First Majestic's Jerritt Canyon Drill Results: Incremental Positive But Core Thesis Unchanged

What happened

First Majestic announced positive 2025 drilling results at its Jerritt Canyon Gold Mine, highlighting potential for expanding gold resources in open-pit and underground areas. This promotional news aims to showcase growth, but it sidesteps the critical operational concerns emphasized in the DeepValue report. The report underscores AG's equity reliance on the Los Gatos silver mine hitting 4,000 tpd throughput by H2 2026 to justify its stretched valuation. Despite the exploration optimism, AG's 2026 guidance shows declining silver production, and valuation metrics like P/E 155 offer no earnings cushion. Thus, while Jerritt Canyon adds long-term optionality, it fails to address the fundamental need for Los Gatos proof and silver market stability.

Implication

Investors should treat the Jerritt Canyon news as a minor positive for resource growth, not a catalyst for near-term stock performance. The core thesis remains focused on Los Gatos achieving 4,000 tpd by H2 2026 and managing costs amid lower silver guidance. AG's valuation is excessive, with high multiples leaving no margin for error and making operational misses costly. The convertible note overhang at ~$22.36 could limit upside, and crowded momentum increases vulnerability to silver volatility. Therefore, maintain a cautious stance, awaiting concrete Los Gatos progress per the DeepValue report's 'WAIT' rating.

Thesis delta

There is no material shift in the investment thesis due to this news. The Jerritt Canyon exploration results are incremental and do not impact the key drivers—Los Gatos operational execution and silver market dynamics—that underpin AG's overvalued and catalyst-dependent equity story.