Discovery Silver Corp.

As you've heard, I'm Mark Gutting, Senior Vice President, Investor Relations. Joining me today are most of our members of our senior management team, speakers who will be taking part in the presentation, Tony McCooch, Discovery CEO, Allison White, our Chief Financial Officer, Pierre Rock, our Chief Operating Officer, Eric Calio, our Senior Vice President in Exploration, Jose Havillera, our Vice President, Corporate Affairs and Sustainability in Mexico. And Tony will conclude with some concluding remarks. Until we get going, I'll point out that, as you know, we issued our Q2 results pre-market this morning. Our press release, MD&A, and financials are all available on our website at discoverysilver.com, as well as at c.plus. Before beginning, I'd like to remind you that during today's call, we will be making forward-looking statements. These statements are based on current expectations, assumptions, and projections about future events. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those in such statements. I refer you to slide two in our slide deck as well as disclosures on our website for more information about forward-looking information. In addition, we will also be referring to non-IFRS measures during the presentation. These measures 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 accounting standards. I will refer you to slide three in our slide deck as well as in our financial disclosures issued today for more information. Finally, all dollar amounts today will be in U.S. dollars unless otherwise indicated. To that point, Q2 2025 represents our first quarter as a U.S. dollar reporting issuer. With that, I'll turn the call over to Tony McCrooch, Discovery CEO. Hey, thanks, Mark. Good afternoon, everyone, and thanks for getting in the call. It's kind of a Nice to be able to be hosting Discovery's first quarterly investor call here. It's our first quarter as a new Canadian gold producer. Since we took over the operations from Newmont, I mean, we've had some success and we've given some sense of what's been going on and then maybe a sense for maybe some color for how we're going to proceed throughout the year. And, you know, in terms of the results, Q2 was a quarter of transition. We integrated systems, reorganized management, began implementing investment plans. We had the operations for 76 days of the quarter and point out that there was also a two-week scheduled meal shutdown shortly after the deal closed in April. But at the same time, we also, in spite of all this, we did turn into a solid quarter of operating and financial performance. I'll skip over the next two slides. This is forward-looking statements, et cetera, that Mark, I think, already alluded to or made reference to. Turning to slide four, I'll start with a brief look at the porcupine off acquisition. Through it, we have changed two operating gold mines, both Coral Pond and Borden, both underground gold mines. And then the Panama Open Pit project is wrapping up the commercial levels of production, which we expect to achieve sometime by Q4 of 2026. We have, you know, I think some of the other exciting parts about it, though, is we have a substantial large resource base. a varied factor of near-term growth projects through these main targets being the TGZ zone and the Hoyle Pond, at Hoyle Pond, sorry, and the Stone Mine project. And as I say, lots of exploration of sites throughout Timmins Camp and at Borden. You look at Timmins Camp and you say, what have been 75 million ounces of gold mined over 100 years? And we come up with a major resource here as part of the acquisition of over 15 million ounces. You know that's that that's really only a subset of of a lot of other things, projects and targets that we could advance and I'm sure Eric and guys will go through stuff, give you some color and where the excitement is there on the exploration side. I'll turn to slide 6. So you know, I'm just really just as part of it, you know, as we reach the porcupine and the agreement for porcupines and in order to support financing, we did complete a test report to a PDA level. I'm just going to discuss it briefly as we see that it's based on which to improve. The results from the report were favorable. There was average production of 285,000 ounces over the next 10 years, a total of 22 years, and based on a $3,300 gold price, the net price and value of that is $3.4 billion. One of the things that our share price has had, it's around our market cap as of yesterday, was just around $2 billion U.S. Very important, so almost none of the upside we see in Porcupine is included in the PEA. That includes main opportunities to grow and improve existing operations and reduce costs. The major new projects like Dome and TVZ and all the exploration upside in the story. And obviously it also doesn't include any value for Cordero in Mexico, which is one of the new world seeding development stage silver