Astonishing Silver Deficit: The Silver Just Isn't There | Mani Alkhafaji

Added: 2026-05-12

[00:00:00]fundamentals have not changed, right?

[00:00:02]So, we know the space better than anyone. We know the supply and we know the demand. We know for a fact that there's really no material new supplies hitting the market. So, it has been a supply demand issue. There's more pressure on demand going forward.

[00:00:17]There's new industries that are entering the market. You know, the conversation around AI and the data centers and how much metal those facilities will consume are astonishing. it it'll just put more pressure on on on obviously the the supply and ultimately the price.

[00:00:31]>> Today's guest is a supporting sponsor of Liberty and Finance. Welcome back to Liberty and Finance. It's with the great pleasure and honor that I'm welcoming back the president of First Majestic Silver, Mani Akafage, to Liberty and Finance. Many, thank you for coming back on for this very special bulletin update.

[00:00:47]>> Yeah, good seeing you, Dunigan. Thanks for having me.

[00:00:49]>> We wanted to get you on about a month ago when you came out with your first quarter of 2026 operating results, which were astonishing. knocking uh the ball out of the park in many physical ways.

[00:01:00]And uh we were told, hey, wait just until May 12th, which is today we're recording this because we've got our financial results coming out that day to back up those operating results. It's astonishing what you guys have pressed, you've dropped the press release just this morning on the wires and we wanted to get this news out to our viewers and subscribers as quickly as we can. Uh we wanted to walk through with you the astonishing results that uh really have been following a new trajectory that First Majestic has been on now uh since making some major course uh changes in the past year. It's been remarkable.

[00:01:36]We're going to talk about what are the uh specific operational changes that are behind some of those results. But uh in the big picture, can you start leading us through what you consider to be the the biggest headline items of your both your operating results and then the financial results that followed from that?

[00:01:52]>> Yeah, well thanks for that and yeah, timing couldn't have been better. Um I think the highlights and we've got a couple of uh uh you know emails as soon as the the press release crossed the wire. Over a billion dollars in the bank and that's that's a you know a huge milestone for First Injustic. uh like it's just amazing how quickly things change. We've spent and you obviously know Keith very well, you know, putting this company together 23 years ago. The whole goal was to position First Majestic to per to put together the right portfolio of assets for times like this. you know, we're we're taking advantage of these metal prices and building cash, generating significant cash flow, paying out dividend, increasing dividends, putting money back in the in in the business. Um, and that's that's really all coming coming in nicely.

[00:02:45]Um, you you've mentioned uh you know, we put out our our production, you know, a few weeks ago, so that was a pleasant surprise for most and the the financials followed suit. So, you know, pleased to put that out uh this this morning.

[00:02:59]>> It's it's really remarkable having our our viewers and subscribers like myself have been educated over the past decade plus by Rick Rule visiting us every single month to talk to us about what he looks for on the uh not only the balance sheet but also the uh management's operating plan for um mining you know exploration development and then e and execution and actual operation of mining operations. And it's just remarkable reading through the press release, which folks, if you haven't done, we're going to put a link in the description of this video. You really should check it out because it walks you through it very succinctly. Uh just remarkable uh results that are kind of like all the wind in the sales at the same time. Um we're going to talk about some of those things. One of the big ticket items that was uh kind of a black eye in the eye of in uh in the view of many uh investors or potential investors in in First Majestic over the past couple years was the shutdown of the Jarrett mine. Uh there were reasons why that had to happen and why that was a prudent use preservation of treasury as you just described building up the treasury. But now the the reversal of that, the restart of that has been a big story.

[00:04:05]Can you explain that to our viewers?

[00:04:07]>> Yeah, for sure. Like when we bought Jared back in 2021, we had a vision for it and that vision hasn't changed.

[00:04:13]Jarrett Canyon is a Jarrett Canyon is a strategic asset. You know, it's got one of only three roasting facilities in in the state of Nevada and really the only the only facility that that's uh uh permitted and idle that's got capacity.

[00:04:29]The other two are owned by the you know the joint venture Nevada gold mines and they're they're at full capacity for for you know decades to come. So Jerry Canyon sits in a very unique position.

