➡ Silver is a crucial metal used in various industries, from building nuclear power plants to manufacturing cell phones. However, the supply of silver is dwindling, with the mining sector unable to produce more and recycling efforts struggling to meet demand. To increase production and meet the deficit, the price of silver needs to rise significantly to incentivize miners and recyclers. This situation is further complicated by the fact that major mining companies undervalue assets, hindering investment in new mines.

➡ This text discusses the importance of silver in electronics manufacturing, with a focus on the differences between North American and Chinese smelting industries. North American smelters often ignore many metals in mined rock due to cost and lack of demand, while Chinese smelters are designed to extract a variety of metals for their electronics industry. The text also covers the acquisition and success of the Gatos Silver mine, and the ongoing exploration efforts to ensure the mine’s longevity. Finally, it mentions the First Majestic Mint’s efforts to meet the high demand for silver among investors.

➡ In 2003, a mining company decided to build its own mint, a task that required a new team and equipment. By March 2024, the mint was operational and processed 5% of the company’s global silver production. In the first quarter of 2025, this increased to 7%, with a goal of reaching 10% by the end of the year. The company always maintains a significant amount of silver in its vaults, with financial statements to be released in August.

Gold has been the granddaddy is now sucking silver along. But it’s really is very much a major supply, demand, fundamental story. And I could tell you, Chris, that, you know, on our travels, you know, around the world over the last 12 months, you know, we’re getting approached by big institutions that not the hedge funds, I’m not talking about traders, I’m talking about actual fundamental pension funds, mutual funds, you know, long term sticky investors that are looking at this market and saying, hey, this is a market that we have to pay attention to. The land of Arcadia.

Well, hello there my friends, Chris Marcus here with you for Arcadia Economics. And it’s quite nice because we are live at the Rick Rule symposium here in Boca Raton, Florida. And I’m joined by someone that very familiar face and looking quite sharp today. Keith, it’s pleasure to be back here with you. And gee, as I’m sitting next to you, I’m thinking as a couple years back we’ve been doing this, I remember the first time I saw you at of the other Rick Rule symposiums back in Vancouver. And nice to see all the things that have happened since then, one of which we have a higher silver price, which I know is making you happy these days and also helpful for first Majestic.

So first of all, welcome on in and how’s everything been going? We’re on day two here, but yeah. Any thoughts on the show so far? Well, great seeing you again, Chris. It’s been been a while. I think it’s been about a year since the last time you and I met face to face. And I keep watching you on YouTube and I like what you’re doing out there and supporting the silver space. And I do the small things I can do in my world and been doing this for 22 years and we have the strongest balance sheet ever in the company’s history, which is pretty cool.

And we just pulled off a major acquisition, the largest acquisition in the company’s history in January of this year. And you know, this year 2025 will produce something in the order of, you know, 32ish, you know, million, 32 million ish silver equivalent ounces of silver, of which 55% of that is silver, pure silver, and 35% of that is gold, and the balance is in the form of lead and zinc. So we’re in a super strong position to take advantage of these higher metal prices at, you know, $35, $36 silver. You know, it’s, it’s nice, of course, but you know, I think we’ve got a Lot of upside ahead of us over the next.

Yeah. And Pete, certainly it’s nice to see sometimes the way life works out where especially. And we’ll touch on the Gato Steel, which curious to see as now you’ve incorporated them in any new things you’ve learned. And in case you want to give us a. Give the audience a surprise on the upcoming earnings, we can do that here, too. Although we’ll keep you out of trouble on that one. Well, on that topic, our production numbers, Q2 production numbers come out literally in, I think, two or three hours. Okay. So this video will probably be public after the news release goes out.

So those people that are watching, you know, go have a look at Q2 production numbers. You know, good, you know, improvement, obviously, but we’re expecting to, you know, have great Q3, Q4 as well. All right, well, maybe we’ll get this one out tonight so people can get that update before the numbers come out and keep perhaps first place to start, obviously, like I was saying, nice timing where you have the increased production with the new composition of the company at the same time that we do finally have a silver rally. And obviously you have a unique access and insight to things going on in the silver market.

Going back to 2024, where we had a silver price starting at $22. I think we’re still over 37 bucks today. Curious, what do you think has been driving silver in particular? Because, yes, we know there’s the deficit. We see the inventories coming down and all the other things you and I and others have about. But curious what your thought is on why that particular time did silver start to move like it has over the past year and a half? Well, the silver story has been, you know, hidden from the big investors of the world. And when I say hidden, I don’t mean it was hidden, you know, covertly, or I just mean it’s hidden because no one looks at the silver space.

