First Majestic (AG) Earnings Call Transcript

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Date

Wednesday, November 5, 2025 at 11:30 a.m. ET

Call participants

President and Chief Executive Officer — Keith N. Neumeyer

Chief Financial Officer — David Soares

Chief Operating Officer — Steven C. Holmes

Vice President, Corporate Development — Mani Alkhafaji

Corporate Counsel — Samir Devendra Patel

Manager, Investor Relations — Darrell Rae

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Takeaways

Record silver production -- Produced 3.9 million ounces in Q3 2025, bringing year-to-date total to 11.3 million ounces as of Q3 2025.

Record revenue -- Revenue for the quarter achieved an all‑time high; $50 million in inventory was not recognized as revenue in Q3 2025 due to retention of 758,000 ounces of silver and nearly 4,000 ounces of gold.

Operating cash flow -- Generated $98 million in operating cash flow.

Cash position -- Held $560 million in cash on hand.

Marketable securities -- Held $140 million in marketable securities as of September 30, 2025, providing added liquidity apart from cash.

EBITDA -- Record quarterly EBITDA (non-GAAP) reached $128 million.

Guidance compliance -- Performance remains on target to meet previously stated full-year 2025 guidance, including being on track to exceed 30 million silver equivalent ounces.

Cost reduction -- Reported lower costs per ounce, with management emphasizing declining cost trends despite broader sector inflation.

Santa Elena exploration -- Two major discoveries, Navidad and Santo Nino, announced within twelve months, expected to extend mine life by several years.

Los Gatos integration -- Integration of acquired Los Gatos mine systems is complete; throughput expansion plan to 4,000 tons per day is in development and will be detailed in January 2026 guidance.

Inventory revenue timing -- Management noted that a portion of held inventory may be converted to revenue in upcoming quarters, with some expected to be recognized in Q4 2025, providing future earnings flexibility.

Dividend policy -- Dividend remains in place and is supported by current strong balance sheet; management expressed interest in potential future increases.

Share buybacks -- CEO Neumeyer confirmed shares were repurchased both on the day of the call and the prior day.

San Dimas operations -- San Dimas mine reported decreased costs and increased production, now back within budget following previous operational challenges.

Summary

First Majestic Silver (NYSE:AG) delivered record operational and financial metrics, highlighting new highs in silver output, revenue, cash balances, and EBITDA. Management confirmed continued compliance with prior production and cost guidance for the nine months ended September 30, with multiple mine sites contributing to positive year-to-date results and operational improvements. Integration of major assets and recent exploration successes set the stage for forthcoming expansion updates and extended production horizons.

Management downplayed the longstanding Mexican tax dispute, stating, "we don't look at, this tax issue as material to the business in any way," and referenced updated disclosures but no new material developments.

The company pointed to $50 million in potential deferred revenue contained in inventoried metal, which may boost reported results in future periods upon sale or monetization.

Guidance for Los Gatos and Santa Elena mine expansions, including throughput increases and cost investments, will be announced in January 2026, creating anticipation for future operational updates.

Management confirmed that all major mines remain on pathway toward multi-year production targets, with a new resource estimate for the Navidad project expected in early 2026.

Industry glossary

Silver equivalent ounces: A production metric that converts output of multiple metals (e.g., gold, lead, zinc) into an equivalent volume of silver using prevailing metal prices for consolidated reporting.

MD&A: "Management’s Discussion and Analysis," a section of financial statements providing management's commentary and additional context about operating results and risk factors.

Throughput: The volume of ore processed in a given period at a mining facility, usually measured in tons per day, directly impacting overall production capacity.

Full Conference Call Transcript

Keith N. Neumeyer: Okay. Well, thanks, operator, and welcome, everyone. That's all dialed in today and we'll likely be listening to this recorded over the next few hours or next few days. But what's turned out to be what we thought was gonna be a fantastic day for us, putting out record Q3 numbers.

