Why a Silver Company Is Spending $75M to Restart a Gold Mine

Here is a company that has spent 24 years telling the market there is no substitute for silver. It is now committing US$75 million to restart a gold mine.

That is the tension worth sitting with before rushing to resolve it. First Majestic Silver Corp. has built its entire identity around a single metal, yet its 2026 capital programme is being driven by a gold restart in Nevada, the sale of producing silver assets, and aggressive drilling at under-explored ground.

This is not a company in maintenance mode. First Majestic has increased its 2026 capital guidance by 47%, from US$213-236 million to US$318-344 million, a deliberate acceleration rather than a routine adjustment.

The First Majestic Silver strategy unfolding across 2025 and 2026 rests on three moves: restarting a mothballed gold mine ahead of schedule, divesting two silver assets while keeping equity in the buyers, and deepening organic development at core operations. What follows breaks down the logic of each move and what, taken together, they reveal about how management is thinking about value creation over the next three to five years. You will leave with a concrete operational roadmap, not a corporate summary.

Why First Majestic is restarting a gold mine (and what that says about the strategy)

A silver company spending US$75 million to bring a gold mine back online looks, at first, like a strategy contradicting its own brand. The resolution is simpler than the tension suggests: management is following asset economics.

Jerritt Canyon, located in Nevada, is a past-producing gold operation that was placed on temporary suspension in March 2023. It has since been reclassified as an advanced-stage development asset rather than an abandoned project, and the difference matters. First Majestic never wrote it off; it parked it until the numbers made sense.

The restart was announced formally on 2 April 2026. Three converging factors drove the decision: an expanded resource base, sustained elevated gold prices, and two years of successful drilling results.

Sustained elevated gold prices were one of the three converging factors management cited for the Jerritt Canyon restart decision, and the macro backdrop driving those prices, including dollar dynamics and central bank accumulation patterns, is a critical input for judging whether the project economics remain viable through the 2027 production timeline.

Management has been candid that Jerritt Canyon is a gold asset while defending the restart as financially rational under current price assumptions. The framing preserves the silver identity by treating the mine as opportunistic capital deployment, not a strategic pivot away from silver.

That distinction is the interpretive point for you as an investor. The US$75 million commitment tells you First Majestic will follow economics wherever they lead, which means its commodity sensitivity profile is broader than the “pure-play silver” label implies. Read the company as silver-tilted, not silver-only.

The resource base and timeline underpinning the decision

The Mineral Resource base underpinning the restart stands at 4.1 million ounces gold Measured and Indicated and 3.7 million ounces Inferred, per end-2025 estimates referenced in the April release. Measured and Indicated resources are the higher-confidence categories in mineral reporting; Inferred carries lower geological certainty.

The CIM Definition Standards for Mineral Resources establish the geological confidence thresholds that separate Measured, Indicated, and Inferred categories, with Measured carrying the highest certainty and Inferred the lowest, which is why the split between Jerritt Canyon’s 4.1 million ounce Measured and Indicated base and its 3.7 million ounce Inferred figure carries real weight in assessing restart viability.

Preparatory work is already advancing on multiple fronts:

• US$13 million for surface support and initial fleet
• US$12 million for plant upgrading, beginning Q2 2026
• US$13 million for underground preparation, including the Smith-SSX underground reopening
• US$15 million for exploration, covering 42,000 metres of planned 2026 drilling

Equipment orders for an entirely new fleet have been placed and confirmed, and key management and supervisory positions have been filled. First Majestic has engaged Stantec Consulting Services Inc. to complete a pre-feasibility study, referred to internally as a “production study,” targeted for Q4 2026.

That study is the next major disclosure event for Jerritt Canyon, making it the near-term milestone to watch. At the Q2 2026 earnings call on 30 July 2026, management specified Q3 2027 as the working start quarter, and commentary at the Beaver Creek Precious Metals Summit confirmed the restart is proceeding ahead of schedule.

First production at Jerritt Canyon is targeted for the second half of 2027, with Q3 2027 as the working internal start quarter.

What “pure-play silver” actually means when the portfolio is in motion

Before looking at the specific deals, you need the framework that makes them coherent. First Majestic is not simply offloading assets; it is running a divestiture-plus-equity-retention model, and understanding that model changes how the transactions read.

The starting logic is portfolio scale. Management describes assets producing roughly 1-2 million ounces annually as insufficient to justify continued management focus, which makes them divestiture candidates regardless of how well they operate. The question is not whether an asset works; it is whether it deserves scarce management bandwidth.

The mechanism is where it gets interesting. Rather than selling outright and walking away, First Majestic converts a lower-priority asset into immediate cash and capital for redeployment while retaining upside through shareholdings in the acquirer and contingent payment structures.

The divestiture-plus-equity-retention model First Majestic is running at Del Toro and La Preciosa echoes a broader pattern among major mining companies, where sellers convert operating exposure in non-core assets into financial positions in smaller, more focused acquirers rather than exiting entirely for cash.

That is a different animal from a clean sale. Here is the contrast:

• Full divestiture: the seller exits entirely, takes the cash, and forgoes any future upside if the buyer advances the project.
• Equity-retention model: the seller takes cash now, keeps a shareholding in the acquirer, and adds contingent payments tied to future milestones, converting operating exposure into financial investment exposure.

For a company with a 24-year operating history, this is a deliberate strategic evolution rather than a distress response. The retained stakes mean First Majestic does not fully leave a divested asset; it swaps day-to-day operating control for a financial position whose value depends on the acquirer’s execution.

The 47% capex increase is the quantitative evidence that this is working as designed. Capital freed from non-core assets is being redeployed into growth programmes, not returned to the balance sheet.

