Americas Gold and Silver (NYSEAM:USAS) 2025 Conference September 09, 2025 04:30 PM ET Speaker0Thanks, Joe. Good afternoon, everyone. It's a pleasure to be here at Beaver Creek once again to give you an update on America's gold and silver. I've been here now for about a little over six months with the rest of our team, and we've had quite a bit of change in the last six and a half months and excited to talk to you about it. I'll talk about this in another slide here.Just the executive team, it's pretty much ...

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Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $27 million, down from $33 million in Q2 2024, attributed to lower zinc and lead production as the company focused on EC120 development [22] - Silver sales increased with a realized price of $34.22 per ounce, and the company produced 689,000 silver ounces, a significant increase from previous quarters [22][23] - The net loss was $15 million, up from $4 million in Q2 2024, driven by investments in the Galena mine and the transition to EC120 [23] Business Line Data and Key Metrics Changes - At Galena, silver production reached 420,000 ounces, a 34% increase quarter-over-quarter, due to operational enhancements and new equipment [12][15] - Cozola in Mexico saw a 103% production increase over Q1, contributing 269,000 silver ounces in Q2, reflecting successful execution in transitioning to high-grade silver copper EC120 [13][19] Market Data and Key Metrics Changes - 82% of the company's revenue came from silver, surpassing the short-term goal of over 80% exposure to silver by 2025, indicating progress in the silver-focused strategy [27] Company Strategy and Development Direction - The company aims to maximize asset value through disciplined execution and strategic investment, focusing on equipment upgrades and exploration efforts [5][6] - A $100 million senior secured debt facility was closed to support growth strategies, particularly at the Galena complex [6][11] - The introduction of long hole stoping is expected to enhance safety, productivity, and cost efficiency in mining operations [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, highlighting operational, explorational, and metallurgical breakthroughs [30] - The company is well-positioned to meet its 2025 goals, with a strong balance sheet and ongoing development programs [13][31] Other Important Information - The company announced a share consolidation, exchanging every 2.5 shares for one, aimed at enhancing stock investability and liquidity [28] Q&A Session Summary - No specific questions and answers were provided in the content, thus this section is not applicable.

Condensed Interim Consolidated Financial Statements [Condensed Interim Consolidated Statements of Financial Position](index=1&type=section&id=Condensed%20interim%20consolidated%20statements%20of%20financial%20position) Total assets grew to $244.3 million, driven by cash, while liabilities increased to $188.0 million due to new loans and contracts Key Financial Position Data (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | :--------- | | Total assets | $244,293 | $192,640 | $51,653 | 26.8% | | Cash and cash equivalents | $61,683 | $20,002 | $41,681 | 208.4% | | Total liabilities | $188,025 | $139,191 | $48,834 | 35.1% | | Total equity | $56,268 | $53,449 | $2,819 | 5.3% | - The increase in **total assets** was primarily driven by a significant rise in **cash and cash equivalents**[2](index=2&type=chunk) [Condensed Interim Consolidated Statements of Loss and Comprehensive Loss](index=2&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss) Net loss significantly increased to $34.0 million, primarily due to higher G&A expenses and increased losses on metals contracts Key Loss and Comprehensive Loss Data (in thousands of U.S. dollars) | For the six-month period ended | June 30, 2025 | June 30, 2024 (Revised) | Change ($) | Change (%) | | :----------------------------- | :------------ | :---------------------- | :--------- | :--------- | | Revenue | $50,474 | $54,065 | $(3,591) | -6.6% | | Corporate general and administrative | $(12,588) | $(3,365) | $(9,223) | 274.1% | | Loss on metals contract liabilities | $(14,573) | $(4,714) | $(9,859) | 209.1% | | Net loss | $(34,021) | $(20,160) | $(13,861) | 68.7% | | Basic and diluted loss per share | $(0.05) | $(0.08) | $0.03 | -37.5% | - The significant increase in **net loss** was largely due to higher **corporate general and administrative expenses** and increased **losses on metals contract liabilities**[4](index=4&type=chunk) [Condensed Interim Consolidated Statements of Changes in Equity](index=3&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity rose to $56.3 million, driven by financing activities and conversions, despite a $34.0 million net loss Key Equity Changes (Six-month period ended June 30, 2025, in thousands of U.S. dollars) | Item | Amount | | :---------------------------------------- | :--------- | | Balance at January 1, 2025 | $53,449 | | Net loss for the period | $(34,021) | | Non-brokered private placements | $16,003 | | Conversion of convertible debenture | $11,526 | | Share-based payments | $6,194 | | Exercise of options, warrants, and deferred share units | $6,679 | | Balance at June 30, 2025 | $56,268 | - **Equity growth** was driven by **capital raises and conversions**, offsetting the **net loss** incurred during the period[6](index=6&type=chunk) [Condensed Interim Consolidated Statements of Cash Flows](index=4&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased significantly due to substantial cash generation from financing activities, offsetting operating and investing outflows Key Cash Flow Data (Six-month period, in thousands of U.S. dollars) | Cash Flow Activity | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :----------------- | :------------ | :------------ | :--------- | :--------- | | Operating activities | $(1,855) | $2,446 | $(4,301) | -175.8% | | Investing activities | $(16,767) | $(9,520) | $(7,247) | 76.1% | | Financing activities | $63,862 | $7,092 | $56,770 | 800.5% | | Increase in cash and cash equivalents | $41,681 | $1,576 | $40,105 | 2544.7% | - The substantial increase in **cash and cash equivalents** was primarily driven by significant cash generation from **financing activities**, particularly a new term loan facility and non-brokered private placements[9](index=9&type=chunk)[10](index=10&type=chunk) Notes to the Condensed Interim Consolidated Financial Statements [1. Corporate Information](index=5&type=section&id=1.%20Corporate%20Information) Americas Gold and Silver Corporation, incorporated in Canada, conducts mining operations in North America, with shares listed on TSX and NYSE American - The company was incorporated on **May 12, 1998**, under the Canada Business Corporations Act[11](index=11&type=chunk) - Its common shares are listed on the **Toronto Stock Exchange** (symbol 'USA') and the **New York Stock Exchange American** (symbol 'USAS')[11](index=11&type=chunk) - The unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2025, were approved by the **Board of Directors on August 11, 2025**[12](index=12&type=chunk) [2. Basis of Presentation and Going Concern](index=5&type=section&id=2.%20Basis%20of%20Presentation%20and%20Going%20Concern) Interim financial statements are prepared under IAS 34, but material uncertainties regarding going concern exist due to net loss and liquidity needs - Financial statements are prepared in accordance with **International Accounting Standard 34, Interim Financial Reporting**, using accounting policies consistent with IFRS[13](index=13&type=chunk) - **Material uncertainties** cast substantial doubt upon the **going concern assumption**, including a **net loss of $34.0 million** for the six-month period ended June 30, 2025, and potential insufficient liquidity for the next twelve months[14](index=14&type=chunk)[16](index=16&type=chunk) - Continuance as a going concern is dependent on achieving profitable operations, obtaining adequate equity or debt financing, or disposing of non-core properties[15](index=15&type=chunk) - The company completed the acquisition of the remaining **40% non-controlling interests of the Galena Complex** on December 19, 2024[15](index=15&type=chunk)[18](index=18&type=chunk) [3. Changes in Accounting Policies and Recent Accounting Pronouncements](index=6&type=section&id=3.%20Changes%20in%20Accounting%20Policies%20and%20Recent%20Accounting%20Pronouncements) The company is assessing the impact of new IASB standards, including IFRS 9, 7, and 18, not yet mandatory or early adopted - Amendments to **IFRS 9 and 7 – Classification and Measurement of Financial Instruments** are mandatory for annual reporting periods beginning on or after **January 1, 2026**[24](index=24&type=chunk) - **IFRS 18 – Presentation and Disclosure in Financial Statements** is mandatory for annual reporting periods beginning on or after **January 1, 2027**[24](index=24&type=chunk) - These standards are currently being assessed for their impact on the Company in current or future reporting periods[19](index=19&type=chunk) [4. Significant Accounting Judgments and Estimates](index=6&type=section&id=4.%20Significant%20accounting%20judgments%20and%20estimates) Management's significant judgments and estimates for interim statements are consistent with 2024 annual statements, alongside going concern considerations - Significant judgments and estimates made by management were consistent with those applied to the Company's annual consolidated financial statements as at and for the year ended December 31, 2024, in addition to the significant judgments mentioned in Note 2[21](index=21&type=chunk) - Actual results could differ significantly from these estimates[20](index=20&type=chunk) [5. Trade and Other Receivables](index=6&type=section&id=5.