Santacruz Silver (NASDAQ: SCZM) 2025 revenue reaches $326.4M
Rhea-AI Filing Summary
Santacruz Silver Mining Ltd. reported audited consolidated results for the year ended December 31, 2025. Revenue rose to $326,382 thousand from $282,987 thousand in 2024, while net income was $42,222 thousand compared with $164,484 thousand a year earlier, when results were boosted by a large gain on adjustment to consideration payable and significant foreign exchange gains.
Total assets reached $445,771 thousand and shareholders’ equity increased to $179,058 thousand, reflecting earnings and share-based activity. The company recorded a $4,088-thousand reversal of impairment on the Bolivar mine and generated operating cash flows of $79,110 thousand, ending the year with cash and cash equivalents of $44,267 thousand. Independent auditors issued unmodified opinions on the 2025 and 2024 financial statements, highlighting key audit matters around impairment of mineral properties and the Illapa joint operation with COMIBOL.
Positive
- None.
Negative
- None.
Insights
Revenue grew and balance sheet strengthened, but 2025 profit normalized after prior one‑off gains.
Santacruz Silver increased 2025 revenue to $326,382 thousand, supported by its Bolivian and Mexican mines, while gross profit nearly doubled to $109,400 thousand from $57,226 thousand. This reflects stronger operating performance despite higher inventories and ongoing mine costs.
Net income fell to $42,222 thousand from $164,484 thousand mainly because 2024 included a large $133,255-thousand gain on adjustment to consideration payable and sizeable foreign exchange gains. Underlying operations still funded $79,110-thousand operating cash flow, enabling continued investment and loan repayments.
Auditors emphasized two technical areas: impairment and reversal assessments for $160,558-thousand mineral properties, including a $4,088-thousand reversal at Bolivar, and complex joint arrangement accounting for the Illapa operation with COMIBOL. Future filings may show how commodity prices, reserve changes and Illapa cash flows influence these sensitive estimates.
Key Figures
Key Terms
cash generating unit financial
joint operation financial
decommissioning and restoration provision financial
marketable securities financial
provisionally priced sales financial
fair value through profit or loss financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
UNDER the Securities Exchange Act of 1934
For the month of April 2026
Commission File No.: 001-43051
Santacruz Silver Mining Ltd.
(Translation of registrant’s name into English)
480 – 1140 West Pender Street
Vancouver, British Columbia
Canada V6E 4G1
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ☐ Form 40-F ☒
EXHIBIT INDEX
| Exhibit | Description | |
| 99.1 | Financial Statements For the years ended December 31, 2025 and 2024. | |
| 99.2 | Form 52-109F1 Certification of Annual Filings Full Certificate - Chief Executive Officer | |
| 99.3 | Form 52-109F1 Certification of Annual Filings Full Certificate- Chief Financial Officer | |
| 99.4 | Management’s Discussion and Analysis for the years ended December 31, 2025 and December 31, 2024. | |
| 99.5 | Ontario Form 13-502F1 - Reporting Issuer Participation Fee Form | |
| 99.6 | Notice Pursuant to Section 11.2 Of National Instrument 51-102 -Continuous Disclosure Obligations dated March 31, 2026 | |
| 99.7 | News Release dated March 31, 2026 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Santacruz Silver Mining Ltd. | ||
| Date: April 2, 2026 | By: | /s/ Andres Bedregal |
| Name: | Andres Bedregal | |
| Title: | Chief Financial Officer | |
Exhibit 99.1
Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars)
TABLE OF CONTENTS
| Independent Auditor’s Reports | 2 |
| Consolidated Statements of Financial Position | 10 |
| Consolidated Statements of Comprehensive Income | 11 |
| Consolidated Statements of Cash Flows | 12 |
| Consolidated Statements of Changes in Shareholders’ Equity (Deficiency) | 13 |
| Notes to the Consolidated Financial Statements | 14 |
| 1 |
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of
Santacruz Silver Mining Ltd.
Opinion
We have audited the accompanying consolidated financial statements of Santacruz Silver Mining Ltd. (the “Company”), which comprise the consolidated statement of financial position as at December 31, 2025, and the consolidated statements of comprehensive income, changes in shareholders’ equity (deficiency), and cash flows for the year then ended and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2025, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated in our auditor’s report.
Assessment of Impairment and Reversal of Impairment of Mineral properties, plant and equipment assets (“MPPE Assets”)
As described in Note 7 to the consolidated financial statements, the carrying amount of the Company’s MPPE Assets was $160,558,000 as of December 31, 2025. As more fully described in Notes 3 and 4 to the consolidated financial statements, management assesses MPPE Assets for indicators of impairment or reversal of impairment at each reporting period. The Company determined there was a reversal of impairment required on the Bolivar mine, included in the Company’s MPPE Assets, as the indication of a previously recognized impairment loss for these mines no longer existed and the assessed impairment amount has decreased.
| 2 |
The test for impairment on the Company’s MPPE Assets, and reversal of impairment of the Bolivar mine, necessitates the determination of the recoverable amount of the combined components of the cash generating unit (“CGU”) to which the MPPE Assets belong. The recoverable amount is the higher of value in use and fair value less costs to sell and requires management judgment and estimation on key external and internal sources of information, such as: changes in the market, economic and legal environment, discounted future after-tax cashflows, costs to sell the MPPE Assets, changes in mineral reserves and resources, and the appropriate discount rate for net present value calculations. For the Bolivar mine, the recoverable amount as at December 31, 2025 exceeded the carrying value, and as a result, a reversal of impairment of $4,088,000 was recorded for the year then ended. For the Company’s other MPPE Assets, there was no impairment identified.
The principal considerations for our determination that the assessment of the impairment, and reversal of impairment, of the MPPE Assets is a key audit matter are that potential variances between management’s assumptions and estimations, and the market conditions, could have a material effect in the future on the Company’s financial position and results of operations. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of impairment on MPPE Assets, and the reversal of impairment for the Bolivar mine. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures include, among others:
| ● | Evaluating the appropriateness of the discounted cash flow model (“DCF”) on the CGUs related to the MPPE Assets, including engaging our internal valuation expert to assess appropriateness of the model. | |
| ● | Testing the completeness and accuracy of underlying data and significant assumptions of the DCF, including assessment of discount rate, evaluating the consistency with external market and industry data for future commodity prices and foreign exchange rates, recent actual mine production results, operating costs and capital expenditures, and volume throughput of resource and reserve estimates. | |
| ● | Evaluating the resource and reserves estimation, including obtaining an understanding of the qualification of management’s specialists, and engaging an expert to assess whether the Company’s estimate was prepared in accordance with appropriate standards. | |
| ● | Assessing management’s determination of no impairment on its MPPE Assets, including the review of key management judgments in addressing potential indications of impairment. | |
| ● | Assessing management’s determination of the CGU carrying amount, ensuring completeness of the net assets incorporated therein. |
Assessment of Joint Arrangement Accounting for the Company’s Illapa joint association agreement with Corporación Minera de Bolivia (“COMIBOL”)
As described in Notes 3 and 4 to the consolidated financial statements, the Company has a 100% ownership of Illapa, however its operations are part of a net operating cash flow interest agreement in which the Company has a 45% interest and the remaining 55% interest is held by COMIBOL. As more fully described in Notes 3 and 4 to the consolidated financial statements, the Company will transfer its 45% ownership of all the fixed assets of the joint operation to COMIBOL at the end of the agreement. The consideration that is due to the Company is based on capital expenditures incurred which represents a residual value of the fixed assets. The Company has recognized CAPEX receivables and remeasures the residual value of Illapa’s assets in accounting for this contract with COMIBOL.
Determining the value of the CAPEX receivable and residual values of Illapa’s assets requires management judgment with respect to timing of payments from COMIBOL and estimate of the fair value of the underlying assets to be transferred to COMIBOL. Since the amount that will ultimately be received by the Company at the end of the agreement will vary depending on the actual capital expenditures made and the actual payable amount according to an appraisal process, each period management will assess its estimation of the amount receivable and residual value of the underlying assets.
| 3 |
The principal considerations for our determination that the assessment of the joint arrangement accounting is a key audit matter are the uncertainties associated with key inputs involved in the estimation models and the potential variances between management’s assessments and interpretations of the joint arrangement contract. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of the COMIBOL contract as well as the estimates made in determining the residual value of Illapa’s assets and CAPEX receivable. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures include, among others:
| ● | Reviewing and evaluating management’s interpretation of the COMIBOL contract in determining ownership of the assets and liabilities subject to the contract. | |
| ● | Testing the completeness and accuracy of key inputs underlying the calculations of the CAPEX receivable and residual value of fixed assets, including assessing the reasonableness of estimated timeline for repayment. |
Other Matter – Restated Comparative Information
We draw attention to Notes 1 to the consolidated financial statements, which explains that certain comparative information for the year ended December 31, 2024 has been restated. Our opinion is not modified in respect of this matter.
The consolidated financial statements for the year ended December 31, 2024, excluding the adjustments that were applied to restate certain comparative information, were audited by another auditor who expressed an unmodified opinion on those consolidated financial statements on May 28, 2025.
As part of our audit of the consolidated financial statements for the year ended December 31, 2025, we also audited the adjustments applied to restate certain comparative information presented. In our opinion, such adjustments are appropriate and have been properly applied.
Other than with respect to the adjustments that were applied to restate certain comparative information, we were not engaged to audit, review, or apply any procedures to the financial statements for the year ended December 31, 2024. Accordingly, we do not express an opinion or any other form of assurance on those consolidated financial statements taken as a whole.
Other Information
Management is responsible for the other information. The other information obtained at the date of this auditor’s report includes Management’s Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
| 4 |
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| ● | Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. | |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. | |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
| ● | Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. | |
| ● | Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. |
| 5 |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Stephen Hawkshaw.
| Vancouver, Canada | Chartered Professional Accountants |
March 31, 2026
| 6 |
 |
Deloitte LLP 410 W. Georgia Street Vancouver BC V6B 0S7 Canada
Tel: 604-669-4466 Fax: 604-685-0395 www.deloitte.ca |
Independent Auditor’s Report
To the Shareholders and the Board of Directors of
Santacruz Silver Mining Ltd.
Opinion
We have audited, excluding the adjustments that were applied to restate certain comparative information for the share consolidation disclosed in Note 1, the consolidated financial statements of Santacruz Silver Mining Ltd. (the “Company”), which comprise the consolidated statement of financial position as at December 31, 2024, and the consolidated statements of income (loss) and comprehensive income (loss), changes in shareholders’ equity (deficiency) and cash flows for the year ended December 31, 2024, and notes to the consolidated financial statements, including material accounting policy information (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements, excluding the adjustments that were applied to restate certain comparative information for the share consolidation disclosed in Note 1, present fairly, in all material respects, the financial position of the Company as at December 31, 2024, and its financial performance and its cash flows for the year ended December 31, 2024 in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IASB”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other Information
Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
| 7 |
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards as issued by the IASB, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| ● | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
| 8 |
| ● | Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
| ● | Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
| ● | Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor’s report is David Macdonald.
/s/ Deloitte LLP
Chartered Professional Accountants
May 28, 2025
Vancouver, Canada
| 9 |
SANTACRUZ SILVER MINING LTD.
Consolidated Statements of Financial Position
As at December 31, 2025 and December 31, 2024
(Expressed in thousands of US dollars)
| Note | December 31, 2025 | December 31, 2024 | |
| $ | $ | ||
| ASSETS | |||
| Current | |||
| Cash and cash equivalents | 5 | 44,267 | 35,721 |
| Marketable securities | 20 | 16,662 | - |
| Trade and other receivables | 6 | 88,399 | 99,854 |
| Inventories | 7 | 57,517 | 32,437 |
| Prepaid expenses and deposits | 14,055 | 5,656 | |
| 220,900 | 173,668 | ||
| Marketable securities | 20 | 5,800 | - |
| Trade and other receivables | 6 | 36,249 | 30,556 |
| Mineral properties, plant and equipment | 8 | 160,558 | 144,733 |
| Goodwill | 8 | 15,466 | 15,466 |
| Deferred income tax asset | 18 | 6,798 | 9,602 |
| Total assets | 445,771 | 374,025 | |
| LIABILITIES | |||
| Current | |||
| Trade payables and accrued liabilities | 9 | 47,402 | 38,781 |
| Consideration payable | 10 | - | 10,000 |
| Loans payable | 11 | 50,642 | 16,432 |
| Current income taxes payable | 18 | 49,470 | 45,450 |
| Other liabilities | 12 | 8,876 | 16,070 |
| Decommissioning and restoration provision | 13 | 822 | 639 |
| 157,212 | 127,372 | ||
| Trade payables and accrued liabilities | 9 | 7,167 | 8,608 |
| Consideration payable | 10 | 20,243 | 34,783 |
| Loans payable | 11 | 1,344 | 3,137 |
| Other liabilities | 12 | 20,541 | 22,508 |
| Decommissioning and restoration provision | 13 | 35,194 | 25,037 |
| Deferred income tax liability | 18 | 25,012 | 21,233 |
| Total liabilities | 266,713 | 242,678 | |
| SHAREHOLDERS’ EQUITY | |||
| Share capital | 14 | 146,166 | 139,080 |
| Equity reserves | 14 | 6,677 | 8,274 |
| Retained earnings (deficit) | 26,215 | (16,007) | |
| Total shareholders’ equity | 179,058 | 131,347 | |
| Total liabilities and shareholders’ equity | 445,771 | 374,025 |
Subsequent event (note 11(b), 11(c), 11(d))
Approved and authorized for issue on behalf of the Board of Directors on March 27, 2026:
| “Arturo Préstamo Elizondo” | “Larry Okada” | |
| Director | Director |
The accompanying notes are an integral part of the audited consolidated financial statements.
| 10 |
SANTACRUZ SILVER MINING LTD.
Consolidated Statements of Comprehensive Income
For the Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars)
| Note | 2025 |
2024 | |
| $ | $ | ||
| Revenues | 22 | 326,382 | 282,987 |
| Mine operating costs | |||
| Cost of sales | 15 | (199,493) | (206,055) |
| Depreciation, depletion and amortization | 8 | (21,577) | (19,706) |
| Reversal of impairment on mineral properties, plant and equipment | 8 | 4,088 | - |
| Gross profit | 109,400 | 57,226 | |
| General and administrative expenses | 16 | (22,305) | (24,307) |
| Share-based compensation expense | 14 | (2,042) | (105) |
| Operating income | 85,053 | 32,814 | |
| Gain on adjustment to consideration payable | 10 | - | 133,255 |
| Finance costs | 17 | (12,368) | (18,232) |
| Foreign exchange gain | 2,015 | 44,199 | |
| Income before tax | 74,700 | 192,036 | |
| Income tax expense | 18 | (32,478) | (27,552) |
| Net income for the year | 42,222 | 164,484 | |
| Other comprehensive income that may be reclassified subsequently to net income or loss: | |||
| Unrealized gain on marketable securities | 331 | - | |
| Currency translation differences | (605) | (105) | |
| Comprehensive income for the year | 41,948 | 164,379 | |
| Net income per share: | |||
| Basic | 23 | $0.47 | $1.86 |
| Diluted | 23 | $0.46 | $1.85 |
| Weighted average number of common shares: | |||
| Basic | 23 | 89,849,385 | 88,438,988 |
| Diluted | 23 | 92,197,091 | 89,063,988 |
The accompanying notes are an integral part of the audited consolidated financial statements.
| 11 |
SANTACRUZ SILVER MINING LTD.
Consolidated Statements of Cash Flows
For the Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars)
| Note | 2025 | 2024 | |
| $ | $ | ||
| Operating activities: | |||
| Net income for the year | 42,222 | 164,484 | |
| Items not affecting cash: | |||
| Depreciation, depletion and amortization | 8 | 21,577 | 19,706 |
| Reversal of impairment on mineral properties, plant and equipment | 8 | (4,088) | - |
| Gain on adjustment to consideration payable | 10 | - | (133,255) |
| Finance costs | 17 | 22,209 | 18,113 |
| Share-based compensation expense | 14 | 2,042 | 105 |
| Foreign exchange (gain) loss | 13,480 | (955) | |
| Income tax expense | 18 | 32,478 | 27,552 |
| Operating cash flows before non-cash working capital | 129,920 | 95,750 | |
| Changes in non-cash working capital: | |||
| Trade and other receivables | 6 | 3,891 | (20,736) |
| Inventories | 7 | (25,080) | 851 |
| Prepaid expenses and deposits | (8,399) | (120) | |
| Trade payables and accrued liabilities | 9 | 10,159 | (7,923) |
| Current income taxes payable | 18 | (21,875) | (3,971) |
| Other liabilities | 12 | (9,377) | (8,981) |
| Decommissioning and restoration provision | 13 | (129) | (438) |
| Net cash generated by operating activities | 79,110 | 54,432 | |
| Investing activities: | |||
| Expenditures on mineral properties, plant and equipment | 8 | (30,619) | (22,619) |
| Proceeds on disposition of mineral properties, plant and equipment | 8 | 311 | 1,697 |
| Purchases of marketable securities | 20 | (34,262) | - |
| Disposition of marketable securities | 20 | 12,131 | - |
| Payment of base purchase price obligation | 10 | (40,000) | - |
| Net cash used in investing activities | (92,439) | (20,922) | |
| Financing activities: | |||
| Proceeds from exercise of options | 14 | 3,721 | 641 |
| Proceeds from loans payable | 11 | 72,956 | 59,218 |
| Repayments of loans payable | 11 | (51,574) | (59,459) |
| Lease payments on plant and equipment | 12 | (3,366) | (2,946) |
| Net cash generated by (used in) financing activities | 21,737 | (2,546) | |
| Effect of exchange rate on changes in cash | 138 | (190) | |
| Net change in cash and cash equivalents | 8,546 | 30,774 | |
| Cash and cash equivalents – beginning of year | 35,721 | 4,947 | |
| Cash and cash equivalents – end of year | 44,267 | 35,721 | |
Cash paid during the year for: |
|||
| Interest expense | 1,033 | 1,383 | |
| Income taxes | 33,095 | 23,356 | |
Supplemental cash flow information (Note 24) |
|||
The accompanying notes are an integral part of the audited consolidated financial statements.
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SANTACRUZ SILVER MINING LTD.
Consolidated Statements of Changes in Shareholders’ Equity (Deficiency)
For Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, except number of shares)
| Share Capital | Equity Reserves | |||||||
| Shares | Amount | Share-based compensation reserve | Contributed surplus | Accumulated other comprehensive loss | Total equity reserves | Retained earnings (deficit) | Total shareholders’ equity (deficiency) | |
| # | $ | $ | $ | $ | $ | $ | $ | |
| Balance, December 31, 2023 | 87,747,785 | 138,014 | 13,410 | (1,872) | (2,839) | 8,699 | (180,491) | (33,778) |
| Shares issued from exercise of options | 1,216,100 | 1,066 | (425) | - | - | (425) | - | 641 |
| Share-based compensation expense | - | - | 105 | - | - | 105 | - | 105 |
| Comprehensive income | - | - | - | - | (105) | (105) | 164,484 | 164,379 |
| Expiration of warrants | - | - | (3,821) | 3,821 | - | - | - | - |
| Balance, December 31, 2024 | 88,963,885 | 139,080 | 9,269 | 1,949 | (2,944) | 8,274 | (16,007) | 131,347 |
| Balance, December 31, 2024 | 88,963,885 | 139,080 | 9,269 | 1,949 | (2,944) | 8,274 | (16,007) | 131,347 |
| Shares issued from exercise of options | 2,649,909 | 6,639 | (2,918) | - | - | (2,918) | - | 3,721 |
| Shares issued from vesting of RSUs | 148,334 | 297 | (297) | - | - | (297) | - | - |
| Shares issued from vesting of PSUs | 200,000 | 150 | (150) | - | - | (150) | - | - |
| Share-based compensation expense | - | - | 2,042 | - | - | 2,042 | - | 2,042 |
| Comprehensive income | - | - | - | - | (274) | (274) | 42,222 | 41,948 |
| Balance, December 31, 2025 | 91,962,128 | 146,166 | 7,946 | 1,949 | (3,218) | 6,677 | 26,215 | 179,058 |
The accompanying notes are an integral part of the audited consolidated financial statements.
| 13 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
1. NATURE OF OPERATIONS
Santacruz Silver Mining Ltd. (the “Company” or “Santacruz”) was incorporated pursuant to the Business Corporations Act of British Columbia on January 24, 2011. The Company’s registered office is located at 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia, Canada V6E 2J3. The Company is listed for trading on the TSX Venture Exchange (“TSX-V”) under the symbol “SCZ” and on the Nasdaq Capital Market (“NASDAQ”) under the symbol “SCZM”.
The Company is engaged in the operation, acquisition, exploration and development of mineral properties in Latin America, with a primary focus on silver and zinc, but also including lead and copper. As at December 31, 2025, the Company had interests in, including mining concession rights, to the following:
| ● | Sinchi Wayra S.A. (“Sinchi Wayra”), Sociedad Minero Metalurgico Reserva Ltda. and Sociedad Minera Illapa S.A. (“Illapa”) which consist of the following mineral properties and businesses located in Bolivia: the producing Tres Amigos and Colquechaquita mines, collectively the “Caballo Blanco Group”; the producing Bolivar and Porco mines held under a net operating cash flow interest agreement with Corporación Minera de Bolivia (“COMIBOL”), a Bolivian state-owned entity; the Soracaya exploration project (“Soracaya Project”); the Reserva mine and the San Lucas ore sourcing and trading business (“San Lucas Group”); | |
| ● | The producing Zimapan mine located in Mexico held by Compañía Minera Zilar Mendi SA de C.V (“Zilar Mendi”). |
On December 10, 2025 the Company consolidated its issued and outstanding common shares on the basis of one post-consolidated common share for every four pre-consolidated common shares. The number of issued and outstanding shares, options, warrants, DSUs, RSUs and PSUs, and any per share amounts in these financial statements have been retrospectively restated in notes 11, 14, and 23 for all periods presented unless otherwise stated.
2. BASIS OF PRESENTATION
These consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (“IASB”). These consolidated financial statements have been prepared on a historical cost basis except for certain items that are measured at fair value including marketable securities. All dollar amounts presented are in thousands of United States dollars unless otherwise specified.
These consolidated financial statements incorporate the financial statements of the Company and its controlled subsidiaries. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances, transactions, income and expenses are eliminated on consolidation.
References made throughout the consolidated financial statements to “US dollar” or “USD” are to United States dollars, “C$” or “CAD” are to Canadian dollars, “MXN” are to Mexican pesos, “BOB” are to Bolivian bolivianos. All references are in thousands, unless otherwise noted.
3. MATERIAL ACCOUNTING POLICIES
a) Basis of consolidation
These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The Company controls an investee if the Company has all of the following:
| ● | Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee); | |
| ● | Exposure, or rights, to variable returns from its involvement with the investee; and | |
| ● | The ability to use its power over the investee to affect its returns. |
| 14 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
Generally, there is a presumption that a majority of voting rights results in control. When the Company owns less than a majority of the voting, or similar rights of an investee, it considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
| ● | The contractual arrangement(s) with the other vote holders of the investee; | |
| ● | Rights arising from other contractual arrangements; | |
| ● | The Group’s voting rights and potential voting rights |
The relevant activities are those which significantly affect the subsidiary’s returns. The ability to approve the operating and capital budget of a subsidiary and the ability to appoint key management personnel are decisions that demonstrate that the Company has the existing rights to direct the relevant activities of a subsidiary.
The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary.
All intercompany transactions and balances are eliminated on consolidation.
These consolidated financial statements incorporate the accounts of the Company and the following subsidiaries:
| Name of entity | Country of incorporation | Percentage ownership |
Principal activity |
| Santacruz Silver Mining Ltd. | Canada | 100% | Holding company and head office function |
| Carrizal Holdings Ltd. | Canada | 100% | Holding company |
| Compañía Minera Zilar Mendi SA de C.V. (1) | Mexico | 100% | Mine operations |
| PCG Mining, S.A. de C.V. | Mexico | 100% | Holding company |
| Laikra Limited | Bermuda | 100% | Holding company |
| Apamera Limited | Bermuda | 100% | Holding company |
| Lewron Metals Ltd. | Bermuda | 100% | Holding company |
| Kempsey S.A. | Panama | 100% | Holding company |
| Shattuck Trading Co. Inc. | Panama | 100% | Holding company |
| Iris Mines and Metals S.A. | Panama | 100% | Holding company |
| Sociedad Minera Illapa S.A. (2) | Bolivia | 100% | Mine operations |
| Sinchi Wayra S.A. | Bolivia | 100% | Mine operations |
| Sociedad Minero Metalurgico Reserva Ltda. | Bolivia | 100% | Mine operations |
| Empresa Minera San Lucas S.A. | Bolivia | 100% | Ore trading house |
| Compañia Minera Concepción S.A. | Bolivia | 100% | Ore trading house |
| Compañia Minera Colquiri S.A. | Bolivia | 100% | Inactive |
| Complejo Metalurgico Vinto S.A. | Bolivia | 100% | Inactive |
| (1) | On November 10, 2025, Carrizal Mining S.A de C.V changed its name to Compañía Minera Zilar Mendi SA de C.V. |
| (2) | Sociedad Minera Illapa S.A. is the operator of the Illapa Joint Operation which includes the Bolivar and Porco mines. |
b) Basis of measurement
The consolidated financial statements have been prepared using the historical cost basis, except for certain financial assets and liabilities that are measured at fair values at the end of each reporting period.
c) Functional and presentation currency
The consolidated financial statements are presented in United States dollars. The functional currency is the US dollar, which is the currency of the primary economic environment in which an entity operates.
Assets and liabilities of the subsidiaries that have a functional currency other than the US dollars are translated into US dollars at the exchange rate in effect on the consolidated statements of financial position date and revenues and expenses are translated at the average rate over the reporting period. Gains and losses from these translations are recognized in other comprehensive income.
| 15 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange at each financial position date. Foreign exchange gains or losses on translation to the functional currency of an entity are recorded in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction.
d) Business combinations
A business combination is an acquisition of assets and liabilities that constitute a business. A business is an integrated set of activities and assets that consist of inputs and processes, including operational processes that, when applied to those inputs, have the ability to create outputs that provide a return to the Company and its shareholders. A business also includes those assets and liabilities that do not necessarily have all the inputs and processes required to produce outputs, but can be integrated with the inputs and processes of the Company to create outputs.
When acquiring a set of activities or assets in the exploration and development stage, which may not have outputs, the Company considers other factors to determine whether the set of activities or assets is a business.
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is allocated to the identifiable assets acquired, liabilities and contingent liabilities assumed based on the acquisition-date fair value.
Any contingent consideration to be transferred will be recognized at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes in fair value recognized in the consolidated statement of comprehensive income in accordance with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9 is measured at fair value at each reporting date with changes in fair value recognized in profit or loss.
The excess of the cost of acquisition over the fair value of the Company’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets acquired, the difference, or gain, is recognized directly in the consolidated statement of comprehensive income. The results of businesses acquired during the period are included in the financial statements from the date of acquisition.
Acquisition related costs, other than costs to issue debt or equity securities of the acquirer, including investment banking fees, legal fees, accounting fees, valuation fees, and other professional or consulting fees are expensed as incurred. The costs to issue equity securities of the Company as consideration for the acquisition are reduced from share capital as share issuance costs. The costs to issue debt securities are capitalized and amortized using the effective interest method.
Provisional fair values are finalized within twelve months of the acquisition date. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed at the acquisition date.
e) Goodwill
Goodwill typically arises on the Company’s business combinations due to: i) the ability of the Company to capture certain synergies through management of the acquired operation within the Company; and ii) the requirement to record a deferred tax liability for the difference between the assigned fair values and the tax bases of assets acquired and liabilities assumed.
Goodwill arising on the acquisition of a business is carried at cost as established at the date of the acquisition less accumulated impairment losses, if any. Goodwill is allocated to each of the Company’s cash-generating units (“CGUs”) that is expected to benefit from the synergies of the acquisition. A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in the consolidated statement of comprehensive income.
An impairment loss recognized for goodwill is not reversed in subsequent periods.
| 16 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
f) Joint arrangements
A joint arrangement is an arrangement over which two or more parties have joint control. Joint control is the contractually agreed sharing of control over an arrangement which exists only when the decisions about the relevant activities (being those that most significantly affect the returns from the arrangement) require the unanimous consent of the parties sharing control.
The Company has assessed the nature of its joint arrangements and determined them to be joint operations. The Company’s 45% interest in the joint arrangement (operation), the general partnership that holds the Bolivar and Porco mines (“Illapa Joint Operation”), located in Bolivia has been accounted for as a joint operation. The remaining 55% interest is held by Corporación Minera de Bolivia (“COMIBOL”).
| Joint Arrangements | Location | Ownership Interest | Classification and accounting method |
Mining properties and projects owned |
| Illapa Joint Operation | Bolivia | 45% | Joint operation, Record 45% Santacruz share |
Bolivar and Porco mines |
The Illapa Joint Operation are within the Illapa legal entity which is 100% owned by the Company however its operations are part of a joint association agreement in which the Company has a 45% interest with the remaining 55% interest held by Corporación Minera de Bolivia (“COMIBOL”). The joint association agreement meets the definition of a Joint Operation in accordance with IFRS 11 Joint Arrangements, and the Company recognizes its 45% share of the operation’s assets, liabilities, revenues and expenses arising from the Joint Operation. The Company is solely responsible for certain transactions made by the Illapa entity, for these transactions, the assets, liabilities, revenues and expenses are recognized at 100% in the Company’s Financial Statements and result in balances payable to or owed from COMIBOL for its share of the joint operation. The net amount due to/from COMIBOL from differences in the participation share of certain transactions has been recognized as a non-current other asset or liability.
g) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held on call with banks, and other short-term highly liquid investments with original maturities of three months or less and/or with original maturities over three months but redeemable on demand without penalty.
h) Inventories
Inventories include concentrate and stockpiled ore and are valued at the lower of average production cost and estimated net realizable value. Net realizable value is the amount estimated to be obtained from sale of the inventory in the normal course of business, less any anticipated costs to be incurred prior to its sale. The production cost of inventories is determined on a weighted average basis and includes cost of production consumables, direct labour, mine-site overhead, and depreciation and depletion of mine properties and property, plant and equipment. Joint-product costing is applied as the primary concentrate products (silver/zinc, silver/lead and silver/copper) both contribute to the profitability of the operation. Joint costing allocates total production costs based on the relative values of the products.
If the carrying value exceeds the net realizable amount, a write-down is recognized. The write-down may be reversed in a subsequent period if the circumstances which caused the write-down no longer exist, to the extent that the related inventory has not been sold. Net realizable value is calculated as the estimated price at the time of sale based on prevailing metal prices less estimated future costs to convert the inventories into saleable form and estimated costs to sell.
Supplies inventory is valued at the lower of average cost and net realizable value. Costs include acquisition, freight, and other directly attributable costs.
| 17 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
i) Mineral property, plant and equipment (“MPPE”)
On initial acquisition, MPPE are valued at cost, being the purchase price and the directly attributable costs of acquisition or construction required to bring the asset to the location and condition necessary for the asset to be capable of operating in the manner intended by management. When provisions for closure and decommissioning are recognized, the corresponding cost is capitalized as part of the cost of the related assets, representing part of the cost of acquiring the future economic benefits of the operation. The capitalized cost of closure and decommissioning activities is recognized in MPPE and depreciated accordingly.
In subsequent periods, buildings, plant and equipment are stated at cost less accumulated depreciation and any impairment in value, while land is stated at cost less any impairment in value and is not depreciated.
Estimates of remaining useful lives and residual values are reviewed annually. Changes in estimates are accounted for prospectively. The expected useful lives are included below. The net carrying amounts of MPPE are reviewed for impairment either individually or at the cash-generating unit (“CGU”) level when events and changes in circumstances indicate that the carrying amounts may not be recoverable. To the extent that these values exceed their recoverable amounts, that excess is recorded as an impairment provision in the financial year in which this is determined.
Expenditure on major maintenance or repairs includes the cost of the replacement of parts of assets and overhaul costs. Where an asset or part of an asset is replaced and it is probable that future economic benefits associated with the item will be available to the Company, the expenditure is capitalized and the carrying amount of the item replaced derecognized. Similarly, overhaul costs associated with major maintenance are capitalized and depreciated over their useful lives where it is probable that future economic benefits will be available and any remaining carrying amounts of the cost of previous overhauls are derecognized. All other costs are expensed as incurred.
Where an item of MPPE is disposed of, it is derecognized and the difference between its carrying value and net sales proceeds is disclosed as earnings or loss on disposal in the consolidated statement of comprehensive income. Any items of mineral property, plant or equipment that cease to have future economic benefits are derecognized with any gain or loss included in the financial year in which the item is derecognized.
Operational mining properties and mine development
When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves (which occurs upon completion of a positive economic analysis of the mineral deposit), the costs incurred to develop such property including costs to further delineate the ore body and remove overburden to initially expose the ore body prior to the start of mining operations, are also capitalized. Such costs are amortized using the units-of-production (“UOP”) method considering the expected production to be obtained over the life of the mineral property.
The expected production includes proven and probable reserves, and a portion of inferred resources expected to be extracted economically as part of the production cost.
Costs associated with commissioning activities on constructed plants are deferred from the date of mechanical completion of the facilities until the date the Company is ready to commence commercial production. Amounts received from selling items produced while preparing the asset for its intended use will be recognized as revenue and the related cost of sales in the consolidated statement of comprehensive income. These costs are amortized using the UOP method (described below) over the life of the mine, commencing on the date of commercial production.
Acquisition costs related to the acquisition of land and mineral rights are capitalized as incurred. Prior to acquiring such land or mineral rights, the Company makes a preliminary evaluation to determine that the property has significant potential to economically develop the deposit. The time between initial acquisition and full evaluation of a property’s potential is dependent on many factors including: location relative to existing infrastructure, the property’s stage of development, geological controls and metal prices. If a mineable deposit is discovered, such costs are amortized when production begins. If no mineable deposit is discovered, such costs are expensed in the period in which it is determined the property has no future economic value.
| 18 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
Major development expenditures on producing properties incurred to increase production or extend the life of the mine are capitalized while ongoing mining expenditures on producing properties are charged against earnings as incurred. Gains or losses from sales or retirements of assets are included in gain or loss on sale of assets.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset until the asset is substantially ready for its intended use. Other borrowing costs are recognized as an expense in the period incurred.
Depreciation of MPPE
The carrying amounts of MPPE (including initial and any subsequent capital expenditure) are depreciated to their estimated residual value over the estimated useful lives of the specific assets concerned, or the estimated life of the associated mine or mineral lease, if shorter. Estimates of residual values and useful lives are reviewed annually and any change in estimate is taken into account in the determination of remaining depreciation charges, and adjusted if appropriate, at each statement of financial position date. Changes to the estimated residual values or useful lives are accounted for prospectively. Depreciation commences on the date when the asset is available for use as intended by management.
For mining properties excluding those at the Bolivar and Porco mines, the economic benefits from the asset are consumed in a pattern which is linked to the production level. Except as noted below, such assets are depreciated on a UOP basis. In applying the UOP method, depreciation is normally calculated using the quantity of material extracted from the mine in the period as a percentage of the total quantity of material to be extracted in current and future periods based on proven and probable reserves and the portion of inferred resources where it is considered highly probable that those resources are expected to be extracted economically. The mineral properties at the Bolivar and Porco mines are depreciated on a straight-line basis over the term of the association contract with COMIBOL.
Assets within operations for which production is not expected to fluctuate significantly from one year to another or which have a physical life shorter than the related mine are depreciated on a straight line basis. PPE are depreciated over their useful life, or over the remaining life of the mine if shorter. The mining, property, plant, and equipment assets at the Bolivar and Porco mines are depreciated on a straight-line basis over the term of the association contract with COMIBOL. The other mining assets and categories of property, plant, and equipment are depreciated on a unit of production and/or straight-line basis as follows:
| ● | Land – not depreciated | |
| ● | Mobile equipment – 2 to 11 years | |
| ● | Buildings and plant facilities – 2 to 50 years | |
| ● | Mining properties and leases including capitalized evaluation and development expenditures – UOP method | |
| ● | Exploration and evaluation – not depreciated until mine goes into production | |
| ● | Assets under construction – not depreciated until assets are ready for their intended use |
j) Exploration and evaluation assets
Exploration expenditures are incurred in the search for economic mineral deposits or the process of obtaining more information about existing mineral deposits and typically include costs associated with drilling, sampling, mapping and other activity related to the search for ore.
Evaluation expenditures are incurred to establish the technical and commercial viability of mineral deposits and typically include costs associated with determining optimal methods of extraction and metallurgical and treatment processes, permitting, and preparing economic evaluations.
| 19 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
Exploration expenditures are expensed as incurred. Evaluation expenditures are capitalized when management determines there is a high degree of confidence that future economic benefits will flow to the Company. Acquired exploration and evaluation projects and acquired exploration rights are recognized as assets at their cost of acquisition or at fair value if purchased as part of a business combination.
Capitalized exploration and evaluation expenditures are reclassified to mineral properties, plant and equipment, in accordance with Note 3, once the technical feasibility and commercial viability are demonstrated.
k) Impairment of non-current assets
The carrying amounts of long-lived assets are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. If there are indicators of impairment, the recoverable amount of the asset is estimated in order to determine the extent of the impairment. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount and is recorded as an expense in the consolidated statement of comprehensive income.
Where the asset does not generate independent cash inflows, the Company estimates the recoverable amount of the CGU to which the asset belongs.
If the recoverable amount of the asset or CGU is determined to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount and an impairment loss is recognized as an expense in the consolidated statement of comprehensive income. Recoverable amount is the higher of fair value less costs of disposal (“FVLCD”) and value in use (“VIU”).
FVLCD is determined as the amount that would be obtained from the sale of the asset or CGU in an arm’s length transaction between knowledgeable and willing parties. The Company considers the use of a combination of its internal discounted cash flow economic models and in-situ value of reserves, resources and exploration potential of each CGU for estimation of its FVLCD. These cash flows are discounted by an appropriate post-tax discount rate to arrive at a net present value of the asset. VIU is determined as the present value of the estimated cash flows expected to arise from the continued use of the asset or CGU in its present form and its eventual disposal. VIU is determined by applying assumptions specific to the Company’s continued use and does not take into account future development.
Impairment losses are evaluated for potential reversals when events or circumstances warrant such consideration. Where an impairment loss is subsequently reversed, the amount of such reversal is limited such that, the revised carrying amount of the asset or CGU does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or CGU in the prior years. A reversal of an impairment loss is recognized into earnings immediately.
l) Leases
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. An identified asset may be implicitly or explicitly specified in a contract, but must be physically distinct, and must not have the ability for substitution by a lessor. The Company has the right to control an identified asset if it obtains substantially all of its economic benefits and either pre-determines, or directs how and for what purpose the asset is used.