You know, no one. None of the big investors globally understand silver. That’s why we’re here. No, it’s. It. And. But it’s shocking, quite honestly. Right? You know, we, you know, everything. This video here would not be possible without silver. You know, us being here today would not be possible without silver. You know, you know, we’re trying to electrify the planet to bring, you know, more energy and electricity to the human race. And that would not be possible without silver. So, you know, and, and. But the institutional shareholder base, the big investors on a global scale, don’t have a clue that how silver actually Fits into the whole scheme of things.

You know, they talk about lithium or they, you know, lately they’ve been talking about uranium. But you know, when do you see silver get talked about in a headline somewhere solely or related in any way to the electrical electrification of the planet? You don’t. Right. So I’m out there for the last 22 years, you know, putting perspective jets together, trying to educate the investor base out there about the importance of investing in silver. And I figured silver would hit 50 bucks when I put the company together back in 2002, which it did. I didn’t expect silver is going to go from 50 to 12 over the next few years, which shocked the hell out of everyone and it stayed at low prices for quite some time.

Now we’re back over 35, you know, nice place to be as a silver producing company, of course, but we still got tons of room to go and you know, gold has been, the granddaddy is now sucking silver along. But it’s really is very much a major supply, demand, fundamental story. And I could tell you Chris, that, you know, on our travels, you know, around the world over the last 12 months, you know, we’re getting approached by big institutions, not the hedge funds. I’m not talking about traders, I’m talking about actual fundamental pension funds, mutual funds, you know, long term sticky investors that are looking at this market saying, hey, this is a market that we have to pay attention to.

Yeah, I appreciate you mentioning that. That leads into my next question where following on what you said last year and a half, we have had the banks start to put out more research with a lot of the things that you’ve mentioned that we’ve talked about before. And I know obviously you’re here, you’re at Rick Rule symposium, but traveling to a lot of these shows, curious what the investor sentiment has been like. And just one last thing I’ll add there is that stood out to me. The last time I had Rick Rule on the show he was talking about what is required for a silver bull market.

And money goes into gold, then the stocks and then into silver. Many ads which we haven’t seen from the generalist until the last 13 or 14 weeks. So it seems like we’re finally seeing a shift there. And anything you could add to that would be great. You know, I could just speak from experience and when I say experience, I mean recent travels. So, you know, we, you know, we’re in London, we were in Zurich, we’re in Toronto, New York, and we’re traveling around these different cities and you know, us struggling to get a single meeting in New York, for example, a couple years ago, you know, we would be, you know, having two, three meetings in a day, just kind of twiddling our thumbs, trying to sell the silver concept or idea through the institutional shareholder base.

And then just like, it just goes over people’s heads. Why buy silver? You know, we can, we can buy gold, right? And that’s. Silver is not gold. They’re totally, totally different. I love gold, but, you know, but, but silver is not gold. And, and now, you know, we go to one of these cities globally and our schedules lined up from, you know, early, early morning to late afternoon every day. And what, what would you say to someone who has that question when they’re saying, all right, gold and silver, the same thing. How would you put that in terms of really the nuances and the differences between the two and investment sense? Yeah, you know, I came from a copper company.

I put together one of the largest copper companies in the early 90s, you know, which is still, you know, you know, what would I. It is one of the largest property companies today. And so, you know, I look at copper and silver very much the same, and silver is a lot rarer than copper, mind you, but nevertheless, they’re, they’re, they’re required in industry, you know, and, and all the things that, you know, you want to build a nuclear power plant, you know, you want to build a refinery or a smelter or you want to build whatever you want to build, you know, a bridge or an office tower or, or, you know, whatever the case may be, you know, these metals are required components in all industry on a global scale.

No matter what you want to do, build a refrigerator or freezer or a microwave oven or a cell phone or a computer, whatever the case may be, whatever you have to do requires those two metals. And when I left the car for company, I looked around and I could have easily formed a gold company back in 2002. And I actually finally made that decision on what I was going to do next after I left my predecessor company. And I chose silver because it’s just purely the supply, demand fundamentals of that metal. And back in those days, electric vehicles and solar panels didn’t even exist.

I was looking at cell phones and I just had bought a cell phone, and it was such a, like, wow, this is a pretty cool device. And, and so it was at the beginning stages when there was a ton of silver sitting around on the planet, because it was only 20 years earlier when all the governments around the world abandoned silver’s coinage and photography imploded upon itself and got replaced by electronics. So it took, you know, a good 20 years for, you know, all that above ground silver supply to be mopped up by industry. But now above ground silver supplies are depleted to such a degree, you know, we don’t even know what the numbers are.

