Santacruz Silver Mining Ltd.

Hi everyone, thank you for joining us. Today we have Santa Cruz's Q1 results webinar. I am joined by CEO and Executive Chairman Arturo Prostamo and CFO Andres Bedregal. Management will start off with commentary on the quarter before getting into Q&A. We may be making some forward-looking statements. If you'd like to know more about those, you can find them on the company's website. And with that out of the way, I'll turn it over to Arturo to get us started.

Good morning, everyone, and thank you for joining us. Q1 was a strong quarter for Santa Cruz, not only from a financial standpoint, but also in demonstrating the continued evolution and strengthening of our business platform. The quarter highlighted the advantages of our diversified multi-asset, multi-jurisdictional operational model, with Silver and Zinc as our core products and further supported by the stability and flexibility provided by our oil sourcing business. From an operating perspective, consolidated silver production was broadly stable compared with Q4, and zinc production remains above the prior year's quadrant. The Bolivar mine continues its recovery, with silver production up in a meaningful way again, quarter over quarter, this time, as you can see, with a 28% increase this last quarter. Caballo Blanco remains our strongest and most profitable mine. CIMAPAN also, our highest high-volume operation, delivers strong gross profit during the quarter, despite lower recoveries and head grades coming in below budget. These results were primarily impacted by the intermittent operational disruption related to the power grid improvements carried out by the Comisión Federal de Electricidad in Mexico. Mexico's national power supplier, as well as limited access to level 960 due to ventilation constraints in the areas. I am pleased to report that both situations were resolved by the end of this first quarter and Q4 will be a more stable quarter for CIMAPAC. Looking ahead, we remain highly focused on improving metal recoveries, particularly silver recoveries, which represent a meaningful opportunity to further enhance the mine's cash flow generation and overall profitability of the company. We're already seeing improvements in these areas during this second quarter. In Bolivia, Sanlucas continues to play an important role in supporting the plant utilization, absorbing some of the fixed costs, and providing us with operational flexibility across all of our Bolivian operations. The operational flexibility we have achieved over the last several quarters is a strong testament of the resilience of Santa Cruz multi-asset, multi-metal business model. In today's environment of metal price volatility and operational challenges, such as the recent water situation at the Bolivar mine, the diversification of our producing assets allows us to maintain stability and continuity throughout our operations, as different operations are able to support one another when the performance or continuity of a single asset is temporarily impacted. Finally, I would like to address the changes we implemented in our reporting format during the first quarter. These enhancements were designed with a clear objective to provide investors with a more transparent detail and intuitive view of our business. We want stakeholders to better understand where value is being created where opportunities for improvement remain and how our operations are generating cash flow and long-term returns. We believe the investment community will find this new format significantly more accessible, meaningful, and aligned with the way sophisticated investors evaluate performance. Overall, Q1 was not only a strong quarter from a financial perspective, but also an important milestone in reinforcing our commitment to our shareholders and the broader investment community. The evolution of our disclosure standards reflect our focus on transparency, accountability, and continuous improvements in the way we communicate our results. By providing more detail and easier to understand reporting, we're giving investors better tools to evaluate the company's performance, identify the key drivers of our business, and clearly assess the areas where management remains focused on delivering further operational and financial improvements. I hope this provides helpful context. With that, I will now turn the call over to Andrés, our CFO, who will walk you through our first quarter financial performance and provide additional context and detail in the reporting framework. Thank you, Arturo.

From a financial standpoint, Q1 was a very solid quarter for the company. Revenue increased 81% year-over-year to $127 million. Gross profit increased 54% to $43 million. Operating income increased 53% year-over-year to $35 million. And net income increased 201% year-over-year to $29 million. And adjusted EBITDA increased 2%. 55 year-over-year to 43 million dollars so that's basically in terms of how our income statements have performed however if we look into the cash generation we close the quarter with approximately 65 million dollars in cash and highly liquid marketable securities this is particularly important when considered two temporary cash impacts during the quarter first In Bolivia income tax for the prior fiscal year is paid in full during this first quarter So we paid approximately 32 million dollars for that tax That's normal into into in 2025 first quarter. We did the same thing for the 2024 income tax expenses and then we also increase our inventory especially in our inventory, which we expect to process and sell in future quarters and both items temporarily pressure cash but neither changes the underlying strength of our business on cost if we look at the income statement and aggregate cost increased year over year however i think it is important to separate two different effects and this is one of the reasons why we have enhanced our reporting framework during the quarter san lucas one was one of the largest contributors to revenue generation as it sold significant portion of its inventory as a result a meaningful portion of the the cost of sales came from san lucas as we all know san lucas is a margin-based or sourcing and processing business so if san lucas if sorry if metal prices abroad market prices increase the cost of buying that or to process it through our million facilities increase so it's an effect a normal effect of the san lucas operation and since this quarter costs have sorry san lucas portion of revenues have increased it's normal that cost increases in addition costs were also affected by the appreciation of the boliviano during the quarter which increases the u.s dollar reported cost when boliviano denominated costs are translated into dollars so far in the second quarter the boliviano has depreciated significantly which should reduce some of the translation pressure if current conditions continue i think that that is why the new reporting framework is important we are presenting the mining operations separately from san lucas treated silver and zinc as co-products and showing realized price all in sustaining costs realized margins by metal which gives investors a clearer view of the actual economic of santa cruz's business model and helper and helps separate market-driven effects such as for example metal prices foreign exchange etc from the actual operating drivers Now, from our balance sheet, I think it remains very strong. At quarter end, we have approximately 65 million dollars in cash and marketable securities. We have working capital of around 76 million and a net cash positive position. If we exclude the CDRs, and that's important, because they are contingent value rights and they are more an accounting related matter. so we are cash positive no we are not dead positive that net debt we are net cash overall the company is in a stronger financial position and our priority is to convert that strength into sustained operating improvement discipline capital allocation and long-term growth that will be a link our summary of the q1 2026