At lease commencement, the Company recognizes a Right of Use Asset (“ROU Asset”) and a lease obligation. The ROU Asset is initially measured at cost, which comprises the initial amount of the lease obligation adjusted for any lease payments made at, or before, the commencement date, plus any initial direct costs incurred, less any lease incentives received.
The ROU Asset is subsequently amortized on a straight-line basis over the shorter of the term of the lease, or the useful life of the asset determined on the same basis as the Company’s property, plant and equipment. The ROU Asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease obligation.
| 20 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
The lease obligation is initially measured at the present value of lease payments remaining at the lease commencement date, discounted using the Company’s incremental borrowing rate. Lease payments included in the measurement of the lease obligation, when applicable, may comprise fixed payments, variable payments that depend on an index or rate, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase, extension or termination option that the Company is reasonably certain to exercise.
The lease obligation is subsequently measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease obligation is remeasured, a corresponding adjustment is made to the carrying amount of the ROU Asset.
The Company has elected not to recognize ROU Assets and lease obligations for short-term leases that have a lease term of twelve months or less or for leases of low-value assets. Payments associated with these leases are recognized as an operating expense on a straight-line basis over the lease term within costs and expenses on the consolidated statement of comprehensive income.
m) Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate of the obligation can be made. The amount recognized as a provision is the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as finance costs.
Decommissioning and restoration costs
Decommissioning and restoration provisions are measured at the expected value of future cash flows, discounted to their present value and determined according to the probability of alternative estimates of cash flows occurring for each operation. Discount rates used are specific to the underlying obligation.
When provisions for decommissioning and restoration are initially recognized, the corresponding cost is capitalized as a component of the cost of the related asset, representing part of the cost of acquiring the future economic benefits of the operation. The capitalized cost of decommissioning and restoration activities is recognized in property, plant and equipment and depreciated accordingly. The value of the provision is progressively increased over time as the effect of discounting unwinds, creating an expense recognized in finance expenses. Decommissioning and restoration provisions are also adjusted for changes in estimates. Those adjustments are accounted for as a change in the corresponding capitalized cost, except where a reduction in the provision is greater than the un-depreciated capitalized cost of the related assets, in which case the capitalized cost is reduced to nil and the remaining adjustment is recognized in the consolidated statement of comprehensive income. In the case of closed sites, changes to estimated costs are recognized immediately in the consolidated statement of comprehensive income. Changes to the capitalized cost result in an adjustment to future depreciation and finance charges. Adjustments to the estimated amount and timing of future decommissioning and restoration cash flows are a normal occurrence in light of the significant judgments and estimates involved.
The provision is reviewed at the end of each reporting period for changes to obligations, legislation or discount rates that impact estimated costs or lives of operations and adjusted to reflect current best estimate. The cost of the related asset is adjusted for changes in the provision resulting from changes in the estimated cash flows or discount rate and the adjusted cost of the asset is depreciated prospectively.
n) Share capital
The Company records proceeds from share issuances net of issue costs and any tax effects in equity. Common shares issued for consideration other than cash are valued based on their fair value on the date of issuance. Professional, consulting, regulatory, and other costs directly attributable to equity transactions are recorded as share issuance costs.
| 21 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
The Company follows the residual method with respect to the measurement of common shares and common share purchase warrants issued as private placement units. Proceeds from private placements are first allocated to the common shares contained in the units based on the market value of shares on the date of issuance, with any residual amount allocated to warrants in the units. If the proceeds are less than or equal to the estimated fair market value of the share issuance, a $nil carrying amount is assigned to the warrants.
o) Share-based payments
Employees (including directors and officers) of the Company may receive a portion of their remuneration in the form of share-based awards, which include stock options (“Options”), restricted share units (“RSUs”), performance share units (“PSUs”), and deferred share units (“DSUs”). The fair value of the share-based awards is charged to the consolidated statement of comprehensive income on a straight-line basis over the vesting period, after adjusting for the estimated number of awards that are expected to vest. The fair value of the share-based awards is determined at the date of grant.
The fair value of the stock options granted is determined using the Black-Scholes option pricing model at the date on which they were granted. Forfeitures are adjusted prospectively based on actual forfeitures. Share-based payments expense, for stock options that are forfeited or cancelled prior to vesting, is reversed. The costs of share-based payments are recognized, together with a corresponding increase in the equity reserve, over the period in which the services and/or performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). On exercise by the employee, the associated option value in the equity reserve is reclassified to share capital.
The fair value of the RSUs and DSUs granted is based on the value of the Company’s share price at the date of grant. Unless otherwise stated, the RSUs have a graded vesting schedule over the vesting period as set by the Board of Directors and can either be settled in cash or equity upon vesting at the discretion of the Company. DSUs vest over a period of one year.
The fair value of PSUs is determined using its expected value at the time of grant. The expected value is determined based upon the fair value of the underlying shares at the time of grant and the estimated probability of meeting performance criteria.
In situations where equity instruments are issued to non-employees, the share-based payments are measured at the fair value of goods or services received, together with a corresponding increase in the equity reserve. If some or all of the goods or services received by the Company as consideration cannot be specifically identified, they are measured at the fair value of the share-based award.
p) Revenue
Revenue associated with the concentrate sales is recognized when control of the asset sold is transferred to the customer. Indicators of control transferring include an unconditional obligation to pay, legal title, physical possession, transfer of risk and rewards, and customer acceptance. This generally occurs when the goods are delivered to a loading port, warehouse, vessel, or metal account as contractually agreed with the buyer; at which point the buyer controls the goods. In cases where the Company is responsible for the cost of shipping and certain other services after the date on which control of the goods transfers to the customer, these other services are considered separate performance obligations and thus a portion of revenue earned under the contract is allocated and recognized as these performance obligations are satisfied.
The Company’s concentrate sales contracts with third-party buyers, in general, provide for a provisional payment based upon provisional assays and quoted metal prices. Final settlement is based on applicable commodity prices set on specified quotational periods, typically ranging from one month prior to shipment, and can extend to three months after the shipment arrives at the smelter and is based on average market metal prices. For this purpose, the transaction price can be measured reliably for those products, such as silver, zinc, lead and copper, for which there exists an active and freely traded commodity market such as the London Metals Exchange and the value of product sold by the Company is directly linked to the form in which it is traded on that market.
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SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
Sales revenue is commonly subject to adjustments based on an inspection of the product by the customer. In such cases, sales revenue is initially recognized on a provisional basis using the Company’s best estimate of contained metal, and adjusted subsequently. Revenues are recorded under these contracts at the time control passes to the buyer based on the expected settlement period. Revenue on provisionally priced sales is recognized based on estimates of the fair value of the consideration receivable based on forward market prices and estimated quantities. At each reporting date provisionally priced metal is marked to market based on the forward selling price for the quotational period stipulated in the contract.
Variations between the price recorded at the date when control is transferred to the buyer and the actual final price set under the smelting contracts are caused by changes in metal prices resulting in the receivable being recorded at fair value through profit or loss (“FVTPL”).
IFRS 15 – Revenue from Contracts with Customers (“IFRS 15”) requires that variable consideration should only be recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The Company concluded that the adjustments relating to the final assay results for the quantity and quality of concentrate sold are not significant and do not constrain the recognition of revenue.
Refining and treatment charges under the sales contracts are netted against revenue for sales of metal concentrate.
The Company recognizes deferred revenue in the event it receives payments from customers in consideration for future commitments to deliver metals and before such sale meets the criteria for revenue recognition. The Company recognizes amounts in revenue as the metals are delivered to the customer. The Company estimates the current portion of deferred revenue based on quantities anticipated to be delivered over the next twelve months.
q) Income taxes
Provision for income taxes consists of current and deferred tax expense. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized either in other comprehensive income (loss) or directly in equity, in which case it is recognized in other comprehensive income (loss) or in equity, respectively. Mining duties, taxes, royalties, and withholding taxes are treated and disclosed as current and deferred taxes if they have the characteristics of an income tax. This is considered to be the case when they are imposed by a government authority and the amount payable is calculated by reference to taxable income.
Current tax expense is the expected tax payable on the taxable income for the year, using tax rates and tax laws enacted or substantively enacted at the reporting date, adjusted for amendments to tax payable or recoverable with regards to previous years.
Deferred tax expense is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax expense is not recognized for temporary differences associated with the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable income or loss and temporary differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax expense is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred income tax assets and deferred income tax liabilities are offset only when there is a legally enforceable right to set off current tax assets against current income tax liabilities and when they relate to income taxes levied by the same taxation authority on the same taxable entity.
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SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
The Company’s operations involve dealing with uncertainties and judgments in the application of tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with tax authorities in various jurisdictions and resolution of disputes arising from tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues based on its estimate of whether, and the extent to which, additional taxes will be due. The Company adjusts these liabilities in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. If the Company’s estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If the estimate of tax liabilities proves to be greater than the ultimate assessment, a tax benefit would result.
r) Earnings (loss) per share
Basic earnings (loss) per share is calculated by dividing the net income (loss) available to common shareholders by the weighted average number of shares issued and outstanding during the year. For all periods presented, the net income (loss) available to common shareholders equals the reported income (loss). Diluted earnings (loss) per share is calculated using the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted earnings (loss) per share assumes that the proceeds to be received on the exercise of dilutive stock options and warrants are used to repurchase common shares at the average market price during the period. In the Company’s case, when a loss is incurred during the year, diluted and basic loss per share are the same because the effect on loss per share of potential issuance of shares under options and warrants would be anti-dilutive.
s) Financial instruments
Measurement – initial recognition
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, all financial assets and financial liabilities are recorded at fair value, net of attributable transaction costs, except for financial assets and liabilities classified as at fair value through profit or loss (“FVTPL”). The directly attributable transaction costs of financial assets and liabilities classified as at FVTPL are expensed in the period in which they are incurred.
Subsequent measurement of financial assets and liabilities depends on the classifications of such assets and liabilities.
Classification of financial assets
Amortized cost
Financial assets that meet the following conditions are measured subsequently at amortized cost:
| ● | the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and |
| ● | the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
The amortized cost of most of the financial assets is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. Interest income is recognized using the effective interest method. In accordance with the amortized cost method, revisions to estimated future cash flows result in adjustments to the carrying value of the financial asset, keeping the original effective interest rate unchanged. Revisions result in amounts recognized in income or loss.
The Company’s financial assets at amortized cost include cash and cash equivalents, receivables not arising from sale of metal concentrates, COMIBOL initial investment period CAPEX receivables, participation receivable from COMIBOL for interest in joint operation and other receivables in the Consolidated Statement of Financial Position.
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SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
FVTPL
The Company, at initial recognition, may also irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.
Financial assets measured at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss to the extent they are not part of a designated hedging relationship. Fair value is determined in the manner described in Note 20. The Company’s financial assets at FVTPL include its trade receivables from provisional concentrate sales.
Financial assets at fair value through other comprehensive income (“FVTOCI”)
Elected investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTOCI are recognized in other comprehensive income (loss).
The Company acquired Treasury Bills and Treasury notes during the year ended 2025. These instruments are financial assets and will be carried at fair value through other comprehensive income. The instruments are classified as marketable securities in the statement of financial position. The instruments at FVTOCI are initially recognized at fair value plus transaction costs. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTOCI are recognized in other comprehensive income (loss). When the securities mature or are sold the cumulative realized gains and losses are recognized through profit and loss as finance costs.
Classification of financial liabilities
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs. Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
Financial liabilities that are not contingent consideration of an acquirer in a business combination, held for trading or designated as FVTPL, are measured at amortized cost using the effective interest method. The Company’s financial liabilities designated as FVTPL include its consideration payable. Financial liabilities at amortized cost primarily include trade and other payables, loans payable and lease liabilities.
Impairment of financial assets at amortized cost
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If, at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses.
Management has recognized negligible expected credit losses on the COMIBOL initial investment period CAPEX receivable balance because the company expects to fully utilize the receivables by offsetting amounts payable to COMIBOL for its 55% share of the Joint Operation.
The Company shall recognize in the consolidated statement of comprehensive income, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.
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SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
3. MATERIAL ACCOUNTING POLICIES (continued)
t) New IFRS accounting standards and pronouncements - adopted
The following amendments to standards were effective for annual periods beginning on or after January 1, 2025:
Lack of exchangeability – Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates
The amendments contain guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. The amendments are effective for annual reporting periods beginning on or after January 1, 2025. There was no material impact on the Company’s consolidated financial statements from the adoption of these amendments, however the guidance contained was considered when determining the appropriate exchange rate to record transactions denominated in BOB, see section below in Note 4 for further information.
u) New IFRS accounting standards and pronouncements – not yet adopted
Below are the amendments to standards applicable for future periods that the Company has not yet adopted:
Amendments to IFRS 9: Financial Instruments and IFRS 7: Financial Instruments: Disclosures
In May 2024, the IASB issued amendments to update classification and measurement requirements in IFRS 9: Financial Instruments, and related disclosure requirements in IFRS 7: Financial Instruments: Disclosures. The IASB clarified the recognition and derecognition date of certain financial assets and liabilities, and amended the requirements related to settling financial liabilities using an electronic payment system. It also clarified how to assess the contractual cash flow characteristics of financial assets in determining whether they meet the solely payments of principal and interest criterion, including financial assets that have environmental, social and corporate governance (“ESG”)-linked features and other similar contingent features. The IASB added disclosure requirements for financial instruments with contingent features that do not relate directly to basic lending risks and costs and amended disclosures relating to equity instruments designated at fair value through other comprehensive income.
The amendments are effective for annual periods beginning on or after January 1, 2026 with early application permitted. The Company is currently assessing the effect of these amendments on our financial statements.
IFRS 18: Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18: Presentation and Disclosure of Financial Statements (“IFRS 18”), which replaces IAS 1: Presentation of Financial Statements. IFRS 18 introduces a specified structure for the income statement by requiring income and expenses to be presented into the three defined categories of operating, investing and financing, and by specifying certain defined totals and subtotals. Where company-specific measures related to the income statement are provided, IFRS 18 requires companies to disclose explanations around these measures, which are referred to as management-defined performance measures. IFRS 18 also provides additional guidance on principles of aggregation and disaggregation which apply to the primary financial statements and the notes. IFRS 18 will not affect the recognition and measurement of items in the financial statements, nor will it affect which items are classified in other comprehensive income and how these items are classified.
Some of the requirements in IAS 1 are moved to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and IFRS 7 Financial Instruments: Disclosures. The IASB also made minor amendments to IAS 7 Statement of Cash Flows and IAS 33 Earnings per Share in connection with the new standard.
The standard is effective for reporting periods beginning on or after January 1, 2027, including for interim financial statements. Retrospective application is required, and early application is permitted. The Company is currently assessing the effect of this new standard to its financial statements.
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SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
4. MATERIAL ACCOUNTING ESTIMATES AND JUDGMENTS
Judgments that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:
Determination of functional currency
The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the entity operates. Determination of functional currency involves certain judgments to determine the primary economic environment of an entity. The Company re-evaluates the functional currency of its entities when there is a change in events and conditions which previously determined the primary economic environment of an entity.
Interests in other entities
The Company applies judgment in determining the classification of its interest in other entities, such as (i) the determination of the level of control or significant influence held by the Company; (ii) the legal structure and contractual terms of the arrangement; (iii) concluding whether the Company has rights to assets and liabilities or to net assets of the arrangement; and (iv) when relevant, other facts and circumstances. The Company has determined that the association agreement with COMIBOL represents a joint operation. All other interests, excluding marketable securities, in other entities have been determined to be subsidiaries as described in IFRS 10, “Consolidated Financial Statements.”
Collectability and classification of value added tax (“VAT”) receivable
VAT receivable is collectible from the governments of Mexico and Bolivia. The collection of VAT is subject to risk due to the complex application and collection process and, therefore, risk related to the collectability and timing of payment from the Mexican and Bolivian governments. The Company uses the facts known at the time and its historical experience to determine its best estimate of the collectability and timing of these recoveries. Changes in the assumptions regarding collectability and the timing of collection could impact the valuation and classification of VAT receivable.
Impairment, or impairment reversal, of MPPE and goodwill
There is significant judgment involved in assessing whether any indications of impairment of MPPE and goodwill, or impairment reversal of MPPE, with consideration given to both external and internal sources of information. Information the Company considers include changes in the market, economic and legal environment in which the Company operates that are not within its control that affect the recoverable amount of mining interests. Internal sources of information include the manner in which mineral property, plant and equipment are being used or are expected to be used and indications of the economic performance of the assets. Estimates include but are not limited to estimates of the discounted future after-tax cash flows expected to be derived from the Company’s mining properties, costs to sell the mining properties and the appropriate discount rate. Changes in metal price forecasts, increases or decreases in estimated future costs of production, increases or decreases in estimated future capital costs, reductions or increases in the amount of recoverable mineral reserves and mineral resources and/or adverse or favorable current economics can result in a write-down or write-up of the carrying amounts of the Company’s mining interests.
Key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are:
Revenue recognition
Revenue from the sale of concentrate to independent smelters is recognized when control of the asset sold is transferred to the customer. The Company’s concentrate sales contracts with third-party buyers, in general, provide for a provisional payment based upon provisional assays and quoted metal prices. Final settlement is based on applicable commodity prices set on specified quotational periods, typically ranging from one to three months following scheduled delivery and is based on average market metal prices. Sales revenue is commonly subject to adjustments based on an inspection of the product by the customer. In such cases, sales revenue is initially recognized on a provisional basis using the Company’s best estimate of contained metal, and adjusted subsequently. Revenues are recorded under these contracts at the time control passes to the buyer based on the expected settlement period.
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SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
4. MATERIAL ACCOUNTING ESTIMATES AND JUDGMENTS (continued)
Revenue on provisionally priced sales is recognized based on estimates of the fair value of the consideration receivable based on forward market prices and estimated quantities. At each reporting date provisionally priced metal is marked to market based on the forward selling price for the quotational period stipulated in the contract. Variations between the price recorded at the date when control is transferred to the buyer and the actual final price set under the smelting contracts are caused by changes in metal prices resulting in the receivable being recorded at FVTPL. In a period of high price volatility, as experienced under current economic conditions, the effect of mark-to-market price adjustments related to the quantity of metal which remains to be settled with independent smelters could be significant.
For changes in metal quantities upon receipt of new information and assay, the provisional sales quantities are adjusted.
Mineral resource estimate
The lives of operating mines are determined from the tonnes of mineralized material or ore that are available to be extracted at the end of each reporting period. The Company initially estimates the tonnes of mineralized material or ore available based on either the findings of qualified, independent mining professionals or the findings of its own technical staff. These estimates are updated from time to time as additional technical and economic information becomes available.
Factors that impact the computation of tonnes of mineralized material or ore available include the geological data on the size, depth, and shape of the mineralized deposit or ore body, the prevailing and expected market price for the underlying metals to be extracted, and the expected costs to extract and process the mined material. Changes in the mineable tonnes of mineralized material or ore available may impact the carrying values of mine properties, exploration and evaluation properties, property, plant and equipment, decommissioning and restoration provision, and result in changes in the recognition of deferred tax amounts in addition to changes in the recognition of depreciation and depletion.
Depreciation and amortization rates for MPPE
Depreciation and amortization expenses are allocated based on assumed asset lives and depreciation and amortization rates. Should the asset life or depreciation rate differ from the initial estimate, an adjustment would be made in the consolidated statement of comprehensive income prospectively. A change in the mineral resource estimate for assets depreciated using the units of production method would impact depreciation expense prospectively.
Estimation of decommissioning and reclamation costs and the timing of expenditures
The cost estimates are updated annually during the life of a mine to reflect known developments, (e.g. revisions to cost estimates and to the estimated lives of operations), and are subject to review at regular intervals. Decommissioning, restoration and similar liabilities are estimated based on the Company’s interpretation of current regulatory requirements, constructive obligations and are measured at the best estimate of expenditures required to settle the present obligation of decommissioning, restoration or similar liabilities that may occur upon decommissioning of the mine at the end of its productive life. The carrying amount is determined based on the net present value of estimated future cash expenditures for the settlement of decommissioning, restoration or similar liabilities that may occur upon decommissioning of the mine. Such estimates are subject to change based on changes in laws and regulations and negotiations with regulatory authorities. Refer to Note 13 for details on decommissioning and restoration costs.
Income taxes and recoverability of deferred tax assets
In assessing the probability of realizing income tax assets recognized, the Company makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, the Company gives additional weight to positive and negative evidence that can be objectively verified.
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SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
4. MATERIAL ACCOUNTING ESTIMATES AND JUDGMENTS (continued)
Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. The Company considers relevant tax planning opportunities that are within the Company’s control, are feasible and within management’s ability to implement. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. Also, future changes in tax laws could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses unrecognized income tax assets at each reporting period. Refer to Note 18 for further discussion on income taxes.
Provisions and contingencies
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time. In the event the Company’s estimates of the future resolution of these matters change, the Company will recognize the effects of the changes in its consolidated financial statements on the date such changes occur.
Measurement of contingent consideration liability
The consideration payable includes a contingent value rights (CVR) component that is contingent upon the zinc price reaching a minimum market price of zinc which if met triggers a payment. CVR payments are based on the average LME zinc price for each calendar month. Therefore, the payoff on the CVR is “path-dependent”, the ultimate amount paid depends on the price of the underlying over time. Additionally, commodity prices exhibit mean reversion, whereby asset prices tend to move back toward their long-term average over time. A valuation approach capable of capturing the path-dependent and mean reversion feature is therefore required.
The Monte Carlo Simulation is a commonly used approach to model securities with path-dependent payoffs and mean reversion features. Monte Carlo Simulation uses random sampling techniques based on continuous time Stochastic processes to generate a large number of possible, but random, asset price paths. In each Individual price path, the payoff of the security can be calculated based on the average zinc price relative to a fixed base price (see note 10(b)). These payoffs are then discounted to the reporting date and averaged to determine the fair value of the CVR.
Uncertainty of timing of cash flows for the COMIBOL initial investment period CAPEX receivable
The initial investment period CAPEX receivable amount becomes available for the Company to offset against amounts due to COMIBOL for its 55% interest in the operation over seven years from 2020 to 2026. If the joint operation does not produce sufficient positive cash flows, COMIBOL can defer payment until cash flows are positive at which point the amounts receivable can be used to reduce the amount due to COMBIOL for its 55% share of the interest in the operation. If the operation does not generate enough positive cash flows to offset amounts due, the outstanding amount receivable will be paid by COMIBOL at the end of the agreement.
The timing of the cash flows will vary depending on the operational results from the joint operation and how much is payable to COMIBOL for their 55% interest in the operation. Depending on estimates and actual results each period the asset will be revalued to reflect the timing of the expected cash flows and will be discounted using the same effective interest rate at inception resulting in recognizing a gain or loss on the re-estimation of cash flows related to the CAPEX receivable.
Measurement of residual value of Illapa Joint Operation’s assets
The Company has recognized a non-depletable mineral properties asset that represents the residual value of the Illapa Joint Operation’s assets. The residual value is derived from the amount the Company expects to receive as compensation from COMIBOL when it transfers the property, plant and equipment from the Illapa Joint Operation at the end of the agreement in 2028. The amount of compensation expected to be received is 45% of the actual and future spending on capital expenditures adjusted for a valuation allowance. Since the amount that will ultimately be received at the end of the agreement will vary depending on the actual CAPEX investment made and the actual payable amount according to an appraisal process, each period management will assess its estimation of the amount receivable, and the difference between the initial carrying value and the revised carrying value will be recorded as a prospective adjustment to depreciation expense of MPPE so that at the end of the agreement, the ending value of MPPE will be equal to the amount receivable from COMIBOL.
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SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
4. MATERIAL ACCOUNTING ESTIMATES AND JUDGMENTS (continued)
Determination of Exchange rate for Bolivian operations
The Sinchi Wayra and Illapa operations are located in Bolivia and sales revenue from the Bolivian operations is denominated and settled in USD but most operating expenses are denominated in BOB. The functional currency of the Bolivian subsidiaries is USD and has not changed since acquisition. Since the operations were acquired in 2022 through to the end of fiscal 2024, the Company used the official exchange rate published by the Central Bank of Bolivia to record all transactions denominated in BOB: this exchange rate has been fixed at 6.96 BOB/USD since 2009.
The spread between the official exchange rate (the “Official rate”) and the Bank rate used to acquire BOB has widened progressively and is no longer a temporary situation. Management expects that the spread will continue due to macroeconomic fundamentals. Recording BOB denominated expenses at the Official rate is no longer appropriate and to better present the economic substance of BOB denominated transactions, management has changed its approach to using a spot rate that is in line with the Bank rate.
As defined in IAS 21 – The effects of changes in foreign exchange rates, the BOB is exchangeable. However, because there is no availability of the currency at the Official rate it is more appropriate to determine the spot rate that is the actual exchange rate that is being used to purchase BOB. Management has applied an estimation technique to determine the spot exchange rate used for translating transactions denominated in BOB. This estimated rate (the “Bank rate”) is based on the average of weekly quotations obtained from commercial banks which reflects the rate at which an orderly exchange transaction takes place at the measurement date between market participants under the prevailing economic conditions.
The
Official rate of 6.96 BOB/USD was used to record transactions denominated in BOB since the acquisition of the Bolivian operations until
December 31, 2024. Starting January 1, 2025, the Bank rate has been used to record transactions denominated in BOB. The average Bank
rate for the year ended December 31, 2025 was 11.92 BOB/USD. All monetary assets and liabilities outstanding as at December 31, 2025
have been translated using the Bank spot rate of 8.36 BOB/USD. The exchange rate is management’s estimate of the USD value of transactions
denominated in BOB. Accordingly, comparative figures which were translated using the Official rate have not been restated as the change
in estimate is only applied prospectively.
5. CASH AND CASH EQUIVALENTS
A summary of the Company’s cash and cash equivalents is as follows:
December 31, 2025 |
December 31, 2024 | |
| $ | $ | |
| Cash | 41,607 | 35,721 |
| Cash equivalents | 2,660 | - |
| Total | 44,267 | 35,721 |
6. TRADE AND OTHER RECEIVABLES
A summary of the Company’s trade and other receivables is as follows:
December 31, 2025 |
December 31, 2024 | |
| $ | $ | |
| Trade receivables | 20,371 | 17,402 |
| COMIBOL contract prepayment | 1,995 | 2,395 |
| COMIBOL initial investment period CAPEX receivable (note 6(a)) | 16,193 | 21,158 |
| Uncertain income tax position receivable (note 18(c)) | 9,356 | 15,226 |
| VAT receivable | 71,944 | 73,320 |
| Other receivables | 4,789 | 909 |
| Balance, end of year | 124,648 | 130,410 |
| Less: current portion | (88,399) | (99,854) |
| Non-current portion | 36,249 | 30,556 |
| a) | COMIBOL initial investment period CAPEX receivable |
The COMIBOL initial investment period CAPEX receivable is a reimbursement of 22.5% of a pre-defined amount of capital investments made by the Company from 2012 to 2019 in the Illapa Joint Operation. The refundable amount becomes available for the Company to offset against amounts due to COMIBOL for its 55% interest in the operation over seven years from 2020 to 2026. If the joint operation does not produce sufficient positive cash flows, COMIBOL can defer payment until cash flows are positive at which point the amounts receivable can be used to reduce the amount due to COMBIOL for its 55% share of the interest in the operation. If the operation does not generate enough positive cash flows to offset amounts due, the outstanding amount receivable will be paid by COMIBOL at the end of the agreement. The classification between current and non-current has been made based upon management’s best estimate of when the receivable will be used to offset future payments to COMIBOL for its 55% interest.
The timing of the cash flows will vary depending on the operational results from the joint operation and how much is payable to COMIBOL for their 55% interest in the operation. Depending on estimates and actual results each period the asset will be revalued to reflect the timing of the expected cash flows and will be discounted using the same effective rate at acquisition resulting in recognizing a gain or loss on the re-estimation of cash flows related the CAPEX receivable.
7. INVENTORIES
A summary of the Company’s inventories is as follows:
| December 31, 2025 | December 31, 2024 | |
| $ | $ | |
| Mineralized material stockpiles | 11,983 | 7,062 |
| Concentrate inventory | 30,172 | 11,256 |
| Supplies inventory | 15,362 | 14,119 |
| Total | 57,517 | 32,437 |
| 30 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
7. INVENTORIES (continued)
During the year ended December 31, 2025, the inventory recognized as cost of sales was $199,493 (2024 – $206,055), which includes production costs directly attributable to the inventory production process.
During the year ended December 31, 2025, the Company recognized through cost of sales a net realizable value write-off of inventory for $501 (2024 – $nil).
8. MINERAL PROPERTIES, PLANT AND EQUIPMENT
A summary of the Company’s Mineral Properties, Plant and Equipment is as follows:
| Depletable mineral properties | Exploration and evaluation |
Plant and equipment |
Total | ||
| $ | $ | $ | $ | ||
| Cost | |||||
| Balance, December 31, 2023 | 69,555 | 12,189 | 111,103 | 192,847 | |
| Additions | 15,194 | - | 7,425 | 22,619 | |
| Change in decommissioning and restoration costs (Note 13) | 1,752 | - | - | 1,752 | |
| Disposals | - | - | (2,721) | (2,721) | |
| Adjustments | 29,220 | - | - | 29,220 | |
| Balance, December 31, 2024 | 115,721 | 12,189 | 115,807 | 243,717 | |
| Additions | 9,212 | - | 21,407 | 30,619 | |
| Change in decommissioning and restoration costs (Note 13) | 3,006 | - | - | 3,006 | |
| Disposals | (3,244) | - | (3,758) | (7,002) | |
| Impairment reversals | 2,071 | 2,017 | 4,088 | ||
| Balance, December 31, 2025 | 126,766 | 12,189 | 135,473 | 274,428 | |
| Accumulated depreciation and impairment | |||||
| Balance, December 31, 2023 | 16,860 | - | 34,222 | 51,082 | |
| Depletion, depreciation and amortization | 3,933 | - | 15,773 | 19,706 | |
| Disposals | - | - | (1,024) | (1,024) | |
| Adjustments | 29,220 | - | - | 29,220 | |
| Balance, December 31, 2024 | 50,013 | - | 48,971 | 98,984 | |
| Depletion, depreciation and amortization | 7,199 | - | 14,378 | 21,577 | |
| Disposals | (3,245) | - | (3,446) | (6,691) | |
| Adjustments | (513) | - | 513 | - | |
| Balance, December 31, 2025 | 53,454 | - | 60,416 | 113,870 | |
| Cost as at December 31, 2024 | 115,721 | 12,189 | 115,807 | 243,717 | |
| Accumulated depreciation and impairment | (50,013) | - | (48,971) | (98,984) | |
| Carrying value - December 31, 2024 | 65,708 | 12,189 | 66,836 | 144,733 | |
| Cost as at December 31, 2025 | 126,766 | 12,189 | 135,473 | 274,428 | |
| Accumulated depreciation and impairment | (53,454) | - | (60,416) | (113,870) | |
| Carrying value – December 31, 2025 | 73,312 | 12,189 | 75,057 | 160,558 |
As at December 31, 2025, the Company’s plant and equipment included right-of-use assets with a carrying amount of $2,926 for leased mining equipment (December 31, 2024 - $2,395). Depreciation on the right of use assets for the year ended December 31, 2025 was $509 (2024 - $677).
| 31 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
8. MINERAL PROPERTIES, PLANT AND EQUIPMENT (continued)
Impairment assessment of Mineral Properties, Plant and equipment and Goodwill
In accordance with the Company’s accounting policies, the Company assesses its CGUs for indicators of impairment or impairment reversal at each period-end. Judgment is applied in assessing whether certain facts and circumstances are indicators of impairment or reversal of impairment, and accordingly, require an impairment test to be performed. The Company considers both external and internal sources of information in assessing whether there are any indications that its assets or CGUs may be impaired or may require a reversal of impairment. The primary external factors considered are changes in estimated long-term metal prices, changes in laws and regulations and the Company’s market capitalization relative to its net asset carrying amount. The primary internal factors considered are the performance of its CGUs against expectations, changes in mineral reserves and resources, life of mine plans and exploration results.
If indicators of impairment or impairment reversal exist for any CGU, those CGUs are tested for impairment or impairment reversal. In general, the CGU carrying amount includes the carrying value of the MPPE and goodwill, less deferred tax liabilities and decommissioning and restoration provision related to each CGU. For CGUs that have allocated goodwill, the CGUs are tested for impairment annually.
Goodwill Impairment test
The Company performed an annual impairment test of the goodwill recognized when the Company acquired the operations in Bolivia upon acquisition as at December 31, 2025. The goodwill that was allocated to the Caballo Blanco and San Lucas Groups CGUs was not impaired because their CGUs’ carrying values were greater than the recoverable amounts.
A summary of the Company’s goodwill and allocation to each CGU is as follows:
| December 31, 2025 | December 31, 2024 | |
| $ | $ | |
| Caballo Blanco Group (Tres Amigos mine) | 2,963 | 2,963 |
| San Lucas Group | 12,503 | 12,503 |
| Goodwill | 15,466 | 15,466 |
Impairment Reversal test
During the year ended December 31, 2023, the Company recorded an impairment charge of $13,830 on the carrying value of the Bolivar CGU (of which $6,472 was allocated to goodwill), and of $8,802 on the Porco CGU.
During the year ended December 31, 2025, the Company assessed the increased long-term consensus silver price to be an indicator of impairment reversal for both CGUs. As a result, the Company performed an impairment reversal test on the Bolivar and Porco CGUs as at December 31, 2025. The Company concluded that the carrying value of the Bolivar CGU as at December 31, 2025 was lower than the recoverable amount. This resulted in a reversal of the impairment charge recognized in 2023. The Company recorded an impairment reversal of $4,088 on the carrying value of the Bolivar CGU. The impairment reversal was calculated after considering the depreciation expense that would have been recorded had the CGUs not been impaired.
The recoverable amount for each CGU was determined by applying a fair value less cost of disposal (“FVLCD”) methodology based on future after-tax cash flows expected to be derived from the CGU discounted with after-tax weighted average cost of capital (“WACC”) of 10.65%, a Level 3 fair value estimate. The projected cash flows used in impairment testing are significantly affected by changes in assumptions for metal prices, estimated quantities of mineral reserves and resources, production costs estimates, capital expenditure estimates, and discount rates. Specific to the Bolivar and Porco CGUs, operations are expected to continue to the end of 2028, equal to the end of the association contract with COMIBOL (i.e. assume no extension of the contract).
| 32 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
8. MINERAL PROPERTIES, PLANT AND EQUIPMENT (continued)
For the year ended December 31, 2024 and 2025, the Company’s impairment testing incorporated the following metal price assumptions:
| December 31, 2025 | December 31, 2024 | |||
| 2026-2029 Average | 2030 and long-term | 2025-2028 Average | 2029 and long-term | |
| Zinc price per tonne | $2,801 | $2,670 | $2,757 | $2,770 |
| Silver price per ounce | $45.70 | $37.74 | $30.79 | $27.29 |
9. TRADE PAYABLES AND ACCRUED LIABILITIES
A summary of the Company’s trade payables and accrued liabilities is as follows:
| December 31, 2025 | December 31, 2024 | |
| $ | $ | |
| Trade payables | 34,541 | 29,784 |
| COMIBOL contract obligations (note 9(a)) | 7,167 | 8,608 |
| Accrued liabilities | 12,861 | 8,997 |
| Balance, end of year | 54,569 | 47,389 |
| Less: current portion | (47,402) | (38,781) |
| Non-current portion | 7,167 | 8,608 |
| a) | COMIBOL contract obligations |
| COMIBOL contract obligations represent the Company’s obligation to pay its portion of committed funding related to the investment of inventories and fixed assets made prior to 2013 under the previous contract of $4,689, and COMIBOL’s share of the VAT receivable of $2,478 (all of which are classified as non-current) |
10. CONSIDERATION PAYABLE
On March 18, 2022, the Company acquired 100% ownership of Sinchi Wayra and Illapa (the “Acquisition”) from Glencore plc (“Glencore”) under the terms and conditions outlined in the Share Purchase Agreement (“SPA”).
On May 10, 2023, the Company signed amendments to the SPA (“Amended SPA”) that impacted the timing of the repayments of the deferred cash consideration and timing of payment of certain VAT amounts collected by the Company.
On March 28, 2024, the Company entered into a binding term sheet (the “Term Sheet”) with Glencore to amend the SPA, Amended SPA and certain transaction documents in connection with the Acquisition. On October 3, 2024, the Company entered into a definitive omnibus agreement under the terms established in the Term Sheet.
