Discovery Silver Q4 2025 Earnings Report

Discovery Silver EPS Results

• Actual EPS: C$0.19
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Discovery Silver Revenue Results

• Actual Revenue: $368.88 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Discovery Silver Announcement Details

• Quarter: Q4 2025
• Date: 2/19/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, February 19, 2026
• Conference Call Time: 2:00PM ET

Discovery Silver (TSE:DSV) Corp is an exploration and development company building a large-scale, high-margin silver asset in Mexico. Its flagship project is the Cordero project, one of the few silver projects globally that offer margin, size, and scaleability. The project is located in a prolific mining belt in Chihuahua State, Mexico.

Discovery Silver Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Discovery finished Q4 with strong cash generation and profitability, reporting Q4 revenue of $274M, EBITDA of $126M, adjusted EPS of $0.14 (up 75% QoQ), and ending the quarter with ~$410M cash plus an undrawn $250M revolver (with $100M accordion).
• Neutral Sentiment: Management guided 2026 production of 260,000–300,000 ounces (H2-weighted) and expects unit costs to decline through the year while running a front‑loaded capital program to support the ramp, leaving near‑term results dependent on mill throughput and first‑half CapEx timing.
• Positive Sentiment: Exploration momentum is a key growth driver — Discovery reported strong drill results across the Porcupine district (Hoyle Pond/TVZ, Owl Creek, Borden, Pamour, Dome) and plans ~280,000 metres of drilling in 2026 to convert and expand resources.
• Negative Sentiment: Cordero permitting appears close but 2026 spending of $90–$100M is mostly driven by a higher‑than‑expected land‑use fee of ~$70–$80M, increasing near‑term cash outlays even as the company says permitting approval is imminent.

Presentation

[Operator]

Good afternoon. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Discovery fourth quarter and full year 2025 results conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw a question, again, press the star one. Thank you. I will now turn the call over to Mark Utting, Senior Vice President, Investor Relations for Discovery. Mr. Utting, you may begin your conference.

[Mark Utting, Senior VP of Investor Relations at Discovery Silver]

Thanks very much, operator, and thanks, everybody, for joining us today for Discovery's fourth quarter and full year 2025 conference call and webcast. Joining me today are most of Discovery's senior management team. Speakers in today's presentation will be Tony Makuch, our President and CEO; Alison White, our Chief Financial Officer; Pierre Rocque, our Chief Operating Officer; Eric Kallio, our Senior Vice President of Exploration; and José Jabalera, our VP, Sustainability and Corporate Affairs in Mexico. After each speaker presents, Tony will have some concluding remarks. As you know, this morning, we issued our Q4 and full year 2025 results. The press release, MD&A, and financials are available on our website at discoverysilver.com and on SEDAR. Before we begin, I'd like to remind you that during today's call, we will be making forward-looking statements.

[Mark Utting, Senior VP of Investor Relations at Discovery Silver]

These statements are based on current expectations, assumptions, and projections about future events. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking information. For more information about the FLIs, please refer to the information on slide two in this deck, as well as forward-looking information on our website. In addition, we'll also be making reference to a number of non-GAAP measures during this presentation. These measures are included to provide additional information, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. These measures do not have any standardized meaning prescribed under GAAP and therefore may not be comparable to those of other issuers. Again, I refer you to slide 3 in our deck and our website for information on non-GAAP measures.

[Mark Utting, Senior VP of Investor Relations at Discovery Silver]

Finally, all dollar amounts today will be in U.S. dollars unless otherwise indicated. With that, I'll turn the call over to Tony Makuch, Discovery's CEO.

[Tony Makuch, President and CEO at Discovery Silver]

Hey, good afternoon. Thanks, everyone, for joining us for this call. I guess we didn't all get the memo from Doug Ford that we had other priorities for today, but anyway, appreciate you being on. You know, maybe and before I get on into the results, I you know always like to, you know, in the end, you know, we have to acknowledge the people at Discovery. We made a lot of progress, and we are doing something special here and, you know, we have people in Porcupine and people in Chihuahua. We're doing some, I think, some great stuff. You know, our people live in Timmins, Schumacher, Toronto, Parral, a lot of different areas in Canada and Mexico.

[Tony Makuch, President and CEO at Discovery Silver]

And anyway, thanks for all you do, and, you know, we look forward to continued success as we progress out of Q4 into 2026. Looking at Q4 in 2025, you know, it was a solid quarter. In particular, adjusted earnings per share increased 75% from the previous quarter. We continued to generate substantial cash flow, even as we increased our investments for the future, and we continued to build our balance sheet strength. Definitely nice to be in a strong gold market. I'll briefly run through the numbers, and then others will get into the details. You know, there's a couple forward-looking statement things. Again, and Mark made reference to them, so I won't, I won't do that. I'll just jump to slide number four, which summarizes our strong results for the quarter.

[Tony Makuch, President and CEO at Discovery Silver]

You can see production increased 6% to almost 67,000 oz. Operating cash costs improved from Q3, largely reflecting inventory movements between the quarters. At the corporate level, our all-in sustaining costs increased from last quarter, but this was related to the higher sustaining capital expenditures in the quarter. Last quarter, we said we would be increasing CapEx in Q4, and we did. So these are investments aimed at driving our growth and helping us to improve the operations and, you know, ultimately to see lower costs to us and improve productivity over the next while. Going to slide five, and, you know, just talk about our earnings performance.

[Tony Makuch, President and CEO at Discovery Silver]

Not bad for a company with this first, you know, first production, not just nine or 8.5 months of production, we already had significant earnings. Revenue totaled $274 million, a 16% increase from last quarter. Revenue does include gold sales of 64,000 oz and a net realized gold price of $4,157/oz. EBITDA totaled $126 million, similar to the last quarter, and there was a $45 million impact from an accounting charge related to reclamation obligations, and that change brought down our EBITDA to some degree. You know, you can ask Alison about that a little bit later in the call, and I'll pass the questions on.

[Tony Makuch, President and CEO at Discovery Silver]

Earnings per share was $0.08 per share, while adjusted earnings per share were $0.14. As I mentioned, our adjusted earnings per share was up significantly from $0.08 last quarter. Slide six looks at cash flow and cash, our cash position. As I mentioned, we continued to generate a lot of cash flow in Q4. The operating cash flow totaled $163 million, up from $153 million the previous quarter. Free cash flow was close to $70 million. It was lower than the last quarter, but it, you know, again, it reflected our higher capital expenditures in the quarter. Our cash position in Q4 rose 20% to $410 million.

[Tony Makuch, President and CEO at Discovery Silver]

Our total liquidity rose to just under $660 million, and total liquidity, including our cash, cash as well as $250 million from a revolving credit facility we finalized in Q4. It also has a $100 million accordion feature, but now you may recognize this is all undrawn at this point in time. Going to slide seven, looking at our key investment programs. Total capital and expenditures was just under $100 million, including leases. In the quarter, sustaining capital expenditures were $34 million, mainly related to investments in Hoyle Pond and Borden, and new mobile equipment, capital development, and infrastructure at the underground mines. We also continued to invest in our Dome Mill and our new and our tailings facility to support our operations going forward.

