Q3 2026 Silvercorp Metals Inc Earnings Call

Operator 2: Thank you for standing by. Good afternoon. My name is Constantine, and I will be your conference operator today. At this time, I would like to welcome everyone to Silvercorp's Third Quarter Fiscal 2026 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. If you would like to withdraw your question, please press star and the number two. Thank you. I would now like to turn the conference over to Lon Shaver, President of Silvercorp. Please go ahead, sir.

Speaker #1: Thank you for standing afternoon . My by . Good name is Constantine and I will be your conference operator today . At this time , I would like to welcome everyone to Silvercore third quarter fiscal 2026 financial results conference call All placed prevent any .

Speaker #1: speaker's remarks , question and noise a After the . lines have been answer . session there will be background on mute to to ask a star .

Speaker #1: press question time , simply number one on your this Then the keypad . If you your to withdraw would like press star . Then the number two .

Speaker #1: Thank you . I would now like to turn the conference over to Lon Shaver , president of Silver Corp . Please go ahead , sir .

Lon Shaver: Thank you, Constantine. On behalf of Silvercorp, I'd like to welcome everyone to this call to discuss our third quarter fiscal 2026 financial results, which were released yesterday. A copy of our news release, the MD&A, and the financial statements are available on our website and SEDAR+. Before we start, please note that certain statements on today's call will contain forward-looking information within the meaning of securities laws. Additionally, please review the cautionary statements on our news release as well as the risk factors described in our most recent regulatory filings. So we'll kick off with our financial results. We delivered record-breaking performance in this Q3, highlighted by revenue of $126 million, which was up 51% from last year. Cash flow from operating activities and free cash flow reached $133 million and $90 million, respectively. Those were up 196% and 336% from last year.

Operator: Thank you, Constantine. On behalf of Silvercorp, I'd like to welcome everyone to this call to discuss our third quarter fiscal 2026 financial results, which were released yesterday. A copy of our news release, the MD&A, and the financial statements are available on our website and SEDAR+. Before we start, please note that certain statements on today's call will contain forward-looking information within the meaning of securities laws. Additionally, please review the cautionary statements on our news release as well as the risk factors described in our most recent regulatory filings. So we'll kick off with our financial results. We delivered record-breaking performance in this Q3, highlighted by revenue of $126 million, which was up 51% from last year. Cash flow from operating activities and free cash flow reached $133 million and $90 million, respectively. Those were up 196% and 336% from last year.

Speaker #2: Thank you. Constantine, on Silvercorp, I'd like to welcome everyone to this call on behalf of Silvercorp to discuss our third quarter fiscal 2026 financial results, which were released yesterday.

Speaker #2: A copy of our news release , the mDNA and the financial statements are available on our website and kdr+ . I'd . Before we start , please note that certain statements on today's call will contain forward looking information within the meaning of securities laws .

Speaker #2: Additionally , please review the cautionary statements on our news release as well as the risk factors described in our most recent regulatory filings .

Speaker #2: So , we'll kick off with our financial results . We delivered record breaking in this performance Q3 , highlighted by revenue of $126 million , up which was year 51% from last .

Speaker #2: Cash operating flow from activities and free cash flow reached $133 million 90 million , respectively , and those were up 196% and 336% from last year .

Lon Shaver: This performance was mainly driven by an 80% increase in the realized selling price of silver, which added just under $49 an ounce after smelter deductions. Silver accounted for 72% of our revenue in the third quarter. These results reinforce why Silvercorp remains a compelling investment in the silver sector. We are a profitable and growing producer that provides leverage to higher metals prices. We reported a net income of -$15.8 million for the quarter, or -$0.07 per share, which reflected a significant $60 million non-cash charge on the fair value of derivative liabilities. However, removing these non-cash and one-time items are just the net income for the quarter, was $47.9 million, or $0.22 per share, compared to $22 million or $0.10 a share in the comparative quarter.

Operator: This performance was mainly driven by an 80% increase in the realized selling price of silver, which added just under $49 an ounce after smelter deductions. Silver accounted for 72% of our revenue in the third quarter. These results reinforce why Silvercorp remains a compelling investment in the silver sector. We are a profitable and growing producer that provides leverage to higher metals prices. We reported a net income of -$15.8 million for the quarter, or -$0.07 per share, which reflected a significant $60 million non-cash charge on the fair value of derivative liabilities. However, removing these non-cash and one-time items are just the net income for the quarter, was $47.9 million, or $0.22 per share, compared to $22 million or $0.10 a share in the comparative quarter.

