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Date
Thursday, August 14, 2025 at 11:30 a.m. ET
Call participants
Chief Executive Officer — Keith Neumeyer
Chief Financial Officer — Ted David Suarez
Chief Operating Officer — Steve Holmes
General Counsel and Corporate Secretary — Sameer Patel
VP Corporate Development and Investor Relations — Manny Alkabhaji
Investor Relations — Daryl Ray
Investor Relations — Joel Felton
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Takeaways
Silver production -- 3,700,000 ounces produced, representing a 76% increase year over year.
Silver equivalent production -- 7,900,000 ounces produced, up 48% year over year.
Revenue -- $68,000,000 in quarterly revenue, a 94% increase year over year.
EBITDA -- $119,900,000 in EBITDA (non-GAAP), a record quarterly result.
Cash flows -- Approximately $115,000,000 in cash flows generated during the quarter.
Cash position -- $510,000,000 in cash, the highest in company history.
Dividend policy -- 1% of revenue distributed as dividends, with increases as revenue grows.
Exploration spending -- 255,000 meters of drilling planned for 2025, with 28 rigs active, including at Shared Canyon.
Guidance status -- Management confirmed production and cost guidance remains on schedule and within previously stated ranges.
Gatos integration -- Integration described as “extremely smooth,” with SAP system implementation completed in the quarter.
Convertible debt -- $230,000,000 principal in convertibles, the majority of the company's debt, with a coupon rate of 0.375%.
Interest expense -- $3,000,000 in interest and standby costs paid in the quarter.
Santa Elena expansion -- Project underway to reach a capacity of 3,500 tonnes per day at Santa Elena; Navidad and Santo Nino ore bodies advancing in development planning.
Cost factors -- Cash expenditures were elevated due to union bonuses and tax payments, described as typical for the Mexican mining sector.
Operational synergies -- Process integration at Cerro Los Gatos resulted in reduced exploration contractor rates and improved consumable supply costs.
First Mint update -- Target to increase to 10% of company production after ramping up shifts and man hours; currently just under 6%.
ESG recognition -- Received an ESG score upgrade from ISS during the quarter.
Summary
First Majestic Silver(AG -0.45%) reported its best quarter ever, achieving record EBITDA and the highest cash position in company history. Management emphasized capital discipline, maintaining previously issued guidance and confirming no anticipated changes to spending or output targets for the remainder of the year. Strategic advancements included the seamless integration of Cerro Los Gatos operations, introduction of SAP controls, and movement toward major project expansions at Santa Elena and new ore bodies. Cost management featured realized savings from procurement synergies and contractor consolidation.
Chief Executive Officer Neumeyer said, “They're convertible into equity. Therefore, I call it equity,” referring to the company's outstanding convertibles.
Chief Operating Officer Holmes stated, “We're accelerating the mining rates and the ramp development downward in Cerro Del Gatos to basically provide a more continuous supply of ore matched with the plant's capacity.”
Continued drilling at the Navidad and Santo Nino ore bodies may increase resource estimates, with management targeting disclosure of development timelines after further engineering reviews are complete.
Industry glossary
PPA (purchase price allocation): Accounting process to assign purchase cost of an acquired asset among identifiable assets, which can impact future amortization and depreciation expenses.
SAP: Enterprise resource planning software implemented for integrated supply chain, maintenance, and financial controls.
Full Conference Call Transcript
Keith Neumeyer: Thank you for that, and welcome, everyone. Glad you were able to join us this morning early. Thank you for joining us today to discuss our second quarter financial results and updated 2025 guidance. Our second quarter results news release, MD&A, and financial statements were released earlier this morning and are posted on our website. Joining me in Vancouver for our call today are Ted David Suarez, our Chief Financial Officer, Steve Holmes, our Chief Operating Officer, Sameer Patel, our General Counsel and Corporate Secretary, Manny Alkabhaji, VP Corporate Development and Investor Relations, also have Daryl Ray and Joel Felton from our investor relations team. We will be prepared to remark or take questions after our presentation.
Before we start, I'll ask Sameer to read out the forward-looking statement disclaimer. It's to you, Sameer. Thank you.
Sameer Patel: 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: Thanks, Sameer. I appreciate that. And, before I get into the presentation, I just wanted to make a couple of quick notes. You know, obviously, a volatile day in the stock market. Silver and gold prices are, you know, having a down day today, which is unfortunate, but, nevertheless, we've seen this constantly. It's just the volatility in the market, but also our stock is somewhat affected today by our news. Such positive news, and I've been on record using the word record 27 times. And you know, maybe today I'll be breaking that record. We'll see. But, there was some news that came out earlier, I'm just looking at headlines. One headline said we missed our revenue by 30%.
