Q2 2025 First Majestic Silver Corp Earnings Call

Speaker #1: Thank you for standing by. This is the conference operator. Welcome to the First Majestic Silver Q2 2025 financial results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded.

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the First Majestic Silver 2025 Q2 Financial Results Conference call. As a reminder, all participants are in 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 *1 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 screen. Should you need assistance during the conference call, you may reach an operator by pressing *0. I would now like to turn the conference over to Mr. Keith Neumeyer, President and Chief Executive Officer of First Majestic Silver. Keith, please go ahead.

Speaker #1: 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.

Speaker #1: 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 the screen.

Speaker #1: Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Mr. Keith Neumeyer, President and Chief Executive Officer of First Majestic Silver.

Speaker #1: Keith, please go ahead.

Speaker #2: Thank you for that, and welcome everyone. I'm glad you were able to join us this morning. Thank you for joining us today to discuss our second quarter financial results and updated 2025 guidance.

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 result 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 David Suarez, our Young Chief Financial Officer; Steve Holmes, our Chief Operating Officer; Samir Patel, our General Counsel and Corporate Secretary; Manny Al-Khadaiji, VP of Corporate Development and Investor Relations. We also have Daryl Ray and Joel Feltingski from our Investor Relations team. We will be prepared to remark or take questions after our presentation. Before we start, I'll ask Samir to read out the forward-looking statement disclaimer. Mr. Samir?

Speaker #2: Our second quarter results news release and DNA and financial statements were released earlier this morning, and our post is on our website. Joining me in Vancouver for our call today are David Suarez, our Chief Financial Officer; Steve Holmes, our Chief Operating Officer; Samir Patel, our General Counsel; and Corporate Secretary.

Speaker #2: Manni Alkavadji, VP of Corporate Development and Investor Relations. We also have Darrell Ray and Joel Felton-Zinski from our Investor Relations team. We will be prepared to remark or take questions after our presentation.

Speaker #2: Before we start, I'll ask Samir to read out the forward-looking statement disclaimer. Mr. Samir?

Speaker #3: 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.

Samir Patel: 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 US 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 of prospective 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.

Speaker #3: All statements that are not historical facts, such as statements regarding future estimates and plans, or expectations or future performance, constitute forward-looking statements that reflect the company's current views with respect to future events.

Speaker #3: 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.

Speaker #3: We encourage you to refer to the quarterly language included in our news release that was disseminated earlier this morning, as well as the disclosure on non-IFRS measures in our most recently filed Management's Discussion and Analysis, and the risk factors set out in our most recently filed Annual Information Form.

Samir Patel: We encourage you to refer to the quarterly 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 CDOC Plus 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.

Speaker #3: As a reminder, these documents, along with all of our continuous disclosure documents, are available on CDOT+ and on EDCO. Investors are cautioned against attributing undue certainty or reliance on any forward-looking statements made during today's call.

Speaker #3: 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.

Speaker #2: Thanks, Samir. I appreciate that. 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.

Keith Neumeyer: Thanks, Samir. 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 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, and 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 reported in Canadian dollars or US dollars, pardon me, and they were using Canadian dollars.

Speaker #2: Silver and gold prices are having a down day today, which is unfortunate. But nevertheless, we've seen this constantly, and it's just the volatility in the market.

Speaker #2: 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.

Speaker #2: We'll see, we'll see. But there was some news that came out earlier, and I'm just looking at headlines. One headline said we missed our revenue by 30%.

Speaker #2: Well, the writer of that headline or that article actually didn't realize that we reported in U.S. dollars, pardon me, and they're using Canadian dollars. So, I don't know how that happened, but nevertheless.

Keith Neumeyer: So I don't know how that happened, but nevertheless, so that headline is complete nonsense. Also, we saw 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 it's just part of the 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 what 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 3.7 million ounces, up 76%. And year over year. And we do have a presentation on screen. I don't know. There's a number of people that are hopefully watching it.

Speaker #2: So, that headline is complete nonsense. Also, we saw Reuters' announcement or headline that came out this morning stating that we had lost; however, we actually have a gain.

Speaker #2: 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.

Speaker #2: We have to deal with, and you know, I would suggest people just look at our news release. That's what the facts are: super record quarter, best quarter ever in the company's history.