[Tony Makuch, President and CEO at Discovery Silver]

Growth capital was largely focused on pre-stripping at the Pamour, and investments in our tailings management facility. I'll talk to you more about that in a moment. Capitalized exploration, mainly related to resource conversion drilling, was almost $10 million, and you'll see momentarily that our exploration expenditures will increase substantially in the next six. We feel it is, you know, as much driver as high gold prices and production. You know, what we can drive in terms of value with the exploration drill bit is, I think, enormous in this company. Speaking of exploration on slide eight, you know, we, I think, you know, we put out some two press releases, I guess, you know, one in Q4, and we just put one recently out in Q1.

[Tony Makuch, President and CEO at Discovery Silver]

You know, I guess in simple terms, we're getting excellent results everywhere we are drilling. Our resource conversion expansion drilling is going very well at Hoyle Pond, Borden, and Pamour, which is, like, the three main areas where we're drilling. Also having success at district targets like Owl Creek and the Brule Pit. You know, Owl Creek being contiguous and, you know, with Hoyle Pond, Brule Pit, you know, a target that's about 1.5 km west of Pamour. In the results we issued earlier this month, we also reported very encouraging results at the TVZ zone, and favorable results from initial drilling at Dome. Eric will get into more of those details later in the presentation. I'll just turn now to slide 9. We did issue our guidance this morning with our Q4 results.

[Tony Makuch, President and CEO at Discovery Silver]

That's our guidance for 2026. You know, and I think our guidance, you know, shows the solid production growth from 2025-2026. Unit costs that will improve as the year progresses and the continuation of a significant investment program to support our growth and improved performance. Slide 10, you know, production guidance is 260,000 oz-300,000 oz. Since it is important to note that production will be weighted to the second half of the year. Unit costs will start the year at high end of our target ranges, reflecting the ramp up of production, as well as the significant and weighting of capital expenditures in the first half of the year.

[Tony Makuch, President and CEO at Discovery Silver]

By the second half of the year, we expect to see the numbers that are in, in the lower end of our ranges and potentially better than the ranges, specifically as we see some of the cost savings related to the capital investment. Going to slide 11, looking at our capital, at a high, high level, the run rate for capital investment in Q4 of 2025 will continue in 2026 and be weighted to the first half of the year. In terms of sustaining capital, we are investing significantly in, in replacing the mobile fleet at Pamour and Borden, and in upgrading infrastructure.

[Tony Makuch, President and CEO at Discovery Silver]

We're also investing in the Dome Mill and the Dome tailings facility to both increase capacity and improve the efficiency of performance, as well as our environmental standards in terms of how we want to progress specifically in our tailings area. Looking at growth capital, the two largest items are investments at the TMA Six, or our tailings facility, including work to divide the number six dam into cells. We did this at Lake Shore Gold with our Bell Creek Mill. We did it at other places. It has a number of benefits, including allowing it for progressive rehabilitation and reducing potential liabilities going forward as we progress it and continuing deposition in these areas.

[Tony Makuch, President and CEO at Discovery Silver]

Other key components of our growth capital are continued pre-stripping at Pamour as we build the Pamour Mine, bringing Pamour into commercial production, probably into 2027, as well as a new vent raise at Borden. Going to slide 12, the $90 million-$100 million we're showing for Cordero is mostly related to the change in the land use fee. We did apply for the change of land use, and we are expecting to receive this sometime in Q1 of this year. And then, you know, we feel pretty confident moving ahead with this project. And finally, as mentioned, we are planning a significant increase in our exploration budget in 2026 from 2025, mainly in the Porcupine region in Ontario.

[Tony Makuch, President and CEO at Discovery Silver]

But we, you know, as I said, exploration is success-driven. We're having a lot of success in exploration, and we plan to do a lot of drilling this year, at least 280,000 m of drilling. So with that, I'll turn the call over to Alison White.

[Alison White, CFO at Discovery Silver]

Before I get started, I'm actually gonna let Mark Utting say a few words about our technology on the call today.

[Mark Utting, Senior VP of Investor Relations at Discovery Silver]

Yes. I've been informed by Q4, our service provider, that they have had some technical problems and that, while the broadcast, the audio is working, these slides are not visible. We apologize for that. We'll be looking into it, after the call. What we will try to do is be as clear as we can in terms of the points we're trying to make, and make sure that copies of the slides are available after the call as well. Again, our apologies for that, and we'll continue on now.

[Alison White, CFO at Discovery Silver]

Thanks, everybody, and thank you, Tony, for the introduction. On slide 13, sorry, Q4 was a strong finish to 2025. We had operational momentum that translated into solid financial results across the business. We reported revenues of $274 million in the quarter, a 16% increase quarter-over-quarter, driven by higher than average realized gold prices. On a full year basis, total revenues reached $653 million, reflecting 2.5 quarters of results under Discovery's ownership. As we had communicated earlier in 2025, Q4 2025 was a period of reinvestment for Discovery, with increased capital expenditures to provide needed investment for the Porcupine operations to achieve their full value potential.

[Alison White, CFO at Discovery Silver]

Very importantly, we had EBITDA of $126 million and continued to generate solid cash flow, with operating cash of $163 million and free cash flow of $68 million, after deploying $95 million in capital expenditures to further advance the asset base at Porcupine. If we move on to slide 14, let's look at adjusted earnings. Discovery delivered adjusted net earnings and adjusted net earnings per share in Q4 of 2025 of $113.5 million or $0.14 per basic share, an increase of 75% from the prior quarter, demonstrating strengthened revenues from robust production throughout the quarter. Net income also benefited from a deferred tax recovery, driven by an adjustment of previously unrecognized deferred tax assets related to reclamation obligations, as reclamation spend was moved inside the active mine life.

[Alison White, CFO at Discovery Silver]

As we walk from the $0.08 of unadjusted earnings per share, there's an addition of $0.04 for a one-time $45 million reclamation expense for non-operating mine sites due to an accounting remeasurement related to a discount rate change. Which will measure the obligation in line with the applicable accounting standard. There's a $0.01 change of $10.9 million in expense related to share issuance for the TTN resource development agreement that was put in place during the quarter. And another penny for foreign exchange losses and TSA costs, arriving at a total of $0.14 in adjusted earnings per share for the quarter. Let's review EBITDA on slide 15. EBITDA grew quarter-over-quarter, driven by increased revenue as gold prices climbed, partially offset by other operating costs recognized.

