Good day, ladies and gentlemen. Welcome to Impact Silver's Q1 2026, period ending March 31st, 2026, financial and production results conference call.

Before we begin, we would like to go over our disclosure statements, followed by Mr. Fred Davidson's comments on the quarterly results and a Q&A period.

Certain statements in the following conference call regarding Impact Silver's core business operations may constitute forward-looking statements. Such statements are not historical facts, but are predictions about future, which inherently involves risk, uncertainties, and could cause actual results to differ materially from those in the forward-looking statements.

I would like to now turn over to the President and CEO of Impact Silver, Mr. Fred Davidson.

Thank you, Jerry. It's certainly a pleasant experience to be able to report this particular quarter.

It's probably the most successful quarter we've had in the 20-year history of the mine. Basically, revenue increased to over $31 million, that's just about three times what the comparable quarter was, and it was driven by a number of issues.

Silver prices, we had higher grades, and we had increased throughput at the Zacualpan silver operation. Gross profit grew almost, again, 10 times to $20 million compared to $2.2 million in the comparable quarter.

Net income was $11.3 million or 3 cents a share, basically following a loss of about $0.1 million in Q1 2025. At the end of the quarter, the company had $45 million in cash, $4 million in guaranteed investment certificates, and working capital of $48 million with no outstanding long-term debt.

This is the kind of quarter we've been looking for for a long time. It's only the start of where we are at the moment.

It's probably the easiest way to do is to summarize that the operation did have a unique set of circumstances. Silver prices were way up for a period of time, and, as I say, the grade is primarily responsible to the [Canna?]

vein, which we originally disclosed in June, I think, last year, where we intercepted 8.5 meters of 534 grams per ton on one of our drill holes. This was something that we identified, say, over 6 months ago, more 9 months ago now.

It did take time to start developing this structure. We haven't even fully outlined it yet.

The original drill hole was in on the 140 level. We have a belief that the vein itself, it's actually a number of veins, but we're calling it the [Canna?]

vein, extends right to surface, which is actually vertical, it's about 150 meters above us, is probably 170, 180 because it's on a decline, on an angle. It's a very exciting thing.

It enhances the overall production that we've got at the mine. As we go by, quarter by quarter, we're going to see it input up and down depending on where we are on the development, how much we're taking from the [Canna?]

versus a number of the other veins. Looking forward, it's going to be at least a very positive year going forward.

With current prices of silver being maintained, I think it's probably our most positive year. Now we've been here 20 years, and I think a lot of the investors and shareholders understand, epithermal veins vary dramatically almost meter by meter both in grade and width.

As we explore [Canna?] and a couple of the other veins we're working on right now, Carlos Pacheco, San Ramon, we're going to see dramatic changes up and down, grade and tonnage throughput, as we go forward over the next year or two.

In any event, the prime driver for the revenue has been the Zacualpan mine. We've been shutting down, as we announced at the end of the quarter, the Plomosas.

The Plomosas, although we're getting some spectacular lead, zinc grades, silver grades coming out of our drilling, and we haven't been able to put it together in terms of a cohesive mine plan, and the end result was we were incurring more expenses doing the development than we were generating revenue. The idea is we're sitting back on it.

We're going to review and do further development plans and see where the mine planning can put Plomosas ultimately back into production. In the interim, we're negotiating with a couple of other mines in the district looking to actually process their feed.

As we go forward on that, we think it's could be, with success in those negotiations, a cash generator. Certainly not in the level of Zacualpan, but certainly attractive.

The final one in Capire, we're working on it as well. The numbers change dramatically depending on the price of metal.

It's more marginal. Again, we hope to have some more definitive understanding of what we're going to do with Capire once we establish the final costs and production costs at Capire going forward.

Altogether, it's going to be a very busy year, and I think, unless something changes dramatically on the price of silver, a profitable year for the company after 20 years. By the way, next year will be the 500 years history of the Zacualpan mining district, and we're going to be celebrating that along with the community going forward.

Jerry, are there any questions for this?

Yep, sounds good. Thanks for the overview, Fred.

Here are some of the questions we've compiled from investors this quarter, and just really in the last 2 days. Please feel free to send questions to [email protected] or call us direct at 778-867-7909.

Question 1: Great quarter, team. Finally, we've seen net income as long promised.

At these $80-plus silver prices, Fred, are we to expect this revenue and margin range to continue?

The answer would probably be yes, but it's going to be highly variable. Again, because these are epithermal veins, the amount we draw down from the [Canna?]

, etc. As anybody who understands epithermal veins knows that development sometimes interferes with production, production sometimes interferes with development.