Well, the writer of that headline or that article actually didn't realize that we were in Canadian dollars or US dollars, pardon me, they're using Canadian dollars, so I know how that happened. But, nevertheless, that headline is complete nonsense. Also, we saw a Reuters announcement or headline that came out this morning that said we had a loss and, actually, we have a gain. So, again, we're contacting these news sources, and are trying to correct them. So, you know, it's just part of the business, unfortunately, we have to deal with. And you know, I would suggest people just look at our news release. That's where the facts are.
Super record quarter, best quarter ever in the company's history. Strong safety performance, which we're very proud of, Silver production, 3,700,000 ounces, up 76% year over year. And we do have a presentation on screen. I don't know if there's a number of people that are hopefully watching it. I know some of you are dialing in and don't have access to the screen, but we do have a PowerPoint that we do have available that we are going through to follow my presentation. So we had silver equivalent production of 7,900,000 ounces, 48% year over year, record quarterly revenue $68,000,000, up 94% year over year. That's not too bad.
You know, we are in line with having a billion dollars in revenue for 2025. It's a pretty exciting place to be. Record EBITDA of $120,000,000. Cash flows of about $115,000,000. Record cash position in me as a CEO. I love looking at this number. I see it every Friday, and $510,000,000 in the bank is not a too bad place to be for a company like ours, and that's growing. It should get better. It should continue to grow. Strong balance sheet, as I said. You know, we do have the convertible, of course, but you know, some people look at that as debt, but, you know, quite honestly, I look at that as equity.
We're paying dividends as all of you know. 1% of revenue. So as our revenue increases, our dividends also increase as a result of increased revenues. Record spending on exploration 255,000 meters or expected to be drilled this year. We have 28 rigs currently active. That includes Shared Canyon. We just had our team down at Shared Canyon watching the drilling going on there, and it's looking quite exciting. There's a second rig arriving, I think, next week. So that's part of that 255,000 meters of drilling. That's a lot of drilling.
The exploration success in Abidade, Santo Nino at Santa Elena, they're just amazing, those two ore bodies, and we're just internally, we're just putting together a bunch of work on the best way to get into those ore bodies, best way to develop them, the quickest timeline is getting that ore into the mill, and the timelines around all of that. So we'll put that information out when we're ready to do that. First Ventures is doing very well. Very excited about that project, and that's making money, which is good.
And you'll see on this slide you know, we remain really the purest silver company in the business, and you look at the numbers, you know, we're at 55% silver. Tech Club, you know, catching up a little bit. They had a good quarter. 44% silver. 30, you know, with after SilverMax with Core, the 34% and Pan Americans, you know, falling a little bit behind. But has increased a little bit as a result of the Mag transaction, 24%. So you know, out of the group, you know, this is the group that we measure ourselves against, and it's important to us to remain 50% silver or higher and we've achieved that over the last couple of quarters.
So moving along into our cost structures and our production, you see we had a great first half of the year. We're on track to hit our guidance. Between, you know, thirty and thirty-one and thirty-two in silver equivalent ounces for the year. We're seeing Gatos continually deliver which is great to see. It's been a great contributor to our portfolio. San Dimas is coming along nicely. Which is good to see after some challenges. The last couple of quarters have been quite good. For San Dimas, costs have creeped up a little bit. As you can see on the slide. We're looking to see that hopefully come down over the next couple of quarters.
But there is inflation in the system. And, you know, Q2 as most of you probably know who are listening. It tends to be a fairly big cash out drop. You know, that's when you got union bonuses. That's when you've got cash or tax payments as well. So there tends to be heavy spend in Q2 just in the Mexican mining sector. That's just kinda normal. So that should revert, you know, over the next couple of quarters. We'll see as things evolve. We'll just move along here. Our guidance, where this is, you know, information already that's gone out to the market, you can see our guidance on costs. We're within guidance as you can tell.
And we're quite within production guidance as well. So everything's working as scheduled and on time and as expected. So when it comes to capital, we had a pretty aggressive first half. Getting these exploration programs going and getting the development done. We did front end the budget slightly, and that was just to get things really kicked off. We as a result of, you know, strong production and revenues and profits in Q4 and Q1. We did expand some of our projects, and we did come out with a revised guidance earlier in July as most of you probably have seen. And that has translated into higher underground development costs, higher exploration costs. But this is all growth capital.
