Discovery Silver Corp. ($DSV)

Good afternoon. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Discovery First Quarter 2026 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, everyone, on the line for joining Discovery's First Quarter 2026 Conference Call and webcast. Joining me today are many members of the Discovery senior management team. Speaking 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, Exploration; and Jose Jabalera, our Senior Vice President, Corporate Affairs and sustainability in Mexico. And again, there are many other members of our senior executive team in the room as well. Before we get started, 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. They are subject to risks and uncertainties, and actual outcomes may not be what is included in those statements. I refer you to Slide 2 as well as our website for further information on that. In addition, we will also be making reference to a number of non-GAAP measures during the presentation. These measures do not have any standardized meaning and they are under GAAP and, therefore, may not be comparable to other issuers. I refer you to Slide 3 on our deck as well as our website for more details. Finally, all dollar amounts will be in U.S. dollars unless otherwise indicated. Now turning to the quarter. To begin with, as many of you know, we're working towards more than doubling gold production at Porcupine to over 500,000 ounces per year. At the same time, we're working towards developing our Cordero project in Mexico through which we will produce about 14 million ounces of silver per year at least over the first 10 years. we plan to achieve these levels of performance while averaging the lowest half of the global cost curve for both gold and silver. And we're going to achieve these milestones using a disciplined approach to investment with the focus on investor returns. During the first quarter, there were a number of key developments in support of achieving our growth objectives. Specifically, we announced the acquisition of Glencore Kidd operations in Timmins. We also reported continued outstanding exploration results in and around Timmins, and we continue with our investment programs through which we will both grow and optimize our current operations. Getting into those in a little bit more detail, looking Kidd on Slide 6. We announced the acquisition of the Kidd operations on March 2. We expect that transaction to close very soon likely over the next few weeks. This is a major milestone for our company to achieve over 0.5 million ounces of annual gold production, we require additional milling capacity. Through the Kidd met site, we have an opportunity to dramatically grow processing capacity and to process different kinds of war. There's lots of other benefits as well, including adding valuable infrastructure that will support the future expansion of both Hoyle Pond and Pamour , including the development of TVZ. It gives us exposure to critical minerals, copper, zinc and silver through Kidd Creek Mine significantly more exploration potential to our already very large and highly prolific portfolio, delivers cost synergies, and this is a very important point. Adds a very large, highly skilled workforce that's going to help us with our existing growth plans. Going to the next slide. This gives you a view of the Kidd Met Site and a conceptual plan for what we expect to do and are currently evaluating. It's a conceptual plan but it kind of points -- show you our thinking in terms of the path forward. And maybe at this point, I'll turn it over to Tony to talk about that.

Okay. And maybe just a couple of simple things. I mean, people should understand first off, that the Hoyle Pond underground operations are actually under the Kidd Met Site. And you can see that the blue rectangular box here is trying to show where the location could be for any new vent raises we can establish for the Hoyle Pond Mine as well as potential location would be for a new shaft that we wanted to develop for the TVZ Zone. But also what we show here, there's -- we've alluded to before the circuits at the Kidd Met Site. And you can see where it had a division, and we sort of tried to conceptualize on here what would be involved in building and it show the location where we build it in 5 million to 7 million tonnes per annum conventional gold circuit at the plant with [indiscernible] crushing and how would that fit in. We still continue to use the B division here, which is the base metal circuit, it's flotation circuit. The division, we're working pretty hard right now on that. That's about 1 million tons a year of capacity. So looking at where the aspect of bringing the Board North to here and run it through this division as early as we can over the next 6 to 12 months, and that would unlock 2,000 to 3,000 tonnes a day of the capacity in the [indiscernible] for conventional processing. And you can see that these circuit at were here, which we would turn into a gold refractory floatation circuit. But on the other cycle, all the A,B the B,C and the circuits that are here could always be utilized as combination-based metal circuits that we needed to handle a gold circuit that's required. So give you the sense on what is can unlock for us, basically, if I -- you can look 6 million to 8 million -- sorry, 7 million to 9 million tonne a year, new gold processing capacity at the Kidd Met Site, A division as a conventional circuit, C division for processing 1 million-ton a year for processing. The Board [indiscernible] us on the division, which we would use to redo process refractory ores and [indiscernible] effectively refractors would be the TV set on as we're talking about. And then the general location where it is, [indiscernible] doesn't this figure doesn't show where the Pamour operations are near. But the Pamour open pit operations are less than 0.5 kilometer from the bottom of this page. And then the idea would be all the cameras would be trucked and see the Hoyle Pond or will be trucked and process through this new service.

