First Majestic Silver achieves record Q3 results with 3.9 million ounces produced and strong cash flow despite persistent tax issue discussions

OPERATOR - (00:03:48)

Thank you for standing by. This is the conference operator. Welcome to the First Majestic Silver 2025 Q3 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 Star then one 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 your screen. Should you need assistance during the conference call, you may signal 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, First Majestic Silver. Keith, please go ahead.

Keith Neumeyer - President and Chief Executive Officer - (00:04:38)

Okay, well, thanks operator. And welcome everyone that's dialed in today. And we'll likely be listening to this recorded over the next few hours or next few days. But what turned out to be what we thought was going to be a fantastic day for us putting out record Q3 numbers. I think we used the word record 18 times in our news release. Yet obviously the focus today is on this tax issue that came up or has been there for years, which I'll address a little bit. But you know, as the market was opening this morning, I saw a headline come out as SilverSeq was. I'm not sure who wrote that headline, but the guy is obviously an idiot. I then saw unfortunately TD put out a statement as well and nothing against TD. TD has been a great financial partner of First Majestic for quite some time, a decade. And their analyst unfortunately came out with the most bonehead headline that I've probably received from an analyst in my career. I'll read it to you. It says Q3 results in line, you know, which is good. You know, focus on ongoing tax reassessment, which is completely incorrect. Wayne, you should know better than that. Management is not focused on taxes. First Majestic is a mining company. You know, our job is to get Silver out of the ground in an economical fashion. That that's following the environment and our social responsibilities on site of the different operations that we do. We look for ongoing efficiencies on trying to reduce our costs and create wealth for our investors. And that's our job. The tax dispute that seemingly some people are focused on today has been with the company for 13 years. There's no change. We continually work with the Mexican government to resolve the issue. I can tell you there's at least weekly meetings that occur in discussions on this particular item. I can also tell you that The Canadian government is now involved in discussions with the Mexican government, which is quite nice to see. And I can tell you our team of experts over several law firms and consultants and inside staff pay a lot of attention to this, obviously, but it's not what we view as a material issue for the company. Whenever the issue does get resolved, we will put out disclosure to discuss further these items. We do do disclosure and over the last decade or the last eight years, pardon me, we've had disclosure in our financial statements in regards to any potential liability in the business, including this tax issue. It's fully out there in the public. We do get questions from institutional investors from now, from time to time, and we answer those questions and we're completely and always very, very transparent. We did update our language in our financial statements, our MD and A, and we put out some language in our news release today just to bring shareholders up to date or investors up to date. And that's where we are. We'll continually work with the Mexican government to further resolve the issue at hand. But timing, who knows? It could be another year, it could be another two years. We have no idea. It's been going on for 13 years. So there's obviously some focus on this. By going back to my earlier comment, I can tell you it's definitely not a focus of management because we don't look at this tax issue as material to the business in any way. And interestingly enough for those who actually want to dig a little bit deeper, the President of Mexico actually had a news conference on Friday, one of her regular news conferences, and one of the reporters asked her about this particular issue because as you can tell by some of the press, you've got these sensational headlines showing up. They're trying to sell newspapers or whatever the heck they're trying to do that have completely misrepresented the situation. The President of Mexico has said that the issue still remains outstanding and negotiations are still underway. And I think that's probably the most accurate statement that's been made public from the Mexican government. Unfortunately, the press didn't pick that up, you know, but nevertheless that's, that's the facts. And also being in Mexico for 22 years, I think we're probably one of the most well positioned companies in Mexico to handle such issues. So, you know, we need to focus on getting the ounces out of the ground and that's what we do. And we came out with one of the best quarterly's. Well actually the best quarterly financial statement we've ever had in the company's. History and the analysts are focusing on completely the wrong thing. I should have introduced the people that are on this line with me. As you can probably tell, I'm slightly irritated. But we do have Steve Holmes, our chief operating officer online. We've also got Davis Heres, our CFO online. We also do have Sameer Patel, our corporate counsel there and Manny Alcovagi with many of you probably