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Key Concepts

• Discovery Silver: A hybrid mining company currently producing gold in Canada (Porcupine Complex) while developing a large silver project in Mexico (Cordderero).
• Porcupine Complex: Discovery Silver’s Canadian gold-producing asset, comprising three operating mines and growth projects.
• Cordderero: A large, undeveloped silver project in Mexico with significant potential.
• All-in Sustaining Cost (AISC): A comprehensive cost metric used in mining, including all expenses related to production.
• Feasibility Study: A detailed study assessing the economic viability of a mining project.
• Tier One Jurisdiction: A politically and legally stable country with a well-established mining industry (Canada is considered one).
• Silver Equivalent (AgEq): A measure used to express the value of different metals (like silver, gold, zinc) in terms of the equivalent amount of silver.

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Operational Performance & Growth at Porcupine Complex

Discovery Silver acquired Newmont’s Porcupine Complex in April 2024. The complex consists of three operating mines (Hoy Pond, Borden, and Pamour – a new open pit) and several growth projects, located in the Timmins gold camp, which has historically produced over 70 million ounces of gold since 1910. In Q4 2025, the complex produced 66,718 ounces of gold, with a total of over 180,000 ounces produced from the acquisition closing date (mid-April) to year-end. The previous total production for the entire year (before Discovery’s acquisition) was approximately 234,000 ounces.

The current operational focus is multifaceted: increasing throughput, improving ore grades, lowering costs, and extending the mine life. Significant investment is being directed towards the underground mines (Hoy Pond and Borden) and ramping up production at the Pamour open pit. Two key growth projects are prioritized:

• Dome Mine: A historically significant mine previously closed in 2017, containing 11 million ounces of resource. A study is underway to bring it back into production, potentially adding substantially to output due to its proximity to the existing processing facility.
• TBZ Project: Located adjacent to the Hoy Pond mine, this project represents another significant growth opportunity.

Discovery Silver anticipates increasing production at the Porcupine Complex from the current level to between 500,000 and 750,000 ounces of gold per year within the next 3 to 5 years.

Financial Position & Cash Flow

As of year-end, Discovery Silver held approximately $410 million in cash and a $250 million revolving credit facility, providing substantial financial flexibility. The company benefits from strong cash flow generated by the Porcupine Complex, particularly at current gold prices. Management emphasizes maintaining cost discipline and focusing on productivity to maximize margins. The company generated $104 million in cash flow year-to-date.

The acquisition of the Porcupine Complex was considered a favorable deal at gold prices of $2,000-$2,000+ per ounce, and higher current prices further enhance profitability. A significant portion of the generated cash flow is being reinvested into growth initiatives at Porcupine.

Cordderero Project – Development & Permitting

Cordderero is a large, undeveloped silver project in Mexico, expected to average 14 million ounces of silver production annually for the first 10 years of operation. The project boasts a low all-in sustaining cost (AISC) of under $1250 per ounce in the early years and under $1350 per ounce over the life of the mine (based on a 2024 feasibility study). The project is also expected to generate significant economic benefits for Mexico, including 2,500 jobs and approximately $4 billion in local purchasing.

The Environmental Impact Assessment (EIA) was submitted in August 2023, and the company is awaiting permitting approval. The permitting process was previously hindered under a previous administration, but the current administration under President Shinbomb is reportedly more supportive of responsible foreign investment. Recent changes in fee structures required by the government have been addressed. Discovery Silver is confident that the permit will be granted “very soon,” potentially within the next few months.

Once the permit is secured, the next steps include updating the feasibility study (particularly capital and cost estimates), completing detailed engineering, and securing financing. Management is committed to minimizing shareholder dilution and is exploring financing options such as high-yield debt markets.

Capital Allocation Priorities

Discovery Silver’s capital allocation priorities are as follows:

1. Supporting Growth at Porcupine: Investing in infrastructure (ventilation, haulage fleets) and upgrading the mill to its full capacity of 12,000 tons per day.
2. Value Creation at Porcupine: Focusing on increasing production, lowering costs, and extending mine life.
3. De-risking Cordderero: Completing the permitting process and preparing for development.

The company emphasizes a disciplined approach to capital allocation and a commitment to shareholder value.

Management Perspective & Shareholder Concerns

Mark Uding, SVP of Investor Relations, emphasized that Discovery Silver offers “dual exposure” to precious metals, positioning itself as a compelling growth story in both the gold and silver sectors. He addressed concerns about “empire building” by assuring shareholders that management is also heavily invested in the company and committed to minimizing dilution.

Jeremy Saffron, the interviewer, highlighted the importance of disciplined execution at Porcupine and the successful permitting of Cordderero as key catalysts for the company’s growth. He noted that the company’s ability to generate Canadian gold cash flow while developing a major silver project is a rare and valuable combination.

Notable Quote: “We’re going to continue to generate very strong results. We’re going to start giving some visibility to the market later this year in terms of what bringing Dome mine back into production could look like.” – Mark Uding.

Risks & Considerations

While the Cordderero project presents significant upside, potential risks include:

• Capex Inflation: Rising capital costs could impact the project’s economics.
• Operating Costs: Unexpected increases in operating costs could reduce profitability.
• Silver Price Volatility: Fluctuations in silver prices could affect the project’s financial viability.
• Permitting Delays: Although management is optimistic, further delays in obtaining the permit could impact the project timeline.

Synthesis & Conclusion

Discovery Silver is strategically positioned as a hybrid precious metals company with a unique combination of near-term gold cash flow from the Porcupine Complex and long-term silver upside from the Cordderero project. The company’s strong financial position, disciplined capital allocation, and experienced management team provide a solid foundation for growth. Successful execution of the growth initiatives at Porcupine and securing the permit for Cordderero are key catalysts that will drive shareholder value in the coming years. The company’s commitment to minimizing dilution and maintaining a healthy balance sheet further enhances its appeal to investors.