Speaker #2: Strong safety performance, which we're very proud of. Silver production reached 3.7 million ounces, up 76% year over year. We do have a presentation on screen.

Speaker #2: I don't know, 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.

Keith Neumeyer: 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 with silver equivalent production of 7.9 million ounces, 48% year over year, record quarterly revenue of 268 million, up 94% year over year. Now, that's not too bad. You know, we're in line with having a billion dollars in revenue for 2025. That's a pretty exciting place to be. Record EBITDA of 120 million, simulated cash flows of about 115 million. Record cash position. And me, as a CEO, I love looking at this number. I see it every Friday, and 510 million bucks 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.

Speaker #2: So, with silver equivalent production of 7.9 million ounces, up 48% year over year, and record quarterly revenue of $268 million, which is up 94% year over year, that's not too bad.

Speaker #2: You know, we're on track to have a billion dollars in revenue for 2025, which is a pretty exciting place to be. We expect record EBITDA of $120 million and significant cash flows of about $115 million.

Speaker #2: Record cash position, and I, as CEO, love looking at this number. I see it every Friday, and $510 million in the bank is not a bad place to be for a company like ours.

Speaker #2: 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.

Keith Neumeyer: 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. Our record spending on exploration, 255,000 meters are expected to be drilled this year. We have 28 rigs currently active. That includes Yarra Canyon. We just had our team down at Yarra 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 explorations from Sassan Abadad, Saturninio, and Santolena. They're just, you know, it's amazing, those two ore bodies.

Speaker #2: 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.

Speaker #2: Record spending on exploration: 255,000 meters are expected to be drilled this year. We have 28 rigs currently active, which includes Yarra Canyon. We just had our team down at Yarra Canyon watching the drilling take place, and it's looking quite exciting.

Speaker #2: 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 and a bit adds that to Nino at Santa Elena.

Speaker #2: They're just, you know, it's amazing those two war bodies, and we're just internally putting together a bunch of work on the best way to get into those war bodies.

Keith Neumeyer: And we're just internally, we're just putting together a bunch of work on the best way to get into those ore bodies, the best way to develop them, the quickest timelines 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 Majestic 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, you know, really the purest silver company that visits. And you know, you look at the numbers. You know, we're at 55% silver. Eclave catching up a little bit. They had a good quarter, 44% silver. After Silver Max with KUR, 34%. And Americans, you know, falling a little bit behind, but has increased a little bit as a result of the MAG transaction, 24%.

Speaker #2: The best way to develop them is the quickest timelines, getting that war into the mill and the timelines around all of that. So, we'll put that information out when we're ready to do that.

Speaker #2: First Majestic is doing very well. I am very excited about that—this project is making money, which is good. You will see on this slide that we remain the purest silver company in the business.

Speaker #2: And you know, if you look at the numbers, we're at 55% silver. EDCO is catching up a little bit; they had a good quarter.

Speaker #2: 44% silver. You know, after silver, next with Q4 is 34%. And Pan American, you know, is falling a little bit behind, but has increased a little bit as a result of the MAG transaction, 24%.

Speaker #2: 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, you know, remain 50% silver or higher and we've achieved that over the last couple of quarters.

Keith Neumeyer: 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 on into our cost structures and our production, you'll see we had a great first half of the year. We're on track to hit our guidance between 30 and 31 and 32 million silver equivalent ounces for the year. We're seeing Gatto continually deliver, which is great to see. It's been a great contributor to our portfolio. Sandemas is coming along nicely, which is good to see. You know, after some challenges in the last couple of quarters, it's been quite good. For Sandemas, the costs have creeped up a little bit, as you can see on the slide.

Speaker #2: So, moving along into our cost structures and our production, you'll see we had a great first half of the year. We're on track to hit our guidance.

Speaker #2: Between, you know, 30 and 31 and 32, a million silver equivalent ounces. For the year, we're seeing gattos continually deliver, which is great to see.

Speaker #2: It's been a great contributor to our portfolio. Sendimus is coming along nicely, which is good to see. After some challenges in the last couple of quarters, it's been quite good.

Speaker #2: For Sendimus, the 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 is, most of you probably know, who are listening.