[Alison White, CFO at Discovery Silver]

Overall, Discovery has continued to have progressively strong momentum, with growth in EBITDA during each quarter of 2025. Equally, through strong earnings generation, we continue to see positive momentum in our free cash flow. The free cash flow generation bolsters the company's balance sheet and allows for capital redeployment into the business, promoting additional value. Speaking of reinvestment, let's move on to capital expenditures on the next slide. During the prior quarters, we mentioned that the second half of the year would be more heavily weighted toward capital expenditures. The 53% increase in capital spend from Q3-Q4 demonstrates that commitment, which will remain consistent as we move into 2026 and aligns with the guidance that Tony mentioned earlier. Capital expenditures in Q4 2025 totaled $99.9 million, compared to $65.2 million in Q3 2025.

[Alison White, CFO at Discovery Silver]

Of the $99 million, sustaining capital expenditures accounted for $34 million, while $66 million were growth capital expenditures. Sustaining capital expenditures were largely focused on procurement of mobile equipment and capital development at Hoyle Pond and Borden, combined with construction work to buttress the number 6 tailings management area at the Dome property. Growth capital expenditures primarily related to pre-stripping at Pamour and longer-term investments at the TMA Six. Let's move on and look at cash costs and all-in sustaining costs on slide 17. Q4 2025 cash costs per ounce sold improved to $1,185 versus $1,339 in Q3 2025, primarily driven by a higher change in inventory in the prior quarter. In Q3 2025, inventory change costs of $13.8 million were recorded, related to oz held in inventory at the end of Q2 2025.

[Alison White, CFO at Discovery Silver]

And if we look at all-in sustaining costs on slide 18, all-in sustaining costs averaged $2,034/oz sold for the quarter, compared to $1,734/oz sold in the previous quarter. The increase in AISC per ounce sold compared to the previous quarter largely reflected a $13 million increase in sustaining capital expenditures, primarily related to higher levels of investment in mobile equipment and capital development, higher corporate G&A costs, and higher accretion and amortization expenditures related to reclamation obligations. Which is partially offset by the favorable change in inventory that I previously mentioned.

[Alison White, CFO at Discovery Silver]

If we move to look at our liquidity slide on slide 19, Discovery's cash balance at December 31, 2025, totaled $410.7 million, an increase of 20% from $341.5 million at September 30, 2025. The stronger gold price environment translated into $68 million of additional free cash flow, and that's net of the meaningful amount of capital we deployed back into the business and that I mentioned earlier. Discovery's liquidity position remains robust, with $411 million in cash on hand, a $250 million undrawn revolving credit facility, and a $100 million accordion feature. We have meaningful financial flexibility, and we believe this balance sheet strength gives us the foundation to advance our strategic priorities with confidence.

[Alison White, CFO at Discovery Silver]

I'll now pass it over to Pierre for his remarks.

[Pierre Rocque, COO at Discovery Silver]

Thank you, Alison. It is a pleasure to be presenting our Q4 results from our Porcupine asset. During Q4, we recovered 66,718 oz of gold and poured 67,010 oz. Both of these results show an increase from the previous quarter, when we recovered 63,714 oz and poured 65,978 oz. Higher production in Q4 reflected the favorable impact of increased mining rates at Pamour and higher average grades at Hoyle Pond and Borden. The overall grade for the quarter was lower than in the previous quarter, mainly reflecting a higher proportion of tons processed from Pamour. At Hoyle Pond, you may recall the impact of summer high temperatures on the production from the mine, as the higher grade stopes were temporarily slowed down.

[Pierre Rocque, COO at Discovery Silver]

Those stopes are now back to normal production rate, and we are assessing ventilation upgrade and cooling options this year to provide relief during the summer months. At Borden, we experienced highway closure on several days due to winter storms in December. We ended up stockpiling the ore on site, which was delivered to the process plant early in 2026. As for Pamour, our mining rate remains well ahead of the PA plan for 2025. At the Dome Mill, we processed over 892,000 tons at an average grade of 2.58 g/ton, an average recovery of 90.2%. Based on operating days during Q4 2025, mill throughput averaged 10,145 tons/day, a 9% increase compared to the previous quarter.

[Pierre Rocque, COO at Discovery Silver]

Mill operating costs during Q4 averaged $21.68/ton, similar to the $21.15/ton processed in Q3. Operating cash cost per ounce averaged 1,185, down from 1,339 in Q3. Site-level AISC averaged 1,824 per oz, compared to 1,699 in the last quarter. Slight increase in AISC reflected a 49% increase in sustaining capital expenditures, nearly $33 million more in Q4. Our sustaining capital expenditures during the quarter were mainly related to increased mobile equipment procurement and higher levels of capital development at both Hoyle Pond and Borden, along with investments at the process plant and tailings storage facilities. I'll now turn the call over to Eric Kallio, our Senior VP, Exploration.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

Okay, thank you, Pierre, and good afternoon, everyone. I'm on slide 21. Before I start, I'd just like to say that it's been another good quarter for exploration, with another 50,000 m drilled, an excellent success with building an operating mine, a new growth project. So with this in mind, there's a lot to talk about. Before getting into that, I'd like to just start with a few comments on the location and geologic setting for our key projects in the Timmins area. So starting with geology, first, I'd like to point out that the entire area we're looking at here is in the southwest part of the Abitibi Greenstone Belt, underlain by rocks from four main formations, including two volcanic and two sedimentary.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

The two volcanics being the Timmins and Deloro, represented by the green and yellow, covering most of the central part of the map, and the two sedimentary being the Porcupine and Timiskaming, which are the gray and darker gray units surrounding the volcanics.

[Mark Utting, Senior VP of Investor Relations at Discovery Silver]

Eric, can I just interrupt you for one second? Just for this part, particularly of the presentation, I can certainly imagine how this would be helpful to be looking at the map. I'm told there is on the left side of the screen that you'd be looking at a downloadable PDF. I don't know exactly what the icon is, but there is a PDF there that can be downloaded and viewed, so that may be helpful as we go through these. Sorry, Eric, go ahead.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

Okay, no problem. Yeah. So in addition to that, and as indicated here, I think it's important to note that most of the rocks here have been strongly folded or cut by two very prominent faults, including the Destor-Porcupine, which is the east-west trending dashed blue line near the lower part of the image, and the Burrows-Benedict, which is the north-south line, which crosscuts this near the center. In terms of corporate current operations, the Dome and Hollinger sit on the West side of the map, just east of the city and north of Destor-Porcupine, and Hoyle Pond and Pamour are approximately 18 km to the east and along narrow bands of volcanics extending easterly from Timmins, with Pamour being adjacent to the Destor-Porcupine and Hoyle Pond being about 5 km to the North.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

