IMPACT Silver Corp. (IPT) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Welcome to IMPACT Silver's Q2 2026 period ending June 30, 2026, Financial and Production Results Conference Call. Before we begin, we would like to go over our disclosure statements, followed by Mr. Fred Davidson's comments on the quarterly results and the Q&A period. Certain statements in the following conference call regarding IMPACT Silver's core business operations may constitute forward-looking statements. Such statements are not historical facts, but are predictions about the future, which inherently involves risks, uncertainties and could cause actual results to differ materially from those contained in the forward-looking statements. I would like to now turn over to Fred Davidson, President and CEO of IMPACT Silver.

Thanks, Jerry. I've got to admit it's always great to have a quarter like this and a first half like this, in fact. So it's been a good year so far. Starting off with some of the numbers, its revenue for the second quarter was $22 million. That's a huge increase over $9.8 million for the comparable in 2025. And for the consolidated -- for the year-to-date, it was $53 million compared to $20 million in the prior period. Gross profits were $8.7 million compared to $1 million in Q2 in 2025. And the gross profit for the 6 months was $29 million compared to $3 million in the year before. So overall, it's a heck of a way to start off the new year. Obviously, the things that are impacting it are the price of metals are obviously dramatically up. As well, we had a significant improvement in grades over the quarter and the year for the year-to-date. The average grade, for instance, the last -- to the June 30, 2025, for the quarter was 158 grams a tonne. We averaged over 200 grams per tonne in this quarter. And year-to-date, we've averaged 229 grams a tonne compared to 158 grams a tonne. So obviously, grade is important, and we can thank the Kena for it. We advertised that a while ago. I don't think people truly appreciated that it was significant and is as significant as it is now. As we go forward, we're working into a new area called San Ramon and San Ramon South Deeps. San Ramon has always been good to us. And as we start to explore and develop there, we expect to see more contribution from San Ramon Deeps and South Deeps. It's getting more complex, the bigger it gets. So overall, the grades are good. Tonnage is slowly increasing. The part of that tonnage was -- and it will be increasing further. We had, as we've advertised, been rebuilding the shaft, which was, I guess, last built early about 1950, 1960 and the track system underground at the Guadalupe because Guadalupe continues to provide our principal source of ore. And it's got, of course, the -- it's fed now by the Kena as well as it's our traditional veins there. So that's going forward. And I've got to admit, it's really quite exciting to see it happen. The other mines are still consistently producing and they're moderate grades and what have you. But those 2, the San Ramon and the Kena and the Guadalupe are our principal source of feed. Overall, the average price we received in the second quarter was $67.91 per ounce, and that's up from $34.83. So you can see there's been a fairly dramatic increase there. And the realized gold price was well, $4,283 as opposed to $3,317. So yes, grade tonnage, price, you can't ask for a better combination. And as everybody knows, our stock is highly leveraged to that type of thing. We are relatively small producer, but we are a very pure producer. 97% or thereabouts of our grade is traditionally the silver production and the other 3% is things like lead, zinc. So going forward, we're looking at subject to our friends south of the border, we're looking at continued strength in the price of metal and continued strength in terms of grades and tonnage as we go for the balance of this year. Other things happening. We're looking at Capire now. Obviously, prices have changed and changed our perspective. And of course, we've had the rather exciting results out of the Carlos Pacheco, where we're running over kilos in certain cases on some of the holes. So we're going to have an extensive program on that. It's high grade. It's brand new in terms of our understanding. We did have an original understanding of Carlos Pacheco. We thought it was limited. It's now opening up to the north. And so the exploration there is dramatic. And finally, at Plomosas, we've been test running ore from other suppliers. We haven't signed off any of it yet. It's got to make money for us. Otherwise, we won't be doing it. But overall, I think we're looking at a strong balance of the year, we have averaged $0.04 for the first 6 months yield per shareholder -- per share rather. And I'm not sure we'll get that quite that comparable to the first quarter, which was dramatic. But certainly, we're seeing growing strength both in production grade and metal prices. Cash in bank is over $50 million. We have no long-term debt. Our working capital is almost -- is the equivalent as well. And we don't expect any substantial changes in that other than as we expand when we start developing Capire, we'll obviously be spending some CapEx there. And the rest of it is our exploration program. We're going to be accelerating the exploration program as we've always sort of funded it based on the amount of cash available that we -- and that's been always tough in this business. We're going to be bringing 2 more rigs on site, and that will bring our surface fleet up to about 3 rigs at Zacualpan and an underground rig as well because we still got 200 square kilometers of project, a number of targets and a lot of them haven't been tested yet. So it's going to be an exciting year in 2027 as we accelerate our exploration there. Overall, it's just been a good 6 months.