%20Trade%20and%20Other%20Receivables) Trade and other receivables increased to $10.4 million, primarily due to higher trade receivables and new value-added taxes receivable Trade and Other Receivables (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :---------------------- | :------------ | :---------------- | :--------- | :--------- | | Trade receivables | $6,373 | $3,572 | $2,801 | 78.4% | | Value added taxes receivable | $941 | $- | $941 | N/A | | Other receivables | $3,112 | $3,560 | $(448) | -12.6% | | Total | $10,426 | $7,132 | $3,294 | 46.2% | [6. Inventories](index=6&type=section&id=6.%20Inventories) Total inventories decreased to $8.2 million, mainly due to a reduction in concentrates, with $1.9 million in inventory write-downs included in cost of sales Inventories (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :------------------ | :------------ | :---------------- | :--------- | :--------- | | Concentrates | $545 | $2,971 | $(2,426) | -81.7% | | Ore stockpiles | $1,715 | $1,767 | $(52) | -2.9% | | Spare parts and supplies | $5,909 | $5,966 | $(57) | -1.0% | | Total | $8,169 | $10,704 | $(2,535) | -23.7% | - **Inventory write-downs** included in cost of sales were **$1.9 million** for the six-month period ended June 30, 2025, compared to $0.8 million in 2024[23](index=23&type=chunk) [7. Property, Plant and Equipment](index=7&type=section&id=7.%20Property%2C%20Plant%20and%20Equipment) Carrying value of property, plant, and equipment increased to $155.8 million, driven by $20.0 million in asset additions during the period Property, Plant and Equipment Carrying Value (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | :--------- | | Carrying value | $155,837 | $147,399 | $8,438 | 5.7% | - **Asset additions** for the six-month period ended June 30, 2025, totaled **$20.024 million**[25](index=25&type=chunk) - **Depreciation and depletion** for the six-month period ended June 30, 2025, was **$12.006 million**[25](index=25&type=chunk) - No impairment or impairment reversals were identified for the six-month period ended June 30, 2025[25](index=25&type=chunk) [8. Precious Metals Delivery and Purchase Agreement](index=7&type=section&id=8.%20Precious%20metals%20delivery%20and%20purchase%20agreement) A $25 million precious metals agreement for Relief Canyon was amended, establishing a fixed gold delivery schedule and increasing net metals contract liability to $43.0 million - The company has a **$25 million precious metals delivery and purchase agreement** with Sandstorm Gold Ltd. for the Relief Canyon Mine[28](index=28&type=chunk) - The agreement was amended on **December 19, 2024**, establishing a quarterly fixed delivery schedule for gold with final delivery in December 2027[29](index=29&type=chunk) - Sandstorm has the right to subscribe for common shares of the Company for proceeds up to **$1.9 million per calendar quarter** to satisfy gold delivery obligations[29](index=29&type=chunk) Net Metals Contract Liability (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | :--------- | | Net metals contract liability | $43,026 | $40,868 | $2,158 | 5.3% | | Revaluation of metals contract liability (6-month period) | $10,203 | $10,083 | $120 | 1.2% | [9. Silver Metals Delivery Agreement](index=8&type=section&id=9.%20Silver%20metals%20delivery%20agreement) A new silver delivery agreement requires monthly deliveries of 18,500 ounces, resulting in a $4.4 million fair value loss due to commodity pricing changes - The company entered into a silver metals delivery agreement for monthly purchases and deliveries of **18,500 ounces of silver for 36 months**, starting January 2026[31](index=31&type=chunk) - The fixed deliveries are recognized as a financial liability measured at fair value through profit or loss, with an expected satisfaction through external purchase of silver[32](index=32&type=chunk) - A **$4.4 million loss to fair value** on metals contract liability was recorded during the six-month period ended June 30, 2025, due to changes in forward commodity pricing curves[32](index=32&type=chunk) [10. Convertible Debenture](index=8&type=section&id=10.%20Convertible%20debenture) The $12.5 million CAD convertible debenture was fully converted into 32.3 million common shares, leading to a $0.7 million gain from fair value changes - The **Convertible Debenture was fully converted** by holders as of January 31, 2025, at a conversion price of **$0.52 CAD**[36](index=36&type=chunk) - The conversion resulted in the issuance of **32,307,692 common shares**[36](index=36&type=chunk) - The Company recognized a **gain of $0.7 million** for the six-month period ended June 30, 2025, from the change in the estimated fair value of the combined Redemption Option and Retraction Option (2024: loss of $0.7 million)[36](index=36&type=chunk) [11. Pre-payment Facility](index=9&type=section&id=11.%20Pre-payment%20Facility) The company amended its offtake agreement to include a $3.0 million pre-payment facility for Galena Complex, drawn in full in June 2025 - The company amended its existing unsecured offtake agreement with Ocean Partners USA, Inc. to include a **pre-payment facility of $3.0 million**[38](index=38&type=chunk) - The Facility was **drawn in full for $3.0 million** in June 2025[38](index=38&type=chunk) - The interest rate was amended to **U.S. SOFR rate plus 4.75% per annum**[38](index=38&type=chunk) [12. Credit Facility](index=9&type=section&id=12.%20Credit%20Facility) A secured credit and offtake agreement with Trafigura for up to $15 million was signed, with $10.0 million drawn for the Zone 120 and El Cajón project - The company signed a credit and offtake agreement with Trafigura PTE Ltd. for a **secured credit facility of up to $15 million**[39](index=39&type=chunk) - The Credit Facility was **drawn for $10.0 million** in August 2024[39](index=39&type=chunk) - The term of the Credit Facility is **36 months**, including a 12-month principal repayment grace period, and bears interest of **U.S. SOFR rate plus 6% per annum** (6.5% thereafter for drawings above $12 million)[39](index=39&type=chunk) [13. Term Loan Facility](index=9&type=section&id=13.%20Term%20Loan%20Facility) A senior secured debt facility of up to $100 million with SAF Group was closed, with an initial $50 million advance and a 5-year term - The company closed a **senior secured debt facility with SAF Group for funds of up to $100 million** on June 24, 2025[40](index=40&type=chunk) - The Term Loan Facility consists of three tranches, with an initial **$50 million term loan advanced** upon closing[40](index=40&type=chunk) - The Initial Advance is due in **5 years**, subject to a **6.0% original issue discount**, and bears interest of **U.S. SOFR rate (4% floor) plus 6% per annum**[41](index=41&type=chunk) [14. Royalty Payable](index=9&type=section&id=14.%20Royalty%20payable) A $4.0 million net smelter returns royalty agreement with Sandstorm resulted in a $0.3 million fair value loss for the period - The company entered into a **$4.0 million net smelter returns royalty agreement** with Sandstorm on April 12, 2023[43](index=43&type=chunk) - The royalty is **2.5%** on attributable production from the Galena Complex and Cosalá Operations, reducing to 0.2% after $4.0 million repayment, with a **$1.9 million buyout option**[43](index=43&type=chunk) - A **loss of $0.3 million** was recognized for the six-month period ended June 30, 2025, due to the change in the estimated fair value of the Royalty Agreement[44](index=44&type=chunk) [15. Share Capital](index=10&type=section&id=15.%20Share%20Capital) The company raised $16.7 million through private placements and settled $1.4 million in payables by issuing common shares, significantly impacting share capital - During the six-month period ended June 30, 2025, the Company closed non-brokered private placements for total gross proceeds of **$16.7 million**, issuing **26,099,212 common shares** and **2,610,000 warrants**[45](index=45&type=chunk) - The Company settled **$1.4 million of transaction-related payables** through the issuance of **2,906,504 common shares** during the six-month period ended June 30, 2025[46](index=46&type=chunk) - On December 19, 2024, the Company completed the acquisition of the remaining 40% non-controlling interests of the Galena Complex by issuing **170,000,000 common shares** and **$10 million in cash**[48](index=48&type=chunk) [a. Authorized](index=10&type=section&id=15.a.%20Authorized) Authorized share capital consists of an unlimited number of common and preferred shares, with no preferred shares issued - Authorized share capital consists of an **unlimited number of common and preferred shares**[50](index=50&type=chunk) - No preferred shares have been issued to date[50](index=50&type=chunk) [b. Stock Option Plan](index=10&type=section&id=15.b.%20Stock%20Option%20Plan) Shares reserved for the stock option plan are limited to 10% of outstanding common shares, with 24.6 million options outstanding at period-end - The number of shares reserved for issuance under the stock option plan is limited to **10% of the number of common shares issued and outstanding**[51](index=51&type=chunk) Stock Options Outstanding (in thousands) | As at | Number (thousands) | Weighted average exercise price (CAD) | | :------------------------- | :----------------- | :------------------------------------ | | Balance, beginning of period (Jan 1, 2025) | 20,110 | $0.67 | | Granted (6-month period) | 9,750 | $0.56 | | Exercised (6-month period) | (1,250) | $0.39 | | Expired (6-month period) | (3,976) | $1.05 | | Balance, end of period (June 30, 2025) | 24,634 | $0.58 | [c. Share-based Payments](index=11&type=section&id=15.c.