press release

Santacruz Silver Reports Second Quarter 2026 Financial Results

2026-08-17

TSX - Toronto Stock Exchange · Corporate Finance

Vancouver, British Columbia--(Newsfile Corp. - August 17, 2026) - Santacruz Silver Mining Ltd. (NASDAQ: SCZM) (TSXV: SCZ) ("Santacruz" or the "Company") reports its financial and operating results for the quarter ended June 30, 2026 ("Q2 2026"). The full version of the unaudited Q2 2026 financial statements (the "Financial Statements") and accompanying Management's Discussion and Analysis (the "MD&A") can be viewed on the Company's website at www.santacruzsilver.comor on SEDAR+ at www.sedarplus.ca. All amounts are expressed in U.S. dollars, unless otherwise stated.

Q2 2026 Highlights

Revenuesof $113.5 million, a 55% increase year-over-year. Gross profitof $51.1 million, a 102% increase year-over-year. Adjusted EBITDA(1)of $46.7 million, a 74% increase year-over-year. Cash and highly-liquid marketable securities(2)of $72.8 million, an 82% increase year-over-year. Working capitalof $86.1 million, a 43% increase year-over-year. Net income of $2.0 million, a 90% decrease year-over-year, reflecting the impact of the non-recurring tax event and non-cash CVR revaluation discussed below. Average realized price per silver ounce sold(1)of $72.17, a 118% increase year-over-year. AISC per silver ounce sold(1)of $21.87, a 25% increase year-over-year. Realized mining margin per silver ounce sold(1)of $50.30, a 222% increase year-over-year. Average realized price per zinc tonne sold(1)of $3,302, a 12% increase year-over year. AISC per zinc tonne sold(1)of $2,219, a 46% increase year-over-year. Realized mining margin per zinc tonne sold(1)of $1,083, a 24% decrease year-over-year.

1. The Company reports non-GAAP measures, which includes: adjusted EBITDA, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per ounce of silver and zinc tonne sold (AISC) and realized mining margin per silver ounce and zinc tonne 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 even though the metrics have the same or similar names. Refer to the section titled "Non-GAAP Measures" in the MD&A for more information. 2. Cash includes $50.4 million and highly-liquid marketable securities includes $22.4 million, consisting of US treasury notes and bills, of which $15.8 million serves as collateral for short-term borrowings.

Arturo Préstamo, Executive Chairman and Chief Executive Officer of Santacruz, commented: "Santacruz delivered strong operating and financial performance in Q2 2026, with revenue up 55% year-over-year to $113.5 million, Adjusted EBITDA up 74% to $46.7 million, and realized mining margin per silver ounce sold rising to $50.30 from $15.63. The Company ended the quarter with $72.8 million in cash and highly liquid marketable securities. Our cash position was affected by the $7.7 million repayment of San Lucas promissory notes in June, which have been reissued in Q3 2026. In addition, we further expect to grow our cash reserves from the reduction of our unusually high trade receivables balance at the current quarter end."

Andrés Bedregal, CFO of Santacruz, stated:"It's important to note that our net income for the quarter was significantly impacted by two non-recurring tax events associated with changes in Bolivia's exchange rate and inflation assumptions, as well as a non-cash fair value adjustment related to the Glencore contingent value rights (CVRs). These items obscure the underlying strength of our operating performance this quarter."

Mr. Bedregal added:"The largest impact on net income was an unusually high $36.1 million income tax expense caused by two non-recurring events. One event was the result of the revaluation of the Boliviano following the change in the official exchange rate from 6.96 to 9.77 Bolivianos per U.S. dollar, a 40% decrease. The change resulted in a taxable foreign exchange gain, despite not representing a cash gain. In future quarters, we expect the impact of foreign exchange revaluation to be significantly lower, as any future changes will be measured from the new closing rate of 9.77 rather than the previous rate of 6.96. Income tax expense was also impacted by a non-recurring taxable gain related to a reduction in our decommissioning and restoration provision which was driven by forecasted lower inflation over the lives of our mining operations in Bolivia."

