First Majestic Silver Corp

$21.5 $10.5B market cap 2026-01-17

First Majestic Silver Corp. AG BUFFETT / MUNGER / KLARMAN SUMMARY

1 SNAPSHOT

Price$21.5

Market Cap$10.5B

EV$10.5B

Net Debt$6M

Shares490M

2 BUSINESS

First Majestic is a Canadian silver mining company operating four mines in Mexico (Santa Elena, San Dimas, La Encantada, and Cerro Los Gatos). The company is the world's "purest" primary silver producer (55% of revenue from silver) and uniquely operates its own silver minting facility (First Mint) in Nevada.

Revenue: $560.6M Organic Growth: -3%

3 MOAT NONE

No sustainable competitive advantage. Silver is a commodity with no pricing power. First Mint vertical integration is novel but tiny (6% of production). Large land packages provide exploration optionality but are not moats. AISC of $21/oz is mid-pack among silver miners - no cost advantage.

4 MANAGEMENT

CEO: Keith Neumeyer (since 2003)

C Grade. Built company to $10B market cap but shareholder value destruction over 5 years (losses in 4/5 years). Gatos acquisition is transformative but risky timing at peak silver prices. Minimal buybacks, token dividends.

5 ECONOMICS

-0.7% Op Margin

Negative ROIC

$36.9M FCF

0.05x Debt/EBITDA

6 VALUATION

FCF/Share$0.08

FCF Yield0.4%

DCF Range$2.00 - $4.00

Assumes silver at $28/oz, 30M AgEq production, AISC $21/oz, 7% net margin, 3% perpetual growth, 12% discount rate. Even optimistic assumptions yield massive overvaluation vs current $21.50 price.

7 MUNGER INVERSION -37.8%

Kill Event	Severity	P()	E[Loss]
Silver price collapses to $20-22/oz range	-50%	25%	-12.5%
Mexico political/regulatory risk materializes	-35%	20%	-7.0%
Operational execution failures at mines	-25%	25%	-6.3%
Dilutive equity raise or convert triggers	-20%	30%	-6.0%
Cost inflation pushes AISC above $25/oz	-15%	40%	-6.0%

Tail Risk: All risks could compound in a recession scenario: silver crashes, costs stay elevated, company needs capital raise at worst time. Stock could return to $5-8 range seen in 2023-2024 (75% downside).

8 KLARMAN LENS

Downside Case

Silver returns to $22-25/oz, AG's AISC of $21 makes mines marginally economic. Losses resume, FCF evaporates, stock trades back to $8-12 (40-60% decline).

Why Market Wrong

Silver supply/demand fundamentals are structural (deficit 4 years running). ESG/green energy creates sustained floor. Gatos acquisition transforms scale. CEO's triple-digit silver call could eventually prove correct.

Why Market Right

Silver has disappointed bulls for 40+ years. Paper markets (COMEX) can suppress prices indefinitely. Recycling increases with price. Mining is inherently value-destroying as reserve replacement costs exceed FCF generated.

Catalysts

Requires silver to break above $35-40/oz and hold. Gatos synergies exceeding guidance. Major exploration discovery extending mine lives.

9 VERDICT REJECT

D Rejected

Strong Buy$2.1

Buy$2.4

Sell$30

First Majestic is a speculative vehicle for silver bulls, not a value investment. At 154x P/E and 4x book value, the stock prices in triple-digit silver that may never arrive. Fails Graham's criteria (unprofitable, P/E 154x), Buffett's quality test (negative ROE, no moat), and Klarman's margin of safety (-86%). Do not buy.

🧠 ULTRATHINK Deep Philosophical Analysis

AG - First Majestic Silver - Ultrathink Analysis

"The first rule of investing is don't lose money. The second rule is don't forget the first rule." - Warren Buffett

The Real Question

The real question is not "Is First Majestic a good silver miner?" - it probably is. The real question is: "Can I own this for 20 years without a view on silver prices?"

The answer is an emphatic no.

Every fiber of First Majestic's value proposition depends on a single variable: the spot price of silver. This is not investing. This is speculation with extra steps. You are paying:

Management fees
Operating risk
Country risk
Environmental liabilities
Labor disputes
Grade decline
Capital intensity

...all to get exposure to silver that you could obtain by simply buying the metal or an ETF.