Keith Neumeyer: 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 is mostly, you probably know where we're listing. It tends to be a fairly big cash outdraw. You know, that's when you've got union bonuses. That's when you've got cash payments as well. So there tends to be heavy spend at Q2 just in the Mexican mining sector. That's just kind of 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, well, this is, you know, information already that's gone out of the market, but you can see our guidance on costs. You know, we're within guidance, as you can tell. And we're quite within production guidance as well.

Speaker #2: It tends to be a fairly big cash outdraw, you know. That's when you've got union bonuses; that's when you've got cash payments as well.

Speaker #2: There tends to be heavy spending in Q2 just in the Mexican mining sector. That's just kind of normal, so that should revert over the next couple of quarters. We'll see.

Speaker #2: As things evolve, we'll just move along here. Our guidance for this is, you know, information already that's gone out to the market, but you can see our guidance on costs.

Speaker #2: We're within guidance, as you can tell. And we're quite within production guidance as well. So everything's working, you know, as scheduled, on time, and as expected.

Keith Neumeyer: So everything's working, you know, as scheduled and on time and as expected. So when it comes to capital, we had a pretty aggressive first half, you know, getting these exploration programs going and getting the development done. We did front-end a budget slightly, and that was just to get things really kicked off. We, you know, as a result of the strong production and revenues and some profits in Q4 and Q1, we did expand some of our code 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.

Speaker #2: So, when it comes to capital, we had a pretty aggressive first half, getting these exploration programs going and getting the development done.

Speaker #2: We did front end the budget, slightly. And that was just to get things really kicked off. We, you know, as a result of the strong production and revenues in and profits in Q4 and Q1, we did expand some of our projects and we did come out with a revised guidance and earlier in July, most of you probably have seen.

Speaker #2: And that is, that has translated into higher underground development costs and 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.

Speaker #2: So, it's great to be in a strong position to be able to increase our budgets and spend this money where it should be spent to grow the business over time. We're happy to be able to do that.

Keith Neumeyer: 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, you know, very, very strong cash flows. Record cash flows. It already used the word "record" again. I can't think of how many times I've used the word "record." I got to use it more. But record cash flows, you know, we're very excited about that. And you know, I go back to the treasury gain. 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.

Speaker #2: And on our cash flows, you can see by this slide, you know, very, very strong cash flows. Record cash flows that are used, or record, again, are you counting how many times I use the word "record"?

Speaker #2: I got to use it more. But record cash flows, you know, we're very excited about that. And, you know, I go back to the treasury, again, you know, the treasury is growing and that's what I look like or what I look at.

Speaker #2: You know, as a successful business, you don't have to go to the public markets to raise capital. You're actually generating cash, and that's a pretty good place to be.

Keith Neumeyer: You're actually generating cash, and that's a pretty good place to be. You know, talking about some of the things that we're doing on the CapEx side. I did, I should go back and just address a couple of CapEx issues. We are looking at getting the Santolena up to 3,500 tons a day. That's in process. We are working on getting Abadad and Saturninio developed, which I kind of touched on, but we're getting pretty advanced on that. And I would, you know, look for news on both of those projects. We have, there's some pretty exciting things going on there. And Gatto is getting it up to a consistent 4,000 tons 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 Licatana. We've bought our own fleet, and we're going to be doing sub-haulage.

Speaker #2: You know, talking about some of the things that we're doing on the CapEx side, I did—I should go back and just address a couple of CapEx issues.

Speaker #2: We are looking at getting the Santa Elena up to 3,500 tons a day. That's in process. We are working on getting the abit add in Santo Niño developed, which I kind of touched on, but we're getting pretty advanced on that.

Speaker #2: And I would, you know, look for news on both of those projects. We have some pretty exciting things going on there. And Ghattos is getting it up to a consistent 4,000 tons per day.

Speaker #2: We're there, but consistently keeping at those levels is one of our major goals. We're actually changing the haulage at Lincoln Tata. We've bought our own fleet, and we're going to be doing self-haulage.

Speaker #2: So we're going to see, 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.

Keith Neumeyer: So we're going to see, 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 you can see for yourself strong cash flows. Okay, we're going to go to our waterfall EBITDA slide. And this just gives you an idea of, you know, what our budget is compared to what actually occurred. You know, obviously, the depletions and amortization is a big number. You know, 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 cover this question?