project, which once built would be probably the second largest silver mine in Mexico, maybe the largest depending on timing, and definitely one of the top 10 big mines in all of Mexico. Turning to slide seven for Q2 2025, just giving a sense of the performance for the quarter. We did commence a number of key investment programs aimed at growing production, lowering the cost of extending mine life. We finalized plans for studies to be done at both TBZ and Rome, And at the same time, we turned in some strong results. Corruption for the 76 days we owned porcupines was 50,000 ounces of gold. Our gold sales were 42,000 ounces. That kind of gap between production sales is not something you'll see again. One of our KPIs is always going to be gold recovered equal gold poured equal gold sold. This is just some timing issues and some, you know, growing things in terms of getting ounces properly poured and sold. We worked out those bugs. All the sustaining costs for the quarter was just over $2,100 per ounce sold. At the site level, what you find, of course, you find ASIC was about $1,872 an ounce. And I want to point out that these costs do not include PAMA, which is a capital approach that's still ramping up. On slide eight now, it deals with the financial performance. I know Alison will get into more details a little later. I'll just say that we generated some solid financial results. Adjusted net earnings per share were $0.04 a share. The adjustments were the exclusion of acquisition and transition-related costs and some non-cash FX losses. Speaking of cash, we generated strong cash flow. We had $67 million of operating cash flow and $27 million of free cash flow. If we had sold everything we produced, that cash flow would have been uniquely higher. It's not often that gold companies start out with producing assets. It is even less common to start out with producing assets that are profitable and generating free cash flows. With ParkSpline, that is what we've done. So we have a new gold company that's actually generating profit, making money now. We can take some credit for the ability to move forward in the assets we obtain. Definitely the gold price helps us. Well, I guess as we progress over the next few quarters and into the next few years, you can judge this maybe on our own performance and not just on the total price and the market . Slide nine looks at the investment. I mentioned that we commenced a number of investment programs during the second quarter. Total capital expenditures were $44 million, $28 million of which was growth capital. We made some good progress at the Dome Mill during Q2. We took advantage of the mill shutdown in late April to advance a number of programs. We also advanced a major tailings project. FAMOA accounted for more than $20 million of the total capex. A large piece of that was pre-stripping. You will hear more from Pierre that we produced 7,000 ounces from FAMOA in Q2. This is pre-production ounces. We expect these numbers from PAMRA to go up over the next few quarters as the strip ratio comes down. And as I say, we intend on achieving commercial production sometime in Q4 of 2026. And once we get beyond that, we expect production to normalize somewhere around 150,000 ounces a year. Of the 16 million ounces of sustaining capex in the quarter, the majority of it was at oil farm in Borden, largely related to capital development. In terms of exploration, although Eric Calio discussed it in more detail, I will say that we are ramping up an extensive exploration program. We expect to do about 140,000 meters of drilling this year. And really, it's the beginning of setting ourselves up. And we'll be doing that and even more up to double that on an annual basis, I would like to believe, for about 10 years. That's maybe a forward-looking statement, but that's also a goal that we've got a lot of place to explore, and Eric's building up a solid exploration team with a lot of exciting new discoveries that can come. So I then outlined some of our key priorities over the next while. A lot of the drilling we are doing is focused on resource conversion. We plan to complete a study updating this year's technical report that will include an initial reserve for Hoyle Farm Borden and Pamor, and that study will be released sometime during the middle of next year. will also complete studies for the dome mine and the tbz zone at oil pond for expected release in the first half of 2026 the dome study will fully incurred resource and provide more a little bit more understanding on how how how we can move that forward and and and and as well the tb zone study tbz study sorry will include release of an initial resource statement I would like to turn the call over to Allison White, our new CFO. Allison was most recently CFO at SSR Mining, and prior to that was with Newmont in a number of roles, including CFO for North American operations. Very pleased to have her on board. Carry on.

