First Majestic Silver Corp.
Annual Report 2023

Plain-text annual report

TSX AG / NYS E AG / FS E FMV 20 Years. The Silver Evolution. 20 03 - 2023 A NNUAL RE PORT 2 F I R S T M A J E S T I C S I LV E R C O R P. 20 Y E A R S . T H E S I LV E R E V O L U T I O N . 3 20 Years. The Silver Evolution. Vancouver-based First Majestic Silver Corp. has operated for 20 years and grown into one of the world’s largest silver producers. Our three producing silver / gold mines in Mexico collectively produced ~25 million silver equivalent ounces in 2023. We employ more than 3,700 workers in North America and represent one of Mexico’s leading employers. First Majestic is a diverse and inclusive organization, committed to so- cially responsible mining and striving to become the world’s largest primary silver producer. Our Mexican operations have been recognized for 16 consecutive years as Socially Responsible by Centro Mexicano para la Filantropía (CEMEFI). PROJECT NEVADA, USA JERRITT CANYON GOLD MINE IN PRODUCTION, MEXICO SANTA ELENA SILVER / GOLD MINE SAN DIMAS SILVER / GOLD MINE LA ENCANTADA SILVER MINE PROJECTS MEXICO DEL TORO SILVER MINE SAN MARTIN SILVER MINE TSX AG / NYS E AG / FSE FM V 2003 - 2023 ANNUAL REPORT 4 5 There’s no substitute for silver. OUR MISSION, OUR VISION, AND OUR VALUES: CONTINUING TO ACHIVE OUR GOALS 06/07 20-YEARS: OUR JOURNEY SILVER’S ENDURING ROLE IN A GREEN FUTURE MESSAGE FROM THE PRESIDENT AND CEO MESSAGE FROM THE CHIEF FINANCIAL OFFICER FIRST MAJESTIC’S SILVER BULLION STORE LA ENCANTADA SILVER MINE 08 12 16 20 26 32 20 YEARS: THE HIGHLIGHTS 2023 MILESTONES 09 14 20-YEARS: SILVER’S EVOLUTION KEY TARGETS FOR 2024 LETTER FROM THE CHIEF OPERATING OFFICER 18 OPERATING AND FINANCIAL HIGHLIGHTS 20 YEARS OF SUSTAINABLE OPERATIONS SAN DIMAS SILVER / GOLD MINE EXPLORATION OVERVIEW 22 28 34 ENVIRONMENTAL REVIEW SANTA ELENA SILVER / GOLD RESERVES & RESOURCES 10 15 19 24 30 36 AUDITED CONSOLIDATEDFINANCIAL STATEMENTS39MANAGEMENT DISCUSSION & ANALYSIS9320 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV6 7 OUR VISION / FOR FIRST MAJESTIC TO BECOME THE WORLD’S LARG- EST PRIMARY SILVER PRODUCER WHILE IMPROVING LIVES AND COMMU- NITIES IN OUR HOST REGIONS AND INCREASING SHAREHOLDER VALUE. OUR MISSION / TO PRODUCE PROFITABLE OUNCES AND TO OPTIMIZE AND GROW OUR MINERAL RESOURCES THROUGH ETHICAL, INNOVATIVE AND SUSTAINABLE PRACTICES THROUGH AN EMPOWERED WORK FORCE THAT ENCOURAGES CONTINUOUS IMPROVEMENT AND PERMANENCE OF THE ORGANIZATION. OUR VALUES / TRUST: ACT AND FIRMLY BELIEVE IN COMMITMENT AND DEDICATION FOR EACH OTHER. ACCOUNTABILITY: TAKE OWN- ERSHIP OF OUR RESPONSIBILITIES AND MEET OUR COMMITMENTS. HONESTY: ALWAYS TELL THE TRUTH, HAVE STRONG MORAL PRIN- CIPLES. CREATIVITY: TURN NEW AND IMAGINATIVE IDEAS INTO BET- TER WAYS OF DOING THINGS. SUSTAINABILITY: WORK TO IMPROVE THE QUALITY OF LIFE OF THE COMMUNITIES WHERE WE OPERATE, WHILE USING THE BEST PRACTICES. ATTITUDE: MAINTAIN A STRONG POSITIVE DISPOSITION AND COMMIT TO LEARN AND CHANGE. LOYALTY: BE TRUE TO OUR VALUES, ALWAYS LOOK AFTER THE BEST INTEREST OF OUR CO-WORKERS AND FAMILIES. WE WILL ACHIEVE OUR VISION BY: DIVERSITY, EQUITY AND INCLUSION VALUE STATEMENT: 1. Continuing to hire the industry’s best talent, 2. Aggressively pursuing the development of our existing property assets, 3. Maximizing margins and minimizing risk through company-wide R&D, optimization and modernization, 4. Ongoing investment in exploration to extend life of mines and find new discoveries, 5. Acquiring strategic mineral assets focused on silver and gold. At First Majestic Silver Corp., we value the diversity of our people, our partners, and our commu- nities. We believe a successful organization is built on our commitment in providing a respectful, equitable, diverse and inclusive work environment that promotes trust and encourages innova- tion, agility and sustainability. 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV8 F I R S T M A J E S T I C S I LV E R C O R P. 9 20-YEAR: OUR JOURNEY 20-YEAR: THE HIGHLIGHTS First Majestic began its journey in 2003, fueled by the dream of building one of the world’s top silver producers. GREAT DREAMS ARE NEVER EASY TO ACHIEVE, AND OURS WAS NO EXCEPTION. Great dreams are never easy to achieve, and ours was no exception. In the two decades since that small office opened with a handful of employees in downtown Vancouver, we have persevered through volatile market cycles, recessions, shift- ing political dynamics and the inevitable setbacks that are simply inherent in the mining business. In those two decades, we have produced over 160 million ounces of silver and 270 million ounces of silver equivalent, operated ten mines, provided thousands of good jobs, injected hundreds of millions of dollars into local economies and built one of the industry’s most progressive and efficient silver miners. Today, we’re proud to call ourselves the First Majestic Family—all 3,700 of us—as we continue our journey into the next 20 years. Through the power of this dedicated workforce, we will continue to improve lives and strengthen communities through socially and environmentally responsible operations, supplying essential metals that are helping resolve the world’s most pressing challenges. KEITH NEUMEYER President and CEO ALL 3,800 OF US ARE PROUD TO CALL OURSELVES THE FIRST MAJESTIC FAMILY. 2003: Opened our doors and raised $11.6M in a private placement financing. Acquired the La Parrilla Silver Mine, which had been dormant since 1999. Raised $43.9M. Acquired the San Martin Silver Mine and La Encantada Silver Mine. With over 850 employees, produced 1.3M ounces of silver. The Great Recession. Began trading on the TSX. Produced 3.7M ounces of silver. 2003/04 2005 2006 2007 2008 First expansion of La Parrilla. Then, acquired historical mine workings that became the Del Toro Silver Mine. Three mines operating, doubling production to 3.6M ounces of silver with over 1,300 employees. $34.4M raised. Del Toro operations commenced. Total production reached record levels of 10.6M ounces silver and 12.8M ounces silver equivalent, launching First Majestic to senior producer status. Revenues climbed to $246M with $104M net income. Three mines produced 7.6M ounces silver equivalent. Del Toro construction began. First profitable year with net income of $3.6M. Produced 3.8M ounces of silver and 4.3M ounces of silver equivalent. 2013 2012 2011 2010 2009 Acquired La Guitarra Silver / Gold Mine. Produced 8.3M ounces of silver and 9.1M ounces of silver equivalent. Revenues reached $118M with $35M in net income. Shares began trading on the NYSE. Produced over 7M ounces silver equivalent. La Encantada & San Martin expansions augmented new records of 11.7M ounces of silver and 15.3M ounces of silver equivalent with revenues of $245M. Six producing mines yielded 11.9M ounces silver, 18.7M ounces silver equivalent and $278M in revenue with lower costs. Acquired San Dimas Silver / Gold Mine into the portfolio. New production silver equivalent record of 22.2M ounces with 11.7M silver ounces. La Guitarra was closed. 2014 2015 2016 2017 2018 Another record year: 11.1 ounces silver, 16.1M ounces silver equivalent produced as AISC declined by 24% from 2014. Acquired Santa Elena Silver / Gold Mine. Record investment in exploration, development and technology. Production declined to 16.2M ounces silver equivalent and 9.7M ounces silver. Record production at Santa Elena. Started construction of First Mint, LLC. Completed sales of La Guitarra and La Parrilla silver Mines to third parties. Temporarily suspended production at the Jerritt Canyon Gold Mine to focus on exploration. Second year of Covid, revenues reached record $584.1M due largely to San Dimas and Santa Elena / Ermitaño. New production records of 26.7M ounces silver equivalent, 12.8M ounces silver. Jerritt Canyon Gold Mine acquired. San Dimas contributed to new production records: 25.6M ounces silver equivalent and 13.2M ounces silver. Suspended production at the San Martin and La Parrilla Mines. 2023 2022 2021 2020 2019 Highest silver equivalent production ever at 31.3M ounces, with 10.5M ounces silver. Bullion store sold $11.6M in silver. Royalty package on non-core assets sold for $20M. Covid greatly impacted operations, with lower production of all metals. First dividend policy announced. Finished the year with record cash of $238.6M. Suspended production at Del Toro. 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORT10 11 20-YEAR: SILVER’S EVOLUTION Green technology makes silver more important than ever. SINCE FIRST MAJESTIC OPENED 20 YEARS AGO, SILVER DEMAND HAS UNDERGONE A DRAMATIC EVOLUTION. SILVER CONSUMPTION IN 2003, AT ONLY 880.2 MILLION OUNCES, WAS MARKEDLY DIFFERENT THAN TODAY. FOR 2024, ANNUAL SILVER CONSUMPTION IS ANTICIPATED TO BE 1.4 BILLION OUNCES, SPREAD ACROSS MANY NEW APPLICATIONS. In its 2004 Silver Survey, the Silver Institute noted only four key sectors of demand: industrial, jewelry/silverware, coins/medals, and photography. There was very little discussion of electric vehicles or their batteries. A sidebar titled “New Uses for Silver” did not even mention solar power applications. The 2005 Silver Survey included only one line about solar power, noting it was “…set to see strong growth in demand over the next few years.” The Institute esti- mated solar demand at the time “would stand at around 96,000 – 128,000 ounces net per month at a minimum,” equating to about 1.1 – 1.5 million ounces per year. By 2023, photovoltaic use had exploded to 193.5 million ounces, a massive increase over the 150 million ounces consumed for solar panels in 2022. The Silver Institute forecasts solar silver demand to hit 232.0 million ounces in 2024, an increase of nearly 20% over 2023. STEADY GROWTH IN SILVER DEMAND Over the past 20 years, global silver demand has increased 36% to 1,195 million ounc- es in 2023 (reaching a record of 1,278.9 million in 2022,) dominated by investment in photovoltaics, power grid and 5G networks, consumer electronics and rising vehicle production. Investors were also buying a lot more coins and bars. The pie charts (pg. 11) illustrate the dramatic change in demand allocation from 2003 to 2023. Today, after nearly two decades of development, the solar industry is entering a new era. The growth of installed capacity has “greatly exceeded expectations,” according to the Silver Institute, and new, high-efficiency, N-type solar cells are in high demand and significantly boosting solar adoption worldwide. The Silver Institute forecasts solar silver demand to hit 232.0 million ounces in 2024, an increase of nearly 20% over 2023. A NEW ERA FOR SOLAR. A FRESH FUTURE FOR SILVER. INDUSTRIAL (Excluding Photovoltaics) PHOTOGRAPHY PHYSICAL INVESTMENT (Coins & Bars) JEWELRY & SILVERWARE PHOTOVOLTAICS 2003 SILVER DEMAND 2023 SILVER DEMAND KEY TRENDS FOR SILVER SUPPLY AND DEMAND Mine Production Forecast Global Industrial Demand PV Silver Demand & Cell Loadings* Moz 1,000 800 600 400 200 0 Moz 700 600 500 400 300 200 100 0 Moz 200 175 150 125 100 75 50 25 0 Index (2014=100) 200 175 150 125 100 75 50 25 0 2014 2016 2018 2020 2022 2024F 2014 2016 2018 2020 2022 2014 2016 2018 2020 2022 N.America C&S America Europe Oceania Asia Africa CIS Brazing Alloys & Solders Other Electrical & Electronics Fabrication Silver Leading Source: BNEF, Metals Focus *denotes silver loadings per photovoltaic cell. OTHER IMPORTANT TRENDS FOR 2023: (1) Industrial demand reached a new annual high, driven by a strong green economy. (2) For the third year in a row, and the fourth in the last five, silver demand in 2023 exceeded supply with an annual deficit of 184.3 million ounces. (3) Global mined silver in 2023 fell by 1% from 2022, to 830.5 million ounces, driven by lower output from operations in Mexico and Peru. For 2024, annual silver consumption is anticipated to be 1.4 billion ounces, spread across many new applications. 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV12 13 SILVER’S ENDURING ROLE IN A GREEN FUTURE OXFORD ECONOMICS PEPORT: Silver industrial demand will increase 46% through 2033, driven largely by 55% growth in electrical and electronics applications— including photovoltaics and electric vehicles. Jewelry and silverware demand is forecast to rise 34% and 30%, respectively. THE NEXT DECADE FOR SILVER—55% GROWTH IN ELECTRONICS Combined, the output of industrial, jewelry and silverware fabricators are forecasted to increase by 42% between 2023 and 2033—roughly double the rate of growth over the previous decade. These trends assure a steady rise in silver demand for years to come. TSX AG / NYS E AG / FSE FM V 2003 - 2023 ANN UAL REPORT 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV14 15 2023 MILESTONES KEY TARGETS FOR 2024 “ We announced revised financial and operational guidance in July, and I’m happy to report we met or exceeded all revised numbers by end of year.” —STEVE HOLMES, COO MILESTONES: 1. SILVER PRODUCTION OF 10.3 MILLION OUNCES 2. GOLD PRODUC- TION OF 198,921 OUNCES 3. SILVER EQUIVALENT (“AGEQ”) PRODUC- TION OF 26.9 MILLION OUNCES ALIGNED TO GUIDANCE 4. ANNUAL REVENUES OF $573.8 MILLION 5. ENDED THE YEAR WITH A CASH AND RESTRICTED CASH BALANCE OF $251.2 MILLION 6. CONTINUED 1% DIVI- DEND POLICY THROUGH ALL FOUR QUARTERS 7. OPENED FIRST MINT, LLC, OUR FULLY-OWNED MINTING FACILITY, IN LAS VEGAS, NEVADA 8. CAPITAL EXPENDITURES OF $141 MILLION 9. MOVED OUR CENTRAL LAB FROM LA PARRILLA TO SANTA ELENA 10. REDUCED WORKFORCE BY 14% TO APPROXIMATELY 3,700, SIGNIFICANTLY REDUCING LABOR COSTS 11. ACHIEVED RECORD SILVER EQUIVALENT PRODUCTION AT SANTA ELENA OF 9.6 MILLION AGEQ OUNCES 12. IMPROVED SAFETY RECORD: 2023 CONSOLIDATED TOTAL REPORTABLE INCIDENT FREQUENCY AND LOST TIME INCIDENT FREQUENCY RATES 16% AND 33%, RESPECTIVELY, LOWER THAN 2022 13. IMPROVED ESG SCORE WITH SUSTAINALYTICS FROM 50.56 IN 2022 TO 31.0 BY THE END OF 2023, PUTTING THE COM- PANY IN THE TOP 38% OF ITS INDUSTRY PEERS 14. MEXICO OPERATIONS RECOGNIZED FOR THE 16TH CONSECUTIVE YEAR AS SOCIALLY RESPON- SIBLE BY CENTRO MEXICANO PARA LA FILANTROPIA AND EMPRESA SOCIALMENTE RESPONSIBLE 01 02 03 04 05 06 07 CONTINUE TO IMPROVE THE COMPANY’S EXCELLENT SAFETY AND ENVIRONMENTAL RECORD CONTINUE TO IMPROVE THE COMPANY’S ESG PERFORMANCE ACHIEVE TOTAL PRODUCTION OF 21.1 TO 23.5 MILLION OUNCES OF SILVER EQUIVALENT MADE UP OF 8.6M – 9.6M SILVER OUNCES AND 150,000 – 167,000 GOLD OUNCES CAPITAL EXPENDITURES OF $125 MILLION, CONSISTING OF $45 MILLION FOR SUSTAINING ACTIVITIES AND $80 MILLION FOR EXPANSIONARY PROJECTS INVEST OVER $35 MILLION IN EXPLORATION DRILLING TO A TOTAL OF 188,500 METRES INCREASE WATER AVAILABILITY AT LA ENCANTADA COMPLETE FULL YEAR OF PRODUCTION AT FIRST MINT, WITH A GOAL OF AT LEAST DOUBLING SALES OF RETAIL MINTED PRODUCTS “ Looking ahead to sustaining growth, we’re investing over $35 million in exploration in 2024.” —KEITH NEUMEYER, CEO 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV16 17 MESSAGE FROM THE PRESIDENT AND CEO 20 Years – Steadfast in Our Vision It’s been quite a journey through First Majestic’s first 20 years of business. These two decades have proved gratifying and successful, but also challenging at times with difficult markets and setbacks. We enjoyed profits. We endured losses. We grew into a substantial enter- prise in a relatively short amount of time. From day one, our dream was to build one of the world’s top primary silver mining companies. We achieved that goal, and we continue to build towards our vision of be- coming the world’s largest primary silver producer. Common themes across our 20 years have included dedication to our vision, operating safely with persis- tence, teamwork and creativity in the face of challenges. First Majestic has been fortunate to have hired talented, supportive people in all positions, working as a family through the good times and the bad. We made fruitful and timely acquisitions along the way. We let go of older and/or smaller mines. We acquired larg- er, more efficient operations that would further our vision. We innovated with technology and strove to be leaders in modern mining and social practices. We were early ESG adopters and supported our communities. We protected local environments and improved lives. We made a major, grassroots discovery at the Santa Elena mine that is providing significant revenues and is expected to do so for years to come. We continued to invest heavily in exploration to make more discoveries across our large and prospective land packages. 2023—CHALLENGES AND HIGH POINTS Looking at 2023, the year proved to be one of the more challenging periods in our history. We faced significant setbacks at the Jerritt Canyon mine, water issues at La Encantada and political headwinds in Mexico. But there was plenty of good news to carry us into what looks to be a much better year in 2024. We met our revised production guidance in 2023, high- lighted by record silver equivalent production at Santa Elena of 9.6 million ounces. We closed the sale of the La Guitarra and La Parrilla mines to Sierra Madre Gold & Silver and Silver Storm Mining, respectively. We also moved the ISO 9001:2015 certified central lab from Durango to Santa Elena, providing greater efficiency for assaying and analysis. PHOTO: Jose Pacheco Ochoa “ First Mint will expand upon First Majestic’s existing bullion sales by vertically integrating the production of investment-grade fine silver bullion.” FIRST MINT—A BETTER WAY TO SELL OUR SILVER I’m very excited about launching First Mint, our fully- owned minting facility, in Las Vegas, Nevada. First Mint will expand upon First Majestic’s existing bullion sales by vertically integrating the production of investment-grade fine silver bullion. Owning our own mint will debottleneck the traditional restrictions we’ve experienced by selling directly to end investors. The mint will allow us to sell a substantially greater portion of our own silver produc- tion directly to our shareholders and bullion customers through our ecommerce Bullion Store, active since 2008, while earning higher margins for our mined silver. JERRITT CANYON’S IMPACT ON REVENUES AND EARNINGS Revenues for 2023 totaled $573.8 million, 8% lower than 2022, due primarily to the temporary suspension of min- ing activities at Jerritt Canyon in March 2023. As a result, we realized a 10% decrease in the total number of payable AgEq ounces sold, offset partly by an increase in payable AgEq ounces produced at Santa Elena and a 4% increase in the average realized silver price. The Jerritt Canyon suspension, resulting in an impairment charge of $125.2 million and a one-time standby cost of $13.4 million, was the primary catalyst resulting in our net loss of $135.1 million for the year. STRENGTHENING THE FIRST MAJESTIC FAMILY Since suffering high turnover following the pandemic, we have built a higher caliber team, one with fresh ideas and enthusiasm for achieving First Majestic’s vision. I’m gratified at how this group has gelled and come together; I know they will provide the skills and innovation to carry us into a successful third decade. 2024—TREASURY GROWTH AND EXPLORATION Looking ahead to 2024, we’re focused on treasury growth and strengthening our balance sheet through efficient operations. In the past 18 months, we have reduced our workforce from nearly 6,000 to around 3,700. We expect no significant capital expenditures this year besides explo- ration and mine development, for which we’ve budgeted $35 and $66 million, respectively. As a result, we expect a successful and robust exploration and mine development programs across our operations. We will continue our search for a suitable, silver-dominant acquisition, focusing on safe and dependable jurisdictions. We have grown First Majestic primarily through M&A activity, but we adhere to high standards. Great silver projects are rare, and historically, we have succeeded in finding them. In closing, I take great satisfaction in seeing First Majes- tic reach this 20-year milestone. Credit goes to everyone on the First Majestic family, both past and current, who worked tirelessly through good times and bad. I’m grateful for your contributions, and I know we can all look forward to a successful third decade. /s/ Keith Neumeyer KEITH NEUMEYER President and CEO 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV 18 19 MESSAGE FROM THE CHIEF OPERATING OFFICER “ The grades at Ermitaño proved better than expected, and the investment in the dual recovery circuit yielded exceptional recovery rates.” SANTA ELENA AND ERMITAÑO HIGHLIGHT 2023 OPERATIONS From an operations perspective, the highlight for 2023 was record silver equivalent production at our Santa Elena mine. This has been a good news story all around. The grades at Ermitaño proved better than expected, and the capital investment in the dual recovery cir- cuit—commissioned and optimized early in the year— yielded exceptional recovery rates higher than we had planed for. Currently Ermitaño supplies all production at Santa Elena. In 2024, we plan to supplement this ore from our Santa Elena underground mine to improve output. We’re also budgeting approximately 59,000 metres of both green- field and brownfield drilling on the Santa Elena property. WE MET KEY GUIDANCE NUMBERS Another highlight was meeting our key mid-year produc- tion guidance numbers for AgEqv. ounces amounting to 26.9 million AgEqv. ounces, which was aligned to our guid- ance range of 26.2 to 27.8 million silver equivalent ounces. Considering the many challenges we faced in 2023, these were positive numbers and represented good perfor- mance from our Mexican operations. A FRESH START AT JERRITT CANYON On the downside, the difficulties at Jerritt Canyon forced us to step back and put the mine into advanced project mode. We worked closely with regulators to fix legacy en- vironmental problems, and we set up a team to generate a plan to eventually restart the mine. This work will include improvements and redesigns to the plant, redesigning the mine plan and exploration on numerous mineral targets that remain underexplored or unexplored. CUTTING COSTS IN MEXICO For the second half of 2023, all production was focused in Mexico. In addition to exceptional results from Santa Ele- na, we cut costs significantly at San Dimas through right- sizing the workforce. We worked closely with the local union and trimmed several unproductive positions. This agreement with the union represented a major milestone for us and improved relations overall. Company-wide, we have reduced our payroll from nearly 6,000 workers to about 3,700 today. Obviously a challenge but was neces- sary to improve overall productivity. AGGRESSIVE EXPLORATION AT SAN DIMAS Over the past several years, the primary producing veins at San Dimas have become more challenging due to grades. To expand resources and reserves, we have budgeted 95,000 metres of drilling at San Dimas in 2024, by far the largest of any of our assets. RESOLVING WATER ISSUES AT LA ENCANTADA At La Encantada, the collapse of one of the three water wells required for operations in June of 2023 caused a 30% reduction in silver production for H2. This lower produc- tion is anticipated to continue into 2024 until a new well is drilled to replace the water supply. By year end, three wa- ter exploration holes were drilled without sufficient suc- cess. In March 2024, exploration hole G11 was completed and tested which proved to be a significant water source. At the time of this report, we anticipate this discovery will allow La Encantada processing rates to increase back to its historic levels of 3,000 tonnes-per-day (“tpd”) by Q3 2024. /s/ Steven Holmes STEVEN HOLMES Chief Operating Officer OPERATING AND FINANCIAL HIGHLIGHTS All dollar amounts in this report US$ unless otherwise indicated OPERATING 2023 2022 2021 2020 2019 Silver equivalent ounces produced 26,874,417 31,252,920 26,855,783 20,379,010 25,554,288 Silver ounces produced 10,250,755 10,522,051 12,842,945 11,598,380 13,241,118 Gold ounces produced 198,921 248,394 192,353 100,081 134,580 Cash costs per silver equivalent ounce1 All-in Sustaining Costs per silver equivalent ounce1 FINANCIAL (Millions except per share amounts) Revenues Mine 0perating earnings Net (loss) earnings (Loss) earnings per share (“EPS”) - basic Free Cash Flow1 $ $ $ $ $ $ $ 14.49 $ 14.39 $ 13.23 $ 9.00 $ 8.74 20.16 $ 19.74 $ 18.84 $ 14.03 $ 12.62 2023 2022 2021 2020 2019 573.8 $ 624.2 $ 584.1 $ 363.9 $ 363.9 25.6 $ 16.8 $ 101.4 $ 105.1 $ 66.2 (135.1) $ (114.3) $ (4.9) $ 23.1 $ (40.5) (0.48) $ (0.43) $ (0.02) $ 0.11 $ (0.20) (9.0) $ (64.9) $ (16.9) $ 30.7 $ 91.0 1. The Company reports non-GAAP measures which include cash costs per ounce produced, all-in sustaining cost per ounce, total production cost per tonne, average realized silver price per ounce sold, working capital, adjusted EPS and free cash flow. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate such measures may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on page 121 for further details on each measure and a reconciliation of non-GAAP to GAAP measures. 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV20 21 MESSAGE FROM THE CHIEF FINANCIAL OFFICER ACHIEVEMENTS AND SETBACKS SET THE STAGE FOR IMPROVED PERFORMANCE IN 2024 Financially, 2023 was a year of achievements and setbacks. The highs included selling the La Guitarra and La Parilla mines for a total of $46.5 million, achieving the second- highest sales levels achieved from our bullion store and the launching of First Mint, LLC, our new minting facility in Nevada. Lows included setbacks trying to develop the Jerritt Canyon mine, ultimately suspending operations in March and regrouping to build a long-term plan for a prof- itable and sustainable operation in the future. STABILIZING AND INVESTING IN MEXICO AND NEVADA I view 2023 as essentially having two distinct periods. The first was spent stabilizing the business following the de- cision to temporarily suspend Jerritt Canyon. The second was spent investing in Mexico, where we made many im- provements, and working in Nevada to put Jerritt Canyon back on track. The temporary suspension of Jerritt Canyon unexpected pressure on the Company, financially and operationally. We had originally budgeted for steady cash flow from the mine’s gold sales. Instead, we spent a significant amount of money and time solving operational issues, ensuring we met environmental requirements, and putting a plan in place to move forward. THE VALUE OF FINANCIAL DISCIPLINE Financial discipline allowed us to maintain good liquidity through the year, ending with a strong treasury of $251.2 million, consisting of $125.6 million in cash and cash equivalents as well as restricted cash of $125.6 million. We worked with our creditors to secure financing for environmental requirements at Jerritt Canyon, raising about $130 million and helping underpin our operations. We enjoyed a strong show of support from creditor banks and underwriters, increasing our revolving line of credit to $175M and allowing us to post bonds and lines of “ Financial discipline allowed us to maintain good liquidity through the year, ending with $251 million in cash and $189 million in working capital.” credit for $51 million for Jerritt Canyon. This allowed us to release ~$28 million in cash used previously to insure environmental liabilities. INFLATION AND EXCHANGE RATE HEADWINDS IN MEXICO We have been impacted by a strong peso that continued to strengthen throughout 2023, averaging 12% higher than 2022. Reported inflation in Mexico averaged around 4.4% in 2023, which was 45% lower than in 2022. However, in- flation within the mining industry remained persistently high with rising costs for labour, energy and reagents. To combat these pressures, the Company implemented sev- eral cost saving initiatives to minimize the effect of these rising costs. In addition, significant cost saving measures and other efficiencies were identified and will be imple- mented in 2024. This includes further workforce optimiza- tion and other restructuring opportunities, procurement savings, and operational improvements.” BETTER UNION RELATIONS PROVIDE FINANCIAL AND OPERATIONAL VALUE Positive outcomes from negotiations with the local union at San Dimas allowed us to continually optimize our work- force and labor costs. These efforts are expected to result in a more efficient operation, an improved working envi- ronment and lower costs. FOR 2024: REINVESTING CASH FLOW AND ESTABLISHING FIRST MINT Looking at 2024, a key theme will be reinvesting our cash flow back into the business. Cash flows projected for next year will be directed towards funding all of our expansion- ary capital. We plan to invest a total of $125 million, con- sisting of $45 million for sustaining activities and $80 mil- lion for expansionary projects. We also plan to spend $35 million in exploration across the company, including $10 million at Jerritt Canyon. wards directing all of our silver production from Mexico to the mint. It is a business that is scalable and can eas- ily accommodate growth by adding additional shifts and equipment, eventually tripling our production of finished product without needing significant capital investments. Overall, I believe we will lay groundwork in 2024 for much better years to follow. Revenues from First Mint may offset a significant portion of our G&A expenses in 2024. While not a major cash flow generating Unit yet, the objective is to mint low-volume, high-margin products with room to grow. We will work to- /s/ David Soares DAVID SOARES Chief Financial Officer “ Looking at 2024, a key theme will be reinvestment of cash flow back into the business.” FINANCIAL REVIEW The Company generated annual revenues totaling $573.8 million in 2023, or 8% lower compared to 2022, due pri- marily to the temporary suspension of mining activities at Jerritt Canyon in March 2023. As a result, the Company re- alized a 10% decrease in the total number of payable AgEq ounces sold, which was partially offset by an increase in payable AgEq ounces produced at Santa Elena, combined with a 4% increase in the average realized silver price. Annual mine operating earnings increased to $25.6 mil- lion compared to $16.8 million in 2022. The improvement in mine operating earnings was driven primarily by a re- duction in operating losses at Jerritt Canyon following the temporary suspension of operating activities. The Compa- ny also saw a 19% increase in operating earnings at Santa Elena compared to the prior year, attributable to stron- ger metal recoveries and grades from Ermitaño, which achieved a new annual production record. Also, cost-sav- ing measures implemented by the Company helped offset the strengthening of the Mexican Peso and combat infla- tionary impacts. Cash flows before movements in working capital and taxes during the year were $99.2 million compared to $109.4 million in the prior year, representing a 9% decrease. The Company reported a net loss of $135.1 million (EPS of $(0.48)) compared to $114.3 million (EPS of $(0.43)) in 2022. Net loss was primarily attributable to a non-cash im- pairment charge of $125.2 million recorded on the Jerritt Canyon mine due to the temporary suspension of mining operations announced on March 20, 2023. Additionally, the Company incurred one-time costs including: $13.4 million for standby costs at Jerritt Canyon, a $7.2 million non-cash charge related to the sale of La Parrilla, and $6.9 million in severance and restructuring costs incurred to fo- cus on optimizing the workforce across the Company. Adjusted net earnings for the year, normalized for non- cash or non-recurring items such as impairment charges, tax settlements, share-based payments, unrealized losses on marketable securities and non-recurring write-downs on mineral inventory was $(23.8) million, or $(0.08) per share, compared to $(55.4) million, or $(0.21) per share in 2022. The Company ended 2023 with a strong treasury of $251.2 million, consisting of $125.6 million in cash and cash equivalents as well as restricted cash of $125.6 million. The Company also ended the year with working capital of $188.9 million. 2003 - 2023 ANN UAL REPORT 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV22 23 COMMUNITY, HEALTH & SAFETY FOLLOWING ARE 2023 HIGHLIGHTS FROM OUR COMMUNITY, HEALTH AND SAFETY INITIATIVES 20 Years of Sustainable Operations From its founding 20 years ago, First Majestic has maintained, and enhanced, a strong sustainability mindset and culture by making sus- tainability a priority. We have the power to create positive value and achieve meaningful change through our sustainability efforts. We know that sustainable development is the best long- term approach to conducting business. Our strategic deci- sions focus on people and communities, working to keep our employees safe, generate meaningful employment and profitable business opportunities while improving the quality of life for local residents and the regions in which we operate. LISTENING TO EMPLOYEES, STAKEHOLDERS AND COMMUNITIES Listening is key to this approach. Our employees and broader stakeholders have much to teach us on how to maintain the balance between profitable operations and safe, vibrant and healthy communities. This approach is embedded in First Majestic’s mission: to produce profit- able silver ounces and to grow our mineral resources through ethical, innovative, and sustainable practices, im- plemented by an empowered workforce that fosters the permanence of the organization. ENGAGEMENT AND TRUST We interact with a wide range of community stakehold- ers, so it is critical that we earn their ongoing acceptance and trust. Effective engagement is key to achieving this. Mutually beneficial relationships with communities near our mines help ensure smooth operations and business success, while delivering long-term value for all our stake- holders. A SUSTAINABILITY FRAMEWORK From exploration to reclamation, our sustainability frame- work aims to increase shared value for our stakeholders over the long-term while reducing risk through all stages of our operations. The framework is guided by interna- tional industry best practices and ensures First Majestic follows a structured, effective approach to sustainable de- velopment across our operations. COMMUNITY RELATIONS, COMMUNITY INTERESTS All our operations maintain community relations pro- grams focused on understanding community interests and increasing beneficial outcomes to local stakeholders. We contribute to the economies where we operate by paying our fair share of taxes, investing in public infrastructure, and buying goods and services locally, which helps sup- port businesses and jobs in our host communities. During complex times of declining mine production or disruptive events, we work with our stakeholders to strengthen com- munity resilience and recovery capacity. Our key Community, Health and Safety stake- holders include: 1. Employees and Contractors 2. Labour Unions 3. Suppliers 4. Government – Municipal, State and National 5. Advocacy Groups 6. Local Com- munities 7. Indigenous Groups 8. Shareholders and Investors SUSTAINALYTICS Provides analytical environmental, social and governance (ESG) research, ratings and data to institutional investors and companies). First Majestic’s ESG Risk Rat- ing improved by 39% year over year. Our score of 31.0 is in the top 62% industry performance. S&P GLOBAL 2023 Corporate Sustainability Assessment ESG score improved to 31, above the Met- als & Mining industry average for the first time.Our new ratings are a direct result of increased transparency around our busi- ness practices, and more accurately reflect our commitment to sustainable values and responsible practices across our mines and corporate offices. HEALTH & SAFETY Strong injury rate performance. 32% an- nual reduction in Reportable Injuries (15% Total Reported Injury Frequency Rate, or TRIFR, reduction). 51% annual reduction in Lost Time Injuries (39% Lost Time Injury Frequency Rate, or TIFR, reduction). OUR PEOPLE Investing in a diverse new generation of mine workers. 17% of our employees aged 18-25 are women, up from 8% in 2020. 22% of our new hires in 2023 are women. 21% of our technical and engineering per- sonnel are women, up from 18% in 2020. COMMUNITIES We are proud to have the strong support of our local communities. Through community surveys around our three operating mines, we found that our support and investment projects have directly benefitted nearly 10,000 residents. We are pleased to report that over $1.2 million USD has been invested in these community programs and projects. These efforts have improved local infrastructure, education, and healthcare, significantly enhancing residents’ quality of life. Our commitment to these communities remains steadfast as we continue to foster positive relationships and sustainable development. 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV24 25 ENVIRONMENTAL REVIEW Evolving with the Critical Need for a Lower Carbon World First Majestic continues to evolve its environmental strategy to achieve meaningful action on climate change. Our teams work on multiple fronts to create effective business solutions for managing our energy consumption and advancing the transition to a lower carbon world. 38% 58% 46% ANNUAL REDUCTION IN OUR SCOPE 1 EMISSIONS ANNUAL REDUCTION IN OUR SCOPE 2 EMISSIONS REDUCTION IN OUR TOTAL SCOPE 1+2 EMISSIONS 41% ANNUAL REDUCTION IN ENERGY USE 35% ANNUAL REDUCTION IN DIESEL USE 29% ANNUAL REDUCTION IN WASTE ROCK GENERATED 51% REDUCTION IN THE CARBON FOOTPRINT 71% WATER USED SOURCED FROM MINE DEWATERING SUPPORTING CLIMATE OPPORTUNITIES: Optimizing business opportunities to meet the growing global de- mand for precious metals needed for low-carbon tech- nologies and solutions. One of our priorities has been reducing our dependency on diesel fuel and converting to Liquified Natural Gas (LNG). La Encantada transitioned to LNG in 2017. In 2021, Santa Elena completed its conversion to LNG as its pri- mary source of fuel for power generation. Parallel to improving our energy sources, we have imple- mented carbon-reduction technologies in our processing and recovery operations, which has helped increase met- als recovery without expanding energy consumption. Following are highlights from our 2023 Environmental Initiatives, focused on achieving higher efficiencies with lower use of natural resources. MITIGATION: Reducing First Majestic’s carbon footprint by using lower-carbon energy sources and more energy- efficient mining processes. ADAPTATION: Proactively adapting our operations to mitigate and improve resiliency against climate risks (such as extreme weather events) on our sites, offices and fa- cilities. CARBON: 38% annual reduction in our Scope 1 emissions. 58% annual reduction in our Scope 2 emissions. 46% re- duction in our total Scope 1+2 emissions. 51% reduction in the carbon footprint of each tonne of ore processed. ENERGY: 41% annual reduction in energy use, including both fuels and electricity. 35% annual reduction in diesel use. 46% annual reduction in energy use per tonne of ore processed. MINERAL WASTE: 29% annual reduction in waste rock generated. WATER: 71% of water used for operations sourced from mine dewatering. CASE STUDY: Working together on Responsible Water Practices In the water-stressed regions surrounding the Sonoran Desert, water is a precious commodity. In addition to practicing responsible water man- agement at our own operations, First Majestic has relationships with local farmers and ranchers to develop responsible resource use practices. One such project is with Raphael Ibarra, a local garlic farmer in the Sonora River basin. Typically, garlic in the area is farmed using sprinkler irriga- tion, which sprays water on an entire plot of land, with a fraction of the water being used by the crops and the rest being lost to evaporation. By most estimates, 80 to 90% of water used in sprin- kler watering systems are lost through evapora- tion or groundwater infiltration. OUR ROLE First Majestic worked with the farmer to finance and establish test plots where alternative irriga- tion practices would be trialed. For an initial tri- al, drip irrigation was tested. Garlic is a suitable candidate for this watering technique due to its relatively low water needs and tendency to ex- perience root rot when over-watered. In 2023, we completed our first year of the trial program for drip irrigation, and the results were good. The farmer reported that he was able to harvest 20 tons of garlic from the hectare of land, which is a 33% improvement over his usual harvest of 15 tons. He also reported an 80% reduction in water use, which is a significant benefit in such a water-stressed region. 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV 26 20 Y E A R S . T H E S I LV E R E V O L U T I O N . 27 FIRST MINT AND THE BULLION STORE Capitalizing on Strong Investment Demand for Physical Silver First Mint LLC, commissioned in Q2 2024, is the first of its kind for any mining company. This modern minting facility, located in the State of Nevada, United States, expands upon First Majestic’s existing bullion sales by vertically integrating the production of investment-grade fine silver bullion products. FIRST OF ITS KIND FOR ANY MINING COMPANY First Mint allows the company to sell a substantially great- er portion of its silver production directly to First Majestic shareholders and bullion customers. Our plan is to also mint silver from other mining companies and clients we see fit. Production at the mint is led by industry veterans with over 20 years’ experience. First Mint will produce 5-ounce, 10-ounce and 1-kilogram bars in the initial stage of operations through 2024, with plans to produce rounds (coins) in subsequent phases. Currently the facility can mint more than three million ounces of silver per year. HIGHER MARGINS ON FIRST MAJESTIC’S SILVER SALES A key advantage to First Majestic is that silver sold from the mint generates a higher price than silver sold on the spot market. We eliminate the middleman by vertically in- tegrating the minting process and controlling the supply chain while capitalizing on the strong investment demand for physical silver. In the past, we have been limited by what our contracted mints could produce for our Bullion Store. Now we are only limited by the amount of silver we produce. INNOVATIVE AND ENVIRONMENTALLY FRIENDLY First Mint will operate some of the most innovative pro- cessing equipment in the precious metals industry, includ- ing an environmentally friendly flameless tunnel, which uses significantly less electricity and releases fewer emis- sions when compared to traditional minting processes. The high efficiency equipment will allow us to turn several million ounces of our own silver into an array of finished bullion products, as well as offer manufacturing capacity for third-party demand. First Mint will seek ISO 9001:2015 certification in 2024, allowing for its silver to be eligible for Individual Retire- ment Accounts (“IRA”). Along with this certification comes a quality commitment: the mint will fully guarantee the weight, purity, and content of its bullion products. Shareholders owning at least 100 shares qualify for a silver discount of $0.50 per ounce from our posted price through the Shareholder Benefits program. BUY SILVER FROM THE SOURCE AT FIRST MAJESTIC’S SILVER BULLION STORE First Majestic remains the only mining company offering their own production in the form of silver bullion for sale securely, online, 24/7. Our unique Silver Bullion Store, now in its 16th year, offers investors and silver enthusiasts the opportunity to pur- chase physical silver mined from our Mexican operations and minted at First Mint, our own private minting facility. The Bullion Store offers high quality 0.999+ fine silver rounds, ingots, bars and medallions at one of the lowest premiums over spot on the internet. Worldwide secure shipping and the ability to track your order is available. In 2023 the store sold 290,432 ounces of silver bullion, representing approximately 2.8% of the Company’s silver production. A maker’s mark and statement of weight and fineness is stamped directly onto all products. In addition, each item purchased will be shipped with a Certificate of Authentic- ity stating this information. YOU CAN ACCESS THE BULLION STORE AT: store.FirstMajestic.com FirstMint.com “ In time, our goal is to sell 100% of the silver we produce directly to the physical market.” —KEITH NEUMEYER, CEO 2003 - 2023 ANN UAL REPORT FIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV28 F I R S T M A J E S T I C S I LV E R C O R P. 20 Y E A R S . T H E S I LV E R E V O L U T I O N . 29 San Dimas silver / gold mine DURANGO STATE, MÉXICO HIGHLIGHTS Ownership 2023 Silver Production (ounces) 2023 Silver Equivalent Production (ounces) 2023 Cash Costs per AgEq Ounce 2023 All-In Sustaining Costs per Ag EqOunce 2024 Projected Cash Costs per AgEq Ounce 2024 Projected All-In Sustaining Costs per AgEq Ounce 100% 6,355,308 12,789,920 $12.51 $16.48 $11.89 - $12.57 $15.54 – 16.57 2024 Projected Silver Production (ounces) 5,300,000 – 5,900,000 2024 Projected Silver Equivalent Production (ounces) 11,100,000 – 12,300,000 San Dimas, First Majestic’s largest and lowest-cost producer, is one of Mexico’s most prominent silver and gold mines and the largest pro- ducing underground mine in the state of Durango. The mine has a long and productive history, with the first production recorded in 1757. FIRST MAJESTIC’S LOWEST-COST AND LARGEST PRODUCING MINE The property covers 71,868 hectares located approximate- ly 130 kilometres northwest of the city of Durango, popu- lation 655,000. The mine employs about 1,700 people, many from the nearby town of Tayoltita. The San Dimas operating plan involves processing ore from several un- derground mining areas with a 2,500 tpd capacity milling operation which produces silver/gold doré bars. San Dimas is exceptionally efficient with some of the in- dustry’s lowest cash costs and All-in Sustaining Costs (“AISC”). Over 50% of the mine’s power is provided by en- vironmentally clean, low-cost hydroelectric generation. In recent years, the major mineralized veins have sustained the bulk of production at San Dimas, including Jessica, Regina and Victoria. These veins have been experiencing lower grades and production during 2023. To expand re- sources and reserves, First Majestic has budgeted 95,000 metres of drilling at San Dimas in 2024, by far the largest of any of our projects. Underground development at San Dimas totaled 17,641 metres in 2023, compared with 20,521 metres in 2022. Exploration drilling totaled 78,039 metres, compared with 64,791 metres in 2022. TSX AG / NYSE AG / FSE FM V 2003 - 2023 ANN UAL REPORT 30 F I R S T M A J E S T I C S I LV E R C O R P. 20 Y E A R S . T H E S I LV E R E V O L U T I O N . 31 Santa Elena silver / gold mine SONORA STATE, MÉXICO HIGHLIGHTS Ownership 2023 Silver Production (ounces) 2023 Gold Production (ounces) 2023 Silver Equivalent Production (ounces) 2023 Cash Costs per Ounce 2023 All-In Sustaining Costs per Ounce 2024 Projected Cash Costs per Ounce 2024 Projected All-In Sustaining Costs per Ounce 100% 1,176,591 100,535 9,571,792 $11.87 $14.83 $13.38 – $14.10 $16.25 – $17.26 2024 Projected Silver Production (ounces) 1,100,000 – 1,200,000 2024 Projected Silver Equivalent Production (ounces) 7,800,000 – 8,700,000 The Santa Elena mine operation consists of the Santa Elena under- ground mine and the Ermitaño underground mine, located within a land package totaling 102,244 hectares. The operation produced 9.6 million ounces of silver equivalent in 2023, a new record due primar- ily to exceptional grades and recoveries from the Ermitaño mine. RECORD PRODUCTION HIGHLIGHTS A BANNER YEAR The Santa Elena operation produces dore bars containing both silver and gold. In 2023, all ore processed at the plant originated from the Ermitaño mine. In 2024, it is planned the mill will be fed with supplemented ore from the Santa Elena mine and spent leach pad stockpiles. This blend may result in an overall increase in plant throughput. This dual-circuit processing plant, completed in 2022 and which includes a 3,000 tpd day tailings filter press, continued to facilitate leaching performance, gener- ate higher recoveries and lower operating costs. This facility has proved to be an exceptional investment for First Majestic. improved First Majestic’s Certified ISO 9001 assay lab was moved to Santa Elena from La Parrilla in 2023, increasing reliabil- ity while reducing costs and providing faster turnaround times. Approximately 59,000 metres of drilling are planned for Santa Elena in 2024. Greenfield and brownfield drilling will focus on several targets within a 5-kilometre radius around the processing plant, where the goal is to find new mineralized veins. The Company is also planning to drill the Los Hernandez property to test updated targets and projections of mineralized structures. Resource addition and conversion drilling will round out the 2024 program. Underground development at Santa Elena totaled 10,497 metres in 2023, compared with 12,924 metres in 2022. Ex- ploration drilling in 2023 totaled 48,058 metres, compared with 42,990 metres in 2022. TSX AG / NYSE AG / FSE FM V 2003 - 2023 ANN UAL REPORT 32 F I R S T M A J E S T I C S I LV E R C O R P. 20 Y E A R S . T H E S I LV E R E V O L U T I O N . 33 La Encantada silver mine COAHUILA STATE, MÉXICO HIGHLIGHTS Ownership 2023 Silver Production (ounces) 2023 Silver Equivalent Production (ounces) 2023 Cash Costs per Ounce 2023 All-in Sustaining Costs per Ounce 2024 Projected Cash Costs per Ounce 2024 Projected All-In Sustaining Costs per Ounce 100% 2,718,856 2,745,622 $20.05 $24.28 $24.03 - $24.51 $28.25 - $30.09 2024 Projected Silver Production (ounces) 2,200,000 – 2,400,000 2024 Projected Silver Equivalent Production (ounces) 2,200,000 – 2,400,000 The La Encantada mine has been in First Majestic’s portfolio since 2005, and it remains a key silver producer for the Company. The mine is located in northern México, 708 kilometres northeast of Torreon, Coahuila. The facility includes a 4,000 tpd cyanidation mill, and the site covers 4,076 hectares of mining rights and 1,343 hectares of sur- face rights. A KEY PRODUCER FOR FIRST MAJESTIC SINCE 2005 La Encantada encompasses a camp with 120 houses and administrative offices, laboratory, general store, hospital, airstrip and all the necessary infrastructure required for such an operation. The mine is accessible via a two-hour flight from the Durango International Airport to the mine’s private airstrip, or via an improved road from the clos- est city, Muzquiz, Coahuila State, which is 225 kilometres away. Through the second half of 2023, La Encantada plant throughput and production was impacted by the collapse of one of three water wells that have been supplying wa- ter to the mill for over 30 years. Production was immedi- ately impacted by 30% and continued throughout the bal- ance of the year. During the second half of 2023 into early 2024, five water exploration holes were drilled to source additional water. In March 2024 the company identified a new water source that is expected to satisfy the site re- quirements and allow plant capacity to return to its his- toric level of 3,000 tpd by Q3 2024. Natural gas generators currently supply approximately 90% of power requirements, providing significant cost sav- ings over diesel generation and producing considerably less greenhouse gas emissions. Underground development at La Encantada totaled 3,067 metres in 2023, compared with 2,555 metres in 2022. Ex- ploration drilling in 2023 totaled 3,812 metres, compared with 10,020 metres in 2022. TSX AG / NYSE AG / FSE FM V 2003 - 2023 ANN UAL REPORT 34 35 EXPLORATION OVERVIEW. FIRST MAJESTIC’S VISION FOR 2024: Expanding Mineral Reserves and Unlocking New Potential Significantly More Aggressive Program for 2024: First Majestic is blessed with an enormous, under-explored land package surrounding three of the most important silver mines in Mexico. In Nevada, Jerritt Canyon offers potential for major regional discoveries across its 30,821 hectares (119 square miles) of ground. Our work in 2023 was active on all four projects, and in 2024 we have planned a significantly more aggressive exploration program. EXPLORATION SUMMARY FOR 2023 The Company completed 143,465 metres of exploration drilling in Mexico and Nevada in 2023, achieving posi- tive results most notably at San Dimas, Santa Elena, and Jerritt Canyon. These ongoing programs were designed to focus on maintaining and adding new mineral resources, upgrading resources to mineral reserves, and further defining mineralization near current underground infra- structure. Results from the Elia and Santa Teresa veins at San Dimas highlighted the potential to add new, high-grade ounces within this past-producing area. At Santa Elena, the results from the Ermitaño vein were in many cases better than expected and will provide a solid foundation for reserve replacement. At La Encantada, drilling was suspended due to a lack of water, and the focus turned to surface exploration where we identified several new prospective targets for drilling. We plan an estimated 188,500 metres of exploration drilling in 2024 across all assets, an increase of 31% over 2023, with a budget of approximately $35 million. Successful drilling at the Javelin target at Jerritt Canyon identified what appears to be another large, mineral- ized gold pod near underground infrastructure and fur- ther showcases the strong exploration potential at the property. LOOKING AHEAD TO 2024 We plan an estimated 188,500 metres of exploration drilling in 2024 across all assets, an increase of 31 per- cent over 2023, with a budget of approximately $35 mil- lion. This work will focus on maintaining current reserves after ongoing mining activities in addition to growing or upgrading current resources and defining new targets for further drilling. SAN DIMAS SILVER / GOLD MINE San Dimas represents our largest drilling initiative for 2024, with approximately 95,000 metres planned. This work will include infill, step-out and exploratory holes focused on near-mine and brownfield targets, including major ore controlling structures in the West, Central and Sinaloa blocks. SANTA ELENA SILVER / GOLD MINE Approximately 59,000 metres of drilling are planned for Santa Elena, where our success with Ermitaño offers in- formation and a good model to look for a comparable deposit. Greenfield and brownfield drilling will focus on targets within a 5-kilometre radius around the process- ing plant, with a goal of finding new mineralized veins. We also plan to return to the Los Hernandez property to test updated targets and projections of mineralized structures. Resource addition and conversion drilling is also planned to take place. JERRITT CANYON GOLD MINE At Jerritt Canyon, our focus switched from short-term tar- gets with smaller volume and short windows to produc- tion to looking for a significant orebody that we can build a mine plan around. Large, highly-prospective tracts of ground at Jerritt Canyon have never been tested. Approxi- mately 25,000 metres of drilling are planned for 2024, along with geophysics and surface sampling. Exploration will focus on drilling open ends of inferred mineralization with large volume potential, as well as testing projections of ore controlling structures below outcropping Upper Plate rock. This strategy offers the potential for discovery of large, mineralized volumes and the prospective ground has historically been poorly tested to date. LA ENCANTADA SILVER MINE At La Encantada, we plan approximately 9,500 metres of drilling to continue searching for a new mineralized brec- cia body while looking to extend and de-risk some of the known veins and vein systems. Drilling will depend on the water supply to the operation returning to normal levels. The 2024 surface exploration program will commence once water supplies have been re-established. 