I think we used the word record 18 times in our news release yet, obviously, the focus today is, on this tax issue that came up or has been there for years, which I'll address a little bit, but know, as the market was opening this morning, I saw a headline come out as silver Seek was I'm not sure who wrote that headline, but the guy is obviously an idiot. I then saw, unfortunately, TD put out a statement as well. And, you know, nothing against TD.

You know, TD has been a great financial partner for Majestic for quite some time, a decade, and their analysts, unfortunately, came out with the most bonehead headline that I've probably received from an analyst in my career. I'll read it to you. It says Q3 results in line. You know, which is good. You know? Focus on ongoing tax reassessment, which is completely bullshit. Wayne, you should know better than that. Management is not focused on taxes. First Majestic is a mining company. You know, our job is to get silver out of the ground in an economical fashion that's following the environment and our social responsibilities on-site at the different operations that we do.

We look for ongoing efficiencies on trying to reduce our costs and create wealth for our investors. And that's our job. The tax dispute that seemingly some people are focused on today has been with the company for thirteen years. There's no change. We continually work with the Mexican government to resolve the issue. I can tell you there's at least weekly meetings that occur in discussions on this particular item. I can also tell you that the Canadian government is now involved discussions with the Mexican government, which is quite nice to see. And I can tell you our team of experts, over several law firms and consultants and inside staff pay a lot of attention to this, obviously.

But it's not what we view as a material issue for the company. Whenever the issue does get resolved, we will put out disclosure to discuss further these items. We do disclosure And over the last decade over the last eight years, pardon me, we've had disclosure in our financial statements in regards to any potential liability in the business. Including this tax issue. It's fully out there in the public, We do get questions from institutional investors from now on from time to time. And we answer those questions. And we're completely and always very, very transparent.

We did update language in our financial statements, our MD and A, and we put out some language in our news release today just to bring shareholders up to date or investors up to date. And that's where we are. We'll continually work with the Mexican government and to further resolve the issue at hand. But timing who knows? You know, it could be another year. It could be another two years. We have no idea. It's been going on for thirteen years. So there's obviously some focus on this.

By going back to my earlier comment I can tell you it's definitely not a focus on management because we don't look at, this tax issue as material to the business in any way. And interestingly enough, for those who actually wanna dig a little bit deeper, the president of Mexico actually had a news conference on one of her regular news conferences. And one of the reporters asked her about this particular issue because as you can tell, by some of the press, you've got this in the sensational headlines showing up you know, you know, they're trying to sell newspapers or whatever the heck they're trying to do. That have completely misrepresented the situation.

The president of Mexico has said that the issue still remains outstanding, and negotiations are still underway. And I think that's probably the most accurate statement that's been made public from the Mexican government. Unfortunately, the press didn't pick that up. You know, But, nevertheless, that's the facts. And, also being in Mexico for twenty-two years, I think we're probably one of the most well-positioned companies in Mexico. To handle such issues. So you know, we need to focus on getting the answer to the ground. And that's what we do. And we came out with one of the best quarterly's well, actually, the best quarterly financial statement we've ever had in company's history.

And the analysts are focusing on completely the wrong thing. I should have introduced the people that are on this line with me. As you can probably tell, I'm slightly irritated. But, we do have Steven C. Holmes, our chief operating officer online. We've also got David Soares, our CFO online. We also do have Samir Devendra Patel, our corporate counsel there. And Mani Alkhafaji, who many of you probably know, our VP corporate development. Darrell Rae, manager of investor relations is also online. If have questions to come up that I will that I that I'd elect to pass on to them, I may elect to do that. But we will not be taking questions on the tax issue.

Because I don't think it's appropriate in a call like this to have those types of discussions. There's several moving parts and things going on behind the scenes. That are constantly occurring and have been occurring over the last eight years. And our disclosure is our disclosure. And we're not willing to go beyond the disclosure that we currently have in our financial statements or MD and A and our news release. So let's talk about some positive stuff. Know, the stuff that we've really been doing as a company that investors should really be caring about. And I've got a presentation in front of me and I'm on slide two. Of the presentation.