Thanks, Tony. And it's a pleasure to be here as a part of the discovery team. I'm going to start on slide 11 and review our financial performance for the quarter. Overall, it was a strong quarter, as Tony mentioned. As you heard, our adjusted net earnings were $28.4 million, or $0.04 per share. Very importantly, we generated robust cash flow with operating cash flow of $67 million and free cash flow of $27 million, bolstering the balance sheet. Looking at the $27 million of free cash flow, it's important to keep in mind a couple of things. First, as Tony mentioned, our gold sales were 8,000 ounces below gold produced. We will make up those ounces in terms of sales during the third quarter. Secondly, we had close to $20 million of acquisition and transition-related costs that will not be repeated on a go-forward basis. When you consider those factors, our $27 million of free cash flow was encouraging, but it could have been significantly higher. In future quarters, assuming similar pricing conditions, we do expect that it will be much higher. Turning to slide 14, Sorry. Turning to slide 12. This slide shows the details of adjusted net earnings and reviews the difference between our net earnings of $5.5 million, or one cent per share, and our adjusted net earnings of $28.4 million, or four cents per share. As you can see, there were $16.6 million of acquisition-related costs, primarily expenditures for legal, consulting, and advisory services, and other expenses related to the completion of the porcupine acquisition. There were $1.6 million of costs related to the acquisition on an after-tax basis, including a variety of activities around Discovery's integration of the porcupine operation. We also had after-tax FX losses of $4.7 million, largely a function of the weakening U.S. dollar during the quarter. As you've heard, Earlier in the call, we became the U.S. dollar recording issuer starting in the second quarter. So as I move to slide 13, slide 13 looks at EBITDA, which totals $55.2 million in Q2. If I touch on each of the add-back items, let's look at financing costs first. The $14.3 million of financing costs mainly relates to the accretion cost of $7.8 million from reclamation and deferred consideration, as well as $6.5 million in interest expense related to the Franco-Nevada royalty and its associated accounting impact. Depletion and depreciation of $16.4 million related mainly to the addition of over $560 million of depletible mineral interest and $314 million of depreciable plants and equipment related to the porcupine acquisition. Finally, income tax expense of about $19 million is attributable to the revenues from production during the quarter. Moving on to slide 14, this breaks down both cash costs and all-in sustaining costs. I want to reiterate one more time that our consolidated cash costs and all-in sustaining costs do not include the MAR, which is a capital project that's ramping up toward commercial production levels. I won't go through each contributor to the costs that are shown here. However, I'll highlight that the site-level AISC of $1,872 an ounce excludes the $213 an ounce gray box in the chart, which represents GMA and share-based payments. There is also about $38 an ounce in the $441 an ounce of sustaining capital expenditures, which is deemed corporate and related primarily to the Cordero project cost. We move on to slide 15, it dives into capital expenditures. I know that Pierre Rocks will also discuss CapEx in his operating review, but I'm going to touch on it briefly before we get there. Total capital expenditures during Q2 were 44.2 million. Sustaining capital was 16.1 million, while growth capital totaled 28.1 million. Just looking at the chart, you can see that more accounted for the largest component of total capital. CapEx at Pomor totaled $22.3 million, all included in growth capital expenditures. Of the $22.3 million, $14 million related to pre-stripping, with the remainder mainly reflecting allocated capital for the tailings management project. I will point out that for reporting purposes, CapEx at the Mill and the No. 6 tailings dam are allocated to the operating mines. The tailings project in total accounted for $16 million, of capital expenditures. I'll let Pierre give you more details on that project a little bit later in the call. The other significant areas for capital investment involve sustaining capital expenditures at Borden and Hoyle Ponds. The largest component of these expenditures is capital development. And as we continue to set the minds up for future production, we have also commenced investment programs to update infrastructure and equipment suites. And if we turn to slide 16, we can take a look at our cash balance. We had cash of $252.5 million as of the end of the quarter on June 30th. Just yesterday, our cash balance was $279 million. As that suggests, we're continuing to generate solid free cash flow. And as you can see from the chart, the main contributor to the buildup in cash during Q2 was the financing package that we arranged concurrent with the Porcupine acquisition. The $468 million you see is comprised of $300 million received from Franco Nevada, for the 2.25% life of mine royalty and the 2% royalty linked note. The other 168.7 million represents the net proceeds from the subscription receipt financing completed in February of this year. With the closing of the acquisition, the 275 million separate seats were exchanged on a one-for-one basis into common shares. The other major contributor to higher cash was the $67 million of operating cash flow. These inflows were partially offset by the $200 million of cash consideration paid to Newmont for the acquisition. The cash component of our capital expenditures was just under $40 million, and we have $51.6 million of restricted cash, which is backing government-required financial assurances in relation to closure plans involving the porcupine assets. I'll also point out that in addition to our cash costs, we have a $100 million credit facility from Franco that remains undrawn, which is adding to our total liquidity balance. And if we flip over to slide 17, we've obviously had and continue to have a significant accounting exercise following the completion of the Park to Pine acquisition. This slide shows the purchase price allocation for the second quarter. I want to stress that the numbers represented the preliminary estimates of the fair values of identified assets that were acquired and the liabilities assumed from new months. It's a complex exercise, and we'll finalize the determination of the fair values of the assets and the liabilities acquired and the deferred taxes within the period allowed, which is 12 months from the acquisition date. You'll see that the value of the net assets listed on the closing date was $524 million. That's higher than the purchase price disclosed when the deal was announced. That's entirely due to the significant increase in Discovery's share price following the deal's announcement. Basically, Newmont benefited from the market's view that Discovery entered a very good deal and the share price reflected that growth between the timing of the deal announcement and the finalization of the acquisition. And with that, I'm going to turn the call over to Pierre Ross, our Chief Operating Officer.

