Sunshine Silver Mining & Refining Co: Form 10-Q for the period ended Jun 30, 2026

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements, the related MD&A and the discussion of our Business and Properties in our Form S-1, as amended (the "Form S-1”), filed with the United States Securities and Exchange Commission (the “SEC”). The following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. These forward-looking statements involve risks and uncertainties. You should review “Risk Factors” in the Form S-1 and the “Cautionary Note Regarding Forward-Looking Statements” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements.

Overview

We are the owner and developer of the permitted Sunshine Mine (the "Sunshine Mine") and the permitted silver/copper refinery located one mile north of the Sunshine Mine (the "Sunshine Silver/Copper Refinery"), as well as the associated facilities including a tailings storage facility and historical antimony refinery grounds (collectively, the "Sunshine Complex"). The Sunshine Mine is a historic, permitted, large-scale past-producing silver mine in the United States, which historically also produced meaningful quantities of antimony, copper and lead. The Sunshine Mine is one of the highest-grade primary silver resources in the world, and when production is restarted, we expect the Sunshine Mine will be one of the largest silver mines in the United States. We have the major permits required to restart mining, milling and refining operations, and we will not require an environmental impact study to initiate restart of such operations. We do not anticipate issues in maintaining our current permitting status or securing the outstanding and ongoing permits required. Our current permits will be subject to normal course updates throughout the construction process. Our mining, milling and refining complex includes substantial installed infrastructure, and we hold a highly prospective land package surrounding the Sunshine Mine. We plan to restart operations at the Sunshine Complex in 2028, subject to the results of the Sunshine Mine Feasibility Study (as discussed below).

On June 5, 2026, we closed our initial public offering of 23,000,000 shares of common stock, including the full exercise by the underwriters of their option to purchase 3,000,000 additional shares, at a public offering price of $13.50 per share, including the full exercise by the underwriters of their option to purchase additional shares. The aggregate gross proceeds from the offering, before deducting underwriting fees and commissions and other offering expenses, were approximately $310.5 million. Following this offering, our authorized capital stock consisted of 3,500,000,000 shares of common stock, par value $0.001 per share, and 250,000,000 shares of preferred stock, par value $0.001 per share.

Details of the initial public offering are available on the prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act") on June 5, 2026, relating to our registration statement on Form S-1 filed with the SEC on May 11, 2026, as amended, and the description of our common stock is contained in the registration statement on Form 8-A filed with the SEC on June 3, 2026. Our common stock began trading on the New York Stock Exchange on June 4, 2026, under the ticker symbol “SSMR.”

Corporate Development

Status of Sunshine Mine Feasibility Study

The Company is advancing the Sunshine Mine Feasibility Study ("Sunshine Mine Feasibility Study"), which is expected to be completed in the second quarter of 2027. Following completion of the study, the Company expects to make a final investment decision regarding the restart of the Sunshine Mine, which, if approved, would support the planned return to silver production in late 2028.

As part of the Sunshine Mine Feasibility Study, the Company is advancing plans for a new mill designed to process up to 2,000 tonnes per day ("tpd"), providing flexibility to increase throughput beyond the current base case of approximately 1,000 tpd as the resource base and operating plan evolve.

Infill Drilling

On July 23, 2026, the Company announced ongoing drill results from its 50,000-meter underground diamond drilling program. Drilling completed between April and July 2026 totaled approximately 11,160 meters across 54 holes, and approximately 19,160 meters across 91 drillholes, bringing the overall program to approximately 60% completion with three active underground rigs. The program remains on track for completion in October 2026 to support the technical work for the Sunshine Mine Feasibility Study and the Company’s target return to production in late 2028.

Infrastructure Upgrades and Improvements

In the first six months of 2026, the Company completed approximately 1,166 meters (3,825 feet) of underground development and continued to upgrade existing infrastructure, including commissioning of a replacement operating hoist at the Jewell Shaft. The new hoist has the capacity to hoist approximately 3,500 tons per day from 4,000 level. During the quarter, the Company also advanced the planned decommissioning of the existing mill during the quarter to prepare the site for construction of a new mill, with the decommissioning expected to be complete by the end of 2026.

Two new rubber-tired underground loaders were acquired and placed into service downshaft on 3100 level and have increased efficiency in underground development. These were important additions to meet development required to reach infill drilling stations.

We also added four of five planned new compressors to provide compressed air to the Sunshine Mine. These add sufficient capacity to meet our compressed air requirements for the first approximately seven years of mining.

We made initial payments towards the upgrade of our hoist located at our Silver Summit shaft in preparation for the rehabilitation of this shaft.

Silver-Copper Refinery and Antimony Plant Feasibility Studies

The Company is evaluating the opportunity to develop a vertically integrated U.S. mine-to-mill-to-refinery platform at the Sunshine Complex. As part of that initiative, feasibility studies are underway to evaluate a new Antimony Plant and the refurbishment of the existing Silver-Copper Refinery which has a nameplate production capacity of approximately 10 million ounces of silver annually. Restarting the Silver-Copper Refinery could enable Sunshine to produce COMEX-deliverable silver onsite.