And we had a record silver quarter, silver producing quarter, 3.9 million ounces, eleven point three year to date. The revenues in the quarter were another record quarter. As I said, we said record 18 times in our news release. So they're just record after record after record. Cash flow is record $140 million. We've got record cash position. We've got over $560 million in the bank. Our mint has had a record quarter as well. So the money is coming in, and the business is doing extremely well. There's always you know, we're dealing with mining, of course, but, you know, it just it's hard to knock the third quarter.

And, you know, I'm very positive that we're gonna end 2025 on a very positive note having a very good Q4 as well. So without getting into details and reading everything on the slide, the slide presentation that I've got in front of me is on the company's website. And for those interested parties, feel free to have a look at it. And if you do have additional questions, feel free to call the company. We can get into further details. But going on to slide three, you see the growth in silver ounces, you know, as I said already, our record silver production, our costs have come down, which is fantastic.

Know, you're seeing a lot of cost creep you know, within the mining sector, which I've noticed a other companies putting their financials out for so for our cost to come down. It was it was really nice to see, you know, jumping to slide four, you know, we're hitting all the metrics in our guidance. You know, we're three quarters of the way in or he says, September 30, We're three quarters of the way into the year, and we're right on track with all the metrics. That we put out in our guidance that we released in July.

So we're on track to meet all of our guidance, you know, north of 30 million silver equivalent ounces and think all of you probably know the breakdown, you know, 55% silver. 35% gold, and, you know, 10% in the form of lensing. So you know, our peer is there, and we remain, you know, the purest silver company in the space of the silver players that all of you are very familiar with. So jumping along to Slide five, You know, Los Gatos was, you know, big acquisition for us. You know, that closed in January. You know, bringing all the systems in place, bringing the First Majestic way of doing business, took some time.

But, you know, SAP and other systems that, we brought over from corporate, you know, from First Majestic have now all been all been implemented now. It's nice to see. We have a plan to get throughput up to 4,000 tons a day, and that plan is being put together now. Look for our guidance in January 2026, and you'll see more color To achieve this. But Super great addition to our portfolio. Jumping to Santa Elena, you know, everyone's knows, you know, I'm sure most of you who are listening today have watched our news releases. Great exploration results, you know, two major discoveries in the last twelve months, which is pretty unusual.

You don't normally see two discoveries that close to back, but the Navidad and the Santo Nino discoveries are huge. And will add multiple years to the life of mine of this operation. Look again, look for guidance in January on some costs that we're going to be implementing over the next couple of years to get into those areas the property. To bring that ore into the mill and maintain or potentially even increase production at Santalini over the next, you know, three, four, five years. That's pretty, pretty exciting. At San Dimas, it goes without saying that we've seen some pretty substantial improvements quarter over quarter there. Costs are now coming down. Production is going up.

It's now within budget. After, you know, a challenging previously couple years. Have all those issues are now behind us. So it's really nice to see San Dimas back on track. We've got some plans there to continually expand that operation. And, you know, look for further guidance in the quarters to come. And looking at Tata, you know, our smallest mine, which is, you know, less important of the top three. But we're, you know, changing the mining operation there to self haulage and you know, it's pretty interesting, and it's gonna reduce costs and help that operation out quite a lot. And that's being implemented now. We'll be fully up and running by 2026.

So look for improvements in the Contata in 2026. So jumping to slide six, You know, I've already covered the revenue record revenue. We did I saw one of the analysts come out and say there was a miss on revenue, which is, you know, not sure what analysts have said. But, anyway, so it's a if you know, this 758,000 ounces of silver that we kept in inventory and the 3,900 or almost 4,000 ounces of gold, So that's $50 million in revenue that we held over the quarter. You know? Our shareholders wanna see that, and It's a lot of embedded revenue. Some of that revenue will show up in Q4.