Thank you, Alison. I'll start with on slide 18. For those who may not know, Oil Pond is one of Canada's highest-grade gold mines with an excellent track record for replacing reserves. A total of 45,160 tons were mined from April 16 to the end of June 2025, with an average mining rate of 594 tons per day. Production mainly came from the lower-end zone on the 1965 and 1985 levels. Total material milled was 98,000 tons at the grade of 5.5 gram per ton. Both the tonnage and grade milled largely reflected the processing of stockpiles during the quarter. Going forward, we do not anticipate processing much stockpile material during the second half of the year. Operating developments during Q2 of 2025 was mainly focused on the main production areas in the lower end zone, as well as in areas of the upper mine, where access to narrow, high-grade veins is currently commonplace. Capsule development activities during the quarter mainly involved continuing to extend the main rent to that in the lower end zone. Production costs in Q2 totaled around $20.9 million with operating cash costs around sold averaging 1,566 and all in sustaining costs around sold averaging $2,036. We expect lower all in sustaining costs in the second half of the year as average grades will increase. Sustaining capital expenditures mainly related were mainly related to capital development activities, as well as oil palm allocation of capital expenditures that are related to the sailing management area. Turning to Borden on slide 19. As you may know, Borden is close to the town of Chapleau, approximately 190 kilometers from the Dome Hill. We trucked the ore to Dome. Gordon is located on the large land position that is under explored and has significant exploration of size. Eric will talk about this in a few minutes. Commercial production started at Borden in 2019, and the mine has produced around 600,000 ounces to date. During Q2, The mine produced 27,000 ounces from processing 166,000 tons at an average rate of 5.6 gram per ton. Mine production during the quarter was 124,000 tons, an average mining rate of just over 1,600 tons per day. The issue we had was trucking availability. By adding stockpiles of ore from earlier in the quarter, we were able to process about 2,000 tons per day for the quarter. Operating development during the quarter was mainly focused on the west, central, and upper east zones. The capital development primarily related to the continued advancement of the main ramp and the exploration drift on the 575 level. Production cost in the second quarter, total 22 million, With operating cash costs per ounce sold averaging $1,175. All in sustaining costs per ounce sold averaged $1,621 for the quarter. Sustaining capital expenditures totaled $9 million. With capital development accounting for $5.7 million. and the remainder related to allocated tailings management area expenditures, as well as investment in infrastructure and new equipment. Turning to PAMOR on slide 20. Within our OpenFit project, initial production was recorded in early 2025, and we are currently ramping up towards commercial levels of operation which we expect in 2026. This timing is driven by the watering requirement. It has been the wet year so far in Phoenix. There was considerable pre-surfing activity ongoing during the second quarter. We moved 2.7 million tons of waste versus 104,000 tons of mineralization. Milk feed from the mines during the second quarter was mainly from bench number 19 of the phase one open pit, with production from bench number 13 commencing late in the quarter. Milk feed from BAMOR is expected to increase significantly in the second half of the year, with the strip ratio expected to average below 10 to 1 during the final quarter of the year. IN ADDITION TO MINE PRODUCTION, 132,000 TONS WERE PROCESSED FROM STUFF FILE DURING THE QUARTER. AS RETOILED UPON, WE DON'T ANTICIPATE PROCESSING MEANINGFUL AMOUNTS OF STUFF FILE FROM TAMOR GOING FORWARD AS THE STRENGTH RATIO COMES DOWN AND WE INCREASE MILFEED FROM THE MINE. PRODUCTION COST IN SECOND QUARTER TOTAL $12 MILLION. operating costs around sold averaged $2,051, while all in sustained costs around sold averaged $2,194. All capital expenditures of PAMOA in Q2 were growth capital expenditures and related mainly to prescripting and allocated TMA capital expenditures. I'll now turn the call over to Eric