The following table summarizes the consideration payable to Glencore.
| December 31, 2025 | December 31, 2024 | |
| $ | $ | |
| Base purchase price (note 10(a)) | - | 34,625 |
| Contingent value rights (note 10(b)) | 20,243 | 10,158 |
| Balance, end of year | 20,243 | 44,783 |
| Less: current portion | - | (10,000) |
| Non-current portion | 20,243 | 34,783 |
| 33 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
10. CONSIDERATION PAYABLE (continued)
| a) | Base purchase price |
| Subject to the Acceleration Option (as defined below), the Company will pay up to $80,000 in cash to Glencore in eight equal annual instalments of $10,000 each (the “Base Purchase Price” or “BPP”) with the first payment being made on or before November 1, 2025. The Company can exercise an option to accelerate the payment of the outstanding balance of the Base Purchase Price in full at any time, such prepayment amount will be $40,000 if exercised prior to November 1, 2025 and shall decrease by $2,000 for each annual instalment of $10,000 that has been paid by the Company (the “Acceleration Option”). | |
|
As at the date of the Term Sheet the fair value of the BPP was estimated using a discounted cash flow method to calculate the net present value of the expected cash flows. The initial recognition of the liability used a discount rate of 20% based on various qualitative and quantitative considerations. | |
| As at December 31, 2025, the Company has paid Glencore $40,000 to exercise the accelerated payment option in full and has fully extinguished the Base Purchase Price liability. | |
| b) | Contingent value rights & additional payments |
| The Company granted to Glencore a contingent value right (the “CVR”) whereby the Company will pay Glencore a monthly payment of $1,333 (the “CVR Payment”), subject to a total cap of $77,700 (the “Valuation Cap”), in the event that in any calendar month after the date the parties enter into the Term Sheet, the average London Metal Exchange (“LME”) spot price of zinc (or the highest open hedge price if the Hedging Option (as defined below) has been exercised) in the calendar month is at least $3,850 per tonne (the “Base Price”). The CVR Payment will increase by $83 for each increase of $100 per tonne above the Base Price and up to a price of $5,049.99 per tonne. | |
| In addition to the CVR Payment, in the event the average LME spot price of zinc (or the highest open hedge price if the Hedging Option has been exercised) in a calendar month is at least $5,050 per tonne (the “Additional Payment Price”), the CVR Payment will increase by $83 for each increase of $100 per tonne above the Additional Payment Price and the Company will pay Glencore a monthly payment of $83 as a Bonus Payment that will increase by $83 for each increase of $100 per tonne above the Additional Payments Price. The Bonus Payment is not considered as part of the CVR Payment. | |
| Upon the occurrence of the monthly average zinc LME spot price exceeding the Base Price, Glencore can require the Company to hedge a limited amount of zinc production from its Bolivian mining operations (so long as the hedging price would exceed the Base Price) subject to certain conditions (the “Hedging Option”). | |
| The CVR and Additional Payments will be effective from the date of the Term Sheet until the earlier of December 31, 2032 and the date the Valuation Cap is reached. The Additional Payments and the Hedging Option will terminate once the Company is no longer obligated to make CVR Payments. | |
| The fair value at the initial recognition of the CVR was calculated using a Monte Carlo Simulation with key inputs and assumptions including the zinc spot price ($3,082 per tonne), the expected price of zinc in each year until December 31, 2032, the market risk-free rate and credit spread and the volatility and variability of historical zinc prices. | |
The Company performed a valuation exercise as at December 31, 2025, and determined a fair value of the CVR of $20,243 (December 31, 2024 – $10,158). The loss on change in fair value attributed to the CVR was $10,085 for the year ended December 31, 2025 (2024 – $8,772), which is recorded as a finance cost (Note 17). | |
| c) | Deferred cash consideration, royalties payable and other payables |
| Prior to the Term Sheet, the Company had $164,566 in consideration payable accounted for as deferred cash consideration, royalties payable and other payables from the profits on sale of inventory and payment of certain VAT amounts. As a result of entering into the term sheet as described above, the Company determined that the contractual change was an extinguishment of the previous liabilities and recognized the base purchase price, CVR and additional payment obligations at their fair value which resulted in a gain of $133,255 during the year ended December 31, 2024. |
| 34 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
10. CONSIDERATION PAYABLE (continued)
The following table summarizes the details of the consideration payable to Glencore and when the previous consideration payable liabilities were considered extinguished and the new consideration was recognized at fair value at inception resulting in a gain on modification:
BPP (a) |
CVRs (b) |
Deferred cash consideration (c) |
Royalties payable (c) |
Other payables (c) |
Total | |
| $ | $ | $ | $ | $ | $ | |
| Balance, December 31, 2023 | - | - | 91,619 | 15,102 | 56,267 | 162,988 |
| Accretion (Note 17) | - | - | 976 | 18 | 584 | 1,578 |
| Gain on adjustment to consideration payable | 29,925 | 1,386 | (92,595) | (15,120) | (56,851) | (133,255) |
| Loss on change in fair value of consideration payable | 4,700 | 8,772 | - | - | - | 13,472 |
| Balance, December 31, 2024 | 34,625 | 10,158 | - | - | - | 44,783 |
| Less: current portion | (10,000) | - | - | - | - | (10,000) |
| Non-current portion | 24,625 | 10,158 | - | - | - | 34,783 |
| Balance, December 31, 2024 | 34,625 | 10,158 | - | - | - | 44,783 |
| Loss on change in fair value of consideration payable | 5,375 | 10,085 | - | - | - | 15,460 |
| Payment of base purchase price obligation | (40,000) | - | - | - | - | (40,000) |
| Balance, December 31, 2025 | - | 20,243 | - | - | - | 20,243 |
| Less: current portion | - | - | - | - | - | - |
| Non-current portion | - | 20,243 | - | - | - | 20,243 |
11. LOANS PAYABLE
A summary of the Company’s loans payable is as follows:
| Bank
facilities (a) |
Trafigura loan facility (b) |
Other loans payable (c) |
Promissory loan payable (d) |
Total | |
| $ | $ | $ | $ | $ | |
| Balance, December 31, 2023 | 11,327 | 5,498 | 950 | - | 17,775 |
| Proceeds advanced | 58,192 | - | 1,026 | - | 59,218 |
| Accretion | - | 547 | - | - | 547 |
| Interest expense (Note 17) | 830 | 658 | - | - | 1,488 |
| Repayment with cash | (55,558) | (2,669) | (1,232) | - | (59,459) |
| Balance, December 31, 2024 | 14,791 | 4,034 | 744 | - | 19,569 |
| Less: Current portion | (14,791) | (1,423) | (218) | - | (16,432) |
| Non-current portion | - | 2,611 | 526 | - | 3,137 |
| Balance, December 31, 2024 | 14,791 | 4,034 | 744 | - | 19,569 |
| Proceeds advanced | 44,279 | - | 16,993 | 11,684 | 72,956 |
| Interest expense (Note 17) | 1,223 | 336 | - | 569 | 2,128 |
| Foreign exchange loss (gain) | 3,797 | - | (160) | 5,270 | 8,907 |
| Repayment with cash | (32,595) | (1,848) | (17,131) | - | (51,574) |
| Balance, December 31, 2025 | 31,495 | 2,522 | 446 | 17,523 | 51,986 |
| Less: Current portion | (31,495) | (1,412) | (212) | (17,523) | (50,642) |
| Non-current portion | - | 1,110 | 234 | - | 1,344 |
| a) | Bank facilities |
| The Company has a secured credit facility denominated in Bolivian Bolivianos with Banco BISA S.A. of BOB 55,000 ($6,579), which is comprised of 1) a revolving credit facility of BOB 48,800 ($5,837) for the financing of mining operations and working capital with a fixed interest rate between 6.0% and 10.00% per annum; and 2) a “loan guarantee” credit facility of BOB 6,200 ($742) for the purpose of providing collateral to the Bolivian government for VAT refunds collected prior to the completion of the audit process by the Bolivian tax authority. |
| 35 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
11. LOANS PAYABLE (continued)
| In Bolivia, companies have the option to receive VAT refunds in advance of the audit process being completed if a loan guarantee for the refund amount is provided. The BOB 55,000 ($6,579) total credit facility is secured by certain real estate assets in Bolivia. | |
| The BOB 48,800 ($5,837) revolving credit facility for working capital purposes can be drawn down at BOB 3,480 ($416) increments and automatically rolls over at maturity once fully repaid. As at December 31, 2025, BOB 48,720 ($5,828) (December 31, 2024 – BOB 48,720 ($7,000)), was drawn down from this credit facility. | |
| Additionally, during December 2025, Sociedad Minera Illapa S.A. received BOB 20,000 ($2,392) from Banco BISA S.A. to cover payroll costs. The loan term is 180 calendar days and due on June 15, 2026. The loan is unsecured and has a fixed annual nominal rate of 10%. | |
| As at December 31, 2025, BOB 1,703 ($204) of the BOB 6,200 ($742) loan guarantee credit facility was used to provide collateral to the Bolivian government on VAT refunds received (December 31, 2024 – BOB 2,415 ($347)). | |
| On April 24, 2025, Sociedad Minera Illapa S.A. obtained a 360-day bank loan from Banco BISA S.A. with a fixed interest rate of 6.0% per annum. The facility is secured by a standby letter of credit guarantee issued by Stifel Bank where the marketable securities are held as collateral (refer to note 20). As at December 31, 2025, the loan amount outstanding was BOB 90,500 ($10,825). | |
| The Company also has an unsecured revolving credit facility for working capital requirements and a loan guarantee with Banco de Crédito de Bolivia S.A. for a total of BOB 48,020 ($5,744). The credit facility has a weighted average fixed interest rate of 6.0% and 10.00% per annum and the weighted average interest rate on the loan guarantee facility is 2.0%. | |
| As at December 31, 2025, BOB 50,078 ($5,990) (December 31, 2024 - BOB 52,332 ($7,519)) was drawn down on the credit facility and $nil (December 31, 2024 - $nil) was used on the loan guarantee. The credit facility has varying maturity dates up to February 2026. The loan guarantee is used for replacement parts for machinery imported from China. The collateral is a fixed term deposit with an annual percentage yield (APY) fixed at annual 6.00% for a term of 120 calendar days for an amount of BOB 3,433 ($411). | |
| The loan guarantee is used for the purpose of providing collateral to the Bolivian government for VAT refunds collected prior to the completion of the audit process by the Bolivian tax authority. All credit facilities are denominated in Bolivian Bolivianos. | |
| On March 31, 2025, Sociedad Minera Illapa S.A. obtained 180-day bank loan outstanding for BOB 45,962 ($5,498) from Banco de Crédito de Bolivia S.A. with a fixed interest rate of 6.00% per annum. The facility is secured by a standby letter of credit guarantee issued by Stifel Bank where the company holds some of its USD cash balances from sales revenues (refer to note 20). | |
| b) | Trafigura loan facility |
| On April 23, 2021, in connection with the acquisition of Zimapan, Trafigura Mexico, S.A. de C.V. (“Trafigura”) loaned the Company $17,616 under a new loan facility (“Trafigura Loan Facility”). | |
| The Trafigura Loan Facility is secured by a first charge over all Zimapan Mine assets and all other material rights and properties owned by Zilar Mendi. In addition, the Company issued to Trafigura 7,000,000 warrants (“Trafigura Warrants”), each Trafigura Warrant exercisable into a Santacruz common share at C$1.58 per share, for a period of 12 months with respect to 1,820,000 of the Trafigura Warrants and 42 months with respect to the remaining 5,180,000 Trafigura Warrants. As at December 31, 2024, a total of 3,320,000 Trafigura Warrants were exercised for gross proceeds to the Company of $4,049 (C$5,246). On October 24, 2024 the remaining 3,680,000 Trafigura Warrants expired unexercised. | |
| Pursuant to the Trafigura Loan Facility, Trafigura will have the right to offset payments owing by Trafigura to Zilar Mendi and/or its affiliates under existing commodity purchase and sale agreements against payments owing by Zilar Mendi to Trafigura under the Trafigura Loan. No offsets were made as of December 31, 2025. |
| 36 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
11. LOANS PAYABLE (continued)
| In the third quarter of 2024, the Company entered into a new amended and restated agreement to settle the outstanding principal amount of $4,156. The amended agreement has the same annual interest rate as the original agreement (1-month SOFR + 6.5%) and is for a period of 36 months, ending on October 31, 2027. The loan is repayable in monthly installments of principal plus accrued interest for the respective period. | |
| The agreement requires that the Company maintain a current ratio greater than 1.1:1 and that the debt to equity ratio not exceed 9:1. The Company is fully compliant with all financial covenants stipulated in the agreement as at December 31, 2025. | |
| On January 29, 2026, the Company made an early payment to settle the remaining balance of the loan facility, fully extinguishing the liability. | |
| c) | Other loans payable |
| In the fourth quarter of 2022, the Company entered into contracts to sell trucks and machinery for net proceeds of $1,310. The Company subsequently leased the trucks and machinery back from the counterparty for a period of five years at a financing charge of 10.0% per annum and is required to make quarterly lease payments plus accrued interest. | |
| As the contracts provide the Company the right to repurchase the trucks and machinery at the end of the term for their residual value of 1%, the Company has an irrevocable right to repurchase the assets, and control of the assets did not transfer to the counterparty. Hence, these contracts are accounted for as financing transactions in accordance with IFRS 9 - Financial Instruments, rather than as sale and leaseback transactions under IFRS 16 – Leases. | |
| In accordance with IFRS 9, these contracts were recorded as a financial liability at amortized cost using the effective interest rate method. As at December 31, 2025, the financial liability was $446 (December 31, 2024 - $744). No interest expense was accrued as it was immaterial. | |
| On February 14, 2026 the Company obtained an unsecured 6 month working capital term loan for BOB 17,150 ($2,051) with a fixed interest rate of 9.95% with repayment of interest and principal at the end of the term from Banco Mercantil Santa Cruz S.A. On March 17, 2026 obtained an unsecured 6 month working capital term loan for BOB 14,000 ($1,675) with a fixed interest rate of 10% with repayment of interest and principal at the end of the term from Banco Bisa S.A. | |
| d) | Promissory notes |
| On February 20, 2025, the Company completed an offering of BOB 70,000 ($8,373) in promissory notes under its San Lucas Promissory Notes Issuance program. The San Lucas Promissory Notes Issuance program allows the Company to issue up to BOB 140,000 ($16,746) in the Bolivian stock market (Bolsa Boliviana de Valores). The notes are denominated in Bolivian Bolivianos and have a 6.50% interest rate and a maturity date of February 15, 2026 and are unsecured. On February 15, 2026, the Company repaid the notes settling the liability in full. In accordance with IFRS 9, these contracts were recorded as a financial liability at amortized cost using the effective interest rate method. | |
| On August 8, 2025, the Company completed a second offering of BOB 70,000 ($8,373) in promissory notes under its San Lucas Promissory Notes Issuance program. The notes under the second offering have an interest rate of 7.00% and a maturity date of June 15, 2026. | |
| The promissory notes require that San Lucas maintain a current ratio greater than 1.15, a debt service ratio greater than 1.5, and that the debt to equity ratio not exceed 1.85. The Company is fully compliant with all financial covenants stipulated as at December 31, 2025. | |
| e) | Bonds |
| On December 30, 2024, the Financial System Supervisory Authority (ASFI) authorized the San Lucas Bonds Program. The San Lucas Bonds program allows the Company to issue up to $40,000 of unsecured bonds in the Bolivian Stock market (Bolsa Boliviana de Valores), the bonds can be denominated in USD or Bolivian Bolivianos. As at December 31, 2025, no bonds have been issued under the program. |
| 37 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
12. OTHER LIABILITIES
A summary of the Company’s other liabilities is as follows:
| December 31, 2025 | December 31, 2024 | |
| $ | $ | |
| Post employment benefits (note 12(a)) | 12,608 | 12,784 |
| Lease liability | 867 | 650 |
| Bolivia uncertain tax position financing arrangement (note 18(c)) | - | 5,974 |
| Other taxes payable (note 12(b)) | 5,106 | 6,976 |
| Long-term portion of current income taxes payable | 713 | 1,503 |
| Participation payable to COMIBOL for interest in joint operation (note 12(c)) | 8,873 | 8,977 |
| Other liabilities | 1,250 | 1,714 |
| Balance, end of the year | 29,417 | 38,578 |
| Less: current portion | (8,876) | (16,070) |
| Non-current portion | 20,541 | 22,508 |
| a) | Post-employment benefits |
| As at December 31, 2025, the Company recognized a provision of $1,933 ($1,473 as at December 31, 2024) for payments that must be made to employees upon termination of employment which is required by Mexican labour legislation. A provision of $9,694 ($11,311 as at December 31, 2024) has been recognized in Bolivia which entitles employees to receive a payment after five years of employment, if the employee resigns or is terminated before the 5-year period they are entitled to receive the amount accrued at the time of separation. Based on expected employee turnover, these provisions are considered non-current. | |
| b) | Other taxes payable |
| Other taxes payable includes amounts payable to the Mexican and Bolivian tax authorities for miscellaneous taxes such as payroll taxes, withholding taxes, VAT payables and income taxes from prior periods which are being paid under an installment plan. | |
| c) | Participation payable to COMIBOL for interest in joint operation |
| The net participation payable from COMIBOL is derived from the Illapa Joint Operation. The Company is solely responsible for 100% of certain transactions specified in the agreement and such transactions are recorded as liabilities where there is a net amount payable to COMIBOL. |
| 38 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
13. DECOMMISSIONING AND RESTORATION PROVISION
The Company has an obligation to undertake decommissioning, restoration, rehabilitation and environmental work when environmental disturbance is caused by the development and ongoing production of a mining operation. Movements in decommissioning liabilities during the years ended December 31, 2025 and 2024 are allocated as follows:
| Bolivar | Porco | Caballo Blanco Group |
San Lucas Group |
Zimapan | Total | |
| $ | $ | $ | $ | $ | $ | |
| Balance, December 31, 2023 | 3,105 | 5,296 | 6,092 | 2,773 | 6,241 | 23,507 |
| Change in estimate (Note 8) | 479 | 522 | 1,105 | 92 | (446) | 1,752 |
| Reclamation work performed | (192) | (8) | (83) | (81) | (74) | (438) |
| Accretion (Note 17) | 274 | 446 | 429 | 222 | 524 | 1,895 |
| Foreign exchange gain | - | - | - | - | (1,040) | (1,040) |
| Balance, December 31, 2024 | 3,666 | 6,256 | 7,543 | 3,006 | 5,205 | 25,676 |
| Less: current portion | (73) | (20) | (476) | (70) | - | (639) |
| Non-current portion | 3,593 | 6,236 | 7,067 | 2,936 | 5,205 | 25,037 |
| Balance, December 31, 2024 | 3,666 | 6,256 | 7,543 | 3,006 | 5,205 | 25,676 |
| Change in estimate (Note 8) | 813 | 1,113 | 570 | 399 | 111 | 3,006 |
| Reclamation work performed | (20) | (7) | (72) | (30) | - | (129) |
| Accretion (Note 17) | 250 | 423 | 698 | 286 | 490 | 2,147 |
| Foreign exchange gain | 443 | 655 | 2,445 | 1,104 | 669 | 5,316 |
| Balance, December 31, 2025 | 5,152 | 8,440 | 11,184 | 4,765 | 6,475 | 36,016 |
| Less: current portion | (84) | (15) | (650) | (73) | - | (822) |
| Non-current portion | 5,068 | 8,425 | 10,534 | 4,692 | 6,475 | 35,194 |
A provision for decommissioning liabilities is estimated based on current regulatory requirements and is recognized at the present value of such costs. The expected timing of cash flows in respect of the provision is based on the estimated life of the Company’s mining operations.
| Decommissioning and restoration provisions - December 31, 2025 | |||||
| Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | |
| Undiscounted uninflated estimated cash flow | $4,248 | $6,925 | $7,829 | $3,250 | $9,791 |
| Discount rate | 10.2% | 10.2% | 9.9% | 9.6% | 8.7% |
| Inflation rate | 20.2% | 20.2% | 20.2% | 20.2% | 3.6% |
| Decommissioning and restoration provisions - December 31, 2024 | |||||
| Bolivar | Porco | Caballo Blanco Group | San Lucas Group |
Zimapan | |
| Undiscounted uninflated estimated cash flow | $3,587 | $6,119 | $7,333 | $2,917 | $8,032 |
| Discount rate | 9.3% | 9.3% | 9.6% | 9.6% | 10.1% |
| Inflation rate | 10.0% | 10.0% | 10.0% | 10.0% | 3.7% |
| 39 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
14. SHARE CAPITAL
a) Authorized share capital
The Company is authorized to issue an unlimited number of common shares without par value.
b) Issued – share capital
During the year ended December 31, 2025, the Company issued 148,334 common shares from the vesting of RSUs, 200,000 common shares from the vesting of PSUs and 2,649,909 common shares from the exercising of Options for proceeds of $3,721. During the year ended December 31, 2024, the Company issued 1,216,100 shares from the exercise of options for proceeds of $642.
c) Stock options
On November 25, 2025 at the Company’s annual general meeting, shareholders re-approved the omnibus equity incentive plan (the “Omnibus Incentive Plan”). Pursuant to the Omnibus Incentive Plan, the Company may grant options, RSUs, PSUs, and DSUs to directors, officers, employees, management company employees, and consultants of the Company and its subsidiaries. The maximum number of shares available for issuance under the Omnibus Incentive Plan is limited to 10% of the issued and outstanding common shares.
Pursuant to the Omnibus Incentive Plan, options granted have a maximum term of ten years and the vesting provisions of options granted are at the discretion of the Board of Directors. Options are non-transferrable and the exercise price of the options shall be determined by the Board of Directors at the time the options are granted but in no event shall be lower than the discounted market price permitted by the TSX-V.
The following is a summary of the Company’s stock options for the years ended December 31, 2025 and December 31, 2024:
| Number of stock options | Weighted average exercise price | |
| # | C$ | |
| Balance, December 31, 2023 | 5,928,600 | 1.60 |
| Granted | 625,000 | 1.60 |
| Exercised | (1,216,100) | 0.72 |
| Cancelled | (1,725,000) | 1.71 |
| Balance, December 31, 2024 | 3,612,500 | 1.84 |
| Granted | 862,500 | 4.40 |
| Exercised | (2,663,544) | 1.94 |
| Cancelled | (54,166) | 3.54 |
| Balance, December 31, 2025 | 1,757,290 | 2.89 |
As at December 31, 2025, the Company had the following stock options outstanding:
| Options outstanding | Options exercisable | ||||||
Grant Date |
Date of expiry |
Number of options | Weighted average exercise price | Weighted average years until expiry | Number of options | Weighted average exercise price | Weighted average years until expiry |
| # | C$ | Years | # | C$ | Years | ||
| May 7, 2021 | May 7, 2026 | 575,000 | 1.88 | 0.35 | 575,000 | 1.88 | 0.35 |
| August 1, 2024 | August 1, 2029 | 409,375 | 1.60 | 3.59 | 117,709 | 1.60 | 3.59 |
| October 16, 2024 | October 16, 2029 | 18,750 | 1.64 | 3.79 | 18,750 | 1.64 | 3.79 |
| June 26, 2025 | June 26, 2030 | 754,165 | 4.40 | 4.49 | 204,170 | 4.40 | 4.49 |
| Balance, December 31, 2025 | 1,757,290 | 2.89 | 2.92 | 915,629 | 2.40 | 1.76 | |
During the year ended December 31, 2025, the Company recognized share-based compensation expense of $1,119 (2024 – ($89)) based on the fair value of the options granted in the current and prior years.
| 40 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
14. SHARE CAPITAL (continued)
The weighted average assumptions used in the Black-Scholes option pricing model were as follows:
| Assumption | Based on | 2025 | 2024 |
| Risk-free rate (%) | Yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options’ expected life | 2.83% | 3.02% |
| Expected life (years) | Expiry term of the options | 5 years | 5 years |
| Expected volatility (%) | Historical volatility of the Company’s share price | 89.86% | 87.08% |
| Dividend yield (%) | Annualized dividend rate as of the date of grant | nil | nil |
The weighted average closing share price on the date of the option exercises for the year ended December 31, 2025 was C$8.58 per share (year ended December 31, 2024 - C$1.68).
d) Warrants
The following is a summary of the Company’s warrants for the years ended December 31, 2025 and December 31, 2024:
| Number of warrants | Weighted average exercise price | |
| # | C$ | |
| Balance, December 31, 2023 | 15,805,490 | 1.72 |
| Expired | (15,805,490) | 1.72 |
| Balance, December 31, 2024 and December 31, 2025 | - | - |
All of the 15,805,490 warrants issued as at December 31, 2023 expired unexercised during 2024. When the warrants expired, the share-based compensation reserve corresponding to the warrants was transferred to contributed surplus. No additional warrants have been issued in the year ended December 31, 2025.
e) Restricted Share Units (“RSU”)
RSUs are non-transferrable awards for service which upon vesting and settlement entitle the recipient to receive cash or common shares of equivalent value at the discretion of the Company. The choice of settlement method is at the Company’s sole discretion and the RSUs have been accounted for assuming they will be settled through equity. Vesting conditions for RSUs are set by the Board of Directors.
The following is a summary of the Company’s RSUs for the years ended December 31, 2025 December 31, 2024:
| Number of RSUs outstanding | Weighted average fair value | |
| # | C$ | |
| Balance, December 31, 2023 | - | - |
| Granted | 206,250 | 1.38 |
| Balance, December 31, 2024 | 206,250 | 1.38 |
| Granted | 238,750 | 3.92 |
| Vested | (148,334) | 2.74 |
| Balance, December 31, 2025 | 296,666 | 2.74 |
| 41 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
14. SHARE CAPITAL (continued)
As at December 31, 2025, the Company had the following RSUs outstanding:
Grant Date |
Vesting Date | Number of RSUs outstanding | Weighted average fair value | Weighted average years until vesting |
| # | C$ | years | ||
| August 1, 2024 | April 1, 2026 | 68,751 | 1.38 | 0.25 |
| August 1, 2024 | April 1, 2027 | 68,749 | 1.38 | 1.25 |
| June 26, 2025 | June 26, 2026 | 79,586 | 3.92 | 0.48 |
| June 26, 2025 | June 26, 2027 | 79,580 | 3.92 | 1.48 |
| Balance, December 31, 2025 | 296,666 | 2.74 | 0.88 | |
During the year ended December 31, 2025, the Company recognized share-based compensation expense of $556 (2024 – $63) related to RSUs.
f) Deferred Share Units (“DSU”)
DSUs are non-transferrable awards that become payable upon termination of service of the participant. Vesting conditions for DSUs are set by the Board of Directors. Upon settlement, DSUs entitle the recipient to receive cash or common shares of an equivalent value at the discretion of the Company. Timing of settlement after vesting occurs at the discretion of the participant and communicated to the Company by the participant in writing at least fifteen days prior to the designated day, or an earlier date as the participant and the Company pay agree. If no notice is given by the participant for a designated day, the DSUs shall be payable on the first anniversary of the date on which the participant’s termination of service, or any earlier period on which the DSUs vest, at the sole discretion of the participant.
The following is a summary of the Company’s DSUs for the years ended December 31, 2025 and December 31, 2024:
| Number of DSUs outstanding | Weighted average fair value | |
| # | C$ | |
| Balance, December 31, 2023 | - | - |
| Granted | 168,750 | 1.38 |
| Balance, December 31, 2024 | 168,750 | 1.38 |
| Balance, December 31, 2025 | 168,750 | 1.38 |
As at December 31, 2025, the Company had the following DSUs outstanding:
Grant Date |
Vesting Date | Number of DSUs outstanding | Weighted average fair value | Weighted average years until vesting |
| # | C$ | years | ||
| August 1, 2024 | August 1, 2025 | 168,750 | 1.38 | 0.00 |
| Balance, December 31, 2025 | 168,750 | 1.38 | 0.00 | |
During the year ended December 31, 2025, the Company recognized share-based compensation expense of $97 (2024 – $70) related to DSUs.
| 42 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
14. SHARE CAPITAL (continued)
g) Performance Share Units (“PSU”)
PSUs are non-transferrable awards that will vest and become payable upon the attainment of performance criteria within a certain period, the criteria and the evaluation of performance in relation to the criteria is determined by the Board of Directors. PSUs are settled through cash or the issuance of common shares of equivalent value at the discretion of the Company. The choice of settlement method is at the Company’s sole discretion.
The following is a summary of the Company’s PSUs for the years ended December 31, 2025 and December 31, 2024:
| Number of PSUs outstanding | Weighted average fair value | |
| # | C$ | |
| Balance, December 31, 2023 | - | - |
| Granted | 312,500 | 1.38 |
| Cancelled | (62,500) | 1.38 |
| Balance, December 31, 2024 | 250,000 | 1.38 |
| Granted | 125,000 | 3.92 |
| Vested | (200,000) | 1.38 |
| Cancelled | (50,000) | 1.38 |
| Balance, December 31, 2025 | 125,000 | 3.92 |
As at December 31, 2025, the Company had the following PSUs outstanding:
Grant Date |
Vesting Date | Number of PSUs outstanding | Weighted average fair value | Weighted average years until vesting |
| # | C$ | years | ||
| June 26, 2025 | June 26, 2026 | 125,000 | 3.92 | 0.48 |
| Balance, December 31, 2025 | 125,000 | 3.92 | 0.48 | |
During the year ended December 31, 2025, the Company recognized share-based compensation expense of $270 (2024 – $61) related to PSUs.
| 43 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
15. COST OF SALES
Cost of sales excluding depletion, depreciation and amortization are costs that directly relate to production and generation of revenues at the operating segments. Significant components of cost of sales are comprised of the following:
| Year ended December 31, | ||
| 2025 | 2024 (1) | |
| $ | $ | |
| Consumables and materials | 16,120 | 18,527 |
| Energy | 3,219 | 4,502 |
| Insurance | 3,796 | 3,236 |
| Mining and plant maintenance costs | 85,272 | 90,851 |
| Ore and concentrate purchase costs | 56,166 | 46,610 |
| Other costs | (672) | 895 |
| Production Costs | 163,901 | 164,621 |
| Transportation and other selling costs | 23,698 | 23,551 |
| Mining royalties expense | 10,246 | 11,713 |
| Finished goods inventory changes | 1,648 | 6,170 |
| Cost of sales | 199,493 | 206,055 |
(1) Mine royalty expense relates to the mining royalty due to the Bolivian government as a result of mining operations at the Sinchi Wayra and Illapa businesses.
16. GENERAL AND ADMINISTRATIVE EXPENSES
A summary of the Company’s general and administrative expenses is as follows:
| Year ended December 31, | ||
| 2025 | 2024 | |
| $ | $ | |
| Community relationship | 1,701 | 2,106 |
| Corporate administration | 2,925 | 2,717 |
| Professional fees | 2,594 | 2,427 |
| Salaries and benefits | 8,487 | 11,960 |
| Tax penalties and inflation charges | 6,598 | 5,097 |
| 22,305 | 24,307 | |
| 44 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
17. FINANCE COSTS
A summary of the Company’s finance costs (income) is as follows:
| Year ended December 31, | ||
| 2025 | 2024 | |
| $ | $ | |
| Accretion of consideration payable (Note 10) | - | 1,578 |
| Accretion of decommissioning provisions (Note 13) | 2,147 | 1,895 |
| Accretion of Trafigura facility loan (Note 11) | - | 547 |
| Accretion (income) of receivable from COMIBOL | (1,056) | (2,924) |
| Financing charge on leases | 603 | 189 |
| Loss on change in fair value of consideration payable (Note 10) | 15,460 | 13,472 |
| Re-measurement of 12.2a COMIBOL CAPEX receivable | 2,927 | 1,868 |
| Interest expense, carrying and finance charges (Note 11) | 2,128 | 1,488 |
| Interest (income) | (1,511) | (480) |
| Other finance expense (income) | (8,330) | 599 |
| 12,368 | 18,232 | |
18. INCOME TAX
a) Income tax expense
A summary of the Company’s income tax expense is as follows:
| Year ended December 31, | ||
| 2025 | 2024 | |
| $ | $ | |
| Current tax expense | 25,746 | 27,976 |
| Deferred tax (recovery) | 6,732 | (424) |
| Income tax expense | 32,478 | 27,552 |
A summary of the Company’s reconciliation of income taxes at statutory rates for the year ended December 31, 2025 and 2024, is as follows:
| Year ended December 31, | ||
| 2025 | 2024 | |
| $ | $ | |
| Income before income taxes | 74,700 | 192,036 |
| Combined federal and provincial statutory income tax rates | 27% | 27% |
| Income tax expense at statutory rates | 20,169 | 51,850 |
| Permanent differences | (11,894) | (29,175) |
| Change due to differences in tax rates | 16,188 | 7,128 |
| Inflation adjustment | (192) | (402) |
| Change due to foreign translation | (13,148) | 29 |
| Deferred tax assets not recognized | 14,315 | (3,991) |
| Mexico mining royalty tax | 1,396 | 608 |
| Tax effect of investment in subsidiaries | (4,067) | 1,044 |
| Impact of change in accounting estimate | 9,215 | - |
| Others | 496 | 461 |
| Income tax expense | 32,478 | 27,552 |
| 45 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
18. INCOME TAX EXPENSE (continued)
b) Deferred taxes
The significant components of the Company’s deferred tax assets are as follows:
| December 31, 2025 | December 31, 2024 | |
| $ | $ | |
| Trade and other receivables | 1,916 | 1,346 |
| Other liabilities | 5,871 | 5,431 |
| Mineral properties, plant and equipment | 12 | 2,048 |
| Decommissioning and restoration provision | 2,671 | 2,554 |
| Non-capital losses | 2,706 | 2,813 |
| Capital losses | - | 4,607 |
| Inventories | - | 858 |
| Other assets | - | 497 |
| Mining tax | 616 | 128 |
| Other | 187 | 164 |
| Deferred tax assets | 13,979 | 20,446 |
The significant components of the Company’s deferred tax liabilities are as follows:
| December 31, 2025 | December 31, 2024 | |
| $ | $ | |
| Mineral properties, plant and equipment | (22,570) | (17,773) |
| Investment in subsidiaries | (1,916) | (5,954) |
| Inventories | (1,444) | (256) |
| Trade payables and accrued liabilities | (22) | (160) |
| COMIBOL initial investment period CAPEX receivable | (3,565) | (7,934) |
| Other | (2,676) | - |
| Deferred tax liabilities | (32,193) | (32,077) |
The following table reconciles the deferred tax assets and liabilities to the Consolidated Statements of Financial Position:
| December 31, 2025 | December 31, 2024 | |
| $ | $ | |
| Deferred tax assets | 6,798 | 9,602 |
| Deferred tax liabilities | (25,012) | (21,233) |
| (18,214) | (11,631) |
Deferred tax assets and liabilities that are probable to be utilized are offset if they relate to the same taxable entity and same taxation authority. Future potential tax deductions that do not offset deferred tax liabilities are considered to be deferred tax assets.
As at December 31, 2025, the Company had unrecognized capital losses of approximately $48,424 (December 31, 2024 - $16,355) that arose in Canada, the capital losses can be carried forward indefinitely.
As at December 31, 2025, the Company had unrecognized inflationary adjustments on its investments in subsidiaries of $21,315 (December 31, 2024 – $nil) that arose in Bolivia, the amount can be utilize upon sale of subsidiaries.
As at December 31, 2025 the Company has unrecognized taxable temporary differences of $87,100 (December 31, 2024 - $109,706) for taxes that would be payable on the unremitted earnings of certain subsidiaries of the Company.
| 46 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
18. INCOME TAX EXPENSE (continued)
c) Bolivia uncertain income tax position relating to tax year 2017
As part of the Acquisition, the Company assumed potential pre-acquisition income tax liabilities for Bolivia’s 2017 tax year related to decommissioning and restoration provisions, depreciation of mineral properties, plant and equipment, undeclared income, and non-deductible expenses in the determination of the Bolivian current income tax. In the second quarter of 2023, the Company received notification from the Bolivian tax authorities on its decision to deny an appeal and confirmed the tax reassessment of 132,559 BOB ($15,856), which includes tax interest and penalties. The Company and the Bolivian tax authorities agreed on a financing arrangement (“financing arrangement”) by making an initial deposit of 40,479 BOB ($4,841) (which represents 35% of the total balance) in the second quarter of 2023, and monthly instalments for the remaining balance of 75,175 BOB ($8,992) over the next five years to June 2028.
As the matter relates to income tax, and there was uncertainty over whether the relevant authorities will accept the current tax treatment under the Bolivian tax law, management concluded that it meets the definition of an uncertain tax treatment within the scope of IAS 12 – Income Taxes and IFRIC 23 – Uncertainty over Income Tax Treatments. In accordance with IFRIC 23, an entity shall consider whether it is probable (more likely than not) that a taxation authority will accept an uncertain tax treatment. If an entity concludes it is probable that a taxation authority will accept an uncertain tax treatment, the entity shall determine the taxable income or loss consistent with the tax treatment applied in its income tax filings. Pursuant to the Sinchi Wayra and Illapa acquisition agreements, Glencore has agreed to indemnify the Company for up to a maximum of $25,000, in aggregate, for all claims and liabilities arising from the acquisition. Such indemnification would, subject to such cap and certain conditions, extend to income tax liabilities. In the unlikely event that the Company exhausts all avenues and receives an unfavourable ruling, the Company is indemnified by the acquisition agreements and would not be liable for any income tax liability up to $25,000.
The Company successfully challenged the Bolivian tax authorities’ decision through legal proceedings with the Supreme Court of Justice and the Constitutional Court in Bolivia. On January 7, 2025 the Supreme Court of Justice ruled in favor of the Company by issuing sentence 188/2025 which nullified the previous rulings in favor of the tax authority and requires the tax authority issue a new assessment that is legally compliant. At that point management will determine whether or not to accept the new assessment or challenge it again. The tax authority appealed the decision during the second quarter of 2025, but the appeal was denied in October 2025. Management has concluded that the matter has been resolved, accordingly, the Company believes there is no current tax liability and has not recognized an expense related to this matter as at December 31, 2025.
As at December 31, 2025, the Company has remitted tax instalments totaling $9,356 inclusive of interest and penalties to the Bolivian tax authorities based on the financing arrangement mentioned in the first paragraph above. As the Company believes the current tax owing related to this matter is $nil and the amounts paid will ultimately be refunded to the Company, the total payment made to date of $9,356 has been recognized as “trade and other receivables” (Note 6). On February 27, 2026, the Company filed a formal refund request with the tax authority requesting the refund of the amounts paid. Due to the current legal status of the proceedings, management expects to receive the full amount and no valuation allowance has been recognized.
| 47 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
19. CAPITAL MANAGEMENT
The Company’s objective when managing its capital is to maintain its ability to continue as a going concern while at the same time maximizing the growth of its business and providing returns to its shareholders. The Company’s capital structure consists of shareholders’ equity (comprising issued capital plus equity reserves plus retained earnings (deficit)) with a shareholders’ equity of $179,058 as at December 31, 2025 (December 31, 2024 - $131,347).
The Company manages its capital structure and makes adjustments based on changes to its economic environment and the risk characteristics of the Company’s assets. The Company’s capital requirements are effectively managed based on the Company having a thorough reporting, planning and forecasting process to help identify the funds required to ensure the Company is able to meet its operating and growth objectives.
The Company is not subject to any externally imposed capital requirements with the exception of compliance with covenants for the Trafigura Loan Facility and for the San Lucas Promissory Notes Issuance program, see note 11(b) and note 11(d) for details.
20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The carrying amounts of the Company’s financial assets and financial liabilities by category are as follows:
| December 31, 2025 | Amortized cost | FVTPL | FVTOCI | Total |
| $ | $ | $ | ||
| Financial assets | ||||
| Cash and cash equivalents | 44,267 | - | - | 44,267 |
| Marketable securities | - | - | 22,462 | 22,462 |
| Trade and other receivables | 22,977 | 20,371 | - | 43,348 |
| 67,244 | 20,371 | 22,462 | 110,077 | |
| Financial liabilities | ||||
| Trade payables and accrued liabilities | 54,569 | - | - | 54,569 |
| Consideration payable | - | 20,243 | - | 20,243 |
| Loans payable | 51,986 | - | - | 51,986 |
| Other liabilities | 23,598 | - | - | 23,598 |
| 130,153 | 20,243 | - | 150,396 | |
| December 31, 2024 | ||||
| Financial assets | ||||
| Cash and cash equivalents | 35,721 | - | - | 35,721 |
| Trade and other receivables | 24,462 | 17,402 | - | 41,864 |
| 60,183 | 17,402 | - | 77,585 | |
| Financial liabilities | ||||
| Trade payables and accrued liabilities | 47,389 | - | - | 47,389 |
| Consideration payable | 34,625 | 10,158 | - | 44,783 |
| Loans payable | 19,569 | - | - | 19,569 |
| Other liabilities | 24,125 | - | - | 24,125 |
| 125,708 | 10,158 | - | 135,866 |
| 48 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
The categories of the fair value hierarchy that reflect the inputs to valuation techniques used to measure fair value are as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3: Inputs for the asset or liability based on unobservable market data.
