Discovery Silver Q1 2026 Earnings Report

Discovery Silver EPS Results

• Actual EPS: C$0.14
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Discovery Silver Revenue Results

• Actual Revenue: $396.28 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Discovery Silver Announcement Details

• Quarter: Q1 2026
• Date: 5/14/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, May 14, 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 Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Discovery Silver said it is on track to more than double gold production at Porcupine to over 500,000 ounces per year while advancing Cordero toward about 14 million ounces of silver annually over the first 10 years.
• Positive Sentiment: The company highlighted the Kidd operations acquisition as a major growth milestone that could add significant milling capacity, processing flexibility, infrastructure, and skilled labor, with closing expected in the next few weeks.
• Neutral Sentiment: Management said exploration remained very strong across Hoyle Pond, TVZ, Owl Creek, Borden, Pamour, and Dome, with 67,000 meters drilled in Q1 and multiple high-grade intercepts supporting future resource growth.
• Neutral Sentiment: Q1 production of 60,269 ounces was described as the weakest quarter of the year, affected by lower mill throughput from winter-related issues and scheduled downtime at the Dome crushing circuit.
• Positive Sentiment: Financial performance was strong, with $285 million of revenue, $178 million of EBITDA, and $63 million of adjusted free cash flow, while cash ended the quarter at $384.9 million.

Presentation

[Operator]

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, SVP of Investor Relations at Discovery]

Thanks very much, operator. Thanks everyone on the line for joining Discovery's First Quarter 2026 Conference Call and Webcast. Joining me today are many members of the Discovery senior management team. Speaking 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, Exploration, and José Jabalera, our Senior Vice President, Corporate Affairs and Sustainability in Mexico. Again, there are many other members of our senior executive team in the room as well. Before we get started, I'll remind you that during today's call, we will be making forward-looking statements. These statements are based on current expectations and projections about future events. They're subject to risks and uncertainties, and actual outcomes may not be what is included in those statements.

[Mark Utting, SVP of Investor Relations at Discovery]

I refer you to slide 2 as well as our website for further information on that. In addition, we'll also be making reference to a number of non-GAAP measures during the presentation. These measures do not have any standardized meaning, and they under GAAP, and therefore may not be comparable to other issuers. I refer you to slide 3 on our deck as well as our website for more details. Finally, all dollar amounts will be in U.S. dollars unless otherwise indicated. Now, turning to the quarter, to begin with, you know, as many of you know, you know, we're working towards more than doubling gold production at Porcupine to over 500,000 ounces per year.

[Mark Utting, SVP of Investor Relations at Discovery]

At the same time, we're working towards developing our Cordero project in Mexico, through which we will produce about 14 million ounces of silver per year, at least over the first 10 years. You know, we plan to achieve these levels of performance while averaging in the lowest half of the global cost curve for both gold and silver. We're going to achieve these milestones using a disciplined approach to investment with a focus on investor returns. During the first quarter, there were a number of key developments in support of achieving our growth objectives. Specifically, we announced the acquisition of Kidd operations in Timmins. We also reported continued outstanding exploration results in and around Timmins, and we continued with our investment programs through which we will both grow and optimize our current operations.

[Mark Utting, SVP of Investor Relations at Discovery]

Getting into those in a little bit more detail, looking at Kidd on slide 6, we announced the acquisition of the Kidd operations on March 2nd. We expect that transaction to close very soon, likely over the next few weeks. This is a major milestone for our company. To achieve over 500,000 ounces of annual gold production, we require additional milling capacity. Through the Kidd Met Site, we have an opportunity to dramatically grow processing capacity and to process different kinds of ore. There is lots of other benefits as well, including adding valuable infrastructure that will support the future expansion of both Hoyle Pond and Pamour, including the development of TVZ.

[Mark Utting, SVP of Investor Relations at Discovery]

It gives us exposure to critical minerals, copper, zinc, and silver through Kidd Creek Mine, adds significantly more exploration potential to our already very large and highly prolific portfolio, delivers cost synergies, and this is a very important point, adds a very large, highly skilled workforce that's going to help us with our existing growth plans. Going to the next slide, this gives you a view of the Kidd Met Site and a conceptual plan for what we expect to do and are currently evaluating. It's a conceptual plan, it kind of points our shows you our thinking in terms of the path forward. Maybe at this point, I'll turn it over to Tony to talk about that.

[Tony Makuch, President and CEO at Discovery]

Okay. And maybe, and just, a couple simple things. I mean, people should understand first off that the Hoyle Pond underground operations are actually under the Kidd Met Site. You can see the blue rectangular box here, and it's trying to show where the location could be for any new vent raises we can establish for the Hoyle Pond Mine, as well as potential location would be for a new shaft if we wanted to develop for the TVZ zone. I think what we show here, there's we've alluded to before, there's four circuits at the Kidd Met Site.