For you, the read is straightforward. The company’s operational exposure is narrowing while its financial exposure to junior acquirers is growing, which is a different risk profile than a straightforward operating-asset sale would produce.

The Del Toro and La Preciosa transactions in detail

The Del Toro sale is the fully documented case study of the model in action. The La Preciosa divestiture is real but only partly visible, and being honest about that gap is part of reading the strategy properly.

Del Toro is a 100%-owned, past-producing silver mine in Zacatecas, Mexico, on care-and-maintenance since January 2020. First Majestic sold it to Sierra Madre Gold and Silver under a share purchase agreement dated 17 December 2025, with the transaction closing in June 2026.

The total consideration runs up to US$60 million, but the structure matters more than the headline. Only half is upfront; the rest is contingent on Del Toro actually advancing.

Post-closing, First Majestic holds approximately 62.43 million Sierra Madre shares, representing roughly 24.77% of issued shares on a non-diluted basis. Management described Sierra Madre as well-suited to develop smaller-scale silver projects, matching asset scale to acquirer capability.

The contingent structure tells you something specific: First Majestic is not liquidating at whatever price the market offers. The milestone payments mean it retains participation in Del Toro’s success, which pays off only if Sierra Madre advances the mine toward production.

La Preciosa is where the picture goes dark. First Majestic confirmed at the Beaver Creek Precious Metals Summit that the asset was divested to Silverstone with an equity stake retained.

The specific terms of the La Preciosa divestiture to Silverstone, including consideration amount, equity percentage, and closing date, have not been publicly disclosed as of September 2026. Investors should watch for these figures in future corporate releases.

Together, these deals define the funding source for the growth programme. The upfront Del Toro proceeds partially offset the 47% capex increase, while the retained equity keeps future optionality on the table.

Santa Elena’s two-portal programme and the Los Gatos exploration push

Divestitures fund the strategy; organic development is what the money buys. The Santa Elena two-portal programme is the clearest expression of it, deepening access at an existing mine rather than acquiring a new one.

First Majestic has budgeted an additional US$12 million in 2026 for the Santo Niño and Navidad portals, covering construction, underground access, decline, and ramp development. Both portals have received construction permits, and this US$12 million is explicitly identified, alongside Jerritt Canyon, as a driver of the 47% capex increase.

The 2026 portal budget covers:

• Construction permits, both received
• Underground access and decline development
• Ramp construction
• The full US$12 million development envelope

The development sequencing is staggered, and the timing is the interpretive point. Santo Niño had first blasting targeted for around 15 August 2026, with ore expected at the mill by end-2027. Navidad follows on an approximately 18-month lag, with ore delivery targeted around mid-2029.

Those dates mean production growth from organic development is a multi-year process, not a near-term catalyst. Portal approvals are not production events, and you should calibrate expectations to end-2027 and mid-2029 rather than treating permits as immediate output.

Los Gatos sits earlier in the cycle. First Majestic has filed an updated NI 43-101 technical report, the standardised format for public disclosure of mineral projects, and allocated incremental 2026 capital for equipment to support higher throughput.

There is a genuine data gap here. Specific reserve tonnes, resource grades, and production volumes from the updated report are not available in accessible disclosure summaries as of September 2026, and management characterises the concessions as largely undeveloped and in the early stages of active exploration. Additional drilling updates were described as expected within roughly two months of September 2026, implying a November 2026 timeframe.

The practical takeaway is that the growth thesis does not hinge on any single event. Jerritt Canyon, Santa Elena, and Los Gatos are three distinct production vectors on three different timelines, which spreads execution risk across the portfolio.

What the overhaul signals about where First Majestic is heading

Pull the three pillars together and a coherent picture emerges. Divest sub-scale assets while retaining upside through equity, redeploy the freed capital into large-resource, long-life projects, and concentrate management bandwidth where scale potential is meaningful.

The total 2026 capital programme of US$318-344 million is the aggregate expression of that ambition. It funds a gold restart, two silver portals, and early-stage exploration simultaneously, which is why the near-term production mix is more complex than the silver-focused brand implies.

The company is targeting the profile of assets like San Dimas, in operation for approximately two centuries. Long-life, established, and large enough to justify sustained focus is the template management is applying across the portfolio.

The honest tension remains. First Majestic’s silver identity is being maintained as an investor-positioning framework, even as the 2026 capital programme is dominated by a gold restart and exploration. That is not a criticism; it is simply the reality you should hold alongside the brand.

Mining company valuations shift materially when a company’s commodity exposure profile changes, and First Majestic’s simultaneous operation of silver assets, a restarting gold mine, and equity stakes in junior developers means investors applying a single metal’s price multiple to the whole entity will systematically misprice it.

Three milestones that will define the strategy’s early scorecard

Rather than forecasting outcomes, treat the following as a practical monitoring framework:

1. Stantec pre-feasibility study, Q4 2026. The next formal project-economics disclosure for Jerritt Canyon, and the moment the restart thesis becomes testable against project-level numbers at current gold prices.
2. Los Gatos drilling update, approximately November 2026. A near-term catalyst for the exploration narrative.
3. Jerritt Canyon first production, targeting H2 2027. The point at which the US$75 million restart spend begins converting into output.

A fourth item stays open: the La Preciosa transaction terms remain publicly undisclosed and should be watched for in future corporate releases. Retained stakes such as the roughly 24.77% Sierra Madre position also mean part of First Majestic’s future value now tracks a junior developer’s execution rather than its own.

First Majestic’s 2026 capital programme of US$318-344 million represents a 47% increase from prior guidance, reflecting simultaneous acceleration across three major growth initiatives.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Past performance does not guarantee future results, and financial projections are subject to market conditions and various risk factors. Forward-looking statements regarding restart timelines, production targets, and study outcomes are speculative and subject to change based on market developments and company performance.