Speaker #2: So, going back to the cash flow slide, we are going back and forth here a little bit, but you can see for yourself strong cash flows.

Speaker #2: Okay, we're going to go to our waterfall EBITDA slide. And this just gives you an idea of, you know, what our budget is compared to, you know, what actually occurred.

Speaker #2: You know, obviously, the depletion and amortization is a big number. You know, I should probably pass this comment because we do get questions on this.

Speaker #2: I think I should probably divert this to David. Why don't you just cover this question?

Speaker #4: Thank you, Keith. Hello, everyone. Just on slide seven here, we’ve got the waterfall that shows the difference between net earnings or what makes up the difference between net earnings and EBITDA.

David Suarez: Yeah. Thank you, Keith. Hello, everyone. Just on slide seven here, 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 can see there a large portion of that difference is really just the depletion, depreciation, and amortization. And about 44 million or so, 44.6, relates to Sara 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 hundred million dollars to a billion dollars. Obviously, that brings up the value and the depreciation as well.

Speaker #4: You can see there a large portion of that difference is really just depletion, depreciation, and amortization. About $44 million or so, $44.6 million, relates to Sarah Losgatos and really the PPA, the purchase price allocation bump that was done.

Speaker #4: When we had to allocate, you know, the $1 billion that we paid for the asset to the asset. So, you know, it went from a value of a few hundred million dollars to $1 billion.

Speaker #4: Obviously, that brings up the value and the depreciation as well. So, you know, we also had a strong production quarter across most of our sites.

David Suarez: 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 non-cash 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 in standby costs, which were about $3 million. And then we also had an income tax recovery impacting here as well, you know, mainly related to changes in the FX rate on our tax pools in Mexico. Anytime there's, you know, 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 $119.9 million.

Speaker #4: And that also contributed a little bit here as well. So really, that non-cash item is making up the big difference between net earnings and EBITDA.

Speaker #4: We had some financing costs, most of which were related to non-cash accretion. But we also had some interest in standby costs, which were about $3 million.

Speaker #4: And then we also had an income tax recovery impacting here as well, you know, mainly related to changes in the FX rate on our tax pools in Mexico.

Speaker #4: Anytime there's big changes from quarter to quarter in the Mexican peso versus the U.S. dollar, we get these, you know, fairly large adjustments on the tax side.

Speaker #4: So, ending EBITDA for the quarter was $119.9 million.

Speaker #2: Great. David, thanks. You can explain that way better than I could have. I'm glad you took that on.

Keith Neumeyer: David, thanks. You can explain that way better than I could. I'm glad you took that off.

Speaker #4: Thanks, Keith.

Speaker #2: Okay, so going to the next slide, slide eight. You know, just some notable comments on the quarter. You know, I already covered some of this stuff already, you know, during my previous verbiage.

David Suarez: Thanks, Keith.

Keith Neumeyer: Thanks. Okay. So going to the next slide. Slide eight. Just some notable comments on the quarter. You know, I already covered some of this stuff already, you know, during my previous verbiage, but you know, the bonuses, of course, are always June, and tax installments, of course, tend to be large at this time of year. We did have some energy disruptions. There were some weather events in June, and you know, water had to use extra diesel at Sandemas and so on. And there was also intervention costs at Los Gatos, which were one kind of one-time cost. But you can see those details in the MD&A. They're all there, you know, laid out. So if you want to see further details on, you know, the impacts, you know, please have a look.

Speaker #2: But you know, the bonuses, of course, are always in June, and tax installments, of course, tend to be large. At this time of year, we did have some energy disruptions.

Speaker #2: There were some weather events in June, and you know, water had to use extra diesel, Sendimus, and so on. Additionally, there were integration costs at Los Gatos, which were kind of one-time costs. However, you can see those details in the MD&A.

Speaker #2: They're all there, you know, laid out. So if you want to see further details on, you know, the impacts, please have a look.

Speaker #2: 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.

Keith Neumeyer: 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 on our ESG scores, which was 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, you know, really pay 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 you know, 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 Gatto's integration. You know, it's been extremely smooth.

Speaker #2: On our ESG scores, which is pretty impressive. You know, this is a big initiative that the company launched a couple of years ago, and our score just continually improves every year.

