First Majestic Silver Corp. (NYSE:AG) Q1 2026 Earnings Call Transcript

First Majestic Silver Corp. (NYSE:AG) Q1 2026 Earnings Call Transcript May 12, 2026

First Majestic Silver Corp. misses on earnings expectations. Reported EPS is $0.31 EPS, expectations were $0.33.

Operator: Thank you for standing by. This is the conference operator. Welcome to the First Majestic Silver 2026 Q1 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Keith Neumeyer, Chief Executive Officer of First Majestic Silver. Keith, please go ahead.

Keith Neumeyer: Well, thank you, and welcome, everyone, to our Q1 highlights conference call with investors and shareholders. Today, with obviously, myself, is President, I’m in Europe right now, Mani Alkhafaji, President and Chief Corporate Development Officer is in Vancouver, David Soares, our Chief Financial Officer, is also in Vancouver; David Howe, Chief Operating Officer, who just was newly appointed on March — or May 4, which we’ll talk about a little bit further in the next couple of slides. But David comes with us after quite a long search for a replacement to Steve. Steve told me last summer that he would like to retire and we put an effort in place to find his replacement. And we are successful in getting Dave Howe who’s a well-known mining executive.

So we’re happy to have Dave on board. Steve will be effectively working until June 30, assisting Dave in anything that Dave might request Steve over the next month or so. We also have Samir Patel, General Counsel and Corporate Secretary, present in Vancouver and also Darrell Rae and Jill [indiscernible] sorry about that, Jill, from Investor Relations also present today. Before I go any further, I’ll need to pass the call over to Samir for the disclaimer.

Samir Patel: Thanks, Keith. Before we begin today’s call, I would like to remind you that we will be referring to certain non-IFRS measures and making certain statements regarding First Majestic Silver and its operations that constitute forward-looking statements in accordance with applicable Canadian and U.S. securities laws. All statements that are not historical facts such as statements regarding future estimates and plans or expectations of future performance constitute forward-looking statements that reflect the company’s current views with respect to future events. These statements are necessarily based upon a number of assumptions and estimates that while considered reasonable by the company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies.

We encourage you to refer to the cautionary language included in our news release that was disseminated earlier this morning and the disclosure on non-IFRS measures in our most recently filed management’s discussion and analysis, as well as the risk factors set out in our most recently filed annual information form. As a reminder, these documents, along with all of our continuous disclosure documents are available on SEDAR+ and on EDGAR. Investors are cautioned against attributing new certainty or reliance on any forward-looking statements made during today’s call and the company does not intend or assume any obligation to update these forward-looking statements or information, other than as required by law. With that, I will turn the call back to Keith.

Keith Neumeyer: Okay. Thanks, Samir. Just a couple of things on our management changes. Steve Holmes has been with the company for 6 years and he’s been extremely instrumental in positioning the company where it is today. Much of the improvements that the business has experienced over the last few years has been a result of Steve’s efforts. And we’re sad to see him go, but at the same time, it’s time for him to retire. And we wish him best in his future travel experiences with his wife and family. So Obviously, we’ll stay in touch with Steve. But Dave Howe is now the new Chief Operating Officer, and he brings a wealth of experience in the industry and Latin America, held a number of key executive roles and we’re really excited for him to help lead the first majestic team to the next phase.

Further description is available in today’s news release, if you wish to read a little bit about his history. We’re also quite pleased to announce a hiring that took place on April 20. We were able to find a great leader for the Jerritt Canyon restart. We’ve brought on Alex Thompson. And Alex is a seasoned and strategic planning executive with experience in building and operating mines all over the world and will be a key part of the restart plan for Jerritt Canyon, which we’ll be excited about talking further about as developments continue. So going to Slide 3 of the presentation, which I’m assuming some of you online have access to. Just going back in time, if you go back over the last 20 years, Q1 is generally a kind of a soft quarter. You get everyone coming back from holidays and then you’ve got to remobilize all the contractors.

And usually, you can lose up to 2 or 3 weeks in Q1. It’s not that unusual. And we’ve experienced that many, many times over the life of the business. But this Q1 was exceptionally good. We didn’t experience that same kind of dip, and we ended up producing 3.5 million ounces of silver, which was 26% of 2026 guidance — midpoint guidance. That’s pretty good being ahead of guidance. And gold production was at 28% of midpoint guidance. So both silver and gold are above our current guidance, which is at least midpoint guidance, which is fantastic to start the year off of such a positive note. The average realized silver price was $86.35 compared to $33.10 last Q1 2025. So pretty impressive there. Revenues were record revenues of $477 million, up 95% compared to a year ago.

