Discovery Silver Corp. (DSV) Earnings Call Transcript & Summary

Good afternoon. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Discovery Fourth Quarter and Full Year 2025 Results Conference Call and Webcast. [Operator Instructions] I will now turn the call over to Mark Utting, Senior Vice President, Investor Relations for Discovery. Mr. Utting, you may begin your conference.

Thanks very much, operator, and thanks, everybody, for joining us today for Discovery's fourth quarter and full year 2025 conference call and webcast. Joining me today are most of Discovery's senior management team. Speakers in today's presentation will be Tony Makuch, our President and CEO; Alison White, our Chief Financial Officer; Pierre Rocque, our Chief Operating Officer; Eric Kallio, our Senior Vice President of Exploration; and Jose Jabalera, our VP, Sustainability and Corporate Affairs in Mexico. After each speaker presents, Tony will have some concluding remarks. As you know, this morning, we issued our Q4 and full year 2025 results. The press release, MD&A and financials are available on our website at discoverysilver.com and on SEDAR. Before we begin, I'd like to remind you that during today's call, we will be making forward-looking statements. These statements are based on current expectations, assumptions 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 indicated in the forward-looking information. For more information about the FLI, please refer to the information on Slide 2 in this deck as well as forward-looking information on our website. In addition, we'll also be making reference to a number of non-GAAP measures during this presentation. These measures are included to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. These measures do not have any standardized meaning prescribed under GAAP and therefore, may not be comparable to those of other issuers. Again, I refer you to Slide 3 in our deck and our website for information on non-GAAP measures. Finally, all dollar amounts today will be in U.S. dollars unless otherwise indicated. With that, I'll turn the call over to Tony Makuch, Discovery's CEO.

