Santacruz Silver Mining : 2024 Year End Report MD&A

Published: 2025-05-28 22:05:05 ET SCZ.V

Published on 05/28/2025 at 22:05

480 - 1140 West Pender Street, Vancouver, BC, V6E 4G1 https://www.santacruzsilver.com

Company Overview 4

2024 Annual Highlights 5

Management Business Overview and Outlook 6

Selected Annual and Quarterly Production Results 7

Bolivar Mine Operating Results 9

Porco Mine Operating Results 10

Caballo Blanco Group Operating Results 11

San Lucas Feed Sourcing Operating Results 13

Zimapan Mine 15

Other Properties 16

Qualified Person and Technical Disclosures 16

Overview of Financial Results 17

Quarters ended December 31, 2024 and 2023 17

Years ended December 31, 2024, 2023 and 2022 19

Summary of Quarterly Results 20

Liquidity, Capital Resources and Contractual Obligations 21

Liquidity 21

Off-balance Sheet Arrangements 22

Transactions with Related Parties 23

Subsequent Events 23

Material Accounting Estimates and Judgments 23

Accounting Policies Including Changes in Accounting Policies and Initial Adoption 23

Financial Instruments and Other Instruments 24

Outstanding Share Data 27

Internal Controls over Financial Reporting and Disclosure Controls and Procedures 27

Non-GAAP Measures 28

This Management's Discussion and Analysis of results of operations and financial condition ("MD&A") should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2024 and the notes thereto of Santacruz Silver Mining Ltd. ("the Company" or "Santacruz") which have been prepared in accordance with IFRS Accounting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB").

All dollar amounts are expressed in thousands of US dollars unless otherwise indicated. Unless otherwise noted, references to "C$" are to thousands of Canadian dollars, references to "MXN" are to thousands of Mexican pesos and references to "BOB" are to thousands of Bolivian bolivianos.

During the year ended December 31, 2024, the Company identified several errors in the previously filed 2023 financial statements. The Company has determined that a correction was required and as such, has restated its previously reported consolidated financial statements as at December 31, 2023 and the consolidated statement of financial position as at January 1, 2023. Refer to note 3 of the accompanying audited annual financial statements for details of the adjustment and impact to the audited consolidated financial statements for the year ended December 31, 2024 and 2023. Where applicable, previously reported figures in this MD&A have been updated to reflect the adjustments made as part of the restatement.

Certain amounts shown in this MD&A may not add exactly to total amounts due to rounding differences. Throughout this MD&A, the terms first quarter, second quarter, third quarter, fourth quarter and year to date are respectively used interchangeably with the terms Q1, Q2, Q3, Q4 and YTD.

This MD&A contains "forward-looking information" within the meaning of applicable Canadian securities regulation and should be read in conjunction with the "Risk Factors" and "Cautionary Note Regarding Forward-looking Information" section in this MD&A

All information contained in this MD&A is current and has been approved by the Board of Directors of the Company as of May 28, 2025.

Santacruz was incorporated pursuant to the Business Corporations Act of British Columbia on January 24, 2011. The Company's registered office is located at 1111 West Hastings Street, 15thFloor, Vancouver, British Columbia, Canada V6E 2J3. The Company is listed for trading on the TSX Venture Exchange (''TSXV'') under the symbol ''SCZ''.

The Company is engaged in the operation, acquisition, exploration and development of mineral properties in Latin America, with a primary focus on silver and zinc, but also including lead and copper. As at December 31, 2024, the Company had acquired ownership including mining concession rights to the following mineral properties:

Bolivia:

Sinchi Wayra ("Sinchi Wayra"), which consists of the following mineral properties and businesses located in Bolivia:

o the Caballo Blanco Group which includes the Tres Amigos and Colquechaquita mines (the "Caballo Blanco Group" or "Caballo Blanco");

the Don Diego Process plant (the "Don Diego Process Plant" or "Don Diego"), which processes production from the Caballo Blanco Group as well as toll milling from San Lucas feed sourcing;

the Soracaya exploration project (the "Soracaya Project" or "Soracaya"); and

the San Lucas Group which includes the San Lucas feed sourcing and trading business and the Reserva mine (the "San Lucas Group" or "San Lucas").

Illapa ("Illapa"), with its operations held under an association agreement with Corporación Minera de Bolivia ("COMIBOL") a Bolivian state-owned entity comprising:

the Bolivar mine (the "Bolivar Mine" or "Bolivar") and process plant complex; and

the Porco mine (the "Porco Mine" or "Porco") and process plant complex.

Mexico:

The Zimapan mine (the "Zimapan Mine" or "Zimapan") and process plant complex located in Hidalgo, Mexico; and,

The La Pechuga Property and the Santa Gorgonia Prospect, which are exploration properties located in Mexico.

Management has assessed the nature of its interest in the Illapa Business and determined it to be a joint operation. The Company records its 45% interest in the assets, liabilities, revenues and expenses of the Illapa Business in its consolidated financial statements. The Company is solely responsible for certain transactions made by the Illapa entity, and for these transactions, the assets, liabilities, revenues and expenses are recognized at 100% in the Company's Financial Statements and result in balances payable to or owed from COMIBOL for its share of the joint operation.

The Company is the operator of the Illapa Business and as such the chief executive officer and executive management team review the Bolivar and Porco operating and financial information on a 100% basis. The Company reports its segment information on a 100% basis with respect to Bolivar and Porco together with an elimination column representing COMIBOL's 55% interest (Refer to Note 22 of the audited consolidated financial statements).

In this MD&A, operational information for Bolivar and Porco is presented at 100%. Readers of this MD&A are cautioned that although in the operating section of this MD&A the Company reports 100% of the production and sales information, the Company records 45% of the assets, liabilities, revenues and expenses in its consolidated financial statements. In contrast to the operational information, all financial information presented in this MD&A is reported showing 45% of the assets, liabilities, revenues and expenses which coincides with the information presented in the audited consolidated financial statements.

In the third quarter of 2024, the Company changed its business process and began feeding all of the Reserva mine's ore to the San Lucas feed sourcing business instead of combining it with the ore from other mines in the Caballo Blanco Group. To reflect the change in business process, the operating segments were updated in Q3 2024 to present the results of the Reserva mine as part of the San Lucas Group, comparative information from previous periods has not been updated and the results of the Reserva mine are still presented as part of the Caballo Blanco Group.

‌2024

2023

Restated(6)

Change

'24 vs '23

Operational

Material Processed (tonnes milled)

1,955,904

1,883,446

Silver Equivalent Produced (ounces) (3)

18,651,701

18,779,646

(1%)

Silver Ounces Produced

6,718,381

7,004,582

(4%)

Zinc Tonnes Produced

94,399

91,616

Lead Tonnes Produced

11,820

12,366

(4%)

Copper Tonnes Produced

1,057

1,254

(16%)

Silver Equivalent Sold (payable ounces) (4)

14,089,723

16,105,327

(13%)

Cash Cost of Production per Tonne (5)

101.35

93.10 9%

Cash Cost per Silver Equivalent Ounce Sold ($/oz) (5)

21.90

18.96 16%

All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold ($/oz) (5)

26.09

22.69 15%

Average Realized Price per Ounce of Silver Equivalent Sold ($/oz) (5) (6)

28.74

22.90 25%

Financial

Revenues

282,987

251,256

13%

Gross Profit

57,226

3,233

1670%

Net Income (loss)

164,484

(11,008)

1594%

Net Earnings (Loss) Per Share - Basic ($/share)

0.46

(0.03)

1633%

Adjusted EBITDA (5)

52,625

17,553

200%

Cash and Cash Equivalent

35,721

4,947

622%

Working Capital (Deficiency)

46,296

(49,171)

194%

2024 Annual Production Summary - By Mine

Bolivar (5)

Porco (5)

Caballo

Blanco Group

San Lucas

Group

Zimapan

Total

Material Processed (tonnes milled)

284,634

204,585

275,273

341,650

849,762

1,955,904

Silver Equivalent Produced (ounces) (1)

4,105,592

2,057,069

3,496,383

4,637,705

4,354,952

18,651,701

Silver Ounces Produced

1,828,098

645,251

1,220,757

1,344,242

1,680,033

6,718,381

Zinc Tonnes Produced

19,395

12,045

18,606

28,043

16,310

94,399

Lead Tonnes Produced

1,327

795

2,316

1,924

5,458

11,820

Copper Tonnes Produced

N/A

1,057

Average head grades per mine:

Silver (g/t)

218

117

153

147

126

Zinc (%)

7.48

6.28

7.30

9.01

2.46

5.42

Lead (%)

0.64

0.51

1.11

0.88

0.75

0.78

Copper (%)

N/A

0.29

Metal recovery per mine:

Silver (%)

Zinc (%)

Lead (%)

Copper (%)

N/A

Silver Equivalent Sold (payable ounces) (2)

3,298,650

1,540,699

2,600,400

3,163,911

3,486,063

14,089,723

Notes for both tables above:

(1)Silver Equivalent Produced (ounces) have been calculated using prices of $23.85/oz, $1.21/lb, $0.94/lb and $3.91/lb for silver, zinc, lead and copper respectively applied to the metal production divided by the silver price as stated here.