Perfect. Thanks, Fred, for that overview. Here are some of the questions we compiled and received from investors and e-mails and calls this quarter. In the future, please feel free to send questions to inquiries@impactsilver.com or call me directly at (778) 867-7909. Question one, great quarter, [indiscernible], filing net income for the second quarter in a row, looking forward to the rest of the year. With significant cash on hand, will there be any sort of a buyback considered for IMPACT?

We've looked at doing a bit of that. The biggest problem with buybacks, it's expensive to do if you only do a little bit because the legal costs, the broker costs, et cetera. It's certainly something we've considered, but we haven't discarded it, but we're not hard on it yet at this point in time.

Okay. Got it. Question 2. In regard to the Plomosas, any updates on the third-party mineral processing news and deals appears to be a breakeven or possibly a profitable activity? Will it just be offset some costs? Or would it possibly add to net income for the company?

Yes. Plomosas is -- what we are doing is we're negotiating with a couple of people there. We've test-mined some ore that actually showed up in the quarter, some gold that we bought -- basically, we bought the ore and processed it. It ended up in a small profit on that on the gold. We've also been mining -- well, not mining, recovering from the tailings pond, the lead oxides that have always been going into the pond. And as you know, we've developed a system for recovering it. But what we're doing right now is really reviewing the operating cost to get it down to a bare minimum, the maintenance cost, if you will. And secondly, to continue the exploration there. And we've actually had a couple of exploration projects come in, in the region that we're negotiating on as well. So we're focusing more on developing the resource before we restart mining. And that's going to be a little bit. It's not easy. So at this point in time, it's nothing in hand. It is to the point where we've got a solid sort of 2-year contract for processing. It's being negotiated with a couple of people right now.

Got it. Question 4 -- sorry, question 3 is more specifically on the average cost sales price of silver. Average price of silver you obtained this quarter seems to be just over $51 an ounce when in some periods, some investors expected USD 70 an ounce. How does that work? Just to add to that, the MD&A and financials actually indicated $67.91 per ounce. So, I'm not quite sure what the $51 was seeing. But Fred?

You've answered it already. I'm not sure. We're certainly getting better than $51 an ounce rate at the moment. And obviously, it's quite a bit down from over $100 in the first quarter, but it's been fairly resilient. And I think there's still strength there. It's down a little bit at the moment, but it's been bouncing up and down for the last several weeks. I'm not sure what's driving it, political or otherwise, but it sure beats the $30 an ounce that we were getting a year ago. So we're quite pleased with the price.

Fair enough. Question 4, we're trending at almost 1 million ounces of silver halfway through the year [indiscernible] Is this now the expected new run rate for IMPACT?

I hope so. The fact is -- we are subject to the variability we get when you're running on epithermal veins. And for instance, first quarter, the Kena gave us some really impressive grades. We got into an area which although we're still really good, weren't as impressive as the kilo. So it's going to vary. But I be expecting that we're going to try and maintain that level of production for the balance of the year, yes.

Okay. Excellent. Question 5 regards to the exploration budget. There's been $2.7 million in exploration drilling reported so far this year. Can we expect more drilling news on a regular basis given the size and meterage?

Well, we gave 2 recent releases on the drilling at Carlos Pacheco, and they were fairly impressive. And I don't think anybody even noticed it. But in any event, a lot of our drilling is, if you will, let's call it production type drilling, where we're drilling ahead of where we're working. And we -- a lot of it isn't 43-101 so it can't be released. But our standard is the equivalent to 43-101, but it's not 43-101. So we're hung up on that. But when they are really significant, we'll even recirculate the assays and the core itself and have it 43-101 qualified. And that's what we did with those 2 releases. It's a material disclosure as far as we're concerned because it looks like Carlos Pacheco in that whole area, Noche Buena is opening up. And it's very significant. It has copper, it has gold. It has silver, it has lead. And we're really quite interested to see where it's going to take us over the next little while. And we will be having -- I'm hoping to get 2 rigs on it by the end of the year, just pounding away until we sort of run out of enthusiasm. But yes, I we'll try and get it out, but recognize a lot of that drilling is sort of in-house drilling, which we can't disclose anyhow.