[Tony Makuch, President and CEO at Discovery]

You can see where it says A division, and we sort of tried to conceptualize on here what would be involved in building a new 5 million ton-7 million ton per annum conventional gold circuit at the plant with the Borden crushing and how that would fit in. We'd still continue to use the B division there, which is the base metal circuit, its flotation circuit. The C division, we're working pretty hard right now on that. That's about a 1 million ton a year capacity. Looking at where the aspect of bringing the Borden ores

[Tony Makuch, President and CEO at Discovery]

To here and run it through this division as early as we can over the next 6 months-12 months, that would unlock 2,000 tons- 3,000 tons of A&M capacity in the Dome Mill for conventional processing. You can see that these circuits, that's where it's here, which we would turn into a gold refractory flotation circuit. On the other side, both all the AB and the BC and D circuits that are here could always be utilized as combination-based metal circuits if we needed, and/or gold circuit as required.

[Tony Makuch, President and CEO at Discovery]

To give you a sense on what this could unlock for us, basically, You know, you can look sorry, 7 million ton-9 million ton a year new gold processing, processing capacity at the Kidd Met Site. The A division as a conventional circuit, C division for processing, and 1 million ton a year for processing. The Borden ores and the D division, which we would then use to process refractory ores at Timmins, effectively the refractory ores would be the TVZ zone as we're talking about. The general location where it is.

[Tony Makuch, President and CEO at Discovery]

Sorry, this figure doesn't show where the Pamour operations are in here, but the Pamour open pit operations are less than a half a kilometer from the bottom of this page. The idea would be all the Pamour ores would be trucked, and same as the Hoyle Pond ores, would be trucked and processed through this new circuit.

[Mark Utting, SVP of Investor Relations at Discovery]

That's perfect. Okay.

[Mark Utting, SVP of Investor Relations at Discovery]

Just going on to slide 8, we'll get to the next key development, and that's exploration progress. You know, for all the production that we have and we're going to be adding, you know, this is we think it's one of the most compelling exploration stories in the industry as well. You know, we issued a press release on April 23rd. That's our latest one. I'm not gonna get into a lot of the details. Eric will get into the details of that release shortly. I'll just very at a high level say we continue to get very good results from resource conversion and extension drilling at Hoyle Pond, Borden, and Pamour.

[Mark Utting, SVP of Investor Relations at Discovery]

Included in that release was excellent results at a number of district targets near those operations and positive results at our near-term projects, specifically Dome and TVZ. Again, there's a lot more information that you'll be hearing very soon about that. Slide 9 looks at our investment programs in the first quarter. Sustaining capital for the quarter was about $21 million, mainly related to capital development, mobile equipment, and infrastructure investments at Hoyle Pond and Borden. I'll mention we are very much on track with our capital development activities at those mines. Also contributing with new mobile equipment at Pamour and some investments at the TMA 6, our tailings facility project as well.

[Mark Utting, SVP of Investor Relations at Discovery]

Sustaining capital was somewhat lower than we planned, which was primarily related to the shifting of delivery schedules for new mobile equipment to second quarter and just other quarters of the year. Growth capital totaled $40 million. Investment in the TMA 6, including our new deposition strategy and pre-stripping at Pamour accounted for the vast majority of that. Again, pre-stripping at Pamour was very much in line with expectations. Just going to slide 10, this gets to the operating results. During the first quarter, Alison will get into all the financial numbers in a few minutes, and Pierre will then add some additional color on operations as well.

[Mark Utting, SVP of Investor Relations at Discovery]

You know, in our year-end results, we indicated that production in 2026 would be weighted to the second half of the year, and the Q1 would likely be our lowest quarter of production for the year. Well, production was 60,200 ounces for the first quarter. What I will say is a highlight of the quarter was Hoyle Pond. It had a very good quarter in Q1 with an average grade exceeding 12 grams per tonne. Also, our total mine tonnes increased by 4%, and we ended the quarter with stockpiles of close to 1.3 million tonnes, which will help us manage both our throughput levels and grades over the balance of the year. Like production, our unit costs are expected to improve significantly in the second half of the year.

[Mark Utting, SVP of Investor Relations at Discovery]

You know, one reason our guidance ranges were as wide as they are, is because of the variability we saw coming in the quarters. I will say our AISC number for the quarter was in line with our guidance, and we do expect that number to improve as we get into the second half of the year. Going to slide 11, it shows a visual of, well, Dome Mill, but specifically in the foreground, the crushing circuit. As we mentioned, we expected quarterly production this year to be lowest in Q1, and a significant reason for that was mill throughput. We did 698,000 tonnes in the quarter.

[Mark Utting, SVP of Investor Relations at Discovery]

You know, the reduction from the previous quarter, most of that was expected, an expected reduction due to scheduled downtime and our understanding of the implications of severe winter on our crushing plant at Dome. We've indicated since we announced the Porcupine deal beginning of last year that we were looking at replacing the three-stage crushing system, that it needed to be replaced. You know, that's because it's inefficient and contributes to high unit costs, because it's prone to breakdowns, particularly in winter conditions, and ultimately because we're gonna need to move it to get it out of the way as we push back the Dome pit when we bring Dome Mill into production. The longer-term solution for this is single-stage crushing and a SAG mill, and that's part of our plans going forward in terms of achieving our growth targets.