(2)Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold stated in the table above, applied to the payable metal content of the concentrates sold from Bolivar, Porco, the Caballo Blanco Group, San Lucas and Zimapan.

(3)The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold, All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold, Average Realized Price per Ounce of Silver Equivalent Sold, and Adjusted EBITDA. These measures are widely used in the mining industry as a benchmark for performance but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See ''Non-GAAP Measures'' section below for definitions.

(4)Average Realized Price per Ounce of Silver Equivalent Sold is prior to all treatment, smelting and refining charges.

(5)Bolivar and Porco are presented at 100% whereas the Company records 45% of revenues and expenses in its consolidated financial statements.

(6)The revenues, gross profit, net loss, net loss per share, Adjusted EBITDA, and working capital deficiency were restated as a result of corrections made to the 2023 comparatives. Refer to Note 3 of the consolidated financial statements for further details and impacts of the restatement.

$7,500 commencing in May 2025 until reaching a total of $40,000 at which point the acceleration option will have been exercised and the base purchase price obligation of $80,000 will be extinguished.

Going forward our Bolivian operations will continue to prioritize operational efficiency across both mining and milling activities. The key objectives are twofold: optimizing mining costs while enhancing recovery rates in our mills. This dual focus aims to increase the quality of our concentrates, with an emphasis on achieving a sustainable balance between cost-efficiency and productivity. By continuously refining our processes, we are committed to strengthening the quality and profitability of our operations.

Going forward Zimapan will continue cost optimization efforts and process improvements to enhance concentrate quality and generate more cash flows. The improvement initiatives have shown positive results over recent quarters, and management will continue to prioritize these ongoing activities. Additionally, the Company will seek synergies between its operations to further improve operational processes, fostering integration and efficiency gains. Through these combined efforts, we aim to drive sustainable improvements in our production capabilities and financial performance.

Management believes that executing the above referenced strategic initiatives will significantly strengthen the Company's financial position setting the stage for the future growth of the Company.

‌2024-Q4

2024-Q3

2024-Q2

2024-Q1

2024-YTD

2023-YTD

Change

Q4 vs Q3

Change

'24 vs. '23

Material Processed (tonnes milled)

Bolivar (4)

69,411

70,271

72,151

72,801

284,634

293,083

(1%)

(3%)

Porco (4)

53,702

48,714

51,307

50,862

204,585

190,837

10%

Caballo Blanco Group

60,776

58,374

83,661

72,462

275,273

316,718

(13%)

San Lucas Group

92,369

96,160

83,900

69,221

341,650

313,506

(4%)

Zimapan

216,883

217,741

209,736

205,402

849,762

769,302

(0%)

10%

Total

493,141

491,260

500,755

470,748

1,955,904

1,883,446

Silver Equivalent Produced (ounces) (1)

Bolivar (4)

1,033,933

1,017,362

1,029,806

1,024,492

4,105,593

4,060,652

Porco (4)

496,735

482,620

534,300

543,414

2,057,069

2,063,929

Caballo Blanco Group

913,243

752,352

968,646

862,142

3,496,383

4,102,398

21%

(15%)

San Lucas Group

1,168,184

1,236,582

1,200,854

1,032,085

4,637,705

4,831,947

(6%)

(4%)

Zimapan

1,097,919

1,155,097

1,085,946

1,015,989

4,354,951

3,720,720

(5%)

17%

Total

4,710,014

4,644,013

4,819,552

4,478,122

18,651,701

18,779,646

(1%)

Silver Ounces Produced

Bolivar (4)

491,377

483,300

427,665

425,756

1,828,098

1,973,779

(7%)

Porco (4)

145,585

171,972

151,258

176,436

645,251

665,216

(15%)

(3%)

Caballo Blanco Group

368,822

248,605

318,520

284,810

1,220,757

1,544,561

48%

(21%)

San Lucas Group

329,760

354,877

364,607

294,998

1,344,242

1,464,180

(7%)

(8%)

Zimapan

426,141

444,634

409,309

399,949

1,680,033

1,356,846

(4%)

24%

Total

1,761,685

1,703,388

1,671,359

1,581,949

6,718,381

7,004,582

(4%)

Zinc Tonnes Produced

Bolivar (4)

4,611

4,553

5,168

5,063

19,395

17,523

11%

Porco (4)

2,983

2,626

3,276

3,160

12,045

11,901

14%

Caballo Blanco Group

4,455

4,117

5,331

4,703

18,606

20,355

(9%)

San Lucas Group

7,089

7,525

7,150

6,279

28,043

28,418

(6%)

(1%)

Zimapan

4,219

4,322

4,127

3,642

16,310

13,419

(2%)

22%

Total

23,357

23,143

25,052

22,847

94,399

91,616

Lead Tonnes Produced

Bolivar (4)

327

305

300

395

1,327

1,461

(9%)

Porco (4)

215

206

205

169

795

777

Caballo Blanco Group

549

515

641

611

2,316

3,237

(28%)

San Lucas Group

554

493

450

427

1,924

2,177

12%

(12%)

Zimapan

1,287

1,508

1,312

1,351

5,458

4,714

(15%)

16%

Total

2,932

3,027

2,908

2,953

11,820

12,366

(3%)

(4%)

Copper Tonnes Produced

Zimapan

248

270

284

255

1,057

1,254

(8%)

(16%)

Total

248

270

284

255

1,057

1,254

(8%)

(16%)

Silver Equivalent Sold (payable ounces) (2)

Bolivar (4)

777,765

730,460

775,682

1,014,743

3,298,650

2,798,472

18%

Porco (4)

345,675

410,617

365,176

419,231

1,540,699

1,305,115

(16%)

18%

Caballo Blanco Group

629,937

708,726

688,391

573,346

2,600,400

2,956,128

(11%)

(12%)

San Lucas Group

847,411

846,455

715,135

754,910

3,163,911

5,756,049

(45%)

Zimapan

852,103

905,497

857,755

870,708

3,486,063

3,289,563

(6%)

Total

3,452,891

3,601,755

3,402,139

3,632,938

14,089,723

16,105,327

(4%)

(13%)

2024-Q4

2024-Q3(5)

2024-Q2(5)

2024-Q1(5)

2024-YTD

2023-YTD(5)

Change Q4 vs Q3

Change '24 vs. '23

Cash Cost of Production per Tonne (3)

Bolivar, Porco, and Caballo Blanco

Group (4)

99.35

121.91

109.06

108.13

109.47

102.99

(19%)

San Lucas Group

234.29

200.18

134.50

156.51

184.43

155.49

17%

19%

Zimapan

57.80

61.59

65.57

57.60

60.64

57.37

(6%)

Total

106.35

110.50

95.11

93.19

101.35

93.10

(4%)

Cash Cost per Silver Equivalent Ounce Sold (3)

Bolivar, Porco, and Caballo Blanco

Group (4)

19.06

21.08

20.85

21.26

20.60

16.10

(10%)

28%

San Lucas Group

28.30

25.55

22.73

22.04

24.81

21.76

11%

14%

Zimapan

23.34

22.08

22.50

20.29

22.04

20.18

Total

22.38

21.66

21.19

21.90

18.96

16%

All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold (3)

Bolivar, Porco, and Caballo Blanco

Group (4)

23.11

25.48

22.80

23.94

23.85

20.37

(9%)

17%

San Lucas Group

34.22.

26.43

22.86

22.28

26.72

21.95

29%

22%

Zimapan

27.13

27.07

27.62

22.59

26.10

23.92

Total

27.83

27.40

24.91

24.27

26.09

22.69

15%

Underground development (m)

11,167

10,933

10,434

9,436

41,970

42,906

(2%)

Core Drilling (m)

3,204

4,166

5,949

4,311

17,631

9,628

(23%)

83%

(1) Silver Equivalent Produced (ounces) have been calculated, for all periods presented, using prices of $23.85/oz, $1.21/lb, $0.94/lb and $3.91/lb for silver, zinc, lead, and copper, respectively applied to the metal production divided by the silver price as stated here.