A new Sunshine Antimony Plant, which is under evaluation, would process antimony-bearing concentrate from the Sunshine Mine. The Company is also evaluating the potential to process antimony-bearing concentrates from third parties on a toll basis, creating an additional potential source of feedstock and revenue for the facility. The Antimony Plant could potentially deliver up to 34.5 million pounds of finished antimony annually. Major permits are in place to support the restart of the refining complex at Sunshine.

The feasibility studies evaluating the potential restart of the Silver-Copper Refinery and a new Sunshine Antimony Plant are targeted for completion in early 2027. The Company has also engaged a consultant to conduct a strategic assessment of the value-creation potential associated with both opportunities, the results of which will inform the respective feasibility studies.

Components of Results of Operations

Exploration Expenses

Our exploration expenses primarily include the costs incurred in the search for and evaluation of new mineral resources before the technical feasibility and commercial viability of extraction are demonstrable. These costs include researching and analyzing exploration data, conducting geological, geochemical, and geophysical studies, exploratory drilling and sampling, and labor required to conduct exploration activities.

Pre-Development Expenses

Our pre-development expenses primarily include expenses related to the establishment of accesses underground, including to drilling stations, and the construction of drilling stations, infill drilling, related labor costs, and maintenance, repair, and rehabilitation activities.

General and Administrative Expenses

Our general and administrative expenses consist of salaries and benefits, stock-based compensation, professional and consultant fees, insurance, mineral and concession lease payments and other general administration costs. We expect our general and administrative expenses will increase significantly due to activities related to the Feasibility Studies we plan to undertake and operating as a public company. We expect higher costs related to salaries, benefits, stock-based compensation, legal fees, compliance and corporate governance, accounting and audit expenses, stock exchange listing fees, transfer agent and other stockholder-related fees, directors’ and officers’ and insurance costs and other administrative costs.

Depreciation and Amortization

Property, plant and equipment are recorded at cost. Depreciation of plant and equipment is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of plants and equipment, and buildings and improvements generally range from ten to twenty years, and for certain equipment, from three to seven years. The estimated useful lives of furniture, fixtures and computers range from three to ten years.

Cost of Goods Sold

Metals inventory and costs of goods sold are reported at average cost.

Accretion Expense

Accretion expense reflects the periodic increase in the carrying amount of the Company’s reclamation obligations resulting from the passage of time.

Income Taxes

As we have incurred substantial losses from our exploration and pre-development activities, we may receive further benefits in the form of deferred tax assets that can reduce our future income tax liabilities, if it is more likely than not that the benefit will be realized before expiration. Historically, we have not recognized these potential benefits in our financial statements and have fully reserved for such deferred tax assets, as we are in a cumulative three-year loss.

Royalties

We conduct exploration activities on patented and unpatented mining claims at the Sunshine Complex. We are required to make mineral and concession lease payments to various entities to secure the appropriate claims or surface rights. Certain of these agreements also have royalty payments that are triggered when we begin producing and selling minerals.

Portions of the Sunshine Mine are subject to NSR Royalties formed under a settlement agreement and royalty deed entered into among SPMI (the prior mine operator), the U.S. government and the Coeur d’Alene Tribe dated April 12, 2001 (collectively, the “2001 Consent Decree”). Pursuant to the 2001 Consent Decree, we are required to pay to the U.S. federal government and the Coeur d’Alene Tribe between a 0% (at a silver price below $6 per ounce) and 7% (at a silver price of $10 per ounce or higher) NSR Royalty in perpetuity.

We are not currently paying any royalties based upon production and sales.

Results of Operations

The following table presents certain information relating to our operating results for the periods indicated:

(in thousands, except for share and per share amounts)

Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

For the three months ended June 30, 2026, we incurred a net loss of $16.7 million, compared to a net loss of 7.0 million for the three months ended June 30, 2025. The increase of $9.7 million in net loss was primarily attributable to the following:

• Pre-development expense increased to $10.2 million for the three months ended June 30, 2026, compared to $3.2 million for the three months ended June 30, 2025, due to the decision in the year ended December 31, 2025 to proceed with activities related to the completion of three feasibility studies, including infill drilling and related expenditures required to complete these studies.
• General and administrative expense increased to $6.9 million for the three months ended June 30, 2026, compared to $2.2 million for the three months ended June 30, 2025, due to increased personnel, stock-based compensation and increases in the scope of legal and accounting services.
• Depreciation and amortization increased to $0.3 million for the three months ended June 30, 2026, compared to $0.1 million for the three months ended June 30, 2025, primarily due to additions of depreciable assets.
• Total other income (expense) changed to income of $0.7 million for the three months ended June 30, 2026, compared to expense of $1.4 million for the three months ended June 30, 2025, primarily due to: the conversion of convertible notes payable and extinguishment of notes payable in July 2025, which decreased interest expense compared to the three months ended June 30, 2025; and due to increased interest income earned on net proceeds from our initial public offering.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

For the six months ended June 30, 2026, we incurred a net loss of $30.0 million compared to a net loss of $11.1 million for the six months ended June 30, 2025. The increase of $18.9 million in net loss was primarily attributable to the following:

• Pre-development expense increased to $17.6 million for the six months ended June 30, 2026, compared to $4.3 million for the six months ended June 30, 2025, due to the decision in the year ended December 31, 2025 to

proceed with activities related to the completion of three feasibility studies, including infill drilling and related expenditures required to complete these studies.