It’s, it’s, we’ve been in five year back to back deficits now. The mining sector cannot produce a single ounce of silver more. You know, in 2016 we peaked out at 890 million ounces. We got down to 780 million ounces in Covid 2020 and now we’re kind of hovering between 830 and 850 million ounces production per year. Yet as the human race is consuming 1.2 billion ounces a year, like do the math now, like how long can that possibly last? It’s a good question. Especially Oxford Economics had a study out, I think this was two years ago now, where they did a forecast of industrial silver demand over the next decade.

Again, we’re looking over the next decade. Take it with a grain of salt. Yeah, they came back forecasting a 46% increase in industrial silver demand. Although as you point out, it’s interesting even, even if silver industrial demand stays flat unless something else happens, we’re already running this deficit, let alone if it goes higher. And we’ve seen Amazon, Microsoft starting to build energy centers. Department of Energy said we need to double or triple the grid by 2028, perhaps through all of that. Is there some way that this gets resolved without some sort of imbalance? It has become harder for me to see what that could be, but curious what you would say to that one.

Yeah, it’s, it’s, you know, recycling often gets spoken of. I just came back from Japan a couple of months ago. I went to see, you know, one of the big smelters and recyclers over there. You know, the, the struggle they have finding computer waste and there’s a whole, there’s a huge competition to buy your old cell phones and buy old computers and try to get the metal out of these old devices and they’re really not making money doing it. The margins are very, very slim and it’s a big struggle. Like this particular facility was only running at 50% capacity because they just couldn’t get the amount of supply that they need to properly run that facility.

So there’s really, you know, recycling is just not going to happen at these prices, you know, nor, nor are the miners going to produce more silver at these prices, you know, the only way we’re going to get more production in the silver space to, to meet the deficit. But you know, that, and that assumes that that consumption does not increase. If consumption remain flat, you know, we would need triple digit silver just to close the gap between current supply and current demand. And you know, let’s see if that happens or not. But the miners need to be incentivized to mine, you know, lower grade ore.

You know, we, we have cut off grades that we can’t go below because we’re not going to make money pulling, you know, low grade rock out of the ground to throw it through our mill. We’re not going to do that. But you know, at $100 silver, $50 silver or $150 silver, you know, we can go back in some of the old mining areas and potentially pull some of that rock out of the ground and get it into the mill. But we’re not there today. And for us to do that, it wouldn’t be overnight, it would take a multiple couple of years to actually put plans together in order to accomplish that.

And whether you can accumulate enough waste, you know, commuter waste and so on, to get into the refineries around the world to try to fill that demand, you know, who knows? But only time will tell. But it’s all going to be dependent on price. We need $100 plus silver to get the investment, get the miners excited, get them putting money into the ground and get the refining business excited as well. To make them make the proper investments in rebuilding their circuits for them to produce the metal that the industry needs. Yeah, I know what you mean.

And you also mentioned the time lag in there, which I think gets overlooked sometimes. Yet even if you had that hundred doll are still depending on whether it’s recycling or new mines in anywhere from a couple of years to a couple of decades. Well, you know, to that point it’s only even, you know, up until really about a year ago, the major mining companies were still using 1200, 1400 gold in their analysis of M and A opportunities. You know, so, you know, they would. And it was ridiculous. So you got gold trading at 2500, you know, 2800, 3000, now 3300.

And the major mining companies are saying, hey, we’re only going to value your asset at 1400 gold. And you know, what does that tell you as an industry? So if they’re valuing an asset at 14 hour gold in a 3:30, $300 gold environment, why would they make the investment in that mine for a 20, 30 year investment there wouldn’t. Right. And that’s what’s held back a lot of investment. If the mining sector ever wakes up and says, hey look, we’re going to reprice our ore in the ground or gold on the ground at $3,000 maybe all of a sudden, you know, investments hard to incur, you know, we don’t know.

Yeah. And also you mentioned something about the smelters in there, which reminds me of something I heard last year when I was here. The year ago this time we had that $3 spread between new York and Shanghai. Yeah. And I was told that the smelters in China had started going directly to the concentrate off takers in Latin America because. And actually we’re lowering the treatment charges to the point where they’re actually paying a credit to do the treatment to get the metal, take it back to China and sell it at the higher price. Yeah. Curious if you happen to have heard anything about that or anything along those lines that you could share.

Well, Los Gato Silver Mine, which is our most recent acquisition, the, the lead con that goes to Asia is actually, we’re getting paid for that. So there’s a, there’s a negative surcharge on that. And, and that’s where the silver is. Because silver, you know, those people listening probably don’t know how or gets processed in a mill but, or smelter. But I’ll tell you, all the silver or 90% of the silver goes into the lead con. So that’s where the value is. The value is not in the lead. The value is in the silver. The smelters will actually lose money on the lead, but they don’t really care.

