MD&A

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# MD&A

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# MD&A
IMPACT Silver Corp.
Form 51-102F1
Management’s Discussion and Analysis
For the Three and Twelve Months Ended December 31, 2025
INTRODUCTION
This Management’s Discussion and Analysis (“MD&A”) is for the three and twelve months ended
December 31, 2025 of IMPACT Silver Corp. (“IMPACT” or the “Company”) prepared as at April 13, 2026
and should be read in conjunction with the Company’s annual audited consolidated financial statements for
the year ended December 31, 2025 and the related notes contained therein. During the year ended
December 31, 2024, the Company amended and restated certain of its financial information (see audited
consolidated financial statements for the year ended December 31, 2024 posted on SEDAR+ for details). As
a result, certain comparative quarterly amounts below have been restated to take these amendments and
restatements into account. All amounts referred to herein are in Canadian dollars unless otherwise
specified.
Additional information relating to the Company including material change notices, certifications of annual
and interim filings and press releases are available on the Canadian System for Electronic Document
Analysis and Retrieval (SEDAR) at www.sedarplus.ca.
This document contains forward-looking statements. Please refer to “NOTE REGARDING FORWARD-
LOOKING STATEMENTS.”
CORPORATE OVERVIEW
IMPACT is recognized as an intermediate miner with strength across the value chain including production,
growth and exploration activities. The Company has extensive land positions in Mexico with production and
exploration potential at its flagship Royal Mines of Zacualpan Silver District located southwest of Mexico City
which includes the nearby Capire zinc-lead-silver mineral district. The Company also owns the Plomosas
Zinc Mine, located in northern Mexico, 150 kilometres northeast of the city of Chihuahua.
The Company has been producing silver from epithermal veins at Zacualpan since 2006 with five mines
feeding a central processing plant. The silver production in 2025 at Zacualpan was 635,778 ounces (“oz”) of
silver, a 7% increase over the previous year, and Q4 production reached 190,253 oz a 17% increase over the
comparable quarter in 2024. Overall production since start up in 2006, Zacualpan has produced almost 14.0
million oz of silver. The Zacualpan district covers over 200 sq kilometres with numerous exploration targets
which remain the focus of a long-term exploration program.
In April 2023, the Company acquired Plomosas, a Carbonate Replacement Deposit (“CRD”) mine which was
in an early stage of producing zinc (lead-silver) while offering exploration upside. After two years of ramping
up production, the Company assessed the performance of the underground operations at Plomosas, and
determined that continuing mining with the current mining plan was not expected to deliver sustainable
economic results. As a result, subsequent to year end, the Company elected to temporarily suspend
underground mining while it works toward a more efficient and sustainable operating plan.
In late Q4, the Company identified impairment indicators for the Plomosas cash generating unit
(“Plomosas CGU"), as the underground performance did not consistently meet internally established
operating thresholds required for sustainable results which required management to determine the
recoverable amount of the Plomosas CGU. A $8.8 million impairment loss was recognized.
The Company is in advanced-stage discussions with a nearby third-party mining company to utilize the
Plomosas processing plant during the suspension period to generate cash flows. The suspension is also
1
expected to reduce operating costs, preserve capital and improve overall capital efficiency until Plomosas can
be restarted under a new sustainable operating plan.
The Company maintains active exploration programs using its own diamond drills to continue to feed and
expand its operations while providing shareholders with meaningful upside potential across the Company’s
projects. The Company has operated in Mexico for more than 20 years, and while mining legislation changes
from time to time, the country remains a highly sought-after jurisdiction in which to operate. However, the
industry remains uncertain as to the impact of proposed Mexican legislation related to mining and its judicial
system.
In a highly volatile commodity market, the recent financings and substantial working capital provide the
opportunity to expand exploration programs, optimize production at the Zacualpan Mine, advance
development at Plomosas and to actively look for new opportunities, primarily in the Mexican market.
Consolidated revenue for the twelve months ended December 31, 2025 was $48.5 million, up 52% from 2024
of $31.9 million, while Q4 2025 revenue was $17.3 million up 70% from the comparative period in 2024 of
$10.2 million. The Company’s year to date 2025 gross profit continued to be positive at $10.4 million,
compared to a loss of $2.2 million in 2024.
Since 2006, the Company has conducted ongoing exploration programs that have led to meaningful
development and production activities, with more than ten sites in the Zacualpan District having been
developed into new mining operations since inception. Over that period, Zacualpan has produced almost 14.0
million ounces of silver, generated more than $322 million in revenue, and contributed to the funding of
capital expenditures, including property, plant and equipment, and mining assets, as well as exploration on
both the Zacualpan and Plomosas properties. Drilling is carried out primarily with the Company’s own drills,
allowing for a cost-effective approach to exploration and mine development. During 2025, the Company
continued to invest in exploration drill programs across both Zacualpan and Plomosas.
