If silver reaches $100 per oz

Overview of First Majestic Silver

Current Position:

• Debt: $201 million.
• Break-even Costs: Expected to drop from $25-$26 per oz to around $24 by year-end.
• 2024 Production: Approximately 22 million oz of silver equivalent, with 50% from silver and 50% from gold.

Key Projects:

• Producing Mines: Three in Mexico and Jerritt Canyon (Nevada, currently on care and maintenance).
• Recent Acquisition: Gatos Silver, expected to enhance free cash flow (FCF) and lower costs.

Financial Projections at Higher Metal Prices

1. Production Potential Post-Acquisition:
   • With the Gatos acquisition, First Majestic’s production could increase to 30 million oz at a projected AISC of $20.
2. Free Cash Flow Projections:
   • At $50 Silver: FCF=Production×(Price−AISC)=30,000,000×(50−20)=30,000,000×30=900,000,000 USD\text{FCF} = \text{Production} \times (\text{Price} - \text{AISC}) = 30,000,000 \times (50 - 20) = 30,000,000 \times 30 = 900,000,000 \text{ USD}FCF=Production×(Price−AISC)=30,000,000×(50−20)=30,000,000×30=900,000,000 USD
   • At $100 Silver: FCF=Production×(Price−AISC)=30,000,000×(100−20)=30,000,000×80=2,400,000,000 USD\text{FCF} = \text{Production} \times (\text{Price} - \text{AISC}) = 30,000,000 \times (100 - 20) = 30,000,000 \times 80 = 2,400,000,000 \text{ USD}FCF=Production×(Price−AISC)=30,000,000×(100−20)=30,000,000×80=2,400,000,000 USD
3. Market Cap Valuation:
   • Assuming a 10x multiple on FCF at $100 silver:
   Market Cap=2,400,000,000×10=24,000,000,000 USD\text{Market Cap} = 2,400,000,000 \times 10 = 24,000,000,000 \text{ USD}Market Cap=2,400,000,000×10=24,000,000,000 USD
4. Stock Price Calculation:
   • Assuming approximately 200 million shares outstanding:
   Stock Price=Market CapShares Outstanding=24,000,000,000200,000,000=120 USD/share\text{Stock Price} = \frac{\text{Market Cap}}{\text{Shares Outstanding}} = \frac{24,000,000,000}{200,000,000} = 120 \text{ USD/share}Stock Price=Shares OutstandingMarket Cap​=200,000,00024,000,000,000​=120 USD/share

Conclusion

If silver reaches $100 per oz, First Majestic Silver could potentially see its stock price rise to approximately $120 per share. This projection is highly dependent on the successful management of costs, resolution of tax issues, and the restart of Jerritt Canyon, but it illustrates significant upside potential if the company can execute its strategy effectively.