Good afternoon. Thanks, everyone, for joining us for this call. I guess we didn't all get the memo from Doug Ford that we had other priorities for today. But we appreciate you being on. Maybe -- and before I get on to the results, I always like to -- in the end, we have to acknowledge the people at Discovery. We made a lot of progress, and we are doing something special here, and we have people in Porcupine, people in Chihuahua. We're doing some, I think, some great stuff. Our people live in [indiscernible], Toronto, [indiscernible], a lot of different areas in Canada and Mexico. And anyway, thanks for all you do, and we look forward to continued success as we progress out of Q4 into 2026. Looking at Q4 in 2025, it was a solid quarter, in particular, adjusted earnings per share increased 75% from the previous quarter. We continue to generate substantial cash flow even as we increase our investments for the future, and we continue to build our balance sheet strength, definitely nice to be in a strong gold market. I'll briefly run through the numbers and then others will get into the details. There's a couple of forward-looking statements things. Again -- and Mark made reference to them, so I won't do that. I'll just jump to Slide #4, which summarizes our strong results for the quarter. And you can see production increased 6% to almost 67,000 ounces. Operating cash costs improved from Q3, largely reflecting inventory movements between the quarters. At the corporate level, our all-in sustaining costs increased from last quarter, but this was related to the higher sustaining capital expenditures in the quarter. And last quarter, we said we would be increasing CapEx in Q4, and we did. So these are investments aimed at driving our growth and helping us to improve the operations and ultimately to see lower costs and improved productivity over the next while. Going to Slide 5, I just talked about our earnings performance. Not bad for a company with this first production just 9 months of -- or 8.5 months of production, we already had significant earnings. Revenue totaled $274 million, a 16% increase from last quarter. Revenue does include gold sales of 64,000 ounces and a net realized gold price of $4,157 per ounce. EBITDA totaled $126 million, similar to the last quarter, and there was a $45 million impact from an accounting charge related to reclamation obligations, and that change brought down our EBITDA to some degree. And you can ask Alison about that a little bit later in the call, when we'll open the call for questions. Earnings per share was $0.08 per share, while adjusted earnings per share were $0.14. As I mentioned, our adjusted earnings per share was up significantly from $0.08 last quarter. Slide 6 looks at cash flow and cash -- our cash position. As I mentioned, we continue to generate a lot of cash flow in Q4. The operating cash flow totaled $163 million, up from $153 million in the previous quarter. Free cash flow was close to $70 million. It was lower than the last quarter, but again, it reflected our higher capital expenditures in the quarter. Our cash position in Q4 rose 20% to $410 million. Our total liquidity rose to just under $660 million and total liquidity, including our cash as well as $250 million from a revolving credit facility we finalized in Q4. It also has a $100 million accordion feature, but you may recognize this is all undrawn at this point in time. Going to Slide 7, looking at our key investment programs. Total capital expenditure was just under $100 million, including leases in the quarter. Sustaining capital expenditures were $34 million, mainly related to investments in Hoyle Pond and Borden in new mobile equipment, capital development and infrastructure at the underground mines. We also continue to invest in our Dome Mill and our new -- our tailings facility to support our operations going forward. Growth capital was largely focused on pre-stripping at the Pamour and investments in our tailings management facility. I'll talk to you more about that in a moment. Capitalized exploration mainly related to resource conversion drilling was almost $10 million, and you'll see momentarily that our exploration expenditures will increase substantially in [indiscernible]. We feel it is as much a driver as high gold prices and production, what we can drive in terms of value with exploration drill bit, I think, is enormous in this company. Speaking of exploration on Slide 8, I think we put out 2 press releases, I guess, one in Q4. We just put one recently out in Q1. And I guess in simple terms, we're getting excellent results everywhere we are drilling. Our resource conversion and expansion drilling is going very well at Hoyle Pond, Borden and Pamour, which is the three main areas where we're drilling, also having success at district targets like Owl Creek and the Broulan pit. Owl Creek being contiguous at Hoyle Pond and the Broulan pit, a target that's about 1.5 kilometers west of Pamour. In the results we issued earlier this month, we also reported very encouraging results at the TVZ zone and favorable results from initial drilling at Dome. Eric will get into more of those details later in the presentation. I'll just turn now to Slide 9, we did issue our guidance this morning with our Q4 results. That's our guidance for 2026. And I think our guidance shows the solid production growth from 2025 to 2026. Unit costs that will improve as the year progresses and the continuation of a significant investment program to support our growth and improved performance. Slide 10. Production guidance is 260,000 to 300,000 ounces. It is important to note that production will be weighted to the second half of the year. Unit costs will start the year at high end of our target ranges, reflecting the ramp-up of production as well as the significant weighting of capital expenditures in the first half of the year. By the second half of the year, we expect to see the numbers that are in the lower end of our ranges and potentially better than the range specifically as we see some of the cost savings related to the capital investment. Going to Slide 11, looking at our capital. At a high level, the run rate for capital investment in Q4 of 2025 will continue in 2026 and be weighted to the first half of the year. In terms of sustaining capital, we are investing significantly in replacing the mobile fleet on Hoyle Pond and Borden and in upgrading infrastructure. We're also investing in the Dome Mill and the Dome tailings facility to both increase capacity and improve the efficiency of performance as well as our environmental standards in terms of how we want to progress specifically in our tailings area. Looking at growth capital, the 2 largest items are investments at the TMA6 or our tailings facility, including work to divide the #6 dam into cells. We did this at Lake Shore Gold, at our Bell Creek Mill. We did it at other places. It has a number of benefits, including allowing for progressive rehabilitation and reducing potential liabilities going forward as we progress and continue the position in these areas. Other key components of our growth capital are continued pre-stripping at Pamour as we build the Pamour mine, bringing Pamour into commercial production probably into 2027 as well as move that rig at Borden. Going to Slide 12, the $90 million to $100 million we're showing for Cordero is mostly related to the change in the land use fee. We did apply for the change in land use. We are expecting to see this sometime in Q1 of this year, and we feel pretty confident moving ahead with this project. And finally, as mentioned, we are planning a significant increase in our exploration budget in 2026 from 2025, mainly in the Porcupine region in Ontario. But as I said, exploration is success driven. We're having a lot of success in exploration, and we plan to do a lot of drilling this year, at least 280,000 meters of drilling. So with that, I'll turn the call over to Alison White, CFO.

