Operational Turnaround and Strategic Realignment
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Achieved positive net income for the first time since 2021, driven by improved operational stability and favorable commodity price tailwinds.
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Successfully transitioned 70% of production at Don David mine to cut-and-fill mining, reducing dilution from 45% to approximately 12% to deliver higher head grades.
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Reopened the Alta Gracia mine to contribute high-grade silver ore, targeting a production increase from 1,500 to 5,000 tonnes per month by year-end.
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Strengthened the balance sheet to $31 million in cash with zero debt, providing the financial flexibility required for upcoming development projects.
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Attributed the Q1 rise in All-In Sustaining Costs (AISC) to 14 days of lost production from a union blockade and proactive safety-related ground support maintenance.
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Modernized the mining fleet with smaller, properly sized equipment to optimize the narrow-vein cut-and-fill method over legacy long-hole mining.
Growth Strategy and Merger Integration
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Anticipate a pro forma production run rate exceeding 100,000 gold equivalent ounces within 12 months following the Gold Group Mining merger.
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Plan to complete a definitive feasibility study for the Back Forty project in Q1 2027, followed immediately by permit applications and construction.
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Targeting the restart of the San Francisco mine in early Q1 2027 after completing confirmatory drilling and infrastructure refurbishment.
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Executing an aggressive 70,000-meter drilling program in 2026, including 50,000 meters for exploration and 20,000 meters for definition drilling.
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Expect to install a third filter press in Q3 to provide redundancy and maintain steady 1,500 tonnes per day throughput at the tailings plant.
Strategic Risks and One-Time Impacts
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Recorded two minor lost-time injury incidents, prompting the implementation of an immediate containment and prevention plan with external consultants.
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Navigated a 9-day work stoppage in January caused by an internal dispute between two union factions, which did not involve grievances against the company.
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Addressed regional security concerns in Sonora, Mexico, by highlighting the acquired Gold Group team's established social licenses and local expertise.
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The proposed reverse triangular merger with Gold Group aims to reduce single-asset dependency and attract a broader institutional investor base.
Analyst Q&A Session
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Sustainability of higher grades and drilling allocation details
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Management confirmed that the shift to cut-and-fill mining will continue to deliver higher head grades by significantly reducing waste rock dilution.
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The 70,000-meter drilling target is corporate-wide, with specific allocations for Cerro Prieto, San Francisco, and Don David exploration.
Drivers of elevated All-In Sustaining Costs (AISC)
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The Q1 AISC spike was temporary, caused by two weeks of lost production and heavy front-loaded investment in reopening the Alta Gracia mine.
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Management expects AISC to trend toward industry standards as heap leach operations like San Francisco come online, which have lower cost profiles than underground mines.
Security risks and cartel activity in Mexican mining jurisdictions
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Management acknowledged the concerns but noted that Sonora is a long-standing mining hub where established relationships have prevented operational disruptions.
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The merger adds a 'hidden asset' in the form of a Mexican management team with deep experience in maintaining social licenses across all local stakeholders.