Speaker #2: This performance was mainly driven by an 80% increase in the realized selling price of silver, which averaged just under $49 an ounce after smelter deductions.

Speaker #2: Silver accounted for 72% of our revenue in the third quarter. These results reinforce why Silvercorp remains a compelling investment in the silver sector.

Speaker #2: We are a profitable and growing producer that provides leverage to higher metals prices. We reported a net income of -$15.8 million for the quarter, or negative $0.07 per share, which reflected a $60 million non-cash significant charge on the fair value of derivative liabilities.

Speaker #2: However , removing these non-cash and one time items are just the income for the net quarter was 47.9 million , or $0.22 per share , compared to 22 million , or $0.10 a share in the comparative quarter .

Lon Shaver: As I mentioned, revenue was up 51%, so with adjusted net income up 118%, that shows our ongoing efforts to control costs and drop these improvements to the bottom line. I also mentioned the record cash flow from operating activities earlier. This figure included an initial $44 million draw on our $175.5 million streaming facility from Wheaton Precious Metals, for the El Domo construction, as well as a positive $9.4 million change in non-cash flowing capital during the quarter. Even after adjusting for these items, our Q3 operating cash flow was still the highest quarter ever at $79.6 million, up 129% compared to last year. During the quarter, we invested nearly $26 million at our operations in China and $18 million at the El Domo project in Ecuador.

Operator: As I mentioned, revenue was up 51%, so with adjusted net income up 118%, that shows our ongoing efforts to control costs and drop these improvements to the bottom line. I also mentioned the record cash flow from operating activities earlier. This figure included an initial $44 million draw on our $175.5 million streaming facility from Wheaton Precious Metals, for the El Domo construction, as well as a positive $9.4 million change in non-cash flowing capital during the quarter. Even after adjusting for these items, our Q3 operating cash flow was still the highest quarter ever at $79.6 million, up 129% compared to last year. During the quarter, we invested nearly $26 million at our operations in China and $18 million at the El Domo project in Ecuador.

Speaker #2: As I mentioned , revenue was up 51% . So with adjusted net income up 118% , that shows our efforts to control costs and drop these improvements to the bottom line .

Speaker #2: I also mentioned that I recorded cash flow from operating activities earlier. This figure included an initial $44 million draw on a $175.5 million streaming facility from Wheaton Precious Metals for the construction, as well as a positive $9.4 million change in non-cash working capital during the quarter.

Speaker #2: Even after adjusting for these items, our Q3 operating cash flow was still the highest quarter ever at $79.6 million, up 129% compared to last year.

Speaker #2: During the quarter, we invested nearly $26 million at our operations in China and Domo, $18 million at the project in Ecuador. That, we cashed to the added balance in sheet the quarter with a strong cash balance of $463 million, an increase of over $80 million from September 30th.

Lon Shaver: Despite that, we added cash to the balance sheet, ending the quarter with a strong cash balance of $463 million, an increase of over $80 million from 30 September. The cash position does not include our investments in associates and other companies, which had a total market value of $233 million on 31 December and was more recently pegged at just under $260 million. After quarter end, we announced a transaction to acquire a gold project in Kyrgyzstan for $162 million in cash, of which $92 million was paid at closing on 27 January. I'd quickly recap our operating results. As we reported last month in Q3, we produced approximately 1.9 million ounces of silver, just over 2,000 ounces of gold, 16 million pounds of lead, and 7 million pounds of zinc.

Operator: Despite that, we added cash to the balance sheet, ending the quarter with a strong cash balance of $463 million, an increase of over $80 million from 30 September. The cash position does not include our investments in associates and other companies, which had a total market value of $233 million on 31 December and was more recently pegged at just under $260 million. After quarter end, we announced a transaction to acquire a gold project in Kyrgyzstan for $162 million in cash, of which $92 million was paid at closing on 27 January. I'd quickly recap our operating results. As we reported last month in Q3, we produced approximately 1.9 million ounces of silver, just over 2,000 ounces of gold, 16 million pounds of lead, and 7 million pounds of zinc.

Speaker #2: The cash position does include investments in associates and other companies, which had a total market value of $233 million on December 31st and was more recently pegged at just under $260 million.