Before I get started, I'm actually going to let Mark Utting say a few words about our technology on the call today.

Yes. So I've been informed by Q4 service provider that they have had some technical problems and that while the broadcast, the audio is working, these slides are not visible. We apologize for that. We'll be looking into it after the call. What we will try to do is be as clear as we can in terms of the points we're trying to make and make sure that copies of the slides are available after the call as well. Again, our apologies for that, and we'll continue on now.

Thanks, everybody, and thank you, Tony, for the introduction. On Slide 13, sorry, Q4 was a strong finish to 2025. We had operational momentum that translated into solid financial results across the business. We reported revenues of $274 million in the quarter, a 16% increase quarter-over-quarter, driven by higher-than-average realized gold prices. On a full year basis, total revenues reached $653 million, reflecting 2.5 quarters of results under Discovery's ownership. As we had communicated earlier in 2025, Q4 2025 was a period of reinvestment for Discovery with increased capital expenditures to provide needed investment for the Porcupine operations to achieve their full value potential. Very importantly, we had EBITDA of $126 million and continue to generate solid cash flow with operating cash of $163 million and free cash flow of $68 million after deploying $95 million in capital expenditures to further advance the asset base at Porcupine. If we move on to Slide 14, let's look at adjusted earnings. Discovery delivered adjusted net earnings and adjusted net earnings per share in Q4 of 2025 of $113.5 million or $0.14 per basic share, an increase of 75% from the prior quarter, demonstrating strength in revenues from robust production throughout the quarter. Net income also benefited from a deferred tax recovery driven by an adjustment of previously unrecognized deferred tax assets related to reclamation obligations as reclamation spend was moved inside the active mine life. As we walk from the $0.08 of unadjusted earnings per share, there's an addition of $0.04 for a onetime $45 million -- excuse me, $45 million reclamation expense for nonoperating mine sites due to an accounting remeasurement related to a discount rate change, which will measure the obligation in line with the applicable accounting standard. There's a $0.01 change of $10.9 million in expense related to share issuance for the TTN resource development agreement that was put in place during the quarter and another $0.01 for foreign exchange losses and TSA costs arriving at the total of $0.14 in adjusted earnings per share for the quarter. Let's review EBITDA on Slide 15. EBITDA grew quarter-over-quarter, driven by increased revenue as gold prices climbed, partially offset by other operating costs recognized. Overall, Discovery has continued to have progressively strong momentum with growth in EBITDA during each quarter of 2025. Equally, through strong earnings generation, we continue to see positive momentum in our free cash flow. The free cash flow generation bolsters the company's balance sheet and allows for capital redeployment into the business, promoting additional value. Speaking of reinvestment, let's move on to capital expenditures on the next slide. During the prior quarters, we mentioned that the second half of the year would be more heavily weighted toward capital expenditures. The 53% increase in capital spend from quarter 3 to quarter 4 demonstrates that commitment, which will remain consistent as we move into 2026 and aligns with the guidance that Tony mentioned earlier. Capital expenditures in Q4 2025 totaled $99.9 million compared to $65.2 million in Q3 of 2025. Of the $99 million, sustaining capital expenditures accounted for $34 million, while $66 million were growth capital expenditures. Sustaining capital expenditures were largely focused on procurement of mobile equipment and capital development at Hoyle Pond and Borden, combined with construction work to buttress the # 6 tailings management area at the Dome property. Growth capital expenditures primarily related to pre-stripping at Pamour and longer-term investments at the TMA6. Let's move on and look at cash costs and all-in sustaining costs on Slide 17. Q4 2025 cash cost per ounce sold improved to $1,185 versus $1,339 in Q3 2025, primarily driven by a higher change in inventory in the prior quarter. In Q3 2025, inventory change costs of $13.8 million were recorded related to ounces held in inventory at the end of Q2 2025. And if we look at all-in sustaining costs on Slide 18, all-in sustaining costs averaged $2,034 per ounce sold for the quarter compared to $1,734 per ounce sold in the previous quarter. The increase in ASP per ounce sold compared to the previous quarter largely reflected a $13 million increase in sustaining capital expenditures primarily related to higher levels of investment in mobile equipment and capital development, higher corporate G&A costs and higher accretion and amortization expenditures related to reclamation obligations, which was partially offset by the favorable change in inventory that I previously mentioned. And if we move to look at our liquidity slide on Slide 19, Discovery's cash balance at December 31, 2025, totaled $410.7 million, an increase of 20% from $341.5 million at September 30, 2025. The stronger gold price environment translated into $68 million of additional free cash flow, and that's net of the meaningful amount of capital we deployed back into the business and that I mentioned earlier. Discovery's liquidity position remains robust with $411 million in cash on hand, a $250 million undrawn revolving credit facility and $100 million accordion feature. We have meaningful financial flexibility, and we believe this balance sheet strength gives us the foundation to advance our strategic priorities with confidence. And I'll now pass it over to Pierre for his remarks.