our sdp exploration thank you pierre and good afternoon everyone i'm on slide 21 and it's great to be here and talk about exploration again as i believe we had a lot we have a lot of very exciting things happening dedicated on the slide our current plan indicates work on several different projects and about 140 000 meters of drilling one of the key projects is at the oil pond underground where we'll be aiming for about 50 000 meters on three main targets including 16B, DDZ, and then mid-mining targets. Just to share a few details, work on the SBA will be from platforms on the 1860 level and focus on infill expansion of the main zones, mostly near the 2000 level. Work on the DDZ will be from the 1210 level and include both infill and net testing in preparation for the new main resource in 2026. The work on the mid-mine targets will be mainly between 1,200 and 1,700 levels, testing for new discoveries, often an extension of many of the historic slopes that have been mined. In terms of progress, it's a little slower than expected, but we now have two builds in motion and adding four more this month, which should start to rapidly increase the rate of building.

Now, looking at Oregon, rain is about 20,000 meters, with the main target here being the 585 Deep Zone 2, which is basically the northeast extension of the main ore body.

Work for the program here will be with three drills parked on the 585 level and drilling downwards into the zone over a 200 to 300-liter strike length, and this is already well underway. From the PAMOR, we have another 40,000 meters of drilling, which will be for infill and extension of what we believe is already a pretty good open-pit resource. In terms of the plan, What we see happening is drilling along most of the strike length of planned pit and then beyond to do the mining activities starting out right now on the east and west extremities. Progress to date here has actually been very good. There's over 12,000 meters completed to date, which is actually slightly ahead of plan. We find that capping it all off here are projects for both regional and don'ts, where we're aiming for a further 32,000 meters and 15,000 at Simmons 10,000 in Borden, and about 7,500 at Dome. In terms of the plan for all projects, they will pretty much all be focused pretty close to the mine, with work in Timmins testing areas west of Fall Pond and near Owl Creek, work at Borden testing north and east of the mine, and work at the Dome near the main pit, and more specifically in the area of a possible starter pit, which we believe could provide a shorter-term opportunity

with minimal impact to items such as milk.

In terms of progress, work on all these projects is just getting underway, but ramping up very rapidly this quarter. So in summary, I believe we have a great lineup of projects and look forward to providing another update on these in the near future. And with that, I'll pass the call over to Jose Javelera, our VP Corporate Affairs and Sustainability for Mexico.

Thanks, Harry. Hi, everyone. So in Cordero, in Mexico, we deliver our stability study at the beginning of 2024. And currently, our main permit with the MIA in Mexico is being evaluated by the Minister of Environment. And we hope to have a positive response in the coming months. So also during Q2, we continue to rethink the project by evaluating energy options, such as gas generation, since we have gas pipeline very close to the project versus power from the grid. Also, the technical work and some measurements to contribute to the progress of the rehabilitation of the water treatment plant are going now. An important point in line with risking the project, last week we were present at meetings the visit of the minister of finance and foreign affairs of canada in mexico it was a visit official visit to president chain bond advancing the visit of the prime minister currently that will be during the next month in mexico and we know that in the next visit the topic of one of the main topics will be mining authorizations in the agenda for mexico so thanks for not by the office chatting with hrc

Hey, thanks, Jose. Thanks, everyone, for all the insights you provided in the call. Appreciate that. As you can see, everybody, we are off to a very strong start with the plan operations. You know, there is a lot of work to do, partly because there's so much opportunity and, you know, and we're excited about working forward as we unlock that and get that information out to our shareholders. We do expect to see higher levels of production in both Q3 and Q4. We also continue ramping up our investment in exploration programs and in CapEx with a target increase in the second half of 2025. We're also accelerating our exploration and initial exploration results that should be coming during the second half of the year. Another big thing as part of trying to work out deliverables as we talked about coming into the end of this year and early into next year is eventually working on a number of studies And, you know, as I talked about re-establishing reserves that are operating mines that were upon Borden and Tamar, and to demonstrate the tremendous potential that exists out of work projects at both the PDZ zone and at Dome. But before I conclude, you know, I always want to, I was reminded of a quote I heard from Indira Gandhi, where she said that, she talked to her grandfather where he said, there's two kinds of people in the world. There are those that do the work and there are those that credit from the work of others, she said. The grandfather told her, be part of the first group. There's less competition. Unfortunately, or, you know, I know as we speak, I know as I'm speaking today, I'm part of the second group. So, you know, with that, I think it's important that I say thanks to all the people who have supported us to get here and to our shareholders. As I say, most importantly, I want to thank personally those that have done the work, got the results in the court for us. Some of you are on shift working now. Others are at home resting before coming back for the next shift. Thank you for your efforts and please continue to work safe. So with that, we'll just conclude the call and we'll be happy to take any questions.

