First Majestic Q3 Revenue Rises 38%, But Labor and Tax Issues Cloud Outlook

What happened

First Majestic Silver reported Q3 2026 revenue of $394 million, a 38% increase year-over-year, driven by higher metal prices and volumes. However, the company is navigating a labor disruption at its San Dimas mine, which could curtail near-term production and offset some of the revenue gains. Additionally, the company is involved in a multistep process to resolve a Mexican tax dispute, which may result in a cash outflow and distract management from operations. These issues arise as the company continues to invest heavily in its mines, with capex still running high relative to its $213–$236 million guidance, and the board has yet to demonstrate sustained adherence to the 2%-of-revenue dividend policy. The market is likely to focus on how management balances these challenges with its capital return commitments, especially given the still-elevated valuation with P/E around 62 and EV/EBITDA near 16.

Implication

The 38% revenue increase is positive, but it is largely a function of metal prices; the underlying operational disruptions at San Dimas and the unresolved tax dispute reduce the visibility of future cash flows. The San Dimas labor disruption could lead to lower silver production in Q4, directly impacting the revenue base used to calculate the 2% dividend and potentially forcing the board to reduce or skip the payout. The Mexican tax dispute may require a significant cash settlement or ongoing legal expenses, further straining free cash flow and reducing the buffer that the company's $937 million cash position offers. With capital expenditures still heavy and the dividend policy discretionary, the market may reprice the stock if the next dividend declaration falls short of the 2% formula, especially given the high P/E and EV/EBITDA multiples. Until there is clarity on the labor situation and tax resolution, a WAIT stance remains appropriate, with an attractive entry only near $18, where the liquidity and asset base offer a better margin of safety.

Thesis delta

The core thesis that AG is a high-beta silver proxy with a dividend credibility test is unchanged; however, the new labor disruption and tax dispute introduce additional near-term risks to cash flow that could accelerate a dividend cut. The revenue growth supports the top-line leverage, but the operational and legal overhangs increase the probability of a bear scenario where the board uses discretion to reduce dividends. As a result, the WAIT rating stands, but the risk-reward has tilted slightly more negative until these issues are resolved.