Thank you, Alison. It is a pleasure to be presenting our Q4 results from our Porcupine asset. During Q4, we recovered 66,718 ounces of gold and poured 67,010 ounces. Both of these results show an increase from the previous quarter when we recovered 63,514 ounces and poured 65,978 ounces. Higher production in Q4 reflected the favorable impact of increased mining rates at Pamour and higher average grades at Hoyle Pond and Borden. The overall grade for the quarter was lower than in the previous quarter, mainly reflecting a higher proportion of tonnes processed from Pamour. At Hoyle Pond, you may recall the impact of summer high temperatures on the production from the mine as the higher grade stopes were temporarily slowed down. Those stopes are now back to normal production rate, and we are assessing ventilation upgrade and cooling options this year to provide relief during the summer months. At Borden, we experienced highway closure on several days due to winter storms in December. We ended up stockpiling the ore at site, which was delivered to the process plant early in 2026. As for Pamour, our mining rate remains well ahead of the PA plan for 2025. At the Dome Mill, we processed over 892,000 tonnes at an average grade of 2.58 grams per tonne and average recovery of 90.2%. Based on operating days during Q4 2025, mill throughput averaged 10,145 tonnes per day, a 9% increase compared to the previous quarter. Mill operating costs during Q4 averaged $21.68 per tonne, similar to the $21.15 per tonne processed in Q3. Operating cash cost. Operating cash cost per ounce sold averaged $1,185, down from $1,339 in Q3. Site level AISC averaged $1,824 per ounce sold compared to $1,699 in the last quarter. Slight increase in AISC reflected a 49% increase in sustaining capital expenditures, nearly $33 million more in Q4. Our sustaining capital expenditures during the quarter were mainly related to increased mobile equipment procurement and higher levels of capital development at both Hoyle Pond and Borden, along with investments at the process plant and tailings storage facilities. I'll now turn the call over to Eric Kallio, our Senior VP, Exploration.

Okay. Thank you, Pierre, and good afternoon, everyone. I'm on Slide 21. Before I start, I'd just like to say that it's been another good quarter for exploration with another 50,000 meters drilled and excellent success with drilling at operating mines and new growth projects. So with this in mind, there's a lot to talk about. Before getting into that, I'd like to just start with a few comments on the location and geologic setting for our key projects in the Timmins area. So starting with geology. I first like to point out that the entire area we're looking at here is in the southwest part of the Abitibi Greenstone Belt underlying by rocks from 4 main formations, including 2 volcanic and 2 sedimentary, the 2 volcanic being the [indiscernible], represented by the green and yellow covering most of the central part of the map and the 2 sedimentary being the Porcupine and Timiskaming, which are the gray and darker gray units surrounding volcanics.

Eric, can I just interrupt you for one second? Just for this part, particularly of the presentation, I can certainly imagine how it would be helpful to be looking at the map. I'm told there is on the left side of the screen that you'd be looking at a downloadable PDF. I don't know exactly what the icon is, but there is a PDF there that can be downloaded and viewed. So that may be helpful as we go through these. Sorry, Eric, go ahead.