[Mark Utting, SVP of Investor Relations at Discovery]

The near-term plan is that we are keeping increasing levels of critical spares on site, and there is a newly designed secondary screening system that's going to be delivered at the end of June that will be installed during the scheduled shutdown in July. These steps we're taking now are designed to help us when we get to next winter. Just going on to slide 12. This shows you our guidance, and I can say we remain on track to achieve all of our guidance for 2026. We've completed the lowest quarter of the year. We expect to see significantly higher production, particularly in Q3 and Q4. An important contributor there will be Hollinger. We began ramping up Hollinger in Q1 and exited the quarter mining about 2,000 tons a day. We expect to get over 40,000 tons from Hollinger this year.

[Mark Utting, SVP of Investor Relations at Discovery]

There was only a few thousand in the first quarter. We also expect to see higher levels of mill throughput, and supported by the large stock piles I mentioned. With that, I'll turn the call over to Alison White, our CFO, to look at the financial results for today.

[Alison White, CFO at Discovery]

Great. Thank you, Mark, and good afternoon everyone on the call. On slide 13, let's look at what a solid quarter and start we had to 2026, which reflects the continued momentum that we are building on from last year. We had robust revenues during Q1 of $285 million, an increase of 4% quarter-over-quarter, primarily reflecting the higher than average gold prices throughout the quarter. This four times during the quarter and coupled with the number of ounces sold over the same period, cash costs per ounce were $1,417.

[Alison White, CFO at Discovery]

As previously mentioned, unit costs are projected to be the highest in the first half of the year and are scheduled to improve during the second half of 2026 as production and sales volumes increase and benefits are realized from the investment to optimize the company's operations. All-in sustaining costs averaged $2,041 per ounce sold, reflecting the higher operating cash costs per ounce sold and is partially offset by lower spend from the sustaining capital during the period. The lower than planned sustaining capital is due to the delayed timing that Mark had mentioned earlier for the delivery of new mobile equipment and for construction work that's ongoing at the Tailings TMA 6 project. EBITDA grew quarter-over-quarter to $178 million, an increase of 41% from Q4 2025, which is driven by an increase in revenue as gold prices climb.

[Alison White, CFO at Discovery]

Discovery has continued to have progressively strong momentum since its transition to an operational company last year, continuing to grow EBITDA during each quarter of 2025 and now again in the first quarter of 2026. We also continued the trend to generate solid free cash flow, with adjusted free cash flow of $63 million, reflecting an adjustment of $87 million for a payment made during the quarter to satisfy the company's 2025 income tax obligation. Discovery deployed $67 million in capital expenditures to further advance the asset base at Porcupine, continuing onward with the vision and capital allocation plans of reinvesting in the business to add value. Q1 2026 net income was $81.7 million, an increase of 25% from Q4 2025, and both earnings per share and adjusted earnings per share were $0.10.

[Alison White, CFO at Discovery]

The increase in net income quarter-over-quarter resulted from the one-time $45 million reclamation expense for non-operating mine sites that occurred in Q4 2025, as well as the benefit of higher revenue and lower depreciation and depletion expense during Q1 2026. Partially offsetting all of this was the impact of an income tax recovery of almost $5 million in Q4 2025 that was also offset by a $49.6 million of income tax expense in Q1 2026 for the current year, and higher share-based compensation costs that also occurred during the current quarter. The income tax recovery in Q4 2025 resulted from the $40.9 million in a deferred tax recovery that was related to revised reclamation cash flows. As we end on that tax note, let's move to slide 14 to review financial metrics.

[Alison White, CFO at Discovery]

We've continued to build on the momentum that began last year across all of our key financial metrics. Revenue and EBITDA increased each of the last four quarters and equally, through strong earnings generation, we continue to see positive momentum in our operating and free cash flow with Q1 adjusted operating cash flow of $130 million and adjusted free cash flow of $63 million that I mentioned previously. The positive free cash flow generation strengthens the company's balance sheet and allows for capital redeployment into the business. Let's take a look at our liquidity position on the next slide, please. Discovery's cash balance totaled $384.9 million at the end of the quarter.

[Alison White, CFO at Discovery]

The stronger gold price environment translated into $130 million of adjusted operating cash flow, partially offset by the 2026 tax payment and continued capital investments that were covered earlier. Discovery's liquidity position remains robust. With $385 million in cash on hand and a $250 million revolving credit facility with a $100 million accordion feature, we have meaningful financial flexibility. We believe that this balance sheet strength gives us the foundation to advance our strategic priorities with confidence. With that, I'm going to pass it over to Pierre, our Chief Operating Officer.

[Pierre Rocque, COO at Discovery]

Thank you. It is a pleasure to be presenting today. I will be speaking to slide number 16. During Q1, we produced 60,269 ounces of gold, with total gold pour of 59,258 ounces. As Tony mentioned earlier, we expect production to ramp up, particularly in the second half of the year. The change in production in Q1 2026 versus the previous quarter reflected lower tonnes processed. The impact of this reduction was partially offset by a 15% improvement in the average grade, reflecting a significantly higher grade at Hoyle Pond and a higher average recovery rate. More than three-quarters of the reduction in tonnes processed was planned and related to the scheduled maintenance, as well as the impact of severe winter conditions on the crushing circuit. The company is currently advancing plans to replace the crushing circuit.