The carrying values of cash and cash equivalents, other receivables, and trade payables and accrued liabilities approximate their fair values because of their short-term nature.
Marketable securities consist of US treasury notes and US treasury bills which are held as part of the Company’s cash position and liquidity management strategy. The marketable securities are measured at fair value using level 1 inputs, the unrealized gain/loss is recorded as other comprehensive income and once the securities are sold or mature the corresponding gain/loss is recorded as finance income/cost.
The securities are held with Stifel which uses a portion of the holdings as collateral for the Standby Letters of Credit that were issued to Banco BISA and Banco Credito de Bolivia (see note 11(a)). Although the securities held can be readily converted to cash, they are restricted to the extent that the amounts serve as collateral. The Standy Letter of credit issued to Banco BISA is for $10,000 and expires on May 26, 2026. The standby letter of credit issued to Banco Credito de Bolivia is for $5,800 and expires on March 26, 2026, and automatically renews each year. Since the standby letter of credit to Banco Credito de Bolivia will renew indefinitely, the amount held as collateral has been classified as non-current.
Trade receivables are measured at fair value using Level 2 inputs. The fair value of trade receivables is measured based on inputs other than quoted prices for the underlying commodity prices (silver, lead, zinc, copper) to which the receivable relates as the trade receivables are provisionally priced at the time of sale.
The fair value of the loans payable for disclosure purposes is determined using discounted cash flows based on the expected amounts and timing of future cash flows discounted using a market rate of interest adjusted for appropriate credit risk.
Consideration payable, comprised of contingent value rights (see note 10(b)), is measured at fair value using Level 3 inputs. The fair value is calculated using a Monte Carlo Simulation with key inputs and assumptions including the zinc spot price, the expected price of zinc in each year until December 31, 2032, the market risk-free rate and credit spread and the volatility and variability of historical zinc prices.
The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the consolidated statements of financial position at fair value on a recurring basis were categorized as follows:
| December 31, 2025 | December 31, 2024 | |||||
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |
| $ | $ | $ | $ | $ | $ | |
| Assets | ||||||
| Marketable securities | 22,462 | - | - | - | - | - |
| Trade and other receivables | - | 20,371 | - | - | 17,402 | - |
| 22,462 | 20,371 | - | - | 17,402 | - | |
| Liabilities | ||||||
| Consideration payable | - | - | 20,243 | - | - | 10,158 |
| - | - | 20,243 | - | - | 10,158 | |
The Company’s trade receivables arose from provisional concentrate sales and are valued using quoted market prices based on the forward London Metal Exchange for silver, zinc and lead and the London Bullion Market Association P.M. fix for silver.
The methodology and assessment of inputs for determining the fair value of financial assets and liabilities as well as the levels of hierarchy for the Company’s financial assets and liabilities measured at fair value remains unchanged from that at December 31, 2024.
| 49 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
The Company has exposure to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s trade receivables.
The Company has concentrate contracts to sell the zinc, lead and copper concentrates produced by all of the Company’s mines. Concentrate contracts are a common business practice in the mining industry. The terms of the concentrate contracts may require the Company to deliver concentrate that has a value greater than the payment received at the time of delivery, thereby introducing the Company to credit risk of the buyers of concentrates. Should any of these counterparties not honour purchase arrangements, or should any of them become insolvent, the Company may incur losses for products already shipped and be forced to sell its concentrates on the spot market or it may not have a market for its concentrates and therefore its future operating results may be materially adversely impacted. At December 31, 2025, the Company had receivable balances associated with buyers of its concentrates of $20,371 (December 31, 2024 - $17,402), the Company’s concentrate is sold to well-known and well-established international concentrate buyers.
The following financial assets represent the maximum credit risk to the Company:
| December 31, 2025 | December 31, 2024 | |
| $ | $ | |
| Cash and cash equivalents | 44,267 | 35,721 |
| Marketable securities | 22,462 | - |
| Trade and other receivables | 43,348 | 41,864 |
Management constantly monitors and assesses the credit risk resulting from its concentrate sales, trading counterparties and customers. With the exception to the above, the Company believes it is not exposed to significant credit risk.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows. The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansion plans. The Company strives to maintain sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash and marketable securities, and its committed loan facilities.
| 50 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following tables summarize the remaining contractual maturities of the Company’s financial liabilities and operating and capital commitments on an undiscounted basis at December 31, 2025:
| <1
year |
1
– 2 years |
2
– 5 years |
>5
years |
Total | |
| $ | $ | $ | $ | $ | |
| Trade payables and accrued liabilities | 47,402 | 7,167 | - | - | 54,569 |
| Consideration payable – CVR & additional payments | 1,697 | 4,644 | 13,147 | 9,035 | 28,523 |
| Loans payable | 50,642 | 1,344 | - | - | 51,986 |
| Lease payments | 854 | - | - | - | 854 |
| 100,595 | 13,155 | 13,147 | 9,035 | 135,932 |
Currency risk
The Company reports its financial statements in USD; however, the Company operates in jurisdictions that utilize other currencies. As a consequence, the financial results of the Company’s operations as reported in USD are subject to changes in the value of the USD relative to local currencies. Since the Company’s sales are denominated in USD and a portion of the Company’s operating costs and capital spending are in local currencies, the Company is negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse.
The sensitivity of the Company’s net loss to changes in the exchange rate between the US dollar and the Bolivian boliviano, the Mexican peso and the Canadian dollar, would be as follows: a 1% change in the US dollar exchange rate relative to the Bolivian boliviano would change the Company’s net income by approximately $540, a 1% change in the US dollar exchange rate relative to the Mexican peso would change the Company’s net income by approximately $151, and a 1% change in the US dollar exchange rate relative to the Canadian dollar would change the Company’s net income by approximately ($77).
The Company’s financial assets and liabilities as at December 31, 2025 are denominated in Canadian dollars, US dollars, Bolivian bolivianos and Mexican pesos and translated to US dollars as follows:
| CAD | BOB | USD | MXN | Total | |
| $ | $ | $ | $ | $ | |
| Financial assets | |||||
| Cash and cash equivalents | 2,024 | 21 | 41,468 | 754 | 44,267 |
| Marketable securities | - | - | 22,462 | - | 22,462 |
| Trade and other receivables | 24 | 21,694 | 21,532 | 98 | 43,348 |
| 2,048 | 21,715 | 85,462 | 852 | 110,077 | |
| Financial liabilities | |||||
| Trade payables and accrued liabilities | 728 | 35,040 | 5,944 | 12,857 | 54,569 |
| Consideration payable | - | - | 20,243 | - | 20,243 |
| Loans payable | - | 49,464 | 2,522 | - | 51,986 |
| Other liabilities | - | 10,675 | 10,124 | 2,799 | 23,598 |
| 728 | 95,179 | 38,833 | 15,656 | 150,396 | |
| Net financial assets (liabilities) | 1,320 | (73,464) | 46,629 | (14,804) | (40,319) |
| 51 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
Interest rate risk
Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest rates. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. As at December 31, 2025, the Company’s exposure to interest rate risk on interest bearing liabilities is limited to its consideration payable, loans payable and lease liabilities. Based on the Company’s interest rate exposure at December 31, 2025, a change of 1% increase or decrease of market interest rate would impact the Company’s income or loss by approximately $529.
Price risk
Metal price risk is the risk that changes in metal prices will affect the Company’s income or the value of its related financial instruments. The Company derives its revenue from the sale of silver, zinc, lead and copper. The Company’s sales are directly dependent on metal prices that have shown significant volatility and are beyond the Company’s control. Consistent with the Company’s mission to provide equity investors with exposure to changes in precious metal prices, the Company’s current policy is to not hedge the price of precious metal.
| 52 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
21. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
The Company’s related parties include its subsidiaries, joint arrangements and key management personnel. During its normal course of operation, the Company enters into transactions with its related parties for goods and services. All related party transactions for the years ended December 31, 2025 and 2024 have been disclosed in these consolidated financial statements.
These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.
Remuneration of key management personnel
Key management includes directors of the Company, the CEO, the CFO, the Executive Chairman, and other members of key management. Compensation to key management personnel was as follows:
| Year ended December 31, | ||
| 2025 | 2024 | |
| $ | $ | |
| Management and consulting fees | 2,723 | 2,806 |
| Share-based compensation expense | 1,655 | 61 |
| 4,378 | 2,867 | |
Of the $2,723 in management and consulting fees incurred with related parties during the year ended December 31, 2025, $231 (2024 - $158) was related to directors’ fees and $2,492 (2024 - $2,648), was related to management fees.
22. SEGMENT INFORMATION
The Company has identified its operating segments based on the internal reports that are reviewed and used by the chief executive officer and the executive management team, collectively the chief operating decision maker (“CODM”), in assessing performance and in determining the allocation of resources. The Company primarily manages its business by looking at individual producing and developing resource projects as well as the aggregate of the exploration and evaluation properties and typically segregate these projects between production, development, and exploration.
| a) | Operating segments |
|
The following reportable operating segments have been identified: the Bolivar mine and processing plant, the Porco mine and processing plant, the Caballo Blanco Group which includes the Tres Amigos, Colquechaquita mines and the Don Diego processing plant, the San Lucas Group which includes the Reserva mine and San Lucas feed sourcing business, Zimapan mine and processing plant, and Corporate and Other activities. The corporate division earns income that is considered incidental to the Company’s activities and therefore does not meet the definition of an operating segment. |
(1) In the following tables it should be noted that the CODM reviews Bolivar and Porco revenues, cost of sales information, capital expenditures, total assets and total liabilities on a 100% basis whereas this financial information is recorded at 45% in the consolidated statement of comprehensive income.
| 53 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
22. SEGMENT INFORMATION (continued)
a) Revenues, operating costs and gross profit by operating segment
| Year ended December 31, 2025 | Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Corporate and other | Illapa Joint Operation eliminations(1) | Inter-company eliminations | Total |
| Country | Bolivia | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | |
| Revenues | 71,616 | 36,500 | 79,196 | 99,364 | 102,439 | - | (58,511) | (4,222) | 326,382 |
| Mine operating costs | |||||||||
| Cost of sales | (37,244) | (23,937) | (31,103) | (77,288) | (67,767) | - | 33,624 | 4,222 | (199,493) |
| Depletion and amortization | (10,255) | (6,108) | (6,972) | (1,988) | (7,727) | - | 11,473 | - | (21,577) |
| Impairment reversals | 9,084 | - | - | - | - | - | (4,996) | - | 4,088 |
| (38,415) | (30,045) | (38,075) | (79,276) | (75,494) | - | 40,101 | 4,222 | (216,982) | |
| Gross profit | 33,201 | 6,455 | 41,121 | 20,088 | 26,945 | - | (18,410) | - | 109,400 |
| Year ended December 31, 2024 | Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Corporate and other | Illapa Joint Operation eliminations(1) | Inter-company eliminations | Total |
| Country | Bolivia | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | |
| Revenues | 84,160 | 40,168 | 68,239 | 80,719 | 81,688 | - | (66,863) | (5,124) | 282,987 |
| Mine operating costs | |||||||||
| Cost of sales | (53,089) | (34,134) | (46,117) | (70,232) | (55,094) | - | 47,487 | 5,124 | (206,055) |
| Depletion and amortization | (11,122) | (3,385) | (7,191) | (888) | (7,684) | - | 10,564 | - | (19,706) |
| (64,211) | (37,519) | (53,308) | (71,120) | (62,778) | - | 58,051 | 5,124 | (225,761) | |
| Gross profit | 19,949 | 2,649 | 14,931 | 9,599 | 18,910 | - | (8,812) | - | 57,226 |
b) Capital expenditures, assets and liabilities by operating segment
| As at December 31, 2025 | Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Corporate and other | Illapa Joint Operation eliminations(1) | Inter-company eliminations | Total |
| Country | Bolivia | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | |
| Capital expenditures | 11,184 | 1,887 | 5,097 | 3,895 | 15,602 | - | (7,046) | - | 30,619 |
| Total assets | 138,287 | 88,393 | 136,936 | 74,026 | 66,534 | 26,687 | (85,092) | - | 445,771 |
| Total liabilities | (56,573) | (39,876) | (133,428) | (4,405) | (42,714) | (20,502) | 30,785 | - | (266,713) |
| As at December 31, 2024 | Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Corporate and other | Illapa Joint Operation eliminations(1) | Inter-company eliminations | Total |
| Country | Bolivia | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | |
| Capital expenditures | 7,309 | 3,756 | 6,588 | 2,683 | 9,642 | - | (7,359) | - | 22,619 |
| Total assets | 119,275 | 72,971 | 92,386 | 89,962 | 59,878 | 16,582 | (77,029) | - | 374,025 |
| Total liabilities | (47,244) | (31,169) | (7,985) | (96,666) | (40,292) | (45,039) | 25,717 | - | (242,678) |
| 54 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
22. SEGMENT INFORMATION (continued)
c) Segment revenue by operating segment, product and major customers
| Year ended December 31, 2025 | Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Corporate and other | Illapa Joint Operation eliminations(1) | Inter-company eliminations | Total |
| Country | Bolivia | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | |
| Silver | 36,960 | 11,344 | 35,503 | 37,595 | 51,755 | - | - | - | 173,157 |
| Zinc | 34,689 | 24,727 | 39,170 | 65,974 | 43,072 | - | - | - | 207,632 |
| Lead | 1,536 | 993 | 3,726 | 4,060 | 8,559 | - | - | - | 18,874 |
| Copper | - | - | - | - | 9,450 | - | - | - | 9,450 |
| Illapa joint operation 55% interest | - | - | - | - | - | - | (58,511) | - | (58,511) |
| Intercompany transactions | 647 | 1,086 | 2,489 | - | - | - | - | (4,222) | - |
| Provisional pricing adjustments | 2,273 | 1,173 | 2,680 | (514) | 11,758 | - | - | - | 17,370 |
| Smelting and refining costs | (4,489) | (2,823) | (4,372) | (7,751) | (22,155) | - | - | - | (41,590) |
| Sales to external customers | 71,616 | 36,500 | 79,196 | 99,364 | 102,439 | - | (58,511) | (4,222) | 326,382 |
| Year ended December 31, 2024 | Bolivar | Porco | Caballo Blanco Group | San Lucas Group | Zimapan | Corporate and other | Illapa Joint Operation eliminations(1) | Inter-company eliminations | Total |
| Country | Bolivia | Bolivia | Bolivia | Bolivia | Mexico | Bolivia | Bolivia | ||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | |
| Silver | 44,525 | 13,477 | 26,105 | 25,237 | 40,717 | - | - | - | 150,061 |
| Zinc | 45,036 | 27,943 | 42,754 | 60,148 | 13,942 | - | - | - | 189,823 |
| Lead | 2,782 | 1,500 | 4,398 | 2,934 | 8,693 | - | - | - | 20,307 |
| Copper | - | - | - | - | 32,787 | - | - | - | 32,787 |
| Illapa
joint operation 55% interest |
- | - | - | - | - | - | (66,863) | - | (66,863) |
| Intercompany transactions | 1,088 | 1,670 | 2,366 | - | - | - | - | (5,124) | - |
| Provisional pricing adjustments | 1,650 | 1,619 | 1,979 | (636) | 7,293 | - | - | - | 11,905 |
| Smelting and refining costs | (10,921) | (6,041) | (9,363) | (6,964) | (21,744) | - | - | - | (55,033) |
| Sales to external customers | 84,160 | 40,168 | 68,239 | 80,719 | 81,688 | - | (66,863) | (5,124) | 282,987 |
During the year ended December 31, 2025, the Company had two customers (2024 – two customers). One customer accounted for 69% of the total sales revenue for the year ended December 31, 2025 (2024 – 71%). The other customer accounted for the remaining 31% of the total sales revenue for the year ended December 31, 2025 (2024 – 29%).
| 55 |
SANTACRUZ SILVER MINING LTD.
Notes to the Consolidated Financial Statements
Years ended December 31, 2025 and 2024
(Expressed in thousands of US dollars, unless otherwise noted)
23. EARNINGS PER SHARE
Earnings per share for the Company was calculated based on the following:
| Year ended December 31, | ||
| 2025 | 2024 | |
| Net income for the year | $42,222 | $164,484 |
| Weighted average number of shares outstanding | 89,849,385 | 88,438,988 |
| Earnings per share – basic | $0.47 | $1.86 |
| Year ended December 31, | ||
| 2025 | 2024 | |
| Net income for the year | $42,222 | $164,484 |
| Weighted average number of shares outstanding | 89,849,385 | 88,438,988 |
| Incremental shares from options, RSUs, DSUs and PSUs | 2,347,706 | 625,000 |
| Earnings per share – diluted | $0.46 | $1.85 |
Earnings per share is based on the weighted average number of common shares of the Company outstanding during the period. The diluted earnings per share reflects the potential dilution of common share equivalents, such as outstanding share options, RSUs, DSUs and PSUs in the weighted average number of common shares outstanding during the period, if dilutive.
The following securities could potentially dilute basic earnings per share in the future, but were not included in the computation of diluted earnings per share because they were anti-dilutive:
| 2025 | 2024 | |
| Stock options | - | 3,612,500 |
| - | 3,612,500 |
24. SUPPLEMENTAL CASH FLOW INFORMATION
A summary of the Company’s non-cash finance costs is as follows:
| Year ended December 31, | ||
| 2025 | 2024 | |
| $ | $ | |
| Accretion of consideration payable (Note 10) | - | 1,578 |
| Accretion of decommissioning provision (Note 13) | 2,147 | 1,895 |
| Accretion of Trafigura Loan Facility (Note 11(b)) | - | 547 |
| Accretion of COMIBOL initial investment CAPEX receivable (Note 6(a)) | (1,056) | (2,924) |
| Finance charges on leases | 603 | 189 |
| Loss on change in fair value of consideration payable (Note 10) | 15,460 | 13,472 |
| Loss on remeasurement of cash flows related to CAPEX receivable (Note 6(a)) | 2,927 | 1,868 |
| Interest expense, carrying and finance charges (Note 11) | 2,128 | 1,488 |
| 22,209 | 18,113 | |
Other non-cash transactions not included in the table above are disclosed elsewhere in the notes to the consolidated financial statements.
| 56 |
Exhibit 99.2
Form 52-109FV1
Certification of Annual Filings
Venture Issuer Basic Certificate
I, Arturo Préstamo Elizondo, Chief Executive Officer of Santacruz Silver Mining Ltd., certify the following:
| 1. | Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Santacruz Silver Mining Ltd. (the “issuer”) for the financial year ended December 31, 2025. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings. |
| Date: March 31, 2026 | |
| /s/ “Arturo Préstamo Elizondo” | |
Arturo Préstamo Elizondo Chief Executive Officer |
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
| i) | controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
| 1 |
Exhibit 99.3
Form 52-109FV1
Certification of Annual Filings
Venture Issuer Basic Certificate
I, Andrés Bedregal, Interim Chief Financial Officer of Santacruz Silver Mining Ltd., certify the following:
| 1. | Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Santacruz Silver Mining Ltd. (the “issuer”) for the financial year ended December 31, 2025. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings. |
| Date: March 31, 2026 | |
| /s/ “Andrés Bedregal” | |
| Andrés Bedregal | |
| Chief Financial Officer |
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
| i) | controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
| 1 |
Exhibit 99.4
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
480 - 1140 West Pender Street, Vancouver, BC, V6E 4G1
www.santacruzsilver.com
Table of Contents
| Company Overview | 4 |
| Management Business Overview and Outlook | 5 |
| 2025 Annual Highlights | 6 |
| Selected Annual and Quarterly Production Results | 7 |
| Bolivar Mine Operating Results | 11 |
| Porco Mine Operating Results | 13 |
| Caballo Blanco Group Operating Results | 14 |
| San Lucas Group Operating Results | 15 |
| Zimapan Mine | 16 |
| Other Properties | 17 |
| Qualified Person and Technical Disclosures | 17 |
| Overview of Financial Results | 18 |
| Quarters ended December 31, 2025 and 2024 | 18 |
| Year ended December 31, 2025 and 2024 | 19 |
| Summary of Quarterly Results | 20 |
| Liquidity, Capital Resources and Contractual Obligations | 21 |
| Off-balance Sheet Arrangements | 23 |
| Transactions with Related Parties | 23 |
| Subsequent Events | 23 |
| Material Accounting Estimates and Judgments | 24 |
| Accounting Policies Including Changes in Accounting Policies and Initial Adoption | 24 |
| Financial Instruments and Other Instruments | 24 |
| Outstanding Share Data | 27 |
| Internal Controls over Financial Reporting and Disclosure Controls and Procedures | 27 |
| Non-GAAP Measures | 28 |
| Cautionary Note Regarding Forward-looking Information | 35 |
| Risk Factors | 36 |
| Additional Information | 52 |
| - 2 - |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
This Management’s Discussion and Analysis of results of operations and financial condition (“MD&A”) should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2025 and the notes thereto of Santacruz Silver Mining Ltd. (“the Company” or “Santacruz”) which have been prepared in accordance with IFRS Accounting Standards (“IFRS®”), as issued by the International Accounting Standards Board (“IASB”).
All dollar amounts are expressed in thousands of US dollars unless otherwise indicated. Unless otherwise noted, references to “C$” are to thousands of Canadian dollars, references to “MXN” are to thousands of Mexican pesos and references to “BOB” are to thousands of Bolivian bolivianos.
Certain amounts shown in this MD&A may not add exactly to total amounts due to rounding differences. Throughout this MD&A, the terms first quarter, second quarter, third quarter, fourth quarter and year to date are respectively used interchangeably with the terms Q1, Q2, Q3, Q4 and YTD.
This MD&A contains “forward-looking information” within the meaning of applicable Canadian securities regulation and should be read in conjunction with the “Risk Factors” and “Cautionary Note Regarding Forward-looking Information” section in this MD&A.
All information contained in this MD&A is current and has been approved by the Board of Directors of the Company as of March 27, 2026.
| - 3 - |
Company Overview
Santacruz was incorporated pursuant to the Business Corporations Act of British Columbia on January 24, 2011. The Company’s registered office is located at 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia, Canada V6E 2J3. The Company is listed for trading on the TSX Venture Exchange (‘‘TSX-V’’) and the Nasdaq Capital Market (“NASDAQ”) under the symbol ‘‘SCZ’’.
The Company is engaged in the operation, acquisition, exploration and development of mineral properties in Latin America, with a primary focus on silver and zinc, but also including lead and copper. As at December 31, 2025, the Company had acquired ownership including mining concession rights to the following mineral properties:
Bolivia:
| ● | Sinchi Wayra (“Sinchi Wayra”), which consists of the following mineral properties and businesses located in Bolivia: |
| ○ | the Caballo Blanco Group which includes the Tres Amigos and Colquechaquita mines (the “Caballo Blanco Group” or “Caballo Blanco”) and the Don Diego processing plant (the “Don Diego Processing Plant” or “Don Diego”), which processes production from the Caballo Blanco Group as well as toll milling from the San Lucas feed sourcing business; | |
| ○ | the San Lucas Group which includes the San Lucas feed sourcing and trading business and the Reserva mine (the “San Lucas Group” or “San Lucas”); and | |
| ○ | the Soracaya exploration project (the “Soracaya Project” or “Soracaya”). |
| ● | Illapa (“Illapa”), with its operations held under a net operating cash flow interest agreement with Corporación Minera de Bolivia (“COMIBOL”) a Bolivian state-owned entity comprising: |
| ○ | the Bolivar mine (the “Bolivar Mine” or “Bolivar”) and process plant complex; and | |
| ○ | the Porco mine (the “Porco Mine” or “Porco”) and process plant complex. |
Mexico:
| ○ | The Zimapan mine (the “Zimapan Mine” or “Zimapan”) and processing plant located in Hidalgo, Mexico. |
Management has assessed the nature of its interest in the Illapa business and determined it to be a joint operation. The Company records its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. The Company is solely responsible for certain specific transactions made by the Illapa business, and for these transactions, the assets, liabilities, revenues and expenses are recognized at 100% in the Company’s Financial Statements and result in balances payable to or owed from COMIBOL for its share of the joint operation. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL’s 55% interest (refer to Note 22 of the audited consolidated financial statements).
In this MD&A, The Company reports 100% of production and sales from the Bolívar and Porco operations. Under the Association Agreement, Illapa S.A. is the designated operator and holds exclusive, comprehensive responsibility for all technical, financial, labor, legal, and commercial aspects of the operations. The Agreement grants Illapa full control over the mining production chain, including the exclusive right to commercialize concentrates in both domestic and international markets and to manage all related commercial processes.
COMIBOL’s entitlement under the Agreement is not a direct share of production, but rather a 55% participation in net cash flow. Accordingly, management believes that reporting production on a 100% gross basis appropriately reflects the operational substance of the arrangement, while COMIBOL’s interest is more accurately represented as an economic participation in net cash flow rather than a direct operational interest in the underlying production.
Since the Company is the operator of the Bolivar and Porco mines, management evaluates the performance of each operation by reviewing production on a 100% basis. Since the information of 100% production results is used to make decisions about allocating resources and assessing performance, this MD&A is prepared under the same basis.
In this MD&A, operational information for Bolivar and Porco is presented at 100%. Readers of this MD&A are cautioned that although in the operating section of this MD&A the Company reports 100% of the production and sales information, the Company records 45% of the assets, liabilities, revenues and expenses in its consolidated financial statements. In contrast to the operational information, all financial information presented in this MD&A is reported showing 45% of the assets, liabilities, revenues and expenses which coincides with the information presented in the audited consolidated financial statements.
| - 4 - |
Company Overview (continued)
From the acquisition of the Bolivian operations through to December 2024, the Company has used the official fixed rate of 6.96 BOB/USD to record transactions denominated in BOB. Commencing January 1, 2025, the Company has been recording transactions denominated in Bolivian Bolivianos using a spot rate determined by an estimation technique instead of the official rate. The Company believes this methodology for calculating the foreign exchange from BOB to USD is a more accurate representation of the current economic conditions in Bolivia. The average rate determined by using the new valuation technique for the year ended December 31, 2025 was 11.92 BOB/USD. All monetary assets and liabilities outstanding as at December 31, 2025 have been revalued using a spot rate of 8.36 BOB/USD.
Management Business Overview and Outlook
2026 Bolivian Operating Priorities:
The Company’s Bolivian operations will remain focused on operational stability, cost discipline and plant performance in 2026. At Bolívar, management continues to advance the recovery of the areas affected by the localized flooding event encountered in 2025. Progress to date has been encouraging, and the affected areas are expected to recover gradually through 2026, with a return to full production anticipated during the year. At Porco, the Company’s smallest and predominantly zinc-oriented mining operation, the priority for 2026 will be to maintain operating stability and support revenue generation through continued focus on zinc production. At Caballo Blanco, the Company’s most efficient operation, management’s objective is to preserve, sustain and further deepen the operating efficiencies achieved to date. San Lucas will continue to play a strategic role in keeping plants utilized through third-party ore supply, supporting fixed-cost absorption, cost efficiency and meaningful revenue contribution. Across the Bolivian platform, the Company’s strategy remains centered on optimizing mining costs, improving plant recoveries and maintaining the flexibility of its integrated operating base.
2026 Mexican Operating Priorities:
In Mexico, the Company’s principal operating focus in 2026 will be on improving metallurgical recoveries and concentrate quality at Zimapán. As the Company’s highest-volume operation, Zimapán has a direct impact on consolidated revenue and operating performance, making recoveries and concentrate quality key priorities. Capital has already been invested toward these objectives, and management expects those initiatives to continue supporting operating improvement through 2026. The Company will also maintain its focus on cost discipline, process optimization and the continued strengthening of operating integration across the broader portfolio in support of more consistent production and financial performance.
Final Settlement of Base Purchase Price Obligation:
On September 5, 2025 the Company made the final installment payment to Glencore extinguishing the Base Purchase Price obligation for the acquisition of the Company’s Bolivian operations. The Company paid a total of $40,000 exercising the accelerated payment option which settled the $80,000 liability in full leaving only the Contingent Value Rights (CVR) & additional payments obligation outstanding. The CVR and additional payment obligations will only become payable should the spot price of zinc exceed a base price of $3,850 per tonne and is subject to a valuation cap, since the beginning of the agreement no payments have been made because the price of zinc has not exceeded the base price. The CVR and Additional Payments are effective until the earlier of December 31, 2032 or the date that the valuation cap is reached.
| - 5 - |
2025 Annual Highlights
| 22025 | 2024 | Change ‘25 vs ‘24 | |
Operational |
|||
| Material Processed (tonnes milled) | 1,945,261 | 1,955,904 | (1%) |
| Silver Equivalent Produced (ounces) (1) | 14,399,019 | 16,173,293 | (11%) |
| Silver Ounces Produced | 5,598,680 | 6,718,380 | (17%) |
| Zinc Tonnes Produced | 87,295 | 94,399 | (8%) |
| Lead Tonnes Produced | 11,094 | 11,820 | (6%) |
| Copper Tonnes Produced | 1,126 | 1,057 | 7% |
| Silver Equivalent Sold (payable ounces) (2) | 10,934,731 | 14,089,723 | (22%) |
| Cash Cost of Production per Tonne (3) | 95.80 | 101.35 | (5%) |
| Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3) | 24.93 | 21.90 | 14% |
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3) | 30.81 | 26.09 | 18% |
| Average Realized Price per Ounce of Silver Equivalent Sold ($/oz) (2) (3) (4) | 39.00 | 28.74 | 36% |
Financial |
|||
| Revenues | 326,382 | 282,987 | 15% |
| Gross Profit | 109,400 | 57,226 | 91% |
| Net Income | 42,222 | 164,484 | (74%) |
| Net Earnings Per Share - Basic ($/share) | 0.47 | 0.49 | (4%) |
| Adjusted EBITDA (3) | 104,584 | 52,625 | 99% |
| Cash | 44,267 | 35,721 | 24% |
| Working Capital | 63,688 | 46,296 | 38% |
2025 Annual Production Summary - By Mine
| Bolivar (5) | Porco (5) | Caballo Blanco Group |
San Lucas Group |
Zimapan | Total | |
| Material Processed (tonnes milled) | 232,448 | 197,231 | 234,709 | 387,805 | 893,067 | 1,945,261 |
| Silver Equivalent Produced (ounces) (1) | 2,374,121 | 1,377,234 | 2,782,260 | 3,881,319 | 3,984,086 | 14,399,019 |
| Silver Ounces Produced | 1,059,846 | 400,486 | 1,192,022 | 1,308,128 | 1,638,198 | 5,598,680 |
| Zinc Tonnes Produced | 14,367 | 10,675 | 16,063 | 27,419 | 18,771 | 87,295 |
| Lead Tonnes Produced | 674 | 504 | 2,573 | 2,264 | 5,080 | 11,094 |
| Copper Tonnes Produced | N/A | N/A | N/A | N/A | 1,126 | 1,126 |
| Average head grades per mine: | ||||||
| Silver (g/t) | 158 | 77 | 170 | 127 | 78 | 109 |
| Zinc (%) | 6.73 | 5.77 | 7.28 | 7.89 | 2.74 | 5.10 |
| Lead (%) | 0.41 | 0.36 | 1.34 | 0.91 | 0.73 | 0.76 |
| Copper (%) | N/A | N/A | N/A | N/A | 0.26 | 0.26 |
| Metal recovery per mine: | ||||||
| Silver (%) | 90 | 82 | 93 | 83 | 73 | 80 |
| Zinc (%) | 92 | 94 | 94 | 90 | 77 | 85 |
| Lead (%) | 71 | 70 | 82 | 64 | 78 | 74 |
| Copper (%) | N/A | N/A | N/A | N/A | 49 | 49 |
| Silver Equivalent Sold (payable ounces) (2) | 1,983,106 | 1,006,027 | 2,035,431 | 2,939,466 | 2,970,701 | 10,934,731 |
Notes for both tables above:
| (1) | Silver Equivalent Produced (ounces) have been calculated using prices of $31.41/oz, $2,775.53/ton, $2,085.90/ton and $9,762.69/ton for silver, zinc, lead and copper respectively applied to the metal production divided by the silver price as stated here. |
| (2) | Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold stated in the table above, applied to the payable metal content of the concentrates sold from Bolivar, Porco, the Caballo Blanco Group, San Lucas Group and Zimapan. |
| (3) | The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold, All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold, Average Realized Price per Ounce of Silver Equivalent Sold, and Adjusted EBITDA. These measures are widely used in the mining industry as a benchmark for performance but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See ‘‘Non-GAAP Measures’’ section below for definitions. |
| (4) | Average Realized Price per Ounce of Silver Equivalent Sold is prior to all treatment, smelting and refining charges. |
| (5) | Bolivar and Porco are presented at 100% whereas the Company records 45% of revenues and expenses in its consolidated financial statements. |
| - 6 - |
Selected Annual and Quarterly Production Results
| 2025 Q4 | 2025 Q3 | 2025 Q2 | 2025 Q1 | 2025 YTD | 2024 YTD | Change Q4 vs Q3 |
Change ‘25 vs ‘24 | |
| Material Processed (tonnes milled) | ||||||||
| Bolivar (4) | 63,267 | 52,023 | 54,803 | 62,356 | 232,448 | 284,634 | 22% | (18%) |
| Porco (4) | 51,416 | 49,161 | 49,152 | 47,501 | 197,231 | 204,585 | 5% | (4%) |
| Caballo Blanco Group | 63,067 | 62,221 | 57,773 | 51,648 | 234,709 | 275,273 | 1% | (15%) |
| San Lucas Group | 105,587 | 100,550 | 94,973 | 86,695 | 387,805 | 341,649 | 5% | 14% |
| Zimapan | 222,703 | 222,629 | 224,162 | 223,573 | 893,067 | 849,764 | (0%) | 5% |
| Total | 506,040 | 486,584 | 480,863 | 471,773 | 1,945,261 | 1,955,905 | 4% | (1%) |
| Silver Equivalent Produced (ounces) (1) | ||||||||
| Bolivar (4) | 565,694 | 420,612 | 601,516 | 786,299 | 2,374,121 | 3,630,036 | 34% | (35%) |
| Porco (4) | 330,176 | 318,694 | 360,841 | 367,523 | 1,377,234 | 1,762,341 | 4% | (22%) |
| Caballo Blanco Group | 730,108 | 707,465 | 685,479 | 659,208 | 2,782,260 | 3,018,705 | 3% | (8%) |
| San Lucas Group | 1,095,945 | 986,403 | 940,457 | 858,514 | 3,881,319 | 3,949,992 | 11% | (2%) |
| Zimapan | 1,017,096 | 991,643 | 958,761 | 1,016,585 | 3,984,086 | 3,812,220 | 3% | 5% |
| Total | 3,739,019 | 3,424,817 | 3,547,054 | 3,688,129 | 14,399,019 | 16,173,293 | 9% | (11%) |
| Silver Ounces Produced | ||||||||
| Bolivar (4) | 202,193 | 132,146 | 304,468 | 421,040 | 1,059,846 | 1,828,098 | 53% | (42%) |
| Porco (4) | 82,047 | 92,001 | 105,901 | 120,537 | 400,486 | 645,250 | (11%) | (38%) |
| Caballo Blanco Group | 289,446 | 294,524 | 294,786 | 313,266 | 1,192,022 | 1,220,757 | (2%) | (2%) |
| San Lucas Group | 366,600 | 326,873 | 319,634 | 295,021 | 1,308,128 | 1,344,242 | 12% | (3%) |
| Zimapan | 403,321 | 396,385 | 398,292 | 440,199 | 1,638,198 | 1,680,033 | 2% | (2%) |
| Total | 1,343,607 | 1,241,929 | 1,423,081 | 1,590,063 | 5,598,680 | 6,718,380 | 8% | (17%) |
| Zinc Tonnes Produced | ||||||||
| Bolivar (4) | 3,973 | 3,186 | 3,225 | 3,983 | 14,367 | 19,395 | 25% | (26%) |
| Porco (4) | 2,727 | 2,488 | 2,786 | 2,674 | 10,675 | 12,044 | 10% | (11%) |
| Caballo Blanco Group | 4,409 | 4,131 | 3,974 | 3,549 | 16,063 | 18,606 | 7% | (14%) |
| San Lucas Group | 7,729 | 7,032 | 6,643 | 6,015 | 27,419 | 28,042 | 10% | (2%) |
| Zimapan | 5,008 | 4,744 | 4,520 | 4,498 | 18,771 | 16,311 | 6% | 15% |
| Total | 23,846 | 21,581 | 21,148 | 20,719 | 87,295 | 94,399 | 10% | (8%) |
Lead Tonnes Produced |
||||||||
| Bolivar (4) | 187 | 104 | 182 | 201 | 674 | 1,326 | 80% | (49%) |
| Porco (4) | 108 | 103 | 132 | 161 | 504 | 795 | 5% | (37%) |
| Caballo Blanco Group | 769 | 722 | 595 | 486 | 2,573 | 2,316 | 7% | 11% |
| San Lucas Group | 699 | 575 | 509 | 481 | 2,264 | 1,924 | 22% | 18% |
| Zimapan | 1,237 | 1,099 | 1,355 | 1,389 | 5,080 | 5,458 | 13% | (7%) |
| Total | 3,000 | 2,603 | 2,773 | 2,718 | 11,094 | 11,820 | 15% | (6%) |
Copper Tonnes Produced |
||||||||
| Zimapan | 287 | 331 | 229 | 279 | 1,126 | 1,057 | (13%) | 7% |
| Total | 287 | 331 | 229 | 279 | 1,126 | 1,057 | (13%) | 7% |
Silver Equivalent Sold (payable ounces) (2) |
||||||||
| Bolivar (4) | 378,140 | 281,420 | 586,851 | 736,696 | 1,983,106 | 3,298,649 | 34% | (40%) |
| Porco (4) | 155,338 | 242,697 | 254,284 | 353,708 | 1,006,027 | 1,540,699 | (36%) | (35%) |
| Caballo Blanco Group | 392,362 | 530,408 | 596,038 | 516,624 | 2,035,431 | 2,600,400 | (26%) | (22%) |
| San Lucas Group | 833,017 | 719,714 | 774,550 | 612,185 | 2,939,466 | 3,163,910 | 16% | (7%) |
| Zimapan | 649,079 | 699,865 | 781,413 | 840,343 | 2,970,701 | 3,486,063 | (7%) | (15%) |
| Total | 2,407,936 | 2,474,104 | 2,993,136 | 3,059,556 | 10,934,731 | 14,089,722 | (3%) | (22%) |
| - 7 - |
Selected Annual and Quarterly Production Results (continued)
2025 Q4 |
2025 Q3 |
2025 Q2 |
2025 Q1 |
2025 YTD(5) |
2024 YTD(5) | Change Q4 vs Q3 |
Change ‘25 vs ‘24 | |
| Cash Cost of Production per Tonne (3) | ||||||||
| Bolivar (4) | 121.15 | 139.93 | 94.96 | 81.19 | 108.46 | 122.34 | (13%) | (11%) |
| Porco (4) | 91.01 | 90.27 | 66.26 | 69.14 | 79.39 | 105.81 | 1% | (25%) |
| Caballo Blanco Group (4) | 78.83 | 69.44 | 54.70 | 56.27 | 65.44 | 98.87 | 14% | (34%) |
| San Lucas Group | 288.52 | 191.05 | 130.84 | 101.64 | 182.85 | 184.43 | 51% | (1%) |
| Zimapan | 71.44 | 60.47 | 68.52 | 64.75 | 66.30 | 60.64 | 18% | 9% |
| Total | 125.86 | 100.11 | 81.95 | 73.22 | 95.80 | 101.35 | 26% | (5%) |
Cash Cost per Silver Equivalent Ounce Sold (3) |
||||||||
| Bolivar (4) | 31.34 | 34.51 | 14.86 | 13.50 | 20.29 | 18.72 | (9%) | 8% |
| Porco (4) | 39.78 | 29.76 | 19.78 | 16.60 | 24.16 | 23.77 | 34% | 2% |
| Caballo Blanco Group (4) | 26.45 | 18.32 | 10.85 | 12.66 | 16.26 | 21.09 | 44% | (23%) |
| San Lucas Group | 39.75 | 34.40 | 21.37 | 17.34 | 28.93 | 24.81 | 16% | 17% |
| Zimapan | 42.17 | 27.74 | 27.56 | 25.70 | 30.27 | 22.04 | 52% | 37% |
| Total | 36.92 | 28.62 | 19.48 | 17.84 | 24.93 | 21.90 | 29% | 14% |
All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold (3) |
||||||||
| Bolivar (4) | 47.88 | 50.89 | 17.55 | 16.79 | 27.78 | 21.54 | (6%) | 29% |
| Porco (4) | 49.52 | 36.30 | 22.35 | 19.63 | 28.95 | 27.54 | 36% | 5% |
| Caballo Blanco Group (4) | 37.65 | 22.34 | 13.87 | 14.78 | 20.89 | 24.58 | 69% | (15%) |
| San Lucas Group | 44.80 | 38.57 | 23.69 | 19.16 | 32.37 | 26.72 | 16% | 21% |
| Zimapan | 50.52 | 34.50 | 32.35 | 34.32 | 37.39 | 26.10 | 46% | 43% |
| Total | 46.42 | 35.62 | 22.95 | 22.34 | 30.81 | 26.09 | 30% | 18% |
| Underground development (m) | 11,558 | 12,634 | 11,531 | 10,135 | 45,858 | 41,970 | (9%) | 9% |
| Core Drilling (m) | 7,313 | 8,631 | 4,689 | 3,179 | 23,812 | 17,631 | (15%) | 35% |
| (1) | Silver Equivalent Produced (ounces) have been calculated using prices of $31.41/oz, $2,775.53/ton, $2,085.90/ton and $9,762.69/ton for silver, zinc, lead and copper respectively applied to the metal production divided by the silver price as stated here. |
| (2) | Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold in the Non-GAAP Measures section, applied to the payable metal content of the concentrates sold from Bolivar, Porco, the Caballo Blanco Group, San Lucas and Zimapan. |
| (3) | The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold, All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold and Average Realized Price per Ounce of Silver Equivalent Sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See ‘‘Non-GAAP Measures’’ section below for definitions. |
| (4) | Bolivar and Porco are presented at 100% whereas the Company records 45% of revenues and expenses in its consolidated financial statements. |
| - 8 - |
Selected Annual and Quarterly Production Results (continued)
For the year ended 2025, the Company processed 1,945,261 tonnes of ore, producing 14,399,019 silver equivalent (AgEq) ounces. This total includes 5,598,680 ounces of silver and 87,295 tonnes of zinc. In the fourth quarter of 2025 the Company reported 3,739,019 silver equivalent ounces produced. The complete annual and Q4 2025 production results were released in a news release dated January 26, 2026.