If you believe silver will reach $50 or $100, why pay 154x earnings for an operational levered bet when you can own the commodity directly?

Hidden Assumptions

The market is making several hidden assumptions that may be wrong:

1. Silver Will Break Its 44-Year High

The all-time high for silver was $49.45 in January 2011 (and briefly $50 in 1980). At current prices, the market assumes silver will not only reach but exceed these levels and sustain them long enough for AG to generate meaningful cash flow.

2. Costs Will Stay Flat While Prices Rise

AISC has risen from $14/oz (2020) to $21/oz (2024). If silver goes to $40, will AISC magically stay at $21? History says no - miners bid up labor, equipment, and energy costs as the commodity rises.

3. Mexico Will Remain Mining-Friendly

Four producing mines in a single country. The previous president was openly hostile to mining. The new president is untested. One election, one law, one permit denial could impair the entire business.

4. Reserves Will Be Replaced Economically

The mining industry has a dirty secret: replacing reserves often costs more than the cash flow they generate. This is why mining is fundamentally a value-destroying activity without new discoveries or higher prices.

5. Management's Triple-Digit Silver Call Is Correct

Keith Neumeyer has been calling for $100+ silver for years. It hasn't happened. Being early is indistinguishable from being wrong when you're paying 154x earnings to wait.

The Contrarian View

For the bears to be right, the following would have to be true:

Silver remains range-bound ($22-35/oz) - Even with "structural deficits," silver has been in a deficit for years without sustained price increases. The COMEX paper market may be able to suppress prices indefinitely through short selling.
Costs continue rising faster than prices - Inflation, peso appreciation, and grade decline erode margins even as silver rises modestly.
Gatos acquisition was poorly timed - Buying a mine at the peak of a silver rally is classic mining industry behavior. If silver corrects, AG paid a premium for diminished cash flows.
Alternative technologies reduce silver demand - Copper, graphene, or other materials could substitute for silver in solar panels and electronics at higher prices.
Recycling increases dramatically - At $40+ silver, recycling economics improve substantially, capping price upside.

The bears have history on their side. Silver has disappointed bullish expectations for over 40 years.

Simplest Thesis

First Majestic is a 154x P/E lottery ticket on triple-digit silver prices that may never arrive.

Why This Opportunity Exists

The opportunity (to short or avoid) exists because:

Retail investors confuse asset quality with valuation - AG may be a "good" silver miner, but that doesn't make it a good investment at any price.
Silver bulls are emotionally committed - The "sound money" and "green energy" narratives create true believers who don't care about valuation.
Momentum investing disguised as fundamental analysis - The stock is up 300%+ from its 2025 lows. Momentum traders pile in calling it "value" because it's a hard asset.
CEO Keith Neumeyer is a skilled promoter - His media presence and silver advocacy create a following that buys the stock regardless of fundamentals.
Gatos acquisition created excitement - "Transformational" deals always generate buzz, even when they destroy value.

What Would Change My Mind

I would consider AG at much lower prices ($3-5 range) if:

Silver sustains above $35/oz for 12+ months - Proving the higher price is structural, not momentum-driven.
AISC declines below $18/oz - Demonstrating operational improvements that create margin even at current silver prices.
Company becomes consistently profitable - Two+ years of positive net income without accounting gimmicks.
P/E ratio falls below 15x - Bringing it in line with industrial miners, not growth stocks.
Management shifts from promotion to capital return - Meaningful buybacks or special dividends indicating belief in undervaluation.

At $21.50, none of these conditions are met.

The Soul of This Business

At its core, First Majestic is a bet on monetary dysfunction.

The company's value proposition assumes:

Central banks will continue debasing fiat currencies
Investors will seek hard money alternatives
Industrial demand for silver will compound with green energy
Supply will remain constrained as grades decline

This may all be true. But even if true, you don't need to own a mining company to profit from it. You can own silver directly.

What makes First Majestic's competitive position inevitable? Nothing.

Any competitor can buy similar assets
Any competitor can build a mint
Any competitor can hire geologists
Silver doesn't know who produced it

What makes First Majestic's competitive position fragile? Everything.

