First Majestic Silver Posts Record Quarter, Eyes Growth

First Majestic Silver ((TSE:AG)) has held its Q1 earnings call. Read on for the main highlights of the call.

First Majestic Silver’s latest earnings call painted a distinctly upbeat picture, as management leaned into record revenue, surging realized silver prices and robust cash generation. While acknowledging higher unit costs, tax outflows and the capital intensity of restarting Jerritt Canyon, executives emphasized that margins, liquidity and resource growth comfortably outweigh these manageable headwinds.

Record Revenue and Strong Metal Prices

First Majestic reported Q1 revenue of $477 million, a 95% jump from a year earlier, powered by sharply higher silver prices. The company realized an average silver price of $86.35 per ounce versus $33.10 in Q1 2025, roughly a 161% year‑over‑year increase that transformed the top line and helped reset its earnings profile.

Production Ahead of Guidance

Operationally, the miner started 2026 ahead of plan, with silver output of 3.5 million ounces, already 26% of the full‑year midpoint guidance. Gold production reached 28% of its midpoint guidance, meaning both metals exceeded internal expectations for the first quarter and give the company a cushion for the rest of the year.

Robust Cash Generation and Liquidity

Cash flow underscored the strength of the quarter, with operating cash flow of $311 million, or about $0.63 per share, and corporate free cash flow of $224 million even after a large tax payment. The treasury now exceeds $1.1 billion, providing ample liquidity for dividends, exploration, expansions and the capital demands of the Jerritt Canyon restart.

Expanded Margins and Improved Metallurgy

Profitability per ounce expanded dramatically, as gross margins climbed to about $52 per ounce in Q1 2026, up from $13 a year earlier, roughly a fourfold increase. Metallurgical performance also improved, with silver purity rising to 66% from 60% in 2025, supporting stronger recoveries and underpinning the higher margins.

Shareholder Returns and Capital Allocation

Shareholders are starting to see more direct rewards, with management declaring the largest dividend in the company’s history at 1.71 cents for record holders. That payout is about four times last year’s level and follows a strategic shift that doubled the dividend policy from 1% to 2% of revenue effective January 1, 2026.

Operational Upsides and Cost Control

On the cost side, First Majestic reported cost‑per‑ton of $170, among the lowest levels in recent periods, reflecting disciplined operations. The conversion of three mines to LNG cut diesel exposure to roughly 5%, while the La Encantada mine generated around $30 million of profit in the quarter, highlighting the leverage to high silver prices.

Development & Expansion Momentum

Growth projects are advancing on multiple fronts, with the Los Gatos mine ramp‑up aiming for 4,000 tonnes per day and the Santa Elena mill slated to expand from 3,200 to 3,500 tonnes per day during 2026. At La Encantada, a new self‑haul fleet of 12 trucks is now operational, improving mine throughput and offering additional operating flexibility.

Aggressive Exploration and Resource Growth

Exploration remains a central pillar, with a drilling program of roughly 266,000 meters plus an additional 42,000 meters at Jerritt Canyon, taking total planned drilling beyond 300,000 meters this year. Recent results include a roughly 90‑million‑ounce resource increase at Santa Elena and confirmation of a sizable 7.8‑million‑ounce gold resource base at Jerritt Canyon.

Progress on Jerritt Canyon Restart

The company is laying the groundwork to bring Jerritt Canyon back into production, hiring experienced site leadership and a new managing director, Alexander Thompson. About $75 million is earmarked for the project in 2026, with prefeasibility work targeted for early 2027 and production targeted for the second half of 2027, subject to equipment deliveries and technical milestones.

Inventory Strategy

Management is also taking a tactical approach to metal sales, holding back 676,000 ounces of silver and 2,700 ounces of gold at quarter‑end, valued at about $63 million. By delaying sales, the company hopes to capture potentially higher future prices, adding an element of commodity timing to its financial strategy.

Higher Per-Ounce Costs Driven by Lower Cutoff Grades

While per‑ounce production costs rose in Q1, management framed this as a deliberate trade‑off driven by lower cutoff grades and increased throughput, effectively mining wider and lower‑grade zones. The approach is designed to extend mine life and unlock more ounces over time, even if it temporarily inflates reported unit costs.

Rising Profit Sharing, Smelting and Royalties

The surge in metal prices brought higher obligations, with profit‑sharing adding close to $2 per ounce and smelting and royalty expenses rising alongside silver prices. These factors lifted all‑in sustaining costs, reminding investors that strong commodity cycles often increase payments to partners, workers and governments.

AISC Impact from Price Ratio Policy

Another accounting change affects reported costs, as the company fixed its silver‑to‑gold price ratio at 75 to 1 for 2026 instead of a floating or historical ratio. Management noted this policy shift alone increases the reported all‑in sustaining cost by roughly $3 per ounce versus last year’s methodology, even though underlying operations have not worsened.

Significant Tax Outflow Reduced Free Cash Flow

Free cash flow, while strong, was held back by a sizable Mexican income tax payment of $95 million made in January, a timing factor that temporarily reduced available cash. Management stressed that this outflow is now behind the company, and underlying operating cash generation remains very robust.

Material and Scheduling Risks for Jerritt Canyon

Jerritt Canyon’s restart carries execution risks, as it requires significant capital and long‑lead equipment such as an underground fleet with 10–12 month delivery times and a critical oxygen plant. The $75 million investment planned for 2026 and the timeline stretching into 2027 underline both the opportunity and the scheduling constraints that investors must monitor.

Operational Interruptions and External Noise

The call also addressed operational noise, including a small 10‑meter ramp collapse at Los Gatos that caused about 2.5 days of downtime but no material production impact. Management cautioned that minor disruptions or false external reports can generate outsized market reactions, even when underlying operations remain solid.

Inflation and Stakeholder Pressure Risks

Looking ahead, management flagged potential pressure from inflation or heightened demands from labor and governments if metal prices stay elevated, though no concrete actions have been signaled yet. Investors are being warned that strong commodity cycles can eventually invite higher input costs or stakeholder claims on profits.

Guidance and Forward-Looking Outlook

Guidance for 2026 reflects confidence after a strong start, with Q1 already delivering 26% of midpoint silver guidance and 28% of gold, and margins rising to $52 per ounce on a cost‑per‑ton of $170. The company plans to spend $75 million on Jerritt Canyon this year, drill over 300,000 meters, expand Santa Elena and Los Gatos throughput and maintain a fortified balance sheet above $1.1 billion in cash.

First Majestic Silver’s earnings call underscored a company riding a powerful silver price tailwind while reinvesting heavily in growth and exploration. Despite higher reported costs and the long road to restarting Jerritt Canyon, the tone was one of controlled ambition, with record margins, strong liquidity and substantial resource growth setting an optimistic backdrop for shareholders.