(2) Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold in the Non-GAAP Measures section, applied to the payable metal content of the concentrates sold from Bolivar, Porco, the Caballo Blanco Group, San Lucas and Zimapan.

(3) The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold, All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold and Average Realized Price per Ounce of Silver Equivalent Sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See ''Non-GAAP Measures'' section below for definitions.

(4) Bolivar and Porco are presented at 100% whereas the Company records 45% of revenues and expenses in its consolidated financial statements.

(5) Cost of sales in previously reported quarters of 2024 and 2023 was restated as a result of corrections made to the prior year comparatives, the restatement of these amounts did not impact cash cost per tonne, cash cost per silver equivalent ounce or all-in sustaining cash cost per silver equivalent ounce because the restatement adjustments were non-cash or related to a 45% Porco and Bolivar adjustment that is not applicable to the MD&A because results are presented on a 100% basis. Refer to Note 3 of the consolidated financial statements for further details regarding the restatement.

Compared to 2023, the tons of processed material increased by 4%. The increase was driven by increases in tonnes milled from the San Lucas Group 9%, Porco 7% and Zimapan 10% operations that were offset by decreases in Bolivar (3%) and Caballo Blanco Group's (13%) operations. The 13% decrease in Caballo Blanco Group is due to the results of the Reserva mine being reported in the San Lucas Group starting in Q3 2024. This highlights the stability and diversification of the Company's asset base, enabling us to offset declines in production at certain operations with increased production from others. This strategic balance is essential for maintaining overall production stability and ensuring consistent performance across our operations.

Compared to Q3 2024, production levels remained stable with no overall change in tonnes milled that reflects a 4% increase in the Caballo Blanco Group and a 10% increase in Porco offset by a 4% decrease in San Lucas and a 1% decrease in Bolivar. This improvement in silver production is especially positive given the recent rise in silver prices and favorable market outlook. Silver ounces produced has continued to increase, rising 3% during Q4 which is a key area of focus for the Company.

‌Bolivar Production Table (3)

2024 Q4

2024 Q3

Change

Q4 vs Q3

2024-YTD

2023-YTD

Change

'24 vs. '23

Material Processed (tonnes milled)

69,411

70,271

(1%)

284,634

293,083

(3%)

Silver Equivalent Produced (ounces) (1)

1,033,933

1,017,362

4,105,592

4,060,652

Silver Equivalent Sold (payable ounces) (2)

777,765

730,460

3,298,650

2,798,472

18%

Production

Silver (ounces)

491,377

483,300

1,828,098

1,973,779

(7%)

Zinc (tonnes)

4,611

4,553

19,395

17,523

11%

Lead (tonnes)

327

305

1,327

1,461

(9%)

Average Grade

Silver (g/t)

236

231

218

228

(4%)

Zinc (%)

7.19

7.19 0%

7.48

6.59

13%

Lead (%)

0.64

0.61 5%

0.64

0.68

(6%)

Metal Recovery

Silver (%)

Zinc (%)

Lead (%)

(1) Silver Equivalent Produced (ounces) have been calculated, for all periods presented, using prices of $23.85/oz, $1.21/lb and $0.94/lb for silver, zinc, and lead, respectively applied to the metal production divided by the silver price as stated here plus the respective concentrate produced by the Bolivar, Porco, the Caballo Blanco Group, and San Lucas multiplied by the respective silver content, as applicable.

(2) Silver Equivalent Sold (payable ounces) have been calculated using the Average Realized Price per Ounce of Silver Equivalent Sold applied to the payable metal content of the concentrates sold from the Bolivar, Porco, the Caballo Blanco Group, and San Lucas in 2024.

(3) Bolivar is presented at 100% whereas the Company records 45% of revenues and expenses in its consolidated financial statements.

The Bolivar Mine has been active for more than 200 years. The current mine complex consists of an underground mine, 1,100 t/d milling facility, tailings storage facility, maintenance workshop, shaft-winder, water treatment plants, supplies warehouse, main office, hospital, and camp.

The Bolivar mine operates in two main areas: the Central Zone, an extension of the original ore deposit that runs deeper, and the Rosario Zone, a parallel area with its own separate entrance.

Currently the mine is producing about 25,000 tonnes of ore per month, and 840 meters of combined primary and secondary development each month. At the same time, ore from the San Lucas feed sourcing business is providing production flexibility and allowing the mill to operate efficiently.

The Bolívar mill has operated continuously since 1993, receiving feed from two main sources: the Bolívar Mine, which supplies approximately 70%, and toll feed sourced through the San Lucas feed sourcing business, contributing the remaining 30%. The mill processes each feed type separately, enabling precise analysis and reporting for each. Different reagent strategies are applied to each source due to the presence of pyrrhotite in the San Lucas feed, which is generally absent in the Bolívar mine feed.

In Q4 2024, Bolivar processed 69,411 tonnes of ore and produced 1,033,933 silver equivalent ounces including 491,377 ounces of silver and 4,611 tonnes of zinc.

When comparing 2024 to 2023 production volumes, Bolívar processed 3% less material in 2024. Silver equivalent production increased by 18%, demonstrating strong metallurgical efficiency relative to the reduction in tonnes processed. Silver production remained relatively stable year-over-year, only decreasing by 7%, which was caused by a 4% decrease in silver head grades. Management is focusing on improving the mine's silver output quality and reinforcing revenue resilience, particularly in the context of a strengthening silver price trend. Zinc production has improved with an 11% increase, driven by a 13% increase in zinc head grades while zinc recovery has remained steady. The higher zinc production offset some of the decrease in silver production. The company will continue its strategic focus on enhancing silver grades and recoveries, coupled with a favorable silver market outlook.

Material processed during Q4 2024 decreased by 1% compared to Q3 2024. Despite the slight reduction in tonnes processed, silver equivalent production increased by 2%, reflecting improved operational efficiency. Silver production increased by 2%, supported by a 2% higher silver head grade and a 1% improvement in silver recovery. These positive metallurgical trends align with a favorable silver market environment, where strengthening silver prices contributed positively to revenue generation. Zinc production remained stable with a 1% increase, while both zinc head grade and recovery were essentially unchanged (0% and +3% respectively). The solid performance in silver production, combined with favorable price dynamics and stable zinc production resulted in Bolívar's improved revenue profile.

‌Porco Mine Operating Results

Porco Production Table (3)

2024 Q4

2024 Q3

Change

Q4 vs Q3

2024-YTD

2023-YTD

Change

'24 vs. '23

Material Processed (tonnes milled)

53,702

48,714

10%

204,585

190,837

Silver Equivalent Produced (ounces) (1)

496,735

482,620

2,057,069

2,063,929

Silver Equivalent Sold (payable ounces) (2)

345,675

410,617

(16%)

1,540,699

1,305,115

18%

Production

Silver (ounces)

145,585

171,972

(15%)

645,251

665,216

(3%)

Zinc (tonnes)

2,983

2,626

14%

12,045

11,901

Lead (tonnes)

215

206

795

777

Average Grade

Silver (g/t)

102

133

(23%)

117

126

(7%)

Zinc (%)

5.89

5.74 3%

6.28

6.61

(5%)

Lead (%)

0.51

0.55

(7%)

0.51

0.54

(5%)

Metal Recovery

Silver (%)

(1%)

(2%)

Zinc (%)

(1%)

Lead (%)

(1) Silver Equivalent Produced (ounces) have been calculated, for all periods presented, using prices of $23.85/oz, $1.21/lb, and $0.94/lb for silver, zinc, and lead, respectively applied to the metal production divided by the silver price as stated here plus the respective concentrate produced by the Bolivar, Porco, the Caballo Blanco Group, and San Lucas multiplied by the respective silver content, as applicable.

(3) Porco is presented at 100% whereas the Company records 45% of revenues and expenses in its consolidated financial statements.

The Porco Mine has been in operation for nearly 500 years. The complex consists of an underground mine, milling facility, maintenance workshop, tailing storage facility, water treatment plant, supplies warehouse, main office, two hospitals and Yancaviri Camp.

The mine produces approximately 17,000 tonnes of ore, and on average realizes 600 meters of total development per month. The mine is comprised of two production areas. Hundimiento uses long hole mechanized mining methods to exploit the deeper extension of the primary vein complex, and the Central zone which is conventionally mined using more selective shrinkage stoping.

The milling facility is sourced by the mine feed (approximately 60%), and the toll feed from the San Lucas feed sourcing business (40%).