Okay. Just going on to Slide 8. We'll get to the next key development that exploration progress. And for all the production that we have and we're going to be adding -- this is -- we think it's one of the most compelling exploration stories in the industry as well. We issued a press release on April 23. That's our latest one. I'm not going to get into a lot of the details. Eric will get into the details of that release shortly. I'll just vary at a high level, say -- we continue to get very good results from resource conversion and extension drilling at Hoyle Pond and Pamour. We've been -- and included in that release was excellent results at a number of district targets near those operations and positive results at our near-term projects, specifically [indiscernible] and TVZ. And again, there's a lot more information that you'll be hearing very soon with that. Slide 9 looks at our investment programs in the first quarter. Sustaining capital for the quarter was about $21 million, mainly related to capital development, mobile equipment and infrastructure investments at Hoyle Pond and Pamour and I'll mention we are very much on track with our capital development activity at those mines, also contributing with new mobile equipment at Pamour some investments at the TME 6 or a tailings facility project as well. staying capital was somewhat lower than we planned, which was primarily related to the shifting of delivery schedules for new mobile equipment to second quarter and just other quarters of the year. Growth capital totaled $40 million investment in TMA 6, including our new acquisition strategy and pre-stripping at Pamour accounted for the vast majority of that. And again, pre-stripping at Pamour was very much in line with expectation. Just going to Slide 10. This gets to the operating results. During the first quarter, Alison will get into all the financial numbers. in a few minutes, and [indiscernible] will then add some additional color on operations as well. In our year-end results, we indicated that production in 2026 would be weighted to the second half of the year. and then Q1 would likely be our lowest quarter of production for the year. Well, production was 60.2000 ounces for the first quarter. What I will say is I highlighted the quarter was Hoyle Pond. It had a very good quarter in Q1 with an average grade of seeding 12 grams per tonne. Also, our total mine tons increased by 4% and and we ended the quarter with stockpiles of close to 1.3 million tonnes, which will help us manage both our throughput levels and grades over the balance of the year. light production, our unit costs are expected to improve significantly in the second half of the year. One reason our guidance ranges were as wide as they are is because of the variability we saw coming in the quarter. And we'll say our ASIC number for the quarter was in line with our guidance, and we do expect that number to improve as we get into the second half of the year. Going to Slide 11. It shows a visual of, well, done mill, but specifically in the foreground, the crushing circuit. As we mentioned, we expected quarterly production this year to be lowest in Q1 and a significant reason for that was mill throughput. We had 698,000 tons in the quarter. the reduction from the previous quarter, most of that was expected and expected reduction due to a scheduled downtime and our understanding of the implications of severe winter on our crushing plants at don't -- we've indicated since we announced the Porcupine deal beginning of last year that we were looking at replacing the 3-stage crushing system, but it needed to be replaced. That's because it's inefficient and contributes to high unit cost because it's prone to breakdowns, particularly in winter conditions and ultimately, because we're going to need to move it to get it out of the way as we push back the Dome pit when we bring Dome mine into production. The longer-term solution for this is single stage crushing in a SAG mill, and that's part of our plans going forward in terms of achieving our growth targets. The near-term plan is that we are keeping increasing levels of critical spares on site and there is a newly designed secondary screening system that's going to be delivered at the end of June that will be installed during the scheduled shutdown in July. And these steps we're taking now are designed to help us when we get to next winter. Just going on to Slide 12. This shows you our guidance, and I can say we remain on track to achieve all of our guidance for 2026. We completed the lowest quarter of the year. We expect to see significantly higher production, particularly in Q3 and Q4. An important contributor there will be Hollinger. We began ramping up Hollinger in Q1 and exited the quarter mining about 2,000 tonnes a day. We expect to get over 40,000 tonnes from Hollinger this year. There was only a few thousand in the first quarter. We also expect to see higher levels of mill throughput and supported by the large stockpiles I mentioned. With that, I'll turn the call over to Alison White, our CFO, to look at the financial results.

