Discovery Silver Corp.

Good morning. My name is Alexandra and I will be your conference operator today. At this time, I would like to welcome everyone to the Discovery Mining second quarter 2026 conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by the number one again. Thank you. I will now turn the call over to Mark Utting, Senior Vice President of Investor Relations for Discovery. Mr. Utting, you may now begin your conference.

Thank you, operator. Good morning, everybody. Thank you very much for joining us on Discovery's second quarter of 2026 conference call and webcast. As you just heard, I'm Mark Gutting, Senior Vice President, Investor Relations. Joining me today are many members of Discovery's senior executive team. Speaking today will be Tony Makuch, our President, CEO, and Chairman, Alison White, our Chief Financial Officer, Duncan King, our Senior Vice President, Canadian Operations. Gord Leavoy, our Senior Vice President, Mineral Processing. Harold Bird, our Vice President, Mineral Processing. Eric Kallio, our Senior Vice President of Exploration. Jose Jabalera, our Senior Vice President in Mexico. We'll then turn it back over to Tony for concluding remarks. Just before we get started, As always I'll remind you that during today's call we will be making forward-looking statements. These statements are based on current expectations and projections about future events. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those forward-looking statements and for more information Please refer to slide two on our slide deck as well as other disclosures on our website. In addition, we will also be making reference to non-GAAP measures during the presentation. These measures do not have any standardized meaning prescribed under GAAP and therefore may not be comparable to other issuers. Slide three in the deck deals with cautionary language around non-GAAP measures. Lastly, for me, all dollar amounts today will be expressed in U.S. dollars unless otherwise indicated. With that, I'll now turn the call over to Tony Makuch.

