First Majestic Silver's Strategic Shift: Lower Grades, Higher Ambitions

First Majestic Silver's Q1 2026 output dips as it mines lower-grade ore, a deliberate strategy to extend mine life betting on high prices. La Encantada shines, while Jerritt Canyon restart advances.

First Majestic Silver Corp. is deliberately mining lower-grade ore, a counterintuitive strategy that underscores a calculated bet on sustained high metals prices. The company's first-quarter 2026 production results, released on April 9, reveal a planned operational pivot designed to maximize resource value rather than sheer output.

While consolidated production of 3.5 million ounces of silver and 34,341 ounces of gold met internal targets—representing 26% and 28% of annual guidance, respectively—it marked a year-over-year decline. Silver output fell 4% and gold dropped 6% from Q1 2025. Management insists this is not an operational setback but a deliberate tactic. By lowering the cut-off grade, the company can now process material that would have been uneconomical under weaker market conditions, effectively expanding its mineable resource base.

This strategic maneuvering was most visible at the individual asset level. The La Encantada silver mine emerged as a standout performer, with production soaring 48% to 829,081 ounces. This surge was driven by higher grades from the Ojuelas zone, improved ore flow, and the deployment of a new development contractor. The average silver grade there increased from 104 to 121 grams per tonne, with recovery rates climbing from 67% to 69%.

Conversely, the San Dimas operation saw expected reductions, with silver and gold production down approximately 13% and 12%, respectively. Across its Mexican underground portfolio, First Majestic processed about 1.06 million tonnes of ore, a 12% increase from the prior-year period.

The company's growth narrative is increasingly bifurcated between optimizing its existing Mexican assets and reigniting a major U.S. project. On April 2, First Majestic announced the formal restart of its Jerritt Canyon gold mine in Nevada. A $75 million investment is earmarked for 2026 to advance the project, with a feasibility study targeted for completion by the fourth quarter. The plan includes 42,000 meters of drilling at the Nevada site this year, supplementing the roughly 66,000 meters already completed in Mexico during Q1. The goal is to return Jerritt Canyon to production in the second half of 2027, supported by an expanded mineral resource base and positive drill results from the past two years.

Investors await further financial details to assess the full impact of this grade strategy. First Majestic will report its complete Q1 financial results, including cost metrics and margins, on May 12. The same date will also bring the declaration of the quarterly dividend. Operational focus will remain sharp, particularly at the Los Gatos joint venture, where the company is working toward a throughput milestone of 4,000 tonnes per day in the latter half of 2026.