Discovery Silver Q2 2026 Earnings Call: Complete Transcript

Discovery Silver (TSX: DSV ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

Access the full call at Summary Discovery Silver reported strong financial performance in Q2 2026 with record revenue of $319 million, driven by higher gold prices and increased production, notably from the Kidd operations. The company achieved record gold production of 67,300 ounces, a 12% increase from Q1, with improvements in mining and milling rates across all operations. Strategic initiatives include the acquisition of Kidd operations, which is expected to significantly contribute to future growth and operational optimization.

Discovery Silver is advancing exploration projects with promising results, especially at Pamour and Dome, suggesting strong future production potential. The company maintains a solid financial position with over $600 million in liquidity and plans for substantial capital investments to drive growth. Management expressed confidence in achieving the 2026 guidance and emphasized ongoing efforts to optimize operations and reduce costs. Full Transcript Alexandra, Operator Good morning.

My name is Alexandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Discovery Silver Second Quarter 2026 Conference Call and webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by the number one again. Thank you. I will now turn the call over to Mark Utting, Senior Vice President of Investor Relations for Discovery Silver.

Mr. Utting, you may now begin your conference. Mark Utting, Senior Vice President, Investor Relations Thank you, operator. Good morning, everybody.

Thank you very much for joining us on Discovery Silver's second quarter 2026 conference call and webcast. As you just heard, I'm Mark Utting, Senior Vice President, Investor Relations. Joining me today are many members of Discovery Silver's senior executive team. Speaking today will be Tony McCooch, our President, CEO and Chairman; Allison White, our Chief Financial Officer; Duncan King, our Senior Vice President, Canadian Operations; Gord Leboy, our Senior Vice President, Mineral Processing; Carol Bird, our Vice President, Mineral Processing; Eric Calio, our Senior Vice President of Exploration; and Jose Haballera, our Senior Vice President in Mexico.

We'll then turn it back over to Tony for concluding remarks. Just before we get started, as always, I'll remind you that during today's call we will be making forward-looking statements. These statements are based on current expectations and projections about future events. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those forward-looking statements, and for more information, please refer to slide two in our slide deck as well as other disclosures on our website.

In addition, we will also be making reference to non-GAAP measures during the presentation. These measures do not have any standardized meaning prescribed under GAAP and therefore may not be comparable to other issuers. Slide three in the deck deals with cautionary language around non-GAAP measures. S.

dollars unless otherwise indicated. With that, I'll now turn the call over to Tony McCooch. Anthony Makuch, President, CEO and Director Okay, thanks Mark. And good morning everyone.

It's really good to be able to be here. Actually, you know, I think maybe before we started we had a really, I think, you know, we had a pretty good results in the quarter. Things went well or progressed well. I.

I know that, you know, like there's a lot of stuff hiding in the background that maybe people all don't see and I don't talk about a lot of people did a lot of, a lot of good work. A lot of people that did a lot of good work. Some of the results aren't really shown in this quarter. You'll be seeing them in future quarters.

But you know, you know what we talk about and all the, all the benefits that we, that we see and all the, all the results you see it's really, you know we get the chance to talk about it and tell you about it but there's a lot of really good people working in the company throughout the operations and they're the ones who did all the good work. So you know, before we start thank them for, for the results and you know and we recognize really what, what everybody's doing. So stay, stay tuned. We got, we're going to talk about good things that happened here but stay tuned.

There's still a lot. Sorry. Anyway, I'll start with slide four. This is a slide that we, we've used a lot in the past to try to you know, show things in terms of where we are in value creation and HOX butter growth to over half a million ounces of gold in production over the next three to five years.

It looks at our potential for Cordero and what we think we can bring with Cordero, you know, 14 million ounces silver production rate but you know, on an equivalent silver equivalent basis depending on silver prices. There's significant zinc and lead production there and definitely you know one a world class silver project in Mexico. Just waiting for a permit and then looking at a gold business, you know and what we're doing, we now believe that has the potential to be significantly greater than what we show here. And you know that's a forward looking statement that Mark talked about earlier.

And during this presentation we will show you why we are confident that this can be achieved. Going to Slide 5. You know, second quarter was favorable and we did have a lot of good works and you know definitely we've done a lot of progress in advancing our growth plans and you know, and maybe there were three key developments during the quarter that really highlight when we did first we completed the acquisition of Kidd operations. Second we.