%20Share-based%20Payments) Share-based payments totaled $1.04 million for the six-month period, with fair value estimated using the Black-Scholes model - The weighted average fair value at grant date of stock options granted during the six-month period ended June 30, 2025, was **$0.23** (2024: $0.12)[54](index=54&type=chunk) - The **Black-Scholes Option Pricing Model** was used to estimate fair value[54](index=54&type=chunk) Total Share-based Payments (in thousands of U.S. dollars) | Period | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Six-month period ended | $1,040 | $311 | [d. Warrants](index=11&type=section&id=15.d.%20Warrants) The company had 22.95 million warrants outstanding at June 30, 2025, with various exercise prices and expiry dates Warrants Outstanding as at June 30, 2025 | Number of warrants | Exercise price (CAD) | Issuance date | Expiry date | | :----------------- | :------------------- | :------------ | :----------- | | 17,600 | 0.30 | Mar 2024 | Mar 27, 2026 | | 1,000,000 | 0.55 | Jun 2023 | Jun 21, 2026 | | 16,322,500 | 0.40 | Mar 2024 | Mar 27, 2027 | | 3,000,000 | 0.42 | Aug 2024 | Aug 14, 2027 | | 2,610,000 | 1.00 | Mar 2025 | Mar 31, 2028 | | **Total: 22,950,100** | | | | [e. Restricted Share Units](index=12&type=section&id=15.e.%20Restricted%20share%20units) 234,076 cash-settled restricted share units were outstanding, and 20.5 million share-settled units were included in equity reserve - As at June 30, 2025, **234,076 cash-settled restricted share units** were outstanding at an aggregate value of **$0.2 million**[56](index=56&type=chunk) - Effective January 1, 2025, the Company amended its accounting policy for share-settled restricted share units, with **20,516,115 units outstanding** at June 30, 2025, included in equity reserve[57](index=57&type=chunk) [f. Deferred Share Units](index=12&type=section&id=15.f.%20Deferred%20share%20units) 8.35 million deferred share units were outstanding, awarded to directors and settled in cash or shares upon departure - As at June 30, 2025, **8,350,376 deferred share units** were issued and outstanding (December 31, 2024: 3,562,917)[58](index=58&type=chunk) - Deferred share units are awarded to eligible directors as payment for 50% to 100% of their director fees and are settled in cash or common shares upon the director leaving the Board[58](index=58&type=chunk) [16. Weighted Average Basic and Diluted Number of Common Shares Outstanding](index=12&type=section&id=16.%20Weighted%20Average%20Basic%20and%20Diluted%20Number%20of%20Common%20Shares%20Outstanding) The weighted average common shares outstanding significantly increased to 639.2 million, reflecting recent equity issuances, with anti-dilutive options excluded Weighted Average Common Shares Outstanding | Period | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Basic and diluted (six-month period) | 639,174,498 | 237,268,113 | - Diluted weighted average number of common shares for the six-month period ended June 30, 2025, excludes **24,633,601 anti-dilutive stock options** and **22,950,100 anti-dilutive warrants**[59](index=59&type=chunk) [17. Non-controlling Interests](index=12&type=section&id=17.%20Non-controlling%20Interests) The company acquired the remaining 40% non-controlling interests of Galena Complex, making net loss 100% attributable to shareholders from December 2024 - The company completed the acquisition of the remaining **40% non-controlling interests of the Galena Complex** on December 19, 2024[60](index=60&type=chunk) - From December 19, 2024, consolidated net loss and other comprehensive loss are **100% attributable to the shareholders** of the Company[18](index=18&type=chunk)[60](index=60&type=chunk) [18. Revenue](index=12&type=section&id=18.%20Revenue) Total revenue decreased to $50.5 million, primarily due to lower silver, zinc, and lead sales, despite positive derivative pricing adjustments Revenue by Commodity (Six-month period, in thousands of U.S. dollars) | Commodity | June 30, 2025 | June 30, 2024 (Revised) | Change ($) | Change (%) | | :---------- | :------------ | :---------------------- | :--------- | :--------- | | Silver | $29,844 | $36,041 | $(6,197) | -17.2% | | Zinc | $11,857 | $20,577 | $(8,720) | -42.4% | | Lead | $5,130 | $9,950 | $(4,820) | -48.4% | | Other by-products | $413 | $805 | $(392) | -48.7% | | Total Revenue | $50,474 | $54,065 | $(3,591) | -6.6% | - Derivative pricing adjustments represent subsequent variations in revenue recognized as an embedded derivative from contracts with customers[63](index=63&type=chunk) [19. Cost of Sales](index=13&type=section&id=19.%20Cost%20of%20Sales) Cost of sales increased to $44.6 million, mainly due to higher raw materials and consumables costs and a significant rise in inventory write-downs Cost of Sales Components (Six-month period, in thousands of U.S. dollars) | Component | June 30, 2025 | June 30, 2024 (Revised) | Change ($) | Change (%) | | :------------------------ | :------------ | :---------------------- | :--------- | :--------- | | Salaries and employee benefits | $14,466 | $15,821 | $(1,355) | -8.6% | | Raw materials and consumables | $13,126 | $17,190 | $(4,064) | -23.6% | | Inventory write-downs | $1,924 | $818 | $1,106 | 135.2% | | Total Cost of Sales | $44,618 | $42,600 | $2,018 | 4.7% | - Certain transportation costs were reclassified from treatment and selling costs in revenue to cost of sales in fiscal 2024[64](index=64&type=chunk) [20. Corporate General and Administrative Expenses](index=13&type=section&id=20.%20Corporate%20General%20and%20Administrative%20Expenses) Corporate G&A expenses significantly increased to $12.6 million, driven by higher salaries, directors' fees, professional fees, and share-based payments Corporate G&A Expenses (Six-month period, in thousands of U.S. dollars) | Component | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :------------------------ | :------------ | :------------ | :--------- | :--------- | | Salaries and employee benefits | $2,322 | $1,113 | $1,209 | 108.6% | | Directors' fees | $2,773 | $226 | $2,547 | 1127.9% | | Share-based payments | $3,601 | $311 | $3,290 | 1057.9% | | Professional fees | $2,156 | $676 | $1,480 | 218.9% | | Office and general | $1,736 | $1,039 | $697 | 67.1% | | Total | $12,588 | $3,365 | $9,223 | 274.1% | [21. Income Taxes](index=14&type=section&id=21.%20Income%20taxes) The estimated average annual income tax rate was 26.5%, with net deferred tax liabilities slightly increasing to $51 thousand - The estimated average annual income tax rate for the six-month period ended June 30, 2025, was **26.5%**, consistent with the rate for the year ended December 31, 2024[67](index=67&type=chunk) Net Deferred Tax Liabilities (in thousands of U.S. dollars) | As at | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :---------------------- | :------------ | :---------------- | :--------- | :--------- | | Net deferred tax liabilities | $51 | $48 | $3 | 6.3% | - Inventory write-downs and impairments may result in non-capital losses and timing differences which have not been recorded due to uncertainty of recoverability[68](index=68&type=chunk) [22. Financial Risk Management](index=14&type=section&id=22.%20Financial%20Risk%20Management) The company manages credit, liquidity, and market risks, with sensitivities disclosed for currency and commodity price fluctuations - This section details the company's exposure to **credit, liquidity, and market risks**, and how they are managed[69](index=69&type=chunk)[71](index=71&type=chunk)[74](index=74&type=chunk) [a. Financial Risk Factors](index=14&type=section&id=22.a.%20Financial%20Risk%20Factors) This section details the company's exposure to credit, liquidity, and market risks, and how they are managed [(i) Credit Risk](index=14&type=section&id=22.a.(i)%20Credit%20Risk) Credit risk is low, primarily from cash and trade receivables, managed by investing in strong institutions and prompt collection - **Credit risk** is primarily attributable to cash and cash equivalents and trade and other receivables[69](index=69&type=chunk) - Credit risk on cash is limited by investing in well-capitalized financial institutions; trade receivables risk is managed by receiving **85% to 100% of estimated value within one month of shipment**[69](index=69&type=chunk) - The Company's exposure to credit risk with respect to trade receivables was **$6.4 million** as of June 30, 2025 (December 31, 2024: $3.6 million), and is not considered significant[70](index=70&type=chunk) [(ii) Liquidity Risk](index=15&type=section&id=22.a.(ii)%20Liquidity%20risk) Liquidity is managed through cash, operations, and financing, with significant contractual maturities in the short to medium term - **Liquidity requirements** are met through cash, cash generated from operations, credit facilities, and debt and equity capital markets[71](index=71&type=chunk) Contractual Maturities of Financial Liabilities and Provisions (June 30, 2025, in thousands of U.S. dollars) | Item | Total | Less than 1 year | 2-3 years | 4-5 years | Over 5 years | | :------------------------ | :------- | :--------------- | :-------- | :-------- | :----------- | | Trade and other payables | $40,970 | $40,970 | $- | $- | $- | | Pre-payment facility | $3,000 | $3,000 | $- | $- | $- | | Credit facility | $10,000 | $6,000 | $4,000 | $- | $- | | Term loan facility | $53,191 | $798 | $13,165 | $39,228 | $- | | Metals contract liability | $43,026 | $17,404 | $25,622 | $- | $- | | Silver contract liability | $22,566 | $2,735 | $15,942 | $3,889 | $- | | Total | $230,584 | $82,597 | $74,238 | $52,482 | $21,267 | - Total lease liabilities discounted were **$3.448 million** at June 30, 2025, with **$1.534 million** due within 1 year[73](index=73&type=chunk) [(iii) Market Risk](index=16&type=section&id=22.a.