Discovery Reports Solid Earnings and Cash Flow in Q1 2026
NEWS RELEASE
DISCOVERY REPORTS SOLID EARNINGS AND CASH FLOW IN Q1 2026
May 14, 2026, Toronto, Ontario – Discovery Silver Corp. (TSX: DSV, OTCQX:
DSVSF) (“Discovery” or the “Company”) today announced financial and operating results for the first quarter of 2026 (“Q1 2026”). Discovery began reporting the results of gold production and sales following the Company’s acquisition (“Porcupine Acquisition”) of the Porcupine Complex (“Porcupine”) in and near Timmins, Ontario on April 15, 2025. All dollar
25% INCREASE IN NET EARNINGS
amounts are in US dollars, unless otherwise noted.
Net earnings $81.7M or $0.10/share vs $65.3M or Tony Makuch, Discovery’s CEO, commented: “Discovery has a vision to $0.08/share in Q4 2025; Adjusted net earnings(1) of more than double gold production, to over 500,000 ounces per year. This $82.7M or $0.10/share versus $113.5M or growth will come from investing in our Porcupine assets, which include $0.14/share in Q4 2025 ($0.05/share earnings numerous current and past-producing sites in the historic Timmins Camp.
contribution in Q4 2025 from income tax recovery) During Q1 2026, we made important progress towards achieving our
41% GROWTH IN EBITDA(1)
growth objectives.
$177.9M vs $126.0M in Q4 2025 (following a “First, we announced an agreement to acquire Glencore’s Kidd operations.
$45.0 million one-time reclamation expense) This acquisition is a major development and provides an opportunity to
4% INCREASE IN REVENUE
substantially grow our processing capacity. In addition, the transaction will $285.0M vs $274.2M in Q4 2025, reflecting add extremely valuable land and infrastructure capable of supporting the average realized price of $4,908/oz in Q1 2026 future expansion of Hoyle Pond and Pamour; deliver important cost synergies; provide exposure to critical minerals; and include attractive PRODUCTION TO RAMP UP exploration upside. The acquisition is expected to close soon. Gold production of 60,269 oz, with production to be weighted to the second half of the year “Also during Q1 2026, we continued to generate outstanding exploration
UNIT COSTS IN LINE WITH GUIDANCE RANGE(1) results, including additional success from resource conversion and extension drilling at all operations, encouraging results at new targets All in sustaining costs (“AISC”)/oz(1)(2) averaged along the western extension of Hoyle Pond, at Borden and at Pamour, and $2,041; Site-level AISC/oz(3) averaged $1,875/oz favourable results at both Dome and TVZ. INVESTING TO IMPROVE AND GROW PORCUPINE “We also continued to make progress with our investment programs to Sustaining capital expenditures(1) of $20.7M, with Porcupine growth capital expenditures of $39.6M grow and optimize our current operations. Capital development and other infrastructure work at Hoyle Pond and Borden, as well as pre-stripping at STRONG FINANCIAL POSITION Pamour, remained on track. Our total sustaining capital expenditures were Total liquidity of $634.9M at March 31, 2026 below planned levels, largely reflecting revised timing for delivery of new (including $384.9M of cash and an undrawn $250M mobile equipment to the second and third quarters. revolving credit facility)
“Turning to our Q1 2026 performance, as previously reported, production EXPLORATION SUCCESS AT ALL TARGETS is expected to be weighted to the second half of 2026 with unit costs to Exploration expenditures of $13.9M; Excellent drill improve as production increases. Improved results will be driven by higher results from resource conversion and expansion processing volumes, largely resulting from increased reliability in the mill, drilling, at new targets near current operations and the ramp up of production from the Hollinger open pit and the benefit of at key near-term growth projects (Dome and TVZ) investments at our current operations.
ADVANCEMENT OF CORDERO
“Looking ahead, we remain on track to meet our production, cost and Work progressed on updating the Feb. 2024 capital expenditure guidance for 2026. In addition, upon closing the Kidd feasibility study capital and operating cost acquisition, we plan to release targets for the remainder of 2026 for copper, estimates zinc and silver production at Kidd Creek Mine, and for anticipated
ON TRACK TO ACHIEVE 2026 GUIDANCE
investments in exploration and infrastructure at the Kidd assets.”
2026 guidance includes back-half weighted production of 260 – 300 koz; front-end weighted
(1) Non-GAAP measure. For more information, see the section entitled, “NON-GAAP MEASURES.”
operating cash costs/oz of $1,250 – $1,400 and
(2) AISC excludes share-based compensation costs.
AISC/oz of $1,950 – $2,250; sustaining capital
(3) Site-level AISC includes corporate G&A allocation and excludes remaining corporate G&A, share-based compensation costs and corporate-level sustaining capital expenditures. expenditures of $120M – $165M and growth
(4) Excludes the $86.8 million 2025 cash income tax payment.
capital expenditures of $195M – $235M
The Company’s full financial statements and management discussion & analysis are available on SEDAR+ at www.sedarplus.ca, and on the Company’s website at www.discoverysilver.com.
