First Majestic Silver (AG) Q3 2026 earnings review
First Majestic profit rises on silver prices, but cash shrinks
First Majestic Silver, which operates four silver and gold mines in Mexico, grew profit from a year ago on higher metal prices, but operational setbacks and tax bills hit its third quarter. Revenue rose 38% from a year ago as the miner sold down held-back silver inventory, yet sales and mine profit fell from the second quarter. A 12-day labour dispute at San Dimas and a ramp rockfall at Los Gatos raised costs, while $74 million in tax payments and $89 million in cash capital spending caused its cash pile to shrink.
| Revenue | $394.1M +38.3% from a year ago |
|---|---|
| Mine operating margin | 43.2% 34.8% a year ago; 53.8% last quarter |
| Free cash flow | $12.4M -77.6% from a year ago by our math |
| Jerritt Canyon Q3 capital spending | $41.9M above the ~$32.6M pace implied by the annual plan |
⚖️ Verdict: 🔴 Bearish
The story got worse because operational disruptions and cash drains interrupted the company's windfall from high silver prices. San Dimas mine profit fell by more than two-thirds from the second quarter due to the strike, and unrestricted cash declined for the first time this year as Mexican tax payments and Jerritt Canyon restart spending ramped up. On the positive side, third-quarter spending at Jerritt Canyon beat the average pace implied by the annual budget, keeping the late-2027 gold restart moving forward.
The question now is whether the third-quarter cost rise and San Dimas strike were one-off setbacks or the start of deeper margin pressure whenever silver prices cool. Either the Mexican mines return to smooth throughput and cash generation in the fourth quarter, or ongoing labour unrest and restart bills keep eating into the cash reserve. Fourth-quarter San Dimas earnings and the 2027 Jerritt Canyon budget in January will settle it.
🐂 Bull Case
Higher Metal Prices Lifted Mine Margins From Last Year
First Majestic mines silver and gold in Mexico, so higher metal prices flow straight into its profit margins. Revenue rose 38.3% from a year ago to $394.1 million, and mine operating margin expanded by 8.4 percentage points to 43.2%.
- Cost of sales (the direct cost of running the mines): 42.4% of revenue, down 3.6 percentage points from a year ago
- Depletion, depreciation and amortization (the non-cash charge for exhausting ore and equipment): 14.4% of revenue, down 4.8 percentage points
- La Encantada mine operating earnings: $32.3 million, up from $0.1 million a year ago
- Santa Elena mine operating earnings: $56.8 million, up 48.1% from a year ago
That margin gain happened because silver revenue jumped 54.1% from a year ago while production costs grew only 14.4%. However, mine operating margin dropped 10.6 percentage points from the second quarter because workers' participation costs and inventory charges rose.
What to watch: the separate third-quarter management discussion and analysis report. It will show whether all-in sustaining cost per ounce stayed under control as silver prices cooled from the first half.
First Majestic Sold Down Its Held-Back Silver Inventory
In the second quarter, chief executive Keith Neumeyer held back silver bullion from sale to avoid selling during a price dip, pushing finished goods inventory up to $15.4 million at cost. He said the company would sell down that stockpile in the third quarter.
The silver miner followed through on that plan. Finished goods inventory dropped by 53.5% from last quarter to $7.1 million at the end of September, which created a $5.5 million expense charge in cost of sales as those stored ounces were sold.
Clearing the backlog matters because it turned stored metal into revenue this quarter, but that boost will not repeat. Meanwhile, silver coins and bullion held at First Mint, its Nevada minting facility, stayed elevated at $17.8 million.
What to watch: finished goods and bullion inventory in the fourth-quarter report. A flat balance around $7 million would show the company is selling mine output as it produces it rather than speculating on silver prices.
Jerritt Canyon Restart Spending Accelerated on Schedule
First Majestic suspended its Jerritt Canyon gold mine in Nevada in 2023, then "commenced a restart plan for the Jerritt Canyon Gold Mine" in April 2026 with a $75 million budget for the year. Because first-half spending was only $9.8 million, the company needed a major second-half ramp-up to stay on track for its third-quarter 2027 production target.
Capital spending at Jerritt Canyon jumped to $41.9 million in the third quarter, up from $8.3 million in the second quarter. That beat the $32.6 million quarterly average implied by the full-year budget, by our math, and lifted nine-month spending to $51.6 million.
The surge in property, plant and equipment additions shows underground rehabilitation and plant work are moving forward, while holding costs for the suspended site ran at $5.1 million for the quarter.
What to watch: the 2027 capital budget announcement in January 2027. That disclosure will show the remaining cash bill required before Jerritt Canyon pours its first gold in late 2027.
🐻 Bear Case
A 12-Day Strike and a Rockfall Cut Mine Profit
Management had called for strong second-half operations led by higher throughput at Los Gatos, its 70%-owned silver mine in Chihuahua, and steady output across Mexico. Instead, physical disruptions hit two of its three largest mines during the third quarter.
First Majestic disclosed "elevated maintenance costs associated with a rockfall on the main ramp, and unplanned equipment maintenance at Los Gatos, along with an ongoing labour dispute which impacted operations for 12 days and reduced throughput of fresh ore in the quarter at San Dimas".