So turning to my next slide, which is number 22. We see a close-up of the Hoyle Pond, Owl Creek area, which contains three of our main targets, including the Lower F, TVZ, and Owl Creek. And as mentioned, this area is located on a narrow band of volcanics, 18 km from Timmins. As shown here, Hoyle Pond is located on the far east side of the image, with mineralization centered on a distinct northeast trending flexure. The Lower F is on the north-east side of the mine, just east of the 1060 fault, and the TVZ in sedimentary rocks, 800 m to the south. Owl Creek is about 3 km to the west and centered on an easterly plunging wedge of volcanics just east of the Owl Creek fault, with mineralization mostly in swarms of veins near the East tip of the wedge.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

So turning to slide 23, we can see a long section for the Lower F, where we added another 12 drill intercepts to the east and west sides of the current resources, with very positive results. As shown here, drilling to the east included six new holes into the projected down plunge extension of the zone and included multiple holes with visible gold and highlights, such as 59.18 g per ton over 6.2 m and 31.33 over 1.6, to confirm that the zone is definitely open to down. Drilling to the west included another six holes targeting the lower edge of the zone, and as with Q3, continued to identify more high-grade lenses of mineralization, including values up to 69.34 over 4.1 and 28.73 over 5.1.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

Considering the above, we're very happy with the progress here so far and plan to keep at least 2 rigs-3 rigs active for the near term, plus another 2-3 in the middle to upper parts of the mine. Then turning to slide 24, we see an image for the TVZ, where drilling is now in progress and we see results from our first hole. As previously described, TVZ is a significant zone of mineralization in the southeast part of the Hoyle Pond mine. It was partially drilled and defined by past operators, where we're now going back and adding more holes to support a maiden resource update later this year.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

Details for the zone, as it's modeled to date, are shown on the current slide and indicate mineralization in a series of northeast trending lenses between the 850 and 1410 level, with the bulk of the mineralization being in one main lens, which we call the TVZ 2, shown here in green, and most of the remainder and splaying sitting to the North. Also shown in the image are locations for the new drilling, which is being done on the 1210 and 1680 levels, with work on 1210 focused mostly on infill and conversion, and 1680 on extensions to depth.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

In terms of results, we have the one hole back so far, but with very positive results, including intervals of 3.9 over 7.5 from the TVZ 2 and 4.1 over 30.1 m, with multiple high-grade intercepts from an untested gap, 100 m to the north of this. Going forward, the program is continuing with one drill on 1210 level and one on 16 level, 1680, with the second slated to start on 1210 very shortly. We're also planning for drilling, which is going to be happening on the 1410 and 900 level later in the year. Turning to slide 25, we see Owl Creek, where we completed another 17 holes near the historic pit.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

Details for the main target and new holes are shown on the current slide, and as indicated, the pit is outlined in yellow, and the new holes favoring the center and west side. As indicated in our lease, drilling here was very successful and included several highlight holes, including values such as 4.8 over 35.7, 3.45 over 25 from hole 18 and O-09C in the center of the pit, as well as 2.61 over 33.9, including 5.36 over 3 and 5.52 over 5 from hole 20, which was drilled on the far west side of the zone, where drilling at this point is still very limited. Given the above, we're very pleased with the progress to date and continue the program with two drills for the foreseeable future.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

So next, turning to slide 26, we see a plan view of the Borden Mine, where we completed another 19 holes in the northeast portion of the mine to infill and expand the main zone. Details for the drilling are shown on the slide, and indicated all this was done on levels 5, 6, and 7, and the east part of the 585 drift, which sits about 200-300 meters along the walls with the target. Looking at results, they're all very positive, the holes generally confirming the overall shape and grade of the current resource, even adding a small expansion on the east side. There are too many highlights to go through individually.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

I think it's worth pointing out that the ones from the expansion area have some of the best values, such as 16.97 over 14.7, including 21.76 over 10.8 m, 6.64 over 12, and 8.24 over 15.2. Given all this, we feel Borden is in very good position for future exploration and resource additions, and planning to have a very steady drill program ongoing here throughout 2026. So next, turning to slide 27, we have the Pamour, where we completed another 61 holes, both near the current resource and in a new area we just started near the Brule Pit, 1.5 km to the west. The new drilling near the current resource includes 60 new holes designed to upgrade and expand zones for future updates.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

As with Q3, easily met expectations with multiple highlights, including 1.26 g per ton over 140 m, 1.5 over 26.9, and 2.7 over 44.5 in holes at or near the bottom of the current pit shell. Drilling at Brule included one new hole, which intercepted some very nice values as well in a similar geologic setting to Pamour, including 2.06 over 29.6 and 4.15 over 25. Important to note that there are no current resources between this area and the Pamour pit. Drill program here is continuing, with 3 drills focused on the east and west extensions of the current pit and 1 at Brule.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

So then going on to slide number 28, we see the Dome where drilling is now in progress, initial results starting to come in, looking very positive. And as previously described, this entire project is centered on the historic pit and mine site, shown in the center of slide, where we already have 11 million oz inferred resource, but now working to upgrade and expand it for a new resource update later this year. In terms of the new drilling, the vast majority target southwest part of the resource pit, with one hole targeting the area to the northeast. For the area to the southwest, drilling tested both inside and outside the current pit shell, with key intercepts from inside, including 1.47 over 12.5, 13.64 over 6.5, and 7.17 over 5.6.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

Intercepts outside, including 1.61 over 28 and 4.86 over 18.5. For the area to the north-east, the new hole tested adjacent to the historic mining and intersected 2.5 over 12.4 and 3.97 over 6. Drilling at the site is still continuing, with one drill at the north-east target and a second drill arriving later this month. Turning to slide number 29, we see a summary of plans for 2026. And as indicated, we see a lot of the same projects continuing, but also a few differences and a much higher budget of about 280,000 m.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

But just going through the list, starting with Hoyle Pond, we'll continue to focus on the S, but adding new work at XMS and other, and several other mid-mine target areas. Borden. The case of Borden is staying much the same as this year. For Pamour, our plan is to have a strong. Continue to have a strong focus on infill drilling surrounding the pit, but at the same time, gradually increase work at depth and on strike, especially at Brule. For TVZ and Dome, as expected, we will see a much higher budget from last year to complement the new resource updates later in the year. And then finally, for regional projects, we're looking at 1-2 drills working steadily at Borden surface and another 2-3 for Timmins, which will be shifting between Owl Creek, Hollinger-McIntyre, and possibly the Paymaster.

[Eric Kallio, Senior VP of Exploration and Growth at Discovery Silver]

So in summary, a lot of projects in progress, a lot of good results, and a lot more to come. So with that, I'll pass over to José Jabalera, our VP Corporate Affairs and Sustainability, Mexico.

[José Jabalera, VP of Sustainability and Corporate Affairs at Discovery Silver]

Thanks, Eric. Hi, everyone. So for our project in Mexico, Cordero project in Chihuahua, Mexico, we are in the final stage of the evaluation of our environmental impact assessment. So lately, we've been having a lot of meetings with the senior level in the government of Mexico, with SEMARNAT, who is the environmental authority, and also with the Minister of Economy, Marcelo Ebrard. These meetings are being very clarifying where our permit is. So we think that we are very close to get it or in a final stage of that evaluation and get our approval in the months to come. So also last week, well, this week was a big visit of the Canadian Minister LeBlanc to Mexico City.

