First Majestic Silver Corp

First Majestic Silver is a large silver/gold producer in Mexico. They recently acquired Gatos Silver in an all-share deal with a 16% premium. Before the Gatos deal, First Majestic was a troubled company with high costs, high debt, and still suffering from putting their Jerritt Canyon mine in Nevada on C&M (care and maintenance). The stock was in a nose dive, and nobody wanted to own it.

The Gatos deal made them well again. In fact, their AISC costs went from the back of the pack to nearly the front for silver miners. Their FCF will jump significantly after the deal closes to around $850M annually at current gold/silver prices. Note that currently 55% of the revenue comes from silver, and about 35% comes from gold.

One of the best things about this deal is the Gatos property. It has huge exploration potential. I expect First Majestic to find a lot of silver on that property, and potentially expand production at that mine. And perhaps, they will be able to buy out the remaining 30% held by a third party.

First Majestic has an AISC of around $22 for silver production. That’s a big improvement. I’m not sure what their gold production AISC will be because they don’t list it, but my guess is around $1700 per oz. They will produce around 13.5M oz of silver in 2026, and 120K oz of gold.

They have a lot of debt at $265M, but also a lot of cash at $575M. They should be able to clean up their balance sheet in 2026 if gold and silver prices trend higher. They do have a large tax lien in Mexico, which has been lingering for more than 5 years. It should get resolved in 2026, with the new Sheinbaum administration. They listed it as a $150M liability on a recent MDA report. Hopefully, they settle it below this amount. Note that Mexico has withheld some of their VAT refund, which will help with their tax lien.

With Los Gatos, they have four producing mines. Let’s do a breakdown. Consider these my estimates for 2026.

Los Gatos: 5.2M oz AG.
San Dimas: 4.2M oz AG, 50K oz AU.
Santa Elena: 1.4M oz AG, 70K oz AU.
La Encantada: 3M oz AG.
Total: 13.5M oz AG at $22 AISC, 120K AU at $1700 AISC.

A couple of additional items of interest. They have a pretty good silver stream deal from the Springpole mine that is currently under development in Canada by First Mining Gold. They will get 18 million oz over the life of the mine and only have to pay a maximum of $7.50 per oz. They paid $25M for this stream, which is worth at least that much today.

They own 20% of Silverstorm, 20% of Sierra Madres Gold & Silver, and 15% of Silver Dollar. Combined, these are valued at around $50M. I expect these investments to substantially increase in value.

Once Jerritt Canyon (JC) is restarted, they could sell its extra milling capacity for additional revenue.

They are working on a plan to produce 3,000 tpd at JC. That would be around 150K to 175K oz at 5 gpt. Previously, when JC was operating, they were using a 3rd-party contractor. This time, First Majestic will use their own equipment and own employees. This will lower their costs and efficiencies dramatically. They plan to drill and do scoping in 2025. It will require about a 12-month restart to purchase new equipment, but a low capex. Hopefully, they will restart the mine in 2027.


DD