Mr. Bedregal concluded:"Our net income was further affected by a $15.8 million non-cash fair value adjustment to the consideration payable balance arising from the CVRs granted to Glencore. The consideration payable balance does not represent a cash payment currently owed to Glencore. The value of the CVR liability is a valuation of the payouts that could occur up to the end of 2032. The payments are only triggered when the month's average LME zinc price exceeds $3,850 per tonne, a threshold that has not been exceeded since the inception of the agreement in 2024. Its important to consider that any payments triggered by higher zinc prices would be accompanied by increased sales revenues from the higher price. Excluding the loss from the change in fair value of the CVR, net income for the quarter would have been $17.8 million."

The following table reconciles net income as reported in the Interim Consolidated Financial Statements to show the net income excluding the non-cash CVR adjustment for the three months ended June 30, 2026 (US$ thousands):

| | | Three months ended June 30 2026 | | | Operating income | | 44,753 | | | Other income | | 1,300 | | | Loss on change in fair value of consideration payable (CVR) | | (15,788 | ) | | Foreign exchange gain | | 7,807 | | | Income before tax expense | | 38,072 | | | Income tax expense | | (36,067 | ) | | Net income for the period | | 2,005 | | | Add: Loss on change in fair value of consideration payable | | 15,788 | | | Adjusted net income for non-cash CVR loss(1) | | 17,793 | |

Note:

(1) "Adjusted net income for non-cash CVR loss" is a non-GAAP measure which excludes the loss on change in fair value of consideration payable reported in the Interim consolidated statement of comprehensive income. refer to note 9 - Consideration payable in the Condensed Interim Consolidated Financial Statements for the Three and Six Months ended June 30, 2026 and 2025 for details.

Arturo Préstamo, Executive Chairman and Chief Executive Officer of Santacruz, added: "During Q2 2026, some parts of Bolivia experienced road blockades that disrupted logistics for approximately 53 days. Operationally, our production was not affected by the blockades, which is a testament to the strength of our operations and the dedication of our teams. Production increased quarter-over-quarter at all five of Santacruz's operations, consolidated silver production increased 17% year-over-year, and notably, silver production at Bolivar increased 32% quarter-over-quarter. The blockades did, however, temporarily constrain concentrate exports — particularly lead concentrate, which contains the majority of our silver production. As a result, sales were below production volumes during the quarter, contributing to an approximately $17.0 million increase in inventories. The blockades were resolved at the end of Q2 2026 and exports have normalized during Q3 2026. We have since been drawing down the inventory accumulated during Q2 2026, with the related revenue expected to be recognized as those shipments are completed."

Mr. Prestamo concluded:"Looking ahead to the second half of 2026, we are focused on our operations, which we expect will provide strong financial performance, including realizing the benefit of the concentrate sales that were deferred from Q2 2026. At the Bolivar mine, we are on track to achieve full operational recovery and return to full production by Q4 2026, with continued quarter-over-quarter improvement expected in Q3 2026. Across our broader portfolio, we continue to evaluate opportunities to increase production and improve operating performance, including initiatives to strengthen San Lucas. As we optimize our existing operations and bring new production online, we are building scale across our portfolio and advancing our goal of becoming a leading silver and base metals producer in Latin America — a trajectory we believe positions us to create meaningful long-term value for our shareholders."

Selected consolidated financial and operating information for Q2 2026, Q1 2026 and Q2 2025 is presented below. All financial information is prepared in accordance with International Financial Reporting Standards ("IFRS"), and all dollar amounts are expressed in thousands of US dollars, except per unit amounts, unless otherwise indicated.

Update to Non-GAAP Performance Measures and Silver/Zinc Equivalent Ounces Metrics

Commencing in Q1 2026, the Company updated its non-GAAP performance measures to provide management and readers with useful information to evaluate the performance of the Company. Refer to the Non-GAAP measures section in the Company's Q2 2026 MD&A for a detailed explanation of the metrics and methodology used to determine them.