(iii)%20Market%20risk) Market risk encompasses interest rate, currency, and price risks, with potential impacts on net loss and trade receivables - **Market risk** comprises interest rate risk, currency risk, and price risk[74](index=74&type=chunk) [(1) Interest Rate Risk](index=16&type=section&id=22.a.(iii).(1)%20Interest%20rate%20risk) The company is exposed to interest rate risk from variable rates on several credit and loan facilities tied to U.S. SOFR - The Company is subject to **interest rate risk** from variable rates on Cosalá Operations' advance payments (U.S. SOFR + 7.2%), the pre-payment facility (U.S. SOFR + 4.75%), the Credit Facility (U.S. SOFR + 6%), and the Term Loan Facility (U.S. SOFR + 6%)[75](index=75&type=chunk) [(2) Currency Risk](index=16&type=section&id=22.a.(iii).(2)%20Currency%20risk) The company faces foreign currency risk from CAD and MXN denominated assets and liabilities, with potential impacts on net loss - The Company is exposed to **foreign currency risk** through financial assets and liabilities denominated in CAD and MXN[76](index=76&type=chunk) Approximate Impact on Net Loss and Other Comprehensive Loss from +/- 10% Exchange Rate Change (June 30, 2025, in thousands of U.S. dollars) | Currency | Net loss | Other comprehensive loss | | :------- | :------- | :----------------------- | | CAD/USD | $1,424 | $324 | | MXN/USD | $2,393 | $32 | - The Company may employ derivative financial instruments to manage foreign currency exchange rate fluctuations, but had no non-hedge foreign exchange forward contracts outstanding or settled during the periods[77](index=77&type=chunk)[78](index=78&type=chunk) [(3) Price Risk](index=16&type=section&id=22.a.(iii).(3)%20Price%20risk) Commodity price fluctuations, particularly in silver, zinc, lead, and gold, could affect trade receivables by approximately $0.6 million - A **±10% fluctuation in silver, zinc, lead, and gold prices** would affect trade receivables by approximately **$0.6 million** as at June 30, 2025[79](index=79&type=chunk) - The Company did not have any non-hedge commodity forward contracts outstanding or settled during the six-month periods ended June 30, 2025 and 2024[80](index=80&type=chunk) - Total gain on derivative instruments, including the convertible debenture, was **$0.7 million** for the six-month period ended June 30, 2025 (2024: loss of $0.7 million)[81](index=81&type=chunk) [b. Fair Values](index=17&type=section&id=22.b.%20Fair%20values) Fair values of most financial instruments approximate carrying amounts due to short-term maturities, with a hierarchy classifying inputs - The fair value of cash, restricted cash, trade and other receivables, and other financial assets and liabilities approximate their carrying amounts due to short-term maturities[82](index=82&type=chunk) Fair Value Hierarchy (June 30, 2025, in thousands of U.S. dollars) | Level | Item | June 30, 2025 | | :------ | :------------------------ | :------------ | | Level 1 | Cash and cash equivalents | $61,683 | | | Restricted cash | $4,624 | | Level 2 | Trade and other receivables | $10,426 | | | Metals contract liability | $43,026 | | | Silver contract liability | $22,566 | | Level 3 | Royalty payable | $3,043 | - Valuation techniques classify inputs into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than quoted prices), and **Level 3** (unobservable inputs)[86](index=86&type=chunk) [23. Segmented and Geographic Information, and Major Customers](index=18&type=section&id=23.%20Segmented%20and%20Geographic%20Information%2C%20and%20Major%20Customers) The company operates four segments across Mexico and the United States, with all revenues earned in these countries and significant customer concentration - The Company's operations comprise four reporting segments: **Cosalá Operations, Galena Complex, Relief Canyon, and Corporate and Other**[88](index=88&type=chunk) - All revenues from sales of concentrates for the three-month and six-month periods ended June 30, 2025 and 2024, were earned in **Mexico and the United States**[89](index=89&type=chunk) - For the six-month period ended June 30, 2025, **three major customers** accounted for **46% of revenues from Cosalá Operations** and **54% of revenues from Galena Complex**[94](index=94&type=chunk) [a. Segmented Information](index=18&type=section&id=23.a.%20Segmented%20information) The company's operations are divided into four reporting segments for mineral resource properties in Mexico and the United States - The Company's operations comprise four reporting segments engaged in acquisition, exploration, development, and exploration of mineral resource properties in Mexico and the United States[88](index=88&type=chunk) - Management determines operating segments based on reports reviewed by chief operating decision makers for strategic decisions[88](index=88&type=chunk) [b. Geographic Information](index=18&type=section&id=23.b.%20Geographic%20information) All revenues are earned in Mexico and the United States, with total assets and net loss segmented by operational region - All revenues are earned in **Mexico** (Cosalá Operations) and the **United States** (Galena Complex and Relief Canyon)[89](index=89&type=chunk) Total Assets by Segment (June 30, 2025, in thousands of U.S. dollars) | Segment | Total Assets | | :---------------- | :----------- | | Cosalá Operations | $68,221 | | Galena Complex | $89,571 | | Relief Canyon | $27,949 | | Corporate and Other | $58,552 | | **Total** | **$244,293** | Net Loss by Segment (Six-month period ended June 30, 2025, in thousands of U.S. dollars) | Segment | Net Loss | | :---------------- | :----------- | | Cosalá Operations | $(4,168) | | Galena Complex | $(3,612) | | Relief Canyon | $(1,198) | | Corporate and Other | $(25,043) | | **Total** | **$(34,021)** | [c. Major Customers](index=20&type=section&id=23.c.%20Major%20customers) Three major customers accounted for 46% of Cosalá Operations' revenues and 54% of Galena Complex's revenues - For the six-month period ended June 30, 2025, **three major customers** accounted for **46% of revenues from Cosalá Operations** and **54% of revenues from Galena Complex**[94](index=94&type=chunk) [24. Contingencies](index=20&type=section&id=24.%20Contingencies) The company faces legal and tax contingencies, including an ongoing appeal against a Mexican tax reassessment with an accrued liability of $1.0 million - The Company accrues for legal and tax matters when a liability is both probable and the amount can be reasonably estimated[95](index=95&type=chunk) - An ongoing appeal exists against a Mexican tax reassessment from 2010 for its subsidiary, Minera Cosalá, related to the year ended December 31, 2007[96](index=96&type=chunk) - The accrued liability for the probable obligation from the ongoing appeal was **$1.0 million** as at June 30, 2025 (December 31, 2024: $1.0 million)[96](index=96&type=chunk)

[Condensed Interim Consolidated Financial Statements](index=1&type=section&id=Condensed%20Interim%20Consolidated%20Financial%20Statements) This section presents the company's financial position, performance, equity changes, and cash flows for the interim period [Condensed Interim Consolidated Statements of Financial Position](index=1&type=section&id=Condensed%20interim%20consolidated%20statements%20of%20financial%20position) As of March 31, 2025, the company's total assets decreased to **$184.3 million** from **$192.6 million** at the end of 2024, while total liabilities also decreased to **$128.9 million** from **$139.2 million**, with total equity seeing a slight increase to **$55.4 million**, but a key concern is the working capital deficit of **$27.8 million**, indicating significant short-term liquidity pressure | Financial Position | March 31, 2025 ($'000) | December 31, 2024 ($'000) | | :--- | :--- | :--- | | **Total Current Assets** | 29,826 | 40,714 | | **Total Assets** | 184,287 | 192,640 | | **Total Current Liabilities** | 57,617 | 69,410 | | **Total Liabilities** | 128,868 | 139,191 | | **Total Equity** | 55,419 | 53,449 | - The company reported a working capital deficit of **$27.8 million** as of March 31, 2025, calculated as current assets of **$29.8 million** minus current liabilities of **$57.6 million**[2](index=2&type=chunk)[14](index=14&type=chunk) [Condensed Interim Consolidated Statements of Loss and Comprehensive Loss](index=2&type=section&id=Condensed%20interim%20consolidated%20statements%20of%20loss%20and%20comprehensive%20loss) For the three months ended March 31, 2025, the company's revenue increased to **$23.5 million** from **$20.9 million** year-over-year, however, the net loss widened to **$18.9 million** compared to **$16.2 million** in the prior year period, primarily driven by a **$9.0 million** loss on metals contract liabilities, while basic and diluted loss per share improved to **($0.03)** from **($0.07)** due to a significant increase in the weighted average number of shares outstanding | Income Statement | Q1 2025 ($'000) | Q1 2024 ($'000) | | :--- | :--- | :--- | | **Revenue** | 23,547 | 20,852 | | **Cost of Sales** | (21,139) | (21,038) | | **Loss on metals contract liabilities** | (9,024) | (3,046) | | **Loss before income taxes** | (18,946) | (16,172) | | **Net Loss** | (18,918) | (16,157) | | **Comprehensive Loss** | (21,098) | (12,909) | | **Basic and Diluted Loss Per Share** | $(0.03) | $(0.07) | - The weighted average number of common shares outstanding increased substantially from **221.9 million** in Q1 2024 to **620.0 million** in Q1 2025, impacting the loss per share calculation[5](index=5&type=chunk) [Condensed Interim Consolidated Statements of Changes in Equity](index=3&type=section&id=Condensed%20interim%20consolidated%20statements%20of%20changes%20in%20equity) Total equity increased from **$53.4 million** at the beginning