Speaker #2: I know many investors don't really pay 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.

Speaker #2: About these types of initiatives, you know, we do continually try to improve that side of our business. It's just something we take quite seriously, and we're quite proud of it.

Speaker #2: So, jumping to the next slide, slide nine: the Ghatto's integration. You know, it's been extremely smooth. It's got to be one of our smoothest integrations in the 23-year history of the company.

Keith Neumeyer: You know, it's got to be one of our smoothest integrations in the 23-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, you know, basically rebuild, you know, 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, you know, they already have a 10-year life of mine. So, you know, you don't need to spend that type of capital. As long as we replace reserves that our resources that we're mining on an annual basis, you know, that's really the job of the exploration team.

Speaker #2: You know, I guess that's probably due to the fact that it's a new mine. You know, it wasn't one of the old ancient mines we bought in the past.

Speaker #2: We've had to go in and, you know, basically rebuild and take time and money to do that. But in this case, there's no capital required.

Speaker #2: We're actually even able to reduce the exploration programs a little bit just because, you know, they already have a 10-year life of mine. So, you know, you don't need to spend that type of capital.

Speaker #2: As long as we replace reserves at our resources that we're mining on an annual basis, you know, that's really the job of the exploration team.

Speaker #2: And they do that successfully, and we expect that they'll continue to do that going forward. The areas like safety, security, environment, health, and legal, you know, everything's aligning.

Keith Neumeyer: And they do that successfully, and we expect that they'll continue to do that going forward. The, you know, areas like safety, security, environment, health, legal, you know, everything's aligning. We're actually just implemented SAP. You know, we've been using SAP within First Majestic for, well, geez, almost five years, I think. And getting that implemented at Gatto takes some time, and that was just launched last week. So it's really nice to see that. That's really going to give us an extra layer of controls over, you know, that that operation. It brings it into the whole supply chain and maintenance and and so on, matching all the guidelines and and policies and procedures within First Majestic. So we're happy to see that. Yeah. I'm not missing anything. I think I'm not missing anything. Okay. Let's move along here.

Speaker #2: We're actually just implemented SAP. You know, we've been using SAP within First Majestic for, well, jeez, almost five years, I think. Getting that implemented at Ghattos takes some time, and that was just launched last week.

Speaker #2: So it's really nice to see that. That's really going to give us an extra layer of controls over, you know, that operation that brings it into the whole supply chain and maintenance, and so on.

Speaker #2: Matching all the guidelines and then policies and procedures within First Majestic. So we're happy to see that. Am I missing anything? I think I'm missing something.

Speaker #2: That's pretty much it. Okay, let's move along here. So our financial strength, you know, it's hard to avoid talking about, you know, having 510 million dollars in the bank.

Keith Neumeyer: So our financial strength, you know, it's hard to avoid talking about, you know, having $510 million in the bank. That's not a bad place to be. So, you know, that that continually grows, or 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, you know, 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 just so the listeners know that we've actually done a PowerPoint presentation.

Speaker #2: Not a bad place to be. So, you know, that continually grows, or hopefully it'll continually grow. There are no plans on spending that money anytime soon.

Speaker #2: We're going to continue with our current budget. Our 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.

Speaker #2: We are looking at some interesting investments in 2026. But, you know, we'll discuss that at a later date. You know, when you get closer to January, when we put our guidance out for 2026.

Speaker #2: 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.

Speaker #2: Usually, we do these fairly informal type discussions where we try to formalize it. That's why we decided to create some slides, which we've shown you today.

Keith Neumeyer: Usually, we do these formal type discussions, but we tried 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.

Speaker #2: So, let’s open up the call for questions.

Speaker #1: Thank you, Keith. We'll 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.

Conference Operator: Thank you, Keith. We'll now proceed to the question and answer session. Once again, to join the question queue, you may press *1 on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press *2. 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.

Speaker #1: You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two.

Speaker #1: 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.

Speaker #1: Our first question is from Wayne Lam with TD Securities. Please go ahead.

Speaker #5: Hey, thanks, guys. Morning, everyone. I guess the first question is: it's really nice to see the smooth integration of Ghattos and, you know, really the operational improvements being made across the entire portfolio.