Speaker #2: After quarter end , announced the transaction to acquire a we gold projects in Kyrgyzstan for 162 million in cash , of which at closing on January 27th .

Speaker #2: And to quickly recap our operating as we reported month in Q3 , we produced approximately over 2000oz of gold , 16,000,000oz , million pounds of lead , and £7 million of zinc production at Yang from benefited increased use of shrinkage mining relative to cut and filler .

Lon Shaver: Production at Ying benefited from increased use of shrinkage mining relative to cut-and-fill resuing, which drove record productivity with tons mined and milled up 23% and 18%, respectively, compared with Q3 2025. Head grades were lower due to the XRT sorter undergoing maintenance in October, as well as higher dilution associated with the shift to more shrinkage mining. We stockpiled over 61,000 tons of ore to be processed during the Chinese New Year holiday later this month. Year to date, we have produced 5.3 million ounces of silver, 6,231 ounces of gold, 46 million pounds of lead, and 18 million pounds of zinc, representing increases relative to last year of 1%, 42%, and 1%, respectively, in silver, gold, and lead production, and a 6% decrease in zinc production. On the cost side, Q3 production costs averaged $76 per ton at Ying, down 11% from last year.

Operator: Production at Ying benefited from increased use of shrinkage mining relative to cut-and-fill resuing, which drove record productivity with tons mined and milled up 23% and 18%, respectively, compared with Q3 2025. Head grades were lower due to the XRT sorter undergoing maintenance in October, as well as higher dilution associated with the shift to more shrinkage mining. We stockpiled over 61,000 tons of ore to be processed during the Chinese New Year holiday later this month. Year to date, we have produced 5.3 million ounces of silver, 6,231 ounces of gold, 46 million pounds of lead, and 18 million pounds of zinc, representing increases relative to last year of 1%, 42%, and 1%, respectively, in silver, gold, and lead production, and a 6% decrease in zinc production. On the cost side, Q3 production costs averaged $76 per ton at Ying, down 11% from last year.

Speaker #2: Pursuing drove , which record productivity with tons mined and milled up 23% and 18% , respectively , compared with Q3 2025 . Head grades were lowered due to the SRT sorter undergoing maintenance in October , as well as higher dilution associated with the shift to more .

Speaker #2: shrinkage Mining . We stockpiled over 61,000 tons of ore to be processed during the Chinese New Year holiday later this month . Year to date , we have produced 5.3 million ounces of silver , 6231oz of gold , £46 million of lead , and £18 million of zinc representing increases relative to last year of 1% , 42% and 1% , respectively , in silver , gold and lead production a 6% decrease in and zinc production cost on the side .

Speaker #2: Q3 production costs averaged $76 per ton at Yang, down 11% from last down year. The improvement reflects ongoing mine mechanization and greater use of cost-efficient shrinkage mining, boosting mine and mill productivity.

Lon Shaver: The improvement reflects ongoing mine mechanization and greater use of cost-efficient shrinkage mining, boosting mine and mill productivity. Year to date, production costs also averaged $80 per ton, below our annual guidance for Yang of between $87 and $88 per ton. Yang's cash cost per ounce of silver net of byproduct credits was negative $1.22 in Q3, compared to a negative $0.30 in the prior year quarter. The decrease was driven by a $3.5 million increase in byproduct credits. Q3 on sustaining costs per ounce net of byproducts was $11.32 at Yang, supporting robust margins amid higher silver prices. Consolidated mining income came at $77.1 million in Q3, with Yang contributing $71.6 million, or 93%, of the total. Turning toward growth projects at Yang, we invested $9 million in Q3, primarily for ramp and tunnel development to enhance underground access and improve material handling.

Operator: The improvement reflects ongoing mine mechanization and greater use of cost-efficient shrinkage mining, boosting mine and mill productivity. Year to date, production costs also averaged $80 per ton, below our annual guidance for Yang of between $87 and $88 per ton. Yang's cash cost per ounce of silver net of byproduct credits was negative $1.22 in Q3, compared to a negative $0.30 in the prior year quarter. The decrease was driven by a $3.5 million increase in byproduct credits. Q3 on sustaining costs per ounce net of byproducts was $11.32 at Yang, supporting robust margins amid higher silver prices. Consolidated mining income came at $77.1 million in Q3, with Yang contributing $71.6 million, or 93%, of the total. Turning toward growth projects at Yang, we invested $9 million in Q3, primarily for ramp and tunnel development to enhance underground access and improve material handling.

