News Summary
On December 17, 2025, First Majestic announced a definitive agreement to sell its non-core Del Toro Silver Mine to Sierra Madre Gold & Silver Ltd. The total consideration for the sale is up to US$60 million, structured as follows:
– Upfront Consideration: US$20 million in cash and US$10 million in Sierra Madre shares upon closing.
– Contingent Payments: Three separate milestone payments of US$10 million each. These are triggered by:
1. Defining a NI 43-101 resource of at least 100 million silver-equivalent ounces within 48 months.
2. Achieving commercial production of at least 4,000 tonnes per day for 30 consecutive days within 60 months.
3. A US$10 million payment due within 18 months of closing.
The Del Toro mine has been on care and maintenance. The transaction’s closing, expected in the first half of 2026, is subject to several conditions, including Sierra Madre completing a concurrent financing of at least CAD$40 million.
Material Impact
This is a strategically sound and financially positive transaction for First Majestic. The company is monetizing a non-producing, non-core asset that was likely incurring ongoing care and maintenance costs.
– Financial Impact: The upfront consideration of US$30 million (US$20M cash, US$10M shares) provides an immediate, non-dilutive boost to an already strong balance sheet. The company reported US$435.4 million in cash in its Q3 2025 results, and this sale will add to that war chest, providing further flexibility to fund its growth projects. The three contingent payments of US$10 million each represent significant potential upside at no cost to First Majestic.
– Strategic Impact: This sale is a clear example of portfolio optimization. Following the transformational acquisition of Gatos Silver (and its 70% stake in the Cerro Los Gatos mine) in early 2025, management is sharpening its focus on its four key producing assets and high-potential exploration projects like Navidad and Santo Niño at Santa Elena. Divesting a dormant asset simplifies the portfolio and frees up management time and resources.
– Contextual Analysis: This news follows a series of positive developments. The December 15 news highlighted exploration success and a plan to expand the Santa Elena plant. In early December, the company refinanced its debt by issuing US$350 million in new convertible notes to repurchase older notes, pushing out maturities. The Del Toro sale fits perfectly within this narrative of strengthening the company financially and operationally for future growth.
The market should react positively to this news as it demonstrates disciplined capital allocation and a clear focus on maximizing value from core assets. The risk is that the contingent payments are not realized, but the upfront value alone makes this a good deal for an idle asset.
Catalysts
– Closing of the Del Toro Sale: Confirmation that all conditions have been met, particularly Sierra Madre’s required financing, and the transaction has closed in H1 2026.
– Q4 and Full-Year 2025 Financials: These results will be critical as they will provide a full-year picture of the integrated company post-Gatos Silver acquisition, showing production, costs, and cash flow performance.
– Santa Elena Progress: Updates on the scoping study for the new Santo Niño and Navidad discoveries. Any progress on the planned plant expansion from 3,200 to 3,500 tonnes per day will be a key indicator of near-term growth.
– Updated Mineral Reserves & Resources: The company is expected to release its updated estimates, which should include a maiden inferred resource for the Navidad discovery and potential additions at Santo Niño, as indicated in the December 15 press release. This will be crucial for understanding the long-term potential of the Santa Elena district.
Materiality Conclusion
The sale of the Del Toro mine is a material positive event. While not a game-changer that alters the company’s fundamental production profile, it is a significant and intelligent strategic move. It unlocks up to US$60 million in value from a non-producing asset, improves an already strong financial position without dilution, and reinforces management’s focus on its core, high-return operations.