It's going to be going up and down quarter by quarter for the balance of the year. I'm not sure, I think we'll probably see that grade be the variable, if anything.

Tonnage is gradually going to increase, subject to any oops that you normally experience in mining underground. What we also face is the price of silver, obviously.

We are seeing some inflation pressure, but I don't think that's going to impact the revenue itself. The margins, well, again, hopefully be maintained as we eliminate the extra costs we're incurring at Plomosas.

It's going to be an interesting year. I wish I could say with assurance that we're going to maintain this revenue and costs and everything else, but I think we are going to be looking at a positive quarter by quarter going forward.

I doubt very much whether we'll hit $11 million net after taxes each quarter, but there's certainly the potential.

Got it. Question 2 in regards to the Plomosas update, the Q2 start and discussion with the other potential vendors in the area, toll operations, what kind of range of size and setup would that work for Impact?

For Impact itself, the idea is we would process ore from—let's say we're really successful and both the people we're talking to produce their produce, they don't fill the mill, and that means that we'll be operating at 200 tons, probably a little less because each time you bring ore in from one group, you have to clean the mill and then process the other ore. We're looking at sort of between 150 to 200 tons.

The capacity of the mill at Plomosas is about 200 tons a day. Because you'd be sourcing ore from two separate situations, we'd probably be only getting about 175 because you have to flush the mill out when you get different ore.

In both cases, we'll be looking at a tolling situation, but with the potential taking an equity position in those mines as well. Again, we're in negotiation.

There's no assurance that we're going to get both. We may get one.

In any case, it would be probably more than enough, even with one, to sustain the operation at Plomosas, and two, could generate fairly positive cash flow.

Sounds good. Question 3 talks about the cash on hand now.

With the cash on hand over 50%-plus of the current market cap, if this continues for the next quarters, will Impact just keep it in GIC, guaranteed investment certificates, in the bank or consider other initiatives like maybe a buyback or a special dividend?

That's a valid question. I've got to admit, it's a pleasant surprise to have this much which we have on hand.

We've got a number of situations we're looking at. One, as I mentioned, we may be taking a position in one or both of these companies the mines will be providing us with ore because we believe we could upgrade that production, and then we'd have to upgrade the size of the mill, but that's not impossible to do either.

There's that one. We're also looking at Capire, which to put it back into operation at a higher throughput, there's a bit of capex.

Every time we talk capex, when you're doing startup, there's also the cost of financing, the inventory, etc., as it goes forward. A number of these things are still outstanding.

At the same time, we're looking at some capital expenditures at the mine itself at Zacualpan. As we've been working on the shaft.

The shaft is over 70 years old, and every bit of steel is being replaced in it while we maintain production. That's one of the other reasons I'm hesitant to say how much we're going to be putting through at Zacualpan.

It's a shaft that goes down to the 190 level. It's virtually every piece of steel's being replaced there.

Meanwhile, we're still mining. The idea being is we have to shut down almost a day a week to bring the steel in, replace the steel, and keep on mining.

There's a number of things happening. It's one of those things that we're certainly looking at it.

We've got a team looking at because financing is suddenly disappeared for the juniors. There's some opportunities that have become apparent at the same time.

It's going to be a very busy year for us, as you can appreciate. We've certainly had the suggestion of a buyback or a dividend.

Again, we're not sitting on the cash to sit on the cash, but at this point in time, liquidity is an incredibly valuable animal to have for a company in the mining industry. Going forward, I think we intend to use it for good purpose.

Got it. Question 4, Fred and team: 270,000-plus ounces of silver this year.

At that run rate, will be over a million ounces finally for Impact. Is this expected as a new run rate for investors?

As I alluded to, a lot of it's going to depend on the grade of material we're running through, one. That's going to vary literally meter by meter as we go forward on our development.

The other part of that, of course, is being able to keep the tonnage up because of what we're doing with the shaft and actually the track system underground. We're going to be busy drilling, which doesn't interfere with mining, but certainly the development does take some time.

As I say, the [Canna?] at this point in time looks like it extends all from the 140 level all the way to surface or near surface.

Every time you want to develop access into that, there's a delay. I would say that I don't know if that's going to be the new run rate per quarter, but easily we can have repetition of this type of quarter with a little bit of generosity with the silver market.

Yep, got it. Question 5 refers to the exploration drilling.

Over $1 million expended in Q1. Are we expecting more regular drill results from the Plomosas as well?

We are.