Okay. No problem, yes. So in addition to that, and as indicated here, I think it's important to note that most of the rocks here have been strongly folded cut by 2 very prominent faults, including the Duster Porcupine, which is the east-west trending dash blue line near the lower part of the image and the [indiscernible] Benedict, which is the North-South line, which crosscuts this near the center. In terms of current operations, the [indiscernible] here sit on the west side of the map. just east of the city and north of Duster Porcupine and Hoyle Pond and Pamour are approximately 18 kilometers to the east and along narrow bands of volcanics extending easterly from Timmins with Pamour being adjacent to the Duster Porcupine and Hoyle Pond being about 5 kilometers to the north. So turning on to my next slide, which is #22. We see a close up for the Hoyle Pond Owl Creek area, which contains 3 of our main targets, including the Lower S, TVZ and Owl Creek. And as mentioned, this area is located on a narrow band of volcanic 18 kilometers from Timmins. As shown here, Hoyle Pond is located on the far east side of the image with mineralization centered on a distinct Northeast trending structure. The Lower S is on the northeast side of the mine, just east of the 1060 fault and the TVZ and sedimentary rocks 800 meters to the south. Owl Creek is about 3 kilometers to the west and centered on an easterly plunging wedge of volcanics just east of the Owl Creek fault with mineralization mostly in swarms of veins near the east tip of the wedge. So turning to Slide 23. We can see a long section for the Lower S., where we added another 12 drill intercepts to the east and west sides of the current resources with very positive results. As shown here, drilling to the east included 6 new holes into the projected down plunge extension of the zone and included multiple holes with visible gold and highlights such as 59.18 grams per tonne over 6.2 meters and 31.33 grams over 1.6 meters to confirm that the zone is definitely open to depth. Drilling to West included another 6 holes targeting the lower edge of the zone and as with Q3, continue to identify more high-grade lens of mineralization, included values up to 69.34 grams over 4.1 meters and 28.73 grams over 5.1 meters. Considering the above, we're very happy with the progress here so far and plan to keep at least 2 to 3 rigs active for the near term, plus another 2 to 3 in the middle to upper parts of the mine. And then turning on to Slide #24. We see an image for the TVZ, where drilling is now in progress, and we see results from our first hole. As previously described, TVZ is a significant zone of mineralization in the southeast part of the Hoyle Pond mine that was partially drilled and defined by past operators where we're now going back and adding more holes to support a maiden resource update later this year. Details for the zone as it modeled to date are shown on the current slide and indicate mineralization in a series of northeast trending lenses between the 850 and 1410 level, with the bulk of the mineralization being the one main lens, which we call the TVZ2 shown here in green, and most of the remainder in splay veins sitting to the north. Also shown in the image are locations for the new drilling, which is being done on the 1210 and 1680 levels with work on 1210 focused mostly on infill and conversion and 1680 on extensions to depth. In terms of results, we have the one hole back so far, but with very positive results, including intervals of 3.9 over 7.5 from the TVZ2 and 4.1 over 30.1 meters with multiple high-grade intercepts from an untested gap 100 meters to the north of this. Going forward, the program is continuing with one drill on 1210 level and one on 1680 with the second slated to start on 1210 very shortly. We're also planning for drilling, which is going to be happening on the 1410 and 900 levels later in the year. Turning to Slide 25. We see Owl Creek, where we completed another 17 holes near the historic pit. Details for the main target and new holes are shown on the current slide. And as indicated, the pit is outlined in yellow, new holes favoring the center and west side. As indicated in our release, drilling here was very successful and included several highlight holes, including values such as 4.8 over 35.7, 3.45 over 25 from holes 18 and 09C in the center of the pit as well as 2.61 over 33.9, including 5.36 over 3 