SUMMARY OF Q1 2026 PERFORMANCE
| Three months ended | |||
| (in $ thousands except per share amounts) | March 31, 2026 | March 31, 2025 | December 31, 2025 |
| Revenue | 285,035 | — | 274,242 | |
| Production costs | 76,184 | — | 73,814 | |
| Earnings (loss) before income taxes | 131,371 | (6,452) | 60,349 | |
| Net earnings (loss) | 81,679 | (6,452) | 65,289 | |
| Basic earnings (loss) per share | 0.10 | (0.02) | 0.08 | |
| Diluted earnings (loss) per share | 0.10 | (0.02) | 0.08 | |
| Cash flow from (used in) operating activities | 42,968 | (6,074) | 163,231 | |
| Cash investment on mine development and PPE | (67,057) | (3,767) | (95,324) | |
| Ore processed (t) | 698,984 | — | 892,818 | |
| Average Grade (g/t Au) | 2.96 | — | 2.58 | |
| Recovery (%) | 90.6% | — | 90.2% | |
| Gold produced (oz) | 60,269 | — | 66,718 | |
| Gold sold (oz)(1) | 56,927 | — | 64,479 | |
| Average realized price ($/oz sold)(2) | $ | 4,908 $ | — $ | 4,157 |
| Operating cash costs per ounce sold ($/oz sold)(2) | $ | 1,417 $ | — $ | 1,185 |
| AISC per ounce sold ($/oz sold)(2)(3) | $ | 2,041 $ | — $ | 2,034 |
| Adjusted net earnings(2) | $ | 82,722 $ | (3,046) $ | 113,495 |
| Adjusted net earnings per share(2) | $ | 0.10 $ | (0.01) $ | 0.14 |
| Adjusted Free cash flow(2) | $ | 62,734 $ | (9,842) $ | 67,907 |
| Three months ended | ||
| March 31, 2026 | March 31, 2025 | December 31, 2025 |
(1) The difference between ounces produced and ounces sold largely reflects the delivery of in-kind ounces under the Franco-Nevada royalty arrangement.
(2) Example of Non-GAAP measure. See the section in this press release entitled, “NON-GAAP MEASURES” for more information.
(3) 2025 results exclude G&A expense, share-based compensation costs and sustaining capital expenditures and lease expense incurred prior to April 15, 2025, the completion date of the Porcupine Acquisition.
Q1 2026
- Revenue increased 4% from the previous quarter to $285.0 million, reflecting an increase of 18% in the average realized gold price, to $4,908 per ounce.
- EBITDA(1)(2) totaled $177.9 million compared to net loss before interest, taxes, and depreciation and amortization of $6.3 million in Q1 2025 and EBITDA of $126.0 million in Q4 2025 (Q4 2025 reduced by a one-time $45.0 million reclamation expense for non-operating sites).
- Net earnings totaled $81.7 million, or $0.10 per basic share, compared to net loss of $6.5 million, or $0.02 per basic share, in Q1 2025, and net earnings of $65.3 million, or $0.08 per basic share, the previous quarter.
- Adjusted net earnings(1) totaled $82.7 million, or $0.10 per basic share, which compared to adjusted net loss of $3.0 million, or $0.01 per basic share, in Q1 2025, and adjusted net earnings of $113.5 million, or $0.14 per basic share, the previous quarter (Q4 2025 adjusted net earnings included a $0.05 per basic share benefit in earnings from a deferred tax recovery related to revised reclamation cash flow projections).
- Key operating results:
- Gold production of 60,269 ounces compared to 66,718 ounces in Q4 2025, mainly reflecting a planned reduction in tonnes processed, partially offset by a 15% improvement in average grade and higher average recoveries.
- Gold sold(3) of 56,927 ounces compared to 64,479 ounces the previous quarter.
- Total production costs of $76.2 million versus $73.8 million in Q4 2025.
- Operating cash costs(1) of $1,417 per ounce sold compared to $1,185 per ounce sold the previous quarter.
- Site-level AISC(1)(4)(5) of $1,875 per ounce sold versus $1,824 per ounce sold in Q4 2025.
- AISC(1)(5) of $2,041 per ounce sold compared to AISC of $2,034 per ounce sold the previous quarter.
- Cash flows included net cash flow from operating activities of $43.0 million ($129.8 million before the impact of a $86.8 million income tax payment relating to the 2025 tax year); Adjusted free cash flow(1) of $62.7 million compared to adjusted free cash outflow of ($9.8) million in Q1 2025 and adjusted free cash inflow of $67.9 million in Q4 2025.
- Capital expenditures(1) totaled $69.9 million, including $20.7 million of sustaining capital expenditures(1) and $49.2 million of growth capital expenditures(1) (includes growth capital expenditures for Porcupine and Cordero, as well as capitalized exploration expenditures). Sustaining capital expenditures in Q1 2026 were largely focused on capital development at Hoyle Pond and Borden, combined with construction work to buttress the No. 6 tailings management area (“TMA6”) at the Dome property. Growth capital expenditures primarily related to pre-stripping at Pamour and longer-term investments at the TMA6.