A single country houses all production
A single commodity determines all value
A single input (labor) is constantly restive
A single variable (grade) is constantly declining

The Patient Investor's Path

The patient investor should:

Avoid AG at current prices entirely
Monitor silver prices and AG's stock price quarterly
Set alerts for AG at $8, $5, and $3
Re-evaluate if stock falls 60%+ with silver still elevated
Consider alternatives like WPM (Wheaton Precious Metals) for precious metals exposure with better economics

The time to buy commodity miners is during the trough of despair, not at 52-week highs during a bull market. First Majestic will almost certainly trade below $10 again within the next 3 years, given silver's historical volatility.

Final Reflection

"We've long felt that the only value of stock forecasters is to make fortune tellers look good." - Warren Buffett

Buying First Majestic at $21.50 is making a forecast:

That silver will rise substantially
That AG will capture that rise operationally
That costs won't rise proportionally
That Mexico will remain stable
That management will allocate capital well
That reserves will be replaced economically

That's a lot of forecasts for a value investor to make.

The disciplined approach is to acknowledge: I don't know where silver is going, and neither does anyone else. If I want silver exposure, I should own silver. If I want to own a mining company, I should demand a margin of safety that compensates me for all the additional risks.

At 154x P/E, there is no margin of safety. There is only hope.

And hope is not an investment strategy.

Executive Summary

Investment Thesis (3 Sentences)

First Majestic Silver is a high-quality silver miner with exceptional operational assets in Mexico, trading near all-time highs following a transformative acquisition and a 35% surge in silver prices. However, the stock fails fundamental value investing criteria due to chronic unprofitability, extreme commodity dependence, and a P/E ratio of 154x trailing earnings that embeds unrealistic expectations about future silver prices. This is a speculative vehicle for silver bulls, not a value investment.

Key Metrics Dashboard

Metric	Value	Assessment
Current Price	$21.50	Near 52-week high ($21.54)
P/E Ratio	153.6x (TTM)	Extremely expensive
Forward P/E	36.0x	Still expensive
P/B Ratio	4.05x	Premium valuation
EV/EBITDA	25.8x	Above sector average
ROE (TTM)	4.2%	Far below Buffett's 15% threshold
5-Year Avg ROE	Negative	Chronic losses
FCF Yield	~0.4%	Minimal
Dividend Yield	0.1%	Token dividend
Net Debt/Equity	~0.0x	Strong balance sheet
Beta	1.44	High volatility

Decision: REJECT (Not a Value Investment)

Rationale: First Majestic fails Graham's defensive criteria, Buffett's quality criteria, and Klarman's margin of safety requirements. The company has lost money in 4 of the past 5 years, has no identifiable moat, and is essentially a leveraged bet on silver prices. At a P/E of 154x, there is no margin of safety - the stock requires silver to reach triple-digit prices just to justify current valuation.

Phase 0: Why Does This Opportunity Exist?

The Bull Case (Why It Might Be Cheap)

Silver supply deficit - 4th consecutive year of deficit (149M oz in 2024)
Growing industrial demand - Solar panels, EVs consuming 250M oz/year
Transformative acquisition - Gatos Silver doubles production capacity
CEO's triple-digit silver call - Keith Neumeyer believes $100+ silver inevitable
First Mint vertical integration - Direct silver sales at premium to spot

The Reality Check (Why It's NOT Cheap)

At $21.50, First Majestic trades at:

154x trailing earnings
4.1x book value
26x EBITDA
10.9x revenue

This is NOT a value opportunity. The market has already priced in:

Successful Gatos integration
Continued silver price appreciation
Margin expansion from operational improvements
Multiple years of production growth

Conclusion: There is no margin of safety. This is momentum investing disguised as silver exposure.

Phase 1: Risk Analysis (Inversion)

"How Could This Investment Lose 50%+ Permanently?"

1. Silver Price Collapse (-40% to -60% impact)

Probability: 25%
Silver is notoriously volatile (range of $11.73 to $34.84 in past 10 years)
A recession or dollar strength could push silver back to $15-20/oz
At $20 silver, AG's mines become barely economic at AISC of $21/oz
No pricing power - pure commodity price taker

2. Mexico Political/Regulatory Risk (-30% to -50% impact)

Probability: 20%
All producing mines are in Mexico
Previous AMLO administration was hostile to mining
New president Sheinbaum untested over multi-year horizon
Mining tax increases, permit delays, or nationalization threats