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV36 37 MEASURED AND INDICATED MINERAL RESOURCE ESTIMATES FOR THE MATERIAL PROPERTIES, Effective Date of December 31, 2023 Category/Area Mineral Type Tonnage Grades Metal Content MEASURED AND INDICATED MINERAL RESOURCE ESTIMATES FOR THE NON-MATERIAL PROPERTIES Category/Area Mineral Type Tonnage k tonnes Ag (g/t) Au (g/t) Grades Pb (%) Zn (%) Ag-Eq (g/t) Ag (k Oz) Au (k Oz) Pb (M lb) Zn (M lb) Ag-Eq (k Oz) Metal Content k tonnes Ag (g/t) Au (g/t) Ag-Eq (g/t) Ag (k Oz) Au (k Oz) Ag-Eq (k Oz) NON-MATERIAL PROPERTIES MATERIAL PROPERTIES SAN DIMAS Measured (UG) Indicated (UG) Total Measured and Indicated (UG) SANTA ELENA Measured Ermitano (UG) Measured Santa Elena (UG) Indicated Ermitano (UG) Indicated Santa Elena (UG) Indicated (Leach Pad) Total Measured and Indicated (UG+Pad) JERRITT CANYON Measured (UG) Indicated (UG) Indicated (OP) Sulphides Sulphides Sulphides Sulphides Sulphides Sulphides Sulphides Oxides Spent Ore All Mineral Types Sulphides Sulphides Sulphides 2,124 1,821 3,945 612 387 2,306 1,384 337 5,026 5,717 4,490 711 Total Measured and Indicated (UG and OP) All Mineral Types 10,918 LA ENCANTADA Indicated (UG) Indicated Tailings Deposit No. 4 Total Indicated (UG+Tailings) TOTAL MATERIAL PROPERTIES Total Measured (UG) Total Indicated(UG and OP) Oxides Oxides All Mineral Types All Mineral Types All Mineral Types Total Measured and Indicated (UG and OP) All Mineral Types 3,299 2,458 5,756 8,840 16,806 25,646 449 353 405 81 152 71 163 25 101 - - - - 178 119 153 120 114 116 5.92 3.80 4.94 4.38 1.72 3.45 1.52 0.39 2.69 5.25 5.42 3.43 5.20 - - - 5.20 2.61 3.50 942 671 817 613 295 489 290 64 30,640 20,680 51,320 404 223 64,340 39,260 627 103,600 1,600 1,890 5,260 7,250 270 86 21 12,060 3,670 256 36,280 68 4 12,890 690 406 16,280 435 65,590 - 966 782 78 78,850 63,860 6,400 1,827 149,110 - - - - 18,900 9,410 28,310 34,130 61,770 95,900 - - - 18,900 9,410 28,310 1,478 158,920 1,411 187,690 2,888 346,610 429 442 280 425 178 119 153 559 347 420 INFERRED MINERAL RESOURCE ESTIMATES FOR THE MATERIAL PROPERTIES, Effective Date of December 31, 2023 Category/Area Mineral Type Tonnage Grades Metal Content k tonnes Ag (g/t) Au (g/t) Ag-Eq (g/t) Ag (k Oz) Au (k Oz) Ag-Eq (k Oz) MATERIAL PROPERTIES SAN DIMAS Inferred Total (UG) Inferred Total (UG) SANTA ELENA Inferred Ermitaño (UG) Inferred Santa Elena (UG) Inferred (Leach Pad) Inferred Total (UG + Pad) JERRITT CANYON Inferred Total (UG) Inferred Total (OP) Inferred Total (UG & OP) LA ENCANTADA Inferred Total (UG) Inferred Tailings Deposit No. 4 Sulphides Sulphides Sulphides Sulphides Oxides Spent Ore All Mineral Types Sulphides Sulphides Sulphides Oxides Oxides Inferred Total (UG + Tailings) All Mineral Types Total Inferred Material Properties All Mineral Types 3,959 3,959 2,049 1,340 50 3,439 11,565 862 12,427 2,115 427 2,542 22,367 306 306 65 143 35 95 - - - 204 118 190 90 3.67 3.67 612 612 38,990 38,990 467 467 77,940 77,940 2.34 1.55 0.66 2.01 4.89 3.10 4.77 - - - 3.61 349 272 101 315 399 253 389 204 118 190 395 4,280 6,160 60 10,500 154 67 1 222 22,970 11,700 160 34,840 - - - 1,819 148,490 7,010 1,905 155,500 86 13,890 1,620 15,510 65,000 - - - 13,890 1,620 15,510 2,594 283,790 SAN MARTIN Measured (UG) Indicated (UG) Total Measured and Indicated (UG) DEL TORO Indicated (UG) Indicated (UG) Total Measured and Indicated (UG) SUBTOTAL NON-MATERIAL PROPERTIES Total Measured Total Indicated Oxides Oxides Oxides 70 221 0.40 958 277 0.53 1,028 273 0.52 - - - - - - 255 500 321 8,520 317 9,020 Sulphides Oxides + Transition 440 153 193 0.53 3.52 5.75 414 2,720 226 0.15 4.97 - 351 1,110 All Mineral Types 592 201 0.43 3.90 4.27 398 3,830 All Mineral Types 70 221 0.40 - - 255 500 All Mineral Types 1,550 248 0.49 1.49 1.63 350 12,350 Total Measured and Indicated All Mineral Types 1,620 247 0.49 1.42 1.56 346 12,850 1 16 17 7 1 8 1 24 25 - - - - - - 580 9,890 10,470 34.2 55.7 5,850 16.7 - 1,720 50.9 55.7 7,570 - - 580 50.9 55.7 17,460 50.9 55.7 18,040 INFERRED MINERAL RESOURCE ESTIMATES FOR THE NON-MATERIAL PROPERTIES Category/Area Mineral Type Tonnage Grades Metal Content k tonnes Ag (g/t) Au (g/t) Pb (%) Zn (%) Ag-Eq (g/t) Ag (k Oz) Au (k Oz) Pb (M lb) Zn (M lb) Ag-Eq (k Oz) NON-MATERIAL PROPERTIES SAN MARTIN Inferred Total (UG) DEL TORO Inferred (UG) Inferred (UG) Oxides Oxides 2,533 226 0.36 2,533 226 0.36 - - - - 256 18,400 256 18,400 29 29 20,870 - - 20,870 Sulphides Oxides + Transition 496 690 185 0.25 3.08 2.73 322 2,950 182 0.08 3.74 - 273 4,030 4 2 6 33.7 29.8 5,130 56.8 - 6,050 90.5 29.8 11,180 Inferred Total (UG) All Mineral Types 1,186 183 0.15 3.46 1.14 293 6,980 Total Inferred Non-Material Properties All Mineral Types 3,719 212 0.29 1.10 0.36 268 25,380 35 90.5 29.8 32,050 MEASURED AND INDICATED RESOURCE: (1) Mineral Resource estimates have been classified in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101. (2) The Mineral Resource estimates provided above have an effective date of December 31, 2023, except for the Santa Elena Leach Pad estimate, which has an effective date of March 11, 2024. (3) The Mineral Resource estimates were prepared by the Company’s Internal QPs, who have the appropriate relevant qualifications, and experience in geology and resource estimation. The Mineral Resource estimates were prepared under the supervision of, or were reviewed by, David Rowe, CPG, Internal QP for First Majestic, a Qualified Person, as that term is defined in NI 43-101. (4) Sample data was collected through a cut-off date of December 31, 2023, for the Material Properties except for the Santa Elena Leach Pad estimate, which has an effective date of March 11, 2024. All properties account for relevant technical information and mining depletion through December 31, 2023. (5) Metal prices considered for Mineral Resources estimates were $24.5/oz Ag and $2,000/oz Au. (6) Silver-equivalent grade is estimated considering: metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the corresponding contract of each mine. Estimation details are listed in each mine section of the Annual Information Form (AIF). (7) The cut-off grades and cut-off values used to report Mineral Resources are different for all mines. The cut-off grades, values and economic parameters are listed in the applicable section describing each mine section of the AIF. (8) Measured and Indicated Mineral Resource estimates are inclusive of the Mineral Reserve estimates. (9) Tonnage is expressed in thousands of tonnes; metal content is expressed in thousands of ounces. Totals may not add up due to rounding. (10) The technical reports from which the above-mentioned information for the material properties is derived are cited under the heading "Technical Reports for Material Properties" of the AIF. INFERRED RESOURCE: (1) Mineral Resource estimates have been classified in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101. (2) The Mineral Resource estimates provided above have an effective date of December 31, 2023, except for the Santa Elena Leach pad estimate, which has an effective date of March 11, 2024. The Mineral Resource estimates were prepared by the Company’s Internal QPs, who have the appropriate relevant qualifications, and experience in geology and resource estimation. (3) The Mineral Resource estimates were prepared under the supervision of, or were reviewed by, David Rowe, CPG, Internal QP for First Majestic, a Qualified Person, as that term is defined in NI 43-101. (4) Sample data was collected through a cut-off date of December 31, 2023, for the Material Properties, except for the Santa Elena Leach pad estimate, which has an effective date of March 11, 2024. All properties account for relevant technical information and mining depletion through December 31, 2023. (5) Metal prices considered for Mineral Resource estimates were $24.5/oz Ag and $2,000/oz Au. (6) Silver-equivalent grade is estimated considering metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the corresponding contract of each mine. Estimation details are listed in each mine section of the AIF. (7) The cut-off grades and cut-off values used to report Mineral Resource estimates are different for all mines. The cut-off grades, values and economic parameters are listed in the applicable section describing each mine section of the AIF. (8) Tonnage is expressed in thousands of tonnes; metal content is expressed in thousands of ounces. Totals may not add up due to rounding. (9) The technical reports from which the above-mentioned information for the material properties is derived are cited under the heading “Technical Reports for Material Properties” of the AIF. 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMV38 39 PROVEN AND PROBABLE MINERAL RESERVES, Effective Date of December 31, 2023 Category/Area Mineral Type SAN DIMAS Proven (UG) Probable (UG) Total Proven and Probable (UG) SANTA ELENA Proven (UG - Ermitano) Proven (UG - Santa Elena) Probable (UG - Ermitano) Probable (UG - Santa Elena) Probable (Pad) Sulphides Sulphides Sulphides Sulphides Sulphides Sulphides Sulphides Oxides Total Proven and Probable (UG+Pad) Oxides + Sulphides LA ENCANTADA Probable (UG) Total Probable (UG) Consolidated FMS Proven (UG) Probable (UG) Oxides Oxides All mineral types All mineral types Total Proven and Probable All mineral types Tonnage k tonnes 1,972 1,663 3,635 590 164 2,086 679 325 3,843 3,675 3,675 2,726 8,428 11,153 Grades Ag (g/t) Au (g/t) Ag-Eq (g/t) Ag (k Oz) Metal Content Au (k Oz) Ag-Eq (k Oz) 265 254 260 78 140 65 167 25 85 130 130 217 137 157 3.47 2.69 3.11 3.87 1.54 2.87 1.30 0.39 2.48 556 480 521 548 267 414 275 65 374 16,780 13,580 30,360 220 144 364 35,270 25,640 60,910 1,473 735 4,367 3,636 266 73 8 10,386 1,408 193 27,774 28 4 5,996 677 10,478 307 46,241 - - 130 130 15,321 15,321 - - 15,321 15,321 3.44 1.36 1.87 537 278 342 18,988 37,171 56,159 302 369 671 47,064 75,409 122,472 (1) Mineral Resource estimates have been classified in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101. (2) The Mineral Resource estimates provided above have an effective date of December 31, 2023, except for the Santa Elena Leach Pad estimate, which has an effective date of March 11, 2024. (3) The Mineral Resource estimates were prepared by the Company’s Internal QPs, who have the appropriate relevant qualifications, and experience in geology and resource estimation. The Mineral Resource estimates were prepared under the supervision of, or were reviewed by, David Rowe, CPG, Internal QP for First Majestic, a Qualified Person, as that term is defined in NI 43-101. (4) Sample data was collected through a cut-off date of December 31, 2023, for the Material Properties except for the Santa Elena Leach Pad estimate, which has an effective date of March 11, 2024. All properties account for relevant technical information and mining depletion through December 31, 2023. (5) Metal prices considered for Mineral Resources estimates were $24.5/oz Ag and $2,000/oz Au. (6) Silver-equivalent grade is estimated considering: metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the corresponding contract of each mine. Estimation details are listed in each mine section of the Annual Information Form (AIF). (7) The cut-off grades and cut-off values used to report Mineral Resources are different for all mines. The cut-off grades, values and economic parameters are listed in the applicable section describing each mine section of the AIF. (8) Measured and Indicated Mineral Resource estimates are inclusive of the Mineral Reserve estimates. (9) Tonnage is expressed in thousands of tonnes; metal content is expressed in thousands of ounces. Totals may not add up due to rounding. (10) The technical reports from which the above-mentioned information for the material properties is derived are cited under the heading “Technical Reports for Material Properties” of the AIF. PRODUCTION 2023 Ore Processed Material from Reserves Mined and Processed Material Mined from Areas Not In Reserves Silver Produced Gold Produced Silver-Equivalent Produced from Gold Silver-Equivalent Produced Units Tonnes Tonnes Tonnes Ounces Ounces Ounces Ounces SAN DIMAS SANTA ELENA LA ENCANTADA JERRITT CANYON TOTAL 875,345 764,445 110,900 882,592 882,592 - 966,392 152,259 814,134 177,643 2,901,972 - 1,799,295 177,643 1,102,677 6,355,308 1,176,591 2,718,856 - 10,250,755 76,964 100,535 321 21,101 198,921 6,434,612 8,395,201 26,766 1,767,083 16,623,662 12,789,920 9,571,792 2,745,622 1,767,083 26,874,417 F I R S T M A J E S T I C S I LV E R C O R P. 2023 Audited Consolidated Financial Statements MANAGEMENT’S RESPONSIBILITIES FOR FINANCIAL REPORTING REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) CONSOLIDATED STATEMENTS OF FINANCIAL POSITION NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS 40 41 45 47 49 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) CONSOLIDATED STATEMENTS OF CASH FLOWS CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY MANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE INFORMATION 40 44 46 48 93 139 20 YEARS. THE SILVER EVOLUTION.2003 - 2023 ANNUAL REPORTFIRST MAJESTIC SILVER CORP.TSX AG / NYSE AG / FSE FMVMANAGEMENT’S RESPONSIBILITIES FOR FINANCIAL REPORTING The consolidated financial statements of First Majestic Silver Corp. (the “Company”) have been prepared and are the responsibility of the Company’s management. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and reflect management’s best estimates and judgment based on information currently available. Management has developed and maintains a system of internal controls to ensure that the Company’s assets are safeguarded, transactions are authorized and properly recorded, and financial information is reliable. The Board of Directors is responsible for ensuring management fulfills its responsibilities. The Audit Committee reviews the results of the audit and the annual consolidated financial statements prior to their submission to the Board of Directors for approval. The consolidated financial statements have been audited by Deloitte LLP and their report outlines the scope of their examination and gives their opinion on the consolidated financial statements. /s/ Keith Neumeyer Keith Neumeyer President & CEO February 21, 2024 /s/ David Soares David Soares, CPA, CA Chief Financial Officer February 21, 2024 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. The Company’s management assessed the effectiveness of the Company’s Internal control over financial reporting as of the year ended December 31, 2023, in accordance with the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of the year ended December 31, 2023, the Company’s internal control over financial reporting was effective. Deloitte LLP, an Independent Registered Public Accounting Firm, has audited the Company’s consolidated financial statements for the year ended December 31, 2023, and as stated in the Report of Independent Registered Public Accounting Firm, they have expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of the year ended December 31, 2023. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of First Majestic Silver Corp. Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial position of First Majestic Silver Corp. and subsidiaries (the “Company”) as at December 31, 2023 and 2022, the related consolidated statements of earnings (loss), comprehensive income (loss), changes in equity, and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and 2022, and its financial performance and its cash flows for each of the two years in the period ended December 31, 2023, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. Impairment - Assessment of Whether Indicators of Impairment or Impairment Reversal Exist in Non-Current Assets - Refer to Note 3 to the Financial Statements Critical Audit Matter Description The Company’s determination of whether or not an indication of impairment or impairment reversal exists at the cash generating unit (“CGU”) level requires significant management judgments pertaining to mining interests and property, plant and equipment. Management considers both external and internal sources of information in assessing whether there are any indications that the Company’s mining interests and property, plant and equipment are impaired or previous impairments should be reversed. While there are several factors that are required to determine whether or not an indicator of impairment or impairment reversal exists, the judgments with the highest subjectivity are the in-situ value of reserves, resources and exploration potential, and changes in market conditions including future commodity prices and market interest rates. Auditing these assumptions required a high degree of subjectivity in applying audit procedures and in evaluating the results of those procedures. This resulted in an increased extent of audit effort. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the in-situ value of reserves, resources and exploration potential, and changes in market conditions including future commodity prices and market interest rates in the assessment of whether indicators of impairment or impairment reversal exists included the following, among others: • Evaluated the effectiveness of controls over management’s assessment of whether there are indicators of impairment or impairment reversal; • Assessed management’s determination of the in-situ value of reserves, resources and exploration potential; and • Assessed if changes in market conditions could indicate impairment by: • Comparing management’s future commodity prices to third party forecasts; and • Evaluating if there were any significant changes in the market interest rates. 39 40 Impairment of Non-Current Asset at the Jerritt Canyon Gold Mine Cash Generating Unit (“CGU”) - Refer to Notes 15, 16 and 18 to the Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Critical Audit Matter Description The Company’s determination of whether an indicator of impairment exists in non-financial assets at the CGU level requires significant management judgments. An impairment loss is recognized if the carrying amount of the CGU exceeds its recoverable amount. The recoverable amount of the CGU is estimated based on the higher of its fair value less cost of disposal (“FVLCD”) and its value in use. An impairment indicator was identified at the Jerritt Canyon Gold Mine CGU (“identified CGU”) due to temporary suspension of operations, heightened costs, and operating mine performance. Management assessed the recoverable value of the identified CGU based on its FVLCD. The recoverable amount of the identified CGU was lower than its carrying value, causing the Company to recognize an impairment charge. While there are several inputs that are required to determine the recoverable value of the identified CGU, the estimates and assumptions with the highest degree of subjectivity and judgment uncertainty are the in-situ value of reserves and mineral resources valuation multiples. Auditing these estimates and assumptions required a high degree of auditor judgments in applying audit procedures and evaluating the results of those procedures. This resulted in an increased extent of audit effort, including the involvement of fair value specialists. To the Shareholders and the Board of Directors of First Majestic Silver Corp. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of First Majestic Silver Corp. and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as at and for the year ended December 31, 2023, of the Company and our report dated February 22, 2024, expressed an unqualified opinion on those financial statements. How the Critical Audit Matter Was Addressed in the Audit Basis for Opinion Our audit procedures related to the in-situ value of reserves and mineral resources valuation multiples used in determining the recoverable value of the identified CGU, included the following, among others: • Evaluated the effectiveness of controls over management’s determination of the in-situ value of reserves and mineral resources valuation multiples; and • With the assistance of fair value specialists, evaluated the reasonableness of the in-situ value of reserves and mineral resources valuation multiples by obtaining third party information from market transactions and comparing those to the assumptions used by management. Primero Tax Rulings — Refer to Note 28(b) to the Financial Statements Critical Audit Matter Description The Company has an ongoing dispute with the Mexican Tax Authorities, the Servicio de Administracion Tributaria (“SAT”). The dispute relates to the determination of the transfer price, which is based upon an Advanced Pricing Agreement (“APA”) from the SAT, applied to intercompany silver sales in connection with a silver streaming arrangement with an unrelated third-party. In 2020, the Mexican Federal Court on Administrative Matters issued a decision nullifying the APA and directing the SAT to reexamine the evidence and basis for the issuance of the APA; the Company has appealed this decision to the Mexican Circuit Courts. As a result of the tax dispute with the SAT, should the Company ultimately be required to pay tax on its intercompany silver revenues based on market prices, the incremental income tax for the years 2010 - 2019 would be approximately $314.2 million, before interest and penalties, without any mitigating adjustments. The Company has not recognized a tax liability related to the Primero tax dispute with the SAT. The evaluation of the accounting and the disclosure of the matter requires significant management judgments to determine the probability of having to pay incremental income tax. Auditing the accounting and the disclosures related to the tax matter required a high degree of auditor judgments due to the significant judgments by management and evaluating whether the audit evidence supports management’s position. This resulted in an increased extent of audit effort, including the involvement of tax specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures relating to the evaluation of the accounting and disclosure related to the tax matter included the following, among others: • Inquired of management to understand the developments of the tax dispute; • Evaluated the effectiveness of management’s controls over the evaluation of the appropriateness of income tax filing positions and corresponding disclosures in the financial statements; • Obtained and evaluated management’s assessment of the dispute, including analysis from the Company’s external counsel; • With the assistance of tax specialists, analyzed the Company’s accounting position related to the tax dispute; and • Evaluated the Company’s disclosures for consistency with our knowledge of the Company’s tax matters and audit evidence obtained. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte LLP Chartered Professional Accountants Vancouver, Canada February 22, 2024 /s/ Deloitte LLP Chartered Professional Accountants Vancouver, Canada February 22, 2024 We have served as the Company’s auditor since 2005. 41 42 CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In thousands of US dollars, except share and per share amounts) CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In thousands of US dollars) The Consolidated Statements of Earnings (Loss) provide a summary of the Company’s financial performance and net earnings or loss over the reporting periods. The Consolidated Statements of Comprehensive Income (Loss) provide a summary of total comprehensive earnings or loss and summarizes items recorded in other comprehensive income that may or may not be subsequently reclassified to profit or loss depending on future events. Note Year Ended December 31, 2023 2022 Net loss for the year ($135,112) ($114,276) Other comprehensive earnings Items that will not be subsequently reclassified to net loss: Unrealized loss on fair value of investments in marketable securities, net of tax Realized (loss) gain on investments in marketable securities, net of tax 13(b) 13(b) Remeasurement of retirement benefit plan Other comprehensive loss Total comprehensive loss (18,768) (10,333) (580) 50 482 312 (19,298) (9,539) ($154,410) ($123,815) Revenues Mine operating costs Cost of sales Cost of sales - standby costs Depletion, depreciation and amortization Mine operating earnings General and administrative expenses Share-based payments Mine holding costs Write down on asset held-for-sale Restructuring costs Impairment (reversal of impairment) of non-current asset Loss (gain) on sale of mining interest Foreign exchange (gain) loss Operating loss Investment and other income (loss) Finance costs Loss before income taxes Income taxes Current income tax expense Deferred income tax recovery Net loss for the year Loss per common share Basic Diluted Weighted average shares outstanding Basic Diluted Year Ended December 31, Note 2023 2022 5 6 6 7 8 14 14, 18 14 9 10 24 24 11 11 11 11 $573,801 $624,221 410,057 13,438 124,664 548,159 471,687 — 135,782 607,469 25,642 16,752 38,709 13,177 22,088 7,229 6,883 125,200 3,024 (11,884) (178,784) 9,149 (26,280) (195,915) 14,005 (74,808) (60,803) 36,372 13,958 11,930 — — (2,651) (4,301) 637 (39,193) (1,888) (20,323) (61,404) 56,250 (3,378) 52,872 ($135,112) ($114,276) ($0.48) ($0.48) ($0.43) ($0.43) 282,331,106 263,122,252 282,331,106 263,122,252 Approved and authorized by the Board of Directors for issuance on February 21, 2024 /s/ Keith Neumeyer Keith Neumeyer, Director /s/ Colette Rustad Colette Rustad, Director 43 The accompanying notes are an integral part of the audited consolidated financial statements The accompanying notes are an integral part of the audited consolidated financial statements 44 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In thousands of US dollars) CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31, 2023 AND 2022 (In thousands of US dollars) The Consolidated Statements of Cash Flows provide a summary of movements in cash and cash equivalents during the reporting periods by classifying them as operating, investing or financing activities. The Consolidated Statements of Financial Position provides a summary of assets, liabilities and equity, as well as their current versus non-current nature, as at the reporting date. Operating Activities Net loss for the year Adjustments for: Depletion, depreciation and amortization Share-based payments Income tax (recovery) expense Finance costs Write down on asset held-for-sale Unrealized (gain) loss from marketable securities and silver futures derivatives Loss (gain) on sale of mining interest Impairment (reversal of impairment) of non-current asset Other Operating cash flows before non-cash working capital and taxes Net change in non-cash working capital items Income taxes paid Cash generated by operating activities Investing Activities Expenditures on mining interests Acquisition of property, plant and equipment Cash disposed as part of the sale of La Guitarra Deposits paid for acquisition of non-current assets Other Cash used in investing activities Financing Activities Proceeds from prospectus offering, net of share issue costs Proceeds from exercise of stock options Repayment of lease liabilities Finance costs paid Proceeds from debt facilities Repayment of debt facilities Dividends declared and paid Shares repurchased and cancelled Cash provided by financing activities Effect of exchange rate on cash and cash equivalents held in foreign currencies Decrease in cash and cash equivalents Cash and cash equivalents, beginning of the year Change in cash and cash equivalents classified as held for sale Cash and cash equivalents reclassified as held for sale Cash and cash equivalents, end of year Supplemental cash flow information Year Ended December 31, Note 2023 2022 ($135,112) ($114,276) 126,170 12,874 (60,803) 26,280 7,229 (2,639) 3,024 125,200 (3,029) 99,194 (18,916) (24,664) 55,614 (113,994) (31,987) (5,401) (1,398) (1,219) 137,411 13,958 52,872 20,323 — 4,242 (4,301) (2,651) 1,843 109,421 (27,686) (62,747) 18,988 (157,975) (59,705) — (1,135) 5,018 (153,999) (213,797) 92,092 2,134 (15,238) (8,471) — — (5,868) — 64,649 2,660 (33,736) 151,438 5,219 — 113,395 4,664 (13,469) (3,172) 50,000 (30,000) (6,867) (665) 113,886 (346) (80,923) 237,926 — (5,219) $125,581 $151,438 24 10 14 14 18 27 27 27 25(a) 22 21(b) 21(b) 25(g) 25(f) 14 27 Assets Current assets Cash and cash equivalents Trade and other receivables Value added taxes receivable Inventories Other financial assets Prepaid expenses and other Assets held-for-sale Total current assets Non-current assets Mining interests Property, plant and equipment Right-of-use assets Deposits on non-current assets Non-current restricted cash Non-current value added taxes receivable Deferred tax assets Total assets Liabilities and Equity Current liabilities Trade and other payables Unearned revenue Current portion of debt facilities Current portion of lease liabilities Liabilities relating to assets held-for-sale Income taxes payable Total current liabilities Non-current liabilities Debt facilities Lease liabilities Decommissioning liabilities Other liabilities Non-current income taxes payable Deferred tax liabilities Total liabilities Equity Share capital Equity reserves Accumulated deficit Total equity Total liabilities and equity Commitments (Note 15); Contingencies (Note 28); Subsequent event (Note 31) Note December 31, 2023 December 31, 2022 $125,581 $151,438 26(c) 12 13 14 15 16 17 19 26(c) 24 20 5 21 22 14 24 21 22 23 24 24 10,099 38,587 63,690 62,380 8,720 — 309,057 998,835 406,294 27,284 6,430 125,573 14,150 88,732 8,598 32,618 64,761 34,528 5,617 72,729 370,289 1,061,124 451,335 26,649 6,003 125,193 12,354 57,062 $1,976,355 $2,110,009 $94,413 2,301 832 17,370 — 5,222 120,138 218,980 19,332 151,564 5,592 23,612 79,017 $618,235 $115,120 3,383 551 13,827 16,278 18,240 167,399 209,811 23,756 149,017 5,655 20,605 122,468 $698,711 1,879,971 88,025 (609,876) $1,358,120 $1,976,355 1,781,280 98,914 (468,896) $1,411,298 $2,110,009 45 The accompanying notes are an integral part of the audited consolidated financial statements The accompanying notes are an integral part of the audited consolidated financial statements 46 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER, 31 2023 AND 2022 (In thousands of US dollars, except share and per share amounts) NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts are expressed in thousands of US dollars) The Consolidated Statements of Changes in Equity summarizes movements in equity, including common shares, share capital, equity reserves and retained earnings or accumulated deficit. 1. NATURE OF OPERATIONS New and amended IFRS standards that are effective for the current year Share Capital Equity Reserves Balance at December 31, 2021 260,050,658 $1,659,781 $101,385 ($6,387) $3,945 $98,943 ($347,753) $1,410,971 Shares Amount Share-based payments(a) Other comprehensive income(loss)(b) Equity component of convertible debenture(c) Total equity reserves Accumulated deficit Total equity Net loss for the period Other comprehensive loss Total comprehensive loss Share-based payments Shares issued for: — — — — — — — — — — — 13,615 Prospectus offerings (Note 25(a)) 11,869,145 113,395 — Exercise of stock options (Note 25(b)) Settlement of restricted and deferred share units (Note 25(c) and 25(e)) Shares repurchased and cancelled (Note 25(f)) Dividend declared and paid (Note 25(g)) 609,623 6,872 (2,208) 148,553 (100,000) — 1,897 (665) — (1,897) — — — (9,539) (9,539) — — — — — — — — — — — — — — — — (114,276) (114,276) (9,539) (9,539) 13,615 — (2,208) (1,897) — — — (9,539) (114,276) (123,815) — — — — — 13,615 113,395 4,664 — (665) (6,867) (6,867) Balance at December 31, 2022 272,577,979 $1,781,280 $110,895 ($15,926) $3,945 $98,914 ($468,896) $1,411,298 Net loss for the period Other comprehensive loss Total comprehensive loss Share-based payments Shares issued for: — — — — — — — — — — — 12,874 Prospectus offerings (Note 25(a)) 13,919,634 92,092 — Exercise of stock options (Note 25(b)) Settlement of restricted and deferred share units (Note 25(c) and 25(e)) Dividend declared and paid (Note 25(g)) 337,500 3,189 (1,055) 311,602 3,410 (3,410) — — — — (19,298) (19,298) — — — — — — — — — — — — — — (135,112) (135,112) (19,298) — (19,298) (19,298) (135,112) (154,410) 12,874 — (1,055) (3,410) — — — — 12,874 92,092 2,134 — — (5,868) (5,868) Balance at December 31, 2023 287,146,715 $1,879,971 $119,304 ($35,224) $3,945 $88,025 ($609,876) $1,358,120 (a) Share-based payments reserve records the cumulative amount recognized under IFRS 2 share-based payments in respect of stock options granted, restricted share units, deferred share units and shares purchase warrants issued but not exercised or settled to acquire shares of the Company. (b) Other comprehensive income reserve principally records the unrealized fair value gains or losses related to fair value through other comprehensive income (“FVTOCI”) of financial instruments and re-measurements arising from actuarial gains or losses and return on plan assets in relation to San Dimas’ retirement benefit plan. (c) Equity component of convertible debenture reserve represents the estimated fair value of its conversion option of $42.3 million, net of deferred tax effect of $11.4 million. This amount is not subsequently remeasured and will remain in equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to share capital. Where the conversion option remains unexercised at the maturity date of the convertible note, the balance will remain in equity reserves. First Majestic Silver Corp. (the “Company” or “First Majestic”) is in the business of production, development, exploration, and acquisition of mineral properties with a focus on silver and gold production in North America. The Company owns three producing mines in Mexico consisting of the San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine and the La Encantada Silver Mine. The Company also owns the Jerritt Canyon Gold Mine in Nevada, USA which has been placed on temporary suspension as of March 20, 2023 to focus on exploration, definition, and expansion of the mineral resources and optimization of mine planning and plant operations. In addition, the Company owns two mines in suspension: the San Martin Silver Mine and the Del Toro Silver Mine, and several exploration stage projects. First Majestic is incorporated in Canada with limited liability under the legislation of the Province of British Columbia and is publicly listed on the New York Stock Exchange under the symbol “AG”, on the Toronto Stock Exchange under the symbol “FR” and on the Frankfurt Stock Exchange under the symbol “FMV”. The Company’s head office and principal address is located at 925 West Georgia Street, Suite 1800, Vancouver, British Columbia, Canada, V6C 3L2. 2. BASIS OF PRESENTATION These audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). The significant accounting policies, estimates and judgments applied in preparing these consolidated financial statements are summarized in Note 3 of the consolidated financial statements and have been consistently applied throughout all periods presented. These audited consolidated financial statements have been prepared on an historical cost basis except for certain items that are measured at fair value such as other financial assets (Note 13). All dollar amounts presented are in thousands of United States dollars unless otherwise specified. These audited consolidated financial statements incorporate the financial statements of the Company and its controlled subsidiaries. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The consolidated financial statements include the accounts of the Company and its subsidiaries (see Note 29). Intercompany balances, transactions, income and expenses are eliminated on consolidation. These audited consolidated financial statements of First Majestic Silver Corp. for the years ended December 31, 2023 and 2022 were approved and authorized for issue by the Board of Directors on February 21, 2024. 3. MATERIAL ACCOUNTING POLICY INFORMATION, ESTIMATES AND JUDGMENTS The Company’s management makes judgments in its process of applying the Company’s accounting policies in the preparation of its audited annual consolidated financial statements. In addition, the preparation of the financial data requires the Company’s management to make assumptions and estimates of the impacts of uncertain future events on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and the resulting impacts on the carrying amounts of the Company’s assets and liabilities are accounted for prospectively. In the current year, the Company has applied the below amendments to IFRS Standards and Interpretations issued by the International Accounting Standards Board (“IASB”) that were effective for annual periods that begin on or after January 1, 2023. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements. Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgments—Disclosure of Accounting Policies The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments replace all instances of the term “significant accounting policies” with “material accounting policy information.” Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions, is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material. The International Accounting Standards Board (“IASB”) has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2. The amendments were applied effective January 1, 2023 and did not have a material impact on the Company’s consolidated financial statements. Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors—Definition of Accounting Estimates The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty.” The definition of a change in accounting estimates was deleted. However, the Board retained the concept of changes in accounting estimates in the Standard with the following clarifications: • A change in accounting estimate that results from new information or new developments is not the correction of an error • The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors The amendments were applied effective January 1, 2023 and did not have a material impact on the Company’s consolidated financial statements. Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12) The amendments clarify that companies are required to recognize deferred taxes on transactions where both assets and liabilities are recognized, such as with leases and decommissioning liabilities. The amendments were applied effective January 1, 2023 and did not have a material impact on the Company’s consolidated financial statements. 47 The accompanying notes are an integral part of the audited consolidated financial statements 48 3. MATERIAL ACCOUNTING POLICY INFORMATION, ESTIMATES AND Accounting Estimates and Judgments: Accounting Estimates and Judgments: Revenue Recognition (Note 5) JUDGMENTS (continued) New and amended IFRS standards that are effective for the current year (continued) Impact of Pillar Two Legislation In December 2021, the Organization for Economic Co-operation and Development (“OECD”) released a draft legislative framework for a global minimum tax that is expected to be used by individual jurisdictions. The goal of the framework is to reduce the shifting of profit from one jurisdiction to another in order to reduce global tax obligations in corporate structures. In March 2022, the OECD released detailed technical guidance on Pillar Two of the rules. Stakeholders raised concerns with the IASB about the potential implications on income tax accounting, especially accounting for deferred taxes, arising from the Pillar Two model rules. The IASB issued the final Amendments (the “Amendments”) International Tax Reform – Pillar Two Model Rules, in response to stakeholder concerns on May 23, 2023. The amendments introduce a temporary exception to the accounting requirements for deferred taxes in IAS 12, so that an entity would neither recognize nor disclose information about deferred taxes and liabilities related to Pillar Two income taxes. This amendment to the IFRS Accounting Standards is mandatory effective for reporting periods beginning on or after January 1, 2023. For the year ended December 31, 2023, Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Company has operations. However, the Pillar Two legislation does not apply to the Company, as its consolidated revenue does not meet the required threshold for applicability of EUR 750 million. The Company will continue to evaluate the potential impact on future periods of the Pillar Two framework, pending legislative adoption by additional individual companies. Business Combinations Accounting Policy: Acquisitions of businesses are accounted for using the acquisition method. The consideration of each business combination is measured, at the date of the exchange, as the aggregate of the fair value of assets given, liabilities incurred or assumed and equity instruments issued by the Company to the former owners of the acquiree in exchange for control of the acquiree. Acquisition-related costs incurred for the business combination are expensed. The acquiree’s identifiable assets, liabilities and contingent liabilities are recognized at their fair value at the acquisition date. Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the consideration of the acquisition over the Company’s interest in the fair value of the net identifiable assets, liabilities and contingent liabilities recognized. If the Company’s interest in the fair value of the acquiree’s net identifiable assets, liabilities and contingent liabilities exceeds the cost of the acquisition, the excess is recognized in earnings or loss immediately. Goodwill may also arise as a result of the requirement under IFRS to record a deferred tax liability on the excess of the fair value of the acquired assets over their corresponding tax bases, with the corresponding offset recorded as goodwill. Determination of a Business Determining what is part of the business combination Accounting Policy: Determination of whether a set of assets acquired and liabilities assumed constitute a business may require the Company to make certain judgments, taking into account all facts and circumstances. A business consists of inputs, including non-current assets and processes, including operational processes, that when applied to those inputs have the ability to create outputs that provide a return to the Company and its shareholders. Fair Value Estimates In business combinations, it generally requires time to obtain the information necessary to identify and measure the following as of the acquisition date: (i) The identifiable assets acquired and liabilities assumed; (ii) The consideration transferred in exchange for an interest in the acquiree; (iii) The resulting goodwill. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports in its consolidated financial statements provisional amounts for the items for which the accounting is incomplete. These provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. The measurement period ends as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable and shall not exceed one year from the acquisition date. The fair value of assets acquired and liabilities assumed requires that management make judgments and estimates taking into account information available at the time of the acquisition about future events including, but not restricted to, estimates of mineral reserves and resources, exploration potential, future metal prices, future operating costs and capital expenditures and discount rates. During the allowable measurement period, the Company will retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. The Company may also recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable and shall not exceed one year from the acquisition date. The fair value of assets acquired and liabilities assumed are subject to change for up to one year from the Acquisition Date. If new information arises which would impact management’s assessment of the fair value at the Acquisition Date, any adjustments to the allocation of the purchase consideration will be recognized retrospectively and comparative information will be revised. Consideration for any acquisition Acquisitions of businesses are accounted for using the acquisition method. The consideration of each business combination is measured, at the date of the exchange, as the aggregate of the fair value of assets given, liabilities incurred or assumed and equity instruments issued by the Company to the former owners of the acquiree in exchange for control of the acquiree. Management makes judgments and estimates in calculating the value of the shares and warrants transferred, including but not limited to share price, volatility, rate of quarterly dividends and the discount rate. The Company needs to assess if other arrangement(s) or transaction(s) shall be recognized as part of applying the acquisition method. To determine if the arrangement(s) or transaction(s), is(are) part of the business combination, the Company considers the following factors: The Company’s primary product is silver and gold. Other metals, such as lead and zinc, produced as part of the extraction process are considered to be by- products arising from the production of silver and gold. Smelting and refining charges are net against revenue from the sale of metals. (i) The reasons for the arrangement(s) or transaction(s); (ii) Who initiated the arrangement(s) or transaction(s); and (iii) The timing of the arrangement(s) or transaction(s). Revenue relating to the sale of metals is recognized when control of the metal or related services are transferred to the customer in an amount that reflects the consideration the Company expects to receive in exchange for the metals. Goodwill Accounting Policy: Goodwill arising on the acquisition of a business is carried at cost as established at the date of the acquisition less accumulated impairment losses, if any. Goodwill is allocated to each of the Company’s cash-generating units that is expected to benefit from the synergies of the acquisition. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash- generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss in the consolidated statements of earnings or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods. As at December 31, 2023, the Company had $nil goodwill (2022 - $nil). Foreign Currency Accounting Policy: The consolidated financial statements are presented in U.S. dollars. The individual financial statements of each entity are presented in their functional currency, which is the currency of the primary economic environment in which the entity operates. Transactions in foreign currencies are translated into the entities’ functional currencies at the exchange rates at the date of the transactions. Monetary assets and liabilities of the Company’s operations denominated in a currency other than the U.S. dollar are translated using exchange rates prevailing at the date of the statement of financial position. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates on the dates of the transactions. Revenue and expense items are translated at the exchange rates in effect at the date of the underlying transaction, except for depletion and depreciation related to non- monetary assets, which are translated at historical exchange rates. Exchange differences are recognized in the statements of earnings or loss in the period in which they arise. Accounting Estimates and Judgments: Determination of Functional Currency The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the entity operates. The Company has determined that the functional currency of each entity is the U.S. dollar. Determination of functional currency may involve certain judgments to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment. When considering whether the Company has satisfied its performance obligation, it considers the indicators of the transfer of control, which include, but are not limited to, whether: the Company has a present right to payment; the customer has legal title to the asset; the Company has transferred physical possession of the asset to the customer; and the customer has the significant risks and rewards of ownership of the asset. Metals in doré sold are priced on date of transfer of control. Final weights and assays are adjusted on final settlement which is approximately one month after delivery. Revenue from the sale of coins, ingots and bullion is recorded when the products have been shipped and funds have been received. When cash was received from customers prior to shipping of the related finished goods, the amounts are recorded as unearned revenue until the products are shipped. Accounting Estimates and Judgments: Determination of Performance Obligations The Company applied judgment to determine if a good or service that is promised to a customer is distinct based on whether the customer can benefit from the good or service on its own or together with other readily available resources and whether the good or service is separately identifiable. Based on these criteria, the Company determined the primary performance obligation relating to its sales contracts is the delivery of the bullion and doré. Inventories (Note 12) Accounting Policy: Mineral inventories, including stockpiled ore, work in process and finished goods, are valued at the lower of weighted average cost and estimated net realizable value. Cost includes all direct costs incurred in production including direct labour and materials, freight, depreciation and amortization and directly attributable overhead costs. Net realizable value is calculated as the estimated price at the time of sale based on prevailing and future metal prices less esti- mated future production costs to convert the inventories into saleable form. Any write-downs of inventory to net realizable value are recorded as cost of sales. If there is a subsequent increase in the value of inventories, the previous write-downs to net realizable value are reversed to the extent that the related inventory has not been sold. Stockpiled ore inventory represents ore that has been extracted from the mine and is available for further processing. Costs added to stockpiled ore inventory are valued based on current mining cost per ounce incurred up to the point of stockpiling the ore and are removed at the weighted average cost per ounce. Stockpiled ore tonnage and head grades are verified by periodic surveys and physical counts. Work in process inventory includes precipitates, inventories in tanks and in the milling process. Finished goods inventory includes metals in their final stage of production prior to sale, including primarily doré, bullion and dried concentrates at our operations and finished goods in-transit. 49 50 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 3. MATERIAL ACCOUNTING POLICY INFORMATION, ESTIMATES AND JUDGMENTS (continued) Inventories (Note 12) (continued) Materials and supplies inventories are valued at the lower of weighted average cost and net realizable value. Costs include acquisition, freight and other directly attributable costs. Exploration Potential, Exploration and Evaluation Expenditures (Note 15) Accounting Policy: Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Exploration and evaluation activity includes: • Acquiring the rights to explore; • Researching and analyzing historical exploration data; • Gathering exploration data through topographical, geochemical and geophysical studies; • Exploratory drilling, trenching and sampling; • Determining and examining the volume and grade of the resource; • Surveying transportation and infrastructure requirements; and • Compiling pre-feasibility and feasibility studies. Capitalization of exploration and evaluation expenditures commences on acquisition of a beneficial interest or option in mineral rights. Capitalized costs are recorded as mining interests at cost less accumulated transfers to producing mineral properties and impairment charges, if applicable. No amortization is charged during the exploration and evaluation phase as the asset is not available for use. Exploration and evaluation assets include exploration potential which represents the potential additional mineralization beyond the existing known reserves and resources of a producing mineral property which the Company gain access through acquiring the mineral rights and/or concessions. The exploration potential is recorded at cost less accumulated transfers to producing mineral properties and accumulated impairment losses, if any. No amortization is charged during the exploration and evaluation phase as the asset is not available for use. The majority of the Company’s exploration and evaluation expenditures focus on mineral deposits in proximity to its existing mining operations. Where the Company is acquiring a new property, the Company makes a preliminary evaluation to determine that the property has significant potential to develop an economic ore body. Exploration and evaluation expenditures are transferred to development or producing mining interests when technical feasibility and commercial viability of the mineral resource have been demonstrated. Factors taken into consideration include: • There is sufficient geological certainty of converting the mineral deposit into proven and probable reserves; • Life of mine plan and economic modeling support the economic extraction of such reserves and resources; • For new properties, a scoping study and/or feasibility study demonstrates that the additional reserves and resources will generate a positive economic outcome; and • Operating and environmental permits exist or are reasonably assured as obtainable. Exploration and evaluation expenditures remain as exploration mining interests and do not qualify as producing mining interests until the aforementioned criteria are met. Exploration and evaluation expenditures are transferred to development or producing mining interests when the technical feasibility and commercial viability of a mineral resource has been demonstrated according to the above mentioned factors. Once the technical feasibility, commercial viability and a development decision have been established, the value of the exploration and evaluation asset is reclassified and accounted for in accordance with IAS 16, Property, Plant and Equipment (“IAS 16”). The exploration and evaluation asset is subject to an impairment test prior to reclassification in accordance with IFRS 6, Exploration and Evaluation of Mineral Resources (“IFRS 6”). It is subsequently measured at cost less accumulated depletion and accumulated impairment losses, if any. Accounting Estimates and Judgments: Economic recoverability and probability of future economic benefits of exploration, evaluation and development costs Management has determined that exploratory drilling, evaluation, development and related costs incurred which were capitalized have potential future economic benefits and are potentially economically recoverable, subject to impairment analysis. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefit including geologic and metallurgic information, exploration plans and results, accessible facilities and existing permits. Mining Interests (Note 15) Accounting Policy: Exploration, development and field support costs directly related to mining interests are deferred until the property to which they directly relate is placed into production, sold, abandoned or subject to a condition of impairment. The deferred costs are amortized over the useful life of the ore body following commencement of production, or written off if the property is sold or abandoned. Administration costs and other exploration costs that do not relate to any specific property are expensed as incurred. Upon commencement of commercial production, mining interests are depleted on a units-of-production basis over the estimated economic life of the mine. In applying the units of production method, depletion is determined using quantity of material extracted from the mine in the period as a portion of total quantity of material to be extracted in current and future periods based on reserves and resources considered to be highly probable to be economically extracted over the life of mine. If no published reserves and resources are available, the Company may rely on internal estimates of economically recoverable mineralized material, prepared on a basis consistent with that used for determining reserves and resources, for purpose of determining depletion. From time to time, the Company acquires or disposes of properties pursuant to the terms of option agreements. Options are exercisable entirely at the discretion of the optionee with no obligation or sale until exercised or expired and, accordingly, are recorded as mineral property costs or recoveries when the payments are made or received. Accounting Estimates and Judgments: Property, Plant and Equipment (Note 16) Mineral Reserve and Resource Estimates Accounting Policy: Mineral reserve and resource estimates affect the determination of recoverable value used in impairment assessments, the depletion and depreciation rates for non-current assets using the units of production method and the expected timing of reclamation and closure expenditures. The figures for mineral reserves and mineral resources are determined in accordance with National Instrument 43-101 (“NI 43-101”) Technical Report standards. There are numerous uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond the Company’s control. Such estimation is a subjective process and the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. Differences between management’s assumptions including economic assumptions such as metal prices and market conditions could have a material effect in the future on the Company’s financial position, results of operation and cash flows. Depletion Rate for Mining Interests Mining interests are depleted on a units-of-production basis over the estimated economic life of the mine. In applying the units of production method, depletion is determined using quantity of material extracted from the mine in the period as a portion of total quantity of material to be extracted in current and future periods based on reserves and resources considered to be highly probable to be economically extracted over the life of mine. Should there be a change in the associated depletion rate from the initial estimate, the change in estimate would be made prospectively in the consolidated statements of earnings or loss. Stream Asset (Note 15) Accounting Policy: A stream asset is a long-term metal purchase agreement for which settlement is called for in silver, the amount of which is based on production at a mine corresponding to the specific agreement. On acquisition of a stream asset, it is recorded at cost and is accounted for in accordance with IFRS 6. A stream asset where the mine corresponding to the specific agreement is an exploration and evaluation stage property is classified as exploration and evaluation asset and is assessed for impairment whenever indicators of impairment exist in accordance with IFRS 6. An impairment loss is recognized for the amount by which the asset’s carrying value exceeds its recoverable amount. Once the technical feasibility, commercial viability and a development decision have been established, the value of the stream asset is reclassified and accounted for in accordance with IAS 16. The exploration and evaluation asset is subject to an impairment test prior to reclassification in accordance with IFRS 6. It is subsequently measured at cost less accumulated depletion and accumulated impairment losses, if any. A producing stream asset is depleted using the units-of-production method over the life of the property to which the interest relates, which is estimated using available information of proven and probable reserves and the portion of resources expected to be classified as mineral reserves at the mine corresponding to the specific agreement. Property, plant and equipment are recorded at cost less accumulated depre- ciation and accumulated impairment losses. The cost of an item of property, plant and equipment includes the purchase price or construction cost, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use, an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, and bor- rowing costs related to the acquisition or construction of qualifying assets. Property, plant and equipment are depreciated using either the straight-line or units-of-production method over the shorter of the estimated useful life of the asset or the expected life of mine. Where an item of property, plant and equipment comprises of major components with different useful lives, the components are accounted for as separate items of property, plant and equipment. Assets under construction are recorded at cost and reclassified to machinery and equipment when it becomes available for use. Depreciation commences when the asset is in the condition and location necessary for it to operate in the manner intended by management. Depreciation charges on assets that are directly related to mineral properties are allocated to those mineral properties. The Company conducts an annual review of residual balances, useful lives and depreciation methods utilized for property, plant and equipment. Any changes in estimate that arise from this review are accounted for prospectively. Accounting Estimates and Judgments: Commencement of Commercial Production Prior to reaching commercial production levels intended by management, costs incurred are capitalized as part of the related mine or mill. Depletion of capitalized costs for mining properties and depreciation and amortization of property, plant and equipment begin when operating levels intended by management have been reached. Determining when a mine or mill is in the condition necessary for it to be capable of operating in the manner intended by management is a matter of judgment dependent on the specific facts and circumstances. The following factors may indicate that commercial production has commenced: • Substantially all major capital expenditures have been completed to bring the asset to the condition necessary to operate in the manner intended by management; • The mine or mill has reached a pre-determined percentage of design capacity; • The ability to sustain a pre-determined level of design capacity for a significant period of time (i.e. the ability to process ore continuously at a steady or increasing level); • The completion of a reasonable period of testing of the mine plant and equipment; • The ability to produce a saleable product; • The mine or mill has been transferred to operating personnel from internal development groups or external contractors; and • Mineral recoveries are at or near the expected production levels. Accounting Estimates and Judgments: Depreciation and Amortization Rates for Property, Plant and Equipment Depreciation and amortization expenses are determined based on estimated useful life of the asset. Should the expected asset life and associated depreciation rates differ from the initial estimate, the change in estimate would be made prospectively in the consolidated statements of earnings or loss. 51 52 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)3. MATERIAL ACCOUNTING POLICY INFORMATION, ESTIMATES AND JUDGMENTS (continued) Borrowing Costs Accounting Policy: lease initial measurement of the The right-of-use assets comprise of the corresponding lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. liability, Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset until the asset is substantially ready for its intended use. Other borrowing costs are recognized as an expense in the period incurred. As at December 31, 2023 and 2022, the Company does not have any qualifying assets under construction. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. Right of Use Assets (Note 17) and Lease Liabilities (Note 22) Accounting Policy: The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise: • Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable; • Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; • The amount expected to be payable by the lessee under residual value guarantees; • The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and • Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever: • the lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. • the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used). • a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company’s general policy on borrowing costs. Impairment of Non-Current Assets (Note 18) Accounting Policy: At each statement of financial position date, the Company reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. Where the asset does not generate independent cash inflows, the Company estimates the recoverable amount of the cash generating unit (“CGU”) to which the asset belongs. If the recoverable amount of the asset or CGU is determined to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount and an impairment loss is recognized as an expense in the consolidated statements of earnings or loss. Recoverable amount is the higher of fair value less costs of disposal (“FVLCD”) and value in use (“VIU”). FVLCD is determined as the amount that would be obtained from the sale of the asset or CGU in an arm’s length transaction between knowledgeable and willing parties. The Company considers the use of a combination of its internal discounted cash flow economic models and in-situ value of reserves, resources and exploration potential of each CGU for estimation of its FVLCD. These cash flows are discounted by an appropriate post-tax discount rate to arrive at a net present value of the asset. VIU is determined as the present value of the estimated cash flows expected to arise from the continued use of the asset or CGU in its present form and its eventual disposal. VIU is determined by applying assumptions specific to the Company’s continued use and does not take into account future development. Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment been recognized for the asset or CGU in prior periods, adjusted for additional amortization which would have been recorded had the asset or CGU not been impaired. A reversal of an impairment loss is recognized as a gain in the statements of earnings or loss. Accounting Estimates and Judgments: Indications of Impairment and Reversal of Impairment Management considers both external and internal sources of information in assessing whether there are any indications that the Company’s property, plant and equipment and mining interests are impaired or previous impairments should be reversed. External sources of information management considers include changes in the market, economic and legal environment in which the Company operates that are not within its control and affect the recoverable amount of its property, plant and equipment and mining interests. Internal sources of information management considers includes the manner in which mining properties and plant and equipment are being used or are expected to be used and indications of economic performance of the assets. For exploration and evaluation assets, indications include but are not limited to expiration of the right to explore, substantive expenditure in the specific area is neither budgeted nor planned, and if the entity has decided to discontinue exploration activity in the specific area. Fair Value Estimates In determining the recoverable amounts of the Company’s property, plant and equipment and mining interests, management makes estimates of the discounted future cash flows expected to be derived from the Company’s mining properties, costs of disposal of the mining properties and the appropriate discount rate. Reductions in metal price forecasts, increases in estimated future costs of production, increases in estimated future capital expenditures, reductions in the amount of recoverable reserves, resources, and exploration potential, and/or adverse current economics can result in an impairment of the carrying amounts of the Company’s non-current assets. Conversely, favourable changes to the aforementioned factors can result in a reversal of previous impairments. Once an indicator of impairment is identified, significant judgement is required to determine the recoverable amounts of the Company’s mining interests. Following the temporary suspension of operations at Jerritt Canyon, the Company has determined that there was an indicator of impairment. The Company determined that the value of the CGU can be estimated using the market approach, based on the implied value per in-situ ounce of the property, rather than from the future cash flows from continuing operations. In estimating the FVLCD, the Company took into account the consideration paid in recent transactions for comparable Companies and benchmarked the value per in-situ ounce at Jerritt Canyon against these transactions. The Company concluded that the resulting measurement is more representative of the fair value of the CGU in the circumstances existing at the end of the current period. Share-based Payment Transactions (Note 25(b)(c)(d)(e)) Accounting Policy: Employees (including directors and officers) of the Company may receive a portion of their remuneration in the form of stock options which are share- based payment transactions (“share-based payments”). Stock options issued to employees are measured by reference to their fair value using the Black- Scholes model at the date on which they were granted. Forfeitures are estimated at grant date and adjusted prospectively based on actual forfeitures. Share-based payments expense, for stock options that are forfeited or cancelled prior to vesting, is reversed. The costs of share-based payments are recognized, together with a corresponding increase in the equity reserve, over the period in which the services and/or performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). On exercise by the employee, the associated option value in the equity reserve is reclassified to share capital. The Company adopted the 2022 Long-Term Incentive Plan (“LTIP”) to allow the Company to grant to its directors, employees and consultants non-transferable Restricted Share Units (“RSU’s”) based on the value of the Company’s share price at the date of grant. Unless otherwise stated, the awards typically have a graded vesting schedule over a three-year period and can be settled either in cash or equity upon vesting at the discretion of the Company. The Company intends to settle all RSU’s in equity. In situations where equity instruments are issued to non-employees, the share-based payments are measured at the fair value of goods or services received. If some or all of the goods or services received by the Company as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Accounting Estimates and Judgments: Valuation of Share-based Payments The Company uses the Black-Scholes Option Pricing Model for valuation of share-based payments. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves. Taxation (Note 24) Accounting Policy: Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case they are recognized in other comprehensive income or directly in equity. Current income tax is based on taxable earnings for the year. The tax rates and tax laws to compute the amount payable are those that are substantively enacted in each tax regime at the date of the statement of financial position. Deferred income tax is recognized, using the liability method, on temporary differences between the carrying value of assets and liabilities in the statement of financial position, unused tax losses, unused tax credits and the corresponding tax bases used in the computation of taxable earnings, based on tax rates and tax laws that are substantively enacted at the date of the statement of financial position and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, and interests in joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognized for all deductible temporary differences to the extent that the realization of the related tax benefit through future taxable earnings is probable. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset the current tax assets against the current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. The Company has applied the mandatory exception to the recognition and disclosure of information about deferred tax assets and liabilities related to Pillar Two income taxes (i.e. income taxes arising from the jurisdictional implementation of OECD’s Pillar Two Model Rules). 53 54 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 3. MATERIAL ACCOUNTING POLICY INFORMATION, ESTIMATES AND JUDGMENTS (continued) Taxation (Note 24) (continued) Accounting Estimates and Judgments: Recognition of Deferred Income Tax Assets In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. Forecasted cash flows from operations are based on life of mine projections internally developed, reviewed by management and are consistent with the forecasts utilized for business planning and impairment testing purposes. Weight is attached to tax planning opportunities that are within the Company’s control, and are feasible and implementable without significant obstacles. The likelihood that tax positions taken will be sustained upon examination by applicable tax authorities is assessed based on individual facts and circumstances of the relevant tax position evaluated in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. At the end of each reporting period, the Company reassesses recognized and unrecognized income tax assets. Tax Contingencies The Company’s operations involve dealing with uncertainties and judgments in the application of tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with tax authorities in various jurisdictions and resolution of disputes arising from tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues based on its estimate of whether, and the extent to which, additional taxes will be due. The Company adjusts these liabilities in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. If the Company’s estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If the estimate of tax liabilities proves to be greater than the ultimate assessment, a tax benefit would result. Cash and Cash Equivalents (Note 19) Accounting Policy: Cash in the statement of financial position includes cash on hand and held at banks and cash equivalents include short-term guaranteed investment certificates redeemable within three months or less at the date of purchase. Accounting Estimates and Judgments: Determination and classification of current and non-current restricted cash The Company determines if the funds on hand and held at banks meets the definition of cash or cash equivalents. When there is a restriction on those funds, the Company assesses the nature of the restriction and if it is applicable, excludes the related amounts from the cash and cash equivalents balance. The Company then assesses the classification of the restricted cash between current and non- current based on the following factors: • An asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the period; and • It expects to realize the asset within twelve months after the reporting period. The evaluation was performed based on the available information at the end of the reporting period; if there are changes in the circumstances the Company will reassess the classification. Financial Instruments Accounting Policy: Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, all financial assets and financial liabilities are recorded at fair value, net of attributable transaction costs, except for financial assets and liabilities classified as at fair value through profit or loss (“FVTPL”). The directly attributable transaction costs of financial assets and liabilities classified as at FVTPL are expensed in the period in which they are incurred. Subsequent measurement of financial assets and liabilities depends on the classifications of such assets and liabilities. Amortized cost in a business combination. Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in OCI. The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity instrument, instead, it is transferred to retained earnings. Accounting Policy: Financial assets measured subsequently at fair value through profit or loss (“FVTPL”) By default, all other financial assets, including derivatives, are measured subsequently at FVTPL. The Company, at initial recognition, may also irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. Financial assets measured at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss to the extent they are not part of a designated hedging relationship. Fair value is determined in the manner described in Note 26. The Company’s financial assets at FVTPL include its account receivable arising from sales of metal contained in concentrates. Financial assets that meet the following conditions are measured subsequently at amortized cost: Financial liabilities and equity • The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. Interest income is recognized using the effective interest method. The Company’s financial assets at amortized cost primarily include cash and cash equivalents, trade and other receivables and value added taxes receivable included in other current and non-current financial assets in the Consolidated Statement of Financial Position. Fair value through other comprehensive income (“FVTOCI”) Financial assets that meet the following conditions are measured at FVTOCI: • The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has designated certain investments in marketable securities that are not held for trading as FVTOCI (Note 13). On initial recognition, the Company may make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments that would otherwise be measured at fair value through profit or loss to present subsequent changes in fair value in other comprehensive income. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs. Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Financial liabilities that are not contingent consideration of an acquirer in a business combination, held for trading or designated as FVTPL, are measured at amortized cost using the effective interest method. The Company’s financial liabilities at amortized cost primarily include trade and other payables, debt facilities (Note 21) and lease liabilities (Note 22). Accounting Estimates and Judgments: Investments in Associates and Joint Ventures As a result of the sale of the La Guitarra Mine and the La Parrilla Mine, the Company is a material shareholder of Sierra Madre Gold and Silver Ltd. (“Sierra Madre”) and of Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.) (“Silver Storm”). Judgement is needed to assess whether the Company’s interest in an investee meets the definition of having significant influence and therefore requires to be accounted for under the equity method. In making a judgement of whether the Company has significant influence over the entity, management has evaluated the ownership percentage as well as other qualitative factors including but not limited to representation on the Board of Directors, participation in operational or financial policy-making processes, material transactions between the Company and the investee, interchange of managerial personnel, provision of technical information and the nature of potential voting rights. As part of this assessment, management has considered that until such time that the Company holds less than 19.9% of the outstanding shares, the Company has agreed to vote in the manner recommended by the Board of Directors of each of Sierra Madre and Silver Storm. Based on the qualitative factors noted above, the restrictions imposed on voting rights, and the lack of rights to have or appoint members to the Board, the Company has determined that significant influence does not exist despite holding a 46% interest in Sierra Madre and a 41% interest in Silver Storm. The Company began accounting for the shares received from Sierra Madre and Silver Storm as equity securities at FVTOCI. Provisions (Note 23) Accounting Policy: Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate of the obligation can be made. The amount recognized as a provision is the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as finance costs. Accounting Estimates and Judgments: Estimated Reclamation and Closure Costs liabilities for decommissioning The Company’s provision represents management’s best estimate of the present value of the future cash outflows required to settle estimated reclamation and closure costs at the end of the mine’s life. The provision reflects estimates of future costs, inflation, movements in foreign exchange rates and assumptions of risks associated with the future cash outflows, and the applicable risk-free interest rates for discounting the future cash outflows. Changes in the above factors can result in a change to the provision recognized by the Company. Changes to reclamation and closure cost obligations are recorded with a corresponding change to the carrying amounts of related mining properties. Adjustments to the carrying amounts of related mining properties can result in a change to future depletion expense. Earnings or Loss per Share (Note 11) Accounting Policy: Basic earnings or loss per share for the period is calculated by dividing the earnings or loss attributable to equity holders of the Company by the weighted average number of shares outstanding during the reporting period. Diluted earnings or loss per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potentially dilutive share equivalents, such as stock options, restricted share units, convertible debt and share purchase warrants. Diluted earnings or loss per share is calculated using the treasury stock method and assumes the receipt of proceeds upon exercise of the options with exercise prices below the average market price to determine the number of shares assumed to be purchased at the average market price during the period. 55 56 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)3. MATERIAL ACCOUNTING POLICY INFORMATION, ESTIMATES AND JUDGMENTS (continued) Assets Held-for-Sale (Note 14) Accounting Policy: A non-current asset or disposal group of assets and liabilities (“disposal group”) is classified as held-for-sale, if its carrying amount will be recovered principally through a sale transaction rather than through continuing use, and when the following criteria are met: (i) The non-current asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups; and (ii) The sale of the non-current asset or disposal group is highly probable. For the sale to be highly probable: • The appropriate level of management must be committed to a plan to sell the asset or disposal group; The amendments are applied on or after the first annual reporting period beginning on or after January 1, 2024, with early application permitted. This amendment is not expected to have a material impact on the Company’s financial statements. Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) The amendments require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognizing in profit or loss any gain or loss relating to the partial or full termination of a lease. A seller-lessee applies the amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to sale and leaseback transactions entered into after the date of initial application. The amendments are effective for annual reporting periods beginning on or after January 1, 2024 although earlier application is permitted. This amendment is not expected to have a material impact on the Company’s financial statements. • An active program to locate a buyer and complete the plan must have Supplier Financing Arrangements (Amendments to IAS 7 and IFRS 7) been initiated; • The non-current asset or disposal group must be actively marketed for sale at a price that is reasonable in relation to its current fair value; • The sale should be expected to qualify for recognition as a completed sale within one year from the date of classification as held for sale (with certain exceptions); and • Actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Non-current assets and disposal groups are classified as held for sale from the date these criteria are met and are measured at the lower of the carrying amount and fair value less costs to sell (“FVLCTS”). If the FVLCTS is lower than the carrying amount, an impairment loss is recognized in net earnings. Upon classification as held for sale, non-current assets are no longer depreciated. Accounting Estimates and Judgments: The amendments require disclosure requirements regarding the effects of supplier finance arrangements on their liabilities, cash flows and exposure to liquidity risk. Entities are required to disclose the following: • The terms and conditions; • The amount of the liabilities that are part of the arrangements, breaking out the amounts for which the suppliers have already received payment from the finance providers, and stating where the liabilities are reflected in the balance sheet; • Ranges of payment due dates; and • Liquidity risk information The amendments are effective for annual reporting periods beginning on or after January 1, 2024 although earlier application is permitted. This amendment is not expected to have a material impact on the Company’s financial statements. Probability of Sale Completion Within One Year Lack of Exchangeability (Amendments to IAS 21) In determining the probability of the sale being completed within a year, management has considered a number of factors including necessary approvals from management, the Board of Directors, regulators and shareholders. Future Changes in Accounting Policies Not Yet Effective as at December 31, 2023: The amendments contain guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. Although this would be relatively uncommon, a lack of exchangeability might arise when a government imposes foreign exchange controls that prohibit the exchange of a currency or that limit the volume of foreign currency transactions. If a currency is deemed not exchangeable, an entity is required to disclose information about: At the date of authorization of these financial statements, the Group has not applied the following new and revised IFRS Accounting Standards that have been issued but are not yet effective. Management does not expect that the adoption of the Standards listed below will have a material impact on the financial statements of the Group in future periods, except if indicated. Classification of Liabilities as Current or Non-Current with Covenants (Amendments to IAS 1) The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. In addition, the amendment requires entities to disclose information to enable users of the financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. • The nature and financial effects of the currency not being exchangeable into the other currency; • The spot exchange rate(s) used; • The estimation process; and • The risks to which the entity is exposed because of the currency not being exchangeable into the other currency. The amendments are effective for annual reporting periods beginning on or after January 1, 2025 although earlier application is permitted. This amendment is not expected to have a material impact on the Company’s financial statements. 4. SEGMENTED INFORMATION All of the Company’s operations are within the mining industry and its major products are precious metals doré which are refined or smelted into pure silver and gold and sold to global metal brokers. Transfer prices between reporting segments are set on an arms-length basis in a manner similar to transactions with third parties. Coins and bullion cost of sales are based on transfer prices. An operating segment is defined as a component of the Company that: • Engages in business activities from which it may earn revenues and incur expenses; • Whose operating results are reviewed regularly by the entity’s chief operating decision maker; and • For which discrete financial information is available. For the year ended December 31, 2023, the Company’s significant operating segments include its three operating mines in Mexico, the Jerritt Canyon Gold Mine in Nevada, United States and its “non-producing properties” in Mexico which include the Del Toro and San Martin mines, which have been placed on suspension. The Jerritt Canyon Gold mine has been placed on temporary suspension as of March 20, 2023 to focus on exploration, definition, and expansion of the mineral resources and optimization of mine planning and plant operations. “Others” consists primarily of the Company’s corporate assets including cash and cash equivalents, other development and exploration properties (Note 15), debt facilities (Note 21), coins and bullion sales, and corporate expenses which are not allocated to operating segments. The Company’s chief operating decision maker (“CODM”) evaluates segment performance based on mine operating earnings. Therefore, other income and expense items are not allocated to the segments. Significant information relating to the Company’s reportable operating segments is summarized in the tables below: Year Ended December 31, 2023 and 2022 Revenue Cost of sales Depletion, depreciation, and amortization Mine operating earnings (loss) Capital expenditures Mexico San Dimas Santa Elena(3) La Encantada Non-producing Properties United States Jerritt Canyon (2)(3) Others(1) Intercompany elimination Consolidated 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 $242,958 $173,987 $50,327 $18,644 $49,657 228,701 224,356 190,189 64,118 67,721 — — 40,521 130,219 8,889 11,706 (7,041) (4,315) $573,801 $624,221 141,274 117,191 106,788 56,443 46,126 — — 74,682 173,341 5,875 6,747 (4,683) (2,589) $423,495 $471,687 47,613 39,950 26,819 12,186 8,861 291 397 18,891 49,229 3,019 2,863 — — $124,664 $135,782 39,814 67,215 56,582 (4,511) 12,734 (291) (397) (53,052) (92,351) (5) 2,096 (2,358) (1,726) $25,642 $16,752 47,363 49,062 47,714 8,608 10,225 637 869 28,113 94,776 4,892 28,530 — — $140,970 $229,477 (1) The “Others” segment includes revenues of $8.9 million (2022 - $11.6 million) from coins and bullion sales of 290,432 silver ounces (2022 - 444,576) at an average price of $26.60 per ounce (2022 - $26.20). (2) Cost of Sales for Jerritt Canyon is inclusive of one time standby costs (Note 6). (3) Santa Elena and Jerritt Canyon have incurred mine holding costs related to care and maintenance and temporary suspension activities (Note 8). During the year ended December 31, 2023, the Company had three (December 31, 2022 - three) customers that accounted for 98% (December 31, 2022 - 97%) of its sales revenue, with one major metal broker accounting for 94% of total revenue (December 31, 2022 - 92%). 57 58 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 4. SEGMENTED INFORMATION (continued) (c) Gold Stream Agreement with Wheaton Precious Metals Corporation At December 31, 2023 and 2022 Producing Exploration Mining Interests Property, plant and equipment Total mining assets Total assets Total liabilities Mexico San Dimas Santa Elena La Encantada Non-producing Properties United States Jerritt Canyon Others Consolidated 5. REVENUES 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 $227,942 $24,696 $97,112 $349,750 $581,639 $89,280 211,658 123,123 110,094 22,181 23,496 62,566 62,414 350,504 425,158 — — 38,831 50,483 41,731 4,461 4,935 14,404 13,781 82,645 93,680 35,830 35,346 $786,316 $832,820 $212,519 $228,304 94,377 98,513 99,979 30,015 24,422 17,611 18,195 133,971 166,778 29,072 47,584 $406,294 $451,335 344,866 272,119 251,804 56,657 52,853 94,581 94,390 567,120 685,616 64,902 82,930 489,970 363,460 295,489 112,310 106,008 141,841 206,796 600,101 756,062 177,004 255,684 $1,405,129 $1,976,355 $1,512,459 $2,110,009 76,835 98,100 79,295 26,702 30,601 17,794 33,391 150,958 226,814 235,401 251,775 $618,235 $698,711 The majority of the Company’s revenues are from the sale of precious metals contained in doré form. The Company’s primary products are precious metals of silver and gold. Revenues from the sale of metal, including by-products, are recorded net of smelting and refining costs. Revenues for the year are summarized as follows: Gross revenue from payable metals: Silver Gold Gross revenue Less: smelting and refining costs Revenues Year Ended December 31, 2023 2022 $243,682 332,703 42% 58% $237,107 389,743 38% 62% 576,385 100% 626,850 100% (2,584) $573,801 (2,629) $624,221 As at December 31, 2023, the Company had $2.3 million of unearned revenue (December 31, 2022 - $3.4 million) that has not satisfied performance obligations. (a) Gold Stream Agreement with Sandstorm Gold Ltd. The Santa Elena mine is subject to a gold streaming agreement with Sandstorm Gold Ltd. (“Sandstorm”), which requires the Company to sell to Sandstorm 20% of its gold production over the life of mine from its leach pad and a designated area of its underground operations at the Santa Elena mine. The selling price to Sandstorm is the lesser of the prevailing market price or $450 per ounce, subject to 1% annual inflation. During the year ended December 31, 2023, the Company delivered 1,094 ounces (2022 - 2,433 ounces) of gold to Sandstorm at an average price of $473 per ounce (2022 - $472 per ounce). (b) Net Smelter Royalty The Santa Elena mine has a net smelter royalty (“NSR”) agreement with Orogen Royalties Inc. that requires a 2% NSR from the production of the Ermitaño property. In addition, there is an underlying NSR royalty where Osisko Gold Royalties Ltd. retains a 2% NSR from the sale of mineral products extracted from the Ermitaño property. For the year ended December 31, 2023, the Company has incurred $8.7 million (2022 - $5.8 million) in NSR payments from the production of Ermitaño. In 2022, the Company sold a portfolio of its existing royalty interests to Metalla Royalty and Streaming Limited (“Metalla”). The agreement requires a 100% royalty for the first 1,000 ounces of gold produced annually from the La Encantada property. For the year ended December 31, 2023, the Company has incurred $0.5 million (2022 - $nil) in NSR payments from production at La Encantada. In 2018, the San Dimas mine entered into a purchase agreement with Wheaton Precious Metals International (“WPMI”), a wholly owned subsidiary of Wheaton Precious Metals Corp., which entitles WPMI to receive 25% of the gold equivalent production (based on a fixed exchange ratio of 70 silver ounces to 1 gold ounce) at San Dimas in exchange for ongoing payments equal to the lesser of $600 (subject to a 1% annual inflation adjustment) and the prevailing market price for each gold equivalent ounce delivered. Should the average gold to silver ratio over a six-month period exceed 90:1 or fall below 50:1, the fixed exchange ratio would be increased to 90:1 or decreased to 50:1, respectively. The fixed gold to silver exchange ratio as of December 31, 2023, was 70:1. During the year ended December 31, 2023, the Company delivered 42,172 ounces (2022 - 41,841 ounces) of gold to WPMI at $628 per ounce (2022 - $623 per ounce). 6. COST OF SALES Cost of sales are costs that are directly related to production and generation of revenues at the operating segments. Significant components of cost of sales, excluding depletion, depreciation and amortization are comprised of the following: Consumables and materials Labour costs Energy Maintenance Assays and labwork Insurance Other costs(1) Production costs Transportation and other selling costs Workers’ participation costs Environmental duties and royalties Finished goods inventory changes Other(2) Cost of Sales Cost of Sales - Standby Costs(3) Year Ended December 31, 2023 $91,197 208,050 42,292 6,847 3,299 3,531 13,796 $369,012 3,163 18,897 12,880 6,105 — 2022 $112,620 227,767 55,542 9,595 6,169 4,875 15,792 $432,360 2,788 17,265 11,063 4,550 3,661 $410,057 $471,687 $13,438 $— (1) Other costs include inventory write-downs at La Encantada resulting from heightened costs due to lower grades, recoveries and throughput which lowered performance. This balance also includes stockpile and work-in-process inventory changes, land access payments as well as services related to travel and medical testing. The inventory write-downs during the year ended December 31, 2023 totaled $15.5 million (2022 - $23.8 million) and related to inventory at both Jerritt Canyon of $13.9 million (2022 - $23.8 million) and La Encantada of $1.6 million (2022 - nil) during the year. (2) Other includes $3.1 million in costs that were incurred during the second quarter of 2022 as a result of marginal ore material that was processed to keep the mill running at minimum feed requirements to perform government mandated air compliance test work at the Jerritt Canyon Gold mine. (3) Cost of sales for the year ended December 31, 2023 included one time standby costs of $13.4 million primarily related to direct severance and demobilization costs at the Jerritt Canyon mine following the temporary suspension announced on March 20, 2023. 59 60 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 7. GENERAL AND ADMINISTRATIVE EXPENSES 10. FINANCE COSTS General and administrative expenses are incurred to support the administration of the business that are not directly related to production. Significant components of general and administrative expenses are comprised of the following: Finance costs are primarily related to interest and accretion expense on the Company’s debt facilities, lease liabilities and accretion of decommissioning liabilities. The Company’s finance costs in the periods are summarized as follows: Corporate administration Salaries and benefits Audit, legal and professional fees Filing and listing fees Directors’ fees and expenses Depreciation 8. MINE HOLDING COSTS Year Ended December 31, 2023 $9,190 17,570 9,090 610 743 1,506 $38,709 2022 $9,001 16,387 7,683 805 867 1,629 $36,372 The Company’s mine holding costs are primarily comprised of labour costs associated with care and maintenance staff, electricity, security, environmental and community support costs for the following mines which are currently under temporary suspension: La Parrilla(1) Del Toro San Martin La Guitarra(1) Santa Elena (2) Jerritt Canyon Year Ended December 31, 2023 $3,576 2,849 905 514 3,296 10,948 $22,088 2022 $3,320 2,347 3,609 2,654 — — $11,930 Debt facilities(1) (Note 21) Accretion of decommissioning liabilities Lease liabilities (Note 22) Interest and other Year Ended December 31, 2023 $12,644 8,325 2,605 2,706 2022 $10,810 6,102 2,131 1,280 $26,280 $20,323 (1) During the year ended December 31, 2023, finance costs for debt facilities includes non-cash accretion expense of $9.6 million (2022 - $8.7 million). 11. EARNINGS OR LOSS PER SHARE Basic earnings or loss per share is the net earnings or loss available to common shareholders divided by the weighted average number of common shares outstanding during the years. Diluted net earnings or loss per share adjusts basic net earnings or loss per share for the effects of potential dilutive common shares. The calculations of basic and diluted earnings or loss per share for the years ended December 31, 2023 and 2022 are as follows: Net loss for the year Weighted average number of shares on issue - basic Weighted average number of shares on issue - diluted(1) Loss per share - basic and diluted Year Ended December 31, 2023 2022 ($135,112) ($114,276) 282,331,106 263,122,252 282,331,106 263,122,252 ($0.48) ($0.43) (1) For the year ended December 31, 2023, diluted weighted average number of shares excluded 6,984,369 (2022 - 5,579,618) options, 5,000,000 (2022 - 5,000,000) warrants, 1,556,458 restricted and performance share units (2022 - 1,177,594) and 13,888,895 common shares issuable under the 2021 convertible debentures (2022 - 13,888,895) (Note 21(a)) that were anti-dilutive. (1) The La Guitarra and the La Parrilla mines, previously classified as an asset held-for-sale, were sold during the first quarter and the third quarter of 2023, respectively (Note 14). (2) During 2023, the Company processed ore solely from the Ermitaño mine which is part of the Santa Elena operation. During the year ended December 31, 2023, the Company has incurred $3.3 million (2022 - $nil) 12. INVENTORIES in holding costs relating to care and maintenance charges for the Santa Elena mine. 9. INVESTMENT AND OTHER INCOME (LOSS) The Company’s investment and other income (loss) are comprised of the following: Gain (loss) from investment in silver futures derivatives Loss from investment in marketable securities (Note 13(a)) Interest income and other Inventories consist primarily of materials and supplies and products of the Company’s operations, in varying stages of the production process, and are presented at the lower of weighted average cost or net realizable value. Year Ended December 31, 2023 $4,279 (1,640) 6,510 $9,149 2022 ($376) (3,865) 2,353 ($1,888) Finished goods - doré Work-in-process Stockpile Silver coins and bullion Materials and supplies December 31, 2023 December 31, 2022 $3,529 7,542 5,055 8,360 39,204 $63,690 $5,561 9,176 4,825 8,001 37,198 $64,761 The amount of inventories recognized as an expense during the period is equivalent to the total of cost of sales plus depletion, depreciation and amortization for the period. As at December 31, 2023, mineral inventories, which consist of stockpile, work-in-process and finished goods includes a $0.7 million write down, which was recorded during the three months ended December 31, 2023 (December 2022 - $9.3 million) and was recognized in cost of sales (Note 6). 61 62 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 13. OTHER FINANCIAL ASSETS As at December 31, 2023, other financial assets consists of the Company’s investment in marketable securities comprised of the following: FVTPL marketable securities (a) FVTOCI marketable securities (b) Total other financial assets (a) Fair Value through Profit or Loss (“FVTPL”) Marketable Securities December 31, 2023 December 31, 2022 $6,279 56,101 $62,380 $6,657 27,871 $34,528 Loss on marketable securities designated as FVTPL for the year ended December 31, 2023 was $1.6 million (2022 - loss of $3.9 million) and was recorded through profit or loss. (b) Fair Value through Other Comprehensive Income (“FVTOCI”) Marketable Securities Changes in fair value of marketable securities designated as FVTOCI for the year ended December 31, 2023 was a loss of $19.3 million (2022 - loss of $9.9 million), net of tax, and were recorded through other comprehensive income and will not be transferred into earnings or loss upon disposition or impairment. The Company made the irrevocable election to designate these equity securities as FVTOCI because these financial assets are not held for trading and are not contingent consideration recognized in a business combination. As at December 31, 2023, the carrying value of all shares designated at FVTOCI was $56.1 million (2022 - $27.9 million). 14. DIVESTITURES (a) La Guitarra Silver Mine On May 24, 2022, the Company announced that it had entered into a share purchase agreement with Sierra Madre Gold and Silver Ltd. (“Sierra Madre”), to sell the Company’s subsidiary La Guitarra Compañia Minera S.A. de C.V. (“La Guitarra”), which owns the La Guitarra Silver Mine, to Sierra Madre for total consideration of approximately $35 million, consisting of 69,063,076 Sierra Madre common shares at a deemed price of $0.51 per share. The closing of the transaction was subject to customary closing conditions including approval of the Sierra Madre shareholders (which was obtained in December 2022), regulatory approval and that Sierra Madre raise a minimum of $7.7 million (CAD $10 million) in a private placement concurrent or prior to the sale. On June 30, 2022, the sale was considered highly probable; therefore, the assets and liabilities of La Guitarra were classified as assets and liabilities held for sale and presented separately under current assets and current liabilities, respectively. Immediately prior to the classification to assets and liabilities held for sale, the carrying amount of La Guitarra was remeasured to its recoverable amount, being its FVLCD, based on the expected proceeds from the sale. At December 31, 2022, the sale continued to be considered highly probable; therefore the assets and liabilities were presented as assets and liabilities held for sale and presented separately under current assets and current liabilities. During 2022, the Company recorded a reversal of impairment loss related to the La Guitarra assets of $12.3 million based on the recoverable amount implied by the share purchase agreement. Out of the impairment reversal of $12.3 million related to La Guitarra, $8.2 million was allocated to depletable mining interest, $1.0 million was allocated to non- depletable mining interest with the remaining $3.1 million allocated to property, plant and equipment, resulting in an impairment reversal of $8.0 million, net of a $4.4 million adjustment to the deferred tax liability. The recoverable amount of La Guitarra, being its FVLCD, was $34.9 million based on the expected proceeds from the sale. On March 29, 2023, the Company completed the sale of La Guitarra to Sierra Madre and received total consideration of $33.2 million net of transaction costs, before working capital adjustments. Pursuant to the share purchase agreement, the purchase price is increased to the extent the working capital of La Guitarra is greater than zero, and decreased to the extent the working capital is less than zero. Based on the carrying value of the asset at the time of disposal of $34.3 million, and the working capital adjustment of $0.2 million, the Company has recorded a loss on disposition of $1.4 million. The Company began accounting for the common shares received from Sierra Madre as an equity security at FVTOCI (Note 13). (b) La Parrilla Silver Mine On December 7, 2022, the Company announced that it had entered into an asset purchase agreement with Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.) (“Silver Storm”) to sell the La Parrilla Silver Mine for total consideration of up to $33.5 million, consisting of 143,673,684 common shares of Silver Storm at a deemed price of $0.16 per share, having an aggregate value as of the date of the sale agreement of $20 million, and up to $13.5 million in contingent consideration, in the form of three milestone payments payable in either cash or Silver Storm shares, out of which $2.7 million is payable no later than 18 months following the closing date. The Company has also agreed to purchase $2.7 million of Silver Storm securities in a future Silver Storm equity financing of up to CAD $7.2 million. Closing the transaction was subject to customary closing conditions, including completion of such financing and receipt of all necessary regulatory approvals (which were obtained in May 2023). At December 31, 2022, the sale was considered highly probable; therefore, the assets of La Parrilla were classified as assets held for sale and presented separately under current assets. Immediately prior to the classification to assets held for sale, the carrying amount of La Parrilla was remeasured to its recoverable amount, being its FVLCD, based on the $20 million initial payment, and the first milestone payment of $2.7 million. During 2022, the Company recorded an impairment loss related to the La Parrilla assets of $9.6 million based on the recoverable amount implied by the asset purchase agreement. Out of the impairment of $9.6 million related to La Parrilla, $5.7 million was allocated to depletable mining interest, $2.1 million was allocated to non-depletable mining interest with the remaining $1.7 million allocated to property, plant and equipment, resulting in an impairment of $9.6 million, net of a $nil adjustment to the deferred tax liability. The recoverable amount of La Parrilla, being its FVLCD, was $22.7 million, net of estimated transaction costs, based on the expected proceeds from the sale. During the three months ended June 30, 2023, the Company recorded an additional write down on asset held-for-sale related to La Parrilla of $7.2 million, based on the change in value of Silver Storm’s common shares at the end of the reporting period. From the $7.2 million write down related to La Parrilla, $3.7 million was allocated to depletable mining interest, $1.4 million was allocated to non-depletable mining interest with the remaining $2.1 million allocated to property, plant and equipment, resulting in a write down of $7.2 million, net of a $nil adjustment to the deferred tax liability. The recoverable amount of La Parrilla, being its FVLCD, was $14.9 million, net of estimated transaction costs, based on the expected proceeds from the sale. On August 14, 2023, the Company completed the sale of La Parrilla to Silver Storm and received total consideration of $13.3 million net of transaction costs. Based on the price of Silver Storm’s common shares at the time of closing the transaction, the Company has recorded a loss on disposition of $1.6 million. In addition, First Majestic participated in Silver Storm’s offering of subscription receipts (the “Subscription Receipts”) and purchased 18,009,000 Subscription Receipts at a price of CAD$0.20 per Subscription Receipt which, in accordance with their terms, have now converted into 18,009,000 Silver Storm common shares and 9,004,500 common share purchase warrants (the “Warrants”). Each Warrant is exercisable for one additional Silver Storm common share until August 14, 2026, at a price of CAD$0.34. The Company began accounting for the shares received from Silver Storm as an equity security at FVTOCI (Note 13). The components of assets and liabilities held for sale relating to La Guitarra and La Parrilla are as follows: Assets: Cash and cash equivalents Trade and other receivables Inventory Prepaid expenses and other Current assets Non-Current Assets: Mineral Interests - depletable Mineral Interests - non-depletable Property, plant and equipment Right of use assets Deposits on long-term assets Total assets held-for-sale Liabilities: Trade payables and accrued liabilities Current portion of lease obligations Current Liabilities Non-Current Liabilities: Deferred tax liabilities Lease obligations Decommissioning liabilities Total liabilities relating to assets held-for-sale As at December 31, 2022 La Guitarra(1) La Parrilla(2) $5,218 396 437 51 $6,102 30,193 3,917 4,004 16 26 $— — 876 — $876 13,758 5,252 7,821 645 117 $44,258 $28,469 $141 8 $149 6,894 12 2,951 $10,006 $— — $— 1,667 438 4,167 $6,272 Net assets held for sale $34,252 $22,197 (1) On March 29, 2023, the Company completed the sale of La Guitarra to Sierra Madre Gold and Silver Ltd. As such, the asset is no longer classified as held-for-sale, with the assets and liabilities derecognized after disposition. (2) On August 14, 2023, the Company completed the sale of La Parrilla to Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.). As such, the asset is no longer classified as held-for-sale, with the asset derecognized after disposition. The La Guitarra and La Parrilla mines are presented in the non-producing properties reportable segment up to the date of disposition (Note 4, 15 and 16). 63 64 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 14. DIVESTITURES (continued) (c) Sale of Royalty Portfolio On December 21, 2022, the Company completed the sale of a portfolio of royalty interests to Metalla Royalty & Streaming Ltd. (“Metalla”), for total consideration of 4,168,056 Metalla shares with a fair value of $21.5 million based on a share price of $5.16 on the date of closing. Asset Owner La Encantada First Majestic Silver Corp. Location Royalty Coahuila, Mexico 100% Gold Royalty(1) La Parrilla Del Toro San Martin La Guitarra Plomosas La Luz La Joya Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.) Durango, Mexico 2% Net Smelter Return First Majestic Silver Corp. First Majestic Silver Corp. Sierra Madre Gold and Silver Ltd. GR Silver Mining Ltd. First Majestic Silver Corp. Silver Dollar Resources Ltd. Zacatecas, Mexico 2% Net Smelter Return Jalisco, Mexico Mexico, Mexico Sinaloa, Mexico 2% Net Smelter Return 2% Net Smelter Return 2% Net Smelter Return San Luís Potosí, Mexico 2% Net Smelter Return Durango, Mexico 2% Net Smelter Return (1) Up to the first 1,000 payable ounces annually Allocated Value Total $1,720,574 $3,871,290 $3,226,075 $5,376,792 $3,011,004 $4,301,434 $— $— The value of the consideration received was credited to mining interests for each property, resulting in a $4.3 million gain during the period ended December 31, 2022 derived from the disposal of the royalty in the Plomosas property, which had a carrying value of $nil. With the exception of La Encantada, all mines included within the royalty portfolio are presented in the non-producing properties reportable segment (Note 4 and 15). 15. MINING INTERESTS Mining interests primarily consist of acquisition, development, exploration and exploration potential costs directly related to the Company’s operations and projects. Upon commencement of commercial production, mining interests for producing properties are depleted on a units-of-production basis over the estimated economic life of the mine. In applying the units of production method, depletion is determined using quantity of material extracted from the mine in the period as a portion of total quantity of material, based on reserves and resources, considered to be highly probable to be economically extracted over the life of mine plan. The Company’s mining interests are comprised of the following: Depletable properties Non-depletable properties (exploration and evaluation costs, exploration potential) December 31, 2023 December 31, 2022 $786,316 212,519 $998,835 $832,820 228,304 $1,061,124 Depletable properties are allocated as follows: Depletable properties Cost At December 31, 2021 Additions Transfer to assets held-for-sale (Note 14) Change in decommissioning liabilities (Note 23) Disposal of royalty portfolio (Note 14) Transfer from non-depletable properties At December 31, 2022 Additions Change in decommissioning liabilities (Note 23) Transfer from non-depletable properties San Dimas Santa Elena La Encantada Jerritt Canyon Non-producing Properties(1) Total $286,196 $125,921 $122,735 $386,069 $494,569 $1,415,490 30,733 — (1,800) — — 23,957 — 1,518 — — 2,507 — (879) (1,721) 2,098 58,728 — 1,241 — 30,503 — 115,925 (279,399) (279,399) (2,332) — — (2,252) (1,721) 32,601 $315,129 $151,396 $124,740 $476,541 $212,838 $1,280,644 26,602 (2,685) 26,426 29,014 816 1,897 2,752 (634) 2,021 13,307 (3,183) — — 152 — 71,675 (5,534) 30,344 At December 31, 2023 $365,472 $183,123 $128,879 $486,665 $212,990 $1,377,129 Accumulated depletion, amortization and impairment At December 31, 2021 Depletion and amortization Reversal of impairment (Note 14) Transfer to assets held-for-sale (Note 14) Impairment (Note 14) At December 31, 2022 Depletion and amortization Impairment (Note 18) At December 31, 2023 Carrying values At December 31, 2022 At December 31, 2023 ($72,671) ($28,650) ($96,908) ($23,258) ($388,354) ($609,841) (30,800) (12,652) (4,336) (28,125) — — — — — — — — — — — — — 8,203 235,448 (5,721) (75,913) 8,203 235,448 (5,721) ($103,471) ($41,302) ($101,244) ($51,383) ($150,424) ($447,824) (34,059) (18,698) (5,454) — — — (6,650) (78,128) — — (64,861) (78,128) ($137,530) ($60,000) ($106,698) ($136,161) ($150,424) ($590,813) $211,658 $227,942 $110,094 $123,123 $23,496 $22,181 $425,158 $350,504 $62,414 $62,566 $832,820 $786,316 (1) Non-producing properties include the San Martin, Del Toro, La Parrilla and La Guitarra mines. La Guitarra and La Parrilla were classified as assets held-for-sale up to the date of disposition on March 29, 2023 and August 14, 2023, respectively. As of December 31, 2023, the assets and liabilities have been derecognized (the net carrying value of the disposal group at December 31, 2022 was $44.0 million) (Note 14). 