In Q4 2024, Porco processed 53,702 tonnes of ore and produced 496,735 silver equivalent ounces including 145,585 ounces of silver and 2,983 tonnes of zinc.

Comparing 2024 to 2023, Porco demonstrated strong operational improvements, with material processed increasing by 7% and silver equivalent production up by 18%. Silver production decreased modestly by 3%, because of a 7% decrease in silver head grade and a slight 2% decrease in recovery, reflecting the resilience of the operation. Zinc production increased by 1% year-over-year, with a 5% decline in zinc head grade and stable zinc recovery. The ability to achieve higher production levels even with slightly lower grades underscores Porco's efficiency improvements and supports future revenue growth, especially considering a favorable silver price environment.

Material processed increased by 10% during Q4 2024 compared to Q3 2024, reflecting a significant ramp-up in production capacity and silver equivalent production grew 3%. Silver production decreased by 15%, primarily driven by a 23% decline in silver head grade, while silver recovery remained stable. Zinc production increased by 14%, supported by the higher throughput and further increased by a 3% increase in zinc head grades and zinc recovery remained constant. The overall performance at Porco shows our volume-driven growth strategy.

‌Caballo Blanco Group Operating Results

Caballo Blanco Group Production Table

2024 Q4

2024 Q3

Change

Q4 vs Q3

2024-YTD

2023-YTD

Change

'24 vs. '23

Material Processed (tonnes milled)

60,776

58,374

275,273

316,718

(13%)

Silver Equivalent Produced (ounces) (1)

913,243

752,352

21%

3,496,383

4,102,398

(15%)

Silver Equivalent Sold (payable ounces) (2)

629,937

708,726

(11%)

2,600,400

2,956,128

(12%)

Production

Silver (ounces)

368,822

248,605

48%

1,220,757

1,544,561

(21%)

Zinc (tonnes)

4,455

4,117

18,606

20,355

(9%)

Lead (tonnes)

549

515

2,316

3,237

(28%)

Average Grade

Silver (g/t)

205

148

39%

153

166

(8%)

Zinc (%)

7.84

7.56 4%

7.30

6.92 6%

Lead (%)

1.17

1.16 1%

1.11

1.32

(16%)

Metal Recovery

Silver (%)

(2%)

Zinc (%)

(1%)

Lead (%)

(2%)

(1) Silver Equivalent Produced (ounces) have been calculated, for all periods presented, using prices of $23.85/oz, $1.21/lb, and $0.94/lb for silver, zinc, lead respectively applied to the metal production divided by the silver price as stated here plus the respective concentrate produced by the Bolivar, Porco, the Caballo Blanco Group, and San Lucas multiplied by the respective silver content, as applicable.

Following a thorough examination of the Don Diego milling facility processing performance, Caballo Blanco Group made a strategic adjustment in Q3 to improve metal recovery and concentrate value. Previously, the milling facility handled ore from three mines: Colquechaquita, Tres Amigos, and Reserva. A recent evaluation revealed that processing a blend of ores exclusively from Colquechaquita and Tres Amigos at Don Diego significantly improved silver recovery in the lead concentrate. This enhancement adds greater value to the lead concentrate and generates additional revenue for the Company. The process modification is consistent with our goal of enhancing efficiencies by improving metal recoveries and concentrate value.

‌Ore from the Reserva mine will now be processed and blended with ore from the San Lucas ore sourcing business to improve overall operating efficiency. The initial results of this adjustment reveal significant gains in silver in lead concentrate recovery, prompting management to adopt this new processing approach as the standard going forward. This revised operational framework will help both Caballo Blanco and San Lucas achieve more consistent recovery performance and maximize the value of its mineral resources.

In Q4 2024, Caballo Blanco processed 60,776 tonnes of ore and produced 913,243 silver equivalent ounces including 368,822 ounces of silver and 4,455 tonnes of zinc.

Comparing 2024 to 2023, material processed at Caballo Blanco declined by 13%, because Reserva's production is now being blended with San Lucas ore and is reported in the San Lucas Group results instead. Despite the lower throughput, silver equivalent production decreased by 15%. Silver production decreased by 21% year-over-year, which was driven by reporting Reserva's production in San Lucas Group and was also impacted by 8% lower head grades and 2% lower recoveries during the year. Zinc production declined by 9%, although zinc head grades improved by 6%.

Material processed increased by 4% in Q4 2024 compared to Q3 2024, indicating stable operational throughput. Silver equivalent production surged by 21%, significantly outpacing the increase in material processed, highlighting strong processing efficiency gains. Silver production rose sharply by 48%, driven by a 39% increase in silver head grade and a 3% improvement in silver recovery. This positive development positions Caballo Blanco to fully capitalize on the current upward silver price trend, thereby boosting revenue contribution to the Company's consolidated operations. Zinc production increased by 8%, supported by a 4% higher zinc head grade and stable recoveries. As part of our broader operational optimization strategy, removing the Reserva mine ore from Caballo Blanco has delivered tangible benefits, resulting in stronger metallurgical outcomes and positioning Caballo Blanco for sustained performance improvements.

San Lucas Group Operating Results

San Lucas Group Production Table

2024 Q4

2024 Q3

Change

Q4 vs Q3

2024-YTD

2023-YTD

Change

'24 vs. '23

Material Processed (tonnes milled)

92,369

96,160

(4%)

341,650

313,506

Silver Equivalent Produced (ounces) (1)

1,168,184

1,236,582

(6%)

4,637,705

4,831,947

(4%)

Silver Equivalent Sold (payable ounces) (2)

847,411

846,455

3,163,911

5,756,049

(45%)

Production

Silver (ounces)

329,760

354,877

(7%)

1,344,242

1,464,180

(8%)

Zinc (tonnes)

7,089

7,525

(6%)

28,043

28,418

(1%)

Lead (tonnes)

554

493

12%

1,924

2,177

(12%)

Average Grade

Silver (g/t)

133

135

(1%)

147

172

(15%)

Zinc (%)

8.47

8.62

(2%)

9.01

9.87

(9%)

Lead (%)

0.93

0.80

16%

0.88

1.05

(16%)

Metal Recovery

Silver (%)

(2%)

(1%)

Zinc (%)

(1%)

Lead (%)

(4%)

Cash Cost of Production per Tonne ($/t) (3)

234.29

200.18

17%

184.43

155.49

19%

Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3)

28.30

25.55 11%

24.81

21.76 14%

All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3)

32.44

26.43 29%

26.72

21.95 22%

(3) The Company reports non-GAAP measures, which include Cash Cost of Production per Tonne, Cash Cost per Silver Equivalent Ounce Sold and All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See "Non-GAAP Measures" section below for definitions.

The San Lucas feed sourcing business utilizes the excess production capacity of each of the milling facilities in Bolivia to produce concentrate. Feed is sourced from independent organized mining groups with whom San Lucas has negotiated agreements outlining methodology for valuation and purchase as well as validating the source of the feed and methods used in extraction. Once the ore material is sampled and the purchase is finalized, it is blended and processed. Starting from Q3 2024, the operating results of the Reserva mine are included in the San Lucas results because all ore produced by the Reserva mine is sold to the San Lucas feed sourcing business to achieve optimal recoveries.

Generally, the ore from the San Lucas feed sourcing business is campaigned through each milling facility and kept separate from mine feeds. Across the three milling facilities, the approximate distribution used by San Lucas to process third-party ore is 44% at Porco, 22% at Don Diego, and 34% at Bolívar. The feed volume and grade are variable and challenging to forecast; however, the consistent and fair business structure offered by our San Lucas feed sourcing business appeals to local miners. By working with a medium- to long-term perspective, we enhance the consistency of the ore, and additional agreements are currently being negotiated to increase feed sourced.

In Q4 2024, San Lucas processed 92,369 tonnes of ore and produced 1,168,184 silver equivalent ounces, including 329,760 ounces of silver and 7,089 tonnes of zinc.

Compared to 2023, material processed at San Lucas increased by 9%, reflecting a deliberate strategy to maximize mill utilization across our operations. Despite this increase, silver equivalent production declined by 4%, primarily due to a 15% decrease in silver head grades and a slight 1% decrease in zinc recoveries. Silver production decreased by 8% year-over-year. Zinc production fell by 1%, in line with a 9% drop in zinc head grade. As a margin-focused operation, San Lucas adjusts ore purchasing costs in accordance with ore quality, maintaining its profitability contribution. Furthermore, by supplementing feedstock for our milling facilities, San Lucas enhances overall operational efficiency and flexibility across the Group, directly supporting throughput and fixed cost absorption.