[José Jabalera, VP of Sustainability and Corporate Affairs at Discovery Silver]

He was talking with President Sheinbaum, and they touched the things around mining and around permits of the areas already on permit. So we think that that will help us for our permit in SEMARNAT. So in the meanwhile, we are going and advancing work for use of natural gas or this evaluation, because with the grid power or natural gas, also do a lot of work around the local water treatment plant, so where we'll get the water for our process. So in the meanwhile, we keep working on those things around the Cordero project in this zone. So thank you very much, and I pass the work to our CEO, Tony Makuch.

[Tony Makuch, President and CEO at Discovery Silver]

Okay, thanks, José. You know, you know, anyway, maybe you get the impression we got a lot going on. We can spend a lot of time talking about operating results, and we've got a lot of really interesting things and operations, what we can do in terms of, you know, increase production, lower costs, and really create value. On a financial side, the company is well managed, strong balance sheet, generating cash. We're profitable in our first months and two months of operations and continue that on throughout the quarter. So a lot of exciting things there. You know, on the exploration side, we have all kinds of exciting things to talk about. We could probably spend a lot more time talking about the exploration upside here.

[Tony Makuch, President and CEO at Discovery Silver]

As I thought, Eric, you know, we, we're 40 again, in terms of the, what you can do from an exploration point of view. We, you know, I think from a, you know, speaking out to any geologists out there, anybody need, looking for some exciting work and being able to be part of new discoveries, give us a call. We're, we're, we're happy to. We got a lot going on, and we're happy to make a lot of investments. We're also doing a lot of really good engineering studies for growth, where, you know, as, as Eric talked about, we're studying Dome, we're studying TVZ, looking at moving those forward, and we got one of the best development projects in the silver space in Mexico at, at Cordero.

[Tony Makuch, President and CEO at Discovery Silver]

And we're just waiting at the cusp of getting our approval to, to move that forward. Company's well-financed and able to finance it. So, you know, like I said, to start the call, we talked about we're building a very special business. Hopefully, we can, we can get that, that across to people, even start to get the sense of the energy in the company and the people. We'll continue to generate excellent results and really continue to invest in this business and build value for our shareholders. So thanks again for participating in today's call, and we'll be happy to take your questions.

[Operator]

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Cosmos Chiu with CIBC. Your line is open.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Hi, thanks, Tony and team. Maybe my first question is on the Hollinger open pit. I'm seeing that you're ramping up production from Hollinger in 2026. It seems to be contributing earlier than what we had expected. Is that, especially if we were to compare it to the PEA that was put out, a bit over a year ago now, is that, is my memory serving me correct, Tony?

[Tony Makuch, President and CEO at Discovery Silver]

Yeah, I mean, there's opportunity there. I mean, Hollinger was a project that was being stopped by, you know, completed by Newmont. There's still some work to do there, and we still felt that there's some additional, this additional mining that we can take place in its current form. We have a bigger plan for Hollinger over the next few years, and we think, Hollinger can be a value driver for, for Hollinger McIntyre, a big value driver for, for, you know, another 50 years of gold mining in Timmins. But that's a whole other story. But, you know, we do see it, you know, with, you know, and Pierre can maybe give a little color, but at least this year and next year, some value from that, from Hollinger.

[Tony Makuch, President and CEO at Discovery Silver]

Is that correct, Pierre?

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

But-

[Tony Makuch, President and CEO at Discovery Silver]

Sure.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

I guess, Pierre, could you give us a bit more numbers then, if possible? So, you know, in terms of, like, tonnage, what's the grade versus Pamour? You know, I didn't get to visit it last year when I came out with you. Is there anything that needs to get done in terms of stripping or dewatering, so CapEx? And again, tonnage, you know, your open pit tonnage, how much of that is gonna come from Pamour versus Hollinger? Anything that could help us, you know, kind of refine our model, that would, that would help.

[Pierre Rocque, COO at Discovery Silver]

So what we have at Hollinger, Cosmo, right now is mining about 6 benches-7 benches that were left behind, and that's what we're planning to do this year. So if you want to plug numbers in your model, you can use 2,000 tons/day. And the grade that we're planning at at Hollinger is about 1.4.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Mmm.

[Tony Makuch, President and CEO at Discovery Silver]

The strip ratio is?

[Pierre Rocque, COO at Discovery Silver]

Strip ratio is very low because essentially it's been done before, so call 1 to 1.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Mm-hmm. And this is incremental to what you are mining out of Pamour, correct?

[Pierre Rocque, COO at Discovery Silver]

So, yes, is the short version. Now, what we're going to do is because the grade at Hollinger is more interesting right now than what we're mining at Pamour, and we're still limited by our processing capacity, we're going to offset some of the Pamour feed with the Hollinger.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Great.

[Tony Makuch, President and CEO at Discovery Silver]

Pamour will be stockpile.

[Pierre Rocque, COO at Discovery Silver]

There will be a stockpile material from Pamour. But that being said, we're still planning to process more next year, 2026, than what we've done in 2025.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Mm-hmm. And then, as you mentioned, strip is pretty low, so-

[Pierre Rocque, COO at Discovery Silver]

Yeah.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

I guess CapEx is, yeah. So CapEx isn't, you know, not a lot of upfront CapEx that I need to consider.

[Pierre Rocque, COO at Discovery Silver]

Not a whole lot.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Yeah. The permitting, there's no permitting, all the permitting you have in place, and everything's, everything's okay?

[Pierre Rocque, COO at Discovery Silver]

Correct. Everything is in place to continue mining, and actually, we started mining in January.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Perfect. Thank you. Maybe switching gears a little bit, going to Cordero. You know, it certainly sounds like it is, you know, exciting and from what José is saying. But I guess my question is, I believe you're still working towards kinda a new technical report to update us on the numbers at Cordero. And Tony, to the extent that you can, you know, kinda share with us, what can we expect, you know? Is it gonna be an update to your CapEx or any other areas that you're updating, throughput? Will they stay about the same? Anything that you can share with us, I think that would be great.

[Tony Makuch, President and CEO at Discovery Silver]

Well, I think the biggest thing, Cosmo, is we've got to update the CapEx. You know-

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Mm-hmm.

[Tony Makuch, President and CEO at Discovery Silver]

There's some we got some a little more detail on a few areas, such as water treatment and power, you know, some other areas, we would take a little bit of time looking at security at site, et cetera. But, you know, I don't know if there's anything else Forbes that you could add to that, or that's pretty much what we're looking at. We're not looking at sort of a whole updated feasibility study. I think we've done a very, very good job on our current one. It's more of that.