- Cash at March 31, 2026, totaled $384.9 million compared to $410.7 million at December 31, 2025, with the change in cash mainly resulting from a $86.8 million income tax payment related to the 2025 tax year made during Q1 2026, the impact of which more than offset the benefit of cash flows from operations generated during the quarter.
- Working capital(1) at March 31, 2026, totaled $288.2 million as compared to working capital of $242.2 million at December 31, 2025. The 19% increase in working capital mainly reflected the reduction in current tax payable following the $86.8 million 2025 income tax payment.
(1) Example of Non-GAAP measure. For more information, see the section in this press release entitled, “NON-GAAP MEASURES”.
(2) Refers to earnings before interest, taxes and depreciation and amortization costs.
(3) The difference between ounces produced and ounces sold largely reflects the delivery of in-kind ounces under the Franco-Nevada royalty arrangement.
(4) Site-level AISC includes corporate G&A allocation and excludes remaining corporate G&A, share-based compensation and corporate-level sustaining capital expenditures.
(5) AISC does not include share-based compensation costs.
Income Statement Summary
| Three months ended | |||
| (in thousands except per share amounts) | March 31, 2026 | March 31, 2025 | December 31, 2025 |
| Revenue | $ 285,035 $ | — $ | 274,242 |
| Production costs | 76,184 | — | 73,814 |
| Depreciation and amortization | 31,576 | — | 49,381 |
| Royalties | 7,058 | — | 7,859 |
| Earnings from mining operations | 170,217 | — | 143,188 |
Expenses
| General and administration | 11,475 | 5,474 | 16,695 | ||
| Exploration | 6,817 | 25 | 340 | ||
| Share-based compensation | 8,859 | 1,167 | 461 | ||
| Other operating costs | 101 | — | 47,512 | ||
| Earnings from operations | 142,965 | (6,666) | 78,180 |
Other
Other income (loss) 1,091 189 (3,623)
Finance Items
| Finance income (expense), net | (12,685) | 25 | (14,208) | |
| Earnings before taxes | 131,371 | (6,452) | 60,349 | |
| Current income tax expense (recovery) | 36,646 | — | 26,255 | |
| Deferred income tax expense (recovery) | 13,046 | — | (31,195) | |
| Net (loss) earnings | $ | 81,679 $ | (6,452) $ | 65,289 |
| Basic earnings per share | $ | 0.10 $ | (0.02) $ | 0.08 |
| Diluted earnings per share | $ | 0.10 $ | (0.02) $ | 0.08 |
Weighted average number of common shares
Basic 810,063 401,122 805,988 Diluted 818,106 401,122 828,211
PORCUPINE OPERATIONS REVIEW
Discovery’s Porcupine Operations consist of the Hoyle Pond, Pamour and Hollinger mine properties, the Dome mine property and milling facility, and numerous near-mine and regional exploration targets. The Porcupine Operations also includes the Borden mine property and large land position near Chapleau, Ontario. Current operations include the Hoyle Pond and Borden underground mines, and Pamour and Hollinger open-pit mines. All mineralization is processed at Dome, including mineralization from Borden, which is trucked 190 km to the Dome Mill. The Dome Mill is a 12,000 tonne-per-day processing facility that in recent years has operated at rates well below optimal levels. Through investment programs launched following the closing of the Porcupine Acquisition in 2025, the Company is targeting a return to sustained nameplate capacity by 2027 or sooner.
| Three months ended | ||
| Porcupine Complex | March 31, 2026 | December 31, 2025 |
| Ore processed (t) | 698,984 | 892,818 | |
| Average Grade (g/t Au) | 2.96 | 2.58 | |
| Recovery (%) | 90.6% | 90.2% | |
| Gold produced (oz)(1) | 60,269 | 66,718 | |
| Gold poured (oz)(1) | 59,258 | 67,010 | |
| Gold sold (oz)(1)(2) | 56,927 | 64,479 | |
| Milling costs (in thousands) | $ | 17,434 $ | 19,354 |
| Milling costs per tonne processed ($/tonne) | $ | 24.9 $ | 21.7 |
| Production costs | $ | 76,184 $ | 73,814 |
| Operating cash costs per ounce sold(3)(4) | $ | 1,417 $ | 1,185 |
| Site-level AISC per ounce sold(3)(4) | $ | 1,875 $ | 1,824 |
| Total capital expenditures(3)(4)(in thousands) | $ 65,684 $ | 96,581 |
(1) Includes gold production, poured and sold from Hoyle Pond, Borden, Pamour and Hollinger.
(2) The difference between ounces produced and ounces sold largely reflects the delivery of in-kind ounces under the Franco-Nevada royalty arrangement.
(3) Example of Non-GAAP measure. See the section in this press release entitled, “NON-GAAP MEASURES” for more information.
(4) Operating cash costs per ounce sold, AISC per ounce sold and total capital expenditures are site level and exclude remaining corporate G&A, share-based compensation costs and corporate-level sustaining capital expenditures.