65 66 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 15. MINING INTERESTS (continued) Non-depletable properties costs are allocated as follows: Non-depletable properties San Dimas(a) Santa Elena(b) La Encantada(c) Jerritt Canyon(d) Non-producing Properties(1) Exploration Projects(2) Springpole Stream(e) Total $29,186 $31,067 $4,640 $104,431 $38,752 $22,948 $11,856 $242,881 At December 31, 2021 Exploration and evaluation expenditures Change in decommissioning liabilities Impairment (Note 14) Reversal of impairment Metalla royalty Transfer to assets held- for-sale (Note 14) Transfer to depletable properties At December 31, 2022 Exploration and evaluation expenditures Change in decommissioning liabilities (Note 23) Impairment (Note 18) Disposal of La Joya Transfer to depletable properties At December 31, 2023 9,645 10,664 2,393 19,752 771 694 — — — — — — — — — — — — $38,831 $41,731 — — — — — — — — — — (2,098) $4,935 (30,503) $93,680 — (153) (2,132) 1,044 (15,485) (9,169) — — — — — — 12,291 10,649 1,547 6,353 623 695 $13,781 $23,489 $11,856 $228,304 — — — — — — — — — (26,426) $24,696 (1,897) $50,483 (2,021) $4,461 — (17,388) — — — — — — (15) — (196) — $82,645 $14,404 $23,973 $11,856 $212,519 — — — — — — — 43,919 (153) (2,132) 1,044 (15,485) (9,169) (32,601) — — — — 32,158 (15) (17,388) (196) (30,344) (d) Jerritt Canyon Gold Mine, Nevada, United States The Jerritt Canyon Mine is subject to a 0.75% NSR royalty on production of gold and silver from the Jerritt Canyon mines and processing plant. The royalty is applied, at a fixed rate of 0.75%, against proceeds from gold and silver products after deducting treatment, refining, transportation, insurance, taxes and levies charges. The Jerritt Canyon Mine is also subject to a 2.5% to 5% NSR royalty relating to the production of gold and silver within specific boundary lines at certain mining areas. The royalty is applied, at a fixed rate of 2.5% to 5.0%, against proceeds from gold and silver products. As at December 31, 2023, total NSR royalty accrual outstanding was $0.7 million (December 31, 2022 - $0.8 million). (e) Springpole Silver Stream, Ontario, Canada In July 2020, the Company completed an agreement with First Mining Gold Corp. (“First Mining”) to purchase 50% of the life of mine payable silver produced from the Springpole Gold Project (“Springpole Silver Stream”), a development stage mining project located in Ontario, Canada. First Majestic agreed to pay First Mining consideration of $22.5 million in cash and shares, in three milestone payments, for the right to purchase silver at a price of 33% of the silver spot price per ounce, to a maximum of $7.50 per ounce (subject to annual inflation escalation of 2%, commencing at the start of the third anniversary of production). Commencing with its production of silver, First Mining must deliver 50% of the payable silver which it receives from the offtaker within five business days of the end of each quarter. The transaction consideration paid and payable by First Majestic is summarized as follows: • The first payment of $10.0 million, consisting of $2.5 million in cash and $7.5 million in First Majestic common shares (805,698 common shares), was paid to First Mining on July 2, 2020; • The second payment of $7.5 million, consisting of $3.75 million in cash and $3.75 million in First Majestic common shares (287,300 common shares), was paid on January 21, 2021 upon the completion and public announcement by First Mining of the results of a Pre-Feasibility Study for Springpole; and • The third payment, consisting of $2.5 million in cash and $2.5 million in First Majestic common shares (based on a 20 day volume weighted average price), will be paid upon receipt by First Mining of a Federal or Provincial Environmental Assessment approval for Springpole, which has not yet been received. In connection with the streaming agreement, First Mining also granted First Majestic 30.0 million common share purchase warrants of First Mining (the “First Mining Warrants”), each of which will entitle the Company to purchase one common share of First Mining at CAD$0.40 over a period of five years. As a result of the distribution by First Mining of shares and warrants of Treasury Metals Inc. that was completed by First Mining on July 15, 2021, pursuant to the adjustment provisions of the First Mining Warrants, the exercise price of these warrants was reduced from $0.40 to $0.37, and the number of these warrants was increased from 30.0 million to 32.1 million. The fair value of the warrants was measured at $5.7 million using the Black-Scholes option pricing model. First Mining has the right to repurchase 50% of the silver stream for $22.5 million at any time prior to the commencement of production at Springpole, and if such a repurchase takes place, the Company will be left with a reduced silver stream of 25% of life of mine payable silver production from Springpole. First Mining is a related party with two independent board members who are also directors and/or officers of First Majestic. (1) Non-producing properties include the San Martin, Del Toro, La Parrilla and La Guitarra mines. La Guitarra and La Parrilla were classified as assets held-for-sale up to the date of disposition on March 29, 2023 and August 14, 2023, respectively. As of December 31, 2023, the assets and liabilities have been derecognized (the net carrying value of the disposal group at December 31, 2022 was $9.2 million) (Note 14). 16. PROPERTY, PLANT AND EQUIPMENT (2) Exploration projects include the La Luz, La Joya, Los Amoles, Jalisco Group of Properties and Jimenez del Tuel projects. (a) San Dimas Silver/Gold Mine, Durango State, Mexico The San Dimas Mine is subject to a gold and silver streaming agreement with WPMI which entitles WPMI to receive 25% of the gold equivalent production (based on a fixed exchange ratio of 70 silver ounces to 1 gold ounce) at San Dimas in exchange for ongoing payments equal to the lesser of $600 (subject to a 1% annual inflation adjustment commencing in May 2019) and the prevailing market price for each gold ounce delivered. Should the average gold to silver ratio over a six-month period exceed 90:1 or fall below 50:1, the fixed exchange ratio would be increased to 90:1 or decreased to 50:1, respectively. The fixed gold to silver exchange ratio as of December 31, 2023, was 70:1. (b) Santa Elena Silver/Gold Mine, Sonora State, Mexico The Santa Elena Mine is subject to a gold streaming agreement with Sandstorm, which requires the mine to sell 20% of its life of mine gold production from its leach pad and a designated area of its underground operations of the Santa Elena mine to Sandstorm. The selling price to Sandstorm is currently the lesser of $450 per ounce, subject to a 1% annual inflation increase every April, and the prevailing market price. The Santa Elena mine has a net smelter royalty (“NSR”) agreement with Orogen Royalties Inc. that requires a 2% NSR from the production of the Ermitaño property. In addition, there is an underlying NSR royalty where Osisko Gold Royalties Ltd. retains a 2% NSR from the sale of mineral products extracted from the Ermitaño property. During the year ended December 31, 2023, the Company has incurred $8.7 million (2022 - $5.8 million) in NSR payments from the production of Ermitaño. (c) La Encantada Silver Mine, Coahuila State, Mexico In December 2022, the Company sold a portfolio of its existing royalty interests to Metalla Royalty and Streaming Limited. Under the terms of the agreement, the Company is required to pay a 100% gross value royalty on the first 1,000 ounces of gold produced annually from the La Encantada property. For the year ended December 31, 2023, the Company has incurred $0.5 million (2022 - $nil) in royalty payments from gold production at La Encantada. The majority of the Company’s property, plant and equipment is used in the Company’s operating mine segments. Property, plant and equipment is depreciated using either the straight-line or units-of-production method over the shorter of the estimated useful life of the asset or the expected life of mine. Where an item of property, plant and equipment comprises of major components with different useful lives, the components are accounted for as separate items of property, plant and equipment. Assets under construction are recorded at cost and re-allocated to land and buildings, machinery and equipment or other when they become available for use. 67 68 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)16. PROPERTY, PLANT AND EQUIPMENT (continued) Property, plant and equipment are comprised of the following: Cost At December 31, 2021 Additions Reclassification to assets held-for-sale (Note 14) Transfers and disposals At December 31, 2022 Additions Reclassification to asset held-for-sale (Note 14) Transfers and disposals At December 31, 2023 Land and Buildings(1) Machinery and Equipment Assets under Construction(2) Other Total $244,957 $624,462 — (30,903) 23,192 5,038 (82,275) 47,783 $237,246 $595,008 14 (14) 8,014 2,719 26 43,276 $245,260 $641,029 $90,451 64,088 (176) (80,436) $73,927 33,749 — (58,938) $48,738 $33,583 $993,453 507 (2,111) 4,772 69,633 (115,465) (4,689) $36,751 $942,932 655 — 1,039 $38,445 37,137 12 (6,609) $973,472 Property, plant and equipment, including land and buildings, machinery and equipment, assets under construction and other assets above are allocated by mine as follow: Cost At December 31, 2021 Additions (2) Reclassification to assets held-for-sale Transfers and disposals At December 31, 2022 Additions(2) Reclassification to asset held-for-sale (Note 14) Transfers and disposals At December 31, 2023 San Dimas Santa Elena La Encantada Jerritt Canyon Non-producing Properties(1) Other Total $158,528 $122,597 $150,718 $193,085 $285,806 $82,719 $993,453 6,985 — (717) 13,093 — 31,852 5,325 — 1,880 16,297 — 367 98 27,835 69,633 (115,465) — (115,465) (5,421) (32,650) (4,689) $164,796 $167,542 $157,923 $209,749 $165,018 $77,904 $942,932 10,765 — 7,810 9,399 — 3,187 4,309 — 6,504 8,453 — (1,534) 14 12 4,197 — 37,137 12 (1,546) (21,030) (6,609) $183,371 $180,128 $168,736 $216,668 $163,498 $61,071 $973,472 Accumulated depreciation, amortization and impairment Accumulated depreciation, amortization and impairment reversal At December 31, 2021 ($53,055) ($57,754) ($130,038) ($20,228) ($258,626) ($24,515) ($544,216) ($147,079) ($374,879) $— ($22,258) ($544,216) Depreciation and amortization (17,554) (10,058) (2,809) (22,747) At December 31, 2021 Depreciation and amortization Impairment (Note 14) Reversal of impairment (Note 14) Reclassification to assets held-for-sale (Note 14) Transfers and disposals At December 31, 2022 Depreciation and amortization Impairment (Note 18) Reclassification to asset held-for-sale (Note 14) Transfers and disposals At December 31, 2023 Carrying values At December 31, 2022 At December 31, 2023 ($136,987) ($330,728) $— ($23,882) ($491,597) Depreciation and amortization (15,577) (15,543) (4,889) (12,016) (1,742) 3,076 20,774 — (40,419) — — 80,964 3,606 — — — — — (3,793) — — 1,902 267 (56,228) (1,742) 3,076 103,640 3,873 Impairment Reversal of impairment Reclassification to assets held-for-sale Transfers and disposals At December 31, 2022 (13,303) (7,585) — 249 (32,134) (21,979) (117) 2,819 — — — — (3,600) (120) — 189 (49,037) (29,684) (117) 3,257 ($157,626) ($382,139) $— ($27,413) ($567,178) $100,259 $87,634 $264,280 $258,890 $73,927 $48,738 $12,869 $11,032 $451,335 $406,294 Impairment (Note 18) Reclassification to asset held-for-sale (Note 14) Transfers and disposals At December 31, 2023 Carrying values At December 31, 2022 At December 31, 2023 — — — 190 — — — 249 — — — (654) — — — 4 (222) (1,742) 3,076 103,640 7,051 (2,838) (56,228) — — — (2,967) (1,742) 3,076 103,640 3,873 ($70,419) ($67,563) ($133,501) ($42,971) ($146,823) ($30,320) ($491,597) — — — — — — (263) 1,491 (331) (10,614) (29,684) — 572 (165) — (117) 1,218 (2,249) — — 570 (49,037) (29,684) (117) 3,257 ($86,259) ($81,615) ($138,721) ($82,697) ($145,887) ($31,999) ($567,178) $94,377 $97,112 $99,979 $98,513 $24,422 $30,015 $166,778 $133,971 $18,195 $17,611 $47,584 $29,072 $451,335 $406,294 (1) Included in land and buildings is $10.4 million (2022 - $11.2 million) of land which is not subject to depreciation. (2) Assets under construction includes certain innovation projects, such as high-intensity grinding (“HIG”) mills and related modernization, plant improvements, other mine infrastructures and equipment overhauls, along with the First Mint facility. (1) Non-producing properties include the San Martin, Del Toro, La Parrilla and La Guitarra mines. La Guitarra and La Parrilla were classified as assets held-for-sale up to the date of disposition on March 29, 2023 and August 14, 2023, respectively. As of December 31, 2023, the assets and liabilities have been derecognized (the net carrying value of the disposal group at December 31, 2022 was $11.8 million). (2) Additions classified in “Other” primarily consist of innovation projects and construction-in-progress. 17. RIGHT-OF-USE ASSETS The Company entered into operating leases to use certain land, buildings, mining equipment and corporate equipment for its operations. The Company is required to recognize right-of-use assets representing its right to use these underlying leased assets over the lease term. Right-of-use assets are initially measured at cost, equivalent to its obligation for payments over the term of the leases, and subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation is recorded on a straight-line basis over the shorter period of lease term and useful life of the underlying asset. 69 70 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 17. RIGHT-OF-USE ASSETS (continued) Right-of-use assets are comprised of the following: At December 31, 2021 Additions Remeasurements Depreciation and amortization Transfer to asset held-for-sale At December 31, 2022 Additions Remeasurements Depreciation and amortization Transfer to asset held-for-sale (Note 14) Disposals At December 31, 2023 18. IMPAIRMENT OF NON-CURRENT ASSET Land and Buildings Machinery and Equipment Other $8,302 1,786 578 (1,608) (634) $8,424 1,719 131 (1,813) 47 15 $20,921 1,514 2,239 (6,431) (27) $18,216 2,821 6,020 (8,301) 10 (5) $2 14 (2) (5) — $9 — — (9) — — Total $29,225 3,314 2,815 (8,044) (661) $26,649 4,540 6,151 (10,123) 57 10 $8,523 $18,761 $— $27,284 On March 20, 2023, the Company announced the temporary suspension of operations at the Jerritt Canyon Gold mine. Having considered the facts and circumstances including the temporary suspension of operations, heightened costs, and operating mine performance, the Company determined that impairment indicators existed for the Jerritt Canyon Gold mine. IFRS accounting standards require an entity to assess its assets for indicators of impairment at the cash- generating unit level based on their individual recoverable amounts. After the Company identified an indicator of impairment for Jerritt Canyon, the Company assessed the recoverable value of the Jerritt Canyon Gold Mine based on its FVLCD. Key Assumptions The FVLCD for Jerritt Canyon was determined using a multiple-based valuation method to estimate the value per in-situ ounce based on comparable market transactions. Valuation multiples applied to mineral resources and property, plant and equipment in the CGU, subject to impairment testing were determined as follows: • External valuation specialists were used to obtain a population of gold exploration, development and operating companies. The value of trading multiples for operating companies based on recent transactions was determined to be between $149 per ounce and $248 per ounce. • Management considered the $165 per ounce multiple to be the most reasonable estimate of the fair value of Jerritt Canyon, as companies in this range included companies in operations that had invested significantly in exploration, capital structure, an operating plant and had significant exploration potential. The market approach used to determine FVLCD is significantly affected by changes in key assumptions of determining which population of comparable companies are most relevant and the price for these precedent transactions. In determining the comparability of public companies and precedent transactions, factors such as primary ore, location, stage of operations, reserves and resources, exploration potential, infrastructure, and accessibility for the underlying commodity were taken into consideration. The Company performed a sensitivity analysis on the key assumption being the population of comparable transactions and determined that a change in this assumption could lead to a different fair value of this asset. Management’s estimate of FVLCD is classified as a level 3 in the fair value hierarchy as the inputs are not based on observable market data. In prior periods, management utilized the discounted cash flow method as the valuation technique to determine the recoverable amount. Recoverable values were determined with internal discounted cash flow economic models projected using management’s best estimate of recoverable mineral reserves and resources, future operating costs, capital expenditures and long-term foreign exchange rates and corroborated by in situ value of its Reserves and Resources. As Jerritt Canyon does not currently have a mine plan to estimate future cash flows, the market approach was used during the current period to determine the FVLCD. Based on the Company’s assessment, the Company concluded that the carrying value of the Jerritt Canyon mine had an estimated recoverable value, based on its FVLCD, below its carrying value at March 31, 2023. As a result, the following impairment charge was recognized during the first quarter of 2023: Impairment of non-current asset Deferred income tax recovery Impairment of non-current asset, net of tax Year Ended December 31, 2023 $125,200 (31,237) $93,963 With the exception of La Parrilla (Note 14), the Company determined there were no significant events or changes in circumstances to indicate that the carrying amount of its other non-current assets may not be recoverable, nor indicators that the recoverable amount of its previously impaired assets will exceed its carrying value. As such, no other impairment or impairment reversal were recognized during the year ended December 31, 2023 (2022 - $2.7 million reversal of impairment). The impairment charge recognized for the year ended December 31, 2023 with respect to the Jerritt Canyon operating segment, which was recorded during the first quarter of 2023, was allocated as follows: Mining interest - producing properties Mining interests - exploration properties (non-depletable) Property, plant and equipment Impairment of non-current asset 19. RESTRICTED CASH Restricted cash is comprised of the following: Nevada Division of Environmental Protection(1) Chartis Commutation Account(2) SAT Primero tax dispute(3) Non-Current Restricted Cash Year Ended December 31, 2023 $78,128 17,388 29,684 $125,200 December 31, 2023 December 31, 2022 $18,408 — 107,165 $125,573 $17,702 28,365 79,126 $125,193 (1) On November 2, 2021, the Company executed an agreement with the Nevada Division of Environmental Protection (“NDEP”) relating to funds required to establish a trust agreement to cover post-closure water treatment cost at Jerritt Canyon. During the year ended December 31, 2022, the Company funded $17.7 million into a trust; these amounts are included within non-current restricted cash. (2) The Company owns an environmental risk transfer program (the “ERTP”) for Jerritt Canyon from American Insurance Group (“AIG”). As part of the ERTP, $28.7 million was on deposit in an interest-bearing account with AIG (the “Commutation Account”). The Commutation Account principal plus interest earned on the principal is used to fund ongoing reclamation and mine closure obligations. The Company elected to extinguish all rights under the policy releasing AIG from reclamation cost and financial assurance liabilities by replacing the policy with surety bonds on June 28, 2023. During the third quarter of 2023, the NDEP and the USDA Forest Services (“USFS”) accepted replacement of the surety bonds and the Company received total funds of $28.7 million. (3) In connection with the dispute between Primero Empresa Minera, S.A. de C.V. (“PEM”) and the Servicio de Admistracion Tributaria (“SAT”) in relation to the advanced pricing agreement (Note 28), the tax authority has frozen a PEM bank account with funds of $107.2 million (1,810 million MXN) as a guarantee against certain disputed tax assessments. This balance consists of Value Added Tax (“VAT”) refunds that the Company has received which were previously withheld by the tax authority. The Company does not agree with SAT’s position and has challenged it through the relevant legal channels. 20. TRADE AND OTHER PAYABLES The Company’s trade and other payables are primarily comprised of amounts outstanding for purchases relating to mining operations, exploration and evaluation activities and corporate expenses. The normal credit period for these purchases is usually between 30 to 90 days. Trade and other payables are comprised of the following items: Trade payables Trade related accruals Payroll and related benefits Restructuring obligations NSR royalty liabilities (Notes 15(b)(c)) Environmental duty and net mineral sales proceeds tax Other accrued liabilities December 31, 2023 December 31, 2022 $31,863 16,302 35,331 1,456 2,850 3,023 3,588 $40,782 30,312 31,797 — 1,518 3,570 7,141 $94,413 $115,120 71 72 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) option remains unexercised at the maturity date of the convertible note, the balance will remain in equity reserves. Deferred tax liability of $11.4 million related to taxable temporary difference arising from the equity portion of the convertible debenture was recognized in equity reserves. Transaction costs of $7.2 million that relate to the issuance of the convertible debentures were allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortized over the life of the convertible debentures using the effective interest method. (b) Revolving Credit Facility On June 29, 2023, the Company amended its senior secured revolving credit facility (the “Revolving Credit Facility”) with the Bank of Montreal, BMO Harris Bank N.A., Bank of Nova Scotia, Toronto Dominion Bank, and National Bank of Canada (“syndicate”) by extending the maturity date from March 31, 2025 to June 29, 2026 and increasing the credit limit from $100.0 million to $175.0 million. Interest on the drawn balance will accrue at the Secured Overnight Financing Rate (“SOFR”) plus an applicable range of 2.25% to 3.5% per annum while the undrawn portion is subject to a standby fee with an applicable range of 0.563% to 0.875% per annum, dependent on certain financial parameters of First Majestic. As at December 31, 2023, the applicable rates were 2.750% and 0.688% per annum, respectively. These debt facilities are guaranteed by certain subsidiaries of the Company and are also secured by a first priority charge against the assets of the Company, and a first priority pledge of shares of the Company’s subsidiaries. The Revolving Credit Facility includes financial covenants, to be tested quarterly on a consolidated basis, requiring First Majestic to maintain the following: (a) a leverage ratio based on net indebtedness to rolling four quarters adjusted EBITDA of not more than 3.00 to 1.00; and (b) an interest coverage ratio, based on rolling four quarters adjusted EBITDA divided by interest payments, of not less than 4.00 to 1.00. The debt facilities also provide for negative covenants customary for these types of facilities and allows the Company to enter into finance leases, excluding any leases that would have been classified as operating leases in effect immediately prior to the implementation of IFRS 16 - Leases, of up to $50.0 million. As at December 31, 2023 and December 31, 2022, the Company was in compliance with these covenants. During the year, as part of ongoing reclamation and mine closure obligations, the Company issued $25.4 million (2022 - $5.0 million) in letters of credit for a total outstanding commitment of $30.4 million. As at December 31, 2023 the undrawn portion of the Revolving Credit Facility net of the letters of credit and drawdowns totals $124.6 million (December 2022 - $75.0 million). 22. LEASE LIABILITIES The Company has Category I leases, Category II leases and equipment financing liabilities for various mine and plant equipment, office space and land. Category I leases and equipment financing obligations require underlying assets to be pledged as security against the obligations and all of the risks and rewards incidental to ownership of the underlying asset being transferred to the Company. For Category II leases, the Company controls but does not have ownership of the underlying right-of-use assets. Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Lease liabilities are subsequently measured at amortized cost using the effective interest rate method. Certain lease agreements may contain lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as vehicles, the Company has elected to account for the lease and non-lease components as a single lease component. 21. DEBT FACILITIES The movement in debt facilities during the year ended December 31, 2023 and year ended December 31, 2022, respectively, are comprised of the following: Balance at December 31, 2021 Finance costs Interest expense Accretion Proceeds from drawdown of revolving credit facility Repayments of principal Payments of finance costs Balance at December 31, 2022 Finance costs Interest expense Accretion Payments of finance costs Balance at December 31, 2023 Statements of Financial Position Presentation Current portion of debt facilities Non-current portion of debt facilities Balance at December 31, 2022 Current portion of debt facilities Non-current portion of debt facilities Balance at December 31, 2023 (a) Convertible Debentures Senior Convertible Debentures Convertible Debentures (a) Revolving Credit Facility (b) $181,178 $56 896 8,673 — — (505) $190,242 858 9,170 (864) $199,406 $431 189,811 $190,242 $426 198,980 $199,406 1,241 — 50,000 (30,000) (1,177) $20,120 2,616 — (2,330) $20,406 $120 20,000 $20,120 $406 20,000 $20,406 Total $181,234 2,137 8,673 50,000 (30,000) (1,682) $210,362 3,474 9,170 (3,194) $219,812 $551 209,811 $210,362 $832 218,980 $219,812 On December 2, 2021, the Company issued $230 million of unsecured senior convertible debentures (the “Notes”). The Company received net proceeds of $222.8 million after transaction costs of $7.2 million. The Notes mature on January 15, 2027 and bear an interest rate of 0.375% per annum, payable semi-annually in arrears in January and July of each year. The Notes are convertible into common shares of the Company at any time prior to maturity at a conversion rate of 60.3865 common shares per $1,000 principal amount of Notes converted, representing an initial conversion price of $16.56 per common share, subject to certain anti-dilution adjustments. In addition, if certain fundamental changes occur, holders of the Notes may be entitled to an increased conversion rate. The Company may not redeem the Notes before January 20, 2025 except in the event of certain changes in Canadian tax law. At any time on or after January 20, 2025 and until maturity, the Company may redeem all or part of the Notes for cash if the last reported share price of the Company’s common shares for 20 or more trading days in a period of 30 consecutive trading days exceeds 130% of the conversion price in effect on each such trading day. The redemption price is equal to the sum of: (i) 100% of the principal amount of the Notes to be redeemed and (ii) accrued and unpaid interest, if any, to the redemption date. The Company is required to offer to purchase for cash all of the outstanding Notes upon a fundamental change, at a cash purchase price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest, if any, to the fundamental change purchase date. The component parts of the convertible debentures, a compound instrument, are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement and the definitions of a financial liability and an equity instrument. A conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company’s own equity instrument is an equity instrument. At initial recognition, net proceeds of $222.8 million from the Notes were allocated into its debt and equity components. The fair value of the debt portion was estimated at $180.4 million using a discounted cash flow model method with an expected life of five years and a discount rate of 4.75%. This amount is recorded as a financial liability on an amortized cost basis using the effective interest method at an effective interest rate of 5.09% until extinguished upon conversion or at its maturity date. The conversion option is classified as equity and was estimated based on the residual value of $42.3 million. This amount is not subsequently remeasured and will remain in equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to share capital. Where the conversion 73 74 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)22. LEASE LIABILITIES (continued) (c) Equipment financing The movement in lease liabilities during the years ended December 31, 2023 and December 31, 2022 are comprised of the following: Balance at December 31, 2021 Additions Remeasurements Finance costs Repayments of principal Repayments of finance costs Transfer to asset held-for-sale (Note 14) Foreign exchange Balance at December 31, 2022 Additions Remeasurements Disposals Finance costs Repayment of principal Repayments of finance costs Transfer to asset held-for-sale (Note 14) Foreign Exchange Balance at December 31, 2023 Statements of Financial Position Presentation Current portion of lease liabilities Non-current portion of lease liabilities Balance at December 31, 2022 Current portion of lease liabilities Non-current portion of lease liabilities Balance at December 31, 2023 (a) Category I leases Category I Leases (a) $5,253 3,109 — 237 (2,446) (210) — — $5,943 2,231 — — 388 (3,502) (389) — — $4,671 $2,801 3,142 $5,943 $3,144 1,527 $4,671 Category II Leases(b) $34,544 3,314 2,815 1,894 (9,065) (1,894) (458) 490 $31,640 4,540 6,151 (36) 2,217 (11,736) (2,183) (82) 1,520 $32,031 $11,026 20,614 $31,640 $14,226 17,805 $32,031 Equipment Financing(c) $64 — — — (64) — — — $— — — — — — — — — $— $— — $— $— — $— Total $39,861 6,423 2,815 2,131 (11,575) (2,104) (458) 490 $37,583 6,771 6,151 (36) 2,605 (15,238) (2,572) (82) 1,520 $36,702 $13,827 23,756 $37,583 $17,370 19,332 $36,702 Category I leases primarily relate to financing arrangements entered into for the rental of vehicles and equipment. These leases have remaining lease terms of one to three years, some of which include options to terminate the leases within a year, with incremental borrowing rates ranging from 3.4% to 11.4% per annum. (b) Category II leases Category II leases primarily relate to equipment and building rental contracts, land easement contracts and service contracts that contain embedded leases for property, plant and equipment. These leases have remaining lease terms of one to seven years, some of which include options to terminate the leases within a year, with incremental borrowing rates ranging from 4.5% to 11.4% per annum. During the year ended December 31, 2023 and 2022, the amounts of lease payments recognized in the profit and loss are summarized as follows: Expenses relating to variable lease payments not included in the measurement of lease liability $113,486 $132,101 Year Ended December 31, 2023 Year Ended December 31, 2022 Expenses relating to short-term leases Expenses relating to low value leases 29,996 661 35,913 760 $144,143 $168,774 During 2017, the Company entered into a $7.9 million credit facility with repayment terms ranging from 12 to 16 equal quarterly installments in principal plus related interest. Proceeds from the equipment financing were primarily used for the purchase and rehabilitation of property, plant and equipment. The equipment financing is secured by certain equipment of the Company and is subject to various covenants, including the requirement for First Majestic to maintain a leverage ratio based on total debt to rolling four quarters adjusted EBITDA. As of December 31, 2023, the credit facility has expired. As of December 31, 2022, the Company was in compliance with these covenants. As at December 31, 2023, the net book value of property, plant and equipment includes $nil (December 31, 2022 - $nil) equipment pledged as security for the equipment financing. 23. DECOMMISSIONING LIABILITIES The Company has an obligation to undertake decommissioning, restoration, rehabilitation and environmental work when environmental disturbance is caused by the development and ongoing production of a mining operation. Movements in decommissioning liabilities during the years ended December 31, 2023 and 2022 are allocated as follows: Balance at December 31, 2021 $15,529 $8,441 $10,995 $100,390 $18,252 $153,607 San Dimas Santa Elena La Encantada Jerritt Canyon Non-Operating Properties(1) Total Movements during the year: Transfer to liability held-for-sale Change in rehabilitation provision Reclamation costs incurred Accretion expense Foreign exchange gain — (1,800) — 1,190 504 — 1,518 (31) 650 261 — (879) — 848 342 — 1,240 (2,704) 2,053 — (7,118) (2,488) (223) 1,361 686 (7,118) (2,409) (2,958) 6,102 1,793 Balance at December 31, 2022 $15,423 $10,839 $11,306 $100,979 $10,470 $149,017 Movements during the year: Change in rehabilitation provision Reclamation costs incurred Accretion expense Other (2,687) — 1,467 — 816 — 1,032 — (634) — 1,076 — (3,183) (270) 3,796 — 139 (5) 954 46 (5,549) (275) 8,325 46 Balance at December 31, 2023 $14,203 $12,687 $11,748 $101,322 $11,604 $151,564 (1) Non-operating properties include the San Martin, Del Toro, La Parrilla and La Guitarra mines, along with the La Luz project. La Guitarra and La Parrilla were classified as assets held-for-sale up to the date of disposition on March 29, 2023 and August 14, 2023, respectively. As of December 31, 2023, the assets and liabilities have been derecognized (the net carrying value of the disposal group at December 31, 2022 was $7.2 million) (Note 14). A provision for decommissioning liabilities is estimated based on current regulatory requirements and is recognized at the present value of such costs. The expected timing of cash flows in respect of the provision is based on the estimated life of the Company’s mining operations. The discount rate for Mexico is 9.7% (2022 - 9.5%), while the inflation rate used is based on long-term expected inflation rate of 3.6% (2022 - 3.7%). At the Jerritt Canyon Gold Mine, the discount rate used is 4.7% (2022 - 3.8%), while the inflation rate is based on the long-term expected inflation rate of 2.4% in the U.S (2022 - 2.8%). The present value of reclamation liabilities may be subject to change based on changes to cost estimates, remediation technologies or applicable laws and regulations. Changes in decommissioning liabilities are recorded against mining interests. At December 31, 2023, the reclamation and closure cost obligation for the Jerritt Canyon Gold Mine totaled $101.3 million. This obligation is secured through $82.4 million in surety bonds held with the NDEP and the USFS, with $30.4 million in letters of credit as collateral for these bonds, to support various reclamation obligation bonding requirements (Note 19). Additionally, on November 2, 2021, the Company executed an agreement with the NDEP relating to funds required to establish a trust agreement to cover post- closure water treatment cost at Jerritt Canyon. The amounts were funded into a trust on October 31, 2022 which are included in the decommissioning liabilities provision with a total of $18.4 million being currently held in this account. 75 76 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)24. INCOME TAXES During the years ended December 31, 2023 and 2022, the movement in deferred tax assets and deferred tax liabilities is shown as follows: The following is a reconciliation of income taxes calculated at the combined Canadian federal and provincial statutory tax rate to the income tax expense for the year ended December 31, 2023 and 2022: Year Ended December 31, Loss before tax Combined statutory tax rate Income tax recovery computed at statutory tax rate Reconciling items: Effect of different foreign statutory tax rates on earnings of subsidiaries Impact of foreign exchange on deferred income tax assets and liabilities Change in unrecognized deferred income tax asset 7.5% mining royalty in Mexico and Nevada net proceeds tax Other non-deductible expenses Impact of inflationary adjustments Change in tax provision estimates Value of losses forgone due to tax settlement Tax settlement Other Income tax (recovery) expense Statements of Earnings Presentation Current income tax expense Deferred income tax recovery Income tax (recovery) expense Effective tax rate 2023 ($195,915) 27% (52,897) 6,152 (60,889) 44,230 2,100 13,994 (12,714) 448 — — (1,227) ($60,803) $14,005 (74,808) ($60,803) 31% 2022 ($61,404) 27% (16,579) 1,052 (20,238) 2,097 11,345 16,941 (18,015) (2,127) 55,657 24,033 (1,294) $52,872 $56,250 (3,378) $52,872 (86%) The Company’s statutory tax rate increased effective January 1, 2018 to 27.00%. For the year ended December 31, 2023, the effective income tax rate on income from operations was 31% (2022 - (86%)). The significant items impacting the effective income tax rate on losses from operations include the tax impact of the deferred tax assets not recognized, foreign exchange effects, Mexico specific mining tax, and the impact of divestiture, restructurings and withholding taxes. The tax provision on earnings is computed after taking account of intercompany transactions such as interest on loans, sales, and other charges and credits among subsidiaries resulting from their capital structure as well as from the various jurisdictions in which operations and assets are owned. For these reasons, the effective tax rate differs from the combined corporate statutory rate in Canada. The Company’s effective tax rate and its cash tax cost depend on the laws of numerous countries and the provisions of multiple income tax conventions between various countries in which the Company operates. As at December 31, 2023 and 2022, the Company has the following income tax payable balances: Current income tax payable Non-current income tax payable Year Ended December 31, 2023 $5,222 23,612 $28,834 2022 $18,240 20,605 $38,845 Deferred tax assets At December 31, 2021 (Expense) benefit to statement of earnings Charge to equity Re-class to liabilities held for sale At December 31, 2022 (Expense) benefit to statement of earnings Translation and other At December 31, 2023 Deferred tax liabilities At December 31, 2021 Benefit to statement of earnings Reclassed to current income taxes payable Translation and other Re-class to liabilities held-for-sale At December 31, 2022 Benefit to statement of earnings At December 31, 2023 Statements of Financial Position Presentation Deferred tax assets Deferred tax liabilities At December 31, 2022 Deferred tax assets Deferred tax liabilities At December 31, 2023 Losses Provisions Deferred tax asset not recognized $187,270 $41,743 ($101,607) (5,451) — (34,189) $147,630 54,978 — 3,217 — (2,283) $42,677 (784) 314 (5,449) — 36,340 ($70,716) (59,897) — Other $16,769 1,082 (1,458) (399) Total $144,175 (6,601) (1,458) (531) $15,994 $135,585 5,824 — 121 314 $202,608 $42,207 ($130,613) $21,818 $136,020 Property, plant and equipment and mining interests Effect of Mexican tax deconsolidation $192,648 (4,884) — — (8,773) $178,991 (49,050) $129,941 $606 — (606) — — $— — $— Other $27,500 (5,095) — (393) (12) $22,000 (25,637) ($3,637) Total $220,754 (9,979) (606) (393) (8,785) $200,991 (74,687) $126,304 $57,062 122,468 $65,406 $88,732 79,017 ($9,715) At December 31, 2023, the Company recognized $88.7 million (2022 - $57.1 million) of net deferred tax assets in entities that have had a loss for tax purposes in either 2023 or 2022, or both. In evaluating whether it is probable that sufficient taxable income will be generated to realize the benefit of these deferred tax assets, the Company considered all available evidence, including approved budgets, forecasts and business plans and, in certain cases, tax planning opportunities. The aggregate amount of taxable temporary differences associated with investments in subsidiaries for which deferred taxes have not been recognized, as at December 31, 2023 was $263.9 million (2022 - $187.2 million). 77 78 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 24. INCOME TAXES (continued) (b) Stock options $480,704 $380,580 Exercise prices (CAD$) Deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax assets have been recognized are attributable to the following: Non-capital losses Capital losses Accrued expenses Mineral properties, plant and equipment Other Year Ended December 31, 2023 $347,291 33,005 628 46,188 53,592 2022 $277,067 26,592 888 45,264 30,769 As at December 31, 2023 and 2022, the Company has available Canadian, US and Mexican non-capital tax losses, which if not utilized will expire as follows: Year of expiry 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 and after No expiry Total Unrecognized losses 25. SHARE CAPITAL Canadian non-capital losses US non-capital losses $— $— — — — — — — — — — — — — — — — — — — 42,579 — $42,579 $42,579 26,492 261,576 $288,068 $26,492 Mexican non-capital losses December 31, 2023 December 31, 2022 $— 33,213 21,168 3,211 8,587 48,690 89,522 55,906 62,244 8,904 63,014 — $394,459 $106,634 $— 33,213 21,168 3,211 8,587 48,690 89,522 55,906 62,244 8,904 132,085 261,576 $725,106 $175,705 2,298 31,322 21,785 4,158 12,739 49,174 82,358 74,040 73,648 80,114 34,288 161,662 $627,586 $277,067 (a) Authorized and issued capital The Company has unlimited authorized common shares with no par value. On May 26, 2022, a new LTIP was adopted. Under the terms of the Company’s LTIP, the maximum number of shares reserved for issuance under the LTIP is 6% of the issued shares on a rolling basis. Options may be exercisable over periods of up to ten years as determined by the Board of Directors of the Company and the exercise price shall not be less than the closing price of the shares on the day preceding the award date, subject to regulatory approval. All stock options granted are subject to vesting with 25% vesting on first anniversary from the date of grant, and 25% vesting each six months thereafter. Any options granted prior to May 26, 2022 will be governed by the 2017 Option Plan and the 2019 Long-Term Incentive Plans, respectively (“2017 Plan” and “2019 LTIP”). The following table summarizes information about stock options outstanding as at December 31, 2023: 5.01 - 10.00 10.01 - 15.00 15.01 - 20.00 20.01 - 250.00 Options Outstanding Options Exercisable Number of Options 2,595,193 3,304,827 997,732 468,500 7,366,252 Weighted Average Exercise Price (CAD $/Share) Weighted Average Remaining Life (Years) 8.43 12.82 16.42 21.61 12.32 6.93 7.93 6.85 7.42 7.40 Number of Options 1,370,545 1,651,640 781,332 430,100 4,233,617 Weighted Average Exercise Price (CAD $/Share) Weighted Average Remaining Life (Years) 8.69 13.41 16.35 21.60 13.26 4.84 7.23 6.68 7.42 6.37 The movements in stock options issued for the year ended December 31, 2023 and year ended December 31, 2022 are summarized as follows: Balance, beginning of the year Granted Exercised Cancelled or expired Balance, end of the year Year Ended December 31, 2023 Year Ended December 31, 2022 Number of Options 7,275,744 1,881,297 (337,500) (1,453,289) 7,366,252 Weighted Average Exercise Price (CAD $/Share) 13.19 9.15 8.42 13.51 12.32 Number of Options 5,638,383 3,107,500 (609,623) (860,516) 7,275,744 Weighted Average Exercise Price (CAD $/Share) 13.29 12.96 9.76 15.44 13.19 During the year ended December 31, 2023, the aggregate fair value of stock options granted was $6.1 million (December 31, 2022 - $14.7 million), or a weighted average fair value of $3.23 per stock option granted (December 31, 2022 - $4.73). During the year ended December 31, 2023, total share-based payments expense related to stock options was $6.9 million (December 31, 2022 - $9.0 million). The following weighted average assumptions were used in estimating the fair value of stock options granted using the Black-Scholes Option Pricing Model: The movement in the Company’s issued and outstanding capital during the years is summarized in the consolidated statements of changes in equity. Assumption Based on ATM program(1)(2)(3) Year Ended December 31, 2023 Year Ended December 31, 2022 Number of Shares Net Proceeds Number of Shares Net Proceeds 13,919,634 $92,092 11,869,145 $113,395 (1) The Company files prospectus supplements to its short form base shelf prospectus, pursuant to which the Company may, at its discretion and from time-to-time, sell common shares of the Company. The sale of common shares is to be made through “at-the-market distributions” (“ATM”), as defined in the Canadian Securities Administrators’ National Instrument 44-102 Shelf Distributions, directly on the New York Stock Exchange. For the year ended December 31, 2022, the Company sold 11,869,145 common shares of the Company under the 2021 ATM program at an average price of $9.80 per common share for gross proceeds of $116.3 million, or net proceeds of $113.4 million. At December 31, 2022, the Company incurred $2.9 million in transaction costs in relation to the ATM. (2) During the year ended December 31, 2023, the Company sold 1,719,634 (2022 - nil) common shares of the Company under the 2022 ATM program at an average price of $8.75 per common share (2022 - $nil) for gross proceeds of $15.0 million (2022 - $nil), or net proceeds of $14.4 million (2022 - $nil). At December 31, 2023, the Company incurred $0.6 million (2022 - $nil) in transaction costs in relation to the 2022 ATM. (3) During the year ended December 31, 2023, the Company sold 12,200,000 (2022 - nil) common shares of the Company under the 2023 ATM program at an average price of $6.51 per common share (2022 - $nil) for gross proceeds of $79.5 million (2022 - $nil), or net proceeds of $77.7 million (2022 - $nil). At December 31, 2023, the Company incurred $1.8 million (2022 - $nil) in transaction costs in relation to the ATM. On August 3, 2023, the Company filed a final short form base shelf prospectus in each province of Canada (other than Quebec), and a registration statement on Form F-10 in the United States, which will allow the Company to undertake offerings (including by way of ATM) under one or more prospectus supplements of various securities listed in the shelf prospectus, up to an aggregate total of $500.0 million, over a 25-month period commencing as of the filing date of the shelf prospectus. Risk-free interest rate (%) Yield curves on Canadian government zero- coupon bonds with a remaining term equal to the stock options’ expected life Expected life (years) Weighted average life of previously transacted awards Expected volatility (%) Historical volatility of the Company’s stock Expected dividend yield (%) Annualized dividend rate as of the date of grant Year Ended December 31, 2023 Year Ended December 31, 2022 3.80 4.06 59.05 0.35% 2.16 5.91 49.00 1.64% 79 80 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 25. SHARE CAPITAL (continued) (b) Stock options (continued) The weighted average closing share price at date of exercise for the year ended December 31, 2023 was CAD$9.78 (December 31, 2022 - CAD$14.70). (c) Restricted Share Units On May 26, 2022, a new LTIP was adopted. The Company adopted the LTIP to allow the Company to grant to its directors, employees and consultants non- transferable Restricted Share Units (“RSU’s”) based on the value of the Company’s share price at the date of grant. Unless otherwise stated, the awards typically have a graded vesting schedule over a three-year period and can be settled either in cash or equity upon vesting at the discretion of the Company. The Company intends to settle all RSU’s in equity. Any RSU’s granted prior to May 26, 2022 will be governed by the 2019 LTIP. The associated compensation cost is recorded as share-based payments expense against equity reserves. The following table summarizes the changes in RSU’s for the year ended December 31, 2023 and the year ended December 31, 2022: On March 23, 2022, a new DSU plan was adopted (“2022 DSU Plan”). All DSU’s issued under the 2022 DSU Plan will be settled in cash. There were 53,189 DSU’s granted under the 2022 plan during the year ended December 31, 2023 resulting in a total expense of $0.3 million (2022 - $0.1 million). As at December 31, 2023, there were a total of 62,332 DSU’s outstanding, with a total liability of $0.4 million. The following table summarizes the changes in DSU’s granted to directors for the year ended December 31, 2023 and the year ended December 31, 2022 under the 2019 DSU plan: Outstanding, beginning of the year Granted Settled Year Ended December 31, 2023 Year Ended December 31, 2022 Number of shares 50,601 — — 50,601 Weighted Average Fair Value (CAD$) 15.83 — — 15.83 Number of shares 25,185 37,312 (11,896) 50,601 Weighted Average Fair Value (CAD$) 18.31 14.07 15.55 15.83 Year Ended December 31, 2023 Year Ended December 31, 2022 Outstanding, end of the year Outstanding, beginning of the year Granted Settled Forfeited Outstanding, end of the year Number of shares 652,339 768,066 (273,515) (266,001) 880,889 Weighted Average Fair Value (CAD$) 14.35 10.90 14.74 12.05 11.92 Number of shares 400,549 498,740 (159,016) (87,934) 652,339 Weighted Average Fair Value (CAD$) 16.77 13.18 16.57 14.74 14.35 During the year ended December 31, 2023, total share-based payments expense related to DSU’s was $0.3 million (year ended December 31, 2022 - $0.3 million). (f) Share Repurchase Program and Share Cancellation The Company has an ongoing share repurchase program to repurchase up to 5,000,000 of the Company’s issued and outstanding shares up to March 31, 2024. The normal course issuer bid will be carried out through the facilities of the Toronto Stock Exchange and alternative Canadian marketplaces. All common shares, if any, purchased pursuant to the share repurchase program will be cancelled. The Company believes that from time to time, the market price of its common shares may not fully reflect the underlying value of the Company’s business and its future business prospects. The Company believes that at such times, the purchase of common shares would be in the best interest of the Company. During the year ended December 31, 2023, the Company repurchased an aggregate of nil common shares (December 2022 - 100,000) at an average price of $nil per share as part of the share repurchase program (December 2022 - $8.52) for total proceeds of $nil (December 2022 - $0.7 million), net of transaction costs. During the year ended December 31, 2023, total share-based payments expense related to RSU’s was $4.5 million (December 31, 2022 - $2.9 million). (g) Dividends (d) Performance Share Units On May 26, 2022, a new LTIP was adopted. The Company adopted the LTIP to allow the Company to grant to its directors, employees and consultants non- transferable Performance Share Units (“PSU’s”). The amount of units to be issued on the vesting date will vary from 0% to 200% of the number of PSU’s granted, depending on the Company’s total shareholder return compared to the return of a selected group of peer companies. Unless otherwise stated, the awards typically vest three years from the grant date. The fair value of a PSU is based on the value of the Company’s share price at the date of grant and will be adjusted based on actual units issued on the vesting date. The Company intends to settle all PSU’s in equity. Any PSU’s granted prior to May 26, 2022 will be governed by the 2019 LTIP. The following table summarizes the changes in PSU’s granted to employees and consultants for the year ended December 31, 2023 and the year ended December 31, 2022: The Company declared the following dividends during the year ended December 31, 2023: Declaration Date February 23, 2023 May 4, 2023 August 3, 2023 November 1, 2023 February 21, 2024(1) Record Date March 10, 2023 May 18, 2023 August 16, 2023 November 15, 2023 March 14, 2024 Dividend per Common Share $0.0054 $0.0057 $0.0051 $0.0046 $0.0048 Year Ended December 31, 2023 Year Ended December 31, 2022 (1) These dividends were declared subsequent to the period end and have not been recognized as distributions to owners during the period presented. Outstanding, beginning of the period Granted Settled Forfeited Outstanding, end of the period Number of shares 474,654 384,653 (38,087) (196,252) 624,968 Weighted Average Fair Value (CAD$) 14.82 11.12 15.47 13.69 12.86 Number of shares 275,516 268,955 — (69,817) 474,654 Weighted Average Fair Value (CAD$) 16.58 13.21 — 15.55 14.82 During the year ended December 31, 2023, total share-based payments expense related to PSU’s was $1.5 million (year ended December 31, 2022 - $1.5 million). (e) Deferred Share Units 26. FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT The Company’s financial instruments and related risk management objectives, policies, exposures and sensitivity related to financial risks are summarized below. (a) Fair value and categories of financial instruments Financial instruments included in the consolidated statements of financial position are measured either at fair value or amortized cost. Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in an arm’s-length transaction between knowledgeable and willing parties. The Company uses various valuation techniques in determining the fair value of financial assets and liabilities based on the extent to which the fair value is observable. The following fair value hierarchy is used to categorize and disclose the Company’s financial assets and liabilities held at fair value for which a valuation technique is used. The Company adopted the 2019 LTIP to allow the Company to grant to its directors, employees and consultants non-transferable Deferred Share Units (“DSU’s”), in addition to options, RSU’s and PSU’s. Unless otherwise stated, the DSU awards typically vest immediately at the grant date. The fair value of a DSU is based on the value of the Company’s share price at the date of grant. The Company intends to settle all DSU’s under the 2019 LTIP in equity. Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. Level 2: All inputs which have a significant effect on the fair value are observable, either directly or indirectly, for substantially the full contractual term. Level 3: Inputs which have a significant effect on the fair value are not based on observable market data. 81 82 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)26. FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (continued) (a) Fair value and categories of financial instruments (continued) During the year ended December 31, 2023, marketable securities valued at $19.6 million have been transferred from Level 3 to Level 1 (there were no transfers between levels 1, 2, and 3 for the year ended December 31, 2022) due to the resumption of trading of Sierra Madre shares on the TSX Venture on June 5, 2023. Level 1 assets include those assets in which unadjusted quoted prices in active markets are accessible to the Company at the measurement date. The table below summarizes the valuation methods used to determine the fair value of each financial instrument: Financial Instruments Measured at Fair Value Valuation Method Marketable securities - common shares Marketable securities - stock warrants Silver futures derivatives Marketable securities and silver future derivatives are valued based on quoted market prices for identical assets in an active market (Level 1) as at the date of statements of financial position. Marketable securities - stock warrants are valued using the Black- Scholes model based on the observable market inputs (Level 2). Financial Instruments Measured at Amortized Cost Valuation Method Cash and cash equivalents Restricted cash Trade and other receivables Trade and other payables Debt facilities Approximated carrying value due to their short-term nature Approximated carrying value as discount rate on these instruments approximate the Company’s credit risk. The Company’s investment policy is to invest its cash in highly liquid short-term investments with maturities of 90 days or less, selected with regards to the expected timing of expenditures from operations. The Company expects that its available capital resources will be sufficient to carry out its development plans and operations for at least the next 12 months. The Company is not subject to any externally imposed capital requirements with the exception of complying with covenants under the debt facilities (Note 21(b)) and lease liabilities (Note 22(b)). As at December 31, 2023 and December 31, 2022, the Company was in compliance with these covenants. (c) Financial risk management The Company thoroughly examines the various financial instruments and risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, currency risk, commodity price risk, and interest rate risk. Where material, these risks are reviewed and monitored by the Board of Directors. Credit Risk Credit risk is the risk of financial loss if a customer or counterparty fails to meet its contractual obligations. The Company’s credit risk relates primarily to chartered banks, trade receivables in the ordinary course of business, value added taxes receivable and other receivables. As at December 31, 2023, net VAT receivable was $52.7 million (December 31, 2022 - $44.9 million), of which $27.5 million (December 31, 2022 - $21.6 million) relates to Minera La Encantada S.A. de C.V. (“MLE”) and $29.0 million (December 31, 2022 - $17.7 million) relates to PEM, offset by VAT payable balances. The Company sells and receives payment upon delivery of its silver doré and by-products primarily through three international customers. All of the Company’s customers have good ratings and payments of receivables are scheduled, routine and fully received within 60 days of submission; therefore, the balance of trade receivables owed to the Company in the ordinary course of business is not significant. The carrying amount of financial assets recorded in the consolidated financial statements represents the Company’s maximum exposure to credit risk. With the exception to the above, the Company believes it is not exposed to significant credit risk. The following table presents the Company’s fair value hierarchy for financial assets and financial liabilities that are measured at fair value: Liquidity Risk December 31, 2023 December 31, 2022 Fair value measurement Fair value measurement Carrying value Level 1 Level 2 Carrying value Level 1 Level 2 Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they arise. The Company manages liquidity risk by monitoring actual and projected cash flows and matching the maturity profile of financial assets and liabilities. Cash flow forecasting is performed regularly to ensure that there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and our holdings of cash and cash equivalents. Financial assets Marketable securities (Note 13) $62,380 $61,749 $631 $34,528 $33,426 $1,102 The Company’s objectives when managing capital are to maintain financial flexibility to continue as a going concern while optimizing growth and maximizing returns of investments from shareholders. In 2022, an impairment reversal and impairment were recorded for the La Guitarra and La Parrilla mines, respectively, bringing the carrying value of the asset to its recoverable amount, being its FVLCD. The valuation technique used in the calculation of this fair value is categorized as Level 2 as it is based on the implied selling price within the purchase agreement (Note 14). During the year ended December 31, 2023, an impairment was recorded for the Jerritt Canyon mine bringing the carrying value of the asset to its recoverable amount, being its FVLCD (Note 18). Management’s estimate of FVLCD is classified as a level 3 in the fair value hierarchy as the inputs are not based on observable market data. During the year ended December 31, 2023, an additional write down was recorded for the La Parrilla mine, bringing the carrying value of the asset to its recoverable amount, being its FVLCD. The valuation technique used in the calculation of the fair value of consideration receivable, was categorized as Level 2 as it is based on the selling price in the market (Note 14). (b) Capital risk management The Company monitors its capital structure and based on changes in operations and economic conditions, may adjust the structure by repurchasing shares, issuing new shares, issuing new debt or retiring existing debt. The Company prepares annual budget and quarterly forecasts to facilitate the management of its capital requirements. The annual budget is approved by the Company’s Board of Directors. The following table summarizes the maturities of the Company’s financial liabilities as at December 31, 2023 based on the undiscounted contractual cash flows: Trade and other payables Debt facilities Lease liabilities Other liabilities Commitments Carrying Amount $94,413 219,812 36,702 5,592 172 Contractual Cash Flows $94,413 258,264 40,572 5,592 172 Less than 1 year 2 to 3 years 4 to 5 years After 5 years $94,413 3,104 17,465 — 172 $— 25,088 18,624 394 — $— 230,072 3,805 5,198 — $— — 678 — — $678 $356,691 $399,013 $115,154 $44,106 $239,075 At December 31, 2023, the Company had working capital of $188.9 million (December 31, 2022 – $202.9 million). Total available liquidity at December 31, 2023 was $313.6 million (December 31, 2022 - $277.9 million), including $124.6 million of undrawn revolving credit facility (December 31, 2022 - $75.0 million). The Company believes it has sufficient cash on hand, combined with cash flows from operations, to meet operating requirements as they arise for at least the next 12 months. If the Company needs additional liquidity to meet obligations, the Company may consider drawing on its debt facility, securing additional debt financing and/or equity financing. The capital of the Company consists of equity (comprising of issued capital, equity reserves and retained earnings or accumulated deficit), debt facilities, lease liabilities, net of cash and cash equivalents as follows: Currency Risk Equity Debt facilities Lease liabilities Less: cash and cash equivalents 83 December 31, 2023 December 31, 2022 $1,358,120 $1,411,298 219,812 36,702 (125,581) 210,362 37,583 (151,438) $1,489,053 $1,507,805 The Company is exposed to foreign exchange risk primarily relating to financial instruments that are denominated in Canadian dollars or Mexican pesos, which would impact the Company’s net earnings or loss. To manage foreign exchange risk, the Company may occasionally enter into short-term foreign currency derivatives, such as forwards and options, to hedge its cash flows. 84 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 26. FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (continued) 27. SUPPLEMENTAL CASH FLOW INFORMATION Currency Risk (continued) The sensitivity of the Company’s net earnings or loss and comprehensive income or loss due to changes in the exchange rates of the Canadian dollar and the Mexican peso against the U.S. dollar is included in the table below: Canadian Dollar Mexican Peso Cash and cash equivalents Restricted cash $11,645 6,380 $— 107,165 $18,025 $107,165 Value added taxes receivable $— 52,737 $52,737 Other financial assets Trade and other payables December 31, 2023 Net assets (liabilities) exposure Effect of +/- 10% change in currency $1,565 — ($4,009) (61,936) $9,201 104,346 $920 10,435 $1,565 ($65,945) $113,547 $11,355 From time to time, the Company utilizes certain derivatives to manage its foreign exchange exposures to the Mexican Peso. During the year ended December 31, 2023, the Company had an unrealized gain of $0.4 million (2022 - no gain or loss) on fair value adjustments to its foreign currency derivatives. As at December 31, 2023, the Company does not hold any foreign currency derivatives (December 31, 2022- $nil). Commodity Price Risk The Company is exposed to commodity price risk on silver and gold, which have a direct and immediate impact on the value of its related financial instruments, non- financial items and net earnings. The Company’s revenues are directly dependent on commodity prices that have shown volatility and are beyond the Company’s control. The Company does not use long-term derivative instruments to hedge its commodity price risk to silver or gold. The following table summarizes the Company’s exposure to commodity price risk and their impact on net earnings: Other adjustments to investing activities: Purchase of marketable securities Proceeds from disposal of marketable securities Cash received on settlement of silver futures Net change in non-cash working capital items: Increase in trade and other receivables (Increase) decrease in value added taxes receivable Increase in inventories Increase in prepaid expenses and other Increase (decrease) in income taxes payable Decrease in trade and other payables (Increase) decrease in restricted cash (Note 19) Non-cash investing and financing activities: Shares received from disposition of mining interest Disposition of La Guitarra and La Parrilla(a) December 31, 2023 Disposition of mining claims in relation to sale of royalty portfolio Effect of +/- 10% change in metal prices Transfer of share-based payments reserve upon settlement of RSU’s Silver $1,604 $1,604 Gold $523 $523 Total $2,127 $2,127 Transfer of share-based payments reserve upon exercise of options Assets acquired by finance lease Metals in doré inventory Interest Rate Risk As at December 31, 2023, cash and cash equivalents include $1.9 million (December 31, 2022 - $1.4 million) that are held in-trust as bonds for tax audits in Mexico. The Company is exposed to interest rate risk on its short-term investments, debt facilities and lease liabilities. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. The Company’s interest-bearing financial assets comprise of cash and cash equivalents which bear interest at a mixture of variable and fixed rates for pre-set periods of time. As at December 31, 2023, the Company’s exposure to interest rate risk on interest bearing liabilities is limited to its debt facilities and lease liabilities. Based on the Company’s interest rate exposure at December 31, 2023, a change of 25 basis points increase or decrease of market interest rate does not have a significant impact on net earnings or loss. 85 FIRST MAJESTIC SILVER 2021 ANNUAL REPORT 86 86 Year Ended December 31, 2023 2022 ($2,493) 1,274 — ($1,219) ($1,501) (7,765) (505) (3,103) 531 (6,193) (380) ($18,916) $46,994 (49,238) — 3,410 1,055 (2,231) ($10) ($1,728) 2,739 4,007 $5,018 ($870) 1,732 (3,447) (316) (4,426) (22,748) 2,389 ($27,686) $21,507 — (17,206) 1,897 2,208 (3,109) $5,297 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 27. SUPPLEMENTAL CASH FLOW INFORMATION (continued) (a) Disposition of mining interest As referred to in Note 14, On March 30, 2023 and August 14, 2023, the Company disposed of its interest in the La Guitarra and La Parrilla mines, respectively. The carrying value of the net assets of these mining interests at the date of disposal were as follows: At date of disposition Cash and cash equivalents Other Receivable Inventory Prepaid expenses and other Mineral Property Interest Property plant and equipment Other assets Total assets Trade Payables and accrued liabilities Leases Deferred tax liabilities Decommissioning liabilities Total liabilities Net assets disposed Loss on disposal Total non-cash consideration 28. CONTINGENCIES AND OTHER MATTERS March 30, 2023 August 14, 2023 La Guitarra La Parrilla $5,401 427 440 35 34,089 4,003 40 $44,435 $232 21 6,894 2,951 $10,098 $34,337 ($1,378) $33,172 $— — 854 — 13,891 5,829 680 $21,254 $— 519 1,667 4,167 $6,353 $14,901 ($1,646) $13,822 In 2019, the SAT issued reassessments for the 2010 to 2012 tax years in the total amount of $359.3 million (6,070 million MXN) inclusive of interest, inflation, and penalties. In 2021, the SAT also issued a reassessment against PEM for the 2013 tax year in the total amount of $189.9 million (3,208 million MXN) and in 2023, the SAT issued reassessments for the 2014, 2015, and 2016 tax years in the total amount of $484.2 million (8,179 million MXN) inclusive of interest, inflation, and penalties (collectively, the “Reassessments”). The Company believes that the Reassessments fail to recognize the applicability of a valid transfer pricing methodology. The major items in the Reassessments include determination of revenue based on silver spot market prices, denial of the deductibility of interest expense and service fees, SAT technical error related to double counting of taxes, and interest and penalties. The Company continues to defend the APA in domestic legal proceedings in Mexico, and the Company has also requested resolution of the transfer pricing dispute pursuant to the Mutual Agreement Procedure (“MAP”), under the relevant avoidance of double taxation treaties, between the competent tax authorities of Mexico, Canada, Luxembourg and Barbados. The SAT has refused to take the necessary steps under the MAP process contained in the three tax treaties. The Company believes that by its refusal, Mexico is in breach of its international obligations regarding double taxation treaties. Furthermore, the Company continues to believe that the APA remains valid and legally binding on the SAT. The Company continues to pursue all available domestic and international remedies under the laws of Mexico and under the relevant tax treaties. Furthermore, as discussed further below, it has also made claims against Mexico under Chapter 11 of the North American Free Trade Agreement (“NAFTA”) for violation of its international law obligations. Domestic Remedies In September 2020, the Company was served with a decision of the Federal Court seeking to nullify the APA granted to PEM. The Federal Court’s decision directs SAT to re-examine the evidence and basis for the issuance of the APA with retroactive effect, for the following key reasons: (i) SAT’s errors in analyzing PEM’s request for the APA and the evidence provided in support of the request; and (ii) SAT’s failure to request from PEM certain additional information before issuing the APA. The Company filed an appeal of the decision to the Mexican Circuit Courts on November 30, 2020. As two writs of certiorari were filed before the Mexican Supreme Court of Justice, on April 15, 2021, the Plenary of the Supreme Court i) admitted one of those writs, ii) requested the Circuit Court to send the appeal file to them, and iii) assigned such writ to the Second Chamber of the Supreme Court for issuing the corresponding decision. Both writs of certiorari were withdrawn in December 2022. The challenge filed by the Company was returned to the Mexican Circuit Courts and on December 5, 2023, the Second Collegiate Court issued a decision, which was formally notified to the Company on January 4, 2024. In such decision, the Second Collegiate Court partially granted constitutional protection to the Company with respect to certain matters, but not others. Accordingly, on January 18, 2024, PEM filed an extraordinary appeal to the Mexican Supreme Court of Justice with respect to the Second Collegiate Court’s decision, and PEM is currently waiting for the Supreme Court to admit such appeal. Due to the size, complexity and nature of the Company’s operations, various legal and tax matters arise in the ordinary course of business. The Company accrues for such items when a liability is probable and the amount can be reasonably estimated. International Remedies i. NAFTA APA Claim (a) Claims and Legal Proceedings Risks The Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of business activities. Each of these matters is subject to various uncertainties and it is possible that some of these other matters may be resolved in a manner that is unfavourable to the Company which may result in a material adverse impact on the Company’s financial performance, cash flow or results of operations. First Majestic carries liability insurance coverage and establishes provisions for matters that are probable and can be reasonably estimated, however there can be no guarantee that the amount of such coverage is sufficient to protect against all potential liabilities. In addition, the Company may in the future be subjected to regulatory investigations or other proceedings and may be involved in disputes with other parties in the future which may result in a significant impact on our financial condition, cash flow and results of operations. (b) Primero Tax Rulings When Primero, the previous owner of San Dimas acquired the San Dimas Mine in August 2010, it assumed the obligations under a Silver Purchase Agreement (“Old Stream Agreement”) that required its subsidiary PEM to sell exclusively to Wheaton Precious Metals (“WPMI”) up to 6 million ounces silver produced from the San Dimas Mine, and 50% of silver produced thereafter, at the lower of: (i) the spot market price and (ii) $4.014 per ounce plus an annual increase of 1% (“PEM Realized Price”). In May 2018, the Old Stream Agreement was terminated between WPMI and Silver Trading (Barbados) Limited (“STB”) in connection with the Company entering into a new stream agreement with WPMI concurrent with the acquisition of Primero by the Company. In order to reflect the commercial terms and the effects of the Old Stream Agreement, for Mexican income tax purposes, PEM recognized the revenue on these silver sales based on the PEM Realized Price instead of at spot market prices. To obtain tax and legal assurance that the Mexican tax authority, Servicio de Administración Tributaria (“SAT”) would accept the PEM Realized Price as the transfer price to calculate Mexican income taxes payable by PEM, a mutually binding Advance Pricing Agreement (“APA”) was entered into with the SAT for taxation years 2010 to 2014. On October 4, 2012, the SAT confirmed that based on the terms of the APA, the PEM Realized Price could be used as PEM’s basis for calculating taxes owed for the silver sold under the Old Stream Agreement. In August 2015, the SAT commenced a legal process seeking to retroactively nullify the APA. The Company submitted a Request for Arbitration dated March 1, 2021 to the International Centre for Settlement of Investment Disputes (“ICSID”), on its own behalf and on behalf of PEM, pursuant to Chapter 11 of NAFTA. On March 31, 2021, the Notice of Registration of the Request for Arbitration was issued by the ICSID Secretariat. Once the NAFTA Arbitration Panel (the “Tribunal”) was fully constituted on August 20, 2021 by the appointment of all three panel members, the NAFTA arbitration proceedings in respect of the APA (the “NAFTA APA Claim”) were deemed to have been fully commenced. The first session of the Tribunal was held by videoconference on September 24, 2021 to decide upon the procedural rules which will govern the NAFTA APA Claim. The Tribunal issued Procedural Order No. 1 on October 21, 2021. Thereafter, on April 26, 2022, the Company submitted its Claimant’s Memorial including expert reports and witness statements to the Tribunal, and in response, Mexico submitted its Counter-Memorial dated November 25, 2022. On January 4, 2023, the Company submitted a Request for Provisional Measures (the “PM Request”) to the Tribunal. Following a reply that was filed by Mexico on February 10, 2023, a hearing regarding the request took place on March 13, 2023. On May 26, 2023, the Tribunal partially granted the provisional measures requested by the Company, issuing an order for the Government of Mexico to permit the withdrawal of the Company’s VAT refunds for the period as of January 4, 2023 that had been deposited by the SAT into a frozen bank account and to deposit all future VAT refunds into an account which shall remain freely accessible by the Company (the “PM Decision”). On June 15, 2023, the Company requested Mexico to comply with the PM Decision, and in response, on June 19, 2023, Mexico filed a Revocation Request against the PM Decision. On July 21, 2023, the Company filed its response to Mexico’s Revocation Request. On July 28, 2023, the Government of Mexico filed a Preliminary Objection to Jurisdiction (the “Preliminary Objection”) and Request for Bifurcation (the “Bifurcation Request”) in which it has requested that the Tribunal should stay the merits phase of the international arbitration commenced in 2021, and instead proceed to examine on a preliminary basis, under what is commonly called a bifurcated procedure, whether the Company’s commencement of the new NAFTA Chapter 11 proceeding limited to the recovery of PEM’s VAT refunds (as discussed further below) impinges on the Tribunal’s jurisdiction. On September 1, 2023, the Company submitted its response to the Preliminary Objection that had been filed by Mexico. In addition, also on September 1, 2023, after receiving the Company’s submissions opposing the Revocation Request, the Tribunal issued its decision dismissing Mexico’s Revocation Request, and reaffirming the PM Decision. The Government of Mexico is therefore obligated to comply with the PM Decision which requires payment of VAT refunds owing to PEM as of January 4, 2023 and into the future until the final award is rendered by the Tribunal. 87 88 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 28. CONTINGENCIES AND OTHER MATTERS (continued) (e) La Parrilla Tax Re-assessments (b) Primero Tax Rulings (continued) International Remedies (continued) i. NAFTA APA Claim (continued) On October 9, 2023, Mexico filed a reply to the Company’s response on the Preliminary Objection. The Company’s rejoinder on the Preliminary Objection was filed on November 6, 2023. The Tribunal rendered its decision dismissing the Preliminary Objection on December 20, 2023. The Tribunal confirmed that the second arbitration regarding the recovery of the VAT refunds (the NAFTA VAT Claim, as defined in the section below) does not breach the waiver under NAFTA (i.e. the same measures are not in dispute). Both the NAFTA APA Claim and the NAFTA VAT Claim may now proceed. As a result, the Tribunal did not need to consider Mexico’s Bifurcation Request, as that became a moot point. Subsequent to the end of the financial year ended December 31, 2023, on February 12, 2024, Mexico filed a request (the “Consolidation Request”) with ICSID pursuant to the procedure in Article 1126 of NAFTA to consolidate the NAFTA APA Claim and the NAFTA VAT Claim (as defined below), and has requested a stay in both of these arbitration proceedings until a new tribunal has been constituted to decide on the Consolidation Request. We expect that a separate tribunal to consider the Consolidation Request will be constituted within 60 days of the date of the Consolidation request, and once constituted, it will take 4-6 months for the tribunal to decide on whether to approve the Consolidation Request. During this period, both the NAFTA APA Claim and the NAFTA VAT Claim will be stayed. If the SAT’s attempts to retroactively nullify the APA are successful, the SAT can be expected to enforce any Reassessments for 2010 through 2014 against PEM in respect of its sales of silver pursuant to the Old Stream Agreement. Such an outcome would likely have a material adverse effect on the Company’s results of operations, financial condition and cash flows. Should the Company ultimately be required to pay tax on its silver revenues based on spot market prices without any mitigating adjustments, the incremental income tax for the years 2010-2019 would be approximately $314.2 million (5,307 million MXN), before taking into consideration interest or penalties. Based on the Company’s consultation with third party advisors, the Company believes PEM filed its tax returns in compliance with applicable Mexican law and that the APA is valid, therefore, at this time, no liability has been recognized in the financial statements with respect to this matter. To the extent it is ultimately determined that the pricing for silver sales under the Old Stream Agreement is significantly different from the PEM Realized Price, and while PEM would have rights of appeal in connection with any reassessments, it is likely to have a materially adverse effect on the Company’s business, financial position and results of operations. ii. NAFTA VAT Claim On March 31, 2023, the Company filed a new Notice of Intent on its own behalf and on behalf of PEM under the “legacy investment” claim provisions contained in Annex 14-C of the Canada-United States-Mexico Agreement (“CUSMA”) and Chapter 11 of NAFTA to invite the Government of Mexico to engage in discussions to resolve the dispute regarding the ongoing denial of access to PEM’s VAT refunds (“NAFTA VAT Claim”) within the stipulated 90-day consultation period. On June 29, 2023, the Company submitted its Request for Arbitration for the NAFTA VAT Claim to ICSID in order to preserve its legacy claim within NAFTA’s applicable limitation period. The Request for Arbitration was registered by ICSID on July 21, 2023. In light of the Consolidation Request (described above), the NAFTA VAT Claim will be stayed until the separate tribunal that will be constituted in respect of the Consolidation Request has rendered its decision as to whether or not the request should be approved. Accordingly, the tribunal for the NAFTA VAT Claim will not be constituted until a decision has been made regarding the Consolidation Request. While the Company remains confident in its position with regards to its two NAFTA claims, it continues to engage with the Government of Mexico in consultation discussions so as to amicably resolve these disputes. (c) La Encantada Tax Re-assessments In December 2019, as part of the ongoing annual audits of the tax returns of Minera La Encantada S.A. de C.V. (“MLE”) and Corporacion First Majestic S.A. de C.V. (“CFM”), the SAT issued tax assessments for fiscal 2012 and 2013 for corporate income tax in the amount of $14.2 million (239 million MXN) and $45.0 million (761 million MXN) including interest, inflation and penalties, respectively. In December 2022, the SAT issued tax assessments to MLE for fiscal years 2014 and 2015 for corporate income tax in the amount of $19.1 million (322 million MXN) and $239.8 million (4,051 million MXN). In 2023, the SAT issued a tax assessment to MLE for the fiscal year 2016 for corporate income tax in the amount of $3.5 million (59 million MXN). The major items relate to forward silver purchase agreement and denial of the deductibility of mine development costs and service fees. The Company continues to defend the validity of the forward silver purchase agreement and will vigorously dispute the assessments that have been issued. The Company, based on advice from legal and financial advisors, believes MLE’s tax filings were appropriate and its tax filing position is correct, therefore no liability has been recognized in the financial statements. (d) San Martin Tax Re-assessments In 2023, as part of the ongoing annual audits of the tax returns of Minera El Pilon S.A. de C.V. (“MEP”), the SAT issued tax assessments for fiscal 2014, 2015 and 2016 for corporate income tax in the total amount of $28.5 million (482 million MXN) including interest, inflation and penalties. The major items relate to forward silver purchase agreement and denial of the deductibility of mine development costs. The Company continues to defend the validity of the forward silver purchase agreement and will vigorously dispute the assessments that have been issued. The Company, based on advice from legal and financial advisors, believes MEP’s tax filings were appropriate and its tax filing position is correct, therefore no liability has been recognized in the financial statements. In 2023, as part of the ongoing annual audits of the tax returns of First Majestic Plata S.A. de C.V. (“FMP”), the SAT issued tax assessment for fiscal 2014 and 2016 for corporate income tax in the total amount of $29.9 million (506 million MXN) including interest, inflation and penalties. The major items relate to forward silver purchase agreement and denial of the deductibility of mine development costs. The Company continues to defend the validity of the forward silver purchase agreement and will vigorously dispute the assessments that have been issued. The Company, based on advice from legal and financial advisors, believes FMP’s tax filings were appropriate and its tax filing position is correct, therefore no liability has been recognized in the financial statements. (f) Del Toro Tax Re-assessments In 2023, as part of the ongoing annual audits of the tax returns of First Majestic Del Toro S.A. de C.V. (“FMDT”), the SAT issued tax assessment for fiscal 2015 and 2016 for corporate income tax in the total amount of $28.6 million (483 million MXN) including interest, inflation and penalties. The major items relate to and denial of the deductibility of mine development costs, refining costs, and other expenses. The Company continues to defend the validity of the expenses and will vigorously dispute the assessments that have been issued. The Company, based on advice from legal and financial advisors, believes FMDT’s tax filings were appropriate and its tax filing position is correct, therefore no liability has been recognized in the financial statements. (g) CFM Tax Re-assessments In 2023, as part of the ongoing annual audits of the tax returns of CFM the SAT issued tax assessment for fiscal 2016 for corporate income tax in the total amount of $85.8 million (1,449 million MXN) including interest, inflation and penalties. The major item relates to planning that took place post-acquisition of Santa Elena (via the acquisition of SilverCrest Mines Inc. on October 1, 2015) at the Canadian level. Mexico contends a right to tax a disposition of the shares of SilverCrest Mines Inc. by First Majestic Silver Corp. although the transaction in question involved the disposition of the shares of one Canadian company by another Canadian company and was reported for tax purposes in Canada. The Company continues to defend the validity of the transaction in question and will vigorously dispute the assessments that have been issued. The Company, based on advice from legal and financial advisors, believes CFM’s tax filings were appropriate and its tax filing position is correct, therefore no liability has been recognized in the financial statements. (h) First Silver Litigation In April 2013, the Company received a positive judgment on the First Silver litigation from the Supreme Court of British Columbia (the “Court”), which awarded the sum of $93.8 million in favour of First Majestic against Hector Davila Santos (the “Defendant”) in connection with a dispute between the Company and the Defendant and his private company involving a mine in México (the “Bolaños Mine”) as set out further below. The Company received a sum of $14.1 million in June 2013 as partial payment of the judgment, leaving an unpaid amount of approximately $64.3 million (CAD$81.5 million). As part of the ruling, the Court granted orders restricting any transfer or encumbrance of the Bolaños Mine by the Defendant and limiting mining at the Bolaños Mine. The orders also require the Defendant to preserve net cash flow from the Bolaños Mine in a holding account and periodically provide to the Company certain information regarding the Bolaños Mine. After many years of domestic Mexican litigation, the enforceability of the British Columbia judgment was finally recognized by the Mexican Supreme Court in a written judgment on November 11, 2022. The Company has commenced collection actions in Mexico against the Defendant’s assets and continues to seek recovery of the balance against one of the Defendant’s assets located in the United States. Nonetheless, there can be no guarantee that the remainder of the judgment amount will be collected. Therefore, as at December 31, 2023, the Company has not accrued any of the remaining $64.3 million (CAD$81.5 million) unrecovered judgment in favour of the Company. 29. SUBSIDIARIES The consolidated financial statements of the Company include the following significant subsidiaries as at December 31, 2023 and 2022 as follows: Name of subsidiary Operations and Projects First Majestic Silver Corp. Parent company and bullion sales Corporación First Majestic, S.A. de C.V. Primero Empresa Minera, S.A de C.V. Nusantara de Mexico, S.A. de C.V. Minera La Encantada, S.A. de C.V. First Majestic Plata, S.A. de C.V.(1) Minera El Pilón, S.A. de C.V. First Majestic Del Toro, S.A. de C.V. La Guitarra Compañia Minera, S.A. de C.V.(1) Majestic Services, S.A. de C.V. Jerritt Canyon Canada Ltd. Jerritt Canyon Gold LLC First Mint LLC FM Metal Trading (Barbados) Inc. FMS Trading AG Holding company San Dimas Silver/Gold Mine Santa Elena Silver/Gold Mine La Encantada Silver Mine La Parrilla Silver Mine San Martin Silver Mine Del Toro Silver Mine La Guitarra Silver Mine Service company Holding company Jerritt Canyon Gold Mine Minting company Metals trading company Metals trading company Location Canada Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Canada United States United States Barbados Switzerland 2023 % Ownership 2022 % Ownership 100% 100% 100% 100% 100% 100% 100% 100% 0% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% 100% 100% (1) La Guitarra and La Parrilla were classified as assets held-for-sale up to the date of disposition on March 29, 2023 and August 14, 2023, respectively. As of December 31, 2023, the assets and liabilities of La Guitarra and assets of La Parrilla have been derecognized (the net carrying value of the disposal group at December 31, 2022 was $56.4 million) (Note 14). The liabilities of La Parrilla still remain at 100% ownership of the Company as the sale was an asset purchase agreement. 89 90 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)30. KEY MANAGEMENT COMPENSATION Salaries, bonuses, fees and benefits Independent members of the Board of Directors Other members of key management(1) Share-based payments Independent members of the Board of Directors Other members of key management 20 Y E A R S . T H E S I LV E R E V O L U T I O N . Year Ended December 31, F I R S T M A J E S T I C S I LV E R C O R P. 2023 $818 7,148 552 4,306 2022 $837 4,983 713 4,059 $12,824 $10,592 Management’s Discussion and Analysis F O R T H E Y E A R A N D Q U A R T E R E N D E D D E C E M B E R 31, 2023 (1) Key management compensation for 2023 is inclusive of one-time severance costs incurred during the year. 31. SUBSEQUENT EVENTS Declaration of Quarterly Dividend On February 21, 2024, the Company’s Board of Directors approved the declaration of its quarterly common share dividend of $0.0048 per share, payable on or after March 28, 2024, to common shareholders of record at the close of business on March 14, 2024. This dividend was declared subsequent to the year-end and has not been recognized as a distribution to owners during the year ended December 31, 2023. 91 2003 - 2023 ANN UAL REPORT 92 NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS)This Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) should be read in conjunction with the audited consolidated financial statements of First Majestic Silver Corp. (“First Majestic” or the “Company”) for the year ended December 31, 2023 which are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). All dollar amounts are expressed in United States (“US”) dollars and tabular amounts are expressed in thousands of US dollars, unless otherwise indicated. Certain amounts shown in this MD&A may not add exactly to total amounts due to rounding differences. This MD&A contains “forward-looking statements” that are subject to risk factors set out in a cautionary note contained at the end of this MD&A. All information contained in this MD&A is current and has been approved by the Board of Directors of the Company as of February 21, 2024 unless otherwise stated. COMPANY OVERVIEW First Majestic is a multinational mining company headquartered in Vancouver, Canada, focused on primary silver and gold production in North America, pursuing the exploration and development of its existing mineral properties and acquiring new assets. The Company owns three producing mines in Mexico consisting of the San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine and the La Encantada Silver Mine. The Company also owns the Jerritt Canyon Gold Mine in Nevada, USA which has been placed on temporary suspension as of March 20, 2023 to focus on exploration, definition, and expansion of the mineral resources and optimization of mine planning and plant operations. In addition, the Company owns two mines currently in care and maintenance in Mexico: the San Martin Silver Mine and the Del Toro Silver Mine, as well as several exploration projects. First Majestic is publicly listed on the New York Stock Exchange (“NYSE”) under the symbol “AG”, on the Toronto Stock Exchange under the symbol “FR” and on the Frankfurt Stock Exchange under the symbol “FMV”. PROJECT NEVADA, USA JERRITT CANYON GOLD MINE IN PRODUCTION MEXICO SANTA ELENA SILVER / GOLD MINE LA ENCANTADA SILVER MINE SAN DIMAS SILVER / GOLD MINE PROJECTS MEXICO DEL TORO SILVER MINE SAN MARTIN SILVER MINE 2023 ANNUAL HIGHLIGHTS Key Performance Metrics Operational Ore Processed / Tonnes Milled Silver Ounces Produced Gold Ounces Produced Silver Equivalent Ounces Produced Cash Costs per Silver Equivalent Ounce (1) All-in Sustaining Cost per Silver Equivalent Ounce (1) Total Production Cost per Tonne (1) Average Realized Silver Price per Ounce (1) Financial (in $millions)1 Revenues Mine Operating Earnings (Loss) Earnings before Income Taxes Net Loss Operating Cash Flows before Working Capital and Taxes Cash and Cash Equivalents Total Assets Total Non-Current Financial Liabilities Working Capital (1) Free Cash Flow (1) Shareholders Loss per Share (“EPS”) - Basic Adjusted EPS (1) NM - Not meaningful 2023 2022 2021 Change ‘23 vs ‘22 2,901,972 3,468,987 3,339,394 10,250,755 10,522,051 12,842,945 198,921 248,394 192,353 26,874,417 31,252,920 26,855,783 $14.49 $20.16 $127.16 $23.29 $573.8 $25.6 ($195.9) ($135.1) $99.2 $125.6 $14.39 $19.74 $124.64 $22.49 $624.2 $16.8 ($61.4) ($114.3) $109.4 $151.4 $13.23 $18.84 $102.77 $25.16 $584.1 $101.4 $25.3 ($4.9) $176.8 $237.9 $1,976.4 $2,110.0 $2,125.0 $498.1 $188.9 ($9.0) ($0.48) ($0.08) $531.3 $202.9 ($64.9) ($0.43) ($0.21) $541.2 $224.4 ($16.9) ($0.02) $0.02 (16%) (3%) (20%) (14%) 1% 2% 2% 4% (8%) 53% NM (18%) (9%) (17%) (6%) (6%) (7%) 86% (10%) 60% (1) These measures do not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate these measures may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. Silver Production (M Oz) Silver Equivalent Production (M Oz) Cash Cost per Eq Ounce ($/Oz) AISC per Eq Ounce ($/Oz) 31.3 12.8 26.9 26.9 10.3 10.5 $14.49 $14.39 $13.23 $20.16 $19.74 $18.84 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 93 94 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Operational Highlights Annual Production Summary Ore Processed / Tonnes Milled Silver Ounces Produced Gold Ounces Produced Silver Equivalent Ounces Produced Cash Costs per Silver Equivalent Ounce(1) All-in Sustaining Cost per Silver Equivalent Ounce(1) Cash Cost per Gold Ounce All-in Sustaining Costs per Gold Ounce Total Production Cost per Tonne(1) (1) See “Non-GAAP Measures” for further details of these measures. San Dimas Santa Elena La Encantada Jerritt Canyon(2) Consolidated 875,345 6,355,308 76,964 12,789,920 $12.51 $16.48 N/A N/A 882,592 1,176,591 100,535 9,571,792 $11.87 $14.83 N/A N/A 966,392 2,718,856 177,643 2,901,972 — 10,250,755 321 21,101 198,921 2,745,622 1,767,083 26,874,417 $20.05 $24.28 N/A N/A $34.17 $38.99 $2,859 $3,262 $14.49 $20.16 N/A N/A $176.84 $115.48 $54.74 $334.39 $127.16 (2) On March 20, 2023, management made the decision to temporarily suspend all mining activities at Jerritt Canyon effective immediately. As of April 24, 2023, all activities at the Jerritt Canyon processing plant were suspended. • Consolidated silver equivalent (“AgEq”) production: Total AgEq production in 2023 reached 26.9 million ounces, aligned to the midpoint of the 2023 revised guidance of between 26.2 to 27.8 million AgEq ounces. The year-over-year decrease in production can be attributable to the temporary suspension of Jerritt Canyon that was announced by the Company on March 20, 2023. • Annual silver production: Silver production for 2023 reached 10.3 million ounces compared to the Company’s revised guidance range of between 10.5 to 11.2 million ounces, primarily due to a lower silver contribution from La Encantada due to the water availability issues which occurred in the second quarter of 2023. • Annual gold production: Gold production for 2023 totalled 198,921 ounces which was aligned with the higher end of the Company’s revised guidance range of between 190,000 to 201,000 ounces. • Santa Elena produced a new annual record of AgEq ounces: Santa Elena produced 9.6 million AgEq ounces in 2023, representing a 5% increase compared to 2022. Mine output and grades from Ermitaño remained strong throughout 2023 and combined with record metallurgical recoveries facilitated by the newly commissioned dual-circuit plant, this enabled Santa Elena to deliver strong production in 2023. • Safety: The 2023 consolidated Total Reportable Incident Frequency Rate (“TRIFR”) was 1.06 and the Lost Time Incident Frequency Rate (LTIFR) was 0.34, an improvement of 16% and 33% compared to the prior year, respectively. • Environmental, Social and Governance: The Company’s Sustainalytics score has improved from 50.56 in 2022 to 31.0 by the end of 2023, putting the Company in the top 38% of its industry peers. • Announced the launch of 100% owned and operated minting facility: First Mint, LLC (“First Mint”), which is currently in the commissioning stage, is expected to expand upon existing bullion sales through vertically integrating production of investment-grade fine silver bullion. This is expected to allow First Majestic to sell a substantially greater portion of its silver production directly to its end customers. • Inventory: The Company held 300,000 silver bullion ounces in finished goods inventory as at December 31, 2023 that has been dedicated to build an initial inventory balance for the Company’s minting facility, First Mint. The fair value of this inventory at December 31, 2023 was $7.1 million. • Move of the ISO 9001:2015 certified Central Lab: Completed the move of the Central Lab from Durango to Santa Elena. • Successfully closed the sales of the La Guitarra Silver Mine and the La Parrilla Silver Mine: The sale of both mines to Sierra Madre Gold & Silver Ltd. (“Sierra Madre”) and Silver Storm Mining Ltd (formerly Golden Tag Resources Ltd.) (“Silver Storm”), respectively, closed by the end of the third quarter. • Cash cost per AgEq ounce: Cash cost per AgEq ounce in the year was $14.49, representing a marginal increase compared to $14.39 per ounce in the previous year. The increase in cash cost per AgEq ounce was primarily due to the strengthening of the Mexican Peso, which averaged 12% higher compared to the prior year and lower AgEq production at La Encantada. This was partially offset by increased AgEq production at Santa Elena. Production at Santa Elena set a new annual record and increased by 5%, compared to the prior year, as a direct result of processing higher grade silver and gold ore from the Ermitaño underground mine combined with record metallurgical recoveries facilitated by the newly commissioned dual-circuit plant. The Company has implemented numerous costs saving initiatives to help offset the strengthening of the Mexican Peso and to combat inflationary impacts primarily in energy, reagents, and other major consumables. This included restructuring and headcount reduction efforts undertaken in 2023 to reduce the impact of rising labor and overall costs. • All-in sustaining cost (“AISC”)1 per AgEq ounce: AISC per AgEq ounce in the year was $20.16, representing a 2% increase compared to $19.74 in the previous year. The increase in AISC per AgEq ounce was primarily attributed to higher cash costs, partially offset by a decrease in sustaining capital expenditures due to the temporary suspension of Jerritt Canyon. Financial Highlights • Cash position and liquidity: The Company ended the year with cash and cash equivalents of $125.6 million compared to $151.4 million at the end of the previous year, while working capital decreased to $188.9 million compared to $202.9 million. Cash and cash equivalents exclude an additional $125.6 million that is held in restricted cash. • Revenue: The Company generated revenues of $573.8 million in 2023, or 8% lower than the previous year. The decrease in revenues was primarily attributed to a 10% decrease in the total number of payable AgEq ounces sold compared to 2022, which was mostly due to the temporary suspension of mining activities at Jerritt Canyon in March of 2023 resulting in lower gold ounces produced for the year. This was partially offset by a 4% increase in payable AgEq ounces produced at Santa Elena and a 4% increase in the average realized silver price per ounce which averaged $23.29 per ounce compared to $22.49 per ounce in 2022. • Mine operating earnings: During the year, the Company recognized mine operating earnings of $25.6 million compared to $16.8 million in 2022. The increase in mine operating earnings was primarily driven by a decrease in operating losses at Jerritt Canyon of $39.3 million compared to 2022, following the temporary suspension of mining activities during the first quarter of 2023. Additionally, operating earnings at Santa Elena increased by $10.6 million, representing a 19% improvement compared to the prior year, attributable to stronger metal recoveries and grades from Ermitaño which allowed the mine to achieve a new annual production record. Cost savings measures implemented by the Company helped offset the strengthening of the Mexican Peso and combat the inflationary impacts relating to energy, reagents and other major consumables. • Net loss: The Company recognized a net loss of $135.1 million (EPS of ($0.48)) in 2023 compared to a net loss of $114.3 million (EPS of ($0.43)) in 2022. The increase in net loss was primarily attributable to an impairment charge of $125.2 million recorded on the Jerritt Canyon mine due to the temporary suspension of mining operations announced March 20, 2023. Additionally, the net loss was also impacted by one-time standby costs of $13.4 million at Jerritt Canyon, a $7.2 million non-cash charge related to the sale of La Parrilla, along with severance and restructuring costs of $6.9 million incurred to optimize the workforce across the Company. This was partially offset by realized mine operating earnings of $25.6 million, compared to $16.8 million in 2022, along with an increase in deferred income tax recoveries of $71.4 million compared to 2022. • Adjusted net loss2: Adjusted net loss, normalized for non-cash or non-recurring items such as impairment, tax settlements, write-down of mineral inventory, share-based payments, write-down on assets held-for-sale, restructuring costs, loss on disposition of assets, unrealized losses on marketable securities and deferred income taxes for the year ended December 31, 2023 was $23.8 million (($0.08) per share), compared to an adjusted loss of $55.4 million (($0.21) per share) in 2022. • Cash flow from operations: During the year, cash flow from operations before changes in working capital and income taxes was $99.2 million compared to $109.4 million in 2022. Corporate Development and Other: • On March 29, 2023, the Company completed the sale of La Guitarra Silver Mine to Sierra Madre Gold & Silver Ltd. and received total consideration of $33.2 million net of transaction costs, before working capital adjustments. Pursuant to the share purchase agreement, the purchase price is increased to the extent the working capital of La Guitarra is greater than zero, and decreased to the extent the working capital is less than zero. Based on the carrying value of the asset at the time of disposal of $34.3 million, and the working capital adjustment of $0.2 million, the Company has recorded a loss on disposition of $1.4 million. • On August 14, 2023, the Company completed the sale of La Parrilla Silver Mine to Silver Storm Mining Ltd. and received total consideration of $13.3 million net of transaction costs. Based on the price of Silver Storm’s common shares at the time of closing the transaction, the Company has recorded a loss on disposition of $1.6 million. In addition, First Majestic participated in Silver Storm’s offering of subscription receipts (the “Subscription Receipts”) and purchased 18,009,000 Subscription Receipts at a price of CAD$0.20 per Subscription Receipt which, in accordance with their terms, have now converted into 18,009,000 Silver Storm common shares and 9,004,500 common share purchase warrants (the “Warrants”). Each Warrant is exercisable for one additional Silver Storm common share until August 14, 2026, at a price of CAD$0.34. 1 This measure does not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate this measure may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. 2 This measure does not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate this measure may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. 95 96 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION2023 FOURTH QUARTER HIGHLIGHTS Key Performance Metrics Operational Ore Processed / Tonnes Milled Silver Ounces Produced Gold Ounces Produced Silver Equivalent Ounces Produced Cash Costs per Silver Equivalent Ounce (1) All-in Sustaining Cost per Silver Equivalent Ounce (1) Total Production Cost per Tonne(1) Average Realized Silver Price per Silver Equivalent Ounce (1) Financial (in $millions) Revenues Mine Operating Earnings (Loss) Net Earnings (Loss) Operating Cash Flows before Non-Cash Working Capital and Taxes Cash and Cash Equivalents Total Assets Total Non-Current Financial Liabilities Working Capital (1) Free Cash Flow (1) Shareholders Earnings (loss) per Share (“EPS”) - Basic Adjusted EPS (1) NM - Not meaningful 2023-Q4 2023-Q3 Change Q4 vs Q3 2022-Q4 Change Q4 vs Q4 652,731 670,203 (3%) 851,564 2,612,416 2,461,868 46,585 46,720 6,640,550 6,285,790 $13.01 $18.50 $122.76 $24.16 $136.9 $17.9 $10.2 $36.3 $125.6 $14.13 $19.74 $125.81 $22.41 $133.2 $13.0 ($27.1) $14.1 $138.3 $1,976.4 $1,952.4 $498.1 $188.9 $3.8 $512.3 $197.8 $6.4 $0.04 ($0.03) ($0.09) ($0.04) 6% 0% 6% (8%) (6%) (2%) 8% 3% 37% 138% 157% (9%) 1% (3%) (4%) (41%) 138% 21% 2,396,696 63,039 7,558,791 $15.36 $20.69 $131.41 $23.24 $148.2 ($13.3) ($16.8) $13.4 $151.4 $2,110.0 $531.3 $202.9 ($32.3) ($0.06) ($0.07) (23%) 9% (26%) (12%) (15%) (11%) (7%) 4% (8%) NM 161% 171% (17%) (6%) (6%) (7%) 112% 157% 54% (1) These measures do not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate these measures may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. Fourth Quarter Production Summary Ore Processed / Tonnes Milled Silver Ounces Produced Gold Ounces Produced Silver Equivalent Ounces Produced Cash Costs per Silver Equivalent Ounce All-in Sustaining Cost per Silver Equivalent Ounce Total Production Cost per Tonne San Dimas Santa Elena La Encantada Jerritt Canyon (1) Consolidated 215,232 1,513,791 18,468 233,601 582,484 28,056 3,110,677 3,008,449 $13.21 $17.80 $183.61 $10.42 $12.82 $117.36 203,898 516,141 61 521,424 $26.19 $34.14 $64.70 — — — — $— $— $— 652,731 2,612,416 46,585 6,640,550 $13.01 $18.50 $122.76 (1) Jerritt Canyon did not have production in the fourth quarter. Refer to Jerritt Canyon operational highlights for further details. Fourth Quarter Operational Highlights • Total AgEq production increased by 6% quarter-over-quarter: Total production reached 6.6 million AgEq ounces in the quarter, representing a 6% increase when compared to 6.3 million AgEq ounces produced in the previous quarter. The higher production is related to record quarterly production at Santa Elena of 3.0 million AgEq ounces, partially offset by lower silver production at La Encantada due to ongoing limited water availability. • Record production at Santa Elena: Santa Elena achieved a new quarterly production record in the fourth quarter. Strong metal recoveries and grades from Ermitaño enabled Santa Elena to produce 3.0 million AgEq ounces in the fourth quarter, representing a 13% increase when compared to 2.7 million AgEq ounces in the prior quarter. • Cash Cost per AgEq Ounce: Cash cost per AgEq ounce for the quarter was $13.01 per ounce, representing an 8% improvement from $14.13 per ounce in the previous quarter. The improvement in cash costs per ounce was primarily attributable to an increase in AgEq production at Santa Elena. Production at Santa Elena increased by 13%, compared to the prior quarter, as a direct result of processing higher grade silver and gold ore from the Ermitaño underground mine as well as record recoveries achieved due to the dual-circuit plant. Additionally, restructuring and headcount reduction efforts undertaken in the third quarter of 2023 helped to reduce the impact of rising labour costs which improved the cash cost per AgEq ounce during the quarter. • AISC per AgEq Ounce: AISC per AgEq ounce in the fourth quarter was $18.50 per ounce, representing a 6% improvement from $19.74 per ounce in the previous quarter. The improvement in AISC per AgEq ounce was primarily attributable to the lower cash costs. • 16 Active Drill Rigs: The Company completed a total of 32,881 metres of drilling across its mines in Mexico during the fourth quarter. Throughout the quarter, up to sixteen drill rigs were active consisting of twelve rigs at San Dimas, and four rigs at Santa Elena. Please refer to the Company’s press release dated February 7, 2024, where the Company reported on its 2023 drilling program including some high-grade exploration results at the San Dimas, Santa Elena and the Jerritt Canyon mines. Fourth Quarter Financial Highlights • Revenue: In the fourth quarter, the Company generated revenues of $136.9 million compared to $148.2 million in the fourth quarter of 2022. The decrease in revenues was primarily attributed to an 11% decrease in the total number of payable AgEq ounces sold compared to the fourth quarter of 2022 primarily due to the temporary suspension of mining activities at Jerritt Canyon in 2023 and slightly lower production at San Dimas and La Encantada. This was offset by a 29% increase in payable AgEq ounces produced at Santa Elena. Additionally, there was a 4% increase in the average realized silver price, which was $24.16 per ounce during the quarter, compared to $23.24 per ounce in the fourth quarter of 2022. • Mine Operating Earnings: The Company realized mine operating earnings of $17.9 million compared to a mine operating loss of $13.3 million in the fourth quarter of 2022. The increase in mine operating earnings was primarily attributed to a decrease in operating loss of $22.6 million at Jerritt Canyon compared to the fourth quarter of 2022. Additionally, operating earnings at Santa Elena increased by $13.6 million compared to the fourth quarter of 2022, attributable to stronger metal recoveries and grades from Ermitaño which allowed the mine to achieve a new quarterly production record. • Cash flow from operations: Operating cash flow before changes in working capital and taxes in the quarter was $36.3 million compared to $13.4 million in the fourth quarter of 2022. This was primarily driven by a $31.2 million increase in mine operating earnings compared to the fourth quarter of 2022, resulting from strong performance at Santa Elena which generated a $13.6 million increase in mine operating earnings compared to the same quarter of 2022. Additionally, there was a $22.6 million decrease in operating losses at Jerritt Canyon compared to the fourth quarter of 2022 following management’s decision to temporarily suspend mining activities during the first quarter of 2023. • Net earnings: Net earnings for the quarter was $10.2 million (EPS of $0.04) compared to a net loss of $16.8 million (EPS of ($0.06)) in the fourth quarter of 2022. The increase in net earnings was primarily attributed to realized mine operating earnings of $17.9 million, which represented a $31.2 million increase compared to a loss of $13.3 million in the fourth quarter of 2022. This was partially offset by increased mine holding costs primarily related to the temporary suspension of Jerritt Canyon. • Adjusted net loss3: Adjusted net loss for the quarter, normalized for non-cash or non-recurring items such as share-based payments, write-downs on mineral inventory, restructuring costs, unrealized losses on marketable securities, and deferred income tax for the quarter ended December 31, 2023, was $8.3 million (Adjusted EPS of ($0.03)) compared to an adjusted net loss of $17.4 million (Adjusted EPS of ($0.07)) in the fourth quarter of 2022. 2024 PRODUCTION OUTLOOK AND COST GUIDANCE UPDATE This section provides management’s revised production outlook and cost guidance for 2024. These are forward-looking estimates and are subject to the cautionary note regarding the risks associated with relying on forward-looking statements at the end of this MD&A. Actual results may vary based on production throughputs, grades, recoveries and changes in economic circumstances. The Company expects to achieve total production in 2024 from its three operating mines in Mexico of between 21.1 to 23.5 million AgEq ounces consisting of 8.6 to 9.6 million ounces of silver and 150,000 to 167,000 ounces of gold. The decrease in forecasted gold production compared to 2023 is primarily due to the temporary suspension of the Jerritt Canyon Gold Mine in Nevada announced in Q1 2023 and lower throughput due to water shortages at La Encantada. A mine-by-mine breakdown of the 2024 production guidance is included in the table below. The Company reports cost guidance to reflect cash costs and AISC on a per AgEq payable ounce. For 2024, the Company is using an 83:1 silver to gold ratio, consistent with its revised 2023 guidance. Metal price and foreign currency assumptions for calculating equivalents are silver: $24.00/oz, gold: $2,000/oz, MXN:USD 18:1. 3 This measure does not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate this measure may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. 97 98 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONGUIDANCE FOR 2024 Operation: San Dimas, Mexico Santa Elena, Mexico La Encantada, Mexico Operations Total: Corporate: Silver Oz (M) Gold Oz (k) Silver Eqv Oz (M) Cash Cost AISC ($ per AgEq oz) ($ per AgEq oz) 5.3 – 5.9 1.1 – 1.2 2.2 – 2.4 8.6 – 9.6 69 – 77 81 – 90 — 11.1 – 12.3 11.89 – 12.57 15.54 – 16.57 7.8 – 8.7 2.2 – 2.4 13.38 – 14.10 16.25 – 17.26 24.03 – 24.51 28.25 – 30.09 150 – 167 21.1 – 23.5 13.69 – 14.46 18.62 – 19.90 ($ per AgEq oz) ($ per AgEq oz) General, Administration & Services — — — — 0.70 — 0.78 Total: Consolidated 8.6 – 9.6 150 – 167 21.1 – 23.5 13.69 – 14.46 19.32 – 20.68 ($ per AgEq oz) ($ per AgEq oz) * Certain amounts shown may not add exactly to the total amount due to rounding differences. * Cash Costs and AISC are non-GAAP measures and are not standardized financial measures under the Company’s financial reporting framework. The Company calculates cash costs and consolidated AISC in the manner set out in the table below. These measures have been calculated on a basis consistent with historical periods. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. La Encantada’s 2024 production guidance has been adjusted lower to reflect a conservative view regarding temporary limited water availability at the mine. We assume in this guidance that water availability will remain an issue for all of 2024. The 2024 budget includes capital consideration to explore for additional water sources in the area. Management is reviewing cost reduction programs at La Encantada to offset the low production impact on cost and remains optimistic that the water flow to the mill will return to historic levels within the year. The Company is projecting its consolidated 2024 AISC to be within a range of $19.32 to $20.68 on a per consolidated payable AgEq ounce basis. Excluding non-cash items, the Company anticipates its 2024 AISC to be within a range of $18.62 to $19.89 per payable AgEq ounce. An itemized AISC cost table is provided below: All-In Sustaining Cost Calculation Total Cash Costs per Payable Equivalent Silver Ounce General and Administrative Costs Sustaining Development Costs Sustaining Property, Plant and Equipment Costs Profit Sharing Lease Payments Share-based Payments (non-cash) Accretion and Reclamation Costs (non-cash) All-In Sustaining Costs (Ag Eq Oz) All-In Sustaining Costs: (Ag Eq Oz excluding non-cash items) FY 2024 ($ per AgEq oz) 13.69 – 14.46 1.55 – 1.72 1.14 – 1.21 0.77 – 0.86 0.82 – 0.91 0.65 – 0.73 0.54 – 0.61 0.16 – 0.18 19.32 – 20.68 18.62 – 19.89 (1) AISC is a non-GAAP measure and is calculated based on the Company’s consolidated operating performance. Other mining companies may calculate AISC differently as a result of differences in underlying accounting principles, the definition of “sustaining costs” and the distinction between sustaining and expansionary capital costs. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. (2) Consolidated AISC includes general and administrative cost estimates and non-cash costs of $2.25 to $2.51 per AgEq ounce. CAPITAL INVESTMENTS IN 2024 In 2024, the Company plans to invest a total of $125.0 million on capital expenditures consisting of $45.0 million for sustaining activities and $80.0 million for expansionary projects. This represents an 11% decrease compared to the 2023 revised capital expenditures and is aligned with the Company’s future growth strategy of increasing exploration and development activities at Santa Elena and San Dimas and increasing exploration at Jerritt Canyon. 2024 Capital Guidance ($millions) Underground Development Exploration Property, Plant and Equipment Corporate Projects Total 99 Sustaining Expansionary $27.0 — 17.6 0.4 $45.0 $39.0 35.1 4.3 1.6 $80.0 Total $66.0 35.1 21.9 2.0 $125.0 The 2024 annual guidance includes total capital investments of $66.0 million for underground development; $21.9 million towards property, plant and equipment; $35.1 million in exploration; and $2.0 million towards corporate innovation projects. Management may revise the guidance during the year to reflect actual and anticipated changes in metal prices or to the business. There can be no assurance that cost estimates related to the Company’s 2024 guidance will prove to be accurate. For further details regarding risks related to the allocation of capital by the Company, see the section in the Annual Information Form (“AIF”) entitled “Risk Factors - Financial Risks - Allocation of Capital - Sustaining and Expansionary Capital”. The Company is planning approximately 188,500 metres of exploration drilling in 2024; this represents a significant increase compared to the 143,465 metres completed in 2023. The 2024 drilling program is expected to consist of: • At San Dimas, approximately 95,000 metres of drilling are planned with infill, step-out and exploratory holes focused on near mine and brownfield targets including major ore controlling structures in the West, Central and Sinaloa blocks. Exploration efforts represent a balanced approach to adding Inferred Resources along known veins, converting Inferred to Indicated Resources and identifying new veins in locations where post mineral cover has deferred work to date. • At Santa Elena, approximately 59,000 metres of drilling are planned. Greenfield and brownfield drilling at Santa Elena will focus on several targets within a 5-kilometre radius around the processing plant where the goal is to find a new mineralized vein. The Company is also planning to return to the Los Hernandez property, to test updated targets and projections of mineralized structures. Resource addition and conversion drilling is also to take place. • At Jerritt Canyon, approximately 25,000 metres of drilling are planned. Exploration work will be focused on drilling open ends of inferred mineralization with large volume potential as well as testing projections of ore controlling structures below outcropping Upper Plate (cover rock) where the presence of large, mineralized volumes is possible and has been poorly tested to date. The Company plans to complete approximately 30,900 metres of underground development in 2024 compared to 34,046 metres completed in 2023. The 2024 development program consists of approximately 17,100 metres at San Dimas, 10,300 metres at Santa Elena and 3,500 metres at La Encantada. At San Dimas, the Company is planning to concentrate development metres in the Perez, Roberta, Regina and Elia Veins. At the Santa Elena district, underground development is expected to focus on Ermitaño. At La Encantada, the Company plans to develop the second levels of both the Ojuelas and Milagros orebodies for 2024 production. 100 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONOVERVIEW OF OPERATING RESULTS Selected Production Results for the Past Eight Quarters 2023 2022 CONSOLIDATED 2023-Q4 2023-Q3 2023-Q2 2023-Q1 2023-YTD 2022-YTD Change Q4 vs Q3 Change ‘23 vs ‘22 Operating Results – Consolidated Operations Q4 Q3(2) Q2(2) Q1(2) Q4 Q3 Q2 Q1 215,232 233,601 203,898 — 213,681 226,292 230,230 — 652,731 670,203 227,065 213,878 260,986 31,240 733,170 219,367 208,821 271,278 146,403 845,868 210,108 207,188 254,766 179,502 851,564 185,126 214,387 255,945 181,056 836,514 197,102 228,487 264,555 213,647 903,791 195,300 201,911 249,906 230,001 877,118 Ore processed/tonnes milled 652,731 670,203 733,170 845,868 2,901,972 3,468,987 (3%) (16%) Production Silver ounces produced Gold ounces produced 2,612,416 2,461,868 2,633,411 2,543,059 10,250,755 10,522,051 46,585 46,720 45,022 60,594 198,921 248,394 Silver equivalent ounces produced 6,640,550 6,285,790 6,320,971 7,627,105 26,874,417 31,252,920 3,110,677 3,010,458 3,372,418 3,296,367 3,054,098 3,776,124 3,046,664 3,080,940 3,008,449 2,669,411 1,788,596 2,105,336 2,302,904 2,733,761 2,241,763 1,868,787 521,424 — 573,458 32,463 806,789 843,951 813,649 788,872 871,365 651,875 353,168 1,381,452 1,388,140 1,467,435 1,546,143 1,620,400 6,640,550 6,285,790 6,320,971 7,627,105 7,558,791 8,766,192 7,705,935 7,222,002 Cost Cash cost per AgEq Ounce(1) All-in sustaining costs per AgEq Ounce(1) $13.01 $18.50 $14.13 $19.74 $15.58 $21.52 $15.16 $20.90 $14.49 $20.16 $14.39 $19.74 Total production cost per tonne(1) $122.76 $125.81 $128.21 $130.71 $127.16 $124.64 6% 0% 6% (8%) (6%) (2%) (14%) 4% (3%) (20%) (14%) 1% 2% 2% (25%) (42%) 1,513,791 1,548,203 1,690,831 1,602,483 1,392,506 1,649,002 1,527,465 1,632,117 582,484 516,141 347,941 565,724 142,037 800,543 104,129 836,448 199,388 804,802 308,070 779,028 384,953 863,510 337,201 644,009 2,612,416 2,461,868 2,633,411 2,543,059 2,396,696 2,736,100 2,775,928 2,613,327 18,468 28,056 — 46,524 $13.21 $10.42 $26.19 $— $13.01 $17.80 $12.82 $34.14 $— $18.50 17,863 28,367 396 46,626 $14.07 $11.72 $25.63 $1,478 $14.13 $17.76 $14.68 $29.86 $1,730 $19.74 20,509 20,073 4,364 44,946 $12.07 $14.45 $16.90 $4,181 $15.58 $15.89 $18.00 $19.83 $4,205 $21.52 20,124 24,039 16,341 60,504 $10.86 $11.93 $15.48 $2,540 $15.16 $14.67 $15.18 $18.64 $3,055 $20.90 20,257 25,830 16,845 62,932 $11.54 $11.20 $15.48 $2,519 $15.36 $16.79 $12.75 $19.39 $2,865 $20.69 23,675 26,989 16,299 66,963 $8.25 $10.37 $15.55 $2,767 $13.34 $10.97 $12.29 $18.61 $3,317 $17.83 18,354 22,309 18,632 59,295 $10.41 $12.34 $14.09 $1,989 $14.12 $14.97 $15.34 $16.65 $2,429 $19.91 18,528 19,556 20,707 58,791 $9.41 $12.96 $16.41 $2,120 $14.94 $12.98 $16.31 $19.63 $2,488 $20.87 $183.61 $117.36 $64.70 $— $193.41 $125.05 $61.35 $— $122.76 $125.81 $173.62 $109.88 $49.91 $577.83 $128.21 $157.39 $108.74 $46.27 $278.57 $130.71 $162.68 $114.29 $47.69 $233.39 $131.41 $161.41 $124.94 $46.29 $245.66 $135.07 $155.09 $109.50 $44.58 $169.16 $114.55 $143.66 $111.36 $41.43 $187.15 $118.51 Underground development (m) Exploration drilling (m) 6,676 32,881 7,722 31,611 8,687 42,285 10,962 36,688 34,046 45,614 143,465 248,123 (1) These measures do not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate these measures may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. Production During the year, the Company produced 26.9 million AgEq ounces, consisting of 10.3 million ounces of silver and 198,921 ounces of gold, representing a decrease of 3% and 20% respectively, compared to the prior year. The decrease in silver production was primarily due to lower silver production at La Encantada resulting from limited water availability during the second half of the year. The decrease in gold production was primarily due to the temporary suspension of mining activities at Jerritt Canyon announced on March 20, 2023. This was partially offset by increased gold production at Santa Elena. Mine output and grades from Ermitaño remained strong throughout 2023 and combined with record metallurgical recoveries facilitated by the newly commissioned dual-circuit plant, this enabled Santa Elena to deliver strong production in 2023. Total production in the fourth quarter of 2023 was 6.6 million AgEq ounces consisting of 2.6 million ounces of silver, and 46,585 ounces of gold representing a 6% increase and a marginal decrease, respectively, when compared to the previous quarter. The higher production is related to record quarterly production at Santa Elena of 3.0 million AgEq ounces, partially offset by lower silver production at La Encantada. Total ore processed amounted to 2.9 million tonnes during the year and 652,731 tonnes during the quarter, representing a 16% and 3% decrease compared to the prior year and quarter, respectively. The lower tonnes for the year was primarily due to temporary suspension of mining activities at Jerritt Canyon. The decrease as compared to the prior quarter was primarily due to lower tonnes processed at La Encantada resulting from limited water availability as disclosed previously, partially offset by increased tonnes processed at Santa Elena. Cash Cost and All-In Sustaining Cost per Ounce Cash cost per AgEq ounce in the year was $14.49, representing a marginal increase compared to $14.39 per ounce in the previous year. The increase in cash cost per AgEq ounce was primarily due to the strengthening of the Mexican Peso, which averaged 12% higher compared to the prior year and lower production at La Encantada due to drought conditions and limited water availability which lowered plant throughput rates beginning mid-year. This was partially offset by increased AgEq production at Santa Elena. Production at Santa Elena set a record and increased by 5%, compared to the prior year, as a direct result of processing higher grade silver and gold ore from the Ermitaño underground mine combined with record metallurgical recoveries facilitated by the newly commissioned dual-circuit plant. The Company has implemented numerous costs saving initiatives to help offset the strengthening of the Mexican Peso and to combat inflationary impacts primarily in energy, reagents, and other major consumables. This included restructuring and headcount reduction efforts undertaken in 2023 to reduce the impact of rising labor and overall costs. Cash cost per AgEq ounce for the quarter was $13.01 per ounce, representing an 8% improvement from $14.13 per ounce in the previous quarter. The improvement in cash costs per ounce was primarily attributable to an increase in AgEq production at Santa Elena. Production at Santa Elena increased by 13%, compared to the prior quarter, as a direct result of processing higher grade silver and gold ore from the Ermitaño underground mine as well as record recoveries achieved due to the dual-circuit plant. Additionally, restructuring and headcount reduction efforts undertaken in the third quarter of 2023 helped to reduce the impact of rising labour costs which improved the cash cost per AgEq ounce during the quarter. PRODUCTION HIGHLIGHTS Ore processed/tonnes milled San Dimas Santa Elena La Encantada Jerritt Canyon Consolidated Silver equivalent ounces produced San Dimas Santa Elena La Encantada Jerritt Canyon Consolidated Silver ounces produced San Dimas Santa Elena La Encantada Consolidated Gold ounces produced San Dimas Santa Elena Jerritt Canyon Consolidated Cash cost per Ounce(1) San Dimas (per AgEq Ounce) Santa Elena (per AgEq Ounce) La Encantada (per AgEq Ounce) Jerritt Canyon (per Au Ounce) Consolidated (per AgEq Ounce) All-in sustaining cost per Ounce(1) San Dimas (per AgEq Ounce) Santa Elena (per AgEq Ounce) La Encantada (per AgEq Ounce) Jerritt Canyon (per Au Ounce) Consolidated (per AgEq Ounce) Production cost per tonne San Dimas Santa Elena La Encantada Jerritt Canyon Consolidated (1) These measures do not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate these measures may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. (2) At Jerritt Canyon, the Company incurred costs related to mining activities for only 79 days during the first quarter. Jerritt Canyon production during the second quarter comprised of processing most of its remaining ore stockpiles and work-in-process (“WIP”) inventory throughout April and May. Jerritt Canyon production during the third quarter comprised of pouring ounces from its in-process inventory. Refer to Jerritt Canyon operational highlights for further details. 101 102 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONAll-in Sustaining Cost per AgEq ounce in the year was $20.16 representing a 2% increase compared to $19.74 per ounce in the previous year. The increase in AISC per AgEq ounce was primarily attributed to higher cash costs, partially offset by a decrease in sustaining capital expenditures due to the temporary suspension of Jerritt Canyon. All-in Sustaining Cost per AgEq ounce in the fourth quarter was $18.50 per ounce, representing a 6% decrease from $19.74 per ounce in the previous quarter. The improvement in AISC per AgEq ounce was primarily attributable to the lower cash costs. Management continues to undertake a series of cost reduction initiatives across the organization aimed at improving efficiencies, lowering production costs, capital spending, care and maintenance holding costs and corporate G&A costs while also increasing production. Current initiatives for 2024 include: • Renegotiating certain contracts and reducing the use of external consultants; • Restructuring to optimize the workforce and reduce labour costs; • Optimizing use of reagent consumption; • Implementing changes in shift line-up and changes to increase productivity at San Dimas; • Utilizing special ore control drilling methods to verify stope positioning, while also increasing rates of mine development to open additional ore stopes at San Dimas; • Optimizing mining sequencing to improve ore extraction at Santa Elena; • Shifting all cemented rock fill operations underground to increase backfill efficiencies and reduce backfill costs at Santa Elena; • Increasing the capacity of the tailing filtration of the new press filters at Santa Elena by adding a higher capacity offtake conveyor system; • Implementing plant optimization methods to lower costs due to the ongoing water shortage at La Encantada; • Adding instrumentation and prioritizing the consumption of water within the La Encantada water delivery system including construction of new water wells; and San Dimas Silver/Gold Mine, Durango, Mexico The San Dimas Silver/Gold Mine is located approximately 130 kilometres northwest of the city of Durango, Durango State, Mexico and consists of 71,868 hectares of mining claims located in the states of Durango and Sinaloa, Mexico. San Dimas is the largest producing underground mine in the state of Durango with over 250 years of operating history. The San Dimas operating plan involves processing ore from several underground mining areas with a 2,500 tonnes per day (“tpd”) capacity milling operation which produces silver/gold doré bars. The mine is accessible via a 40-minute flight from the Durango International Airport to a private airstrip in the town of Tayoltita, or by improved roadway. The Company owns 100% of the San Dimas mine. San Dimas 2023-Q4 2023-Q3 2023-Q2 2023-Q1 2023-YTD 2022-YTD Change Q4 vs Q3 Change ‘23 vs ‘22 Total ore processed/tonnes milled 215,232 213,681 227,065 219,367 875,345 787,636 Average silver grade (g/t) Average gold grade (g/t) Silver recovery (%) Gold recovery (%) Production Silver ounces produced Gold ounces produced 234 2.77 93% 96% 237 2.71 95% 96% 245 2.92 95% 96% 241 2.98 94% 96% 240 2.85 94% 96% 261 3.31 94% 96% 1,513,791 1,548,203 1,690,831 1,602,483 6,355,308 6,201,090 18,468 17,863 20,509 20,124 76,964 80,814 • Lower holding costs at the Company’s suspended operations including the Jerritt Canyon Gold Mine. Silver equivalent ounces produced 3,110,677 3,010,458 3,372,418 3,296,367 12,789,920 12,957,826 Development and Exploration During the year, the Company completed 34,046 metres of underground development and 143,465 metres of exploration drilling, compared to 45,614 metres and 248,123 metres, respectively, in the previous year. During the quarter, the Company completed 6,676 metres of underground development and 32,881 metres of exploration drilling, compared to 7,722 metres and 31,611 metres, respectively, in the previous quarter. Throughout the quarter, up to sixteen drill rigs were active consisting of twelve rigs at San Dimas, and four rigs at Santa Elena. Throughout the quarter, up to sixteen drill rigs were active consisting of twelve rigs at San Dimas, and four rigs at Santa Elena. Exploration activities in Jerritt Canyon consisted of surface mapping and sampling, seismic survey and permitting in support of the planned 2024 exploration program. Exploration activities at La Encantada were temporarily refocused on water source development. Cost Cash cost per AgEq Ounce(1) All-In sustaining costs per AgEq Ounce(1) $13.21 $17.80 $14.07 $17.76 $12.07 $15.89 $10.86 $14.67 $12.51 $16.48 $9.81 $13.76 Total production cost per tonne(1) $183.61 $193.41 $173.62 $157.39 $176.84 $155.76 Underground development (m) Exploration drilling (m) 3,713 24,932 4,369 22,374 4,895 16,588 4,664 14,145 17,641 78,039 20,521 64,791 (15%) 11% (1) These measures do not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate these measures may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. 2023 vs. 2022 In 2023, San Dimas produced 6,355,308 ounces of silver and 76,964 ounces of gold for a total production of 12,789,920 AgEq ounces, a marginal decrease compared to 12,957,826 AgEq ounces in 2022. The mill processed a total of 875,345 tonnes, an 11% increase compared to 787,636 tonnes processed in the previous year. During the year, silver and gold grades averaged 240 g/t and 2.85 g/t, respectively, compared to 261 g/t and 3.31 g/t in the previous year. Silver and gold grades were lower in 2023 compared to 2022 due to the depletion of the Jesica, Regina and Victoria veins as the mine transitioned to narrower veins and blending with lower grade, historical backfill material in 2023. Silver recoveries averaged 94%, while gold recoveries averaged 96%, which were both consistent with 2022. During the year, cash cost per AgEq ounce was $12.51, representing a 28% increase compared to $9.81 per AgEq ounce in 2022. AISC per AgEq ounce in the year was $16.48, representing a 20% increase compared to $13.76 per AgEq ounce in 2022. The increase in cash costs during the year was primarily due to an increase in direct production costs due to a stronger Mexican Peso against the U.S. dollar which averaged 12% higher compared to the previous year and higher energy costs as the Company utilized less power from the on-site hydroelectric plant due to lower-than-expected rainfall in the third quarter. The increase in AISC per AgEq ounce was primarily attributable to the higher cash costs. During the year, the Company incurred restructuring costs associated with San Dimas of $5.8 million as the Company continued to focus on workforce optimization to reduce the impact of rising labor costs. The San Dimas mine is subject to a gold and silver streaming agreement with Wheaton Precious Metals Corp. (“Wheaton” or “WPM”) which entitles WPM to receive 25% of the gold equivalent production (based on a fixed exchange ratio of 70 silver ounces to 1 gold ounce) at San Dimas in exchange for ongoing payments equal to the lesser of $600 (subject to a 1% annual inflation adjustment commencing in May 2019) and the prevailing market price, for each gold ounce delivered. Should the average gold to silver ratio over a six-month period exceed 90:1 or fall below 50:1, the fixed exchange ratio would be increased to 90:1 or decreased to 50:1, respectively. The fixed gold to silver exchange ratio as of December 31, 2023, was 70:1. During the year ended December 31, 2023, the Company delivered 42,172 ounces (2022 - 41,841 ounces) of gold to WPM at $628 per ounce (2022 - $623 per ounce). During the year, a total of 17,641 metres of underground development and 78,039 metres of exploration drilling were completed compared to 20,521 metres and 64,791 metres, respectively, in the prior year. Total exploration costs for the year were $9.5 million compared to $7.6 million in the prior year driven by the increased drilling metres. 103 104 1% (1%) 2% (2%) 0% (2%) 3% 3% (6%) 0% (5%) 11% (8%) (14%) 0% 0% 2% (5%) (1%) 28% 20% 14% (14%) 20% MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION2023 Q4 vs. 2023 Q3 2023 vs. 2022 During the fourth quarter, San Dimas produced 3,110,677 AgEq ounces consisting of 1,513,791 ounces of silver and 18,468 ounces of gold representing a 2% decrease and a 3% increase, respectively, when compared to the prior quarter. The mill processed a total of 215,232 tonnes of ore with average silver and gold grades of 234 g/t and 2.77 g/t, respectively, compared to 213,681 tonnes milled with average silver and gold grades of 237 g/t and 2.71 g/t, respectively, in the previous quarter. Silver and gold recoveries averaged 93% and 96%, respectively, which were in line with the prior quarter. The Central Block and Sinaloa Graben areas contributed approximately 78% and 22%, respectively, of the total production during the quarter. In the fourth quarter, cash cost per AgEq ounce was $13.21, representing a 6% decrease compared to $14.07 per AgEq ounce in the prior quarter. The improvement in cash costs during the quarter was primarily due to the decrease in production costs compared to the prior quarter as a result of the workforce restructuring that took place in the third quarter, along with a 3% increase in AgEq ounces produced. AISC per AgEq ounce for the quarter was $17.80, representing a marginal increase compared to $17.76 per AgEq ounce in the prior quarter. The increase was primarily due to increased worker participation costs along with higher sustaining capital expenditures incurred during the quarter. A total of 3,713 metres of underground development was completed in the fourth quarter, compared to 4,369 metres in the prior quarter. During the fourth quarter, up to twelve drill rigs were active, consisting of ten underground and two on surface completing a total of 24,932 metres of exploration drilling compared to 22,374 metres in the prior quarter. Total exploration costs were $3.1 million compared to $2.8 million in the prior quarter. This increase was a result of increased drilling metres during the quarter. Santa Elena Silver/Gold Mine, Sonora, Mexico The Santa Elena Silver/Gold Mine is located approximately 150 kilometres northeast of the city of Hermosillo, Sonora, Mexico. The operating plan for Santa Elena involves the processing of ore in a 3,000 tpd cyanidation circuit from underground reserves. Santa Elena consists of a central processing plant that can receive ore from two separate underground mining operations, Santa Elena and Ermitaño. The Company owns 100% of the Santa Elena Silver/Gold Mine including mining concessions totaling over 102,244 hectares. Santa Elena 2023-Q4 2023-Q3 2023-Q2 2023-Q1 2023-YTD 2022-YTD Change Q4 vs Q3 Change ‘23 vs ‘22 Total ore processed/tonnes milled 233,601 226,292 213,878 208,821 882,592 851,973 Average silver grade (g/t) Average gold grade (g/t) Silver recovery (%) Gold recovery (%) Production Silver ounces produced Gold ounces produced 106 3.88 73% 96% 75 4.09 64% 95% 39 3.12 52% 94% 31 4.00 50% 90% 64 3.77 64% 94% 61 3.75 73% 92% 582,484 347,941 142,037 104,129 1,176,591 1,229,612 28,056 28,367 20,073 24,039 100,535 94,684 Silver equivalent ounces produced 3,008,449 2,669,411 1,788,596 2,105,336 9,571,792 9,147,215 Cost Cash cost per AgEq Ounce(1) All-In sustaining costs per AgEq Ounce(1) $10.42 $12.82 $11.72 $14.68 $14.45 $18.00 $11.93 $15.18 $11.87 $14.83 $11.59 $13.97 Total production cost per tonne(1) $117.36 $125.05 $109.88 $108.74 $115.48 $114.99 Underground development (m) Exploration drilling (m) 2,224 7,949 2,609 9,237 3,042 16,373 2,623 14,499 10,497 48,058 12,924 42,990 3% 41% (5%) 14% 1% 67% (1%) 13% (11%) (13%) (6%) (15%) (14%) 4% 5% 1% (12%) 2% (4%) 6% 5% 2% 6% 0% (19%) 12% (1) These measures do not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate these measures may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. In 2023, Santa Elena produced 1,176,591 ounces of silver and 100,535 ounces of gold for a total production of 9,571,792 AgEq ounces, a new annual record and a 5% increase compared to 9,147,215 AgEq ounces in 2022. The mill processed a total of 882,592 tonnes of ore, a 4% increase compared to 851,973 tonnes processed in the previous year. Silver and gold grades from Santa Elena averaged 64 g/t and 3.77 g/t, respectively, compared to 61 g/t and 3.75 g/t in the previous year. Silver recoveries decreased from 73% in 2022 to 64% in 2023 due to lower silver grades in the first half of 2023. Gold recoveries increased from 92% to 94% in 2023 and were the result of the robust operational performance of the new 3,000 tpd filter press and dual-circuit plant. The new tailing filter press combined with additional leaching and settling capacity allowed the plant to reduce the grind size, thus liberating more gold and increasing recoveries. During the year, the Company successfully completed the move of the Company’s ISO 9001:2015 certified Central Lab from Durango to Santa Elena. For 2023, cash cost per AgEq ounce was $11.87, representing a 2% increase compared to $11.59 per ounce in 2022. AISC per AgEq ounce was $14.83, representing a 6% increase compared to $13.97 per AgEq ounce in the previous year. The increase in cash costs and AISC was primarily attributed to the negative impact of a stronger Mexican Peso which averaged 12% higher compared to the previous year. This was partially offset by a 5% increase in AgEq ounces produced compared to the previous year. The Santa Elena mine is subject to a gold streaming agreement with Sandstorm Gold Ltd. (“Sandstorm”), which requires the mine to sell 20% of its gold production from the leach pad and a designated area of its underground operations over the life of mine to Sandstorm. The selling price to Sandstorm is currently the lesser of $450 per ounce (subject to a 1% annual inflation increase every April) and the prevailing market price. During the year ended December 31, 2023, the Company delivered 1,094 ounces of gold (2022 - 2,433 ounces) to Sandstorm at an average price of $473 per ounce (2022 - $472 per ounce). During the fourth quarter, no ore was processed from the Santa Elena mine. Orogen Royalties Inc., formerly Evrim Resource Corp., retains a 2% net smelter return (“NSR”) royalty from the sale of mineral products extracted from the Ermitaño mining concessions. In addition, Osisko Gold Royalties Ltd. has a 2% NSR royalty from the sale of mineral products extracted from the Ermitaño mining concessions. For the year ended December 31, 2023, the Company has incurred $8.7 million (December 31, 2022 - $5.8 million) in NSR payments from the production of Ermitaño. During the year, a total of 10,497 metres of underground development and 48,058 metres of exploration drilling were completed compared to 12,924 metres of underground development and 42,990 metres of exploration drilling in the prior year. Total exploration costs for the year were $8.7 million compared to $8.1 million in the prior year driven by the increased drilling metres. 2023 Q4 vs. 2023 Q3 During the fourth quarter, Santa Elena produced a quarterly record of 3,008,449 AgEq ounces consisting of 582,484 ounces of silver and 28,056 ounces of gold representing a 67% increase in silver ounces and a marginal decrease in gold ounces when compared to the prior quarter. The increase in silver equivalent production was primarily driven by higher silver grades and recoveries in the period. The mill processed 233,601 tonnes of ore during the quarter from Ermitaño, another quarterly record, compared to 226,292 tonnes in the previous quarter. Average silver and gold head grades were 106 g/t and 3.88 g/t, compared to 75 g/t and 4.09 g/t in the previous quarter. Silver and gold recoveries from Ermitaño ore reached another record during the quarter averaging 73% and 96%, respectively, compared to 64% and 95%, respectively, in the prior quarter. The record metallurgical recoveries were facilitated by the continuous operational optimization of the new dual-circuit plant. Cash cost per AgEq ounce in the fourth quarter was $10.42, representing an 11% decrease compared to $11.72 per AgEq ounce in the previous quarter. The improvement in cash cost was primarily attributed to a 13% increase in AgEq ounces produced resulting from higher silver grades and recoveries as compared to the prior quarter. AISC per AgEq ounce for the quarter was $12.82, representing a 13% decrease compared to $14.68 per AgEq ounce in the prior quarter. The improvement in AISC was primarily driven by the decrease in cash costs per AgEq ounce. During the quarter, a total of 2,224 metres of underground development was completed at the Ermitaño mine at Santa Elena, compared to 2,609 metres in the previous quarter. Up to four drill rigs consisting of two surface rigs and two underground rigs completed 7,949 metres of exploration drilling in the region compared to 9,237 metres in the prior quarter. Total exploration costs in the fourth quarter were $1.5 million compared to $2.0 million in the previous quarter due to lower exploration metres. 105 106 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONLa Encantada Silver Mine, Coahuila, Mexico 2023 Q4 vs. 2023 Q3 (6%) (2%) (4%) (12%) (22%) (12%) 31% 31% 22% 20% (62%) Ore processed/tonnes milled Average silver grade (g/t) Silver recovery (%) Production Silver ounces produced Gold ounces produced The La Encantada Silver Mine is an underground mine located in the northern México State of Coahuila, 708 kilometres northeast of Torreon. La Encantada has 4,076 hectares of mineral concessions and surface land ownership of 1,343 hectares. La Encantada also has a 4,000 tpd cyanidation plant, a camp with 120 houses as well as administrative offices, laboratory, general store, hospital, airstrip and all the necessary infrastructure required for such an operation. The mine is accessible via a two-hour flight from the Durango International Airport to the mine’s private airstrip, or via an improved road from the closest city, Muzquiz, Coahuila State, which is 225 kilometres away. The Company owns 100% of the La Encantada Silver Mine. La Encantada 2023-Q4 2023-Q3 2023-Q2 2023-Q1 2023-YTD 2022-YTD Change Q4 vs Q3 Change ‘23 vs ‘22 203,898 230,230 260,986 271,278 966,392 1,025,172 (11%) 110 71% 109 70% 127 75% 132 72% 121 73% 123 76% 2% 1% 516,141 565,724 800,543 836,448 2,718,856 3,091,349 61 94 76 89 321 413 Silver equivalent ounces produced 521,424 573,458 806,789 843,951 2,745,622 3,125,761 Cost Cash cost per AgEq Ounce(1) All-In sustaining costs per AgEq Ounce(1) Total production cost per tonne(1) Underground development (m) Exploration drilling (m) $26.19 $34.14 $64.70 739 — $25.63 $29.86 $61.35 744 — $16.90 $19.83 $49.91 750 1,950 $15.48 $18.64 $46.27 834 1,863 $20.05 $24.28 $54.74 3,067 3,812 $15.30 $18.48 $45.01 2,555 10,020 (9%) (35%) (9%) 2% 14% 5% (1%) 0% (1) These measures do not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate these measures may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. 2023 vs. 2022 In 2023, La Encantada produced 2,718,856 ounces of silver and 321 ounces of gold for a total of 2,745,622 AgEq ounces, a decrease of 12% compared to 3,125,761 AgEq ounces in 2022. The mill processed a total of 966,392 tonnes of ore, a 6% decrease compared to 1,025,172 tonnes processed in the previous year. The decrease in production and tonnes milled was primarily due to the impact of limited water supply to the mill, mainly driven by severe drought conditions throughout the year which impacted existing water wells in the area. During the second half of the year, the Company drilled three water exploration holes in an effort to source additional water supply to the mill. The Company has identified several new targets that will be drilled in Q1 and Q2 2024 to seek to identify additional water sources. Refer to 2024 Production Guidance for further discussion. Silver recoveries averaged 73% during the year, compared to 76% in 2022. Silver grades during the year averaged 121 g/t, a decrease of 2% compared to 123 g/t in 2022. During the year, cash cost per AgEq ounce was $20.05, representing a 31% increase compared to $15.30 per AgEq ounce in 2022. AISC per AgEq ounce was $24.28 per ounce in 2023, representing a 31% increase compared to $18.48 per AgEq ounce in 2022. The increase in cash costs per AgEq ounce during the year was primarily due to the 12% decrease in AgEq ounces produced driven by lower production in the second half of the year due to water availability issues. Additionally, there was an increase in direct production costs due to the negative impact of a stronger Mexican Peso which averaged 12% higher compared to the previous year. The increase in AISC per AgEq ounce for the year was due to higher cash costs incurred during the year. Management is reviewing mine plan optimization and cost reduction programs at La Encantada to offset the lower production impact on costs. In December 2022, the Company sold a royalty interest on La Encantada to Metalla Royalty and Streaming Limited (“Metalla”). Under the terms of the agreement, the Company is required to pay a 100% gross value royalty on the first 1,000 ounces of gold produced annually from the La Encantada property. For the year ended December 31, 2023, the Company incurred $0.5 million (December 31, 2022 - $nil) in royalty payments from gold production at La Encantada. A total of 3,067 metres of underground development and 3,812 metres of exploration drilling were completed in 2023 compared to 2,555 metres of underground development and 10,020 metres of exploration drilling in the prior year. Total exploration costs for the year were $1.5 million compared to $2.3 million in the prior year driven by the decrease in drilling metres as exploration drilling at La Encantada was temporarily suspended in the third and fourth quarter as a water conservation measure. During the fourth quarter, La Encantada produced 521,424 AgEq ounces consisting of 516,141 ounces of silver and 61 ounces of gold representing a 9% decrease in silver ounces and a 35% decrease in gold ounces when compared to the prior quarter. The lower production is primarily related to the continued decline in throughput due to reduced water availability, along with lower average silver grades. The mill processed a total of 203,898 tonnes of ore with an average silver grade and recovery during the quarter of 110 g/t and 71%, respectively, compared to 230,230 tonnes, 109 g/t and 70%, respectively, in the previous quarter. Stope production from the new Beca Zone has contributed 48,811 tonnes with average silver grades of 121 g/t, compared to 74,695 tonnes and 146 g/t, respectively in the third quarter. Cash cost per AgEq ounce for the quarter was $26.19, representing a 2% increase compared to $25.63 per AgEq ounce in the prior quarter. The increase is primarily due to the 9% decrease in AgEq ounces produced compared to the prior quarter, resulting from the continued lack of available water and lower ore grades. AISC per AgEq ounce for the quarter was $34.14, representing a 14% increase compared to $29.86 per AgEq ounce in the previous quarter. The increase in AISC per AgEq ounce was primarily due to the increase in cash costs along with additional sustaining capital expenditures related to drilling for additional water sources and improvements to water well infrastructure. A total of 739 metres of underground development was completed in the fourth quarter compared to 744 metres in the prior quarter. Exploration drilling at La Encantada was temporarily suspended in the third and fourth quarter as a water conservation measure. Jerritt Canyon Gold Mine, Nevada, United States The Jerritt Canyon Gold Mine is an underground mining complex located in northern Nevada, United States. Jerritt Canyon was discovered in 1972 and has been in production since 1981 having produced over 9.5 million ounces of gold over its 40-year production history. The operation, which was purchased by the Company on April 30, 2021, has one of only three permitted gold processing plants in Nevada that uses roasting in its treatment of ore. This processing plant has a capacity of 4,000 tpd. On March 20, 2023, the Company temporarily suspended mining activities at Jerritt Canyon to reduce overall costs and refocus mining and exploration plans at the mine. The property consists of a large, underexplored land package consisting of 30,821 hectares (119 square miles). Jerritt Canyon is 100% owned by the Company. Jerritt Canyon 2023-Q4 2023-Q3 2023-Q2 2023-Q1 2023-YTD 2022-YTD Ore processed/tonnes milled Average gold grade (g/t) Gold recovery (%) Production Gold ounces produced Silver equivalent ounces produced Cost Cash cost per Au Ounce(1) All-In sustaining costs per Au Ounce(1) Total production cost per tonne(1) Underground development (m) Exploration drilling (m) — — 0% — — $— $— $— — — — — 0% 31,240 146,403 177,643 804,206 4.90 89% 4.03 86% 4.26 87% 3.42 82% 396 4,364 16,341 21,101 72,483 32,463 353,168 1,381,452 1,767,083 6,022,118 $1,478 $1,730 $4,181 $4,205 $2,540 $3,055 $2,862 $3,265 $2,326 $2,748 $— $577.83 $278.57 $334.39 $205.87 — — — 7,375 2,841 6,181 2,841 9,614 13,556 130,322 Change ‘23 vs ‘22 (78%) 25% 6% (71%) (71%) 23% 19% 62% (70%) (90%) (1) These measures do not have a standardized meaning under the Company’s financial reporting framework and the methods used by the Company to calculate these measures may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 50 to 59 for further details on these measures and a reconciliation of non-GAAP to GAAP measures. 107 108 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION2023 vs. 2022 La Guitarra Silver Mine, Mexico State, Mexico On March 20, 2023, management made the decision to temporarily suspend all mining activities at Jerritt Canyon effective immediately. Since the acquisition of the Jerritt Canyon Gold Mine in Nevada, the Company focused on increasing underground mining rates to sustainably feed the processing plant at a minimum of 3,000 tpd in order to generate free cash flow. Despite these efforts, mining rates remained below this threshold and cash costs per ounce remained higher than anticipated primarily due to ongoing challenges such as contractor inefficiencies, inflationary pressures, lower than expected head grades and extreme weather events affecting northern Nevada. Going forward, the Company plans to focus on exploration, definition, and expansion of the mineral resources and optimization of mine planning and plant operations. As of April 24, 2023, all activities at the Jerritt Canyon processing plant were suspended. In 2023, Jerritt Canyon produced 21,101 ounces of gold, a decrease of 71% compared to 72,483 gold ounces in 2022 following the temporary suspension of all mining activities. The mill processed a total of 177,643 tonnes of ore in 2023 compared to 804,206 in the previous year, with an average gold grade of 4.26 g/t, or an increase of 25% compared to 3.42 g/t in 2022. Gold recoveries averaged 87% during the year, compared to 82% in 2022. During the year, cash cost per Au ounce averaged $2,862 per ounce, a 23% increase compared to $2,326 per ounce in 2022. AISC per Au ounce averaged $3,265 in 2023, a 19% increase compared to $2,748 per ounce in 2022. One-time standby costs of $13.4 million were incurred year-to-date, primarily related to one-time severance and demobilization costs due to the temporary suspension of mining and processing activities. All contractors are now off site with mining and processing activities suspended. The Company expects to continue to advance certain environmental management projects and exploration efforts at Jerritt Canyon following positive drill results highlighting the exploration potential of Jerritt Canyon. A total of 2,841 metres of underground development and 13,556 metres of exploration drilling were completed in 2023 compared to 9,614 metres of underground development and 130,322 metres of exploration drilling in the prior year. Total exploration costs for 2023 were $5.2 million compared to $15.7 million in the prior year. At Jerritt Canyon, approximately 25,000 metres of drilling are planned for 2024. 2023 Q4 vs. 2023 Q3 As of April 24, 2023, all activities at the Jerritt Canyon processing plant were suspended following the Company’s previously announced temporary suspension of mining activities on March 20, 2023. The La Guitarra Silver Mine is located in the Temascaltepec Mining District in the State of Mexico, Mexico, approximately 130 kilometres southwest from México City. The La Guitarra milling and mining operations were placed under care and maintenance in August 2018. On May 24, 2022, the Company announced that it had entered into a share purchase agreement with Sierra Madre Gold and Silver Ltd. (“Sierra Madre”), to sell the Company’s subsidiary La Guitarra Compañia Minera S.A. de C.V. (“La Guitarra”), which owned the La Guitarra Silver Mine, to Sierra Madre for total consideration of approximately $35 million, consisting of 69,063,076 Sierra Madre common shares at a deemed price of $0.51 per share. On June 30, 2022, the sale was considered highly probable; therefore, the assets and liabilities of La Guitarra were classified as assets and liabilities held for sale and presented separately under current assets and current liabilities, respectively. Immediately prior to the classification to assets and liabilities held for sale, the carrying amount of La Guitarra was remeasured to its recoverable amount, being its FVLCD, based on the expected proceeds from the sale. At December 31, 2022, the sale continued to be considered highly probable; therefore the assets and liabilities were presented as assets and liabilities held for sale and presented separately under current assets and current liabilities. During 2022, the Company recorded a reversal of impairment loss related to the La Guitarra assets of $12.3 million based on the recoverable amount implied by the share purchase agreement. On March 29, 2023, the Company completed the sale of La Guitarra to Sierra Madre and received total consideration of $33.2 million net of transaction costs (paid in common shares of Sierra Madre), before working capital adjustments. Based on the carrying value of the asset at the time of disposal of $34.3 million, and the working capital adjustment of $0.2 million, the Company has recorded a loss on disposition of $1.4 million. The Company began accounting for the common shares received from Sierra Madre as an equity security at FVTOCI. Del Toro Silver Mine, Zacatecas, Mexico The Del Toro Silver Mine is located 60 kilometres to the southeast of the La Parrilla mine and consists of 3,815 hectares of mining concessions and 219 hectares of surface rights. The Del Toro operation represents the consolidation of three historical silver mines, the Perseverancia, San Juan and Dolores mines, which are approximately one and three kilometres apart, respectively. Del Toro includes a 2,000 tpd flotation circuit and a 2,000 tpd cyanidation circuit. First Majestic owns 100% of the Del Toro Silver Mine. No drilling occurred in the fourth quarter as all underground rigs were demobilized in the third quarter. Exploration activities at Jerritt Canyon consisted of surface mapping and sampling, seismic survey and permitting in support of the planned exploration program for 2024. Surface drilling programs have been deferred to mid-2024 to prioritize drilling targets. At Jerritt Canyon, approximately 25,000 metres of drilling are planned for 2024. Operations at the Del Toro mine have been on care and maintenance since January 2020. San Martin Silver Mine, Jalisco, Mexico La Parrilla Silver Mine, Durango, Mexico The La Parrilla Silver Mine, located approximately 65 kilometres southeast of the city of Durango in Durango State, Mexico, is a complex of underground operations consisting of the Rosarios, La Blanca and San Marcos mines which are inter-connected through underground workings, and the Vacas and Quebradillas mines which are connected via above-ground gravel roads. La Parrilla includes a 2,000 tpd sequential processing plant consisting of a 1,000 tpd cyanidation circuit and a 1,000 tpd flotation circuit, metallurgical pilot plant, buildings, offices and associated infrastructure. Operations at the La Parrilla mine were placed on care and maintenance in September 2019. On December 7, 2022, the Company announced that it had entered into an asset purchase agreement with Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.) (“Silver Storm”) to sell the La Parrilla Silver Mine for total consideration of up to $33.5 million, consisting of 143,673,684 common shares of Silver Storm at a deemed price of $0.16 per share, having an aggregate value as of the date of the sale agreement of $20 million, and up to $13.5 million in contingent consideration, in the form of three milestone payments payable in either cash or Silver Storm shares, out of which $2.7 million is payable no later than 18 months following the closing date. The San Martin Silver Mine is an underground mine located near the town of San Martin de Bolaños in the Bolaños river valley, in the northern portion of the State of Jalisco, México. San Martin has 33 contiguous mining concessions in the San Martin de Bolaños mining district covering mineral rights for 12,795 hectares, plus an application of a new mining concession covering 24,723 hectares to be granted. In addition, the mine includes 160 hectares of surface land where the processing plant, camp, office facilities, maintenance shops, and tailings dams are located, and an additional 640 hectares of surface rights. The 1,300 tpd mill and processing plant consists of crushing, grinding and conventional cyanidation by agitation in tanks and a Merrill-Crowe doré production system. The mine can be accessed via small plane, 150 kilometres from Durango, or 250 kilometres by paved road north of Guadalajara, Jalisco. The San Martin Silver Mine is 100% owned by the Company. In July 2019, the Company suspended all mining and processing activities at the San Martin operation due to growing insecurity in the area. Increasing violence and safety concerns resulted in the Company removing all of its remaining employees from the area in 2021 and the mine and plant have been occupied and are currently under the de facto control of an organized criminal group. Due to this situation, the Company has been unable to carry out proper care and maintenance of the mine and plant and tailings storage facilities and the Company has limited information as to the current state of repair at the mine, including the tailings storage facility. The Company has repeatedly requested all applicable governmental authorities to take action to secure the area but, to date, the Mexican government has failed to take any such action and the Company’s own efforts have been unsuccessful. The Company is continuing its efforts to work with governmental authorities to take action to secure the area, although it is not known when that might, if ever, occur. As of December 31, 2022, the sale was considered highly probable; therefore, the assets of La Parrilla were classified as assets held for sale and presented separately under current assets. Immediately prior to the classification to assets held for sale, the carrying amount of La Parrilla was remeasured to its recoverable amount, being its fair value less costs of disposal (“FVLCD”), based on the $20 million initial payment, and the first milestone payment of $2.7 million. Springpole Silver Stream, Ontario, Canada During the three months ended June 30, 2023, the Company recorded an additional write down on asset held-for-sale related to La Parrilla of $7.2 million, based on the change in value of Silver Storm’s common shares at the end of the reporting period. The recoverable amount of La Parrilla, being its FVLCD, was $14.9 million, net of estimated transaction costs, based on the expected proceeds from the sale. On August 14, 2023, the Company completed the sale of La Parrilla to Silver Storm and received total consideration of $13.3 million net of transaction costs. Based on the price of Silver Storm’s common shares at the time of closing the transaction, the Company has recorded a loss on disposition of $1.6 million. In addition, First Majestic participated in Silver Storm’s offering of subscription receipts (the “Subscription Receipts”) and purchased 18,009,000 Subscription Receipts at a price of CAD$0.20 per Subscription Receipt which, in accordance with their terms, have now converted into 18,009,000 Silver Storm common shares and 9,004,500 common share purchase warrants (the “Warrants”). Each Warrant is exercisable for one additional Silver Storm common share until August 14, 2026, at a price of CAD$0.34. The Company began accounting for the shares received from Silver Storm as an equity security at fair value through other comprehensive income (“FVTOCI”). In July 2020, the Company completed an agreement with First Mining Gold Corp. (“First Mining”) to purchase 50% of the life of mine payable silver produced from the Springpole Gold Project (“Springpole Silver Stream”), a development stage mining project located in Ontario, Canada. First Majestic agreed to pay First Mining consideration of $22.5 million in cash and shares, in three milestone payments, for the right to purchase silver at a price of 33% of the silver spot price per ounce, to a maximum of $7.50 per ounce (subject to annual inflation escalation of 2%, commencing at the start of the third anniversary of production). Commencing with its production of silver, First Mining must deliver 50% of the payable silver which it receives from the offtaker within five business days of the end of each quarter. The transaction consideration paid and payable by First Majestic is summarized as follows: • The first payment of $10.0 million, consisting of $2.5 million in cash and $7.5 million in First Majestic common shares (805,698 common shares), was paid to First Mining on July 2, 2020; • The second payment of $7.5 million, consisting of $3.75 million in cash and $3.75 million in First Majestic common shares (287,300 common shares), was paid on January 21, 2021 upon the completion and public announcement by First Mining of the results of a Pre-Feasibility Study for Springpole; and • The third payment, consisting of $2.5 million in cash and $2.5 million in First Majestic common shares (based on a 20 day volume weighted average price), will be paid upon receipt by First Mining of a Federal or Provincial Environmental Assessment approval for Springpole, which has not yet been received. 109 110 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION In connection with the streaming agreement, First Mining also granted First Majestic 30.0 million common share purchase warrants of First Mining (the “First Mining Warrants”), each of which will entitle the Company to purchase one common share of First Mining at CAD$0.40 over a period of five years. As a result of the distribution by First Mining of shares and warrants of Treasury Metals Inc. that was completed by First Mining on July 15, 2021, pursuant to the adjustment provisions of the First Mining Warrants, the exercise price of these warrants was reduced from $0.40 to $0.37, and the number of these warrants was increased from 30.0 million to 32.1 million. The fair value of the warrants was measured at $5.7 million using the Black-Scholes option pricing model. First Mining has the right to repurchase 50% of the silver stream for $22.5 million at any time prior to the commencement of production at Springpole, and if such a repurchase takes place, the Company will be left with a reduced silver stream of 25% of life of mine payable silver production from Springpole. Springpole is one of Canada’s largest, undeveloped gold projects with permitting underway. In January 2021, First Mining announced results of its Pre-Feasibility Study (“PFS”) which supports a 30,000 tpd open pit mining operation over an 11-year mine life. First Mining announced resources of 24.3 million ounces of silver in the Indicated category and 1.4 million ounces of silver in the Inferred category, plus 4.6 million ounces of gold in the Indicated category and 0.3 million ounces of gold in the Inferred category. A draft Environmental Impact Statement for Springpole was published in June 2022, and the Federal and Provincial Environment Assessment processes for the project are in progress. The Springpole Project also includes large land holdings of 41,913 hectares which are fully encompassed under the silver streaming agreement. Keith Neumeyer, our President & Chief Executive Officer, and Raymond Polman, a director of the Company, are each directors of First Mining and accordingly may be considered to have a conflict of interest with respect to First Mining and the Springpole Silver Stream Agreement. OVERVIEW OF FINANCIAL PERFORMANCE For the years ended December 31, 2023, 2022 and 2021 (in thousands of dollars, except for per share amounts): Annual 2023 Annual 2022 Annual 2021 Variance % ‘23 vs ‘22 1. Revenues in the year ended December 31, 2023 decreased $50.4 million or 8% compared to the previous year, primarily attributed to: • a 10% decrease in the total number of payable AgEq ounces sold compared to the prior year which resulted in a decrease in revenues of $69.0 million. This was primarily due to the temporary suspension of mining activities at Jerritt Canyon in 2023 and lower production at San Dimas and La Encantada. Partially offset by: • a 4% increase in payable AgEq ounces produced at Santa Elena; and • a 4% increase in realized silver price per ounce sold, which averaged $23.29 compared to $22.49 in the prior year. This resulted in an $18.5 million increase in revenue compared to the prior year. 2. Cost of sales in the year decreased $48.2 million or 10% compared to the previous year as a result of the following factors: • a $63.3 million decrease in labour, consumables, energy and maintenance costs during the quarter along with other costs including insurance, lab work, and service costs, primarily due to the temporary suspension of operations at the Jerritt Canyon Mine during the first quarter of 2023. Partially offset by: • a $13.4 million increase in one-time standby costs primarily related to one-time severance and demobilization costs following the temporary suspension of mining activities at Jerritt Canyon; • a $1.8 million increase in environmental duties and royalties due to the increased production at Ermitaño which resulted in increased royalties paid; • a $1.6 million increase due to changes in inventory expense compared to the prior year; • a $1.6 million increase in worker participation costs in Mexico; and • a stronger Mexican Peso against the U.S. dollar, which averaged 12% higher compared to the same period of 2022. 