First Majestic Silver - Q4 2025

Transcript

Operator (participant)

Thank you for standing by. This is the conference operator. Welcome to the First Majestic Silver 2025 Q4 Financial Results Conference Call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. If you are participating through the webcast, you can submit a question in writing by using the form in the lower section of the webcast frame on your screen. Should you need assistance during the conference, you may reach an operator by pressing star, then zero. 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 (CEO)

Welcome. Welcome, everyone, to an excellent day for the company, and nice to see our analysts coming out with some good reports today. It's been an up day in silver prices, which is obviously nice to come out with fantastic results on an up day in metal. So, you know, thanks to everyone for joining us today to discuss our fourth quarter and our year-end financial statements, and I hope that you've all read the news release prior to today's call. We have a full room here in Vancouver. We have Mani Alkhafaji, President and Chief Corporate Development Officer, here with us today. David Soares, our CFO, Steve Holmes, our COO, Samir Patel, our General Counsel and Corporate Secretary. We also have Darren Fernandez, Director of Finance.

We also have Darrel Rae and Joel Faltinsky at Investor Relations of our team here. So if there are any questions, we will be passing the questions on to the relevant staff that are currently present today in the room. And I'd like to just pass the call over to Samir Patel before we continue.

Samir Patel (General Counsel and Corporate Secretary)

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 undue 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 (CEO)

Thanks, Samir. We do have a presentation that's available. It'll be put on our website, but for those online today, you can see it as we go through the presentation. I'm going to pass the call on to Mani, who will be going through the presentation. Take it away.

Mani Alkhafaji (President and Chief Corporate Development Officer)

Great. Thanks, Keith. Good morning, everyone. Appreciate you guys taking the time to join us. I'm going to start with the highlights, the slide with the highlights, title. We did have a wonderful year. You know, 2025 was transformational. We set out some key milestones, stretch targets, and we came with wonderful end to the quarter, end to the year and a great year overall. We produced 4.2 million pure silver ounces in the quarter, just over 15 million for the year. From an equivalent stance, you know, we came in with 31, just over 31 million silver equivalent ounces. That's, we'll touch on that in the next slide, but that came in higher than our revised guidance, which is great to see. Revenues, big milestones.

You know, we broke through $1.2 billion, almost $1.3 billion this year. You know, that's, that, that gives us obviously a lot of financial strength, that we see that trickling down to the bottom line. Again, you would have seen that in the news release. Our realized price, we came in, for the quarter, higher than the average, which again, is a big testament to our strategies. Q4 average was just under $59, and for the year was $41.52. Interesting to see as well, our mint, that's our new, [mint to the business] had record after record quarters throughout the year and ending the year on a, on a wonderful note. We generated just under $23 million from that operation.

Cash flows, again, combined with the metal prices and the production, no surprise to see record cash flows coming into the business and, hitting on, on these milestones. Our exploration program, again, was quite aggressive at the start, and, we came in nicely with that, over 250 km of drilling. Great results that we've disclosed throughout the year and will be reflected in our Annual Information Form at the end of this quarter. Just a quick second on that bar that you guys see on the slides. That's a very important KPI to First Majestic. We are the purest silver producer among our peers. About 50%, you know, for the year, it was 58%, but this number continues to improve, and Q4 was actually north of 60%. So as-...

As silver price continue to improve, our leverage materializes. Okay, moving on to the next slide. Another big milestone for us is our free cash flow. And you see over the last few quarters, it's been steadily increasing, but in Q4 2025 was a step change for the company. Again, due to the operational discipline, the metal improvements and cost containment, we're very, we're very pleased with, with the performance. This gives us a lot of flexibility and obviously capital allocation, providing, investing back into the business, whether it's exploration, whether it's plant expansion, which we can touch on a bit later. But wonderful trend to see, and we look forward to continuing this. Moving on to the next slide. Our guidance, if you recall, we did update our guidance.