[Forbes Gemmell, EVP of Business Development and Growth at Discovery Silver]

The only, the only change in scope from the FS we put out in 2024, we're looking at gas power rather than grid power. So we're still doing some evaluation of that right now and probably come to a decision point in the second quarter of this year. But aside from that, we're looking at the same size of plant, a very similar mine plan, and I suppose some more advanced work we've done on the water treatment plant. But basically a very similar scope and sort of focused really on updating the CapEx for, obviously, our financing budgeting purposes.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Thanks, Forbes. And in terms of timing, when are you expecting to, you know, provide us with that new technical report?

[Forbes Gemmell, EVP of Business Development and Growth at Discovery Silver]

We're still sort of talking through that now. I mean, obviously, it opens up a bit of a can of worms. You go through a full technical report process. So I think it's an internal exercise for now, and then if anything is released, it wouldn't be until the second half of this year.

[Tony Makuch, President and CEO at Discovery Silver]

Let's just say, 3 months, 3-4 months after we get our permit.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Okay. And then, maybe one last follow-up question on Cordero. You've kind of allocated $90 million-$100 million in terms of CapEx for the project in 2026, a part of which is fees required for permits. Could you maybe break that down for us? How much of that $90 million-$100 million is, you know, related to fees, and how much of it is related to, you know, engineering studies and other things that you're working on at Cordero?

[Tony Makuch, President and CEO at Discovery Silver]

Go ahead, Alison.

[Alison White, CFO at Discovery Silver]

Sure. So Cosmos, this is Alison.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Hi, Allison.

[Alison White, CFO at Discovery Silver]

Hi. The fees are a vast majority of that, just as you mentioned, of the $90 million-$100 million. And roughly, the fees are between $70 million-$80 million, dependent on the final outcome of the ratios that are required as a part of the calculation for the overall payment that has to be made. That won't be finalized until later this year when we actually receive the information about the permit.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Mm-hmm. And, and what's that for, again, the $70 million-$80 million, and is it, and is it higher than what you had expected previously?

[Alison White, CFO at Discovery Silver]

It's for the land use permit, and it is higher than what we had initially anticipated. The government goes through an annual process to update the required calculation for the fees, and this utilizes some of those most recent updates.

[Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC]

Mm-hmm. Great. Awesome. Thanks, Tony, and team. Those are all the questions I have, but I guess Doug Ford was referring to the hockey game. That's the more important thing, Doug Ford. You, you'd be happy to know we're winning 1-0. We're winning 1-0. So thank you.

[Tony Makuch, President and CEO at Discovery Silver]

It's all about perspective, right, Alison? Thanks, Cosmos.

[Operator]

Our next question comes from the line of John Tumazos, with John Tumazos Very Independent Research. Your line is open.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

Thank you very much. How many meters of snow do we have up in Timmins this week? Should we expect the tons per day to be maybe 1,000 tons a day less for the first quarter, simply because it's harder to move surface material?

[Tony Makuch, President and CEO at Discovery Silver]

Well, it's probably about 2 m of snow total accumulated. I wouldn't doubt a meter and a half anyway, but, you know, I don't think the snow. It's winter country, it's winter people, like, the snow doesn't stop operations from happening. There may be some other things, but I don't know, Pierre, are we going to have any less throughput this quarter, the last-

[Pierre Rocque, COO at Discovery Silver]

But there, there's the usual grind shutdown, right? But if you want to compare the first few months of 2025, compare that to what we've done in 2026, we're ahead of what was done in January, February last year.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

Being better than Newmont is good, but are we as good as 9,700 tons a day in the fourth quarter?

[Tony Makuch, President and CEO at Discovery Silver]

What do you think? Yeah, sure. Yep. Well, our goal-

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

So-

[Tony Makuch, President and CEO at Discovery Silver]

is to this year to do approximately, I think it's somewhere around 3.7 million-3.8 million tons processed throughout the year, and try to increase that again next year.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

Great.

[Tony Makuch, President and CEO at Discovery Silver]

All of its availability and utilization of the plant, comminution throughput, but we got to do it for, and in short, I mean, we have more ore stockpiles on surface than we have mill capacity right now. We could probably shut the mines down for three months and still keep the mill running if we wanted. So our issue is processing, but we, you know, in terms of processing, we don't want to run, you know, increase throughput and impact metallurgical recovery. So we're trying to do things the right way.

[Pierre Rocque, COO at Discovery Silver]

To that point, John, as you heard today, we're spending money, lots of capital money in the mill to improve our process over there. So yeah, 3.7 million tons, but our objective is to go back to that 12,000 tons/day and exceed that.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

So the permit is 15,000 tons a day, and when we made repairs in April and July, I thought there were days of 12,500 tons a day. But on a sustained basis, we struggle to do 10,000 tons a day, and we're mill-constrained.

[Tony Makuch, President and CEO at Discovery Silver]

No, I know. So we could get we do 12,500 tons a day, even better on any given day, but part of it is, you know, reliability of the plant and maintenance, et cetera. So, you know, you got to look at availability and utilization combined with the numbers, John. So whenever we do run, and Gord's on the phone, but, I mean, those are the rates that you try to turn on, and then, you know, things happen, right? But we have maintenance shutdowns, et cetera. So in order to achieve the rates we want, those are the type of rates we got to run at a nominal capacity and in order to achieve what, you know, the final numbers on an average basis.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

Is Gord going to make a comment?

[Tony Makuch, President and CEO at Discovery Silver]

You're going to make a comment, Gord?

[Gordon Leavoy, Senior VP of Mineral Processing at Discovery Silver]

I can make a comment. We are working towards a 12,000 ton/day average over 365 days, John. We're not there yet. We still have another year of maintenance work to do in here. We're probably almost halfway through what we had planned to get done, but we are not done yet. We will beat 9,700 tons a day in the first quarter, guaranteed.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

Looking ahead a few years, maybe 5 or more, there looks like there's enough ore for 75,000 tons a day if you restart all the pits full.

[Tony Makuch, President and CEO at Discovery Silver]

Yeah.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

How is it, what are the next stepping stones to increase? For example, can we get quickly to 25,000 tons a day by dropping a used SAG mill into the existing mill, an extra ball mill, flotation tanks, et cetera? Do we buy the neighbor down the road, or do we just write a big check for $500 million and build a 30,000-ton-a-day mill like Cordero twice? What's the way to get big?

[Tony Makuch, President and CEO at Discovery Silver]

Well, you know, all those are iterations of things we're working on, John. And, you know, in the end, you know, we talk about the exploration, and we're drilling to find more stuff. And like I say, we can mine, probably, you know, we can stockpile Pamour while we're mining Hollinger stuff, and we can be selective in terms of putting the highest grade through. But ultimately, we don't want to be building big stockpiles and having big money tied up in inventory. So, you know, our goal is to increase mill capacity, and increasing mill capacity is what helps us to get to the higher production levels in spite of any exploration success, and they throw that on, and that's why it's exciting company.