It's all very nice to see, and it'll have big impacts on the business over the next couple of years. So it's great to be in a position, a strong position to be able to increase our budgets and spend this money where this money should be spent to grow the business over time. And we're happy to be able to do that. And on our cash flows, you can see by this slide very, very strong cash flows record cash flows or use the word record again. Are you counting how many times I use the word record? I gotta use it more. But record cash flows, you know, we're very excited about that.
And, you know, I go back to the treasury game. You know, the treasury is growing, and that's what I look like or what I look at. You know, as being a successful business. You know, you don't have to be going to the public markets to raise capital. You're actually generating cash, and that's a pretty good place to be. You know, talking about the things that we're doing on the CapEx side, I should go back and just address a couple of CapEx issues. We are looking at getting the Santa Elena up to 3,500 tonnes a day. That's in process.
We are working on getting Navidad and Santo Nino developed, which I kind of touched on, but we're getting pretty advanced on that. And I would look for news on both of those projects. We have there's some pretty exciting things going on there. And, like, Gatos, getting it up to a consistent 4,000 tonnes per day. We're there, but consistently keeping it at those levels is one of our major goals. We're actually changing the haulage at La Contada. We bought our own fleet, and we're going to be doing self-haulage. So we're hoping to see a little bump up in CapEx.
Because we have to buy the fleet, but it'll be a lower OpEx over the next couple of quarters as we start to do our own haulage there. So going back to the cash flow slide, going back and forth here a little bit, but
Sameer Patel: Okay.
Keith Neumeyer: You can see for yourself strong cash flows. Okay. We're gonna go to our waterfall EBITDA slide. And this just gives you an idea of what our budget is compared to what actually occurred. Obviously, the depletion and amortization is a big number. I should probably pass this comment because we do get questions on this. I think I should probably divert this to David. Why don't you just cover this question, Keith? Hello, everyone. Just on slide seven here,
David Suarez: You know, we've got the waterfall that shows the difference between net earnings or what makes up the difference between net earnings and EBITDA. You could see there a large portion of that difference is really just the depletion, depreciation, and amortization. And about $44,000,000 or so, $44.6 relates to Cerro Los Gatos and really the PPA, the purchase price allocation bump that was done. When we had to allocate, you know, the billion dollars that we paid for the asset to the asset. So, you know, it went from a book value of a few $100,000,000 to a billion dollars. Obviously, that brings up the value. And the depreciation as well.
So you know, we also had a strong production quarter, which, across most of our sites, and that also contributed a little bit here as well. So really, that noncash item making up the big difference between net earnings and EBITDA. We had some financing costs, most of which were related to non-cash accretion. But we also had some interest and standby costs, which were about $3,000,000. And then we also had an income tax recovery impacting here as well. Mainly related to changes in the FX rate on our tax pools in Mexico.
Anytime there are big changes from quarter to quarter in the Mexican peso versus the US dollar, we get these, you know, fairly large adjustments on the tax side. So ending EBITDA for the quarter was $119,900,000.
Keith Neumeyer: David, thanks. You could have explained that way better than I could have. I'm glad you took that off. Thanks, Keith. Thanks. Okay. So going to the next slide, slide
Sameer Patel: Eight.
Keith Neumeyer: Just some notable comments on the quarter. I already covered some of this stuff already during my previous verbiage, but, you know, the bonuses, of course, is always June and tax installments, of course, tend to be large. At this time of year, we did have some energy disruption. There were some weather events in June and, you know, water
Operator: Had to use extra diesel
Keith Neumeyer: That's in and so on. And there were also integration costs at Los Gatos, which were one kind of one-time off cost, but you can see those details in the MD&A. They're all there. Laid out. So if you want to see further details on the impacts, you know, please have a look. And then, you know, you see the details on the tax payments and the dividend payments and so on, on this slide. We did get upgraded by ISS our ESG scores, which is pretty impressive. You know, this is a big initiative that the company launched a couple of years ago, and you know, our score just continually improves every year.
I know many investors don't know, really a lot of attention to this kind of stuff, but we do have a group of investors and shareholders and institutions that really do care about these types of initiatives. And we do continually try to improve that side of our business, which is something we take quite seriously and we're quite proud of it. So jumping to the next slide, Slide nine. The Gatos integration. You know, it's been extremely smooth. You know, it's gotta be one of our smoothest integrations in the twenty-three-year history of the company. You know, I guess that's probably to do with the fact that it's a new mine.
You know, it wasn't, you know, one of the old ancient mines that we bought in the past. We've had to go in and basically rebuild and take time and money to do that. But in this case, there's no capital required. We're actually even able to reduce the exploration programs a little bit just because they already have a ten-year life of mine. So you don't need to spend that type of capital. As long as we replace reserves at our resources that we're mining on an annual basis, that's really the job of the exploration team. And they do that successfully. And then we expect that they'll continue to do that forward.