and 5.52 over 5 from hole 20, which was drilled on the far west side of the zone, where drilling at this point is still very limited. Given the above, we're very pleased with the progress to date and continue the program with 2 drills for the foreseeable future. So next, turning to Slide 26. We see a planned view of the Borden mine, where we completed another 19 holes in the Northeast portion of the mine to infill and expand the main zone. Details for the drilling are shown on the slide and indicated all this was done on cut 5, 6 and 7 and the east part of the 585 drift, which sits about 200 to 300 meters annual to the target. Looking at results, they're all very positive, holes generally confirming the overall shape and grade of the current resource, even adding a small extension on the east side. There are too many highlights to go through individually. I think it's worth pointing out that the ones from the expansion area has some of the best values, such as 16.97 over 14.7 meters, including 21.76 over 10.8 meters, 6.64 over 12 meters and 8.24 over 15.2 meters. Given all this, we feel Borden is in very good position for future exploration and resource additions and plan to have a very steady drill program ongoing here throughout 2026. So next, turning to Slide 27, the Pamour, where we completed another 61 holes both near the current resource and in the new area we just started near the Broulan Trend, 1.5 kilometers to the west. New drilling near the current resource includes 60 new holes designed to upgrade and expand zones for future updates. And as with Q3, easily met expectations with multiple highlights, including 1.26 grams per tonne over 140 meters, 1.5 over 26.9 meters and 2.7 over 44.5 meters in holes at or near the bottom of the current pit shell. Drilling at Broulan included 1 new hole, which inspected some very nice values as well in a similar geologic setting to Pamour, including 2.06 over 29.6 and 4.15 over 25. Important to note is that there are no current resources between this area and the Pamour Pit. Drill program here is continuing with three drills focused on the east and west extensions of the current pit and at Broulan. So then going on to Slide #28. We see the Dome, where drilling is now in progress and initial results starting to come in, looking very positive. And as previously described, this entire project is centered on the historic pit and mine site shown in the center of the slide, where we already have 11 million ounce inferred resource, but now working to upgrade and expand it for a new resource update later this year. In terms of the new drilling, the vast majority targeted southwest part of the resource pit with one hole targeting the area to the Northeast. For the area to the Southwest, drilling tested both inside and outside the current pit shell with key intercepts from inside, including 1.47 over 12.5, 13.64 over 6.5 and 7.17 over 5.6 and intercepts outside, including 1.61 over 28 and 4.86 over 18.5. For the area to the Northeast, the new hole tested adjacent to the historic mining and intersected 2.5 over 12.4 and 3.97 over 6. Drilling at the site is still continuing with one drill at the Northeast target and a second drill arriving later this month. So then turning on to Slide #29. We see a summary of plans for 2026. And as indicated, we see a lot of the same projects continuing, but also a few differences and a much higher budget of 280,000 meters. We're just going through the list, starting with Hoyle Pond. We'll continue to focus on the S by adding new work at XMX and other -- and several other mid-mine target areas. Borden. In case of Borden, we are staying much the same as this year. For Pamour, our plan is to have -- continue to have a strong focus on infill drilling surrounding the pit, but at the same time, gradually increase work at depth and on strike, especially at Broulan. For TVZ and Dome, as expected, we will see a much higher budget from last year to complement the new resource update later in the year. And then finally, for regional projects, we're looking at 1 to 2 drills working steadily at Borden Surface and another 2 to 3 for Timmins, which will be shifting between Owl Creek, Hollinger - McIntyre and possibly the Paymaster. So in summary, a lot of projects in progress, a lot of good results and a lot more to come. So with that, I'll pass over to Jose Jabalera, our VP, Corporate Affairs and Sustainability in Mexico.