Thank you, Mark, and good afternoon, everyone, on the call. On Slide 13, let's look at what a solid quarter and start we had in 2026, which reflects the continued momentum that we are building on from last year. We had robust revenues during Q1 of $285 million, an increase of 4% quarter-over-quarter, primarily reflecting the higher-than-average gold prices throughout the quarter. We moved more tonnes during the quarter. And coupled with the number of ounces sold over the same period, cash cost per ounce were $1,417. As previously mentioned, unit costs are projected to be the highest in the first half of the year and are scheduled to improve during the second half of 2026 as production and sales volumes increase and benefits are realized from the investment to optimize the company's operations. All-in sustaining costs averaged $2,041 per ounce sold, reflecting the higher operating cash cost per ounce sold, and is partially offset by lower spend from the sustaining capital during the period. The lower-than-planned sustaining capital is due to the delayed timing that Mark had mentioned earlier for the delivery of new mobile equipment and for construction work that's ongoing at the tailings TMA6 project. EBITDA grew quarter-over-quarter to $178 million, an increase of 41% from Q4 2025, which is driven by an increase in revenue as gold prices climb. Discovery has continued to have progressively strong momentum since its transition to an operational company last year, continuing to grow EBITDA during each quarter of 2025 and now again in the first quarter of 2026. We also continue the trend to generate solid free cash flow with adjusted free cash flow of $63 million, reflecting an adjustment of $87 million for our payment paid during the quarter to satisfy the company's 2025 income tax obligation. Further, Discovery deployed $67 million in capital expenditures to further advance the asset base at Porcupine, continuing onwards with the vision and capital allocation plans of reinvesting in the business to add value. Q1 2026 net income was $81.7 million, an increase of 25% from Q4 2025. And both earnings per share and adjusted earnings per share were $0.10. The increase in net income quarter-over-quarter resulted from the onetime $45 million reclamation expense for nonoperating mine sites that occurred in Q4 2025 as well as the benefit of higher revenue and lower depreciation and depletion expense during Q1 2026. Partially offsetting all of this was the impact of an income tax recovery of almost $5 million in Q4 2025 that was also offset by a $49.6 million of income tax expense in Q1 2026 for the current year and higher share-based compensation costs that also occurred during the quarter. The income tax recovery in Q4 2025 resulted from the $40.9 million and a deferred tax recovery that was related to revised reclamation cash flow. And as we end on that tax note, let's move to Slide 14 to review financial metrics. We continued to build on the momentum that began last year across all of our key financial metrics. Revenue and EBITDA have increased each of the last 4 quarters. And equally, through strong earnings generation, we continue to see positive momentum in our operating and free cash flow with Q1 adjusted operating cash flow of $130 million and adjusted free cash flow of $63 million that I mentioned previously. The positive free cash flow generation strengthens the company's balance sheet and allows for capital redeployment into the business. So let's take a look at our liquidity position on the next slide, please. Discovery cash balance totaled $384.9 million at the end of the quarter. The stronger gold price environment translated into $130 million of adjusted operating cash flow, partially offset by the 2026 tax payments and continued capital investments that were covered this year. Discovery's liquidity position remains robust. With $385 million in cash on hand and a $250 million revolving credit facility with a $100 million accordion feature, we have meaningful financial flexibility. We believe that this balance sheet strength gives us the foundation to advance our strategic priorities with confidence. And with that, I'm going to pass it over to Pierre, our Chief Operating Officer.

Thank you. It is a pleasure to be presenting today. I will be speaking to Slide #16. During Q1, we produced 60,269 ounces of gold with total gold ore of 59,258 ounces. As Tony mentioned earlier, we expect production to ramp up, particularly in the second half of the year. The change in production in Q1 2026 versus the previous quarter reflected lower tonnes processed. The impact of this reduction was partially offset by a 15% improvement in the average grade, reflecting a significantly higher grade at Hoyle Pond and a higher average recovery rate. More than 3/4 of the reduction in tonnes processed was planned and related to the scheduled maintenance as well as the impact of severe winter conditions on the crushing circuit. Company is currently advancing plans to replace the crushing circuit. Total ore tonnes mined increased by 4% compared to Q4 2025, and we have close to 1.3 million tonnes of stockpile material that is available for processing at the end of Q1. Tony discussed the crushing circuit at the mill in his remarks. I'll point out that during operating days, the Dome Mill continues to show improved performance. Daily throughput at the mill exceeded 11,000 tonnes per day on 26 days in Q1, including 10 days when the mill exceeded the operating capacity of 12,000 tonnes per day. Operating cash cost per ounce sold averaged $1,417 compared to $1,185 in the previous quarter, with the increase mainly reflecting the higher mining costs given the increased mining rate in Q1 2026 and the impact of lower gold sold. Site level all-in sustaining costs averaged $1,875 per ounce sold, similar to the previous quarter as the impact of higher operating costs was partially offset by a reduction in sustaining capital expenditures. I'll now turn the call over to Eric Kallio, Senior Vice President, Exploration.