At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. Your first question today comes from the line of Larry Liu from CIBC. Your line is open.

Hi, Tony, Alison, Pierre, Eric, Jose and Mark and team. Thanks for taking my question today. I guess I'll kick off my first question asking about how the asset, from your perspective, how are the assets performing compared to your initial expectations within a technical report? If you look at today's results, 50,000 ounces came in strong. If you factor in the timing of the transaction, as well as the two-week mill shutdown, I'm wondering if we can factor in any further upside compared to the initial technical report at this point.

I'll let Pierre give a little bit of color here, but I mean, let me just put it in perspective. Yeah, definitely we took over the assets and we did a review and you got a sense of what could be accomplished here. But we also recognize we did inherit over a thousand very talented, skilled and motivated people working here. So we got a lot upside in terms of intellectual property and opportunity that was given to us. You know, there's challenges, but I think there's been some unique significant effort done in the quarter and getting some positive impacts. I don't know, Pierre, do you have any thoughts there? Right. In terms of the assets, as Tony mentioned, we're really blessed with the operating crews here. Whether it's at the mill or the mine, they're really top-notch. Thank you for that. And when you look at the assets themselves, starting with PAMORC, Referring to the PEA, we were at about 3,000 tons per day for 2025. Well, I can say we have exceeded that, and we're way ahead of that. When you look at oil pond, we were averaging around 500 tons per day. Well, we are ahead of that as well. Right now, I would say the only asset that needs a little bit more attention right now is that Borden. where we were planning to get 2,000 tons per day. We're real short of that in the quarter, but we think that with a little bit of changes in the mining plan, and more importantly, changes in the equipment, we'll be able to achieve and exceed the 2,000 tons per day. As I alluded a little bit earlier, truck availability, loaders availability, during the quarter was really below expectations. That's only due to the age of the equipment. So, as we replace the equipment, it's going to improve for sure.

Yeah, for sure. Thanks, Pierre and Tony. I guess that kind of leads on to my next question. Speaking of ahead of schedule, I'm just wondering if you can share with us where you are in terms of your ramp-up process at Panmore, and then how much more capex do you still need to

you still need to spend to push the asset towards commercial production or how much more do you intend to spend by uh before the end of the year you're okay with that yeah that's right so there is still a lot of uh pre-stripping like if you look at the remainder of the year uh what we're tracking with the peas so that will be the main main expense i would say the the priest tripping and after that the allocated portion of the tailings and and after that some equipment replacement that we're doing there so it's still a challenging second half of the year financially but we think that it's going to be compensated by an improvement in truth Remember, though, I mean, we expect to continue advancing PAMOA this year. We don't expect a cheap commercial production sometime by or before Q4 in 2026.

Still a lot of work to do, right? For sure. It sounds good. It's good to see more progress there, for sure, and good to hear that things are ahead of schedule. I guess my last question is more numbers-driven, might be more accounting, actually. So, for reclamation liabilities, I noticed that there is a slight change in the discount rate used for the estimate. That's why resulting in an increase in the reclamation liabilities. I'm wondering what's the reason driving that change, and should we expect such a magnitude of changes going forward?

So, Larry, this is Allison. And really, the change in the reclamation liabilities is all related to the purchase price accounting. that we have done during the quarter. And, you know, this is really a huge quarter of transition for us on the accounting and finance front. We're getting our arms wrapped around the systems, the people, the numbers. And so part of what we have to do is take the look at, you know, what's come over from Newmont, as well as what's the reassessment of the fair market value of those reclamation liabilities. So the increase that you see in the change in the discount rates that you see are all related to those purchase price activities. And we do have a year to finalize those. So if we have new facts that we need to consider going forward, we will. However, we don't anticipate a change in the discount rate to get back to your question.

Gotcha. Perfect. Sounds good. Thanks so much, Tony, Alison, and Pierre for answering my question, and congrats again on a strong quarter.

Your next question comes from the line of John Tomazos from John Tomazos Ferry Independent Research. Your line is open.