You know, we set out the preliminary guidance in January of 2025. Then halfway through the year, we've updated it, we revised it upward. We've increased the production targets and improved costs. Nice to see that we came in pretty much at or better than guidance on both silver and gold. Silver equivalent came in right in the middle. One thing I do want to highlight that's impacted our silver equivalent, as well as our all-in sustaining costs, which, you know, we do, we do recognize that it was a miss on the cost side, but that's purely related to the conversion of byproduct metal to silver. The silver equivalent ratio did collapse towards the end, which is wonderful for silver, telling us that silver outperformed gold and base metal.

But it did have about a, you know, to put numbers on it, about 1 million, 1.4 million silver-equivalent ounces reduction in our production, as well about a $1 increase in our all-in sustaining. So without that, our all-in sustaining would have been in the $20, which would have been right in the middle of the, toward the lower end of the guidance, had we used the guidance assumptions. Okay, moving on to the next slide, which is our 2026 guidance. So similarly, we are investing heavily, and we're continuing with our robust production for the year. We're targeting about 13 million-14 million pure silver and, you know, just 110,000-130,000 ounces of gold, and the balance is lead and zinc.

We did change things a little bit for 2026. We have locked in the conversion ratio to 75:1 to avoid the noise that we were seeing pretty much in 2025. So that should... We're going to lock in pretty much the assumption ratios on the metal prices, so we're not susceptible to external factors. The next slide. Some operational highlights. This is obviously throughout the year, we have been providing updates, but it's nice to look back on the accomplishments. Gatos was a key highlight for the business. We did close this transaction in January of 2025, and we spent, you know, about half the year integrating this asset, and it could not have gone any better.

Smooth transition, smooth integration, and we're pleased to say that it's fully completed at this point, and it's nice to enjoy the dividends that we're getting from this operation. Beautiful assets, massive land, land position, and lots of opportunities. We're still targeting a lot of low-hanging fruits in terms of cost reduction, in terms of near mine reserve and resource growth. So look for more news on that. Santa Elena it has been the gift that keeps on giving. You know, we say this almost every news release and every now and then, we still have exciting stuff to talk about here. Obviously, we've had fantastic discoveries in this district. In the 10 years that First Majestic has owned Santa Elena, we've had four new discoveries, and these are massive achievements.

The map on the right gives you a sense of what they are. So we've obviously had the Ermitaño mine that we're currently producing from. We've had Luna, but the more recent discoveries is Navidad and Santo Niño. We have put out a maiden resource at the end of last year on Navidad. Plenty of drilling and results have come through throughout the year, and that will be reflected in our 2025 Annual Information Form, which will be published before the end of the quarter. We are also investing in plant expansion at Santa Elena. Again, we see a lot of value, a lot of growth opportunities in this operation. It is a massive district, comes with 102,000 hectares, and again, with the exploration success that we've seen, it gives us confidence in investing.

So we're taking the plant from about 3,100 tons-3,200 tons per day to 3,500 at a sustainable level. We're expecting to get to this level in H2 of 2026. I did fail to touch on Gatos. We're also expanding the throughputs of this operation, so we have a contractor that's been engaged at the end of last year and continuing, obviously, right now. We're targeting mine throughputs of about 4,000 tons per day at a sustainable level from about 3,500. San Dimas, you know, same thing, massive district, plenty of exploration success that we'll be discussing in our annual R&R update. And La Encantada has been, you know, an exciting turnaround for the story or for the portfolio.

It is our smallest mine, but it is our purest silver producer, 100% silver. It came in with a beautiful Q4, produced about 1 million ounces, which is nice to see this operation turning around after the water challenges and the haulage issues that we've experienced. We are internalizing hauling as well over here, so we're anticipating further cost improvements and operational efficiencies. Okay, moving on to the next slide. Just some further consideration. You know, we do obviously focus on safe production, and it's nice to see us coming in with our TRIFR and LTIFR numbers for the year, putting us in really, truly world-class measures. Safe production gives us the production milestones that we're getting, so we're continuing with that.