During Q1 2026, a total of 698,984 tonnes were processed at Porcupine Complex at an average grade of 2.96 g/t, with recovery rates averaging 90.6%, which compared to 892,818 tonnes at an average grade of 2.58 g/t and recovery rates averaging 90.2% in the previous quarter. A total of 60,269 ounces of gold were produced over this period, with total gold poured of 59,258 ounces, versus 66,718 ounces and 67,010 ounces produced and poured, respectively, in the previous quarter. The change in production in Q1 2026 reflected lower tonnes processed, the impact of which was partially offset by a 15% improvement in the average grade, reflecting a significantly higher grade at Hoyle Pond, and a higher average recovery rate. More than three quarters of the reduction in tonnes processed was planned and related to scheduled maintenance as well as the expected impact of severe winter conditions on the crushing circuit. The Company is currently advancing plans to replace the crushing circuit. Total ore tonnes mined increased by 4% compared to Q4 2025, with there being close to 1.3 million tonnes of stockpiled material available for processing as at March 31, 2026.
Also contributing to the reduction in tonnes processed was unscheduled downtime largely due to reduced availability rates in the crushing circuit caused largely by damage to screens in the secondary and tertiary crushers. While the Company works towards replacing the crushing system, initiatives have been taken to increase availability rates, including adding critical spares at site, and ordering a newly designed screening system, which is scheduled for delivery at the end of the second quarter.
Based on full operating days, the Dome Mill's processing capabilities continued to achieve significant improvement with daily throughput exceeding 11,000 tonnes per day on 26 days in Q1 2026, including 10 days when the mill achieved the operating capacity of over 12,000 tonnes per day. Mill operating costs during Q1 2026 averaged $24.94 per tonne processed compared to $21.68 per tonne processed in the previous quarter, with the change largely reflecting reduced processing volumes.
Production costs, including mining and processing costs, in Q1 2026 totaled $76.2 million versus $73.8 million in the previous quarter. Operating cash costs(1) per ounce sold averaged $1,417 compared to $1,185 in the previous quarter, with the increase mainly reflecting higher mining costs, given increased mining rates in Q1 2026, and the impact of lower gold sold. Site-level AISC(1)(2) averaged $1,875 per ounce sold compared to $1,824 in Q4 2025. The quarter-over-quarter increase in AISC reflected higher operating cash costs, partially offset by a reduction in sustaining capital expenditures(1) to $19.0 million in Q1 2026 versus $32.9 million the previous quarter. Sustaining capital expenditures in Q1 2026 mainly related to capital development at both Hoyle Pond and Borden and construction work to buttress the TMA6 at the Dome property.
(1) Example of Non-GAAP measure. For more information, see the section in this press release entitled, “NON-GAAP MEASURES.”
(2) Site-level AISC includes corporate G&A allocation and excludes remaining corporate G&A, share-based compensation costs and corporate-level sustaining capital expenditures.
CORDERO OVERVIEW
The Cordero Project was acquired by Discovery in 2019. Since that time, the Company has invested over $100.0 million in Mexico, conducting significant exploration drilling and technical analysis, leading to the release of multiple studies, most recently the feasibility study dated February 16, 2024 (the “February 2024 Feasibility Study”) and filed on SEDAR+ (www.sedarplus.ca) on March 28, 2024. The results of the FS confirmed Cordero to be one of the world’s largest undeveloped silver deposits, with the potential for large-scale production at low unit costs, and is capable of generating substantial free cash flows and attractive economic returns.
Key highlights of the FS include:
- Average annual production of 37.0 million silver equivalent ounces(1) (“AgEq”) over the first 12 years with a total project life of 19 years;
- AISC(2) averaging below $12.50 per AgEq ounce in Years 1 – 8;
- Base-case after-tax net present value (“NPV”) of $1.2 billion (Base-case metal prices: Silver – $22.00 per ounce; Gold – $1,600 per ounce; Zinc – $1.20 per ounce; Lead – $1.00 per ounce);
- Initial capital expenditures(2) of $606.0 million (resulting in a NPV to capital ratio of 2:1);
- Large-scale Mineral Reserves totaling 302 million ounces of silver, 840,000 ounces of gold, 5.2 billion pounds of zinc and 3.0 billion pounds of lead;
- Important socio-economic contribution to Mexico, including an initial investment of over $600 million, the creation of 2,500 jobs during development, and over 1,000 jobs during operations, $4.0 billion in total procurement, all to remain within Mexico, and, assuming a fixed $35.00 per ounce silver price, total tax contributions within Mexico of $2.4 billion over the project life; and,
- High levels of environmental responsibility and a commitment to contributing to the management of key social issues such as carbon reduction and water quality and availability.
First Quarter 2026 Highlights
During Q1 2026, Discovery continued work on key initiatives to further de-risk the project, including:
- Progressed work on updating the February 2024 Feasibility Study capital and operating cost estimates to reflect the current pricing environment;
- Engaged a third-party specialist power consultant and commenced work on the development schedule and capital cost update to establish natural gas power at site, in an effort to reach a decision point in 2026 on the selection of either natural gas power or grid power as the primary source of power for Cordero;
- Advanced discussions with water treatment plant operators on the planned upgrade and operation of the local water treatment plant; and,
- Advanced work on finalizing the development schedule and financing strategy for Cordero and participated in ongoing discussions with the various governmental bodies involved in issuing the permits for the project.
