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
amounts are in US dollars, unless otherwise noted.
Tony Makuch, Discovery’s CEO, commented: “Discovery has a vision to
more than double gold production, to over 500,000 ounces per year. This
growth will come from investing in our Porcupine assets, which include
numerous current and past-producing sites in the historic Timmins Camp.
During Q1 2026, we made important progress towards achieving our
growth objectives.
“First, we announced an agreement to acquire Glencore’s Kidd operations.
This acquisition is a major development and provides an opportunity to
substantially grow our processing capacity. In addition, the transaction will
add extremely valuable land and infrastructure capable of supporting the
future expansion of Hoyle Pond and Pamour; deliver important cost
synergies; provide exposure to critical minerals; and include attractive
exploration upside. The acquisition is expected to close soon.
“Also during Q1 2026, we continued to generate outstanding exploration
results, including additional success from resource conversion and
extension drilling at all operations, encouraging results at new targets
along the western extension of Hoyle Pond, at Borden and at Pamour, and
favourable results at both Dome and TVZ.
“We also continued to make progress with our investment programs to
grow and optimize our current operations. Capital development and other
infrastructure work at Hoyle Pond and Borden, as well as pre -stripping at
Pamour, remained on track. Our total sustaining capital expenditures were
below planned levels, largely reflecting revised timing for delivery of new
mobile equipment to the second and third quarters.
“Turning to our Q1 2026 performance, as previously reported, production
is expected to be weighted to the second half of 2026 with unit costs to
improve as production increases. Improved results will be driven by higher
processing volumes, largely resulting from increased reliability in the mill,
the ramp up of production from the Hollinger open pit and the benefit of
investments at our current operations.
“Looking ahead, we remain on track to meet our production, cost and
capital expenditure guidance for 2026. In addition, upon closing the Kidd
acquisition, we plan to release targets for the remainder of 2026 for copper,
zinc and silver production at Kidd Creek Mine, and for anticipated
investments in exploration and infrastructure at the Kidd assets.”
(1) Non-GAAP measure. For more information, see the section entitled, “NON-GAAP MEASURES.”
(2) AISC excludes share-based compensation costs.
(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.
(4) Excludes the $86.8 million 2025 cash income tax payment.
25% INCREASE IN NET EARNINGS
Net earnings $81.7M or $0.10/share vs $65.3M or
$0.08/share in Q4 2025; Adjusted net earnings(1) of
$82.7M or $0.10/share versus $113.5M or
$0.14/share in Q4 2025 ($0.05/share earnings
contribution in Q4 2025 from income tax recovery)
41% GROWTH IN EBITDA(1)
$177.9M vs $126.0M in Q4 2025 (following a
$45.0 million one-time reclamation expense)
4% INCREASE IN REVENUE
$285.0M vs $274.2M in Q4 2025, reflecting
average realized price of $4,908/oz in Q1 2026
PRODUCTION TO RAMP UP
Gold production of 60,269 oz, with production to
be weighted to the second half of the year
UNIT COSTS IN LINE WITH GUIDANCE RANGE(1)
All in sustaining costs (“AISC”)/oz(1)(2) averaged
$2,041; Site-level AISC/oz(3) averaged $1,875/oz
INVESTING TO IMPROVE AND GROW PORCUPINE
Sustaining capital expenditures (1) of $20.7M, with
Porcupine growth capital expenditures of $39.6M
STRONG FINANCIAL POSITION
Total liquidity of $634.9M at March 31, 2026
(including $384.9M of cash and an undrawn $250M
revolving credit facility)
EXPLORATION SUCCESS AT ALL TARGETS
Exploration expenditures of $13.9M; Excellent drill
results from resource conversion and expansion
drilling, at new targets near current operations and
at key near-term growth projects (Dome and TVZ)
ADVANCEMENT OF CORDERO
Work progressed on updating the Feb. 2024
feasibility study capital and operating cost
estimates
ON TRACK TO ACHIEVE 2026 GUIDANCE
2026 guidance includes back -half weighted
production of 260 – 300 koz; front -end weighted
operating cash costs/oz of $1,250 – $1,400 and
AISC/oz of $1,950 – $2,250; sustaining capital
expenditures of $120M – $165M and growth
capital expenditures of $195M – $235M
1
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
(in $ thousands except per share amounts)
March 31, 2026
March 31, 2025
Three months ended
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)
Three months ended
March 31, 2026 March 31, 2025 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) 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
(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).
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• Key operating results:
o 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.
o Gold sold(3) of 56,927 ounces compared to 64,479 ounces the previous quarter.
o Total production costs of $76.2 million versus $73.8 million in Q4 2025.
o Operating cash costs(1) of $1,417 per ounce sold compared to $1,185 per ounce sold the previous quarter.
o Site-level AISC(1)(4)(5) of $1,875 per ounce sold versus $1,824 per ounce sold in Q4 2025.
o 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 capi tal 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.
3
Income Statement Summary
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 2 025, the Company is targeting a return to sustained
nameplate capacity by 2027 or sooner.
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
4
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 o perating 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.
5
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.”
6
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
7
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 projec t 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 re lated 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 exp loration 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. Capitalize d 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.