Wayne Lam: Hey, thanks, guys. Morning everyone. I guess first question, really nice to see the smooth integration of Gatto and, you know, really the operational improvements being made across the entire portfolio. Just wondering if you could 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?

Speaker #5: Just wondering if you could 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?

Speaker #4: Sure. Well, thanks,

Keith Neumeyer: Sure. Well, thanks, Wayne, for dialing in and listening today, and I appreciate your question. So I'm going to pass your question on to our Chief Operating Officer, Steve Holmes.

Speaker #2: Wayne, thank you for dialing in and listening today. I appreciate your question. So, I'm going to pass your question on to our Chief Operating Officer, Steve Holmes.

Speaker #6: Right. So, yeah, thanks for the question. And Sarah Losgatos, 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.

Steve Holmes: Right. So yeah, thanks for the question. And at Sara Los 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 Sara Los 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.

Speaker #6: So, what we're doing is accelerating the mining rates and the ramp development downward at Sarah Los Gatos to basically provide a more continuous supply of ore matched with the plant's capacity.

Speaker #6: 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.

Speaker #6: So, it's really about making sure the mine can support the capacity of the plant. It's a matter of accelerating development, particularly in the ramp systems in the northwest zone, central zone, and even in the southeast deep zone, which is developing now. This is a big part of the future of the ramp.

Steve Holmes: And it's a matter of accelerating development, particularly in the ramp systems in the northwest zone, central zone, and even in the southeast deep zone, which is developing now, which is a big part of the future of the ramp.

Speaker #2: Wayne, does that answer your question?

Keith Neumeyer: Wayne, does that answer your question?

Speaker #5: Oh, yeah. I was also wondering, so that ties in with the synergies portion?

Wayne Lam: Oh, yeah. I was also wondering, so that ties in with the synergies portion?

Speaker #6: Right. So on the synergies, we've identified many synergies, some of which come from Gattos with two First Majestic, and many of which come from First Majestic to Sarah Losgatos.

Steve Holmes: Right. So on the synergies, we've identified many synergies, some of which come from Gatos with to First Majestic, and many of which come from First Majestic to Sara Los Gatos. Some examples, Wayne, would be, for example, we've instituted as part of First Majestic's operating practices a really strong reconciliation process within Sara 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 overbreak and reduce dilution in the deposit. So we're working on that. On the other side, we noted that Sara Los Gatos has a robust business improvement process that's based on lean principles, 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 operations.

Speaker #6: Some examples, Wayne, would be, for example, we've instituted, as part of First Majestic's operating practices, a really strong reconciliation process within San Luis Gonzaga that allows us to really measure what we actually achieve versus our plan. We've seen some really significant opportunities to improve over-break and reduce dilution in the deposit.

Speaker #6: So, we’re working on that. On the other side, we noted that Sarah Losgatos has a robust business improvement process that’s based on lean principles, some of which we were applying within First Majestic.

Speaker #6: But they also have some really good processes that we are applying now through the First Majestic operations. So these synergies are two-way streets where we're drawing on the best that we can see in Ghatto's and we're providing the best processes and technology that come from First Majestic into Ghatto's.

Steve Holmes: So these synergies are two-way streets where 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 Majestic into Gatos. So those are just two examples.

Speaker #6: So, those are just two examples.

Speaker #2: David David mentioned the new contracts that were renegotiating and exploration.

Keith Neumeyer: You mentioned the new contracts that we're renegotiating on the exploration.

Speaker #6: Yeah, so you know, Manni just 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 Sarah Los Gatos, and we have a major contractor that does most of our work in Mexico that we're quite comfortable with, which gives us very good rates on exploration work.

Steve Holmes: Yeah. So, you know, Manny just brought up a point that we have a lot of different synergies. One of them, for example, is there are three different exploration contractors doing exploration work at Sara Los Gatos. 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. And we've integrated that contractor now into Sara 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 Sara Los Gatos to give Sara Los Gatos just lower costs overall. Bulk oils is a good example.

Speaker #6: And we've integrated that contractor now into Sarah Losgatos 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.

Speaker #6: And we've been able to utilize some of our major suppliers to integrate into Sarah Losgatos to give Sarah Losgatos just lower costs overall. Bulk oils is a good example.

Speaker #6: Some of the ground control; supply was another good example as well.

