What Discovery Silver (DSV) Said on Its Q3 Earnings Call

Key Points

• Record quarterly revenue and EBITDA: Q3 revenue rose 16% sequentially to $371 million and EBITDA increased 7% to $181 million, supported by higher gold sales and a full quarter of Kidd operations. Free cash flow was $87 million, and the company ended September with $450.7 million in cash.
• Production increased, but per-ounce costs rose: Gold production reached 70,564 ounces, up 5% from Q2, while cash costs climbed to $1,470 per ounce and all-in sustaining costs averaged $2,293. Discovery said it remained on track to meet guidance, though Porcupine costs and capital spending are expected near the high end of their ranges.
• Growth projects advanced: Discovery completed federal environmental permitting for its Cordero silver project and plans a feasibility-study update around year-end or early 2027. It also expects updated Pamour and Dome resource estimates and a Porcupine preliminary economic assessment in early 2027.

Discovery Silver TSE: DSV reported record third-quarter revenue and gold production as its newly acquired Kidd operations contributed a full quarter of results and the company advanced exploration at its Timmins properties and permitting for its Cordero silver project.

Revenue rose 16% from the second quarter to $371 million in the third quarter of 2026, while EBITDA increased 7% to a record $181 million, Chief Financial Officer Alison White said on the company’s earnings call. Higher gold sales at Porcupine and the contribution from Kidd more than offset a lower average realized gold price.

Discovery generated $87 million in free cash flow, compared with an $11 million outflow in the preceding quarter, even as cash spending on capital projects reached $116 million. White said the improvement reflected strong operational performance and a change in working capital, including the normalization of payables after accelerated payments ahead of a second-quarter systems implementation.

Production rises as costs increase

Gold production reached 70,564 ounces, up 5% from the previous quarter, while gold sold rose 8%, Co-Chief Operating Officer Gord Leavoy said. The company processed 943,000 tons during the quarter, 4% more than in the second quarter and 17% more than a year earlier.

Milling costs fell to $20.10 per ton from $21.50 in the prior quarter. Mining costs per ton also improved by more than 10% from the second quarter, according to Co-Chief Operating Officer Duncan King.

On a per-ounce basis, however, cash costs rose to $1,470 from $1,387 in the second quarter. White attributed the increase to higher royalty expenses and the processing of higher-cost inventory. Companywide all-in sustaining costs averaged $2,293 per ounce sold, reflecting higher sustaining capital spending on equipment, the Dome Mill and tailings work.

Adjusted earnings were $83 million, or $0.10 per share, down from $92 million, or $0.11 per share, in the preceding quarter. The figure was up from $61 million, or $0.08 per share, a year earlier.

Discovery ended September with $450.7 million in cash and $844 million in total liquidity, including the undrawn portion of its revolving credit facility. White said the company remained on track to meet its key production, cost and capital guidance ranges, with Porcupine capital spending and cash costs expected toward the higher ends of their respective ranges.

Resource updates planned for early 2027

Executives highlighted drilling at the Pamour and Dome properties in Timmins, where Discovery is preparing updated resource estimates. President, CEO and Chairman Tony Makuch said recent results suggest both properties have potential to become substantially larger open-pit operations.

At Pamour, Executive Vice President of Exploration and Growth Eric Kallio said drilling has extended mineralization around the main pit and identified promising results at Pamour West and the north contact area. The updated resource, planned for early in the first quarter of 2027, is expected to include approximately 100 holes drilled in 2025 and 2026 and cover a larger area than the previous estimate.

At Dome, drilling identified mineralization extending up to 600 meters south of the current pit, as well as new zones to the north, Kallio said. He added that several of the intersections are shallow and remain open for expansion. Discovery is also working on an updated Dome resource estimate for early 2027.

Makuch said advancing Pamour remains the company’s priority. With existing mill capacity constraining production, Discovery is targeting processing of Borden ore at the Kidd metallurgical site in 2027 and is considering a new gold circuit there that could eventually process Pamour material.

The company is preparing a Porcupine preliminary economic assessment for early 2027 that will incorporate resource updates and work on milling options, Makuch said.

Cordero permits and spending outlook

Discovery said it received environmental approval and a change-of-land-use permit for Cordero, completing the federal environmental permitting process. The company reduced its 2026 Cordero capital spending guidance to $20 million to $30 million after the land-use permit fee came in below its original assumption.

White said Discovery paid a $12 million permit fee in the third quarter and had spent $18 million on Cordero capital through the first nine months. The original guidance for fees and growth capital was $90 million to $100 million.

Makuch said an update to Cordero’s feasibility study, focused largely on capital and cost estimates, is expected around year-end or early in the first quarter of 2027. Discovery plans to advance detailed engineering next year while evaluating options that could include building the project itself or working with a partner.

At Kidd, acquired June 1, third-quarter revenue was $72.3 million and production costs were $45.1 million, said Dawid Myburgh, senior vice president of Timmins operations. The operation posted a small loss after depreciation but generated positive cash flow. Makuch said Discovery was not promising how much longer the Kidd base-metals mine would remain operational.

About Discovery Silver (TSE:DSV)

Discovery is a growing precious metals company that is creating value for stakeholders through exposure to both gold and silver. The Company's silver exposure comes from its first asset, the 100%-owned Cordero project, one of the world's largest undeveloped silver deposits, which is located close to infrastructure in a prolific mining belt in Chihuahua State, Mexico. In April 2025, Discovery acquired the Porcupine Complex, transforming the Company into a new Canadian gold producer with multiple operations in one of the world's most renowned gold camps in and near Timmins, Ontario.

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