Material processed decreased by 4% in Q4 2024 compared to Q3 2024, a variation within normal operational parameters. Silver equivalent production declined by 6%, slightly exceeding the reduction in tonnes processed, driven by a 7% decrease in silver production, a 1% lower silver head grade, and a 2% decline in silver recovery. Zinc production fell by 6%, while zinc head grade and recovery remained relatively stable. It is important to note that San Lucas operates under a margin-based business model, where lower ore grades are offset by lower ore purchase costs, preserving contribution margins. Additionally, San Lucas plays a critical strategic role in ensuring that our milling facilities operate at optimal capacity, depending on the available throughput from the Company's core mining operations.

‌Zimapan Production Table

2024 Q4

2024 Q3

Change Q4 vs Q3

2024-YTD

2023-YTD

Change '24 vs. '23

Material Processed (tonnes milled)

216,883

217,741

849,762

769,302

10%

Silver Equivalent Produced (ounces) (1)

1,097,919

1,155,097

(5%)

4,354,951

3,720,720

17%

Silver Equivalent Sold (payable ounces) (2)

852,103

905,497

(6%)

3,486,063

3,289,563

Production

Silver (ounces)

426,141

444,634

(4%)

1,680,034

1,356,846

24%

Zinc (tonnes)

4,219

4,322

(2%)

16,310

13,419

22%

Lead (tonnes)

1,287

1,508

(15%)

5,458

4,714

16%

Copper (tonnes)

248

270

(8%)

1,057

1,254

(16%)

Average Grade

Silver (g/t)

Zinc (%)

2.50

2.58

(3%)

2.46

2.31 7%

Lead (%)

0.69

0.77

(10%)

0.75

0.78

(3%)

Copper (%)

0.28

0.29

(3%)

0.29

0.32

(11%)

Metal Recovery

Silver (%)

(4%)

Zinc (%)

Lead (%)

(5%)

Copper (%)

(4%)

(14%)

Cash Cost of Production per Tonne ($/t) (3)

57.80

61.59

(6%)

60.64

57.37 6%

Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3)

23.34

22.08 6%

22.04

20.18 9%

All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold ($/oz) (3)

27.13

27.07 0%

26.10

23.92 9%

The Zimapan operation produces feed from the Carrizal and Monte mines, which are connected by a 7.4-kilometre underground access and haulage tunnel which terminates at the San Francisco process plant. Mining methods used include long hole and cut and fill stoping. The plant processes about 72,000 tonnes per month and produces three concentrates using differential flotation. Tailings Storage Facility and other support facilities are located adjacent and downstream of the plant location.

Steadily increasing mine and plant production has assisted in reducing unit costs thereby helping to mitigate the impact of metal and supply chain price volatility. Higher metallurgical recoveries in 2024 resulting from focused attention to this issue during 2024 had a significant positive impact on metal production. A shift to higher productivity high-value mining areas is the focus for 2025.

Compared to 2023, Zimapan delivered a solid operational performance, with tonnes processed increasing by 10% and silver equivalent production rising by 17%. Silver production improved by 24% year-over-year, supported by a 9% increase in silver head grades and a 3% increase in recoveries. Zinc production grew significantly by 22% which was driven by a 7% improvement in zinc head grades and a 3% increase in recoveries. These positive trends in both production and metallurgical performance underscore the successful optimization initiatives implemented over the past year. Zimapan's year-over-year improvements, combined with favorable silver market conditions, have strengthened its contribution to the Company's overall production and revenue growth.

Material processed remained stable in Q4 2024 compared to Q3 2024. Despite consistent throughput, silver equivalent production decreased by 5%. Silver production decreased by 4%, driven by a 4% decline in silver recoveries while silver head grades remained consistent year over year. Zinc production decreased by 2%, mainly due to a 3% reduction in zinc head grade, while zinc recovery improved slightly by 1%, mitigating part of the impact. While overall production was slightly lower quarter-over-quarter, stable processing volumes and modest improvements in head grades reinforce the operation's solid fundamentals. In addition, the ongoing positive trend in silver prices continues to support revenue stability, mitigating the impact of short-term production variations.

‌Other Properties

Soracaya is an approximately eight-hectare exploration asset located approximately 200 km south south-west of Potosi and

4.4 km from the San Vincente mine (owned by Pan American Silver). Verification of the resource to NI 43-101 standards is currently in progress as well as some claim maintenance work underground.

‌Qualified Person and Technical Disclosures

All scientific and technical disclosure contained in this MD&A was reviewed and approved by Garth Kirkham P.Geo. an independent consultant to the Company, is a qualified person under NI 43-101 and has approved the scientific and technical information contained within this news release.

Production at the Zimapan Mine is not supported by a feasibility study on mineral reserves demonstrating economic or technical viability or any other independent economic study under NI 43-101. Accordingly, there is increased uncertainty and higher economic and technical risks of failure associated with production operations at the Zimapan Mine. Production and economic variables may vary considerably due to the absence of a complete and detailed site analysis according to and in accordance with NI 43- 101. Project failure may adversely impact the Company's future profitability.

‌Overview of Financial Results

2024 Q4

2023 Q4

Restated (1)

Change

'24 vs '23

Revenues

81,669

57,616

42%

Mine operating costs

Cost of sales

(52,556)

(42,471)

24%

Depletion, depreciation and amortization

(3,863)

(7,898)

(51%)

Impairment - Mine Operating Costs

(22,632)

(100%)

Gross profit (loss)

25,250

(15,385)

264%

General and administrative expenses

(6,095)

(4,670)

31%

Share-based payments expense

(28)

(196%)

Operating (loss) income

19,182

(20,083)

196%

Gain on adjustment to consideration payable

933

(100%)

Finance costs

(528)

(855)

(38%)

Foreign exchange gain

11,196

2,379

371%

Marketable securities loss

(234)

(100%)

Gain on disposal of assets held for sale

14,649

(100%)

Income (loss) before tax

29,850

(3,211)

(1030%)

Income tax (expense) recovery

(8,782)

3,702

(337%)

Net income for the period

21,068

491

4191%

Other comprehensive income (loss)

Currency translation differences

(10,142)

2,793

(463%)

Comprehensive income for the period

10,926

3,284

233%

Net income per share:

Basic and diluted

0.06

0.00

Weighted average number of common shares:

Basic

355,855,538

350,991,138

Diluted

355,355,538

352,084,018

(1) The financial results were restated as a result of corrections made to the 2023 comparatives. Refer to Note 3 of the consolidated financial statements for further details and impacts of the restatement. The quarterly results presented in this MD&A have been adjusted under the same basis as the annual adjustments presented in the financial statements.

2024

2023

Restated (1)

Change

'24 vs '23

Revenues

282,987

251,256

13%

Mine operating costs

Cost of sales

(206,055)

(199,432)

Depreciation, depletion and amortization

(19,706)

(25,959)

(24%)

Impairment - Mine Operating Costs

(22,632)

(100%)

Gross profit

57,226

3,233

1670%

General and administrative expenses

(24,307)

(26,288)

(8%)

Share-based payments expense

(105)

(229)

(54%)

Operating income (loss)

32,814

(23,284)

241%

Gain on adjustment to consideration payable

133,255

933

14182%

Finance costs

(18,232)

(4,833)

273%

Foreign exchange gain

44,199

6,727

557%

Marketable securities loss

(2,054)

(100%)

Gain on disposal of assets held for sale

14,649

(100%)

Impairment on mineral properties, plant and equipment

Transaction costs for Sinchi Wayra acquisition

Income (loss) before tax

192,036

(7,912)

2527%

Income tax expense

(27,552)

(3,096)

790%

Net income (loss) for the year

164,484

(11,008)

1594%

Other comprehensive income (loss)

Currency translation differences

(105)

(1,168)

(91%)

Comprehensive income (loss) for the year

164,379

(12,176)

(1450%)

Net income (loss) per share:

Basic and diluted

0.46

(0.03)

Weighted average number of common shares:

Basic

353,755,953

349,941,159

Diluted

356,255,953

352,299,217

(1) The net loss (income) and net loss (income) per share for 2023 were restated as a result of corrections made to the 2023 comparatives. Refer to Note 3 of the consolidated financial statements for further details and impacts of the restatement.

$933 in the year ended December 31, 2023. On March 18, 2022, the Company acquired 100% ownership of Sinchi Wayra and Illapa (the "Acquisition") from Glencore plc ("Glencore") under the terms and conditions outlined in the Share Purchase Agreement ("SPA").