Thank you, everyone, for your service to the company. Alison, could you explain the 75% plus quarter and 100% plus quarter? six-month tax rate is it because the transaction expenses and the currency charges are not deductible for tech purposes and would the tax rate be 35 going forward yes so john um

Thank you for the question and very astute observations, I would say, first of all. So we are working through a little bit of transition, as I mentioned in the answer that I gave to Larry, just about the process that we're going through from a finance and accounting lens. But you are correct. Our effective rate is hovering between 30% and 35% right now, and that's largely based on what's coming in at Dome. We are in the process of understanding what sort of tax planning opportunities initiatives we can put in place and how we might be able to bring those rates down going forward, but we do need a little bit more time to work through that as an organization.

Thank you. Pierre, could you explain the thresholds for PAMOR being commercial? It's confusing to me that the cash cost is $2,000 And there's a $1,300 margin with $3,300 gold, yet it's not commercial. So how does the engineering reconcile with the economics?

Right. So commercial production, there's no set rules for that. Internally, we are converging towards 75% mining rate sustained for three months. We're not there yet. And as I alluded earlier, we're having dewatering requirements that far exceeds our capability to increase the mining rate right now. So our efforts are really directed towards dewatering. To the best of our knowledge right now, we will not be in a position to improve drastically the mining rate until 2026, at which point we will meet that self-imposed rule, if you wish, of 75% reduction rate over a sustained three months. You have to remember that when we started here in April, previous owner was a little bit behind the eight ball with dewatering. Basically, they didn't do much. And then the new water treatment plant that we put in place, we forgot to winterize that. And basically we had to pick up the pieces in April and May. So that delayed a little bit our start for dewatering, but we're catching up a little bit, but it's a very long process. Does that clarify?

If the gold price is good,

you're going to make a profit lower than 75 but you still won't call it commercial uh like i said there's no set rules for it that's the one we decided to use i think a big part there john is that you know in terms of separation in terms of what we're doing and the amount of work that we set it up for proper line production is is is a lot of defining stuff that gets you set up for for achieving your average throughput. Right now, it is somewhat intermittent, and not just on tons per day, but it's also on grade and being into the ore bot and get all the benches proper. So it's just a matter of time that we're gonna get there, whether it's, and again, it's at achieving 75% mining, effective mining rate, mill rate every day for three months, and then we can call it commercial production. But it's arbitrary.

If I can just wonder to Eric, Eric, what is the distance from the edge of the Pamore pit to the edge of the Idle Hollinger pit?

I don't know.

Is it two kilometers?

It's more than two kilometers. It takes me about half an hour to drive, I guess, so maybe over 20 kilometers, I would say.

How much information is there? Should we assume that that stretch of land is no geologic information, or are there areas where you know there's no gold Or what is the nature of the information?

Well, I mean, the stretch of land, you know, covers kind of quite a few different types of geology. I mean, there's a couple of major faults in there, the Barrow's Benedict Fault that offsets things quite a bit. There is some mining along the whole stretch, but, you know, they're mostly small historic mines that didn't go down very deep.

and uh really didn't show the type of raw halo that you did see after pamora or the dome either but he also the primer the the hollander mcintyre on the on the sort of i guess you would say the the western limb of the porcelain sink line and whereas pamor is off on part of the the the eastern limb of that eastern and part part part of that so you can't just go straight across but you're going from from different from some mineralized are highly prospective mineralized parts of the structure to an un-mineralized structure in the core of the incline. Yeah, the middle part is quite different, I mean, than what you see either at Panmore or at Alter. So it's not just a simple geographic line. There's geology, as you talk about, and faults and changes. But it's a nice spot. There is a lot of potential mineralization. And as I think Erica will lead to is, It's an exciting camp. We're not only drilling, we find new extensions of existing mineralization. You can follow up on new targets that can grow in terms of size of resources and there's potential to find whole new discoveries in the camp.

Tony, with the mill fixed up during the quarter and Pam Moore in startup and Borden at $2,000 and oil at 600 ton a day. It looks like the mill is ahead of the mines at the moment. Is it worth having a contract miner go to the dome pit and deliver 3,000, 4,000 ton a day while Pam Moore is starting up? And maybe you could drop a sag mill into the dome mill and get the party going a little better at the dome pit?