As I say, we've had the issue with Plomosas, and that is trying to put the sort of mine plan together because of we were using the mine plan from our predecessors, and quite frankly, it was based on information which never sort of came out the right way. That means some of this is going to be underground mining or drilling, which we don't normally disclose because it's, first of all, it's not 43-101.

We can't. We will be doing surface drilling on a number of other targets in the area, and those, when we develop sort of an understanding or package, yes, we'll be going forward with news releases.

We're doing some geophysics on the project as well. Up north, in the northern section of Plomosas, we're looking at, again, early stage, the copper-gold exposures in that area, and we're currently trenching in that area.

As information which is 43-101 releasable, and two, which is relevant to explaining what we're doing, we'll be releasing that as we go.

Sounds good. Question 6 refers to the higher operational costs this quarter.

It jumped a bit to $6.7 million, and there's commentary on inflationary pressures and cost increases. Is this also a new level of expectation for expenses?

The operational costs for Zacualpan were a little higher than prior years, but not significantly. The thing that impacted the financials for the year more than anything else was, of course, some of the costs related to shutting down Plomosas.

We're seeing sort of an inflationary fact combined with FX of about 8%, 9% a year. The peso got a little stronger, Canadian dollar got a little weaker, it comes through by the time you've translated through U.S.

dollars, etc., impacts us as well. It was negative.

It's very much a function of there is going to be inflation, no question, and there is going to be FX, which could easily change the relationship between the Mexican peso, U.S. dollar, Canadian dollar.

Sounds good. Question 7: At these prices, Capire seems to make more and more sense with higher silver prices.

The potential restart, is that still within 2026, or is that going to be later?

Even if we press the button and go right now, and we're still waiting for some outstanding information and some technical information, it probably wouldn't be available till 2027 realistically. That's just how these things take, because the model we're looking at at this point in time it's a mill that does 200 tons a day, a conventional mill with a float, con, and what have you.

What we'd be doing is, I think we mentioned it before, is XRT, or X-ray sorting, and that would allow us to put a higher tonnage in the front end through the XRT unit. The XRT unit would sort high-grade from low-grade and allow us to still operate the mill at 200 tons a day, but we'd be processing material from the open pit at about 300, 300 350 tons a day thereabouts.

All of that takes time. Part of that is the machine that we'd even want to install there, once we've worked out the final specs on it, probably delivery time of 8 to 12 months.

We're not going to start it unless we have the XRT. Then the second part of it is it produces multiple amounts of material coming through in terms of lead, zinc, copper, gold, and silver.

Again, we have to enter into negotiations with the ultimate buyers. Do they want a mixed concentrate?

Are they want us to break that up and concentrate perhaps the copper separately, for instance? All of that is being spec'd right now as we're talking to potential buyers of the concentrate.

That's going hand in hand with the technical studies, which is also going to go ahead before we push the button for the delivery of the equipment, because we'll need a larger crusher and again, some surface equipment to do the mining.

Sounds good. The last question, Question 8, Fred: Any other potential M&A ideas, or is it more going to be organic growth expected with Impact and the large area we have?

As the area is so large, we've taken to areas that are remotely accessible by us that you basically have to go to Taxco to get to, and we're having juniors that can option in on some of those properties just to move the exploration forward on those after 10, 15 years where we've just done very little out in that district. At the same time, with the Plomosas thing, we are looking at the potential of if we do tolling with some of these guys, the potential making an acquisition.

Those are sort of not huge steps in each case, but they're steps that can move us forward. The other side of it is we think that the market is sort of a little tight right now for fundraising for juniors, and that's one of the reasons we did do our financing when we did, granted maybe 3 months a little earlier than the market, was to get us set in a position where we could do that.

We've actually just constituting a small team that are actually going out doing some evaluations of other projects that may be of interest to us. We're doing all of that, but the idea is incremental at this point in time, unless we see something that really knocks our socks off of anything.

I think we're going to be sort of very active. The idea is not so much how many ounces you produce, but how many profitable ounces you produce.

I think that's going to be our prime focus, and we are going to still focus on, obviously, silver. If something is a byproduct, then that's fine too.

We are, as we've said before, we're silver-driven, and I think was somewhat unique in the industry as being probably the highest percentage of revenue related to silver. There's that leverage that the shareholders get.

When the silver price does move up, it goes virtually to the bottom line, which is fairly nice.

Definitely. That's all the questions we have for this quarter.

Thank you, everyone, investors, for the questions and interest in Impact Silver. Please submit your future questions and inquiries to us at [email protected].

We look forward to hearing from you on our next quarterly conference call, Q2 2026. For more information, please visit www.impactsilver.com.

Have a good day.