3. Depletion, depreciation and amortization in the year decreased $11.1 million or 8% compared to the prior year primarily as a result of a $30.3 million decrease related to lower depletion at Jerritt Canyon due to the temporary suspension of mining activities. Revenues Mine operating costs Cost of sales Cost of sales - standby costs Depletion, depreciation and amortization $573,801 $624,221 $584,117 (8%) (1) Partially offset by: 410,057 13,438 124,664 548,159 471,687 366,085 — 135,782 607,469 — 116,613 482,698 (13%) (2) 100% (2) (8%) (3) (10%) Mine operating earnings 25,642 16,752 101,419 53% General and administrative Share-based payments Mine holding costs Write down on asset held-for-sale Acquisition costs Restructuring costs Impairment (reversal of impairment) of non-current asset Loss (gain) on sale of mining interest Foreign exchange (gain) loss Operating (loss) earnings Investment and other income (loss) Finance costs Loss before income taxes Current income tax expense Deferred income tax recovery Income tax (recovery) expense Net loss for the year Loss per common share Basic and diluted NM - Not meaningful 111 38,709 13,177 22,088 7,229 — 6,883 125,200 3,024 (11,884) (178,784) 9,149 (26,280) (195,915) 14,005 (74,808) (60,803) 36,372 13,958 11,930 — — — (2,651) (4,301) 637 (39,193) (1,888) (20,323) (61,404) 56,250 (3,378) 52,872 ($135,112) ($114,276) 27,063 12,290 12,056 — 1,973 — — — (1,165) 49,202 (2,948) (21,004) 25,250 49,283 (19,110) 30,173 ($4,923) 6% (4) (6%) 85% (5) 100% (6) 0% 100% (7) NM (8) (170%) (9) NM NM NM (10) 29% (11) NM (75%) NM NM (12) (18%) (13) ($0.48) ($0.43) ($0.02) (10%) (13) • a $19.1 million increase in depletion and depreciation from the Mexican operations primarily due to an increase in throughput at San Dimas and Santa Elena in addition to a higher depletable base. 4. General and administrative expense in the year increased $2.3 million or 6% compared to the prior year, primarily attributed to higher severance costs related to restructuring efforts to optimize the workforce during the year along with higher audit, legal and professional fees related to the Company’s two ongoing NAFTA cases. 5. Mine holding costs increased by $10.2 million compared to the prior year, primarily related to the temporary suspension of Jerritt Canyon and care and maintenance activities at Santa Elena. This was partially offset by lower holding costs due to the sale of La Guitarra and La Parrilla in the first and third quarters of 2023, respectively. 6. Write down on asset held-for-sale increased by $7.2 million compared to the prior year as the Company recorded an additional write down related to La Parrilla based on the change in value of Silver Storm’s shares at the end of the second quarter. 7. 8. 9. Restructuring costs for the year totalled $6.9 million as the Company continued to focus on optimizing its workforce during the third and fourth quarters primarily at San Dimas, as well as the Durango regional office and Santa Elena. Impairment of $125.2 million on the Jerritt Canyon mine due to the temporary suspension of mining operations was recorded during the year. This was compared to 2022 where the Company recorded a reversal of impairment of $12.3 million for La Guitarra, offset by a $9.6 million impairment related to La Parrilla, based on the recoverable amount, being its fair value less cost of disposal. Loss on sale of mining interest for the year increased by $7.3 million compared to the prior year, following the sale of La Guitarra and La Parrilla to Sierra Madre and Silver Storm, respectively. The sale of La Guitarra was completed on March 29, 2023, and the Company received $33.2 million in consideration net of transaction costs, before working capital adjustments, representing the value of the Sierra Madre shares received. Based on the carrying value of the asset at the time of disposal of $34.3 million, and the working capital adjustment of $0.2 million, along with changes in the foreign exchange rate between the time the asset was classified as held-for-sale and the closing date, the Company recorded a loss on disposition of $1.4 million. The sale of La Parrilla was completed on August 14, 2023, and the Company received $13.3 million in consideration net of transaction costs. Based on the carrying value of the asset of $14.9 million, and the price of Silver Storm’s shares at the time of disposal, the Company has recorded a loss on disposition of $1.6 million. This is compared to 2022 in which the Company recorded a gain of $4.3 million on the sale of a portfolio of royalty interests to Metalla, for total consideration of 4,168,056 Metalla shares with a fair value of $21.5 million based on a share price of $5.16 on the date of closing. 10. Investment and other income for the year totalled $9.2 million compared to the prior year’s loss of $1.9 million. The increase in other income is primarily due to an unrealized gain on silver futures of $4.3 million, compared to a loss of $0.4 million in the prior year, interest income of $6.5 million, compared to $2.4 million in the prior year, as well as an unrealized loss on marketable securities of $1.6 million, compared to a loss of $3.9 million in the prior year. 112 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION11. Finance costs for the year increased by $6.0 million compared to the prior year due to an increase in interest expense as a result of higher interest rates on the Company’s revolving credit facility and additional interest from the issuance of surety bonds during the year. Additionally, there was an increase in the accretion expense for decommissioning liabilities of $2.2 million resulting from changes in the asset retirement obligations. 12. During the year ended December 31, 2023, the Company recorded an income tax recovery of $60.8 million, compared to an income tax expense of $52.9 million in 2022. The income tax recovery in 2023 was primarily driven by an impairment on non-current assets during the first quarter of 2023, along with foreign exchange and inflationary adjustments. The income tax expense in 2022 was primarily driven by the one-time payment Corporación First Majestic S.A. de C.V. (“CFM”) made of approximately $21.3 million and surrendering of certain tax loss carry forwards resulting in a non-cash deferred tax expense of $54.0 million in the second quarter of 2022. 13. As a result of the foregoing, net loss for the year ended December 31, 2023 was $135.1 million (EPS of ($0.48)), compared to the net loss of $114.3 million (EPS of ($0.43)) in the prior year. For the quarters ended December 31, 2023 and 2022 (in thousands of dollars, except for per share amounts): Revenues Mine operating costs Cost of sales Depletion, depreciation and amortization Fourth Quarter 2023 Fourth Quarter 2022 Variance % $136,946 $148,189 (8%) (1) 89,395 29,650 119,045 126,148 35,307 161,455 (29%) (2) (16%) (3) (26%) 1. Revenues in the quarter decreased $11.2 million compared to the same quarter of the prior year primarily attributed to: • an 11% decrease in the total number of payable AgEq ounces sold compared to the fourth quarter of 2022 which resulted in a decrease in revenues of $15.7 million. This was primarily due to the temporary suspension of mining activities at Jerritt Canyon in 2023 and slightly lower production at San Dimas and La Encantada. Partially offset by: • a 29% increase in payable AgEq ounces produced at Santa Elena; and • a 4% increase in the average realized silver price, which was $24.16 per ounce during the quarter, compared to $23.24 per ounce in the fourth quarter of 2022. This resulted in a $4.6 million increase in revenue compared to the same quarter of the prior year. 2. Cost of sales in the quarter decreased $36.8 million compared to the same quarter of the prior year primarily due to: • a $34.4 million decrease in labour, consumables, energy, other costs including insurance, lab work, and maintenance costs during the quarter primarily due to the temporary suspension of mining activities at Jerritt Canyon during the first quarter of 2023; • a $3.0 million decrease in change in inventory expense compared to the same quarter of 2022; and • a $2.7 million decease in worker participation costs in Mexico. Partially offset by: • a $1.1 million increase in environmental duties and royalties due to the increased production at Ermitaño which resulted in increased royalties paid; • an inventory write-down of $0.7 million at La Encantada related to higher costs due to lower grades, recoveries and throughput; and • a stronger Mexican Peso against the U.S. dollar, which averaged 11% higher compared to the same period of 2022. 3. Depletion, depreciation and amortization in the quarter decreased $5.7 million compared to the same quarter of the previous year, primarily as a result of: • a decrease of $10.3 million related to lower depletion at Jerritt Canyon following the temporary suspension in the first quarter of 2023. Mine operating earnings (loss) 17,901 (13,266) NM Partially offset by: General and administrative expenses Share-based payments Mine holding costs Restructuring costs Impairment of non-current assets Gain on sale of mining interest Foreign exchange gain Operating earnings (loss) Investment and other income (loss) Finance costs Loss before income taxes Current income tax expense Deferred income tax recovery Income tax recovery Net earnings (loss) for the period 8,149 2,466 7,338 455 — — (2,931) 2,424 1,005 (6,592) (3,163) 8,770 (22,164) (13,394) $10,231 8,165 2,845 2,645 — 4,934 (4,301) (2,716) (24,838) (962) (5,662) (31,462) 5,038 (19,681) (14,643) ($16,819) 0% (13%) 177% (4) 100% (5) (100%) (6) (100%) (7) 8% 110% NM (8) 16% (9) 90% 74% 13% 9% (10) 161% (11) Earnings (loss) per share (basic and diluted) NM - Not meaningful $0.04 ($0.06) 157% (11) • an increase in depletion of $4.4 million related to the increase in production from Santa Elena and an increase in depletable assets following the reclassification from non-depletable to depletable mineral interest in the first quarter of 2023. 4. Mine holding costs increased by $4.7 million compared to the same quarter of 2022, primarily related to the temporary suspension of Jerritt Canyon. This was partially offset by lower holding costs due to the sale of La Guitarra and La Parrilla in the first and third quarters of 2023, respectively. 5. Restructuring Costs for the quarter totalled $0.5 million as the Company continues to focus on optimizing its workforce at San Dimas. 6. Impairment of non-current assets for the quarter decreased by $4.9 million compared to the same quarter of 2022, primarily due to the announcement of the sale of the La Guitarra and the La Parrilla mines in Mexico in 2022. During the fourth quarter of 2022, the Company recorded a reversal of impairment loss related to the La Guitarra mine of $4.7 million, along with a $9.6 million impairment loss related to La Parrilla, based on the recoverable amount implied by the purchase agreements. The sale of both of these assets were completed in 2023. 7. Gain on sale of mining interest for the quarter decreased by $4.3 million compared to the fourth quarter of the prior year. This was due to the sale of a portfolio of royalty interests to Metalla in the fourth quarter of 2022. The royalty interests were sold for a total consideration of 4,168,056 Metalla shares with a fair value of $21.5 million based on a share price of $5.16 on the date of closing. 8. 9. Investment and other income for the quarter increased by $2.0 million compared to the fourth quarter of the prior year, primarily due to a loss from investment in silver future derivatives of $0.5 million, compared to a loss of $3.6 million in the same quarter of the prior year. This was partially offset by interest income of $1.6 million, compared to $2.2 million in the same quarter of the prior year. Finance costs in the quarter increased by $0.9 million compared to the fourth quarter of the prior year due to an increase in the accretion expense for decommissioning liabilities resulting from changes in the asset retirement obligation. Additionally, there was an increase in interest expense as a result of higher interest rates on the Company’s revolving credit facility along with additional interest from the surety bonds issued during the third quarter of 2023. 10. During the quarter, the Company recorded an income tax recovery of $13.4 million compared to a recovery of $14.6 million in the fourth quarter of 2022. The decrease in income tax recovery was primarily due to an increase in current income tax expense of $3.7 million resulting from higher earnings at its Mexican operations. This was partially offset by an increase in deferred income tax recovery of $2.5 million. 11. As a result of the foregoing, net earnings for the quarter was $10.2 million (EPS of $0.04) compared to a net loss of $16.8 million (EPS of ($0.06)) in the same quarter of the prior year. 113 114 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SUMMARY OF QUARTERLY RESULTS The Company’s cash flows from operating, investing and financing activities during the year ended December 31, 2023 are summarized as follows: The following table presents selected financial information for each of the most recent eight quarters: • Cash generated by operating activities of $55.6 million, primarily due to: • $99.2 million in cash flows from operating activities before movements in working capital and taxes; 2023 2022 net of: Selected Financial Information Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Revenue Cost of sales $136,946 $133,211 $146,692 $156,952 $148,189 $159,751 $159,443 $156,838 $89,395 $92,187 $104,607 $123,868 $126,148 $120,707 $113,619 $111,213 Depletion, depreciation and amortization $29,650 $27,998 $32,587 $34,429 $35,307 $35,707 $34,212 $30,556 Mine operating earnings (loss) $17,901 $13,026 $1,138 ($6,423) ($13,266) $3,337 $11,612 $15,069 Net earnings (loss) after tax $10,231 ($27,149) ($17,534) ($100,660) ($16,819) ($20,692) ($84,050) $7,285 Earnings (loss) per share - basic Earnings (loss) per share - diluted $0.04 $0.04 ($0.09) ($0.09) ($0.06) ($0.06) ($0.37) ($0.37) ($0.06) ($0.06) ($0.08) ($0.08) ($0.32) ($0.32) $0.03 $0.03 During the fourth quarter of 2023, mine operating earnings was $17.9 million compared to earnings of $13.0 million in the previous quarter. The increase in mine operating earnings was primarily due to an increase in operating earnings at Santa Elena of $8.0 million representing a 41% increase compared to the third quarter. The increase in operating earnings at Santa Elena was attributable to stronger metal recoveries and grades from Ermitaño which allowed the mine to achieve a new quarterly production record and increase revenues by 17%. The net earnings for the quarter was $10.2 million compared to a net loss of $27.1 million in the prior quarter. The increase in earnings is primarily attributed to an income tax recovery of $13.4 million, compared to an expense of $3.6 million in the prior quarter. Additionally, there was a decrease in restructuring costs of $6.0 million compared to the prior quarter due to workforce optimization efforts in the third quarter of 2023, and a decrease in general and administrative expenses of $2.3 million. LIQUIDITY, CAPITAL RESOURCES AND CONTRACTUAL OBLIGATIONS Liquidity As at December 31, 2023, the Company had cash and cash equivalents of $125.6 million, comprised primarily of cash held with reputable financial institutions and is invested in cash accounts and in highly liquid short-term investments with maturities of three months or less. With the exception of $1.9 million held in-trust for tax audits in Mexico, the Company’s cash and cash equivalents are not exposed to liquidity risk and there are no restrictions on the ability of the Company to use these funds to meet its obligations. On August 3, 2023, the Company filed and obtained a receipt for a final short form base shelf prospectus in each province of Canada (other than Quebec), and a registration statement on Form F-10 in the United States, which will allow the Company to undertake offerings (including by way of “at-the- market distributions”) under one or more prospectus supplements of various securities listed in the shelf prospectus, up to an aggregate total of $500.0 million, over a 25-month period commencing as of the filing date of the base shelf prospectus. Working capital as at December 31, 2023 was $188.9 million compared to $202.9 million at December 31, 2022. Total available liquidity at December 31, 2023 was $313.6 million, including working capital of $188.9 compared to $277.9 million at December 31, 2022. The Company has $124.6 million of undrawn revolving credit facility compared to $75.0 million at December 31, 2022. The following table summarizes the Company’s cash flow activity during the year: Cash flow Cash generated by operating activities Cash used in investing activities Cash provided by financing activities Decrease in cash and cash equivalents Effect of exchange rate on cash and cash equivalents held in foreign currencies Cash and cash equivalent reclassified as held for sale Change in cash and cash equivalents classified as held for sale Cash and cash equivalents, beginning of the year Cash and cash equivalents, end of year Year Ended December 31, 2023 2022 $55,614 (153,999) 64,649 ($33,736) 2,660 — 5,219 151,438 $125,581 $18,988 (213,797) 113,886 ($80,923) (346) (5,219) — 237,926 $151,438 • $24.7 million in income taxes paid during the period; and • $18.9 million net change in non-cash working capital items during the period, including a $7.8 million increase in value added tax (“VAT”) receivables, a $6.2 million decrease in trade payable, a $3.1 million increase in prepaid expenses, a $1.5 million increase in trade and other receivables, a $0.5 million increase in inventories, a $0.5 million increase in income taxes payable, and a $0.4 million increase in restricted cash. • Cash used in investing activities of $154.0 million, primarily related to: • $114.0 million spent on mine development and exploration activities; • $32.0 million spent on purchase of property, plant and equipment; • $5.4 million disposal of cash that was held for sale as part of the disposition of La Guitarra; • $1.4 million spent on deposits on non-current assets; • $2.5 million spent on purchasing marketable securities; net of: • $1.3 million of proceeds from the disposals of marketable securities. • Cash provided by financing activities of $64.6 million, primarily consists of the following: • $92.1 million of net proceeds from the issuance of shares through the ATM program; • $2.1 million of net proceeds from the exercise of stock options; net of: • $15.2 million for repayment of lease obligations; • $8.5 million payment of financing costs; and • $5.9 million for the payment of dividends during the period. During the year ended December 31, 2023, the Company received $56.5 million (954.0 million MXN) related to value added tax filings (“VAT”). In connection with the tax ruling relating to Primero Empresa Minera, S.A. de C.V. (“PEM”), the Servicio de Administracion Tributaria’s (the “SAT”), the Mexican tax authority, has frozen a PEM bank account which contains approximately $107.2 million as security for certain tax re-assessments that are currently being disputed by PEM, and this amount is reflected in the Company’s restricted cash accounts. This balance consists of VAT refunds that are owed to PEM and that are currently being withheld from PEM due to the freezing of the bank account into which the SAT is depositing these refunds. The Company does not agree with the SAT’s position regarding its tax re-assessments and is challenging the freezing of the bank account, and the failure to provide access to the VAT refunds in such bank account, through various legal actions, both domestically in Mexico and internationally through the NAFTA arbitration process. During the year, the Company received total funds of $28.7 million which was previously classified as restricted cash. These funds related to an interest-bearing account previously held with AIG (the “Commutation Account”). The Commutation Account principal plus interest earned on the principal was used to fund ongoing reclamation and mine closure activities. The Company elected to extinguish all rights under the policy releasing AIG from reclamation cost and financial assurance liabilities by replacing the policy with surety bonds on June 28, 2023. 115 116 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Reconciliation on Use of Proceeds from ATM Programs At-the-Market Distributions (“ATM”) Programs During the year ended December 31, 2023, the Company sold 13,919,634 common shares under the ATM programs at an average price of $6.79 per common share for gross proceeds of $94.5 million, or net proceeds of $92.1 million after costs. The use of proceeds from the amount raised in the current year is reconciled as follows: Gross Proceeds: Use of Proceeds: Exploration Expansionary development Sustaining development Offering expenses Capital Resources $94,524 32,158 35,767 24,167 2,432 $94,524 Credit Risk Credit risk is the risk of financial loss if a customer or counterparty fails to meet its contractual obligations. The Company’s credit risk relates primarily to chartered banks, trade receivables in the ordinary course of business, value added taxes receivable and other receivables. As at December 31, 2023, net VAT receivable was $52.7 million (December 31, 2022 - $44.9 million), of which $27.5 million (December 31, 2022 - $21.6 million) relates to Minera La Encantada S.A. de C.V. (“MLE”) and $29.0 million (December 31, 2022 - $17.7 million) relates to PEM, offset by VAT payable balances. The Company sells and receives payment upon delivery of its silver doré and by-products primarily through three international customers. All of the Company’s customers have good ratings and payments of receivables are scheduled, routine and fully received within 60 days of submission; therefore, the balance of trade receivables owed to the Company in the ordinary course of business is not significant. The carrying amount of financial assets recorded in the consolidated financial statements represents the Company’s maximum exposure to credit risk. With the exception to the above, the Company believes it is not exposed to significant credit risk. Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they arise. The Company manages liquidity risk by monitoring actual and projected cash flows and matching the maturity profile of financial assets and liabilities. Cash flow forecasting is performed regularly to ensure that there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and our holdings of cash and cash equivalents. The Company’s objective when managing capital is to maintain financial flexibility to continue as a going concern while optimizing growth and maximizing returns of investments from shareholders. Indebtedness The Company continually monitors its capital structure and, based on changes in operations and economic conditions, may from time to time adjust the structure by repurchasing shares, issuing new shares, issuing new debt or retiring existing debt. The Company prepares an annual budget and quarterly forecasts to facilitate the management of its capital requirements. The annual budget is approved by the Company’s Board of Directors. As of December 31, 2023, the Company’s total consolidated indebtedness was $352.9 million, $20.4 million of which was secured indebtedness. The Company may be required to use a portion of its cash flow to service principal and interest owing thereunder, which will limit the cash flow available for other business opportunities. The Company may in the future determine to borrow additional funds from lenders. For further details regarding this risk, see the section in the AIF entitled “Risk Factors – Financial Risks – Indebtedness”. The Company is not subject to any externally imposed capital requirements with the exception of complying with banking covenants defined in its debt facilities. As at December 31, 2023 and December 31, 2022, the Company was fully in compliance with these covenants. Currency Risk Contractual Obligations and Commitments As at December 31, 2023, the Company’s contractual obligations and commitments are summarized as follows: Trade and other payables Debt facilities Lease liabilities Other liabilities Purchase obligations and commitments Contractual Cash Flows $94,413 258,264 40,572 5,592 172 Less than 1 year $94,413 3,104 17,465 — 172 2 to 3 years $— 25,088 18,624 394 — 4 to 5 years $— 230,072 3,805 5,198 — $399,013 $115,154 $44,106 $239,075 After 5 years $— — 678 — — $678 At December 31, 2023, the Company had working capital of $188.9 million (December 2022 - $202.9 million) and total available liquidity of $313.6 million (December 2022 - $277.9 million), including $124.6 million (December 2022 - $75.0 million) of undrawn revolving credit facility. The Company believes it has sufficient cash on hand, combined with cash flows from operations, to meet operating requirements as they arise for at least the next 12 months. MANAGEMENT OF RISKS AND UNCERTAINTIES The Company thoroughly examines the various financial instruments and risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, currency risk, commodity price risk, and interest rate risk. Where material, these risks are reviewed and monitored by the Board of Directors. Some of these risks and uncertainties are detailed below. For a comprehensive list of the Company’s risks and uncertainties, see the Company’s most recent AIF under the heading “Risk Factors”. The AIF is available under our SEDAR+ profile at www.sedarplus.ca, and on EDGAR as an exhibit to Form 40-F. The Company is exposed to foreign exchange risk primarily relating to financial instruments that are denominated in Canadian dollars or Mexican pesos, which would impact the Company’s net earnings or loss. To manage foreign exchange risk, the Company may occasionally enter into short-term foreign currency derivatives, such as forwards and options, to hedge its cash flows. The sensitivity of the Company’s net earnings or loss and comprehensive income or loss due to changes in the exchange rates of the Canadian Dollar and the Mexican Peso against the U.S. Dollar is included in the table below: Cash and cash equivalents Restricted cash $11,645 6,380 $— 107,165 $18,025 $107,165 Value added taxes receivable $— 52,737 $52,737 Other financial assets Trade and other payables December 31, 2023 Net assets (liabilities) exposure Effect of +/- 10% change in currency $1,565 — ($4,009) (61,936) $9,201 104,346 $920 10,435 $1,565 ($65,945) $113,547 $11,355 Canadian Dollar Mexican Peso Commodity Price Risk The Company is exposed to commodity price risk on silver and gold, which have a direct and immediate impact on the value of its related financial instruments, non- financial items and net earnings. The Company’s revenues are directly dependent on commodity prices that have shown volatility and are beyond the Company’s control. The Company does not use long-term derivative instruments to hedge its commodity price risk to silver or gold. The following table summarizes the Company’s exposure to commodity price risk and their impact on net earnings: Metals in doré inventory December 31, 2023 Effect of +/- 10% change in metal prices Silver $1,604 $1,604 Gold $523 $523 Total $2,127 $2,127 117 118 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Interest Rate Risk Environmental and Health and Safety Risks The Company is exposed to interest rate risk on its short-term investments, debt facilities and lease liabilities. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. The Company’s interest-bearing financial assets comprise of cash and cash equivalents which bear interest at a mixture of variable and fixed rates for pre-set periods of time. As at December 31, 2023, the Company’s exposure to interest rate risk on interest bearing liabilities is limited to its debt facilities and lease liabilities. Based on the Company’s interest rate exposure at December 31, 2023, a change of 25 basis points increase or decrease of market interest rate does not have a significant impact on net earnings or loss. Political and Country Risk First Majestic currently conducts foreign operations in Mexico and the United States, and as such the Company’s operations are exposed to various levels of political and economic risks by factors outside of the Company’s control. These potential factors include, but are not limited to: royalty and tax increases or claims by governmental bodies, the ongoing hostilities in Ukraine and the Middle East, expropriation or nationalization, foreign exchange controls, high rates of inflation, fluctuations in foreign currency exchange rates, import and export tariffs and regulations, lawlessness, cancellation or renegotiation of contracts and environmental and permitting regulations, illegal mining operations by third parties on the Company’s properties, labour unrest and surface access issues. The Company currently has no political risk insurance coverage against these risks. The Company is unable to determine the impact of these risks on its future financial position or results of operations. Changes, if any, in mining or investment policies or shifts in political attitude in foreign countries may substantively affect the Company’s exploration, development and production activities. Uncertainty in the Estimation of Mineral Resources and Mineral Reserves, and Metal Recoveries There is a degree of uncertainty attributable to the estimation of Mineral Resources and Mineral Reserves (as defined in the Canadian Institute of Mining’s Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines and included by reference in the Canadian Securities Administrators’ National Instrument 43-101). Until Mineral Reserves or Mineral Resources are actually mined, extracted and processed, the quantity of minerals and their grades must be considered estimates only. In addition, the quantity of Mineral Reserves and Mineral Resources may vary depending on, among other things, applicable metal prices, exchange rates assumptions used, underground stability conditions, the ability to maintain constant underground access to all working areas, geological variability, mining methods assumptions used and operating cost escalation. Any material change in the quantity of Mineral Reserves, Mineral Resources, grade or dimensions of the geological structures may affect the economic viability of some or all of the Company’s mineral properties and may have a material adverse effect on the Company’s operational results and financial condition. Mineral Reserves on the Company’s properties have been estimated on the basis of economic factors at the time of calculation, including commodity prices and operating costs; variations in such factors may have an impact on the amount of the Company’s Mineral Reserves. In addition, there can be no assurance that metal recoveries in small scale laboratory tests will be replicated in larger scale tests under on-site conditions or during production, or that the existing known and experienced recoveries will continue. Governmental Regulations, Licenses and Permits On May 8, 2023, the Mexican Government enacted a decree amending several provisions of the Mining Law, the Law on National Waters, the Law on Ecological Equilibrium and Environmental Protection and the General Law for the Prevention and Integral Management of Waste (the “Decree”), which became effective on May 9, 2023. The Decree amends the mining and water laws, including: (i) the duration of the mining concession titles, (ii) the process to obtain new mining concessions (through a public tender), (iii) imposing conditions on water use and availability for the mining concessions, (iv) the elimination of “free land and first applicant” scheme; (iv) new social and environmental requirements in order to obtain and keep mining concessions, (v) the authorization by the Ministry of Economy of any mining concession’s transfer, (vi) new penalties and cancellation of mining concessions grounds due to non-compliance with the applicable laws, (vii) the automatic dismissal of any application for new concessions, and (viii) new financial instruments or collaterals that should be provided to guarantee the preventive, mitigation and compensation plans resulting from the social impact assessments, among other amendments. These amendments are expected to have an impact on our current and future exploration activities and operations in Mexico and the extent of such impact is yet to be determined but could be material for the Company. On June 7, 2023, the Senators of the opposition parties (PRI, PAN and PRD) filed a constitutional action against the Decree, which is pending to be decided by Plenary of the Supreme Court of Justice. Additionally, during the second quarter of 2023, the Company filed amparo lawsuits, challenging the constitutionality of the Decree. Those amparo lawsuits are pending to be decided by the District Courts. For further details regarding risks relating to government regulations, licenses and permits, see the section in the AIF entitled “Risk Factors – Operational Risks – Governmental Regulations, Licenses and Permits”. Public Health Crises Global financial conditions and the global economy in general have, at various times in the past and may in the future, experience extreme volatility in response to economic shocks or other events. Many industries, including the mining industry, are impacted by volatile market conditions in response to the widespread outbreak of epidemics, pandemics, or other health crises. Such public health crises and the responses of governments and private actors can result in disruptions and volatility in economies, financial markets, and global supply chains as well as declining trade and market sentiment and reduced mobility of people, all of which could impact commodity prices, interest rates, credit ratings, credit risk and inflation. Any public health crises could materially and adversely impact the Company’s business, including without limitation, employee health, workforce availability and productivity, limitations on travel, supply chain disruptions, increased insurance premiums, increased costs and reduced efficiencies, the availability of industry experts and personnel, restrictions on the Company’s exploration and drilling programs and/or the timing to process drill and other metallurgical testing and the slowdown or temporary suspension of operations at some or all of the Company’s properties, resulting in reduced production volumes. Any such disruptions could have an adverse effect on the Company’s production, revenue, net income and business. The Company’s activities are subject to extensive laws and regulations governing environmental protection and employee health and safety. Environmental laws and regulations are complex and have tended to become more stringent over time. The Company is required to obtain governmental permits and in some instances air, water quality, waste disposal, hazardous substances and mine reclamation rules and permits. Although the Company makes provisions for environmental compliance and reclamation costs, it cannot be assured that these provisions will be adequate to discharge its future obligations for these costs. Failure to comply with applicable environmental and health and safety laws may result in injunctions, damages, suspension or revocation of permits and imposition of penalties. There can be no assurance that First Majestic has been or will be at all times in complete compliance with such laws, regulations and permits, or that the costs of complying with current and future environmental and health and safety laws and permits will not materially and adversely affect the Company’s business, results of operations or financial condition. On August 26, 2021, the NDEP issued 10 Notices of Alleged Violation (collectively the “NOAV”) that alleged the Company doing business as Jerritt Canyon Gold, LLC had violated various air permit conditions and regulations applicable to operations at the Jerritt Canyon in Elko County, Nevada. The NOAV are related to compliance with emission monitoring, testing, recordkeeping requirements, and emission and throughput limits. The Company filed a Notice of Appeal on September 3, 2021, challenging the NOAV before the Nevada State Environmental Commission (“NSEC”). The Company raised various defenses to the NOAV, including that the Company is not liable for the violations because it was never the owner/operator of Jerritt Canyon during the period the alleged violations began (on April 30, 2021, the Company acquired Jerritt Canyon Canada Ltd, which, through subsidiaries, owns and operates Jerritt Canyon). There is currently no hearing scheduled or any scheduling order in the matter, and the parties have yet to engage in discovery. On March 8, 2022, NDEP issued an additional four Notices of Alleged Violations to Jerritt Canyon Gold, LLC for alleged exceedances and violations of an Air Quality Operating permit and Mercury Operating Permit to Construct. The new NOAVs relate to alleged exceedances of mercury emission limitations, exceedances of operating parameters, installation of equipment, and recordkeeping requirements. The Company filed a Request for Hearing with the Nevada State Environmental Commission on March 18, 2022, that challenged the bases for the alleged NOAVs and any potential penalties associated with the NOAVs. JCG and NDEP agreed to waive the 20-day hearing requirement for the NOAVs and the parties request that the NSEC withhold schedule a hearing for the NOAVs at this time. At this time the estimated amount cannot be reliably determined. The Company intends to, and attempts to, fully comply with all applicable environmental regulations, however the Company’s ability to conduct adequate maintenance and safety protocols may be considerably constrained or even prevented in areas where its control is impacted by criminal activities, such as the San Martin mine. Although the Company has repeatedly requested all applicable governmental authorities to take action to secure the area, to date, the Mexican government has failed to take any such action and the Company’s own efforts have been unsuccessful. Due to this situation, the Company has been unable to conduct care and maintenance activities at San Martin since its remaining employees were withdrawn in 2021 and the Company has limited information as to the current state of repair at the mine, including the tailing storage facility. As a result, there may be an increased risk that an environmental incident may occur at this operation and, as applicable Mexican laws impose strict liability on the property owner, the Company could incur material financial liabilities and suspension of authorizations as a result. While responsible environmental stewardship is a top priority for the Company, there can be no assurance that the Company has been or will be at all times in complete compliance with applicable environmental laws, regulations and permits, or that the costs of complying with current and future environmental laws and permits will not materially and adversely affect the Company’s business, results of operations or financial condition. Natural Protected Areas Risk Pursuant to the General Law of Ecological Equilibrium and Environmental Protection (the “General Law”), the Government of Mexico may, from time to time, establish Natural Protected Areas. There are a variety of different levels of environmental protection provided under the General Law which limit the economic activity that may be undertaken in any particular Natural Protected Area. The Mexican government has announced its intention to create additional Natural Protected Areas in Mexico. Although there are currently no Natural Protected Areas in effect in the vicinity of the Company’s mining operations in Mexico, there can be no assurance that any such area will not be established in the future. In the event that a Natural Protected Area is established over land which is a part of or is nearby to any of the Company’s mineral properties in Mexico, the Company’s activities on such properties may be restricted or prevented entirely which may have a material adverse impact on the Company’s business. Climate Related Risks A number of governments have introduced or are moving to introduce climate change legislation and treaties at the international, national, state/provincial and local levels. Regulation relating to emission levels (such as carbon taxes) and energy efficiency is becoming more stringent. If the current regulatory trend continues, this may result in increased costs at some or all of the Company’s operations. In addition, the physical risks of climate change may also have an adverse effect on the Company’s operations. These risks include the following: • Changes in sea levels could affect ocean transportation and shipping facilities that are used to transport supplies, equipment and workforce and products from the Company’s operations to world markets. • Extreme weather events (such as prolonged drought, flooding or freezing conditions) have the potential to disrupt operations at the Company’s mines and may require the Company to make additional expenditures to mitigate the impact of such events. Extended disruptions to supply lines could result in interruption to production. • The Company’s facilities depend on regular supplies of consumables (diesel, tires, sodium cyanide, etc.) and reagents to operate efficiently. In the event that the effects of climate change or extreme weather events cause prolonged disruption to the delivery of essential commodities, production levels at the Company’s operations may be reduced. There can be no assurance that efforts to mitigate the risks of climate changes will be effective and that the physical risks of climate change will not have an adverse effect on the Company’s operations and profitability. 119 120 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONSubstantial Decommissioning and Reclamation Costs During the year ended December 31, 2023, the Company reassessed its reclamation obligation at each material mine based on updated life of mine (“LOM”) estimates, rehabilitation, and closure plans. The total discounted amount of estimated cash flows required to settle the Company’s estimated obligations is $151.6 million, which has been discounted using a risk-free rate of 9.7% for the mines in Mexico and 4.7% for the Jerritt Canyon Gold Mine. The estimated decommissioning and reclamation obligations breakdown primarily consists of $101.3 million for the reclamation obligation of the Jerritt Canyon Gold Mine, including $17.6 million related to the Environmental Trust that was funded on October 31, 2022; $14.2 million for the San Dimas Silver/Gold Mine; $12.7 million for the Santa Elena Silver/Gold Mine; $11.7 million for the La Encantada Silver Mine; $7.0 million for the San Martin Silver Mine; and $4.1 million for the Del Toro Silver. The present value of the reclamation liabilities may be subject to change based on management’s current and future estimates, changes in the remediation technology or changes to applicable laws and regulations. Such changes will be recorded in our accounts as they occur. The costs of performing the decommissioning and reclamation must be funded by the Company’s operations. These costs can be significant and are subject to change. The Company cannot predict what level of decommissioning and reclamation may be required in the future by regulators. If the Company is required to comply with significant additional regulations or if the actual cost of future decommissioning and reclamation is significantly higher than current estimates, this could have an adverse impact on the Company’s future cash flows, earnings, results of operations and financial condition. Claims and Legal Proceedings Risks The Company continues to defend the APA in domestic legal proceedings in Mexico, and the Company has also requested resolution of the transfer pricing dispute pursuant to the Mutual Agreement Procedure (“MAP”), under the relevant avoidance of double taxation treaties, between the competent tax authorities of Mexico, Canada, Luxembourg and Barbados. The SAT has refused to take the necessary steps under the MAP process contained in the three tax treaties. The Company believes that by its refusal, Mexico is in breach of its international obligations regarding double taxation treaties. Furthermore, the Company continues to believe that the APA remains valid and legally binding on the SAT. The Company continues to pursue all available domestic and international remedies under the laws of Mexico and under the relevant tax treaties. Furthermore, as discussed further below, it has also made claims against Mexico under Chapter 11 of the North American Free Trade Agreement (“NAFTA”) for violation of its international law obligations. Domestic Remedies In September 2020, the Company was served with a decision of the Federal Court seeking to nullify the APA granted to PEM. The Federal Court’s decision directs SAT to re-examine the evidence and basis for the issuance of the APA with retroactive effect, for the following key reasons: (i) SAT’s errors in analyzing PEM’s request for the APA and the evidence provided in support of the request; and (ii) SAT’s failure to request from PEM certain additional information before issuing the APA. The Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of business activities. Each of these matters is subject to various uncertainties and it is possible that some of these other matters may be resolved in a manner that is unfavourable to the Company which may result in a material adverse impact on the Company’s financial performance, cash flow or results of operations. First Majestic carries liability insurance coverage and establishes provisions for matters that are probable and can be reasonably estimated, however there can be no guarantee that the amount of such coverage is sufficient to protect against all potential liabilities. In addition, the Company may in the future be subjected to regulatory investigations or other proceedings and may be involved in disputes with other parties in the future which may result in a significant impact on our financial condition, cash flow and results of operations. The Company filed an appeal of the decision to the Mexican Circuit Courts on November 30, 2020. As two writs of certiorari were filed before the Mexican Supreme Court of Justice, on April 15, 2021, the Plenary of the Supreme Court i) admitted one of those writs, ii) requested the Circuit Court to send the appeal file to them, and iii) assigned such writ to the Second Chamber of the Supreme Court for issuing the corresponding decision. Both writs of certiorari were withdrawn in December 2022. The challenge filed by the Company was returned to the Mexican Circuit Courts and on December 5, 2023, the Second Collegiate Court issued a decision, which was formally notified to the Company on January 4, 2024. In such decision, the Second Collegiate Court partially granted constitutional protection to the Company with respect to certain matters, but not others. Title of Properties The validity of mining or exploration titles or claims or rights, which constitute most of the Company’s property holdings, can be uncertain and may be contested. The Company has used reasonable commercial efforts to investigate the Company’s title or claim to its various properties, however, no assurance can be given that applicable governments will not revoke or significantly alter the conditions of the applicable exploration and mining titles or claims and that such exploration and mining titles or claims will not be challenged or impugned by third parties. Mining laws are continually developing and changes in such laws could materially impact the Company’s rights to its various properties or interests therein. The Company has obtained title insurance for its Jerritt Canyon Mine but there is a risk that such insurance could be insufficient, or the Company could not be successful in any claim against its insurer. Accordingly, the Company may have little or no recourse as a result of any successful challenge to title to any of its properties. The Company’s properties may be subject to prior unregistered liens, agreements or transfers, land claims or undetected title defects which may have a material adverse effect on the Company’s ability to develop or exploit the properties. In Mexico, legal rights applicable to mining concessions are different and separate from legal rights applicable to surface lands; accordingly, title holders of mining concessions must obtain agreement from surface landowners to obtain suitable access to mining concessions and for the amount of compensation in respect of mining activities conducted on such land. If the Company is unable to agree to terms of access with the holder of surface rights with respect to a particular claim, the Company may be able to gain access through a regulatory process in México, however there is no guarantee that such process will be successful or timely or that the terms of such access will be favorable to the Company. In any such event, access to the Company’s properties may be curtailed, which may result in reductions in production and corresponding reductions in revenue. Any such reductions could have a material adverse effect on the Company, its business and its results of operations. Primero Tax Rulings Accordingly, on January 18, 2024, PEM filed an extraordinary appeal to the Mexican Supreme Court of Justice with respect to the Second Collegiate Court’s decision, and PEM is currently waiting for the Supreme Court to admit such appeal. International Remedies i. NAFTA APA Claim The Company submitted a Request for Arbitration dated March 1, 2021 to the International Centre for Settlement of Investment Disputes (“ICSID”), on its own behalf and on behalf of PEM, pursuant to Chapter 11 of NAFTA. On March 31, 2021, the Notice of Registration of the Request for Arbitration was issued by the ICSID Secretariat. Once the NAFTA Arbitration Panel (the “Tribunal”) was fully constituted on August 20, 2021 by the appointment of all three panel members, the NAFTA arbitration proceedings in respect of the APA (the “NAFTA APA Claim”) were deemed to have been fully commenced. The first session of the Tribunal was held by videoconference on September 24, 2021 to decide upon the procedural rules which will govern the NAFTA APA Claim. The Tribunal issued Procedural Order No. 1 on October 21, 2021. Thereafter, on April 26, 2022, the Company submitted its Claimant’s Memorial including expert reports and witness statements to the Tribunal, and in response, Mexico submitted its Counter-Memorial dated November 25, 2022. On January 4, 2023, the Company submitted a Request for Provisional Measures (the “PM Request”) to the Tribunal. Following a reply that was filed by Mexico on February 10, 2023, a hearing regarding the request took place on March 13, 2023. On May 26, 2023, the Tribunal partially granted the provisional measures requested by the Company, issuing an order for the Government of Mexico to permit the withdrawal of the Company’s VAT refunds for the period as of January 4, 2023 that had been deposited by the SAT into a frozen bank account and to deposit all future VAT refunds into an account which shall remain freely accessible by the Company (the “PM Decision”). On June 15, 2023, the Company requested Mexico to comply with the PM Decision, and in response, on June 19, 2023, Mexico filed a Revocation Request against the PM Decision. On July 21, 2023, the Company filed its response to Mexico’s Revocation Request. When Primero, the previous owner of San Dimas acquired the San Dimas Mine in August 2010, it assumed the obligations under a Silver Purchase Agreement (“Old Stream Agreement”) that required its subsidiary PEM to sell exclusively to Wheaton Precious Metals (“WPMI”) up to 6 million ounces silver produced from the San Dimas Mine, and 50% of silver produced thereafter, at the lower of: (i) the spot market price and (ii) $4.014 per ounce plus an annual increase of 1% (“PEM Realized Price”). In May 2018, the Old Stream Agreement was terminated between WPMI and Silver Trading (Barbados) Limited (“STB”) in connection with the Company entering into a new stream agreement with WPMI concurrent with the acquisition of Primero by the Company. On July 28, 2023, the Government of Mexico filed a Preliminary Objection to Jurisdiction (the “Preliminary Objection”) and Request for Bifurcation (the “Bifurcation Request”) in which it has requested that the Tribunal should stay the merits phase of the international arbitration commenced in 2021, and instead proceed to examine on a preliminary basis, under what is commonly called a bifurcated procedure, whether the Company’s commencement of the new NAFTA Chapter 11 proceeding limited to the recovery of PEM’s VAT refunds (as discussed further below) impinges on the Tribunal’s jurisdiction. On September 1, 2023, the Company submitted its response to the Preliminary Objection that had been filed by Mexico. In order to reflect the commercial terms and the effects of the Old Stream Agreement, for Mexican income tax purposes, PEM recognized the revenue on these silver sales based on the PEM Realized Price instead of at spot market prices. To obtain tax and legal assurance that the Mexican tax authority, Servicio de Administración Tributaria (“SAT”) would accept the PEM Realized Price as the transfer price to calculate Mexican income taxes payable by PEM, a mutually binding Advance Pricing Agreement (“APA”) was entered into with the SAT for taxation years 2010 to 2014. On October 4, 2012, the SAT confirmed that based on the terms of the APA, the PEM Realized Price could be used as PEM’s basis for calculating taxes owed for the silver sold under the Old Stream Agreement. In August 2015, the SAT commenced a legal process seeking to retroactively nullify the APA. In 2019, the SAT issued reassessments for the 2010 to 2012 tax years in the total amount of $359.3 million (6,070 million MXN) inclusive of interest, inflation, and penalties. In 2021, the SAT also issued a reassessment against PEM for the 2013 tax year in the total amount of $189.9 million (3,208 million MXN) and in 2023, the SAT issued reassessments for the 2014, 2015, and 2016 tax years in the total amount of $484.2 million (8,179 million MXN) inclusive of interest, inflation, and penalties (collectively, the “Reassessments”). The Company believes that the Reassessments fail to recognize the applicability of a valid transfer pricing methodology. The major items in the Reassessments include determination of revenue based on silver spot market prices, denial of the deductibility of interest expense and service fees, SAT technical error related to double counting of taxes, and interest and penalties. In addition, also on September 1, 2023, after receiving the Company’s submissions opposing the Revocation Request, the Tribunal issued its decision dismissing Mexico’s Revocation Request, and reaffirming the PM Decision. The Government of Mexico is therefore obligated to comply with the PM Decision which requires payment of VAT refunds owing to PEM as of January 4, 2023 and into the future until the final award is rendered by the Tribunal. On October 9, 2023, Mexico filed a reply to the Company’s response on the Preliminary Objection. The Company’s rejoinder on the Preliminary Objection was filed on November 6, 2023. The Tribunal rendered its decision dismissing the Preliminary Objection on December 20, 2023. The Tribunal confirmed that the second arbitration regarding the recovery of the VAT refunds (the NAFTA VAT Claim, as defined in the section below) does not breach the waiver under NAFTA (i.e. the same measures are not in dispute). Both the NAFTA APA Claim and the NAFTA VAT Claim may now proceed. As a result, the Tribunal did not need to consider Mexico’s Bifurcation Request, as that became a moot point. Subsequent to the end of the financial year ended December 31, 2023, on February 12, 2024, Mexico filed a request (the “Consolidation Request”) with ICSID pursuant to the procedure in Article 1126 of NAFTA to consolidate the NAFTA APA Claim and the NAFTA VAT Claim (as defined below), and has requested a stay in both of these arbitration proceedings until a new tribunal has been constituted to decide on the Consolidation Request. We expect that a separate tribunal to consider the Consolidation Request will be constituted within 60 days of the date of the Consolidation request, and once constituted, it will take 4-6 months for the tribunal to decide on whether to approve the Consolidation Request. During this period, both the NAFTA APA Claim and the NAFTA VAT Claim will be stayed. 