Santacruz Silver (SCZM) grows Q2 sales but profit drops
Rhea-AI Filing Summary
Santacruz Silver Mining Ltd. reported much higher sales for the six months ended June 30, 2026, with revenues of $240,987 versus $143,609 in 2025, driven by both mining operations and ore processing. Six‑month net income was $30,475, essentially unchanged from $30,428 a year earlier, as higher income taxes and fair‑value losses offset the sales growth.
For the quarter, revenue rose to $113,458 from $73,295, but net income fell to $2,005 from $20,977, largely due to a sharp increase in income tax expense to $36,067 and a $15,788 loss on the zinc‑linked contingent value right owed to Glencore. Operating cash flow for the six months declined to $24,140 from $39,160, after working‑capital investments and tax payments of $43,161.
Liquidity improved modestly, with cash and cash equivalents of $50,398 and total assets of $490,181. Shareholders’ equity increased to $213,088 from $179,058, while loans payable decreased to $45,168. The decommissioning and restoration provision was reduced to $21,245 following updated cost estimates in Bolivia.
Positive
- Six‑month revenues increased more than 60% to $240,987 from $143,609, reflecting growth in both mining and ore processing.
- Shareholders’ equity rose to $213,088 from $179,058, supported by retained earnings and modest equity issuance.
- Loans payable decreased to $45,168 from $51,986, reducing reported financial leverage.
- The decommissioning and restoration provision was lowered to $21,245 from $36,016 after updated cost estimates, easing long‑term obligations.
Negative
- Quarterly net income dropped to $2,005 from $20,977, despite higher revenues.
- Six‑month operating cash flow declined to $24,140 from $39,160, pressured by working‑capital movements and tax payments.
- Income tax expense for the six months more than doubled to $52,506 from $20,770, materially reducing after‑tax earnings.
- The fair value of the Glencore contingent value right increased to $35,066, driving a $14,823 loss on change in fair value for the six‑month period.
Key Figures
Key Terms
contingent value right financial
Monte Carlo Simulation financial
decommissioning and restoration provision financial
IFRIC 23 regulatory
management-defined performance measures financial
FAQ
How did Santacruz Silver Mining (SCZM) perform financially for the six months ended June 30, 2026?
What were Santacruz Silver Mining’s Q2 2026 revenues and net income?
How much cash and debt does Santacruz Silver Mining (SCZM) have as of June 30, 2026?
How significant is Santacruz Silver Mining’s contingent value right (CVR) obligation to Glencore?
What portion of Santacruz Silver Mining’s revenue comes from ore processing versus mining operations?
How did Santacruz Silver Mining’s decommissioning and restoration provision change in 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
UNDER the Securities Exchange Act of 1934
For the month of August 2026
Commission
File No.:
(Translation of registrant’s name into English)
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ☐ Form 40-F ☒
EXHIBIT INDEX
| Exhibit | Description | |
| 99.1 | Unaudited Condensed Interim Consolidated Financial Statements for the period ended June 30, 2026. | |
| 99.2 | Management’s Discussion and Analysis for the period ended June 30, 2026. | |
| 99.3 | Certification of Interim Filings (Form 52-109F2) – Chief Executive Officer | |
| 99.4 | Certification of Interim Filings (Form 52-109F2) – Chief Financial Officer | |
| 99.5 | News Release dated August 17, 2026 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Santacruz Silver Mining Ltd. | ||
| Date: August 17, 2026 | By: | /s/ Andres Bedregal |
| Name: | Andres Bedregal | |
| Title: | Chief Financial Officer | |
Exhibit 99.1
Condensed Interim Consolidated Financial Statements
For the Three and Six Months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars)
(Unaudited)
TABLE OF CONTENTS
| Notice of no auditor review of Condensed Interim Consolidated Financial Statements | 3 |
| Condensed Interim Consolidated Statements of Financial Position | 3 |
| Condensed Interim Consolidated Statements of Comprehensive Income | 4 |
| Condensed Interim Consolidated Statements of Cash Flows | 5 |
| Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity | 6 |
| Notes to the Condensed Interim Consolidated Financial Statements | 7 |
SANTACRUZ SILVER MINING LTD.
Condensed Interim Consolidated Statements of Financial Position
As at June 30, 2026 and December 31, 2025
(Unaudited)
(Expressed in thousands of US dollars)
Notice of no auditor review of condensed interim consolidated financial statements
Pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed interim consolidated financial statements of Santacruz Silver Mining Ltd. for the three months and six months ended June 30, 2026, have been prepared by and are the responsibility of the Company’s management.
The Company’s independent auditor has not performed a review of these financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.
August 14, 2026
| Note | June 30, 2026 | December 31, 2025 | ||||||||
| $ | $ | |||||||||
| ASSETS | ||||||||||
| Current | ||||||||||
| Cash and cash equivalents | 4 | |||||||||
| Marketable securities | 20 | |||||||||
| Trade and other receivables | 5 | |||||||||
| Inventories | 6 | |||||||||
| Prepaid expenses and deposits | ||||||||||
| Marketable securities | 20 | |||||||||
| Trade and other receivables | 5 | |||||||||
| Mineral properties, plant and equipment | 7 | |||||||||
| Goodwill | 7 | |||||||||
| Deferred income tax asset | 18 | |||||||||
| Total assets | ||||||||||
| LIABILITIES | ||||||||||
| Current | ||||||||||
| Trade payables and accrued liabilities | 8 | |||||||||
| Deferred revenue | ||||||||||
| Loans payable | 10 | |||||||||
| Current income taxes payable | 18 | |||||||||
| Other liabilities | 11 | |||||||||
| Decommissioning and restoration provision | 12 | |||||||||
| Trade payables and accrued liabilities | 8 | |||||||||
| Consideration payable | 9 | |||||||||
| Loans payable | 10 | |||||||||
| Other liabilities | 11 | |||||||||
| Decommissioning and restoration provision | 12 | |||||||||
| Deferred income tax liability | 18 | |||||||||
| Total liabilities | ||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||
| Share capital | 13 | |||||||||
| Equity reserves | 13 | |||||||||
| Retained earnings | ||||||||||
| Total shareholders’ equity | ||||||||||
| Total liabilities and shareholders’ equity | ||||||||||
Subsequent event (note 10(d), 13(e), 13(f), 13,(g))
Approved and authorized for issue on behalf of the Board of Directors on August 14, 2026:
| “Arturo Préstamo Elizondo” | “Larry Okada” | |
| Director | Director |
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
| 3 |
SANTACRUZ SILVER MINING LTD.
Condensed Interim Consolidated Statements of Comprehensive Income
For the Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
| Note | 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| $ | $ | $ | $ | |||||||||||||||
| Revenues | 14 | |||||||||||||||||
| Mine operating costs | ||||||||||||||||||
| Cost of sales | 15 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Depreciation, depletion and amortization | 7 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Gross profit | ||||||||||||||||||
| General and administrative expenses | 16 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Share-based compensation expense | 13 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Operating income | ||||||||||||||||||
| Other income | 17 | ( | ) | |||||||||||||||
| Loss on change in fair value of consideration payable | 9 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Foreign exchange gain | ||||||||||||||||||
| Income before tax | ||||||||||||||||||
| Income tax expense | 18 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Net income for the period | ||||||||||||||||||
| Other comprehensive income that may be reclassified subsequently to net income or loss: | ||||||||||||||||||
| Unrealized (loss) gain on marketable securities | ( | ) | ( | ) | ||||||||||||||
| Currency translation differences | ( | ) | ( | ) | ||||||||||||||
| Comprehensive income for the period | ||||||||||||||||||
| Net income per share: | ||||||||||||||||||
| Basic | 23 | |||||||||||||||||
| Diluted | 23 | |||||||||||||||||
| Weighted average number of common shares: | ||||||||||||||||||
| Basic | 23 | |||||||||||||||||
| Diluted | 23 | |||||||||||||||||
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
| 4 |
SANTACRUZ SILVER MINING LTD.
Condensed Interim Consolidated Statements of Cash Flows
For the Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
| Note | 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| $ | $ | $ | $ | |||||||||||||||
| Operating activities: | ||||||||||||||||||
| Net income for the period | ||||||||||||||||||
| Items not affecting cash: | ||||||||||||||||||
| Depreciation, depletion and amortization | 7 | |||||||||||||||||
| Other income | 24 | |||||||||||||||||
| Loss on change in fair value of consideration payable | 9 | |||||||||||||||||
| Share-based compensation expense | 13 | |||||||||||||||||
| Foreign exchange gain | ( | ) | ( | ) | ( | ) | ||||||||||||
| Gain on change in estimate of decommissioning provisions | 12 | ( | ) | ( | ) | |||||||||||||
| Income tax expense | 18 | |||||||||||||||||
| Operating cash flows before non-cash working capital | ||||||||||||||||||
| Changes in non-cash working capital: | ||||||||||||||||||
| Trade and other receivables | 5 | ( | ) | ( | ) | ( | ) | |||||||||||
| Inventories | 6 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Prepaid expenses and deposits | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Trade payables and accrued liabilities | 8 | ( | ) | ( | ) | ( | ) | |||||||||||
| Deferred revenue | ||||||||||||||||||
| Current income taxes payable | 18 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Other liabilities | 11 | ( | ) | ( | ) | ( | ) | |||||||||||
| Decommissioning and restoration provision | 12 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Net cash generated by operating activities | ||||||||||||||||||
| Investing activities: | ||||||||||||||||||
| Expenditures on mineral properties, plant and equipment | 7 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Proceeds on disposition of mineral properties, plant and equipment | 7 | ( | ) | |||||||||||||||
| Purchases of marketable securities | 20 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Maturities of marketable securities | 20 | |||||||||||||||||
| Payment of consideration payable for acquisition of Sinchi Wayra | 9 | ( | ) | ( | ) | |||||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Financing activities: | ||||||||||||||||||
| Proceeds from exercise of options | 13 | |||||||||||||||||
| Proceeds from loans payable | 10 | |||||||||||||||||
| Repayments of loans payable | 10 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Lease payments on plant and equipment | 11 | ( | ) | ( | ) | ( | ) | |||||||||||
| Net cash provided by (used in) financing activities | ( | ) | ( | ) | ||||||||||||||
| Effect of exchange rate on changes in cash | ( | ) | ||||||||||||||||
| Net change in cash and cash equivalents | ||||||||||||||||||
| Cash and cash equivalents – beginning of period | 4 | |||||||||||||||||
| Cash and cash equivalents – end of period | ||||||||||||||||||
Cash paid during the period for: | ||||||||||||||||||
| Interest expense | ||||||||||||||||||
| Income taxes | ||||||||||||||||||
Supplemental cash flow information (Note 24) | ||||||||||||||||||
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
| 5 |
SANTACRUZ SILVER MINING LTD.
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
For the Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, except number of shares)
| Share Capital | Equity reserves | |||||||||||||||||||||||||||||||
| Shares | Amount | Share-based compensation reserve | Contributed surplus | Accumulated other comprehensive loss | Total equity reserves | Retained earnings (deficit) | Total shareholders’ equity | |||||||||||||||||||||||||
| # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Balance, December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued from vesting of RSUs | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||||||||||||||
| Comprehensive income | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance, June 30, 2025 | ( | ) | ||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | ( | ) | ||||||||||||||||||||||||||||||
| Shares issued from exercise of options | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued from vesting of RSUs | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued from vesting of PSUs | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||||||||||||||
| Comprehensive income | - | |||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | ( | ) | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
| 6 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 1. | NATURE OF OPERATIONS |
Santacruz Silver Mining Ltd. (the “Company” or “Santacruz”) was incorporated pursuant to the Business Corporations Act of British Columbia on January 24, 2011. The Company’s registered office is located at 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia, Canada V6E 2J3. The Company is listed for trading on the TSX Venture Exchange (“TSX-V”) under the symbol “SCZ” and on the Nasdaq Capital Market (“NASDAQ”) under the symbol “SCZM”.
The Company is engaged in the operation, acquisition, exploration and development of mineral properties in Latin America, with a primary focus on silver and zinc, but also including lead and copper. The company also generates sales revenue from ore processing that come from the sale of metal concentrates obtained from processing ore purchased from third-party miners in Bolivia.
As at June 30, 2026, the Company had interests in, including mining concession rights, to the following:
| ● | Sinchi Wayra S.A. (“Sinchi Wayra”), Sociedad Minero Metalurgico Reserva Ltda. and Sociedad Minera Illapa S.A. (“Illapa”) which consist of the following mineral properties and businesses located in Bolivia: the producing Tres Amigos and Colquechaquita mines, collectively the (“Caballo Blanco Group”); the producing Bolivar and Porco mines held under a net operating cash flow interest agreement with Corporación Minera de Bolivia (“COMIBOL”), a Bolivian state-owned entity; the Soracaya exploration project (“Soracaya Project”); the Reserva mine and the San Lucas ore sourcing and trading business (“San Lucas Group”); |
| ● | The producing Zimapan mine located in Mexico held by Compañía Minera Zilar Mendi SA de C.V (“Zilar Mendi”). |
| 2. | BASIS OF PRESENTATION |
These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting” which is part of IFRS Accounting Standards (“IFRS® Accounting Standards”) as issued by the International Accounting Standards Board (“IASB”). Because these statements have been prepared in accordance with IAS 34, certain disclosures included in the annual financial statements have been condensed or omitted. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2025.
These unaudited condensed interim consolidated financial statements were approved by the Board of Directors of the Company on August 14, 2026.
References made throughout the consolidated financial statements to “US dollar” or “USD” are to United States dollars, “C$” or “CAD” are to Canadian dollars, “MXN” are to Mexican pesos, “BOB” are to Bolivian bolivianos. All references are in thousands, unless otherwise noted.
On December 10, 2025 the Company consolidated its issued and outstanding common shares on the basis of one post-consolidated common share for every four pre-consolidated common shares. The number of issued and outstanding shares, options, warrants, DSUs, RSUs and PSUs, and any per share amounts in these financial statements have been retrospectively restated in notes 10, 13, and 23 for all periods presented unless otherwise stated.
| 3. | MATERIAL ACCOUNTING POLICIES |
The
accounting policies applied in the preparation of these unaudited condensed consolidated interim financial statements are consistent
with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2025
and reflect all the adjustments necessary for fair presentation in accordance with IFRS for the interim periods presented.
| 7 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 3. | MATERIAL ACCOUNTING POLICIES (continued) |
New IFRS accounting standards and pronouncements – not yet adopted
IFRS 18: Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18: Presentation and Disclosure of Financial Statements (“IFRS 18”), which replaces IAS 1: Presentation of Financial Statements. IFRS 18 introduces a specified structure for the income statement by requiring income and expenses to be presented into the three defined categories of operating, investing and financing, and by specifying certain defined totals and subtotals. Where company-specific measures related to the income statement are provided, IFRS 18 requires companies to disclose explanations around these measures, which are referred to as management-defined performance measures. IFRS 18 also provides additional guidance on principles of aggregation and disaggregation which apply to the primary financial statements and the notes. IFRS 18 will not affect the recognition and measurement of items in the financial statements, nor will it affect which items are classified in other comprehensive income and how these items are classified. Some of the requirements in IAS 1 are moved to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and IFRS 7 Financial Instruments: Disclosures. The IASB also made minor amendments to IAS 7 Statement of Cash Flows and IAS 33 Earnings per Share in connection with the new standard.
The standard is effective for reporting periods beginning on or after January 1, 2027, including for interim financial statements. Retrospective application is required, and early application is permitted. The Company is currently assessing the effect of this new standard to its financial statements.
New IFRS accounting standards and pronouncements –adopted
Amendments to IFRS 9: Financial Instruments and IFRS 7: Financial Instruments: Disclosures
In May 2024, the IASB issued amendments to update classification and measurement requirements in IFRS 9: Financial Instruments, and related disclosure requirements in IFRS 7: Financial Instruments: Disclosures. The IASB clarified the recognition and derecognition date of certain financial assets and liabilities, and amended the requirements related to settling financial liabilities using an electronic payment system. It also clarified how to assess the contractual cash flow characteristics of financial assets in determining whether they meet the solely payments of principal and interest criterion, including financial assets that have environmental, social and corporate governance (ESG)-linked features and other similar contingent features. The IASB added disclosure requirements for financial instruments with contingent features that do not relate directly to basic lending risks and costs and amended disclosures relating to equity instruments designated at fair value through other comprehensive income. The amendments are effective for annual periods beginning on or after January 1, 2026 with early application permitted. The Company has adopted the amendments with no material impact to the current reporting period.
The preparation of the financial statements in conformity with IFRS requires management to select accounting policies and make estimates and judgments that may have a material impact on the financial statements. Estimates are continuously evaluated and are based on management’s experience and expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes may differ from these estimates. The Company’s critical accounting judgments and estimates have been consistently applied with those presented in Note 4 of the audited annual consolidated financial statements for the years ended December 31, 2025, and 2024.
| 4. | CASH AND CASH EQUIVALENTS |
A summary of the Company’s cash and cash equivalents is as follows:
June 30, 2026 | December 31, 2025 | |||||||
| $ | $ | |||||||
| Cash | ||||||||
| Cash equivalents | ||||||||
| Total | ||||||||
| 8 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 5. | TRADE AND OTHER RECEIVABLES |
A summary of the Company’s trade and other receivables is as follows:
June 30, 2026 | December 31, 2025 | |||||||
| $ | $ | |||||||
| Trade receivables | ||||||||
| COMIBOL contract prepayment | ||||||||
| COMIBOL initial investment period CAPEX receivable (note 5(a)) | ||||||||
| Uncertain income tax position receivable (note 18(c)) | ||||||||
| VAT receivable | ||||||||
| Other receivables | ||||||||
| Balance, current portion | ||||||||
| COMIBOL initial investment period CAPEX receivable (note 5(a)) | ||||||||
| VAT receivable | ||||||||
| Other receivables | ||||||||
| Balance, non-current portion | ||||||||
| a) |
The
COMIBOL initial investment period CAPEX receivable is a reimbursement of
The
timing of the cash flows will vary depending on the operational results from the joint operation and how much is payable to COMIBOL for
their
| 6. | INVENTORIES |
A summary of the Company’s inventories is as follows:
June 30, 2026 | December 31, 2025 | |||||||
| $ | $ | |||||||
| Mineralized material stockpiles | ||||||||
| Concentrate inventory | ||||||||
| Supplies inventory | ||||||||
| Total | ||||||||
During
the three and six months ended June 30, 2026, the inventory recognized as cost of sales was $
During
the three and six months ended June 30, 2026, the Company recognized through cost of sales a net realizable value write-off of inventory
of $ and $ (2025 – $
| 9 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 7. | MINERAL PROPERTIES, PLANT AND EQUIPMENT |
A summary of the Company’s Mineral Properties, Plant and Equipment is as follows:
| Depletable mineral properties | Exploration and evaluation | Plant and equipment | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Cost | ||||||||||||||||
| Balance, December 31, 2024 | ||||||||||||||||
| Additions | ||||||||||||||||
| Change in decommissioning and restoration costs (note 12) | ||||||||||||||||
| Disposals | ( | ) | ( | ) | ( | ) | ||||||||||
| Adjustments | ||||||||||||||||
| Balance, December 31, 2025 | ||||||||||||||||
| Additions | ||||||||||||||||
| Change in decommissioning and restoration costs (note 12) | ( | ) | ( | ) | ||||||||||||
| Disposals | ( | ) | ( | ) | ||||||||||||
| Adjustments | ( | ) | ||||||||||||||
| Balance, June 30, 2026 | ||||||||||||||||
| Accumulated depreciation and impairment | ||||||||||||||||
| Balance, December 31, 2024 | ||||||||||||||||
| Depletion, depreciation and amortization | ||||||||||||||||
| Disposals | ( | ) | ( | ) | ( | ) | ||||||||||
| Adjustments | ( | ) | ||||||||||||||
| Balance, December 31, 2025 | ||||||||||||||||
| Depletion, depreciation and amortization | ||||||||||||||||
| Disposals | ( | ) | ( | ) | ||||||||||||
| Adjustments | ( | ) | ( | ) | ||||||||||||
| Balance, June 30, 2026 | ||||||||||||||||
| Cost as at December 31, 2025 | ||||||||||||||||
| Accumulated depreciation and impairment | ( | ) | ( | ) | ( | ) | ||||||||||
| Carrying value - December 31, 2025 | ||||||||||||||||
| Cost as at June 30, 2026 | ||||||||||||||||
| Accumulated depreciation and impairment | ( | ) | ( | ) | ( | ) | ||||||||||
| Carrying value – June 30, 2026 | ||||||||||||||||
As
at June 30, 2026, the Company’s plant and equipment included right-of-use assets with a carrying amount of $
A summary of the Company’s Goodwill and allocation to each CGU is as follows:
June 30, 2026 | December
31, 2025 | |||||||
| $ | $ | |||||||
| Caballo Blanco Group (Tres Amigos mine) | ||||||||
| San Lucas Group | ||||||||
| Goodwill | ||||||||
| 10 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 8. | TRADE PAYABLES AND ACCRUED LIABILITIES |
A summary of the Company’s trade payables and accrued liabilities is as follows:
June 30, 2026 | December 31,
| |||||||
| $ | $ | |||||||
| Trade payables | ||||||||
| COMIBOL contract obligations (note 8(a)) | ||||||||
| Accrued liabilities | ||||||||
| Balance, end of period | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Non-current portion | ||||||||
| a) | COMIBOL contract obligations |
COMIBOL
contract obligations represent the Company’s obligation to pay its portion of committed funding related to the investment of inventories
and fixed assets made prior to 2013 under the previous contract of $
| 9. | CONSIDERATION PAYABLE |
On
March 18, 2022, the Company acquired
The following table summarizes the consideration payable to Glencore under the omnibus agreement:
June 30, 2026 | December 31, 2025 | |||||||
| $ | $ | |||||||
| Contingent value rights (note 9(b)) | ||||||||
| Balance, end of period | ||||||||
| Less: current portion | ||||||||
| Non-current portion | ||||||||
| a) | Base purchase price |
The
base purchase price was to pay up to $
| b) | Contingent value rights & additional payments |
The
Company granted a contingent value right (the “CVR”) to Glencore whereby the Company will pay Glencore a monthly payment
of $
| 11 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 9. | CONSIDERATION PAYABLE (continued) |
In
addition to the CVR Payment, in the event the average LME spot price of zinc (or the highest open hedge price if the Hedging Option has
been exercised) in a calendar month is at least $
Upon the occurrence of the monthly average zinc LME spot price exceeding the Base Price, Glencore can require the Company to hedge a limited amount of zinc production from its Bolivian mining operations (so long as the hedging price would exceed the Base Price) subject to certain conditions (the “Hedging Option”).
The CVR and Additional Payments will be effective from the date of the omnibus agreement until the earlier of December 31, 2032 and the date the Valuation Cap is reached. The Additional Payments and the Hedging Option will terminate once the Company is no longer obligated to make CVR Payments.
The
fair value at the initial recognition of the CVR was calculated using a Monte Carlo Simulation with key inputs and assumptions including
the zinc spot price ($
The
Company performed a valuation exercise as at June 30, 2026 and determined a fair value of the CVR of $
The following table summarizes the details of the consideration payable to Glencore:
BPP (a) | CVRs (b) | Total | ||||||||||
| $ | $ | $ | ||||||||||
| Balance, December 31, 2024 | ||||||||||||
| Loss on change in fair value of consideration payable | ||||||||||||
| Settlement of base purchase price obligation | ( | ) | ( | ) | ||||||||
| Balance, December 31, 2025 | ||||||||||||
| Less: current portion | ||||||||||||
| Non-current portion | ||||||||||||
| Balance, December 31, 2025 | ||||||||||||
| Gain on change in fair value of consideration payable | ||||||||||||
| Balance, June 30, 2026 | ||||||||||||
| Less: current portion | ||||||||||||
| Non-current portion | ||||||||||||
| 12 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 10. | LOANS PAYABLE |
A summary of the Company’s loans payable is as follows:
| Bank
facilities (a) | Trafigura loan facility (b) | Other loans payable (c) | Promissory loan payable (d) | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Balance, December 31, 2024 | ||||||||||||||||||||
| Proceeds advanced | ||||||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Foreign exchange loss or gain | ( | ) | ||||||||||||||||||
| Repayment with cash | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Balance, December 31, 2025 | ||||||||||||||||||||
| Less: Current portion | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Non-current portion | ||||||||||||||||||||
| Balance, December 31, 2025 | ||||||||||||||||||||
| Proceeds advanced | ||||||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Foreign exchange gain | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Repayment with cash | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Balance, June 30, 2026 | ||||||||||||||||||||
| Less: Current portion | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Non-current portion | ||||||||||||||||||||
| a) | Bank facilities |
The
Company has a secured credit facility denominated in Bolivian Bolivianos with Banco BISA S.A. of BOB
The
BOB
As
at June 30, 2026, BOB
On
April 24, 2025, Sociedad Minera Illapa S.A. obtained a 360-day bank loan from Banco BISA S.A. with a fixed interest rate of
On
April 20, 2026, Sociedad Minera Illapa S.A. obtained a 360-day bank loan from Banco BISA S.A. with a fixed interest rate of
| 13 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 10. | LOANS PAYABLE (continued) |
The
Company also has an unsecured revolving credit facility for working capital requirements and a loan guarantee with Banco de Crédito
de Bolivia S.A. for a total of BOB
As
at June 30, 2026, BOB
On
March 31, 2025, Sociedad Minera Illapa S.A. obtained 180-day bank loan outstanding for BOB
On
February 14, 2026 the Company obtained an unsecured 6 month working capital term loan for BOB
On
March 17, 2026, the Company received a working capital term loan from Banco BISA S.A. for BOB
On
March 31, 2026, the Company obtained an additional working capital term loan from Banco BISA S.A. for BOB
| b) |
On
April 23, 2021, in connection with the acquisition of Zimapan, Trafigura Mexico, S.A. de C.V. (“Trafigura”) loaned the Company
$
The Trafigura Loan Facility is secured by a first charge over all Zimapan Mine assets and all other material rights and properties owned by Zilar Mendi.
In
the third quarter of 2024, the Company entered into a new amended and restated agreement to settle the outstanding principal amount of
$
On January 29, 2026, the Company made an early payment to settle the remaining balance of the loan facility, fully extinguishing the liability.
| 14 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 10. | LOANS PAYABLE (continued) |
| c) |
In
the fourth quarter of 2022, the Company entered into contracts to sell trucks and machinery for net proceeds of $
During
December 2025, the Company received BOB
On
June 29, 2026, the Company received BOB
| d) |
The
San Lucas Promissory Notes Issuance program allows the Company to issue up to BOB
On
February 20, 2025, the Company completed its first offering of BOB
On
April 8, 2026, the Company completed its third offering of BOB
On
August 4, 2026, the Company completed the fourth offering of BOB
In accordance with IFRS 9, these contracts were recorded as a financial liability at amortized cost using the effective interest rate method. The promissory notes require that San Lucas maintain a current ratio greater than 1.15, a debt service ratio greater than 1.5, and that the debt to equity ratio not exceed 1.85. The Company is fully compliant with all financial covenants stipulated as at June 30, 2026.
| e) | Bonds |
On
December 30, 2024, the Financial System Supervisory Authority (ASFI) authorized the San Lucas Bonds Program. The San Lucas Bonds program
allows the Company to issue up to $
| 15 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 11. | OTHER LIABILITIES |
A summary of the Company’s other liabilities is as follows:
June 30, 2026 | December
31, 2025 | |||||||
| $ | $ | |||||||
| Post Employment Benefits (note 11(a)) | ||||||||
| Lease liability | ||||||||
| Other taxes payable (note 11(b)) | ||||||||
| Long-term portion of current income taxes payable | ||||||||
| Participation payable to COMIBOL for interest in joint operation (note 11(c)) | ||||||||
| Other liabilities | ||||||||
| Balance, end of the period | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Non-current portion | ||||||||
| a) |
As
at June 30, 2026, the Company recognized a provision of $
| b) |
Other taxes payable includes amounts payable to the Mexican and Bolivian tax authorities for miscellaneous taxes such as payroll taxes, withholding taxes, VAT payables and income taxes from prior periods which are being paid under an installment plan.
| c) |
The net participation payable to COMIBOL is derived from the Illapa Joint Operation. The Company is solely responsible for 100% of certain transactions specified in the agreement and such transactions are recorded as liabilities where there is a net amount payable to COMIBOL.
| 16 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 12. | DECOMMISSIONING AND RESTORATION PROVISION |
The Company has an obligation to undertake decommissioning, restoration, rehabilitation and environmental work when environmental disturbance is caused by the development and ongoing production of a mining operation. Movements in decommissioning liabilities during the six months ended June 30, 2026 and 2025 are allocated as follows:
| Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance, December 31, 2024 | ||||||||||||||||||||||||
| Change in estimate | ||||||||||||||||||||||||
| Reclamation work performed | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Accretion | ||||||||||||||||||||||||
| Foreign exchange gain | ||||||||||||||||||||||||
| Balance, December 31, 2025 | ||||||||||||||||||||||||
| Less: current portion | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Non-current portion | ||||||||||||||||||||||||
| Balance, December 31, 2025 | ||||||||||||||||||||||||
| Change in estimate (note 12(a)) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Reclamation work performed | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Accretion | ||||||||||||||||||||||||
| Foreign exchange gain | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Balance, June 30, 2026 | ||||||||||||||||||||||||
| Less: current portion | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Non-current portion | ||||||||||||||||||||||||
| a) |
In
the second quarter of 2026, management updated its estimate of the future expenditures required for the restoration of its mining properties
which resulted in a $
A provision for decommissioning liabilities is estimated based on current regulatory requirements and is recognized at the present value of such costs. The expected timing of cash flows in respect of the provision is based on the estimated life of the Company’s mining operations.
| Decommissioning and restoration provisions - June 30, 2026 | ||||||||||||||||||||
| Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | ||||||||||||||||
| Undiscounted uninflated estimated cash flow | $ | $ | $ | $ | $ | |||||||||||||||
| Discount rate | % | % | % | % | % | |||||||||||||||
| Inflation rate | % | % | % | % | % | |||||||||||||||
| Decommissioning and restoration provisions - December 31, 2025 | ||||||||||||||||||||
| Bolivar | Porco | Caballo Blanco Group | San Lucas
Group | Zimapan | ||||||||||||||||
| Undiscounted uninflated estimated cash flow | $ | $ | $ | $ | $ | |||||||||||||||
| Discount rate | % | % | % | % | % | |||||||||||||||
| Inflation rate | % | % | % | % | % | |||||||||||||||
| 17 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 13. | SHARE CAPITAL |
a) Authorized share capital
b) Issued – share capital
During
the six months ended June 30, 2026, the Company issued common shares from the vesting of RSUs, common shares from the
vesting of PSUs, and common shares from the exercise of options for proceeds of $
c) Stock options
On November 25, 2025 at the Company’s annual general meeting, shareholders re-approved the omnibus equity incentive plan (the “Omnibus Incentive Plan”). Pursuant to the Omnibus Incentive Plan, the Company may grant options, RSUs, PSUs, and DSUs to directors, officers, employees, management company employees, and consultants of the Company and its subsidiaries. The maximum number of shares available for issuance under the Omnibus Incentive Plan is limited to 10% of the issued and outstanding common shares.
Pursuant to the Omnibus Incentive Plan, options granted have a maximum term of ten years and the vesting provisions of options granted are at the discretion of the Board of Directors. Options are non-transferrable and the exercise price of the options shall be determined by the Board of Directors at the time the options are granted but in no event shall be lower than the discounted market price permitted by the TSX-V.
| Number of stock options | Weighted average exercise price | |||||||
| # | C$ | |||||||
| Balance, December 31, 2024 | ||||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Cancelled | ( | ) | ||||||
| Balance, December 31, 2025 | ||||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Balance, June 30, 2026 | ||||||||
| Options outstanding | Options exercisable | |||||||||||||||||||||||||
| Grant Date | Date of expiry | Number of options | Weighted average exercise price | Weighted average remaining years | Number of options | Weighted average exercise price | Weighted average remaining years | |||||||||||||||||||
| C$ | C$ | |||||||||||||||||||||||||
| August 1, 2024 | August 01, 2029 | |||||||||||||||||||||||||
| October 16, 2024 | October 16, 2029 | |||||||||||||||||||||||||
| June 26, 2025 | June 26, 2030 | |||||||||||||||||||||||||
| February 27, 2026 | February 27, 2031 | |||||||||||||||||||||||||
| Balance, June 30, 2026 | ||||||||||||||||||||||||||
During the six months ended June 30, 2026, the Company recognized share-based compensation expense of $ (2025 - $) based on the fair value of the options granted in the current and prior years.
| 18 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 13. | SHARE CAPITAL (continued) |
| Assumption | Based on | 2026 | 2025 | |||||||
| Risk-free rate (%) | Yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options’ expected life | % | % | |||||||
| Expected life (years) | Expiry term of the options | years | years | |||||||
| Expected volatility (%) | Historical volatility of the Company’s share price | % | % | |||||||
| Dividend yield (%) | Annualized dividend rate as of the date of grant | |||||||||
The weighted average closing share price on the date of the option exercises for the six months ended June 30, 2026 was $ per share (year ended December 31, 2025 - C$).
e) Restricted Share Units (RSU)
RSUs are non-transferrable awards for service which upon vesting and settlement entitle the recipient to receive cash or common shares of equivalent value at the discretion of the Company. The choice of settlement method is at the Company’s sole discretion and the RSUs have been accounted for assuming they will be settled through equity. Vesting conditions for RSUs are set by the Board of Directors.
| Number of RSUs outstanding | Weighted average fair value | |||||||
| C$ | ||||||||
| Balance, December 31, 2024 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Balance, December 31, 2025 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Balance, June 30, 2026 | ||||||||
Grant Date | Vesting Date | Number of RSUs outstanding | Weighted average fair value | Weighted average years until vesting | ||||||||||
| C$ | ||||||||||||||
| August 1, 2024 | March 31, 2027 | |||||||||||||
| June 26, 2025 | June 26, 2027 | |||||||||||||
| January 05, 2026 | January 05, 2027 | |||||||||||||
| January 05, 2026 | January 05, 2028 | |||||||||||||
| January 05, 2026 | January 05, 2029 | |||||||||||||
| Balance, June 30, 2026 | ||||||||||||||
During the six months ended June 30, 2026, the Company recognized share-based compensation expense of $ (2025 – $) related to RSUs.