[Pierre Rocque, COO at Discovery]

Total ore tonnes mined increased by 4% compared to Q4 2025. We have close to 1.3 million tonnes of stockpiled material that is available for processing at the end of Q1. Tony discussed the crushing circuit at the mill in his remarks. I'll point out that during operating days, the Dome Mill continued to show improved performance. Daily throughput at the mill exceeded 11,000 tonnes per day on 26 days in Q1, including 10 days when the mill exceeded the operating capacity of 12,000 tonnes per day. Operating cash costs per ounce sold averaged $1,417 compared to $1,185 in the previous quarter, with the increase mainly reflecting the higher mining costs given the increased mining rate in Q1 2026 and the impact of lower gold sold.

[Pierre Rocque, COO at Discovery]

Site level all-in sustaining costs averaged $1,875 per ounce sold, similar to the previous quarter, as the impact of higher operating costs was partially offset by a reduction in sustaining capital expenditures. I'll now turn the call over to Eric Kallio, Senior Vice President, Exploration.

[Eric Kallio, SVP of Exploration at Discovery]

Okay, thank you, Pierre. Good afternoon, everyone. I'm on slide 17. Before starting, just like to say it's been another great quarter for exploration. Another 67,000 meters drilled with excellent success with both operating mines and growth projects. With this in mind, we have, again, a lot of new information, my plan today is just to go through some of the highlights, starting with the current slide at Hoyle Pond. As shown on the slide, which is a long section looking south, work at the mine continues focused on the lower S Zone, including another five holes near the lower limit of the current resource, with very positive results. We have several holes containing visible gold and high grades directly down plunge with deposit P and others indicating potential new high-grade lenses to the west.

[Eric Kallio, SVP of Exploration at Discovery]

In terms of those, we're very happy with progress here so far and plan to keep at least 2 rigs-3 rigs active here in the near term. Plus also integrating another 2 rigs-3 rigs in the mid to upper part of the mine to start advancing those projects as well. Turning to the next slide, which is number 18, we see the TVZ area, which was another important drill project for us in Q1. As mentioned in the past, TVZ is a significant zone of mineralization in the southeast part of the Hoyle Pond mine that was partially drilled and defined by past operators, but we are now back and adding more holes to support a maiden resource estimate for later this year.

[Eric Kallio, SVP of Exploration at Discovery]

With that in mind, what we see here on the slide is an overall view of the target area, including the Main Zone, drill platform, and even the workings from Hoyle Pond mine. Just to dwell slightly on the main target here a bit, what we're looking at is essentially a large northeast plunging structure, which is based on drilling to date, extending from at least the 850 to the 1,680 level and remaining open in both directions. Internally, the zone consists of a series of lenses, which you show here in various colors, the largest being the TVZ2, which is the large green one sitting on the south side of the zone, and the remainder being clay bins, which sit immediately to the north.

[Eric Kallio, SVP of Exploration at Discovery]

In terms of drill platforms, just to point out that the project already has a number of areas with drill platforms that have been set up from past work, and these can be activated fairly quickly with just a little bit of work. Aside from that, all of our new drilling has actually been from just the 1210 and 1680 levels, and then we'll be shortly starting from 1410 as well. Turning on to my next slide, number 19, we see a more detailed view of the zone in long section, including recent drill results that has indicated it's all looking good so far. In terms of 1210, which is in the upper right-hand side of the slide, we had multiple new holes with wide high-grade intercepts nearby to our first hole that we announced in Q1.

[Eric Kallio, SVP of Exploration at Discovery]

On 1680, several more, which intersected attractive grades and widths near the lower limits of past drilling. Just to give you a flavor for what we're seeing, intersections on 1210, we're including numbers sections 4.23 over 55, 6.41 over 11, 5.18 over 9.1, intersections from 1680, such as 4.32 over 19, 4.24 over 10, and 4.73 over 6. Important to note is that all of these intersections are similar or better to other previously drilled holes in both areas. The drilling below the 16 level is still very limited. Given the above, we're very happy with progress so far. The program's continuing with three drills active on 1210, 1680, and 1410 levels.

[Eric Kallio, SVP of Exploration at Discovery]

Expect to see a lot of additional new results from the upper and lower parts of the zone very shortly. We're also starting on rehab of new 4th platform on the 1430 level and the 900, which will provide even more platforms as the year progresses. Returning on to the next slide, which is number 20, we see the Owl Creek area, where we completed another 12 holes near the historic pit, as well as at the 750 zone, which is 750 m to the east. Indicated here, drilling near the historic pit included eight new holes resurfaced from the 650-meter level with very encouraging values, multiple holes intersecting wide, high-grade zones near the east side, and another continuing to enlarge the overall footprint to the west.

[Eric Kallio, SVP of Exploration at Discovery]

Key intercepts to the east confirming the wide of higher-grade zone include values such as 4.11 over 39 over 3, 5.24 over 10, 4 over 13.8. The key intercepts to the west includes 4.5, 2.2. Drilling at the 750 zone includes 1 new hole, which is designed to confirm and extend mineralization near the 250 level and at the lower limits of historic drilling and was also very successful with an intercept of 5.76 over four and a half, 2.57 over 8.9. Given the above, we continue to be very pleased with progress of the project to date and plan to continue with two drills for the near term.