Thanks, Mark, and good morning, everyone. It's really good to be able to be here. Actually, you know, I think maybe before we started, we had a really, I think, you know, we had some pretty good results in the quarter. Things went well, or progressed well. I know that you know like there's a lot of stuff hiding in the background that maybe people all don't see and don't talk about a lot of people did a lot of a lot of good work a lot of people that did a lot of good work some of the results aren't really shown in this quarter they'll be you'll be seeing them in future quarters but you know you know what we talk about and all the all the benefits that we that we see in all the results you see. It's really, you know, we get the chance to talk about it and tell you about it, but there's a lot of really good people working in the company throughout the operations, and they're the ones who did all the good work. So, you know, before we start, we thank them for the results, and we recognize really what everybody's doing. So stay tuned. We're going to talk about good things that happened here, but stay tuned. There's still a lot more. I'm sorry. Anyway, I'll start with slide four. This is a slide that we use a lot in the past to try to, you know, show things in terms of where we are in value creation. It talks about our growth to over half a million ounces of gold in production over the next three to five years. It looks at our potential for Cordero and what we think we can bring Cordero, you know, 14 million ounce silver production rate, but, you know, on an equivalent silver equivalent basis, depending on silver prices, there's significant zinc and lead production there. and definitely a world-class silver project in Mexico. We're just waiting for a permanent. And then looking at a gold business and what we're doing, we now believe that has a potential to be significantly greater than what we show here. And that's a forward-looking statement that Mark talked about earlier. And during this presentation, we will show you why we are confident that this can be achieved. When you slide five, you know, second quarter was favorable and we did have a lot of good works. And, you know, definitely we've done a lot of progress in advancing our growth plans. And, you know, maybe there were three key developments during the quarter that maybe we could highlight. First, we completed the acquisition of the kit operations. Second, we continued to achieve outstanding exploration results. And, you know, and on the exploration results, like, you know we we we originally were putting all in one press release now we put our three press releases in the last three weeks you know instead of lumping them in one there's so much in good information all we realize we we probably have to start presenting them each individually and you can see there's actually results at all of our exploration targets and and we expect that to continue you know we really think that this is as much of a as much as this is a production and business story and and a going concern operation that's that's financially viable and as much as this is a growth story, this could be an exploration story as well on steroids. And, you know, so we had a lot of good exploration results and we did ramp up our investments in the quarter and then we've had certainly, you know, we're focusing on trying to improve our operations. But, you know, going to slide six, this looks at the kid acquisition, you know, I think in our last call we did talk a lot about it. about it but you know if summing it up you know the growth we talked about this is the really a big enabler besides the exploration besides the uh you know had the people and what we're doing it doing in in in the park find camp but besides all the the the geology etc that we see here and the infrastructure in place you know the you know and the acquisition of the kid operations really helps us to achieve the growth that we're targeting over the time frame that we plan to achieve it. And a big part of it is the kid metallurgical site and what we can do there. And we'll probably be talking more and more in the future as the year progresses in terms of the benefits of that. We're not going to get into too much of the details of that, but that was a significant acquisition that really enables us to move forward. You know, you know, maybe, you know, you know, when we talk about it, there's a current processing capacity there. But for us to grow operation optimized oil plantings in the Panama without this infrastructure and the geography, the land position, the power, the water, the companies get operations, maybe I can talk too long about that, maybe I shouldn't. and you know this is a very important acquisition for Discovery. Slide 7 shows what we know from the last quarterly call and sort of gives a sort of concept that lays out our planned construction of the new conventional gold circuit incorporated into space that was the A Division. You can see that some of the conceptual diagrams of where the infrastructure will go. We are currently reviewing what this circuit will look like and our advancing engineering design work And I can tell you that we have moving parts, exploration success and sort of our productivity rates that we might design for are still lots of being added to the story. So we got a lot of blank pages. We might have a lot of headings on chapters written in the book, but all the content is being rewritten as we speak. in terms of what we're doing there. The B circuit, you know, that's that kid. There is four circuits, as we've talked about before. The B circuit will continue to be used as a base metal circuit, and we're now processing the kid material, at least for 2026 and all of 2027. For the C circuit, you know, we are doing test work now, and we expect that this circuit will be used to process boron ore starting Some time next year, and we see this. This could add something up to 40,000 ounces in annual production just in our current form. and, you know, and where did we get that from? Well, it will add 2,000 tons a day of added availability at Dome. We can see improved metallurgical recoveries at all at the ORIS process at the Dome mill currently, plus we think we're going to get that improvement in recoveries from Borden, right? It also gives us the ability to process higher levels of Borden ore at Kidd. So maybe it gives us the ability to increase productivity from Borden because we were limited on Borden ore could be intermingled into the gold circuit at Dome. And, you know, with the KIDMET site, we also investigated future plans for the D-Circuit. Our goal would be to have the TVZ and or other materials processed here. And, you know, so we still have a lot, lot, lot to work there. I've been reading and reading an enabler in a lot of ways. Slide 8 looks at the expiration. And I mentioned we had three press releases over the last three weeks, all with excellent results. Eric's going to talk about this later. So, you know, I'll just focus on a couple of things and maybe highlights. You know, we're excited about Padmore based on recent drilling and, you know, tied into past drilling where we've established that the minimalized system over, if we've identified over a strike length of more than four kilometers, the system remains open in all directions and at depth. And, you know, we've talked previously about the depth potential in this region of the camp. in terms of depth of oil pond where it's down to 2,000 meters, I should say, and the depth that was at the Hallmore project, which is on strike on the same system. It's not a mine that we have, but it was mined down to 5,000 feet. So there's a significant upside here. We're currently working on a mine redesign for the PAMR pit and we expect PAMR to become a much larger producer. And with that, as I talked about earlier in terms of the processing capacity of what we might build at KID, at KID circuit to support a much larger open pit operation here. And the other point that I'll make is that Dolman is the second large open pit operation we expect to be able to bring online. It has transformation growth potential and by what we do at KID with the KID-A circuit and being able to move Pamela there. This enables the dome mill in its current form to be used to process and to start the dome open pit. This is, again, this is all future-looking stuff. We do also have longer-term, the Hollander-Magnon Tire is a potential third-scale open pit, but Again, you know, that's maybe we just start with the PAMOR and then see how PAMOR goes to Dome. But, you know, we truly believe that they may come when Discovery operates three of Canada's largest open-bit gold mines, all located in the Timmins Camp. Going to slide nine, it looks at our Q2 capital expenditures. As expected, our capex went up in Q2, totaling $86 million. That reflects our progress on, you know, a number of fronts. We're tailings, so advancing our tailings project at Dome to build up our tailings capacity. We continue to do pre-stripping at Panmore. Our goal is to bring Panmore to commercial production, and we're investing in new fleets of equipment and infrastructure that will follow up on important. And we expect to see further progress and further investments in CapEx over the year, et cetera. And that's been our goal to invest that back into these operations to build to not only Bill Production, but also to improve the operating performance. So not just growing production, but improving performance and reducing costs. Unit costs, maybe I should highlight that better. In terms of slide 10, it highlights our Q2 operating performance. Again, on the other side, I'll leave the financial results for Alison to review, but I'll say that Virtually every financial metric improved substantially from last year's second quarter. We achieved record revenue in Q2 2026. Adjusted earnings increased significantly compared to both prior periods. And speaking of record results, we achieved record gold production in Q2. Production increased over 10% from the previous quarter. Duncan and Gord will get into the details, but the increase was largely due to higher throughput. And a key highlight for the quarter was that both mining and milling rates showed strong growth at every operation. Finally, for me, in this part, before I pass it on to Alison, slide 11 shows our 2026 guidance. And, you know, I'm going to tell you that we are tracking well to achieve all of our guides for the year. And with that, I'll turn the call over to Alison.