Thank you, Pierre, and good afternoon, everyone. I'm on Slide 17. Before starting, I just like to say, it's been another great quarter for exploration, another 67,000 meters drilled, excellent success with both operating mines and growth projects. So with this in mind, we have, again, a lot of new information, but my plan today is just go through some of the highlights, starting with the current slide at Hoyle Pond. As shown on the slide, which is a long section looking south, work at the mine continues to focus on the lower S Zone, included another 5 holes near the lower limit of the current resource with very positive results. We have several holes containing visible gold and high grade directly down plunge to the deposit to the east and others indicating potential new high-grade lenses to the west. Considering above, we're very happy with progress here so far. We plan to keep these 2 to 3 rigs active here in the near term, plus also integrating another 2 to 3 rigs in the mid- to upper part of the mine to start advancing those projects as well. Turning to the next slide, which is #18. You see the TVZ area, which is another important drilled project for us in Q1. As mentioned in the past, 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, but we are now back adding more holes to support a maiden resource estimate for later this year. With that in mind, what we see here on the slide is an overall view of the target area, including the main zones, drill platforms and even the workings from Hoyle Pond mine. Just slightly on the main target here a bit. What we're looking at is essentially a large Northeast plunging structure, which is based on drilling to date extending from at least the 850 to the 1680 levels and remaining open in both directions. Internally, the zone consists of a series of lenses, which we show here in various colors, the largest being the TVZ 2, which is a large green one sitting on the south side of the zone and the remainder being clay bins, which sit immediate to the north. And then in terms of drill platforms, just to point out that the project already has a number of areas with drill platforms has been set up from past work, and these can be activated fairly quickly, but just a little bit of work. Aside from that, all of our new drilling has actually been from just the 1210 and 1680 levels, and then we'll be shortly starting from 1410 as well. Turning on to my next slide, #19, we see a more detailed view of the zone in long section, including recent drill results that has indicated it's all looking good so far. In terms of 1210, which is in the upper right-hand side of the slide, we had multiple new holes with wide high-grade intercepts nearby to our first hole that we announced in Q1 and on 1680, several more, which intersected attractive grades and widths near the lower limits of past drilling. Just to give you a flavor for what we're seeing, intersections on 1210, we're including numbers sections 4.23 over 55, 6.41 over 11, 5.18 over 9.1. And then intersections from 1680, such as 4.32 over 19, 4.24 over 10, and 4.73 over 6. Important to note is that all of these intersections are similar or better to other previously drilled holes in both areas and the drilling below the 16 level is still very limited. Given the above, we're very happy with progress so far. The program's continuing with 3 drills active on 1210, 1680, and 1410 levels. We expect to see a lot of additional new results from the upper and lower parts of the zone very shortly. We're also starting on rehab of new port platform on the 1430 level and the 900, which will provide even more platforms as the year progresses. Returning on to the next slide, which is #20, we see the Owl Creek area, where we completed another 12 holes near the historic pit, as well as at the 750 zone, which is 750 meters to the east. Indicated here, drilling near the historic pit included 8 new holes resurfaced from the 650-meter level with very encouraging values, multiple holes intersecting wide, high-grade zones near the east side and another continuing to enlarge the overall footprint to the west. Key intercepts to the east confirming the wide of higher-grade zone include values such as 4.11 over 30, 9 over 3, 5.24 over 10, 4 over 13.8. And the key intercepts to the west includes 4.5/2.2. Drillings at the 750 zone includes 1 new hole, which is designed to confirm and extend mineralization near the 250 level and at the lower limits of historic drilling and was also very successful with an intercept of 5.76 over 4.5, 2.57 over 8 9. Given the above, we continue to be very pleased with progress of the project to date and plan to continue with 2 drills for the near term. Then turning to Slide 21, we see an overall view of the Borden Mine, where we added another 24 holes in the northeast portion of the mine. We're showing here the focus for current work continuing to be on the main zone, which is the farthest target on the east part of -- right-hand part of the slide. All drilling being done from the 585 drift, testing mostly down plunge northeast of the mine workings. Additionally, we also saw drilling start on the lower part of the East Lower Zone or ELZ, which is another mineralized structure with similarities to the main zone 500 meters to the west. Important to note that both zones still have limited drilling down plunge and remain open for expansion. So yes, I'm not going to go into a lot of details here in terms of the results. They're well summarized in our press release, but I guess I could just mention that we continue to have a lot of success here with the drilling, getting very good grades and widths in both areas, both inside and outside resources. Also very optimistic about the future of the site. Then turning to Slide 22, we have the Pamour, where we completed another 67 holes near the current open pit resource, as well as Pamour West, 1.5 kilometers to the west, and the North Contact Zone, north of the phase 2 pit. Drilling near the open pit included 6 new holes designed to upgrade and expand resources, and that's what Q4 results were easily meeting expectations with multiple highlights from all areas. Drilling at Pamour West with another 6 holes found in the historic mine at the Broulan property. And as of Q4, also continued to intersect very nice values along strike of Pamour and a similar geologic setting. Then drilling at the North Contact Zone included 5 new holes to test the major east-west contact north of the Pamour pit and also started to show very positive results. Important to note that none of the material from Pamour West or North Contact area is included in the current resource estimate, and we'll be working hard to incorporate this in our next update later this year. The program's continuing with 4 drills, 2 focused on extensions of Pamour pit, 1 at Pamour West and 1 at the North Contact. Then going on to Slide 23, we see the Dome, where we had continuation of drilling in preparation for the new resource estimate later this year. As indicated on the image, the vast majority of new drilling targets the northeast part of the resource pit but also included final holes from the area to the southwest. Drilling in the northeast area included 10 holes to evaluate mineralization on the Dome Fault, near the lower portions of the current resource, very successful, indicating close correlation of geology, similar better grades and width to the historic holes, which were drilled mostly before 1970. Drilling to the southwest included 4 holes to test the exploration target to the south of the current open pit as the Q4 continued to identify new growth opportunities for future expansion. Drilling at the site's continuing with 2 rigs, both now located on the north side of the pit. Considering results and progress to date, the project remains on track for a new resource estimate by the end of 2026. So in summary, things continue well, and lots more to come. So with that, we'll pass over to José Jabalera, Senior VP Corporate Affairs and Sustainability in Mexico.