[Eric Kallio, SVP of Exploration at Discovery]

Turning to slide 21, we see an overall view of the Borden Mine, where we added another 24 holes in the northeast portion of the mine. We're showing here the focus for current work continuing to be on the main zone, which is the farthest target on the right-hand part of the slide. All drilling being done from the 585 drift, testing mostly down plunge northeast of the mine workings. Additionally, we also saw drilling start on the lower part of the East Lower Zone or ELZ, which is another mineralized structure with similarities to the main zone 500 m to the west. Important to note that both zones still have limited drilling down plunge remaining open for expansion. Yeah, I'm not gonna go into a lot of details here in terms of the results.

[Eric Kallio, SVP of Exploration at Discovery]

They're well summarized in our press release, I guess I could just mention that we continue to have a lot of success here with the drilling, getting very good grades and widths in both areas, both inside and outside resources. I think so, very optimistic about the future of the site. Turning to slide 22, we have the Pamour, where we completed another 67 holes near the current open pit resource, as well as Pamour West, 1.48 km to the west, and the North Contact Zone, north of the phase 2 pit. Drilling near the open pit included six new holes designed to upgrade and expand resources. That's what Q4 results were easily meeting expectations with multiple highlights from all areas. Drilling at Pamour West with another six holes found in the historic mine at the Broulan property.

[Eric Kallio, SVP of Exploration at Discovery]

As of Q4, also continued to intersect very nice values along strike of Pamour and a similar geologic setting. Drilling at the North Contact Zone included five new holes to test the major east-west contact north of the Pamour pit and also started to show very positive results. Important to note that none of the material from Pamour West or North Contact area is included in the current resource estimate, and we'll be working hard to incorporate this in our next update later this year. The program's continuing with four drills, two focused on extensions of Pamour pit, one at Pamour West and one at the North Contact. Going on to slide 23, we see the Dome, where we had continuation of drilling in preparation for the new resource estimate later this year.

[Eric Kallio, SVP of Exploration at Discovery]

As indicated on the image, the vast majority of new drilling targets the northeast part of the resource pit but also included final holes from the area to the southwest. Drilling in the northeast area included 10 holes to evaluate mineralization on the Dome Fault, near the lower portions of the current resource, and very successful, indicating close correlation of geology, similar better grades and width to the historic holes, which were drilled mostly before 1970. Drilling to the southwest included four holes to test the exploration target to the south of the current open pit, as the Q4 continued to identify new growth opportunities for future expansion. Drilling at the site's continuing with two rigs, both now located on the north side of the pit. Considering results and progress to date, the project remains on track for a new resource estimate by the end of 2022.

[Eric Kallio, SVP of Exploration at Discovery]

In summary, things continue well, and lots more to come. With that, we'll pass over to José Jabalera, Senior VP Corporate Affairs and Sustainability, Mexico.

[José Jabalera, SVP of Corporate Affairs and Sustainability in Mexico at Discovery]

Thank you, Eric. Hi, everyone. In Cordero, in Mexico, we continue to advancing the project. In that advancing, we are including the studies on water and power in that. Also after the last event or the Flood in Mexico event with the president when she announced incentives on the investment, we got meetings with senior Mexican authorities, and that comes for, they scheduled a site visit at the project to go in the final process of the evaluation for our MIA. We will have that visit on the next week to continue advancing on the processing of the permits for SEMARNAT. With that, I pass the words to our CEO, Tony Makuch.

[Tony Makuch, President and CEO at Discovery]

Okay. Thanks, José. Thanks, everybody, for the presentation.

[Tony Makuch, President and CEO at Discovery]

You know, we had a fairly solid quarter. It was a quarter where, you know, really our mines definitely outperformed the mill in terms of throughput. The mill had some challenges in terms of weather, but, you know, as we're moving on, we're, you know, we're working at having these things corrected, and we expect to have really solid processing results as the year goes on. Really want to thank the hard work of all the people in the company that did all the work and got all the success of the year. You know, we really appreciate that.

[Tony Makuch, President and CEO at Discovery]

To wrap up, you know, on the other side, you can see from exploration and a few other things, we had some significant developments in the first quarter that supports our growth objective. The acquisition of Kidd is one really important value driver for the company and one of our There's a lot of synergies and a lot of value in terms of what we inherited from, with Kidd and then take advantage here. The main thing is the unlocking of processing capacity. You can see, you know, when I try to show you somewhere between 7 million-9 million tons of new processing capacity that can be unlocked with that.

[Tony Makuch, President and CEO at Discovery]

You just do the math yourself in terms of when we talk about where we think that it can go. We have lots of resources if Eric still give us continued exploration success and there's still a lot of gold left around Timmins and some of these are, they're right within existing operating mines and on operating infrastructure. We continue to invest and we invest properly in terms of building the value, and like I said, as Mark talked about, we, you know, our growth objective to reach over half a million ounces of gold production. You know, that's, I, you know, if you do the math, you see we have significant plans in place and we expect to even somewhat exceed that.

[Tony Makuch, President and CEO at Discovery]

You know, with that, maybe I'll just thank everybody for participating in the call and be happy to take any questions.

[Operator]

Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Your first question comes from Larry Liu with CIBC. Your line is open.