3. Operational Execution Failure (-20% to -40% impact)

Probability: 25%
San Dimas had significant labor issues in 2024
La Encantada had water supply crisis
Gatos integration risks (largest acquisition ever)
Grade decline is industry-wide challenge

4. Dilution and Capital Raises (-15% to -25% impact)

Probability: 30%
Company has history of equity raises
$230M convertible notes could convert, diluting shareholders
CapEx requirements ($182M in 2025) may require more capital

5. Cost Inflation Eroding Margins (-10% to -20% impact)

Probability: 40%
Mexican peso appreciation hurts (most costs in pesos)
Energy costs, labor costs rising globally
AISC has risen from $14/oz (2020) to $21/oz (2024)

Inversion Summary Table

Risk Event	Probability	Impact	Expected Loss
Silver price collapse	25%	-50%	-12.5%
Mexico political risk	20%	-35%	-7.0%
Operational failures	25%	-25%	-6.3%
Dilution/capital raises	30%	-20%	-6.0%
Cost inflation	40%	-15%	-6.0%
Total Expected Downside			-37.8%

Bear Case (3-Sentence Short Thesis)

First Majestic is a perennial money-loser masquerading as a growth story, with losses in 4 of 5 years despite favorable silver prices. The stock trades at 154x earnings in anticipation of a triple-digit silver price that may never arrive. When silver inevitably corrects or costs continue rising, the stock could easily return to its $5-10 historical trading range.

Pre-Defined Sell Triggers (If Owned)

Thesis Break: Silver spot price falls below $22/oz for 3+ months
Moat Erosion: AISC rises above $25/oz without commensurate price increase
Management Failure: Keith Neumeyer resigns or company does large dilutive raise
Valuation: P/E ratio exceeds 200x or stock price exceeds $30

Phase 2: Financial Analysis

ROE Decomposition (DuPont Analysis)

Year	ROE	Profit Margin	Asset Turnover	Equity Multiplier
2024	-7.5%	-18.2%	0.28x	1.46x
2023	-12.8%	-30.1%	0.29x	1.46x
2022	-8.7%	-20.0%	0.34x	1.29x
2021	-0.3%	-0.8%	0.28x	1.28x
2020	1.5%	2.2%	0.25x	1.25x

Conclusion: Consistently negative ROE driven by razor-thin (often negative) profit margins. This is NOT a high-quality business by Buffett standards.

Owner Earnings Calculation (FY 2024)

Net Income:                         -$101.9M
+ Depreciation/Amortization:        +$128.6M
- Maintenance CapEx (est. 60%):     -$69.1M
- Working Capital Changes:          -$10.0M (estimated)
= Owner Earnings:                   -$52.4M (NEGATIVE)

Per Share: -$0.18 (using 295M shares)

Conclusion: The company destroys value for shareholders on an owner earnings basis.

Valuation Trinity

1. Liquidation Value (Floor)

Tangible Book Value: $1,351M / 295M shares = $4.58/share
Net Current Asset Value (NCAV): ($369M - $628M) = Negative
Current price $21.50 = 370% premium to tangible book

2. DCF Valuation (Conservative Assumptions)

Assumptions:

Silver price: $28/oz (current level)
Production: 30M AgEq oz/year
AISC: $21/oz
Net margin: 7% (assuming silver stays elevated)
Growth: 3% perpetual
Discount rate: 12%

2025E Revenue: $900M
2025E Net Income: $63M
Owner Earnings (adj): ~$100M

DCF Value = $100M × (1 / (0.12 - 0.03))
         = $100M × 11.1
         = $1,111M / 490M shares
         = $2.27/share

Even with optimistic assumptions, DCF suggests significant overvaluation.

3. Private Market Value

Comparable M&A transactions in silver mining:

Typically 0.5-1.0x NAV for operating mines
AG's NAV (using stated reserves at $28 silver): ~$1.5B
Private market value: $1.5B × 0.7 = $1.05B
Per share: $2.14/share

Valuation Summary

Method	Value/Share	vs. Current ($21.50)	MOS
Tangible Book Value	$4.58	370% premium	-73%
NCAV	Negative	N/A	N/A
DCF (Optimistic)	$2.27	847% premium	-89%
Private Market Value	$2.14	905% premium	-90%
Intrinsic Value	$3.00	617% premium	-86%

Conclusion: By every traditional value metric, AG is massively overvalued. The stock is pricing in transformational silver price appreciation that has not yet occurred.