And we did hold back some silver and gold as well. And so this was not included in revenue. We did hold back 676,000 ounces of silver, also 2,700 ounces of gold held in inventory at the end of the quarter. And the value of that inventory is $63 million. So if we sold it, that obviously would have improved our revenue and also improved our profitability. But we elected to hold on to it for higher prices, and we’re expecting that’s going to be a good strategy for us. We’ve really got our eyes on margins. And as the price of silver goes up, costs also go up, and we’ll address that in the next couple of slides. But one thing I think the analysts or the investors should really pay attention to is actually the expanding margins, which is pretty impressive.

And I’ve got a couple of more comments coming up on that topic. We’ve really been focused on efficiency and keeping our costs in check and it’s really paying off. We’ve had operating cash flows in Q1 of $311 million, $0.63 a share. And our silver purity is 66%. That compares to 60% in Q4 of 2025. Our dividend is our largest dividend ever, about $0.0171 for shareholders of record on May 15. The dividend is basically 4x the size of last year’s dividend with revenue doubling and us changing our policy, increasing our dividend from 1% to 2% effective January 1, 2026, has made a big impact. And so shareholders will be getting the highest dividend that they’ve ever received in the company’s history. So that will be fun to see all those checks arriving in people’s mailboxes.

Going on to Slide 4. So the cash cost and all-in sustaining cost per ounce are aligned with plans. There’s really no big surprises there. Per ounce cost increased when you compare to Q1 as it shows on this slide there. The main drivers of the increase, as we’ve mentioned to the analysts before, it is — we have changed our ratios, which has a big impact, which I’ll talk about shortly. But our production cost did go up a little bit, mostly due to higher throughput because we have reduced the cutoff grades due to price. So we could mine a lot lower grade ore and still get the same ounces, but it does affect your cost. Your cost to go up as a result of that method of mining, but it does improve life of mine as well at the same time. So it has a big benefit.

And the revenues that we’re getting, even though the grades are slightly lower, far outpaces the increase in costs, which is really nice to see. Other things, as I said, the price ratio, that had a $3 impact. If we use the same price ratio as we did in 2025 at 9:1, it would — our all-in sustaining costs will be basically $3 less than what we’re showing in Q1 of 2026. But we did fix the ratio at 75:1 due to the volatility of silver and gold, and that 75:1 ratio will be held throughout the quarter — or pardon me, throughout the year. Profit sharing is also up and I will comment later on that, but profit sharing was close to $2 an ounce. Smelting and royalties obviously go up with the silver prices going up. So everyone is obviously making a little bit more money, which is great to see.

Important to notice, as I said about margins, the margins have increased almost 4x. Our margins a year ago in Q1 were $13 an ounce. Our margins in Q1 of 2026 was $52 an ounce. So quite a game change. So any increase in costs that we’re experiencing is easily taken with the increase in margins. Our cost per tonne, $170, which if you look at that chart on that slide, Slide 4, you’ll see that it’s the lowest for a while. So that shows you quite clearly that we’re having a true impact on keeping our costs in line with our expectations. On a bit of a side note, we’ve got calls from analysts and others about our exposure to diesel with the happenings that are going on in the Middle East right now. Most of you probably know that we converted 3 of our mines over to liquid natural gas over the last few years and one of our mines is on the grid.

So our total exposure to diesel and our cost is only 5%. So it’s — we rely on diesel very little. Most of the energy is created by renewable sources. Going on to Slide 5. We produced $311 million in operating cash flow from the 4 operating mines. Each of them, a notable year-over-year improvements in profitability, notably La Encantada, where it had a bang-up quarter. La Encantada actually profited $30 million in Q1. I don’t actually remember the last time we made that much money, but it’s obviously going quite well there. So it’s nice to see that mine finally hitting its stride after some difficulty that it had over the last couple of years. Corporate-wide, this translates into $224 million in free cash flow, even accounting for a very large tax payment that was made in January as a result of our 2025 income taxes that just simply due to the profitability of the business.

The Mexican government paid $95 million, which obviously came out of our cash flow. So the chart shows the increase in cash flow being generated. Operating discipline, of course, over our 4 mines is key, cost efficiencies and obviously, the increase in silver prices is having a huge impact on the business. We’re very flexible for future growth with the size of our treasury over $1.1 billion, obviously, pretty impressive. Our development and exploration programs are very aggressive and on track, and I’ve got a couple of more comments later on the exploration programs. Operational expansions at both Santa Elena and Los Gatos is coming along quite nicely. I’ll address that as well going forward. And we just keep pushing other permits and the development of the Santa Elena new ore bodies, which we’ll discuss as these topics become more relevant, and we’ll be discussing those news releases in the coming months as these developments occur.