[Larry Liu, Analyst at CIBC]

Hi, Tony, Alison, Pierre, Eric, Mark, and team. I guess I'll start off my first question by asking about Kidd Creek. Would you mind reminding us, you know, what are some of the opportunities you see here? Does the acquisition of Kidd Creek change the way we should look at the near-term mine plan? As well as, you know, can you also remind us what are some of the steps between now to closing our transaction into one?

[Tony Makuch, President and CEO at Discovery]

Well, I think, you know, it's the first thing in terms of the acquisition of Kidd, you know, we, you know, the mine's still operating. We do expect the mine to operate, you know, there, you know, and continue to produce the ores, definitely for the rest of this year. We're working hard in terms of what can be done there and done safely and effectively. I think that's somewhat of an opportunity. There's significant exploration lands acquired here, and I mean, that's really part of a long-term exploration program. But, you know, if I can, going to slide 7, where I tried to show the biggest part here is unlocking the value of on the metallurgical site.

[Tony Makuch, President and CEO at Discovery]

What that brings to us in terms of adding mill capacity. You know, we do with very minimal capital investment. We can process the ore to ores at the Kidd Met Site at the C division. We're looking to process, you know, refractory gold ores such as TVZ in the D circuit. Again, these aren't significant capital expenditures for here, and they're not necessarily significant time too. We expect that, you know, things go properly. We're doing some test work right now and working on firming that it could be between September of this year and March of next year that we could be actually processing more ores here.

[Tony Makuch, President and CEO at Discovery]

That unlocks 2,000 tons-3,000 tons a day capacity at the Dome Mill pretty quickly for the gold ores. We mentioned about, you know, Mark mentioned about the significant amount of stockpiles we have on surface as we're building stockpiles from mining. There's a lot of opportunity there. You know, the big part is we're going to be starting the engineering now and working on what we need to do to build a whole new mill circuit at Pamour. Sorry, at Kidd to treat the Pamour ores, and that's a 5 million-7 million ton a year conventional gold circuit. You know, one of the really advantages here with this, you have a brownfield site where you have over 100 MW of power already.

[Tony Makuch, President and CEO at Discovery]

We have all the water we need. We have, you know, a site, a cleared site with actual concrete foundations in place. Not the final foundations for all of what we do, but definitely an area that was used in the past for metallurgical work that we can go in here, build a coarse ore bin in, put a primary crusher, a SAG mill, and then, you know, can grade that, like say, a 5 million-7 million ton a year gold circuit to process all the Pamour ores and really unlock the value then of Dome Mill. You know, like, think about it.

[Tony Makuch, President and CEO at Discovery]

It gives us somewhere between 7 million and 9 million tons a year of processing capacity between six months from now, you know, grossing from six months from now to three years from now. We see the opportunity here. That's the main part. In terms of closing, I mean, things are working well. We're working towards some, you know, final transfers or closing plans, et cetera, with the provincial government. You know, we're kind of thinking we're gonna have this thing closed before the end of the month. There's always something that can happen. But we're, you know, I think we're pretty much dotting the i's and crossing the t's as we speak.

[Larry Liu, Analyst at CIBC]

Yeah, for sure. Thanks, Tony, for that answer. I guess, you know, kind of a follow-up here on Kidd Creek, not diving too deep as well. How, you know, are you comfortable adding copper, zinc, and silver to your portfolio? Should, you know, would this be a good experience for having some processing base metal capacity from Cordero potentially in the future?

[Tony Makuch, President and CEO at Discovery]

Yeah. I mean, you know, as part of this part, you know, we, we have the offtake in place with Glencore, and pretty much the offtake terms are not really much different than the offtake terms that they provided to their own Kidd site itself. It gives us that lead in terms of working. It's a going concern business. It's producing, you know, 3,000 tons per day, or it's running at a 1.2 million ton a year capacity currently, and it will continue on that for the rest of this year. You know, we still have to get work with them on plans once we, once we take over. The operation will continue to produce, you know, a copper concentrate and a zinc concentrate.

[Tony Makuch, President and CEO at Discovery]

The copper concentrate goes to the Horne Smelter. The zinc concentrate goes to Quebec, to Montreal. That goes in place, and we have that agreement in place with Glencore, and it's great learning capacity for what we would do as we advance Cordero as well.

[Larry Liu, Analyst at CIBC]

Perfect. Sounds good. Sorry, if I can, Alison, I do apologize in advance. This is going to be a tax question. If I look at this quarter's free cash flow, before being adjusted, a large item would be the taxes paid for last year from Porcupine taxes. Going forward, should we expect more of a monthly installment, or how should we look at taxes, cash taxes being paid going forward?

[Alison White, CFO at Discovery]

Larry. You're exactly right. First of all, thanks for the question. Taxes are never anybody's favorite topic to talk about, so you're brave to ask it. Nevertheless, yes, you're right, and we will be, and we are paying monthly installments in 2026. The one-time event for 2025 payment was largely just because last year was our first partial year of operation.

[Larry Liu, Analyst at CIBC]

Amazing. Sounds good. All right. Thanks so much, Tony, and team for the response. I'll return to the queue. Thank you.

[Operator]

Your next question comes from John Tumazos with Very Independent Research. Your line is open.