of the period to **$55.4 million** at March 31, 2025, primarily driven by capital injections from private placements (**$3.6 million**), conversion of debentures (**$11.0 million**), and other share issuances, which more than offset the net loss of **$18.9 million** for the period | Equity Changes (Q1 2025) | Amount ($'000) | | :--- | :--- | | **Balance at January 1, 2025** | 53,449 | | Net loss for the period | (18,918) | | Other comprehensive loss | (2,180) | | Non-brokered private placements | 3,567 | | Conversion of convertible debenture | 11,042 | | Other share issuances & payments | 8,459 | | **Balance at March 31, 2025** | 55,419 | [Condensed Interim Consolidated Statements of Cash Flows](index=4&type=section&id=Condensed%20interim%20consolidated%20statements%20of%20cash%20flows) The company experienced a significant decrease in cash, ending Q1 2025 with **$8.8 million** compared to **$20.0 million** at the start of the year, with cash used in operating activities being **$7.0 million**, a sharp decline from cash generated of **$0.2 million** in Q1 2024, and net cash from financing activities of **$3.9 million** was insufficient to cover the cash used in operations and **$6.6 million** used in investing activities | Cash Flow Statement | Q1 2025 ($'000) | Q1 2024 ($'000) | | :--- | :--- | :--- | | **Net cash from (used in) operating activities** | (7,031) | 171 | | **Net cash used in investing activities** | (6,561) | (4,813) | | **Net cash generated from financing activities** | 3,873 | 5,401 | | **Increase (decrease) in cash** | (11,251) | 1,843 | | **Cash and cash equivalents, end of period** | 8,751 | 3,904 | [Notes to the Condensed Interim Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20the%20condensed%20interim%20consolidated%20financial%20statements) This section provides detailed explanations and disclosures supporting the condensed interim consolidated financial statements [Note 2: Basis of Presentation and Going Concern](index=5&type=section&id=2.%20Basis%20of%20presentation%20and%20going%20concern) The financial statements are prepared on a going concern basis, but management highlights material uncertainties that cast substantial doubt on this assumption, as the company had a working capital deficit of **$27.8 million** and a net loss of **$18.9 million** in Q1 2025, and does not have sufficient liquidity to fund operations for the next twelve months, requiring additional financing - The company had a working capital deficit of **$27.8 million** and cash and cash equivalents of **$8.8 million** as at March 31, 2025[14](index=14&type=chunk) - Management states that the company does not have sufficient liquidity to fund its operations for the next twelve months and will require further financing to meet its obligations and execute its business plans[14](index=14&type=chunk) - Material uncertainties, including achieving cash flow positive production and the ability to raise additional funds, cast substantial doubt upon the going concern assumption[16](index=16&type=chunk) [Note 7: Property, Plant and Equipment](index=7&type=section&id=7.%20Property%2C%20plant%20and%20equipment) The carrying value of Property, Plant, and Equipment (PP&E) increased to **$149.9 million** as of March 31, 2025, up from **$147.4 million** at the end of 2024, reflecting asset additions of **$7.6 million**, partially offset by depreciation and depletion charges of **$5.5 million** for the quarter, with no impairments identified | PP&E Carrying Value | March 31, 2025 ($'000) | December 31, 2024 ($'000) | | :--- | :--- | :--- | | Mining interests | 94,615 | 92,979 | | Non-producing properties | 12,469 | 12,469 | | Plant and equipment | 40,186 | 38,967 | | Right-of-use lease assets | 2,587 | 2,973 | | Corporate office equipment | 35 | 11 | | **Total** | **149,892** | **147,399** | - Depreciation and depletion expense for the three-month period ended March 31, 2025, was **$5.5 million**[25](index=25&type=chunk) [Note 8: Precious Metals Delivery and Purchase Agreement](index=7&type=section&id=8.%20Precious%20metals%20delivery%20and%20purchase%20agreement) The company has a precious metals delivery and purchase agreement with Sandstorm Gold Ltd., with the associated net metals contract liability increasing from **$40.9 million** at year-end 2024 to **$44.3 million** as of March 31, 2025, driven by a **$7.1 million** revaluation loss, partially offset by **$3.7 million** in metal deliveries during the quarter | Metals Contract Liability Continuity | Q1 2025 ($'000) | | :--- | :--- | | **Beginning Balance** | 40,868 | | Delivery of metals purchased | (3,719) | | Revaluation of liability | 7,115 | | **Ending Balance** | **44,264** | - In December 2024, the agreement was amended, giving the company the right to satisfy gold delivery obligations by having Sandstorm subscribe for up to **$1.9 million** in common shares per quarter through December 2027[31](index=31&type=chunk) [Note 9: Silver Metals Delivery Agreement](index=8&type=section&id=9.%20Silver%20metals%20delivery%20agreement) In December 2024, the company entered into a silver delivery agreement with Mr. Eric Sprott, requiring monthly deliveries of **18,500 ounces** of silver for 36 months starting in January 2026, which created a financial liability measured at fair value, resulting in a **$1.9 million** loss due to changes in forward commodity prices during Q1 2025 - The agreement requires fixed monthly deliveries of **18,500 ounces** of silver for 36 months, beginning January 2026[33](index=33&type=chunk) - A fair value loss of **$1.9 million** was recorded on the metals contract liability during the three-month period ended March 31, 2025[33](index=33&type=chunk) [Note 10: Convertible Debenture](index=8&type=section&id=10.%20Convertible%20debenture) The company's outstanding convertible debenture, with a principal balance of **$16.8 million CAD** (**$11.7 million USD**), was fully converted by the holders as of January 31, 2025, resulting in the issuance of **32.3 million** common shares and the elimination of the debenture liability from the balance sheet - The convertible debenture was fully converted by January 31, 2025, at a price of **$0.52 CAD**, resulting in the issuance of **32,307,692** common shares[37](index=37&type=chunk) - A gain of **$0.7 million** was recognized in Q1 2025 from the change in the estimated fair value of the debenture's embedded options, compared to a loss of **$1.1 million** in Q1 2024[37](index=37&type=chunk) [Note 14: Share Capital](index=9&type=section&id=14.%20Share%20capital) The company's share capital increased during Q1 2025 due to multiple financing and settlement activities, including a non-brokered private placement raising **$3.6 million**, the issuance of **2.9 million** shares to settle **$1.4 million** in payables, and the issuance of **32.3 million** shares upon the conversion of its convertible debenture, with the number of issued common shares growing to **649.1 million** [Share Issuances and Financings](index=9&type=section&id=14.%20Share%20Issuances%20and%20Financings) During Q1 2025, the company raised gross proceeds of **$3.6 million** through a non-brokered private placement of **7.2 million** common shares, and additionally settled **$1.4 million** of transaction-related payables by issuing **2.9 million** common shares, following a significant acquisition and financing in late 2024 - In Q1 2025, the company closed non-brokered private placements for total gross proceeds of **$3.6 million** through the issuance of **7,174,558** common shares[46](index=46&type=chunk) - The company settled **$1.4 million** of transaction-related payables by issuing **2,906,504** common shares in Q1 2025[47](index=47&type=chunk) - On December 19, 2024, the company acquired the remaining **40%** non-controlling interest of the Galena Complex and completed a concurrent private placement raising **$50 million CAD** (**$35.1 million USD**)[44](index=44&type=chunk) [Stock Options, Warrants, and Share Units](index=10&type=section&id=14.%20Stock%20Options%2C%20Warrants%2C%20and%20Share%20Units) As of March 31, 2025, the company had significant potential share dilution from various equity instruments, with **25.6 million** stock options outstanding, **9.6 million** granted in Q1 2025, and additionally **26.2 million** warrants, **20.4 million** share-settled Restricted Share Units (RSUs), and **7.8 million** Deferred Share Units (DSUs) outstanding | Equity Instrument | Outstanding as of March 31, 2025 | | :--- | :--- | | Stock Options | 25,592,000 | | Warrants | 26,244,100 | | Share-settled RSUs | 20,400,000 | | Deferred Share Units (DSUs) | 7,806,408 | - During Q1 2025, **9.55 million** stock options were granted with a weighted average exercise price of **$0.55 CAD**[52](index=52&type=chunk) [Note 16: Non-Controlling Interests](index=12&type=section&id=16.%20Non-controlling%20interests) The company's non-controlling interests (NCI) were eliminated on December 19, 2024, following the acquisition of the remaining **40%** interest in the Galena Complex from Mr. Eric Sprott, with the transaction resulting in the derecognition of the **$18.3 million** NCI carrying amount from the consolidated financial statements - On December 19, 2024, the company completed the acquisition of the remaining **40%** non-controlling interests of the Galena Complex[62](index=62&type=chunk) - The **$18.3 million** carrying amount of the non-controlling interests was derecognized from the financial statements upon completion of the acquisition[62](index=62&type=chunk) [Note 17: Revenue](index=13&type=section&id=17.