So going to Slide 6. But we continually have exploration success at San Dimas and Santa Elena and Los Gatos. We’re expanding the Santa Elena mill. We’re expanding the Los Gatos mine development. At Los Gatos, our work is to mine 4,000 tonnes a day. We have brought in a contractor to assist in getting up to those levels. We’re actually pretty close right now. The mill itself can handle that. It’s not a bottleneck at the mill. It’s always been a bottleneck at the mine, and that’s what we’re resolving by bringing on some assistance from a third-party contractor, which seems to be working quite well. We’re making good progress at Santa Elena, getting the mill expanded. As I think most of you know, we’re expanding that mill to 3,500 tonnes a day from 3,200 tonnes a day, and we should reach that objective by H2 2026.

Exploration is just going wonderfully. Navidad and Santo Niño discoveries are obviously really paying off. We put out some numbers on those 2 ore bodies already, but we continually advance studies and then work on those 2 ore bodies because we want to get them into the mill as soon as we can. So that work is underway. And as we get more information and more time lines associated with getting Santo Niño and Navidad up and running, we’ll be putting more additional news out on time lines and how that’s going to affect future production at Santa Elena. So always looking for enhancing adjustments, productivity that’s always a focus, not just at Santa Elena, but also in all the mines. La Encantada, I think most of you likely know as well. We decided about a year ago to go to self-hauling.

We were having challenges with the contractors that were assisting in getting ore to the mill. And after a couple of contractors, we decided just to do it ourselves. So we bought a dozen trucks, which took almost a year to get delivered, and they’re all now on site and they’re all now operational. And I would expect you’re going to start to see costs come down a little bit as a result of that. But also, we’re already noticing increased throughput at the mill. The mill can handle it. There’s no problem with that. This mill ran at 5,000 tonnes a day back years ago. So it’s just really the mine, and we’re resolving that by having this truck fleet and so on. So it’s early days, but it’s looking pretty good. Going to Jerritt Canyon, we’re obviously very excited about the announcement of hiring Alex Thompson as our Managing Director.

We really needed a leader there to really get a hold of this thing. Alex has 20 years’ experience primarily at BHP, but he’s really taken control of this operation, and he’s very well liked by the team down on site, and we’ll be putting obviously a bunch of new people in place to get this operation up and running. We’re investing $75 million in 2026 and filling in the talent base, as I’ve mentioned. We are preparing a feasibility study or pre-feasibility study, I should say. Hopefully, that will be out in early 2027. We’re prepping the underground. We’ve got people on site right now underground, preparing the area, planning on development. The plant upgrading is not quite started yet. We’re just in the order of — process of ordering a bunch of different equipment.

A bunch of POs have gone out and several more POs will be going out over the next 2 weeks as items become obviously required or we identify items that we need. And some of the items are longer lead than others. And so we’re trying to get all those items necessary for the underground and the plant ordered and in the system and get these pieces of equipment on site as soon as possible. And we’ll share updates as we progress over the next year. We are still targeting for production to commence in H2 2027. And so far, we’re on track. I did want to bring something up because we had a false news release that went out of Mexico. It was regarding a collapse at Los Gatos. And I looked at the photograph myself, and I read the article myself. And I don’t know — we actually don’t even know where that mine is.

It was definitely not a commercial operation. There was some little hole in the side of a mountain that was probably just artisanal mining or maybe owned by a Mexican mining company or something I have no idea. But it was definitely not a modern operation. But we did have a small collapse, and there was a 10-meter section of the ramp that collapsed, and we were down 2.5 days and back on track is very normal. It was not material in any way at all. That’s why we didn’t say anything about it. We didn’t release it because it was just things happened in mining and being down for 2 days is nothing. So we decided not to comment on it, but I know that a number of analysts did phone in the company asked about it and asked about that story. So I just wanted to address it on this call just so everyone is clear that everything is hunky dory and there’s no issues that remain.

Going to Slide 7. So the solid balance sheet and cash flows, we are investing in our world-class district scale operations. As you know, these are big, big, chunky land packages, and we’re increasing the mining rates at Los Gatos to get that operation up to 4,000 tonnes a day, as we’ve said already. And we want to get the Santa Elena, obviously, expansion complete as well. So a lot of focus is going on, on those 2 operations. We have a very, very large exploration program. It’s 266,000 meters of exploration over the sites this year. And that does not include an additional 42,000 meters at Jerritt Canyon, which we just recently announced with the opening — reopening news release on Jerritt Canyon. So we’re drilling over 300,000 meters of drilling this year, which is quite obviously a very large program.