Phase 3: Moat Analysis

Moat Assessment: NONE

First Majestic has no sustainable competitive advantage:

Moat Source	Present?	Evidence
Brand Power	No	Cannot charge premium for silver; commodity product
Cost Advantage	No	AISC of $21/oz is mid-pack; higher than Fresnillo, Coeur
Switching Costs	No	Silver is fungible; customers switch freely
Network Effects	No	Not applicable to mining
Regulatory Moat	Weak	Mining permits have value but not unique
Resource Scarcity	Weak	Good assets but not irreplaceable

Competitive Position

Company	AISC ($/oz)	Silver % of Revenue	2024 Production (M oz AgEq)
Pan American Silver	~$18	24%	~20M
Hecla Mining	~$12	44%	~15M
Coeur Mining	~$18	34%	~15M
First Majestic	$21	55%	22M
Fresnillo	~$15	60%	~50M

Competitive Advantage Period: 0 years (no moat)

Moat Durability Assessment

The only "advantage" First Majestic has is:

Highest silver purity (55% vs peers 24-44%) - but this is just asset allocation, not moat
First Mint vertical integration - novel but tiny (~6% of production)
Large land packages (102K+ hectares each at Gatos and Santa Elena) - exploration optionality

These are not sustainable competitive advantages. Any competitor can:

Buy silver-focused assets
Build a minting facility
Acquire exploration acreage

Moat Trajectory: Stable to narrowing (industry-wide grade decline is eroding all miners)

Phase 4: Management & Capital Allocation

Keith Neumeyer (CEO since 2003)

Positives:

Built company from scratch to $10B market cap
Strong operator with 20+ years mining experience
Aligned with shareholders (owns ~1% = ~$100M stake)
Vocal silver advocate (though this is marketing, not fundamentals)

Negatives:

Triple-digit silver predictions have not materialized
Shareholder value destruction (losses in 4 of 5 years)
Large acquisitions at potentially cyclical peaks

Capital Allocation Track Record

Use of Cash (2020-2024)	Amount	Assessment
CapEx (sustaining + growth)	~$500M	Necessary but high
Gatos Acquisition	~$1,000M	Transformative but risky timing
Dividends	~$20M	Token amount
Buybacks	~$5M	Minimal
Exploration	~$150M	Appropriate

Grade: C - Significant capital deployed without commensurate value creation

Insider Activity

Minimal insider buying despite "conviction" in silver
Convertible notes suggest some management/board hedging

Phase 5: Catalyst Analysis

Potential Positive Catalysts

Catalyst	Probability	Timeline	Impact
Silver breaks $35+ resistance	30%	6-12 months	+30-50%
Gatos synergies exceed guidance	40%	12 months	+10-15%
Major exploration discovery	20%	12-24 months	+15-25%
First Mint reaches 10% of production	60%	12 months	+5-10%

Potential Negative Catalysts

Catalyst	Probability	Timeline	Impact
Silver falls below $25	40%	6-12 months	-30-40%
Mexico regulatory issues	25%	12-24 months	-20-30%
AISC exceeds $23/oz	30%	12 months	-15-25%
Dilutive equity raise	20%	12-24 months	-10-15%

Net Catalyst Assessment: Balanced to slightly negative given valuation starting point.

Klarman Lens Analysis

Downside Case

If silver returns to $22-25/oz (its 2023-early 2025 range), AG's mines become marginally economic at best. With AISC of $21/oz, there would be minimal FCF, losses would resume, and the stock could easily trade back to $8-12 per share - a 40-60% decline from current levels.

Why Market Might Be Wrong (Bull Case)

Silver supply/demand fundamentals truly are structural (not cyclical)
ESG/green energy demand creates sustained floor for industrial silver
Central bank gold buying could extend to silver
Gatos acquisition transforms company into larger, more profitable entity

Why Market Might Be Right (Steelman Bear Case)

Silver has disappointed bulls for 40+ years
Paper market (COMEX) can suppress prices indefinitely
Recycling and substitution increase with higher prices
Mining is inherently a value-destroying business (replacing reserves is expensive)

Potential Catalysts to Close Value Gap

Without a significant silver price increase, there is no value gap to close - the stock appears fairly priced to overvalued for current silver prices.

