First Majestic Silver Signals Powerful Upswing in Earnings

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 carried a distinctly upbeat tone as executives highlighted record revenue, sharply higher realized silver prices, and production ahead of guidance. Management acknowledged rising per-ounce costs and the capital demands of restarting Jerritt Canyon, but framed these as calculated trade-offs within a balance sheet strengthened by cash generation and expanding resources.

Record Revenue Fueled by Surging Silver Prices

First Majestic posted Q1 revenue of $477 million, a 95% jump from a year earlier, driven primarily by a dramatic move in silver prices. The company realized an average silver price of $86.35 per ounce versus $33.10 in Q1 2025, a roughly 161% year-over-year increase that amplified the impact of steady production.

Production Running Ahead of 2026 Guidance Pace

Operationally, the miner started 2026 ahead of plan, with silver output of 3.5 million ounces equating to 26% of the full-year midpoint guidance. Gold production also ran hot at 28% of the midpoint, signaling that mines are performing at or above expectations as the year gets underway.

Cash Engine Delivers Strong Flows and Liquidity

The surge in prices and solid operations generated Q1 operating cash flow of $311 million, or about $0.63 per share, even after a large tax payment. Corporate free cash flow reached $224 million, and the treasury now holds more than $1.1 billion, giving the company ample flexibility for growth projects and risk management.

Margin Expansion Backed by Better Metallurgy

Profitability per ounce expanded sharply, with gross margins climbing from $13 per ounce in Q1 2025 to $52 per ounce this quarter, roughly a fourfold increase. Metallurgical improvements also lifted silver purity to 66% from 60%, enhancing realized value from each tonne of ore processed.

Shareholder Payouts Rise with Bigger Dividend

Shareholders will see more cash returned as the company announced its largest-ever dividend of 1.71 cents for record holders. This payout is about four times last year’s level and follows a policy change that doubled the payout ratio from 1% to 2% starting in 2026.

Cost Discipline and Operational Upsides

Cost control remains a bright spot, with cost per tonne reported at $170, among the lowest in recent periods and supporting healthy margins. The conversion of three mines to LNG cut diesel exposure to roughly 5%, while the La Encantada mine alone delivered an estimated $30 million profit in the quarter.

Expansion Projects Push Throughput Higher

Growth capex is focused on boosting plant capacities, including ramping Los Gatos toward 4,000 tonnes per day. At Santa Elena, mill expansion from 3,200 to 3,500 tonnes per day is targeted during 2026, and a new 12-truck self-haul fleet at La Encantada is already helping to raise throughput.

Exploration Drive Targets Larger Resource Base

The company is running an aggressive drilling campaign of more than 300,000 meters this year, including about 266,000 meters across its core portfolio and 42,000 meters at Jerritt Canyon. Recent work has already boosted Santa Elena’s resources by roughly 90 million ounces of silver, while Jerritt Canyon now boasts about 7.8 million ounces of gold resources.

Jerritt Canyon Restart Plans Take Shape

First Majestic is advancing its Nevada asset with the hiring of seasoned site leadership and a new managing director, Alexander Thompson, to oversee Jerritt Canyon. The company plans to invest about $75 million into restart activities during 2026, targeting a prefeasibility study in early 2027 and first production in the second half of 2027.

Strategic Inventory Holding to Play the Price Cycle

Management leaned into a bullish view on metals by holding back 676,000 ounces of silver and 2,700 ounces of gold at quarter-end. This inventory, valued at about $63 million, is being retained with the aim of selling into potentially higher prices later in the year.

Higher Unit Costs from Lower Cutoff Grades

Per-ounce production costs rose in Q1 as the company deliberately lowered cutoff grades, effectively mining wider zones at lower grades to extend mine life. While this strategy increases reported unit costs, management presented it as a value-focused trade-off that unlocks more ounces over the long term.

Profit Sharing, Smelting and Royalties Edge Up

Higher metal prices have a double-edged effect as profit sharing, smelting, and royalty expenses increase alongside revenues. Profit sharing alone added close to $2 per ounce to costs, contributing to a higher all-in sustaining cost profile even as margins remained robust.

Accounting Impact from Fixed Price Ratio Policy

The company’s decision to fix its silver-to-gold price ratio at 75:1 for 2026 has a mechanical effect on reported costs. Management noted that this methodology change inflates reported all-in sustaining costs by about $3 per ounce compared with last year’s ratio approach, without altering underlying economics.

Tax Payment Temporarily Dampens Free Cash Flow

A sizable Mexican income tax payment of $95 million in January temporarily weighed on free cash flow, even in a strong pricing environment. Despite this outflow, the company still delivered substantial free cash generation in Q1 and ended the quarter with a sizeable cash buffer.

Jerritt Canyon Faces Capex and Scheduling Risks

The Jerritt Canyon restart carries material and timing risks tied to long-lead items such as an underground fleet with 10–12 month delivery windows and a critical oxygen plant. Management emphasized that the $75 million spend planned for 2026 and the production target in 2027 depend on careful sequencing of this capital program.

Handling Minor Disruptions and Market Noise

Operations encountered a small setback when a 10-meter ramp collapse at Los Gatos caused about two and a half days of downtime, which management called immaterial to guidance. Executives also pushed back on false external reports that briefly stirred market confusion, stressing that minor incidents can attract outsized attention.

Inflation and Stakeholder Demands on the Radar

Management acknowledged that sustained high metals prices could invite future pressure from suppliers, labor groups or governments seeking a greater share of profits. While no immediate moves have been signaled by authorities or unions, the company is monitoring input cost inflation and stakeholder expectations as potential risks.

Guidance Points to Strong 2026 Trajectory

Looking ahead, the company framed Q1 as a strong springboard for 2026, with silver and gold production already tracking slightly ahead of full-year guidance pacing. Planned 2026 initiatives include more than 300,000 meters of drilling, $75 million of investment into Jerritt Canyon, incremental mill expansions at Santa Elena and Los Gatos, and continued focus on margin enhancement through cost control and improved metallurgy.

First Majestic Silver’s earnings call painted the picture of a company riding a powerful metals upcycle while investing heavily to extend its growth runway. Record revenue, strong margins, and a deep drilling program are being balanced against rising unit costs, tax outflows, and the capital intensity of Jerritt Canyon, leaving investors with a story of high rewards paired with manageable, well-flagged risks.