So pretty exciting. We’ve updated our resources and reserves in March. I’m not sure if you’ve seen the AIF that went out in March, but it’s all there for people that want to go look at it. It’s on SEDAR and it’s also on our website. The Santa Elena, we had a 90 million ounce increase, which is pretty amazing. That was basically due to Santo Niño and Navidad discoveries, and we continue to upgrade those assets. And I think that number is actually going to improve over the next year. Jerritt Canyon with the — including some of the underground, we’ve kind of redeveloped based on the gold prices today, all those open pits that were being mined back in the ’80s and ’90s are pretty well now economic. So we’re going to be — we’re working on a plan to include the underground and open pit in the same mine plan, obviously, blending and so on.

But we’re now at 7.8 million ounces of gold in Jerritt Canyon, which is pretty, pretty impressive compared to our prior disclosure a couple of years ago. Restart is still scheduled, as I said, for H2. And I guess that’s really about it. Continually strengthen our cash flow, balance sheet, look for continued increase in our treasury. Obviously, we’re quite leveraged to the price of silver, as you can see in our share volatility over the last couple of days, but that’s something that we’ve got used to over time. So anyways, I am done with my presentation. We will now go to questions.

Operator: [Operator Instructions] Our first question comes from Heiko Ihle with H.C. Wainwright.

Q&A Session

Heiko Ihle: Congratulations to Alex and Dave, who I know quite well from his time back at Endeavour. Keith, you focused quite a bit on the margins earlier on this call. And obviously, it’s quite impressive what has been happening and what’s been accomplished in the last few quarters. And I assume the answer is no. But do you think there comes a point when and if commodity prices keep rising or even staying at these levels where people are more so trying to get their piece, be it labor, governments, other stakeholders. Have there been any conversations? What have you seen? I mean you’re much closer to the pulse than I am. Maybe just a bit of color.

Keith Neumeyer: Well, on the government, you can never predict, right? So there’s no rumors or there’s no discussions that the government is going to be changing anything. You have to remember at these prices and the profitability of the Mexican miners department is getting a windfall right on, their tax income from mining is accelerating quite dramatically. So I’m pretty sure the government is pretty happy. So I’m not sure why they want to kill the goose or whatever. The unions, again, the same thing. These union members, their bonuses are tied to the silver price. So we’ve just gone through a couple of negotiations with the national union, and they’re very quiet, quite happy, obviously, negotiations went very smoothly. So there’s really no issues there.

But they are getting paid more. So our all-in sustaining cost has increased as a result of higher taxes and higher bonuses. So that can be expected. Other things, if we go back to the last bull market, 2011, when silver hit $50, we saw the Sandviks of the world increased prices by 15% to 25%. We’ve not seen that. We’re just in the process of signing an agreement with Sandvik, and we’re looking — it’s looking like we’re going to get pretty reasonable pricing on this new purchase that were being put in. We haven’t seen big increases in cyanide or ammonia. We don’t rely on diesel that much. So no, we haven’t really seen the inflation that maybe some would be expecting.

Heiko Ihle: Moving on to Jerritt Canyon. I mean, obviously, I’m excited to see the site reenter production, and I know we got Alex on board now, but on a grander scale, I mean, I went through your April 2 release again this morning, you mentioned the $75 million of spend this year. $7.5 million of that is workforce staffing. When do you think hiring for the site should really start ramping up? I assume this is like second half or even fourth quarter kind of thing. And then building on all of that, once Jerritt is in full operations, I don’t think you’ll have any issues getting workers to site given the proximity of talent. What are you seeing with the labor pool? Because I mean you’re probably going to take up a decent amount of the workforce in the local area?

Keith Neumeyer: Well, I think all of it will come from the local area. And maybe some of the turmoil at Newmont right now might assist. Hopefully, we don’t know for a fact. But we have a list of Canada — or pardon me, a list of positions that need to be filled. It’s very extensive and detailed. And I think I don’t have the exact number in front of me, but we’ve hired a handful of people just in the last couple of weeks and for key management positions, and we’re looking to hire several more key people over the next week or 2. And then at that point, we’ll start going down into the business deeper and targeting more labor-intensive type individuals. And we should be well manned by fall and having to look at adding the underground workforce and so on in the early part of 2027.