(1) AgEq produced is metal recovered in concentrate. AgEq is calculated as Ag + (Au x 72.7) + (Pb x 45.5) + (Zn x 54.6); These factors are based on metal prices of Ag - $22/oz, Au - $1,600/oz, PB - $1,00/lb and Zn - $1.20/lb, as used in the February 2024 FS.
(2) Example of Non-GAAP measure. For more information, see the section in this press release entitled, “NON-GAAP MEASURES.”
2026 GUIDANCE
(in $ millions, unless otherwise stated) Total Gold produced (koz) 260 — 300 Operating cash costs per ounce sold ($/oz sold)(1)(2) $ 1,250 — 1,400 AISC per ounce sold ($/oz sold)(1)(2)(4) $ 1,950 — 2,250 Royalties(2) $ 25 — 35 Sustaining capital(1)(3) $ 120 — 165 Porcupine - Growth capital(1)(3) $ 195 — 235 Cordero - Fees and capital $ 90 — 100 Exploration (capital & expensed) $ 55 — 75 Corporate G&A(4) $ 35 — 40
(1) Example of Non-GAAP measure. See the section in this press release entitled, “NON-GAAP MEASURES” for more information.
(2) Royalty expense is included in operating cash cost and AISC per ounce sold. Royalty expense does not include costs related to the Franco Nevada Royalties.
(3) Capitalized exploration is excluded from sustaining and growth capital expenditures and is provided in exploration guidance.
(4) Corporate G&A and AISC exclude share-based compensation.
(5) Based on, where applicable, a USD/CAD exchange rate of 1.36, a USD/MXN$ exchange rate of 18.0.
Discovery’s full-year guidance for 2026 was announced in a press release dated February 19, 2026. The guidance is based on a plan for increased production as compared to 2025, that is expected to be weighted towards the second half of the year. Average operating cash costs per ounce sold(1), and AISC(1) per ounce sold are projected to be highest in the first half of the year.
Targets for both sustaining(1) and growth(1) capital expenditures in 2026, reflect planned investment in support of the Company’s goal of more than doubling gold production, to over half a million ounces per year, with a cost profile in the lower half of the global cost curve. The Company’s guidance also includes a significant commitment to exploration given the substantial potential that exists to convert and expand mineral resources at existing operations and to identify new resources at the Porcupine Operations, near-term projects and regional targets.
Gold Production
Gold production in Q1 2026 totaled 60,269 ounces. Consistent with the Company's business plan for the year, quarterly production in 2026 is expected to increase during the second half of the year, largely reflecting an increase in tonnes processed as production from the Hollinger open pit ramps up, planned improvement in average grades at Borden and Pamour, and the anticipated benefits of capital investments to optimize operations at Hoyle Pond, Borden and Pamour. The Company remains on track to achieve the 2026 production guidance of 260,000 – 300,000 ounces.
Unit Costs
Operating cash costs per ounce sold and AISC per ounce sold averaged $1,417 and $2,041, respectively, in Q1 2026, compared to full-year guidance of $1,250 – $1,400 and $1,950 - $2,250, respectively. Unit costs are projected to be the highest in the first half of the year, and to improve during the second half of 2026 as production and sales volumes increase and benefits are realized from investments to optimize the Company's operations. The Company remains on track to achieve both operating cash costs per ounce sold and AISC per ounce sold guidance for 2026. AISC of $2,041 excludes the $156 per ounce impact of share-based compensation.
Royalties
Royalty expense in Q1 2026 totaled $7.1 million compared to full-year 2026 guidance of $25 – $35 million. Royalty expense is highly dependent on the average realized gold price and will fluctuate based on the commodity cycle. Royalty expense primarily relates to agreements with First Nations groups and private interests at Borden and, to a lesser extent, at Hoyle Pond and Pamour. The Company continues to target royalty expense of $25 - $35 million for full-year 2026.
Sustaining Capital Expenditures
Sustaining capital expenditures for 2026 are projected to be $120 – $165 million, with $20.7 million incurred in Q1 2026. Expenditures during the year are primarily focused on work to buttress the TMA6 at the Dome property, as well as ongoing investment in capital improvements at the Dome Mill and new mobile equipment and improved infrastructure at Hoyle Pond and Borden. The $20.7 million of sustaining capital expenditures in Q1 2026 was lower than planned, mainly reflecting the timing for delivery of new mobile equipment and for construction work at the TMA6 project. Capital development expenditures at Hoyle Pond and Borden during Q1 2026 were in line with expectations. The Company continues to target full-year 2026 sustaining capital expenditures of $120 - $165 million.