[Tony Makuch, President and CEO at Discovery Silver]

Yeah, you know, it's not gonna happen in six months, but it's not gonna take us 10 years either to get. When you talk about 50,000 tons a day of milling capacity, it'd probably be a reason to think that that's probably what we need in ten years over the next few years. And, you know, we have a lot of initiatives we're working on to try to get there. I wish it would be as easy as just dropping in a new SAG. I agree with you, and you're right on track, so.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

In terms of Mexico, Wheaton said on their call Tuesday morning that, counting reserves and measured and indicated, but not inferred, they were paying $60 an ounce for the silver in the ground at Antamina, + $15 or 20% of spot for the stream. So they invested to buy in at a $75 an ounce break even. That makes the, 230 million oz of production, based on your old feasibility study at $22 silver, look awful good, as though Cordero is worth more than Discovery is?

[Tony Makuch, President and CEO at Discovery Silver]

Mm-hmm.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

If the permit comes this quarter, and I guess people are gonna throw money at you based on what Wheaton Precious Metals paid, how quickly can we pour silver in Chihuahua? By the first of 2029?

[Tony Makuch, President and CEO at Discovery Silver]

Oh, you know, the feasibility study had about a 2.5-year build. Yeah, yeah, you know, if we're now, then I would think pretty close to that, right?

[Alison White, CFO at Discovery Silver]

John, just to add on to that, I would just clearly say financing is not the limitation there-

[Tony Makuch, President and CEO at Discovery Silver]

Yeah.

[Alison White, CFO at Discovery Silver]

-as you well know. And so that won't be a hurdle in order to get moving on the construction side.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

Thank you. I'll give somebody else a chance.

[Operator]

Next question comes from the line of Rabi Nizami with National Bank of Canada. Your line is open.

[Rabi Nizami, Metals and Mining Equity Research Analyst at National Bank of Canada]

Good afternoon. Thanks for taking my question. Just wanted to ask you about your 2026 guidance and, particularly the, the cadence of, of how we'd expect to see the, the year play out on a quarter-by-quarter basis. You've mentioned that it's an H2-weighted wrap-up in terms of production and, costs, commensurate with that. So, could you tell us a bit about, about what's driving that? Is the production more driven by throughput going to the mill, or is it more of a grade factor? If you could give us a bit more color on that.

[Tony Makuch, President and CEO at Discovery Silver]

You want to talk about that, Pierre? Are you okay, or?

[Pierre Rocque, COO at Discovery Silver]

Well, in terms of throughput, you're correct. It's, you know, backloaded towards the end of the year rather than front end. In terms of expenditures, we still have high capital costs. I think there was a slide on that, did you show that?

[Alison White, CFO at Discovery Silver]

For the guidance, not-

[Pierre Rocque, COO at Discovery Silver]

For the guidance, yeah.

[Alison White, CFO at Discovery Silver]

But the capital cost is in the first part of the year, and the production is in the second.

[Tony Makuch, President and CEO at Discovery Silver]

You should see, so, so like, like you've seen in, from Q2-Q3-Q4 in 2025. You see this sort of the same type of, you know, Q1 2026, Q2, Q3, Q4, in, you know, incremental increase quarter-over-quarter. And same thing on the cost side, incremental decrease quarter-over-quarter, as we progress. And, you know, we have a lot of other initiatives, and we, you know, in terms of other, other things that should help us reduce costs and improve productivity. You know, those are the kind of things you should expect quarter-over-quarter. So maybe we're the top end of the guidance and low end on the guidance on the production rate in the first quarter.By the last quarter, we're probably, you know, equal or beating the guidance on both costs and production rates.

[Rabi Nizami, Metals and Mining Equity Research Analyst at National Bank of Canada]

Thanks for that. And in terms of just capital allocation through the year, obviously, with the heavier CapEx spend in the first half and the tax payment in Q1 as well, and well, hopefully, we also see the land transfer tax payment also in Cordero as well. So with that, how are you thinking about your liquidity position, and do you – what would be the conditions under which you would consider drawing on the revolver? Is that something we'll see through the year?

[Alison White, CFO at Discovery Silver]

Yeah. So, Rabi, we are definitely keeping our eyes on that, I would say, on almost every day, and utilizing what we have. We still anticipate having a very strong liquidity position at the end of 2026, because we are, you know, we've run multiple different scenarios through our budgeting process at various different gold prices, and it will be highly dependent on the price of gold. And but in any scenario, whether that's a spot price, a short-term consensus price, or a call it downside case from short-term consensus, we have a significant amount of liquidity between the revolver and just regular cash flow generation to support what we have put out in our guidance.

[Tony Makuch, President and CEO at Discovery Silver]

And on the question, Rabi, if let's say the price of gold stays where it is today, we could advance all of our projects, advance, even begin advancing Cordero, and still building our cash position. So not drawing our revolver.

[Rabi Nizami, Metals and Mining Equity Research Analyst at National Bank of Canada]

Okay, thank you very much. I'll pass the mic on.

[Tony Makuch, President and CEO at Discovery Silver]

Big part of our business is, I mean, we, you know, we're working towards, you know, positioning ourselves at being, you know, we want to be the lower half of the cost curve in the industry. We. So we've got to pull our costs down. Some of that is improvements in infrastructure, et cetera, and it's also improvements in productivity. You know, and that's our goal, and that's how we wanna differentiate ourselves and from a value proposition point of view. Go ahead.

[Operator]

Our next question comes from the line of Jake Savage with Agentis Capital. Your line is open.

[Jake Savage, Metals and Mining Equity Research Analyst at Agentis Capital]

Hi, everyone. Congrats on another strong quarter of production and exploration at Porcupine. Just given a few of the things you've talked about, the pits ramping up and the mill ramping up, can you walk us through how you're planning to optimize the overall mill feed grade at the Dome Mill? Are you looking at adjusting the blend with Hoyle Pond and Borden, given the ventilation upgrades and mobile equipment upgrades? Are things tracking pretty close to the PEA, or are you increasingly selective?

[Pierre Rocque, COO at Discovery Silver]

Right. So for 2026, we're going to track pretty well, if not in excess of the PEA, for the two underground mines. The bulk of the feed, of course, is coming from Pamour in the PEA. And in our case here, we're basically adding some from Hollinger. So the total blend here, we're trying to keep close to 40%-45% from the underground, and the rest is coming from the open pit.

[Jake Savage, Metals and Mining Equity Research Analyst at Agentis Capital]

Excellent. Okay, thank you.

[Operator]

Our last question comes from the line of John Tumazos with John Tumazos Very Independent Research. Your line is open.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

So, Gord, whenever you're doing under 10,000 tons a day instead of 12.5, what are the parts that break down and limit the production?