Second we continue to achieve outstanding exploration results. And you know, we know and on the exploration results like you know we originally were putting all one press release. Now we put out three press releases in the last three weeks. You know, instead of lumping them into one.

There's so much good information. All we realized we, we probably have to start presenting them each individually and you can see this excellent job results at all of our exploration targets and we expect that to continue. We really think that this is as much of a. As much as this is a production and business story and a going concern operation that financially viable.

And as much as this is a growth story, this is me this could be an exploration story as well on steroids. And you know so, so it was. We had a lot of good exploration results and and we did ramp up our investments in in the quarter and and then we've had Stephanie, you know we're focusing on trying to improve our operations but you know going to slide 6 this looks at the Kidd acquisition. You know.

You know I think when in our last call we did talk a lot about it about it but you know if summing it up we know the growth we talked about that this is the really a big enabler besides the exploration, besides the you know had the people and what we're doing doing in the porcupine camp. But besides all the geology etc. That we see here and the infrastructure in place, you know the acquisition of the Kidd operations really helps us to achieve the growth that we're targeting over the time frame that we plan to achieve it. You know and, and a big part of it is the Kidd metallurgical site and and what we can do there.

And we'll probably be talking here more and more future as the year progresses in terms of the benefits of that we're not going to get into too much of the details of that but you know that, that, that was a significant acquisition that really enables us to move forward and you know, and you know, maybe you know, you know when we talk about it there's a current processing capacity there. But for us to grow our operation optimize Hoyle Pond more without this infrastructure and the geography, the land position, the power, the water that comes with operations. Maybe I can, I can talk too long, maybe I shouldn't and this is a very important acquisition for Discovery Silver.

Slide 7 shows, shows what we know from from the last quarterly call and sort of gives a sort of concept that lays out our plan construction new conventional gold circuit incorporated into space. That was the A division. You can see that some of the conceptual diagrams of where the infrastructure will go where we are currently reviewing what this circuit will look like and our advancing engineering design work. And I can tell you that we have moving parts exploration success and sort of our productivity rates that we might design for.

There's still a lot to being added to the story. So we got a lot of blank pages we might Have a lot of headings on chapters written in the book. But all the content is being rewritten as we speak in terms of what we're doing there. The B circuit, you know that's at Kidd.

There is four circuits as we've talked about before. The B circuit will continue to be used as a base metal circuit now processing the Kidd Creek material at least for 2026 and all of 2027 for the C circuit. You know, we are doing test work now and we expect that this circuit will be used to process Borden ore starting. So sometime, sometime next year and we don't wait.

We see this. This could add sometime something up to 40,000 ounces in annual production just in our current form, you know. And where do we get that from? Well, it will add 2000 tons a day of added availability at Dome.

We can see improved metallurgical recoveries at all at the ores processed at the Dome mill currently. Plus we think we're going to get improvement in recoveries from Gordon. Right. And it also gives us the ability to process higher levels of Borden ore at Kidd.

So maybe it gives us the ability to increase productivity from Borden because we were limited how much Borden ore could be intermingled into the into the gold circuit at Dome. And you know, with the Kidd metallurgical site we also investigated future plans for the D circuit. Our goal would be to have the TVZ and or other materials processed here. And you know, so we still have a lot, a lot, lot to work there but really, really an enabler in a lot of slide 8 looks at the exploration and I mentioned we had three press releases over the last few weeks, all with excellent results.

Eric's going to talk about this later so I know I'll just focus on a couple of things and maybe highlights. You know, we're excited about Pamour. Based on recent drilling and you know, tied into past drilling we've established that the mineralizing system over we've identified over strike length of more than 4km. The system remains open in all directions and at depth.

And you know we've talked previously about the depth potential in this region of the camp in terms of depth of Hoyle Pond where it found a 162000 meters I should say. And you know, and the depth that was at the Hallmark project which is on strike on the same system. It's not a mine that we have but it was mined down to 5,000. So there's significant upside here.

We're currently working on a mine redesign for the Pamour Pit and We expect Pamour to become a much larger producer and you know with that, you know as I talked about earlier in terms of the processing capacity of what we might build at Kidd at Kidd Circuit to support a much larger open pit operation here. And the other point that I'll make is that you know Dome is the second large open pit operation we expect. We have to bring online. It has transformational growth potential and by, by you know what we do at Kidd with, with the, with with the Kidd A circuit and being able to to move Pamour there.