Financials, you know, a couple of things to mind. We did hold some inventory at the end that wasn't reflected in our revenue. That becomes part of, you know, it's either raw material for the mint or just timing differences that would have gone flushed out in Q1. The mint, I did touch on that, did have a wonderful year and quarter. For the year, the revenue was just under $50 million, but the profitability was about $24 million for the year. One thing, you know, that we don't-- that's not reflected in our income statement, but it's important to recognize, is the marketable securities that we hold. It did have an impressive movement in the year and in the quarter.

So for the year, our position has increased by about $140 million. That's not included in our income statement. It is reflected in our balance sheet, so just keep that in mind. And we did recognize the provision that was disclosed at the end of last Q3 results. We did take a provision on that in the income statement. Important to recognize that this amount has not been paid, as we do continue conversation with SAT, and we're cautiously optimistic about where things are going there. A couple of things we want to highlight, again, nothing new. Being in Mexico, there is obviously some cash payments that will be hitting us in Q1 and delivered in Q2 related to 2025. We obviously had a wonderful year in 2025.

We have some cash, true-up payments that will be made before the end of the quarter, so that'll be reflected. Moving on to the financial strengths. You know, the slide speaks for itself. The cash flow is trickling to the treasury, which is wonderful to see. We're sitting with just under $940 million in the bank between unrestricted and restricted cash position. Our working capital is $733 million. That is including some marketable securities that you see on the slides. Like I said, we've done very well with those, and we're pleased to be shareholders of these companies. We did close, you know, the best terms in the mining industry when it comes to convertible notes. That was done in December.

We, the coupon rate on this is 1/8, which is wonderful. So we're glad to have the support in the market. Moving on to our dividend policy. So we did declare dividends for Q4. But it's important to recognize, we're also seeing a lot of confidence in our balance sheets and our cash flow, to the point that we have declared an increase. We've effectively doubled our dividend policy, effective 2026. So that'll be reflected on revenue earned for Q1 of 2026. So that went from 1% of the top line to 2% of the top line being revenue. And lastly, some of the catalysts, you know, it's, we're blessed to have three world-class districts in our portfolio, and we see a lot of value in the drill bits.

So you see, we're coming. Well, we have declared a 266 km of drilling across all the operations, which we're quite excited about. Plenty of targets that we'll be chasing. Our updated reserve and resource reflect a lot of the success that we've had from 2025. So look for that. That will likely go out before March 31st. Continued strengthening of the balance sheets. Metal prices have obviously are better than they were in Q4. Q4 is wonderful. You can imagine what Q1 and hopefully the rest of 2026 will look like for First Majestic. With that, that concludes our prepared slide deck. We'd like to open it up for Q&A, if there's any.

Keith Neumeyer (CEO)

Well, thanks, Mani, for doing that. If anyone wants to ask any questions, we're available.

Operator (participant)

Thank you, Keith. We will now proceed to the question-and-answer session. Once again, to join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. If you are participating today through the webcast, you can submit a question in writing by using the form in the lower section of the webcast frame on your screen. The first question today will come from Heiko Ihle with H.C. Wainwright. Please go ahead.

Heiko Ihle (Managing Director)

Hey, Keith and team. Congratulations on a good quarter here.

Keith Neumeyer (CEO)

Thanks, Heiko.

Heiko Ihle (Managing Director)

Hey, we're close to 2/3 through Q1 right now, or at least we're in the second half of the quarter. Metal prices have obviously been extremely volatile, bit of unprecedented times here. I heard that some of the refineries have been putting off, you know, taking the products from some sellers for capacity reasons. Cost-wise, obviously, there are some changes. I guess the question is: Is there anything quantifiable that you're willing to, you know, point out on this call that you encountered this quarter related to costs or shipments or anything unexpected that maybe we don't yet account for in our models?

