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Silver Prices Exploded. New Supply Never Came. | First Majestic

The Deep Dive Aug 25, 2026

Summary

Silver's price surge has not created new mines: new projects need roughly 18 years from discovery to production, so supply cannot respond quickly.

First Majestic's unchanged production generated $40 million in quarterly free cash flow at $32 silver and roughly $220-250 million a year later.

Two Santa Elena discoveries hold over 90 million silver-equivalent ounces (all metals converted to silver ounces), with permits arriving 12-18 months early.

Exploration beats acquisition: Santa Elena discovery ounces cost about $0.32 each, far below what developers charge for ounces in the ground.

A $1.2 billion cash position funds 300,000-plus metres of drilling, mill expansions and the Jerritt Canyon restart — growth without acquisitions.

Key points on First Majestic Silver

  • Management says production from the same four mines barely changed, yet a record $40 million free-cash-flow quarter at $32 silver in spring 2025 turned into roughly $220-250 million a year later.
  • Two discoveries near Santa Elena added over 90 million ounces of silver-equivalent as incremental resource in a March update; permits came an estimated 12-18 months early, with production from the two finds framed 2-3 years out (as of August 2026).
  • The company holds about $1.2 billion in cash, says it does not need to raise money, and has committed to more than 300,000 meters of drilling in 2026; Santa Elena discovery costs are cited at about $0.32 per ounce.
  • Jarrett Canyon in Nevada, shut since early 2023, is being restarted with a $75 million commitment targeting the second half of 2027 at 125,000-150,000 ounces of gold a year; management says it currently carries zero value on the books.
  • Growth toward a 50-million-ounce silver-equivalent goal within 10 years rests on drilling, this year's mill expansions (Santa Elena from 3,200 to 3,500 tons per day; Los Gatos from 3,500 to 4,000), and M&A - and management rules out buying gold or copper assets to grow.

Steve Hyland's takeaways

  • Top takeaway The host argues the price move made the existing mines bigger, not new ones: the same ounces that earned a $40 million free-cash-flow quarter at $32 silver generated close to a quarter of a billion dollars a year later.
  • He frames the supply problem as structural - the price signal worked, but new silver mines are still not being built, so added ounces must come from ground producers already control.

Mani Alkafaji's takeaways

  • Top takeaway Argues the silver price rally has not changed the supply picture: only a couple of small mines of one to two million ounces each are coming, and they will not move the needle.
  • Calls the constraint structural - about 18 years on average from discovery hole to production, requiring patient capital and sustained triple-digit prices to justify new mines.
  • Reads generalist investors as still absent - kicking tires but not buying - which he says shows the silver bull cycle is at a very early stage.
  • Reaffirms the goal of becoming the world's largest silver-producing company while staying silver-focused and selective, ruling out available gold or copper acquisitions.

Keith Neumeier's takeaways

  • Top takeaway Says the silver price is financing the junior space for the first time in a long time - a level of exploration funding not seen since 2004-2006.
  • Puts a number on growth: passing the 50-million-ounce silver-equivalent threshold within the next 10 years through successful M&A, drilling, and mill expansions.
  • Details two small mill expansions this year: Santa Elena from 3,200 to 3,500 tons per day and Los Gatos from 3,500 to 4,000 tons per day.