But because. So they need, in Asia, they need that silver for industry. And this is where we have a disconnect in North America, which I think is slowly being realized in the institutional shareholder investor base in the west. Because they’re seeing that if China is going to continually produce all these electronics, all these products, all these solar panels, everything else, they don’t produce enough silver internally within their country to build all these products. So they have to get it in. They don’t want to stop selling computers, so they don’t really care if they pay $5 an ounce over current spot, what the North Americans are willing to sell it to them for, because there’s so little silver in a laptop that doesn’t matter to them.

You know, silver could be $200 an ounce and they wouldn’t care because you know, the margins, they’re, they’re selling that computer for make up for, you know, any small, you know, there might be, you know, in, in this laptop here there’s maybe call it a quarter of an ounce of silver or something like that. So, so you know, maybe one ounce of the most. But the screens on these things tend to be the bigger consumer of silver. But on a 40 inch television you’re talking about 3 ounces of silver approximately. So how much does it matter to them? Right, so, so that’s where the ARBIT is and, and the North American markets aren’t waking up.

The, the, the, the fact of the matter is it’s a regulatory function and you know, you know rare earths get talked about a lot and there’s a little bit off topic but you know I remember 20 years ago, you know lithium was looked at as a rare earth. But, and then lithium prices sky actually wasn’t quite 20 years, more like 10 years ago. I’m getting too old. But, and, and today you know, all these other metals are being looked at as rare earth. They’re only rare because the smelters don’t process them. Right. The mining sector, you know, in a pile of a ton of rock there’s all kinds of different metals.

And if the smelter can’t process those metals then it gets thrown into waste. There’s been no movement within the North American smelter industry to extract all these elements out of the rock that they’re getting from the mines because there’s been no money in it for them. But the Chinese have looked ahead in time because they’re huge electronics manufacturers and they need all these different metals to produce, you know, these different unique products that they produce. So they actually designed their smelters to extract all these different metals. The, the smelter I went to in Japan for example, they actually refined 20 different metals.

You know, you find a smelter in North America that processes 20 different metals, forget it. You know, you know they, they, they might produce a, you know they, they get a gold con from you know, XYZ mine out of Quebec. You know, they’ll pull the gold out, they’ll pull the copper out, they’ll pull the zinc out, they’ll pull all the easy stuff out. But the other 20 or 30 or 40 minerals that are in that ton of rock they’re going to ignore because it’s too expensive for them to pull it out. And they wouldn’t even, even if they pulled it out, they wouldn’t know what to do with it because they had to find a customer to sell it to.

So there’s no supply chain in place. So anyways, we’ve got a slightly bit off topic but that goes back to the silver story and why there’s a premium because the Chinese, the Asians need that silver for their industrial production, electronic products. Yep. And we’ll see by the time the tariff war is done, maybe they’ll just stop sending stuff to North America at some point. But outside of that it does seem a bit unbalanced. And Keith, obviously I’d like to touch on first Majestic and it’s interesting you were mentioning how a lot of analysts using a lower gold price or valuation of ounces in the which in your case probably helped out a little bit.

Obviously you had the Gatos deal last year and I guess we’re almost about a year since it was first announced and obviously now incorporated Anything that you’ve seen or learned, things that went well as you were expecting any challenges that came up that you could update people on. Yeah, Gatos was a different acquisition for us. You go back 20 years or 20 some odd years. Most of the mines or most of the assets that we purchased over that period of time have been in distress. You know, they come to the market because the company couldn’t raise money or maybe they didn’t have the proper talent or maybe it needed more investment in exploration or development or the mill was failing or whatever the case may be challenged asset.

And we’ve been able to go in and fix these old mines and, and bring them, you know, to, to modern operating businesses or structures and, and we’ve been very good at it. Gato Silver or Los Gato Silver mine, you know, is very unique because it’s brand new. You know, it was a, the mill was less than three years old. You know, 350 million dollar mill, state of the art, super clean, you know, 10 year mine life which is unheard of. Like how many underground mines have a 10 year mine life? Not too many as far as I know.

So it had everything had great management in place. Now of course there was some changes at the high levels. We put some of our own people in and moved some people around and you know, there were some layoffs but nevertheless for the most part it’s exactly the same as it was since we purchased it. And it’s cash flowing nicely. It’s a 13 million ounce producer, 70% silver. The rest in the formula is zinc. So you know, we go from a 21 million ounce silver equivalent producer in 20, 24 to a 31 million ounce silver equivalent ounce producer in 2025, of which 55% of that is silver, 35% of that is gold and the balance is lead and zinc.