On July 31, 2026 the Company issued RSUs to directors, consultants, officers and employees of the Company. One-third of the RSUs vest on each anniversary of the grant date.
| 19 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 13. | SHARE CAPITAL (continued) |
f) Deferred Share Units (DSU)
DSUs are non-transferrable awards that become payable upon termination of service of the participant. Vesting conditions for DSUs are set by the Board of Directors. Upon settlement, DSUs entitle the recipient to receive cash or common shares of an equivalent value at the discretion of the Company. Timing of settlement after vesting occurs at the discretion of the participant and communicated to the Company by the participant in writing at least fifteen days prior to the designated day, or an earlier date as the participant and the Company pay agree. If no notice is given by the participant for a designated day, the DSUs shall be payable on the first anniversary of the date on which the participant’s termination of service, or any earlier period on which the DSUs vest, at the sole discretion of the participant.
| Number of DSUs outstanding | Weighted average fair value | |||||||
| C$ | ||||||||
| Balance, December 31, 2024 and December 31, 2025 | ||||||||
| Balance, June 30, 2026 | ||||||||
Grant Date | Vesting Date | Number of DSUs outstanding | Weighted average fair value | Weighted average years until vesting | ||||||||||
| # | C$ | years | ||||||||||||
| August 1, 2024 | August 1, 2025 | |||||||||||||
| Balance, June 30, 2026 | ||||||||||||||
During the six months ended June 30, 2026, the Company recognized share-based compensation expense of $ (2025 – $) related to DSUs.
On July 31, 2026 the Company issued DSUs to directors of the Company. One-third of the DSUs vest on each anniversary of the grant date.
| 20 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 13. | SHARE CAPITAL (continued) |
g) Performance Share Units (PSU)
PSUs are non-transferrable awards that will vest and become payable upon the attainment of performance criteria within a certain period, the criteria and the evaluation of performance in relation to the criteria is determined by the Board of Directors. PSUs are settled through cash or the issuance of common shares of equivalent value at the discretion of the Company. The choice of settlement method is at the Company’s sole discretion.
| Number of PSUs outstanding | Weighted average fair value | |||||||
| C$ | ||||||||
| Balance, December 31, 2024 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Cancelled | ( | ) | ||||||
| Balance, December 31, 2025 | ||||||||
| Vested | ( | ) | ||||||
| Balance, June 30, 2026 | ||||||||
During the six months ended June 30, 2026, the Company recognized share-based compensation expense of $ (2025 – $) related to PSUs.
On July 31, 2026 the Company issued PSUs to directors, officers and employees of the Company. The PSUs vest upon attaining certain performance measures over a one-year period. The criteria and the evaluation of performance in relation to the criteria are determined by the Board of Directors.
| 14. | REVENUES |
The Company’s sales revenue is generated from the following significant components:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Sales revenue from mining operations (note 14(a)) | ||||||||||||||||
| Sales revenue from ore processing (note 14(b)) | ||||||||||||||||
| a) |
Sales revenue comes from the sale of metal concentrates which primarily contain silver and zinc but also includes lead and copper. All sales revenue from mining operations is generated from concentrate sales derived from ore that was extracted from the Company’s mineral properties. To generate revenues from the Company’s mineral properties, the Company is responsible and incurs costs for the operation, acquisition, exploration and development of those properties.
| b) |
Sales
revenue from ore processing comes from the San Lucas feed sourcing business located in Bolivia. The feed sourcing business generates
revenue from the sale of metal concentrates derived from ore purchased from third-party miners. Third-party miners are paid based upon
the metal content of the ore provided and the prevailing metal prices at the time of purchase. After purchasing the ore, the Company
assumes full ownership of the ore and is responsible for the processing and sale of the final product which is metal concentrates. The
San Lucas ore sourcing and trading business operates under a margin-based business model that maintains contribution margins by aligning
ore purchase costs with its metallurgical content and optimizes mill capacity utilization.
| 21 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 15. | COST OF SALES |
Cost of sales excluding depletion, depreciation and amortization are costs that directly relate to production and generation of revenues at the operating segments. Significant components of cost of sales are comprised of the following:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Consumables and materials | ||||||||||||||||
| Energy | ||||||||||||||||
| Insurance | ||||||||||||||||
| Mining and plant maintenance costs | ||||||||||||||||
| Other costs | ( | ) | ( | ) | ( | ) | ||||||||||
| Production Costs | ||||||||||||||||
| Transportation and other selling costs | ||||||||||||||||
| Mining royalties expense(1) | ||||||||||||||||
| Finished goods inventory changes | ( | ) | ( | ) | ||||||||||||
| Change in estimate of decommissioning provisions (note 12(a)) | ( | ) | ( | ) | ||||||||||||
| Cost of sales – mining operations | ||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Purchased ore costs(2) | ||||||||||||||||
| Ore processing costs | ||||||||||||||||
| Finished goods inventory changes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in estimate of decommissioning provisions (note 12(a)) | ( | ) | ( | ) | ||||||||||||
| Cost of sales – ore processing | ||||||||||||||||
| (1) |
| (2) |
| 16. | GENERAL AND ADMINISTRATIVE EXPENSES |
A summary of the Company’s general and administrative expenses is as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Corporate administration | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Salaries and benefits | ||||||||||||||||
| Tax penalties and inflation charges | ||||||||||||||||
| 22 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 17. | OTHER INCOME |
A summary of the Company’s other income is as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Accretion of decommissioning provisions (note 12) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Accretion of receivable from COMIBOL (note 5(a)) | ( | ) | ||||||||||||||
| Financing charge on leases | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest expense, carrying and finance charges | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income on VAT receivable | ||||||||||||||||
| Interest income | ||||||||||||||||
| Other income | ( | ) | ( | ) | ||||||||||||
| ( | ) | |||||||||||||||
| 18. | INCOME TAX |
| a) | Income tax expense |
A summary of the Company’s income tax expense is as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Current tax expense | ||||||||||||||||
| Deferred tax (recovery) | ( | ) | ||||||||||||||
| Income tax expense | ||||||||||||||||
A summary of the Company’s reconciliation of income taxes at statutory rates for the three and six months ended June 30, 2026 and 2025, is as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Income before income taxes | ||||||||||||||||
| Combined federal and provincial statutory income tax rates | % | % | % | % | ||||||||||||
| Income tax expense at statutory rates | ||||||||||||||||
| Permanent differences | ( | ) | ||||||||||||||
| Change due to differences in tax rates | ||||||||||||||||
| Inflation adjustment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change due to foreign translation | ( | ) | ( | ) | ||||||||||||
| Deferred tax assets not recognized | ||||||||||||||||
| Mexico mining royalty tax | ||||||||||||||||
| Tax effect of investment in subsidiaries | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impact of change in accounting estimate | ( | ) | ||||||||||||||
| Others | ||||||||||||||||
| Income tax expense | ||||||||||||||||
| 23 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 18. | INCOME TAX (continued) |
| b) | Deferred taxes |
The significant components of the Company’s deferred tax assets are as follows:
June 30, 2026 | December
31, 2025 | |||||||
| $ | $ | |||||||
| Trade and other receivables | ||||||||
| Accounts payable | ||||||||
| Other liabilities | ||||||||
| Mineral properties, plant and equipment | ||||||||
| Decommissioning and restoration provision | ||||||||
| Non-capital losses | ||||||||
| Mining tax | ||||||||
| Other | ||||||||
| Deferred tax assets | ||||||||
The significant components of the Company’s deferred tax liabilities are as follows:
June 30, 2026 | December
31, 2025 | |||||||
| $ | $ | |||||||
| Mineral properties, plant and equipment | ( | ) | ( | ) | ||||
| Investment in subsidiaries | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ( | ) | ||||
| Trade payables and accrued liabilities | ( | ) | ||||||
| COMIBOL initial investment period CAPEX receivable | ( | ) | ( | ) | ||||
| Mining tax | ( | ) | ||||||
| Other | ( | ) | ( | ) | ||||
| Deferred tax liabilities | ( | ) | ( | ) | ||||
The following table reconciles the deferred tax assets and liabilities to the Consolidated Statements of Financial Position:
June 30, 2026 | December
31, 2025 | |||||||
| $ | $ | |||||||
| Deferred tax assets | ||||||||
| Deferred tax liabilities | ( | ) | ( | ) | ||||
| ( | ) | ( | ) | |||||
Deferred tax assets and liabilities that are probable to be utilized are offset if they relate to the same taxable entity and same taxation authority. Future potential tax deductions that do not offset deferred tax liabilities are considered to be deferred tax assets.
As
at June 30, 2026, the Company had unrecognized capital losses of approximately $
As
at June 30, 2026, the Company had unrecognized inflationary adjustments on its investments in subsidiaries of $
As
at June 30, 2026, the Company has unrecognized taxable temporary differences of $
| 24 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 18. | INCOME TAX (continued) |
| c) | Bolivia uncertain income tax position relating to tax year 2017 |
As part of the acquisition of the Bolivian operations, the Company assumed potential pre-acquisition income tax liabilities related to Bolivia’s 2017 tax year. The potential liability is from different tax positions regarding the deductibility of decommissioning and restoration provisions, depreciation of mineral properties, plant and equipment, undeclared income, and non-deductible expenses in the determination of the Bolivian current income tax.
As the matter relates to income tax, and there was uncertainty over whether the relevant authorities will accept the current tax treatment under the Bolivian tax law, management concluded that it meets the definition of an uncertain tax treatment within the scope of IAS 12 – Income Taxes and IFRIC 23 – Uncertainty over Income Tax Treatments. In accordance with IFRIC 23, an entity shall consider whether it is probable (more likely than not) that a taxation authority will accept an uncertain tax treatment. If an entity concludes it is probable that a taxation authority will accept an uncertain tax treatment, the entity shall determine the taxable income or loss consistent with the tax treatment applied in its income tax filings.
In
2023, the Bolivian tax authorities issued the tax reassessment of
The Company successfully challenged the Bolivian tax authorities’ decision through legal proceedings with the Supreme Court of Justice and the Constitutional Court in Bolivia. On January 7, 2025 the Supreme Court of Justice ruled in favor of the Company by issuing sentence 188/2025 which nullified the previous rulings in favor of the tax authority and requires the tax authority issue a new assessment that is legally compliant. The tax authority appealed the decision during the second quarter of 2025, but the appeal was denied in October 2025 and has no further avenues to challenge the decision. The next step is for the tax authority to issue a new assessment, this time updated for the items addressed by the court ruling management will determine whether or not to accept the new assessment or challenge it again. Management has concluded that the matter has been resolved, accordingly, the Company believes there is no current tax liability and has not recognized an expense or any liability related to this matter as at June 30, 2026.
Pursuant
to the Sinchi Wayra and Illapa acquisition agreements, Glencore has agreed to indemnify the Company for up to a maximum of $
As
at June 30, 2026, the Company has remitted tax instalments totaling
| 25 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 19. | CAPITAL MANAGEMENT |
The
Company’s objective when managing its capital is to maintain its ability to continue as a going concern while at the same time
maximizing the growth of its business and providing returns to its shareholders. The Company’s capital structure consists of shareholders’
equity (comprising issued capital plus equity reserves plus retained earnings) with a shareholders’ equity of $
The Company manages its capital structure and makes adjustments based on changes to its economic environment and the risk characteristics of the Company’s assets. The Company’s capital requirements are effectively managed based on the Company having a thorough reporting, planning and forecasting process to help identify the funds required to ensure the Company is able to meet its operating and growth objectives.
The Company is not subject to any externally imposed capital requirements with the exception of compliance with covenants for the San Lucas Promissory Notes Issuance program (note 10(d)).
| 20. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT |
The carrying amounts of the Company’s financial assets and financial liabilities by category are as follows:
| June 30, 2026 | Amortized cost | FVTPL | FVTOCI | Total | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||
| Marketable securities | ||||||||||||||||
| Trade and other receivables | ||||||||||||||||
| Financial liabilities | ||||||||||||||||
| Trade payables and accrued liabilities | ||||||||||||||||
| Consideration payable | ||||||||||||||||
| Loans payable | ||||||||||||||||
| Other liabilities | ||||||||||||||||
| December 31, 2025 | ||||||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||
| Marketable securities | ||||||||||||||||
| Trade and other receivables | ||||||||||||||||
| Financial liabilities | ||||||||||||||||
| Trade payables and accrued liabilities | ||||||||||||||||
| Consideration payable | ||||||||||||||||
| Loans payable | ||||||||||||||||
| Other liabilities | ||||||||||||||||
The categories of the fair value hierarchy that reflect the inputs to valuation techniques used to measure fair value are as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3: Inputs for the asset or liability based on unobservable market data.
The carrying values of cash and cash equivalents, other receivables, and trade payables and accrued liabilities approximate their fair values because of their short-term nature.
| 26 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 20. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) |
Marketable securities consist of US treasury notes and US treasury bills which are held as part of the Company’s cash position and liquidity management strategy. The marketable securities are measured at fair value using level 1 inputs, the unrealized gain/loss is recorded as other comprehensive income and once the securities are sold or mature the corresponding gain/loss is recorded as other income/expense.
The
securities are held with Stifel which uses a portion of the holdings as collateral for the Standby Letters of Credit that were issued
to Banco BISA and Banco Credito de Bolivia (see note 10(a)). Although the securities held can be readily converted to cash, they are
restricted to the extent that the amounts serve as collateral. The Standby Letter of credit issued to Banco BISA is for $
Trade receivables are measured at fair value using Level 2 inputs. The fair value of trade receivables is measured based on inputs other than quoted prices for the underlying commodity prices (silver, lead, zinc, copper) to which the receivable relates as the trade receivables are provisionally priced at the time of sale.
The fair value of the loans payable for disclosure purposes is determined using discounted cash flows based on the expected amounts and timing of future cash flows discounted using a market rate of interest adjusted for appropriate credit risk.
Consideration payable, comprised of contingent value rights (see note 9(b)), is measured at fair value using Level 3 inputs. The fair value is calculated using a Monte Carlo Simulation with key inputs and assumptions including the zinc spot price, the expected price of zinc in each year until December 31, 2032, the market risk-free rate and credit spread and the volatility and variability of historical zinc prices.
The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the consolidated statements of financial position at fair value on a recurring basis were categorized as follows:
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Marketable securities | ||||||||||||||||||||||||
| Trade and other receivables | ||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Consideration payable | ||||||||||||||||||||||||
The Company’s trade receivables arose from provisional concentrate sales and are valued using quoted market prices based on the forward London Metal Exchange for silver, zinc and lead and the London Bullion Market Association P.M. fix for silver.
The methodology and assessment of inputs for determining the fair value of financial assets and liabilities as well as the levels of hierarchy for the Company’s financial assets and liabilities measured at fair value remains unchanged from that at December 31, 2025.
The Company has exposure to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.
| 27 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 20. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) |
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s trade receivables.
The
Company has concentrate contracts to sell the zinc, lead and copper concentrates produced by all of the Company’s mines. Concentrate
contracts are a common business practice in the mining industry. The terms of the concentrate contracts may require the Company to deliver
concentrate that has a value greater than the payment received at the time of delivery, thereby introducing the Company to credit risk
of the buyers of concentrates. Should any of these counterparties not honour purchase arrangements, or should any of them become insolvent,
the Company may incur losses for products already shipped and be forced to sell its concentrates on the spot market or it may not have
a market for its concentrates and therefore its future operating results may be materially adversely impacted. At June 30, 2026, the
Company had receivable balances associated with buyers of its concentrates of $
The following financial assets represent the maximum credit risk to the Company:
June 30, 2026 | December
31, 2025 | |||||||
| $ | $ | |||||||
| Cash and cash equivalents | ||||||||
| Marketable securities | ||||||||
| Trade and other receivables | ||||||||
Management constantly monitors and assesses the credit risk resulting from its concentrate sales, trading counterparties and customers. With the exception to the above, the Company believes it is not exposed to significant credit risk.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows. The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansion plans. The Company strives to maintain sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash and marketable securities, and its committed loan facilities.
In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following tables summarize the remaining contractual maturities of the Company’s financial liabilities and operating and capital commitments on an undiscounted basis at June 30, 2026:
| <1
year | 1
– 2 years | 2
– 5 years | >5
years | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Trade payables and accrued liabilities | ||||||||||||||||||||
| Consideration payable – CVR & additional payments | ||||||||||||||||||||
| Loans payable | ||||||||||||||||||||
| Lease payments | ||||||||||||||||||||
| 28 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 20. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) |
Currency risk
The Company reports its financial statements in USD; however, the Company operates in jurisdictions that utilize other currencies. As a consequence, the financial results of the Company’s operations as reported in USD are subject to changes in the value of the USD relative to local currencies. Since the Company’s sales are denominated in USD and a portion of the Company’s operating costs and capital spending are in local currencies, the Company is negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse.
The
sensitivity of the Company’s net income to changes in the exchange rate between the US dollar and the Bolivian boliviano, the Mexican
peso and the Canadian dollar, would be as follows: a
The Company’s financial assets and liabilities as at June 30, 2026 are denominated in Canadian dollars, US dollars, Bolivian bolivianos and Mexican pesos and translated to US dollars as follows:
| CAD | BOB | USD | MXN | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Financial assets | ||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||
| Marketable securities | ||||||||||||||||||||
| Trade and other receivables | ||||||||||||||||||||
| Financial liabilities | ||||||||||||||||||||
| Trade payables and accrued liabilities | ||||||||||||||||||||
| Consideration payable | ||||||||||||||||||||
| Loans payable | ||||||||||||||||||||
| Other liabilities | ||||||||||||||||||||
| Net financial assets (liabilities) | ( | ) | ( | ) | ( | ) | ||||||||||||||
Interest rate risk
Interest
rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest
rates. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. As
at June 30, 2026, the Company’s exposure to interest rate risk on interest bearing liabilities is limited to its consideration
payable, debt facilities and lease liabilities. Based on the Company’s interest rate exposure at June 30, 2026, a change of
Price risk
Metal
price risk is the risk that changes in metal prices will affect the Company’s income or the value of its related financial instruments.
The Company derives its revenue from the sale of silver, zinc, lead and copper. The Company’s sales are directly dependent on metal
prices that have shown significant volatility and are beyond the Company’s control. Consistent with the Company’s mission
to provide equity investors with exposure to changes in precious metal prices, the Company’s current policy is to not hedge the
price of precious metal.
| 29 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 21. | RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION |
The Company’s related parties include its subsidiaries, joint arrangements and key management personnel. During its normal course of operation, the Company enters into transactions with its related parties for goods and services. All related party transactions for the three and six months ended June 30, 2026 and 2025, have been disclosed in these consolidated financial statements.
These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.
Remuneration of key management personnel
Key management includes directors of the Company, the COO, the CFO, the CEO and Executive Chairman, and other members of key management. Compensation to key management personnel was as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Management and consulting fees | ||||||||||||||||
| Share-based compensation | ||||||||||||||||
Of
the $
| 22. | SEGMENT INFORMATION |
The Company has identified its operating segments based on the internal reports that are reviewed and used by the chief executive officer and the executive management team, collectively the chief operating decision maker (“CODM”), in assessing performance and in determining the allocation of resources. The Company primarily manages its business by looking at individual producing and developing resource projects as well as the aggregate of the exploration and evaluation properties and typically segregate these projects between production, development, and exploration.
Operating segments
Management
has identified
The
Bolivar and Porco segment revenues, cost of sales, capital expenditures, total assets and total liabilities are presented on 100% basis
even though the assets, liabilities, sales and expenses are recorded at 45% in the consolidated balance sheet and statement of comprehensive
income because the Company’s interest meets the definition of a joint operation in accordance with IFRS 11 Joint Arrangements.
The Illapa Joint Operations elimination column in the tables below shows the removal of COMIBOL’s
Under the Association Agreement, Illapa S.A. is the designated operator and holds exclusive, comprehensive responsibility for all technical, financial, labor, legal, and commercial aspects of the operations. The Agreement grants Illapa full control over the mining production chain, including the exclusive right to commercialize concentrates in both domestic and international markets and to manage all related commercial processes. Because the Company is responsible for overseeing all of the operations, the CODM evaluates the performance of the segment on a 100% gross basis.
| 30 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 22. | SEGMENT INFORMATION (continued) |
| a) | Revenues, operating costs and gross profit mining operations and ore processing: |
| Three months ended June 30, 2026 | Bolivar | Porco | Caballo Blanco Group | Zimapan | San Lucas Group | Illapa Joint Operation eliminations | Total | |||||||||||||||||||||
| Country | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Revenues from mining operations | ( | ) | ||||||||||||||||||||||||||
| Mine operating costs | - | |||||||||||||||||||||||||||
| Production costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Depletion and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Gross profit - mining operations | ( | ) | ||||||||||||||||||||||||||
| Revenues from ore processing | ||||||||||||||||||||||||||||
| Ore processing operating costs | - | |||||||||||||||||||||||||||
| Purchased ore & conc. costs | ( | ) | ( | ) | ||||||||||||||||||||||||
| Ore processing costs | ( | ) | ( | ) | ||||||||||||||||||||||||
| Depletion and amortization | ( | ) | ( | ) | ||||||||||||||||||||||||
| ( | ) | ( | ) | |||||||||||||||||||||||||
| Gross profit - ore processing | ||||||||||||||||||||||||||||
| Total revenues | ( | ) | ||||||||||||||||||||||||||
| Total cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Total depletion and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Gross profit – total | ( | ) | ||||||||||||||||||||||||||
| Three months ended June 30, 2025 | Bolivar | Porco | Caballo Blanco Group | Zimapan | San Lucas Group | Illapa Joint Operation eliminations | Total | |||||||||||||||||||||
| Country | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Revenues from mining operations | ( | ) | ||||||||||||||||||||||||||
| Mine operating costs | ||||||||||||||||||||||||||||
| Production costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Depletion and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Gross profit - mining operations | ( | ) | ||||||||||||||||||||||||||
| Revenues from ore processing | ||||||||||||||||||||||||||||
| Ore processing operating costs | - | |||||||||||||||||||||||||||
| Purchased ore & conc. costs | ( | ) | ( | ) | ||||||||||||||||||||||||
| Ore processing costs | ( | ) | ( | ) | ||||||||||||||||||||||||
| Depletion and amortization | ( | ) | ( | ) | ||||||||||||||||||||||||
| ( | ) | ( | ) | |||||||||||||||||||||||||
| Gross profit - ore processing | ||||||||||||||||||||||||||||
| Total revenues | ( | ) | ||||||||||||||||||||||||||
| Total cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Total depletion and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Gross profit - total | ( | ) | ||||||||||||||||||||||||||
| 31 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 22. | SEGMENT INFORMATION (continued) |
| Six months ended June 30, 2026 | Bolivar | Porco | Caballo Blanco Group | Zimapan | San Lucas Group | Illapa Joint Operation eliminations | Total | |||||||||||||||||||||
| Country | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Revenues from mining operations | ( | ) | ||||||||||||||||||||||||||
| Mine operating costs | ||||||||||||||||||||||||||||
| Production costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Depletion and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Gross profit - mining operations | ( | ) | ||||||||||||||||||||||||||
| Revenues from ore processing | ||||||||||||||||||||||||||||
| Ore processing operating costs | ||||||||||||||||||||||||||||
| Purchased ore & conc. costs | ( | ) | ( | ) | ||||||||||||||||||||||||
| Ore processing costs | ( | ) | ( | ) | ||||||||||||||||||||||||
| Depletion and amortization | ( | ) | ( | ) | ||||||||||||||||||||||||
| ( | ) | ( | ) | |||||||||||||||||||||||||
| Gross profit - ore processing | ||||||||||||||||||||||||||||
| Total revenues | ( | ) | ||||||||||||||||||||||||||
| Total cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Total depletion and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Gross profit – total | ( | ) | ||||||||||||||||||||||||||
| Six months ended June 30, 2025 | Bolivar | Porco | Caballo Blanco Group | Zimapan | San Lucas Group | Illapa Joint Operation eliminations | Total | |||||||||||||||||||||
| Country | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Revenues from mining operations | ( | ) | ||||||||||||||||||||||||||
| Mine operating costs | ||||||||||||||||||||||||||||
| Production costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Depletion and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Gross profit - mining operations | ( | ) | ||||||||||||||||||||||||||
| Revenues from ore processing | ||||||||||||||||||||||||||||
| Ore processing operating costs | ||||||||||||||||||||||||||||
| Purchased ore & conc. costs | ( | ) | ( | ) | ||||||||||||||||||||||||
| Ore processing costs | ( | ) | ( | ) | ||||||||||||||||||||||||
| Depletion and amortization | ( | ) | ( | ) | ||||||||||||||||||||||||
| ( | ) | ( | ) | |||||||||||||||||||||||||
| Gross profit - ore processing | ||||||||||||||||||||||||||||
| Total revenues | ( | ) | ||||||||||||||||||||||||||
| Total cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Total depletion and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Gross profit - total | ( | ) | ||||||||||||||||||||||||||
| 32 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 22. | SEGMENT INFORMATION (continued) |
| b) | Capital expenditures, total assets and total liabilities by operating segment |
| As at June 30, 2026 | Bolivar | Porco | Caballo Blanco Group | Zimapan | San Lucas Group | Corporate and other | Illapa Joint Operation eliminations | Total | ||||||||||||||||||||||||
| Country | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Capital expenditures | ( | ) | ||||||||||||||||||||||||||||||
| Total assets | ( | ) | ||||||||||||||||||||||||||||||
| Total liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| As at December 31, 2025 | Bolivar | Porco | Caballo Blanco Group | Zimapan | San Lucas Group | Corporate and other | Illapa Joint Operation eliminations | Total | ||||||||||||||||||||||||
| Country | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Capital expenditures | ( | ) | ||||||||||||||||||||||||||||||
| Total assets | ( | ) | ||||||||||||||||||||||||||||||
| Total liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| c) | Revenues by operating segment, product and major customers |
| Three months ended June 30, 2026 | Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Total | ||||||||||||||||||
| Country | Bolivia | Bolivia | Bolivia | Bolivia | Mexico | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Silver | ||||||||||||||||||||||||
| Zinc | ||||||||||||||||||||||||
| Lead | ||||||||||||||||||||||||
| Copper | ||||||||||||||||||||||||
| Illapa joint operation | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Provisional pricing adjustments | ( | ) | ||||||||||||||||||||||
| Smelting and refining costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Sales to external customers | ||||||||||||||||||||||||
| Three months ended June 30, 2025 | Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Total | ||||||||||||||||||
| Country | Bolivia | Bolivia | Bolivia | Bolivia | Mexico | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Silver | ||||||||||||||||||||||||
| Zinc | ||||||||||||||||||||||||
| Lead | ||||||||||||||||||||||||
| Copper | ||||||||||||||||||||||||
| Illapa joint operation | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Provisional pricing adjustments | ( | ) | ||||||||||||||||||||||
| Smelting and refining costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Sales to external customers | ||||||||||||||||||||||||
| 33 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| 22. | SEGMENT INFORMATION (continued) |
| Six months ended June 30, 2026 | Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Total | ||||||||||||||||||
| Country | Bolivia | Bolivia | Bolivia | Bolivia | Mexico | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Silver | ||||||||||||||||||||||||
| Zinc | ||||||||||||||||||||||||
| Lead | ||||||||||||||||||||||||
| Copper | ||||||||||||||||||||||||
| Illapa joint operation | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Provisional pricing adjustments | ( | ) | ( | ) | ||||||||||||||||||||
| Smelting and refining costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Sales to external customers | ||||||||||||||||||||||||
| Six months ended June 30, 2025 | Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Total | ||||||||||||||||||
| Country | Bolivia | Bolivia | Bolivia | Bolivia | Mexico | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Silver | ||||||||||||||||||||||||
| Zinc | ||||||||||||||||||||||||
| Lead | ||||||||||||||||||||||||
| Copper | ||||||||||||||||||||||||
| Illapa joint operation | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Provisional pricing adjustments | ( | ) | ||||||||||||||||||||||
| Smelting and refining costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Sales to external customers | ||||||||||||||||||||||||
During
the three and six months ended June 30, 2026 and 2025, the Company had two customers. One customer in Bolivia accounted for
| 34 |
SANTACRUZ SILVER MINING LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Three and Six Months ended June 30, 2026 and 2025
(Unaudited)
(Expressed in thousands of US dollars, unless otherwise noted)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Net income for the period | ||||||||||||||||
| Weighted average number of shares outstanding | ||||||||||||||||
| Earnings per share – basic | ||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Net income for the period | ||||||||||||||||
| Weighted average number of shares outstanding | ||||||||||||||||
| Incremental shares from options, RSUs, DSUs and PSUs | ||||||||||||||||
| Earnings per share – diluted | ||||||||||||||||
Earnings per share is based on the weighted average number of common shares of the Company outstanding during the period. The diluted earnings per share reflects the potential dilution of common share equivalents, such as outstanding share options, RSUs, DSUs and PSUs in the weighted average number of common shares outstanding during the period, if dilutive.
| 2026 | 2025 | |||||||
| Stock options | ||||||||
| 24. | SUPPLEMENTAL CASH FLOW INFORMATION |
A summary of the Company’s non-cash other income is as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Accretion of decommissioning provision (note 12) | ||||||||||||||||
| Accretion of COMIBOL initial investment CAPEX receivable (note 5(a)) | ( | ) | ( | ) | ( | ) | ||||||||||
| Finance charges on leases | ||||||||||||||||
| Interest expense, carrying and finance charges (note 10) | ||||||||||||||||
Other non-cash transactions not included in the table above are disclosed elsewhere in the notes to the consolidated financial statements.
| 35 |
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE QUARTER ENDED JUNE 30, 2026
Table of Contents
| Company Overview | 4 |
| 2026 Second Quarter Highlights | 7 |
| Management Business Overview and Outlook | 9 |
| Selected Quarterly Production Results | 10 |
| Mining Operations - Bolivar Mine Operating Results | 14 |
| Mining Operations - Porco Mine Operating Results | 16 |
| Mining Operations - Caballo Blanco Group Operating Results | 18 |
| Mining Operations - Zimapan Mine | 20 |
| Ore Processing Operations - San Lucas Group Operating Results | 22 |
| Other Properties | 24 |
| Qualified Person and Technical Disclosures | 24 |
| Overview of Financial Results | 25 |
| Quarters ended June 30, 2026 and 2025 | 25 |
| For the six months ended June 30, 2026 and 2025 | 27 |
| Summary of Quarterly Financial Results | 28 |
| Liquidity, Capital Resources and Contractual Obligations | 29 |
| Liquidity | 29 |
| Off-balance Sheet Arrangements | 31 |
| Transactions with Related Parties | 31 |
| Subsequent Events | 32 |
| Material Accounting Estimates and Judgments | 32 |
| Accounting Policies Including Changes in Accounting Policies and Initial Adoption | 32 |
| Financial Instruments and Other Instruments | 32 |
| Outstanding Share Data | 36 |
| Internal Controls over Financial Reporting and Disclosure Controls and Procedures | 36 |
| Non-GAAP Measures | 36 |
| Cash cost of production per tonne milled and cash costs per silver ounce or zinc tonne - Mining operations | 40 |
| Average realized price per silver ounce and zinc tonne sold – Mining operations | 50 |
| Realized mining margin for silver ounces and zinc tonnes sold – Mining operations | 55 |
| Cash cost of production per tonne milled and cash costs per ounce or zinc tonne sold – Ore processing | 56 |
| Average realized price per silver ounce and zinc tonne sold - Ore processing | 58 |
| Realized ore processing margin for silver ounces and zinc tonnes sold | 59 |
| Adjusted EBITDA | 60 |
| Cautionary Note Regarding Forward-looking Information | 61 |
| Additional Information | 61 |
| -2- |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
This Management’s Discussion and Analysis of results of operations and financial condition (“MD&A”) should be read in conjunction with the unaudited condensed interim consolidated financial statements for the three months ended June 30, 2026 and the notes thereto of Santacruz Silver Mining Ltd. (“the Company” or “Santacruz”) which have been prepared in accordance with IFRS Accounting Standards (“IFRS®”), as issued by the International Accounting Standards Board (“IASB”).
All dollar amounts are expressed in thousands of US dollars unless otherwise indicated. Unless otherwise noted, references to “C$” are to thousands of Canadian dollars, references to “MXN” are to thousands of Mexican pesos and references to “BOB” are to thousands of Bolivian bolivianos.
Certain amounts shown in this MD&A may not add exactly to total amounts due to rounding differences. Throughout this MD&A, the terms first quarter, second quarter, third quarter, fourth quarter and year to date are respectively used interchangeably with the terms Q1, Q2, Q3, Q4 and YTD.
This MD&A contains “forward-looking information” within the meaning of applicable Canadian securities regulation and should be read in conjunction with the “Risk Factors” and “Cautionary Note Regarding Forward-looking Information” section in this MD&A
All information contained in this MD&A is current and has been approved by the Board of Directors of the Company as of August 14, 2026.
| -3- |
Company Overview
Santacruz was incorporated pursuant to the Business Corporations Act of British Columbia on January 24, 2011. The Company’s registered office is located at 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia, Canada V6E 2J3. The Company is listed for trading on the TSX Venture Exchange (‘‘TSX-V’’) under the symbol “SCZ” and the Nasdaq Capital Market (“NASDAQ”) under the symbol “SCZM”.
The Company is engaged in the operation, acquisition, exploration and development of mineral properties in Latin America, with a primary focus on silver and zinc, but also produces lead and copper. As at June 30, 2026, the Company had acquired ownership including mining concession rights to the following mineral properties:
Bolivia:
| ● | Sinchi Wayra (“Sinchi Wayra”), which consists of the following mineral properties and businesses located in Bolivia: |
| ○ | the Caballo Blanco Group which includes the Tres Amigos and Colquechaquita mines (the “Caballo Blanco Group” or “Caballo Blanco”) and the Don Diego processing plant (the “Don Diego Processing Plant” or “Don Diego”), which processes production from the Caballo Blanco Group as well as toll milling from the San Lucas feed sourcing business; | |
| ○ | the San Lucas Group which includes the San Lucas feed sourcing and trading business and the Reserva mine (the “San Lucas Group” or “San Lucas”); and | |
| ○ | the Soracaya exploration project (the “Soracaya Project” or “Soracaya”). |
| ● | Illapa (“Illapa”), with its operations held under a net operating cash flow interest agreement with Corporación Minera de Bolivia (“COMIBOL”) a Bolivian state-owned entity comprising: |
| ○ | the Bolivar mine (the “Bolivar Mine” or “Bolivar”) and process plant complex; and | |
| ○ | the Porco mine (the “Porco Mine” or “Porco”) and process plant complex. |
Mexico:
| ○ | The Zimapan mine (the “Zimapan Mine” or “Zimapan”) and processing plant located in Hidalgo, Mexico. |
Management has assessed the nature of its interest in the Illapa business and determined it to be a joint operation. The Company records its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. The Company is solely responsible for certain specific transactions made by the Illapa business, and for these transactions, the assets, liabilities, revenues and expenses are recognized at 100% in the Company’s Financial Statements and result in balances payable to or owed from COMIBOL for its share of the joint operation. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL’s 55% interest (refer to Note 22 of the condensed interim consolidated financial statements).
In this MD&A, The Company reports 100% of production and sales from the Bolivar and Porco operations. Under the Association Agreement, Illapa S.A. is the designated operator and holds exclusive, comprehensive responsibility for all technical, financial, labor, legal, and commercial aspects of the operations. The Agreement grants Illapa full control over the mining production chain, including the exclusive right to commercialize concentrates in both domestic and international markets and to manage all related commercial processes.