Thanks, Tony, and good morning, everyone. Overall, it was another solid quarter, reflecting the continued momentum that we built in Q1 and certainly that we've continued to build over the past year of operations. We had robust revenues during Q2 of $319 million, an increase of 12% quarter over quarter, primarily reflecting higher ounces sold and the impact of the KID operations from the closing on June 1st, which did contribute $30 million to revenues during Q2. Revenue has increased steadily since the same quarter of the prior year, our fourth consecutive quarter of growth, driven by the operational team efforts to lift production and buy higher gold prices over the same period of time. We've moved more tons during the quarter compared to the prior quarter at a lower cost per ton, coupled with higher number of ounces sold during the period and partially offset by a planned reduction in grade. As a result, cash costs per ounce were $1,387 per ounce sold. As we've said before, we expect unit costs to be the highest in the first half of the year and improve during the second half of 2026 as production and sales volumes build. All-in sustaining costs averaged $2,154 per ounce sold, reflecting expected higher sustaining capital expenditures partially offset by the lower cash costs. The ramp-up of sustaining capital reflected capital development and infrastructure improvement at Hoyle Pond in Borden, additional deliveries of new mobile equipment, and construction work at the tailings TMA-6 project. EBITDA of $170 million was similar to the prior quarter as the contribution from the KID operations offset the decrease in the average realized gold price. That said, and similar to my comments on revenue, we've carried strong EBITDA momentum from last year. Free cash outflow of $11 million reflected the ramp up of our capital expenditures program and the impact of $56 million in working capital changes, reflecting accelerated payments of accounts payable prior to a new system implementation that occurred at the end of the quarter. Funding of the kid operations that were offset by the first month's impact where no cash was received for kid revenues in June due to the timing of the receipts in the month following for sales according to the new offtake agreement. Discovery deployed $86 million in capital expenditures to further advance the asset base at Porcupine consistent with our capital allocation plan and toward our vision of reinvesting in the business to build value over the long term. Operating in free cash flow reflect the reinvestment in the business through the company's capital expenditure programs and the impact of working capital described earlier. Let's move on to the next slide to review net income and adjusted net income. On an adjusted basis, earnings were $92.3 million or 11 cents per share compared to $82.7 million or 10 cents per share in the prior quarter and 28.4 million or 4 cents per share during Q2 2025. The primary differences between net income and adjusted net income during Q2 2026 included the exclusion of a one-time deferred tax expense resulting from a change in the discount rate methodology from the acquisition date fair value for the kid acquisition subsequent to remeasurement, which had a two cent impact. TSA and other one-time costs had a one cent impact The purchase price allocation adjustments related to the KID acquisition for the fair value also had a one cent impact and finally another cent for payments to First Nations in relation to the closing of the KID acquisition and reclamation expenses for non-operating sites. To summarize, adjusted earnings were up quarter over quarter and nearly three times from only one year ago when the company initiated operation through the acquisition of Porcupine. Let's turn to the next slide to review our capital priorities. First, we are actively investing to drive future growth. Our capital spend program is robust during the current year with $195 to $235 million planned for growth capital at Porcupine, including an additional $25 to $35 million for capitalized exploration and $120 to $165 million planned for sustaining capital. The capital spend program includes replacing equipment, expanding mill capacity, and working to enhance future production levels through exploration and conversion drilling across the business that continues at a rapid pace. Second, we are strengthening our balance sheet. Despite the period of reinvestment that I just spoke about, we had over $600 million in liquidity at the end of the quarter with $364 million in cash and since the close of the quarter during July have upsized the company's revolving credit facility to $400 million bringing total current liquidity to over $750 million. As we look to continue to expand and grow, our financial strength will be fundamental to our success. We continue to build on the momentum that began last year across all of our key financial metrics. Revenue and EBITDA have remained robust each of the last four quarters and equally through strong earnings generation. Let's take a look at our liquidity position on the next slide. Discovery's cash balance totaled $364 million at the end of the quarter. The gold price environment translated into $130 million of operating cash flow, partially offset by the working capital adjustments and continued capital investments that were covered earlier. This leaves us with a strong balance sheet and the financial flexibility to fund our capital programs and advance our strategic priorities that underpin our vision with confidence. And I'm now going to pass it over to Duncan King, our Senior Vice President of Canadian Operations.

