Financial Report Summary and Analysis

Overview of the Company’s Financial Performance

Key Highlights:

• In 2024, the San Jose de Gracia (SJG) mine processed 257,676 tons of ore and produced approximately 25,677 ounces of gold. After adjustments, 22,003 ounces of gold were sold.
• Revenue increased by 31% to $46,503,016 in 2024 from $35,573,194 in 2023, primarily due to a 47% increase in net revenue per ounce.
• Mine production costs increased by 35% to $15,090,417 in 2024 from $11,156,677 in 2023, due to a 30% increase in mined tonnage.
• The company had a net loss of $1,247,352 in 2024 compared to a net loss of $235,675 in 2023, primarily due to increased interest expense and other expenses.
• As of December 31, 2024, the company had negative working capital of $15,278,780, a decrease from negative $10,261,645 at the end of 2023.

Revenue and Profit Trends

Revenue:

• Revenue increased by 31% in 2024 to $46,503,016 from $35,573,194 in 2023.
• This was primarily due to a 47% increase in net revenue per ounce, from $1,433 in 2023 to $2,113 in 2024.

Profit:

• The company reported a net loss of $1,247,352 in 2024, compared to a net loss of $235,675 in 2023.
• The increase in net loss was primarily due to:
  • Increased interest expense of $1,696,258 in 2024 compared to $567,792 in 2023, due to the company entering a revolving credit line facility.
  • Increased currency translation loss of $506,439 in 2024 compared to $45,177 in 2023.

Strengths and Weaknesses

Strengths:

• Increased operational efficiency and production at the SJG mine, with a 30% increase in milled throughput and a 19% increase in gold production in Q4 2024 compared to the previous quarter.
• Successful implementation of an optimization program to improve plant throughput, recoveries, and equipment utilization.
• Expansion of mining areas and access to higher-grade ore zones, which is expected to support increased production and grades in the future.

Weaknesses:

• Negative working capital position, which decreased from 2023 due to a decrease in cash, reclassification of a tax receivable to long-term, and an increase in short-term trade liabilities.
• Increased interest expense and other expenses, leading to a higher net loss in 2024 compared to 2023.
• Exploration activities were limited in 2024 due to the focus on operational improvements, which may impact the company’s ability to grow its resource base in the short term.

Outlook

• The company believes SJG is well-positioned for 2025, with the successful Q4 2024 demonstrating more normalized operations.
• The company plans to continue focusing on improving ore feed to the mill, throughput rates, and recoveries in 2025.
• Exploration activities are expected to resume in Q3 2025, with a focus on growing the known resources at SJG.
• The company expects a significant increase in revenue in 2025 due to a combination of higher-grade feed material, increased processing throughput, and higher gold prices.

Overall, the company made significant progress in improving operational efficiency and production at the SJG mine in 2024, but faced challenges with increased expenses and a negative working capital position. The outlook for 2025 is positive, with the company focusing on further optimizing operations and resuming exploration activities to grow its resource base.