[00:04:39]Um what changed with us right now, you know, when we shut it down, it it's got some issues that we wanted to overcome.

[00:04:46]We never really banked on the metal price to do what it did right now. This was a nice bonus, but you know, the restart plan really called for self-owner mining, which is what we're going to be doing. Uh and effectively a new mine plan, and that's what we've been working on. We got distracted a little bit and had to shift focus on Gats. that Gats transaction, you know, consumed a lot of management's time and, you know, between the due diligence, the the the bidding process worked out, you know, couldn't have worked any better uh for us, the timing of it and all that.

[00:05:15]But now that's done in in and and is in the rearview mirror for us. We shifted focus on Jared. Now, the timing worked out quite well for us. When we shut it down, gold is at $16,700 and you know, today is uh you know, 47 $4,800.

[00:05:32]So that's really enabled us to shift focus. We put out a new resource updated again about a month ago or so sitting at 7.8 million ounces tier one jurisdiction of gold ounces when gold is at all-time high. You know, it's it's a it's a nice options for us to have right now.

[00:05:54]And that's real key because that that theme about uh the market price for your product, gold or silver, versus the all-in uh sustaining costs of production has been a theme over the past several years and it's remarkable uh what that translated into in terms of earning in the past couple of quarters. Can you focus on that for uh your silver operations for example? Yeah. So, we uh we actually just put out a a chart on our website to kind to show what the margins were this time last year versus what they are right now. You know, in Q125 2025, our our margins against our all and sustaining costs were about $13 an ounce. That's great. You know, not bad.

[00:06:38]We had a great Q1 2025 last year. But you look at what we just did right now, Q1206, we're generating about $52 of on every ounce of silver that we're producing.

[00:06:50]You know, that's just the margin. That's after paying our cost that's going directly to the bottom line. And you know, this time last year, thinking about a price of $50 silver was unbelievable. to have margins of these kind of prices and these kind of numbers is is uh you know it's a great great uh story for us and great position for us to be in.

[00:07:14]>> Right. because like as you pointed out the things that build up to that I was looking in your press release that came out today and you're allin sustaining cost uh of production uh has gone up slightly but the but that the market price of of silver or or in gold in that case has just blown it away so that your margins have just exploded to the upside. That's enabled you to build treasury also to double down on additional exploration to expand your your assets. Um, and you're even holding back and stacking up some of your your final products. Uh, can you talk to us about that because that in addition to the numbers that are hitting the books, uh, you you're building up some inventory of ounces on both the gold and silver side as well.

[00:07:58]>> Yeah. And and our goal is not, you know, not to build and hold bully on on the balance sheet. This is really just part of our strategic plan. Uh, we always have some inventory on the books as raw material and feed mainly for the mint.

[00:08:10]And you know sometimes you have some some timing differences but at the end of this quarter we did you know divert a bit more ounces towards the mint and you know we'll be holding that a little bit.

[00:08:19]Uh metal prices obviously were all over the place in Q1. We've seen them peak at around you know just under $120 and drop to 67 and you know they're kind of going sideways. Uh so we did hold back a little bit within spatial improved prices which we're starting to see right now. you know, days like yesterday and the day before. Um that that's really it's nice to have that inventory to to to sell into into the market, but uh our our balance sheet is is pretty strong.

[00:08:47]You know, we don't need to be doing this, but we do we do tend to be opportunistic and we we'll hold back when when we see the metal prices are a little bit depressed and we we hope and expect them to do better like they have.

[00:09:00]For the last uh several quarters, the shares of mining companies have lagged the metals. Uh you mentioned about the favorable environment that's created by the metals. Normally in most uh bull markets and metals, we see uh only a little bit of a lag uh before the public and investors, generalists, investors wake up to the fact that there's an outsized benefit from the earnings multipliers that'll happen when uh those the the cost uh to sales margins are are enjoyed by the companies and those will show up on the bottom line. uh in this case there's been this I guess extended period of value opportunity for potential investors. So what uh examples can you give regarding your whether it's your free cash flow you already mentioned about your treasury position your earnings that people need to understand and even your dividend uh the increase uh for potential investors.

