MDA

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# MDA

Source: https://discoverysilver.com/site/assets/files/6684/2025-q4-dsv-mda.pdf
Published: 2026-02-18T00:00:00+00:00
Fetched: 2026-05-05T09:26:30.397+00:00
Source artifact: 322b8419-f938-4cbf-9046-40abb36207e7
Normalizer input: text

## Content

# MDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the years ended December 31, 2025 and 2024
February 18, 2026
DISCOVERY SILVER CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEARS ENDED December 31, 2025, and 2024
(Expressed in United States dollars, except where otherwise noted)
MANAGEMENT’S DISCUSSION AND ANALYSIS
This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the annual audited
consolidated financial statements, and their related notes, of Discovery Silver Corp. (“Discovery Silver” or “the
Company”), as at and for the years ended December 31, 2025 and 2024 (the “Financial Statements”) which are prepared
in accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board (“IFRS Accounting Standards”). Additional information relating to the Company, including the most recent Annual
Information Form (“AIF”) for the year ended December 31, 2025 is available on SEDAR+ at www.sedarplus.ca.
All information contained in this MD&A is current and has been reviewed by management and approved by the Board of
Directors (the “Board”) of the Company as of February 18, 2026, unless otherwise stated. All dollar ($) amounts are
expressed in United States dollars (“USD”), the Company’s reporting currency, except where otherwise noted.
References to Canadian dollars are denoted as (“CAD”).
FORWARD-LOOKING STATEMENTS
This MD&A may contain forward-looking statements and should be read in conjunction with the risk factors described in
the “Financial Risk Factors”, “Other Risks and Uncertainties” and “Forward Looking Statements” sections near the end of
this MD&A and as described in the Company’s AIF for the year ended December 31, 2025. Additional information
including this MD&A, Consolidated Financial Statements for the year ended December 31, 2025, the Company’s AIF and
press releases have been filed electronically under the Discovery Silver Corp. profile at www.sedarplus.ca and are posted
on the Company’s website at www.discoverysilver.com.
NON-GAAP MEASURES
Certain non-GAAP measures are included in this MD&A, among them: sustaining and growth capital expenditures, free
cash flow, operating cash costs and operating cash costs per ounce sold, all-in sustaining costs (“AISC”) and AISC per
ounce sold, average realized gold price per ounce sold, adjusted net earnings and adjusted net earnings per share,
earnings before interest, taxes and depreciation and amortization (“EBITDA”) and working capital. In the mining
industry, these are common performance measures but may not be comparable to similar measures presented by other
issuers. The Company believes that these measures, when considered in conjunction with information prepared in
accordance with GAAP, provide investors with useful information to assist in their evaluation of the Company’s
performance and ability to generate cash flow from its operations. Accordingly, these 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 Accounting Standards (“IFRS”) as issued by the International Accounting Standards
Board. For further information, refer to the “Non-GAAP Measures” section of this MD&A.
The following additional abbreviations may be used throughout this MD&A: General and Administrative Expenses
(“G&A”); Troy Ounces (“oz”); Grams per Tonne (“g/t”); Square Kilometre (“km2”); and Life of Mine (“LOM”). Throughout
this MD&A the reporting periods for the three months ended December 31, 2025, and December 31, 2024, are
abbreviated as Q4 2025 and Q4 2024, respectively, while the reporting periods for the year ended December 31, 2025,
and December 31, 2024, are abbreviated as FY 2025 and FY 2024, respectively. Additionally, the reporting period for the
three months ended June 30, 2025 and September 30, 2025, are abbreviated as Q2 2025 and Q3 2025, respectively.
2
DISCOVERY SILVER CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEARS ENDED December 31, 2025, and 2024
(Expressed in United States dollars, except where otherwise noted)
COMPARATIVE INFORMATION
Discovery completed the acquisition (the “Porcupine Acquisition” or the “Acquisition”) of the Porcupine Complex
(“Porcupine” or the “Porcupine Operations”) from Newmont Corporation (“Newmont”) on April 15, 2025, which
transformed the Company into a Canadian gold producer anchored in and near Timmins, Ontario, Canada. Prior to the
Porcupine Acquisition, the focus of Discovery’s business had primarily been exploration and development activities
related to the wholly owned Cordero silver project in Mexico. The change to the Company’s business portfolio has a
meaningful impact on the comparability of results in both Q4 2025 and Q3 2025, as well as in future quarters, to
reporting periods prior to the Porcupine Acquisition.
Q4 2025 HIGHLIGHTS
• Solid operating performance
o Q4 2025 gold production increased 6% to 66,718 ounces from 63,154 ounces in Q3 2025, with total gold sold
of 64,479 ounces compared to 66,200 ounces sold the previous quarter.
o Total production costs of $73.8 million versus $106.8 million in Q3 2025.
o Operating cash costs1 of $1,185 per ounce sold, a 12% improvement from $1,339 per ounce the previous
quarter
o Site-level AISC2 of $1,824 per ounce sold versus $1,699 per ounce the previous quarter largely reflecting
higher sustaining capital expenditures.
o AISC1 of $2,034 per ounce sold compared to AISC of $1,734 per ounce in Q3 2025.
• Increased revenue totaling $274.2 million versus $237.0 million in Q3 2025, with the 16% increase resulting from a
higher average realized gold price1.
• Net earnings of $65.3 million, or $0.08 per share, and adjusted net earnings1 of $113.5 million or $0.14 per share,