2026 Second Quarter Operational Highlights

| Operational Highlights | 2026 Q2 | | 2026 Q1 | | Change Q2 vs Q1 | | 2025 Q2 | | Change '26 Q2 vs '25 Q2 | | 2026 YTD | | 2025 YTD | | Change '26 YTD vs '25 YTD | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mining Operations & Ore Processing(1) | | | | | | | | | | | | | | | | | | | | | | | | | | Tonnes milled | | 521,956 | | | 487,777 | | | 7% | | | 480,863 | | | 9% | | | 1,009,733 | | | 952,636 | | | 6% | | | Silver ounces produced | | 1,573,100 | | | 1,341,499 | | | 17% | | | 1,423,081 | | | 11% | | | 2,914,599 | | | 3,013,144 | | | (3%) | | | Zinc tonnes produced | | 23,240 | | | 21,640 | | | 7% | | | 21,149 | | | 10% | | | 44,880 | | | 41,868 | | | 7% | | | Lead tonnes produced | | 3,165 | | | 2,686 | | | 18% | | | 2,772 | | | 14% | | | 5,851 | | | 5,490 | | | 7% | | | Copper tonnes produced | | 337 | | | 308 | | | 9% | | | 229 | | | 47% | | | 645 | | | 508 | | | 27% | | | Supplemental context metrics | | | | | | | | | | | | | | | | | | | | | | | | | | Silver equivalent ounces produced (2) | | 2,814,489 | | | 2,281,465 | | | 23% | | | 2,535,803 | | | 11% | | | 5,095,954 | | | 5,225,944 | | | (2%) | | | Zinc equivalent tonnes produced (2) | | 59,680 | | | 59,370 | | | 1% | | | 53,771 | | | 11% | | | 119,050 | | | 110,814 | | | 7% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mining Operations(1) | | | | | | | | | | | | | | | | | | | | | | | | | | Tonnes milled | | 406,532 | | | 393,010 | | | 3% | | | 385,890 | | | 5% | | | 799,542 | | | 770,968 | | | 4% | | | Silver ounces produced | | 1,161,733 | | | 1,000,094 | | | 16% | | | 1,103,447 | | | 5% | | | 2,161,827 | | | 2,398,489 | | | (10%) | | | Zinc tonnes produced | | 15,548 | | | 14,496 | | | 7% | | | 14,506 | | | 7% | | | 30,044 | | | 29,210 | | | 3% | | | Lead tonnes produced | | 2,293 | | | 2,084 | | | 10% | | | 2,263 | | | 1% | | | 4,377 | | | 4,500 | | | (3%) | | | Copper tonnes produced | | 337 | | | 308 | | | 9% | | | 229 | | | 47% | | | 645 | | | 508 | | | 27% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Silver ounces sold(3) | | 894,167 | | | 871,752 | | | 3% | | | 1,282,983 | | | (30%) | | | 1,765,919 | | | 2,571,587 | | | (31%) | | | Zinc tonnes sold(3) | | 14,419 | | | 14,026 | | | 3% | | | 12,202 | | | 18% | | | 28,445 | | | 25,456 | | | 12% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash cost of production per tonne milled (4) | | 86.83 | | | 87.19 | | | (0%) | | | 69.92 | | | 24% | | | 87.00 | | | 68.37 | | | 27% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash cost per silver ounce sold ($/oz)(4) | | 15.54 | | | 18.34 | | | (15%) | | | 13.17 | | | 18% | | | 16.92 | | | 12.98 | | | 30% | | | Cash cost per zinc tonne sold ($/t)(4) | | 1,746 | | | 1,843 | | | (5%) | | | 1,517 | | | 15% | | | 1,794 | | | 1,559 | | | 15% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average realized price per silver ounce sold ($/oz)(4) | | 72.17 | | | 80.61 | | | (10%) | | | 33.13 | | | 118% | | | 76.33 | | | 33.13 | | | 130% | | | All-in sustaining cost per silver ounce sold ($/oz)(4) | | 21.87 | | | 28.90 | | | (24%) | | | 17.50 | | | 25% | | | 25.34 | | | 17.71 | | | 43% | | | Realized mining margin per silver ounce sold (4) | | 50.30 | | | 51.71 | | | (3%) | | | 15.63 | | | 222% | | | 51.00 | | | 15.42 | | | 231% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average realized price per zinc tonne sold ($/t)(4) | | 3,302 | | | 3,276 | | | 1% | | | 2,938 | | | 12% | | | 3,289 | | | 3,136 | | | 5% | | | All-in sustaining cost per zinc tonne sold ($/t)(4) | | 2,219 | | | 2,545 | | | (13%) | | | 1,517 | | | 46% | | | 2,380 | | | 1,976 | | | 20% | | | Realized mining margin per zinc tonne sold (4) | | 1,083 | | | 731 | | | 48% | | | 1,421 | | | (24%) | | | 910 | | | 1,160 | | | (22%) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ore Processing Operations(1) | | | | | | | | | | | | | | | | | | | | | | | | | | Tonnes milled | | 115,424 | | | 94,767 | | | 22% | | | 94,973 | | | 22% | | | 210,191 | | | 181,668 | | | 16% | | | Silver ounces produced | | 411,367 | | | 341,405 | | | 20% | | | 319,634 | | | 29% | | | 752,772 | | | 614,655 | | | 22% | | | Zinc tonnes produced | | 7,692 | | | 7,144 | | | 8% | | | 6,643 | | | 16% | | | 14,836 | | | 12,658 | | | 17% | | | Lead tonnes produced | | 872 | | | 602 | | | 45% | | | 509 | | | 71% | | | 1,474 | | | 990 | | | 49% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Silver ounces sold(3) | | 333,899 | | | 634,875 | | | (47%) | | | 365,489 | | | (9%) | | | 968,774 | | | 652,862 | | | 48% | | | Zinc tonnes sold(3) | | 8,796 | | | 7,397 | | | 19% | | | 6,529 | | | 35% | | | 16,193 | | | 10,392 | | | 56% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Realized ore processing margin per silver ounce sold (4) | | 33.42 | | | 16.49 | | | 103% | | | 4.83 | | | 592% | | | 22.32 | | | 6.33 | | | 253% | | | Realized ore processing margin per zinc tonne sold (4) | | 819 | | | 667 | | | 23% | | | 1,539 | | | (47%) | | | 750 | | | 1,783 | | | (58%) | |