Steve Holmes: Some of the ground control supply was another good example as well.

Speaker #5: 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.

Wayne Lam: Okay, great. Yeah, it sounds like quite a few opportunities there. Maybe at Santolena, 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 and advancement of some of those new veins. Maybe some color on when Ermitaño gets mined out. When does Santo Niño come in? Sounds like that's pretty advanced. And then does Navadad give you that bigger step change in tonnage and how far out would that be?

Speaker #5: Just wondering if you could provide a bit more detail on the sequencing and advancement of some of those new veins. Maybe some color on when Ermitano gets mined out, when does Santo Niño come in?

Speaker #5: 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?

Speaker #2: Yeah, Wayne, some of that information is not yet public. We’ve put out news around Navidad and then Santo Niño in the winter.

Keith Neumeyer: Yeah, Wayne, some of that information is not yet public. And you know, we've put out news around Navadad and then Saturninio in the winter. You know, these are three major discoveries. And you know, I've mentioned to people that our geological team is suggesting that these discoveries are larger than Ermitaño. Time will tell. Our maiden discovery, or our maiden resource, was released in our AIF earlier in the year, and it was 30 million ounces at Navadad, which included, I think, did that include winter as well?

Speaker #2: You know, these are, you know, three major discoveries. And, you know, I've mentioned to people that, you know, our geological team always suggests that these discoveries are larger than Ermitano.

Speaker #2: Time will tell. Our maiden discovery or our maiden resource was released in our AIF earlier in the year, and it was 30 million ounces at Navidad. Did that include Winter as well?

Speaker #2: Or just Navidad?

Speaker #6: It did include a portion of winter.

Steve Holmes: It did include a portion of winter.

Speaker #2: Yeah, okay. Yeah, a

Keith Neumeyer: Yeah, okay. A portion of winter and then Navadad. But the drilling is continuing. And then we discovered Saturninio, 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 it, where to build the attics, where to build the tunnels. Once we have all that done, which hopefully will be by the end of the year, maybe Q1, we will put out some guidance on that. So you know, we'll be able to answer your question at that time.

Speaker #6: A portion of winter.

Speaker #2: Portion of winter and then Navidad. But drilling is continuing. And then we discovered Santo Niño, which we have the resource around yet. Our whole focus is, you know, how quickly can we get these ore bodies into the mill?

Speaker #2: 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 it.

Speaker #2: We're to build the attics. We're to build the tunnels. Once we have all that done, which hopefully will be by, you know, the end of the year, maybe Q1, we will put out some guidance on that.

Speaker #2: So, you know, we'll be able to answer your question at that time.

Speaker #5: Okay, perfect. Yeah, sounds like a lot to come, and I'm excited to hear about those new opportunities. Thanks for taking my questions.

Wayne Lam: Okay, perfect. Yeah, sounds like a lot to come and excited to hear about those new opportunities. Thanks for taking my questions.

Speaker #2: Yeah, thanks, Wayne.

Keith Neumeyer: Yeah, thanks, Wayne.

Speaker #1: Once again, if you have a question, please press star, then one. Meanwhile, I'll pass the floor over to Mr. Darrell Ray and Best Your Relations at First Majestic Silver to take us through questions submitted from the webcast.

Conference Operator: Once again, if you have a question, please press *1. 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.

Speaker #7: Hi, so, okay, yeah, we'll take a couple from the webcast. Guilin, this one's likely directed towards David. David, what is your total, or First Majestic, what is your total debt outstanding?

Daryl Ray: Hi. So, okay, yeah, we'll take a couple from the webcast. Gaylene, this one's likely directed towards David. David, what is your total, or First Majestic, what is your total debt outstanding? What was paid in the last quarter in interest, and what are you expecting to pay in 2025 or 2026?

Speaker #7: What was paid in the last quarter in interest, and what are you expecting to pay in 2025 or 2026?

Speaker #4: Yeah, just to answer that question, what was paid in the last quarter is about $3 million. It's included in the financing bucket of the EBIT to EBITDA slide.