Because of the strike, San Dimas revenue fell 27.7% from the second quarter to $75.7 million, and its mine operating earnings dropped 71.2% to $15.0 million. Total company cost of sales rose 16.6% from the second quarter even as revenue fell 5.1%, proving that labour unrest in Mexico and underground bottlenecks can quickly erase the benefit of high silver prices.
What to watch: San Dimas revenue and cost of sales in the fourth quarter. Since the footnotes describe the labour dispute as ongoing, another weak quarter at San Dimas would threaten the full-year silver production outlook.
Tax Payments and Capital Spending Drained the Cash Pile
Building a large cash reserve has been First Majestic's primary goal so it can fund the Jerritt Canyon restart and a potential Mexican tax settlement while still growing through high silver prices. In the third quarter, that cash build stopped and reversed as tax bills and capital spending came due.
- Unrestricted cash and equivalents: $1,070.8 million, down $22.1 million from the second quarter
- Free cash flow (operating cash flow minus cash capital spending): $12.4 million, down 77.6% from a year ago by our math
- Cash income taxes paid: $73.7 million, up from $12.0 million a year ago
- Restricted cash frozen by the Mexican tax authority: $142.1 million, up from $124.1 million at year-end
In the tax dispute, "the SAT froze two PEM bank accounts as security for certain tax reassessments which are being disputed", trapping more value-added tax refunds. At the same time, First Majestic paid $19.3 million in dividends to its Los Gatos joint-venture partner, leaving little cash after capital spending.
What to watch: year-end restricted cash and any settlement announcement with the Mexican tax authority. A cash settlement would immediately reduce the $1.07 billion unrestricted cash balance.
San Martin Sale Faces Closing and Payment Uncertainty
First Majestic has been selling its suspended Mexican mines to clean up its portfolio, agreeing in July 2026 to sell the San Martin silver mine to Flextronics, a private Mexican company, for up to $90 million. However, only $2.5 million of that price is payable at closing, with $87.5 million pushed into future payments.
In the third-quarter footnotes, the company concluded that the San Martin deal cannot even be classified as held for sale on the balance sheet "given the uncertainty around satisfying all closing conditions within one year". Those conditions include Mexican antitrust approval and the buyer arranging security for its promissory notes.
This delay matters because First Majestic continues to pay care-and-maintenance holding costs at San Martin, and even if the deal closes, collecting $87.5 million over time from a private buyer carries credit risk.
What to watch: Mexican antitrust approval and promissory note security disclosures in the fourth-quarter report. Reclassifying San Martin as held for sale would show the buyer has secured backing for the $87.5 million obligation.
Risks This Quarter Didn't Answer
Because the supplied materials contain only the unaudited interim financial statements, several standing operational and cost questions got no reading this quarter.
- Total silver and gold ounces produced: not in the financial statements; the separate production release or management discussion and analysis will show whether output met the 3.65 million ounce quarterly pace implied by the full-year plan.
- All-in sustaining cost per ounce: not in the financial statements; the management discussion and analysis will show whether unit costs eased from $25.68 per ounce in the second quarter.
- Santo Nino first blast and Los Gatos technical report: not mentioned in the footnotes; management had targeted August for the first blast at Santo Nino and late 2026 for the Los Gatos resource update.
💲 Other KPIs
Coin and bullion revenue at First Mint, the company's Nevada minting facility and Canadian store, dropped 85.8% from a year ago and 58.0% from the second quarter. The unit sold 22,476 silver ounces at an average price of $70.05 per ounce, down from 266,583 ounces at $41.68 a year ago.
Diluted shares rose 0.9% from a year ago and fell 0.8% from the second quarter. First Majestic spent $1.5 million on share buybacks in the third quarter, down from $22.7 million in the first half, as it conserved cash for capital spending and taxes.
Current income taxes payable on the balance sheet rose by $54.8 million from year-end 2025 to $294.2 million, even after the miner paid $216.0 million in cash taxes during the first nine months of 2026. Higher mine profits in Mexico drove current tax expense to $88.8 million in the quarter.
🔮 Guidance
Unchanged. The financial statements confirm the Jerritt Canyon restart plan is underway following the $75 million annual budget set earlier this year. With $51.6 million spent across the first nine months, by our math the plan leaves $23.4 million for the fourth quarter, down from $41.9 million in the third quarter.
❓ Key Questions
Is the San Dimas labour dispute resolved?
Footnote 7 describes the San Dimas labour dispute as ongoing and notes it halted fresh ore throughput for 12 days in the third quarter. Investors need to know if work stoppages continued into the fourth quarter and how many silver ounces were lost.
What were Q3 silver production and all-in sustaining costs?
The interim financial statements do not include the operational table showing silver ounces produced or all-in sustaining cost per ounce. Those figures are needed to check whether output stayed on pace for the ~14.6 million ounce annual target and whether unit costs eased.
Why did First Mint bullion sales drop to 22,476 ounces?
First Mint sold only 22,476 silver ounces in the third quarter, down from 173,409 ounces in the first quarter, while coin and bullion inventory stayed high at $17.8 million. Management should explain whether retail demand dried up or if the mint held back inventory again.
What is the status of the Mexican tax settlement talks?
Chief executive Keith Neumeyer previously pointed to a potential tax settlement by year-end, while frozen bank accounts rose to $142.1 million this quarter. Investors need to know the expected cash cost of any settlement and whether talks are still progressing.