COMIBOL’s entitlement under the Agreement is not a direct share of production, but rather a 55% participation in net cash flow. Accordingly, management believes that reporting production on a 100% gross basis appropriately reflects the operational substance of the arrangement, while COMIBOL’s interest is more accurately represented as an economic participation in net cash flow rather than a direct operational interest in the underlying production.
Since the Company is the operator of the Bolivar and Porco mines, management evaluates the performance of each operation by reviewing production on a 100% basis. Since the information of 100% production results is used to make decisions about allocating resources and assessing performance, this MD&A is prepared under the same basis.
| -4- |
Company Overview (continued)
In this MD&A, operational information for Bolivar and Porco is presented at 100%. Readers of this MD&A are cautioned that although in the operating section of this MD&A the Company reports 100% of the production and sales information, the Company records 45% of the assets, liabilities, revenues and expenses in its consolidated financial statements. In contrast to the operational information, all financial information presented in this MD&A is reported showing 45% of the assets, liabilities, revenues and expenses which coincides with the information presented in the condensed interim consolidated financial statements.
Update to non-GAAP performance measures and silver/zinc equivalent ounces metrics
Commencing in Q1 2026 the Company updated its non-GAAP performances measures to provide management and readers with useful information to evaluate the performance of the Company. Refer to the Non-GAAP measures section of this MD&A for a detailed explanation of the metrics and methodology used to determine them. All of the changes made have been applied retrospectively for the comparative periods. The following section provides a summary of the changes made:
Segregation of mining operations & ore processing: Operational and cost metrics are now presented as either Mining operations or Ore processing operations because the underlying business processes and profitability drivers each type of operation are fundamentally different. Our mining operations consist of Bolivar, Porco, Caballo Blanco and the Zimapan mines. Mining operations include the production metrics, revenues and costs from extracting ore from our mineral properties which is then processed and sold in concentrate form. Ore processing operations consist of the San Lucas feed sourcing business and includes the production metrics, revenue and costs from purchasing ore from third-party miners which is then processed and sold in concentrate form. Mining operations generate high margins because the input for the final product, metal concentrates, is from ore that is extracted from the Company’s mine properties that it owns. Ore processing generates significantly lower margins because the ore is purchased from third-party miners and the amount paid for the purchased ore is based upon the ore’s metal content and prevailing metal prices at the time of purchase.
Co-product costing methodology: The Company will no longer focus on costs per silver equivalent ounces sold and will now provide costs per actual silver ounce and zinc tonne sold in the period using a co-product cost methodology which allocates costs between each metal. The Company’s primary payable metals are silver and zinc, the revenue generated by each metal varies depending on prevailing metal prices but because each metal generates greater than 30% of the total revenues, the Company has concluded that reporting costs as co-products by silver ounce sold and zinc tonne sold is the most appropriate way to assess the performance of its operations. The total tonnes of ore milled in the period generates silver and zinc payable metals for sale, the ratio of payable silver and zinc produced from each tonne milled is used to allocate each period’s production costs between silver ounces sold and zinc tonnes sold, which will generate the following metrics: cash cost per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce and zinc tonne sold and will also provide an average realized price per silver ounce and zinc tonne sold.
By-product credits from secondary metal sales: The Company’s operations are poly-metallic whereby each tonne of ore milled generates primarily payable ounces of silver and tonnes of zinc but also generates payable tonnes of lead and copper. The combined revenues of lead and copper are incidental to our primary metal production of silver and zinc because they generate less than 10% of total revenues. Lead and copper concentrate is produced primarily to obtain the silver contained within so the Company has adopted the practice of calculating the net cost of producing an ounce of silver, after deducting revenues gained from incidental by-product production of lead and copper.
| -5- |
Company Overview (continued)
Silver equivalent ounces and zinc equivalent tonnes: The Company has modified its production disclosures to include zinc equivalent tonnes produced and has updated the method of calculating silver equivalent ounces produced. Previously the Company used budgeted metal prices which were updated annually to convert metal sales into silver equivalents, the new methodology uses the period’s average actual metal prices to determine the conversion factor. The Company considers silver equivalent (“AgEq”) ounces and zinc equivalent (“ZnEq”) tonnes to be useful production metrics for evaluating its multi-metal production profile but they should be considered only supplemental to the actual production volumes of silver and zinc produced and sold. The Company will continue to present the silver equivalent ounces produced and zinc equivalent ounces produced for the combined mining and ore processing operations, but will no longer report the figure for each operation. The Company will no longer report its cash cost and all-in sustaining cost per silver equivalent ounce sold to focus on the more relevant metrics of cash cost and all-in sustaining cost per silver ounce and zinc tonne sold instead.
Average realized price per silver ounce and zinc tonne sold: Revenues are presented as the sum of invoiced revenues related to delivered shipments of zinc, lead and copper concentrates, after having deducted treatment, smelting and refining charges made by the customer. The average realized price per silver ounce and zinc tonne sold is an analysis of the gross revenues prior to the charges made by the customer which is then divided by silver ounces and zinc tonnes sold. In prior periods the Company added back only treatment, smelting and refining charges. Commencing Q2 2026, the Company modified its methodology to provide readers with a more comparable figure against the actual market prices of the metal and to be consistent with peers by also adding back metallurgical deductions to determine the average realized price per silver ounce and zinc tonne sold. Prior periods have been restated with the new calculation methodology.
Realized mining margin and realized ore processing margin: Management has created two new non-GAAP measures: the realized mining margin and realized ore processing margin. Management believes the margins are an effective way to evaluate the profitability of the Company’s operations. The margin is calculated by subtracting the all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold from the average realized price per silver ounce or zinc tonne sold.
As there are no standardized methods of calculating non-GAAP measures, the Company’s methods may differ from those used by others and, accordingly, the Company’s use of these measures may not be directly comparable to similarly titled measures used by others. Accordingly, these non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Refer to the Non-GAAP Measures section in this MD&A for a detailed explanation of the metrics, the methodology used and a reconciliation of these measures to our revenues and operating expenses, as reported in our condensed interim consolidated financial statements which are prepared under IFRS. All of the changes made to the non-GAAP measures have been applied retrospectively to comparative periods.
| -6- |
2026 Second Quarter Highlights
| Operational Highlights | 2026 Q2 | 2026 Q1 | Change Q2 vs Q1 | 2025 Q2 | Change ‘26 Q2 vs ‘25 Q2 | 2026 YTD | 2025 YTD | Change ‘26 YTD vs ‘25 YTD | ||||||||||||||||||||||||
Mining Operations & Ore Processing(1) | ||||||||||||||||||||||||||||||||
| Tonnes milled | 521,956 | 487,777 | 7 | % | 480,863 | 9 | % | 1,009,733 | 952,636 | 6 | % | |||||||||||||||||||||
| Silver ounces produced | 1,573,100 | 1,341,499 | 17 | % | 1,423,081 | 11 | % | 2,914,599 | 3,013,144 | (3 | )% | |||||||||||||||||||||
| Zinc tonnes produced | 23,240 | 21,640 | 7 | % | 21,149 | 10 | % | 44,880 | 41,868 | 7 | % | |||||||||||||||||||||
| Lead tonnes produced | 3,165 | 2,686 | 18 | % | 2,772 | 14 | % | 5,851 | 5,490 | 7 | % | |||||||||||||||||||||
| Copper tonnes produced | 337 | 308 | 9 | % | 229 | 47 | % | 645 | 508 | 27 | % | |||||||||||||||||||||
| Supplemental context metrics | ||||||||||||||||||||||||||||||||
| Silver equivalent ounces produced (2) | 2,814,489 | 2,281,465 | 23 | % | 2,535,803 | 11 | % | 5,095,954 | 5,225,944 | (2 | )% | |||||||||||||||||||||
| Zinc equivalent tonnes produced (2) | 59,680 | 59,370 | 1 | % | 53,771 | 11 | % | 119,050 | 110,814 | 7 | % | |||||||||||||||||||||
Mining Operations(1) | ||||||||||||||||||||||||||||||||
| Tonnes milled | 406,532 | 393,010 | 3 | % | 385,890 | 5 | % | 799,542 | 770,968 | 4 | % | |||||||||||||||||||||
| Silver ounces produced | 1,161,733 | 1,000,094 | 16 | % | 1,103,447 | 5 | % | 2,161,827 | 2,398,489 | (10 | )% | |||||||||||||||||||||
| Zinc tonnes produced | 15,548 | 14,496 | 7 | % | 14,506 | 7 | % | 30,044 | 29,210 | 3 | % | |||||||||||||||||||||
| Lead tonnes produced | 2,293 | 2,084 | 10 | % | 2,263 | 1 | % | 4,377 | 4,500 | (3 | )% | |||||||||||||||||||||
| Copper tonnes produced | 337 | 308 | 9 | % | 229 | 47 | % | 645 | 508 | 27 | % | |||||||||||||||||||||
| Silver ounces sold (3) | 894,167 | 871,752 | 3 | % | 1,282,983 | (30 | )% | 1,765,919 | 2,571,587 | (31 | )% | |||||||||||||||||||||
| Zinc tonnes sold (3) | 14,419 | 14,026 | 3 | % | 12,202 | 18 | % | 28,445 | 25,456 | 12 | % | |||||||||||||||||||||
| Cash cost of production per tonne milled (4) | 86.83 | 87.19 | (0 | )% | 69.92 | 24 | % | 87.00 | 68.37 | 27 | % | |||||||||||||||||||||
| Cash cost per silver ounce sold ($/oz) (4) | 15.54 | 18.34 | (15 | )% | 13.17 | 18 | % | 16.92 | 12.98 | 30 | % | |||||||||||||||||||||
| Cash cost per zinc tonne sold ($/t) (4) | 1,746 | 1,843 | (5 | )% | 1,517 | 15 | % | 1,794 | 1,559 | 15 | % | |||||||||||||||||||||
| Average realized price per silver ounce sold ($/oz) (4) | 72.17 | 80.61 | (10 | )% | 33.13 | 118 | % | 76.33 | 33.13 | 130 | % | |||||||||||||||||||||
| All-in sustaining cost per silver ounce sold ($/oz) (4) | 21.87 | 28.90 | (24 | )% | 17.50 | 25 | % | 25.34 | 17.71 | 43 | % | |||||||||||||||||||||
| Realized mining margin per silver ounce sold (4) | 50.30 | 51.71 | (3 | )% | 15.63 | 222 | % | 51.00 | 15.42 | 231 | % | |||||||||||||||||||||
| Average realized price per zinc tonne sold ($/t) (4) | 3,302 | 3,276 | 1 | % | 2,938 | 12 | % | 3,289 | 3,136 | 5 | % | |||||||||||||||||||||
| All-in sustaining cost per zinc tonne sold ($/t) (4) | 2,219 | 2,545 | (13 | )% | 1,875 | 18 | % | 2,380 | 1,976 | 20 | % | |||||||||||||||||||||
| Realized mining margin per zinc tonne sold (4) | 1,083 | 731 | 48 | % | 1,063 | 2 | % | 910 | 1,160 | (22 | )% | |||||||||||||||||||||
Ore Processing (1) | ||||||||||||||||||||||||||||||||
| Tonnes milled | 115,424 | 94,767 | 22 | % | 94,973 | 22 | % | 210,191 | 181,668 | 16 | % | |||||||||||||||||||||
| Silver ounces produced | 411,367 | 341,405 | 20 | % | 319,634 | 29 | % | 752,772 | 614,655 | 22 | % | |||||||||||||||||||||
| Zinc tonnes produced | 7,692 | 7,144 | 8 | % | 6,643 | 16 | % | 14,836 | 12,658 | 17 | % | |||||||||||||||||||||
| Lead tonnes produced | 872 | 602 | 45 | % | 509 | 71 | % | 1,474 | 990 | 49 | % | |||||||||||||||||||||
| Silver ounces sold (3) | 333,899 | 634,875 | (47 | )% | 365,489 | (9 | )% | 968,774 | 652,862 | 48 | % | |||||||||||||||||||||
| Zinc tonnes sold (3) | 8,796 | 7,397 | 19 | % | 6,529 | 35 | % | 16,193 | 10,392 | 56 | % | |||||||||||||||||||||
| Realized ore processing margin per silver ounce sold (4) | 33.42 | 16.49 | 103 | % | 4.83 | 592 | % | 22.32 | 6.33 | 253 | % | |||||||||||||||||||||
| Realized ore processing margin per zinc tonne sold (4) | 819 | 667 | 23 | % | 1,539 | (47 | )% | 750 | 1,783 | (58 | )% | |||||||||||||||||||||
Notes:
(1) Mining operations includes only production from Bolivar, Porco, Caballo Blanco and Zimapan. Ore processing operations includes only production from San Lucas ore processing business. Readers are cautioned that Bolivar and Porco production figures are presented at 100% however the Company records only its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL’s 55% interest (refer to segment information note of the condensed interim consolidated financial statements).
(2) Silver equivalent ounces and zinc equivalent tonnes produced have been calculated using the period’s average metal prices quoted on the London Metal Exchange. The silver and zinc equivalent production is calculated by dividing each metal’s price by the price of Silver or Zinc to arrive at their equivalent. Refer to the section titled “Non-GAAP Measures” for further information.
(3) Silver ounces sold and zinc tonnes sold may be lower or higher than the volumes produced in the period due to two effects: (i) timing - concentrates produced in a quarter may be shipped and invoiced in a subsequent period or have been produced in a prior period; and (ii) commercial terms - payable ounces under offtake agreements are lower than produced ounces due to standard treatment and quality deductions applied by the customer.
(4) The Company reports non-GAAP measures, which include: cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in this MD&A.
| -7- |
2026 Second Quarter Highlights (continued)
| Financial Highlights | 2026 Q2 | 2026 Q1 | Change Q2 vs Q1 | 2025 Q2 | Change ‘26 Q2 vs’25 Q2 | 2026 YTD | 2025 YTD | Change ‘26 YTD vs ‘25 YTD | ||||||||||||||||||||||||
| Revenues | 113,458 | 127,529 | (11 | )% | 73,295 | 55 | % | 240,987 | 143,609 | 68 | % | |||||||||||||||||||||
| Gross profit | 51,139 | 42,869 | 19 | % | 25,288 | 102 | % | 94,008 | 53,147 | 77 | % | |||||||||||||||||||||
| Net income (loss) | 2,005 | 28,470 | (93 | )% | 20,977 | (90 | )% | 30,475 | 30,428 | 0 | % | |||||||||||||||||||||
| Net earnings (loss) per share - basic ($/share) (1) | 0.02 | 0.31 | (94 | )% | 0.24 | (92 | )% | 0.34 | 0.34 | (6 | )% | |||||||||||||||||||||
| Adjusted EBITDA (2) | 46,663 | 42,568 | 10 | % | 26,770 | 74 | % | 89,231 | 54,286 | 64 | % | |||||||||||||||||||||
| Cash & cash equivalents | 50,398 | 42,651 | 18 | % | 39,997 | 26 | % | 50,398 | 39,997 | 26 | % | |||||||||||||||||||||
| Working capital | 86,122 | 75,901 | 13 | % | 60,295 | 43 | % | 86,121 | 60,295 | 43 | % | |||||||||||||||||||||
Notes:
(1) On December 10, 2025 the Company consolidated its issued and outstanding common shares on the basis of one post-consolidated common share for every four pre-consolidated common shares. The number of issued and outstanding shares and any per share amounts have been retrospectively restated.
(2) The Company reports non-GAAP measures, which includes Adjusted EBITDA, these measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in the MD&A.
The net income for the three months ended June 30, 2026 (2026 Q2) was impacted by several large non-recurring tax events and a non-cash loss on the revaluation of consideration payable. Refer to the section titled “Overview of Financial Results” on page 26 and 27 of this MD&A for further details.
Year to Date Production Summary - By Segment
| Mining Operations(1) | Ore Processing(1) | Combined | ||||||||||||||||||||||||||
| Bolivar(2) | Porco(2) | Caballo Blanco Group | Zimapan | 2026 Q2 Total | San Lucas Group | 2026 Q2 Total | ||||||||||||||||||||||
| Material Processed (tonnes milled) | 137,125 | 97,492 | 118,996 | 445,929 | 799,542 | 210,191 | 1,009,733 | |||||||||||||||||||||
| Silver Ounces Produced | 603,157 | 171,583 | 633,103 | 753,984 | 2,161,827 | 752,772 | 2,914,599 | |||||||||||||||||||||
| Zinc Tonnes Produced | 7,340 | 5,807 | 8,093 | 8,804 | 30,044 | 14,836 | 44,880 | |||||||||||||||||||||
| Lead Tonnes Produced | 431 | 250 | 1,532 | 2,164 | 4,377 | 1,474 | 5,851 | |||||||||||||||||||||
| Copper Tonnes Produced | N/A | N/A | N/A | 645 | 645 | N/A | 645 | |||||||||||||||||||||
| Average head grades per mine: | ||||||||||||||||||||||||||||
| Silver (g/t) | 153 | 66 | 179 | 77 | 104 | 137 | 111 | |||||||||||||||||||||
| Zinc (%) | 5.79 | 6.26 | 7.23 | 2.66 | 4.32 | 7.94 | 5.07 | |||||||||||||||||||||
| Lead (%) | 0.43 | 0.34 | 1.53 | 0.65 | 0.70 | 1.07 | 0.78 | |||||||||||||||||||||
| Copper (%) | N/A | N/A | N/A | 0.26 | 0.26 | N/A | 0.26 | |||||||||||||||||||||
| Metal recovery per mine: | ||||||||||||||||||||||||||||
| Silver (%) | 89 | 83 | 92 | 68 | 77 | 82 | 78 | |||||||||||||||||||||
| Zinc (%) | 92 | 95 | 94 | 74 | 83 | 89 | 84 | |||||||||||||||||||||
| Lead (%) | 73 | 76 | 84 | 75 | 76 | 65 | 74 | |||||||||||||||||||||
| Copper (%) | N/A | N/A | N/A | 55 | 55 | N/A | 55 | |||||||||||||||||||||
Notes:
(1) Mining operations includes only production from Bolivar, Porco, Caballo Blanco and Zimapan. Ore processing includes only production from San Lucas ore processing business.
(2) Readers are cautioned that Bolivar and Porco production figures are presented at 100% however the Company records only its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL’s 55% interest (refer to segment information note of the condensed interim consolidated financial statements).
| -8- |
Management Business Overview and Outlook
2026 Bolivian Operating Priorities:
The Company’s Bolivian operations will remain focused on operational stability, cost discipline and plant performance in 2026. At Bolivar, management continues to advance the recovery of the areas affected by the localized flooding event encountered in 2025. Progress to date has been encouraging, and the affected areas are expected to recover gradually through 2026, with a return to full production anticipated during the year. At Porco, the Company’s smallest and predominantly zinc-oriented mining operation, the priority for 2026 will be to maintain operating stability and support revenue generation through continued focus on zinc production. At Caballo Blanco, the Company’s most efficient operation, management’s objective is to preserve, sustain and further deepen the operating efficiencies achieved to date. San Lucas will continue to play a strategic role in keeping plants utilized through third-party ore supply, supporting fixed-cost absorption, cost efficiency and meaningful margin contribution. Across the Bolivian platform, the Company’s strategy remains centered on optimizing mining costs, improving plant recoveries and maintaining the flexibility of its integrated operating base.
2026 Mexican Operating Priorities:
In Mexico, the Company’s principal operating focus in 2026 will be on improving metallurgical recoveries and concentrate quality at Zimapan. As the Company’s highest-volume operation, Zimapan has a significant impact on consolidated revenue and operating performance metrics, making recoveries and concentrate quality key priorities. Capital has already been invested toward these objectives, and management expects those initiatives to continue supporting operating improvement through 2026. The Company will also maintain its focus on cost discipline, process optimization and the continued strengthening of operating integration across the broader portfolio in support of more consistent production and financial performance.
| -9- |
Selected Quarterly Production Results
| 2026 Q2 | 2026 Q1 | 2025 Q4 | 2025 Q3 | 2025 Q2 | 2025 Q1 | Change Q2 ‘26 vs Q1 ‘26 | Change ‘26 Q2 vs’25 Q2 | |||||||||||||||||||||||||
| Tonnes milled | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 72,081 | 65,044 | 63,267 | 52,023 | 54,803 | 62,356 | 11 | % | 32 | % | ||||||||||||||||||||||
| Porco (1) | 52,195 | 45,297 | 51,416 | 49,161 | 49,152 | 47,501 | 15 | % | 6 | % | ||||||||||||||||||||||
| Caballo Blanco Group | 59,997 | 58,999 | 63,067 | 62,221 | 57,773 | 51,648 | 2 | % | 4 | % | ||||||||||||||||||||||
| Zimapan | 222,259 | 223,670 | 222,703 | 222,629 | 224,162 | 223,573 | (1 | )% | (1 | )% | ||||||||||||||||||||||
| San Lucas Group | 115,424 | 94,767 | 105,587 | 100,550 | 94,973 | 86,695 | 22 | % | 22 | % | ||||||||||||||||||||||
| Total | 521,956 | 487,777 | 506,040 | 486,585 | 480,863 | 471,773 | 7 | % | 9 | % | ||||||||||||||||||||||
| Silver ounces produced | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 343,522 | 259,635 | 202,193 | 132,146 | 304,468 | 421,040 | 32 | % | 13 | % | ||||||||||||||||||||||
| Porco (1) | 100,875 | 70,708 | 82,047 | 92,001 | 105,901 | 120,537 | 43 | % | (5 | )% | ||||||||||||||||||||||
| Caballo Blanco Group | 326,215 | 306,888 | 289,446 | 294,524 | 294,786 | 313,266 | 6 | % | 11 | % | ||||||||||||||||||||||
| Zimapan | 391,121 | 362,863 | 403,321 | 396,385 | 398,292 | 440,199 | 8 | % | (2 | )% | ||||||||||||||||||||||
| San Lucas Group | 411,367 | 341,405 | 366,600 | 326,873 | 319,634 | 295,021 | 20 | % | 29 | % | ||||||||||||||||||||||
| Total | 1,573,100 | 1,341,499 | 1,343,607 | 1,241,929 | 1,423,081 | 1,590,063 | 17 | % | 11 | % | ||||||||||||||||||||||
| Zinc tonnes produced | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 3,684 | 3,656 | 3,973 | 3,186 | 3,225 | 3,983 | 1 | % | 14 | % | ||||||||||||||||||||||
| Porco (1) | 2,974 | 2,833 | 2,727 | 2,488 | 2,786 | 2,674 | 5 | % | 7 | % | ||||||||||||||||||||||
| Caballo Blanco Group | 4,126 | 3,967 | 4,409 | 4,131 | 3,974 | 3,549 | 4 | % | 4 | % | ||||||||||||||||||||||
| Zimapan | 4,764 | 4,040 | 5,008 | 4,744 | 4,521 | 4,498 | 18 | % | 5 | % | ||||||||||||||||||||||
| San Lucas Group | 7,692 | 7,144 | 7,729 | 7,032 | 6,643 | 6,015 | 8 | % | 16 | % | ||||||||||||||||||||||
| Total | 23,240 | 21,640 | 23,846 | 21,581 | 21,149 | 20,719 | 7 | % | 10 | % | ||||||||||||||||||||||
| Lead tonnes produced | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 233 | 198 | 187 | 104 | 182 | 201 | 18 | % | 28 | % | ||||||||||||||||||||||
| Porco (1) | 136 | 114 | 108 | 103 | 132 | 161 | 19 | % | 3 | % | ||||||||||||||||||||||
| Caballo Blanco Group | 765 | 767 | 769 | 722 | 595 | 486 | 0 | % | 29 | % | ||||||||||||||||||||||
| Zimapan | 1,159 | 1,005 | 1,237 | 1,099 | 1,354 | 1,389 | 15 | % | (14 | )% | ||||||||||||||||||||||
| San Lucas Group | 872 | 602 | 699 | 575 | 509 | 481 | 45 | % | 71 | % | ||||||||||||||||||||||
| Total | 3,165 | 2,686 | 3,000 | 2,603 | 2,772 | 2,718 | 18 | % | 28 | % | ||||||||||||||||||||||
| Copper tonnes produced | ||||||||||||||||||||||||||||||||
| Zimapan | 337 | 308 | 287 | 331 | 229 | 279 | 9 | % | 47 | % | ||||||||||||||||||||||
| Total | 337 | 308 | 287 | 331 | 229 | 279 | 9 | % | 47 | % | ||||||||||||||||||||||
Notes:
(1) Readers are cautioned that Bolivar and Porco production figures are presented at 100% however the Company records only its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL’s 55% interest (refer to segment information note of the condensed interim consolidated financial statements).
| -10- |
Selected Quarterly Production Results (continued)
| Mining Operations Results (1) | 2026 Q2 | 2026 Q1 | 2025 Q4 | 2025 Q3 | 2025 Q2 | 2025 Q1 | Change Q2 ‘26 vs Q1 ‘26 | Change ‘26 Q2 vs ‘25 Q2 | ||||||||||||||||||||||||
| Cash cost of production per tonne milled (2) | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 109.33 | 131.88 | 121.15 | 139.92 | 94.96 | 81.20 | (17 | )% | 15 | % | ||||||||||||||||||||||
| Porco (1) | 93.40 | 113.05 | 91.00 | 90.27 | 66.26 | 69.14 | (17 | )% | 41 | % | ||||||||||||||||||||||
| Caballo Blanco Group | 94.61 | 90.87 | 78.84 | 69.45 | 54.70 | 56.27 | 4 | % | 73 | % | ||||||||||||||||||||||
| Zimapan | 75.90 | 67.98 | 71.44 | 60.47 | 68.53 | 64.75 | 12 | % | 11 | % | ||||||||||||||||||||||
| Total | 86.83 | 87.19 | 82.97 | 76.42 | 69.92 | 66.82 | (0 | )% | 24 | % | ||||||||||||||||||||||
| Cash cost per silver ounce sold (2) | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 16.42 | 28.00 | 28.50 | 38.81 | 12.19 | 10.50 | (41 | )% | 35 | % | ||||||||||||||||||||||
| Porco (1) | 35.25 | 42.66 | 48.81 | 36.08 | 24.64 | 21.32 | (17 | )% | 43 | % | ||||||||||||||||||||||
| Caballo Blanco Group | 12.58 | 14.01 | 18.12 | 13.78 | 8.02 | 9.88 | (10 | )% | 57 | % | ||||||||||||||||||||||
| Zimapan | 12.37 | 12.03 | 23.94 | 13.73 | 15.85 | 14.17 | 3 | % | (22 | )% | ||||||||||||||||||||||
| Total | 15.54 | 18.34 | 25.30 | 20.37 | 13.17 | 12.80 | (15 | )% | 18 | % | ||||||||||||||||||||||
| Cash cost per zinc tonne sold (2) | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 1,657 | 2,089 | 1,540 | 1,659 | 1,216 | 1,220 | (21 | )% | 36 | % | ||||||||||||||||||||||
| Porco (1) | 1,304 | 1,107 | 1,644 | 1,402 | 1,040 | 1,107 | 18 | % | 25 | % | ||||||||||||||||||||||
| Caballo Blanco Group | 1,356 | 1,454 | 1,526 | 1,295 | 820 | 1,097 | (7 | )% | 65 | % | ||||||||||||||||||||||
| Zimapan | 2,403 | 2,508 | 2,827 | 2,190 | 2,394 | 2,494 | (4 | )% | 0 | % | ||||||||||||||||||||||
| Total | 1,746 | 1,843 | 2,008 | 1,700 | 1,517 | 1,598 | (5 | )% | 15 | % | ||||||||||||||||||||||
Notes:
(1) Mining operations includes only production from Bolivar, Porco, Caballo Blanco and Zimapan. Ore processing includes only production from San Lucas ore processing business. Readers are cautioned that Bolivar and Porco production figures are presented at 100% however the Company records only its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL’s 55% interest (refer to segment information note of the condensed interim consolidated financial statements).
(2) The Company reports non-GAAP measures, which include: cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in this MD&A.
| -11- |
Selected Quarterly Production Results (continued)
| Mining Operations Results (1) | 2026 Q2 | 2026 Q1 | 2025 Q4 | 2025 Q3 | 2025 Q2 | 2025 Q1 | Change Q2 ‘26 vs Q1 ‘26 | Change ‘26 Q2 vs ‘25 Q2 | ||||||||||||||||||||||||
| Average realized price per silver ounce sold (2) | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 76.45 | 87.76 | 57.41 | 40.78 | 33.88 | 31.52 | (13 | )% | 126 | % | ||||||||||||||||||||||
| Porco (1) | 76.79 | 84.13 | 54.97 | 42.43 | 35.65 | 40.66 | (9 | )% | 115 | % | ||||||||||||||||||||||
| Caballo Blanco Group | 77.49 | 80.54 | 60.01 | 41.60 | 33.94 | 31.60 | (4 | )% | 128 | % | ||||||||||||||||||||||
| Zimapan | 66.32 | 76.60 | 56.67 | 40.55 | 31.00 | 33.25 | (13 | )% | 114 | % | ||||||||||||||||||||||
| Total | 72.17 | 80.61 | 57.54 | 41.14 | 33.13 | 33.12 | (10 | )% | 118 | % | ||||||||||||||||||||||
| All-in sustaining cost per silver ounce sold (2) | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 25.81 | 38.79 | 44.77 | 57.68 | 14.57 | 13.32 | (33 | )% | 77 | % | ||||||||||||||||||||||
| Porco (1) | 43.11 | 54.12 | 62.06 | 44.37 | 28.22 | 25.87 | (20 | )% | 53 | % | ||||||||||||||||||||||
| Caballo Blanco Group | 18.13 | 20.44 | 27.94 | 17.69 | 11.12 | 12.01 | (11 | )% | 63 | % | ||||||||||||||||||||||
| Zimapan | 15.01 | 21.88 | 31.01 | 20.15 | 20.55 | 22.56 | (31 | )% | (27 | )% | ||||||||||||||||||||||
| Total | 21.87 | 28.90 | 36.37 | 29.35 | 17.50 | 17.91 | (24 | )% | 25 | % | ||||||||||||||||||||||
| Realized mining margin per silver ounce sold (2) | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 50.64 | 48.97 | 12.64 | (16.90 | ) | 19.32 | 18.20 | 3 | % | 162 | % | |||||||||||||||||||||
| Porco (1) | 33.69 | 30.01 | (7.08 | ) | (1.94 | ) | 7.44 | 14.79 | 12 | % | 353 | % | ||||||||||||||||||||
| Caballo Blanco Group | 59.36 | 60.09 | 32.08 | 23.91 | 22.82 | 19.59 | (1 | )% | 160 | % | ||||||||||||||||||||||
| Zimapan | 51.32 | 54.72 | 25.65 | 20.40 | 10.45 | 10.69 | (6 | )% | 391 | % | ||||||||||||||||||||||
| Total | 50.30 | 51.71 | 21.17 | 11.79 | 15.63 | 15.22 | (3 | )% | 222 | % | ||||||||||||||||||||||
| Average realized price per zinc tonne sold (2) | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 3,530 | 3,344 | 3,934 | 3,506 | 3,183 | 3,435 | 6 | % | 11 | % | ||||||||||||||||||||||
| Porco (1) | 3,457 | 3,042 | 3,899 | 3,495 | 3,236 | 3,419 | 14 | % | 7 | % | ||||||||||||||||||||||
| Caballo Blanco Group | 3,442 | 3,186 | 3,881 | 3,532 | 3,172 | 3,558 | 8 | % | 9 | % | ||||||||||||||||||||||
| Zimapan | 2,969 | 3,466 | 3,615 | 3,012 | 2,487 | 3,007 | (14 | )% | 19 | % | ||||||||||||||||||||||
| Total | 3,302 | 3,276 | 3,801 | 3,336 | 2,938 | 3,319 | 1 | % | 12 | % | ||||||||||||||||||||||
| All-in sustaining cost per zinc tonne sold (2) | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 2,521 | 2,861 | 2,352 | 2,447 | 1,436 | 1,518 | (12 | )% | 76 | % | ||||||||||||||||||||||
| Porco (1) | 1,570 | 1,395 | 2,047 | 1,710 | 1,175 | 1,309 | 13 | % | 34 | % | ||||||||||||||||||||||
| Caballo Blanco Group | 1,800 | 1,946 | 2,172 | 1,579 | 1,048 | 1,281 | (7 | )% | 72 | % | ||||||||||||||||||||||
| Zimapan | 2,623 | 3,380 | 3,387 | 2,725 | 2,810 | 3,330 | (22 | )% | (7 | )% | ||||||||||||||||||||||
| Total | 2,219 | 2,545 | 2,655 | 2,247 | 1,875 | 2,069 | (13 | )% | 18 | % | ||||||||||||||||||||||
| Realized mining margin per zinc tonne sold (2) | ||||||||||||||||||||||||||||||||
| Bolivar (1) | 1,009 | 483 | 1,582 | 1,059 | 1,746 | 1,917 | 109 | % | (42 | )% | ||||||||||||||||||||||
| Porco (1) | 1,887 | 1,647 | 1,852 | 1,785 | 2,060 | 2,110 | 15 | % | (8 | )% | ||||||||||||||||||||||
| Caballo Blanco Group | 1,643 | 1,240 | 1,709 | 1,953 | 2,124 | 2,277 | 32 | % | (23 | )% | ||||||||||||||||||||||
| Zimapan | 346 | 87 | 228 | 287 | (324 | ) | (323 | ) | 299 | % | (207 | )% | ||||||||||||||||||||
| Total | 1,083 | 731 | 1,146 | 1,089 | 1,063 | 1,250 | 48 | % | 2 | % | ||||||||||||||||||||||
Notes:
(1) Mining operations includes only production from Bolivar, Porco, Caballo Blanco and Zimapan. Ore processing includes only production from San Lucas ore processing business. Readers are cautioned that Bolivar and Porco production figures are presented at 100% however the Company records only its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL’s 55% interest (refer to segment information note of the condensed interim consolidated financial statements).
(2) The Company reports non-GAAP measures, which include: cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in this MD&A.
| -12- |
Selected Quarterly Production Results (continued)
Santacruz’s Consolidated Operations Results
Q2 2026 vs Q1 2026
Consolidated silver production increased 17% to 1,573,100 ounces in Q2 2026 from 1,341,499 ounces in Q1 2026, with quarter-over-quarter increases at all five operations. The improvement was driven primarily by higher processed volumes, with consolidated tonnes milled increasing 7% to 521,956 tonnes, together with higher silver head grades at Bolivar and Porco and a marked improvement in silver recovery at Zimapan. Bolivar contributed the largest single increase as rehabilitation of the areas affected by the May 2025 flooding event continued to advance, while San Lucas processed 22% more ore than in the prior quarter. Consolidated zinc production increased 7% to 23,240 tonnes, driven principally by higher throughput, which more than offset lower zinc grades at Bolivar and Porco. Lead production increased 18% to 3,165 tonnes and copper production increased 9% to 337 tonnes.