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

Thank you for taking my question. I'm trying to envision or anticipate the fourth quarter technical study. The January study last year described resources of four deposits and production from three of them. Based on the drilling results, will we have resources from four more deposits, TVZ, Owl Creek, if you're taking material from Hollinger, and now we've acquired Kidd Creek. Will the new report describe eight distinct resources and envision production from all eight of them?

[Tony Makuch, President and CEO at Discovery]

Well, that's a good question. Eric, you can chime in. Some of that really, you're not offline, John.

[Eric Kallio, SVP of Exploration at Discovery]

Yeah, well, you know, say we have the three main ones, which are the operations for the, you know, we'll be doing update on those, and then we've got Dome and TVZ. That's the base plan for sure. I mean, we've had the results at Owl Creek, like you say. You know, we see if we have enough drilling to do a resource there by year-end. Really it's be those five that we're aiming for at year-end.

[Tony Makuch, President and CEO at Discovery]

You do have, we do have Hollinger that we could discuss or include. There will be some things out of Kidd. We are still working on Kidd. By the way, we will give something out of Kidd. It might be part of a separate report there, John.

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

Is the 131 million tons that Glencore reported for Kidd good enough to meet your standards?

[Tony Makuch, President and CEO at Discovery]

I mean, it was, Okay. I'm not sure if it was quite that number, but yeah, I mean, the level of drilling and the level of quality of workmanship, we're not questioning that at all. Eric?

[Eric Kallio, SVP of Exploration at Discovery]

I mean, we didn't do 43-101 report. That's a JORC report. We know that was done in the past. I mean, the drillings have been always done to a measured and indicated standard for the mining by areas really where most of the resources is in the deep part of the mine. Really, which they could be added to the resources, but it's really not because of the quality of definition of the drilling that they're not putting it in. They have uncertainties with other parts of the mining approach.

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

Just wanna make sure I heard you right, Eric. Did you say that there'll be a resource for Hollinger or Owl Creek or not?

[Eric Kallio, SVP of Exploration at Discovery]

Right now, we don't have plans to do it, but depending on how the drilling goes, we could do one.

[Tony Makuch, President and CEO at Discovery]

That's Owl Creek you're talking about?

[Eric Kallio, SVP of Exploration at Discovery]

Owl Creek, yeah.

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

If you're taking material from Hollinger, do you have resources without drilling them based on earlier data since you're putting ore through the mill?

[Eric Kallio, SVP of Exploration at Discovery]

The ore we're taking, this is broken ore, so it's within the mine.

[Tony Makuch, President and CEO at Discovery]

Yes, there is material at Hollinger. You know, it's a valid point that the material at Hollinger we're mining, that was part of a historic resource or a resource from the previous operators. You know, it's work we're doing, and something we're considering, but it may be more work, John, for 2027, only because, you know, in terms of the level of drilling and the other work we needed to do to verify to complete a 43-101 level or a one level report, it may more roll into 2027 for Hollinger. It is one of the key areas and a lot of potential for sizable resource there.

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

If I could ask one more. When do you expect to have the single stage crusher at the Dome Mill and where will you put it? Will it be away from the existing mill site in case a decade from now you move the mill site?

[Tony Makuch, President and CEO at Discovery]

What we're looking at doing, John, is right now with in terms of the primary crusher, what we're looking at doing is either getting some, putting an ore bin at site and a new ore bin and truck dump at site and do fine crushing, bring crushed material from Pamour, put primary crushing at site. That's one alternative. Second alternative would be to put that there. We're just working on now. There's some work in the back. If I had a drawing up, I'd show you.

[Tony Makuch, President and CEO at Discovery]

There's work in the back that's around the secondary and tertiary crushing plant and going into the tailings where we would excavate some, doing some foundation work where we would put it right now. That would be the first phase of what we do at the Dome Mill. Yeah, I mean, the reality is we could keep the mill where it is, have a variation of crushing there and continue to run, we can run the Dome pit for anywhere from, depending on throughput rate that we wanna mine at, for 10-15 years before we even have to move and replace the mill at that Dome.

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

Thank you, and congratulations on all the progress.

[Operator]

Once again, if you have a question, it is star one. Your next question comes from Ken Ilodibe with SCP Resource Finance. Your line is open.

[Ken Ilodibe, Analyst at SCP Resource Finance]

Hello, Tony and team. Just congrats on the quarter, and thanks for taking my question. Just switching gears to operations, you've talked about production and costs improving through H2 as I guess throughput and mining rates ramp up. My question is, what are the main things that we should be watching over the next couple of quarters to see if the ramp up is progressing as expected? Maybe just broadly, are you seeing anything so far in April into May from an operational standpoint that gives you confidence in this ramp up?

[Pierre Rocque, COO at Discovery]

Yeah, just wanna make sure I understood your question. You wanna know what we're going to watch for this year and how we're doing in Q2, correct?

[Ken Ilodibe, Analyst at SCP Resource Finance]

Yeah.

[Pierre Rocque, COO at Discovery]

Right. Of the four sources, we don't report separately, as you know, I'll be kind of speaking in general terms. I would say to you that our mining rates are progressing really well. We don't foresee any issues here at any of our operations. Of course, as Tony alluded earlier, grades do fluctuate up and down, mostly due to sequencing and some adjustment with block models that we're doing throughout the year. With that, on that aspect, Ken, I don't anticipate any issues delivering material to the mill, whether it's Q2, Q3, or Q4. In terms of processing capacity, we did allude to the fact that we had a few mechanical issues in Q1.

