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