Thank you, Eric. Hi, everyone. In Cordero, in Mexico, we continue to advancing the project. Now in that advancing, we are including the studies on water and power in that. And also after the last event or the flood in Mexico, event with the president when she announced incentives on the investment, we got meetings with senior Mexican authorities, and that comes for they scheduled a site visit at the project to go in the final process of the evaluation for our MIA. So we will have that visit on the next week to continue advancing on the processing of the permits for SEMARNAT. So with that, I pass the words to our CEO, Tony Makuch.

Okay. Thanks, José. Thanks, everybody, for the presentation. We had a fairly solid quarter. It was a quarter where really our mines definitely outperformed the mill in terms of throughput. The mill had some challenges in terms of weather, but as we're moving on, we're working at having these things corrected, and we expect to have really solid processing results as the year goes on. And really want to thank the hard work of all the people in the company that did the ones that did all the work and got all the success of the year. We really appreciate that. And then to wrap up on the other side, you can see from exploration and a few other things, we had some significant developments in the first quarter that supports our growth objective. The acquisition of Kidd is one really important value driver for the company and one of our -- there's a lot of synergies and a lot of value in terms of what we inherited from -- with Kidd and then take advantage here. The main thing is the unlocking of processing capacity. You can see when I try to show you somewhere between 7 million and 9 million tonnes of new processing capacity, that can be unlocked with that and you just do the math yourself in terms of when we talk about where we think that it can go. We have lots of resources if Eric still give us continued exploration success and there's still a lot of gold left around Timmins and some of these are, they're right within existing operating mines and on operating infrastructure. We continue to invest and we invest properly in terms of building the value. And like I said, as Mark talked about, we -- our growth objective to reach over 0.5 million ounces of gold production, then if you do the math, and you can see we have significant plans in place and we expect to even somewhat exceed that. Anyway, with that, maybe I'll just thank everybody for participating in the call and be happy to take any questions.