%20Revenue) Total revenue for Q1 2025 was **$23.5 million**, up from **$20.9 million** in Q1 2024, primarily driven by silver sales, which accounted for **$13.6 million**, followed by zinc sales at **$9.6 million**, with lead and other by-products contributing the remaining revenue | Revenue by Commodity (Net) | Q1 2025 ($'000) | Q1 2024 ($'000) | | :--- | :--- | :--- | | Silver | 13,608 | 14,127 | | Zinc | 9,581 | 8,750 | | Lead | 3,356 | 4,258 | | Other by-products | 306 | 397 | | **Gross Revenue** | **26,851** | **27,532** | | Treatment/Selling Costs & Other | (3,304) | (6,680) | | **Total Revenue** | **23,547** | **20,852** | [Note 19: Corporate General and Administrative Expenses](index=14&type=section&id=19.%20Corporate%20general%20and%20administrative%20expenses) Corporate general and administrative (G&A) expenses surged to **$6.5 million** in Q1 2025, a nearly fourfold increase from **$1.7 million** in Q1 2024, primarily due to significant increases in directors' fees (to **$1.9 million** from **$0.1 million**) and share-based payments (to **$1.7 million** from **$0.2 million**) | G&A Expenses | Q1 2025 ($'000) | Q1 2024 ($'000) | | :--- | :--- | :--- | | Salaries and employee benefits | 1,148 | 512 | | Directors' fees | 1,881 | 122 | | Share-based payments | 1,676 | 156 | | Professional fees | 976 | 368 | | Office and general | 816 | 499 | | **Total** | **6,497** | **1,657** | [Note 21: Financial Risk Management](index=15&type=section&id=21.%20Financial%20risk%20management) The company is exposed to significant financial risks, most notably liquidity risk, given its working capital deficit and need for additional capital, and also faces market risks from commodity price volatility, which affects provisionally priced concentrate sales, and currency risk from its operations in Canada (CAD) and Mexico (MXN) [Liquidity Risk](index=15&type=section&id=21.%20Liquidity%20risk) The company faces substantial liquidity risk, with **$60.7 million** in undiscounted financial liabilities due within one year, compared to a cash balance of only **$8.8 million**, and total contractual maturities for all financial liabilities amount to **$142.1 million** | Contractual Maturities (Undiscounted) | Total ($'000) | Less than 1 year ($'000) | | :--- | :--- | :--- | | Trade and other payables | 31,560 | 31,560 | | Pre-payment facility | 2,500 | 2,500 | | Credit facility & Interest | 11,089 | 5,074 | | Royalty payable | 3,026 | 3,026 | | Metals contract liability | 44,264 | 16,282 | | Silver contract liability | 20,092 | 513 | | Other liabilities | 29,601 | 1,787 | | **Total** | **142,132** | **60,742** | [Market Risk](index=16&type=section&id=21.%20Market%20risk) The company is exposed to market risks including currency and commodity price fluctuations, where a **+/- 10%** change in the CAD/USD exchange rate would impact net loss by approximately **$0.7 million**, while a similar change in the MXN/USD rate would have a **$1.2 million** impact, and a **+/- 10%** fluctuation in metal prices would affect trade receivables by approximately **$0.6 million** - The company is exposed to foreign currency risk through financial assets and liabilities denominated in Canadian Dollars (CAD) and Mexican Pesos (MXN)[78](index=78&type=chunk) | Currency Sensitivity (Impact of +/- 10% change) | Impact on Net Loss ($'000) | | :--- | :--- | | CAD/USD | 683 | | MXN/USD | 1,178 | - A **±10%** fluctuation in silver, zinc, lead, and gold prices would affect trade receivables from provisionally priced sales by approximately **$0.6 million**[81](index=81&type=chunk) [Note 22: Segmented and Geographic Information](index=18&type=section&id=22.%20Segmented%20and%20geographic%20information%2C%20and%20major%20customers) The company's operations are divided into three main segments: Cosalá Operations in Mexico, and the Galena Complex and Relief Canyon in the United States, with Cosalá and Galena being the primary revenue generators in Q1 2025, contributing **$11.8 million** and **$11.7 million**, respectively, both operating segments reported losses before income taxes for the period, and two major customers accounted for **50%** of Cosalá's revenue and **40%** of Galena's revenue | Segment Performance (Q1 2025) | Revenue ($'000) | Loss Before Taxes ($'000) | | :--- | :--- | :--- | | Cosalá Operations | 11,816 | (1,559) | | Galena Complex | 11,731 | (2,140) | | Relief Canyon | - | 58 | | Corporate and Other | - | (15,305) | | **Total** | **23,547** | **(18,946)** | - For Q1 2025, two major customers accounted for **50%** of revenues from Cosalá Operations and **40%** of revenues from Galena Complex[96](index=96&type=chunk) [Note 23: Contingencies](index=20&type=section&id=23.%20Contingencies) The company has an ongoing contingency related to a 2007 tax reassessment from Mexican authorities, with the dispute involving the disallowance of deductions for transactions with certain suppliers, and as of March 31, 2025, the company maintains an accrued liability of **$1.0 million** for this matter - The company received a reassessment from Mexican tax authorities for the 2007 fiscal year, disallowing certain deductions[98](index=98&type=chunk) - An accrued liability of **$1.0 million** related to the probable obligation from the ongoing appeal was recorded and remains outstanding as of March 31, 2025[98](index=98&type=chunk)

Financial Data and Key Metrics Changes - For the full year 2024, revenue increased to $100.2 million, up 5% from $95.2 million in 2023, driven by higher realized metal prices with silver averaging $28.13 per ounce and zinc at $1.26 per pound [26] - Consolidated attributable silver production was 1.7 million ounces, with approximately 3.7 million ounces of silver equivalent, including 31.5 million pounds of zinc and 15.8 million pounds of lead [26] - The company reported a net loss of $48.9 million for 2024, compared to a net loss of $38.2 million in 2023, primarily due to higher cost of sales and increased exploration costs [27] Business Line Data and Key Metrics Changes - The Galena Complex produced about 300 tonnes per day in 2024, significantly below its peak production of 600 tonnes per day in 2002, with a target to ramp up to 1,200 tonnes per day [18][19] - Cosalá operations delivered production of 2.4 million silver equivalent ounces, approximately 900,000 ounces of silver at a cash cost of $11 per ounce and an all-in sustaining cost of $21.48 per ounce [20] Market Data and Key Metrics Changes - The company expects to realize approximately 80% of its revenues from silver as production increases from higher-grade zones at both Galena and Cosalá [23] - The company has institutionalized over 50% of its shareholder register, a significant achievement compared to previous efforts [31] Company Strategy and Development Direction - The company is focused on unlocking the full potential of the Galena Complex through operational improvements and new equipment [10][11] - A substantial debt financial facility is being pursued to strengthen the balance sheet and provide financial flexibility [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the silver market, describing it as a strong bull market with significant growth potential [5][37] - The company is confident in increasing silver production steadily as it progresses with the EC120 project at Cosalá, which has already contributed $3.7 million to revenue in 2024 [28] Other Important Information - The company has ordered five new pieces of equipment to enhance safety and productivity [11] - An internal trade-off study is being conducted to establish the optimal path to ramp up mining operations [12] Q&A Session Summary - No specific questions or answers were provided in the content regarding the Q&A session [39]

Core Viewpoint - Americas Gold and Silver (USAS) reported a wider adjusted net loss in 2024 compared to the previous year, primarily due to increased costs despite higher revenues from silver and zinc prices [1][2]. Financial Performance - The adjusted net loss for 2024 was $33.7 million, compared to a loss of $28.4 million in 2023 [1]. - The net loss for 2024 was $48.9 million, up from $38.2 million in 2023, influenced by higher foreign exchange losses and increased tax expenses [2]. - Adjusted loss per share was 13 cents, wider than the Zacks Consensus Estimate of 11 cents [1]. - The company posted a loss per share of 17 cents in 2024, compared to a loss of 16 cents per share in 2023 [3]. Revenue and Production - Revenues were approximately $100 million in 2024, a 5% increase from the prior year, driven by a 20% rise in silver prices and a 7% increase in zinc prices [4]. - The company’s attributable silver production was 1.7 million ounces in 2024, down 15% from 2023, with zinc and lead production also declining [6]. - Silver equivalent production was 3.7 million ounces, 19% higher than the previous year, mainly due to higher prices [6]. Operational Insights - The Galena Complex produced around 1.5 million ounces of silver in 2024, a decrease from 1.6 million ounces in 2023 [7]. - The Cosalá Operations saw a 25% year-over-year decline in silver production to 0.825 million ounces [8]. - The company expects an increase in silver production in 2025 as it progresses with the EC120 Project [10]. Cost Structure - Attributable cash costs were $17.41 per ounce of silver produced in 2024, up from $13.21 per ounce in 2023 [11]. - All-in-sustaining costs rose to $28.13 per ounce of silver produced compared to $20.44 per ounce in the prior year [11]. - Adjusted EBITDA was a loss of $1.5 million in 2024, slightly worse than the loss of $1.4 million in 2023 [12]. Cash Position - The company ended 2024 with cash and cash equivalents of $20 million and a working capital deficit of $28.7 million [13]. - Operating activities consumed $5.9 million in cash during the year [13]. Stock Performance - Shares of USAS surged 150% over the past year, contrasting with a 9.5% decline in the industry [14].