Sales volumes did not rise to the same degree as production. During the quarter, road blockades in certain parts of Bolivia extended for approximately 53 days, disrupting supply chains across many sectors of the Bolivian economy. The blockades temporarily disrupted the export of the Company’s concentrates but did not affect production, which continued without interruption at all operations. Silver ounces sold from mining operations of 894,167 increased 3% from 871,752 in Q1 2026, lagging the 16% increase in mining silver production, and silver ounces sold at San Lucas declined 47% to 333,899, as concentrate produced during the blockade period could not be shipped and was accumulated as inventory; first-quarter San Lucas sales had also been elevated by the shipment of previously accumulated concentrate. Consolidated inventories increased to $71,876 at June 30, 2026 from $57,517 at December 31, 2025, driven by higher concentrate inventory ($36,445 compared with $30,172) and higher ore stockpiles ($19,493 compared with $11,983). The Company expects this inventory to be sold in the subsequent quarter as export logistics have normalized. Zinc tonnes sold increased quarter over quarter at both mining operations (14,419 tonnes, up 3%) and San Lucas (8,796 tonnes, up 19%).
The average realized price per silver ounce sold from mining operations decreased 10% to $72.17 from $80.61 in Q1 2026, in line with lower average silver prices during the quarter (the average LME silver price declined 13% to $73.44 per ounce). This negative impact on Q2 operations as compared to Q1 was largely offset by lower unit costs: cash cost per silver ounce sold decreased 15% to $15.54 from $18.34, and all-in sustaining cost per silver ounce sold decreased 24% to $21.87 from $28.90, leaving the realized mining margin per silver ounce sold broadly stable at $50.30 (Q1 2026 — $51.71). Cash cost of production per tonne milled was also stable at $86.83 (Q1 2026 — $87.19). For zinc, the average realized price per tonne sold of $3,302 was 1% higher, while all-in sustaining cost per zinc tonne sold decreased 13% to $2,219, and the realized mining margin per zinc tonne sold increased 48% to $1,083 from $731. At San Lucas, the realized ore processing margin per silver ounce sold more than doubled to $33.42 from $16.49, and the realized ore processing margin per zinc tonne sold increased 23% to $819. Consolidated revenues of $113,458 were 11% lower than the $127,529 recorded in Q1 2026, as the lower silver prices and the blockade-related reduction in silver ounces sold at San Lucas more than offset the higher zinc volumes sold; Adjusted EBITDA nonetheless increased 10% quarter over quarter to $46,663 on the stronger unit margins.
Q2 2026 vs Q2 2025
Compared with Q2 2025, consolidated silver production increased 11% and zinc production increased 10%, on 9% higher consolidated tonnes milled. Readers should note that Q2 2025 production was adversely affected by the May 2025 flooding event at Bolivar.
The average realized price per silver ounce sold from mining operations increased 118% to $72.17 from $33.13 in Q2 2025, and the average realized price per zinc tonne sold increased 12% to $3,302 from $2,938. Silver ounces sold from mining operations decreased 30% year over year, with the largest reductions at Bolivar (down 46%) and Caballo Blanco (down 48%), reflecting the blockade-related timing of concentrate exports, while Zimapan, tons sold were broadly in line with its production. Zinc tonnes sold increased 18% from mining operations and 35% at San Lucas. Unit costs increased against the prior-year quarter, cash cost per silver ounce sold of $15.54 (Q2 2025 — $13.17) and all-in sustaining cost per silver ounce sold of $21.87 (Q2 2025 — $17.50), with cash cost of production per tonne milled of $86.83 (Q2 2025 — $69.92). The substantially higher realized silver price more than offset the cost increases, and the realized mining margin per silver ounce sold expanded 222% to $50.30 from $15.63. For zinc, all-in sustaining cost per tonne sold increased 18% to $2,219 (Q2 2025 — $1,875), and the realized mining margin per zinc tonne sold was $1,083, compared with $1,063 in Q2 2025. The combination of substantially higher realized prices and higher zinc volumes sold more than offset the lower silver volumes, and consolidated revenues increased 55% year over year to $113,458, with gross profit increasing 102% to $51,139 and Adjusted EBITDA increasing 74% to $46,663.
| -13- |
Mining Operations - Bolivar Mine Operating Results
| Bolivar Production Table (1) | 2026 Q2 | 2026 Q1 | Change Q2 vs Q1 | 2025 Q2 | Change Q2 vs Q2 | 2026 YTD | 2025 YTD | Change ‘26 YTD vs ‘25 YTD | ||||||||||||||||||||||||
| Material Processed (tonnes milled) | 72,081 | 65,044 | 11 | % | 54,803 | 32 | % | 137,125 | 117,159 | 17 | % | |||||||||||||||||||||
| Production | ||||||||||||||||||||||||||||||||
| Silver (ounces) | 343,522 | 259,635 | 32 | % | 304,468 | 13 | % | 603,157 | 725,508 | (17 | )% | |||||||||||||||||||||
| Zinc (tonnes) | 3,684 | 3,656 | 1 | % | 3,225 | 14 | % | 7,340 | 7,208 | 2 | % | |||||||||||||||||||||
| Lead (tonnes) | 233 | 198 | 18 | % | 182 | 28 | % | 431 | 383 | 13 | % | |||||||||||||||||||||
| Average Grade | ||||||||||||||||||||||||||||||||
| Silver (g/t) | 165 | 141 | 17 | % | 190 | (13 | )% | 153 | 215 | (29 | )% | |||||||||||||||||||||
| Zinc (%) | 5.55 | 6.06 | (8 | )% | 6.52 | (15 | )% | 5.79 | 6.77 | (14 | )% | |||||||||||||||||||||
| Lead (%) | 0.42 | 0.43 | (2 | )% | 0.44 | (5 | )% | 0.43 | 0.46 | (7 | )% | |||||||||||||||||||||
| Metal Recovery | ||||||||||||||||||||||||||||||||
| Silver (%) | 90 | 88 | 2 | % | 91 | (1 | )% | 89 | 90 | (0 | )% | |||||||||||||||||||||
| Zinc (%) | 92 | 93 | (1 | )% | 90 | 2 | % | 92 | 91 | 2 | % | |||||||||||||||||||||
| Lead (%) | 77 | 70 | 10 | % | 75 | 2 | % | 73 | 71 | 3 | % | |||||||||||||||||||||
| Metals Sold | ||||||||||||||||||||||||||||||||
| Silver ounces sold (2) | 218,307 | 189,404 | 15 | % | 406,070 | (46 | )% | 407,711 | 880,036 | (54 | )% | |||||||||||||||||||||
| Zinc tonnes sold (2) | 2,469 | 3,655 | (32 | )% | 2,797 | (12 | )% | 6,124 | 6,465 | (5 | )% | |||||||||||||||||||||
| Average realized price per silver ounce sold (3) | 76.45 | 87.76 | (13 | )% | 33.88 | 126 | % | 81.71 | 32.61 | 151 | % | |||||||||||||||||||||
| All-in sustaining cost per silver ounce sold (3) | 25.81 | 38.79 | (33 | )% | 14.57 | 77 | % | 31.84 | 13.90 | 129 | % | |||||||||||||||||||||
| Realized mining margin per silver ounce sold (3) | 50.64 | 48.97 | 3 | % | 19.32 | 162 | % | 49.87 | 18.71 | 166 | % | |||||||||||||||||||||
| Average realized price per zinc tonne sold (3) | 3,530 | 3,344 | 6 | % | 3,183 | 11 | % | 3,419 | 3,326 | 3 | % | |||||||||||||||||||||
| All-in sustaining cost per zinc tonne sold (3) | 2,521 | 2,861 | (12 | )% | 1,436 | 76 | % | 2,724 | 1,483 | 84 | % | |||||||||||||||||||||
| Realized mining margin per zinc tonne sold (3) | 1,009 | 483 | 109 | % | 1,746 | (42 | )% | 695 | 1,843 | (62 | )% | |||||||||||||||||||||
Notes:
(1) Readers are cautioned that Bolivar and Porco production figures are presented at 100% however the Company records only its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL’s 55% interest (refer to segment information note of the condensed interim consolidated financial statements).
(2) Silver ounces sold and zinc tonnes sold may be lower or higher than the volumes produced in the period due to two effects: (i) timing - concentrates produced in a quarter may be shipped and invoiced in a subsequent period or have been produced in a prior period; and (ii) commercial terms - payable ounces under offtake agreements are lower than produced ounces due to standard treatment and quality deductions applied by the customer.
(3) The Company reports non-GAAP measures, which include: cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in this MD&A.
| -14- |
Summary
The Bolivar Mine has been active for more than 200 years. The current mine complex consists of an underground mine, 1,100 t/d milling facility, tailings storage facility, maintenance workshop, shaft-winder, water treatment plants, supplies warehouse, main office, hospital, and camp.
The Bolivar mine operates in two main areas: the Central Zone, an extension of the original ore deposit that runs deeper, and the Rosario Zone, a parallel area with its own separate entrance.
Currently the plant processes about 21,000 tonnes of ore per month, and 840 meters of combined primary and secondary development each month. At the same time, ore from the San Lucas feed sourcing business is providing production flexibility and allowing the mill to operate efficiently.
The Bolivar mill has operated continuously since 1993, receiving feed from two main sources: the Bolivar Mine, which supplies approximately 70%, and toll feed sourced through the San Lucas feed sourcing business, contributing the remaining 30%. The mill processes each feed type separately, enabling precise analysis and reporting for each. Different reagent strategies are applied to each source due to the presence of pyrrhotite in the San Lucas feed, which is generally absent in the Bolivar mine feed.
Q2 2026 vs Q1 2026
Compared with Q1 2026, Bolivar’s silver production increased 32% to 343,522 ounces from 259,635 ounces. The increase was driven by an 11% increase in tonnes milled and a 17% higher silver head grade (165 g/t versus 141 g/t), together with a modest improvement in silver recovery, as rehabilitation of the areas affected by the May 2025 flooding event continued to advance. Zinc production of 3,684 tonnes was broadly unchanged quarter over quarter, as higher throughput was largely offset by an 8% lower zinc grade. Lead production increased 18% to 233 tonnes, supported by higher throughput and improved lead recovery.
Silver ounces sold increased 15% to 218,307 ounces, lagging the growth in production as the road blockades temporarily restricted concentrate exports, with the excess accumulated as inventory for sale in subsequent periods. The average realized price per silver ounce sold decreased 13% to $76.45 from $87.76, in line with lower average silver prices during the quarter, but this was more than offset by a 33% reduction in all-in sustaining cost per silver ounce sold to $25.81 from $38.79, reflecting the higher volumes sold and produced over which costs are absorbed. As a result, the realized mining margin per silver ounce sold improved 3% to $50.64 from $48.97. For zinc, the average realized price per tonne sold increased 6% to $3,530 and all-in sustaining cost per tonne sold decreased 12% to $2,521, more than doubling the realized mining margin per zinc tonne sold to $1,009 from $483, notwithstanding 32% lower zinc tonnes sold of 2,469 tonnes, which reflected shipment timing during the blockade period.
Q2 2026 vs Q2 2025
Compared with Q2 2025, Bolivar’s silver production increased 13% from 304,468 ounces and zinc production increased 14% from 3,225 tonnes, driven by a 32% increase in tonnes milled as mining areas continued to be restored. Head grades remained below the prior-year quarter (silver of 165 g/t versus 190 g/t; zinc of 5.55% versus 6.52%), reflecting the areas currently being mined as the operation advances through its recovery plan, with higher processed volumes more than offsetting the lower grades. Lead production increased 28% to 233 tonnes.
Silver ounces sold of 218,307 were 46% lower than the 406,070 ounces sold in Q2 2025 despite the higher production, reflecting the temporary disruption of concentrate exports caused by the road blockades. The average realized price per silver ounce sold increased 126% to $76.45 from $33.88, which more than offset a higher all-in sustaining cost per silver ounce sold of $25.81 (Q2 2025 — $14.57), itself a function of the lower volumes sold and the areas being mined during the recovery; the realized mining margin per silver ounce sold expanded 162% to $50.64 from $19.32. For zinc, the average realized price per tonne sold increased 11% to $3,530, while the realized mining margin per zinc tonne sold decreased to $1,009 from $1,746, as all-in sustaining cost per zinc tonne sold rose to $2,521 from $1,436 on 12% lower zinc tonnes sold.
| -15- |
Mining Operations - Porco Mine Operating Results
| Porco Production Table (1) | 2026 Q2 | 2026 Q1 | Change Q2 vs Q1 | 2025 Q2 | Change Q2 vs Q2 | 2026 YTD | 2025 YTD | Change ‘26 YTD vs’25 YTD | ||||||||||||||||||||||||
| Material Processed (tonnes milled) | 52,195 | 45,297 | 15 | % | 49,152 | 6 | % | 97,492 | 96,653 | 1 | % | |||||||||||||||||||||
| Production | ||||||||||||||||||||||||||||||||
| Silver (ounces) | 100,875 | 70,708 | 43 | % | 105,901 | (5 | )% | 171,583 | 226,438 | (24 | )% | |||||||||||||||||||||
| Zinc (tonnes) | 2,974 | 2,833 | 5 | % | 2,786 | 7 | % | 5,807 | 5,460 | 6 | % | |||||||||||||||||||||
| Lead (tonnes) | 136 | 114 | 19 | % | 132 | 3 | % | 250 | 293 | (15 | )% | |||||||||||||||||||||
| Average Grade | ||||||||||||||||||||||||||||||||
| Silver (g/t) | 72 | 59 | 21 | % | 79 | (8 | )% | 66 | 88 | (25 | )% | |||||||||||||||||||||
| Zinc (%) | 5.95 | 6.61 | (10 | )% | 6.03 | (1 | )% | 6.26 | 6.01 | 4 | % | |||||||||||||||||||||
| Lead (%) | 0.33 | 0.34 | (2 | )% | 0.41 | (19 | )% | 0.34 | 0.43 | (23 | )% | |||||||||||||||||||||
| Metal Recovery | ||||||||||||||||||||||||||||||||
| Silver (%) | 84 | 82 | 2 | % | 85 | (2 | )% | 83 | 83 | (0 | )% | |||||||||||||||||||||
| Zinc (%) | 96 | 95 | 1 | % | 94 | 2 | % | 95 | 94 | 1 | % | |||||||||||||||||||||
| Lead (%) | 79 | 74 | 7 | % | 65 | 21 | % | 76 | 69 | 11 | % | |||||||||||||||||||||
| Metals Sold | ||||||||||||||||||||||||||||||||
| Silver ounces sold (2) | 83,629 | 66,274 | 26 | % | 104,099 | (20 | )% | 149,903 | 247,788 | (40 | )% | |||||||||||||||||||||
| Zinc tonnes sold (2) | 2,894 | 2,858 | 1 | % | 2,079 | 39 | % | 5,752 | 4,148 | 39 | % | |||||||||||||||||||||
| Average realized price per silver ounce sold (3) | 76.79 | 84.13 | (9 | )% | 35.65 | 115 | % | 80.04 | 38.56 | 108 | % | |||||||||||||||||||||
| All-in sustaining cost per silver ounce sold(3) | 43.11 | 54.12 | (20 | )% | 28.22 | 53 | % | 47.97 | 26.86 | 79 | % | |||||||||||||||||||||
| Realized mining margin per silver ounce sold(3) | 33.69 | 30.01 | 12 | % | 7.44 | 353 | % | 32.06 | 11.70 | 174 | % | |||||||||||||||||||||
| Average realized price per zinc tonne sold(3) | 3,457 | 3,042 | 14 | % | 3,236 | 7 | % | 3,251 | 3,327 | (2 | )% | |||||||||||||||||||||
| All-in sustaining cost per zinc tonne sold(3) | 1,570 | 1,395 | 13 | % | 1,175 | 34 | % | 1,483 | 1,242 | 19 | % | |||||||||||||||||||||
| Realized mining margin per zinc tonne sold(3) | 1,887 | 1,647 | 15 | % | 2,060 | (8 | )% | 1,768 | 2,085 | (15 | )% | |||||||||||||||||||||
Notes:
(1) Readers are cautioned that Bolivar and Porco production figures are presented at 100% however the Company records only its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL’s 55% interest (refer to segment information note of the condensed interim consolidated financial statements).
(2) Silver ounces sold and zinc tonnes sold may be lower or higher than the volumes produced in the period due to two effects: (i) timing - concentrates produced in a quarter may be shipped and invoiced in a subsequent period or have been produced in a prior period; and (ii) commercial terms - payable ounces under offtake agreements are lower than produced ounces due to standard treatment and quality deductions applied by the customer.
(3) The Company reports non-GAAP measures, which include: cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in this MD&A.
| -16- |
Summary
The Porco Mine has been in operation for nearly 500 years. The complex consists of an underground mine, milling facility, maintenance workshop, tailing storage facility, water treatment plant, supplies warehouse, main office, two hospitals and Yancaviri Camp.
The milling facility processes approximately 17,000 tonnes of ore, and on average realizes 600 meters of total development per month. The mine is comprised of two production areas. Hundimiento uses long hole mechanized mining methods to exploit the deeper extension of the primary vein complex, and the Central zone which is conventionally mined using more selective shrinkage stoping.
The milling facility is sourced by the mine feed (approximately 60%), and the toll feed from the San Lucas feed sourcing business (40%).
Q2 2026 vs Q1 2026
Porco is a predominantly zinc-oriented underground operation, and its performance is best assessed on zinc output. Compared with Q1 2026, zinc production increased 5% to 2,974 tonnes, as a 15% increase in tonnes milled more than offset a 10% lower zinc grade, with zinc recovery remaining strong at 96%. Silver production increased 43% to 100,875 ounces from 70,708 ounces, driven by a 21% higher silver head grade and improved silver recovery, and lead production increased 19% to 136 tonnes.
Zinc tonnes sold of 2,894 were broadly unchanged quarter over quarter, while the average realized price per zinc tonne sold increased 14% to $3,457 from $3,042. All-in sustaining cost per zinc tonne sold increased 13% to $1,570, and the realized mining margin per zinc tonne sold improved 15% to $1,887 from $1,647. Silver ounces sold increased 26% to 83,629 ounces, and although the average realized price per silver ounce sold declined 9% to $76.79 in line with lower silver prices during the quarter, a 20% reduction in all-in sustaining cost per silver ounce sold to $43.11 lifted the realized mining margin per silver ounce sold 12% to $33.69 from $30.01.
Q2 2026 vs Q2 2025
Compared with Q2 2025, zinc production increased 7% from 2,786 tonnes on 6% higher tonnes milled and continued strong zinc recoveries. Silver production decreased 5% from 105,901 ounces, primarily reflecting an 8% lower silver head grade. This profile reflects mine sequencing deliberately focused on zinc-rich areas, rather than an operational shortfall, and is consistent with Porco’s role within the Company’s silver-zinc co-product portfolio.
Zinc tonnes sold increased 39% year over year to 2,894 tonnes, Porco’s zinc shipments were comparatively less affected by the blockade period, at an average realized price per tonne sold of $3,457, up 7% from $3,236. The realized mining margin per zinc tonne sold of $1,887 was 8% lower than the $2,060 recorded in Q2 2025, as all-in sustaining cost per zinc tonne sold increased 34% to $1,570 from $1,175. For silver, the average realized price per ounce sold increased 115% to $76.79 from $35.65, expanding the realized mining margin per silver ounce sold to $33.69 from $7.44 in Q2 2025, with silver ounces sold of 83,629 (down 20% from 104,099) reflecting the timing of concentrate exports during the blockade period.
| -17- |
Mining Operations - Caballo Blanco Group Operating Results
| Caballo Blanco Group Production Table | 2026 Q2 | 2026 Q1 | Change Q2 vs Q1 | 2025 Q2 | Change Q2 vs Q2 | 2026 YTD | 2025 YTD | Change ‘26 YTD vs ‘25 YTD | ||||||||||||||||||||||||
| Material Processed (tonnes milled) | 59,997 | 58,999 | 2 | % | 57,773 | 4 | % | 118,996 | 109,421 | 9 | % | |||||||||||||||||||||
| Production | ||||||||||||||||||||||||||||||||
| Silver (ounces) | 326,215 | 306,888 | 6 | % | 294,786 | 11 | % | 633,103 | 608,052 | 4 | % | |||||||||||||||||||||
| Zinc (tonnes) | 4,126 | 3,967 | 4 | % | 3,974 | 4 | % | 8,093 | 7,523 | 8 | % | |||||||||||||||||||||
| Lead (tonnes) | 765 | 767 | (0 | )% | 595 | 29 | % | 1,532 | 1,081 | 42 | % | |||||||||||||||||||||
| Average Grade | ||||||||||||||||||||||||||||||||
| Silver (g/t) | 183 | 175 | 5 | % | 168 | 9 | % | 179 | 184 | (3 | )% | |||||||||||||||||||||
| Zinc (%) | 7.30 | 7.15 | 2 | % | 7.32 | (0 | )% | 7.23 | 7.30 | (1 | )% | |||||||||||||||||||||
| Lead (%) | 1.51 | 1.54 | (2 | )% | 1.23 | 23 | % | 1.53 | 1.19 | 28 | % | |||||||||||||||||||||
| Metal Recovery | ||||||||||||||||||||||||||||||||
| Silver (%) | 92 | 93 | (0 | )% | 94 | (2 | )% | 92 | 94 | (1 | )% | |||||||||||||||||||||
| Zinc (%) | 94 | 94 | 0 | % | 94 | 0 | % | 94 | 94 | (0 | )% | |||||||||||||||||||||
| Lead (%) | 84 | 84 | (0 | )% | 84 | 0 | % | 84 | 83 | 2 | % | |||||||||||||||||||||
| Metals Sold | ||||||||||||||||||||||||||||||||
| Silver ounces sold (1) | 191,707 | 224,420 | (15 | )% | 366,847 | (48 | )% | 416,127 | 614,439 | (32 | )% | |||||||||||||||||||||
| Zinc tonnes sold (1) | 4,252 | 3,592 | 18 | % | 2,918 | 46 | % | 7,844 | 6,018 | 30 | % | |||||||||||||||||||||
| Average realized price per silver ounce sold (2) | 77.49 | 80.54 | (4 | )% | 33.94 | 128 | % | 79.13 | 33.00 | 140 | % | |||||||||||||||||||||
| All-in sustaining cost per silver ounce sold (2) | 18.13 | 20.44 | (11 | )% | 11.12 | 63 | % | 19.38 | 11.48 | 69 | % | |||||||||||||||||||||
| Realized mining margin per silver ounce sold (2) | 59.36 | 60.09 | (1 | )% | 22.82 | 160 | % | 59.75 | 21.52 | 178 | % | |||||||||||||||||||||
| Average realized price per zinc tonne sold (2) | 3,442 | 3,186 | 8 | % | 3,172 | 9 | % | 3,325 | 3,371 | (1 | )% | |||||||||||||||||||||
| All-in sustaining cost per zinc tonne sold (2) | 1,800 | 1,946 | (7 | )% | 1,048 | 72 | % | 1,867 | 1,168 | 60 | % | |||||||||||||||||||||
| Realized mining margin per zinc tonne sold (2) | 1,643 | 1,240 | 32 | % | 2,124 | (23 | )% | 1,458 | 2,203 | (34 | )% | |||||||||||||||||||||
Notes:
(1) Silver ounces sold and zinc tonnes sold may be lower or higher than the volumes produced in the period due to two effects: (i) timing - concentrates produced in a quarter may be shipped and invoiced in a subsequent period or have been produced in a prior period; and (ii) commercial terms - payable ounces under offtake agreements are lower than produced ounces due to standard treatment and quality deductions applied by the customer.
(2) The Company reports non-GAAP measures, which include: cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in this MD&A.
| -18- |
Summary
Following a thorough examination of the Don Diego milling facility processing performance, Caballo Blanco Group made a strategic adjustment in Q3 to improve metal recovery and concentrate value. Previously, the milling facility handled ore from three mines: Colquechaquita, Tres Amigos, and Reserva. A recent evaluation revealed that processing a blend of ores exclusively from Colquechaquita and Tres Amigos at Don Diego significantly improved silver recovery in the lead concentrate. This enhancement adds greater value to the lead concentrate and generates additional revenue for the Company. The process modification is consistent with our goal of enhancing efficiencies by improving metal recoveries and concentrate value.
Ore from the Reserva mine will now be processed and blended with ore from the San Lucas ore sourcing business to improve overall operating efficiency. The initial results of this adjustment reveal significant gains in silver in lead concentrate recovery, prompting management to adopt this new processing approach as the standard going forward. This revised operational framework will help both Caballo Blanco and San Lucas achieve more consistent recovery performance and maximize the value of its mineral resources.
Q2 2026 vs Q1 2026
Compared with Q1 2026, Caballo Blanco’s silver production increased 6% to 326,215 ounces from 306,888 ounces, driven by a 5% higher silver head grade (183 g/t versus 175 g/t) on modestly higher throughput. Zinc production increased 4% to 4,126 tonnes, and lead production was unchanged at 765 tonnes. Recoveries remained stable across all metals, and the operation continued to perform as one of the Company’s most consistent contributors.
Silver ounces sold of 191,707 decreased 15% from 224,420 in Q1 2026, reflecting the blockade-related timing of concentrate exports rather than operating performance, with the excess production accumulated as inventory. The average realized price per silver ounce sold decreased 4% to $77.49 from $80.54, while all-in sustaining cost per silver ounce sold, the lowest in the Company’s portfolio, declined 11% to $18.13 from $20.44, leaving the realized mining margin per silver ounce sold essentially unchanged at $59.36 (Q1 2026 — $60.09). Zinc tonnes sold increased 18% to 4,252 tonnes at an average realized price per tonne sold of $3,442, up 8%, and the realized mining margin per zinc tonne sold improved 32% to $1,643 from $1,240 on both higher prices and lower unit costs.
Q2 2026 vs Q2 2025
Compared with Q2 2025, Caballo Blanco’s silver production increased 11% from 294,786 ounces, on 4% higher tonnes milled and a 9% higher silver head grade, while zinc production increased 4% from 3,974 tonnes. Lead production increased 29% from 595 tonnes, reflecting a 23% higher lead grade in the areas mined during the quarter. Grades and recoveries remained stable across periods, underscoring Caballo Blanco’s operating consistency.
Silver ounces sold of 191,707 were 48% lower than the 366,847 ounces sold in Q2 2025 despite the higher production, reflecting the temporary disruption of concentrate exports caused by the road blockades. The average realized price per silver ounce sold increased 128% to $77.49 from $33.94 and, notwithstanding a higher all-in sustaining cost per silver ounce sold of $18.13 (Q2 2025 — $11.12), the realized mining margin per silver ounce sold expanded 160% to $59.36 from $22.82, the highest in the portfolio. Zinc tonnes sold increased 46% year over year to 4,252 tonnes at an average realized price per tonne sold of $3,442 (up 9%), while the realized mining margin per zinc tonne sold of $1,643 compared with $2,124 in Q2 2025, reflecting a higher all-in sustaining cost per zinc tonne sold of $1,800 (Q2 2025 — $1,048).
| -19- |
Mining Operations - Zimapan Mine
| Zimapan Production Table | 2026 Q2 | 2026 Q1 | Change Q2 vs Q1 | 2025 Q2 | Change Q2 vs Q2 | 2026 YTD | 2025 YTD | Change ‘26 YTD vs ‘25 YTD | ||||||||||||||||||||||||
| Material Processed (tonnes milled) | 222,259 | 223,670 | (1 | )% | 224,162 | (1 | )% | 445,929 | 447,735 | (0 | )% | |||||||||||||||||||||
| Production | ||||||||||||||||||||||||||||||||
| Silver (ounces) | 391,121 | 362,863 | 8 | % | 398,292 | (2 | )% | 753,984 | 838,491 | (10 | )% | |||||||||||||||||||||
| Zinc (tonnes) | 4,764 | 4,040 | 18 | % | 4,521 | 5 | % | 8,804 | 9,019 | (2 | )% | |||||||||||||||||||||
| Lead (tonnes) | 1,159 | 1,005 | 15 | % | 1,354 | (14 | )% | 2,164 | 2,743 | (21 | )% | |||||||||||||||||||||
| Copper (tonnes) | 337 | 308 | 9 | % | 229 | 47 | % | 645 | 508 | 27 | % | |||||||||||||||||||||
| Average Grade | ||||||||||||||||||||||||||||||||
| Silver (g/t) | 76 | 78 | (3 | )% | 77 | (2 | )% | 77 | 79 | (2 | )% | |||||||||||||||||||||
| Zinc (%) | 2.78 | 2.55 | 9 | % | 2.62 | 6 | % | 2.66 | 2.59 | 3 | % | |||||||||||||||||||||
| Lead (%) | 0.68 | 0.62 | 9 | % | 0.80 | (15 | )% | 0.65 | 0.76 | (15 | )% | |||||||||||||||||||||
| Copper (%) | 0.27 | 0.25 | 7 | % | 0.22 | 22 | % | 0.26 | 0.24 | 8 | % | |||||||||||||||||||||
| Metal Recovery | ||||||||||||||||||||||||||||||||
| Silver (%) | 72 | 65 | 12 | % | 71 | 1 | % | 68.4 | 74.1 | (8 | )% | |||||||||||||||||||||
| Zinc (%) | 77 | 71 | 9 | % | 77 | 0 | % | 74.0 | 77.8 | (5 | )% | |||||||||||||||||||||
| Lead (%) | 77 | 73 | 6 | % | 76 | 2 | % | 75.0 | 81.0 | (7 | )% | |||||||||||||||||||||
| Copper (%) | 57 | 54 | 4 | % | 45 | 25 | % | 55.5 | 46.7 | 19 | % | |||||||||||||||||||||
| Metals Sold | ||||||||||||||||||||||||||||||||
| Silver ounces sold (1) | 400,524 | 391,654 | 2 | % | 405,967 | (1 | )% | 792,178 | 829,324 | (4 | )% | |||||||||||||||||||||
| Zinc tonnes sold (1) | 4,804 | 3,921 | 23 | % | 4,408 | 9 | % | 8,725 | 8,825 | (1 | )% | |||||||||||||||||||||
| Average realized price per silver ounce sold(2) | 66.32 | 76.60 | (13 | )% | 31.00 | 114 | % | 71.40 | 32.15 | 122 | % | |||||||||||||||||||||
| All-in sustaining cost per silver ounce sold(2) | 15.01 | 21.88 | (31 | )% | 20.55 | (27 | )% | 18.40 | 21.57 | (15 | )% | |||||||||||||||||||||
| Realized mining margin per silver ounce sold(2) | 51.32 | 54.72 | (6 | )% | 10.45 | 391 | % | 53.00 | 10.57 | 401 | % | |||||||||||||||||||||
| Average realized price per zinc tonne sold(2) | 2,969 | 3,466 | (14 | )% | 2,487 | 19 | % | 3,192 | 2,747 | 16 | % | |||||||||||||||||||||
| All-in sustaining cost per zinc tonne sold(2) | 2,623 | 3,380 | (22 | )% | 2,810 | (7 | )% | 2,963 | 3,070 | (4 | )% | |||||||||||||||||||||
| Realized mining margin per zinc tonne sold(2) | 346 | 87 | 299 | % | (324 | ) | (207 | )% | 230 | (323 | ) | (171 | )% | |||||||||||||||||||
Notes:
(1) Silver ounces sold and zinc tonnes sold may be lower or higher than the volumes produced in the period due to two effects: (i) timing - concentrates produced in a quarter may be shipped and invoiced in a subsequent period or have been produced in a prior period; and (ii) commercial terms - payable ounces under offtake agreements are lower than produced ounces due to standard treatment and quality deductions applied by the customer.
(2) The Company reports non-GAAP measures, which include: cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in this MD&A.
| -20- |
Summary
The Zimapan operation produces feed from the Carrizal and Monte mines, which are connected by a 7.4-kilometre underground access and haulage tunnel which terminates at the San Francisco process plant. Mining methods used include long hole and cut and fill stoping. The plant processes about 72,000 tonnes per month and produces three concentrates using differential flotation. Tailings Storage Facility and other support facilities are located adjacent and downstream of the plant location.
Q2 2026 vs Q1 2026
Compared with Q1 2026, Zimapan’s silver production increased 8% to 391,121 ounces from 362,863 ounces despite broadly unchanged throughput and a slightly lower silver head grade, driven by a significant improvement in silver recovery to 72% from 65% following the resolution of the temporary constraints experienced in the first quarter, including limited ventilation in the higher-grade zones at Level 960 and repeated power interruptions caused by the local service provider’s maintenance of the power grid. Zinc production increased 18% to 4,764 tonnes, supported by a 9% higher zinc grade and improved zinc recovery, while lead production increased 15% to 1,159 tonnes and copper production increased 9% to 337 tonnes, with metal recoveries improving across all four payable metals.
Silver ounces sold of 400,524 were broadly in line with both production and the 391,654 ounces sold in Q1 2026. The average realized price per silver ounce sold decreased 13% to $66.32 from $76.60, in line with lower average silver prices during the quarter, but this was substantially offset by a 31% reduction in all-in sustaining cost per silver ounce sold to $15.01 from $21.88, driven by the improved metal recoveries, higher by-product copper credits and lower sustaining capital expenditures in the period; the realized mining margin per silver ounce sold was $51.32, compared with $54.72 in Q1 2026. Zinc tonnes sold increased 23% to 4,804 tonnes and, although the average realized price per zinc tonne sold decreased 14% to $2,969 from $3,466, all-in sustaining cost per zinc tonne sold decreased 22% to $2,623 on the higher volumes sold, and the realized mining margin per zinc tonne sold improved to $346 from $87 in Q1 2026.
Q2 2026 vs Q2 2025
Compared with Q2 2025, Zimapan’s silver production was broadly stable, decreasing 2% from 398,292 ounces, while zinc production increased 5% from 4,521 tonnes on a higher zinc grade. Lead production decreased 14% from 1,354 tonnes, primarily reflecting a 15% lower lead grade associated with mine sequencing, while copper production increased 47% from 229 tonnes on materially higher copper grades and recoveries. Zimapan remained an important contributor to consolidated output and continues to be managed with a focus on recoveries and concentrate quality.