Speaker #2: Year to date production costs also averaged $80 per ton below our annual guidance for Yang of between 87 and $88 per ton . The cash cost per ounce of silver , net of byproduct credits , was -$1.22 in Q3 compared to a -$0.30 in the prior year quarter .

Speaker #2: decrease The was driven by a 3.5 million increase in credits by product . Q3 on sustaining cost per ounce , net of byproducts , was 1132 at Yang , supporting robust margins amid higher silver prices .

Speaker #2: Consolidated mining income came in at $77.1 million, compared with Q3, Yin $71.6 million, or total. Turning to our growth projects at Yang, we invested $9 million in Q3, primarily in ramp and tunnel development to enhance underground access and improve material handling.

Lon Shaver: This work goes hand in hand with our efforts to expand mining capacity across the four licenses at Ying. Recall that we increased the permit at the SGX mine with a renewal for another 11 years and a capacity increase from 198,000 tons to 500,000 tons per year. The HPG permit was also renewed and expanded from 50,000 to 120,000 tons, and the DCG permit increased from 30,000 to 100,000 tons. We're now in the process of applying to increase the TLP-LM permit from 230,000 tons to 600,000 tons per year, with approval expected later this quarter. Once all approvals are in place, Ying's total permitted annual mining capacity will rise to 1.32 million tons. At Kuanping, our satellite project north of Ying, mine construction continued with over three kilometers of ramp development and 693 meters of exploration tunneling completed in Q3.

Operator: This work goes hand in hand with our efforts to expand mining capacity across the four licenses at Ying. Recall that we increased the permit at the SGX mine with a renewal for another 11 years and a capacity increase from 198,000 tons to 500,000 tons per year. The HPG permit was also renewed and expanded from 50,000 to 120,000 tons, and the DCG permit increased from 30,000 to 100,000 tons. We're now in the process of applying to increase the TLP-LM permit from 230,000 tons to 600,000 tons per year, with approval expected later this quarter. Once all approvals are in place, Ying's total permitted annual mining capacity will rise to 1.32 million tons. At Kuanping, our satellite project north of Ying, mine construction continued with over three kilometers of ramp development and 693 meters of exploration tunneling completed in Q3.

Speaker #2: This work goes hand in hand with our efforts to expand mining capacity across the four licenses at Yang . Recall that we increased the the permit at the mine with a renewal for another 11 years and a capacity increase from 198,000 tons to 500,000 tons per year .

Speaker #2: The HPG permit was also renewed and expanded from 50,000 to 120,000 tons , and the DCG permit increased from 30,000 to 100,000 tons .

Speaker #2: When on the process of applying to increase the TLP permit from 230,000 tons to 600,000 tons per year , with approval this expected later Yang's .

Speaker #2: Once all permits and approvals are in place, total quarterly annual mining capacity will rise to 1.32 million tons. At Quan, our satellite project north of Yang Mine, construction continued with over three kilometers of ramp development and 693 meters of exploration.

Speaker #2: Tunneling completed in Q3 . Kwon ping is expected to begin delivering some minor development or starting in June of this year . Q1 ping is a mining permit to produce up to 200,000 tons per year , which at a full contribution , would bring our total mining capacity to 1.52 million tons per year .

Lon Shaver: Kuanping is expected to begin delivering some minor development ore starting in June of this year. Kuanping has a mining permit to produce up to 200,000 tons per year, which at a full contribution would bring our total mining capacity at Ying to 1.52 million tons per year. As we previously mentioned, we'll publish an updated technical report for the Ying district to include the Kuanping contribution by mid-year of this year. Switching gears to Ecuador, at El Domo, mine construction continued in Q3 with around 1.1 million cubic meters of material moved. Cumulative earth-moving volumes have now reached 46% of the total design volume for construction package one, with activities focused on hallroom development, process plant site preparation, and the TSF starter dam.

Operator: Kuanping is expected to begin delivering some minor development ore starting in June of this year. Kuanping has a mining permit to produce up to 200,000 tons per year, which at a full contribution would bring our total mining capacity at Ying to 1.52 million tons per year. As we previously mentioned, we'll publish an updated technical report for the Ying district to include the Kuanping contribution by mid-year of this year. Switching gears to Ecuador, at El Domo, mine construction continued in Q3 with around 1.1 million cubic meters of material moved. Cumulative earth-moving volumes have now reached 46% of the total design volume for construction package one, with activities focused on hallroom development, process plant site preparation, and the TSF starter dam.