On May 10, 2023, the Company signed amendments to the SPA ("Amended SPA") that impacted the timing of the repayments of the deferred cash consideration and timing of payment of certain VAT amounts collected by the Company which generated a gain on adjustment to consideration payable of $933 in the year-ended December 31, 2023.

On March 28, 2024, the Company entered into a binding term sheet (the "Term Sheet") with Glencore to amend the SPA, Amended SPA and certain transaction documents in connection with the Acquisition. Consideration payable was adjusted for the terms and conditions outlined in the Term Sheet in the first quarter of 2024 which generated a gain on adjustment to consideration payable of $133,255 in the year-ended December 31, 2023.

The following table presents selected financial information for each of the most recent eight quarters:

2024 (2)

2023

Restated (2)

Revenues

81,669

78,244

70,485

52,589

57,616

64,408

63,854

65,378

Mine operating costs

56,419

62,523

54,629

52,190

50,369

58,837

60,363

55,822

Gross profit

25,250

15,721

15,856

399

(15,385)

5,571

3,491

9,556

Operating expenses

(6,068)

(6,592)

(6,806)

(4,946)

(4,698)

(7,757)

(7,218)

(6,844)

Net income (loss)

21,067

9,310

1,449

132,658

490

(5,102)

(2,115)

(4,281)

Net income (loss) per share - basic and

diluted (1)

0.06

0.03

0.00

0.38

0.00

(0.01)

(1) The basic and fully diluted calculations result in the same value due to the anti-dilutive effect of outstanding stock options and warrants for all quarters.

(2) The financial results were restated as a result of corrections made to the 2023 comparatives. Refer to Note 3 of the consolidated financial statements for further details and impacts of the restatement. The quarterly results presented in this MD&A have been adjusted under the same basis as the annual adjustments presented in the financial statements.

The Company's quarterly results vary based on the silver equivalent ounces sold per period together with the average realized silver price for the period. In Q1 2024 the Company recorded a one-time gain on adjustment to consideration payable of

$133,255 after entering into the Term Sheet with Glencore.

‌Liquidity, Capital Resources and Contractual Obligations

For the year ended December 31, 2024, the Company had cash and cash equivalents of $35,721 (2023 - $4,947). The Company's cash and cash equivalents are not exposed to liquidity risk and there is no restriction on the ability of the Company to use these funds to meet its obligations.

For the year ended December 31, 2024, the Company reported net income of $164,484 (2023 - net loss of $11,008). As at December 31, 2024, the Company had working capital of $46,296 (2023 - working capital deficiency of $44,687).

The Company has a consideration payable balance outstanding for the acquisition of the Sinchiwayra and Illapa operations which occurred in 2022. The consideration payable consists of a base purchase price obligation and contingent value rights ("CVR") obligation.

The base purchase price obligation consists of the Company paying up to $80,000 in cash to Glencore in eight equal annual instalments of $10,000 each (the "Base Purchase Price" or "BPP") with the first payment being made on or before November 1, 2025. The Company can exercise an option to accelerate the payment of the outstanding balance of the Base Purchase Price in full at any time. Such prepayment amount will be $40,000 if exercised prior to November 1, 2025 and shall decrease by $2,000 for each annual instalment of $10,000 that has been paid by the Company (the "Acceleration Option").

On March 20th 2025, the Company made a $10,000 payment to Glencore as part of a plan to exercise the acceleration option to satisfy the base purchase price obligation owed to Glencore for the purchase of the Sinchiwayra and Illapa operations. An additional payment of $7,500 was made in May 2025 and the Company will continue to make bi-monthly payments of $7,500 commencing in May 2025 until reaching a total of $40,000 at which point the acceleration option will have been exercised and the base purchase price obligation of $80,000 will be extinguished by exercising the acceleration option.

The CVR has not resulted in any payments to date because the price of zinc has not reached the levels that would trigger a payment (greater than $3,850 per tonne).

At December 31, 2024, the Company has non-current loans payable of $3,137 (2023 - $748), and non-current consideration payable to Glencore of $34,783 (2023 - $113,351). In addition, the Company has an accumulated deficit of $16,007 (2023 -

$180,491) and shareholders' equity of $131,347 (2023 - deficiency of $33,778).

Year ended December 31,

2024

2023 (1)

Cash flow

Cash generated by operating activities

54,432

29,591

Cash (used by) provided by investing activities

(20,922)

(23,596)

Cash (used by) provided by financing activities

(2,546)

(5,659)

Increase in cash and cash equivalents

30,964

336

Effect of exchange rate on cash and cash equivalents held in foreign currencies

(190)

Cash and cash equivalents, beginning of the year

4,947

4,609

Cash and cash equivalents, end of the year

35,721

4,947

(1) The cash generated by operating activities and used by investing and financing activities were restated as a result of corrections made to the 2023 comparatives. Refer to Note 3 of the consolidated financial statements for further details and impacts of the restatement.

The Company's cash flows from operating, investing, and financing activities during the year ended December 31, 2024, are summarized as follows:

$95,750 in cash flows from operating activities before movements in working capital items; and,

$41,318 net decrease in non-cash working capital items during the period.

$22,619 spent on expenditures on mineral properties, plant and equipment; and,

$1,697 proceeds from disposition of mineral properties, plant and equipment.

$3,187 net repayment on loans payable and lease liability payments; and,

$641 of proceeds from the exercise of stock options.

The Company's objective when managing capital is to maintain financial flexibility to continue as a going concern while optimizing growth and maximizing returns of investments from shareholders.

The Company monitors its capital structure and based on changes in operations and economic conditions, may from time to time adjust the structure by repurchasing shares, issuing new shares, issuing new debt or retiring existing debt. The Company prepares an annual budget and quarterly forecasts to facilitate the management of its capital requirements. The annual budget is approved by the Company's Board of Directors.

The Company is not subject to any externally imposed capital requirements with the exception of compliance with covenants for the Trafigura Loan Facility. The Company is fully compliant with all financial covenants stipulated in the agreement; however, it did not meet the requirement to deliver its annual financial statements by April 30, 2024, due to delays in the issuance of the audited reports. Trafigura has granted a formal waiver, confirming that the delayed submission of the financial statements does not constitute a breach of covenants.

‌Off-balance Sheet Arrangements

The Company has not entered into any material off-balance sheet arrangement such as guarantee contracts, contingent interests in assets transferred to unconsolidated entities or derivative financial obligations.

During the three and twelve months ended December 31, 2024 and 2023, the Company incurred the following charges for directors, officers, and other members of key management of the Company, as well as for companies controlled by directors and officers of the Company:

Three months ended December 31 Twelve months ended December 31,

2024

2023

2024

2023

Management and consulting fees

1,818

1,655

2,806

2,571

Share-based compensation

(52)

197

229

1,766

1,852

2,867

2,800

Of the $1,818 in management and consulting fees incurred with related parties during the three months ended December 31, 2024, $100 (2023 - $75) was related to directors' fees and $1,718 (2023 - $1,580) was related to management fees.

As at December 31, 2024, directors and officers or their related companies were owed $73 (December 31, 2023 - $27) in respect of the services rendered. These are non-interest bearing with standard payment terms.

Key management includes directors of the Company, the CEO, the CFO, the Executive Chairman, and other members of key management. Other than the amounts disclosed above, there was no other compensation paid or payable to key management for employee services for the reported periods.

‌Subsequent Events

On March 20, 2025 the Company paid Glencore $10,000 and an additional payment of $7,500 was made on May 6, 2025, these are the part of a series of payments to be made to repay $40,000 prior to November 1, 2025 in order to exercise the accelerated payment option. Refer to note 10(a) in the annual audited consolidated financial statements for more information.

On February 27th, 2025 the Company completed an offering of $70,000 BOB ($10,057 USD) in promissory notes under its San Lucas Promissory Notes Issuance program. The San Lucas Promissory Notes Issuance program allows the Company to issue up to $140,000 BOB ($20,115 USD) in the Bolivian Stock market (Bolsa Boliviana de Valores). The notes are denominated in Bolivian Bolivianos and have a 6.25% interest rate and a maturity date of February 27th, 2026 and are unsecured. Refer to note 11(e) in the annual audited consolidated financial statements for more information.

With regards to the uncertain tax position related to the Illapa tax matter, on January 7, 2025 the Supreme Court of Justice ruled in favor of the Company by issuing sentence 188/2025 which nullified the previous rulings in favor of the tax authority and requires the Tax authority issue a new assessment that is legally compliant, at that point management will determine whether or not to accept the new assessment or could challenge it again. Management expects that the tax authority will exercise its right to appeal the decision within six months of the sentence. An appeal of the sentence would not affect management's current legal assessment which believes that it is probable that the current tax treatments will be accepted. Accordingly, the Company believes there is no current tax liability and has not recognized an expense related to this matter as at December 31, 2024. Refer to note 18(c) in the annual audited consolidated financial statements for more information.

