IMPACT Silver doubles Q2 revenue, but Plomosas remains a C$2m drag on Zacualpan’s stronger economics

IMPACT Silver Corp. (TSXV: IPT; OTCQB: ISVLF) swung to a second-quarter profit as stronger silver grades and higher realized prices transformed the economics of its Zacualpan operation, although the improvement was partly offset by another loss at the temporarily suspended Plomosas underground mine. Revenue climbed 124% to C$22.0 million from C$9.8 million a year earlier, while gross profit increased to C$8.7 million from C$1.0 million and net income reached C$2.8 million compared with a C$2.0 million loss in the second quarter of 2025.

The six-month comparison is even more pronounced. First-half revenue increased to C$53.1 million from C$20.5 million, while net income reached C$14.1 million compared with a C$2.1 million loss during the corresponding 2025 period. IMPACT Silver ended June with C$52.2 million of cash, the same amount of working capital and no long-term debt, giving the company substantially more flexibility to fund exploration and consider options for underperforming assets.

The headline earnings improvement, however, masks a sharp divergence between the company’s two operating centres. Zacualpan has become significantly more profitable as higher-grade silver material moves through the Guadalupe mill, while Plomosas remains under temporary underground mining suspension and produced a C$2.0 million gross loss during the quarter.

How did higher grades change the economics of IMPACT Silver’s Zacualpan operation?

Zacualpan-Guadalupe processed 36,908 tonnes during the quarter, only 8% more than the 34,173 tonnes processed a year earlier. Silver-equivalent production nevertheless increased 39% to 221,385 ounces from 159,298 ounces because average silver head grades rose 31% to 207 grams per tonne from 158 grams per tonne.

That gap between throughput growth and production growth is important. IMPACT Silver did not generate its operating improvement simply by pushing dramatically more material through the mill; a richer feed contributed disproportionately to metal output, while higher silver pricing increased the value received for that production.

Zacualpan revenue more than doubled to C$18.5 million from C$7.4 million, while segment gross profit surged to C$10.8 million from C$2.0 million. Silver accounted for approximately 97% of production value at the operation, leaving Zacualpan highly exposed to both the upside and downside of silver-price movements.

Costs did not move entirely in the same favourable direction. Zacualpan operating expenses increased to C$7.4 million from C$4.9 million because of inflation, foreign-exchange pressure, union-related salary payments and higher underground development, pushing operating expenses per silver-equivalent ounce 9% higher to C$33.34.

The result is therefore stronger than a simple commodity-price story but not immune to cost pressure. Higher grades and silver prices have so far more than compensated for increased operating expenditure, producing a sizeable expansion in gross profit.

Why is Plomosas still holding back IMPACT Silver’s consolidated result?

IMPACT Silver temporarily suspended underground mining at Plomosas in March while reassessing the operation’s cost structure and longer-term plan. The company reduced the underground workforce during the second quarter but retained much of the plant and administrative workforce to maintain permits, support exploration and manage the wind-down.

Plomosas still generated C$3.4 million of quarterly revenue from stockpiled material, third-party gold-bearing feed processed under an industrial test arrangement and lead oxide recovered from the tailings pond. Operating expenses reached C$5.2 million, however, including C$1.8 million connected with third-party material and additional severance and closure-related spending.

The segment consequently posted a C$2.0 million gross loss, double the C$1.0 million loss recorded a year earlier. That explains why consolidated gross profit of C$8.7 million was below the C$10.8 million generated at Zacualpan alone.

Management continues to evaluate third-party processing opportunities that could make use of the Plomosas plant without immediately restarting underground mining. Discussions with a nearby operator are continuing, but no committed commercial arrangement or restart timetable has been announced.

What can IMPACT Silver do with a C$52.2m cash position?

The stronger balance sheet gives IMPACT Silver more room to make choices rather than being forced into an immediate Plomosas restart. The company has continued exploration at both operations, including C$0.7 million spent at Plomosas during the quarter across nearly 4,900 metres of surface and underground drilling.

At Zacualpan, drilling has continued to extend high-grade zones around Noche Buena and the Carlos Pacheco vein, including previously reported intersections such as 1,333 grams per tonne of silver over 5.72 metres. Those results remain exploration outcomes rather than future production guarantees, but they provide targets that could support higher-grade mine sequencing if continuity and economics are confirmed.

The company is also reassessing the potential rehabilitation of its Capire mill and a possible restart of silver production there. With no long-term debt and C$52.2 million in cash, management has considerably more financial capacity to evaluate those opportunities than it had before Zacualpan’s profitability improved.

The central question for the second half is therefore whether Zacualpan can sustain stronger grades and margins while management prevents Plomosas from absorbing an increasing share of the cash generated elsewhere. The Q2 numbers show a clear operational turnaround at the group level, but they also make equally clear where the remaining weakness sits.