know, our VP Corporate development, Del Rey, manager of Investor relations is also online. If questions do come up that I will, that I, that I elect to pass on to them, I may elect to do that. But we will not be taking questions on the tax issue because I don't think it's appropriate in a call like this to have those types of discussions. There's several moving parts and things going on behind the scenes that, that are constantly occurring and have been occurring over the last eight years. And our disclosure is our disclosure and we're not willing to go beyond the disclosure that we currently have in our financial statements, our MDA and our news release. So let's talk about some positive stuff, you know, the stuff that we've really been doing as a company that investors should really be caring about. And I've got a presentation in front of me and I'm on slide 2 of the presentation and we had a record silver quarter, silver producing quarter, 3.9 million ounces, 11.3 year to date. The, you know, the revenues in the quarter were another record quarter as I said. We said record 18 times in our news release. So they're just record after record after record cash flows. Record 140 million. You know, we've got record cash position, we've got over $560 million in the bank. Our mint is had a record quarter as well. So the money's coming in and the business is doing extremely well. There's always, you know, we're dealing with mining of course, but you know, it just, it's hard to knock the third quarter. And you know, I'm very positive that we're going to end 2025 on a very positive note having a very good Q4 as well. So without getting into details and reading everything on the slide, the slide presentation that I've got in front of me is on the company's website. And for those interested parties, feel free to have a look at it. And if you do have additional questions, feel free to call the company and we can get into further details. But going on to Slide 3, you know, you see the growth in silver ounces, you know, as I said already our record silver production, our costs have come down, which is fantastic. You know, you're seeing a lot of cost creep, you know, within the mining sector, which I've noticed through other companies putting their financials out for. So for our cost to come down was really nice to see. You know, jumping to slide four. You know, we're hitting all the metrics in our guidance. You know, we're three quarters of the way in, or at least as September 30th, we're three quarters of the way into the year and we're right on track with all the metrics that we put out in our, our guidance that we released in July of this year. So we're on track to meet all of our guidance, you know, north of 30 million silver equivalent ounces. And I think all of you probably know the breakdown. 55% silver, 35% gold and 10% in the form of lensing. So our purity is there and we remain the purest silver company in the space of the silver players that all of you are very familiar with. So jumping along to slide five, Los Gatos was a big acquisition for us that closed in January. You know, bringing all the systems in place, bringing the first Majestic way of doing business took some time. But you know, SAP and other systems that we brought over from corporate, you know, from first Majestic, have now all been, all been implemented now it's nice to see now we have a plan to get throughput up to 4,000 tons a day. And that plan is being put together now. Look for our guidance in January 2026 and you'll see more color on our budgeting to achieve this. But you know, Los Gatos has been a great asset for us, a super great addition to our portfolio. So jumping to Santa Elena, you know, everyone knows, I'm sure most of you are listening today, have watched our news releases, great exploration results. You know, two major discoveries in the last 12 months, which is pretty unusual. You don't normally see two discoveries that close to back, but the Navidad and the Santo Nino discoveries are huge and will add multiple years to the life of mine of this operation. Look again, look for guidance in January on some costs that we're going to be implementing over the next couple years to get into those areas of the property, to bring that ore into the mill and maintain or potentially even increase production at Santelane over the next three, four, five years. So that's pretty exciting. At San Dimas, it goes without saying that we've seen some pretty substantial improvements quarter over quarter There costs are now coming down, production is going up. It's now within budget after, you know, a challenging previously couple years, which all those issues are now behind us. So it's really nice to see San Dimas back on track. And we've got some plans there to continually expand that operation and you know, look for further guidance in the quarters to come. And looking at Tata, our smallest mine, which is, you know, less important of the top three. But we're changing the mining operation there to self haulage. And that's pretty interesting. And it's going to reduce costs and help that operation out quite a lot. And that's being implemented now and will be fully up and running by Q1 of 2026. So look for improvements in the cantata in 2026. So jumping to Slide 6. You know, I've already covered the revenue record revenue we did. I saw one of the analysts come out and say there was a miss on revenue, which is, you know, not sure what