Final Recommendation

Investment Recommendation Box

┌─────────────────────────────────────────────────────────────────┐
│                     INVESTMENT RECOMMENDATION                    │
├─────────────────────────────────────────────────────────────────┤
│ Company: First Majestic Silver Corp.  Ticker: AG                │
│ Current Price: $21.50    Date: 2026-01-17                       │
├─────────────────────────────────────────────────────────────────┤
│ VALUATION SUMMARY                                                │
│ ┌─────────────────────────┬─────────────┬─────────────────────┐ │
│ │ Method                  │ Value/Share │ vs Current Price    │ │
│ ├─────────────────────────┼─────────────┼─────────────────────┤ │
│ │ Graham Number           │ N/A         │ Negative earnings   │ │
│ │ Net Current Asset Value │ Negative    │ N/A                 │ │
│ │ Tangible Book Value     │ $4.58       │ -79% (overvalued)   │ │
│ │ DCF (Optimistic)        │ $2.27       │ -89% (overvalued)   │ │
│ │ Private Market Value    │ $2.14       │ -90% (overvalued)   │ │
│ │ Owner Earnings (10x)    │ Negative    │ N/A                 │ │
│ └─────────────────────────┴─────────────┴─────────────────────┘ │
│                                                                  │
│ INTRINSIC VALUE ESTIMATE: $3.00 (commodity-adjusted)            │
│ MARGIN OF SAFETY: -86% (SEVERELY OVERVALUED)                    │
├─────────────────────────────────────────────────────────────────┤
│ RECOMMENDATION:  [ ] BUY  [ ] HOLD  [ ] SELL  [X] REJECT        │
├─────────────────────────────────────────────────────────────────┤
│ BUY PRICE (Buffett Entry):    $2.10 (30% below IV)              │
│ ACCUMULATE PRICE:             $2.40 (20% below IV)              │
│ FAIR VALUE:                   $3.00 (Intrinsic Value)           │
│ TAKE PROFITS PRICE:           N/A (Not recommended to own)      │
│ SELL PRICE:                   N/A (Not recommended to own)      │
├─────────────────────────────────────────────────────────────────┤
│ POSITION SIZE: 0% of portfolio                                   │
│ CATALYST: Silver price > $50/oz required for value thesis       │
│ PRIMARY RISK: Complete commodity price dependence               │
│ SELL TRIGGER: Already REJECT - do not buy at current prices     │
└─────────────────────────────────────────────────────────────────┘

Reasons for REJECT

Fails Graham's Criteria:
- Not profitable consistently (losses in 4/5 years)
- P/E of 154x far exceeds 15x threshold
- P/B of 4.1x far exceeds 1.5x threshold
- No 20-year dividend record
Fails Buffett's Quality Test:
- ROE is negative (not >15%)
- No identifiable moat
- Pure commodity business
- Cannot explain why this will compound wealth
Fails Klarman's Margin of Safety:
- Stock trades at 617% premium to intrinsic value
- No catalyst to realize value
- Requires silver to triple just to justify current valuation
Fails Munger's Inversion Test:
- Many ways to lose 50%+ permanently
- Single commodity dependence
- Country concentration in Mexico

Alternative Approaches to Silver Exposure

If you want silver exposure, consider:

Physical silver - Direct commodity exposure without operating risk
Silver ETFs (SLV, SIVR) - Lower cost, no management risk
Streaming companies (WPM, FNV) - Lower risk, royalty model, better economics
Wait for AG - At $5-8, this becomes potentially interesting

Source Documentation

Primary Documents Downloaded

Annual Report 2024 (10.2 MB PDF)
Annual Report 2023 (10.8 MB PDF)
Annual Report 2022 (9.4 MB PDF)
Form 40-F 2024 SEC Filing (4.9 MB PDF)
Corporate Presentation (9.1 MB PDF)

API Data Retrieved

AlphaVantage: Income Statement, Balance Sheet, Cash Flow
AlphaVantage: Company Overview
AlphaVantage: Earnings Transcripts (Q4 2024, Q2 2025)
EODHD: Historical Prices (5 years, 1,266 data points)

Key Sources

First Majestic IR: firstmajestic.com/investors
SEC EDGAR: Form 40-F
Silver Institute: silverinstitute.org