The Company maintains strict cost controls and is focused on production efficiencies. Management regularly
considers potential adjustments in mining processes and new technologies to improve margins and offset
higher supplier and labour costs. IMPACT continues to operate with the objective of maximizing earnings,
and to test the potential of its current projects while maintaining leading Environmental, Social and
Governance (“ESG”) programs and standards.
IMPACT is a reporting issuer in British Columbia, Ontario and Alberta. The Company’s shares trade on the
TSX Venture Exchange as a Tier 1 Issuer under the symbol IPT, in the U.S. on the Over-The-Counter Quality
Best Market as ISVLF, and on the Frankfurt Stock Exchange under the symbol IKL.
We believe that our multi-decade experience building mines in Mexico, combined with our strong balance
sheet, will allow IMPACT to become a significant miner in Mexico.
Operating Highlights:
 Zacualpan processed 38,570 tonnes (“t”) for the quarter up 5% from the prior year.
 9% higher silver grades over the comparable period in 2024.
 Development and initial mining commenced at the new high grade Kena Vein South in the
Guadalupe mine.
 The comprehensive infrastructure upgrade program continued at the Guadalupe mine at Zacualpan
to improve production efficiency and costs.
 The Company completed over 18,000 metres of infill and exploratory diamond drilling across both
properties during 2025, of which 4,600 metres was in Q4 2025.
2
 At Plomosas, with the latest results (Dec. 9, 2025) in the Santo Domingo Zone, the Company
announced an intersection of 18.83% ZnEq over 4.95 metres (“m”) including 25.57% ZnEq over 1.33
metres, and (Nov. 20, 2025) in a separate drill hole in the Juarez zone 15.14% ZnEq over 3.07 metres
including 24.69% ZnEq over 1.47 metres.
 Although there were a number of issues that impacted production at Plomosas, including equipment
maintenance and difficult ground conditions and geology, mill throughput for the year was 46,875
tonnes a 20% increase over year to date (“YTD”) 2024 production.
Financial Highlights
 At December 31, 2025, the Company had cash of $23.7 million, and $4.0 million invested in
guaranteed investment certificates (“GICs”), compared to $7.1 million in cash at December 31, 2024.
Working capital was $31.7 million up from $9.0 million at December 31, 2024, and the Company has
no long-term debt at December 31, 2025.
 During 2025, the Company completed two private placements for gross proceeds of $21.2 million:
In Q2 2025, Company completed a non-brokered private placement for gross proceeds of $5.2
million consisting of a LIFE offering with gross proceeds of $1.8 million consisting of 8.8 million
units at a price of $0.20 per unit, and a standard offering with gross proceeds of $3.5 million
consisting of 19.2 million units at $0.18 per unit.
In Q3 2025, the Company closed a private placement financing and issued 44.4 million units at
a price of $0.36 per unit for aggregate gross proceeds of $16.0 million.
 Consolidated revenue for YTD was $48.5 million, representing a 52% increase compared to revenue
of $31.9 million YTD 2024.
 Gross profit for the fourth quarter 2025 was $6.6 million, and $10.4 million YTD, compared to $1.1
million in Q4 2024 and a loss YTD of $2.2 million in 2024. Gross profit before amortization and
depletion1 for 2025 was $12.9 million, compared to $0.9 million in 2024.
 In Q4 2025, the Company spent $0.7 million on exploration (Q4 2024 - $0.5 million), and YTD 2025
spent $3.9 million (YTD 2024 - $4.6 million). This was split between Zacualpan and Plomosas.
 While revenue from Plomosas in Q4 2025 was $2.2 million down from $3.6 million in Q4 2024,
revenue YTD in 2025 increased to $10.0 million compared to $9.0 million in 2024. Operating costs
YTD 2025 were $14.7 million (2024 - $12.5 million).
 Zacualpan revenue was $15.1 million in Q4 2025, up from $6.6 million in Q4 2024. Revenue YTD
2025 was $38.5 million on higher commodity prices (YTD 2024 - $22.9 million).
 During the year ended December 31, 2025, the Company invested $2.6 million in property, plant and
equipment, including mining assets.
1
Gross profit before amortization and depletion is a non-IFRS measure which the company believes provides meaningful information about the
Company’s financial performance. See “Non-IFRS MEASURES”.
3
 The net loss YTD 2025 was $10.3 million (the loss before income taxes was $8.3 million), compared
to a net loss of $9.8 million in 2024. This includes the non-cash impairment write-down of $8.8
million from Plomosas and $1.2 million for share-based compensation expense.
Zacualpan Silver Operation
During Q4 2025, the Guadalupe mill processed 38,570 t of mill feed at the Zacualpan/Guadalupe complex,
up from 36,582 t in Q4 2024. Production was up during the quarter despite one ball mill not operating due
to a major repair.
Silver production from the Guadalupe complex in Q4 2025 was 190,253 oz, a 17% increase from 162,876 oz
in Q4 2024. Silver sales increased by 25% over the same period in 2024 primarily owing to higher grades and
mill throughput. The average mill head grade for silver in Q4 2025 was up by 9% to 179 grams per tonne
(“g/t”) from 164 g/t in Q4 2024.
Revenue per tonne sold in Q4 2025 increased by 107% to $391.27 from $189.34 in Q4 2024 on higher
commodity prices, while direct costs per tonne increased 7% to $156.49. The increase in direct costs per tonne
in Q4 2025 was due to several factors including inflationary pressure on operating costs as well as increased
employee benefits and production taxes. As well, there were additional expenses associated with the extensive
development and maintenance conducted during the period as the Company continues to optimize
production and feed blend.
YTD revenue per tonne increased by 60% to $269.58 compared to $168.80 in the same period of 2024 while
direct costs per tonne increased by 7% to $15

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