The silver equivalent ounces produced figures reported in 2025 and 2024 have been calculated using the Company’s 2025 budgeted metal prices of $31.41/oz for silver, $2,776/ton for zinc, $2,086/ton for lead, and $9,763/ton for copper. Given the significant increase in silver prices during the fourth quarter of 2025, the Company has performed a supplemental calculation of AgEq ounces produced using the actual Q4 2025 average market prices of $54.83/oz for silver, $3,165/ton for zinc, $1,971/ton for lead, and $11,100/ton for copper. When using the Q4 actual market prices, the supplemental AgEq ounces produced is 2,886,206 AgEq ounces. The decreased AgEq ounces produced is caused by silver price’s outperformance relative to the other metals the company produces causing a significantly lower silver-equivalent conversion ratio for those by-products. The supplemental AgEq ounces calculation was provided to give readers additional context to evaluate production metrics and should be considered in conjunction with the Company’s primary silver equivalent calculation based on budget metal prices.
2025 YTD vs 2024 YTD
For the year ended December 31, 2025, Santacruz processed 1,945,261 tonnes of ore, broadly in line with 2024, while silver equivalent production decreased 11% to 14.4 million ounces. The reduction was driven primarily by the mid-May 2025 water inflow at Bolívar, which restricted access to the Pomabamba and Nané higher-silver-grade areas for a significant portion of the year, materially reducing consolidated silver output. As a result, silver production declined 17% year over year, while zinc production decreased 8%.
Outside of Bolívar, the portfolio remained comparatively stable and continued to demonstrate the benefit of the Company’s diversified operating base. San Lucas increased tonnes processed by 14% and continued to support plant utilization and fixed-cost absorption across the group, while Zimapán increased silver equivalent production by 5% on higher zinc output. Caballo Blanco remained a consistent contributor, although year-over-year comparability is affected by the 2024 reclassification of Reserva ore to San Lucas. Overall, the strength of the broader portfolio moderated, but did not fully offset, the impact of the disruption at Bolívar. Management expects a gradual recovery of the affected areas through 2026, with a return to full production anticipated during the year, consistent with the mine plan and based on progress achieved to date.
Q4 2025 vs Q3 2025
In Q4 2025, Santacruz processed 506,040 tonnes of ore, 4% more than in Q3 2025, and produced 3,739,019 silver equivalent ounces, up 9% quarter over quarter. The improvement was led by Bolívar, where throughput increased 22% and silver equivalent production increased 34% as access and operating conditions improved in the affected areas. The quarter was also supported by higher silver equivalent production from San Lucas (+11%), Caballo Blanco (+3%), Zimapán (+3%), and Porco (+4%). Consolidated silver production increased 8% quarter over quarter, zinc production increased 10% and lead production increased 15%.
Cash Cost and All-in Sustaining Cost per Silver Equivalent Ounce Sold
Cash Cost per Silver Equivalent Ounce Sold and All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold are presented on a silver equivalent ounce sold basis. Accordingly, these measures are affected not only by operating costs, but also by payable ounces sold and the Average Realized Price per Ounce of Silver Equivalent Sold used in the silver equivalent calculation. Period-to-period comparability should therefore be assessed in that context, particularly in periods of meaningful changes in metal prices. In management’s view, the margin between the Average Realized Price per Ounce of Silver Equivalent Sold and AISC per Silver Equivalent Ounce Sold provides a more useful indicator of the economic performance of these metrics.
| - 9 - |
Selected Annual and Quarterly Production Results (continued)
2025 YTD vs 2024 YTD
For the year ended December 31, 2025, consolidated cash cost per silver equivalent ounce sold increased from $21.90 in 2024 to $24.93 in 2025 and the consolidated all in sustaining cost (AISC) increased from $26.09 in 2024 to $30.81 in 2025. The year-over-year increase was driven primarily by less silver-equivalent ounces sold in the year due to the operating disruption at Bolívar following the May 2025 water inflow, and higher ore purchase costs at San Lucas under its margin-based sourcing model as metal prices increased. The cash cost of production per tonne significantly favourably decreased from $101.35 to $95.80 in 2025 which demonstrates that the principal driver of the increase in the per-ounce cost came from the production mix and the decrease in AgEq ounces sold due to a lower conversion ratio applied to by-product revenues as opposed to being caused by actual increases in site operating costs per tonne.
From an economic perspective, higher realized prices more than offset the increase in AISC per ounce. Average realized price per ounce of silver equivalent sold increased to $39.00 in 2025 from $28.74 in 2024, compared against an AISC of $30.81 per ounce, which implies a margin of $8.19 per AgEq ounce sold as compared to $2.65/AgEq ounce sold in 2024. Reported AISC is presented on a silver-equivalent ounce sold basis and is sensitive to the changes in metal prices that would affect the AgEq conversion ratio when silver price changes disproportionately relative to the by-product metal prices.
Q4 2025 vs Q3 2025
In Q4 2025, consolidated cash cost per silver equivalent ounce sold increased from $28.62 in Q3 to $36.92 in Q4 and consolidated AISC increased from $35.62 in Q3 to $46.42 in Q4. The increase occurred despite higher production, as silver equivalent ounces sold decreased 3% quarter over quarter and several operations reported higher unit costs. San Lucas and Zimapán were the main contributors to the increase: at San Lucas, ore purchase costs rose in line with higher silver and zinc prices under its margin-based sourcing model, while at Zimapán both cash cost and AISC increased as the operation continued mine development and plant improvement work focused improving recoveries and concentrate quality. Porco and Caballo Blanco also reported higher cost per ounce as less ounces were sold and the operating mix outweighed otherwise stable production.
The Bolívar operation’s costs had favourable results, cash cost per silver equivalent ounce sold decreased by 9% and AISC decreased 6% due to improved throughput, grades and recoveries quarter over quarter. Even with the higher consolidated cost profile, Q4 remained economically better than in Q3 as the average realized price per ounce of silver equivalent sold increased to $55.19, compared with AISC of $46.42, implying an average margin of $8.77 per silver equivalent ounce sold versus $4.51 in Q3.
| - 10 - |
Bolivar Mine Operating Results
| Bolivar Production Table (3) | 2025 Q4 |
2025 Q3 |
Change Q4 vs Q3 |
2025 YTD |
2024 YTD |
Change ‘25 YTD vs ‘24 YTD |
| Material Processed (tonnes milled) | 63,267 | 52,023 | 22% | 232,448 | 284,634 | (18%) |
| Silver Equivalent Produced (ounces) (1) | 565,694 | 420,612 | 34% | 2,374,121 | 3,630,036 | (35%) |
| Silver Equivalent Sold (payable ounces) (2) | 378,140 | 281,420 | 34% | 1,983,106 | 3,298,649 | (40%) |
| Production | ||||||
| Silver (ounces) | 202,193 | 132,146 | 53% | 1,059,846 | 1,828,098 | (42%) |
| Zinc (tonnes) | 3,973 | 3,186 | 25% | 14,367 | 19,395 | (26%) |
| Lead (tonnes) | 187 | 104 | 80% | 674 | 1,326 | (49%) |
| Average Grade | ||||||
| Silver (g/t) | 108 | 89 | 22% | 158 | 218 | (28%) |
| Zinc (%) | 6.75 | 6.61 | 2% | 6.73 | 7.48 | (10%) |
| Lead (%) | 0.40 | 0.31 | 28% | 0.41 | 0.64 | (36%) |
| Metal Recovery | ||||||
| Silver (%) | 92 | 89 | 3% | 90 | 92 | (2%) |
| Zinc (%) | 93 | 93 | (0%) | 92 | 91 | 1% |
| Lead (%) | 74 | 64 | 16% | 71 | 73 | (3%) |
| Cash Cost of Production per Tonne ($/t) (4) | 121.15 | 139.93 | (13%) | 108.46 | 122.34 | (11%) |
| Cash Cost per Silver Equivalent Ounce Sold ($/oz) (4) | 31.34 | 34.51 | (9%) | 20.29 | 18.72 | 8% |
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold ($/oz) (4) | 47.88 | 50.89 | (6%) | 27.78 | 21.54 | 29% |
| (1) | Silver Equivalent Produced (ounces) have been calculated using prices of $31.41/oz, $2,775.53/ton and $2,085.90/ton for silver, zinc and lead respectively applied to the metal production divided by the silver price as stated here. |
| (2) | Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold applied to the payable metal content of the concentrates sold from the Bolivar, Porco, the Caballo Blanco Group, and San Lucas in 2024. |
| (3) | Bolivar is presented at 100% whereas the Company records 45% of revenues and expenses in its consolidated financial statements. |
| (4) | The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold and All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” section below for definitions. |
The Bolivar Mine has been active for more than 200 years. The current mine complex consists of an underground mine, 1,100 t/d milling facility, tailings storage facility, maintenance workshop, shaft-winder, water treatment plants, supplies warehouse, main office, hospital, and camp.
The Bolivar mine operates in two main areas: the Central Zone, an extension of the original ore deposit that runs deeper, and the Rosario Zone, a parallel area with its own separate entrance.
Currently the mine produces about 19,000 tonnes of ore per month, and 840 meters of combined primary and secondary development each month. At the same time, ore from the San Lucas feed sourcing business is providing production flexibility and allowing the mill to operate efficiently.
The Bolívar mill has operated continuously since 1993, receiving feed from two main sources: the Bolívar Mine, which supplies approximately 70%, and toll feed sourced through the San Lucas feed sourcing business, contributing the remaining 30%. The mill processes each feed type separately, enabling precise analysis and reporting for each. Different reagent strategies are applied to each source due to the presence of pyrrhotite in the San Lucas feed, which is generally absent in the Bolívar mine feed.
| - 11 - |
Bolivar Mine Operating Results (continued)
2025 YTD vs 2024 YTD
For the year ended December 31, 2025, Bolívar’s results were materially affected by the water inflow event that occurred in mid-May 2025 and restricted access to the Pomabamba and Nané higher-silver-grade areas for a significant portion of the year. Tonnes processed decreased 18% year over year and silver equivalent production decreased 35%, while silver production declined 42%. The annual reduction was driven principally by lower silver head grades, partially offset by relatively stable metallurgical recoveries.
Recovery activities continued through the second half of 2025 and advanced in line with the established recovery plan. Q4 performance improved meaningfully versus Q3, reflecting better access, higher grades and stronger recoveries, and management continues to expect a gradual recovery of the affected areas during 2026 consistent with the mine plan. Progress to date has been encouraging. For 2026, the operational priority at Bolívar is to continue restoring access to the affected zones, recover silver head grades and progressively normalize production sequencing.
Q4 2025 vs Q3 2025
In Q4 2025, ore processed at Bolívar increased by 22% compared to Q3 2025, reflecting improved access and operating conditions as recovery activities advanced at the Pomabamba and Nané areas. Silver equivalent production increased by 34%, driven by higher throughput, a 22% increase in silver head grades and a 3% improvement in silver recoveries. Silver production increased by 53% quarter over quarter, while zinc and lead production rose by 25% and 80%, respectively, consistent with improved stope availability and the mining sequence.
Recovery efforts at the affected mining areas continued throughout Q4 2025 and advanced in line with the established recovery plan. While operating conditions improved materially compared to Q3 2025, access to the highest-grade portions of the Pomabamba and Nané veins remained partially restricted during Q4 2025. Notwithstanding these constraints, production from the Pomabamba and Nané veins increased month-over- month during Q4 2025, reflecting improved grades and silver recoveries, as a growing proportion of ore was sourced from these higher-silver-grade structures.
| - 12 - |
Porco Mine Operating Results
| Porco Production Table (3) |
2025 Q4 |
2025 Q3 | Change Q4 vs Q3 |
2025 YTD | 2024 YTD | Change ‘25 YTD vs ‘24 YTD |
| Material Processed (tonnes milled) | 51,416 | 49,161 | 5% | 197,231 | 204,585 | (4%) |
| Silver Equivalent Produced (ounces) (1) | 330,176 | 318,694 | 4% | 1,377,234 | 1,762,341 | (22%) |
| Silver Equivalent Sold (payable ounces) (2) | 155,338 | 242,697 | (36%) | 1,006,027 | 1,540,699 | (35%) |
| Production | ||||||
| Silver (ounces) | 82,047 | 92,001 | (11%) | 400,486 | 645,250 | (38%) |
| Zinc (tonnes) | 2,727 | 2,488 | 10% | 10,675 | 12,044 | (11%) |
| Lead (tonnes) | 108 | 103 | 5% | 504 | 795 | (37%) |
| Average Grade | ||||||
| Silver (g/t) | 61 | 71 | (14%) | 77 | 117 | (34%) |
| Zinc (%) | 5.66 | 5.43 | 4% | 5.77 | 6.28 | (8%) |
| Lead (%) | 0.28 | 0.30 | (6%) | 0.36 | 0.51 | (29%) |
| Metal Recovery | ||||||
| Silver (%) | 81 | 82 | (1%) | 82 | 84 | (2%) |
| Zinc (%) | 94 | 93 | 1% | 94 | 94 | (0%) |
| Lead (%) | 74 | 69 | 7% | 70 | 76 | (8%) |
| Cash Cost of Production per Tonne ($/t) (4) | 91.01 | 90.27 | 1% | 79.39 | 105.81 | (25%) |
| Cash Cost per Silver Equivalent Ounce Sold ($/oz) (4) | 39.78 | 29.76 | 34% | 24.16 | 23.77 | 2% |
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold ($/oz) (4) |
49.52 |
36.30 |
36% | 28.95 | 27.54 | 5% |
| (1) | Silver Equivalent Produced (ounces) have been calculated using prices of $31.41/oz, $2,775.53/ton and $2,085.90/ton for silver, zinc and lead respectively applied to the metal production divided by the silver price as stated here |
| (2) | Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold applied to the payable metal content of the concentrates sold from the Bolivar, Porco, the Caballo Blanco Group, and San Lucas in 2024. |
| (3) | Porco is presented at 100% whereas the Company records 45% of revenues and expenses in its consolidated financial statements. |
| (4) | The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold and All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” section below for definitions |
The Porco Mine has been in operation for nearly 500 years. The complex consists of an underground mine, milling facility, maintenance workshop, tailing storage facility, water treatment plant, supplies warehouse, main office, two hospitals and Yancaviri Camp.
The mine produces approximately 17,000 tonnes of ore, and on average realizes 600 meters of total development per month. The mine is comprised of two production areas. Hundimiento uses long hole mechanized mining methods to exploit the deeper extension of the primary vein complex, and the Central zone which is conventionally mined using more selective shrinkage stoping. The milling facility is sourced by the mine feed (approximately 60%), and the toll feed from the San Lucas feed sourcing business (40%).
2025 YTD vs 2024 YTD
For the year ended December 31, 2025, Porco processed 197,231 tonnes, 4% below 2024, and produced 1.38 million silver equivalent ounces, 22% lower year over year. Silver production declined 38%, reflecting lower silver head grades as mine sequencing continued to prioritize zinc zones, while zinc production decreased 11% and zinc recoveries remained stable at 94%. The annual operating profile is consistent with Porco’s role as the Company’s smallest mine and a predominantly zinc-oriented operation.
For 2026, management’s focus at Porco is on zinc production and operating stability. The objective is to maintain consistent throughput and metallurgical performance in the zinc-dominant areas in order to support steadier revenue generation and reduce quarterly volatility.
| - 13 - |
Porco Mine Operating Results (continued)
Q4 2025 vs Q3 2025
Porco reported a 10% increase in zinc production compared to the previous quarter, driven by higher head grades and stable throughput. Zinc recoveries remained strong at 94%, reflecting consistent metallurgical performance. Silver production declined as mining continued to focus on zinc-rich zones, consistent with the mine plan and Porco’s role as a predominantly zinc-producing underground operation.
Caballo Blanco Group Operating Results
| Caballo Blanco Group Production Table |
2025 Q4 |
2025 Q3 | Change Q4 vs Q3 |
2025 YTD | 2024 YTD | Change ‘25 YTD vs ‘24 YTD |
| Material Processed (tonnes milled) | 63,067 | 62,221 | 1% | 234,709 | 275,273 | (15%) |
| Silver Equivalent Produced (ounces) (1) | 730,108 | 707,465 | 3% | 2,782,260 | 3,018,705 | (8%) |
| Silver Equivalent Sold (payable ounces) (2) | 392,362 | 530,408 | (26%) | 2,035,431 | 2,600,400 | (22%) |
| Production | ||||||
| Silver (ounces) | 289,446 | 294,524 | (2%) | 1,192,022 | 1,220,757 | (2%) |
| Zinc (tonnes) | 4,409 | 4,131 | 7% | 16,063 | 18,606 | (14%) |
| Lead (tonnes) | 769 | 722 | 7% | 2,573 | 2,316 | 11% |
| Average Grade | ||||||
| Silver (g/t) | 156 | 160 | (2%) | 170 | 153 | 11% |
| Zinc (%) | 7.39 | 7.14 | 4% | 7.28 | 7.30 | (0%) |
| Lead (%) | 1.51 | 1.45 | 4% | 1.34 | 1.11 | 21% |
| Metal Recovery | ||||||
| Silver (%) | 91 | 92 | (1%) | 93 | 90 | 3% |
| Zinc (%) | 95 | 93 | 2% | 94 | 93 | 2% |
| Lead (%) | 81 | 80 | 1% | 82 | 76 | 8% |
| Cash Cost of Production per Tonne ($/t) (3) | 78.83 | 69.44 | 14% | 65.44 | 98.87 | (34%) |
| Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3) | 26.45 | 18.32 | 44% | 16.26 | 21.09 | (23%) |
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3) |
37.65 |
22.34 |
69% | 20.89 | 24.58 | (15%) |
| (1) | Silver Equivalent Produced (ounces) have been calculated using prices of $31.41/oz, $2,775.53/ton and $2,085.90/ton for silver, zinc and lead respectively applied to the metal production divided by the silver price as stated here. |
| (2) | Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold applied to the payable metal content of the concentrates sold from the Bolivar, Porco, the Caballo Blanco Group, and San Lucas in 2024. |
| (3) | The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold and All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” section below for definitions |
Following a thorough examination of the Don Diego milling facility processing performance, Caballo Blanco Group made a strategic adjustment in Q3 to improve metal recovery and concentrate value. Previously, the milling facility handled ore from three mines: Colquechaquita, Tres Amigos, and Reserva. A recent evaluation revealed that processing a blend of ores exclusively from Colquechaquita and Tres Amigos at Don Diego significantly improved silver recovery in the lead concentrate. This enhancement adds greater value to the lead concentrate and generates additional revenue for the Company. The process modification is consistent with our goal of enhancing efficiencies by improving metal recoveries and concentrate value.
Ore from the Reserva mine will now be processed and blended with ore from the San Lucas ore sourcing business to improve overall operating efficiency. The initial results of this adjustment reveal significant gains in silver in lead concentrate recovery, prompting management to adopt this new processing approach as the standard going forward. This revised operational framework will help both Caballo Blanco and San Lucas achieve more consistent recovery performance and maximize the value of its mineral resources.
| - 14 - |
Caballo Blanco Group Mine Operating Results (continued)
2025 YTD vs 2024 YTD
For the year ended December 31, 2025, Caballo Blanco processed 234,709 tonnes and produced 2.78 million silver equivalent ounces, decreases of 15% and 8%, respectively, compared with 2024. Silver production was broadly stable year over year (-2%), as higher annual silver head grades and improved recoveries substantially offset lower throughput. Lead production increased 11%, while zinc production decreased 14%. Year-over-year comparability is also affected by the 2024 operating reorganization that redirected Reserva ore to San Lucas beginning in Q3 2024.
Caballo Blanco continued to be the Company’s most efficient operation on both a cash cost per silver equivalent ounce sold and AISC basis. For 2026, management’s priority is to preserve, sustain and further deepen those efficiencies through disciplined mine sequencing, plant stability and continued focus on metallurgical performance.
Q4 2025 vs Q3 2025
Caballo Blanco increased ore processed compared to Q3 2025, resulting in a 3% increase in silver equivalent production. Silver production remained stable, while zinc and lead output increased by 7% each, supported by higher head grades and strong recoveries. Results reflect solid operational performance and continued adherence to the mine plan.
San Lucas Group Operating Results
| San Lucas Group Production Table |
2025 Q4 |
2024 Q3 | Change Q4 vs Q3 |
2025 YTD | 2024 YTD | Change ‘24 YTD vs. ‘23 YTD |
| Material Processed (tonnes milled) | 105,587 | 100,550 | 5% | 387,805 | 341,649 | 14% |
| Silver Equivalent Produced (ounces) (1) | 1,095,945 | 986,403 | 11% | 3,881,319 | 3,949,992 | (2%) |
| Silver Equivalent Sold (payable ounces) (2) | 833,017 | 719,714 | 16% | 2,939,466 | 3,163,910 | (7%) |
| Production | ||||||
| Silver (ounces) | 366,600 | 326,873 | 12% | 1,308,128 | 1,344,242 | (3%) |
| Zinc (tonnes) | 7,729 | 7,032 | 10% | 27,419 | 28,042 | (2%) |
| Lead (tonnes) | 699 | 575 | 22% | 2,264 | 1,924 | 18% |
| Average Grade | ||||||
| Silver (g/t) | 135 | 126 | 7% | 127 | 147 | (13%) |
| Zinc (%) | 8.20 | 7.86 | 4% | 7.89 | 9.01 | (12%) |
| Lead (%) | 0.97 | 0.90 | 8% | 0.91 | 0.88 | 3% |
| Metal Recovery | ||||||
| Silver (%) | 80 | 80 | (0%) | 83 | 83 | (1%) |
| Zinc (%) | 89 | 89 | (0%) | 90 | 91 | (2%) |
| Lead (%) | 68 | 63 | 8% | 64 | 64 | 1% |
| Cash Cost of Production per Tonne ($/t) (3) | 288.52 | 191.05 | 51% | 182.85 | 184.43 | (1%) |
| Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3) | 39.75 | 34.40 | 16% | 28.93 | 24.81 | 17% |
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3) | 44.80 | 38.57 | 16% | 32.37 | 26.72 | 21% |
| (1) | Silver Equivalent Produced (ounces) have been calculated using prices of $31.41/oz, $2,775.53/ton and $2,085.90/ton for silver, zinc and lead respectively applied to the metal production divided by the silver price as stated here. |
| (2) | Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold applied to the payable metal content of the concentrates sold from the Bolivar, Porco, the Caballo Blanco Group, and San Lucas in 2024. |
| (3) | The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold and All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” section below for definitions. |
The San Lucas feed sourcing business utilizes the excess production capacity of each of the milling facilities in Bolivia to produce concentrate. Feed is sourced from independent organized mining groups with whom San Lucas has negotiated agreements outlining methodology for valuation and purchase as well as validating the source of the feed and methods used in extraction. Once the ore material is sampled and the purchase is finalized, it is blended and processed. Starting from Q3 2024, the operating results of the Reserva mine are included in the San Lucas results because all ore produced by the Reserva mine is sold to the San Lucas feed sourcing business to achieve optimal recoveries.
Generally, the ore from the San Lucas feed sourcing business is campaigned through each milling facility and kept separate from mine feeds. Across the three milling facilities, the approximate distribution used by San Lucas to process third-party ore is 44% at Porco, 22% at Don Diego, and 34% at Bolívar. The feed volume and grade are variable and challenging to forecast; however, the consistent and fair business structure offered by our San Lucas feed sourcing business appeals to local miners. By working with a medium- to long-term perspective, we enhance the consistency of the ore, and additional agreements are currently being negotiated to increase feed sourced.
| - 15 - |
San Lucas Group Operating Results (continued)
2025 YTD vs 2024 YTD
For the year ended December 31, 2025, San Lucas processed 387,805 tonnes, 14% more than in 2024, while silver equivalent production was broadly stable at 3.88 million ounces (-2%). The higher throughput reflects San Lucas’s role as a flexible feed sourcing platform for the Company’s plants. Silver and zinc production were modestly lower year over year, while lead production increased 18%, supported by feed mix. Annual comparisons are also affected by the inclusion of Reserva ore within San Lucas starting in Q3 2024.
San Lucas continued to play a strategic role in keeping plants fully utilized across the group, supporting fixed-cost absorption and cost efficiency while generating meaningful revenue and attractive margins through its margin-based sourcing model. For 2026, management expects San Lucas to remain an important contributor to mill utilization, commercial flexibility and overall group profitability.
Q4 2025 vs Q3 2025
San Lucas continued to play a strategic role in Q4 2025, with ore processed up 5% from the prior quarter. Silver equivalent production increased by 11%, driven by higher throughput and improved head grades, while recoveries remained stable. The operation’s flexible, margin-based sourcing model continued to support group-level mill utilization.
Zimapan Mine
Zimapan Production Table |
2025 Q4 |
2025 Q3 | Change Q4 vs Q3 |
2025 YTD | 2024 YTD | Change ‘25 YTD vs ‘24 YTD |
| Material Processed (tonnes milled) | 222,703 | 222,629 | (0%) | 893,067 | 849,764 | 5% |
| Silver Equivalent Produced (ounces) (1) | 1,017,096 | 991,643 | 3% | 3,984,086 | 3,812,220 | 5% |
| Silver Equivalent Sold (payable ounces) (2) | 649,079 | 699,865 | (7%) | 2,970,701 | 3,486,063 | (15%) |
| Production | ||||||
| Silver (ounces) | 403,321 | 396,385 | 2% | 1,638,198 | 1,680,033 | (2%) |
| Zinc (tonnes) | 5,008 | 4,744 | 6% | 18,771 | 16,311 | 15% |
| Lead (tonnes) | 1,237 | 1,099 | 13% | 5,080 | 5,458 | (7%) |
| Copper (tonnes) | 287 | 331 | (13%) | 1,126 | 1,057 | 7% |
| Average Grade | ||||||
| Silver (g/t) | 80 | 77 | 4% | 78 | 82 | (4%) |
| Zinc (%) | 2.89 | 2.90 | (0%) | 2.74 | 2.46 | 11% |
| Lead (%) | 0.72 | 0.67 | 8% | 0.73 | 0.75 | (4%) |
| Copper (%) | 0.26 | 0.29 | (10%) | 0.26 | 0.29 | (11%) |
| Metal Recovery | ||||||
| Silver (%) | 70 | 72 | (3%) | 73 | 75 | (4%) |
| Zinc (%) | 78 | 73 | 6% | 77 | 78 | (2%) |
| Lead (%) | 78 | 74 | 5% | 78 | 85 | (8%) |
| Copper (%) | 50 | 52 | (3%) | 49 | 43 | 14% |
| Cash Cost of Production per Tonne ($/t) (3) | 71.44 | 60.47 | 18% | 66.30 | 60.64 | 9% |
| Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3) | 42.17 | 27.74 | 52% | 30.27 | 22.04 | 37% |
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3) | 50.52 | 34.50 | 46% | 37.38 | 26.10 | 43% |
| (1) | Silver Equivalent Produced (ounces) have been calculated using prices of $31.41/oz, $2,775.53/ton, $2,085.90/ton and $9,762.69/ton for silver, zinc, lead and copper respectively applied to the metal production divided by the silver price as stated here. |
| (2) | Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold applied to the payable metal content of the concentrates sold from Zimapan in 2024. |
| (3) | The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold and All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” section below for definitions. |
The Zimapan operation produces feed from the Carrizal and Monte mines, which are connected by a 7.4-kilometre underground access and haulage tunnel which terminates at the San Francisco process plant. Mining methods used include long hole and cut and fill stoping. The plant processes about 72,000 tonnes per month and produces three concentrates using differential flotation. Tailings Storage Facility and other support facilities are located adjacent and downstream of the plant location.
| - 16 - |
Zimapan Mine Operating Results (continued)
2025 YTD vs 2024 YTD
For the year ended December 31, 2025, Zimapán processed 893,067 tonnes, 5% more than in 2024, and produced 3.98 million silver equivalent ounces, 5% higher year over year. The increase was driven mainly by higher zinc production (+15%) on stronger grades, which more than offset a modest decrease in silver production (-2%). Throughput remained stable to higher, confirming Zimapán’s role as the Company’s highest-volume operation.
Cost performance remained under pressure during the year, with cash cost per silver equivalent ounce sold and AISC increasing relative to 2024, as the operation continued mine development and plant improvement work. For 2026, the principal operating priority at Zimapán is to improve metallurgical recoveries and concentrate quality. Capital has already been allocated toward this objective, which is particularly important at Zimapán given its scale and the direct impact that recoveries and concentrate quality have on revenue.
Q4 2025 vs Q3 2025
Zimapán delivered strong results throughput in Q4 2025, with silver equivalent production increasing by 3% from Q3 2025. Zinc production increased by 6%, supported by higher head grades and improved recoveries. Silver production remained stable, reflecting consistent plant performance.
Other Properties
Soracaya is an approximately eight-hectare exploration asset located approximately 200 km south south-west of Potosi and 4.4 km from the San Vincente mine (owned by Pan American Silver). Verification of the resource to NI 43-101 standards is currently in progress as well as some claim maintenance work underground.
Qualified Person and Technical Disclosures
All scientific and technical disclosure contained in this MD&A was reviewed and approved by Garth Kirkham P.Geo. an independent consultant to the Company, is a qualified person under NI 43-101 and has approved the scientific and technical information contained within this news release.
Production at the Zimapan Mine is not supported by a feasibility study on mineral reserves demonstrating economic or technical viability or any other independent economic study under NI 43-101. Accordingly, there is increased uncertainty and higher economic and technical risks of failure associated with production operations at the Zimapan Mine. Production and economic variables may vary considerably due to the absence of a complete and detailed site analysis according to and in accordance with NI 43- 101. Project failure may adversely impact the Company’s future profitability.
| - 17 - |
Overview of Financial Results
Quarters ended December 31, 2025 and 2024
| 2025 Q4 |
2024 Q4 |
Change ‘25 Q4 vs ‘24 Q4 |
|
| Revenues | 102,784 | 81,669 | 26% |
| Mine operating costs | |||
| Cost of sales | (65,019) | (52,557) | 24% |
| Depreciation, depletion and amortization | (5,766) | (3,863) | 49% |
| Reversal of impairment on MPP&E | 4,088 | - | 100% |
| Gross profit | 36,087 | 25,249 | 43% |
| General and administrative expenses | (6,976) | (6,095) | 14% |
| Share-based compensation expense | 227 | 27 | 741% |
| Operating income | 29,338 | 19,181 | 53% |
| Finance costs | (9,970) | (523) | 1806% |
| Foreign exchange gain (loss) | (11,482) | 2,966 | (487%) |
| Income before tax | 7,886 | 21,624 | (64%) |
| Income tax expense | (12,436) | (8,782) | 42% |
| Net income for the period | (4,550) | 12,842 | (135%) |
| Other comprehensive income that may be reclassified subsequently to net income or loss: | |||
| Unrealized gain (loss) on marketable securities | 42 | - | 100% |
| Currency translation differences | (791) | (2,131) | (63%) |
| Comprehensive income (loss) for the period | (5,299) | 10,711 | (149%) |
| Net income (loss) per share: | |||
| Basic | (0.05) | 0.14 | |
| Diluted | (0.05) | 0.14 | |
| Weighted average number of common shares: | |||
| Basic | 91,431,323 | 88,963,885 | |
| Diluted | 93,759,237 | 89,588,885 |
Revenues for the quarter ended December 31, 2025 were $102,784, an increase of $21,115 compared to Q4 2024. The increase was primarily due to an increase in the average realized price of silver equivalent sold from $31.77 in Q4 2024 to $55.19 in Q4 2025, offset by a decrease in silver ounces in the current quarter.
Cost of sales for the quarter ended December 31, 2025 was $65,019, an increase of $12,462 compared to Q4 2024. The increase was mainly driven by or San Lucas, which operates a margin-based sourcing model, as higher silver and zinc prices in the fourth quarter increased ore purchase costs.
Depreciation, depletion and amortization for the quarter ended December 31, 2025 was $5,766, an increase of $1,903 compared with Q4 2024. This movement was primarily due to a greater depletion of mineral properties in Bolivia, arising from the increase to the properties’ cost basis from continued development and change to the reclamation obligation estimate.
General and administrative expenses for the quarter ended December 31, 2025 were $881 higher compared to Q4 2024, driven by greater inflation and surcharges recognized for outstanding payables to the Mexican tax authority for historical balances that are being settled in 2026.
Share-based compensation expense for the quarter ended December 31, 2025 was $200 higher than in Q4 2024 due to greater fair values of underlying equity awards granted between the periods driven by the increase in the Company’s share price.
| - 18 - |
Overview of Financial Results for the quarters ended December 31, 2025 and 2024 (continued)
Finance costs for the quarter ended December 31, 2025 were $9,970, an increase of $9,447 compared to Q4 2024. The change was primarily attributed to the loss recognized from the quarterly change in fair value of the contingent value rights, driven by increased zinc prices during the quarter and significantly increased forward prices.
Foreign exchange loss for the quarter ended December 31, 2025 was $11,482, a decrease of $14,448 from a gain of $2,966 in Q4 2024. The decrease was mainly due to the depreciation of the Boliviano between quarters, resulting in losses from the revaluation of monetary items on the balance sheet.
Income tax expense for the quarter ended December 31, 2025 was $12,436, an increase of $3,654 compared to Q4 2024. The increase was mainly due to higher revenues in the quarter compared to Q4 2024 and the recognition of a valuation allowance on certain deferred tax asset balances derived from Bolivian operations and an increase in the tax value of MPP&E balances primarily driven by the appreciation of the Mexican Peso against the US dollar.
Year ended December 31, 2025 and 2024
| 2025 YTD | 2024 YTD | Change ‘25 YTD vs ‘24 YTD | |
| Revenues | 326,382 | 282,987 | 15% |
| Mine operating costs | |||
| Cost of sales | (199,493) | (206,055) | (3%) |
| Depreciation, depletion and amortization | (21,577) | (19,706) | 9% |
| Reversal of impairment on MPP&E | 4,088 | - | 100% |
| Gross profit | 109,400 | 57,226 | 91% |
| General and administrative expenses | (22,305) | (24,307) | (8%) |
| Share-based compensation expense | (2,042) | (105) | 1845% |
| Operating income | 85,053 | 32,814 | 159% |
| Gain on adjustment to consideration payable | - | 133,255 | (100%) |
| Finance costs | (12,368) | (18,232) | (32%) |
| Foreign exchange gain | 2,015 | 44,199 | (95%) |
| Income before tax | 74,700 | 192,036 | (61%) |
| Income tax expense | (32,478) | (27,552) | 18% |
| Net income for the period | 42,222 | 164,484 | (74%) |
| Other comprehensive income that may be reclassified subsequently to net income or loss: | |||
| Unrealized gain (loss) on marketable securities | 331 | - | 100% |
| Currency translation differences | (605) | (105) | 476% |
| Comprehensive income for the period | 41,948 | 164,379 | (74%) |
| Net income (loss) per share: | |||
| Basic | 0.47 | 1.86 | |
| Diluted | 0.46 | 1.85 | |
| Weighted average number of common shares: | |||
| Basic | 89,849,385 | 88,438,988 | |
| Diluted | 92,197,091 | 89,063,988 |
Revenues for the year ended December 31, 2025 were $326,382, an increase of $43,395 compared to 2024. The increase is driven primarily by an increase in the average realized price per ounce of silver equivalent ounce sold from $28.74 in 2024 to $39.00 in 2025, offset by a decrease in silver ounces in the current year.
| - 19 - |
Overview of Financial Results for the year ended December 31, 2025 and 2024 (continued)
Cost of sales for the year ended December 31, 2025 was $199,493, a decrease of $6,562 compared to 2024. The decrease was due to the change in exchange rate effective January 1, 2025, by using the Bank rate instead of the Official rate to record BOB denominated transactions. With the impact of the reduction of the exchange rate, the change between periods was primarily attributed to a decrease in consumables and materials, mining and plant maintenance costs, and mining royalties expense. The impact was offset by increased ore purchase costs at San Lucas from higher silver and zinc prices towards the end of the year and increases in in operating costs in Mexico.