Silver ounces sold of 400,524 were broadly unchanged from 405,967 in Q2 2025. The average realized price per silver ounce sold increased 114% to $66.32 from $31.00, while all-in sustaining cost per silver ounce sold decreased 27% to $15.01 from $20.55 and cash cost per silver ounce sold decreased 22% to $12.36 from $15.85, reflecting the recovery improvements and materially higher by-product copper credits from the 47% increase in copper production. As a result, the realized mining margin per silver ounce sold expanded to $51.32 from $10.45 in Q2 2025 — the largest year-over-year margin improvement in the portfolio. For zinc, tonnes sold increased 9% to 4,804 tonnes at an average realized price per tonne sold of $2,969, up 19% from $2,487, and with all-in sustaining cost per zinc tonne sold reduced 7% to $2,623, the realized mining margin per zinc tonne sold turned positive at $346, compared with negative $(324) in Q2 2025, marking a meaningful improvement in the operation’s zinc unit economics that management intends to sustain through its continued focus on recoveries and concentrate quality.
| -21- |
Ore Processing Operations - San Lucas Group Operating Results
| San Lucas Production Table | 2026 Q2 | 2026 Q1 | Change Q2 vs Q1 | 2025 Q2 | Change Q2 vs Q2 | 2026 YTD | 2025 YTD | Change ‘26 YTD vs ‘25 YTD | ||||||||||||||||||||||||
Material Processed (tonnes milled) | 115,424 | 94,767 | 22 | % | 94,973 | 22 | % | 210,191 | 181,668 | 16 | % | |||||||||||||||||||||
| Production | ||||||||||||||||||||||||||||||||
| Silver (ounces) | 411,367 | 341,405 | 20 | % | 319,634 | 29 | % | 752,772 | 614,655 | 22 | % | |||||||||||||||||||||
| Zinc (tonnes) | 7,692 | 7,144 | 8 | % | 6,643 | 16 | % | 14,836 | 12,658 | 17 | % | |||||||||||||||||||||
| Lead (tonnes) | 872 | 602 | 45 | % | 509 | 71 | % | 1,474 | 990 | 49 | % | |||||||||||||||||||||
| Metal Recovery | ||||||||||||||||||||||||||||||||
| Silver (%) | 82 | 81 | 2 | % | 85 | (3 | )% | 82 | 85.4 | (5 | )% | |||||||||||||||||||||
| Zinc (%) | 89 | 89 | (0 | )% | 90 | (1 | )% | 89 | 90.1 | (1 | )% | |||||||||||||||||||||
| Lead (%) | 67 | 63 | 5 | % | 59 | 12 | % | 65 | 62.6 | 4 | % | |||||||||||||||||||||
| Metals Sold | ||||||||||||||||||||||||||||||||
| Silver ounces sold (1) | 333,899 | 634,875 | (47 | )% | 365,489 | (9 | )% | 968,774 | 652,862 | 48 | % | |||||||||||||||||||||
| Zinc tonnes sold (1) | 8,796 | 7,397 | 19 | % | 6,529 | 35 | % | 16,193 | 10,392 | 56 | % | |||||||||||||||||||||
| Realized ore processing margin per silver ounce sold (2) | 33.42 | 16.49 | 103 | % | 4.83 | 592 | % | 22.32 | 6.33 | 253 | % | |||||||||||||||||||||
| Realized ore processing margin per zinc tonne sold (2) | 819 | 667 | 23 | % | 1,539 | (47 | )% | 750 | 1,783 | (58 | )% | |||||||||||||||||||||
Notes:
(1) Silver ounces sold and zinc tonnes sold may be lower or higher than the volumes produced in the period due to two effects: (i) timing - concentrates produced in a quarter may be shipped and invoiced in a subsequent period or have been produced in a prior period; and (ii) commercial terms - payable ounces under offtake agreements are lower than produced ounces due to standard treatment and quality deductions applied by the customer.
(2) The Company reports non-GAAP measures, which include: cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in this MD&A.
| -22- |
Summary
San Lucas is the Company’s ore sourcing and trading business in Bolivia and should be regarded as a strategic component of the broader Bolivian production portfolio. By procuring ore from third-party suppliers and processing it through the Company’s existing plants, San Lucas supports higher plant utilization, enhances fixed-cost absorption, and increases overall operating flexibility. Given its margin-based structure, purchase prices are aligned to contained metal value. San Lucas is best evaluated on the basis of margin generation and its contribution to overall operating efficiency, rather than on average feed grade alone.
Q2 2026 vs Q1 2026
Compared with Q1 2026, San Lucas processed 115,424 tonnes, a 22% increase, and produced 411,367 ounces of silver (up 20%), 7,692 tonnes of zinc (up 8%), and 872 tonnes of lead (up 45%). The increase was driven primarily by higher volumes of purchased ore delivered by third-party suppliers, with recoveries broadly stable to modestly improved. The higher volumes directly supported plant utilization and fixed-cost absorption across the Company’s Bolivian processing facilities, consistent with San Lucas’s strategic role within the portfolio.
San Lucas is best assessed on margin generation rather than production volume alone. The realized ore processing margin per silver ounce sold more than doubled to $33.42 from $16.49 in Q1 2026, as realized silver prices declined more slowly than the cost of purchased ore, which under the margin-based model is aligned to the contained metal value of the ore acquired at the time of purchase, and as unit costs benefited from the higher processed volumes. The realized ore processing margin per zinc tonne sold increased 23% to $819 from $667. Silver ounces sold of 333,899 were 47% lower than in Q1 2026; this movement reflects shipment timing rather than performance, as first-quarter sales of 634,875 ounces had been elevated by the shipment of previously accumulated concentrate while second-quarter shipments were constrained by the road blockades, with the resulting inventory expected to be sold as export logistics have normalized. Zinc tonnes sold increased 19% to 8,796 tonnes.
Q2 2026 vs Q2 2025
Compared with Q2 2025, San Lucas increased silver production by 29% from 319,634 ounces, zinc production by 16% from 6,643 tonnes, and lead production by 71% from 509 tonnes, on 22% higher processed tonnes. The year-over-year growth underscores the flexibility of the San Lucas model, which allows the Company to scale third-party feed sourcing in response to plant availability and market conditions.
The realized ore processing margin per silver ounce sold expanded to $33.42 from $4.83 in Q2 2025, as the average realized price per silver ounce sold increased 154% to $74.58 from $29.32, well ahead of the increase in all-in sustaining cost per silver ounce sold to $41.16 from $24.49, which principally reflects the higher metal-value-linked cost of purchased ore. The realized ore processing margin per zinc tonne sold was $819, compared with $1,539 in Q2 2025, as the increase in the average realized zinc price to $3,107 from $2,832 was outpaced by the higher purchased-ore cost per tonne. Zinc tonnes sold increased 35% year over year to 8,796 tonnes, while silver ounces sold of 333,899 were 9% lower, reflecting the blockade-related shipment timing. Revenues from ore processing increased 75% to $38,654 from $22,072, and gross profit from ore processing increased 68% to $13,804 from $8,205, reflecting both the stronger unit margins and the higher volumes.
| -23- |
Other Properties
The Soracaya Project is located in the province of Sud-Chicas, in the department of Potosí in Bolivia. The Project has UTM WGS-84 coordinates of 784,896E; 7,645,567N at an elevation of 4,421 meters above sea level (masl). Paved and gravel roads connect the Soracaya Project to the capital city La Paz (676 km), the town of Uyumi (132 km) and the San Vicente mine site (12 km). There are currently six mining concessions at Soracaya which cover 8,325 hectares and are fully owned by Sinchi Wayra, the Company’s wholly owned subsidiary that was acquired in 2021 as part of the acquisition of its Bolivian assets.
The Soracaya site is typical for an exploration property with access and drill roads, limited infrastructure which includes offices, living quarters and related facilities, power generation and electrical distribution, water treatment, core logging and temporary warehousing facilities. In addition, an underground exploration drift and portal has been developed, surface exploration trenches have also been developed and remain open and accessible.
On October 4, 2024 the company published an NI 43-101 technical report of the property. The effective date of the resource estimate is January 1, 2024. Since the publication of the report, the Company has continued to perform exploration activities and is evaluating advancing the project into the development phase. The project is fully permitted for exploration and can currently extract 300 tonnes per month for exploration and metallurgical testing purposes. The Company has applied for an enhanced exploration and production permit which will allow for the extraction of 3,000 tonnes per month and expects to obtain approval before the end of 2026.
The mineral resources were estimated in conformity with CIM’s “Estimation of Mineral Resources and Mineral Reserves Best Practices Guidelines” (December 2019) and are reported in accordance with NI 43-101 guidelines.
Mineral resources are classified under the inferred category according to CIM guidelines. The author evaluated the resource in order to ensure that it meets the condition of “reasonable prospects of eventual economic extraction” as suggested under NI 43-101. The criteria considered were confidence, continuity and economic cut-off in addition to considering constraining the resources within an underground mining volumes.
Using a cut-off grade of 10.0% ZnEq, the Soracaya Project resources are presented in the table below.
| Tonnes | ZnEq | Zn | Ag | Pb | Cu | NSR | ||||||
| 4,137,000 | 31.62 | 1.23 | 259.76 | 7.23 | 0.09 | 248.82 |
Notes:
The current Resource Estimate was prepared by Garth Kirkham, P.Geo., of Kirkham Geosystems Ltd.
| 1) | All mineral resources have been estimated in accordance with Canadian Institute of Mining and Metallurgy and Petroleum (“CIM”) definitions, as required under National Instrument 43-101 (“NI43-101”). | |
| 2) | The Mineral Resource Estimate was prepared using a 10% zinc equivalent cut-off grade. Cut-off grades were derived from $3.65/lb. copper, $21.00/oz silver, $1.15/lb. zinc and $1.00/lb. lead. This cut-off grade was based on current smelter agreements and total OPEX costs of $156.00/t based on 2023 actual costs derived from the Porco mine data, with process recoveries of 70.0% for copper, 80.0% for zinc, 70.0% for lead, and 85% for silver. All prices are stated in $USD. | |
| 3) | An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration. | |
| 4) | Mineral resources are not mineral reserves until they have demonstrated economic viability. Mineral resource estimates do not account for a resource’s mineability, selectivity, mining loss, or dilution. All figures are rounded to reflect the relative accuracy of the estimate and therefore numbers may not appear to add precisely. |
Qualified Person and Technical Disclosures
All scientific and technical disclosure contained in this MD&A was reviewed and approved by Garth Kirkham P.Geo. an independent consultant to the Company, who is a qualified person under NI 43-101 and has approved the scientific and technical information contained within this news release.
Production at the Zimapan Mine is not supported by a feasibility study on mineral reserves demonstrating economic or technical viability or any other independent economic study under NI 43-101. Accordingly, there is increased uncertainty and higher economic and technical risks of failure associated with production operations at the Zimapan Mine. Production and economic variables may vary considerably due to the absence of a complete and detailed site analysis according to and in accordance with NI 43- 101. Project failure may adversely impact the Company’s future profitability.
| -24- |
Overview of Financial Results
Quarters ended June 30, 2026 and 2025
| Change | ||||||||||||
| 2026 Q2 | 2025 Q2 | ‘26 Q2 vs ‘25 Q2 | ||||||||||
| Revenues | 113,458 | 73,295 | 55 | % | ||||||||
| Mine operating costs | ||||||||||||
| Cost of sales | (54,523 | ) | (42,568 | ) | 28 | % | ||||||
| Depletion, depreciation and amortization | (7,796 | ) | (5,439 | ) | 43 | % | ||||||
| Gross profit | 51,139 | 25,288 | 102 | % | ||||||||
| General and administrative expenses | (5,767 | ) | (3,957 | ) | 46 | % | ||||||
| Share-based compensation expense | (619 | ) | (1,349 | ) | (54 | )% | ||||||
| Operating income | 44,753 | 19,982 | 124 | % | ||||||||
| Other income | 1,300 | (51 | ) | (2649 | )% | |||||||
| Loss on change in fair value of consideration payable | (15,788 | ) | (1,034 | ) | 1427 | % | ||||||
| Foreign exchange gain | 7,807 | 3,144 | 180 | % | ||||||||
| Income before tax | 38,072 | 22,041 | 77 | % | ||||||||
| Income tax expense | (36,067 | ) | (1,064 | ) | 3289 | % | ||||||
| Net income for the period | 2,005 | 20,977 | (86 | )% | ||||||||
| Other comprehensive income that may be reclassified subsequently to net income or loss: | ||||||||||||
| Unrealized gain (loss) on marketable securities | (68 | ) | 177 | (138 | )% | |||||||
| Currency translation differences | 753 | (805 | ) | (194 | )% | |||||||
| Comprehensive income for the period | 2,690 | 20,350 | (82 | )% | ||||||||
| Net income per share (1): | ||||||||||||
| Basic | 0.02 | 0.24 | ||||||||||
| Diluted | 0.02 | 0.22 | ||||||||||
| Weighted average number of common shares (1): | ||||||||||||
| Basic | 92,666,724 | 88,967,382 | ||||||||||
| Diluted | 94,053,260 | 93,451,548 | ||||||||||
Notes:
(1) On December 10, 2025 the Company consolidated its issued and outstanding common shares on the basis of one post-consolidated common share for every four pre-consolidated common shares. The number of issued and outstanding shares and any per share amounts have been retrospectively restated.
Revenues for the quarter ended June 30, 2026 was $113,458, an increase of $40,163 as compared to Q2 2025. The increase was driven by an increase in the average realized price of silver from $33.13 in Q2 2025 to $72.17 in Q2 2026. The increase caused by the higher silver price was partially offset by decreases in the quantity of silver ounces sold in Q2 2026, reflecting both the blockade-related export disruption in Q2 2026 and the lower production base at Bolivar during its recovery. Zinc tonnes sold increased by 18% and the average realized price per Zinc tonne increased from $2,938 to $3,276 per tonne.
Cost of sales for the quarter ended June 30, 2026 was $54,523, an increase of $11,955 compared to Q2 2025. The increase was mainly driven by San Lucas, which operates a margin-based sourcing model, as higher silver and zinc prices in the current quarter increased ore purchase costs. The increase was further impacted by the change in exchange rate in Bolivia between quarters, leading to greater costs when translating Boliviano denominated transactions to the US dollar. Increase by cost category was primarily attributed to ore purchase costs and mining and plant maintenance costs. The increase was offset by an update to the estimate of the future expenditures required for the restoration of mining properties which resulted in a decrease in the decommissioning and restoration provision. The decrease in future expenditures is primarily caused by significant changes to the Bolivian economic environment which includes the adopting of a floating exchange rate and a significant reduction in the projected inflation rate. The change in estimate reduced the carrying value of the decommissioning and restoration asset to zero and the remaining $6,505 was recorded as a reduction to cost of sales.
| -25- |
Overview of Financial Results (continued)
Depreciation, depletion and amortization for the quarter ended June 30, 2026 was $7,796, an increase of $2,357 compared with Q2 2025. This movement was due to a greater depreciation basis arising from continued capital expenditures to increase the properties’ cost basis.
General and administrative expenses for the quarter ended June 30, 2026 were $5,767, an increase of $1,810 compared with Q2 2025. The increase was primarily attributable to greater salaries and benefits in Bolivia during the current period.
Other income for the quarter ended June 30, 2026 was $1,300, an increase from the loss of $51 in Q2 2025. The increase was due to higher interest income on VAT receivable balances which was partially offset by increases in the interest expense from loans payable.
Loss on change in fair value of consideration payable for the three months ended June 30, 2026 was $15,788 a significant increase from $1,034 in 2025. The consideration payable liability is a Contingent Value Right (CVR) obligation which requires that the Company make payments in the event that the price of zinc exceeds $3,850 per tonne. The average price of zinc in Q2 2026 was $3,476 which is approaching the price trigger for the payment and resulted in the CVR obligation increasing by $15,788 in the quarter with a corresponding non-cash expense charged to the income statement. The CVR liability is a valuation of the payouts that could occur up to the end of 2032 and does not represent a cash payment currently owed to Glencore. The payments are only triggered when the month’s average LME zine price exceeds $3,850 per tonne, a threshold that has not been exceed since the inception of the agreement in October 2024.
Foreign exchange gain for the quarter ended June 30, 2026 was $7,807, having increased by $4,663 compared with Q2 2025. This change was primarily attributed to the change in the Boliviano exchange rate, which led to a gain on the revaluation of monetary assets and liabilities.
Income tax expense for the quarter ended June 30, 2026 was $36.1 million, an increase of $35.0 million compared to Q2 2025. The significant increase was primarily attributable to several non-recurring items arising from changes in Bolivia’s foreign exchange and inflation assumptions, as well as higher taxable income resulting from stronger metal prices.
The most significant one-time event that impacted income tax expense was that in June 2026, Bolivia transitioned from a fixed official exchange rate between the Boliviano and the U.S. dollar to a floating exchange rate. The fixed rate was 6.96 BOB to $USD and the ending exchange rate at period end was 9.77, a 40% increase. The new exchange rate generated a significant increase in the tax basis of foreign-currency-denominated assets, most notably the Company’s cash and marketable securities generated from U.S. dollar-denominated sales. The resulting unrealized foreign exchange gain was recognized as taxable income under the Bolivian tax system. The increase in the exchange rate also caused taxable income to increase as the $USD denominated sales revenue translated to Bolivianos increased taxable income considerably.
A second significant one-time item that increased taxable income resulted from a downward revision in Bolivia’s expected inflation rate. The lower inflation assumption reduced the nominal value of future expenditures included in the Company’s decommissioning and restoration provision. This reduction in future estimated expenditures decreased the carrying value of the related liability, resulting in a gain that is taxable under Bolivian tax regulations.
The two one-time items represented a significant portion of the increase in Q2 2026 income tax expense and are non-recurring in nature but will affect the tax liability payable to the Bolivian government during fiscal 2026.
In addition to these non-recurring items, income tax expense increased as a result of higher taxable income during the quarter, primarily driven by the significant increase in metal prices compared with the prior-year period. For the six months ended June 30 2026 Income before tax has increased from $51,198 to $82,981 in 2025, a 38% increase year over year which drove an increase in the income tax expense.
| -26- |
Overview of Financial Results (continued)
For the six months ended June 30, 2026 and 2025
| 2026 YTD | 2025 YTD | Change ‘26 YTD vs ‘25 YTD | ||||||||||
| Revenues | 240,987 | 143,609 | 68 | % | ||||||||
| Mine operating costs | ||||||||||||
| Cost of sales | (131,886 | ) | (80,446 | ) | 64 | % | ||||||
| Depletion, depreciation and amortization | (15,093 | ) | (10,016 | ) | 51 | % | ||||||
| Gross profit | 94,008 | 53,147 | 77 | % | ||||||||
| General and administrative expenses | (13,365 | ) | (8,877 | ) | 51 | % | ||||||
| Share-based compensation expense | (1,148 | ) | (1,508 | ) | (24 | )% | ||||||
| Operating income | 79,495 | 42,762 | 86 | % | ||||||||
| Other income | 3,460 | 2,037 | 70 | % | ||||||||
| Loss on change in fair value of consideration payable | (14,823 | ) | (2,979 | ) | 398 | % | ||||||
| Foreign exchange gain | 14,849 | 9,378 | 58 | % | ||||||||
| Income before tax | 82,981 | 51,198 | 62 | % | ||||||||
| Income tax expense | (52,506 | ) | (20,770 | ) | 153 | % | ||||||
| Net income for the period | 30,475 | 30,428 | 0 | % | ||||||||
| Other comprehensive income that may be reclassified subsequently to net income or loss: | ||||||||||||
| Unrealized gain (loss) on marketable securities | (298 | ) | 177 | (268 | )% | |||||||
| Currency translation differences | 1,603 | (483 | ) | (432 | )% | |||||||
| Comprehensive income for the period | 31,780 | 30,122 | 6 | % | ||||||||
| Net income per share (1): | ||||||||||||
| Basic | 0.33 | 0.34 | ||||||||||
| Diluted | 0.32 | 0.33 | ||||||||||
| Weighted average number of common shares (1): | ||||||||||||
| Basic | 92,423,038 | 88,965,643 | ||||||||||
| Diluted | 93,809,574 | 93,449,809 | ||||||||||
Notes:
(1) On December 10, 2025 the Company consolidated its issued and outstanding common shares on the basis of one post-consolidated common share for every four pre-consolidated common shares. The number of issued and outstanding shares and any per share amounts have been retrospectively restated.
Revenues for the six months ended June 30, 2026 was $240,987, an increase of $97,378 compared with the six months ended June 30, 2025. The increase was primarily due to an increase in the average realized price of silver from $33.13 in 2025 to $76.33 in 2026.
Cost of sales for the six months ended June 30, 2026 was $131,886, an increase of $51,440 compared with the six months ended June 30, 2025. The increase was primarily driven by San Lucas, which operates a margin-based sourcing model, as higher silver and zinc prices in the current quarter increased ore purchase costs. Increase by cost category was attributed to ore purchase costs and mining and plant maintenance costs. The increase was offset by an update to the estimate of the future expenditures in Bolivia required for the restoration of mining properties which resulted in a decrease in the decommissioning and restoration provision exceeding the decommissioning and restoration asset. The remaining amount of the change was recorded as a reduction to cost of sales.
Depreciation, depletion and amortization for the six months ended June 30, 2026 was $15,093, an increase of $5,077 compared with the six months ended June 30, 2025. The increase is attributed to a greater depreciation basis arising from continued capital expenditures to increase the properties’ cost basis during the period.
General and administrative expenses for the six months ended June 30, 2026 was $13,365, an increase of $4,488 compared with the six months ended June 30, 2025. The increase was mainly attributable to an increase in salaries and benefits in Bolivia, which increased as a result of the change in Boliviano exchange rate.
Other income for the six months ended June 30, 2026 was $3,460, an increase of $1,423 compared to the six months ended June 30, 2025. The increase was due to higher interest income on VAT receivable balances which was partially offset by increases in the interest expense from loans payable.
| -27- |
Overview of Financial Results (continued)
Loss on change in fair value of consideration payable for the six months ended June 30, 2026 was $14,823, a significant increase from $2,979 in 2025. The consideration payable liability is a Contingent Value Right (CVR) obligation which requires that the Company make payments in the event that the price of zinc exceeds $3,850 per tonne. The average price of zinc in Q2 2026 was $3,476 which is approaching the price trigger for the payment and resulted in the CVR obligation increasing by $14,823 in the year with a corresponding non-cash expense charged to the income statement. The CVR liability is a valuation of the payouts that could occur up to the end of 2032 and does not represent a cash payment currently owed to Glencore. The payments are only triggered when the month’s average LME zine price exceeds $3,850 per tonne, a threshold that has not been exceed since the inception of the agreement in October 2024.
Foreign exchange gain for the six months ended June 30, 2026 was $14,849, an increase of $5,471 compared to the six months ended June 30, 2025. This change was primarily attributed to the change in the Boliviano exchange rate, which led to a gain on the revaluation of monetary assets and liabilities.
Income tax expense for the quarter ended June 30, 2026 was $52,506, an increase of $37,376 compared to the six months ended June 30, 2025. The significant increase was primarily attributable to several non-recurring items arising from changes in Bolivia’s foreign exchange and inflation assumptions, as well as higher taxable income resulting from stronger metal prices.
The most significant one-time event that impacted income tax expense was that in June 2026, Bolivia transitioned from a fixed official exchange rate between the Boliviano and the U.S. dollar to a floating exchange rate. The fixed rate was 6.96 BOB to $USD and the ending exchange rate at period end was 9.77, a 40% increase. The new exchange rate generated a significant increase in the tax basis of foreign-currency-denominated assets, most notably the Company’s cash and marketable securities generated from U.S. dollar-denominated sales. The resulting unrealized foreign exchange gain was recognized as taxable income under the Bolivian tax system. The increase in the exchange rate also caused taxable income to increase as the $USD denominated sales revenue translated to Bolivianos increased taxable income considerably.
A second significant one-time item that increased taxable income resulted from a downward revision in Bolivia’s expected inflation rate. The lower inflation assumption reduced the nominal value of future expenditures included in the Company’s decommissioning and restoration provision. This reduction in future estimated expenditures decreased the carrying value of the related liability, resulting in a gain that is taxable under Bolivian tax regulations.
The two one-time items represented a significant portion of the increase in the YTD 2026 income tax expense and are non-recurring in nature but will affect the tax payable to the Bolivian government during fiscal 2026.
In addition to these non-recurring items, income tax expense increased as a result of higher taxable income during the six months ended, primarily driven by the significant increase in metal prices compared with the prior-year period. Income before tax has increased from $22,041 to S38,072, a 73% increase quarter of quarter which has increased the income tax expense.
Summary of Quarterly Financial Results
The following table presents selected financial information for each of the most recent eight quarters:
| 2026 | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |||||||||||||||||||||||||
| Revenues | 113,458 | 127,529 | 102,784 | 79,989 | 73,295 | 70,314 | 81,669 | 78,244 | ||||||||||||||||||||||||
| Mine operating costs | 62,319 | 84,660 | 66,697 | 59,823 | 48,007 | 42,455 | 56,419 | 62,522 | ||||||||||||||||||||||||
| Gross profit | 51,139 | 42,869 | 36,087 | 20,166 | 25,288 | 27,859 | 25,250 | 15,722 | ||||||||||||||||||||||||
| Operating expenses | (6,386 | ) | (8,127 | ) | (6,749 | ) | (7,213 | ) | (5,306 | ) | (5,079 | ) | (6,068 | ) | (6,592 | ) | ||||||||||||||||
| Net income (loss) | 2,005 | 28,470 | (4,550 | ) | 16,344 | 20,977 | 9,451 | 12,842 | 17,534 | |||||||||||||||||||||||
| Net income (loss) per share – basic and diluted (1) | 0.02 | 0.31 | (0.05 | ) | 0.05 | 0.06 | 0.03 | 0.06 | 0.05 | |||||||||||||||||||||||
(1) On December 10, 2025 the Company consolidated its issued and outstanding common shares on the basis of one post-consolidated common share for every four pre-consolidated common shares. The number of issued and outstanding shares and any per share amounts have been retrospectively restated.
The Company’s quarterly results vary based on the silver ounces and zinc tonnes sold per period together with the average realized silver and zinc prices for the period. Operating expenses vary from quarter to quarter depending on the silver ounces and zinc tonnes produced in the period.
| -28- |
Liquidity, Capital Resources and Contractual Obligations
Liquidity
As at June 30, 2026, the Company had cash and cash equivalents of $50,398 (December 31, 2025 - $44,267). The Company’s cash is not exposed to liquidity risk and there is no restriction on the ability of the Company to use these funds to meet its obligations. The Company also has $22,421 of marketable securities, which consist of liquid holdings of US treasury bills and treasury notes that can be readily sold to be converted into cash. The securities are held with Stifel bank which uses a portion of the holdings as collateral for the Standby Letters of Credit that were issued to Banco BISA and Banco Credito de Bolivia (see note 10(a) of the condensed interim consolidated financial statements). Although the securities held can be readily converted to cash, they are restricted to the extent that the amounts serve as collateral. The Standby Letter of credit issued to Banco BISA is for $10,000 and expires on April 20, 2027. The standby letter of credit issued to Banco Credito de Bolivia is for $5,800 and expires on September 14, 2026, and automatically renews every six months.
For the six months ended June 30, 2026, the Company reported net income of $30,475 (six months ended June 30, 2025 - net income of $30,428). As at June 30, 2026, the Company had working capital of $86,122 (December 31, 2025 - working capital of $63,688).
The Company has a consideration payable balance outstanding for the acquisition of the Sinchi Wayra and Illapa operations which occurred in 2022. The consideration payable consisted of a base purchase price obligation and contingent value rights (“CVR”) obligation. The base purchase price obligation was fully paid in the third quarter of 2025, only the contingent value rights remain outstanding. The CVR has not resulted in any payments to date because the price of zinc has not reached the levels that would trigger a payment (greater than $3,850 per tonne).
As at June 30, 2026, the Company has non-current loans payable of $200 (December 31, 2025 - $1,344), and non-current consideration payable to Glencore of $35,066 (December 31, 2025 - $20,243). The consideration payable to Glencore is an estimated fair value of CVR payments that will only become payable if zinc price exceeds $3,850, which has not yet occurred.
Credit Facilities and Borrowings
The Company has a secured credit facility denominated in Bolivian Bolivianos with Banco BISA S.A. of BOB 55,000 ($5,635), which is comprised of a revolving credit facility of BOB 48,800 ($5,000) for the financing of mining operations and working capital with a fixed interest rate of 10.00% per annum.
The Company also has an unsecured revolving credit facility for working capital requirements and a loan guarantee with Banco de Crédito de Bolivia S.A. for a total of BOB 48,020 ($4,920). The credit facility has a weighted average fixed interest rate of 10.00% per annum and the weighted average interest rate on the loan guarantee facility is 2.0%.
On April 8, 2026, the Company completed an offering of BOB 70,000 ($7,718) under its San Lucas Promissory Notes Issuance program. The notes have an annual interest rate of 11.50%, mature on March 22, 2027, and are unsecured. On August 4, 2026, the Company completed an additional offering of BOB 70,000 ($7,718). The notes have an annual interest rate of 10.9985%, mature on July 18, 2027 and are unsecured.
On February 14, 2026 the Company obtained an unsecured 6 month working capital term loan for BOB 17,150 ($1,757) with a fixed interest rate of 10.0% with repayment of interest and principal at the end of the term from Banco Mercantil Santa Cruz S.A. On March 17, 2026, the Company obtained an unsecured 6 month working capital term loan for BOB 14,000 ($1,434) with a fixed interest rate of 10% with repayment of interest and principal at the end of the term from Banco Bisa S.A. On March 31, 2026, the Company obtained an additional working capital term loan from Banco BISA S.A. for BOB 69,986 ($7,171). The loan term is 360 calendar days and due on March 26, 2027. The loan is unsecured and has a fixed interest rate of 10%.
On December 30, 2024, the Financial System Supervisory Authority (ASFI) authorized the San Lucas Bonds Program. The San Lucas Bonds program allows the Company to issue up to $40,000 of unsecured bonds in the Bolivian Stock market (Bolsa Boliviana de Valores), the bonds can be denominated in USD or Bolivian Bolivianos. As at June 30, 2026, no bonds have been issued under the program.
| -29- |
Liquidity, Capital Resources and Contractual Obligations (continued)
Cash Flow
The Company’s cash flows from operating, investing, and financing activities during the three and six months ended June 30, 2026 are summarized as follows:
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Cash flow | ||||||||||||||||
| Cash generated by operating activities | 15,366 | 32,871 | 24,140 | 39,160 | ||||||||||||
| Cash (used by) provided by investing activities | (6,688 | ) | (30,122 | ) | (16,546 | ) | (46,967 | ) | ||||||||
| Cash (used by) provided by financing activities | (954 | ) | 4,632 | (1,425 | ) | 11,998 | ||||||||||
| Increase in cash and cash equivalents | 7,724 | 7,381 | 6,169 | 4,191 | ||||||||||||
| Effect of exchange rate on held in foreign currencies | 23 | 89 | (38 | ) | 85 | |||||||||||
| Cash, beginning of the period | 42,651 | 32,527 | 44,267 | 35,721 | ||||||||||||
| Cash, end of period | 50,398 | 39,997 | 50,398 | 39,997 | ||||||||||||
Operating Activities
Operating cash flow for the quarter decreased by $15,020 compared to 2025. Lower operating cash flow was primarily driven by higher income taxes paid during the current period.
Investing Activities
Cash used in investing activities decreased by $30,421 compared to 2025. The decrease was attributed to the full repayment and extinguishment of the base purchase price of the consideration payable to Glencore for the acquisition of Sinchi Wayra in 2025. This was offset by an increase in capital expenditures of $4,287 during the quarter.
The Company continues to invest in marketable securities that are held with Stifel Bank, which uses a portion of the holdings as collateral for the Standby Letters of Credit that were issued to Banco BISA and Banco Credito de Bolivia. The Company received proceeds of $12,529 from disposals of securities during the current year period, and reinvested the proceeds into purchases of additional securities for $12,786.
Financing Activities
For the six months ended June 30, 2026, cash used by financing activities was $1,425, compared to a net amount provided of $11,998 in 2025. During the current period, the Company received $54,969 from the proceeds of loans and repaid $56,662 on those loans and lease liabilities, compared to $44,057 and $30,500 respectively during 2025.
Proceeds from the exercise of stock options were $1,102, compared to $nil in 2025.
Capital Resources
The Company’s objective when managing capital is to maintain financial flexibility to continue as a going concern while optimizing growth and maximizing returns of investments from shareholders.
The Company monitors its capital structure and based on changes in operations and economic conditions, may from time to time adjust the structure by repurchasing shares, issuing new shares, issuing new debt or retiring existing debt. The Company prepares an annual budget and quarterly forecasts to facilitate the management of its capital requirements. The annual budget is approved by the Company’s Board of Directors.
The Company is not subject to any externally imposed capital requirements with the exception of compliance with covenants for the San Lucas Promissory Notes Issuance program. The Company is fully compliant with all financial covenants stipulated in the agreement.
| -30- |
Liquidity, Capital Resources and Contractual Obligations (continued)
Contractual Obligations
The expected maturity of the Company’s contractual obligations as at June 30, 2026 are outlined below:
| <1
year | 1
- 2 years | 2
- 5 years | >5
years | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Trade payables and accrued liabilities | 40,080 | 6,139 | - | - | 46,219 | |||||||||||||||
| Consideration payable - CVR & additional payments | 7,458 | 11,586 | 18,756 | 6,170 | 43,970 | |||||||||||||||
| Loans payable | 44,968 | 200 | - | - | 45,168 | |||||||||||||||
| Lease payments | 39 | 35 | 35 | - | 109 | |||||||||||||||
| 92,545 | 17,960 | 18,791 | 6,170 | 135,466 | ||||||||||||||||
Liquidity Outlook
The Company believes that the cash on hand, combined with expected operating cash flows, will be sufficient to meet operating requirements as they arise for at least the next 12 months. With respect to longer term capital expenditure funding requirements, the Company believes that cash flow from its existing operations, available credit through existing debt facilities and access to debt and capital markets is adequate and will enable the Company to maintain an appropriate overall liquidity position. The Company continues to assess financing alternatives, including equity or debt or a combination of both, to fund future growth.
Off-balance Sheet Arrangements
The Company has not entered into any material off-balance sheet arrangement such as guarantee contracts, contingent interests in assets transferred to unconsolidated entities or derivative financial obligations.
Transactions with Related Parties
During the six months ended June 30, 2026 and 2025, the Company incurred the following charges for directors, officers, and other members of key management of the Company, as well as for companies controlled by directors and officers of the Company:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Management and consulting fees | 664 | 627 | 1,359 | 1,309 | ||||||||||||
| Share-based compensation | 320 | 1,133 | 715 | 1,282 | ||||||||||||
| 984 | 1,760 | 2,074 | 2,591 | |||||||||||||
Of the $664 in management and consulting fees incurred with related parties during the six months ended June 30, 2026, $55 (2025 - $61) was related to directors’ fees and $609 (2025 - $566) was related to management fees.
Key management includes directors of the Company, the CEO, the CFO, the Executive Chairman, and other members of key management. Other than the amounts disclosed above, there was no other compensation paid or payable to key management for employee services for the reported periods.
| -31- |
Subsequent Events
Refer to notes 10(d) and 13 of the condensed interim consolidated financial statements for the six months ended June 30, 2026 and 2025 for a description of subsequent events related to the additional offering of promissory notes and the grant of equity awards.
Material Accounting Estimates and Judgments
In preparing the accompanying consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates.
Management reviews estimates and their underlying assumptions on an ongoing basis. Revisions to estimates are recognized prospectively.