The, you know, areas like safety, security, environment, health, people, everything's aligning. We're actually just implemented SAP. You know, we've been using SAP within First Majestic for, geez, almost five years, I think. And getting that implemented at Gatos takes some time, and that was just launched last week. So it's really nice to see that. That's really gonna give us an extra layer of controls over that operation and brings it into the whole supply chain and maintenance and so on. Matching all the guidelines and then policies and procedures within those. So we're happy to see that. Yeah. I'm not missing anything. I think I'm missing anything. That was pretty much okay. Let's move along here.
So our financial strength, you know, it's hard to avoid talking about having $510,000,000 in the bank. That's not a bad place to be. So know, that continually grows or hope hopefully, it'll continually grow. There's no plans on spending that money anytime soon. We're going to continue with our current budget. Our current budget was released in July for the balance of the year, there will be no changes to our guidance or our budget on our spend. We are looking at some interesting investments in 2026. But, you know, we'll discuss that at a later date when we get closer to January when we put our guidance out for 2026. So I think that's it for my presentation.
This is the first time ever, and I'll just so the listeners know, that we've actually done a PowerPoint presentation. Usually, we do these general and informal type discussions, but we try to formalize it and that's why we decided to create some slides, which we've shown you today. So let's open up the call for questions.
Operator: Thank you, Keith. We'll now proceed to the question and answer session. If you're using a speakerphone, please pick up your handset before pressing any keys. If you're 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 screen. Our first question is from Wayne Lam with TD Securities. Please go ahead.
Wayne Lam: Hey. Thanks, guys. Morning, everyone. I guess first question really nice to see the smooth integration of Gatos and, you know, really the operational improvements being made across the entire portfolio. Just wondering if you'd maybe help walk through some of the synergies that you've kind of outlined with the integration. And then can you provide maybe a bit more detail on the improvements needed to sustain the 4,000 tons per day there and what the timeline would be? To achieving that?
Keith Neumeyer: Sure. Well, thanks, Wayne. For dialing in and listening today, and appreciate your question. So I'm gonna pass your question on to our Chief Operating Officer, Steve Holmes. Right. So, yeah, thanks for the question. And that's Gatos, you know, we have a situation where the plant capacity is a bit higher than the mine, and that's been that way for quite a few years. So what we're doing is we're accelerating the mining rates and the ramp development downward in Cerro Del Gatos to basically provide a more continuous supply of ore matched with the plant's capacity. And that'll take some time. But we put a plan together to execute on that.
And so far, we've been pretty successful in doing that. So it's really about making sure the mine can support the capacity of the plant and it's a matter of accelerating development particularly in the ramp systems in the Northwest zone, Central Zone, and even in the South Southeast deep zone, which is developing now. Is a big part of the future of the RAM. Wayne, does that answer your question?
Wayne Lam: Oh, yeah. I was also wondering so that ties in with the synergies portion.
Keith Neumeyer: Right. So on the synergies, we've identified many synergies some of which come from Gatos with two First Majestic and many of which come from First Majestic to Cerro Los Gatos. Some examples, Wayne, would be, for example, we've instituted as part of First Majestic's operating practice a really strong reconciliation process within Sierra Los Gatos that allows us to really measure what we actually achieve versus our plan and we've seen some really significant opportunities to improve what break and reduce dilution in the deposit. So we're working on that.
On the other side, we noted that Cerro Los Gatos has a robust business improvement process that's based on main principles that, some of which we were applying within First Majestic, but they also have some really good processes that we are applying now through the First Majestic operation. So these synergies are two-way streets. We're drawing on the best that we can see in Gatos and we're providing the best processes and technology that come from First into Gatos. So those are just two examples. You mentioned the new contracts that we're renegotiating on the exploration. Yes. So Matt has brought up a point that we have a lot of different synergies.
One of them, for example, is there were three different exploration contractors doing exploration work at Cerro Del Scatos. And we have a major contractor that does most of our work in Mexico. That we're quite comfortable with that gives us very good rates on exploration work. We've integrated that contractor now into Cerro Los Gatos and saw significant savings in exploration work that was being done. So that's one example. Another one is we've looked at all the major consumable contracts like bulk oils and things of this nature, and we've been able to utilize some of our major suppliers to integrate into Cerro Los Gatos to give Cerro Los Gatos just lower costs overall.
Bulk oils is a good example. Some of the ground control supply was another good example as well.