Thanks, Eric. Hi, everyone. So for our project in Mexico, Cordero project in Chihuahua, Mexico, we are in the final stage of the evaluation of our environmental impact assessment. So lately, we've been having a lot of meetings with the senior level with the government of Mexico, with SEMARNAT with the environmental authority and also with the Minister of Economy, Marcelo Ebrard. These meetings are being very clarifying where our target is. So we think that we are very close to get it or in the final stage of that evaluation and get our approval in the months to come. So -- also last week -- well, this week with a big visit of the Canadian Minister, Leblanc to Mexico City. He was talking with President Sheinbaum, and they touched the things around mining and around permits that are already on transmit. So we think that, that will help us for our transmit in SEMARNAT. So in the meanwhile, we are going and advancing work for use of natural gas or this evaluation because the grid power or natural gas. Also do a lot of work around the local water treatment plant, where we -- that we will get the water for our process. So in the meanwhile, we keep working on those things around the Cordero project in the zone. So thank you very much, and I pass the word to our CEO, Tony Makuch.

Okay. Thanks, Jose. Anyway, maybe you get the impression we got a lot going on. We can -- maybe we can spend a lot of time talking about operating results, and we've got a lot of really interesting things in operations, and what we can do in terms of increased production, lower cost and really create value. On the financial side, the company is well managed, strong balance sheet, generating cash. We're profitable in the first months and 2 months of operations and continue that on throughout the quarter. So a lot of exciting things there. And on the exploration side, we have all kinds of exciting things to talk about. We could probably spend a lot more time talking about the exploration upside here. And as I talked to Eric, we're 40 again in terms of the what you can do from an exploration point of view. I think from a -- speaking out to any geologist anybody looking for some exciting work and being able to be part of new discoveries, give us a call. We're happy to -- we've got lots going on, and we're happy to make a lot of investments. We're also doing a lot of pretty good engineering studies for growth. As Eric talked about with signing Dome, signing TVZ, looking at moving those forward, and we've got one of the best development projects in the silver space in Mexico at Cordero, and we're just waiting at the cusp of getting our approval to move that forward. The company is well financed and able to finance. So at the start of the call, we talked about we're building a very special business. Hopefully, we can get that across to people and you can start to get the sense of the energy in the company and the people. We'll continue to generate excellent results and really continue to invest in this business and build value for our shareholders. So thanks again for participating in today's call, and we'll be happy to take your questions.

[Operator Instructions] Our first question comes from the line of Cosmos Chiu with CIBC.

Maybe my first question is on the Hollinger open pit. I'm seeing that you're ramping up production from Hollinger in 2026. It seems to be contributing earlier than what we had expected. Is that -- especially if we were to compare it to the PEA that was put out a bit over a year ago now. Is that -- is my memory serving me correct, Tony?

Yes. I mean there's opportunity there. I mean Hollinger was a project that was being -- was stopped by -- completed by Newmont. There's still some work to do there, and we still felt that there's some additional mining that we can take place in its current form. We have a bigger plan for Hollinger over the next few years. And we think Hollinger can be a value driver for Hollinger McIntyre, a big value driver for another 50 years of gold mining in Timmins. But that's a whole other story. But we do see -- and Pierre might give a little bit of color, but at least this year and next year, some value from Hollinger. Correct, Pierre?

I guess, Pierre, could you give us a bit more numbers then, if possible? So in terms of like tonnage, what's the grade versus Pamour? I didn't get to visit it last year when I came out with you. Is there anything that needs to get done in terms of stripping or dewatering, so CapEx? And I guess, tonnage, your open pit tonnage, how much of that is going to come from Pamour versus Hollinger? Anything that could help us kind of refine our model, that would help.

So what we have at Hollinger, Cosmos, right now is mining about 6, 7 benches that were left behind. And that's what we're planning to do this year. So if you want to plug numbers in your model, you can use 2,000 tonnes per day. And the grade that we're planning at Hollinger is about 1.4.

And the strip ratio is?

Strip ratio is very low because essentially, it's been done before, so called 1:1.

And this is incremental to what you are mining out of Pamour, correct?

So yes, is the short version. Now what we're going to do is because the grade at Hollinger is more interesting right now than what we're mining at Pamour, and we're still limited by our processing capacity. We're going to offset some of the Pamour feed with the Hollinger.

[indiscernible] stockpile.

So there will be a stockpile material from Pamour. But that being said, we're still planning to process more next year, 2026 than what we've done in 2025.

And then as you mentioned, strip is pretty low. So I guess, CapEx is -- not a lot of upfront CapEx that I need to consider.

Not a whole lot.

Yes. And the permitting, there's no permitting -- all the permitting you have in place and everything is okay.