Speaker #2: we As previously mentioned , we'll publish an updated technical report for the district to include the contribution by mid-year of this year . Switching gears to Ecuador at mine construction continued in Q3 , with around one point 1,000,000m³ of material moved moving Earth .

Speaker #2: Cumulative volumes have now reached 46% of the volume for total construction package one , with activities focused on Hall Road development process , plant site preparation and the TSF starter dam .

Lon Shaver: We also commissioned the 600-bed construction camp, allowing us to accommodate the new mining contractor, CRCC19, with whom we are in the process of finalizing a contract to carry out mine construction. CRCC19 has mobilized personnel and will bring equipment on site later this month. We spent approximately $45 million on construction through December 2025, which represents about 16% of our updated budget of $284 million. And at the Condor Gold Project in Ecuador, we completed and announced a PA in December for an underground gold operation centered around the Camp and Los Cuyes deposits. The study demonstrates a long-life, low-cost gold project with strong economics at a base case gold price that was used of $2,600 an ounce. This represents a first step as the company continues to de-risk the project through further technical work.

Operator: We also commissioned the 600-bed construction camp, allowing us to accommodate the new mining contractor, CRCC19, with whom we are in the process of finalizing a contract to carry out mine construction. CRCC19 has mobilized personnel and will bring equipment on site later this month. We spent approximately $45 million on construction through December 2025, which represents about 16% of our updated budget of $284 million. And at the Condor Gold Project in Ecuador, we completed and announced a PA in December for an underground gold operation centered around the Camp and Los Cuyes deposits. The study demonstrates a long-life, low-cost gold project with strong economics at a base case gold price that was used of $2,600 an ounce. This represents a first step as the company continues to de-risk the project through further technical work.

Speaker #2: We also commissioned the 600 bed construction camp , allowing us to accommodate the new mining contractor , Crcc 19 , with whom we are in the process of finalizing a contract to carry out mine construction .

Speaker #2: CRC 19 has mobilized personnel and will bring equipment on site later this month . We spent approximately 45 million on construction through December 2025 , which represents about 16% of our updated budget of 284 million .

Speaker #2: And at the Condor Gold project in Ecuador , we completed and announced a PA in December for underground gold operation centered around the camp and less cours de deposits .

Speaker #2: The study demonstrates a life , low long cost gold project with strong a base economics at case gold price that was used of 2600 an ounce .

Speaker #2: This represents a first step as the company continues to de-risk the project through further technical work. Our plan is to drive two exploration tunnels into these deposits in order to complete underground drilling to facilitate advance exploration and resource definition.

Lon Shaver: Our plan is to drive two exploration tunnels into these deposits in order to complete underground drilling to facilitate advanced exploration and resource definition. To proceed on this basis, we require an environmental license and water permits. The water permits have been approved by the relevant government authorities. Technical reports for the environmental license were also completed and submitted to the related government authorities for review. The environmental impact study for the Condor Project has been approved by the Ministry of Environment, Water, and Ecological Transition. We're now actively engaged in formal consultation with the directly impacted communities surrounding the project. This represents the final stage in obtaining the environmental license for exploitation.

Operator: Our plan is to drive two exploration tunnels into these deposits in order to complete underground drilling to facilitate advanced exploration and resource definition. To proceed on this basis, we require an environmental license and water permits. The water permits have been approved by the relevant government authorities. Technical reports for the environmental license were also completed and submitted to the related government authorities for review. The environmental impact study for the Condor Project has been approved by the Ministry of Environment, Water, and Ecological Transition. We're now actively engaged in formal consultation with the directly impacted communities surrounding the project. This represents the final stage in obtaining the environmental license for exploitation.

Speaker #2: To proceed on this basis, we require an environmental license and water permits. The water permits have been approved by the relevant government authorities.

Speaker #2: Technical reports for the environmental license were also completed and submitted to the related government authorities for review. The Environmental Impact Study for the Condor Project has been approved by the Ministry of Environment, Water and Ecological Transition.

Speaker #2: Now, actively, we're engaged in formal consultation with the directly impacted communities surrounding the project. This process represents the final stage in obtaining the environmental license for exploitation.