[Financial Statements](index=3&type=section&id=Financial%20Statements) [Management's Responsibility for Financial Reporting](index=1&type=section&id=Management's%20Responsibility%20for%20Financial%20Reporting) Management confirms its responsibility for preparing the consolidated financial statements in accordance with IFRS Accounting Standards and maintaining a system of internal control - Management is responsible for preparing the financial statements in accordance with **IFRS Accounting Standards**[2](index=2&type=chunk) - The Board of Directors, via the audit committee, approves the financial statements and oversees management's reporting responsibilities[3](index=3&type=chunk) [Independent Auditor's Report](index=2&type=section&id=Independent%20Auditor's%20Report) The auditor issued a qualified opinion highlighting substantial doubt about the company's ability to continue as a going concern due to its working capital deficit and net losses - The auditor's opinion is that the financial statements are **fairly presented** in all material respects in conformity with IFRS Accounting Standards[6](index=6&type=chunk) - A key audit matter highlights a material uncertainty that casts **substantial doubt on the Company's ability to continue as a going concern**, citing its working capital deficit and net losses[7](index=7&type=chunk) [Consolidated Statements of Financial Position](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) The company's financial position weakened, with a significant increase in liabilities leading to a working capital deficit of $28.7 million and a reduction in total equity Consolidated Financial Position Summary (in thousands of U.S. dollars) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $40,714 | $23,036 | | **Total Assets** | $192,640 | $180,488 | | **Total Current Liabilities** | $69,410 | $61,207 | | **Total Liabilities** | $139,191 | $108,288 | | **Total Equity** | $53,449 | $72,200 | - Cash and cash equivalents significantly increased to **$20.0 million** in 2024 from $2.1 million in 2023, primarily due to financing activities[13](index=13&type=chunk) - The company shifted from a working capital surplus to a **deficit of $28.7 million** as of December 31, 2024, as current liabilities exceeded current assets[13](index=13&type=chunk) [Consolidated Statements of Loss and Comprehensive Loss](index=4&type=section&id=Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss) The company's net loss widened to $48.9 million, driven by a significant increase in the loss on the metals contract liability despite a slight rise in revenue Statement of Loss Summary (in thousands of U.S. dollars) | Metric | 2024 | 2023 (Revised) | | :--- | :--- | :--- | | Revenue | $100,188 | $95,160 | | Cost of sales | $(82,740) | $(80,658) | | Loss on metals contract liability | $(10,065) | $(3,396) | | **Net Loss** | **$(48,886)** | **$(38,173)** | | **Loss per share (Basic & Diluted)** | **$(0.17)** | **$(0.16)** | - The loss on the metals contract liability **nearly tripled**, contributing significantly to the increased net loss in 2024[15](index=15&type=chunk) [Consolidated Statements of Changes in Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity decreased by $18.8 million to $53.4 million, as the net loss and acquisition of non-controlling interests outweighed significant capital raised from equity financing - Equity was significantly impacted by the **net loss for the year ($44.9 million attributable to shareholders)**[18](index=18&type=chunk) - The company raised substantial capital through various equity issuances, including a **$33.4 million private placement** of subscription receipts and a **$9.2 million non-brokered private placement**[18](index=18&type=chunk) - The acquisition of the remaining 40% non-controlling interest in the Galena Complex **reduced equity by $19.2 million** attributable to shareholders and eliminated the $18.3 million non-controlling interest balance[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company's cash balance increased by $17.9 million, driven by $35.1 million in net financing activities that covered cash used in operations and investments Cash Flow Summary (in thousands of U.S. dollars) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,068) | $(1,013) | | Net cash used in investing activities | $(18,850) | $(18,133) | | Net cash generated from financing activities | $35,121 | $20,324 | | **Increase in cash and cash equivalents** | **$17,941** | **$97** | | **Cash and cash equivalents, end of year** | **$20,002** | **$2,061** | - Major financing inflows in 2024 included a **$33.4 million private placement** of subscription receipts, **$9.2 million** from non-brokered private placements, and **$9.4 million** from a new credit facility[20](index=20&type=chunk) [Notes to the Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [1. Corporate Information](index=7&type=section&id=1.%20Corporate%20information) Americas Gold and Silver Corporation is a Canadian mining company engaged in exploration, development, and production, with shares listed on the TSX and NYSE American - The company conducts mining exploration, development, and production in the Americas[22](index=22&type=chunk) - Common shares are listed on the TSX under 'USA' and NYSE American under 'USAS'[22](index=22&type=chunk) [2. Basis of Presentation and Going Concern](index=7&type=section&id=2.%20Basis%20of%20presentation%20and%20going%20concern) A material uncertainty exists regarding the company's ability to continue as a going concern due to a significant working capital deficit and insufficient liquidity for the next year - The company reported a **working capital deficit of $28.7 million** and a **net loss of $48.9 million** for the year ended December 31, 2024[25](index=25&type=chunk) - Management states the company **does not have sufficient liquidity** to fund its operations for the next twelve months and will require further financing[25](index=25&type=chunk) - Continuance as a going concern is dependent on achieving profitable operations and obtaining adequate equity or debt financing, creating a **material uncertainty**[26](index=26&type=chunk)[27](index=27&type=chunk) [3. Summary of Material Accounting Policies](index=8&type=section&id=3.%20Summary%20of%20material%20accounting%20policies) This section outlines key accounting policies, including revenue recognition for concentrate sales, depletion of mining interests, and impairment testing for assets - Revenue from concentrate sales is recognized at the time of delivery based on forward prices, with subsequent variations in metal prices treated as embedded derivative adjustments[35](index=35&type=chunk)[36](index=36&type=chunk) - Producing mining interests are depleted using the **unit-of-production method** based on estimated recoverable mineral reserves[60](index=60&type=chunk) - The company reviews property, plant, and equipment for impairment when indicators exist, with the recoverable amount determined as the higher of value in use or fair value less costs to dispose[68](index=68&type=chunk)[69](index=69&type=chunk) [4. Significant Accounting Judgments and Estimates](index=13&type=section&id=4.%20Significant%20accounting%20judgments%20and%20estimates) Management's key judgments and estimates involve mineral reserves, decommissioning provisions, deferred taxes, asset impairment, and the company's overall liquidity - Significant estimates are required for **mineral reserves**, which directly impact depletion and amortization calculations[83](index=83&type=chunk) - Accounting for **decommissioning provisions** requires estimates of the timing and future costs of rehabilitation work[85](index=85&type=chunk) - The ability to achieve positive cash flow from operations and maintain access to capital markets is a significant judgment affecting the company's **liquidity and going concern assessment**[91](index=91&type=chunk)[92](index=92&type=chunk) [6. Acquisition of Non-controlling Interests](index=15&type=section&id=6.%20Acquisition%20of%20non-controlling%20interests) The company acquired the remaining 40% non-controlling interest in the Galena Complex through a transaction involving shares, cash, and a future silver delivery obligation - On December 19, 2024, the company acquired the remaining **40% non-controlling interest** of the Galena Complex[94](index=94&type=chunk) Acquisition Consideration | Consideration Component | Value/Description | | :--- | :--- | | Common Shares Issued | 170,000,000 shares (valued at $64.5M) | | Cash Payment | $10 million | | Silver Delivery Obligation | 18,500 oz/month for 36 months starting Jan 2026 | | Working Capital Assumed | $1.3 million | - The acquisition was accounted for as an **equity transaction**, with $9.0 million in related expenses charged to retained earnings[96](index=96&type=chunk) [9. Property, Plant and Equipment](index=16&type=section&id=9.