‌Material Accounting Estimates and Judgments

‌Refer to Note 4 of the 2024 annual audited consolidated financial statements for a detailed discussion.

Accounting Policies Including Changes in Accounting Policies and Initial Adoption

Refer to Note 3 of the 2024 annual audited consolidated financial statements for a detailed discussion.

‌December 31, 2024

Amortized cost

FVTPL

Total

Financial assets

Cash and cash equivalents

35,721

Trade and other receivables

24,462

17,402

41,864

60,183

17,402

77,585

Financial liabilities

Trade payables and accrued liabilities

49,937

Consideration payable

34,625

10,158

44,783

Loans payable

19,569

Other liabilities

36,030

140,161

10,158

150,319

December 31, 2023 (restated)

Amortized cost

FVTPL

Total

Financial assets

Cash and cash equivalents

4,947

Trade and other receivables

22,855

9,896

32,751

27,802

9,896

37,698

Financial liabilities

Trade payables and accrued liabilities

59,271

Consideration payable

147,886

15,102

162,988

Loans payable

17,775

Other liabilities

46,357

271,289

15,102

286,391

(1) The Trade and other receivables, trade payables and accrued liabilities and other liabilities amounts were restated as a result of corrections made to the 2023 comparatives. Refer to Note 3 of the consolidated financial statements for further details and impacts of the restatement.

The categories of the fair value hierarchy that reflect the inputs to valuation techniques used to measure fair value are as follows:

Trade receivables are measured at fair value using Level 2 inputs. The fair value of trade receivables is measured based on inputs other than quoted prices for the underlying commodity prices (silver, lead, zinc, copper) to which the receivable relates as the trade receivables are provisionally priced at the time of sale.

The carrying values of cash and cash equivalents, other receivables, and trade payables and accrued liabilities approximate their fair values because of their short-term nature.

The fair value of the loans payable for disclosure purposes is determined using discounted cash flows based on the expected amounts and timing of future cash flows discounted using a market rate of interest adjusted for appropriate credit risk.

The levels in the fair value hierarchy into which the Company's financial assets and liabilities that are measured and recognized on the consolidated statements of financial position at fair value on a recurring basis were categorized as follows:

December 31, 2024 December 31, 2023

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

Assets

Trade and other receivables

17,402

9,896

17,402

9,896

Liabilities

Consideration payable

10,158

15,102

10,158

15,102

The majority of the Company's trade receivables arose from provisional concentrate sales and are valued using quoted market prices based on the forward London Metal Exchange for silver, zinc and lead and the London Bullion Market Association P.M. fix for silver.

The methodology and assessment of inputs for determining the fair value of financial assets and liabilities as well as the levels of hierarchy for the Company's financial assets and liabilities measured at fair value remains unchanged from that as at December 31, 2023.

The Company has exposure to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework and reviews the Company's policies on an ongoing basis.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company's trade receivables.

The Company has concentrate contracts to sell the zinc and lead concentrates produced by all of the Company's mines and the San Lucas trading business. Concentrate contracts are a common business practice in the mining industry. The terms of the concentrate contracts may require the Company to deliver concentrate that has a value greater than the payment received at the time of delivery, thereby introducing the Company to credit risk of the buyers of concentrates. Should any of these counterparties not honour purchase arrangements, or should any of them become insolvent, the Company may incur losses for products already shipped and be forced to sell its concentrates on the spot market or it may not have a market for its concentrates and therefore its future operating results may be materially adversely impacted. At December 31, 2024, the Company had receivable balances associated with buyers of its concentrates of $17,402 (December 31, 2023 - $9,836). The Company's concentrate is sold to well-known concentrate buyers.

The following financial assets represent the maximum credit risk to the Company:

December 31,

2024

2023

Cash and cash equivalents

$ 35,721

4,947

Trade and other receivables

41,864

39,426

Prepaid expenses and deposits

5,656

5,536

Management constantly monitors and assesses the credit risk resulting from its concentrate sales, trading counterparties and customers. With the exception to the above, the Company believes it is not exposed to significant credit risk.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows. The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company's normal operating requirements on an ongoing basis and its expansion plans. The Company strives to maintain sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash and short-term investments, and its committed loan facilities.

In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following tables summarize the remaining contractual maturities of the Company's financial liabilities and operating and capital commitments on an undiscounted basis:

year

1 - 2

years

2 - 5

years

Total

Trade payables and accrued liabilities

41,329

8,608

49,937

Consideration payable - base purchase price(1)

10,000

40,000

20,000

80,000

Consideration payable - CVR & additional payments

1,118

3,499

6,468

1,272

12,357

Loans payable

16,432

3,137

19,569

Lease payments

704

727

69,583

25,267

46,468

21,272

162,590

(1) The Base Purchase Price, as disclosed in Note 10(a), includes an acceleration option that enables the Company to repay less than the contractually committed amounts as presented in the table above. The Company continues to monitor its liquidity position and will determine prior to November 1, 2025 whether it will exercise the first acceleration option available to the Company.

Currency risk

The Company reports its financial statements in USD; however, the Company operates in jurisdictions that utilize other currencies. As a consequence, the financial results of the Company's operations as reported in USD are subject to changes in the value of the USD relative to local currencies. Since the Company's sales are denominated in USD and a portion of the Company's operating costs and capital spending are in local currencies, the Company is negatively impacted by strengthening local currencies relative to the USD and positively impacted by the inverse.

The sensitivity of the Company's net income to changes in the exchange rate between the US dollar and the Bolivian boliviano, the US dollar and the Mexican peso and the US dollar and the Canadian dollar, respectively, would be as follows: a 1% change in the US dollar exchange rate relative to the Bolivian boliviano would change the Company's net income by approximately

$506, a 1% change in the US dollar exchange rate relative to the Mexican peso would change the Company's net income by approximately $103, and a 1% change in the US dollar exchange rate relative to the Canadian dollar would change the Company's net income by approximately $(35).

The Company's financial assets and liabilities as at December 31, 2024 are denominated in Canadian dollars, US dollars, Bolivian bolivianos and Mexican pesos and translated to US dollars as follows:

CAD

BOB

USD

MXN

Total

Financial assets

Cash and cash equivalents

3,109

31,434

1,120

35,721

Trade and other receivables

15,806

24,814

1,142

102

41,864

15,864

27,923

32,576

1,222

77,585

Financial liabilities

Trade payables and accrued liabilities

419

42,890

4,938

1,690

49,937

Consideration payable

44,783

Loans payable

15,536

4,033

19,569

Other liabilities

13,374

10,690

11,965

36,029

419

71,800

64,444

13,655

150,318

Net financial assets (liabilities)

15,445

(43,877)

(31,868)

(12,433)

(72,733)

Interest rate risk

Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest rates. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. As at December 31, 2024, the Company's exposure to interest rate risk on interest bearing liabilities is limited to its consideration payable, debt facilities and lease liabilities. Based on the Company's interest rate exposure at December 31, 2024, a change of 1% increase or decrease of market interest rate would impact the Company's income or loss by approximately $202.

Price risk

Metal price risk is the risk that changes in metal prices will affect the Company's income or the value of its related financial instruments. The Company derives its revenue from the sale of silver, zinc, lead and copper. The Company's sales are directly dependent on metal prices that have shown significant volatility and are beyond the Company's control. Consistent with the Company's mission to provide equity investors with exposure to changes in precious metal prices, the Company's current policy is to not hedge the price of precious metal.

‌Outstanding Share Data

As at the date of this report, the Company has 355,855,538 common shares issued and outstanding, 14,300,000 common shares issuable under stock options, 825,000 common shares issuable under restricted share units, 1,000,000 common shares issuable under performance share units, 675,000 common shares issuable under deferred share units.

‌Internal Controls over Financial Reporting and Disclosure Controls and Procedures

The Company has disclosure controls and procedures in place to provide reasonable assurance that any information required to be disclosed by the Company under securities legislation is recorded, processed, summarized and reported within the applicable time periods and that required information is gathered and communicated to the Company's management so that decisions can be made about the timely disclosure of that information.