Correct. Everything is in place to continue mining. And actually, we started mining in January.

Perfect. Maybe switching gears a little bit, going to Cordero. Certainly, it sounds like it is exciting and from what Jose is saying. But I guess my question is, I believe you're still working towards kind of a new technical report to update us on the numbers at Cordero. And Tony, to the extent they can kind of share with us, what can we expect? Is it going to be an update to your CapEx, or any other areas that you're updating? Throughput, would it stay about the same? Anything that you can share with us? I think that would be great.

Well, I think the biggest thing, Cosmos, is we've got to update the CapEx. There's some -- we got some -- a little more detail on a few areas such as water treatment and power, some other areas, we were taking a little bit of time looking at security at site, et cetera. But I don't know if there's anything else, Forbes, that you could add to that or that's pretty much what we're looking at. We're not looking at sort of a whole updated feasibility study. I think we've done a very, very good job on our current one. It's more that.

The only change in scope from the -- we put out in 2024 will be looking at gas power -- rather grid power. So we're still doing some evaluation of that right now and probably come to a decision point in the second quarter of this year. But aside from that, we're looking at the same size of plant, a very similar mine plan and I suppose some more advanced work that we've done on the water treatment plant, a very similar scope and so the focus is really on updating the CapEx for our financing budgeting purposes.

And then in terms of timing, when are you expecting to provide us with that new technical report?

We're still sort of talking through that now. I mean, obviously, it opens up a bit [indiscernible] to go through a full technical report process. So I think it's an internal exercise for now. And then if anything is released, it wouldn't be until the second half of this year.

Or let's just say, 3 months -- 3 to 4 months after we get our permit.

Okay. And then maybe one last follow-up question on Cordero. You've kind of allocated $90 million to $100 million in terms of CapEx for the project in 2026, a part of which is fees required for permits. Could you maybe break that down for us? How much of that $90 million to $100 million is related to fees, and how much [indiscernible] is related to engineering studies and other things that you're working on at Cordero?

Go ahead, Alison.

Sure. So Cosmos, this is Alison. The fees are a vast majority of that, just as you mentioned, of the $90 million to $100 million. And roughly, the fees are between $70 million and $80 million dependent on the final outcome of the ratios that are required as a part of the calculation for the overall payment that has to be made that won't be finalized until later this year when we actually receive the information about the permit.

And what's that for again, the $70 million to $80 million? And is it higher than what you had expected previously?

So it's for the land use permit, and it is higher than what we had initially anticipated. The government goes through an annual process to update the required calculation for the fees, and this utilizes some of those most recent updates.

Our next question comes from the line of John Tumazos with John Tumazos Very Independent Research.

How many meters of snow do we have up in Timmins this week? And should we expect the tonnes per day to be maybe 1,000 tonnes a day less for the first quarter simply because it's harder to move surface material?

Well, it's probably about 2 meters of snow total accumulated, [indiscernible] 1.5 meters anyway. But I don't think the snow -- it's winter country, it's winter people, like the snow doesn't stop operations. I think maybe some other things. But I don't know, Pierre, we're going to have less throughput this quarter than last one?

Well, there's the usual planned shutdown, right? But if you want to compare the first few months of 2025, compare that to what we've done in 2026, we're ahead of what was done in January, February last year.

So being better than Newmont is good, but are we as good as 9,700 tonnes a day in the fourth quarter?

Well, our goal this year to do approximately -- I think, it's somewhere around 3.7 million, 3.8 million tonnes of processed throughout the year and try to increase that again next year. All of its availability and utilization of the plant, combination throughput, but we got to do it in short. I mean we have more ore stockpiles on surface than we have mill capacity right now. We could probably shut the mines down for 3 months and still keep the mill running if we want. So our issue is processing. But we -- in terms of processing, we don't want to run increased throughput and impact metallurgical recovery. So we're trying to do things the right way.

To that point, John, as you heard today, we're spending money -- worth of capital money in the mill to improve our process over there. So yes, 3.7 million tonnes, but our objective is to go back to that 12,000 tonnes per day and exceed that.