Judgements, estimates, and assumptions that have been made in applying accounting policies that have the most significant effects on the amounts recognized in the accompanying unaudited condensed interim consolidated financial statements are presented in our audited financial statements for the year ended December 31, 2025.
Accounting Policies Including Changes in Accounting Policies and Initial Adoption
Refer to Note 3 of the 2025 annual audited consolidated financial statements for a detailed discussion.
Financial Instruments and Other Instruments
The carrying amounts of the Company’s financial assets and financial liabilities by category are as follows:
| June 30, 2026 | Amortized cost | FVTPL | FVTOCI | Total | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | 50,398 | - | - | 50,398 | ||||||||||||
| Marketable securities | - | - | 22,421 | 22,421 | ||||||||||||
| Trade and other receivables | 21,037 | 44,440 | - | 65,477 | ||||||||||||
| 71,435 | 44,440 | 22,421 | 138,296 | |||||||||||||
| Financial liabilities | ||||||||||||||||
| Trade payables and accrued liabilities | 46,219 | - | - | 46,219 | ||||||||||||
| Consideration payable | 35,066 | - | 35,066 | |||||||||||||
| Loans payable | 45,168 | - | - | 45,168 | ||||||||||||
| Other liabilities | 19,579 | - | - | 19,579 | ||||||||||||
| 110,966 | 35,066 | - | 146,032 | |||||||||||||
| December 31, 2025 | Amortized cost | FVTPL | FVTOCI | Total | ||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | 44,267 | - | - | 44,267 | ||||||||||||
| Marketable securities | - | - | 22,462 | 22,462 | ||||||||||||
| Trade and other receivables | 22,977 | 20,371 | - | 43,348 | ||||||||||||
| 67,244 | 20,371 | 22,462 | 110,077 | |||||||||||||
| Financial liabilities | ||||||||||||||||
| Trade payables and accrued liabilities | 54,569 | - | - | 54,569 | ||||||||||||
| Consideration payable | - | 20,243 | - | 20,243 | ||||||||||||
| Loans payable | 51,986 | - | - | 51,986 | ||||||||||||
| Other liabilities | 23,598 | - | - | 23,598 | ||||||||||||
| 130,153 | 20,243 | - | 150,396 | |||||||||||||
| -32- |
Financial Instruments and Other Instruments (continued)
The categories of the fair value hierarchy that reflect the inputs to valuation techniques used to measure fair value are as follows:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities; | |
| ● | Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and | |
| ● | Level 3: Inputs for the asset or liability based on unobservable market data. |
The carrying values of cash, other receivables, and trade payables and accrued liabilities approximate their fair values because of their short-term nature.
Marketable securities consist of US treasury notes and US treasury bills which are held as part of the Company’s cash position and liquidity management strategy. The marketable securities are measured at fair value using level 1 inputs, the unrealized gain/loss is recorded as other comprehensive income and once the securities are sold or mature the corresponding gain/loss is recorded as other income/expense.
The securities are held with Steifel bank which uses a portion of the holdings as collateral for the Standby Letters of Credit that were issued to Banco BISA and Banco Credito de Bolivia (see note 10(a) of the condensed interim consolidated financial statements). Although the securities held can be readily converted to cash they are restricted to the extent that the amounts serve as collateral. The Standby Letter of credit issued to Banco BISA is for $10,000 and expires on May 26, 2026. The standby letter of credit issued to Banco Credito de Bolivia is for $5,800 and expires on March 26, 2026, and automatically renews each year. Since the standby letter of credit to Banco Credito de Bolivia will renew indefinitely, the amount held as collateral has been classified as non-current.
Trade receivables are measured at fair value using Level 2 inputs. The fair value of trade receivables is measured based on inputs other than quoted prices for the underlying commodity prices (silver, lead, zinc, copper) to which the receivable relates as the trade receivables are provisionally priced at the time of sale.
The fair value of the loans payable for disclosure purposes is determined using discounted cash flows based on the expected amounts and timing of future cash flows discounted using a market rate of interest adjusted for appropriate credit risk.
The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the consolidated statements of financial position at fair value on a recurring basis were categorized as follows:
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| Assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Marketable securities | 22,421 | - | - | 22,462 | - | - | ||||||||||||||||||
| Trade and other receivables | - | 44,440 | - | - | 20,371 | - | ||||||||||||||||||
| 22,421 | 44,440 | - | 22,462 | 20,371 | - | |||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Consideration payable | - | - | 35,066 | - | - | 20,243 | ||||||||||||||||||
| - | - | 35,066 | - | - | 20,243 | |||||||||||||||||||
The majority of the Company’s trade receivables arose from provisional concentrate sales and are valued using quoted market prices based on the forward London Metal Exchange for silver, zinc and lead and the London Bullion Market Association P.M. fix for silver.
The methodology and assessment of inputs for determining the fair value of financial assets and liabilities as well as the levels of hierarchy for the Company’s financial assets and liabilities measured at fair value remains unchanged from that as at December 31, 2025.
| -33- |
Financial Instruments and Other Instruments (continued)
The Company has exposure to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s trade receivables.
The Company has concentrate contracts to sell the zinc and lead concentrates produced by all of the Company’s mines and the San Lucas trading business. Concentrate contracts are a common business practice in the mining industry. The terms of the concentrate contracts may require the Company to deliver concentrate that has a value greater than the payment received at the time of delivery, thereby introducing the Company to credit risk of the buyers of concentrates. Should any of these counterparties not honour purchase arrangements, or should any of them become insolvent, the Company may incur losses for products already shipped and be forced to sell its concentrates on the spot market or it may not have a market for its concentrates and therefore its future operating results may be materially adversely impacted. At June 30, 2026, the Company had receivable balances associated with buyers of its concentrates of $44,439 (December 31, 2025 - $20,371). The Company’s concentrate is sold to well-known concentrate buyers.
The following financial assets represent the maximum credit risk to the Company:
June 30, 2026 | December 31, 2025 | |||||||
| $ | $ | |||||||
| Cash | 50,398 | 44,267 | ||||||
| Marketable securities | 22,421 | 22,462 | ||||||
| Trade and other receivables | 65,477 | 43,348 | ||||||
Management constantly monitors and assesses the credit risk resulting from its concentrate sales, trading counterparties and customers. Other than as set out in the above table, the Company believes it is not exposed to significant credit risk.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows. The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansion plans. The Company strives to maintain sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash and short-term investments, and its committed loan facilities.
In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following tables summarize the remaining contractual maturities of the Company’s financial liabilities and operating and capital commitments on an undiscounted basis:
| <1
year | 1
- 2 years | 2
- 5 years | >5
years | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Trade payables and accrued liabilities | 40,080 | 6,139 | - | - | 46,219 | |||||||||||||||
| Consideration payable - CVR & additional payments | 7,458 | 11,586 | 18,756 | 6,170 | 43,970 | |||||||||||||||
| Loans payable | 44,968 | 200 | - | - | 45,168 | |||||||||||||||
| Lease payments | 39 | 35 | 35 | - | 109 | |||||||||||||||
| 92,545 | 17,960 | 18,791 | 6,170 | 135,466 | ||||||||||||||||
| -34- |
Financial Instruments and Other Instruments (continued)
Currency risk
The Company reports its financial statements in USD; however, the Company operates in jurisdictions that utilize other currencies. As a consequence, the financial results of the Company’s operations as reported in USD are subject to changes in the value of the USD relative to local currencies. Since the Company’s sales are denominated in USD and a portion of the Company’s operating costs and capital spending are in local currencies, the Company is negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse.
The sensitivity of the Company’s net income to changes in the exchange rate between the US dollar and the Bolivian boliviano, the US dollar and the Mexican peso and the US dollar and the Canadian dollar, respectively, would be as follows: a 1% change in the US dollar exchange rate relative to the Bolivian boliviano would change the Company’s net income by approximately $308, a 1% change in the US dollar exchange rate relative to the Mexican peso would change the Company’s net income by approximately $245, and a 1% change in the US dollar exchange rate relative to the Canadian dollar would change the Company’s net income by approximately $(75).
The Company’s financial assets and liabilities as at June 30, 2026 are denominated in Canadian dollars, US dollars, Bolivian bolivianos and Mexican pesos and translated to US dollars as follows:
| CAD | BOB | USD | MXN | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Financial assets | ||||||||||||||||||||
| Cash and cash equivalents | 1,213 | 7,212 | 41,090 | 883 | 50,398 | |||||||||||||||
| Marketable securities | - | - | 22,421 | - | 22,421 | |||||||||||||||
| Trade and other receivables | 98 | 6,980 | 58,154 | 245 | 65,477 | |||||||||||||||
| 1,311 | 14,192 | 121,665 | 1,128 | 138,296 | ||||||||||||||||
| Financial liabilities | ||||||||||||||||||||
| Trade payables and accrued liabilities | 456 | 27,093 | 6,410 | 12,260 | 46,219 | |||||||||||||||
| Consideration payable | - | - | 35,066 | - | 35,066 | |||||||||||||||
| Loans payable | - | 45,168 | - | - | 45,168 | |||||||||||||||
| Other liabilities | - | 9,828 | 7,590 | 2,161 | 19,579 | |||||||||||||||
| 456 | 82,089 | 49,066 | 14,421 | 146,032 | ||||||||||||||||
| Net financial assets (liabilities) | 855 | (67,897 | ) | 72,599 | (13,293 | ) | (7,736 | ) | ||||||||||||
Interest rate risk
The fair values and future cash flows of the Company will fluctuate because of changes in market interest rates generating interest rate risk. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. As at June 30, 2026, the Company’s exposure to interest rate risk on interest bearing liabilities is limited to its consideration payable, debt facilities and lease liabilities. Based on the Company’s interest rate exposure at June 30, 2026, a change of 1% increase or decrease of market interest rate would impact the Company’s income or loss by approximately $489.
Price risk
Metal price risk is the risk that changes in metal prices will affect the Company’s income or the value of its related financial instruments. The Company derives its revenue from the sale of silver, zinc, lead and copper. The Company’s sales are directly dependent on metal prices that have shown significant volatility and are beyond the Company’s control. Consistent with the Company’s mission to provide equity investors with exposure to changes in precious metal prices, the Company’s current policy is to not hedge the price of precious metal.
| -35- |
Outstanding Share Data
As at the date of this report, the Company has 92,990,284 common shares issued and outstanding, 1,039,789 common shares issuable under stock options, 452,997 common shares issuable under restricted share units, 304,000 common shares issuable under performance share units, 228,750 common shares issuable under deferred share units.
On December 10, 2025 the Company consolidated its issued and outstanding common shares on the basis of one post-consolidated common share for every four pre-consolidated common shares. The number of issued and outstanding shares, options, warrants, DSUs, RSUs and PSUs, and any per share amounts in the consolidated financial statements have been retrospectively restated in notes 10, 13, and 23 for all periods presented unless otherwise stated.
Internal Controls over Financial Reporting and Disclosure Controls and Procedures
The Company has disclosure controls and procedures in place to provide reasonable assurance that any information required to be disclosed by the Company under securities legislation is recorded, processed, summarized and reported within the applicable time periods and that required information is gathered and communicated to the Company’s management so that decisions can be made about the timely disclosure of that information.
The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting. Any system of internal controls over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, believe that any disclosure controls and procedures or internal controls over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, the Company’s management cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any control system is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost- effective control system, misstatements due to error or fraud may occur and not be detected.
Non-GAAP Measures
Silver and Zinc Equivalent Production Figures
The Company considers silver equivalent (“AgEq”) ounces and zinc equivalent (“ZnEq”) tonnes to be useful production metrics for evaluating its multi-metal production profile but they should be considered only supplemental. These measures are commonly used in the mining industry as reference metrics to facilitate period-over-period comparisons and, where relevant, benchmarking against industry peers. The metrics should be viewed as supplemental to, and not a substitute for the actual metal production volumes disclosed for each metal.
| -36- |
Non-GAAP Measures (continued)
AgEq ounces and ZnEq tonnes are calculated by applying conversion factors that normalize the value of each non-reference metal to the selected reference metal. For AgEq ounces, the values of zinc, lead, and copper are converted into silver equivalent ounces. For ZnEq tonnes, the values of silver, lead, and copper are converted into zinc equivalent tonnes. Each conversion factor is derived from the ratio of the in-situ metal value of the contained fine metal to the price of the reference metal used in the equivalency calculation. The denominator used to calculate silver equivalent ounces is the silver price, while the denominator used to calculate zinc equivalent tonnes is the zinc price. This methodology expresses multi-metal production in a common unit of measure. Since the silver price and zinc price are the denominators in each metric, price variations of these metals can significantly affect the result, especially when one metal price changes significantly relative to the other metal prices.
The metal prices used in the calculation of AgEq and ZnEq are based on the average quarterly prices quoted on the London Metal Exchange (“LME”).
| Metal Prices | Silver Ounces | Zinc Tonnes | Lead Tonnes | Copper Tonnes | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Average Q2-LME - 2026 | 73.44 | 3,463 | 1,955 | 13,324 | ||||||||||||
| Average Q1-LME - 2026 | 84.39 | 3,243 | 1,931 | 12,852 | ||||||||||||
| Average Q4-LME - 2025 | 54.83 | 3,165 | 1,971 | 11,100 | ||||||||||||
| Average Q1-LME - 2025 | 31.91 | 2,838 | 1,970 | 9,346 | ||||||||||||
The methods used by the Company to calculate these equivalencies may differ from those used by other companies reporting similar metrics and may not be directly comparable. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for performance measures prepared in accordance with IFRS.
Costs per tonne milled, silver ounce sold or zinc tonne sold
The Company has included certain non-GAAP performance measures throughout this MD&A including cash cost per tonne milled, cash cost per silver ounce sold, cash cost per zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce sold, all-in sustaining cost (“AISC”) per zinc tonne sold, average realized price per silver ounce sold, average realized price per zinc tonne sold, mining/ore processing margin per silver ounce sold, mining/ore processing margin per zinc tonne sold, and adjusted EBITDA each as defined in this section.
These performance measures are employed by the Company to measure its operating and financial performance internally, to assist in business decision-making, and provide key performance information to senior management. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors and other stakeholders also use these non-GAAP measures as information to evaluate the Company’s operating and financial performance. As there are no standardized methods of calculating these non-GAAP measures, the Company’s methods may differ from those used by others and, accordingly, the Company’s use of these measures may not be directly comparable to similarly titled measures used by others. Accordingly, these non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
| -37- |
Non-GAAP Measures (continued)
Cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce and zinc tonne sold
The non-GAAP measures of cash cost per silver ounce sold and cash cost per zinc tonne sold and cash cost of production per tonne milled are used by the Company to manage and evaluate operating performance at respective mining operations and are widely reported in the silver mining industry as benchmarks for performance, but do not have a standardized meaning. cash costs are calculated based on the cash operating costs at the respective mining operations and, in the case of cash cost per silver ounce sold and cash cost per zinc tonne sold, also include the third party concentrate treatment, smelting and refining cost.
Management of the Company believes that the Company’s ability to control the cash cost per silver ounce and zinc tonne sold and cash cost of production per tonne milled are three of its key performance drivers impacting both the Company’s financial condition and results of operations. Having a low cash cost of production per tonne milled, when taken in connection with effective management of mining dilution, will improve the cash cost per silver ounce and zinc tonne produced. Having a low-cost base per silver ounce and zinc tonne of production allows the Company to continue operating during times of declining commodity prices and provides more flexibility in responding to changing market conditions. In addition, low-cost operations offer a better opportunity to generate positive cash-flows, which improves the Company’s financial condition. The Company believes these measures provide investors and analysts with useful information about the Company’s underlying cash costs of operations and are relevant metrics used to understand the Company’s operating profitability and ability to generate cash-flow.
To facilitate a better understanding of these measures as calculated by the Company, the following tables provides a detailed reconciliation between the cash cost per silver ounce sold, cash cost per zinc tonne sold and the cash cost of production per tonne milled, and the Company’s operating expenses as reported in the Company’s consolidated statements of income (loss) and comprehensive income (loss) contained in the respective financial statements for the referenced periods.
The Company’s operations are poly-metallic whereby each tonne of ore milled generates primarily payable ounces of silver and tonnes of zinc but also generates payable tonnes of lead and copper. The combined revenues of lead and copper are incidental to our primary metal production of silver and zinc because they generate less than 10% of total revenues. Lead and copper concentrate is produced primarily to obtain the silver contained within so the Company has adopted the practice of calculating the net cost of producing an ounce of silver, after deducting revenues gained from incidental by-product production of lead and copper. This performance measurement has been commonly used in the mining industry for many years and was developed as a relatively simple way of comparing the net production costs of the primary metal for a specific period against the prevailing market price of that metal.
The Company’s primary payable metals are silver ounces and zinc tonnes, the revenue generated by each metal varies depending on prevailing metal prices but because one metal generates greater than 30% of the total revenues, the Company has concluded that reporting costs as co-products by silver ounces sold and zinc tonnes sold is the most appropriate way to assess the performance of its operations. The total tonnes of ore milled in the period generates silver and zinc payable metals, the ratio of payable silver and zinc produced from each tonne milled is used to allocate each period’s production costs between silver ounces sold and zinc tonnes sold. The Company calculates the tonnes milled to payable silver and zinc for each operation and for each period separately in order to most appropriately allocate costs between each primary metal for the purposes of determining the cash cost per silver ounce and zinc tonne sold.
AISC is a non-GAAP measure and was calculated based on guidance provided by the World Gold Council (“WGC”) in September 2013. WGC is not a regulatory industry organization and does not have the authority to develop accounting standards for disclosure requirements. Other mining companies may calculate AISC differently as a result of differences in underlying accounting principles and policies applied, as well as differences in definitions of sustaining versus development capital expenditures.
| -38- |
Non-GAAP Measures (continued)
AISC is a more comprehensive measure than cash cost per ounce for the Company’s operating performance by providing greater visibility, comparability and representation of the total costs associated with producing silver from its mining operations.
Consolidated AISC includes total production cash costs incurred at the Company’s mining operations, which forms the basis of the Company’s total cash costs. Additionally, the Company includes sustaining capital expenditures, corporate general and administrative expense, sustaining share-based payments, and reclamation cost accretion. The Company defines sustaining capital expenditures as, “costs incurred to sustain and maintain existing assets at current productive capacity and constant planned levels of productive output without resulting in an increase in the life of assets, future earnings, or improvements in recovery or grade. Sustaining capital includes costs required to improve/enhance assets to minimum standards for reliability, environmental or safety requirements.”
The Company believes that the AISC measure represents the total sustainable costs of producing silver and zinc from current operations and provides the Company and other stakeholders of the Company with additional information of the Company’s operational performance and ability to generate cash flows. As the measure seeks to reflect the full cost of silver and zinc production from current operations, new project capital and expansionary capital at current operations are not included. Certain other cash expenditures, including tax payments, dividends and financing costs are also not included.
| -39- |
Cash cost of production per tonne milled, cash cost per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold - Mining operations
Cost of sales includes transportation and other selling costs, royalties and inventory changes which are excluded from the calculation of cash costs per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold, and cash cost of production per tonne milled. The following tables provide a detailed reconciliation of these measures to our cost of sales, as reported in the condensed interim consolidated financial statements.
Consolidated - Cash costs per ounce and tonne – Mining operations
| Three Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 18,364 | 21,272 | 39,636 | |||||||||
| Transportation and other selling cost | (2,626 | ) | (3,235 | ) | (5,861 | ) | ||||||
| Royalty | (1,556 | ) | (1,944 | ) | (3,500 | ) | ||||||
| Inventory change | 2,399 | 2,625 | 5,024 | |||||||||
| Cash cost of production (A) | 16,581 | 18,718 | 35,299 | |||||||||
| Cost of sales | 18,364 | 21,272 | 39,636 | |||||||||
| Concentrate treatment, smelting and refining cost | 3,565 | 3,898 | 7,463 | |||||||||
| By-product lead revenue | (3,494 | ) | - | (3,494 | ) | |||||||
| By-product copper revenue | (4,538 | ) | - | (4,538 | ) | |||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 13,897 | 25,170 | 39,067 | |||||||||
| Sustaining capital expenditures | 3,237 | 3,908 | 7,145 | |||||||||
| General and administrative expenses | 1,971 | 2,372 | 4,343 | |||||||||
| Accretion of decommissioning and restoration provision | 451 | 548 | 999 | |||||||||
| All-in sustaining cost (C) | 19,555 | 31,998 | 51,553 | |||||||||
| Material processed (tonnes milled) (D) | 406,532 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 894,167 | 14,419 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 15.54 | 1,746 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 21.87 | 2,219 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 86.83 | |||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 19,239 | 15,250 | 34,489 | |||||||||
| Transportation and other selling cost | (2,717 | ) | (1,952 | ) | (4,669 | ) | ||||||
| Royalty | (881 | ) | (570 | ) | (1,451 | ) | ||||||
| Inventory change | (785 | ) | (602 | ) | (1,387 | ) | ||||||
| Cash cost of production (A) | 14,855 | 12,127 | 26,982 | |||||||||
| Cost of sales | 19,239 | 15,250 | 34,489 | |||||||||
| Concentrate treatment, smelting and refining cost | 4,005 | 3,260 | 7,265 | |||||||||
| By-product lead revenue | (4,233 | ) | - | (4,233 | ) | |||||||
| By-product copper revenue | (2,119 | ) | - | (2,119 | ) | |||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 16,892 | 18,510 | 35,402 | |||||||||
| Sustaining capital expenditures | 2,702 | 2,155 | 4,857 | |||||||||
| General and administrative expenses | 2,581 | 2,006 | 4,587 | |||||||||
| Accretion of decommissioning and restoration provision | 281 | 207 | 488 | |||||||||
| All-in sustaining cost (C) | 22,457 | 22,877 | 45,334 | |||||||||
| Material processed (tonnes milled) (D) | 385,890 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 1,282,983 | 12,202 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 13.17 | 1,517 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 17.50 | 1,875 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 69.92 | |||||||||||
| -40- |
Non-GAAP Measures (continued)
Consolidated - Cash costs per ounce or tonne – Mining operations
| Six Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 38,809 | 43,721 | 82,530 | |||||||||
| Transportation and other selling cost | (4,951 | ) | (5,895 | ) | (10,845 | ) | ||||||
| Royalty | (3,649 | ) | (4,540 | ) | (8,189 | ) | ||||||
| Inventory change | 2,903 | 3,165 | 6,068 | |||||||||
| Cash cost of production (A) | 33,113 | 36,451 | 69,563 | |||||||||
| Cost of sales | 38,809 | 43,721 | 82,530 | |||||||||
| Concentrate treatment, smelting and refining cost | 6,930 | 7,303 | 14,233 | |||||||||
| By-product lead revenue | (7,150 | ) | - | (7,150 | ) | |||||||
| By-product copper revenue | (8,706 | ) | - | (8,706 | ) | |||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 29,883 | 51,024 | 80,907 | |||||||||
| Sustaining capital expenditures | 8,871 | 10,079 | 18,949 | |||||||||
| General and administrative expenses | 5,012 | 5,438 | 10,451 | |||||||||
| Accretion of decommissioning and restoration provision | 979 | 1,156 | 2,136 | |||||||||
| All-in sustaining cost (C) | 44,746 | 67,697 | 112,443 | |||||||||
| Material processed (tonnes milled) (D) | 799,542 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 1,765,919 | 28,445 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 16.92 | 1,794 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 25.34 | 2,380 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 87.00 | |||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 37,270 | 31,947 | 69,217 | |||||||||
| Transportation and other selling cost | (5,609 | ) | (4,524 | ) | (10,133 | ) | ||||||
| Royalty | (1,928 | ) | (1,492 | ) | (3,420 | ) | ||||||
| Inventory change | (1,600 | ) | (1,353 | ) | (2,953 | ) | ||||||
| Cash cost of production (A) | 28,132 | 24,579 | 52,711 | |||||||||
| Cost of sales | 37,270 | 31,947 | 69,217 | |||||||||
| Concentrate treatment, smelting and refining cost | 8,747 | 7,743 | 16,490 | |||||||||
| By-product lead revenue | (8,289 | ) | - | (8,289 | ) | |||||||
| By-product copper revenue | (4,347 | ) | - | (4,347 | ) | |||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 33,381 | 39,690 | 73,071 | |||||||||
| Sustaining capital expenditures | 6,768 | 6,067 | 12,835 | |||||||||
| General and administrative expenses | 4,829 | 4,103 | 8,932 | |||||||||
| Accretion of decommissioning and restoration provision | 555 | 435 | 990 | |||||||||
| All-in sustaining cost (C) | 45,533 | 50,295 | 95,828 | |||||||||
| Material processed (tonnes milled) (D) | 770,968 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 2,571,587 | 25,456 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 12.98 | 1,559 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 17.71 | 1,976 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 68.37 | |||||||||||
| -41- |
Non-GAAP Measures (continued)
Bolivar Mine (1) - Cash cost per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold, and cash cost of production per tonne milled
| Three Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 3,577 | 3,723 | 7,301 | |||||||||
| Transportation and other selling cost | (631 | ) | (656 | ) | (1,287 | ) | ||||||
| Royalty | (681 | ) | (708 | ) | (1,389 | ) | ||||||
| Inventory change | 1,595 | 1,661 | 3,256 | |||||||||
| Cash cost of production (A) | 3,861 | 4,019 | 7,880 | |||||||||
| Cost of sales | 3,577 | 3,723 | 7,301 | |||||||||
| Concentrate treatment, smelting and refining cost | 352 | 367 | 719 | |||||||||
| By-product lead revenue | (346 | ) | - | (346 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 3,584 | 4,090 | 7,674 | |||||||||
| Sustaining capital expenditures | 1,612 | 1,678 | 3,290 | |||||||||
| General and administrative expenses | 318 | 331 | 649 | |||||||||
| Accretion of decommissioning and restoration provision | 120 | 125 | 246 | |||||||||
| All-in sustaining cost (C) | 5,634 | 6,224 | 11,859 | |||||||||
| Material processed (tonnes milled) (D) | 72,081 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 218,307 | 2,469 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 16.42 | 1,657 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 25.81 | 2,521 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 109.33 | |||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 4,599 | 2,940 | 7,539 | |||||||||
| Transportation and other selling cost | (730 | ) | (467 | ) | (1,197 | ) | ||||||
| Royalty | (342 | ) | (218 | ) | (560 | ) | ||||||
| Inventory change | (353 | ) | (225 | ) | (578 | ) | ||||||
| Cash cost of production (A) | 3,174 | 2,030 | 5,204 | |||||||||
| Cost of sales | 4,599 | 2,940 | 7,539 | |||||||||
| Concentrate treatment, smelting and refining cost | 720 | 461 | 1,181 | |||||||||
| By-product lead revenue | (369 | ) | - | (369 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 4,950 | 3,401 | 8,351 | |||||||||
| Sustaining capital expenditures | 553 | 354 | 907 | |||||||||
| General and administrative expenses | 352 | 225 | 577 | |||||||||
| Accretion of decommissioning and restoration provision | 59 | 38 | 97 | |||||||||
| All-in sustaining cost (C) | 5,915 | 4,017 | 9,932 | |||||||||
| Material processed (tonnes milled) (D) | 54,803 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 406,070 | 2,797 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 12.19 | 1,216 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 14.57 | 1,436 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 94.96 | |||||||||||
Note:
(1) Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco.
| -42- |
Non-GAAP Measures (continued)
Bolivar Mine (1) - Cash cost per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold, and cash cost of production per tonne milled
| Six Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 8,677 | 10,765 | 19,442 | |||||||||
| Transportation and other selling cost | (1,228 | ) | (1,481 | ) | (2,708 | ) | ||||||
| Royalty | (1,511 | ) | (1,856 | ) | (3,367 | ) | ||||||
| Inventory change | 1,527 | 1,565 | 3,092 | |||||||||
| Cash cost of production (A) | 7,464 | 8,994 | 16,458 | |||||||||
| Cost of sales | 8,677 | 10,765 | 19,442 | |||||||||
| Concentrate treatment, smelting and refining cost | 781 | 959 | 1,740 | |||||||||
| By-product lead revenue | (571 | ) | - | (571 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 8,886 | 11,724 | 20,610 | |||||||||
| Sustaining capital expenditures | 3,226 | 3,907 | 7,133 | |||||||||
| General and administrative expenses | 631 | 763 | 1,393 | |||||||||
| Accretion of decommissioning and restoration provision | 238 | 287 | 525 | |||||||||
| All-in sustaining cost (C) | 12,981 | 16,680 | 29,661 | |||||||||
| Material processed (tonnes milled) (D) | 137,125 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 407,711 | 6,124 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 21.80 | 1,914 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 31.84 | 2,724 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 120.02 | |||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 9,004 | 6,545 | 15,549 | |||||||||
| Transportation and other selling cost | (1,672 | ) | (1,237 | ) | (2,909 | ) | ||||||
| Royalty | (766 | ) | (566 | ) | (1,332 | ) | ||||||
| Inventory change | (607 | ) | (434 | ) | (1,041 | ) | ||||||
| Cash cost of production (A) | 5,959 | 4,308 | 10,267 | |||||||||
| Cost of sales | 9,004 | 6,545 | 15,549 | |||||||||
| Concentrate treatment, smelting and refining cost | 1,783 | 1,330 | 3,113 | |||||||||
| By-product lead revenue | (859 | ) | - | (859 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 9,928 | 7,875 | 17,803 | |||||||||
| Sustaining capital expenditures | 1,486 | 1,116 | 2,602 | |||||||||
| General and administrative expenses | 697 | 507 | 1,204 | |||||||||
| Accretion of decommissioning and restoration provision | 119 | 86 | 205 | |||||||||
| All-in sustaining cost (C) | 12,229 | 9,585 | 21,814 | |||||||||
| Material processed (tonnes milled) (D) | 117,159 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 880,036 | 6,465 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 11.28 | 1,218 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 13.90 | 1,483 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 87.63 | |||||||||||
Note:
(1) Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco.
| -43- |
Non-GAAP Measures (continued)
Porco Mine (1) - Cash cost per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold, and cash cost of production per tonne milled
| Three Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 2,875 | 3,375 | 6,250 | |||||||||
| Transportation and other selling cost | (574 | ) | (674 | ) | (1,248 | ) | ||||||
| Royalty | (323 | ) | (380 | ) | (703 | ) | ||||||
| Inventory change | 265 | 311 | 576 | |||||||||
| Cash cost of production (A) | 2,243 | 2,633 | 4,875 | |||||||||
| Cost of sales | 2,875 | 3,375 | 6,250 | |||||||||
| Concentrate treatment, smelting and refining cost | 339 | 397 | 736 | |||||||||
| By-product lead revenue | (266 | ) | - | (266 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 2,948 | 3,772 | 6,720 | |||||||||
| Sustaining capital expenditures | 212 | 248 | 460 | |||||||||
| General and administrative expenses | 260 | 306 | 566 | |||||||||
| Accretion of decommissioning and restoration provision | 185 | 218 | 403 | |||||||||
| All-in sustaining cost (C) | 3,605 | 4,544 | 8,149 | |||||||||
| Material processed (tonnes milled) (D) | 52,195 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 83,629 | 2,894 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 35.25 | 1,304 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 43.11 | 1,570 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 93.40 | |||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 2,421 | 1,827 | 4,248 | |||||||||
| Transportation and other selling cost | (520 | ) | (392 | ) | (912 | ) | ||||||
| Royalty | (146 | ) | (110 | ) | (256 | ) | ||||||
| Inventory change | 101 | 76 | 177 | |||||||||
| Cash cost of production (A) | 1,856 | 1,401 | 3,257 | |||||||||
| Cost of sales | 2,421 | 1,827 | 4,248 | |||||||||
| Concentrate treatment, smelting and refining cost | 446 | 336 | 782 | |||||||||
| By-product lead revenue | (302 | ) | - | (302 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 2,565 | 2,163 | 4,728 | |||||||||
| Sustaining capital expenditures | 42 | 32 | 74 | |||||||||
| General and administrative expenses | 235 | 178 | 413 | |||||||||
| Accretion of decommissioning and restoration provision | 95 | 71 | 166 | |||||||||
| All-in sustaining cost (C) | 2,937 | 2,444 | 5,381 | |||||||||
| Material processed (tonnes milled) (D) | 49,152 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 104,099 | 2,079 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 24.64 | 1,040 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 28.22 | 1,175 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 66.26 | |||||||||||
Note:
(1) Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco.
| -44- |
Non-GAAP Measures (continued)
Porco Mine (1) - Cash cost per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold, and cash cost of production per tonne milled
| Six Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 5,463 | 6,179 | 11,642 | |||||||||
| Transportation and other selling cost | (1,061 | ) | (1,201 | ) | (2,262 | ) | ||||||
| Royalty | (707 | ) | (796 | ) | (1,503 | ) | ||||||
| Inventory change | 1,006 | 1,113 | 2,119 | |||||||||
| Cash cost of production (A) | 4,701 | 5,295 | 9,996 | |||||||||
| Cost of sales | 5,463 | 6,179 | 11,642 | |||||||||
| Concentrate treatment, smelting and refining cost | 671 | 758 | 1,429 | |||||||||
| By-product lead revenue | (359 | ) | - | (359 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 5,775 | 6,936 | 12,711 | |||||||||
| Sustaining capital expenditures | 456 | 513 | 969 | |||||||||
| General and administrative expenses | 556 | 626 | 1,182 | |||||||||
| Accretion of decommissioning and restoration provision | 404 | 455 | 859 | |||||||||
| All-in sustaining cost (C) | 7,191 | 8,530 | 15,722 | |||||||||
| Material processed (tonnes milled) (D) | 97,492 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 149,903 | 5,752 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 38.52 | 1,206 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 47.97 | 1,483 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 102.53 | |||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 5,389 | 3,724 | 9,113 | |||||||||
| Transportation and other selling cost | (1,170 | ) | (808 | ) | (1,978 | ) | ||||||
| Royalty | (365 | ) | (250 | ) | (615 | ) | ||||||
| Inventory change | 6 | 15 | 21 | |||||||||
| Cash cost of production (A) | 3,860 | 2,681 | 6,541 | |||||||||
| Cost of sales | 5,389 | 3,724 | 9,113 | |||||||||
| Concentrate treatment, smelting and refining cost | 1,059 | 729 | 1,788 | |||||||||
| By-product lead revenue | (820 | ) | - | (820 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 5,628 | 4,453 | 10,081 | |||||||||
| Sustaining capital expenditures | 337 | 221 | 558 | |||||||||
| General and administrative expenses | 482 | 336 | 818 | |||||||||
| Accretion of decommissioning and restoration provision | 207 | 143 | 350 | |||||||||
| All-in sustaining cost (C) | 6,655 | 5,152 | 11,807 | |||||||||
| Material processed (tonnes milled) (D) | 96,653 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 247,788 | 4,148 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 22.71 | 1,073 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 26.86 | 1,242 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 67.67 | |||||||||||
Note:
(1) Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco.
