First Majestic Doubles Dividend, Eyes Growth to 50M Ounces | Keith Neumeyer

Key Concepts

• Silver Price Forecast: Prediction of silver reaching and exceeding $100 per ounce, with current prices fluctuating around $80-$85.
• Leverage in Silver Stocks: The amplified impact of silver price increases on the performance of silver mining stocks.
• Institutional Investment: The importance of attracting large pension and mutual funds to the silver and gold mining sector.
• Capital Discipline & Free Cash Flow: Mining companies’ focus on efficient capital allocation and the resulting increase in free cash flow.
• Mexico Operations & Security: Challenges and strategies for operating mining operations in Mexico amidst security concerns.
• Succession Planning: The process of preparing for leadership transitions within First Majestic Silver.
• Strategic Metal vs. Critical Metal: The evolving recognition of silver’s importance in modern technologies and its designation as a critical/strategic resource.
• Consolidation in Mining Sector: Anticipated trend of shrinking number of mining companies through mergers and acquisitions.
• Convertible Notes: A financing tool used by First Majestic to raise capital at favorable terms.

First Majestic Silver: Insights from Kitco Mining Conference Coverage

I. Silver Market Dynamics & Price Projections

Keith Nummire, CEO of First Majestic Silver, expressed both excitement and caution regarding the recent surge in silver prices. He noted silver briefly exceeded $100 per ounce at the end of 2025/beginning of 2026, before correcting to around $80-$85. Nummire, who first predicted the triple-digit silver price in 2012, believes a return to those levels is likely sooner than initially anticipated, based on current chart patterns. He described the initial run-up as “parabolic” and “unhealthy,” but views the subsequent correction as a normal market function.

He highlighted the historical underperformance of silver equities relative to the silver price, attributing this to disbelief among large institutional funds. Despite recent gains in stock prices, Nummire believes they still have significant room to grow, potentially reaching levels one-third higher than those seen during the 2011 peak. He confidently predicts gold reaching $5,000 and silver returning to triple digits “fairly shortly.”

II. Equity Performance & Institutional Investment

Nummire observed that while share prices have largely caught up to the silver price after the correction, they still underperform historically. He attributes this to skepticism from large funds, evidenced by initial meetings at the conference. He believes these institutions are underestimating the potential of both gold and silver. He emphasized the need for increased investment from pension funds and mutual funds to unlock the full potential of the mining sector, citing the outstanding cash flows being generated.

First Majestic reported $250 million in free cash flow in Q4 and holds $1 billion in cash reserves, with approximately $1.2 billion in revenue for the past year. He contrasted this with historical data, noting that current equity valuations are about one-third of what they were in 2011/2016, despite improved share price performance. The concept of “leverage” is key – the amplified impact of silver price increases on mining company bottom lines.

III. Operational Planning & Volatility Management

Nummire addressed the challenges posed by silver price volatility, stating that it doesn’t significantly affect First Majestic’s business planning. The company operates with conservative budgets based on lower metal prices, a strategy honed over 40 years of experience in the mining sector. While acknowledging that sustained high prices would necessitate a strategy shift, he noted that exploration and development budgets have already been increased.

Specifically, the exploration budget is now $50 million, and the development budget is around $80 million. Plant expansions are underway at Los Santos (to 4,000 tons/day) and Santa Elena (to 3,500 tons/day). The company is generating more cash than it is spending, allowing for strategic investments. The company is currently budgeting based on $3,300 gold and $54 silver.

IV. Capital Allocation & Shareholder Returns

First Majestic is experiencing a “new phenomenon” of significant cash generation. Nummire expressed a desire to “hoard” cash, but also acknowledged the importance of shareholder returns. The company has doubled its dividend, commencing January 1st, 2026, and maintains a share buyback program, though it hasn’t been actively utilized recently due to strong share price performance. M&A opportunities are also being actively explored.

Nummire emphasized First Majestic’s position as the “purest silver company” in its size category, with 60% of revenue derived from silver. He highlighted the company’s strong track record of capital allocation over the past 20 years.

V. Financial Transactions & Market Trends

Nummire discussed two significant financial transactions: a $350 million convertible note offering at a record-low 0.125% coupon rate, and the $4.3 billion stream by Wheaton Precious Metals on BHP’s Antina project. He believes the Wheaton deal underscores the critical role of silver in financing large-scale copper development projects.

He noted a trend of capital discipline within the mining sector, leading to increased free cash flow and cash balances. He also observed a reluctance among mining companies to make significant investments, mirroring the skepticism of institutional investors. He predicts a substantial consolidation of the mining sector over the next 5 years, with a reduction in the number of companies, leaving a smaller group of leaders.

VI. Mexico Operations & Security Concerns

Nummire addressed the escalating security concerns in Mexico, particularly following recent violent incidents involving other mining companies. He emphasized First Majestic’s 23 years of experience operating in Mexico and its strong relationships with government regulators at all levels. The company has a dedicated crisis committee and maintains close communication with the government to ensure the safety of its personnel. He stated that the company prioritizes the safety of its people and implements mitigation plans to address security risks.

VII. Succession Planning & Future Vision

Nummire discussed the recent promotion of Manny Alaji to President and Chief Corporate Development Officer as part of a broader succession planning process. He acknowledged the increasing complexity of the business and the need for a strong leadership team. He expressed confidence in Alaji’s ability to contribute to the company’s growth.

First Majestic’s goal is to reach 50 million ounces of silver production. The company is focused on internal growth through exploration and expansion of its existing assets – Santa Elena, San Martin, and La Encantada – which collectively represent a vast land package. The company’s discovery cost per ounce is currently $0.32, significantly lower than the cost of acquiring ounces through M&A.

Conclusion:

The interview paints a picture of First Majestic Silver as a well-positioned company poised to benefit from a potentially significant upswing in the silver market. The company’s strong financial position, conservative operational planning, and strategic focus on silver production, coupled with a proactive approach to security and succession planning, suggest a promising outlook for the future. The key takeaway is the potential for substantial growth in both the silver price and the value of silver mining equities, particularly for companies like First Majestic that are well-managed and strategically focused.