Well, I mean, there's a lot of these are, I mean, you know, that's part of what you're, you know, you can figure out that there's a, you know, right now, you know, we're not mineralization or deposit limited in terms of what we can do. We need to do the technical work to advance what the dome project, as well as, you know, really solidify production from oil pond in Borden and get Pamela up. It's not just about managing production, et cetera, but it's also about managing costs and really setting ourselves up to be a... We like to be a low-cost producer. I want to lower cost producers and focus on responsible mining. There's a lot of things we need to do. know we do have it as part of our goal i i think you you know as we talking in future quarters about what we're doing to the dome mill to get it up but yeah right now the the the mines can't keep up to the the mill there is low-grade stockpiles that i guess we could put in if we if if they make sense to keep the milk full i think gordon's you know made a lot of very good progress and we have demonstrated that the milk can run at uh you know 11 500 12 000 tons a day and get pretty good recoveries in well over 91, 92%. It's just a matter of time. You know, we're working through that. We want to be able to do it consistently and responsibly and similarly with the mines, get them up consistently and responsibly. And the big picture is, you know, and I would say in two years from now, we're going to be... Hockey game. Yeah, yeah, sure. But even before we get our first hockey game there, John, in that sense, we got... We got lots of significant upside between all these projects. As we say, there's ability to grow this into being a tier one asset in the gold space, and as defined by some of our senior peers, they'll say half a million ounce a year for 10 plus years at the lower half of the cost curve, and that's part of our goal. We're not going to get there next year, but And it takes 10 years to get there either.

Again, if you'd like to ask a question, please press star one of your telephone keypad. Your next question comes from the line of Phil Kerr from Ventum Financial. Your line is open.

Thanks, operator. Everyone at Discovery, congrats on the transformational quarter. Most of my questions have been touched on or taken care of by the presentation, but just a few simple ones here. Just in terms of G&A, the reported number there was relatively quite high compared to your peers, and I'm just curious. I would assume there were some one-time items in there, and I'm wondering what this number may level off at for the rest of the year moving forward.

So, you're right. There were a lot of one-time G&A costs that were sitting. in the quarter, and that is largely due to the acquisition and the costs associated with that. I think that, you know, we will not run at that same rate going forward. We don't have an exact number yet for you, but by and large, the quarterly G&A that was attributable to the acquisition was close to $20 million, so there is certainly a lot of it that's sitting in there that will or wealth repeat itself going forward.

Okay. And just in terms of exploration dollars, I think the breakdown of meters allocated about 25,000 meters to regional targets. Would those targets be and those costs be expensed?

Yeah, they would be for the most part. Yeah, pretty much all.

And what sort of drilling cost per meter are you seeing?

Well, drilling cost per meter right now is still kind of... It's kind of hard for me to say what we're going to get going forward. I mean, they vary a lot from project to project. Patmore is probably doing very well, but it's a pretty high rate of seed. And Coal Pond, for example, we've been underground with only one drill for a while. So, you know... you're going to have fairly high costs per meter there.

Okay.

And then... It varies a lot right now, but we'll be able to give you a better answer on that. I mean, they can vary between probably $150 and $300 a meter, I guess.

Yeah. Okay. And then just in terms of the Franco-Nevada royalty, I did see a line broken out in the production costs But as we added it up into the income statement, I sort of lost where that, I think it was about $6.5 million, where that was being reported or where it was lost in translation from operations to the financial statements.

Yes, so that is a complex accounting arrangement that we have entered into in relation to the Franklin, Nevada royalty. And that's largely due to a number of terms that are present in the contract. There's two different tranches that are included in that royalty. And so it qualifies for embedded derivative treatment underneath our accounting rules. So effectively, the royalty gets recorded as deferred revenue, and then it amortizes over the life of mine. The deferred revenue ends up being reduced by the ounces produced, and then there's a royalty and an interest expense reported. So, Phil, we're happy to walk you through anything in terms of model offline, but hopefully that high level just kind of helps you understand the general mechanics of how we're accounting for that royalty.

Complex accounting said it all.

Thank you. I could have stopped earlier.

Thank you. Yeah. Thanks for the question, Phil.

And there are no further questions at this time. I will now turn the call back over to the presenters for some final closing remarks.

Yeah, I just want to thank everyone for taking the time to participate in the call. To repeat something Tony said, there's a lot of work going on and there's a lot of work to do, and that's a function of there being a lot of opportunity here. And having calls like this give us an opportunity to talk about the progress we're achieving. and sort of what we see going forward. And so we'll look forward to keeping you updated, and that includes our next quarterly call in November. Thanks very much again.

This concludes today's conference call. You may now disconnect.