But, you know, I think the analysts that follow the company should take note of our inventory levels because it is something that we have focus on. And as a silver gold company, I think that know, our input from our investors and shareholders worldwide want us to see inventory levels at these at these types of rates. So it's very positive. We could all you know, obviously, know, it's our choice. It's like cash. So if we do want to convert those ounces into revenue at any time, we could do it. Quite easily just on a phone call. So you know, there's really $55 million in net earnings that wouldn't have that would have showed up.

Pardon me, though, that's in relationship to the securities that we've been monetizing. Another bullet point we do treat our portfolio I gather, maybe in a unique way. We don't it on our balance sheet. We have a virtually our entire portfolio in other comprehensive income. And you know, we do monetize that, and we have been monetizing that. So if the analysts would like to look at that, maybe they wanna focus on that number as well because I think it's a quite important number, and there's a lot of cash sitting in our reserves in the form of marketable securities that I don't think people take into consideration. There's a slide coming up, which I'll point out again.

That shows that value. Now our safety performance has been very good and our sustainability improved as well. We're one of the best producing mining companies in the space. And recognized by the different agencies, which is obviously nice to see. So jumping along, to slide seven, and this points to my previous comment of marketable securities, of which is $140 million sitting there. That's as of September 30, and the marks improved even further since then.

So who knows what that number is gonna be as of December 30, but it is a significant amount of our liquidity And so as a result of, you know, our deals we've done in the m and a front over the last couple of years, which I think is pretty helpful for the business overall. Going jumping along to slide eight, you know, again, another record I've already touched on, know, records, but $98 million in operating cash flow, obviously pretty significant. Los Gatos was not pardon me. Los Gatos was a significant contributor to that, which is obviously fantastic. It's great to see. And going to the next slide, slide nine.

Our EBITDA, you know, another record. $128 million in EBITDA. And I'm not I'm not gonna go over each of these items because you know, if you if you're looking for further details on all the bars here, I'm not gonna bother covering them, but if you do have further questions, feel free to talk to Darrell or Manny at any time you wish to. And jumping to our next slide, the dividend policy As all of you know, the dividend's intact and obviously will be with our significant cash balances and our significant portfolio. Actually, I'd like to see that dividend increase but we'll see how that transpires over time.

So looking at Slide 11, you know, the integration, you know, it's pretty well done. There's a couple of items that we're still working on, but, you know, look for an increased balance sheet improvement. In Q4. I would expect to see that as a result of, you know, our production and all obviously, metal prices. We still aggressively doing exploration We're likely not gonna get a chance to talk about Jared Canyon today, but we do have some interesting exploration things happening there. We do hope to put out an update news release on Jarrah Canyon at the end of the year.

If not, end of the year, early 2026, but our objective is to hope having have some news out on a go forward plan at Jerry Canyon by the end of this year. And I don't wanna talk too much about it on today's call. Know we do get a lot of questions about Gerard Canyon, but I'd rather wait until we do come out with some further disclosure just to talk about the whole picture. We will be updating our resource estimates at the Navidad projects as well in March, which is obviously pretty exciting. And, you know, we're as I've touched on already, the Los Gatos input increase to 4,000 in the Santa Elena mill increased to 3,500.

It's all coming into our budget in 2026, so we hope to talk for about that when we come out with our guidance for 2026. So that was really the end of the presentation. I know the guys in Vancouver are watching for questions. So I'll pass it on to Manny and the team in Vancouver. Yeah. So I think, Keith, you probably addressed couple of the questions on Jared's. The one question that's coming up here is, are you doing any share buyback? At these prices?

Keith N. Neumeyer: We did some today. We did some yesterday.

Manny Alkhafaji: K. That concludes the web, questions that we have.

Keith N. Neumeyer: Okay. Well, that's good. Okay. Well, well, thanks for everyone's time, and those who are listening to this after the fact, I encourage you to call into the office or send us an email and you have further questions, we're always happy and willing to answer any inquiries that come in from interested investors and shareholders.

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

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