Depreciation, depletion and amortization for the year ended December 31, 2025 was $21,577, an increase of $1,871 compared to 2024. This change was primarily due to an increase in mineral properties depletion in Bolivia, consistent with the reasons as described in the quarterly movement above.
General and administrative expenses for the year ended December 31, 2025 was $22,305, a decrease of $2,002 compared to 2024. This decrease was mainly attributable to the impact of the change in exchange rate on salaries in Bolivia, offset by greater inflation and surcharges recognized for outstanding payables to the Mexican tax authority for historical balances that are being settled in 2026.
Share based compensation expense for the year ended December 31, 2025 was $2,042, an increase of $1,937 compared to 2024 due to greater fair values of underlying equity awards granted between the periods driven by the increase in the Company’s share price that occurred during the year.
Finance costs for the year ended December 31, 2025 was $12,368, a decrease of $5,864 compared to 2024. The change was mainly due to an increase in other finance income recognized in Bolivia driven by an increase in the interest income generated from VAT receivable balances due to higher inflation adjustment than previous years. These increases were offset by a greater year-over-year change in the fair value of the contingent value rights, consistent with the reasoning for the quarterly movement discussed above.
Foreign exchange gain for the year ended December 31, 2025, was $2,015 compared to $44,199 in the year ended December 31, 2024. The decrease was due to changing the exchange rate that is being used to record BOB denominated transactions by using the Bank rate instead of the Official rate.
Income tax expense for the year ended December 31, 2025 was $32,478, an increase of $4,926 compared to 2024. The increase is primarily due to the 15% increase in revenues year over year and an increase in the deferred tax liability generated from mineral properties caused by the impairment reversal.
Summary of Quarterly Results
The following table presents selected financial information for each of the most recent eight quarters:
| 2025 | 2024 | |||||||
| Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |
| Revenues | 102,784 | 79,989 | 73,295 | 70,314 | 81,669 | 78,244 | 70,485 | 52,589 |
| Mine operating costs | 66,697 | 59,823 | 48,007 | 42,455 | 56,419 | 62,522 | 54,629 | 52,190 |
| Gross profit | 36,087 | 20,166 | 25,288 | 27,859 | 25,250 | 15,722 | 15,856 | 399 |
| Operating expenses | (6,749) | (7,213) | (5,306) | (5,079) | (6,068) | (6,592) | (6,806) | (4,946) |
| Net income (loss) | (4,550) | 16,344 | 20,977 | 9,451 | 12,842 | 17,534 | 1,449 | 132,659 |
| Net income (loss) per share – basic and diluted (1) |
(0.05) |
0.05 |
0.06 |
0.03 | 0.06 | 0.05 | 0.00 | 0.38 |
| (1) | The basic and fully diluted calculations result in the same value due to the anti-dilutive effect of outstanding stock options and warrants for all quarters. |
The Company’s quarterly results vary based on the silver equivalent ounces sold per period together with the average realized silver price for the period. In Q1 2024 the Company recorded a one-time gain on adjustment to consideration payable of $133,255 after entering into the Term Sheet with Glencore.
| - 20 - |
Liquidity, Capital Resources and Contractual Obligations
Liquidity
As at December 31, 2025, the Company had cash & cash equivalents of $44,267 (December 31, 2024 - $35,721). The Company’s cash is not exposed to liquidity risk and there is no restriction on the ability of the Company to use these funds to meet its obligations. The Company also has $22,462 of marketable securities, which consist of liquid holdings of US treasury bills and treasury notes that can be readily sold to be converted into cash. The securities are held with Stifel bank which uses a portion of the holdings as collateral for the Standby Letters of Credit that were issued to Banco BISA and Banco Credito de Bolivia (see note 11(a) of the audited consolidated financial statements). Although the securities held can be readily converted to cash, they are restricted to the extent that the amounts serve as collateral. The Standy Letter of credit issued to Banco BISA is for $10,000 and expires on May 26, 2026. The standby letter of credit issued to Banco Credito de Bolivia is for $5,800 and expires on March 26, 2026, and automatically renews each year the amount held as collateral has been classified as non-current.
For the year ended December 31, 2025, the Company reported net income of $42,222 (December 31, 2024 – net income of $164,484). As at December 31, 2025, the Company had working capital of $63,688 (December 31, 2024 - working capital of $46,296).
The Company has a consideration payable balance outstanding for the acquisition of the Sinchi Wayra and Illapa operations which occurred in 2022. The consideration payable consisted of a base purchase price obligation and contingent value rights (“CVR”) obligation. The base purchase price obligation was fully paid in the third quarter of 2025, only the contingent value rights remain outstanding. The CVR has not resulted in any payments to date because the price of zinc has not reached the levels that would trigger a payment (greater than $3,850 per tonne).
At December 31, 2025, the Company has non-current loans payable of $1,344 (December 31, 2024 - $3,137), and non-current consideration payable to Glencore of $20,243 (December 31, 2024 - $34,783).
Credit Facilities and Borrowings
The Company has a secured credit facility denominated in Bolivian Bolivianos with Banco BISA S.A. of BOB 55,000 ($6,579), which is comprised of a revolving credit facility of BOB 48,800 ($5,837) for the financing of mining operations and working capital with a fixed interest rate between 6.0% and 10.00% per annum.
The Company also has an unsecured revolving credit facility for working capital requirements and a loan guarantee with Banco de Crédito de Bolivia S.A. for a total of BOB 48,020 ($5,744). The credit facility has a weighted average fixed interest rate of 6.0% and 10.00% per annum and the weighted average interest rate on the loan guarantee facility is 2.0%.
On February 20, 2025, the Company completed an offering of BOB 70,000 ($8,373) in promissory notes under its San Lucas Promissory Notes Issuance program. The San Lucas Promissory Notes Issuance program allows the Company to issue up to BOB 140,000 ($16,746) in the Bolivian stock market (Bolsa Boliviana de Valores). The notes are denominated in Bolivian Bolivianos and have a 6.50% interest rate and a maturity date of February 15, 2026 and are unsecured. The notes were fully repaid on February 15, 2026. On August 8, 2025, the Company completed a second offering of BOB 70,000 ($8,373) under the program. The notes under the second offering have an interest rate of 7.00% and a maturity date of June 15, 2026.
On February 14, 2026 the Company obtained an unsecured 6 month working capital term loan for BOB 17,150 ($2,051) with a fixed interest rate of 9.95% with repayment of interest and principal at the end of the term from Banco Mercantil Santa Cruz S.A. On March 17, 2026 obtained an unsecured 6 month working capital term loan for BOB 14,000 ($1,675) with a fixed interest rate of 10% with repayment of interest and principal at the end of the term from Banco Bisa S.A.
On December 30, 2024, the Financial System Supervisory Authority (ASFI) authorized the San Lucas Bonds Program. The San Lucas Bonds program allows the Company to issue up to $40,000 of unsecured bonds in the Bolivian Stock market (Bolsa Boliviana de Valores), the bonds can be denominated in USD or Bolivian Bolivianos. As at March 27, 2026, no bonds have been issued under the program.
| - 21 - |
Liquidity, Capital Resources and Contractual Obligations (continued)
Cash Flow
The Company’s cash flows from operating, investing, and financing activities during the year ended December 31, 2025, are summarized as follows:
| Year ended December 31, | ||
| 2025 | 2024 | |
| Cash flow | ||
| Cash generated by operating activities | 79,110 | 54,432 |
| Cash (used by) provided by investing activities | (92,439) | (20,922) |
| Cash (used by) provided by financing activities | 21,737 | (2,546) |
| Increase in cash | 8,408 | 30,964 |
| Effect of exchange rate on cash held in foreign currencies | 138 | (190) |
| Cash, beginning of the period | 35,721 | 4,947 |
| Cash, end of period | 44,267 | 35,721 |
Operating Activities
Operating cash flow for the year increased by $24,678 compared to 2024. Higher operating cash flow was primarily driven by a higher average realized price of silver equivalent sold of $39.00 during the year compared to $28.74 in 2024. This was offset by an increase in income taxes paid, and an increase in non-cash working capital. Working capital changes were mainly related to an increase of ending inventory balance, primarily in San Lucas as a result of higher silver prices at the end of the year driving the cost of inventory of the margin operations.
Investing Activities
Cash used in investing activities increased by $71,517 compared to 2024. Capital expenditures for the year increased by $8,000 compared to 2024. This increase was mainly attributed to higher expenditures in Mexico, as capital continues to be allocated to Zimapan to improve metallurgical recoveries and concentrate quality.
During the year, the Company began to invest in marketable securities. The securities are held with Stifel which uses a portion of the holdings as collateral for the Standby Letters of Credit that were issued to Banco BISA and Banco Credito de Bolivia. The Company spent $34,262 on the purchases of such marketable securities, net of $12,131 in proceeds from disposals during the year.
The Company used cash of $40,000 to exercise the accelerated payment option and fully settled the base purchase price liability amount outstanding from the acquisition of the Company’s Bolivian operations.
Financing Activities
For the year ended December 31, 2025, financing activities provided $21,737, compared to the use of $2,546 in 2024. During the year ended December 31, 2025, the Company received $72,956 from the proceeds of loans and repaid $54,939 on those loans and lease liabilities, compared to $59,218 and $62,405 respectively during 2024.
Proceeds from the exercise of stock options were $3,721, compared to $641 in 2024.
Capital Resources
The Company’s objective when managing capital is to maintain financial flexibility to continue as a going concern while optimizing growth and maximizing returns of investments from shareholders.
The Company monitors its capital structure and based on changes in operations and economic conditions, may from time to time adjust the structure by repurchasing shares, issuing new shares, issuing new debt or retiring existing debt. The Company prepares an annual budget and quarterly forecasts to facilitate the management of its capital requirements. The annual budget is approved by the Company’s Board of Directors.
The Company is not subject to any externally imposed capital requirements with the exception of compliance with covenants for the Trafigura Loan Facility and the San Lucas Promissory Notes Issuance program. The Company is fully compliant with all financial covenants stipulated in the agreement.
| - 22 - |
Liquidity, Capital Resources and Contractual Obligations (continued)
Contractual Obligations
The expected maturity of the Company’s contractual obligations as at December 31, 2025 are outlined below:
|
<1
year |
1
- 2 years |
2
- 5 years |
>5
years |
Total |
| $ | $ | $ | $ | $ | |
| Trade payables and accrued liabilities | 47,402 | 7,167 | - | - | 54,569 |
| Consideration payable - CVR & additional payments | 1,697 | 4,644 | 13,147 | 9,035 | 28,523 |
| Loans payable | 50,642 | 1,344 | - | - | 51,986 |
| Lease payments | 854 | - | - | - | 854 |
| 100,595 | 13,155 | 13,147 | 9,035 | 135,932 |
Liquidity Outlook
The Company believes that the cash on hand, combined with expected operating cash flows, will be sufficient to meet operating requirements as they arise for at least the next 12 months. With respect to longer term capital expenditure funding requirements, the Company believes that cash flow from its existing operations, available credit through existing debt facilities and access to debt and capital markets is adequate and will enable the Company to maintain an appropriate overall liquidity position. The Company continues to assess financing alternatives, including equity or debt or a combination of both, to fund future growth.
Off-balance Sheet Arrangements
The Company has not entered into any material off-balance sheet arrangement such as guarantee contracts, contingent interests in assets transferred to unconsolidated entities or derivative financial obligations.
Transactions with Related Parties
During the three and twelve months ended December 31, 2025 and 2024, the Company incurred the following charges for directors, officers, and other members of key management of the Company, as well as for companies controlled by directors and officers of the Company:
Three months ended December 31, |
Twelve months ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| Management and consulting fees | 803 | 1,818 | 2,723 | 2,806 |
| Share-based compensation | (546) | (52) | 1,655 | 61 |
| 257 | 1,766 | 4,378 | 2,867 | |
Of the $803 in management and consulting fees incurred with related parties during the three months ended December 31, 2025, $61 (2024 - $100) was related to directors’ fees and $742 (2024 - $1,718) was related to management fees.
Key management includes directors of the Company, the CEO, the CFO, the Executive Chairman, and other members of key management. Other than the amounts disclosed above, there was no other compensation paid or payable to key management for employee services for the reported periods.
Subsequent Events
Refer to note 11 of the audited consolidated financial statements for the year ended December 31, 2025 for a description of the subsequent event related to the settlement of the Trafigura loan facility (note 11(b)) & the settlement of promissory notes (note 11(d)) and obtaining two new working capital term loans (note 11(c)) that occurred subsequent to December 31, 2025.
| - 23 - |
Material Accounting Estimates and Judgments
Refer to Note 4 of the 2025 annual audited consolidated financial statements for a detailed discussion.
Accounting Policies Including Changes in Accounting Policies and Initial Adoption
Refer to Note 3 of the 2025 annual audited consolidated financial statements for a detailed discussion.
Financial Instruments and Other Instruments
| December 31, 2025 | Amortized cost | FVTPL | FVTOCI | Total |
| $ | $ | $ | $ | |
| Financial assets | ||||
| Cash and cash equivalents | 44,267 | - | - | 44,267 |
| Marketable securities | - | - | 22,462 | 22,462 |
| Trade and other receivables | 22,977 | 20,371 | - | 43,348 |
| 67,244 | 20,371 | 22,462 | 110,077 | |
| Financial liabilities | ||||
| Trade payables and accrued liabilities | 54,569 | - | - | 54,569 |
| Consideration payable | - | 20,243 | - | 20,243 |
| Loans payable | 51,986 | - | - | 51,986 |
| Other liabilities | 23,598 | - | - | 23,598 |
| 130,153 | 20,243 | - | 150,396 |
| December 31, 2024 | Amortized cost | FVTPL | FVTOCI | Total |
| Financial assets | ||||
| Cash and cash equivalents | 35,721 | - | - | 35,721 |
| Trade and other receivables | 24,462 | 17,402 | - | 41,864 |
| 60,183 | 17,402 | - | 77,585 | |
| Financial liabilities | ||||
| Trade payables and accrued liabilities | 47,389 | - | - | 47,389 |
| Consideration payable | 34,625 | 10,158 | - | 44,783 |
| Loans payable | 19,569 | - | - | 19,569 |
| Other liabilities | 24,125 | - | - | 24,125 |
| 125,708 | 10,158 | - | 135,866 |
The categories of the fair value hierarchy that reflect the inputs to valuation techniques used to measure fair value are as follows:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities; | |
| ● | Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and | |
| ● | Level 3: Inputs for the asset or liability based on unobservable market data. |
The carrying values of cash, other receivables, and trade payables and accrued liabilities approximate their fair values because of their short-term nature.
Marketable securities consist of US treasury notes and US treasury bills which are held as part of the Company’s cash position and liquidity management strategy. The marketable securities are measured at fair value using level 1 inputs, the unrealized gain/loss is recorded as other comprehensive income and once the securities are sold or mature the corresponding gain/loss is recorded as finance income/cost.
The securities are held with Steifel bank which uses a portion of the holdings as collateral for the Standby Letters of Credit that were issued to Banco BISA and Banco Credito de Bolivia (see note 11(a) of the audited consolidated financial statements). Although the securities held can be readily converted to cash they are restricted to the extent that the amounts serve as collateral. The Standy Letter of credit issued to Banco BISA is for $10,000 and expires on May 26, 2026. The standby letter of credit issued to Banco Credito de Bolivia is for $5,800 and expires on March 26, 2026, and automatically renews each year. Since the standby letter of credit to Banco Credito de Bolivia will renew indefinitely, the amount held as collateral has been classified as non-current.
| - 24 - |
Financial Instruments and Other Instruments (continued)
Trade receivables are measured at fair value using Level 2 inputs. The fair value of trade receivables is measured based on inputs other than quoted prices for the underlying commodity prices (silver, lead, zinc, copper) to which the receivable relates as the trade receivables are provisionally priced at the time of sale.
The fair value of the loans payable for disclosure purposes is determined using discounted cash flows based on the expected amounts and timing of future cash flows discounted using a market rate of interest adjusted for appropriate credit risk.
The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the consolidated statements of financial position at fair value on a recurring basis were categorized as follows:
| December 31, 2025 | December 31, 2024 | |||||
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |
| $ | $ | $ | $ | $ | $ | |
| Assets | ||||||
| Marketable securities | 22,462 | - | - | - | - | - |
| Trade and other receivables | - | 20,371 | - | - | 17,402 | - |
| 22,462 | 20,371 | - | - | 17,402 | - | |
| Liabilities | ||||||
| Consideration payable | - | - | 20,243 | - | - | 10,158 |
| - | - | 20,243 | - | - | 10,158 | |
The majority of the Company’s trade receivables arose from provisional concentrate sales and are valued using quoted market prices based on the forward London Metal Exchange for silver, zinc and lead and the London Bullion Market Association P.M. fix for silver.
The methodology and assessment of inputs for determining the fair value of financial assets and liabilities as well as the levels of hierarchy for the Company’s financial assets and liabilities measured at fair value remains unchanged from that as at December 31, 2024.
The Company has exposure to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s trade receivables.
The Company has concentrate contracts to sell the zinc and lead concentrates produced by all of the Company’s mines and the San Lucas trading business. Concentrate contracts are a common business practice in the mining industry. The terms of the concentrate contracts may require the Company to deliver concentrate that has a value greater than the payment received at the time of delivery, thereby introducing the Company to credit risk of the buyers of concentrates. Should any of these counterparties not honour purchase arrangements, or should any of them become insolvent, the Company may incur losses for products already shipped and be forced to sell its concentrates on the spot market or it may not have a market for its concentrates and therefore its future operating results may be materially adversely impacted. At December 31, 2025, the Company had receivable balances associated with buyers of its concentrates of $20,371 (December 31, 2024 - $17,402). The Company’s concentrate is sold to well-known concentrate buyers.
| - 25 - |
Financial Instruments and Other Instruments (continued)
The following financial assets represent the maximum credit risk to the Company:
December 31, 2025 |
December 31, 2024 | |
| $ | $ | |
| Cash | 44,267 | 35,721 |
| Marketable securities | 22,462 | - |
| Trade and other receivables | 43,348 | 41,864 |
Management constantly monitors and assesses the credit risk resulting from its concentrate sales, trading counterparties and customers. With the exception to the above, the Company believes it is not exposed to significant credit risk.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows. The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansion plans. The Company strives to maintain sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash and short-term investments, and its committed loan facilities.
In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following tables summarize the remaining contractual maturities of the Company’s financial liabilities and operating and capital commitments on an undiscounted basis:
| <1
year |
1
- 2 years |
2
- 5 years |
>5
years |
Total | |
| $ | $ | $ | $ | $ | |
| Trade payables and accrued liabilities | 47,402 | 7,167 | - | - | 54,569 |
| Consideration payable - CVR & additional payments | 1,697 | 4,644 | 13,147 | 9,035 | 28,523 |
| Loans payable | 50,642 | 1,344 | - | - | 51,986 |
| Lease payments | 854 | - | - | - | 854 |
| 100,595 | 13,155 | 13,147 | 9,035 | 135,932 |
Currency risk
The Company reports its financial statements in USD; however, the Company operates in jurisdictions that utilize other currencies. As a consequence, the financial results of the Company’s operations as reported in USD are subject to changes in the value of the USD relative to local currencies. Since the Company’s sales are denominated in USD and a portion of the Company’s operating costs and capital spending are in local currencies, the Company is negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse.
The sensitivity of the Company’s net income to changes in the exchange rate between the US dollar and the Bolivian boliviano, the US dollar and the Mexican peso and the US dollar and the Canadian dollar, respectively, would be as follows: a 1% change in the US dollar exchange rate relative to the Bolivian boliviano would change the Company’s net income by approximately $540, a 1% change in the US dollar exchange rate relative to the Mexican peso would change the Company’s net income by approximately $151, and a 1% change in the US dollar exchange rate relative to the Canadian dollar would change the Company’s net income by approximately $(77).
| - 26 - |
The Company’s financial assets and liabilities as at December 31, 2025 are denominated in Canadian dollars, US dollars, Bolivian bolivianos and Mexican pesos and translated to US dollars as follows:
| CAD | BOB | USD | MXN | Total | |
| $ | $ | $ | $ | $ | |
| Financial assets | |||||
| Cash | 2,024 | 21 | 41,468 | 754 | 44,267 |
| Marketable securities | - | - | 22,462 | - | 22,462 |
| Trade and other receivables | 24 | 21,694 | 21,532 | 98 | 43,348 |
| 2,048 | 21,715 | 85,462 | 852 | 110,077 | |
| Financial liabilities | |||||
| Trade payables and accrued liabilities | 728 | 35,040 | 5,944 | 12,857 | 54,569 |
| Consideration payable | - | - | 20,243 | - | 20,243 |
| Loans payable | - | 49,464 | 2,522 | - | 51,986 |
| Other liabilities | - | 10,675 | 10,124 | 2,799 | 23,598 |
| 728 | 95,179 | 38,833 | 15,656 | 150,396 | |
| Net financial assets (liabilities) | 1,320 | (73,464) | 46,629 | (14,804) | (40,319) |
Interest rate risk
Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest rates. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. As at December 31, 2025, the Company’s exposure to interest rate risk on interest bearing liabilities is limited to its consideration payable, debt facilities and lease liabilities. Based on the Company’s interest rate exposure at December 31, 2025, a change of 1% increase or decrease of market interest rate would impact the Company’s income or loss by approximately $529.
Price risk
Metal price risk is the risk that changes in metal prices will affect the Company’s income or the value of its related financial instruments. The Company derives its revenue from the sale of silver, zinc, lead and copper. The Company’s sales are directly dependent on metal prices that have shown significant volatility and are beyond the Company’s control. Consistent with the Company’s mission to provide equity investors with exposure to changes in precious metal prices, the Company’s current policy is to not hedge the price of precious metal.
Outstanding Share Data
As at the date of this report, the Company has 92,401,115 common shares issued and outstanding, 1,352,289 common shares issuable under stock options, 335,666 common shares issuable under restricted share units, 125,000 common shares issuable under performance share units, 168,750 common shares issuable under deferred share units.
Internal Controls over Financial Reporting and Disclosure Controls and Procedures
The Company has disclosure controls and procedures in place to provide reasonable assurance that any information required to be disclosed by the Company under securities legislation is recorded, processed, summarized and reported within the applicable time periods and that required information is gathered and communicated to the Company's management so that decisions can be made about the timely disclosure of that information.
The Company's management is responsible for establishing and maintaining adequate internal controls over financial reporting. Any system of internal controls over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
| - 27 - |
The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, believe that any disclosure controls and procedures or internal controls over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, the Company’s management cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any control system is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost- effective control system, misstatements due to error or fraud may occur and not be detected.
Non-GAAP Measures
The Company has included certain non-GAAP performance measures throughout this MD&A, including Cash Cost per Silver Equivalent Ounce Sold, Cash Cost of Production per Tonne, All-in Sustaining Cash Cost (“AISC”) per Silver Equivalent Ounce Sold, Average Realized Price per Ounce of Silver Equivalent Sold, and Adjusted EBITDA each as defined in this section.
These performance measures are employed by the Company to measure its operating and financial performance internally, to assist in business decision-making, and provide key performance information to senior management. The Company believes that, in addition to conventional measures prepared in accordance with International Financial Reporting Standards (“IFRS® Accounting Standards”), as issued by the International Accounting Standards Board (“IASB”), certain investors and other stakeholders also use these non-GAAP measures as information to evaluate the Company's operating and financial performance. As there are no standardized methods of calculating these non-GAAP measures, the Company's methods may differ from those used by others and, accordingly, the Company's use of these measures may not be directly comparable to similarly titled measures used by others. Accordingly, these non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Cash Cost per Silver Equivalent Ounce Sold, All-in Sustaining Cash Cost (“AISC”) per Silver Equivalent Ounce Sold, and Cash Cost of Production per Tonne
The non-GAAP measures of cash cost per silver equivalent ounce sold and cash cost of production per tonne are used by the Company to manage and evaluate operating performance at respective mining operations and are widely reported in the silver mining industry as benchmarks for performance, but do not have a standardized meaning. Cash costs are calculated based on the cash operating costs at the respective mining operations and, in the case of cash cost per silver equivalent ounce sold, also include the third party concentrate treatment, smelting and refining cost.
Management of the Company believes that the Company's ability to control the cash cost per silver equivalent ounce produced and cash cost of production per tonne are two of its key performance drivers impacting both the Company's financial condition and results of operations. Having a low cash cost of production per tonne, when taken in connection with effective management of mining dilution, will improve the cash cost per silver equivalent ounce produced. Having a low-cost base per silver equivalent ounce of production allows the Company to continue operating during times of declining commodity prices and provides more flexibility in responding to changing market conditions. In addition, low-cost operations offer a better opportunity to generate positive cash-flows, which improves the Company's financial condition.
The Company believes these measures provide investors and analysts with useful information about the Company's underlying cash costs of operations and are relevant metrics used to understand the Company's operating profitability and ability to generate cash-flow.
| - 28 - |
To facilitate a better understanding of these measures as calculated by the Company, the following table provides a detailed reconciliation between the cash cost of production per tonne, cash cost per silver equivalent ounce sold, and the Company's operating expenses as reported in the Company's consolidated statements of income (loss) and comprehensive income (loss) contained in the respective financial statements for the referenced periods.
AISC is a non-GAAP measure and was calculated based on guidance provided by the World Gold Council ("WGC") in September 2013. WGC is not a regulatory industry organization and does not have the authority to develop accounting standards for disclosure requirements. Other mining companies may calculate AISC differently as a result of differences in underlying accounting principles and policies applied, as well as differences in definitions of sustaining versus development capital expenditures.
AISC is a more comprehensive measure than cash cost per ounce for the Company's operating performance by providing greater visibility, comparability and representation of the total costs associated with producing silver from its mining operations.
The Company defines sustaining capital expenditures as, “costs incurred to sustain and maintain existing assets at current productive capacity and constant planned levels of productive output without resulting in an increase in the life of assets, future earnings, or improvements in recovery or grade. Sustaining capital includes costs required to improve/enhance assets to minimum standards for reliability, environmental or safety requirements.”
Consolidated AISC includes total production cash costs incurred at the Company's mining operations, which forms the basis of the Company's total cash costs. Additionally, the Company includes sustaining capital expenditures, corporate general and administrative expense, sustaining share-based payments (if any), and reclamation cost accretion. AISC for Bolivia Consolidated and Zimapan do not include certain corporate and non-cash items such as corporate general and administrative expense and sustaining share-based payments.
The Company believes that this measure represents the total sustainable costs of producing silver from current operations and provides the Company and other stakeholders of the Company with additional information of the Company's operational performance and ability to generate cash flows. As the measure seeks to reflect the full cost of silver production from current operations, new project capital and expansionary capital at current operations are not included. Certain other cash expenditures, including tax payments, dividends and financing costs are also not included.
| - 29 - |
Cash Cost per Silver Equivalent Ounce Sold, All-in Sustaining Cash Cost (“AISC”) per Silver Equivalent Ounce Sold, and Cash Cost of Production per Tonne
The following tables provide a detailed reconciliation of these measures to our operating expenses, as reported in our consolidated financial statements.
| Three Months Ended December 31, 2025 | |||||||
| Bolivar (1) | Porco (1) | Caballo Blanco Group | San Lucas Group | Zimapan | Corporate/ other | Total (1) | |
| Cost of sales | 11,081 | 5,706 | 9,490 | 30,048 | 18,074 | - | 74,399 |
| Transportation and other selling cost | (1,518) | (954) | (1,795) | (2,637) | (1,352) | - | (8,256) |
| Royalty | (1,397) | (557) | (1,700) | (1,510) | (166) | - | (5,330) |
| Inventory change | (501) | 484 | (1,023) | 4,563 | (647) | - | 2,876 |
| Cash Cost of Production (A) | 7,665 | 4,679 | 4,972 | 30,464 | 15,910 | - | 63,689 |
| Cost of sales | 11,081 | 5,706 | 9,490 | 30,048 | 18,074 | - | 74,399 |
| Concentrate treatment, smelting and refining cost | 771 | 473 | 889 | 3,067 | 9,296 | - | 14,496 |
| Cash Cost of Silver Equivalent Sold (B) | 11,852 | 6,179 | 10,379 | 33,115 | 27,370 | - | 88,895 |
| Sustaining capital expenditures | 5,003 | 517 | 2,851 | 2,108 | 3,981 | - | 14,460 |
| General and administrative expenses | 1,062 | 688 | 1,301 | 2,004 | 1,314 | 1,099 | 7,467 |
| Accretion of decommissioning and restoration provision | 186 | 308 | 243 | 95 | 124 | - | 957 |
| All-in Sustaining Cash Cost (C) | 18,104 | 7,692 | 14,774 | 37,322 | 32,789 | 1,099 | 111,779 |
| Material processed (tonnes milled) (D) | 63,267 | 51,416 | 63,067 | 105,587 | 222,703 | - | 506,040 |
| Silver Equivalent Sold (payable ounces) (E) | 378,140 | 155,338 | 392,362 | 833,017 | 649,079 | - | 2,407,936 |
| Cash Cost per Silver Equivalent Ounce Sold (B/E) | 31.34 | 39.78 | 26.45 | 39.75 | 42.17 | - | 36.92 |
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold (C/E) | 47.88 | 49.52 | 37.65 | 44.80 | 50.52 | - | 46.42 |
| Cash Cost of Production per tonne (A/D) | 121.15 | 91.01 | 78.83 | 288.52 | 71.44 | - | 125.86 |
| (1) | Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco. |
| Three Months Ended December 30, 2024 | |||||||
Bolivar (1) |
Porco (1) |
Caballo Blanco Group | San Lucas Group | Zimapan | Corporate/ other | Total(1) | |
| Cost of sales | 12,390 | 7,459 | 8,573 | 23,069 | 15,078 | - | 66,569 |
| Transportation and other selling cost | (2,017) | (1,263) | (1,808) | (1,881) | (952) | - | (7,921) |
| Royalty | (1,828) | (844) | (1,093) | (873) | (57) | - | (4,695) |
| Inventory change | (133) | (122) | (1,044) | 1,326 | (1,533) | - | (1,506) |
| Cash Cost of Production (A) | 8,412 | 5,230 | 4,628 | 21,641 | 12,536 | - | 52,447 |
| Cost of sales | 12,390 | 7,459 | 8,573 | 23,069 | 15,078 | - | 66,569 |
| Concentrate treatment, smelting and refining cost | 2,115 | 1,129 | 1,760 | 910 | 4,808 | - | 10,722 |
| Cash Cost of Silver Equivalent Sold (B) | 14,505 | 8,588 | 10,333 | 23,979 | 19,886 | - | 77,291 |
| Sustaining capital expenditures | 2,103 | 1,765 | 1,741 | 2,683 | 2,966 | - | 11,258 |
| General and administrative expenses | 469 | 304 | 359 | 2,112 | 143 | 3,457 | 6,844 |
| Accretion of decommissioning and restoration provision | 168 | 270 | (88) | 222 | 120 | - | 692 |
| All-in Sustaining Cash Cost (C) | 17,245 | 10,927 | 12,345 | 28,996 | 23,115 | 3,457 | 96,085 |
| Material processed (tonnes milled) (D) | 69,411 | 53,702 | 60,776 | 92,369 | 216,883 | - | 493,141 |
| Silver Equivalent Sold (payable ounces) (E) | 777,765 | 345,675 | 629,937 | 847,411 | 852,103 | - | 3,452,891 |
| Cash Cost per Silver Equivalent Ounce Sold (B/E) | 18.65 | 24.84 | 16.40 | 28.30 | 23.34 | - | 22.38 |
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold (C/E) | 22.17 | 31.61 | 19.60 | 34.22 | 27.13 | - | 27.83 |
| Cash Cost of Production per tonne (A/D) | 121.19 | 97.39 | 76.15 | 234.29 | 57.80 | - | 106.35 |
| (1) | Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco. |
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Cash Cost per Silver Equivalent Ounce Sold, All-in Sustaining Cash Cost (“AISC”) per Silver Equivalent Ounce Sold, and Cash Cost of Production per Tonne (continued)
| Year Ended December 31, 2025 | |||||||
| Bolivar (1) | Porco (1) | Caballo Blanco Group | San Lucas Group | Zimapan | Corporate/ other | Total (1) | |
| Cost of sales | 35,738 | 21,479 | 28,726 | 77,288 | 67,767 | - | 230,999 |
| Transportation and other selling cost | (5,460) | (4,013) | (6,299) | (8,216) | (4,918) | - | (28,906) |
| Royalty | (3,369) | (1,826) | (4,112) | (3,349) | (446) | - | (13,102) |
| Inventory change | (1,699) | 17 | (2,956) | 5,188 | (3,193) | - | (2,643) |
| Cash Cost of Production (A) | 25,211 | 15,658 | 15,358 | 70,911 | 59,210 | - | 186,348 |
| Cost of sales | 35,738 | 21,479 | 28,726 | 77,288 | 67,767 | - | 230,999 |
| Concentrate treatment, smelting and refining cost | 4,489 | 2,823 | 4,373 | 7,752 | 22,155 | - | 41,592 |
| Cash Cost of Silver Equivalent Sold (B) | 40,227 | 24,302 | 33,099 | 85,040 | 89,922 | - | 272,591 |
| Sustaining capital expenditures | 11,184 | 1,887 | 5,097 | 3,895 | 15,603 | - | 37,666 |
| General and administrative expenses | 3,130 | 1,998 | 3,635 | 5,939 | 5,045 | 3,965 | 23,712 |
| Accretion of decommissioning and restoration provision | 556 | 941 | 698 | 286 | 490 | - | 2,972 |
| All-in Sustaining Cash Cost (C) | 55,098 | 29,128 | 42,529 | 95,160 | 111,060 | 3,965 | 336,940 |
| Material processed (tonnes milled) (D) | 232,448 | 197,231 | 234,709 | 387,805 | 893,067 | - | 1,945,261 |
| Silver Equivalent Sold (payable ounces) (E) | 1,983,106 | 1,006,027 | 2,035,431 | 2,939,466 | 2,970,701 | - | 10,934,731 |
| Cash Cost per Silver Equivalent Ounce Sold (B/E) | 20.29 | 24.16 | 16.26 | 28.93 | 30.27 | - | 24.93 |
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold (C/E) | 27.78 | 28.95 | 20.89 | 32.37 | 37.39 | - | 30.81 |
| Cash Cost of Production per tonne (A/D) | 108.46 | 79.39 | 65.44 | 182.85 | 66.30 | - | 95.80 |
| (1) | Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco. |
| Year Ended December 31, 2024 | |||||||
|
Bolivar (1) |
Porco (1) |
Caballo Blanco Group | San Lucas Group | Zimapan | Corporate/ other | Total(1) | |
| Cost of sales | 50,842 | 30,590 | 45,479 | 71,537 | 55,094 | - | 253,541 |
| Transportation and other selling cost | (7,714) | (4,993) | (7,432) | (6,012) | (4,384) | - | (30,536) |
| Royalty | (6,032) | (2,991) | (4,532) | (2,926) | (196) | - | (16,677) |
| Inventory change | (2,273) | (958) | (6,298) | 410 | 1,018 | - | (8,101) |
| Cash Cost of Production (A) | 34,823 | 21,648 | 27,216 | 63,009 | 51,532 | - | 198,227 |
| Cost of sales | 50,842 | 30,590 | 45,479 | 71,537 | 55,094 | - | 253,541 |
| Concentrate treatment, smelting and refining cost | 10,920 | 6,040 | 9,363 | 6,963 | 21,744 | - | 55,030 |
| Cash Cost of Silver Equivalent Sold (B) | 61,762 | 36,630 | 54,842 | 78,500 | 76,838 | - | 308,571 |
| Sustaining capital expenditures | 7,309 | 3,756 | 6,588 | 2,683 | 9,642 | - | 29,978 |
| General and administrative expenses | 1,362 | 1,060 | 2,067 | 3,131 | 3,979 | 14,738 | 26,337 |
| Accretion of decommissioning and restoration provision | 609 | 992 | 429 | 222 | 524 | - | 2,776 |
| All-in Sustaining Cash Cost (C) | 71,042 | 42,438 | 63,926 | 84,536 | 90,983 | 14,738 | 367,663 |
| Material processed (tonnes milled) (D) | 284,634 | 204,585 | 275,273 | 341,649 | 849,764 | - | 1,955,905 |
| Silver Equivalent Sold (payable ounces) (E) | 3,298,649 | 1,540,699 | 2,600,400 | 3,163,910 | 3,486,063 | - | 14,089,722 |
| Cash Cost per Silver Equivalent Ounce Sold (B/E) | 18.72 | 23.77 | 21.09 | 24.81 | 22.04 | - | 21.90 |
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold (C/E) | 21.54 | 27.54 | 24,.58 | 26.72 | 26.10 | - | 26.09 |
| Cash Cost of Production per tonne (A/D) | 122.34 | 105.81 | 98.87 | 184.43 | 60.64 | - | 101.35 |
| (1) | Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco. |
| - 31 - |
Average Realized Price per Ounce of Silver Equivalent Sold
Revenues are presented as the sum of invoiced revenues related to delivered shipments of zinc, lead and copper concentrates, after having deducted treatment, smelting and refining charges.
The following is an analysis of the gross revenues prior to treatment, smelting and refining charges, and shows deducted treatment, smelting and refining charges to arrive at the net reportable revenue for the period per IFRS. Gross revenues are divided by silver equivalent ounces sold to calculate the average realized price per ounce of silver equivalents sold.