[00:09:55]>> Yeah and I think that's that's it. we we we started get a a glimpse of uh the the equities starting to work with the metal prices in Q4 and Q1 and obviously the the geopolitical issues that's gone around has caused a bit of a noise and really distraction. Uh but ultimately the miners are are flushed with cash right now and I think it'll just take consistencies. We've had this is really the second and maybe third quarter where we're starting to see you know across the industry people are making money uh balance sheets are improving debts are being repaid cash are being stacked investments are are are taking place um I think we just stick to what we're doing yeah to us there's really two things that we can control our cost and we have our production what's going on with the metal prices is a nice bonus uh we didn't do our our budget and our guidance at $80 or $90 silver. We've done it at a much lower conservative price. So, we're racking in uh these bonuses and, you know, I think it'll it'll just take more, you know, another couple of quarters like this for the generalists and and Wall Street to wake up and say, "Hey, like these guys, you know, I got my money. I I I did what I can with the tech giants. It's time to take exposure and and get some get get some guess I'm going with the with the miners." And uh yeah, I think that's where that's going to I think that's where that that's going to be the next step really.

[00:11:20]>> It does seem like a perfect storm for that kind of a setup. And interestingly enough uh some of that trepidation perhaps or let's just say hesitancy on the part of perhaps institutional or uh retail investors may be because in previous markets where whether it was 1980 or 2011 when there was a sharp sharp runup in for example silver price uh then the pullback that followed lasted you know a decade or more and in this case for example uh we we talked to a number of analysts very well respected such as Michael Oliver for momentum structural analysis or David Morgan and others and they are are saying that this time uh they're fully expecting uh for silver because of many reasons and you can maybe help us uh understand some of the fundamental reasons uh at at sovereign uh strategic levels and so on and industry levels why it's why they're telling us uh that they expect silver to be finding a new a different price regime and and uh persisting there not just a not just a single spike like we saw just this past January for example.

[00:12:28]What are those drivers that you believe in and the management of First Majestic believe are going to sustain at driving uh the kind of demand that's going to continue to underpin uh the necessity of silver production in the future?

[00:12:43]>> Yeah. Well, look, fundamentals have not changed, right? So, we know the space better than anyone. We know the supply and we know the demand. We know for a fact that there's really no material new supplies hitting the market. So, it's becoming or has been a supply demand issue. That has been the case for 5 years. This is year six that we're into right now. And there's really nothing that's going to bridge that gap. I've made the comparison a couple of times now. You know, the last official deficit we've had was 150 million ounces of silver. So, supply exceeded demand or sorry, uh demand exceeded supply by 150 million. Put that in perspective. First Majestic had a record year last year for annual 2025 where we produced just over 50 million ounces. So that's 10 First Majestics that have to come in just to bridge that annual gap. And it took us 23 years to put this company and portfolio together. So it's not going to happen. What we know is demand, you know, is there's more pressure on demand going forward. There's new industries that are entering the markets. Um, you know, we we we all know the story behind the solar panels and EVs, but you know, the conversation around uh AI and the data centers and how much metal those facilities will consume are astonish astonishing. There's really no real data out there. We've seen a few new slides or recent slides and some of these numbers are, you know, are a headscratcher because you look at it like, okay, that's exciting, but where is that metal going to come from? Um we know that uh some of the EV manufacturers Samsung and and Toyota are are uh spending a lot of money and research into the solid state batteries that's going to consume a lot more silver than the current state right now.

[00:14:27]So all that is exciting you know for a company like First Majestic there's less and less uh space or names in the space.

[00:14:35]So uh it'll just put more pressure on on on obviously the the supply and ultimately the price. Another thing that uh potential investors are always concerned about when uh getting uh becoming partial owners through investing in a mining company is about the nature of mines as a depleting resource. But First Majestic has been striving very hard and showing remarkable results at expanding the resource and extending the mine life of the assets that you have as well as the additional unexplored land package that you've got. Can you help people understand why this is not about a melting ice cube here but something that you're actually defining uh at greater expanse as as time moves forward?