Notes:

(1) Mining operations includes only production from Bolivar, Porco, Caballo Blanco and Zimapan. Ore processing operations includes only production from San Lucas ore processing business. Readers are cautioned that Bolivar and Porco production figures are presented at 100% however the Company records only its 45% interest in the assets, liabilities, revenues and expenses of the Illapa business in its consolidated financial statements. 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 segment information note of the condensed interim consolidated financial statements). (2) Silver equivalent ounces and zinc equivalent tonnes produced have been calculated using the period's average metal prices quoted on the London Metal Exchange. The silver and zinc equivalent production is calculated by dividing each metal's price by the price of Silver or Zinc to arrive at their equivalent. Refer to the section titled "Non-GAAP Measures" for further information. (3) Silver ounces sold and zinc tonnes sold may be lower or higher than the volumes produced in the period due to two effects: (i) timing - concentrates produced in a quarter may be shipped and invoiced in a subsequent period or have been produced in a prior period; and (ii) commercial terms - payable ounces under offtake agreements are lower than produced ounces due to standard treatment and quality deductions applied by the customer. (4) The Company reports non-GAAP measures, which include: cash cost of production per tonne milled, cash cost per silver ounce and zinc tonne sold, average realized price per silver ounce and zinc tonne sold, all-in sustaining cost per silver ounce, zinc tonne sold, realized mining margin per silver ounce or zinc tonne sold and realized ore processing margin per silver ounce or zinc tonne 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 even though the metrics have the same or similar names. Refer to the section titled "Non-GAAP Measures" in this MD&A.

