First Majestic Silver 2026 Q2 Earnings Call

Keith, please go ahead. Well, thank you, and welcome everyone to our Q2 conference call to discuss today's or this morning's news release.

Hopefully, you've all read it by now. Before I get into introducing Samir, I'd like to introduce the people in the room with me here today. Manuel Covarrubias, our President and Chief Corporate Development Officer. We have Dave Howe, our Chief Operating Officer, who's new to the company. He's joined us about three months ago. Samir Patel, General Counsel, Corporate Secretary, Darrell Rae, and Joel Faltinsky from Investor Relations, Darren Fernandez from our financial leadership team, and our new CFO, Neil Beaumont, who's just recently joined us a couple of weeks ago. We did put a news release out on that and his bio's there.

He was with Canada Pension Plan and KPMG and BHP and has added a lot of depth to the finance role, which we're quite pleased about. I'm just going to pass this on to Samir for comments.

Thanks, Keith. Before we begin today's call, I would like to remind you that we will be referring to certain non-IFRS measures in 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 statements regarding future estimates, 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 early 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. 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.

Thanks, Samir. We have a presentation showing on the screen. Some of you hopefully can see it. You've got full control over it. We'll go through it slide by slide on our end. I won't read the entire slides as I'm hoping most people on the call have already gone through our news release, another strong quarter for us. Big revenue number, $416 million, up 53% year-over-year, 3.8 million ounces of silver produced in the quarter, bringing our H1 production numbers up to 7.3 million ounces, which is basically 50% of our revised guidance that we put out in July, which is obviously, as you probably know, about a 10% increase from our guidance that we put out in January. We're looking forward to a strong H2 going forward. EBITDA of $252 million, up 110%.

Strong cash flow of $0.50 a share. Exploration is continuing at a robust pace. We did 94,000 meters across the portfolio in Q2. In the full first six months of the year, we did 160,000 meters of drilling. We're very pleased to see the permits come in from Mexico on our Santo Niño and Navidad portals. Those two discoveries have been well laid out to the public in the form of several news releases over the last couple of years. These two portals, we are actually projecting them to come into development in about 12 or 14 months. We've now started development at Santo Niño in the last few weeks. We're looking forward to doing first blasting there in the next week or so.

Santo Niño is over a year ahead of schedule, which will hopefully bring ore into the mill towards the end of 2027 from that, and slightly later, probably about an 18-month after that, we'll probably see Navidad starting to add ore to the mill at Santa Elena. Those are two very exciting things that are developing at Santa Elena. Looking for extended mine life there as a result of these two new discoveries that were discovered about two years ago now. We did revise our guidance, as I did say already. We did declare our dividend as well. We did a 270% increase in our dividend year-over-year, which is obviously nice for shareholders. We did do substantial share buybacks in the quarter. We bought 1.2 million shares during the period. That program was there for us to use at any time.

Whether or not we do that going forward, I expect that we likely will, but look for further news on that. We ended with a strong treasury at the end of June 30th. We had $1.25 billion in the treasury, which is obviously a pretty nice place to be. I'm going to jump to the next slide. That was all slide three. On slide four, we're looking at the all-in sustaining costs. As everyone knows who's listening to this webinar, our analysts are quite familiar with this. There is inflation, of course, as a result of quite large bonuses going to the workforce, which is quite nice for them. You probably imagine how happy the workforce is these days because their bonuses are tied to silver prices. It's really paying off for the communities in the areas that we're active in.

That's really nice to see from our perspective. We're keeping our costs in line. As you can see on that graph there, our cost per ton are 107. Pretty well compared to the last four years. We are keeping our costs in line on a daily basis as a result of the prominent efforts that are currently underway. Jumping to the next slide, operating cash flows, obviously quite good. You see the Q2 number there of $248 million, slightly down from Q1, that's all price driven. We all know what happens in the gold and silver prices, we are affected by those prices, we're completely unhedged at all times, our shareholders virtually demand that we remain unhedged, which I'm a firm believer of that.

We still have the strong cash flows and still adding cash in our treasury, which is obviously very nice to see. Free cash flow of a strong $195 million as well in the quarter. Moving along. At Los Gatos, we're working to continually reach the 4,000 tons a day. We actually exceeded that number. As you can see, we hit a record of 4,070 tons per day in June, which is great. We're on track to have continuous throughput at Los Gatos at 4,000 tons a day, which is important for that operation. Santa Elena continues to perform extremely well. We now have our throughput where we are getting close to 3,500 tons a day. We expect to have daily throughput at 3,500 tons a day throughout H2. Again, this permits the Santo Niño and Navidad is key for that asset going forward.

San Dimas had a pretty good quarter. There was some labor disruptions as quite common at that mine, as most of our shareholders are aware. Nevertheless, the union is getting paid a lot of money these days, I can tell you, they're quite happy and they're working hard, some of the development rates that we're seeing out of the workforce there are quite good compared to the last couple of years. La Encantada, we had our own fleet now of trucks doing our own ore transport to the mill. That's the changeover from what we did over the last several years. We bought our own fleet, it's really paying off and adding to the throughput, we're starting to hit record throughput levels at La Encantada as we speak, which is really nice to see for that operation.

Both La Encantada and Santa Elena are performing above budget, which is quite nice to see. Jumping to the next slide. Jerritt Canyon, we continually get a bunch of questions on Jerritt. We're pretty excited about it. At current gold prices, it's going to be a big cash flow generator for us. We have initiated underground development and rehabilitation. Drilling is continuing. I don't have the number in front of me, we have substantial meters of drilling in the quarter, and we'll continue to do that to prove up the mine plan and get ready for mining next year. A variety of consultants have been hired to initiate production there. We're on track. We're within budget. A bunch of the key equipment has now been ordered. There's a couple of components that are still being worked on to get orders in the system.