Porcupine Growth Capital Expenditures
Growth capital expenditures at Porcupine, excluding capitalized exploration expenditures, are targeted at $195 – $235 million, with $39.6 million incurred in Q1 2026. Two key projects contributing to planned growth capital in 2026 include increasing tailings capacity at TMA6 through additional raises and execution of a new deposition strategy, and continued pre-stripping at Pamour, as the mine ramps up towards commercial levels of operation. The new deposition strategy at TMA6 involves dividing the tailings facility into cells, which will support higher volumes and facilitate progressive rehabilitation, as completed cells can be rehabilitated prior to closure of the dam. Of the $39.6 million of growth capital expenditures, over 80% related to the TMA6 project and pre-stripping at Pamour, with the remainder largely related to other infrastructure work and new mobile equipment.
Cordero
Fees and growth capital related to Cordero are expected to total $90 – $100 million. A significant component of planned expenditures at Cordero relates to the anticipated payment of the change for the land use permit fee. This permit, and payment of the related fee, will follow the approval of the Environmental Impact Statement (“Manifesto de Impacto Ambiental” or “MIA”) application by the Mexican Government’s Department of Natural Resources and Environment (“Secretaría de Medio Ambiente y Recursos Naturales” or “SEMARNAT”). Total expenditures in Q1 2026 were $2.5 million, mainly related to salaries and benefits.
Exploration
Total exploration expenditures in 2026, including both capitalized and expensed expenditures, are targeted at $55 – $75 million. The Company's exploration work program for the year involves an estimated 255,000 – 280,000 metres of drilling, as well as 1,200 – 1,400 metres of exploration development. During Q1 2026, a total of 63,778 metres were drilled and 111 metres of exploration development were completed. A significant portion of planned exploration development is scheduled for the second half of 2026. The Company continues to target full-year 2026 capitalized and expensed expenditures of $55 – $75 million.
Capital exploration expenditures in Q1 2026 totaled $7.1 million and are targeted at $25 – $35 million for the full year. Capital drilling during the quarter mainly related to ongoing resource conversion and expansion drilling at Hoyle Pond, Borden and Pamour.
Key targets include the S Zone Deep and XMS Zone at Hoyle Pond, the further northeast extension of the Main Zone and infill of the Far West and East Lower Zones at Borden, and within and along strike of all three phases of the Pamour pit design. Capitalized exploration expenditures also include planned drilling at Dome designed to upgrade and add confidence to current inferred resources located on the edges and below the historic Dome pit. In addition, the Company is also targeting completion of 500 – 1,000 metres of underground exploration development at Hoyle Pond and Borden.
Expensed exploration expenditures in 2026 are targeted at $30 – $40 million, with total expenditures of $6.8 million in Q1 2026. Drilling during the quarter focused on the mid-mine at Hoyle Pond, at the TVZ Zone adjacent to Hoyle Pond, and at Owl Creek, three kilometres west along the Hoyle Pond volcanic belt. Other key targets for expensed exploration for the quarter include the down plunge extension of the Main Zone at Borden, and several targets around Pamour, including the Pamour West area and the Keora Trend.
As at May 13, 2026, the Company had 21 exploration drill rigs operating. A breakout of drill-rig locations and related targets is provided below:
Hoyle Pond: Five underground drills – Two drills involved in resource conversion and extension drilling of the S Zone, two drills targeting the XMS Zone and one drill targeting the UM4 zone.
TVZ Zone: Three underground drills – Two drills on the 1210 level primarily focused on infilling and extending mineralization proximal to historic drilling, and one drill on the 1410 level testing the down plunge extension of mineralization.
Owl Creek: Two surface drills – Drilling focused on infill and extension of mineralization at both the Owl Creek and the 750 Zones.
Borden: Six drills (four underground and two surface) – Three drill rigs involved in infill and expansion drilling targeting the Main (Deep) Zone to the northeast and one involved in infill and extension of the East Lower Zone, with two surface drills exploring to the northeast of the mine.
Pamour: Three surface drills – One drill focused on the Pamour open pit area, one drill at Pamour West and one drill at the North Contact Zone.
Dome: Two surface drills – One drill located in the southwest portion of the historic open pit and the other one the north side, with drilling continuing to evaluate additional drill targets to the north, south and west sides of the pit.
Corporate G&A
Corporate G&A in 2026 is estimated at $35 – $40 million, with $11.5 million recorded in Q1 2026. Expenditure levels in 2026 reflect the full-year impact of the Company’s transformation into a growing Canadian gold producer, and the related strengthening of organizational capabilities across operations, exploration, and corporate functions, such as finance and information technology. The Company remains on track to be within the guidance range for full-year 2026.
(1) Example of Non-GAAP measure. For more information, see the section in this press release entitled, “NON-GAAP MEASURES.”
ABOUT DISCOVERY
Discovery is a growing precious metals company that is creating value for stakeholders through exposure to both gold and silver. The Company’s silver exposure comes from its first asset, the 100%-owned Cordero project, one of the world’s largest undeveloped silver deposits, which is located close to infrastructure in a prolific mining belt in Chihuahua State, Mexico. In April 2025, Discovery acquired the Porcupine Complex, transforming the Company into a new Canadian gold producer with multiple operations in one of the world’s most renowned gold camps in and near Timmins, Ontario. Discovery owns a dominant land position within the camp, with a large base of Mineral Resources remaining and substantial growth and exploration upside.
