First Majestic Silver has suspended its NAFTA arbitration against Mexico after both sides agreed in principle on a framework to settle a long-running tax dispute over its San Dimas mine. The tribunal paused the case until December 31, 2026.
At a glance
- Mexico's tax authority had reassessed about $260 million in taxes for 2010-2012 and about $132.1 million for 2013.
- The dispute centres on how silver sold to Wheaton Precious Metals under a streaming deal is taxed.
- If no final agreement is reached, First Majestic will ask the tribunal to resume the arbitration.
Background
First Majestic Silver is a Vancouver-based miner with four underground mines in Mexico. A streaming deal means a miner sells part of its future output to a financier at a fixed low price in exchange for upfront cash. Mexico's tax authority, the SAT, argued taxes should be based on market prices rather than the lower streaming prices.
What happened
First Majestic Silver has temporarily suspended its arbitration against Mexico under the North American Free Trade Agreement, BNamericas reported. Both sides agreed in principle on a framework to resolve a long-running tax dispute.
The arbitration tribunal ordered the case suspended until December 31, 2026. The company said it is confident of closing the agreement before year-end, and the parties can ask to extend the pause into the first quarter of 2027 if needed.
What the dispute is about
The case involves First Majestic's subsidiary Primero Empresa Minera, owner of the San Dimas gold and silver mine in Durango. In 2012, Mexico's tax authority granted it an advance pricing agreement that taxed silver sold to Wheaton Precious Metals under a streaming contract on actual revenue, not market prices.
The authority later annulled that agreement. In 2021 it issued reassessments of about $260 million for the 2010-2012 tax years and about $132.1 million for 2013, calculated using market prices.
What it means
A settlement would remove a major legal and financial risk for First Majestic. In October 2025, Mexico's Supreme Court declined to review the company's appeal against a ruling that upheld the 2012 reassessment, and the company filed for arbitration in March 2021.
First Majestic operates four underground mines in Mexico: Santa Elena, Los Gatos, in which it holds 70%, San Dimas and La Encantada. It is also investing there. In July it raised its investment budget by 47% to $344 million for expansion projects there. If no final deal is reached by year-end, it will ask the tribunal to lift the suspension.
Our read
Outlook: neutral. The tax dispute affects First Majestic's finances, not silver supply. A settlement removes a company risk but does not change the silver market.
What to watch
- Whether First Majestic and Mexico sign a final agreement before December 31, 2026.
- The size of any tax payment under the settlement.
- Production at San Dimas, which was hit by a labour dispute earlier this month.
For information only, not investment advice.
Silver price in India
metalscost.com India reference price as of 2026-10-16.
Detailed analysis
Timeline
- 2026-10-13: First Majestic says the NAFTA arbitration is suspended until December 31, 2026.
Government Policies
Mexico and First Majestic agreed in principle on a framework to settle a long tax dispute.
Mining Production
First Majestic raised its Mexico investment budget 47% to $344 million in July.
What could lift prices
- Settling the dispute could free First Majestic to invest more in Mexican silver output.
- The company is expanding with new permits at Santo Niño and Navidad.
What could weigh on prices
- A settlement does not change silver supply.
- A failed deal would revive a costly legal fight.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Mexico | Medium | A deal would end a long-running tax dispute with a major silver miner. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Silver Mining | Positive | Progress on the tax dispute reduces regulatory risk for miners in Mexico. |
Who gains, who loses
- First Majestic Silver: It is close to resolving a dispute worth hundreds of millions of dollars.
- Mexico's tax authority: A settlement may involve accepting less than the full reassessments.
Other ways this could play out
- If the deal closes by December 31, the arbitration will end and the tax risk will be resolved.
- If talks stall, the arbitration will resume in 2027.
Price risks
- Silver prices depend on global demand, not on this dispute.
- A settlement payment could weigh on First Majestic's finances.
Historical comparison
- 2021: Mexico reassessed San Dimas taxes and First Majestic filed for NAFTA arbitration.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
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