[Operator Instructions] Your first question comes from Larry Liu with CIBC. Your line is open.

I guess I'll start off my first question by asking about Kidd Creek. Would you mind reminding us what are some of the opportunities you see here? Does the acquisition of Kidd Creek change the way we should look at the near-term mine plan, as well as can you also remind us what are some of the steps between now to closing our transaction in Q1?

Well, I think it's the first thing in terms of the acquisition of Kidd, we -- the mine's still operating. We do expect the mine to operate there and continue to produce the ores, definitely for the rest of this year. We're working hard in terms of what can be done there and done safely and effectively. I think that's somewhat of an opportunity. There's significant exploration lands acquired here, and I mean that's really part of a long-term exploration program. But if I can, going to Slide 7, where I tried to show the biggest part here is unlocking the value of on the metallurgical site. What that brings to us in terms of adding mill capacity, we do with very minimal capital investment. We can process the Borden ores at the Kidd met site at the C division. We're looking to process refractory gold ores such as TVZ in the D circuit. Again, these aren't significant capital expenditures for here, and they're not necessarily significant time, too. So we expect that things go properly. We're doing some test work right now and working on firming that it could be between September and March of -- September of this year and March of next year that we could be actually processing more Borden ores here. So that unlocks 2,000 tonnes 3,000 tonnes a day capacity at the Dome Mill pretty quickly for the gold ores. We mentioned about -- Mark mentioned about the significant amount of stockpiles we have on surface as we're building stockpiles from mining. So there's a lot of opportunity there. And the big part is we're going to be starting the engineering now and working on what we need to do to build a whole new mill circuit at Pamour -- sorry, at Kidd to treat the Pamour ores, and that's a 5 million to 7 million tonne a year conventional gold circuit. One of the really advantages here with this, you have a brownfield site where you have over 100 megawatt of power already. We have all the water we need. We have a site, a cleared site with actual concrete foundations in place, not the final foundations for all of what we do, but definitely an area that was used in the past for metallurgical work that we can go in here, build a -- put a coarse ore bin in, put a primary crusher, a SAG mill, and then can grade that, like say, a 5 million to 7 million tonne a year gold circuit to process all the Pamour ores and really unlock the value then of Dome Mill. Think about it. It gives us somewhere between 7 million and 9 million tonnes a year of processing capacity between 6 months from now, going from 6 months from now to 3 years from now. We see the opportunity here. And that's the main part. In terms of closing, I mean, things are working well. We're working towards some final transfers or closing plans, et cetera, with the provincial government. And we're kind of thinking we're going to have this thing closed before the end of the month, but there's always something that can happen. But we're I think we're pretty much dotting the Is and crossing the Ts as we speak.

Yes, for sure. I guess kind of a follow-up here on Kidd Creek, not diving too deep as well, how are you comfortable adding copper, zinc, and silver to your portfolio? Should -- would this be a good experience for having some processing base metal capacity from Cordero potentially in the future?

Yes. I mean as part of this, we have the offtake in place with Glencore and pretty much the offtake terms are not really much different than the offtake terms that they provided to their own Kidd site itself. And it gives us that lead in terms of working. So It's a going concern business. It's producing 3,000 tonnes per day, or it's running at a 1.2 million tonne a year capacity currently, and it will continue on that for the rest of this year. We still have to get work with them on plans once we take over. So the operation will continue to produce a copper concentrate and a zinc concentrate. The copper concentrate goes to the Horne Smelter. The zinc concentrate goes to Quebec -- to Montreal, and that goes in place. And we have that agreement in place with Glencore, and it's great learning capacity for what we would do as we advance Cordero as well.

Perfect. Sounds good. And sorry, if I can, Alison, I do apologize in advance. This is going to be a tax question. So if I look at this quarter's free cash flow, before being adjusted, a large item would be the taxes paid for last year from Porcupine taxes. So going forward, should we expect more of a monthly installment? Or how should we look at taxes, cash taxes being paid going forward?

