Discovery Silver Posts Record $371 Million Q3 Revenue on Kidd Boost

Discovery Silver booked $371 million in third-quarter 2026 revenue, up 16% from the second quarter, as its newly acquired Kidd operations delivered a full quarter of results and gold output climbed to a record. EBITDA rose 7% to $181 million, Chief Financial Officer Alison White said on the earnings call, with higher gold sales at Porcupine and the Kidd contribution more than offsetting a lower average realized gold price.

Free cash flow reached $87 million, a sharp swing from an $11 million outflow in the prior quarter, even as cash spending on capital projects hit $116 million. White said the improvement reflected strong operational performance and a change in working capital, including the normalization of payables after accelerated payments ahead of a second-quarter systems implementation.

What drove production and costs?

Gold production reached 70,564 ounces, up 5% from the previous quarter, while gold sold rose 8%, Co-Chief Operating Officer Gord Leavoy said. The company processed 943,000 tons, 4% more than in the second quarter and 17% more than a year earlier.

Unit costs moved in both directions:

• Milling costs fell to $20.10 per ton from $21.50 in the prior quarter
• Mining costs per ton improved by more than 10%, according to Co-Chief Operating Officer Duncan King
• Cash costs per ounce rose to $1,470 from $1,387, on higher royalty expenses and processing of higher-cost inventory
• All-in sustaining costs averaged $2,293 per ounce sold, reflecting higher sustaining capital on equipment, the Dome Mill and tailings work

Adjusted earnings came in at $83 million, or $0.10 per share, down from $92 million, or $0.11 per share, in the preceding quarter but up from $61 million, or $0.08 per share, a year earlier.

Where does the balance sheet stand?

Discovery ended September with $450.7 million in cash and $844 million in total liquidity, including the undrawn portion of its revolving credit facility. White said the company remained on track to meet its key production, cost and capital guidance ranges, with Porcupine capital spending and cash costs expected toward the higher ends of their respective ranges.

What comes next for Timmins?

Drilling at the Pamour and Dome properties frames the exploration story. President, CEO and Chairman Tony Makuch said recent results suggest both properties have potential to become substantially larger open-pit operations.

At Pamour, Executive Vice President of Exploration and Growth Eric Kallio said drilling extended mineralization around the main pit and identified promising results at Pamour West and the north contact area. The updated resource, planned for early in the first quarter of 2027, is expected to include approximately 100 holes drilled in 2025 and 2026 and cover a larger area than the previous estimate.

At Dome, drilling identified mineralization extending up to 600 meters south of the current pit, plus new zones to the north, Kallio said. Several intersections are shallow and remain open for expansion. An updated Dome resource estimate is due in early 2027.

Advancing Pamour remains the priority, Makuch said. With existing mill capacity constraining production, Discovery is targeting processing of Borden ore at the Kidd metallurgical site in 2027 and considering a new gold circuit there that could eventually process Pamour material. A Porcupine preliminary economic assessment, incorporating resource updates and milling options work, is planned for early 2027.

What changed at Cordero?

Discovery received environmental approval and a change-of-land-use permit for Cordero, completing the federal environmental permitting process. The company cut its 2026 Cordero capital spending guidance to $20 million to $30 million after the land-use permit fee came in below its original assumption.

White said Discovery paid a $12 million permit fee in the third quarter and had spent $18 million on Cordero capital through the first nine months. The original guidance for fees and growth capital was $90 million to $100 million.

A Cordero feasibility study update, focused largely on capital and cost estimates, is expected around year-end or early in the first quarter of 2027, Makuch said. Discovery plans to advance detailed engineering next year while evaluating options that could include building the project itself or working with a partner.

At Kidd, acquired June 1, third-quarter revenue was $72.3 million against production costs of $45.1 million, said Dawid Myburgh, senior vice president of Timmins operations. The operation posted a small loss after depreciation but generated positive cash flow. Makuch declined to promise how much longer the Kidd base-metals mine would remain operational.

In plain terms: record output and a permitting milestone give Discovery cash and optionality heading into a busy 2027.