Consolidated(1) Average Realized Price per Ounce of Silver Equivalent Sold
Three months ended December 31, |
Twelve months ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| Revenues | 118,397 | 98,968 | 384,893 | 349,848 |
| Add back: Treatment, smelting and refining charges | 14,496 | 10,722 | 41,592 | 55,030 |
| Gross Revenues | 132,893 | 109,690 | 426,485 | 404,878 |
| Silver Equivalent Sold (ounces) | 2,407,936 | 3,452,891 | 10,934,731 | 14,089,722 |
| Average Realized Price per Ounce of Silver Equivalent Sold (2) | 55.19 | 31.77 | 39.00 | 28.74 |
| Average Market Price per Ounce of Silver per London Silver Fix | 54.73 | 31.48 | 40.03 | 28.26 |
| (1) | Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco. |
| (2) | Average Realized Price per Ounce of Silver Equivalent Sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
Bolivar(1) Average Realized Price per Ounce of Silver Equivalent Sold
Three months ended December 31, |
Twelve months ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| Revenues | 20,496 | 22,129 | 70,969 | 83,073 |
| Add back: Treatment, smelting and refining charges | 771 | 2,115 | 4,489 | 10,920 |
| Gross Revenues | 21,267 | 24,244 | 75,458 | 93,993 |
| Silver Equivalent Sold (ounces) | 378,140 | 777,765 | 1,983,106 | 3,298,649 |
| Average Realized Price per Ounce of Silver Equivalent Sold (2) | 56.24 | 31.17 | 38.05 | 28.49 |
| Average Market Price per Ounce of Silver per London Silver Fix | 54.73 | 31.48 | 40.03 | 28.26 |
| (1) | Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco. |
| (2) | Average Realized Price per Ounce of Silver Equivalent Sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
Porco(1) Average Realized Price per Ounce of Silver Equivalent Sold
Three months ended December 31, |
Twelve months ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| Revenues | 7,890 | 9,330 | 35,414 | 38,498 |
| Add back: Treatment, smelting and refining charges | 473 | 1,129 | 2,823 | 6,040 |
| Gross Revenues | 8,363 | 10,459 | 38,237 | 44,538 |
| Silver Equivalent Sold (ounces) | 155,338 | 345,675 | 1,006,027 | 1,540,699 |
| Average Realized Price per Ounce of Silver Equivalent Sold (2) | 53.84 | 30.26 | 38.01 | 28.91 |
| Average Market Price per Ounce of Silver per London Silver Fix | 54.73 | 31.48 | 40.03 | 28.26 |
| (1) | Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco. |
| (2) | Average Realized Price per Ounce of Silver Equivalent Sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
| - 32 - |
Caballo Blanco Group Average Realized Price per Ounce of Silver Equivalent Sold
Three months ended December 31, |
Twelve months ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| Revenues | 21,586 | 17,590 | 76,707 | 65,872 |
| Add back: Treatment, smelting and refining charges | 889 | 1,760 | 4,373 | 9,363 |
| Gross Revenues | 22,475 | 19,350 | 81,080 | 75,235 |
| Silver Equivalent Sold (ounces) | 392,362 | 629,937 | 2,035,431 | 2,600,400 |
| Average Realized Price per Ounce of Silver Equivalent Sold (1) | 57.28 | 30.72 | 39.83 | 28.93 |
| Average Market Price per Ounce of Silver per London Silver Fix | 54.73 | 31.48 | 40.03 | 28.26 |
| (1) | Average Realized Price per Ounce of Silver Equivalent Sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
San Lucas Group Average Realized Price per Ounce of Silver Equivalent Sold
Three months ended December 31, |
Twelve months ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| Revenues | 34,746 | 25,269 | 99,364 | 80,719 |
| Add back: Treatment, smelting and refining charges | 3,067 | 910 | 7,752 | 6,963 |
| Gross Revenues | 37,813 | 26,179 | 107,116 | 87,682 |
| Silver Equivalent Sold (ounces) | 833,017 | 847,411 | 2,939,466 | 3,163,910 |
| Average Realized Price per Ounce of Silver Equivalent Sold (1) | 45.39 | 30.89 | 36.44 | 27.71 |
| Average Market Price per Ounce of Silver per London Silver Fix | 54.73 | 31.48 | 40.03 | 28.26 |
| (1) | Average Realized Price per Ounce of Silver Equivalent Sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
Zimapan Mine Average Realized Price per Ounce of Silver Equivalent Sold
Three months ended December 31, |
Twelve months ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| Revenues | 33,679 | 24,650 | 102,439 | 81,687 |
| Add back: Treatment, smelting and refining charges | 9,296 | 4,808 | 22,155 | 21,744 |
| Gross Revenues | 42,975 | 29,458 | 124,594 | 103,431 |
| Silver Equivalent Sold (ounces) | 649,079 | 852,103 | 2,970,701 | 3,486,063 |
| Average Realized Price per Ounce of Silver Equivalent Sold (1) | 66.21 | 34.57 | 41.94 | 29.67 |
| Average Market Price per Ounce of Silver per London Silver Fix | 54.73 | 31.48 | 40.03 | 28.26 |
| (1) | Average Realized Price per Ounce of Silver Equivalent Sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to third-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one to four months after delivery to the customer, based on the market price at that time. |
| - 33 - |
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure in which net income is adjusted for income tax expense, interest income, interest expense, amortization and depletion, and impairment charges, foreign exchange gains or losses, unrealized losses or gains on marketable securities, share-based payments expense, accretion expense, changes in fair value of consideration payable and other non-recurring items. Foreign exchange gains or losses may consist of both realized and unrealized losses.
Under IFRS, entities must reflect in compensation expense the cost of share-based payments. In the Company's circumstances, share-based payments can involve a significant accrual of amounts that will not be settled in cash but are settled by the issuance of shares in exchange.
The Company discloses Adjusted EBITDA to aid in understanding of the results of the Company and is meant to provide further information about the Company's financial results to investors.
The following table provides a reconciliation of Adjusted EBITDA for the three and twelve months ended December 31, 2025 and 2024.
Three months ended December 31, |
Twelve months ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| Net income (loss) for the period | (4,550) | 12,842 | 42,222 | 164,484 |
| Income tax expense | 12,436 | 8,782 | 32,478 | 27,552 |
| Interest (income) | (418) | (464) | (1,511) | (480) |
| Interest expense, carrying and finance charges | 867 | 486 | 2,128 | 1,488 |
| Reversal of impairment on mineral properties, plant and equipment | (4,088) | - | (4,088) | - |
| Depreciation, depletion and amortization | 5,766 | 3,863 | 21,577 | 19,706 |
| Foreign exchange (gain) | 11,482 | (2,966) | (2,015) | (44,199) |
| Share-based compensation expense | (227) | (27) | 2,042 | 105 |
| Accretion (income) | 419 | (282) | 1,091 | 2,172 |
| (Gain) on adjustment to consideration payable | - | - | - | (133,255) |
| Loss on remeasurement of cash flows related to CAPEX receivable | 10,198 | (2,070) | 15,460 | 13,472 |
| Other finance expense (income) | (1,096) | 2,856 | (4,800) | 1,583 |
| Adjusted EBITDA | 30,789 | 23,020 | 104,584 | 52,628 |
| - 34 - |
Cautionary Note Regarding Forward-looking Information
Certain of the statements and information in this MD&A constitute “forward-looking information” within the meaning of applicable Canadian provincial securities laws relating to the Company and its operations. All statements, other than statements of historical fact, are forward-looking statements. When used in this MD&A, the words, “will”, “believes”, “expects”, “intents”, “plans”, “forecast”, “objective”, “guidance”, “outlook”, “potential”, “anticipated”, “budget”, and other similar words and expressions, identify forward-looking statements or information. These forward-looking statements or information relate to, among other things: future financial or operational performance; the expected timing for release of forecasts for 2025, including our estimated production of silver, zinc, lead and copper, and for our estimated Cash Costs, AISC, capital and exploration, mine operation, general and administrative, care and maintenance expenditures; future anticipated prices for silver, zinc, lead and copper and other metals and assumed foreign exchange rates; the impacts of inflation on the Company and its operations; whether the Company is able to maintain a strong financial condition and have sufficient capital, or have access to capital, to sustain our business and operations; the timing and outcome with respect to the Company’s environmental, social and governance activities, and the Company’s corporate social responsibility activities and our reporting in respect thereof; the ability of the Company to successfully complete any capital projects, the expected economic or operational results derived from those projects, and the impacts of any such projects on the Company; the potential maximum consideration payable to Glencore pursuant to the Term Sheet; the future results of our exploration activities, anticipated mineral reserves and mineral resources; the costs associated with the Company's decommissioning obligations; the Company’s plans and expectations for its properties and operations; and expectations with respect to the future anticipated impact of pandemics on our operations.
These forward-looking statements and information reflect the Company’s current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant operational, business, economic, competitive, political, regulatory, and social uncertainties and contingencies. These assumptions, include: our ability to implement environmental, social and governance activities; tonnage of ore to be mined and processed; ore grades and recoveries; that the Company will receive all required regulatory approvals to operate; that the market price of zinc may be above certain minimum thresholds for the payment of the CVR Payments and Additional Payments; prices for silver, zinc, lead, copper remaining as estimated; currency exchange rates remaining as estimated; capital, decommissioning and reclamation estimates; our mineral reserve and mineral resource estimates and the assumptions upon which they are based; prices for energy inputs, labour, materials, supplies and services (including transportation); no labour-related disruptions at any of our operations; no unplanned delays or interruptions in scheduled production; protection of our interests against claims and legal proceedings; all necessary permits, licenses and regulatory approvals for our operations are received in a timely manner and can be maintained. The foregoing list of assumptions is not exhaustive.
The
Company cautions the reader that forward-looking statements and information involve known and unknown risks, uncertainties and other
factors that may cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements
or information contained in this MD&A and the Company has made assumptions and estimates based on or related to many of these factors.
Such factors include, some of which are described in the “Risks Factors” section of this MD&A without limitation: fluctuations
in silver, zinc, lead and copper prices; fluctuations in prices for energy inputs; fluctuations in currency markets (such as the MXN,
BOB and CAD versus the USD); risks related to the technological and operational nature of the Company’s business; required regulatory
approvals; changes in national and local government, legislation, taxation, controls or regulations and political, legal or economic
developments in Canada, the United States, Mexico, Bolivia or other countries where the Company may carry on business, some of which
might prevent or cause the suspension or discontinuation of mining activities, including the risk of expropriation related to certain
of our operations, particularly in Bolivia; risks and hazards associated with the business of mineral exploration, development and mining
(including environmental hazards, industrial accidents, unusual or unexpected geological or structural formations, pressures, cave-ins
and flooding); risks relating to the credit worthiness or financial condition of suppliers, refiners and other parties with whom the
Company does business; inadequate insurance, or inability to obtain insurance, to cover these risks and hazards; employee relations;
relationships with and claims by the local communities and indigenous populations; availability and increasing costs associated with
mining inputs and labour;
| - 35 - |
Cautionary note regarding forward-looking information (continued)
the Company’s ability to secure our mine sites or maintain access to our mine sites due to criminal activity, violence, or civil and labour unrest; that changes to the market price of zinc may affect the total consideration payable to Glencore pursuant to the omnibus agreement; the speculative nature of mineral exploration and development, including the risk of obtaining or retaining necessary licenses and permits; challenges to, or difficulty in maintaining, the Company’s title to properties and continued ownership thereof; diminishing quantities or grades of mineral reserves as properties are mined; global financial conditions; the Company’s ability to complete and successfully integrate acquisitions, and to mitigate other business combination risks; the actual results of current exploration activities, conclusions of economic evaluations, and changes in project parameters to deal with unanticipated economic or other factors; increased competition in the mining industry for properties, equipment, qualified personnel, and their costs; having sufficient cash to pay obligations as they come due; the duration and effects of the coronavirus and COVID-19 variants, and any other epidemics or pandemics on our operations and workforce, and their effects on global economies and society. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described, or intended. Investors are cautioned against attributing undue certainty or reliance on forward-looking statements or information. Forward-looking statements and information are designed to help readers understand Management's current views of our near- and longer-term prospects and may not be appropriate for other purposes. The Company does not intend, and does not assume any obligation, to update or revise forward-looking statements or information to reflect changes in assumptions or in circumstances or any other events affecting such statements or information, other than as required by applicable law.
Risk Factors
The risk factors described below could materially affect the Company’s future operating results and could cause actual events and results to differ materially from those described in forward-looking statements and forward-looking information. Additional risks not presently known to us, or that we currently consider immaterial, may also impair our operations. Readers are strongly encouraged to review the following identified risks in detail.
Metal and Commodity Price Fluctuations
The majority of our revenue is derived from the sale of silver, zinc, lead and copper, and therefore fluctuations in the prices of these metals significantly affects our operations and profitability. Our sales are directly dependent on metal prices, and metal prices have historically shown significant volatility and are beyond our control. The Board of Directors continually assesses the Company’s strategy towards our metal exposure, depending on market conditions.
The prices of silver and other metals are affected by numerous factors beyond our control, including:
| ● | global and regional levels of supply and demand; |
| ● | sales by government holders and other third parties; |
| ● | metal stock levels maintained by producers and others; |
| ● | increased production due to new mine developments and improved mining and production methods; |
| ● | speculative activities; |
| ● | inventory carrying costs; |
| ● | availability, demand and costs of metal substitutes; |
| ● | international economic and political conditions; |
| ● | interest rates, inflation and currency values; |
| ● | increased demand for silver or other metals for new technologies; and |
| ● | reduced demand resulting from obsolescence of technologies and processes utilizing silver and other metals. |
In addition to general global economic conditions that can have a severely damaging effect on our business in many ways, declining market prices for metals could materially adversely affect our operations and profitability. A decrease in the market price of silver, zinc, lead and copper and other metals could affect the commercial viability of our mines and production at our mining properties. Lower prices could also adversely affect future exploration and our ability to develop mineral properties and mines which would have a material adverse impact on our financial condition, results of operations and future prospects. There can be no assurance that the market prices will remain at sustainable levels.
| - 36 - |
Risk Factors (continued)
If market prices of silver, zinc, lead and copper remain below levels used in the Company’s impairment testing and resource prices for an extended period of time, the Company may need to reassess its long-term price assumptions, and a significant decrease in the long-term price assumptions would be an indicator of potential impairment, requiring the Company to perform an impairment assessment on related assets. Due to the sensitivity of the recoverable amounts to long term metal prices, as well as to other factors including changes to mine plans and cost escalations, any significant change in these key assumptions and inputs could result in impairment charges in future periods.
Foreign Operations
The Company’s production and revenues are derived from our operations in Mexico and Bolivia. As a result, we are exposed to a number of risks and uncertainties, including:
| ● | expropriation, nationalization, and the cancellation, revocation, renegotiation, or forced modification of existing contracts, permits, licenses, approvals, or title, particularly without adequate compensation; |
| ● | changing political and fiscal regimes, sometimes unexpectedly or as a result of precipitous events, and economic and regulatory instability; |
| ● | unanticipated adverse changes to constitutional rights and protections, and other laws and policies, including those relating to mineral title, royalties and taxation; |
| ● | delays or inability to obtain or maintain necessary permits, licenses or approvals; |
| ● | opposition to mine development projects from governments, communities, and other groups, which may include frivolous or vexatious claims, misinformation, and the potential for violence and property damage; |
| ● | restrictions on foreign investment; |
| ● | limitations on repatriation of operating cash flows, including legal and practical restrictions to transfer funds from and to foreign jurisdictions; |
| ● | unreliable or undeveloped infrastructure; |
| ● | labour unrest and scarcity; |
| ● | human rights violations, which may include Indigenous rights claims; |
| ● | inability of governments or governmental bodies to complete, or properly complete, consultation processes and to comply with national and international laws, protocols, standards and/or norms; |
| ● | difficulty obtaining key equipment and components for equipment; |
| ● | difficulty obtaining consumables and others necessary to operate our mines; |
| ● | regulations and restrictions with respect to imports and exports; |
| ● | high rates of inflation; |
| ● | extreme fluctuations in currency exchange rates and restrictions on foreign exchange, currencies and repatriation; |
| ● | inability to obtain fair dispute resolution or judicial determinations because of bias, corruption or abuse of power; |
| ● | abuse of power of foreign governments who impose, or threaten to impose, fines, penalties or other similar mechanisms, without regard to the rule of law; |
| ● | difficulties enforcing judgments, particularly judgments obtained in Canada or the United States, with respect to assets located outside of those jurisdictions; |
| ● | difficulty understanding and complying with the regulatory and legal framework with respect to mineral properties, mines and mining operations, and permitting; |
| ● | violence and the prevalence of criminal activity, including organized crime, theft and illegal mining; |
| ● | civil unrest, terrorism and hostage taking; government, union and community pressures to maintain unprofitable operations; |
| ● | military repression and increased likelihood of international conflicts or aggression; and |
| ● | increased public health concerns. |
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Risk Factors (continued)
In 2014, the Bolivian government enacted the New Mining Law. Among other things, the New Mining Law set out a number of new economic and operational requirements relating to state participation in mining projects. Further, the New Mining Law provided that all pre-existing contracts were to migrate to one of several new forms of agreement within a prescribed period of time. As a result, we anticipate that our current Mining Joint Operations Agreement with COMIBOL relating to the Illapa Joint Operation will be subject to such migration and possible renegotiation of key terms. The migration process has been delayed by COMIBOL and has not been completed. The primary effects on the Illapa Joint Operation and our interest therein will not be known until such time as we have, if required to do so, renegotiated the existing contract, and the full impact may only be realized over time. We will take appropriate steps to protect and, if necessary, enforce our rights under our existing agreement with COMIBOL. There is, however, no guarantee that governmental actions, including possible expropriation or additional changes in the law, and the migration of our contract will not impact our involvement in the Illapa Joint Operation in an adverse way and such actions could have a material adverse effect on us and our business.
Criminal activity and violence are also prevalent in some areas that we work in. For example, violence in Mexico is well documented and has, over time, been increasing. Conflicts between the drug cartels and violent confrontations with authorities are not uncommon. Other criminal activity, such as kidnapping and extortion, is also an ongoing concern. Many incidents of crime and violence go unreported and efforts by police and other authorities to reduce criminal activity are challenged by a lack of resources, corruption and the pervasiveness of organized crime. Incidents of criminal activity could occur and might affect our employees and our contractors and their families, as well as the communities in the vicinity of our operations. Such incidents may prevent access to our mines or offices; halt or delay our operations and production; could result in harm to employees, contractors, visitors or community members; increase employee absenteeism; create or increase tension in nearby communities; or otherwise adversely affect our ability to conduct business. We can provide no assurance that possible security incidents will not have a material adverse effect on our future operations.
Although we are unable to determine the impact of these risks on our future financial position or results of operations, many of these risks and uncertainties have the potential to substantially affect our exploration, development and production activities and could therefore have a material adverse impact on our operations and profitability.
Governmental Regulation
Our operations, exploration, and development activities are subject to extensive laws and regulations in the jurisdictions in which we conduct our business, including with respect to:
| ● | environmental protection, including greenhouse gas emissions, biodiversity, and water, soil and air quality; |
| ● | permitting; |
| ● | management and use of toxic substances and explosives; |
| ● | management and use of natural resources, including water and energy supplies; |
| ● | management of waste and wastewater; |
| ● | exploration, development, production, and post-closure reclamation of mines; |
| ● | imports and exports; |
| ● | transportation; |
| ● | price controls; |
| ● | taxation; |
| ● | mining royalties; |
| ● | labour standards, employee profit-sharing, and occupational health and safety, including mine safety regulations |
| ● | community and Indigenous rights; |
| ● | human rights; |
| ● | social matters, including historic and cultural preservation, engagement and consultation, local hiring and procurement, development funds; |
| ● | anti-corruption and anti-money laundering; and |
| ● | data protection and privacy. |
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Risk Factors (continued)
The costs associated with compliance with these and future laws and regulations can be substantial, and changes to existing laws and regulations (including the imposition of higher taxes and mining royalties) could cause additional expense, capital expenditures, restrictions on or suspensions of our operations and delays in the development of our properties. In addition, the regulatory and legal framework in some jurisdictions in which we operate are outdated, unclear and at times, inconsistent.
A failure to comply with these laws and regulations, including with respect to our past and current operations, and possibly even actions of parties from whom we acquired our mines or properties, could lead to, among other things, the imposition of substantial fines, penalties, sanctions, the revocation of licenses or approvals, expropriation, forced reduction or suspension of operations, and other civil, regulatory or criminal proceedings. Other enforcement actions may include corrective measures requiring capital expenditures, the installation of additional equipment or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of such mining activities and may have civil or criminal fines or penalties imposed upon them for violations of applicable laws or regulations.
As governments continue to struggle with deficits and concerns over the effects of depressed economies, the mining and metals sector has often been identified as a source of revenue. Taxation and royalties are often subject to change and are vulnerable to increases in both poor and good economic times, especially in many resource-rich countries. The addition of new taxes, specifically those aimed at mining companies, could have a material impact on our operations and will directly affect profitability and our financial results. COVID-19 resulted in unprecedented public health measures and massive increases in government spending which caused significant long-term damage to the global and most national economies. The resulting costs to governments, increased fiscal debt, interest rates, and inflation continue to result in further taxation pressures, the impacts of which could impact our financial performance.
In April 2021, the Senate of Mexico approved the amendment of various articles of the Federal Labor Law, Social Security Law, Law of the National Workers’ Housing Fund Institute, Federal Fiscal Code, Income Tax Law and the Value Added Tax Law. These new regulations significantly limit the ability of operating companies to subcontract and outsource labour to contractors and to employ related service providers. As a consequence of this new legislation, additional employee profit sharing costs, payroll taxes and benefits costs were imposed on our operations.
Permits
We are required to obtain and renew governmental permits for the operation and expansion of existing operations or for the development, construction, and commencement of new operations. Obtaining or renewing the necessary governmental permits can be costly and involve extended timelines. We may not be able to obtain or renew permits that are necessary to our operations, or the cost to obtain or renew permits may exceed our expected recovery from a given property once in production.
Failure to obtain or maintain the necessary permits, or to maintain compliance with any permits, can result in fines, penalties, or suspension or revocation of the permits. Our ability to obtain and renew permits is contingent upon certain variables, some of which are not within our control, including, introduction of new permitting legislation, the interpretation of applicable requirements implemented by the permitting authority, the need for public consultation hearings or approvals, and political or social pressure.
Any unexpected delays, failure to obtain or renew permits, failure to comply with the terms of the permit, or costs associated with the permitting process could impede or prevent the development or operation of a mine, which could have material adverse impacts on our operations and profitability.
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Risk Factors (continued)
Mining Risks and Insurance
The business of mining is generally subject to numerous risks and hazards, including environmental hazards, industrial accidents, contagious disease hazards, labour disputes, encountering unusual or unexpected geologic formations, cave-ins, flooding and periodic interruptions due to inclement or hazardous weather conditions at its existing locations. Such risks could result in damage to, or destruction of, mineral properties or producing facilities, personal injury, environmental damage, delays in mining, monetary losses and possible legal liability. The Company’s insurance will not cover all the potential risks associated with its operations. In addition, although certain risks are insurable, the Company may be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance against environmental risks (including potential for pollution or other hazards as a result of disposal of waste products occurring from exploration and production) is not generally available to the Company or to other companies within the industry on acceptable terms.
The Company carries insurance to protect against certain risks in such amounts as it considers adequate. Risks not insured against include, without limitation, environmental pollution, mine flooding or other hazards against which such companies cannot insure or against which they may elect not to insure. Losses from uninsured events may cause the Company to incur significant costs. The activities of the Company are subject to a number of challenges over which the Company has little or no control, but that may delay production and negatively impact the Company’s financial results, including: increases in energy, fuel and/or other production costs; higher insurance premiums; industrial accidents; labour disputes; shortages of skilled labour; contractor availability; unusual or unexpected geological or operating conditions; slope failures; cave-ins of underground workings; and failure of pit walls or dams. If the Company’s total production costs per ounce of silver rise above the market price of silver and remain so for any sustained period, the Company may experience losses and may curtail or suspend some or all of its exploration, development and mining activities.
Operational Risks
The ownership, operation, and development of a mine or mineral property involves significant risks and hazards which even the combination of experience, knowledge, and careful evaluation may not be able to overcome.
These risks include:
| ● | environmental and health hazards; |
| ● | industrial and equipment accidents, explosions and third party accidents; |
| ● | the encountering of unusual or unexpected geological formations; |
| ● | ground falls and cave-ins; |
| ● | flooding; |
| ● | labour disruptions; |
| ● | mechanical equipment, machinery, and facility performance problems; |
| ● | seismic events; |
| ● | extreme temperature variations and air quality issues underground; and |
| ● | periodic interruptions due to inclement or hazardous weather conditions. |
These risks could result in:
| ● | damage to, or destruction of, mineral properties or production facilities; |
| ● | personal injury or death; |
| ● | environmental damage and liabilities; |
| ● | delayed production; |
| ● | labour disruptions; |
| ● | increased production costs; |
| ● | asset write downs; |
| ● | abandonment of assets; |
| ● | monetary losses; |
| ● | civil, regulatory or criminal proceedings, including fines and penalties, relating to health, safety and the environment; |
| ● | community unrest, protests, and legal proceedings at local or international levels; |
| ● | loss
of social acceptance for our activities; and other liabilities. |
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Risk Factors (continued)
Advancements in science and technology and in mine design, methods, equipment, and training have created the possibility of reducing some of these risks, but there can be no assurances that such occurrences will not take place and that they will not negatively impact us, our operations, and our personnel.
Liabilities that we incur may exceed the policy limits of our insurance coverage or may not be insurable, in which case we could incur significant costs that could adversely impact our business, operations, profitability, or value.
Title to Assets
The validity of mining or exploration titles or claims or rights, which constitute most of our property holdings, can be uncertain and may be contested. Our properties may be subject to prior unregistered liens, agreements or transfers, Indigenous land claims, or undetected title defects. In some cases, we do not own or hold rights to the mineral concessions we mine, including some of our mining and exploration titles in Bolivia where the government has title to the concessions and our right to mine is contractual in nature. We have not conducted surveys of all the claims in which we hold direct or indirect interests and therefore, the precise area and location of such claims may be in doubt. No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the applicable exploration and mining titles or claims, or that such exploration and mining titles or claims will not be challenged or impugned by third parties. We may be unable to operate our properties as expected, or to enforce our rights to our properties. Any defects in title to our properties, or the revocation of our rights to mine, could have a material adverse effect on our operations and financial condition.
We operate in countries with developing mining laws, and changes in such laws could materially impact our rights or interests to our properties. We are also subject to expropriation risk in a number of countries in which we operate, including the risk of expropriation or extinguishment of property rights based on a perceived lack of development or advancement. Expropriation, extinguishment of rights and other similar governmental actions would likely have a material adverse effect on our operations and profitability.
In many jurisdictions in which we operate, legal rights applicable to mining concessions are different and separate from legal rights applicable to surface lands. Accordingly, title holders of mining concessions in many jurisdictions must agree with surface landowners on compensation in respect of mining activities conducted on such land. We do not hold title to all of the surface lands at some of our operations and rely on contracts or other similar rights to conduct surface activities.
Environmental Legislation, Regulations, and Hazards
We
are subject to environmental laws and regulation in the various jurisdictions in which we operate that impose requirements or restrictions
on our activities, such as mine development, water management, use of hazardous substances, reclamation, and waste transportation, storage
and disposal. Compliance with environmental laws and regulations may require significant costs and may cause material changes or delays
in our operations. There is no assurance that we will be in full compliance with environmental legislation at all times. Failure to comply
with applicable environmental legislation could lead to adverse consequences, including expropriation, suspension or forced cessation
of operations, revocation of or restrictions on permits, fines and other penalties, civil or regulatory proceedings, and, in certain
circumstances, criminal proceedings. Furthermore, any such failures could increase costs and extend timelines, requiring additional capital
expenditures and remedial actions. These negative consequences could significantly impact our financial condition, operations, and cash
flow.
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Risk Factors (continued)
Future environmental legislation could also require stricter standards and mandate increased enforcement, fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees.
Environmental hazards may exist on our properties which are currently unknown to us. We may be liable for losses associated with such hazards or may be forced to undertake extensive remedial cleanup action or to pay for governmental remedial cleanup actions, even in cases where such hazards have been caused by previous or existing owners or operators of the property, or by the past or present owners of adjacent properties, or by natural conditions. The costs of such cleanup actions may have a material adverse effect on our operations and profitability.
We are subject to environmental reclamation requirements to minimize long-term effects of mining exploitation and exploration disturbance by requiring the operating company to control possible deleterious elements and to re-establish, to some degree, pre-disturbance landforms and vegetation. These environmental reclamation requirements vary depending on the location of the property and the managing governmental agency. We are actively providing for and carrying out reclamation activities on our properties as required.
We operate four tailings storage facilities, we are conducting a third party review of all our tailings facilities. These reviews once concluded might find that the storage facilities design, construction, operation, maintenance, and monitoring activities at the tailings and water storage facilities might require further investments to meet the Canadian Dam Safety Guidelines, TSM Tailings Protocol, and known best practices. The development and update of guidelines and standards, such the Canadian Dam Association Technical Bulletin on Tailings Dam Breach Analyses and the Global Industry Standard for Tailings Management, may change requirements, costs, and ultimate capacity of our tailings facilities. Design of all of our tailings and water storage facilities includes detailed consideration of stability under static and dynamic (pseudostatic) seismic conditions to ensure exceedance of relevant safety factors. While we believe that appropriate steps have been taken to prevent safety incidents, there are inherent risks involved with tailings facilities, including among other things, seismic activity, and the ability of field investigations completed prior to construction to detect weak foundation materials. There can be no assurance that a dam or other tailings facility safety incident will not occur, and such an incident could have a material adverse effect on our operations and profitability of the Company.
In addition to increasing regulatory requirements and operational risks, claims from local communities and NGOs with respect to real or alleged environmental incidents are becoming more common and may impact operations. In the case of legitimate claims, such actions could result in injunctions, suspensions, or other work stoppages, including revocation of permits, or significant fines or awards of damages. In other cases, we may be subject to frivolous or exaggerated claims made in an effort to obstruct or prevent mining operations or to affect our reputation.
Community Action
The success of our business is, in many ways, dependent on maintaining positive and respectful relationships with communities in the areas where we work. There is an increasing level of public concern relating to the perceived effects of mining activities, particularly on communities and peoples impacted by such activities. Communities and certain NGO’s that oppose resource development have become more vocal and active with respect to the impact of mining activities. Adverse publicity related to extractive industries or specifically to the Company’s operations, could have an adverse effect on our reputation, impact our relationships with the communities in which we operate, and ultimately have a material adverse effect on our business, financial condition and results of operations. Some communities and NGOs have taken actions, such as installing road blockades, applying for injunctions for work stoppage, filing lawsuits for damages or to challenge our ownership or use of property, and intervening and participating in lawsuits seeking to cancel or revoke our rights, permits and licenses that are necessary for our operations to continue, which could materially impact our business. These actions relate not only to current activities but are often in respect of past activities by prior owners of mining properties. NGOs may also lobby governments for changes to laws, regulations and policies pertaining to mining, which, if made, could have a material adverse effect on our business, financial condition and results of operations. The manner with which we respond to
| - 42 - |
Risk Factors (continued)
civil disturbances and other activities can give rise to additional risks where those responses are perceived to be inconsistent with international standards, including those with respect to human rights.
Artisanal, or informal, mining is associated with a number of negative impacts, including environmental degradation, forced labour, child labour, human trafficking and funding of conflict. Additionally, effective local government administration is often lacking in the locations where these miners operate informally or illegally. These activities are largely unregulated and work conditions are often unsafe and present health risks to the artisanal miners and local communities, which while unrelated to our operations, may have a material impact on them. Informal miners are active on land adjacent to our Porco operation which create an additional component to risk.
The Company is continuing with the implementation of ESG, standards and internal social contribution designed to enhance our community engagement processes, drive world-class environmental practices and reinforce our commitment to the safety and health of our employees and surrounding communities. As part of these activities, we have implemented response mechanisms which help us manage our social risks by better understanding and responding to community questions or concerns around the perceived or actual impacts of our activities. While we are committed to operating in a responsible manner, there is no assurance that our efforts will be successful at mitigating adverse impacts to our operations, and we may suffer material consequences to our business, including among other things, delays and closures, increased costs, and significant reputational damage.
In Canada, recent jurisprudence has permitted foreign claimants to bring legal actions in relation to alleged human rights violations and tort claims which may have occurred in their home country. This includes the adoption of international customary law principles as actionable torts in Canada. In addition, international bodies, such as the Inter-American Commission and the Inter-American Court of Human Rights, may adopt precautionary measures or make orders for member states in respect of human rights violations that could materially impact our operations.
Developments Regarding Indigenous Peoples
Some of our operations are near areas presently or previously inhabited or used by Indigenous peoples or have communities nearby. There are many national and international laws, regulations, conventions, codes and other instruments dealing with the rights of Indigenous peoples that impose obligations on governments and entities. Many of these are complex and interwoven in application, and are integrated and applied differently by governments, communities, Indigenous peoples, and other interest groups. These may include a mandate that government consult with Indigenous peoples in the areas around our projects and mines regarding actions affecting local stakeholders, prior to granting us mining rights, permits or approvals. Applicable conventions, such as the ILO Convention 169 which has been ratified by Bolivia and Mexico, is an example of such an international convention.
The United Nations Declaration on the Rights of Indigenous Peoples (“UNDRIP”) was negotiated over a 24- year period with Indigenous peoples, member states and UN experts and was adopted by the UN General Assembly in September 2007. Canada officially endorsed UNDRIP in 2016 and in June 2021, the United Nations Declaration on the Rights of Indigenous Peoples Act (the “UNDRIP Act”) was enacted into law in Canada to align and harmonize Canadian laws with UNDRIP. The substantive impact of UNDRIP on each member states’ obligations to Indigenous peoples, including in Canada, remains uncertain, particularly with respect to the principle of free, prior and informed consent. At minimum, UNDRIP and the UNDRIP Act are likely to result in more robust consultation processes with potentially affected Indigenous peoples where projects trigger their application. Such requirements under UNDRIP and the associated application under Canadian law could impact our operations and our ability to develop new operations.
New
or amended laws, regulations and conventions respecting the rights of Indigenous peoples, including with respect to the acquisition and
use of lands, may alter decades old arrangements or agreements made by prior owners of our mines and properties, or even those made by
us in more recent years. There can be no guarantee that we have entered into all agreements with Indigenous peoples in accordance with
the laws and international standards and norms governing such relationships or that future laws and actions will not have a material
adverse effect on our rights or ability to explore or mine,
| - 43 - |
Risk Factors (continued)
or on our financial position, cash flow, and results of operations. Furthermore, it is not uncommon for Indigenous peoples to challenge agreements or arrangements previously entered into for various reasons. Public opposition, including opposition by NGOs, to mining activities has also increased in recent years, in part due to the perceived effects of those activities on local communities and on Indigenous peoples. There has been an increase in resort to strategic litigation supported by NGOs and other interest groups in reference to laws, regulations and conventions respecting the rights of Indigenous peoples, which if targeted at our operations, could have a material impact on the future operations of our mines.
If we cannot maintain an agreement or positive relationship with Indigenous peoples in respect of our operations, there may be significant disruptions in our operations and activities, we may be subject to legal or administrative proceedings, and we may be precluded from operating, or from continuing to operate, in such areas. There could also be significant harm to our reputation. The risks associated with operating or conducting activities in or near areas presently or previously inhabited by Indigenous peoples could further impact our ability to acquire or advance development projects and complete, or realize benefits from, future acquisitions.
Natural Disasters, Terrorist Acts, Health Crises including Pandemics, Other Disruptions or Dislocations, whether those effects are Local, Nationwide or Global
Upon the occurrence of a natural disaster, pandemic or upon an incident of war (for example, the current and ongoing conflict between Russia and Ukraine), riot or civil unrest, the impacted country, and the overall global economy, may not efficiently and quickly recover from such an event, which could have a materially adverse effect on the Company. Terrorist attacks, public health crises including epidemics, pandemics or outbreaks of new infectious diseases or viruses, and related events can result in volatility and disruption to global supply chains, operations, mobility of people, patterns of consumption and service and the financial markets, which could affect interest rates, credit ratings, credit risk, inflation, business, financial conditions, results of operations and other factors relevant to the Company.
Exploration and Development Risks
The long-term operation of our business and its profitability is dependent, in part, on the cost and success of our exploration and development programs. Mineral exploration and development is highly speculative and involves significant risks. Few properties that are explored are ultimately developed into producing mines. There is no assurance that our mineral exploration and development programs will result in discoveries of economic quantities of mineralization that are necessary for a property to be brought into commercial production. The commercial viability of a mineral deposit, once discovered, is also dependent upon a number of factors, including, among other things, (i) the particular attributes of the deposit, such as size, grade, and metallurgy; (ii) interpretation of geological data; (iii) feasibility studies; (iv) proximity to infrastructure and availability of labour, power, and water; (v) metal prices; (vi) foreign currency exchange rates; and (vii) government regulations, including regulations relating to development, taxation, royalties, import and export, and environmental protection.
The actual operating results of our projects may differ materially from those we had anticipated due to these and other factors, many of which are beyond our control. There can be no assurance that our acquisition, exploration, and development programs will yield new mineral reserves to replace or expand current mineral reserves, or that they will result in additional production. Unsuccessful exploration or development programs could have a material adverse effect on our operations and profitability.
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Risk Factors (continued)
Imprecision in Mineral Reserve and Mineral Resource Estimates
Our mineral resources are estimates. No assurances can be given that the estimated levels of mineral resources are accurate, or that the estimates will result in material being produced or processed profitably. These estimates are expressions of judgment based on knowledge and experience and are based on assumptions and interpretation of available geological, geochemical and operational data and information. Valid estimates made at a given time may significantly change when new information becomes available. It may take many years from the initial phase of drilling before production occurs, and during that time, the economic feasibility of our projects may change and may ultimately prove unreliable.
Fluctuations in the market price of silver, zinc, lead and copper and other metals, as well as increased capital or production costs or reduced recovery rates, may render our mineral reserves uneconomic to develop for a particular project or result in a reduction of mineral reserves. No assurances can be given that any mineral resource estimate will ultimately be reclassified as proven or probable mineral reserves or that mineralization can be mined or processed profitably. Inferred mineral resources have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. Mineral resource estimates may also be recalculated based on actual production experience. The evaluation of mineral resources is influenced by economic and technological factors, which may change over time. If our mineral resource figures are reduced in the future, this could have an adverse impact on the Company’s future cash flows, earnings, results of operations, and financial condition.
Production and Cost Estimates
We prepare estimates of future production and future production costs for our operations. No assurance can be given that production and cost estimates will be achieved. These production and cost estimates are based on many factors and assumptions, including: the accuracy of mineral resource estimates; ground conditions and physical characteristics of ores, such as hardness and the presence or absence of particular metallurgical characteristics; equipment and mechanical availability; labour availability and productivity; access to the mine; facilities and infrastructure; sufficient materials and supplies on hand; and the accuracy of estimated rates and costs of mining and processing, including the cost of human and physical resources required to carry out our activities. Failure to achieve production or cost estimates, or increases in costs, could have an adverse impact on our future cash flows, earnings, results of operations, and financial condition.