Lon Shaver: Once this license is secured, we'll commence the development of underground tunnels into the Camp and Los Cuyes deposits, access that we believe could be used if and when we transition to a mining operation once we have received appropriate permits for this and the necessary surface infrastructure. Turning to Kyrgyzstan, we have recently acquired a 70% interest in the Tulkubash and Kyzyltash gold projects. This represents another important step in our strategy to build a globally diversified producer with added exposure to gold-strong fundamentals. These projects give us the opportunity to apply our mine-building expertise and financial strength to unlock value for all stakeholders through a phased development approach, starting with the fully permitted Tulkubash project and followed by Kyzyltash.

Operator: Once this license is secured, we'll commence the development of underground tunnels into the Camp and Los Cuyes deposits, access that we believe could be used if and when we transition to a mining operation once we have received appropriate permits for this and the necessary surface infrastructure. Turning to Kyrgyzstan, we have recently acquired a 70% interest in the Tulkubash and Kyzyltash gold projects. This represents another important step in our strategy to build a globally diversified producer with added exposure to gold-strong fundamentals. These projects give us the opportunity to apply our mine-building expertise and financial strength to unlock value for all stakeholders through a phased development approach, starting with the fully permitted Tulkubash project and followed by Kyzyltash.

Speaker #2: Once license is secured , we'll development of underground tunnels commence the into the camp and Les deposits access that we believe could be used if and when we transition to a mining operation .

Speaker #2: Once we have received appropriate permits for this and the necessary surface infrastructure . Turning to Kyrgyzstan , we recently acquired a 70% interest in the Tokyo Bash and Gold .

Speaker #2: This represents another important project step in our strategy to build a globally diversified producer with gold. Strong exposure to fundamentals. These projects give us the opportunity to mindfully apply our expertise and financial strength to unlock value for all stakeholders through a phased development approach.

Speaker #2: Starting with the fully permitted Tokyo Bash Project and followed by Kyzyltash , the Kyrgyz government retains a 30% free carried interest , so we feel interests are aligned as we advance the projects production toward manner in a modern benefits and responsible .

Lon Shaver: The Kyrgyz government retains a 30% free-carried interest, so we feel interests are aligned as we advance the projects toward production in a modern and responsible manner that benefits our shareholders and the country as a whole. We look forward to updating the market on our development plans over the coming months. And with that, operator, I'd like to open the call for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and the number 1 on your telephone keypad. If you would like to withdraw your question, please press star and the number 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your questions. Your first question comes from the line of Joseph Reagor from Roth Capital Partners.

Operator: The Kyrgyz government retains a 30% free-carried interest, so we feel interests are aligned as we advance the projects toward production in a modern and responsible manner that benefits our shareholders and the country as a whole. We look forward to updating the market on our development plans over the coming months. And with that, operator, I'd like to open the call for questions.

Speaker #2: That our shareholders whole. As a country, we look and look forward to updating the market on our development plans over the coming months.

Speaker #2: And with that , operator , I'd like to open the call for questions .

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and the number one on your telephone keypad. If you would like to withdraw your question, please press star and the number 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your questions. Your first question comes from the line of Joseph Reagor from Roth Capital Partners.

Speaker #1: Thank you . Ladies and gentlemen . We will now begin the question and answer session . If you would like to ask a question , please press star and the number one on your telephone keypad .

Speaker #1: If you would like to withdraw your question , please press star . Then the number two . If you are using a speaker phone , please lift the handset before pressing any keys .

Speaker #1: One moment please , follow . Show up your questions . Your first question comes from the line of Joseph Reger from Roth Capital , partner , please go ahead .

Lon Shaver: Please go ahead. Hey, Lon. Thanks for taking the questions. I guess first thing on the guidance, you guys didn't make any changes to the guidance, but it seems like you're probably tracking towards a higher than the high end on throughput at Ying, but obviously lower grades than expected. Is it fair for us to make assumptions like that? Yeah. I mean, I think it's pretty obvious given the challenge that we had in Q2 that it was going to be tough to catch that up. Certainly, going into Q4 with some extra tons to mill during Chinese New Year will certainly help smooth over and not make it as low of a Q4 as we typically would have because of Chinese New Year.

Operator: Please go ahead.

Joseph Reagor: Hey, Lon. Thanks for taking the questions. I guess first thing on the guidance, you guys didn't make any changes to the guidance, but it seems like you're probably tracking towards a higher than the high end on throughput at Ying, but obviously lower grades than expected. Is it fair for us to make assumptions like that?