Thank you. I'll discuss our production numbers and then ask Gord Leavoy to review our processing performance. During Q2, we achieved record production of 67,300 ounces, 12% higher than in Q1. Gold ford and gold sold were both 66,000 ounces. The increase in production was due primarily to higher tons processed, which more than offset the impact of an anticipated reduction in the average grade. The lower grade was largely a result of fixed Mix of mill feed. We had a higher proportion of feed from the open pit sources and stockpiles. As Tony mentioned, a highlight of the quarter was our mining rate, which increased at every operation. We mined 1.1 million tons during the quarter and ended the quarter with 14 million tons in stockpile. Site level operating cash costs averaged $1,878 per ounce, a 2% improvement from Q1. Site level operating AISC has increased to 2,028 per ounce, with the increase entirely due to the pickup in the sustaining capital. You may recall we were below plan for sustaining capital in Q1, mainly due to the timing for the delivery of our mobile equipment. We made up for a lot of that in Q2. I'll now call on Gord Leavoy to talk about the milling.

Good morning. We milled 904,000 tons in Q2 2026. That was up almost 30% from the previous quarter. Some of the issues we had in Q1 in the crushing circuit did impact to some extent in early Q2, but overall the mill performed much better for the quarter. We exceeded 11,000 tons per day on 49 days in Q2, and we exceeded 12,000 tons a day on 11 days. Supported by the higher throughput, our milling costs for the quarter were $21.50 14% better than in Q1 and just slightly higher than our best quarterly average to date of 21.20 per ton in last year's third quarter. I'll now turn over the call to Harold Bird, Vice President of Mineral Processing, to discuss the kit operations.

Thanks, Gord. Good morning. Overall, kit operations had good performance in the first month since its acquisition. Excuse me. contributing a positive revenue of $30 million versus production cost of $19 million. Kids growth capital primarily related to tailings, buttressing, and mill modifications to support the processing of board and ore, which is targeting to begin in the first half of 2027. Further study work has commenced to expand to the kid mill process to process Panama in future years. KIT Operations continues to be a safe, reliable operating mine that currently has a total recordable injury frequency rate of zero. And now I'd like to turn the call over to Eric Kallio, our Senior Vice President of Exploration.