| -45- |
Non-GAAP Measures (continued)
Caballo Blanco Group - Cash cost per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold, and cash cost of production per tonne milled
| Three Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 2,908 | 5,170 | 8,078 | |||||||||
| Transportation and other selling cost | (622 | ) | (1,105 | ) | (1,727 | ) | ||||||
| Royalty | (392 | ) | (696 | ) | (1,088 | ) | ||||||
| Inventory change | 149 | 264 | 413 | |||||||||
| Cash cost of production (A) | 2,043 | 3,633 | 5,676 | |||||||||
| Cost of sales | 2,908 | 5,170 | 8,078 | |||||||||
| Concentrate treatment, smelting and refining cost | 334 | 595 | 929 | |||||||||
| By-product lead revenue | (829 | ) | - | (829 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 2,413 | 5,765 | 8,178 | |||||||||
| Sustaining capital expenditures | 732 | 1,300 | 2,032 | |||||||||
| General and administrative expenses | 255 | 452 | 707 | |||||||||
| Accretion of decommissioning and restoration provision | 76 | 136 | 212 | |||||||||
| All-in sustaining cost (C) | 3,476 | 7,653 | 11,129 | |||||||||
| Material processed (tonnes milled) (D) | 59,997 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 191,707 | 4,252 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 12.58 | 1,356 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 18.13 | 1,800 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 94.61 | |||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 3,367 | 1,977 | 5,344 | |||||||||
| Transportation and other selling cost | (849 | ) | (498 | ) | (1,347 | ) | ||||||
| Royalty | (368 | ) | (216 | ) | (584 | ) | ||||||
| Inventory change | (159 | ) | (94 | ) | (253 | ) | ||||||
| Cash cost of production (A) | 1,991 | 1,169 | 3,160 | |||||||||
| Cost of sales | 3,367 | 1,977 | 5,344 | |||||||||
| Concentrate treatment, smelting and refining cost | 706 | 415 | 1,121 | |||||||||
| By-product lead revenue | (1,130 | ) | - | (1,130 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 2,943 | 2,392 | 5,335 | |||||||||
| Sustaining capital expenditures | 684 | 401 | 1,085 | |||||||||
| General and administrative expenses | 385 | 226 | 611 | |||||||||
| Accretion of decommissioning and restoration provision | 67 | 40 | 107 | |||||||||
| All-in sustaining cost (C) | 4,079 | 3,059 | 7,138 | |||||||||
| Material processed (tonnes milled) (D) | 57,773 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 366,847 | 2,918 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 8.02 | 820 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 11.12 | 1,048 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 54.70 | |||||||||||
| -46- |
Non-GAAP Measures (continued)
Caballo Blanco Group - Cash cost per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold, and cash cost of production per tonne milled
| Six Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 6,753 | 9,869 | 16,622 | |||||||||
| Transportation and other selling cost | (1,240 | ) | (1,861 | ) | (3,101 | ) | ||||||
| Royalty | (1,147 | ) | (1,621 | ) | (2,768 | ) | ||||||
| Inventory change | 92 | 194 | 286 | |||||||||
| Cash cost of production (A) | 4,458 | 6,581 | 11,039 | |||||||||
| Cost of sales | 6,753 | 9,869 | 16,622 | |||||||||
| Concentrate treatment, smelting and refining cost | 763 | 1,119 | 1,882 | |||||||||
| By-product lead revenue | (1,959 | ) | - | (1,959 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 5,557 | 10,988 | 16,545 | |||||||||
| Sustaining capital expenditures | 1,711 | 2,498 | 4,209 | |||||||||
| General and administrative expenses | 602 | 878 | 1,480 | |||||||||
| Accretion of decommissioning and restoration provision | 194 | 279 | 473 | |||||||||
| All-in sustaining cost (C) | 8,064 | 14,643 | 22,707 | |||||||||
| Material processed (tonnes milled) (D) | 118,996 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 416,127 | 7,844 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 13.35 | 1,401 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 19.38 | 1,867 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 92.77 | |||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 5,789 | 4,601 | 10,390 | |||||||||
| Transportation and other selling cost | (1,608 | ) | (1,321 | ) | (2,929 | ) | ||||||
| Royalty | (718 | ) | (595 | ) | (1,313 | ) | ||||||
| Inventory change | (77 | ) | (5 | ) | (82 | ) | ||||||
| Cash cost of production (A) | 3,386 | 2,680 | 6,066 | |||||||||
| Cost of sales | 5,789 | 4,601 | 10,390 | |||||||||
| Concentrate treatment, smelting and refining cost | 1,423 | 1,192 | 2,615 | |||||||||
| By-product lead revenue | (1,823 | ) | - | (1,823 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 5,389 | 5,793 | 11,182 | |||||||||
| Sustaining capital expenditures | 825 | 554 | 1,379 | |||||||||
| General and administrative expenses | 730 | 600 | 1,330 | |||||||||
| Accretion of decommissioning and restoration provision | 108 | 83 | 191 | |||||||||
| All-in sustaining cost (C) | 7,052 | 7,030 | 14,082 | |||||||||
| Material processed (tonnes milled) (D) | 109,421 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 614,439 | 6,018 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 8.77 | 963 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 11.48 | 1,168 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 55.44 | |||||||||||
| -47- |
Non-GAAP Measures (continued)
Zimapan Mine - Cash cost per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold, and cash cost of production per tonne milled
| Three Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 9,005 | 9,004 | 18,009 | |||||||||
| Transportation and other selling cost | (800 | ) | (800 | ) | (1,600 | ) | ||||||
| Royalty | (160 | ) | (160 | ) | (320 | ) | ||||||
| Inventory change | 390 | 390 | 780 | |||||||||
| Cash cost of production (A) | 8,435 | 8,434 | 16,869 | |||||||||
| Cost of sales | 9,005 | 9,004 | 18,009 | |||||||||
| Concentrate treatment, smelting and refining cost | 2,540 | 2,540 | 5,080 | |||||||||
| By-product lead revenue | (2,053 | ) | - | (2,053 | ) | |||||||
| By-product copper revenue | (4,538 | ) | - | (4,538 | ) | |||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 4,954 | 11,544 | 16,498 | |||||||||
| Sustaining capital expenditures | 682 | 682 | 1,364 | |||||||||
| General and administrative expenses | 305 | 305 | 610 | |||||||||
| Accretion of decommissioning and restoration provision | 69 | 69 | 138 | |||||||||
| All-in sustaining cost (C) | 6,010 | 12,600 | 18,610 | |||||||||
| Material processed (tonnes milled) (D) | 222,259 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 400,524 | 4,804 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 12.37 | 2,403 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 15.01 | 2,623 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 75.90 | |||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 8,853 | 8,505 | 17,358 | |||||||||
| Transportation and other selling cost | (619 | ) | (594 | ) | (1,213 | ) | ||||||
| Royalty | (26 | ) | (25 | ) | (51 | ) | ||||||
| Inventory change | (374 | ) | (359 | ) | (733 | ) | ||||||
| Cash cost of production (A) | 7,834 | 7,527 | 15,361 | |||||||||
| Cost of sales | 8,853 | 8,505 | 17,358 | |||||||||
| Concentrate treatment, smelting and refining cost | 2,132 | 2,049 | 4,181 | |||||||||
| By-product lead revenue | (2,432 | ) | - | (2,432 | ) | |||||||
| By-product copper revenue | (2,119 | ) | - | (2,119 | ) | |||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 6,434 | 10,554 | 16,988 | |||||||||
| Sustaining capital expenditures | 1,423 | 1,368 | 2,791 | |||||||||
| General and administrative expenses | 425 | 408 | 833 | |||||||||
| Accretion of decommissioning and restoration provision | 60 | 58 | 118 | |||||||||
| All-in sustaining cost (C) | 8,342 | 12,388 | 20,730 | |||||||||
| Material processed (tonnes milled) (D) | 224,162 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 405,967 | 4,408 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 15.85 | 2,394 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 20.55 | 2,810 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 68.53 | |||||||||||
| -48- |
Non-GAAP Measures (continued)
Zimapan Mine - Cash cost per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold, and cash cost of production per tonne milled
| Six Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 17,918 | 16,908 | 34,826 | |||||||||
| Transportation and other selling cost | (1,423 | ) | (1,352 | ) | (2,775 | ) | ||||||
| Royalty | (282 | ) | (268 | ) | (550 | ) | ||||||
| Inventory change | 279 | 292 | 571 | |||||||||
| Cash cost of production (A) | 16,492 | 15,580 | 32,072 | |||||||||
| Cost of sales | 17,918 | 16,908 | 34,826 | |||||||||
| Concentrate treatment, smelting and refining cost | 4,715 | 4,468 | 9,183 | |||||||||
| By-product lead revenue | (4,261 | ) | - | (4,261 | ) | |||||||
| By-product copper revenue | (8,706 | ) | - | (8,706 | ) | |||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 9,666 | 21,376 | 31,042 | |||||||||
| Sustaining capital expenditures | 3,477 | 3,161 | 6,638 | |||||||||
| General and administrative expenses | 1,289 | 1,178 | 2,467 | |||||||||
| Accretion of decommissioning and restoration provision | 144 | 135 | 279 | |||||||||
| All-in sustaining cost (C) | 14,576 | 25,850 | 40,426 | |||||||||
| Material processed (tonnes milled) (D) | 445,929 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 792,178 | 8,725 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 12.20 | 2,450 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 18.40 | 2,963 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 71.92 | |||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 17,088 | 17,077 | 34,165 | |||||||||
| Transportation and other selling cost | (1,160 | ) | (1,157 | ) | (2,317 | ) | ||||||
| Royalty | (79 | ) | (81 | ) | (160 | ) | ||||||
| Inventory change | (922 | ) | (929 | ) | (1,851 | ) | ||||||
| Cash cost of production (A) | 14,927 | 14,910 | 29,837 | |||||||||
| Cost of sales | 17,088 | 17,077 | 34,165 | |||||||||
| Concentrate treatment, smelting and refining cost | 4,481 | 4,493 | 8,974 | |||||||||
| By-product lead revenue | (4,787 | ) | - | (4,787 | ) | |||||||
| By-product copper revenue | (4,347 | ) | - | (4,347 | ) | |||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 12,435 | 21,570 | 34,005 | |||||||||
| Sustaining capital expenditures | 4,121 | 4,175 | 8,296 | |||||||||
| General and administrative expenses | 1,214 | 1,230 | 2,444 | |||||||||
| Accretion of decommissioning and restoration provision | 122 | 122 | 244 | |||||||||
| All-in sustaining cost (C) | 17,892 | 27,097 | 44,989 | |||||||||
| Material processed (tonnes milled) (D) | 447,735 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 829,324 | 8,825 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 14.99 | 2,444 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 21.57 | 3,070 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 66.64 | |||||||||||
| -49- |
Non-GAAP Measures (continued)
Average realized price per silver ounce and zinc tonne sold – Mining operations
Revenues are presented as the sum of invoiced revenues related to delivered shipments of zinc, lead and copper concentrates, after having deducted treatment, smelting and refining charges made by the customer. The average realized price per silver ounce and zinc tonne sold is an analysis of the gross revenues prior to the treatment, smelting, refining and metallurgical deduction charges which is then divided by silver equivalent ounces and zinc tonnes sold. The following tables show a detailed reconciliation of average realized price per silver ounce or zinc tonne sold to our revenues as reported in the condensed interim consolidated financial statements.
Consolidated (1) Average realized price per silver ounce or zinc tonne sold – Mining operations
| Three months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 48,727 | 35,799 | ||||||
| Add back: Treatment, smelting and refining charges | 3,565 | 3,898 | ||||||
| Add back: Metallurgical deductions | 12,239 | 7,921 | ||||||
| Gross Revenues | 64,531 | 47,618 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 894,167 | 14,419 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 72.17 | 3,302 | ||||||
| Average market price per ounce of silver / zinc tonne | 73.15 | 3,476 | ||||||
| Three months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 32,646 | 27,116 | ||||||
| Add back: Treatment, smelting and refining charges | 3,752 | 3,018 | ||||||
| Add back: Metallurgical deductions | 6,107 | 5,714 | ||||||
| Gross Revenues | 42,505 | 35,848 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 1,282,983 | 12,202 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 33.13 | 2,938 | ||||||
| Average market price per ounce of silver / zinc tonne | 33.68 | 2,667 | ||||||
| Six months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 100,727 | 70,260 | ||||||
| Add back: Treatment, smelting and refining charges | 7,611 | 7,917 | ||||||
| Add back: Metallurgical deductions | 26,464 | 15,391 | ||||||
| Gross Revenues | 134,801 | 93,569 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 1,765,919 | 28,445 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 76.33 | 3,289 | ||||||
| Average market price per ounce of silver / zinc tonne | 78.83 | 3,371 | ||||||
| Six months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 63,722 | 59,570 | ||||||
| Add back: Treatment, smelting and refining charges | 8,497 | 7,503 | ||||||
| Add back: Metallurgical deductions | 12,969 | 12,760 | ||||||
| Gross Revenues | 85,188 | 79,833 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 2,571,587 | 25,456 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 33.13 | 3,136 | ||||||
| Average market price per ounce of silver / zinc tonne | 32.76 | 2,772 | ||||||
| (1) | Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco. |
| (2) | Average realized price per ounce of silver ounce or zinc tonne sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
| -50- |
Non-GAAP Measures (continued)
Bolivar (1) Average realized price per silver ounce or zinc tonne sold
| Three months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 12,770 | 6,966 | ||||||
| Add back: Treatment, smelting and refining charges | 352 | 367 | ||||||
| Add back: Metallurgical deductions | 3,568 | 1,383 | ||||||
| Gross Revenues | 16,690 | 8,715 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 218,307 | 2,469 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 76.45 | 3,530 | ||||||
| Average market price per ounce of silver / zinc tonne | 73.15 | 3,476 | ||||||
| Three months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 10,856 | 7,004 | ||||||
| Add back: Treatment, smelting and refining charges | 720 | 461 | ||||||
| Add back: Metallurgical deductions | 2,183 | 1,437 | ||||||
| Gross Revenues | 13,759 | 8,902 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 406,070 | 2,797 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 33.88 | 3,183 | ||||||
| Average market price per ounce of silver / zinc tonne | 33.68 | 2,667 | ||||||
| Six months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 23,849 | 16,691 | ||||||
| Add back: Treatment, smelting and refining charges | 776 | 952 | ||||||
| Add back: Metallurgical deductions | 8,687 | 3,295 | ||||||
| Gross Revenues | 33,312 | 20,938 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 407,711 | 6,124 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 81.71 | 3,419 | ||||||
| Average market price per ounce of silver / zinc tonne | 78.83 | 3,371 | ||||||
| Six months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 21,962 | 16,727 | ||||||
| Add back: Treatment, smelting and refining charges | 1,783 | 1,330 | ||||||
| Add back: Metallurgical deductions | 4,953 | 3,444 | ||||||
| Gross Revenues | 28,698 | 21,500 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 880,036 | 6,465 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 32.61 | 3,326 | ||||||
| Average market price per ounce of silver / zinc tonne | 32.76 | 2,772 | ||||||
| (1) | Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco. |
| (2) | Average realized price per ounce of silver ounce or zinc tonne sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
| -51- |
Non-GAAP Measures (continued)
Porco (1) Average realized price per silver ounce or zinc tonne sold
| Three months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 3,962 | 7,972 | ||||||
| Add back: Treatment, smelting and refining charges | 339 | 397 | ||||||
| Add back: Metallurgical deductions | 2,121 | 1,635 | ||||||
| Gross Revenues | 6,422 | 10,005 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 83,629 | 2,894 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 76.79 | 3,457 | ||||||
| Average market price per ounce of silver / zinc tonne | 73.15 | 3,476 | ||||||
| Three months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 2,288 | 5,281 | ||||||
| Add back: Treatment, smelting and refining charges | 446 | 336 | ||||||
| Add back: Metallurgical deductions | 977 | 1,110 | ||||||
| Gross Revenues | 3,712 | 6,727 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 104,099 | 2,079 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 35.65 | 3,236 | ||||||
| Average market price per ounce of silver / zinc tonne | 33.68 | 2,667 | ||||||
| Six months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 6,966 | 14,878 | ||||||
| Add back: Treatment, smelting and refining charges | 676 | 764 | ||||||
| Add back: Metallurgical deductions | 4,355 | 3,056 | ||||||
| Gross Revenues | 11,998 | 18,698 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 149,903 | 5,752 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 80.04 | 3,251 | ||||||
| Average market price per ounce of silver / zinc tonne | 78.83 | 3,371 | ||||||
| Six months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 6,424 | 10,813 | ||||||
| Add back: Treatment, smelting and refining charges | 1,059 | 729 | ||||||
| Add back: Metallurgical deductions | 2,071 | 2,259 | ||||||
| Gross Revenues | 9,554 | 13,801 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 247,788 | 4,148 | ||||||
| Average realized price per silver ounce or zinc tonne sold (2) | 38.56 | 3,327 | ||||||
| Average market price per ounce of silver / zinc tonne | 32.76 | 2,772 | ||||||
| (1) | Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco. |
| (2) | Average realized price per ounce of silver ounce or zinc tonne sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
| -52- |
Non-GAAP Measures (continued)
Caballo Blanco Group Average realized price per silver ounce or zinc tonne sold
| Three months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 11,609 | 11,865 | ||||||
| Add back: Treatment, smelting and refining charges | 334 | 595 | ||||||
| Add back: Metallurgical deductions | 2,912 | 2,178 | ||||||
| Gross Revenues | 14,855 | 14,637 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 191,707 | 4,252 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 77.49 | 3,442 | ||||||
| Average market price per ounce of silver / zinc tonne | 73.15 | 3,476 | ||||||
| Three months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 10,345 | 7,426 | ||||||
| Add back: Treatment, smelting and refining charges | 706 | 415 | ||||||
| Add back: Metallurgical deductions | 1,399 | 1,416 | ||||||
| Gross Revenues | 12,450 | 9,257 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 366,847 | 2,918 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 33.94 | 3,172 | ||||||
| Average market price per ounce of silver / zinc tonne | 33.68 | 2,667 | ||||||
| Six months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 25,929 | 20,902 | ||||||
| Add back: Treatment, smelting and refining charges | 797 | 1,159 | ||||||
| Add back: Metallurgical deductions | 6,204 | 4,019 | ||||||
| Gross Revenues | 32,929 | 26,080 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 416,127 | 7,844 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 79.13 | 3,325 | ||||||
| Average market price per ounce of silver / zinc tonne | 78.83 | 3,371 | ||||||
| Six months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 16,217 | 15,968 | ||||||
| Add back: Treatment, smelting and refining charges | 1,423 | 1,192 | ||||||
| Add back: Metallurgical deductions | 2,633 | 3,128 | ||||||
| Gross Revenues | 20,274 | 20,287 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 614,439 | 6,018 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 33.00 | 3,371 | ||||||
| Average market price per ounce of silver / zinc tonne | 32.76 | 2,772 | ||||||
| (1) | Average realized price per ounce of silver ounce or zinc tonne sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
| -53- |
Non-GAAP Measures (continued)
Zimapan Mine Average realized price per silver ounce or zinc tonne sold
| Three months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 20,386 | 8,997 | ||||||
| Add back: Treatment, smelting and refining charges | 2,540 | 2,540 | ||||||
| Add back: Metallurgical deductions | 3,638 | 2,725 | ||||||
| Gross Revenues | 26,563 | 14,261 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 400,524 | 4,804 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 66.32 | 2,969 | ||||||
| Average market price per ounce of silver / zinc tonne | 73.15 | 3,476 | ||||||
| Three months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 9,157 | 7,405 | ||||||
| Add back: Treatment, smelting and refining charges | 1,880 | 1,806 | ||||||
| Add back: Metallurgical deductions | 1,548 | 1,750 | ||||||
| Gross Revenues | 12,584 | 10,962 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 405,967 | 4,408 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 31.00 | 2,487 | ||||||
| Average market price per ounce of silver / zinc tonne | 33.68 | 2,667 | ||||||
| Six months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 43,983 | 17,789 | ||||||
| Add back: Treatment, smelting and refining charges | 5,362 | 5,042 | ||||||
| Add back: Metallurgical deductions | 7,217 | 5,022 | ||||||
| Gross Revenues | 56,562 | 27,853 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 792,178 | 8,725 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 71.40 | 3,192 | ||||||
| Average market price per ounce of silver / zinc tonne | 78.83 | 3,371 | ||||||
| Six months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 19,119 | 16,062 | ||||||
| Add back: Treatment, smelting and refining charges | 4,231 | 4,253 | ||||||
| Add back: Metallurgical deductions | 3,312 | 3,930 | ||||||
| Gross Revenues | 26,662 | 24,245 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 829,324 | 8,825 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 32.15 | 2,747 | ||||||
| Average market price per ounce of silver / zinc tonne | 32.76 | 2,772 | ||||||
| (1) | Average realized price per ounce of silver ounce or zinc tonne sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
| -54- |
Non-GAAP Measures (continued)
Realized mining margin for silver ounces and zinc tonnes sold – Mining operations
The realized mining margin is used to evaluate the profitability of the Company’s operations. The realized mining margin is calculated by subtracting the All-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold from the Average realized price per silver ounce or zinc tonne sold.
| Three months ended June 30, 2026 | ||||||||||||||||||||
| Bolivar | Porco | Caballo Blanco Group | Zimapan | Consolidated | ||||||||||||||||
| Average realized price per silver ounce sold | 76.45 | 76.79 | 77.49 | 66.32 | 72.17 | |||||||||||||||
| All-in sustaining cost per silver ounce sold | 25.81 | 43.11 | 18.13 | 15.01 | 21.87 | |||||||||||||||
| Realized margin per silver ounce sold | 50.64 | 33.69 | 59.36 | 51.32 | 50.30 | |||||||||||||||
| Average realized price per zinc tonne sold | 3,530 | 3,457 | 3,442 | 2,969 | 3,302 | |||||||||||||||
| All-in sustaining cost per zinc tonne sold | 2,521 | 1,570 | 1,800 | 2,623 | 2,219 | |||||||||||||||
| Realized margin per zinc tonne sold | 1,009 | 1,887 | 1,643 | 346 | 1,083 | |||||||||||||||
| Three months ended June 30, 2025 | ||||||||||||||||||||
| Bolivar | Porco | Caballo Blanco Group | Zimapan | Consolidated | ||||||||||||||||
| Average realized price per silver ounce sold | 33.88 | 35.65 | 33.94 | 31.00 | 33.13 | |||||||||||||||
| All-in sustaining cost per silver ounce sold | 14.57 | 28.22 | 11.12 | 20.55 | 17.50 | |||||||||||||||
| Realized margin per silver ounce sold | 19.32 | 7.44 | 22.82 | 10.45 | 15.63 | |||||||||||||||
| Average realized price per zinc tonne sold | 3,183 | 3,236 | 3,172 | 2,487 | 2,938 | |||||||||||||||
| All-in sustaining cost per zinc tonne sold | 1,436 | 1,175 | 1,048 | 2,810 | 1,875 | |||||||||||||||
| Realized margin per zinc tonne sold | 1,746 | 2,060 | 2,124 | (324 | ) | 1,063 | ||||||||||||||
| Six months ended June 30, 2026 | ||||||||||||||||||||
| Bolivar | Porco | Caballo Blanco Group | Zimapan | Consolidated | ||||||||||||||||
| Average realized price per silver ounce sold | 81.71 | 80.04 | 79.13 | 71.40 | 76.33 | |||||||||||||||
| All-in sustaining cost per silver ounce sold | 31.84 | 47.97 | 19.38 | 18.40 | 25.34 | |||||||||||||||
| Realized margin per silver ounce sold | 49.87 | 32.06 | 59.75 | 53.00 | 51.00 | |||||||||||||||
| Average realized price per zinc tonne sold | 3,419 | 3,251 | 3,325 | 3,192 | 3,289 | |||||||||||||||
| All-in sustaining cost per zinc tonne sold | 2,724 | 1,483 | 1,867 | 2,963 | 2,380 | |||||||||||||||
| Realized margin per zinc tonne sold | 695 | 1,768 | 1,458 | 230 | 910 | |||||||||||||||
| Six months ended June 30, 2025 | ||||||||||||||||||||
| Bolivar | Porco | Caballo Blanco Group | Zimapan | Consolidated | ||||||||||||||||
| Average realized price per silver ounce sold | 32.61 | 38.56 | 33.00 | 32.15 | 33.13 | |||||||||||||||
| All-in sustaining cost per silver ounce sold | 13.90 | 26.86 | 11.48 | 21.57 | 17.71 | |||||||||||||||
| Realized margin per silver ounce sold | 18.71 | 11.70 | 21.52 | 10.57 | 15.42 | |||||||||||||||
| Average realized price per zinc tonne sold | 3,326 | 3,327 | 3,371 | 2,747 | 3,136 | |||||||||||||||
| All-in sustaining cost per zinc tonne sold | 1,483 | 1,242 | 1,168 | 3,070 | 1,976 | |||||||||||||||
| Realized margin per zinc tonne sold | 1,843 | 2,085 | 2,203 | (323 | ) | 1,160 | ||||||||||||||
| -55- |
Non-GAAP Measures (continued)
Cash cost of production per tonne milled, cash cost per silver ounce or zinc tonne sold, all-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold – Ore processing
The following tables provide a detailed reconciliation of these measures to our operating expenses, as reported in our condensed interim consolidated financial statements. Readers should be cautioned that the cash cost, AISC and cash cost per tonne milled are not key metrics for evaluating the performance of our ore processing operations because ore is purchased from third-party miners who are paid based upon the metal content and prevailing market prices at the time of purchase. The cash cost per silver ounce sold and zinc tonne sold and the AISC per silver ounce or zinc tonne sold should not be compared to or consolidated with the results from the Mining operations because of the different nature of the businesses.
San Lucas ore processing cash cost
| Three Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 12,187 | 16,830 | 29,017 | |||||||||
| Transportation and other selling cost | (952 | ) | (1,315 | ) | (2,267 | ) | ||||||
| Royalty | (639 | ) | (882 | ) | (1,520 | ) | ||||||
| Inventory change | 3,236 | 4,469 | 7,705 | |||||||||
| Cash cost of production (A) | 13,832 | 19,102 | 32,934 | |||||||||
| Cost of sales | 12,187 | 16,830 | 29,017 | |||||||||
| Concentrate treatment, smelting and refining cost | 869 | 1,200 | 2,069 | |||||||||
| By-product lead revenue | (826 | ) | - | (826 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 12,230 | 18,030 | 30,260 | |||||||||
| Sustaining capital expenditures | 601 | 831 | 1,432 | |||||||||
| General and administrative expenses | 874 | 1,207 | 2,081 | |||||||||
| Accretion of decommissioning and restoration provision | 38 | 53 | 91 | |||||||||
| All-in sustaining cost (C) | 13,744 | 20,120 | 33,864 | |||||||||
| Material processed (tonnes milled) (D) | 115,424 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 333,899 | 8,796 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 36.63 | 2,050 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 41.16 | 2,287 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 285.33 | |||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 7,880 | 6,712 | 14,592 | |||||||||
| Transportation and other selling cost | (1,072 | ) | (914 | ) | (1,986 | ) | ||||||
| Royalty | (282 | ) | (241 | ) | (523 | ) | ||||||
| Inventory change | 185 | 158 | 343 | |||||||||
| Cash cost of production (A) | 6,710 | 5,716 | 12,426 | |||||||||
| Cost of sales | 7,880 | 6,712 | 14,592 | |||||||||
| Concentrate treatment, smelting and refining cost | 1,059 | 903 | 1,962 | |||||||||
| By-product lead revenue | (956 | ) | - | (956 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 7,983 | 7,615 | 15,598 | |||||||||
| Sustaining capital expenditures | 411 | 351 | 762 | |||||||||
| General and administrative expenses | 530 | 452 | 982 | |||||||||
| Accretion of decommissioning and restoration provision | 28 | 23 | 51 | |||||||||
| All-in sustaining cost (C) | 8,952 | 8,441 | 17,393 | |||||||||
| Material processed (tonnes milled) (D) | 94,973 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 365,489 | 6,529 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 21.84 | 1,166 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 24.49 | 1,293 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 130.84 | |||||||||||
| -56- |
Non-GAAP Measures (continued)
San Lucas ore processing cash cost
| Six Months Ended June 30, 2026 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 40,393 | 32,695 | 73,088 | |||||||||
| Transportation and other selling cost | (2,651 | ) | (2,270 | ) | (4,921 | ) | ||||||
| Royalty | (2,553 | ) | (1,959 | ) | (4,512 | ) | ||||||
| Inventory change | 9,459 | 7,969 | 17,428 | |||||||||
| Cash cost of production (A) | 44,648 | 36,435 | 81,083 | |||||||||
| Cost of sales | 40,393 | 32,695 | 73,088 | |||||||||
| Concentrate treatment, smelting and refining cost | 2,746 | 2,256 | 5,002 | |||||||||
| By-product lead revenue | (3,381 | ) | - | (3,381 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 39,758 | 34,951 | 74,709 | |||||||||
| Sustaining capital expenditures | 888 | 991 | 1,879 | |||||||||
| General and administrative expenses | 2,244 | 1,978 | 4,222 | |||||||||
| Accretion of decommissioning and restoration provision | 108 | 92 | 201 | |||||||||
| All-in sustaining cost (C) | 42,998 | 38,013 | 81,010 | |||||||||
| Material processed (tonnes milled) (D) | 210,191 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 968,774 | 16,193 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 41.04 | 2,158 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 44.38 | 2,347 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 385.76 | |||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||
| Silver | Zinc | Total | ||||||||||
| Cost of sales | 13,908 | 10,732 | 24,640 | |||||||||
| Transportation and other selling cost | (1,846 | ) | (1,430 | ) | (3,276 | ) | ||||||
| Royalty | (468 | ) | (365 | ) | (833 | ) | ||||||
| Inventory change | 404 | 303 | 707 | |||||||||
| Cash cost of production (A) | 11,997 | 9,241 | 21,238 | |||||||||
| Cost of sales | 13,908 | 10,732 | 24,640 | |||||||||
| Concentrate treatment, smelting and refining cost | 1,401 | 1,130 | 2,531 | |||||||||
| By-product lead revenue | (1,821 | ) | - | (1,821 | ) | |||||||
| By-product copper revenue | - | - | - | |||||||||
| Cash cost of silver ounce or zinc tonne sold (B) | 13,488 | 11,862 | 25,350 | |||||||||
| Sustaining capital expenditures | 464 | 380 | 844 | |||||||||
| General and administrative expenses | 1,163 | 808 | 1,971 | |||||||||
| Accretion of decommissioning and restoration provision | 53 | 38 | 91 | |||||||||
| All-in sustaining cost (C) | 15,169 | 13,087 | 28,256 | |||||||||
| Material processed (tonnes milled) (D) | 181,668 | |||||||||||
| Silver ounces or zinc tonnes sold (E) | 652,862 | 10,392 | ||||||||||
| Cash cost per silver ounce or zinc tonne sold (B/E) | 20.66 | 1,141 | ||||||||||
| All-in sustaining cost per silver ounce or zinc tonne sold (C/E) | 23.23 | 1,259 | ||||||||||
| Cash cost of production per tonne milled (A/D) | 116.91 | |||||||||||
| -57- |
Non-GAAP Measures (continued)
Average realized price per silver ounce and zinc tonne sold - Ore processing
Revenues are presented as the sum of invoiced revenues related to delivered shipments of zinc, lead and copper concentrates, after having deducted treatment, smelting and refining charges.
The following is an analysis of the gross revenues prior to treatment, smelting and refining charges, and shows deducted treatment, smelting and refining charges to arrive at the net reportable revenue for the period per IFRS. Gross revenues are divided by silver equivalent ounces sold to calculate the Average realized price per ounce of silver equivalents sold.
San Lucas ore processing average realized prices per silver ounce and zinc tonne sold
| Three months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 16,353 | 21,475 | ||||||
| Add back: Treatment, smelting and refining charges | 869 | 1,200 | ||||||
| Add back: Metallurgical deductions | 7,681 | 4,651 | ||||||
| Gross Revenues | 24,903 | 27,327 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 333,899 | 8,796 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 74.58 | 3,106.72 | ||||||
| Average market price per ounce of silver / lead tonne | 73.15 | 3,475.50 | ||||||
| Three months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 32,646 | 27,116 | ||||||
| Add back: Treatment, smelting and refining charges | 3,752 | 3,018 | ||||||
| Add back: Metallurgical deductions | 6,107 | 5,714 | ||||||
| Gross Revenues | 42,505 | 35,848 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 1,282,983 | 12,202 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 33.13 | 2,937.86 | ||||||
| Average market price per ounce of silver / lead tonne | 33.68 | 2,667.42 | ||||||
| Six months ended June 30, 2026 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 46,232 | 39,353 | ||||||
| Add back: Treatment, smelting and refining charges | 2,697 | 2,229 | ||||||
| Add back: Metallurgical deductions | 15,694 | 8,574 | ||||||
| Gross Revenues | 64,624 | 50,155 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 968,774 | 16,193 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 66.71 | 3,097.34 | ||||||
| Average market price per ounce of silver / lead tonne | 78.83 | 3,371.19 | ||||||
| Six months ended June 30, 2025 | ||||||||
| Silver | Zinc | |||||||
| Revenues | 63,722 | 59,570 | ||||||
| Add back: Treatment, smelting and refining charges | 8,497 | 7,503 | ||||||
| Add back: Metallurgical deductions | 12,969 | 12,760 | ||||||
| Gross Revenues | 85,188 | 79,833 | ||||||
| Silver Ounces or Zinc Tonnes Sold | 2,571,587 | 25,456 | ||||||
| Average realized price per silver ounce or zinc tonne sold (1) | 33.13 | 3,136.13 | ||||||
| Average market price per ounce of silver / lead tonne | 32.76 | 2,772.35 | ||||||
| (1) | Average realized price per ounce of silver ounce or zinc tonne sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
| -58- |
Non-GAAP Measures (continued)
Realized ore processing margin for silver ounces and zinc tonnes sold
The key metric for evaluating the performance and profitability of ore processing operations is the realized ore processing margin. The realized ore processing margin is calculated by subtracting the All-in sustaining cost (“AISC”) per silver ounce or zinc tonne sold from the Average realized price per silver ounce or zinc tonne sold. The non-GAAP measures of cash cost per silver ounce sold and zinc tonne sold and the AISC per silver ounce or zinc tonne sold for Ore Processing operations are calculated based upon the same basis as those used to calculate the same metrics for mining operations.
The realized ore processing margin should not be compared with the realized mining margin because of the differences in the nature of the business. Ore processing operations operate with a much lower margin because ore is purchased from third-party miners instead of being extracted from the Company own mine properties.
San Lucas provides Santacruz with an important strategic advantage by supplying third-party ore feed to existing processing plants, helping maintain high plant utilization and support more stable operating performance. By keeping processing facilities closer to full capacity, San Lucas contributes to better absorption of fixed costs across the production base, which can improve unit cost efficiency and strengthen margins. In addition, the business provides operational flexibility by allowing the Company to supplement mine production with externally sourced material when appropriate, while generating margin-based returns tied to processing capacity, metallurgical recoveries, and disciplined ore purchasing. This model enhances the overall resilience of the Company’s operating platform and supports a more efficient use of existing infrastructure.