But don’t forget, Jerritt is only 45 minutes away from town, Elko. And so it’s the closest mine to Elko. So if you’re — rather than having to drive to one of the other neighboring mines, it will take you 1.5 hours both ways. You’re on the road for 3 hours a day, working in Jerritt, you’re only on the road for 1.5 hours on the day. So it’s a big, big difference. It’s a well-known site. And I think the community at Elko is pretty excited about it, and we’re getting approached by people regularly to come on as employees.

Heiko Ihle: And someone who’s been on the ground at Jerritt Canyon, I mean the site is just gigantic and it’s huge. So — on that note, I will get back in queue.

Operator: [Operator Instructions] The next question comes from Eric Winmill with Scotiabank.

Eric Winmill: Maybe just continuing on Jerritt Canyon. So in addition to the hiring plans, any other critical path items or milestones beyond the PFS we should be looking for throughout this year and next year?

Keith Neumeyer: Well, the 2 most critical things is the oxygen plant and the underground fleet. So we’re working right now on defining all of that and defining costs and defining time lines. And we’re still a little bit early, but we will be putting an order in for some of the underground fleet in the next couple of weeks, which have 10- to 12-month lead times. We’re just working with the group on the oxygen plant right now. And I can’t really give you a whole bunch of details because it’s just kind of a moving thing. But once we know more, we’ll be putting more information out to the market.

Eric Winmill: Appreciate that. And maybe just some of the other expansions you’re working on Los Gatos or Santa Elena, any critical items that we should be keeping an eye on?

Keith Neumeyer: No, no, just time and money. There’s nothing critical.

Eric Winmill: Just one more for me, if you don’t mind. In terms of M&A, what are you guiding to the market? Are you happy with the size of the portfolio? Or any changes you want to make or assets you might look to add down the road?

Keith Neumeyer: Well, we’re always looking for ways to grow. I can’t talk too much about it. But yes, we have — our group continually scours the planet and looking for good silver projects, and they’re kind of a rare animal and they’re hard to find and — but we continue to look.

Operator: I will now pass the floor over to Mr. Darrell Rae, Investor Relations at First Majestic Silver to take us through questions submitted through the webcast.

Darrell Rae: Okay. Thanks, Ashiya. Yes, just a few here. One is just getting a general First Mint update. I’d say there are a few questions in here, what percentage of your total revenue came from First Mint business? And just talk about the first quarter.

Keith Neumeyer: Yes, I’m going to pass this question over to Mani.

Mani Alkhafaji: Yes. Thanks, Keith. Yes, the mint continues to operate quite nicely. Q1 was another record for us. It is very, very retail driven. So obviously, when we see the metal prices are riding up, the orders are coming in nicely. So we had a nice uptick throughout the quarter, which was great to see. The — operationally, it is going quite well. We worked out quite nicely, and we do have plans for further expansion. We’ll be pulling the trigger on this in due course. But all in all, it is going quite nicely and building on the momentum that we had from last year.

Darrell Rae: And the last one we have in the queue is just, picking up on Keith, your comments and elaborating on the strategy about the lower cutoff grade and that seemingly increasing mine life. Just a little clarification question.

Keith Neumeyer: Yes. I would maybe use 20%. I should talk to our QP before I throw that number out, but that’s kind of my guess is, yes, mine life does increase as a result of the lower cutoff grade. We historically — well, previously, I should say, you’re in an underground and you’re mining 3, 4 meters of rock, and you’re leaving behind the low-grade material on the walls of that tunnel because it’s deemed uneconomic. So you just leave it behind, and that’s just common mining practice. Today, we can widen those mining stopes by a couple of meters and then still pull all this rock out and still make money even though the grade is lower. So yes, it does — so you’re mining slower or you’re advancing slower and you’re mining wider. So that has an impact on your life of mine, and it’s obviously a positive impact.

Darrell Rae: And that’s it from the webcast, Ashiya.

Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Keith for any closing remarks. Please go ahead.

Keith Neumeyer: I think I covered everything. Obviously, impressive quarter. Q2 is looking pretty darn good as well. So we hope to have another great quarter back to back, but we’ll have much more things to talk about as we advance through this year. It’s an exciting year with a large capital expenditure going into exploration and development and mill and mine expansion. So we’re pretty excited about what we’re seeing in the company. And also with metal prices the way they are today, assuming they stay in these levels, it’s just going to be a bang up record year again. And I just want to — Mani, is there anything that you would like to add before we go?

Mani Alkhafaji: No. Just be on the lookout for more updates throughout the year, but a lot of exciting stuff.

Keith Neumeyer: Okay. Very good. Well, thanks, everyone, for joining us.

Operator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.