Okay, thank you, Harold, and good morning, everyone. I'm Hutt, slide 18, and Hoppy says it's been another good quarter for Exploration, with excellent success at operating mines and new growth projects. So with this in mind, let's look at, I'll start here with Pam Moore, where we've drilled another 47 holes. We continue to obtain some very exciting new results. Shown in the image, the main focus here has remained on three main targets, including the main pits, Primoral West and the North Contact Zone. Additionally, we added a new target into the mix. It's called Keora Tread, which is located west of the main pit. Results for each of the areas shown in the current image indicated extremely positive Some of the best results seem to come from the main pit, including highlights of 3.05 over 30 meters and 2.08 over 24 meters. Additionally, we continue to see strong results from the M.O.S., including our contact areas, including several holes, multiple zones, and excellent grades and widths. And then finally, we have the QR Trend, where we're very happy to report a high-grade result of 17.36 grams per ton, over 5.9 meters in the very first hole drilled, 200 meters west of the current resource. And now turning to my next slide, number 19, you see the first two images providing different angles for the areas drilled, with this first one looking to the north and focused on the south side of what's called the Pan-Moor trend. Key things to note here are the main pith and Pan-Moor west areas, which are on the central and left sides of the slide, as well as the overall size of the target area, which we're looking at here which at this point measures a little over four kilometers long and at least 400 meters deep. Also notable is the very shallow depth of drilling to date to both areas and the large areas still remaining to be tested below and between. Then turning to the next slide which is number 20, you see a view looking to the southwest providing a better view for the north side of the trade. Key things to note here would be the current resource set which sits in the background as well as all the intersections in the north contact and QR areas which sit directly to the north. Also provided here is another good angle of the Tambor west area. So given all the above, we're very pleased with progress today at Tambor. The drilling is continuing here with four drills. Additionally, work has now begun on a new resource update and on track for this year to what we believe will be a very positive result. So then going on next to slide number 21, we see the dome, which we've which was another project which we believe has a lot of potential. As previously described, Dome is a historic mining property which already has over 17 million ounces mined and where we have a resource of over 11 million ounces. But also now working to upgrade and extend for an updated estimate this year. As indicated on the image, all the new drilling is in the area surrounding the current resource which focus on areas to the southwest, north and northeast portions of the property. The results continue to look very encouraging. drilling in the southwest portion of the property through its nine holes to evaluate mineralization near the south limits and continue to indicate excellent grades and widths at very shallow depths. This needed to have eight more holes in the north part of the property and under the north wall of the pit, which were also very successful with multiple excellent intercepts, with moving in a pile height of 9.09 over 17.3 meters. And then finally, we had one new hole to the northeast intersecting the port stain near the east limit and containing a very high grade assay of 278.4 grams over 1.1 meters. So then turning to my next slide, 22, you see another image-related dome, which provides two different viewing angles across the target area and a little more detail on the new results, with the one on the top covering the south part of the pit, looking northwards, and the other covering areas to the north and looking west. The key things to note here would be the red and blue outlines represent current pit shells and underground workings, as well as the shallow depth and epsilon grades and widths in both areas to remain open for future testing and expansion. So with this, I'll conclude by saying it's similar to Pam Moore drilling. Here, it's looking very good, standing with two drills, two to three drills. Work has also now begun on a new resource update and on track for year end.

So then turning on to my next slide,

73, we see the TVZ where we also have very good progress. As described in the past, TVZ is a significant zone of mineralization in the southeast part of the Paul Kahn that was partially drilled and defined by past operators, which remain in cells related to support and made an estimate for later this year. Shown on the screen, there are two different angles on the deposit, with both being long sections and providing different levels of detail. Turning to the one on the left, We see more of an overall view of the size and shape of the zone as indicated looking at a large northeast trending structure just south of the line between 850 and 1700 levels and where mineralization is contained mostly in a series of lenses that are highlighted here in the brighter colors. Also important to note here on this slide is the close proximity of the zone to the current line workings and location of various drill platforms including 1210 and 1680 levels which we have been using for most of the drilling to date. Referring now more to the right-hand side, we see details for the new drilling, which as indicated are all located, has been focused really on the 12, 10, and 16 data levels and looking very positive.

And just to give you a few examples, what we're seeing basically looking at values of 5.13 over 18.2, 7 over 16.9, 5.7, 5.17 over 21.