%20Property,%20plant%20and%20equipment) The carrying value of PP&E decreased to $147.4 million as depreciation and depletion charges of $24.1 million exceeded asset additions PP&E Carrying Value (in thousands of U.S. dollars) | Category | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Mining interests | $92,979 | $94,345 | | Plant and equipment | $38,967 | $42,788 | | **Total Carrying Value** | **$147,399** | **$153,101** | - Depreciation and depletion expense for 2024 was **$24.1 million**, an increase from $20.8 million in 2023[100](index=100&type=chunk) - In 2023, a **$6.0 million impairment charge** was recorded for the Relief Canyon Mine cash-generating unit due to its market capitalization being less than its net assets[101](index=101&type=chunk) [10. Precious Metals Delivery and Purchase Agreement](index=17&type=section&id=10.%20Precious%20metals%20delivery%20and%20purchase%20agreement) The fair value of the metals delivery liability increased to $40.9 million, resulting in a $10.1 million revaluation loss due to changes in commodity prices Metals Contract Liability Continuity (in thousands of U.S. dollars) | Description | 2024 | 2023 | | :--- | :--- | :--- | | Beginning Balance | $36,837 | $30,989 | | Advance increase (net) | $12,512 | $13,989 | | Delivery of metals purchased | $(18,564) | $(9,899) | | Revaluation (Loss) | $10,083 | $3,478 | | **Ending Balance** | **$40,868** | **$36,837** | - The company recognized a **$10.1 million loss** on the metals contract liability in 2024, compared to a $3.4 million loss in 2023[108](index=108&type=chunk) [11. Silver Metals Delivery Agreement](index=18&type=section&id=11.%20Silver%20metals%20delivery%20agreement) A new silver delivery agreement was established as part of the Galena Complex acquisition, creating a financial liability with an initial fair value of $19.8 million - A new silver delivery agreement was established with Mr. Eric Sprott, requiring delivery of **18,500 oz of silver per month for 36 months**, beginning January 2026[114](index=114&type=chunk) - The agreement resulted in the recognition of a financial liability measured at fair value, initially valued at **$19.8 million**[114](index=114&type=chunk) [12. Convertible Debenture](index=18&type=section&id=12.%20Convertible%20debenture) The outstanding convertible debenture of $16.8 million CAD was fully converted into common shares subsequent to the year-end - The outstanding principal of the convertible debenture was **$16.8 million CAD ($11.7 million USD)** at year-end 2024, down from $24.0 million CAD ($18.1 million USD) in 2023[124](index=124&type=chunk) - The debenture was **fully converted** into 32,307,692 common shares on January 31, 2025, subsequent to the reporting period[124](index=124&type=chunk) [14. Credit Facility](index=20&type=section&id=14.%20Credit%20facility) The company secured a new $15 million credit facility to fund the EC120 project, of which $10.0 million was drawn as of year-end - A new secured credit facility of up to **$15 million** was signed with Trafigura on August 14, 2024[127](index=127&type=chunk) - The facility is intended to fund the development of the EC120 silver-copper project and was drawn for **$10.0 million** in August 2024[127](index=127&type=chunk) [19. Share Capital](index=22&type=section&id=19.%20Share%20capital) The company's share capital increased substantially through multiple equity offerings and the issuance of shares for an acquisition, raising the share count to 594.5 million Issued Common Shares | Date | Number of Shares | Value (in thousands of U.S. dollars) | | :--- | :--- | :--- | | Dec 31, 2023 | 218,689,766 | $455,548 | | Dec 31, 2024 | 594,450,243 | $573,532 | - Completed a bought deal private placement of subscription receipts for gross proceeds of **$50 million CAD ($35.1 million USD)**, issuing 125,000,000 common shares[145](index=145&type=chunk) - Issued **170,000,000 common shares** as part of the consideration for the acquisition of the remaining 40% of the Galena Complex[145](index=145&type=chunk) [21. Non-controlling Interests](index=25&type=section&id=21.%20Non-controlling%20interests) The 40% non-controlling interest in the Galena Complex was acquired, resulting in the derecognition of the $18.3 million carrying amount and reducing the balance to zero - On December 19, 2024, the company acquired the remaining **40% non-controlling interest** in the Galena Complex[160](index=160&type=chunk) - The **$18.3 million carrying amount** of the non-controlling interest was derecognized upon completion of the acquisition, resulting in a nil balance at year-end[160](index=160&type=chunk) [22. Revenue](index=26&type=section&id=22.%20Revenue) Net revenue increased to $100.2 million, with silver and zinc sales being the primary contributors, while treatment and selling costs decreased Revenue by Commodity (in thousands of U.S. dollars) | Commodity | 2024 | 2023 (Revised) | | :--- | :--- | :--- | | Silver | $62,378 | $63,106 | | Zinc | $38,864 | $38,746 | | Lead | $18,207 | $25,457 | | Other by-products | $1,402 | $1,240 | | **Gross Revenue** | **$120,851** | **$128,549** | | Treatment and selling costs | $(24,341) | $(33,577) | | **Net Revenue** | **$100,188** | **$95,160** | [27. Financial Risk Management](index=29&type=section&id=27.%20Financial%20risk%20management) The company faces significant liquidity risk, along with market risks from interest rates, foreign currency fluctuations, and commodity price volatility - **Liquidity risk** is a key concern, managed through cash reserves, operational cash flow, and access to debt and equity markets[172](index=172&type=chunk) - The company is exposed to **currency risk** from financial assets and liabilities denominated in Canadian dollars (CAD) and Mexican pesos (MXN)[177](index=177&type=chunk) - **Commodity price risk** exists for concentrate sales that are provisionally priced; a 10% fluctuation in metal prices would affect trade receivables by approximately $0.4 million[180](index=180&type=chunk) [28. Segmented and Geographic Information, and Major Customers](index=32&type=section&id=28.%20Segmented%20and%20geographic%20information,%20and%20major%20customers) The company's revenue is generated by its Cosalá and Galena segments and is highly concentrated, with two major customers accounting for 91% of total revenue Segment Revenue (in thousands of U.S. dollars) | Segment | 2024 Revenue | 2023 Revenue | | :--- | :--- | :--- | | Cosalá Operations | $54,111 | $50,871 | | Galena Complex | $46,077 | $44,173 | | Relief Canyon | $- | $116 | | **Total** | **$100,188** | **$95,160** | - The company relies heavily on **two major customers**, who accounted for **91% of consolidated revenue** in 2024 (45% from Cosalá, 46% from Galena)[195](index=195&type=chunk) [30. Contingencies](index=34&type=section&id=30.%20Contingencies) The company has a contingent liability related to a 2007 tax reassessment in Mexico, with a disputed amount of $5.0 million and an accrued liability of $1.0 million - The company is involved in a tax dispute in Mexico from a 2007 reassessment, with a remaining disputed amount of **$5.0 million** (MXN 102.2 million)[200](index=200&type=chunk) - A liability of **$1.0 million** has been accrued for this contingency as of December 31, 2024, representing the probable obligation[200](index=200&type=chunk)

Group 1 - The investment group focuses on gold and silver mining ideas, indicating a potential breakout in both silver and silver miners after a prolonged trading range since 2013 [1] - The author is recognized as an expert in gold and silver mining stocks, with a significant following on social media and various platforms [2] - The article expresses a beneficial long position in USAS shares, highlighting the author's personal investment stance [3]

Core Insights - Americas Gold and Silver (USAS) has completed the acquisition of the remaining 40% interest in the Galena Complex in Idaho, enhancing its position in the silver market [1][3] - The company has arranged a private placement to raise C$40 million ($28 million), with $10 million allocated for the acquisition and plans to restructure existing debt [2] - Silver prices have increased by 24.6% this year, with global industrial demand projected to rise by 7% in 2024, indicating a continued deficit in the silver market [5] Company Developments - The Galena Complex is situated in Idaho's Silver Valley, known for its rich silver, lead, zinc, and copper production [3] - In the third quarter of 2024, the Galena Complex produced approximately 323,000 ounces of silver, a 7% decrease year-over-year, and 2.6 million pounds of lead, down 15% from the previous year [18] - The completion of the hoist project at the Galena Complex is anticipated to enhance production capabilities in 2025 [11] Financial Performance - Shareholders of Sprott affiliates received around 170 million common shares of USAS and $10 million in cash, along with a commitment for monthly silver deliveries of 18,500 ounces for 36 months starting January 2026 [9] - USAS shares have appreciated by 75.2% over the past year, significantly outperforming the industry, which saw a decline of 21.7% [17]