Speaker #3: Go ahead .

Speaker #4: Hey , thanks for taking the questions . I guess first thing on the guidance , you guys didn't changes make any to guidance , but it seems like you probably tracking towards a higher than the high end on throughput at Ying , but obviously lower grades than expected .

Speaker #4: Is it ? Is it fair for us to to make assumptions like that ? Yeah .

Lon Shaver: Yeah. I mean, I think it's pretty obvious given the challenge that we had in Q2 that it was going to be tough to catch that up. Certainly, going into Q4 with some extra tons to mill during Chinese New Year will certainly help smooth over and not make it as low of a Q4 as we typically would have because of Chinese New Year.

Speaker #2: mean , I think I it's pretty obvious given the , the challenge that we had in Q2 that it was going to be tough to catch to catch that up .

Speaker #2: Certainly , you know , going into Q4 with some extra tons to to mill during Chinese New Year will certainly , you know , help smooth over and not make it as low of a Q4 as we typically would have because of Chinese New Year .

Lon Shaver: But yeah, I think right now, if we're going to be looking at guidance, it would be at the lower end, and that might be still challenging at this point. Okay. Fair enough. And then on the quarter, the $60+ million derivative liability, was that solely related to the convertible notes, or was there something else in that? Yeah. No, that's related to the convertible. Okay. All right. Thanks. I'll turn it over. Okay. Thanks, Joe. Hi, ladies and gentlemen. As a reminder, if you would like to ask a question, please press * and the number 1 on your telephone keypad. If you're using a speakerphone, please make sure to lift your handset before pressing any keys. There are no further questions at this time. This concludes your question and answer session.

Lon Shaver: But yeah, I think right now, if we're going to be looking at guidance, it would be at the lower end, and that might be still challenging at this point.

Speaker #2: But . Yeah , I think right now , if we're going to be looking guidance , it would be at the at the lower end , and that might still challenging at this point

Joseph Reagor: Okay. Fair enough. And then on the quarter, the $60+ million derivative liability, was that solely related to the convertible notes, or was there something else in that?

Speaker #2: . Fair

Speaker #4: enough . Okay . And then on the quarter , the 60 plus million derivative liability was that solely related to the convertible notes or was there something else in that .

Lon Shaver: Yeah. No, that's related to the convertible. Okay. All right. Thanks. I'll turn it over.

Speaker #2: Yeah . No , that's related to the convertible . Okay .

Lon Shaver: Okay. Thanks, Joe.

Speaker #4: All right. Thanks. I'll turn it over.

Operator: Hi, ladies and gentlemen. As a reminder, if you would like to ask a question, please press * and the number 1 on your telephone keypad. If you're using a speakerphone, please make sure to lift your handset before pressing any keys. There are no further questions at this time. This concludes your question and answer session.

Speaker #2: Okay. Thanks, Joe.

Speaker #1: Hi , ladies . Ladies and gentlemen , as a reminder , if you would like to ask a question , please press star .

Speaker #1: Then the number one on your telephone keypad . If you're using a speakerphone , please make sure to lift your handset before pressing any keys .

Speaker #1: There are no further questions at this time . This concludes our question and answer session . I would now like to turn the conference back over to the management team for any closing remarks .

Lon Shaver: I would now like to turn the conference back over to the management team for any closing remarks. All right. Well, thank you. Thanks, operator, and thanks to everyone for joining us today. If anyone does have any further questions, we're always happy to take calls or emails. And we look forward to catching up with all of you next time when we discuss our fiscal 2026 year-end results. Have a great day, everyone. This concludes today's conference call. You may disconnect your lines. Thank you for your participation, and have a wonderful day.

Operator: I would now like to turn the conference back over to the management team for any closing remarks.

Lon Shaver: All right. Well, thank you. Thanks, operator, and thanks to everyone for joining us today. If anyone does have any further questions, we're always happy to take calls or emails. And we look forward to catching up with all of you next time when we discuss our fiscal 2026 year-end results. Have a great day, everyone. This concludes today's conference call. You may disconnect your lines. Thank you for your participation, and have a wonderful day.

Speaker #2: thank All right . Well , you . Thanks . Operator . And thanks , joining us everyone , for today . If anyone does have any further questions , we're always happy to or take calls emails , and we look forward to catching up with all of you next time .

Speaker #2: When we discuss our fiscal 2026 year-end results. Have a great day, everyone.