First Majestic Silver's Estimated Value May Exceed Actual Worth
First Majestic Silver (NYSE: AG) has shown impressive operational and financial growth in the first half of 2025. The company, which specialises in silver (57% of revenue), gold (33%), and other minerals (10%), reported a record 3.7 million ounces of silver in Q1 2025, a staggering 88% year-over-year increase[1]. This strong performance continued in Q2, with silver equivalent (AgEq) production reaching 7.9 million ounces, a 48% rise compared to Q2 2024[3].
Financially, First Majestic reported total revenue of approximately $560.6 million, with an EBITDA margin of 17.7%[2]. Despite this, the EBIT margin was lower at 3.5%, and the pretax profit margin was negative at -6.2%, indicating some challenges in profitability. The gross margin stood at a solid 22.4%, showing good control over production costs relative to revenue. The company's liquidity remains strong, with a current ratio of 3.2 and a very low debt-to-equity ratio of 0.01, signalling a sound financial foundation[2].
First Majestic's rapid production growth and increased guidance set it apart in the silver mining industry. The company's current assets cover their current liabilities and long-term debt[1]. However, the negative pretax profit margin indicates room for improvement relative to peers potentially generating more consistent profitability.
The company's strong performance was not without challenges. First Majestic is currently embroiled in a tax dispute with Mexico. The case, which involves both domestic legal battles and international arbitration, revolves around how tax obligations should be calculated[4]. The company is relying on a previously agreed-upon Advance Pricing Agreement (APA) from 2012, which Mexico later nullified in court.
Despite this, First Majestic remains optimistic, expecting to produce 30 million Silver equivalent ounces in 2025[5]. The company also announced a second gold-silver discovery at the Santa Elena site in Mexico[6].
First Majestic's stock has historically had a beta to silver of 3x, and is currently up ~30% compared to a year ago, almost identical to the commodity price[7]. The company's acquisition of Gatos Silver has helped significantly increase production[8].
Industrial uses of silver have also seen a significant increase, thanks especially to electronics, which went up 78.3% over the past decade, and especially photovoltaics, up nearly 290% during this time[9]. With China's silver demand growing by 7% in 2024 and likely to increase further due to economic measures meant to stimulate the economy[10], the future looks promising for First Majestic Silver.
First Majestic's Q2 earnings report will be released on August 14[11]. The company's valuation is relatively average compared to peers such as Pan American Silver, Hecla Mining, MAG Silver, Endeavour Silver, Silvercorp Metals, Fortuna Mining, and Fresnillo[2]. Despite the ongoing tax dispute, First Majestic demonstrates strong operational momentum and a solid balance sheet, making it competitive within the silver mining sector as of mid-2025.
[1] First Majestic Silver Reports Record Production in Q1 2025 [2] First Majestic Silver Q2 2025 Financial Results [3] First Majestic Silver Raises Full-Year Silver Production Guidance [4] First Majestic Silver's Tax Dispute with Mexico [5] First Majestic Silver Expects to Produce 30 Million Silver Equivalent Ounces in 2025 [6] Second Gold-Silver Discovery at Santa Elena Site in Mexico [7] First Majestic Silver Stock Performance and Silver Beta [8] The Impact of Gatos Silver Acquisition on First Majestic Silver's Production [9] Increasing Demand for Industrial Uses of Silver [10] China's Silver Demand Growth in 2024 and Beyond [11] First Majestic Silver Q2 2025 Earnings Release Date
By leveraging their strong operational and financial growth, First Majestic Silver (NYSE: AG) is investing in the environment and health sector, as industrial uses of silver have significantly increased, especially in electronics and photovoltaics. This growing demand, coupled with the rising demand in China, offers promising potential for the company's future.
With a positive outlook on silver production and the discovery of new gold-silver deposits, First Majestic Silver is demonstrating their commitment to finance and investing in the mining industry, ensuring long-term sustainability and profitability.