Actual production and costs may vary from estimates for a variety of reasons, including actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; short-term operating factors relating to the mineral resources, such as the need for sequential development of orebodies and the processing of new or different ore grades; and risks and hazards associated with mining. In addition, there can be no assurance that silver recoveries or other metal recoveries in small scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production, or that the existing known and experienced recoveries will continue. Costs of production may also be affected by a variety of factors, including ore grade metallurgy, labour costs and productivity, costs of supplies and services (such as, for example, fuel and power), general inflationary pressures, and currency exchange rates. Failure to achieve production estimates could have an adverse impact on our future cash flows, earnings, results of operations, and financial condition.
Infrastructure
Mining, processing, development, and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power, and water supply are important determinants for capital and operating costs, and sufficient and functional processing equipment and facilities are critical to our operations. The lack of availability or the delay in the availability of any one or more of these items could prevent or delay the development of our projects, result in the failure to achieve the anticipated production volume, and increase the construction costs and ongoing operating costs associated with our projects and operations. Similarly, continued improvements or replacement of existing infrastructure may require high capital investments and involve significant delays. In addition, unusual weather phenomena, sabotage, government, or other interference in the maintenance or provision of such infrastructure could adversely affect our operations and profitability.
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Risk Factors (continued)
Replacement of Resources
The Bolivar, Porco, Caballo Blanco complex, San Lucas Trading Operation and Zimapan mines accounted for all of our production in 2025. Current life-of-mine plans provide for a defined production life for mining at each of our mines. There is no assurance that any of our green field or near mine exploration projects will be successful, and substantial expenditures are required to establish mineral reserves. If our mineral reserves are not replaced either by the development or discovery of additional mineral reserves and/or extension of the life-of-mine at our current operating mines or through the acquisition or development of additional producing mines, this could have an adverse impact on our future cash flows, earnings, results of operations, and financial condition, and this may be compounded by requirements to expend funds for reclamation and decommissioning.
Trading Activities and Credit Risk
The zinc, lead, and copper concentrates produced by us are sold through long-term supply arrangements to metal traders or integrated mining and smelting companies. The terms of the concentrate contracts may require us to deliver concentrate that has a value greater than the payment received at the time of delivery, thereby introducing us to credit risk of the buyers of our concentrates. Should any of these counterparties not honour supply arrangements, or should any of them become insolvent, we may incur losses for products already shipped and be forced to sell our concentrates in the spot market or we may not have a market for our concentrates and therefore our future operating results may be materially adversely impacted.
At December 31, 2025, we had receivable balances associated with buyers of its concentrates of $20,371 (2024 - $17,402).
Supplier advances for products and services yet to be provided are a common practice in some jurisdictions in which we operate. These advances represent a credit risk to us to the extent that suppliers do not deliver products or perform services as expected. As at December 31, 2025, the Company had made $14,055 of supplier advances (2024 - $5,656), which are reflected in “Prepaid expenses and deposits” on the Company’s balance sheet.
Management constantly monitors and assesses the credit risk resulting from our concentrate sales and refining arrangements. Furthermore, management carefully considers credit risk when allocating prospective sales and refining business to counterparties. In making allocation decisions, management attempts to avoid unacceptable concentration of credit risk to any single counterparty.
From time to time, we may invest in equity securities of other companies. Just as investing in the Company is inherent with risks such as those set out in this MD&A, by investing in other companies we will be exposed to the risks associated with owning equity securities and those risks inherent in the investee companies.
Taxation Risks
In addition to the risks relating to taxation discussed under the heading “Risks Related to Our Business – Governmental Regulation”, we are also exposed to other tax related risks. In assessing the probability of realizing income tax assets recognized, we make estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, we give additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. We consider relevant tax planning opportunities that are within our control, are feasible, and within management’s ability to implement. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence.
Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. Future changes in tax laws could also limit us from realizing the tax benefits from the deferred tax assets. We reassess unrecognized income tax assets at each reporting period.
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Risk Factors (continued)
Exchange Rate Risk
We report our financial statements in USD; however, we operate in jurisdictions that utilize other currencies. As a consequence, the financial results of our operations, as reported in USD, are subject to changes in the value of the USD relative to local currencies. Since our sales are denominated in USD and a portion of our operating costs and capital spending are in local currencies, we are negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse.
Our balance sheet contains various monetary assets and liabilities, some of which are denominated in foreign currencies. Accounting convention dictates that these balances are translated at the end of each period, with resulting adjustments being reflected as foreign exchange gains or losses on our income statement.
Liquidity Risk
Liquidity risk is the risk that we will not be able to meet our financial obligations as they come due. The volatility of the metals markets can impact our ability to forecast cash flow from operations. We must maintain sufficient liquidity to meet our short-term business requirements, taking into account our anticipated cash flows from operations, our holdings of cash, and committed loan facilities.
We manage our liquidity risk by continuously monitoring forecasted and actual cash flows. We have in place a rigorous reporting, planning and budgeting process to help determine the funds required to support our normal operating requirements on an ongoing basis and our expansion plans. We continually evaluate and review capital and operating expenditures in order to identify, decrease, and limit all non-essential expenditures.
We are required to use a portion of our cash flow to service principal and interest on debt, which will limit the cash flow available for other business opportunities. We also maintain and enter into intercompany credit arrangements with our subsidiaries in the normal course. Our ability to make scheduled principal payments, pay interest on or refinance our indebtedness depends on our future performance, our cash flows, and applicable interest rates, which directly impacts our costs of financing, and which are subject to economic, financial, competitive and other factors beyond our control. Unexpected delays in production, the suspension of our mining licenses, or other operational problems could impact our ability to service the debt and make necessary capital expenditures when the debt becomes due. If we are unable to generate such cash flow to timely repay any debt outstanding, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets, applicable interest rates, and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. The Company’s board of directors will determine whether to pay cash dividends on its issued and outstanding shares. The declaration of dividends will depend upon the Company’s future earnings, its capital requirements, its financial condition and other relevant factors. The Company’s board does not intend to declare any dividends on its shares for the foreseeable future. It is anticipated that the Company will retain any earnings to finance the growth of its business and for general corporate purposes.
Limited Supplies and Supply Chain Disruptions
Our operations depend on an uninterrupted supply of reagents, production inputs, and other supplies and resources such as skilled personnel. Supply may be interrupted due to a shortage or the scarce nature of inputs, especially with regard to chemical reagents. Supply might also be interrupted due to transportation and logistics associated with the remote location of some of our operations, and government restrictions or regulations which delay importation of necessary items. Any interruptions to the procurement and supply of reagents, production inputs and other supplies, or the availability of skilled personnel, as well as increasing rates of inflation, could have an adverse impact on our future cash flows, earnings, results of operations, and financial condition.
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Risk Factors (continued)
Competitive Conditions
The mining industry is very competitive, particularly with respect to properties that produce, or are capable of producing, silver, zinc, lead, copper and other metals. Mines have limited lives and, as a result, the Company continually seeks to replace and expand mineral reserves through the acquisition of new properties. In addition, there is a limited supply of desirable mineral lands available in areas where we would consider conducting exploration and/or production activities. Because we face strong competition for new properties from other mining companies, some of which have greater financial resources than we do, we may be unable to acquire attractive new mining properties on terms that we consider acceptable.
Competition for resources is intense, particularly affecting the availability of manpower, drill rigs, mining equipment, and production equipment. Competition in the mining business for limited sources of capital could adversely impact our ability to acquire and develop suitable silver mines, silver developmental projects, silver producing companies, or properties having significant exploration potential. As a result, there can be no assurance that our acquisition and exploration programs will yield new mineral reserves to replace or expand current mineral reserves, or that we will be able to maintain production levels in the future.
Our competitive position is largely determined by our costs compared to other producers throughout the world and our ability to maintain our financial integrity through the lows of the metal price cycles. Costs are governed to a large extent by the location, grade, and nature of mineral reserves as well as by operating and management skills. In contrast with diversified mining companies, we focus on silver and zinc production, development, and exploration, and are therefore subject to unique competitive advantages and disadvantages related to the price of silver and zinc and to a lesser extent other base metal by-products. If silver and zinc prices substantially increase, we will be in a relatively stronger competitive position than diversified mining companies that produce, develop, and explore for other minerals in addition to silver and zinc. Conversely, if silver and zinc prices substantially decrease, we may be at a competitive disadvantage to diversified mining companies.
Employee Recruitment, Retention and Human Error
Recruiting and retaining qualified personnel is critical to our success. We are dependent on the services of key executives including the Company’s Executive Chairman the President of our Bolivian operations and other highly skilled and experienced executives and personnel focused on managing our interests. The number of persons skilled in acquisition, exploration, and development of mining properties is limited and competition for such persons is intense. As our business activity grows, we will require additional key financial, administrative, and mining personnel as well as additional operations staff. There can be no assurance that we will be successful in attracting, training, and retaining qualified personnel as competition for persons with these skill sets increases. If we are not successful in attracting, training, and retaining qualified personnel, the efficiency of our operations could be impaired, which could have an adverse impact on the Company’s future cash flows, earnings, results of operations, and financial condition.
Even when efforts to attract and retain qualified personnel and consultants to manage our interests are successful, people are fallible and human error and mistakes could result in significant uninsured losses to us. These could include, but are not limited to, loss or forfeiture of mineral claims or other assets for non-payment of fees or taxes, erroneous or incomplete filings or non-fulfillment of other obligations, significant tax liabilities in connection with any tax planning effort we might undertake or mistakes in interpretation and implementation of tax laws and practices, and legal claims for errors or mistakes by our personnel.
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Risk Factors (continued)
Employee Relations
Our employees and contractors are free to pursue collective bargaining and unions have been established at many of our operations. Although we have reached agreements with our various unions and place significant emphasis on maintaining positive relationships with the unions and employees, we have experienced labour strikes and work stoppages in the past. Should they occur, some labour strikes and work stoppages have the potential to materially affect our operations and thereby adversely impact our future cash flows, earnings, production, and financial conditions.
Economic Dependence
We have 2 customers that account for 100% of the concentrate and silver and zinc sales revenue. The loss of certain of these customers or curtailment of purchases by such customers could have a material adverse effect on our results of operations, financial condition, and cash flows.
General Economic Conditions
General economic conditions may adversely affect our growth, profitability and ability to obtain financing. Events in global financial markets in the past several years have had a profound impact on the global economy, particularly with the injection of monetary support and the massive increase in government debt in response to the COVID-19 pandemic since early 2020. Many industries, including the silver and zinc mining industry, have been and continue to be impacted by these market conditions. Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, inflation and significant interest rate increases, currency devaluations, high volatility in global equity, commodity, foreign exchange and precious metal markets and a lack of market confidence and liquidity. A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to, consumer spending, employment rates, business conditions, inflation, fuel and energy costs, consumer debt levels, lack of available credit, the state of the financial markets, interest rates and tax rates, may adversely affect our growth, profitability and ability to obtain financing. A number of issues related to economic conditions could have a material adverse effect on our business, financial condition and results of operations, including:
| ● | inflation, volatility and other pressures in credit markets could impact the cost and availability of financing and our overall liquidity; |
| ● | the volatility of silver, zinc, lead, copper and other metal prices would impact our revenues, profits, losses and cash flow; |
| ● | recessionary pressures could adversely impact demand for our production; |
| ● | volatile energy, commodity and consumables prices and currency exchange rates could impact our production costs; |
| ● | Russia’s invasion of the Ukraine, the threat of expanded conflict in Europe and the impact on geo-political stability and the global economy; and |
| ● | the devaluation and volatility of global stock markets could impact the valuation of our equity and other securities. |
Compliance
We are subject to complex laws and regulatory regimes that differ in the various jurisdictions in which we operate and are sometimes extra-jurisdictional in application. Ensuring that such laws and regulatory requirements are understood and followed by our personnel is difficult and we may inadvertently fail to comply with such laws and requirements or they may be contravened by our personnel. We have established programs, policies, controls, training, and monitoring to reduce and mitigate risks in certain areas, including anti-corruption compliance. In this respect, we have adopted a Code of Business Conduct and Ethics, developed a training program, implemented internal controls, to identify potential risks, and taken other steps to reduce the risk of non-compliance with applicable anti-corruption laws, including in the United States and Canada. However, there is no guarantee such programs, policies, controls, training or monitoring will prevent violations of the law, particularly by individual employees or agents. Violations of such laws, particularly those relating to corruption, could lead to the imposition of substantial fines, penalties or other civil or criminal prosecution or sanctions, and could severely damage our reputation. Such fines, penalties, and sanctions, and any damage to our reputation, could have a material adverse effect on our business.
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Risk Factors (continued)
Climate Change
There is significant evidence of the effects of climate change on our planet and an intensifying focus on addressing these issues. We recognize that climate change is a global challenge that may have both favorable and adverse effects on our business in a range of possible ways. Mining and processing operations are energy intensive and result in a carbon footprint either directly or through the purchase of fossil-fuel based electricity. As such, we are impacted by current and emerging policy and regulation relating to greenhouse gas emission levels, energy efficiency, and reporting of climate-change related risks. While some of the costs associated with reducing emissions may be offset by increased energy efficiency, technological innovation, or the increased demand for our metals as part of technological innovations, the current regulatory trend may result in additional transition costs at some of our operations. Governments are introducing climate-change legislation and treaties at the international, national, and local levels, and regulations relating to emission levels and energy efficiency are evolving and becoming more rigorous. Current laws and regulatory requirements are not consistent across the jurisdictions in which we operate, and regulatory uncertainty is likely to result in additional complexity and cost in our compliance efforts. Public perception of mining is, in some respects, negative and there is increasing pressure to curtail mining in many jurisdictions as a result, in part, of perceived adverse effects of mining on the environment and on local communities. Concerns around climate change may also affect the market price of our shares as institutional investors and others may divest interests in industries that are thought to have more environmental impacts. While we are committed to operating responsibly and reducing the negative effects of our operations on the environment, our ability to reduce emissions and energy and water usage by increasing efficiency and adopting new innovation is constrained by technological advancement, operational factors, and economics. Adoption of new technologies, the use of renewable energy, and infrastructure and operational changes necessary to reduce water usage may also increase our costs significantly. Concerns over climate-change, and our ability to respond to regulatory requirements and societal pressures, may have significant impacts on our operations and our reputation and may even result in reduced demand for our products.
The physical risks of climate-change could also adversely impact our operations. These risks include, among other things, extreme weather events, resource shortages, changes in rainfall and storm patterns and intensities, water shortages, changing sea levels, and extreme temperatures. Climate-related events such as mudslides, floods, droughts, and fires can have significant impacts, directly and indirectly, on our operations and could result in damage to our facilities, disruptions in accessing our sites with labour and essential materials or in shipping products from our mines, risks to the safety and security of our personnel and to communities, shortages of required supplies such as fuel and chemicals, inability to source enough water to supply our operations, and the temporary or permanent cessation of one or more of our operations. There is no assurance that we will be able to anticipate, respond to, or manage the risks associated with physical climate-change events and impacts, and this may result in material adverse consequences to our business and to our financial results.
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Risk Factors (continued)
Information and Cyber Security
The secure processing, maintenance, and transmission of information and data is critical to our business. Furthermore, we and our third-party service providers collect and store sensitive data in the ordinary course of our business, including personal information of our employees, as well as proprietary and confidential business information relating to ourselves and in some cases, our customers, suppliers, investors and other stakeholders. With the increasing dependence and interdependence on electronic data communication and storage, including the use of cloud-based services and personal devices, we are exposed to evolving technological risks relating to this information and data. These risks include targeted attacks on our systems or on systems of third parties that we rely on, failure or non-availability of a key information technology systems, or a breach of security measures designed to protect our systems. While we employ security measures in respect of our information and data, including implementing systems to monitor and detect potential threats, the performance of periodic audits, and penetration testing, we cannot be certain that we will be successful in securing this information and data and there may be instances where we are exposed to malware, cyber-attacks or other unauthorized access or use of our information and data. Any data breach or other improper or unauthorized access or use of our information could have a material adverse effect on our business and could severely damage our reputation, compromise our network or systems and result in a loss or escape of sensitive information, a misappropriation of assets or incidents of fraud, disrupt our normal operations, and cause us to incur additional time and expense to remediate and improve our information systems. In addition, we could also be subject to legal and regulatory liability in connection with any such cyber-attack or breach, including potential breaches of laws relating to the protection of personal information.
Stakeholder Confidence
Our business and operations require us to develop and maintain strong and trusting relationships with key stakeholders, including local communities, Indigenous peoples, governments, unions, and other groups and institutions. Poor management of these relationships, inadequate attention to matters of importance to these stakeholders, and operating in a manner that is perceived as unethical or damaging to the environment or to people could result in an erosion of trust and confidence in us and have negative impacts on our business and our financial and operating results. It can also affect our reputation more broadly, including with shareholders, government bodies, NGOs and other interest groups, the media, and the general public. A loss of trust and confidence and negative public opinion could impact our ability to obtain permits, licenses and other approvals, impede our efforts to find growth opportunities, materially increase our costs and expenses, result in legal claims and challenges, decrease the price of our shares and create negative market sentiment, all of which could have material impacts on our business and profitability. Since 2020, the importance of ESG performance requirements, standards and reporting has increased significantly across all stakeholder groups. While the Company has in place numerous programs and commitments with respect to ESG, there is no assurance that the Company will be able to adequately address all ESG pressures and potential requirements to maintain stakeholder confidence.
Acquisitions and Integration
An element of our business strategy is to make selected acquisitions. We expect to continue to evaluate acquisition opportunities on a regular basis and intend to pursue those opportunities that we believe are in our long-term best interests. The success of our acquisitions will depend upon a number of factors, including the adequacy, completeness, analysis and interpretation of information obtained during due diligence, our ability to effectively manage the integration and operations of entities once we complete an acquisition, and our ability, in some cases, to make improvements or advancements that we anticipated.
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Risk Factors (continued)
In addition to acquisitions, we might enter into joint venture, option and similar arrangements which, among other things, also require an investment in time and capital, and are subject to risks associated with due diligence matters. We also occasionally make investments in other mining companies, such as our investments in Zacatecas Silver Corp. Such arrangements may depend, in part, on other parties and may be speculative in nature or by means of payment to certain sell/purchase of certain non-strategic assets. There is no guarantee that any of these arrangements will be successful or that we will recover any capital or other investments made in relation thereto.
Accounting Policies and Internal Controls
As a publicly listed company, the Company is subject to numerous legal and accounting requirements that do not apply to private companies. The cost of compliance with many of these requirements is material. Failure to comply with these requirements can have numerous adverse consequences including, but not limited to, the Company’s inability to file required periodic reports on a timely basis, loss of market confidence, delisting of its securities and/or governmental or private actions against the Company. There can be no assurance that the Company will be able to comply with all of these requirements or that the cost of such compliance will not prove to be a substantial competitive disadvantage vis-à-vis privately held and larger public competitors.
The Company prepares its financial reports in accordance with International Financial Reporting Standards (“IFRS® Accounting Standards”), as issued by the International Accounting Standards Board (“IASB”). In the preparation of its financial reports, management may need to rely upon assumptions, make estimates or use their best judgment in determining the financial condition of the Company. Significant accounting policies are described in more detail in the Company’s audited financial statements.
In order to have a reasonable level of assurance that financial transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported, the Company has implemented and continues to analyze its internal control systems for financial reporting.
The restatements of prior period financial statements reflect the company's efforts to ensure the accuracy of its financial reporting. These restatements resulted from identified deficiencies in internal controls over financial reporting. In response, the company has undertaken measures to strengthen its internal control environment, including the hiring of additional staff at its corporate location, improvements to the process of the preparation of the consolidated financial statements and haven taken actions to improve the coordination between the Corporate accounting function and the site accounting teams and continues to monitor and improve its controls to prevent similar issues in the future. The company remains committed to maintaining effective internal controls and transparency in its financial disclosures. Although the Company believes its financial reporting and financial statements are prepared with reasonable safeguards to ensure reliability, the Company cannot provide absolute assurance in this regard.
Litigation
The Company is party to, and may become party to, litigation from time to time in the ordinary course of business which could adversely affect its business. Should any litigation in which the Company is, or becomes involved be determined against the Company, such a decision could adversely affect the Company’s ability to continue operating, could negatively impact the value of the Common Shares, and could use significant resources. Even if the Company is involved in litigation and wins, litigation can redirect significant Company resources, including the time and attention of management and available working capital. Litigation may also create a negative perception of the Company’s brand.
Additional Information
Additional information relating to the Company is on SEDAR+ at www.sedarplus.ca.
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Exhibit 99.5
Exhibit 99.6
CHANGE OF STATUS REPORT
Pursuant to Section 11.2 of National Instrument 51-102 –
Continuous Disclosure Obligations
March 31, 2026
| TO | British Columbia Securities Commission, as Principal Regulator |
| AND TO | Ontario Securities Commission |
| Alberta Securities Commission | |
| Financial and Consumer Affairs Authority of Saskatchewan | |
| Manitoba Securities Commission | |
| Financial and Consumer Services Commission (New Brunswick) | |
| Superintendent of Securities, Department of Justice and Public Safety, Prince Edward Island | |
| Nova Scotia Securities Commission | |
| Superintendent of Securities, Newfoundland and Labrador | |
| RE: | Santacruz Silver Mining Ltd. – Change of Status Report |
Pursuant to section 11.2 of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”), Santacruz Silver Mining Ltd. (the “Company”) hereby advises that, effective January 21, 2026, it ceased to be a “venture issuer” as defined in NI 51-102 as a result of the Company listing its common shares for trading on the facilities of the Nasdaq Capital Market under the symbol “SCZM”. The Company also continues to trade on the TSX Venture Exchange under the symbol “SCZ” and the Frankfurt Stock Exchange under the symbol “1SZ”.
| SANTACRUZ SILVER MINING LTD. | ||
| By: | “Arturo Préstamo” | |
| Arturo Préstamo | ||
| Chief Executive Officer | ||
Exhibit 99.7
 |
News Release
March 31, 2026 |
Santacruz Silver Reports Year End 2025 Financial Results
Vancouver, B.C. – Santacruz Silver Mining Ltd. (NASDAQ:SCZM) (TSX.V:SCZ) (“Santacruz” or the “Company”) reports its financial and operating results for the year ended December 31, 2025 (“FY 2025”). The full version of the audited consolidated financial statements for FY 2025 (the “Financial Statements”) and accompanying Management’s Discussion and Analysis (the “MD&A”) can be viewed on the Company’s website at www.santacruzsilver.com or on SEDAR+ at www.sedarplus.ca. All amounts are expressed in U.S. dollars, unless otherwise stated.
FY 2025 Highlights
| ● | Revenues of $326.4 million, a 15% increase year-over-year. |
| ● | Gross Profit of $109.4 million, a 91% increase year-over-year. |
| ● | Net Income of $42.2 million, a 74% decrease year-over-year1. |
| ● | Adjusted EBITDA of $104.6 million, a 99% increase year-over-year. |
| ● | Cash and Highly-Liquid Marketable Securities of $66.7 million, a 87% increase year-over-year2. |
| ● | Working Capital of $63.7 million, a 38% increase year-over-year. |
| ● | Average Realized Price per Ounce of Silver Equivalent Sold of $39.00, a 36% increase year-over-year. |
| ● | AISC per Silver Equivalent Ounce Sold of $30.81, a 18% increase year-over-year. |
| ● | Realized Margin per Silver Equivalent Ounce Sold of $8.19, a 209% increase year-over-year. |
1. Net Income for the period of FY 2024 includes a significant non-recurring, non-cash gain arising from the restructuring of the Company’s prior agreement with Glencore in connection with the acquisition of the Bolivian assets.
2. Cash includes $44.3 million and Highly-Liquid Marketable Securities includes $22.5 million, consisting of US treasury notes and bills, of which $15.8 million serves as collateral for short-term borrowings.
Arturo Préstamo, Executive Chairman and CEO of Santacruz, commented: “Last year was a milestone year for Santacruz, highlighted by our full debt repayment to Glencore, materially strengthened balance sheet, and growing treasury position, while continuing to strengthen our presence as a leading silver producer in Latin America. Strong silver prices throughout the year, supported by robust demand, contributed to a revenue increase of 15%. Additionally, the margin between the average realized price of silver and AISC improved by 209% due to operational efficiencies and cost optimization initiatives across our operations. While total production was down 11% due to Bolivar’s May 2025 flooding event, the strength and diversification of our multi-asset operating portfolio helped offset the impact, with operations remaining cash-generative and profitable. We continue to expect Bolivar’s full recovery by Q4 2026, with the dewatering program progressing ahead of plan and driving consistent quarter-over-quarter improvements throughout the year.”
Mr. Préstamo continued: “Looking at our priorities for 2026, in Bolivia, we remain focused on operational strength, cost discipline and processing plant efficiencies at our three producing mines and ore feed sourcing company, while advancing Soracaya towards production. In Mexico, we are improving metallurgical recoveries and concentrate quality at Zimapan, which is our highest-volume operation. With key capital already invested in Zimapan, these initiatives are expected to support continued operating improvements this year. Across all of our processing plants, our strategy continues to focus on lowering mining costs, improving recovery rates, and maintaining the flexibility of our integrated operations to support long-term value for our shareholders.”
Selected consolidated financial and operating information for FY 2025 and the financial year ended December 31, 2024 (“FY 2024”) is presented below. All financial information is prepared in accordance with International Financial Reporting Standards (“IFRS”), and all dollar amounts are expressed in thousands of US dollars, except per unit amounts, unless otherwise indicated.
 | 1 |
2025 Annual Highlights
| 2025 | 2024 | Change ‘25 vs ‘24 | ||||||||||
Operational | ||||||||||||
| Material Processed (tonnes milled) | 1,945,261 | 1,955,904 | (1 | )% | ||||||||
| Silver Equivalent Produced (ounces) (1) | 14,399,019 | 16,173,293 | (11 | )% | ||||||||
| Silver Ounces Produced | 5,598,680 | 6,718,380 | (17 | )% | ||||||||
| Zinc Tonnes Produced | 87,295 | 94,399 | (8 | )% | ||||||||
| Lead Tonnes Produced | 11,094 | 11,820 | (6 | )% | ||||||||
| Copper Tonnes Produced | 1,126 | 1,057 | 7 | % | ||||||||
| Silver Equivalent Sold (payable ounces) (2) | 10,934,731 | 14,089,723 | (22 | )% | ||||||||
| Cash Cost of Production per Tonne (3) | 95.80 | 101.35 | (5 | )% | ||||||||
| Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3) | 24.93 | 21.90 | 14 | % | ||||||||
| All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3) | 30.81 | 26.09 | 18 | % | ||||||||
| Average Realized Price per Ounce of Silver Equivalent Sold ($/oz) (2) (3) (4) | 39.00 | 28.74 | 36 | % | ||||||||
Financial | ||||||||||||
| Revenues | 326,382 | 282,987 | 15 | % | ||||||||
| Gross Profit | 109,400 | 57,226 | 91 | % | ||||||||
| Net Income | 42,222 | 164,484 | (74 | )% | ||||||||
| Net Earnings Per Share - Basic ($/share) | 0.47 | 0.49 | (4 | )% | ||||||||
| Adjusted EBITDA (3) | 104,584 | 52,625 | 99 | % | ||||||||
| Cash | 44,267 | 35,721 | 24 | % | ||||||||
| Working Capital | 63,688 | 46,296 | 38 | % | ||||||||
2025 Annual Production Summary - By Mine
| Bolivar(5) | Porco (5) | Caballo Blanco Group | San Lucas Group | Zimapan | Total | |||||||||||||||||||
| Material Processed (tonnes milled) | 232,448 | 197,231 | 234,709 | 387,805 | 893,067 | 1,945,261 | ||||||||||||||||||
| Silver Equivalent Produced (ounces) (1) | 2,374,121 | 1,377,234 | 2,782,260 | 3,881,319 | 3,984,086 | 14,399,019 | ||||||||||||||||||
| Silver Ounces Produced | 1,059,846 | 400,486 | 1,192,022 | 1,308,128 | 1,638,198 | 5,598,680 | ||||||||||||||||||
| Zinc Tonnes Produced | 14,367 | 10,675 | 16,063 | 27,419 | 18,771 | 87,295 | ||||||||||||||||||
| Lead Tonnes Produced | 674 | 504 | 2,573 | 2,264 | 5,080 | 11,094 | ||||||||||||||||||
| Copper Tonnes Produced | N/A | N/A | N/A | N/A | 1,126 | 1,126 | ||||||||||||||||||
| Average head grades per mine: | ||||||||||||||||||||||||
| Silver (g/t) | 158 | 77 | 170 | 127 | 78 | 109 | ||||||||||||||||||
| Zinc (%) | 6.73 | 5.77 | 7.28 | 7.89 | 2.74 | 5.10 | ||||||||||||||||||
| Lead (%) | 0.41 | 0.36 | 1.34 | 0.91 | 0.73 | 0.76 | ||||||||||||||||||
| Copper (%) | N/A | N/A | N/A | N/A | 0.26 | 0.26 | ||||||||||||||||||
| Metal recovery per mine: | ||||||||||||||||||||||||
| Silver (%) | 90 | 82 | 93 | 83 | 73 | 80 | ||||||||||||||||||
| Zinc (%) | 92 | 94 | 94 | 90 | 77 | 85 | ||||||||||||||||||
| Lead (%) | 71 | 70 | 82 | 64 | 78 | 74 | ||||||||||||||||||
| Copper (%) | N/A | N/A | N/A | N/A | 49 | 49 | ||||||||||||||||||
| Silver Equivalent Sold (payable ounces) (2) | 1,983,106 | 1,006,027 | 2,035,431 | 2,939,466 | 2,970,701 | 10,934,731 | ||||||||||||||||||
Notes for both tables above:
| (1) | Silver Equivalent Produced (ounces) have been calculated using prices of $31.41/oz, $2,775.53/t, $2,085.90/t and $9,762.69/t for silver, zinc, lead and copper respectively applied to the metal production divided by the silver price as stated here. |
| (2) | Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold stated in the table above, applied to the payable metal content of the concentrates sold from Bolivar, Porco, the Caballo Blanco Group, San Lucas Group and Zimapan. |
| (3) | The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold, All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold, Average Realized Price per Ounce of Silver Equivalent Sold, and Adjusted EBITDA. These measures are widely used in the mining industry as a benchmark for performance but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See ‘‘Non-GAAP Measures’’ section below for definitions. |
| (4) | Average Realized Price per Ounce of Silver Equivalent Sold is prior to all treatment, smelting and refining charges. |
| (5) | Bolivar and Porco are presented at 100% whereas the Company records 45% of revenues and expenses in its consolidated financial statements. |
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Production Results
For the year ended December 31, 2025, the Company processed 1,945,261 tonnes of ore, producing 14,399,019 silver equivalent (AgEq) ounces. This total includes 5,598,680 ounces of silver and 87,295 tonnes of zinc. In the fourth quarter of 2025, the Company reported 3,739,019 silver equivalent ounces produced. The complete annual and Q4 2025 production results were released in a news release dated January 26, 2026.
2025 YTD vs 2024 YTD
For the year ended December 31, 2025, Santacruz processed 1,945,261 tonnes of ore, broadly in line with 2024, while silver equivalent production decreased 11% to 14.4 million ounces. The reduction was driven primarily by the mid-May 2025 water inflow at Bolivar, which restricted access to the Pomabamba and Nané higher-silver-grade areas for a significant portion of the year, materially reducing consolidated silver output. As a result, silver production declined 17% year over year, while zinc production decreased 8%.
Outside of Bolivar, the portfolio remained comparatively stable and continued to demonstrate the benefit of the Company’s diversified operating base. San Lucas increased tonnes processed by 14% and continued to support plant utilization and fixed-cost absorption across the group, while Zimapan increased silver equivalent production by 5% on higher zinc output. Caballo Blanco remained a consistent contributor, although year-over-year comparability is affected by the 2024 reclassification of Reserva ore to San Lucas. Overall, the strength of the broader portfolio moderated, but did not fully offset, the impact of the disruption at Bolivar. The Company expects a gradual quarter-over-quarter recovery in the affected areas through 2026, with a return to full production anticipated in Q4 2026, consistent with the mine plan and based on progress achieved to date.
Q4 2025 vs Q3 2025
In Q4 2025, Santacruz processed 506,040 tonnes of ore, 4% more than in Q3 2025, and produced 3,739,019 silver equivalent ounces, up 9% quarter over quarter. The improvement was led by Bolivar, where throughput increased 22%, and silver equivalent production increased 34% as access and operating conditions improved in the affected areas. The quarter was also supported by higher silver equivalent production from San Lucas (+11%), Caballo Blanco (+3%), Zimapan (+3%), and Porco (+4%). Consolidated silver production increased 8% quarter over quarter, zinc production increased 10%, and lead production increased 15%.
Cash Cost and All-in Sustaining Cost per Silver Equivalent Ounce Sold
FY 2025 vs FY 2024
For the year ended December 31, 2025, consolidated cash cost per silver equivalent ounce sold increased from $21.90 in FY 2024 to $24.93 in FY 2025, and the consolidated all in sustaining cost (“AISC”) increased from $26.09 in FY 2024 to $30.81 in FY 2025. The year-over-year increase was driven primarily by less silver-equivalent ounces sold in the year due to the operating disruption at Bolivar following the May 2025 water inflow, and higher ore purchase costs at San Lucas under its margin-based sourcing model as metal prices increased. The cash cost of production per tonne significantly favourably decreased from $101.35 to $95.80 in FY 2025, which demonstrates that the principal driver of the increase in the per-ounce cost came from the production mix and the decrease in AgEq ounces sold due to a lower conversion ratio applied to by-product revenues as opposed to being caused by actual increases in site operating costs per tonne.
From an economic perspective, higher realized prices more than offset the increase in AISC per ounce. Average realized price per ounce of silver equivalent sold increased to $39.00 in FY 2025 from $28.74 in FY 2024, compared against an AISC of $30.81 per ounce, which implies a margin of $8.19 per AgEq ounce sold as compared to $2.65/AgEq ounce sold in FY 2024. Reported AISC is presented on a silver-equivalent ounce sold basis and is sensitive to the changes in metal prices that would affect the AgEq conversion ratio when silver price changes disproportionately relative to the by-product metal prices.
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Q4 2025 vs Q3 2025
In Q4 2025, consolidated cash cost per silver equivalent ounce sold increased from $28.62 in Q3 2025 to $36.92 in Q4 2025, and consolidated AISC increased from $35.62 in Q3 2025 to $46.42 in Q4 2025. The increase occurred despite higher production, as silver equivalent ounces sold decreased 3% quarter over quarter and several operations reported higher unit costs. San Lucas and Zimapan were the main contributors to the increase: at San Lucas, ore purchase costs rose in line with higher silver and zinc prices under its margin-based sourcing model, while at Zimapan, both cash cost and AISC increased as the operation continued mine development and plant improvement work focused on improving recoveries and concentrate quality. Porco and Caballo Blanco also reported a higher cost per ounce as less ounces were sold and the operating mix outweighed otherwise stable production.
The Bolivar operation’s costs had favourable results, cash cost per silver equivalent ounce sold decreased by 9% and AISC decreased 6% due to improved throughput, grades and recoveries quarter over quarter. Even with the higher consolidated cost profile, Q4 2025 remained economically better than in Q3 2025 as the average realized price per ounce of silver equivalent sold increased to $55.19, compared with AISC of $46.42, implying an average margin of $8.77 per silver equivalent ounce sold versus $4.51 in Q3 2025.
Webinar Details
CEO Arturo Préstamo and CFO Andrés Bedregal will present at a webinar hosted by Adelaide Capital on Tuesday, April 7th at 3:00 pm ET. Investors and shareholders are invited to participate in the webinar.
Registration Link: https://us02web.zoom.us/webinar/register/WN_huyhKk5NQVGlMUzqbZw3lQ.
The webinar will also be live-streamed on the Adelaide Capital YouTube Channel, where a replay will be available after the event: https://bit.ly/adcap-youtube.
Questions can be submitted during the session or in advance to olenka@adcap.ca.
Non-GAAP Measures
The financial results in this news release include references to non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold, All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold, Average Realized Price per Ounce of Silver Equivalent Sold, and Adjusted EBITDA. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. For a reconciliation of non-GAAP and GAAP measures, please refer to the “Non-GAAP Measures” section in the Company’s FY 2025 Management Discussion and Analysis, which is available on SEDAR+ at www.sedarplus.ca.
Qualified Person
Garth Kirkham P.Geo., an independent consultant to the Company, is a qualified person under NI 43-101 and has approved the scientific and technical information contained within this news release.
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About Santacruz Silver Mining Ltd.
Santacruz Silver is engaged in the operation, acquisition, exploration, and development of mineral properties across Latin America. In Bolivia, the Company operates the Bolivar, Porco, and Caballo Blanco mining complexes, with Caballo Blanco comprising the Tres Amigos and Colquechaquita mines. The Reserva mine, whose production is provided to the San Lucas ore sourcing and trading business, is also located in Bolivia. Additionally, the Company oversees the Soracaya exploration project. In Mexico, Santacruz operates the Zimapan mine.
‘signed’
Arturo Préstamo Elizondo,
Executive Chairman and CEO
For further information, please contact:
Arturo Préstamo
Santacruz Silver Mining Ltd.
Email: info@santacruzsilver.com
Telephone: +52 81 83 785707
Andrés Bedregal
Santacruz Silver Mining Ltd.
Email: info@santacruzsilver.com
Telephone: +591 22444849
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) nor the Nasdaq Capital Market LLC accepts responsibility for the adequacy or accuracy of this news release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
Forward Looking Information
This news release includes certain statements and information that may constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future events or future performance reflect the expectations or beliefs of the management of the Company regarding future events. Generally, forward-looking statements and information can be identified by the use of forward-looking terminology such as “intends”, “expects” or “anticipates”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “should”, “would” or will “potentially” or “likely” occur. This information and these statements, referred to herein as “forward-looking statements”, are not historical facts, are made as of the date of this news release.
These forward-looking statements involve numerous risks and uncertainties and actual results might differ materially from results suggested in any forward-looking statements. These risks and uncertainties include, among other things, risks related to changes in general economic, business and political conditions, including changes in the financial markets, changes in applicable laws, and compliance with extensive government regulation, as well as those risk factors discussed or referred to in the Company’s disclosure documents filed with the securities regulatory authorities in certain provinces of Canada and available at SEDAR+ (www.sedarplus.ca).
There can be no assurance that any forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader should not place any undue reliance on forward-looking information or statements. The Company undertakes no obligation to update forward-looking information or statements, other than as required by applicable law.
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Filing Exhibits & Attachments
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