with adjusted net earnings up 86% from the previous quarter.
• Significant cash flow generation during Q4 2025 with net cash flow from operating activities of $163.2 million and
free cash flow1 of $67.9 million.
• Substantial growth in Liquidity
o Liquidity of more than $650.0 million, from cash as at December 31, 2025 of $410.7 million and an undrawn
$250.0 million revolving credit facility ("RCF"), with an accordion feature for an additional $100.0 million.
• Encouraging exploration success, including excellent results from resource conversion and expansion drilling at
Hoyle Pond, Borden and Pamour and positive results from district drilling at Owl Creek
(1) Example of Non-GAAP measure. See the section in this MD&A entitled, NON-GAAP MEASURES, for more information.
(2) Site-level AISC includes corporate G&A allocation and excludes remaining corporate G&A, share-based compensation costs and corporate-level sustaining
capital expenditures.
3
DISCOVERY SILVER CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEARS ENDED December 31, 2025, and 2024
(Expressed in United States dollars, except where otherwise noted)
2026 GUIDANCE
(in $ millions, unless otherwise stated) Total
Gold produced (koz) 260 - 300
Operating cash costs per ounce sold ($/oz sold)(1)(2) $ 1,250 - 1,400
AISC per ounce sold ($/oz sold)(1)(2) $ 1,950 - 2,250
Royalties(2) $ 25 - 35
Sustaining capital(1) $ 120 - 165
Porcupine - Growth capital(1) $ 195 - 235
Cordero - Fees and capital $ 90 - 100
Exploration (capital & expensed) $ 55 - 75
Corporate G&A(3) $ 35 - 40
(1) Example of Non-GAAP measure. See the section in this MD&A entitled, “NON-GAAP MEASURES” for more information.
(2) Royalty expense is included in operating cash cost and AISC per ounce sold. Royalty expense does not include costs related to the Franco Nevada Royalties.
(3) Corporate G&A excludes share-based compensation.
(4) Based on, where applicable, a USD/CAD exchange rate of 1.36, a USD/MXN$ exchange rate of 18.0.
Discovery’s 2026 guidance outlines a plan for increased production, that is expected to ramp up and peak during the
second half of the year. Operating cash costs per ounce sold1, AISC1 per ounce sold and capital expenditures1 are
projected to be the highest in the first half of the year.
Targets for both sustaining1 and growth1 capital expenditures in 2026, reflect planned investment in support of the
Company’s goal of more than doubling gold production, to over half a million ounces per year, with a cost profile in the
lower half of the global cost curve. The Company’s guidance also includes a significant commitment to exploration given
the substantial potential that exists to convert and expand mineral resources at existing operations and to identify new
resources at the Porcupine operations, near-term projects and regional targets.
Gold Production
Gold production in 2026 is targeted to reach 260,000 – 300,000 ounces, with production weighted towards the second
half of the year. Hoyle Pond and Borden are expected to account for approximately two-thirds of gold production in
2026, with the remaining third coming from open-pit mining sources. Open pit production will come from Pamour, as
well as the Hollinger open pit, where production resumed early in 2026, and is expected to ramp up as the year
progresses.
Unit Costs
Operating cash costs per ounce sold are projected to be highest in the first two quarters of 2026, and average $1,250 –
$1,400 per ounce for the full year. Operating cash costs per ounce sold in 2026 are expected to benefit from increased
volumes, resulting from higher planned processing rates at the Dome Mill, at similar grades, the impact of which will be
offset by increased mining and processing costs and higher royalties as a result of an increase in the average realized
gold price1. AISC per ounce sold is targeted at $1,950 – $2,250, reflecting higher sustaining capital expenditures and
increased royalties compared to 2025. Unit costs are expected to be higher in the first half of the year, due to lower
production levels, as mine operations at Hollinger ramp up, with AISC impacted by the weighting of sustaining capital
expenditures to the first six months of 2026.
4
DISCOVERY SILVER CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEARS ENDED December 31, 2025, and 2024
(Expressed in United States dollars, except where otherwise noted)
Royalties
Royalty expense in 2026 is expected to total $25 – $35 million. Royalty expense is highly dependent on the average
realized gold price and will fluctuate dependent on the commodity cycle. Royalty expense primarily relates to royalty
agreements with First Nations groups and private interests at Borden and, to a lesser extent, at Hoyle Pond and Pamour.
Royalty expense does not include costs related to the Franco Nevada Royalties, which are accounted for as deferred
revenue and are recognized when the performance obligations under the royalty agreement are satisfied. Interest
expense is recorded based on the total deferred revenue balance.
Porcupine Sustaining Capital Expenditures
Sustaining capital expenditures for 2026 are projected to be $120 – $165 million primarily related to work to buttress
the No. 6 tailings management area (“TMA6”) at the Dome property, as well as ongoing investments in capital
improvements at the Dome Mill, new mobile equipment and improved infrastructure at Hoyle Pond and Borden.
Planned capital development at both operations is required to achieve production targets. The replacement of mobile
fleets at Hoyle Pond and Borden is an important initiative that will support future production growth and greater
efficiency through improved cycle times for haulage, enhanced backfill rates and reduced ongoing maintenance costs.
Porcupine Growth Capital Expenditures
Growth capital expenditures at Porcupine are targeted at $195 – $235 million. Two key projects contributing to planned
growth capital

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