Keith Neumeyer (CEO)

... Well, the refineries have suspended financing, and that's really the biggest issue. So, you know, I think it's, you know, if you're a small retail store, you know, in Miami, for example, and, you're used to, you know, your people are walking in their front door and selling you silver, you know, that small retail store would collect, you know, X amount of ounces over a period of a few days. And then, you know, it's a cash flow issue, right? So they would then phone up the refinery that they would normally use for, you know, that would buy that metal from them to melt it into other products, and they would get financing for that. So that would keep that business operating and, you know, cash flow coming in.

What's happened is, because of the tightness in the market and the volatility in the market, the refineries have told everyone they're no longer financing. So, it's really hurt, you know, the retail buyers of metal, because they just simply can't buy the metal anymore because they have to wait, you know, 30, 45 days and sometimes even longer than that, depending on the quality of the metal that they're buying. For us, it doesn't affect us in any way. You know, we don't finance our metal. You know, if you're a smaller producer, you may be affected because you need the cash flow to finance your business. For us, we don't have to do that, so, you know, we wait for our turn and, so, yeah, it doesn't affect us.

Heiko Ihle (Managing Director)

Fair enough. And then just to clarify, you got 266,000 meters of exploration plans this year. Just the costs that you're seeing and availability of rigs, I assume, is no issue?

Mani Alkhafaji (President and Chief Corporate Development Officer)

Yeah. The beauty thing with, with that, sorry, this is Mani. We have, we have a contractor who basically does most of our drilling, with long-term contracts, so our costs are relatively contained. With that being obviously, you know, First Majestic with a big footprint in Mexico, we have, we're able to, have access to resources, so the number of rigs are available to us. So no, no, no concerns.

Heiko Ihle (Managing Director)

Very good. I'll get back in queue. Thank you.

Operator (participant)

The next question will come from Alex Terentiew with National Bank. Please go ahead.

Alex Terentiew (Director of Equity Research)

Hey, guys. Yeah, nice, nice quarter. Nice to see your cash jump as much as it did there. Which kind of leads me to my question. You know, it's a nice problem to have, or you can debate whether it's a problem or not, but you know, cash is going up. I know you guys are spending this a bit more on development this year and bumping your exploration or keeping your exploration nice and strong. But you know, how are you guys thinking about the cash and what to do with it? These silver prices, you know, your free cash flow is going to be, you know, should be strong again in 2026.

Is there other thoughts for, you know, additional capital returns to investors or, and obviously, you know, Jerritt Canyon might play into this as well. So maybe just, you know, kind of wrapping a question on your thoughts on Jerritt Canyon in there as well here.

Keith Neumeyer (CEO)

Yeah, sure. Sure, Alex, and thanks for your report today. It was quite, quite good to see. Yeah, you know, capital allocation, there is this tax issue that is still pending. So that's, you know, the market, the market is well aware of that issue, and it's something that the team is actively in discussions with to solve, and we hope that 2026 is going to be the final year that that issue will be behind us, you know, after, you know, that just, you know, starting back in 2012, that we inherited in 2018. So, you know, that's one issue that we hope to see. You know, we haven't done any share buybacks in Q4, but we always have that option to do that as well. We did increase the dividend.

There will be some news coming on Jerritt Canyon over the next couple of months. So I would, you know, suggest people wait for that. Let's look at it. You know, being the CEO for 20, somewhat 23 years, it's kind of nice to see $1 billion in value. So, we're not about to spend it anytime soon.

Alex Terentiew (Director of Equity Research)

Okay, fair enough. Just one little accounting question. You know, realized silver price came in $59, average price in the quarter, it was $54. So is that, you know, I, I'm guessing part of that could be just, you know, timing of sales, but it's also, do you guys, do you guys factor in final sale on, you know, provisional pricing, settlements into that? So, you know, if there's a positive adjustment, you kind of factor that into the quarter's realized price. Is that how your accounting works?