On Behalf of the Board of Directors,
Tony Makuch, P.Eng
President, CEO & Director
For further information contact:
Mark Utting, CFA
SVP Investor Relations Phone: 416-806-6298 Email: [email protected] Website: www.discoverysilver.com
QUALIFIED PERSON
The scientific and technical information in this press release was reviewed and approved by Pierre Rocque, P.Eng., Chief Operating Officer of the Company and Eric Kallio, P.Geo., Senior Vice President, Exploration of the Company, who are recognized as a Qualified Persons (“QPs”) under the guidelines of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).
Scientific and technical information in this press release with respect to the Company’s Cordero project has been prepared and presented based on the technical report entitled “Cordero Silver Project, Technical Report and Feasibility Study” with an effective date of February 16, 2024, as filed on SEDAR+ (the “Feasibility Study”) which was completed by Ausenco Engineering Canada ULC, with support of AGP Mining Consultants Inc., WSP USA Inc. and RedDot3D Inc. The mineral reserve estimate was completed under the supervision of Wille Hamilton, P.Eng. Of AGP and the mineral resource estimate was completed under the supervision of R. Mohan Srivastava, P.Geo, both of whom are independent QPs as such term is defined in NI 43-101.
NON-GAAP MEASURES
The Company has included certain non-GAAP measures in this document, as detailed below. In the mining industry, these are common performance measures and ratios but may not be comparable to similar measures or ratios presented by other issuers and the non-GAAP measures and ratios do not have any standardized meaning. Accordingly, these measures and ratios are included to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS Accounting Standards. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to other issuers.
Adjusted Cash Flow From Operations
Adjusted Cash Flow From Operations is a non-GAAP performance measure that is calculated as cash flows from operations adjusted to exclude certain non-recurring items. The Company believes that this measure is useful to the external users in assessing the Company’s ability to generate cash flow from operations and build the cash resources of the Company.
Adjusted cash flow from operations is reconciled to the amounts included in the Consolidated Statements of Cash Flows as follows:
| Three months ended | |||
|---|---|---|---|
| March 31, | March 31, | December 31, | |
| $ Thousands | 2026 | 2025 | 2025 |
| Net cash provided by operating activities | $ | 42,968 $ | (6,074) $ | 163,231 |
| Cash taxes paid relating to prior-year taxable income(1) | 86,823 | — | — | |
| Adjusted cash flow from operations | $ | 129,791 $ | (6,074) $ | 163,231 |
(1) Cash taxes for the year ended 2025 have been excluded to present normalized cash flow from operations. The adjustment reflects the timing of the Company’s first cash tax payments following its transition to producer status in 2025.
Free Cash Flow and Adjusted Free Cash Flow
Free Cash Flow is a non-GAAP performance measure that is calculated as cash flows from operations net of cash flows invested in mineral property, plant, and equipment and exploration and evaluation assets. The Company believes that this measure is useful to the external users in assessing the Company’s ability to generate cash flow after capital investments and build the cash resources of the Company. The Company also discloses and calculates adjusted free cash flow by excluding non-recurring items from free cash flow.
Free cash flow is reconciled to the amounts included in the Consolidated Statements of Cash Flows as follows:
| Three months ended | |||
|---|---|---|---|
| March 31, | March 31, | December 31, | |
| $ Thousands | 2026 | 2025 | 2025 |
| Net cash provided by operating activities | $ | 42,968 $ | (6,074) $ | 163,231 |
| Mineral interests and PPE additions | (67,057) | (3,767) | (95,324) | |
| Free cash flow | $ | (24,089) $ | (9,841) $ | 67,907 |
| Cash taxes paid relating to prior-year taxable income(1) | 86,823 | — | — | |
| Adjusted free cash flow | $ | 62,734 $ | (9,841) $ | 67,907 |
(1) Cash taxes for the year ended 2025 have been excluded to present normalized free cash flow. The adjustment reflects the timing of the Company’s first cash tax payments following its transition to producer status in 2025.
Sustaining and Growth Capital
Sustaining capital and growth capital are non-GAAP measures. Sustaining capital is defined as capital required to maintain current operations at existing levels. Growth capital is defined as capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations. Both measurements are used by management to assess the effectiveness of investment programs.
| Three months ended | |||
|---|---|---|---|
| March 31, March 31, December 31, | |||
| $ Thousands | 2026 | 2025 | 2025 |
| Sustaining capital | $ | 20,689 $ | 36 $ | 33,805 |
| Growth capital(1) | 49,215 | 3,092 | 66,054 | |
| Leases | — | 735 | 5,933 | |
| Total capital expenditures | 69,904 | 3,863 | 105,792 | |
| Working capital changes | (2,847) | (96) | (10,468) | |
| Additions to mining interests, plant and equipment(2) | $ | 67,057 $ | 3,767 $ | 95,324 |
(1) Growth capital includes capitalized exploration expenditures of $7.1 million that meet the Company’s definition of growth capital.
