have to chase anything for growth." Neumeyer is the fourth-largest shareholder with 2.8 million shares. Diluting shares, naturally, isn't his first choice, but he'd be open to buying a smaller pure silver company to help ramp up production.

The one thing First Majestic has to watch out for is a volatile /> silver price. For every $1 move in the price of silver, First Majestic sees 80 cents added to its bottom line ... or taken away. Ninety percent of its revenues come from just silver. Silver prices have seen wild swings this year -- rising to a high of almost $50 and then plummeting to $26 -- and are now trading around the $30 mark. First Majestic's shares have taken the ride, hitting a bottom of $10.49, skyrocketing to a high of $25.61 then falling back to $15.

First Majestic needs silver to stay above $8.32 an ounce to turn a profit but really needs silver to say above $25 to withstand the amount of money it's funneling into exploration and development.

Analysts don't seem particularly worried, but, if anything, are seeing more upside. The stock has 6 buy ratings, 1 hold and an average price target of more than $24, which presents 61% potential upside.

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-- Written by Alix Steel in New York.

>To contact the writer of this article, click here: Alix Steel.
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