Important to note, that all of these intersections are similar to or better than previously drilled holes in these areas. Aside from the above, I'd also like to point out that as part of the latest program work is also initiated to collect samples from the electrical testing from holes near the 1210 with a total of four samples now collected and shipped out with results expected later this year. In the above, we're very happy with the progress so far. The program is continuing with three drills on 1210 and 1680 levels. Turning now to the next slide, which is 24, you see Owl Creek, where we completed another 10 holes and continue to confirm and expand mineralization near the Owl Creek pit. Just for context, the Owl Creek pit is located one and a half kilometers west of Falcon Line on the south side of the Falcon Belt, which is the same contact that holds the mine. That's the pit, as well as two underground ramps, which you see here on the image, where they both developed by Falcon Bridge Gold in the 1980s. Shown on screen are two images with the one on the left being a plan of the drill area and the one on the right being a long section providing more details. For the left, you see the new drilling targeted two main areas on the east and west sides of the pit and continues to obtain very positive results. With some of the key volumes on the east side being 7 grams, 7.09 over 17, and 6.35 over 9.4. Highlights to the west, 4.72 over 24. and 19.35 and 5.4. So turning now to the right side, we see a few looking northwards across the zone and give it again another angle on the results, and showing the overall pattern of holes going to depth from west to east. Important to note here is the holes on the left are the ones drilled directly below the pit, and the ones on the right are what we call into the wide-highway zone. Also important to note here is We think there's very good continuity between the areas and limited drilling, which exists below the 650-meter level and in areas going to the east. In terms of current activities, drilling is continuing here with two drills on site focused on further confirmation expansion. Additionally, in light of the good success, work has now been initiated on a new exploration ramp from Hohon Mine, which will allow more detailed drilling both here and in the areas between. Although not shown in the image, we expected the ramp will enter the zone from the east side near the 300-meter level and allow quick access to the zone. The expected completion date is in Q3, 2027. And then turning to slide 25, we see an overall view of the Borden Mines where we have also been very bitten. As described in the past, Borden is located west of Timmins and tensioned on a major east-west trending shear zone called the Nain Zone, which has now been traced and partly mined for distance of over over two kilometers. In terms of recent exploration, pretty much all work is focused on the far east side and on extending the main and east lower zones from platforms underground near the 585 level as well as from surface northeast of the mine of the main zone. In terms of results, they've all been very positive with excellent gradable widths both within and outside the current resource shapes in both zones targeted with some of the key highlights from underground reaching levels such as 9.16 over 29.0 meters. And the highlight of the program, I think, a new intersection on surface of 6.34 over 8.7, 500 meters down plunge from the inferred resource. So then moving on to slide 26, I have one more image related to this area, which is a 3D look in the northwards across the area drilled. It's showing more detail on all the new holes. A few things to note here might be, that all the Devoles would drill from the 585 level, which is the green line at the top of the drawing, and targeting at and beyond the current limit of the inferred resource, which is shown here in light blue. I'd also point out locations of the new surface hole beyond 26-0-1119, which is in the far left side and located 500 meters from the current resource. So with this being my last slide, I'd just like to say in summary, things still continue to go well and a lot more to come. So with that, I'll pass over to Jose Jabalera, VP Corporate Affairs and Sustainability at Nexco. Thanks, Eric.

In Cordero on July 24, we received an official visit from senior level seminar officials with very good outcome from the project and from the visit. So we right now are in the final stage of the environmental permitting process. At the same time, we are continuing with the studies to update capital and cost estimates, as well as more detailed studies regarding water and power for the project. So I will pass to our CEO, Tony Makuch.

Thanks, everybody. And hopefully the last slide. It will be the last slide, slide 28. and you know I think you get a sense there's a lot a lot a lot of things going on whether it's operated farm separation development a lot of a lot of exciting projects here and this slide and and really just a slide that maybe we put together when when we first started with the acquisition of Fox Farm with Discovery we we tried to show out how gold production could grow growed well over half a million ounces a year and by the way it doesn't include Cordera in here which which is even open above that but You can see from our quarter two results that the bills will achieve an expiration of the acquisition of KID, our continued investment in operations. It's, you know, we can see how we're demonstrating what's going on here, that we're taking the vision from concept to reality in terms of what we can build and put to find and build and discovery as a whole. Looking at the slide, you know, PAMER is now, as we talked about, now expected to become a much larger mine than the 150,000 ounce a year producer outlined in last year's technical report that showed 150,000 ounces a year up to 2047, I think, in the report. As I mentioned, we're taking, we're working on a mine redesign for PAMER and a new large-scale processing plant dedicated to support this. This then unlocks the dome mill for the dome mine, which at current levels or greater could produce over 200,000 ounces a year. will give you a better sense of what that looks like later this year when we update the resource. We also have growth potential at Borden as outlined by, you know, by Eric in terms of what he sees, plus the processing as we build processing capacity for Borden. And then, you know, I'm looking at the investments we're planning. And then there's TBZ in Elk Creek at Royal Pond. We have a, you know, we're planning an initial B42-101 resource for TBZ later this year, and we'll continue working towards a resource at Elk Creek. There's still a lot of work to be, still to be done. Probably some of the exploration targets I know there is that we haven't even talked about here. There's much more to our story lying ahead of us and a lot of exciting things to do. I think one of the things though that's also important and maybe we should acknowledge, you know, and Harold talked about the safe performance at KID and, you know, that TMIFR of zero and I know there's been a significant improvement in our TMIFR and all the pork plant operations that are down to one. You know, so effectively, you know, we're running mines here, underground mines and open pit mines and processing plants in the team's camp that's safer to work there than to be working at Walmart or working at Canadian Tire. So, you know, we're really proud of that and we want to maintain that as we go forward. Anyway, with that, I want to thank everyone for being on the call and I'd be happy to take any questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Larry Liu with CIBC. Your line is now open. Please go ahead.