So it’s really been a game changer for us and it’s been a great acquisition. Yeah. And again I will congratulate you on the timing. Certainly nice to have that incorporated while we have the. Where it is. Yeah. And also Keith, though I did want to ask you, you guys have had some nice exploration results and I found a couple new targets over the past year which obviously, I mean you talked about the life of mine obviously always a concern. So it’s, I think about, it’s not the easiest quest to do what you’re doing where you know, one mind’s running out.

You got to continuously explore. So with that said, if you could touch on the exploration success you’ve had. Yeah, sure. It’s, you know, mining is a very complicated business and it’s a very cash intensive business. You know, we always have to reinvest capital and either you have the choice of investing money or raising money from investors, which obviously we’ve had to do over the years, or sometimes you have cash flow and you can use that cash flow, develop the business, which is fortunately what we’re doing today. You know, we have 28 drill rigs active within the company.

We’re doing 255,000 meters of drilling this year. You know, huge, huge drill program. Santa Elena, which you’re referring to, you know, is a mine that’s just been given. You know, we bought that mine for $105 million back in 2015. At the time, you know, it was a lot of money and I. But we did it and it had an eight year mine life and it was producing 2.5 million ounces of silver equivalent per year. So last year, 2024, it produced 10 million ounces. You know, so it’s grown four times over that period of time. And it has an 8 year mine life, still has an 8 year mine life after 10 years of being operations.

So what does that tell you? Tells you our drill program, we’ve been doing some good drilling. Our drilling program has been pretty darn successful and we’ve continually got discoveries. We’ve had two major discoveries in the last 12 months, which is pretty exciting. And yeah, it’s a great asset and big land package, 102,000 hectare land package that mine will be producing for decades into the future. Well, I think that’s a testament. Obviously there are a couple tough years in there. Although you keep moving forward, and it’s really nice to see that here we are sitting here today and everything you just described.

And Heath, perhaps the last one. I know you have a busy interview schedule here today, but I did have this beautiful silver cube from the First Mint. Wow, that one should look familiar to you, because now you have the First Mint where you guys are. They sent this to you? They didn’t even show this to me. Someone. Well, someone got it for me from First Mint, so I don’t know if that was arranged. Maybe. Is this the. Do I have the insider piece? You might. I don’t know if they did this for you. I’m gonna have to take a picture of this before I go.

Sure. I think someone got me this to tide me over until you have the cubes back in stock, which still. That is super cool. Pretty nice. Anything you could comment on that you’ve seen through the Mint and how things are going there? You know, it’s been a real joy. You know, we. We had to solve a bottleneck. You know, we’ve been selling silver like that, you know, to investors around the world since 2008. And in 2002, it got so frustrating because they just wouldn’t give us the silver. You know, our. Our. Our purchasers, investors, you know, would go onto our website and see sold out, sold out, sold out.

And they say, hey, you guys are a silver company. Why. Why the hell can you sell a silver? I said, wow, that’s a good point. So I pulled the trigger in 2003 to build our own mint. Had to get. Had to get the people in place, of course, because we’re not a minting company. We’re a mining company. So it was a completely different skill set. So I had to pull in all these different people, find a space, buy all the equipment, and do all that wonderful stuff we did and buy. March of 2024, we’re up and running, and we’ve had a great time.

And it’s. We had 5% of our global production of silver go through the Mint in 2024. And Q1, 2025, we did 7% of our production through the Mint, and we Hope to have 10% of our production through the Mint by the end of 2025. All right, well, all I ask is that at some point, you go into your vault at first Mint, take a picture of your stack, whether it’s coming from the mine. Do you ever just have a big pile somewhere? There’s a lot of. There’s a lot of silver. There. I could tell you that we, we, our financial statements will be coming out in August.

We will, we’ll report our silver inventory number, but we do always have a substantial amount of silver in our vaults. Well, they’ve told me I can come snoop around one day the next time I make it to Las Vegas. So I will plan on that whenever I’m out there. And Keith, just thank you for making some time to join me here. I know you have a busy schedule at the conference and people are excited about silver this year, which is nice, but really nice to see the progress, how things have come along and appreciate you being a good friend for several years now and be fun to continue following this journey.

Yeah, it was great seeing again, Chris. All right, my friend. Again. You can find more about First Majestic silver@first majestic.com, which is in the description field below. And thank you to Keith. Hope you’re having a great day watching at home, and we’ll check back in with you soon.
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