Silver's Supply Response Never Came — First Majestic Plans to Grow on Ground It Already Owns

First Majestic Silver pulled roughly the same ounces from the same four mines in back-to-back years, and its quarterly result went from a record $40 million in free cash flow (the cash left after operating costs and capital spending) to roughly $220–250 million. Silver's price did the work. The video's central claim is what did not happen next: after the better part of a year at prices the host calls a fantasy in 2024, the market still is not building new silver mines.

That leaves companies that already produce — First Majestic among them — in an unusual position. Its plan, as presented in the video, is to grow on ground it already controls, funded by cash it already has.

## A supply response measured in decades

In a normal commodity cycle, high prices attract capital and new supply follows. First Majestic's president says silver is not behaving that way. Not much has changed in the supply picture, he says. A couple of small mines are opening, but at one to two million ounces each, they will not move the needle.

His explanation is structural: it takes about 18 years on average from a discovery hole to production, and that kind of capital commitment needs sustained triple-digit silver prices. By that math, mines that could ease today's tightness would have needed discovery around 2008. He also reads institutional money as still absent — generalist investors are kicking tires, which he takes as a sign this bull cycle is early.

CEO Keith Neumeyer does see the front end of that pipeline moving. Juniors are raising money and drilling again for the first time since the mid-2000s, he says. That is good news for future supply, but it starts an 18-year clock rather than ending one.

## Growth from ground it already owns

The company runs four mines in Mexico, and three sit on district-scale land packages (large, contiguous claim holdings): San Dimas at 75,000 hectares, Santa Elena at 102,000, and Los Gatos at 103,000. Management's argument is that these packages cannot be drilled out, so they keep giving up new ounces.

Santa Elena is the proof of concept. First Majestic bought it about a decade ago with a 6.5-year mine life, when it produced a third of today's output. Production has since grown three to four times, mine life has extended about ten years past its expected end, and every find has come from within a five-kilometer radius of existing work.

Two discoveries made within a 12-month window received resource updates in March — a resource being the estimated metal content of known mineralization. Together they add more than 90 million ounces of silver equivalent (one number that folds silver and other metals together at assumed prices) on top of the current operation. Construction permits for those discoveries arrived 12 to 18 months ahead of schedule, per management, and production from them is framed two to three years out.

Los Gatos follows the same pattern one chapter earlier: a 10-year mine life built almost entirely off a discovery hole drilled in 2006, with about 3% of the package explored so far.

## Jerritt Canyon: the unpriced fourth asset

The fourth property earns no market credit, according to management. Jerritt Canyon in Nevada has been shut since early 2023, when gold was $1,600 an ounce and the mine did not work at those economics. With gold several times that level, First Majestic has committed $75 million to restart it with a self-performed, company-owned fleet, targeting the second half of 2027 at 125,000 to 150,000 ounces of gold per year. The company carries the asset at zero on its books and calls the restart a coming catalyst for the stock.

## The balance sheet as the enabler

"If we ever needed to raise money, which we don't, we've got $1.2 billion in the bank right now," management says in the video. That is what turns an exploration promise into a funded program: more than 300,000 meters of drilling are committed this year.

Management also argues the drilling is inexpensive. At Santa Elena, discovery cost has run about 32 cents per ounce, for ounces near the mill, while developers' ounces in the ground routinely trade at dollars per ounce.

The cash also buys restraint. Management says it will not spend the windfall on exploration it does not need or on the first deal available, and it intends to stay silver-focused. Gold and copper assets are available to buy, the speakers note. Silver assets are not — which, in the video's telling, is the whole story of this market.

## What growth looks like from here

The stated ambition is to become the largest silver-producing company in the world, with a concrete marker: 50 million ounces of silver equivalent within ten years, through M&A, drilling, and mill expansions. By the company's own account, M&A is the shakiest leg, because assets big enough to matter do not yet exist. That puts the weight on the other two, both on ground First Majestic already controls. This year's steps are modest and specific: the Santa Elena mill goes from 3,200 to 3,500 tons of ore per day, and Los Gatos from 3,500 to 4,000.

## Reading this with care

Everything above is what the video and its executive guests claim. It is an interview on a channel that also promotes an investor conference, not an independent audit; the 90-million-ounce figure, the permit timing, and the Jerritt Canyon plan all warrant verification against company filings. The closing argument is nonetheless coherent: the price signal worked, but it made existing producers bigger rather than creating new mines — and First Majestic intends to be one of the producers it made bigger.