121 122 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION If the SAT’s attempts to retroactively nullify the APA are successful, the SAT can be expected to enforce any Reassessments for 2010 through 2014 against PEM in respect of its sales of silver pursuant to the Old Stream Agreement. Such an outcome would likely have a material adverse effect on the Company’s results of operations, financial condition and cash flows. Should the Company ultimately be required to pay tax on its silver revenues based on spot market prices without any mitigating adjustments, the incremental income tax for the years 2010-2019 would be approximately $314.2 million (5,307 million MXN), before taking into consideration interest or penalties. Based on the Company’s consultation with third party advisors, the Company believes PEM filed its tax returns in compliance with applicable Mexican law and that the APA is valid, therefore, at this time, no liability has been recognized in the financial statements with respect to this matter. To the extent it is ultimately determined that the pricing for silver sales under the Old Stream Agreement is significantly different from the PEM Realized Price, and while PEM would have rights of appeal in connection with any reassessments, it is likely to have a materially adverse effect on the Company’s business, financial position and results of operations. ii. NAFTA VAT Claim On March 31, 2023, the Company filed a new Notice of Intent on its own behalf and on behalf of PEM under the “legacy investment” claim provisions contained in Annex 14-C of the Canada-United States-Mexico Agreement (“CUSMA”) and Chapter 11 of NAFTA to invite the Government of Mexico to engage in discussions to resolve the dispute regarding the ongoing denial of access to PEM’s VAT refunds (“NAFTA VAT Claim”) within the stipulated 90-day consultation period. On June 29, 2023, the Company submitted its Request for Arbitration for the NAFTA VAT Claim to ICSID in order to preserve its legacy claim within NAFTA’s applicable limitation period. The Request for Arbitration was registered by ICSID on July 21, 2023. In light of the Consolidation Request (described above), the NAFTA VAT Claim will be stayed until the separate tribunal that will be constituted in respect of the Consolidation Request has rendered its decision as to whether or not the request should be approved. Accordingly, the tribunal for the NAFTA VAT Claim will not be constituted until a decision has been made regarding the Consolidation Request. While the Company remains confident in its position with regards to its two NAFTA claims, it continues to engage with the Government of Mexico in consultation discussions so as to amicably resolve these disputes. La Encantada Tax Re-assessments In December 2019, as part of the ongoing annual audits of the tax returns of Minera La Encantada S.A. de C.V. (“MLE”) and Corporacion First Majestic S.A. de C.V. (“CFM”), the SAT issued tax assessments for fiscal 2012 and 2013 for corporate income tax in the amount of $14.2 million (239 million MXN) and $45.0 million (761 million MXN) including interest, inflation and penalties, respectively. In December 2022, the SAT issued tax assessments to MLE for fiscal years 2014 and 2015 for corporate income tax in the amount of $19.1 million (322 million MXN) and $239.8 million (4,051 million MXN). In 2023, the SAT issued a tax assessment to MLE for the fiscal year 2016 for corporate income tax in the amount of $3.5 million (59 million MXN). The major items relate to forward silver purchase agreement and denial of the deductibility of mine development costs and service fees. The Company continues to defend the validity of the forward silver purchase agreement and will vigorously dispute the assessments that have been issued. The Company, based on advice from legal and financial advisors, believes MLE’s tax filings were appropriate and its tax filing position is correct, therefore no liability has been recognized in the financial statements. San Martin Tax Re-assessments In 2023, as part of the ongoing annual audits of the tax returns of Minera El Pilon S.A. de C.V. (“MEP”), the SAT issued tax assessments for fiscal 2014, 2015 and 2016 for corporate income tax in the total amount of $28.5 million (482 million MXN) including interest, inflation and penalties. The major items relate to forward silver purchase agreement and denial of the deductibility of mine development costs. The Company continues to defend the validity of the forward silver purchase agreement and will vigorously dispute the assessments that have been issued. The Company, based on advice from legal and financial advisors, believes MEP’s tax filings were appropriate and its tax filing position is correct, therefore no liability has been recognized in the financial statements. La Parrilla Tax Re-assessments In 2023, as part of the ongoing annual audits of the tax returns of First Majestic Plata S.A. de C.V. (“FMP”), the SAT issued tax assessment for fiscal 2014 and 2016 for corporate income tax in the total amount of $29.9 million (506 million MXN) including interest, inflation and penalties. The major items relate to forward silver purchase agreement and denial of the deductibility of mine development costs. The Company continues to defend the validity of the forward silver purchase agreement and will vigorously dispute the assessments that have been issued. The Company, based on advice from legal and financial advisors, believes FMP’s tax filings were appropriate and its tax filing position is correct, therefore no liability has been recognized in the financial statements. Del Toro Tax Re-assessments In 2023, as part of the ongoing annual audits of the tax returns of First Majestic Del Toro S.A. de C.V. (“FMDT”), the SAT issued tax assessment for fiscal 2015 and 2016 for corporate income tax in the total amount of $28.6 million (483 million MXN) including interest, inflation and penalties. The major items relate to and denial of the deductibility of mine development costs, refining costs, and other expenses. The Company continues to defend the validity of the expenses and will vigorously dispute the assessments that have been issued. The Company, based on advice from legal and financial advisors, believes FMDT’s tax filings were appropriate and its tax filing position is correct, therefore no liability has been recognized in the financial statements. CFM Tax Re-assessments In 2023, as part of the ongoing annual audits of the tax returns of CFM the SAT issued tax assessment for fiscal 2016 for corporate income tax in the total amount of $85.8 million (1,449 million MXN) including interest, inflation and penalties. The major item relates to planning that took place post-acquisition of Santa Elena (via the acquisition of SilverCrest Mines Inc. on October 1, 2015) at the Canadian level. Mexico contends a right to tax a disposition of the shares of SilverCrest Mines Inc. by First Majestic Silver Corp. although the transaction in question involved the disposition of the shares of one Canadian company by another Canadian company and was reported for tax purposes in Canada. The Company continues to defend the validity of the transaction in question and will vigorously dispute the assessments that have been issued. The Company, based on advice from legal and financial advisors, believes CFM’s tax filings were appropriate and its tax filing position is correct, therefore no liability has been recognized in the financial statements. First Silver litigation In April 2013, the Company received a positive judgment on the First Silver litigation from the Supreme Court of British Columbia (the “Court”), which awarded the sum of $93.8 million in favour of First Majestic against Hector Davila Santos (the “Defendant”) in connection with a dispute between the Company and the Defendant and his private company involving a mine in México (the “Bolaños Mine”) as set out further below. The Company received a sum of $14.1 million in June 2013 as partial payment of the judgment, leaving an unpaid amount of approximately $64.3 million (CAD$81.5 million). As part of the ruling, the Court granted orders restricting any transfer or encumbrance of the Bolaños Mine by the Defendant and limiting mining at the Bolaños Mine. The orders also require the Defendant to preserve net cash flow from the Bolaños Mine in a holding account and periodically provide to the Company certain information regarding the Bolaños Mine. After many years of domestic Mexican litigation, the enforceability of the British Columbia judgment was finally recognized by the Mexican Supreme Court in a written judgment on November 11, 2022. The Company has commenced collection actions in Mexico against the Defendant’s assets and continues to seek recovery of the balance against one of the Defendant’s assets located in the United States. Nonetheless, there can be no guarantee that the remainder of the judgment amount will be collected. Therefore, as at December 31, 2023, the Company has not accrued any of the remaining $64.3 million (CAD$81.5 million) unrecovered judgment in favour of the Company. OTHER FINANCIAL INFORMATION Share Repurchase Program The Company has an ongoing share repurchase program to repurchase up to 5,000,000 of the Company’s issued and outstanding shares up to March 31, 2024. The normal course issuer bid will be carried out through the facilities of the Toronto Stock Exchange and alternative Canadian marketplaces. All common shares, if any, purchased pursuant to the share repurchase program will be cancelled. The Company believes that from time to time, the market price of its common shares may not fully reflect the underlying value of the Company’s business and its future business prospects. The Company believes that at such times, the purchase of common shares would be in the best interest of the Company. During the year ended December 31, 2023, the Company repurchased an aggregate of nil common shares (December 2022 - 100,000) at an average price of $nil per share as part of the share repurchase program (December 2022 - $8.52) for total proceeds of $nil (December 2022 - $0.7 million), net of transaction costs. Off-Balance Sheet Arrangements At December 31, 2023, the Company had no material off-balance sheet arrangements such as contingent interest in assets transferred to an entity, derivative instruments obligations or any obligations that generate financing, liquidity, market or credit risk to the Company, other than contingent liabilities and vendor liability and interest, as disclosed in this MD&A and the consolidated financial statements and the related notes. Related Party Disclosures Amounts paid to related parties were incurred in the normal course of business and measured at the exchange amount, which is the amount agreed upon by the transacting parties and on terms and conditions similar to non-related parties. In July 2020, the Company entered into a streaming agreement with First Mining to purchase 50% of the payable silver produced over the life of the Springpole Gold Project for total consideration of $22.5 million in cash and shares, over three payments. Keith Neumeyer, our President & Chief Executive Officer, and Raymond Polman, a director of the Company, are each directors of First Mining and accordingly may be considered to have a conflict of interest with respect to First Mining and the Springpole Silver Stream Agreement. With the exception of the agreement with First Mining, there were no transactions with related parties outside of the ordinary course of business during the year ended December 31, 2023. Outstanding Share Data As at February 21, 2024, the Company has 287,225,523 common shares issued and outstanding. Senior Management Changes During the year, in support of the reorganization and in alignment with First Majestic’s growth strategy, the Corporate Secretary and General Counsel positions were combined. These positions were held by two officers who are no longer with the Company. Samir Patel, LL.B., was appointed as the Company’s General Counsel & Corporate Secretary, and an officer of the Company. In addition, Exploration and Technical Services were combined under the leadership of Gonzalo Mercado, Vice President of Exploration and Technical Services, and Michael Deal has been appointed as Vice President of Metallurgy and Innovation. Finally, Mani Alkhafaji was appointed to the role of Vice President of Corporate Development & Investor Relations. Mr. Alkhafaji joined the Company in 2015 and most recently was Vice President of Business Planning & Procurement. 123 124 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONSUBSEQUENT EVENTS The following significant events have occurred subsequent to December 31, 2023: Declaration of Quarterly Dividend On February 21, 2024, the Company’s Board of Directors approved the declaration of its quarterly common share dividend of $0.0048 per share, payable on or after March 28, 2024, to common shareholders of record at the close of business on March 14, 2024. This dividend was declared subsequent to the year-end and has not been recognized as a distribution to owners during the year ended December 31, 2023. ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES Critical Accounting Judgments and Estimates The preparation of consolidated financial statements in conformity with IFRS as issued by the International Accounting Standards Board (“IASB”) requires management to make judgments, estimates and assumptions about future events that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, events or actions, actual results may differ from these estimates. Assets and liabilities held-for-sale Accounting Policy A non-current asset or disposal group of assets and liabilities (“disposal group”) is classified as held-for-sale, if its carrying amount will be recovered principally through a sale transaction rather than through continuing use, and when the following criteria are met: (i) The non-current asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups; and (ii) The sale of the non-current asset or disposal group is highly probable. For the sale to be highly probable: • The appropriate level of management must be committed to a plan to sell the asset or disposal group; • An active program to locate a buyer and complete the plan must have been initiated; • The non-current asset or disposal group must be actively marketed for sale at a price that is reasonable in relation to its current fair value; • The sale should be expected to qualify for recognition as a completed sale within one year from the date of classification as held for sale (with certain exceptions); and • Actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Non-current assets and disposal groups are classified as held for sale from the date these criteria are met and are measured at the lower of the carrying amount and fair value less costs to sell (“FVLCTS”). If the FVLCTS is lower than the carrying amount, an impairment loss is recognized in net earnings. Upon classification as held for sale, non-current assets are no longer depreciated. Significant estimates and judgements In determining the probability of the sale being completed within a year, management has considered a number of factors including necessary approvals from management, the Board of Directors, regulators and shareholders. Investments in Associates and Joint Ventures As a result of the sale of the La Guitarra Mine and the La Parrilla Mine, the Company is a material shareholder of Sierra Madre and of Silver Storm. Judgement is needed to assess whether the Company’s interest in an investee meets the definition of having significant influence and therefore requires to be accounted for under the equity method. In making a judgement of whether the Company has significant influence over the entity, management has evaluated the ownership percentage as well as other qualitative factors including but not limited to representation on the Board of Directors, participation in operational or financial policy-making processes, material transactions between the Company and the investee, interchange of managerial personnel, provision of technical information and the nature of potential voting rights. As part of this assessment, management has considered that until such time that the Company holds less than 19.9% of the outstanding shares, the Company has agreed to vote in the manner recommended by the Board of Directors of each of Sierra Madre and Silver Storm. Based on the qualitative factors noted above, the restrictions imposed on voting rights, and the lack of rights to have or appoint members to the Board, the Company has determined that significant influence does not exist despite holding a 48% interest in Sierra Madre and a 41% interest in Silver Storm. The Company began accounting for the shares received from Sierra Madre and Silver Storm as equity securities at FVTOCI. Impairment of Non-Current Asset Once an indicator of impairment is identified, significant judgement is required to determine the recoverable amounts of the Company’s mining interests. Following the temporary suspension of operations at Jerritt Canyon, the Company has determined that there was an indicator of impairment. The Company determined that the value of the cash generating unit (“CGU”) can be estimated using the market approach, based on the implied value per in-situ ounce of the property, rather than from the future cash flows from continuing operations. In estimating the fair value less costs of disposal (“FVLCD”), the Company took into account the consideration paid in recent transactions for comparable Companies and benchmarked the value per in-situ ounce at Jerritt Canyon against these transactions. The Company concluded that the resulting measurement is more representative of the fair value of the CGU in the circumstances existing at the end of the current period. New and amended IFRS standards that are effective for the current year In the current year, the Company has applied the below amendments to IFRS Standards and Interpretations issued by the IASB that were effective for annual periods that begin on or after January 1, 2023. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements. Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgments—Disclosure of Accounting Policies The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments replace all instances of the term “significant accounting policies” with “material accounting policy information.” Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions, is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material. The International Accounting Standards Board (“IASB”) has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2. The amendments were applied effective January 1, 2023 and did not have a material impact on the Company’s consolidated financial statements. Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors—Definition of Accounting Estimates The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty.” The definition of a change in accounting estimates was deleted. However, the Board retained the concept of changes in accounting estimates in the Standard with the following clarifications: • A change in accounting estimate that results from new information or new developments is not the correction of an error • The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors The amendments were applied effective January 1, 2023 and did not have a material impact on the Company’s consolidated financial statements. Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12) The amendments clarify that companies are required to recognize deferred taxes on transactions where both assets and liabilities are recognized, such as with leases and decommissioning liabilities. The amendments were applied effective January 1, 2023 and did not have a material impact on the Company’s consolidated financial statements. Impact of Pillar Two Legislation In December 2021, the Organization for Economic Co-operation and Development (“OECD”) released a draft legislative framework for a global minimum tax that is expected to be used by individual jurisdictions. The goal of the framework is to reduce the shifting of profit from one jurisdiction to another in order to reduce global tax obligations in corporate structures. In March 2022, the OECD released detailed technical guidance on Pillar Two of the rules. Stakeholders raised concerns with the IASB about the potential implications on income tax accounting, especially accounting for deferred taxes, arising from the Pillar Two model rules. The IASB issued the final Amendments (the “Amendments”) International Tax Reform – Pillar Two Model Rules, in response to stakeholder concerns on May 23, 2023. The amendments introduce a temporary exception to the accounting requirements for deferred taxes in IAS 12, so that an entity would neither recognize nor disclose information about deferred taxes and liabilities related to Pillar Two income taxes. This amendment to the IFRS Accounting Standards is mandatory effective for reporting periods beginning on or after January 1, 2023. For the year ended December 31, 2023, Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Company has operations. However, the Pillar Two legislation does not apply to the Company, as its consolidated revenue does not meet the required threshold for applicability of EUR 750 million. The Company will continue to evaluate the potential impact on future periods of the Pillar Two framework, pending legislative adoption by additional individual companies. 125 126 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONFuture Changes in Accounting Policies Not Yet Effective as at December 31, 2023: Cash Cost per AgEq Ounce, All-In Sustaining Cost per AgEq Ounce, All-In Sustaining Cost per Au Ounce, and Production Cost per Tonne At the date of authorization of these financial statements, the Group has not applied the following new and revised IFRS Accounting Standards that have been issued but are not yet effective. Management does not expect that the adoption of the Standards listed below will have a material impact on the financial statements of the Group in future periods, except if indicated. Classification of Liabilities as Current or Non-Current with Covenants (Amendments to IAS 1) The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. Cash costs per AgEq ounce and total production cost per tonne are non-GAAP performance measures used by the Company to manage and evaluate operating performance at each of the Company’s operating mining units, in conjunction with the related GAAP amounts. These metrics are widely reported in the mining industry as benchmarks for performance but do not have a standardized meaning and are disclosed in addition to IFRS measures. Management and investors use these metrics for comparing the costs against peers in the industry and for assessing the performance of each mine within the portfolio. Management calculates the cash costs per ounce and production costs per tonne by: • starting with the production costs (GAAP) from the income statement; • adding back duties and royalties, smelting and refining costs as well as transportation and selling costs, which form a part of the cost of sales on the financial In addition, the amendment requires entities to disclose information to enable users of the financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. The amendments are applied on or after the first annual reporting period beginning on or after January 1, 2024, with early application permitted. This amendment is not expected to have a material impact on the Company’s financial statements. statements and provide a better representation of total costs incurred; • cash costs are divided by the payable silver equivalent ounces produced; and • production costs are divided by the total tonnes milled. AISC is a non-GAAP performance measure and was calculated based on guidance provided by the World Gold Council (“WGC”). WGC is not a regulatory industry organization and does not have the authority to develop accounting standards for disclosure requirements. Other mining companies may calculate AISC differently as a result of differences in underlying accounting principles and policies applied, as well as differences in definitions of sustaining versus expansionary capital expenditures. AISC is a more comprehensive measure than cash cost per ounce and is useful for investors and management to assess the Company’s operating performance by providing greater visibility, comparability and representation of the total costs associated with producing silver from its current operations, in conjunction with related GAAP amounts. AISC helps investors to assess costs against peers in the industry and help management assess the performance of each mine within the portfolio in a standardized manner. The Company defines sustaining capital expenditures as, “costs incurred to sustain and maintain existing assets at current productive capacity and constant planned levels of productive output without resulting in an increase in the life of assets, future earnings, or improvements in recovery or grade. Sustaining capital includes costs required to improve/enhance assets to minimum standards for reliability, environmental or safety requirements. Sustaining capital expenditures excludes all expenditures at the Company’s new projects and certain expenditures at current operations which are deemed expansionary in nature.” Expansionary capital expenditure is defined as, “costs incurred to extend existing assets beyond their current productive capacity and beyond their planned levels of productive output, resulting in an increase in the life of the assets, increasing their future earnings potential, or improving their recoveries or grades which would serve to increase the value of the assets over their useful lives”. Development and exploration work which moves inferred resources to measured or indicated resources and adds to the Net Present Value of the assets is considered expansionary in nature. Expansionary capital also includes costs required to improve/ enhance assets beyond their minimum standard for reliability, environmental or safety requirements. Consolidated AISC includes total production costs (GAAP measure) incurred at the Company’s mining operations, which forms the basis of the Company’s total cash costs. Additionally, the Company includes sustaining capital expenditures, corporate general and administrative expenses, share-based payments, operating lease payments and reclamation cost accretion. AISC by mine does not include certain corporate and non-cash items such as general and administrative expense and share-based payments. The Company believes this measure represents the total sustainable costs of producing silver from current operations and provides additional information of the Company’s operational performance and ability to generate cash flows. As the measure seeks to reflect the full cost of silver production from current operations, new projects and expansionary capital at current operations are not included. Certain other cash expenditures, including tax payments, dividends and financing costs are also not included. Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) The amendments require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognizing in profit or loss any gain or loss relating to the partial or full termination of a lease. A seller-lessee applies the amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to sale and leaseback transactions entered into after the date of initial application. The amendments are effective for annual reporting periods beginning on or after January 1, 2024 although earlier application is permitted. This amendment is not expected to have a material impact on the Company’s financial statements. Supplier Financing Arrangements (Amendments to IAS 7 and IFRS 7) The amendments require disclosure requirements regarding the effects of supplier finance arrangements on their liabilities, cash flows and exposure to liquidity risk. Entities are required to disclose the following: • The terms and conditions; • The amount of the liabilities that are part of the arrangements, breaking out the amounts for which the suppliers have already received payment from the finance providers, and stating where the liabilities are reflected in the balance sheet; • Ranges of payment due dates; and • Liquidity risk information The amendments are effective for annual reporting periods beginning on or after January 1, 2024 although earlier application is permitted. This amendment is not expected to have a material impact on the Company’s financial statements. Lack of Exchangeability (Amendments to IAS 21) The amendments contain guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. Although this would be relatively uncommon, a lack of exchangeability might arise when a government imposes foreign exchange controls that prohibit the exchange of a currency or that limit the volume of foreign currency transactions. If a currency is deemed not exchangeable, an entity is required to disclose information about: • The nature and financial effects of the currency not being exchangeable into the other currency; • The spot exchange rate(s) used; • The estimation process; and • The risks to which the entity is exposed because of the currency not being exchangeable into the other currency. The amendments are effective for annual reporting periods beginning on or after January 1, 2025 although earlier application is permitted. This amendment is not expected to have a material impact on the Company’s financial statements. NON-GAAP MEASURES The Company has included certain non-GAAP measures including “Cash costs per silver equivalents ounce”, “All-in sustaining cost per silver equivalent ounce”, “All- in sustaining cost per gold ounce”, “Production cost per tonne”, “Average realized silver price per silver equivalent ounce”, “Average realized gold price”, “Adjusted net earnings”, “Adjusted earnings per share”, “Free cash flow” and “Working capital” to supplement its consolidated financial statements, which are presented in accordance with IFRS. The terms IFRS and generally accepted accounting principles (“GAAP”) are used interchangeably throughout this MD&A. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP measures do not have any standardized meaning prescribed under IFRS and the methods used by the Company to calculate such measures may differ from methods used by other companies with similar descriptions, therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. 127 128 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONThe following tables provide detailed reconciliations of these measures to cost of sales, as reported in notes to our consolidated financial statements. (expressed in thousands of U.S. Dollars, except ounce and per ounce amounts) Three Months Ended December 31, 2023 San Dimas Santa Elena La Encantada Jerritt Canyon Consolidated Mining cost Milling cost Indirect cost Total production cost (A) Add: transportation and other selling cost Add: smelting and refining cost Add: environmental duty and royalties cost Total cash cost (B) Workers’ participation General and administrative expenses Share-based payments Accretion of decommissioning liabilities Sustaining capital expenditures Operating lease payments All-In Sustaining Costs (C) Payable silver equivalent ounces produced (D) Payable gold ounces produced (E) Tonnes milled (F) Cash cost per AgEq ounce (B/D) AISC per AgEq ounce (C/D) Cash cost per Au ounce (B/E) AISC per Au ounce (C/E) Production cost per tonne (A/F) $16,413 9,338 13,767 $39,519 276 443 422 $40,660 4,017 — — 367 9,301 427 $54,772 3,077,782 N/A 215,232 $13.21 $17.80 N/A N/A $11,762 10,089 5,565 $27,413 242 173 3,068 $30,896 905 — — 258 4,002 1,958 $38,019 2,965,389 N/A 233,601 $10.42 $12.82 N/A N/A $3,941 5,570 3,682 $13,192 92 112 201 $13,597 73 — — 269 2,818 963 $17,720 519,109 N/A 203,898 $26.19 $34.14 N/A N/A $183.61 $117.36 $64.70 $— — — $— — — — $— — — — — — — $— — — — $— $— $— $— N/A $32,117 24,997 23,011 $80,124 826 729 3,691 $85,370 4,995 7,787 2,466 894 16,121 3,738 $121,372 6,562,280 N/A 652,731 $13.01 $18.50 N/A N/A $122.76 (expressed in thousands of U.S. Dollars, except ounce and per ounce amounts) San Dimas Santa Elena La Encantada Jerritt Canyon Consolidated Three Months Ended December 31, 2022 Mining cost Milling cost Indirect cost Total production cost (A) Add: transportation and other selling cost Add: smelting and refining cost Add: environmental duty and royalties cost Total cash cost (B) Workers’ participation General and administrative expenses Share-based payments Accretion of decommissioning liabilities Sustaining capital expenditures Operating lease payments All-In Sustaining Costs (C) Payable silver equivalent ounces produced (D) Payable gold ounces produced (E) Tonnes milled (F) Cash cost per AgEq ounce (B/D) AISC per AgEq ounce (C/D) Cash cost per Au ounce (B/E) AISC per Au ounce (C/E) Production cost per tonne (A/F) $14,529 8,249 11,401 $34,179 326 330 311 $35,146 8,522 — — 306 7,007 175 $51,156 3,046,462 N/A 210,108 $11.54 $16.79 N/A N/A 207 72 1,797 $25,755 (763) — — 167 2,884 1,285 $29,328 2,299,400 N/A 207,188 $11.20 $12.75 N/A N/A $9,782 8,974 4,923 $3,855 5,292 3,004 $23,679 $12,151 139 173 76 $23,336 13,341 5,218 $41,894 14 26 457 $51,502 35,856 24,546 $111,903 743 601 2,641 $12,539 $42,391 $115,888 (75) — — 218 2,144 882 $15,708 810,165 N/A 254,766 $15.48 $19.39 N/A N/A — — — 514 5,298 — $48,203 1,387,134 16,827 179,502 $30.56 $34.75 $2,519 $2,865 7,684 7,768 2,845 1,554 17,521 2,814 $156,074 7,543,161 N/A 851,564 $15.36 $20.69 N/A N/A $162.68 $114.29 $47.69 $233.39 $131.41 129 130 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION(expressed in thousands of U.S. Dollars, except ounce and per ounce amounts) Year Ended December 31, 2023 San Dimas Santa Elena La Encantada Jerritt Canyon Consolidated (expressed in thousands of U.S. Dollars, except ounce and per ounce amounts) Year Ended December 31, 2022 San Dimas Santa Elena La Encantada Jerritt Canyon Consolidated Mining cost Milling cost Indirect cost $65,076 34,457 55,262 $42,040 37,924 21,958 Total production cost (A) $154,795 $101,919 Add: transportation and other selling cost Add: smelting and refining cost Add: environmental duty and royalties cost Total cash cost (B) Workers’ participation General and administrative expenses Share-based payments Accretion of decommissioning liabilities Sustaining capital expenditures Operating lease payments All-In Sustaining Costs (C) Payable silver equivalent ounces produced (D) Payable gold ounces produced (E) Tonnes milled (F) Cash cost per AgEq ounce (B/D) AISC per AgEq ounce (C/D) Cash cost per Au ounce (B/E) AISC per Au ounce (C/E) Production cost per tonne (A/F) $16,044 22,316 14,536 $52,896 547 556 825 $54,824 1,014 — — 1,076 5,858 3,597 $66,369 2,733,851 N/A 966,392 $20.05 $24.28 N/A N/A $27,297 26,853 5,252 $59,402 34 58 834 $150,457 121,550 97,008 $369,012 3,163 2,584 12,880 $60,328 $387,639 — — — 514 7,994 — 18,897 37,203 13,177 4,089 64,630 13,609 $68,836 $539,244 1,765,316 26,750,881 21,080 177,643 N/A 2,901,972 $34.17 $38.99 $2,862 $3,262 $14.49 $20.16 N/A N/A 1,409 1,584 1,452 $159,240 15,116 — — 1,467 33,042 932 $209,797 12,732,827 N/A 875,345 $12.51 $16.48 N/A N/A 957 385 9,769 $113,030 2,767 — — 1,032 16,794 7,584 $141,207 9,518,887 N/A 882,592 $11.87 $14.83 N/A N/A $176.84 $115.48 $54.74 $334.39 $127.16 Mining cost Milling cost Indirect cost Total production cost (A) Add: transportation and other selling cost Add: smelting and refining cost Add: environmental duty and royalties cost Total cash cost (B) Workers’ participation General and administrative expenses Share-based payments Accretion of decommissioning liabilities Sustaining capital expenditures Operating lease payments All-In Sustaining Costs (C) Payable silver equivalent ounces produced (D) Payable gold ounces produced (E) Tonnes milled (F) Cash cost per AgEq ounce (B/D) AISC per AgEq ounce (C/D) Cash cost per Au ounce (B/E) AISC per Au ounce (C/E) Production cost per tonne (A/F) $48,032 30,753 43,899 $122,684 1,212 1,483 1,380 $126,759 16,106 — — 1,190 33,252 585 $177,892 12,927,243 N/A 787,636 $9.81 $13.76 N/A N/A $43,382 34,605 19,982 $97,970 780 396 6,689 $105,835 1,978 — — 649 13,801 5,369 $127,632 9,133,062 N/A $14,363 19,835 11,948 $46,146 480 664 339 $47,629 (819) — — 847 6,499 3,355 $57,511 3,112,363 N/A 851,973 1,025,172 $11.59 $13.97 N/A N/A $15.30 $18.48 N/A N/A $93,302 51,339 20,918 $199,080 136,533 96,747 $165,559 $432,359 102 87 2,656 2,788 2,630 11,064 $168,404 $448,841 — — — 2,054 28,525 — $198,983 6,016,478 72,411 804,206 $27.99 $33.07 $2,326 $2,748 17,265 34,743 13,958 6,102 83,853 10,911 $615,673 31,189,146 N/A 3,468,987 $14.39 $19.74 N/A N/A $155.76 $114.99 $45.01 $205.87 $124.64 Average Realized Silver Price per Silver Equivalent Ounce Revenues are presented as the net sum of invoiced revenues related to delivered shipments of silver or gold doré bars, including associated metal by-products of lead and zinc after having deducted refining and smelting charges, and after elimination of intercompany shipments of silver, silver being minted into coins, ingots and bullion products. The average realized silver price is a non-GAAP performance measure that allows management and investors to assess the Company’s ability to sell ounces produced, in conjunction with related GAAP amounts. Management calculates this measure by taking total revenue reported under GAAP and adding back smelting and refining charges to arrive at the gross reportable revenue for the period. Gross revenues are divided into payable silver equivalent ounces sold to calculate the average realized price per ounce of silver equivalents sold. The streaming and royalty agreements in place between the Company and Sandstorm as well as Wheaton, impacts the total revenues reported on the financial statements given the reduced prices provided to these vendors in line with the terms of the agreements. Therefore, management adjusts revenue to exclude smelting and refining charges as well as revenues earned through agreements with these vendors. This provides management with a better picture regarding its ability to convert ounces produced to ounces sold and provides the investor with a clear picture of the price that the Company can currently sell the inventory for, excluding pre-arranged agreements. 131 132 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONThree Months Ended December 31, Year Ended December 31, Three Months Ended December 31, Year Ended December 31, Revenues as reported Add back: smelting and refining charges Gross revenues Less: Sandstorm gold revenues Less: Wheaton gold revenues 2023 $136,946 730 137,676 (11) (6,604) 2022 $148,189 600 148,789 (220) (6,832) 2023 $573,801 2,584 576,385 (518) (26,499) 2022 $624,222 2,629 626,851 (1,148) (26,053) Operating cash flows Less: Sustaining capital expenditures Free cash flow Adjusted Earnings per Share (“Adjusted EPS”) 2023 $19,925 16,121 $3,804 2022 ($14,758) 17,521 ($32,279) 2023 $55,614 64,630 ($9,016) 2022 $18,988 83,853 ($64,865) Gross revenues, excluding Sandstorm, Wheaton (A) $131,061 $141,737 $549,368 $599,649 Payable silver equivalent ounces sold Less: Payable silver equivalent ounces sold to Sandstorm Less: Payable silver equivalent ounces sold to Wheaton Payable silver equivalent ounces sold, excluding Sandstorm and Wheaton (B) 6,295,250 (1,571) (869,860) 7,007,210 (35,385) (873,498) 27,205,471 (90,114) (3,525,412) 30,320,473 (200,509) (3,462,825) 5,423,819 6,098,326 23,589,945 26,657,138 Average realized silver price per silver equivalent ounce (A/B) Average market price per ounce of silver per COMEX $24.16 $23.25 $23.24 $21.29 $23.29 $23.39 $22.49 $21.80 Average Realized Gold Price per Ounce Revenues are presented as the net sum of invoiced revenues related to delivered shipments of silver or gold doré bars, including associated metal by-products of lead and zinc after having deducted refining and smelting charges, and after elimination of intercompany shipments of silver, silver being minted into coins, ingots and bullion products. The average realized gold price is a non-GAAP performance measure that allows management and investors to assess the Company’s ability to sell ounces produced, in conjunction with related GAAP amounts. Management calculates this measure by taking total revenue reported under GAAP and adding back smelting and refining charges to arrive at the gross reportable revenue for the period. Silver revenues are deducted from the reportable revenue for the period in order to arrive at the gold revenue for the period. Gross gold revenues are divided into gold ounces sold to calculate the average realized price per ounce of gold sold. The streaming and royalty agreements in place between the Company and Sandstorm as well as Wheaton, impacts the total revenues reported on the financial statements given the reduced prices provided to these vendors in line with the terms of the agreements. Therefore, management adjusts revenue to exclude smelting and refining charges as well as revenues earned through agreements with these vendors. This provides management with a better picture regarding its ability to convert ounces produced to ounces sold and provides the investor with a clear picture of the price that the Company can currently sell the inventory for, excluding pre-arranged agreements. Gross revenue, excluding Sandstorm, Wheaton Less: Silver revenues Gross gold revenues, excluding Sandstorm, Wheaton (A) Gold ounces sold Less: Gold ounces sold to Wheaton Less: Gold ounces sold to Sandstorm Gold ounces sold, excluding Sandstorm and Wheaton (B) Average realized gold price per ounce (A/B) Average market price per ounce of gold Free Cash Flow Three Months Ended December 31, Year Ended December 31, 2023 $131,061 (56,684) $74,377 47,550 (10,472) (22) 37,056 $2,007 $1,977 2022 $141,737 (56,119) $85,618 59,511 (10,943) (465) 48,103 $1,780 $1,731 2023 $549,368 (243,682) $305,686 202,063 (42,172) (1,094) 158,797 $1,925 $1,943 2022 $599,649 (237,107) $362,541 246,265 (41,841) (2,433) 201,991 $1,795 $1,801 Free cash flow is a non-GAAP liquidity measure which is determined based on operating cash flows less sustaining capital expenditures. Management uses free cash flow as a critical measure in the evaluation of liquidity in conjunction with related GAAP amounts. It also uses the measure when considering available cash, including for decision-making purposes related to dividends and discretionary investments. Further, it helps management, the Board of Directors and investors evaluate a Company’s ability to generate liquidity from operating activities. The Company uses the financial measure “Adjusted EPS” which is a non-GAAP measure, to supplement earnings per share (GAAP) information in its consolidated financial statements. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s performance. Management uses adjusted earnings per share as a critical measure of operating performance in conjunction with the related GAAP amounts. The only items considered in the adjusted earnings-per-share calculation are those that management believes (1) may affect trends in underlying performance from year to year and (2) are not considered normal recurring cash operating expenses. Adjusted earnings per share is used for forecasting, operational and strategic decision making, evaluating current Company and management performance, and calculating financial covenants. Management believes that excluding certain non-cash and non-recurring items from the calculation increases comparability of the metric from period to period, which makes it useful for management, the audit committee and investors, to evaluate the underlying core operations. The presentation of Adjusted EPS is not meant to be a substitute for EPS presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measure. To calculate adjusted earnings per share, management adjusts from net earnings (GAAP), the per-share impact, net of the tax effects of adjustments, of the following: • share based payments; • realized and unrealized gains and losses from investment in derivatives and marketable securities; and • other infrequent or non-recurring losses and gains. The following table provides a detailed reconciliation of net earnings (losses) as reported in the Company’s consolidated financial statements to adjusted net earnings and Adjusted EPS: Net earnings (loss) as reported Adjustments for non-cash or unusual items: Tax settlement Impairment (reversal) of non-current assets Deferred income tax recovery Loss (gain) from investment in marketable securities Loss (gain) on divestiture of mining interest Share-based payments Standby Costs Abnormal costs (1) Restructuring costs Write-down on assets held-for-sale Write-down of mineral inventory Adjusted net loss Three Months Ended December 31, Year Ended December 31, 2023 $10,231 — — (22,164) 21 — 2,466 — — 455 — 659 ($8,332) 2022 ($16,819) 6,300 4,934 (19,681) (425) (4,301) 2,845 — 436 — — 9,314 ($17,397) 2023 2022 ($135,112) ($114,276) — 125,200 (74,808) 1,640 3,024 13,177 13,438 — 6,883 7,229 15,500 ($23,829) 24,033 (2,651) (3,378) 3,865 (4,301) 13,958 — 3,553 — — 23,767 ($55,430) Weighted average number of shares on issue - basic 286,997,928 266,673,994 282,331,106 263,122,252 Adjusted EPS ($0.03) ($0.07) ($0.08) ($0.21) (1) Abnormal costs includes $3.1 million in costs that were incurred during the second quarter of 2022 as a result of marginal ore material that was processed to keep the mill running at minimum feed requirements to perform government mandated air compliance test work at the Jerritt Canyon Gold mine. 133 134 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONWorking Capital and Available Liquidity Working capital is determined based on current assets and current liabilities as reported in the Company’s consolidated financial statements. The Company uses working capital as a measure of the Company’s short-term financial health and operating efficiency. Available liquidity includes the Company’s working capital and undrawn revolving credit facility. Current Assets Less: Current Liabilities Working Capital Available Undrawn Revolving Credit Facility Available Liquidity December 31, 2023 December 31, 2022 $309,057 (120,138) $188,919 124,640 $313,559 $370,289 (167,399) $202,890 75,000 $277,890 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Disclosure Controls and Procedures The Company’s management, with the participation of its President and Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of the Company’s disclosure controls and procedures. Based upon the results of that evaluation, the Company’s CEO and CFO have concluded that, as of December 31, 2023, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in reports it files is recorded, processed, summarized and reported, within the appropriate time periods and is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Internal Control over Financial Reporting The Company’s management, with the participation of its CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in the rules of the United States Securities and Exchange Commission and the Canadian Securities Administrators. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the IASB. The Company’s internal control over financial reporting includes policies and procedures that: • maintain records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company; • provide reasonable assurance that transactions are recorded as necessary for preparation of financial statements in accordance with IFRS as issued by IASB; • provide reasonable assurance that the Company’s receipts and expenditures are made only in accordance with authorizations of management and the Company’s Directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements. The Company’s internal control over financial reporting may not prevent or detect all misstatements because of inherent limitations. Additionally, projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the Company’s policies and procedures. The Company’s management evaluated the effectiveness of our internal controls over financial reporting based upon the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s evaluation, our CEO and CFO concluded that our internal controls over financial reporting was effective as of December 31, 2023. There have been no significant changes in our internal controls during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting. The Company’s independent registered public accounting firm, Deloitte LLP, have audited these Consolidated Annual Financial Statements and have issued an attestation report dated February 21, 2024 on the Company’s internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of Treadway Commission. Limitations of Controls and Procedures The Company’s management, including the President and CEO and CFO, believes that any disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, may not prevent or detect all misstatements because of inherent limitations. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any control system also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected. CAUTIONARY STATEMENTS Cautionary Note regarding Forward-Looking Statements Certain information contained herein this MD&A constitutes forward-looking statements under applicable securities laws (collectively, “forward-looking statements”). These statements relate to future events or the Company’s future performance, business prospects or opportunities. Forward-looking statements include, but are not limited to: commercial mining operations; anticipated mineral recoveries; projected quantities of future mineral production; statements with respect to the Company’s business strategy; future planning processes; interpretation of drill results and other technical data; anticipated development, expansion, exploration activities and production rates and costs and mine plans and mine life; the security situation at the San Martin mine; the estimated cost and timing of plant improvements at the Company’s operating mines and development of the Company’s development projects; construction and operations of the replacement well at La Encantada; the operations of the Company’s central lab; the timing of completion of exploration programs and drilling programs; the restarting of operations or potential plans at the Company’s temporarily suspended and/or non-operating mines; the temporary suspension of processing activities at Jerritt Canyon; decommissioning activities at Jerritt Canyon; future exploration activities at the Jerritt Canyon Gold Mine and the costs thereof; anticipated reclamation and decommissioning activities and associated costs; conversion of mineral resources to proven and probable mineral reserves; analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable; statements with respect to the Company’s future financial position including operating efficiencies, cash flow, capital budgets, costs and expenditures, cost savings, allocation of capital, and statements with respect to the recovery of value added tax receivables and the tax regime in Mexico; the implementation and effect of cost reduction initiatives; the preparation of technical reports and completion of preliminary economic assessments; the repurchase of the Company’s shares; viability of the Company’s projects; potential metal recovery rates; sales of bullion direct to customers; payment of dividends; the impact of amendments to accounting policies; effectiveness of internal controls and procedures; the validity of the APA; statements with respect to the recovery of value added tax receivables and the tax regime in Mexico; the conduct or outcome of outstanding litigation, regulatory proceedings, negotiations or proceedings under NAFTA or other claims and the compliance by counterparties with judgments or decisions; the anticipated start of silver bullion production from the Company’s minting facility; the Share Repurchase Program (as defined herein); maintaining relations with employees; future regulatory trends, future market conditions, future staffing levels and needs and assessment of future opportunities of the Company; the Company’s plans with respect to enforcement of certain judgments in favour of the Company and the likelihood of collection under those judgments; the Company’s ability to comply with future legislation or regulations including amendments to Mexican mining legislation and the Company’s intent to comply with future regulatory and compliance matters; expectations regarding the effects of public health crises including pandemics such as COVID-19 on the Company’s operations, the global economy and the market for the Company’s products. All statements other than statements of historical fact may be forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “forecast”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions) are not statements of historical fact and may be “forward-looking statements”. Forward-looking statements are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management made in light of management’s experience and perception of historical trends, current conditions and expected future developments at the dates the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include, without limitation: global economic conditions including public health threats, the inherent risks involved in the mining, exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other geological data, fluctuating commodity prices, fluctuating currency exchange rates, the possibility of project delays or cost overruns or unanticipated excessive operating costs and expenses, uncertainties related to the necessity of financing, the availability of and costs of financing needed in the future, uninsured risks, defects in title, availability and costs of materials and equipment, climate change events including, but not limited to, drought conditions, changes in national or local governments, changes in applicable legislation or application thereof, timeliness of government approvals, actual performance of facilities, equipment, and processes relative to specifications and expectations and unanticipated environmental impacts on operations, availability of time on court calendars in Canada and elsewhere; the recognition of Canadian judgments under Mexican law; the possibility of settlement discussions; the risk of appeal of judgment; and the insufficiency of the defendant’s assets to satisfy the judgment amount and other factors described in the Company’s Annual Information Form under the heading “Risk Factors”. The Company believes that the expectations reflected in any such forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included herein this MD&A should not be unduly relied upon. These statements speak only as of the date of this MD&A. The Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable laws. Actual results may differ materially from those expressed or implied by such forward-looking statements. Cautionary Note regarding Reserves and Resources National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), issued by the Canadian Securities Administrators, lays out the standards of disclosure for mineral projects. This includes a requirement that a certified Qualified Person (“QP”) (as defined under the NI 43-101) supervises the preparation of the mineral reserves and mineral resources. Gonzalo Mercado, Vice President of Exploration and Technical Services is a certified QP for the Company and has reviewed this MD&A for QP technical disclosures. All NI 43-101 technical reports can be found on the Company’s website at www.firstmajestic.com or under the Company’s profile on SEDAR+ at www.sedarplus.ca. 135 136 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONMANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONCautionary Note to United States Investors Concerning Estimates of Mineral Reserves and Resources This Management’s Discussion and Analysis has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ materially from the requirements of United States securities laws applicable to U.S. companies. Information concerning our mineral properties has been prepared in accordance with the requirements of Canadian securities laws, which differ in material respects from the requirements of the United States Securities and Exchange Commission (the “SEC”) applicable to domestic United States issuers. Accordingly, the disclosure in this Management’s Discussion and Analysis regarding our mineral properties is not comparable to the disclosure of United States issuers subject to the SEC’s mining disclosure requirements. Additional Information CORPORATE INFORMATION Additional information on the Company, including the Company’s Annual Information Form and the Company’s audited consolidated financial state- ments for the year ended December 31, 2023, is available under the Company’s profile on SEDAR+ at www.sedarplus.ca and on the Company’s website at www.firstmajestic.com. 20 Y E A R S . T H E S I LV E R E V O L U T I O N . BOARD OF DIRECTORS AND OFFICERS CORPORATE HEADQUARTERS Keith Neumeyer President, Chief Executive Officer & Director @keith_neumeyer Steven Holmes, MBA, B.Sc., MNEng. Chief Operating Officer David Soares, CPA, CA Chief Financial Officer Samir Patel, LL.B. General Counsel & Corporate Secretary Marjorie Co, B.Sc., LL.B., MBA 1,3,4 Director Thomas F. Fudge, Jr., P.E., P.Eng. (ret) 2,3 Board Chair & Director Raymond Polman, B.Sc., CPA, CA, ICD.D.4 Director Colette Rustad, B.Comm, CPA, CA, ICD.D.1,2 Director First Majestic Silver Corp. 1800 – 925 West Georgia Street Vancouver, BC, V6C 3L2 Canada Tel. 604 688 3033 Fax. 604 639 8873 Toll Free. 1 866 529 2807 info@firstmajestic.com www.firstmajestic.com INDEPENDENT AUDITORS Deloitte LLP 939 Granville Street Vancouver, BC, V6Z 1L3 INVESTOR RELATIONS CONTACT info@firstmajestic.com Tel. 604 688 3033 Toll Free. 1 866 529 2807 (North America only) Mani Alkhafaji, CA, CPA Vice President of Corporate Development & Investor Relations Jill Anne Arias Vice President of Marketing & Corporate Communications @FMSilverCorp, @JillArias instagram @firstmajesticsilver LEGAL ADVISORS Bennett Jones LLP 2500 Park Place 666 Burrard Street Vancouver, BC, V6C 2X8 ANNUAL GENERAL MEETING MARKET INFORMATION TRADING SYMBOLS TRANSFER AGENT The Sutton Place Hotel 845 Burrard Street Vancouver, BC, V6Z 2K6 Date: Thursday, May 23, 2024 Time: 10:00 am (Pacific Time) TSX: AG NYSE: AG FSE: FMV Design. Hitman Creative Media Inc. Printing. Ancan Marketing (1) Audit Committee (2) Compensation Committee (3) Corporate Governance & Nominating Committee (4) Environmental, Social, Health & Safety Committee Computershare Trust Company of Canada 3rd Floor - 510 Burrard Street Vancouver, BC, V6C 3B9 Canada Tel. 604 661 9400 Fax. 604 661 9401 FIRST MINT, LLC Cory Anderson VP & General Manager of First Mint info@firstmint.com www.firstmint.com @firstmintllc 2003 - 2023 ANN UAL REPORT 137 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION TSX AG / NYS E AG / FSE FMV 20 Years. The Silver Evolution. FIRSTMAJESTIC.COM 

Continue reading text version or see original annual report in PDF format above