Hi, Tony, Alison, Mark, and team. Thanks for taking my question. I guess I'll kick off the first question with free cash flow. So free cash flow turned negative this quarter, but for very good reasons, right? For timing cash flow from KID and other items, I guess my first question is, Can you remind us what are some of the upside for the new enterprise resource planning system that was implemented and how that would help with further operation optimization from here?

Yeah, Larry. So, I'll be happy to take that question and talk about the benefits for us in implementing the new system. So, you may recall that When the company acquired the Porcupine Operations, there was an agreement to utilize some of the ERP system with Newmont, and so the company then simultaneously set up its own instance of SAP, and that SAP instance will allow us to have a lot more flexibility as well as a lot more visibility into the cost structure for all of our operations on a go-forward basis. It's also going to obviously be in our full control since it's a discovery implemented instance that has been set up in the full with the full complement of everything that we typically look at and that we typically like to track. So we are anticipating that we will see some additional value going forward. We also will be able to have a little bit more granularity into the business that the whole management team is used to seeing and we'll be able to provide some additional clarity on all the growth that's coming in the future.

Yeah, I mean, in summary there, effectively, we've been operating under the Code of Accounts and Accounting Practices that were limited to what our SEP was set up under Newmont. We can now implement it more in our way, as Alison mentioned. We have a different view on our management accounting and how we can account for things. So we see that as a big value driver in terms of maybe, let's just say, we can turn the finance team and accounting team into profit centers for the company.

Yeah, no, for sure. Good to hear that things are doing the discovery way, doing the best way possible. And I guess kind of on that note as well, Tony and Alison, Can you remind us what's kind of your view for Kitt Creek, both near term and longer term? I know this quarter, because of time of year cash flow, the operation kind of had a little bit negative free cash flow. But for the rest of the year, should we still expect a positive free cash flow? And how does it help the operation or hitting that 500,000 ounce in the near to medium term?

So, Larry, this is sort of the first and only month that we'll see this cash flow differential that we did see because of the timing of the offtake agreements and the way that the sales agreements were structured. The cash is remitted back to the organization in the following month after the sale. And so because the transaction occurred as of June 1st, there will this We do see that gap in terms of sale versus cash remittance, but on a go-forward basis, there will always be a one-month lag, but it will be a constant one-month lag, and we will have that catch-up in terms of cash and sales on a go-forward basis. So we'll still be a month behind in cash collection, but that will be something that you'll see roll into the overall financials on a go-forward basis.

Yeah, effectively, as Harold mentioned, we had almost $30 million in revenue with $19 million in costs. So, yeah, the cash is going to come in a month later based on the off-date agreements and how concentrates get moved, but the reading was positive.

Amazing. Sounds good. Thanks again, Tony and Alison, for taking my question, and congrats on a strong quarter.

A reminder, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. There are no further questions at this time. I will now turn the call back to Mr. Utting for closing remarks.

Well, listen, thanks everyone for participating in today's call. You've heard we've got two key parts when we talk to the market that we address, and one is the significant improvement you're seeing in performance as we go quarter to quarter, and in this case, particularly compared to last year's second quarter. But we also have a lot to talk about in terms of our growth story, which we think is clearly one of the best in the gold industry today. and on that second quarter was a tremendous quarter for us and we expect to continue to have a lot of progress and look forward to our next call when we can tell you about how much further we've come. Thanks very much.

This concludes today's call. Thank you for attending. You may now disconnect.