This enables the Dome mill in its current form to be used to process and to start the Dome open. This is again this, this is all future looking stuff. We do also have longer term the Hollinger McIntyre as a potential third large scale open Pit. But again you know that's maybe we just.

We just start with the Pamour and then see how Pamour goes to Dome. But you know we truly believe that the day may come when Discovery Silver operates three of Canada's largest open pit gold mines all located in the Timmins camp. Going to Slide 9. It looks at our Q2 capital expenditures.

As expected. Our CapEx went up in Q2 totaling $86 million. That reflects our our progress on. On you know a number of fronts tailings.

We're advancing our tenants project at Dome to build up our tailings capacity. We continue to do pre stripping at Pamour our goal is. Is is to bring Pam to commercial production and we're investing in new fleets equipment and infrastructure will fall on important and we you know we expect to see further progress and further investments in capex over the years et cetera. And that's been our goal here to invest back into these operations to build, to not only build production but also, but also to improve the operating performance.

So not just growing production but improving performance and reducing costs, unit costs. Maybe I should highlight that better. In terms of slide 10. It highlights our Q2 operating performance.

Again on this. I don't leave it for financial results for Allison to review. But I'll say that virtually every financial metric improved substantially from last year's second quarter. We achieved record revenue in Q2 2026.

Adjusted earnings increased significantly compared to both period prior periods. And speaking of record results, we achieved record goal production in Q2. Production increased over 10% from the previous quarter. Duncan and Gord will get into the details.

But the increase was largely largely due to higher throughput. And a key highlight for the quarter was that both mining and milling rates showed strong growth at every operation. Finally for me in this part before I pass it on to Allison. Slide 11 shows our 2026 guidance and you know, again we tell you that we are tracking well to achieve all of our guidance for the year.

And with that I'll turn the call over to Allison. Duncan King, Senior Vice President, Canadian Operations Thank you. I'll discuss our production numbers and then ask Gord Levoy to review our processing performance during Q2. We achieved record production of 67,300 ounces, 12% higher than in Q1.

Gold poured and gold sold were both 66,000 ounces. The increase in production was due primarily to higher tons processed, which more than offset the impact of an anticipated reduction in the average grade. The lower grade was largely a result of mix of mill feed. We had a higher proportion of feed from the open pit sources and stockpiles.

As Tony mentioned, a highlight of the quarter was our mining rate which increased at every operation. 4 million tonnes in stockpiles. Site-level operating cash costs averaged $1,878 per ounce, a 2% improvement from Q1. Site-level AISC increased to $2,028 per ounce, with the increase entirely due to the pickup in sustaining capital.

You may recall we were below plan for sustaining capex in Q1 mainly due to the timing for the delivery of our mobile equipment. We made up a lot of that in Q2. I'll now call on Gord Levoy to talk about the milling. Gord Levoy (Senior Vice President, Mineral Processing) Good morning.

We milled 904,000 tons in Q2 2026. That was up almost 30%. Some of the issues we had in Q1 in the crushing circuit did impact to some extent in early Q2, but overall the mill performed much better for the quarter. We exceeded 11,000 tons per day on 49 days in Q2 and we exceeded 12,000 tons a day on 11 days.

20 per ton in last year's third quarter. I'll now turn over the call to Harold Byrd, Vice President of Mineral Processing, to discuss the Kidd Operations. Harold Byrd, Vice President, Mineral Processing Thanks, Gord. Good morning.

Overall, Kidd Operations had good performance in the first month since its acquisition, contributing positive revenue of $30 million versus production cost of $19 million. Kidd's growth capital primarily related to tailings buttressing and mill modifications to support the processing of Borden ore, which is targeting to begin in the first half of 2027. Further study work has commenced to expand the Kidd mill to process Pamour in future years. Kidd Operations continues to be a safe, reliable operating mine that currently has a total recordable injury frequency rate of zero.

And now I'd like to turn the call over to Eric Kallio, our Senior Vice President of Exploration. Eric Kallio, Senior Vice President, Growth and Exploration Okay, thank you, Harold, and good morning, everyone. I'm on slide 18 and happy to say there's been another good quarter for exploration. Excellent success at operating mines and new growth projects.

With this in mind to look at. But I'll start here with Pam Moore where we drilled another 47 holes. We continue to obtain some very exciting new results shown in the image. The main focus here has remained on three main targets including the main pits, Primor West and the north contact zone.

Additionally, we added a new targeting to the next. It's called Korra Trend and which is located west of the main pit.