The Company's management is responsible for establishing and maintaining adequate internal controls over financial reporting. Any system of internal controls over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The restatements of prior period financial statements reflect the company's efforts to ensure the accuracy of its financial reporting. These restatements resulted from identified deficiencies in internal controls over financial reporting. In response, the company has undertaken measures to strengthen its internal control environment, including the hiring of additional staff at its corporate location, improvements to the process of the preparation of the consolidated financial statements and haven taken actions to improve the coordination between the Corporate accounting function and the site accounting teams and continues to monitor and improve its controls to prevent similar issues in the future. The company remains committed to maintaining effective internal controls and transparency in its financial disclosures.

The Company's management, including the Chief Executive Officer and the Chief Financial Officer, believe that any disclosure controls and procedures or internal controls over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, the Company's management cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any control system is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost- effective control system, misstatements due to error or fraud may occur and not be detected.

‌Non-GAAP Measures

The Company has included certain non-GAAP performance measures throughout this MD&A, including Cash Cost per Silver Equivalent Ounce Sold, Cash Cost of Production per Tonne, All-in Sustaining Cash Cost ("AISC") per Silver Equivalent Ounce Sold, Average Realized Price per Ounce of Silver Equivalent Sold, and Adjusted EBITDA each as defined in this section.

These performance measures are employed by the Company to measure its operating and financial performance internally, to assist in business decision-making, and provide key performance information to senior management. The Company believes that, in addition to conventional measures prepared in accordance with International Financial Reporting Standards ("IFRS® Accounting Standards"), as issued by the International Accounting Standards Board ("IASB"), certain investors and other stakeholders also use these non-GAAP measures as information to evaluate the Company's operating and financial performance. As there are no standardized methods of calculating these non-GAAP measures, the Company's methods may differ from those used by others and, accordingly, the Company's use of these measures may not be directly comparable to similarly titled measures used by others. Accordingly, these non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

The non-GAAP measures of cash cost per silver equivalent ounce sold and cash cost of production per tonne are used by the Company to manage and evaluate operating performance at respective mining operations and are widely reported in the silver mining industry as benchmarks for performance, but do not have a standardized meaning. Cash costs are calculated based on the cash operating costs at the respective mining operations and, in the case of cash cost per silver equivalent ounce sold, also include the third party concentrate treatment, smelting and refining cost.

Management of the Company believes that the Company's ability to control the cash cost per silver equivalent ounce produced and cash cost of production per tonne are two of its key performance drivers impacting both the Company's financial condition and results of operations. Having a low cash cost of production per tonne, when taken in connection with effective management of mining dilution, will improve the cash cost per silver equivalent ounce produced. Having a low-cost base per silver equivalent ounce of production allows the Company to continue operating during times of declining commodity prices and provides more flexibility in responding to changing market conditions. In addition, low-cost operations offer a better opportunity to generate positive cash-flows, which improves the Company's financial condition.

The Company believes these measures provide investors and analysts with useful information about the Company's underlying cash costs of operations and are relevant metrics used to understand the Company's operating profitability and ability to generate cash-flow.

To facilitate a better understanding of these measures as calculated by the Company, the following table provides a detailed reconciliation between the cash cost of production per tonne, cash cost per silver equivalent ounce sold, and the Company's operating expenses as reported in the Company's consolidated statements of income (loss) and comprehensive income (loss) contained in the respective financial statements for the referenced periods.

AISC is a non-GAAP measure and was calculated based on guidance provided by the World Gold Council ("WGC") in September 2013. WGC is not a regulatory industry organization and does not have the authority to develop accounting standards for disclosure requirements. Other mining companies may calculate AISC differently as a result of differences in underlying accounting principles and policies applied, as well as differences in definitions of sustaining versus development capital expenditures.

AISC is a more comprehensive measure than cash cost per ounce for the Company's operating performance by providing greater visibility, comparability and representation of the total costs associated with producing silver from its mining operations.

The Company defines sustaining capital expenditures as, "costs incurred to sustain and maintain existing assets at current productive capacity and constant planned levels of productive output without resulting in an increase in the life of assets, future earnings, or improvements in recovery or grade. Sustaining capital includes costs required to improve/enhance assets to minimum standards for reliability, environmental or safety requirements."

Consolidated AISC includes total production cash costs incurred at the Company's mining operations, which forms the basis of the Company's total cash costs. Additionally, the Company includes sustaining capital expenditures, corporate general and administrative expense, sustaining share-based payments (if any), and reclamation cost accretion. AISC for Bolivia Consolidated and Zimapan do not include certain corporate and non-cash items such as corporate general and administrative expense and sustaining share-based payments.

The Company believes that this measure represents the total sustainable costs of producing silver from current operations and provides the Company and other stakeholders of the Company with additional information of the Company's operational performance and ability to generate cash flows. As the measure seeks to reflect the full cost of silver production from current operations, new project capital and expansionary capital at current operations are not included. Certain other cash expenditures, including tax payments, dividends and financing costs are also not included.

The following tables provide a detailed reconciliation of these measures to our operating expenses, as reported in our annual audited consolidated financial statements.

Three Months Ended December 31, 2024

Bolivia Operating

Mines(1)

San Lucas Group

Zimapan

Corporate/ other

Total (1)

Cost of sales

28,422

23,069

15,078

66,569

Transportation and other selling cost

(5,088)

(1,881)

(952)

(7,921)

Royalty

(3,765)

(873)

(57)

(4,695)

Inventory change

(1,299)

1,326

(1,533)

(1,506)

Cash Cost of Production (A)

18,270

21,641

12,536

52,447

Cost of sales

28,422

23,069

15,078

66,569

Concentrate treatment, smelting and refining cost

5,004

910

4,808

10,722

Cash Cost of Silver Equivalent Sold (B)

33,426

23,979

19,886

77,291

Sustaining capital expenditures

5,609

1,458

2,966

10,033

General and administrative expenses

1,132

2,112

143

3,458

6,845

Accretion of decommissioning and restoration provision

350

222

120

692

All-in Sustaining Cash Cost (C)

40,517

27,771

23,115

3,458

94,861

Material processed (tonnes milled) (D)

183,889

92,369

216,883

493,141

Silver Equivalent Sold (payable ounces) (E)

1,753,377

847,411

852,103

3,452,891

Cash Cost per Silver Equivalent Ounce Sold (B/E)

19.06

28.30

23.34

22.38

All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold (C/E)

23.11

34.22

27.13

27.83

Cash Cost of Production per tonne (A/D)

99.35

234,.29

57.80

106.35

(1) Bolivar, Porco, the Caballo Blanco Group, are presented here as Bolivia Operating Mines. Information for Bolivar and Porco is presented at 100% and financial information will not tie to the consolidated financial statements as the Company records 45% of Bolivar and Porco.

Three Months Ended December 31, 2023 (2)

Bolivia

Operating Mines(1)

San Lucas Group

Zimapan

Corporate/ other

Total(1)

Cost of sales

24,894

15,402

10,605

50,900

Transportation and other selling cost

(5,144)

(1,504)

(1,011)

(7,658)

Royalty

(2,904)

(611)

(3,515)

Inventory change

5,387

(1,588)

2,903

6,702

Cash Cost of Production (A)

22,233

11,699

12,497

46,429

Cost of sales

24,894

15,402

10,605

50,900

Concentrate treatment, smelting and refining cost

7,910

3,160

5,677

16,747

Cash Cost of Silver Equivalent Sold (B)

32,804

18,562

16,282

67,647

Sustaining capital expenditures

4,628

3,113

7,741

General and administrative expenses

1,903

528

881

2,518

5,831

Accretion of decommissioning and restoration provision

303

(20)

283

All-in Sustaining Cash Cost (C)

39,638

19,090

20,256

2,518

81,502

Material processed (tonnes milled) (D)

201,568

83,343

204,507

489,417

Silver Equivalent Sold (payable ounces) (E)

1,975,463

933,859

904,540

3,813,863

Cash Cost per Silver Equivalent Ounce Sold (B/E)

16.61

19.88

18.00

17.74

All-in Sustaining Cash Cost per Silver Equivalent Ounce Sold (C/E)

20.07

20.44

22.39

21.37

Cash Cost of Production per tonne (A/D)

110.30

140.37

61.11

94.87

(2) Cost of sales in previously reported quarters of 2024 and 2023 was restated as a result of corrections made to the prior year comparatives, the restatement of these amounts did not impact cash cost per tonne, cash cost per silver equivalent ounce or all-in sustaining cash cost per silver equivalent ounce because the restatement adjustments were non-cash or related to a 45% Porco and Bolivar adjustment that is not applicable to the MD&A because results are presented on a 100% basis. Refer to Note 3 of the consolidated financial statements for further details regarding the restatement.

Disclaimer

Santacruz Silver Mining Ltd. published this content on May 29, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 29, 2025 at 02:04 UTC.