[Pierre Rocque, COO at Discovery]

I just wanna bring to your attention and others' attention that if you compare what we did process in Q1 of 2026, which was about 7,700 tons per day, and you compare that to the previous operator, which in Q1 2025, they processed around 4,800 tons per day, you can see that we have put in place some improvements already. Later this year, some of the mechanical parts, secondary screens, to name it, is going to be replaced. That's going to increase the availability of the process plant. As I did mention earlier, we did exceed the in-place capacity of 12,000 tons per day in Q1. We're going to work towards exceeding that 12,000 tons per day in the rest of the year.

[Tony Makuch, President and CEO at Discovery]

Alluding to that then, the real two primary key indicators if you wanna watch for how we're achieving the ramp up, one would be daily mill throughput as you see the mill producing, processing more on a day-to-day basis, going from average 10,000 tons a day to 10,500 tons-11,000 tons a day or whatever. Second part is our, you know, our quarterly production of gold. Those are two main drivers that right now if you want, so you watch.

[Ken Ilodibe, Analyst at SCP Resource Finance]

Okay. Is it fair to say that, I guess in the long term, you're working on a single stage crusher replacement, but then in the shorter term, you are confident in the reliability of what you have right now?

[Tony Makuch, President and CEO at Discovery]

Well, in the, in the short term, what we need to do is get plant reliability, and the biggest part is the screen, the screens on the secondary screens. That's what's been causing some of the trouble. There's lots of areas within the plant. In the short term, it's reliability on our secondary and tertiary crushing circuit, mostly the screens.

[Tony Makuch, President and CEO at Discovery]

You know, you're sizing on the material before you go to your fine ore bin. That's critical in the short term. A longer term processing is movement of the actual primary crusher to a different location and working on other areas. A much longer term thing is to replace the three-stage crushing circuit with a primary crusher and a SAG mill. That's up for Dome. The other aspects now, what we're doing with the Kidd Met Site, we have a number of initiatives there now.

[Tony Makuch, President and CEO at Discovery]

One initiative is to get a Borden ore to that, to that through the C circuit and open up capacity for That gives us like, you know, 700,000 to 1 million tons a year of new capacity at the Dome Mill because we're processing it at the Kidd Met Site. Second part is what we're gonna do to build a new 5 million-7 million ton a year conventional gold circuit at the Kidd Met Site, and the work we're gonna do on that. The third part is the refractory gold circuit now that we're gonna be able to work with at the Kidd Met Site. Our You know, like Eric can go through, you can see what our resources come out at.

[Tony Makuch, President and CEO at Discovery]

If we just look at the resources at Pamour, Hoyle Pond, Borden, and Dome, we had well over 15 million ounces of resources. You know, you should be able to, you know I don't know, you know, you don't wanna mine that over 30 years. We should be able to mine that faster. The first part, without adding any exploration success, we need mill capacity, so that's a big value driver. Second part is you can see, Eric, it, and all the exploration success we're having. Definitely we need more mill capacity, and then we can become more discernible in terms of, you know, as Pierre said, we, you know, focus on higher grade and proper margin as we understand all the different deposits.

[Tony Makuch, President and CEO at Discovery]

We have the potential to build a lot of new mines here and with that, you know, the mill capacity, and those are the things we're working on, right?

[Ken Ilodibe, Analyst at SCP Resource Finance]

Okay. That's all for me. Thanks Tony and the team for taking my questions. Best of luck in Q2, and I'll pass the mic to next person on the queue.

[Tony Makuch, President and CEO at Discovery]

Maybe just to reiterate, this is to tell you that, by the way, when we talk about mill capacity, you know, we're not building new mills. We're in brownfield permitted sites. We're just modifying plant site. We don't have to bring in power. We don't have to bring in water systems. We don't have to build substantial new foundations. We got actually existing tailings areas. We just have to modify permits on. We're working on and within existing operations to grow this stuff. We're not going to greenfield building brand-new permitting, brand-new processing operations. Sorry. Carry on.

[Operator]

This concludes the question and answer session. I will turn the call to Mark Utting for closing remarks.

[Mark Utting, SVP of Investor Relations at Discovery]

Thanks very much. Again, just wanna thank everyone for taking part in the call. As you've heard, to say the least, we have a lot going on. We're making a lot of progress. There's a lot more to come. That's good for a bunch of reasons, one of which is we will definitely have a lot more to talk about when we have our next quarterly call. We look forward to speaking with you then. Enjoy the rest of your day. Thank you.

[Operator]

This concludes today's conference call. Thank you for joining. You may now disconnect.

Participants

Analysts

• Alison White, CFO at Discovery
• Eric Kallio, SVP of Exploration at Discovery
• John Tumazos, Principal and Director of Research at Very Independent Research
• José Jabalera, SVP of Corporate Affairs and Sustainability in Mexico at Discovery
• Ken Ilodibe, Analyst at SCP Resource Finance
• Larry Liu, Analyst at CIBC
• Mark Utting, SVP of Investor Relations at Discovery
• Pierre Rocque, COO at Discovery
• Tony Makuch, President and CEO at Discovery