Wayne Lam: Okay. Great. Yeah. Sounds like, quite a few opportunities there. Maybe at Santa Elena, you guys are also starting to delineate quite a few new discoveries. Just wondering if you could provide a bit more detail on the sequencing advancement of some of those new veins. Maybe some color on, when Ermittano gets mined out? When does Santo Nino come in? Sounds like that's pretty advanced. And then, does Navidad give you that bigger step change in tonnage, and how far out would that be?
Keith Neumeyer: Yeah. Wayne, some of that information is not yet public, and, you know, we've put out news around Navidad and Santo Nino and winter. You know, these are, you know, three major discoveries. And, you know, I've mentioned to people that, you know, our geological team is suggesting that these discoveries are larger than Irma Tano. Time will tell, our maiden discovery maiden resource was released in our 30,000,000 ounces at Navidad included, I think, did that include winter as well? We just It did include a portion of winter. Okay. A portion. So, yeah, portion of winter and then But the drilling is continuing. And then we discovered Santo Nino, which we haven't put a resource around yet.
Our whole focus is, you know, how quickly can we get these ore bodies into the mill. We're doing a bunch of engineering work. Steve's spending a ton of time right now with the team to try to figure out the best way to get into this and how to develop a where to build the ads, where to build the tunnels. Once we have all that done, we which hopefully will be by, you know, end of the year, maybe Q1. And we will put out some guidance on that. So, you know, we'll answer be able to answer your question at that time.
Wayne Lam: Okay. Perfect. Yeah. Sounds like, a lot to come, and, excited to hear about those new opportunities. Thanks for taking my questions. Thanks, Wayne.
Operator: Meanwhile, I'll pass the floor over to Mr. Daryl Ray, Investor Relations at First Majestic Silver to take us through questions submitted from the webcast.
Daryl Ray: Hi. So, okay, we'll take a couple from the webcast.
Galen: This one is slightly directed towards David. David, what is your total debt? What was paid in the last quarter in interest? And what are you expecting to pay in 2025 or 2026?
David Suarez: Yeah. Just to answer that question, was paid in the last quarter. It's about $3,000,000. It's included in the financing bucket of the EBITDA slide. Part of that 7 or so million dollars. We're not looking at changing our or increasing our levels at First Majestic even though we're there, our balance sheet is very strong. And if we had a use for that debt or a project, then we can look at it. But as Keith said, right now, our cash balance means super strong, and it's increasing. And we've got, you know, internal projects, lining up for which will, you know, probably disclose once they're further developed the ideas around those are further developed in early 2026.
So for now, you know, we've got our converts, outstanding. We're happy with that level of debt. And, and at the right time, you know, we'll see what we do with that.
Keith Neumeyer: And just a comment about debt. You know, I know the analysts out there look at convertibles as debt, but I don't. I look at convertibles as equity. They're convertible into equity. Therefore, I call it equity. But that $230,000,000 is based for the majority, yeah, of the company's debt.
David Suarez: Which is convertible. Super low carrying costs on those and also you know, if we if we were to think about renewing that or what other options we have, you know, the rates right now are super attractive as well.
Operator: Yeah. And the rate on that $230,000,000
Keith Neumeyer: For those who aren't aware, is 0.375%. The lowest coupon done in the history of mining companies. It's not one lore. Anything else? Okay. Yes. And another question
Galen: Probably for you, Keith. Is First Mint up to full capacity? And if not, when is this likely to happen?
Keith Neumeyer: No, it's not. And full capacity is measured by basically man hours and shifts. Equipment could produce more than it's currently producing. But is limited by five man hours. So we could put a second shift on and double current capacity if need be. The budget is to do 100,000 ounces a month. They're slightly behind that. The budget is no. Not the budget, but the goal is to get up 10% of the company's production through the mint. We're currently just shy of 6%. So it's not too bad. You know, after one year of production, you know, this is a start-up business. It's brand new.
You know, there's competition out there that we're dealing with, and but, you know, it's a profit center. We're making money. And we're trying to grow it. And as I said, we're trying to get it up to 10% of the production of the global production company.
Galen: K. That's great. Galen, any more on your end?
Operator: We have no further analysts on the in the queue.
Galen: Okay. And that's the final question from the webcast.
Operator: All right. Then I'd like to hand the call back over to Keith for any closing remarks.
Keith Neumeyer: Well, thanks, everyone, for joining in today, and I'm sure there'll be many people that will be listening to this online after the live presentation. I would ask that you do look at the news release, read through it, if you have further questions, please contact the company. Go to [email protected]. Or just dial us in and ask for either Daryl or Joel. They'll be happy to answer any of your further questions. Thanks again, and have a great day.
Operator: This brings today's conference call to a close. Thank you. You may now disconnect your lines. Thank you for participating and have a pleasant day.