Mani Alkhafaji (President and Chief Corporate Development Officer)

Yeah, that's one part of it, Alex.

Alex Terentiew (Director of Equity Research)

Okay.

Mani Alkhafaji (President and Chief Corporate Development Officer)

Due to the concentrate sales.

Alex Terentiew (Director of Equity Research)

Yes. Yeah.

Mani Alkhafaji (President and Chief Corporate Development Officer)

But also, you have a lot, many, but no one else really has. We have the mint. The mint recognize $69 average price as well. That helps both the overall. That's about 12% of our production that went through the mint in Q4, of the Doré production, I should say.

Alex Terentiew (Director of Equity Research)

Okay, that's a good point. Thanks. That's it for me.

Operator (participant)

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 (Investor Relations)

Yeah, we just have a few more, team. One relates a couple of questions on this, but you know, congrats on the solid results at the mint. Do you have any plans to expand First Mint?

... and do you want to elaborate on that for us?

Keith Neumeyer (CEO)

Yeah. So keep in mind, the mint is less than a year old. It's about a year old. So the ramp-up has been pretty exciting, pretty quick. The answer is yes, we do plan on expanding. The facility is capable of further expansion. We're working diligently on, obviously, our marketing strategy to get the name out there, and it's been quite effective, so we'll keep working on that.

Darrell Rae (Investor Relations)

Okay. And we had a few questions on along the lines of congrats on the strong average selling price versus the COMEX in the quarter. Are you hedging prices, and would you consider direct-to-market selling in the future?

Keith Neumeyer (CEO)

We have, interestingly enough, I've been contacted by, you know, direct buyers over the last month or so. We did assist one U.S. buyer with some ounces in Q4. It's not a strategy that we normally follow. It doesn't really make a lot of sense for us to do that. And we don't hedge. We're fully exposed. I think our investors or shareholders who own First Majestic would not quite appreciate us hedging. So, you know, we just simply don't do that.

Darrell Rae (Investor Relations)

Okay, and probably the last question, just kind of looking through these, is around silver purity. Nice to see your silver purity at 60%. Do you have any plans to buy a late-stage developer, or what are your plans to maintain your focus on silver?

Keith Neumeyer (CEO)

Well, as Mani said in the presentation, our silver purity is very important to us. It's a major KPI for us. So, it's nice to have gold. You know, gold is a very stable metal, more stable than silver, as you know, I'm sure all the listeners are aware of. But, you know, the, you know, we're always going to maintain as much purity in silver as we possibly can. But, you know, silver mines are hard, hard to come by. They're, they're, they're pretty rare animals, so we're always looking around for the next big acquisition, so stay tuned.

Darrell Rae (Investor Relations)

That's great. Okay, and I know we're getting close to the top of the hour. Maybe one last one. Any update on Jerritt Canyon, when a restart may happen or, any general update on Jerritt?

Keith Neumeyer (CEO)

Yeah, so we'll keep touch on that. We're going to be putting a standalone update on Jerritt Canyon once we have the plans and numbers finalized. We're hoping before the end of the quarter. That's still the plan. You can imagine First Majestic or management's team is focused on Jerritt Canyon now, now that Gatos is integrated and closed. So, we're putting a lot of attention, and we'll be sharing that once ready.

Darrell Rae (Investor Relations)

Okay. That's it from the queue, Nick.

Operator (participant)

Okay, thank you. Showing no further audio questions, this will conclude our question-and-answer session. I would like to turn the conference back over to Keith for any closing remarks.

Keith Neumeyer (CEO)

Thanks for everyone to join us today. If there are additional questions, please feel free to contact us. I think you know who we are and how to contact us. We're always available. Darrel and Joel and Mani and myself, feel free to reach out. We'll be at the PDAC coming up in the next few weeks as well. You know, we'll hope to see you at our aquarium event on the Monday evening for further contact or questions.

Operator (participant)

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