[00:15:16]>> Yeah. And it's important to you know understand the assets that we have their underground assets. So this is not open pit structure where everything is well defined. These underground assets they're vein type structures where the life of mine is really a product of how much exploration you do. Now, as long as you have the land to explore, the life of mine is generally there. Um, and we're blessed to have significant packages around Santena, around Losatoos, around Sand Deas, and that really gives us the opportunity to go and spend. And with with obviously the robust cash flow and the balance sheets, we're not holding back on expiration. We have effectively a 300 kilometer drilling program right now across the portfolio. We have 266 in Mexico and another 40 42,000 in in Nevada for Jer Canyon. We've seen some unbelievable results. You know, couple of new discoveries at Santelena recently. Uh Sand Deas has had some really exciting new new vein uh that we that we've been following up on. Ogatos is really a new mine, but it's also quite exciting to see some of the geological prospects that uh RT was looking at. So all that you know it's it's uh it gives us comfort comfort in expanding these operations. We know they're going to be there for decades to come. So we're expanding the melisantena for example.

[00:16:38]We're expanding the throughput rates at at las gateos and same thing with sandas. We're pushing the mill to beyond its name plate capacity and uh we're we're trying to take advantage and be optimistic with these metal prices. So just in review, it sounds like uh the market has not yet fully recognized the ability to sustain the profitability that that First Majestic has now proven two quarters in a row is going to perhaps become the new normal uh not only in the industry but specifically for First Majestic that has worked very diligently to to expand its resources and to execute efficiently. you've got multiple uh operating mines in multiple jurisdictions that are producing both silver and now it'll be gold with Jarrett coming online. And uh you've got all of that against a backdrop of financial projections that were made with a much lower market price for metals uh than now experts in the marketplace are expecting. So it looks like a perfect storm for uh the next foreseeable period of time. Uh any more highlights of the current the most recent quarter quarter 1 uh financials from 2026 that you want to highlight uh for our viewers?

[00:17:58]>> Yeah, know I think you you you pretty much hit on all points. Uh it's nice to have all four assets firing in all cylinders. So you got the operation discipline, you got the cost control, and the metal prices doing their thing.

[00:18:10]our mint which is again our our other uh unique aspect of the business has uh has done wonderfully over the last couple of quarters and continues with that momentum. So we're we're uh you know always looking for ways to innovate and maximize shareholder return. Uh you've hit on the dividends and uh the dividend increase is it's really it's designed in a unique way. It's given we've known or you know it worked in our favor that oxy metal prices have gone up. So by definition our revenue doubled compared to last year um and our payout of that dividend also doubled. So instead of 1% of revenue now is 2%. So the actual dividend payout was almost four times what it was this time last year. Uh so we're always looking for you know creative ways of of uh giving back and maximizing the shareholders value.

[00:19:03]>> You'll probably enjoy this. I just got off an interview with Miles Franklin Precious Melo CEO Andy Shechman and completely un uninvited. He just out of the blue when he was talking about things that are going on in the marketplace, he mentioned specifically the performance of First Majestic Silver and he underscored the uh character of the people, the the leadership that are involved there and how much uh respect he has not only for your company and for those who are in the leadership positions there and the long relationship that he's had with them and how it looks like you really are firing on all cylinders. It's uh it's a nice endorsement from from another industry leader uh who doesn't have anything to gain or or lose from that. And uh I just wanted to pass that along as well. Uh folks, we'll put in the description of this video a link to today's press release. I really suggest you take a quick look at it. It's remarkable the number of both operational and financial records that First Majestic racked up in the latest quarter which is following on a previous record quarter last quarter and frankly no end in sight. So uh Monty any final thoughts for our viewers before we wrap?

[00:20:12]>> No look appreciate it. There'll be plenty of updates throughout the year between exploration and you know Jerry Canyon which we know a lot of eyes are on it. So be on the lookout and any questions feel free to reach out to us or uh you know we're we're will be a recruit uh conference in a in a couple of months and we'll definitely be bringing some silver some exciting new product as well with us.

[00:20:33]>> We'll be looking forward to that. Mani Alafaji, the president of First Majestic Silver, thank you for joining us here again on Liberty and Finance.

[00:20:41]>> Thank you Dunan.