Larry, you're exactly right. First of all, thanks for the question. Taxes are never anybody's favorite topic to talk about, so you're brave to ask it. But nevertheless, yes, you're right, and we will be, and we are paying monthly installments in 2026. The onetime event for 2025 payment was largely just because last year was our first partial year of operation.

Your next question comes from John Tumazos with Very Independent Research.

I'm trying to envision or anticipate the fourth quarter technical study. The January study last year described resources of 4 deposits and production from 3 of them. Based on the drilling results, will we have resources from 4 more deposits, TVZ, Owl Creek, if you're taking material from Hollinger? And now we've acquired Kidd Creek. So will the new report describe 8 distinct resources and envision production from all 8 of them?

Well, that's a good question. Eric, you can chime in. Some of that really, you're not offline.

Yes, well say we have the 3 main ones, which are the operations for the -- we'll be doing update on those, and then we've got Dome and TVZ. That's the base plan for sure. I mean we've had the results at Owl Creek, like you say. We see if we have enough drilling to do a resource there by year-end, but really, it's be those 5 that we're aiming for at year-end.

You do have, we do have Hollinger that we could discuss or include and there will be some things out of Kidd, but we're still working on Kidd whether that's part of our -- by the way, we will give something out of Kidd, but it might be part of a separate report there, John.

Is the 131 million tonnes that Glencore reported for Kidd good enough to meet your standards?

I mean, it was, okay. I'm not sure if it was quite that number. But yes, I mean, the level of drilling and the level of quality of workmanship, we're not questioning that at all. Eric?

I mean we didn't do 43-101 report. That's a JORC report. We know that was done in the past. But I mean the drillings have been always done to a measured and indicated standard for the mining site areas really where most of the resources is in the deep part of the mine. So really -- which they could be added to the resources, but it's really not because of the quality of definition of the drilling that they're not putting it in. They have uncertainties with other parts of the mining approach.

Just want to make sure I heard you right, Eric. Did you say that there'll be a resource for Hollinger or Owl Creek or not?

Right now, we don't have plans to do it, but depending on how the drilling goes, we could do one.

That's Owl Creek you're talking about?

Owl Creek, yes.

If you're taking material from Hollinger, do you have resources without drilling them based on earlier data since you're putting ore through the mill?

The ore we're taking, this is broken ore, so it's within the mine.

Yes, there is material at Hollinger. And it's a valid point that the material at Hollinger we're mining, that was part of a historic resource or a resource from the previous operators. And it's work -- we're doing, and something we're considering, but it may be more work, John, for 2027, only because in terms of the level of drilling and the stuff, other work we needed to do to verify to complete a 43-101 level report. It may be more roll into 2027 for Hollinger. But it is one of the key areas and a lot of potential for sizable resource there.

If I can ask one more, when do you expect to have the single stage crusher at the Dome Mill and where will you put it? Will it be away from the existing mill site in case a decade from now you move the mill site?

What we're looking at doing, John, is right now in terms of the primary crusher, what we're looking at doing is either getting some -- putting an ore bin at site and in a short to bring new ore at site, the new ore bin and truck dump at site and do fine crushing, bring crushed material from Pamour, put primary crushing at site. That's one alternative. Second alternative would be to put that there. But we're just working on now. There's some work in the back. If I had a drawing up, I'd show you. There's work in the back that's around the secondary and tertiary crushing plant and going into the tailings where we would excavate some -- doing some foundation work where we would put it right now. That would be the first phase of what we do at the Dome Mill. And yes, I mean, the reality is we could keep the mill where it is, have a variation of crushing there and continue to run that we can run the Dome pit for anywhere from, depending on throughput rate that we want to mine at, for 10 to 15 years before we even have to move and replace the mill at that Dome.

Your next question comes from Ken Ilodibe with SCP Resource Finance.

Just congrats on the quarter. Well, just switching gears to operations. So you've talked about production and costs improving through H2 as I guess throughput and mining rates ramp up. So my question is, what are the main things that we should be watching over the next couple of quarters to see if the ramp-up is progressing as expected? And maybe just broadly, are you seeing anything so far in April into May from an operational standpoint that gives you confidence in this ramp-up?

Yes, just want to make sure I understood your question. You want to know what we're going to watch for this year and how we're doing in Q2, correct?

Yes.