analyst that said. But anyway, so it's a, you know, this 758,000 ounces of silver that we kept in inventory and the 3,900 or almost 4,000 ounces gold. So that's $50 million in revenue that we held over the quarter. You know, our shareholders want to see that. And it's a lot of embedded revenue. Some of that revenue will show up in Q4. But I think the analysts that follow the company should take note of our inventory levels because it is something that we have focus on. And as a silver gold company, I think that, you know, our input from our investors and shareholders worldwide want us to see inventory levels of these at these types of rates. So it's very positive. We could all, you know, obviously, you know, it's our choice. It's like cash. So if we do want to convert those ounces into revenue at any time, we could do it quite easily just on a phone call. So, you know, there's really $55 million in net earnings that wouldn't have. That would have showed up or, pardon me, that's in relationship to the securities that we've been monetizing. Another bullet point. We do treat our portfolio, I gather, maybe in a unique way. We don't put it on our balance sheet. We have virtually our entire portfolio in other comprehensive income. And we do monetize that, and we have been monetizing that. So the analysts would like to look at that. Maybe they want to focus on that number as well. Because I think it's a quite important number and there's a lot of cash sitting in our reserves in the form of marketable securities that I don't think people take into consideration. There is a slide coming up which I'll point out again that shows that value. Now our safety performance has been very good and our sustainability has improved as well. One of the best producing mining companies in the space and recognized by the different agencies, which is obviously nice to see. So jumping along to slide seven. And this points to my previous comment of marketable securities, which is $140 million sitting there, that's as of September 30th. And the market has improved even further since then. So who knows what that number is going to be as of December 30th. But it is a significant amount of our liquidity and as a result of our deals we've done on the MA front for the last couple of years, which I think is pretty helpful for the business overall. Jumping along to slide 8, you know, again, another record. I've already touched on, you know, records, but, you know, 98 million in operating cash flow, pretty obviously pretty significant. Los Gatos was not. Or what, Pardon me. Los Gatos was a significant contributor to that, which is obviously fantastic. It's great to see. And going to the next slide, slide nine, our EBITDA, you know, another record $128 million in EBITDA. And I'm not going to go over each of these items because, you know, if you're looking for further details on all the bars here, I'm not going to bother covering them. But if you do have further questions, feel free to talk to Darrell or Manny at any time you wish to. And jumping to our next slide, the dividend policy. As all of you know, the dividend's intact and obviously will be with our significant cash balances and our significant portfolio. You know, actually I'd like to see that dividend increase, but we'll see how that transpires over time. So Looking at slide 11, you know, the integration, you know, it's pretty well done. There's a couple of items that we're still working on, but you know, look for increased balance sheet improvement in Q4. I would expect to see that as a result of, you know, our production and obviously metal prices, we still aggressively doing exploration. We're likely not going to get a chance to talk about Jarrah Canyon today, but we do have some interesting exploration things happening there. We do hope to put out an update news release on Jerry Canyon at the end of the year, if not end of the year early 2026. But our objective is to hopefully have some news out on a go forward plan at Jerry Canyon by the end of this year. And I don't want to talk too much about it on today's call. I know we do get a lot of questions about Jerry Canyon, but I'd rather wait until we do come out with some further disclosure just to talk about the. The whole picture. We will be updating our, our resource estimates at the Navidad project as well in March of next year, which is obviously pretty exciting. And you know, as I touched on already, the Los Gatos input increase to 4,000 and the Santa Elena mill increase to 3,500 is all coming into our budget in 2026. So. So we hope to talk further about that when we come up with our guidance for 2026. So that was really the end of the presentation. I know the guys in Vancouver are watching for questions, so I'll pass it on to Manny and the team in Vancouver. Yeah, so I think, Keith, you've probably addressed a couple of the questions on Jarrett's. The one question that is coming up here is, are you doing any share buyback at these prices? We did some today, we did some yesterday. That concludes the web questions that we have. Okay, well, that's good. Well, thanks for everyone's time. And for those who are listening to this after the fact, I encourage you to call into the office or send us an email. And if you have further questions, we're always happy and willing to answer any queries that come in from interested investors and shareholders.

OPERATOR - (00:23:47)

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.