(2) Represents cash expenditures for additions to mining interests, plant and equipment during the period, as reported in the Condensed Consolidated Interim Statements of Cash Flows.
Operating Cash Costs and Operating Cash Costs per Ounce Sold
Operating cash costs and operating cash costs per ounce sold are non-GAAP measures. In the gold mining industry, these metrics are common performance measures but do not have any standardized meaning under GAAP. Operating cash costs include mine site operating costs such as mining, processing, administration and royalty expenses but exclude depreciation and depletion and reclamation costs. Operating cash cost per ounce sold is based on ounces sold and is calculated by dividing operating cash costs by volume of gold ounces sold.
The Company discloses operating cash costs and operating cash cost per ounce sold as it believes the measures provide valuable assistance to investors and analysts in evaluating the Company’s operational performance and ability to generate cash flow. The most directly comparable measure prepared in accordance with GAAP is production costs. Operating cash costs and operating cash costs per ounce sold should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP.
AISC and AISC per Ounce Sold
AISC and AISC per ounce sold are non-GAAP measures. These measures are intended to assist readers in evaluating the total costs of producing and selling gold from current operations. While there is no standardized meaning across the industry for this measure, the Company’s definition conforms to the definition of AISC as set out by the World Gold Council in its guidance note dated June 27, 2013, except for share-based compensation as disclosed below.
The Company defines AISC as the sum of operating costs (as defined and calculated above), sustaining capital, exploration expense, corporate expenses, lease payments relating to sustaining assets, and reclamation cost accretion and depreciation related to current operations. Corporate expenses include general and administrative expenses, net of transaction related costs, severance expenses for management changes and interest income. AISC excludes growth capital expenditures, growth exploration expenditures, reclamation cost accretion and depreciation not related to current operations, lease payments related to non-sustaining assets, interest expense, debt repayment, taxes, and share-based compensation.
Operating cash costs and AISC Reconciliation
The following tables reconcile these non-GAAP measures to the most directly comparable GAAP measures available for Q1 2026 and Q4 2025:
| Three months ended March 31, 2026 | |||
| $ Thousands unless otherwise stated | Porcupine | Corporate | Total Consolidated |
| Production costs | 76,184 | — | 76,184 |
| Royalty expense | 7,058 | — | 7,058 |
| TSA(1)(2) | (2,577) | — | (2,577) |
| Operating cash costs | 80,665 | — | 80,665 |
| General and administrative(2) | 2,059 | 7,650 | 9,709 |
Share-based compensation —
| Accretion of site closure provisions | 3,070 | — | 3,070 |
| Amortization of site closure provision | 983 | — | 983 |
| Sustaining capital | 18,986 | 1,703 | 20,689 |
| Sustaining leases | 978 | 98 | 1,076 |
| AISC(3) | 106,741 | 9,451 | 116,192 |
| Ounces of gold sold | 56,927 | — | 56,927 |
| Operating cash costs per ounce sold ($) | 1,417 | — | 1,417 |
| Sustaining capital expenditures per ounce sold ($) | 334 | — | 363 |
| AISC per ounce sold ($) | 1,875 | — | 2,041 |
(1) Transition services agreement ("TSA").
(2) Excludes certain items not reflective of normal operations.
(3) Excludes the $156 per ounce impact of share-based compensation.
| Three months ended December 31, 2025 | |||
| $ Thousands unless otherwise stated | Porcupine | Corporate | Total Consolidated |
| Production costs | 73,814 | — | 73,814 |
| Royalty expense | 7,859 | — | 7,859 |
| TSA(1) | (3,047) | — | (3,047) |
| PPA inventory(2) | (2,231) | — | (2,231) |
| Operating cash costs | 76,395 | — | 76,395 |
| General and administrative(3) | 1,809 | 12,118 | 13,927 |
| Share-based compensation | — | 461 | 461 |
| Accretion of site closure provisions | 3,688 | — | 3,688 |
| Amortization of site closure provision | 1,043 | — | 1,043 |
| Sustaining capital | 32,908 | 897 | 33,805 |
| Sustaining leases | 1,740 | 84 | 1,824 |
| AISC | 117,583 | 13,560 | 131,143 |
| Ounces of gold sold | 64,479 | — | 64,479 |
| Operating cash costs per ounce sold ($) | 1,185 | — | 1,185 |
| Sustaining capital expenditures per ounce sold ($) | 510 | — | 524 |
| AISC per ounce sold ($) | 1,824 | — | 2,034 |
(1) Costs not reflective of normal operations.
(2) Purchase price allocation represents the depletion of inventories acquired with the business combinations.
(3) Excludes certain items not reflective of normal operations.
Average Realized Price per Ounce Sold
In the gold mining industry, average realized price per ounce sold is a common performance measure that does not have any standardized meaning. The most directly comparable measure prepared in accordance with GAAP is revenue from gold sales. Average realized price per ounces sold should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. The measure is intended to assist readers in evaluating the total revenues realized in a period from current operations.