The Company believes the realized ore processing margin provides investors and analysts with useful information about the Company’s underlying operating performance from its Ore processing operations.
San Lucas realized ore processing margin
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Average realized price per silver ounce sold | 74.58 | 29.32 | 66.71 | 29.56 | ||||||||||||
| All-in sustaining cost per silver ounce sold | 41.16 | 24.49 | 44.38 | 23.23 | ||||||||||||
| Realized ore processing margin per silver ounce sold | 33.42 | 4.83 | 22.32 | 6.33 | ||||||||||||
| Average realized price per zinc tonne sold | 3,107 | 2,832 | 3,097 | 3,043 | ||||||||||||
| All-in sustaining cost per zinc tonne sold | 2,287 | 1,293 | 2,347 | 1,259 | ||||||||||||
| Realized margin per zinc tonne sold | 819 | 1,539 | 750 | 1,783 | ||||||||||||
| -59- |
Non-GAAP Measures (continued)
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure in which net income is adjusted for income tax expense, interest income, interest expense, amortization and depletion, and impairment charges, foreign exchange gains or losses, unrealized losses or gains on marketable securities, share-based payments expense, accretion expense, changes in fair value of consideration payable and other non-recurring items. Foreign exchange gains or losses may consist of both realized and unrealized losses.
Under IFRS, entities must reflect in compensation expense the cost of share-based payments. In the Company’s circumstances, share-based payments can involve a significant accrual of amounts that will not be settled in cash but are settled by the issuance of shares in exchange.
The Company discloses Adjusted EBITDA to aid in understanding of the results of the Company and is meant to provide further information about the Company’s financial results to investors.
The following table provides a reconciliation of Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net income for the period | 2,005 | 20,977 | 30,475 | 30,428 | ||||||||||||
| Income tax expense | 36,067 | 1,064 | 52,506 | 20,770 | ||||||||||||
| Depreciation, depletion and amortization | 7,796 | 5,439 | 15,093 | 10,016 | ||||||||||||
| Change in estimate of decommissioning provisions | (6,505 | ) | - | (6,505 | ) | - | ||||||||||
| Foreign exchange gain | (7,807 | ) | (3,144 | ) | (14,849 | ) | (9,378 | ) | ||||||||
| Share-based compensation expense | 619 | 1,349 | 1,148 | 1,508 | ||||||||||||
| Loss on change in fair value of consideration payable | 15,788 | 1,034 | 14,823 | 2,979 | ||||||||||||
| Accretion of decommissioning provisions | 746 | 394 | 1,589 | 775 | ||||||||||||
| Accretion of receivable from COMIBOL | (461 | ) | 12 | (977 | ) | (440 | ) | |||||||||
| Financing charge on leases | - | 162 | 28 | 296 | ||||||||||||
| Interest expense, carrying and finance charges | 1,185 | 349 | 2,060 | 600 | ||||||||||||
| Interest income on VAT receivable | (2,487 | ) | (1,326 | ) | (4,958 | ) | (2,387 | ) | ||||||||
| Interest income | (517 | ) | (291 | ) | (894 | ) | (607 | ) | ||||||||
| Other income | 234 | 751 | (308 | ) | (274 | ) | ||||||||||
| Adjusted EBITDA | 46,663 | 26,770 | 89,231 | 54,286 | ||||||||||||
| -60- |
Cautionary Note Regarding Forward-looking Information
Certain of the statements and information in this MD&A constitute “forward-looking information” within the meaning of applicable Canadian provincial securities laws relating to the Company and its operations. All statements, other than statements of historical fact, are forward-looking statements. When used in this MD&A, the words, “will”, “believes”, “expects”, “intends”, “plans”, “forecast”, “objective”, “guidance”, “outlook”, “potential”, “anticipated”, “budget”, and other similar words and expressions, identify forward-looking statements or information. These forward-looking statements or information relate to, among other things: future financial or operational performance; the expected timing for release of forecasts for 2026, including our estimated production of silver, zinc, lead and copper, and for our estimated Cash Costs, AISC, capital and exploration, mine operation, general and administrative, care and maintenance expenditures; future anticipated prices for silver, zinc, lead and copper and other metals and assumed foreign exchange rates; the impacts of inflation on the Company and its operations; whether the Company is able to maintain a strong financial condition and have sufficient capital, or have access to capital, to sustain our business and operations; the timing and outcome with respect to the Company’s environmental, social and governance activities, and the Company’s corporate social responsibility activities and our reporting in respect thereof; the ability of the Company to successfully complete any capital projects, the expected economic or operational results derived from those projects, and the impacts of any such projects on the Company; the potential maximum consideration payable to Glencore pursuant to the Term Sheet; the future results of our exploration activities, anticipated mineral reserves and mineral resources; the costs associated with the Company’s decommissioning obligations; the Company’s plans and expectations for its properties and operations; and expectations with respect to the future anticipated impact of pandemics on our operations.
These forward-looking statements and information reflect the Company’s current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant operational, business, economic, competitive, political, regulatory, and social uncertainties and contingencies. These assumptions, include: our ability to implement environmental, social and governance activities; tonnage of ore to be mined and processed; ore grades and recoveries; that the Company will receive all required regulatory approvals to operate; that the market price of zinc may be above certain minimum thresholds for the payment of the CVR Payments and Additional Payments; prices for silver, zinc, lead, copper remaining as estimated; currency exchange rates remaining as estimated; capital, decommissioning and reclamation estimates; our mineral reserve and mineral resource estimates and the assumptions upon which they are based; prices for energy inputs, labour, materials, supplies and services (including transportation); no labour-related disruptions at any of our operations; no unplanned delays or interruptions in scheduled production; protection of our interests against claims and legal proceedings; all necessary permits, licenses and regulatory approvals for our operations are received in a timely manner and can be maintained. The foregoing list of assumptions is not exhaustive.
The Company cautions the reader that forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements or information contained in this MD&A and the Company has made assumptions and estimates based on or related to many of these factors. Such factors include, some of which are described in the “Risks Factors” section of this MD&A without limitation: fluctuations in silver, zinc, lead and copper prices; fluctuations in prices for energy inputs; fluctuations in currency markets (such as the MXN, BOB and CAD versus the USD); risks related to the technological and operational nature of the Company’s business; required regulatory approvals; changes in national and local government, legislation, taxation, controls or regulations and political, legal or economic developments in Canada, the United States, Mexico, Bolivia or other countries where the Company may carry on business, some of which might prevent or cause the suspension or discontinuation of mining activities, including the risk of expropriation related to certain of our operations, particularly in Bolivia; risks and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected geological or structural formations, pressures, cave-ins and flooding); risks relating to the credit worthiness or financial condition of suppliers, refiners and other parties with whom the Company does business; inadequate insurance, or inability to obtain insurance, to cover these risks and hazards; employee relations; relationships with and claims by the local communities and indigenous populations; availability and increasing costs associated with mining inputs and labour;
Cautionary note regarding forward-looking information (continued)
the Company’s ability to secure our mine sites or maintain access to our mine sites due to criminal activity, violence, or civil and labour unrest; that changes to the market price of zinc may affect the total consideration payable to Glencore pursuant to the omnibus agreement; the speculative nature of mineral exploration and development, including the risk of obtaining or retaining necessary licenses and permits; challenges to, or difficulty in maintaining, the Company’s title to properties and continued ownership thereof; diminishing quantities or grades of mineral reserves as properties are mined; global financial conditions; the Company’s ability to complete and successfully integrate acquisitions, and to mitigate other business combination risks; the actual results of current exploration activities, conclusions of economic evaluations, and changes in project parameters to deal with unanticipated economic or other factors; increased competition in the mining industry for properties, equipment, qualified personnel, and their costs; having sufficient cash to pay obligations as they come due; the duration and effects of the coronavirus and COVID-19 variants, and any other epidemics or pandemics on our operations and workforce, and their effects on global economies and society. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described, or intended. Investors are cautioned against attributing undue certainty or reliance on forward-looking statements or information. Forward-looking statements and information are designed to help readers understand Management’s current views of our near- and longer-term prospects and may not be appropriate for other purposes. The Company does not intend, and does not assume any obligation, to update or revise forward-looking statements or information to reflect changes in assumptions or in circumstances or any other events affecting such statements or information, other than as required by applicable law.
Additional Information
Additional information relating to the Company is on SEDAR+ at www.sedarplus.ca.
| -61- |
Exhibit 99.3
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, ARTURO PRESTAMO ELIZONDO, Chief Executive Officer of Santacruz Silver Mining Ltd., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Santacruz Silver Mining Ltd. (the “issuer”) for the interim period ended June 30, 2026. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and | |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is based on the principles set out in the “Internal Control – Integrated Framework (2013)” issued by The Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | N/A |
| 5.3 | N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2026 and ended on June 30, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: August 14, 2026
| “Arturo Prestamo Elizondo” | |
| ARTURO PRESTAMO ELIZONDO | |
| Chief Executive Officer |
Exhibit 99.4
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, ANDRES BEDREGAL, Chief Financial Officer of Santacruz Silver Mining Ltd., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Santacruz Silver Mining Ltd. (the “issuer”) for the interim period ended June 30, 2026. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and | |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is based on the principles set out in the “Internal Control – Integrated Framework (2013)” issued by The Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | N/A |
| 5.3 | N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2026 and ended on June 30, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: August 14, 2026
| “Andres Bedregal” | |
| ANDRES BEDREGAL | |
| Chief Financial Officer |
Exhibit 99.5
 |
News Release | |
| August 17, 2026 |
Santacruz Silver Reports Second Quarter 2026 Financial Results
Vancouver, B.C. – Santacruz Silver Mining Ltd. (NASDAQ:SCZM) (TSX.V:SCZ) (“Santacruz” or the “Company”) reports its financial and operating results for the quarter ended June 30, 2026 (“Q2 2026”). The full version of the unaudited Q2 2026 financial statements (the “Financial Statements”) and accompanying Management’s Discussion and Analysis (the “MD&A”) can be viewed on the Company’s website at www.santacruzsilver.com or on SEDAR+ at www.sedarplus.ca. All amounts are expressed in U.S. dollars, unless otherwise stated.
Q2 2026 Highlights
| ● | Revenues of $113.5 million, a 55% increase year-over-year. |
| ● | Gross profit of $51.1 million, a 102% increase year-over-year. |
| ● | Adjusted EBITDA(1) of $46.7 million, a 74% increase year-over-year. |
| ● | Cash and highly-liquid marketable securities(2) of $72.8 million, an 82% increase year-over-year. |
| ● | Working capital of $86.1 million, a 43% increase year-over-year. |
| ● | Net income of $2.0 million, a 90% decrease year-over-year, reflecting the impact of the non-recurring tax event and non-cash CVR revaluation discussed below. |
| ● | Average realized price per silver ounce sold(1) of $72.17, a 118% increase year-over-year. |
| ● | AISC per silver ounce sold(1) of $21.87, a 25% increase year-over-year. |
| ● | Realized mining margin per silver ounce sold(1) of $50.30, a 222% increase year-over-year. |
| ● | Average realized price per zinc tonne sold(1) of $3,302, a 12% increase year-over year. |
| ● | AISC per zinc tonne sold(1) of $2,219, a 46% increase year-over-year. |
| ● | Realized mining margin per zinc tonne sold(1) of $1,083, a 24% decrease year-over-year. |
1. The Company reports non-GAAP measures, which includes: adjusted EBITDA, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per ounce of silver and zinc tonne sold (AISC) and realized mining margin per silver ounce and zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in the MD&A for more information.
2. Cash includes $50.4 million and highly-liquid marketable securities includes $22.4 million, consisting of US treasury notes and bills, of which $15.8 million serves as collateral for short-term borrowings.
Arturo Préstamo, Executive Chairman and Chief Executive Officer of Santacruz, commented: “Santacruz delivered strong operating and financial performance in Q2 2026, with revenue up 55% year-over-year to $113.5 million, Adjusted EBITDA up 74% to $46.7 million, and realized mining margin per silver ounce sold rising to $50.30 from $15.63. The Company ended the quarter with $72.8 million in cash and highly liquid marketable securities. Our cash position was affected by the $7.7 million repayment of San Lucas promissory notes in June, which have been reissued in Q3 2026. In addition, we further expect to grow our cash reserves from the reduction of our unusually high trade receivables balance at the current quarter end.”
Andrés Bedregal, CFO of Santacruz, stated: “It’s important to note that our net income for the quarter was significantly impacted by two non-recurring tax events associated with changes in Bolivia’s exchange rate and inflation assumptions, as well as a non-cash fair value adjustment related to the Glencore contingent value rights (CVRs). These items obscure the underlying strength of our operating performance this quarter.”
Mr. Bedregal, added: “The largest impact on net income was an unusually high $36.1 million income tax expense caused by two non-recurring events. One event was the result of the revaluation of the Boliviano following the change in the official exchange rate from 6.96 to 9.77 Bolivianos per U.S. dollar, a 40% decrease. The change resulted in a taxable foreign exchange gain, despite not representing a cash gain. In future quarters, we expect the impact of foreign exchange revaluation to be significantly lower, as any future changes will be measured from the new closing rate of 9.77 rather than the previous rate of 6.96. Income tax expense was also impacted by a non-recurring taxable gain related to a reduction in our decommissioning and restoration provision which was driven by forecasted lower inflation over the lives of our mining operations in Bolivia.”
Mr. Bedregal, concluded: “Our net income was further affected by a $15.8 million non-cash fair value adjustment to the consideration payable balance arising from the CVRs granted to Glencore. The consideration payable balance does not represent a cash payment currently owed to Glencore. The value of the CVR liability is a valuation of the payouts that could occur up to the end of 2032. The payments are only triggered when the month’s average LME zinc price exceeds $3,850 per tonne, a threshold that has not been exceeded since the inception of the agreement in 2024. Its important to consider that any payments triggered by higher zinc prices would be accompanied by increased sales revenues from the higher price. Excluding the loss from the change in fair value of the CVR, net income for the quarter would have been $17.8 million.”
 | 1 |
The following table reconciles net income as reported in the Interim Consolidated Financial Statements to show the net income excluding the non-cash CVR adjustment for the three months ended June 30, 2026 (US$ thousands):
| Three
months ended June 30 2026 | ||||
| Operating income | 44,753 | |||
| Other income | 1,300 | |||
| Loss on change in fair value of consideration payable (CVR) | (15,788 | ) | ||
| Foreign exchange gain | 7,807 | |||
| Income before tax expense | 38,072 | |||
| Income tax expense | (36,067 | ) | ||
| Net income for the period | 2,005 | |||
| Add: Loss on change in fair value of consideration payable | 15,788 | |||
| Adjusted net income for non-cash CVR loss(1) | 17,793 | |||
Note:
(1) “Adjusted net income for non-cash CVR loss” is a non-GAAP measure which excludes the loss on change in fair value of consideration payable reported in the Interim consolidated statement of comprehensive income. refer to note 9 - Consideration payable in the Condensed Interim Consolidated Financial Statements for the Three and Six Months ended June 30, 2026 and 2025 for details.
Arturo Préstamo, Executive Chairman and Chief Executive Officer of Santacruz, added: “During Q2 2026, some parts of Bolivia experienced road blockades that disrupted logistics for approximately 53 days. Operationally, our production was not affected by the blockades, which is a testament to the strength of our operations and the dedication of our teams. Production increased quarter-over-quarter at all five of Santacruz’s operations, consolidated silver production increased 17% year-over-year, and notably, silver production at Bolivar increased 32% quarter-over-quarter. The blockades did, however, temporarily constrain concentrate exports — particularly lead concentrate, which contains the majority of our silver production. As a result, sales were below production volumes during the quarter, contributing to an approximately $17.0 million increase in inventories. The blockades were resolved at the end of Q2 2026 and exports have normalized during Q3 2026. We have since been drawing down the inventory accumulated during Q2 2026, with the related revenue expected to be recognized as those shipments are completed.”
Mr. Prestamo concluded: “Looking ahead to the second half of 2026, we are focused on our operations, which we expect will provide strong financial performance, including realizing the benefit of the concentrate sales that were deferred from Q2 2026. At the Bolivar mine, we are on track to achieve full operational recovery and return to full production by Q4 2026, with continued quarter-over-quarter improvement expected in Q3 2026. Across our broader portfolio, we continue to evaluate opportunities to increase production and improve operating performance, including initiatives to strengthen San Lucas. As we optimize our existing operations and bring new production online, we are building scale across our portfolio and advancing our goal of becoming a leading silver and base metals producer in Latin America — a trajectory we believe positions us to create meaningful long-term value for our shareholders.”
Selected consolidated financial and operating information for Q2 2026, Q1 2026 and Q2 2025 is presented below. All financial information is prepared in accordance with International Financial Reporting Standards (“IFRS”), and all dollar amounts are expressed in thousands of US dollars, except per unit amounts, unless otherwise indicated.
| 2 |
Update to Non-GAAP Performance Measures and Silver/Zinc Equivalent Ounces Metrics
Commencing in Q1 2026 the Company updated its non-GAAP performances measures to provide management and readers with useful information to evaluate the performance of the Company. Refer to the Non-GAAP measures section in the Company’s Q2 2026 MD&A for a detailed explanation of the metrics and methodology used to determine them.
| 2026 Second Quarter Operational Highlights | ||||||||||||||||||||||||||||||||
| Operational Highlights | 2026 Q2 | 2026 Q1 | Change Q2 vs Q1 | 2025 Q2 | Change ‘26 Q2 vs ‘25 Q2 |
2026 YTD | 2025 YTD | Change ‘26 YTD vs ‘25 YTD | ||||||||||||||||||||||||
Mining Operations & Ore Processing (1) | ||||||||||||||||||||||||||||||||
| Tonnes milled | 521,956 | 487,777 | 7 | % | 480,863 | 9 | % | 1,009,733 | 952,636 | 6 | % | |||||||||||||||||||||
| Silver ounces produced | 1,573,100 | 1,341,499 | 17 | % | 1,423,081 | 11 | % | 2,914,599 | 3,013,144 | (3 | )% | |||||||||||||||||||||
| Zinc tonnes produced | 23,240 | 21,640 | 7 | % | 21,149 | 10 | % | 44,880 | 41,868 | 7 | % | |||||||||||||||||||||
| Lead tonnes produced | 3,165 | 2,686 | 18 | % | 2,772 | 14 | % | 5,851 | 5,490 | 7 | % | |||||||||||||||||||||
| Copper tonnes produced | 337 | 308 | 9 | % | 229 | 47 | % | 645 | 508 | 27 | % | |||||||||||||||||||||
| Supplemental context metrics | ||||||||||||||||||||||||||||||||
| Silver equivalent ounces produced (2) | 2,814,489 | 2,281,465 | 23 | % | 2,535,803 | 11 | % | 5,095,954 | 5,225,944 | (2 | )% | |||||||||||||||||||||
| Zinc equivalent tonnes produced (2) | 59,680 | 59,370 | 1 | % | 53,771 | 11 | % | 119,050 | 110,814 | 7 | % | |||||||||||||||||||||
Mining Operations (1) | ||||||||||||||||||||||||||||||||
| Tonnes milled | 406,532 | 393,010 | 3 | % | 385,890 | 5 | % | 799,542 | 770,968 | 4 | % | |||||||||||||||||||||
| Silver ounces produced | 1,161,733 | 1,000,094 | 16 | % | 1,103,447 | 5 | % | 2,161,827 | 2,398,489 | (10 | )% | |||||||||||||||||||||
| Zinc tonnes produced | 15,548 | 14,496 | 7 | % | 14,506 | 7 | % | 30,044 | 29,210 | 3 | % | |||||||||||||||||||||
| Lead tonnes produced | 2,293 | 2,084 | 10 | % | 2,263 | 1 | % | 4,377 | 4,500 | (3 | )% | |||||||||||||||||||||
| Copper tonnes produced | 337 | 308 | 9 | % | 229 | 47 | % | 645 | 508 | 27 | % | |||||||||||||||||||||
| Silver ounces sold (3) | 894,167 | 871,752 | 3 | % | 1,282,983 | (30 | %) | 1,765,919 | 2,571,587 | (31 | )% | |||||||||||||||||||||
| Zinc tonnes sold (3) | 14,419 | 14,026 | 3 | % | 12,202 | 18 | % | 28,445 | 25,456 | 12 | % | |||||||||||||||||||||
| Cash cost of production per tonne milled (4) | 86.83 | 87.19 | (0 | %) | 69.92 | 24 | % | 87.00 | 68.37 | 27 | % | |||||||||||||||||||||
| Cash cost per silver ounce sold ($/oz) (4) | 15.54 | 18.34 | (15 | %) | 13.17 | 18 | % | 16.92 | 12.98 | 30 | % | |||||||||||||||||||||
| Cash cost per zinc tonne sold ($/t) (4) | 1,746 | 1,843 | (5 | %) | 1,517 | 15 | % | 1,794 | 1,559 | 15 | % | |||||||||||||||||||||
| Average realized price per silver ounce sold ($/oz) (4) | 72.17 | 80.61 | (10 | %) | 33.13 | 118 | % | 76.33 | 33.13 | 130 | % | |||||||||||||||||||||
| All-in sustaining cost per silver ounce sold ($/oz) (4) | 21.87 | 28.90 | (24 | %) | 17.50 | 25 | % | 25.34 | 17.71 | 43 | % | |||||||||||||||||||||
| Realized mining margin per silver ounce sold (4) | 50.30 | 51.71 | (3 | %) | 15.63 | 222 | % | 51.00 | 15.42 | 231 | % | |||||||||||||||||||||
| Average realized price per zinc tonne sold ($/t) (4) | 3,302 | 3,276 | 1 | % | 2,938 | 12 | % | 3,289 | 3,136 | 5 | % | |||||||||||||||||||||
| All-in sustaining cost per zinc tonne sold ($/t) (4) | 2,219 | 2,545 | (13 | %) | 1,517 | 46 | % | 2,380 | 1,976 | 20 | % | |||||||||||||||||||||
| Realized mining margin per zinc tonne sold (4) | 1,083 | 731 | 48 | % | 1,421 | (24 | %) | 910 | 1,160 | (22 | )% | |||||||||||||||||||||
Ore Processing Operations (1) | ||||||||||||||||||||||||||||||||
| Tonnes milled | 115,424 | 94,767 | 22 | % | 94,973 | 22 | % | 210,191 | 181,668 | 16 | % | |||||||||||||||||||||
| Silver ounces produced | 411,367 | 341,405 | 20 | % | 319,634 | 29 | % | 752,772 | 614,655 | 22 | % | |||||||||||||||||||||
| Zinc tonnes produced | 7,692 | 7,144 | 8 | % | 6,643 | 16 | % | 14,836 | 12,658 | 17 | % | |||||||||||||||||||||
| Lead tonnes produced | 872 | 602 | 45 | % | 509 | 71 | % | 1,474 | 990 | 49 | % | |||||||||||||||||||||
| Silver ounces sold (3) | 333,899 | 634,875 | (47 | %) | 365,489 | (9 | %) | 968,774 | 652,862 | 48 | % | |||||||||||||||||||||
| Zinc tonnes sold (3) | 8,796 | 7,397 | 19 | % | 6,529 | 35 | % | 16,193 | 10,392 | 56 | % | |||||||||||||||||||||
| Realized ore processing margin per silver ounce sold (4) | 33.42 | 16.49 | 103 | % | 4.83 | 592 | % | 22.32 | 6.33 | 253 | % | |||||||||||||||||||||
| Realized ore processing margin per zinc tonne sold (4) | 819 | 667 | 23 | % | 1,539 | (47 | %) | 750 | 1,783 | (58 | )% | |||||||||||||||||||||
Notes:
(1) Mining operations includes only production from Bolivar, Porco, Caballo Blanco and Zimapan. Ore processing operations includes only production from San Lucas ore processing business. Readers are cautioned that Bolivar and Porco production figures are presented at 100% however the Company records only its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL’s 55% interest (refer to segment information note of the condensed interim consolidated financial statements).
(2) Silver equivalent ounces and zinc equivalent tonnes produced have been calculated using the period’s average metal prices quoted on the London Metal Exchange. The silver and zinc equivalent production is calculated by dividing each metal’s price by the price of Silver or Zinc to arrive at their equivalent. Refer to the section titled “Non-GAAP Measures” for further information.
(3) Silver ounces sold and zinc tonnes sold may be lower or higher than the volumes produced in the period due to two effects: (i) timing - concentrates produced in a quarter may be shipped and invoiced in a subsequent period or have been produced in a prior period; and (ii) commercial terms - payable ounces under offtake agreements are lower than produced ounces due to standard treatment and quality deductions applied by the customer.
(4) The Company reports non-GAAP measures, which include: cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in this MD&A.
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| 2026 Second Quarter Financial Highlights | ||||||||||||||||||||||||||||||||
Financial Highlights | 2026 Q2 | 2026 Q1 | Change Q2 vs Q1 | 2025 Q2 | Change ‘26 Q2 vs’25 Q2 |
2026 YTD |
2025 YTD | Change ‘26 YTD vs ‘25 YTD | ||||||||||||||||||||||||
| Revenues | 113,458 | 127,529 | (11 | %) | 73,295 | 55 | % | 240,987 | 143,609 | 68 | % | |||||||||||||||||||||
| Gross profit | 51,139 | 42,869 | 19 | % | 25,288 | 102 | % | 94,008 | 53,147 | 77 | % | |||||||||||||||||||||
| Net income (loss) | 2,005 | 28,470 | (93 | %) | 20,977 | (90 | )% | 30,475 | 30,428 | 0 | % | |||||||||||||||||||||
| Net earnings (loss) per share - basic ($/share) (1) | 0.02 | 0.31 | (94 | %) | 0.24 | (92 | )% | 0.34 | 0.34 | (6 | )% | |||||||||||||||||||||
| Adjusted EBITDA (2) | 46,663 | 42,568 | 10 | % | 26,770 | 74 | % | 89,231 | 54,286 | 64 | % | |||||||||||||||||||||
| Cash & cash equivalents | 50,398 | 42,651 | 18 | % | 39,997 | 26 | % | 50,398 | 39,997 | 26 | % | |||||||||||||||||||||
| Working capital | 86,122 | 75,901 | 13 | % | 60,295 | 43 | % | 86,121 | 60,295 | 43 | % | |||||||||||||||||||||
Notes:
(1) On December 10, 2025 the Company consolidated its issued and outstanding common shares on the basis of one post-consolidated common share for every four pre-consolidated common shares. The number of issued and outstanding shares and any per share amounts have been retrospectively restated.
(2) The Company reports non-GAAP measures, which includes Adjusted EBITDA, these measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. Refer to the section titled “Non-GAAP Measures” in the MD&A.
Summary
Q2 2026 vs Q1 2026
Consolidated silver production increased 17% to 1,573,100 ounces in Q2 2026 from 1,341,499 ounces in Q1 2026, with quarter-over-quarter increases at all five operations. The improvement was driven primarily by higher processed volumes, with consolidated tonnes milled increasing 7% to 521,956 tonnes, together with higher silver head grades at Bolivar and Porco and a marked improvement in silver recovery at Zimapan. Bolivar contributed the largest single increase as rehabilitation of the areas affected by the May 2025 flooding event continued to advance, while San Lucas processed 22% more ore than in the prior quarter. Consolidated zinc production increased 7% to 23,240 tonnes, driven principally by higher throughput, which more than offset lower zinc grades at Bolivar and Porco. Lead production increased 18% to 3,165 tonnes and copper production increased 9% to 337 tonnes.
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Sales volumes did not rise to the same degree as production. During the quarter, road blockades in certain parts of Bolivia extended for approximately 53 days, disrupting supply chains across many sectors of the Bolivian economy. The blockades temporarily disrupted the export of the Company’s concentrates but did not affect production, which continued without interruption at all operations. Silver ounces sold from mining operations of 894,167 increased 3% from 871,752 in Q1 2026, lagging the 16% increase in mining silver production, and silver ounces sold at San Lucas declined 47% to 333,899, as concentrate produced during the blockade period could not be shipped and was accumulated as inventory; first-quarter San Lucas sales had also been elevated by the shipment of previously accumulated concentrate. Consolidated inventories increased to $71,876 at June 30, 2026 from $57,517 at December 31, 2025, driven by higher concentrate inventory ($36,445 compared with $30,172) and higher ore stockpiles ($19,493 compared with $11,983). The Company expects this inventory to be sold in the subsequent quarter as export logistics have normalized. Zinc tonnes sold increased quarter over quarter at both mining operations (14,419 tonnes, up 3%) and San Lucas (8,796 tonnes, up 19%).
The average realized price per silver ounce sold from mining operations decreased 10% to $72.17 from $80.61 in Q1 2026, in line with lower average silver prices during the quarter (the average LME silver price declined 13% to $73.44 per ounce). This was largely offset by lower unit costs: cash cost per silver ounce sold decreased 15% to $15.54 from $18.34, and all-in sustaining cost per silver ounce sold decreased 24% to $21.87 from $28.90, leaving the realized mining margin per silver ounce sold broadly stable at $50.30 (Q1 2026 — $51.71). Cash cost of production per tonne milled was also stable at $86.83 (Q1 2026 — $87.19). For zinc, the average realized price per tonne sold of $3,302 was 1% higher, while all-in sustaining cost per zinc tonne sold decreased 13% to $2,219, and the realized mining margin per zinc tonne sold increased 48% to $1,083 from $731. At San Lucas, the realized ore processing margin per silver ounce sold more than doubled to $33.42 from $16.49, and the realized ore processing margin per zinc tonne sold increased 23% to $819. Consolidated revenues of $113,458 were 11% lower than the $127,529 recorded in Q1 2026, as the lower silver prices and the blockade-related reduction in silver ounces sold at San Lucas more than offset the higher zinc volumes sold; Adjusted EBITDA nonetheless increased 10% quarter over quarter to $46,663 on the stronger unit margins.
Q2 2026 vs Q2 2025
Compared with Q2 2025, consolidated silver production increased 11% and zinc production increased 10%, on 9% higher consolidated tonnes milled. Readers should note that Q2 2025 production was adversely affected by the May 2025 flooding event at Bolivar, refer to news release dated July 29, 2025 and August 21, 2025 for more information.
The average realized price per silver ounce sold from mining operations increased 118% to $72.17 from $33.13 in Q2 2025, and the average realized price per zinc tonne sold increased 12% to $3,302 from $2,938. Silver ounces sold from mining operations decreased 30% year over year, with the largest reductions at Bolivar (down 46%) and Caballo Blanco (down 48%), reflecting the blockade-related timing of concentrate exports, while Zimapan, tons sold were broadly in line with its production. Zinc tonnes sold increased 18% from mining operations and 35% at San Lucas. Unit costs increased against the prior-year quarter, cash cost per silver ounce sold of $15.54 (Q2 2025 — $13.17) and all-in sustaining cost per silver ounce sold of $21.87 (Q2 2025 — $17.50), with cash cost of production per tonne milled of $86.83 (Q2 2025 — $69.92). The substantially higher realized silver price more than offset the cost increases, and the realized mining margin per silver ounce sold expanded 222% to $50.30 from $15.63. For zinc, all-in sustaining cost per tonne sold increased 46% to $2,219 (Q2 2025 — $1,517), and the realized mining margin per zinc tonne sold was $1,083, compared with $1,421 in Q2 2025. The combination of substantially higher realized prices and higher zinc volumes sold more than offset the lower silver volumes, and consolidated revenues increased 55% year over year to $113,458, with gross profit increasing 102% to $51,139 and Adjusted EBITDA increasing 74% to $46,663.
Webinar Details
CEO Arturo Préstamo and CFO Andrés Bedregal will discuss the Company’s financial results in a webinar hosted by Adelaide Capital on Thursday, August 20th at 2:00 pm ET. Investors and shareholders are invited to participate in the webinar.
Registration Link: https://us02web.zoom.us/webinar/register/WN_45DXDP6HTR2IqjauiLFlaw.
The webinar will also be live-streamed on the Adelaide Capital YouTube Channel, where a replay will be available after the event: https://bit.ly/adcap-youtube.
Questions can be submitted during the session or in advance to info@santacruzsilver.com.
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Non-GAAP Measures
The financial results in this news release include references to non-GAAP measures which include: Adjusted EBITDA, cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, Average realized price per silver ounce and zinc tonne sold, All-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies even though the metrics have the same or similar names. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. For a reconciliation of non-GAAP and GAAP measures, please refer to the “Non-GAAP Measures” section in the Company’s Q2 2026 MD&A, which is available on SEDAR+ at www.sedarplus.ca.
Qualified Person
Garth Kirkham P.Geo., an independent consultant to the Company and a Qualified Person as defined under NI 43-101, has approved the scientific and technical information contained within this news release.
About Santacruz Silver Mining Ltd.
Santacruz Silver is engaged in the operation, acquisition, exploration, and development of mineral properties across Latin America. In Bolivia, the Company operates the Bolivar, Porco, and Caballo Blanco mining complexes, with Caballo Blanco comprising the Tres Amigos and Colquechaquita mines. The Reserva mine, whose production is provided to the San Lucas ore sourcing and trading business, is also located in Bolivia. Additionally, the Company oversees the Soracaya exploration project. In Mexico, Santacruz operates the Zimapan mine.
‘signed’
Arturo Préstamo Elizondo,
Executive Chairman and CEO
For further information, please contact:
Arturo Préstamo
Santacruz Silver Mining Ltd.
Email: info@santacruzsilver.com
Telephone: +52 81 83 785707
Andrés Bedregal
Santacruz Silver Mining Ltd.
Email: info@santacruzsilver.com
Telephone: +591 22444849
Eduardo Torrecillas
Santacruz Silver Mining Ltd.
Email: info@santacruzsilver.com
Telephone: +591 22444849
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) nor the Nasdaq Capital Market LLC accepts responsibility for the adequacy or accuracy of this news release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
Forward Looking Information
This news release includes certain statements and information that may constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future events or future performance reflect the expectations or beliefs of the management of the Company regarding future events. Generally, forward-looking statements and information can be identified by the use of forward-looking terminology such as “intends”, “expects” or “anticipates”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “should”, “would” or will “potentially” or “likely” occur. This information and these statements, referred to herein as “forward-looking statements”, are not historical facts, are made as of the date of this news release.
These forward-looking statements involve numerous risks and uncertainties and actual results might differ materially from results suggested in any forward-looking statements. These risks and uncertainties include, among other things, risks related to changes in general economic, business and political conditions, including changes in the financial markets, changes in applicable laws, and compliance with extensive government regulation, as well as those risk factors discussed or referred to in the Company’s disclosure documents filed with the securities regulatory authorities in certain provinces of Canada and available at SEDAR+ (www.sedarplus.ca).
There can be no assurance that any forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader should not place any undue reliance on forward-looking information or statements. The Company undertakes no obligation to update forward-looking information or statements, other than as required by applicable law.
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