2026 Second Quarter Financial Highlights

| Financial Highlights | 2026 Q2 | | 2026 Q1 | | Change Q2 vs Q1 | | 2025 Q2 | | Change '26 Q2 vs'25 Q2 | | 2026 YTD | | 2025 YTD | | Change '26 YTD vs '25 YTD | | | | | | | | | | | Revenues | | 113,458 | | | 127,529 | | | (11%) | | | 73,295 | | | 55% | | | 240,987 | | | 143,609 | | | 68% | | | Gross profit | | 51,139 | | | 42,869 | | | 19% | | | 25,288 | | | 102% | | | 94,008 | | | 53,147 | | | 77% | | | Net income (loss) | | 2,005 | | | 28,470 | | | (93%) | | | 20,977 | | | (90%) | | | 30,475 | | | 30,428 | | | 0% | | | Net earnings (loss) per share - basic ($/share) (1) | | 0.02 | | | 0.31 | | | (94%) | | | 0.24 | | | (92%) | | | 0.34 | | | 0.34 | | | (6%) | | | Adjusted EBITDA (2) | | 46,663 | | | 42,568 | | | 10% | | | 26,770 | | | 74% | | | 89,231 | | | 54,286 | | | 64% | | | Cash & cash equivalents | | 50,398 | | | 42,651 | | | 18% | | | 39,997 | | | 26% | | | 50,398 | | | 39,997 | | | 26% | | | Working capital | | 86,122 | | | 75,901 | | | 13% | | | 60,295 | | | 43% | | | 86,121 | | | 60,295 | | | 43% | |

Notes:

(1) On December 10, 2025 the Company consolidated its issued and outstanding common shares on the basis of one post-consolidated common share for every four pre-consolidated common shares. The number of issued and outstanding shares and any per share amounts have been retrospectively restated. (2) The Company reports non-GAAP measures, which includes 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 even though the metrics have the same or similar names. Refer to the section titled "Non-GAAP Measures" in the MD&A.

Summary

Q2 2026 vs Q1 2026

Consolidated silver production increased 17% to 1,573,100 ounces in Q2 2026 from 1,341,499 ounces in Q1 2026, with quarter-over-quarter increases at all five operations. The improvement was driven primarily by higher processed volumes, with consolidated tonnes milled increasing 7% to 521,956 tonnes, together with higher silver head grades at Bolivar and Porco and a marked improvement in silver recovery at Zimapan. Bolivar contributed the largest single increase as rehabilitation of the areas affected by the May 2025 flooding event continued to advance, while San Lucas processed 22% more ore than in the prior quarter. Consolidated zinc production increased 7% to 23,240 tonnes, driven principally by higher throughput, which more than offset lower zinc grades at Bolivar and Porco. Lead production increased 18% to 3,165 tonnes and copper production increased 9% to 337 tonnes.

Sales volumes did not rise to the same degree as production. During the quarter, road blockades in certain parts of Bolivia extended for approximately 53 days, disrupting supply chains across many sectors of the Bolivian economy. The blockades temporarily disrupted the export of the Company's concentrates but did not affect production, which continued without interruption at all operations. Silver ounces sold from mining operations of 894,167 increased 3% from 871,752 in Q1 2026, lagging the 16% increase in mining silver production, and silver ounces sold at San Lucas declined 47% to 333,899, as concentrate produced during the blockade period could not be shipped and was accumulated as inventory; first-quarter San Lucas sales had also been elevated by the shipment of previously accumulated concentrate. Consolidated inventories increased to $71,876 at June 30, 2026 from $57,517 at December 31, 2025, driven by higher concentrate inventory ($36,445 compared with $30,172) and higher ore stockpiles ($19,493 compared with $11,983). The Company expects this inventory to be sold in the subsequent quarter as export logistics have normalized. Zinc tonnes sold increased quarter over quarter at both mining operations (14,419 tonnes, up 3%) and San Lucas (8,796 tonnes, up 19%).