Right. So of the 4 sources, we don't report separately, as you know, so I'll be kind of speaking in general terms. I would say to you that our mining rates are progressing really well. We don't foresee any issues here at any of our operations. Of course, as Tony alluded earlier, grades do fluctuate up and down, mostly due to sequencing and some adjustment with block models that we're doing throughout the year. So with that -- on that aspect, Ken, I don't anticipate any issues delivering material to the mill, whether it's Q2, Q3, or Q4. In terms of processing capacity, we did allude to the fact that we had a few mechanical issues in Q1. And I just want to bring to your attention and others' attention that if you compare what we did process in Q1 of 2026, which was about 7,700 tonnes per day and you compare that to the previous operator, which in Q1 2025, they processed around 4,800 tonnes per day, you can see that we have put in place some improvements already. So later this year, some of the mechanical parts, secondary screens, to name it, is going to be replaced. So that's going to increase the availability of the process plant. And as I did mention earlier, we did exceed the nameplate capacity of 12,000 tonnes per day in Q1. We're going to work towards exceeding that 12,000 tonnes per day in the rest of the year.

And alluding to that then, the real two primary key indicators if you want to watch for how we're achieving the ramp up, one would be daily mill throughput as you see the mill producing, processing more on a day-to-day basis, going from average 10,000 tonnes a day to 10,500 tonnes to 11,000 tonnes a day or whatever. Second part is our quarterly production of gold. And those are the 2 main drivers that right now, if you want, so you watch.

Okay. So Is it fair to say that, I guess, in the long term, you're working on a single stage crusher replacement, but then in the shorter term, you are confident in the reliability of what you have right now?

Well, in the short term, what we need to do is get plant reliability, and the biggest part is the screen, the screens on the secondary screens. That's what's been causing some of the trouble. There's lots of areas within the plant. So in the short term, it's reliability on our secondary and tertiary crushing circuit, mostly the screens that's provided your sizing and the material before you go to refine ore bin. So that's critical in the short term. A longer-term processing is movement of the actual primary crusher to a different location and working on other areas. A much longer-term thing is to replace the 3-stage crushing circuit with a primary crusher and a SAG mill. That's up for Dome. And then the other aspects now, what we're doing with the Kidd Met Site, we have a number of initiatives there now. One initiative is to get a Borden ore to that, to that through the C circuit and open up capacity for -- that gives us like 700,000 to 1 million tonnes a year of new capacity at the Dome Mill because we're processing it at the Kidd Met Site. Second part is what we're going to do to build a new 5 million to 7 million tonne a year conventional gold circuit at the Kidd Met Site, and the work we're going to do on that. And then the third part is the refractory gold circuit now that we're going to be able to work with at the Kidd Met Site. Our -- like Eric can go through, you can see what our resources come out at. If we just look at the resources at Pamour, Hoyle Pond, Borden, and Dome, we had well over 15 million ounces of resources. And you should be able to -- I don't know you don't want to mine that over 30 years. We should be able to mine that faster. So the first part, without adding any exploration success, we need mill capacity, so that's a big value driver. Second part is you can see, Eric, it, and all the exploration success we're having. So definitely we need more mill capacity, and then we can become more discernible in terms of -- as Pierre said, we focus on higher grade and proper margin as we understand all the different deposits. We have the potential to build a lot of new mines here and with that the mill capacity, and those are the things we're working on, right? Maybe just to reiterate, this is to tell you that, by the way, when we talk about mill capacity, we're not building new mills. We're in brownfield permitted sites. We're just modifying plant site. We don't have to bring in power. We don't have to bring in water systems. We don't have to build substantial new foundations. We got actually existing tailings areas. We just have to modify permits on. So we're working on and within existing operations to grow this stuff. We're not going to greenfield building brand-new permitting, brand-new processing operations. Sorry. Carry on.

This concludes the question and answer session. I will turn the call to Mark Utting for closing remarks.

Thanks very much. And again, just want to thank everyone for taking part in the call. As you've heard, to say the least, we have a lot going on. We're making a lot of progress, and there's a lot more to come. And that's good for a bunch of reasons, one of which is we will definitely have a lot more to talk about when we have our next quarterly call. So we look forward to speaking with you then. Enjoy the rest of your day. Thank you.

This concludes today's conference call. Thank you for joining. You may now disconnect.