In Q2/25, Miner Achieves Positive Income For Fifth Straight Quarter
Research Report

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Disclosures for Research Capital Corp., Guanajuato Silver Co., September 2, 2025

Analyst Certification I, Stuart McDougall, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report. 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Guanajuato Silver Co. (GSVR:TSX.V; GSVRF:OTCQX) released its Q2/25 operational and financial results, reported Stuart McDougall, Research Capital Corp. analyst, in a Sept. 2 research note. Research Capital raised its target price on the Canadian miner by 33%.

"At the mine level, this marks the fifth straight quarter in which the company has reported positive income since production began in Q4/21," McDougall wrote.

40% Potential Upside

Research Capital's new target price is CA$0.40 per share, up from CA$0.30. The increase reflects Guanajuato Silver's lower share count since the investment firm's last research report, when it expected the company to issue units in the August financing at half the actual price of CA$0.30 per unit.

"Our valuation still reflects an in situ approach, using US$3 per ounce silver and US$75 per ounce gold, discounted by 50% in the case of historic resources and adjusted for cash and equity," McDougall explained.

Compared to the CA$0.40 per share target, Guanajuato Silver was trading at the time of the analyst's research report at about CA$0.28 per share, implying a potential return of 40%.

The Vancouver, British Columbia-headquartered company that reactivates past-producing silver and gold mines in Mexico remains a Speculative Buy.

It has 543.4 million shares outstanding, a market cap of CA$154.88 million (CA$154.88M) and a 52-week range of CA$0.14–0.37 per share.

Overall Decline QOQ

McDougall reviewed Guanajuato Silver's results from Q2/25, ended June 30, 2025, noting production and revenue declined since Q1/25. Production, down 15% from Q1/25, was 321,990 ounces of silver. This decrease resulted from both lower throughput and head grades due to having to rely on low-grade stockpiles. At the San Ignacio project, 94% of the material processed was fresh mineralization, at the El Cubo project 56% and at the Valenciana project 45%. Average consolidated recoveries of 83% stayed the same.

Production improved quarter over quarter (QOQ) at San Ignacio, El Cubo and Topia, and this offset losses at Valenciana, where mining focused on the 390 level at Cata and the 160 level at Pozos.

Financially, the precious metals miner reported a net loss in Q2/25 of US$3.7M. Operating cash flow from operations was positive at US$2.2M, due to strong metal prices.

McDougall wrote that throughput levels, grades and cash costs should improve in H2/25 and into next year as the producer invests capital in its mines. It has the funds to do so, having raised CA$18M through a nonbrokered equity financing in August.

According to the company, in Q2/25, its average cash cost was US$21.67 per silver equivalent ounce, its average all-in sustaining cost was US$26.38. Research Capital's calculations, incorporating offsite costs and using the miner's conversion ratios, are US$27.83 and US$32.97, respectively. Both are 15% higher QOQ, again largely reflecting the decline in throughput and grades.

At quarter's end, Guanajuato Silver had US$1.9M in cash. It had (US$6.7M) in working capital, greatly improved from Q1/25 thanks to restructuring of its gold loan in April. Debt was US$18M.

Mine Development Advancing

McDougall reported the developmental changes Guanajuato has in progress or recently done at each of its four projects.

At El Cubo, dewatering of the lower levels in the Villalpando area and electrification are underway. Block 18-150 is expected to be ready for production in Q3/25. Electrification is expected to be done by year-end, eliminating the use of more expensive portable diesel generators.

At Valenciana, pumps and associated infrastructure were installed, and the 460 and 480 levels should be accessible by year-end.

At San Ignacio, the 442 Ramp was advanced, with access to Block 627 and Melladito Sur expected in Q3/25. Ramp 605 was advanced enough to intersect the Melladito Norte vein. Also, 65 meters of development were completed toward the vein's north end in preparation for long-hole stoping in H2/25.

At Topia, the lead concentrate filter was commissioned and a new reagent storage facility was constructed. Commissioning of the zinc concentrate filter and newly installed centrifugal concentrator is expected by year-end. These programs are part of a phased approach to modernize and expand the flotation plant to 400 tons per day (400 tpd) from the current 260 tpd capacity.

What to Watch For

McDougall pointed out that near-term catalysts include project updates on an ongoing basis and subsequent quarterly results.