David Suarez: Yeah, just to answer that question, what was paid in the last quarter is about $3 million. It's included in the financing bucket of the EBITDA slide. It's part of that $7 or so million dollars. We're not looking at changing our or increasing our debt levels at First Majestic, even though our balance sheet is very strong. And if we had a use for that debt or a project, then we could look at it. But as Keith said, right now, our cash balance remains super strong and it's increasing. And we've got, you know, internal projects lining up for which we'll probably disclose once the further develop 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 at the right time, you know, we'll see what we do with that.

Speaker #4: It's part of that seven or so million dollars. We're not looking at changing or increasing our debt levels at First Majestic, even though our balance sheet is very strong.

Speaker #4: And if we had a use for that debt or a project, then we could look at it. But as Keith said, right now our cash balance remains super strong and it's increasing.

Speaker #4: And we've got, you know, prod 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.

Speaker #4: So for now, you know, we've got our converts outstanding. We're happy with that level of debt. And at the right time, you know, we'll see what we do with that.

Speaker #2: 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.

Keith Neumeyer: I just have 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 million is based for the majority of the company's debt, which is convertible.

Speaker #2: They're convertible into equity; therefore, I call it equity. But that $230 million is based on the majority of the company's debt, which is convertible.

Speaker #4: Super low carrying costs on those. And also, you know, 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.

David Suarez: Super low carrying costs on those. And also, you know, if we were to think about, you know, renewing that or what other options we have, you know, the rates right now are super attractive as well.

Speaker #2: Yeah, and the rate on that 230 million, for those who aren't aware, is zero point three seven five percent. The lowest coupon done in the history of mining companies.

Keith Neumeyer: Yeah, and the rate on that 230 million, for those who aren't aware, is 0.375%. The lowest coupon done in the history of mining companies. It's not a lot lower. Anything else?

Speaker #2: It's not one lower. Anything else?

Speaker #7: Okay, yeah. And another question, probably for you, Keith: Is First Mint up to full capacity? And if not, when is this likely to happen?

Daryl Ray: Okay, yeah. And another question, probably for you, Keith, is First Mint up to full capacity? And if not, when is this likely to happen?

Speaker #2: No, it's not. Full capacity is measured by man hours and shifts. The equipment could produce more, and it's currently producing, but it's limited by five man hours. We could put a second shift on.

Keith Neumeyer: No, it's not. When full capacity is measured by basically man hours and shifts. The equipment could produce more if it's currently producing, but it's limited by 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 on the budget, but the goal is to get up to 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 startup business. It's brand new. You know, there's competition out there that we're dealing with. And then, but you know, it's a profit center. We're making money, and we're trying to grow it.

Speaker #2: 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 not the budget, but the goal is to get up to 10% of the company's production through the Mint.

Speaker #2: We're currently just shy of 6%. So it's not too bad. You know, after one year of production, this is a startup business. It's brand new.

Speaker #2: You know, there's competition out there that we're dealing with, but you know, it's a profit center. We're making money, and we're trying to grow it.

Speaker #2: And as I said, we're trying to get it up to 10% of the global production of the company.

Keith Neumeyer: And as I said, we're trying to get it up to 10% of the production of the global production of the company.

Speaker #7: Okay, that's great. Guilin, any more on your end?

Daryl Ray: Okay, that's great. Gaylene, any more on your end?

Speaker #1: We have no further analysts in the queue.

Conference Operator: We have no further analysts in the queue.

Speaker #7: Okay, and that's the final question from the webcast.

Daryl Ray: Okay, that's the final question from the webcast.

Speaker #1: All right, then I'd like to hand the call back over to Keith for any closing remarks.

Conference Operator: All right, then I'd like to hand the call back over to Keith for any closing remarks.

Speaker #2: Well, thanks everyone for joining in today. I'm sure there will be many people listening to this online after the live presentation.

Keith Neumeyer: Well, thanks, everyone, for joining in today. And I'm sure there'll be many people that'll be listening to this online, you know, 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 info@firstmajestic.com or just dial us in and ask for either Dale or Daryl or Joel. They'll be happy to answer any of your further questions. Thanks again, and have a great day.

Speaker #2: I would ask that you do look at the news release, read through it. If you have further questions, please contact the company. You can reach us at info@firstmajestic.com or just dial in and ask for either Dale, Darrell, or Joel.

Speaker #2: They'll be happy to answer any of your further questions. Thanks again. Have a great day.

Conference 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.