[Gordon Leavoy, Senior VP of Mineral Processing at Discovery Silver]

Well, John, we had some issues with our screen decks in the secondary crusher. Our supplier made some changes to new screen decks and didn't inform. Turns out we had to go back to the old style, so that is our biggest issue that we've had in the last quarter and the first two weeks of January.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

Is that fixed?

[Gordon Leavoy, Senior VP of Mineral Processing at Discovery Silver]

That's fixed, and we have new screens coming. So we've rehabbed the screen that was in place. We have a spare screen that we also rehabbed and made the changes to with Metso, and Metso is building us a new screen right now. So our lower tonnage is. When we're running, we're running at very high rates. Problem is keeping it running for the full month. So it's our utilization. It's the availability. So we've had two issues in January. We had a conveyor belt issue, then we had screen deck issue, which are both fixed now.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

When you stop at 12,500 tons a day, and don't get to the 15 permitted level, what's the next bottleneck?

[Gordon Leavoy, Senior VP of Mineral Processing at Discovery Silver]

Above 12,000 tons a day, to get to 15,000 or, we would need some horsepower and grinding and some more leach retention time. The thickener would need to be upgraded.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

When do we go and apply for a permit to raise the 15,000 tons a day? And do we raise it to 25 or a bigger number?

[Gordon Leavoy, Senior VP of Mineral Processing at Discovery Silver]

Well, that would be a Tony question, I think.

[Tony Makuch, President and CEO at Discovery Silver]

Yeah, you know, John, these are all things that we're, that's exactly what we're working on, the concept of the scope of that. I mean, we're looking at other alternatives, as you know, about, you know, what do we, you know, as you talked about earlier, do we upgrade this plant? Do we build a new plant somewhere? Do we take advantage of some other plants in the area and have a combination thereof and focus in those directions? It is as big a priority to us as the exploration and as the production, you know, so, you know, like, the development and growing that is very important and is things that we're working on, right?

[Tony Makuch, President and CEO at Discovery Silver]

So, you know, it's gonna unlock a lot of value. If we get another 15,000 tons a day milling capacity, we're not gonna have to wait for, you know, that long for feed to feed that plant. And, you know, it'd be incremental to what we do. And so very quick payback on any of that kind of stuff.

[Pierre Rocque, COO at Discovery Silver]

John?

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

So, yes.

[Pierre Rocque, COO at Discovery Silver]

To Tony's point here, as you know, Pamour is limited by the mill capacity right now. So once you remove that constraint, Pamour can offer and deliver a whole lot more than the 10,000 tons per day that is in the PEA.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

A year ago, when you made your presentation, March second, in Toronto, I just assumed that you would build the Cordero mill twice and drop a 30,000 ton a day mill right into Dome. And now a year has passed, and we haven't added a lot of capacity. We're still refurbishing. But if you announced the 30,000 ton a day new mill and let a couple contracts, the two neighbors down the road that don't want to sell you the mill, they'd be paying you to take it because they missed the boat. So why don't you just go ahead and announce a big new mill?

[Tony Makuch, President and CEO at Discovery Silver]

Well, I mean, that's, you know, to announce a big new mill, it requires a big new tailings areas, it requires power, it requires water, and it requires permits. And, you know, John, the other aspect of it is to announce a big new mill like that, you're gonna, you could, because of the size of the footprint, you could be creating a, like, a permitting thing, a issue and time on permitting. Whereas if we can do some incremental things with a few other selected indications, we might, it might be more strategic for us. But, you know, you know, when we can announce it, but, and then the time we announce it and the time to get it into production and built might be the same, and that's what we're working towards, John.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

So Tony, July 15, the town last year appropriated CAD 27 million to move the water tower and the water treatment plant to help you expand the Hollinger pit. Everybody's rooting for you. Everything's easy, isn't it?

[Tony Makuch, President and CEO at Discovery Silver]

Yeah, yeah, yeah, we're moving, boy. You know, we talk about what the opportunities are. You can see the drill results, and you're bringing up a lot of the opportunities around. To me, it's nice that that milling capacity is our problem. Sometimes you just don't find the ore. You know, we're there, and we got the right market, right? The price of gold, metal prices are high, and we have earnings, we're generating cash flow, so we have the finance, the money to invest back into the business, and we're working on all these things in stages.

[Tony Makuch, President and CEO at Discovery Silver]

You know, I would expect as, you know, John, as the year progresses, there's gonna be a lot more clarity on that. That is the big value driver, as much a value driver as exploration success, as development success, and the mine as, you know, build the mill. And so what we said in November last year, what we would have said in April of last year, is still the goal. We have the opportunity to stabilize and get long-term production from Pamour and Hoyle Pond and Borden. We have the opportunity to build two, at least two new mines at TVZ and Dome. And, you know, and we have the opportunity to discover new resources and even expand upon that.

[Tony Makuch, President and CEO at Discovery Silver]

You're seeing some of those results already. You know, we said we were gonna try to increase our current mill capacity. We're working on that and trying to get that up to, you know, I can say around 4.3 million-4.4 million tons a year on a current mill, but that doesn't, you know, the real solution is to get new capacity. We still got to keep our current business in good form and get our costs down and keep that running while we're working to make the right decision in terms of how we grow our production and our mill throughput.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

Thank you all for your service. I just wanna buy season tickets for the Discovery Arena, and I don't want you to wait too long. I want to be in good health by the time it's built.

[Tony Makuch, President and CEO at Discovery Silver]

No problem.

[John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research]

Thank you.

[Tony Makuch, President and CEO at Discovery Silver]

Thank you. We're all in the same boat there. Because the clock is ticking, right? Pitter-patter, right? So be safe.

[Operator]

That concludes the question and answer session. I would like to turn the call back over to Mark Utting for closing remarks.

[Mark Utting, Senior VP of Investor Relations at Discovery Silver]

Thanks, operator, and thanks, everyone again, for taking part in today's call. As you heard, there's a lot of, a lot of exciting things going on. There's a lot of energy, and we think we've got some pretty compelling catalysts, right in our very near term here. So there's a lot to talk about, and we look forward to having our next update, so we can tell you about our additional progress. Thanks again.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.

Participants

Executives

• Alison White, CFO
• Eric Kallio, Senior VP of Exploration and Growth
• Forbes Gemmell, EVP of Business Development and Growth
• Gordon Leavoy, Senior VP of Mineral Processing
• José Jabalera, VP of Sustainability and Corporate Affairs
• Mark Utting, Senior VP of Investor Relations
• Pierre Rocque, COO
• Tony Makuch, President and CEO

Analysts

• Cosmos Chiu, Managing Director and Director of Precious Metals Equity Research at CIBC
• Jake Savage, Metals and Mining Equity Research Analyst at Agentis Capital
• John Tumazos, Principal, Director of Research, and Managing Member at John Tumazos Very Independent Research
• Rabi Nizami, Metals and Mining Equity Research Analyst at National Bank of Canada