• General and administrative expense increased to $12.5 million for the six months ended June 30, 2026, compared to $3.8 million for the six months ended June 30, 2025, due to increased personnel, stock-based compensation related to grants of stock options and increases in the scope of legal and accounting services.
• Depreciation and amortization increased to $0.7 million for the six months ended June 30, 2026, compared to $0.3 million for the six months ended June 30, 2025, primarily due to additions of depreciable assets during the year ended December 31, 2025.
• Total other income (expense) changed to income of $0.8 million for the six months ended June 30, 2026, compared to expense of $2.6 million for the six months ended June 30, 2025, primarily due to: the conversion of convertible notes payable and extinguishment of notes payable in July 2025, which decreased interest expense period over period; and due to increased interest income earned on net proceeds from our initial public offering.

Liquidity and Capital Resources

As of June 30, 2026, we had cash and cash equivalents of $288.7 million, compared to cash and cash equivalents of $31.0 million as of December 31, 2025. Cash and cash equivalents increased due to our receipt of net proceeds from our IPO. We continue to incur costs related to the advancement of the feasibility studies, general and administrative expenditures and capital expenditures.

As of August 12, 2026, we had no long-term debt.

We believe that we have sufficient cash and resources to carry out our business plans for at least the next twelve months. We may require additional funds at a later date to support operations at the Sunshine Complex which, depending upon the circumstances, may be in various forms of debt, equity or a combination thereof. There can be no assurance that additional funds will be available to us on acceptable terms, or at all. We manage liquidity risk through the management of our capital structure.

Private Placement Transactions

In 2025 we entered into common stock purchase agreements (the "Private Placement") pursuant to which, among other things, we offered and sold 18,750,000 units (each, a “Unit”) consisting of one share of common stock and one half of a common stock warrant (each, a "Private Placement Warrant") at a purchase price of $4.00 per Unit. Each Private Placement Warrant is exercisable for one share of common stock, has an exercise price of $5.00 per share and is exercisable until the later of two years from the date of grant or six months after the completion of this offering. We offered and sold additional Units on the same terms to related and unrelated parties.

Through the Private Placement and related agreements, we received cash proceeds of approximately $46.9 million, extinguished approximately $28.1 million of notes payable, and issued 18.75 million common shares and 9.375 million Private Placement Warrants.

Convertible Notes

On September 2, 2022, we entered into a convertible note purchase agreement with ESUS and Ospraie (as successor-in-interest to the Municipal Employees’ Retirement System of Michigan Group Trust) (as amended, the “2022 Convertible Note Purchase Agreement”) for an aggregate principal amount of approximately $30.7 million, bearing interest at a rate of 5.00% per annum, compounding annually. In connection with the issuance of the convertible notes, we also issued to ESUS warrants to purchase 2,739,640 shares of common stock at an exercise price of $2.87 per share and we issued to Ospraie warrants to purchase 2,615,060 shares of common stock at an exercise price of $2.87 per share. Those warrants, as amended on April 29, 2026, were automatically net exercised into 4,217,123 shares of our common stock immediately prior to the completion of the IPO.

On July 15, 2025, in connection with the Private Placement, all convertible notes outstanding under the 2022 Convertible Note Purchase Agreement (totaling approximately $35.3 million including accrued interest) were converted into 12,319,850 shares of common stock pursuant to a note conversion and cancellation agreement (the “Note Conversion and Cancellation Agreement”), by and among the Company, ESUS and Ospraie.

Cash Flows

The following table presents our sources and uses of cash for the periods indicated:

(in thousands)

Cash used in operating activities primarily consists of cash used in pre-development activities and general and administrative expense. Cash used in operating activities was $22.8 million and $7.2 million for the six months ended June 30, 2026 and 2025, respectively.

Cash used in investing activities primarily consists of cash used for investments in mining equipment and infrastructure. Cash used in investing activities was $9.5 million and $4.3 million for the six months ended June 30, 2026 and 2025, respectively.

Cash provided by financing activities during the six months ended June 30, 2026 was $290.0 million, which was primarily due to net proceeds from our IPO. Cash provided by financing activities was $17.3 million for the six months ended June 30, 2025, which was primarily due to proceeds from the issuance of notes payable. Cash used in financing activities to pay notes payable for insurance premium financing was $0.5 million and $0.3 million during the six months ended June 30, 2026 and 2025, respectively.

Stock-Based Compensation

In 2021, we issued stock options to purchase 1,000,000 shares of common stock under the 2021 Long Term Incentive Plan (the “LTIP”). These stock options are exercisable over a 10-year term and vest in equal monthly installments over a 60-month period subject to the grantee’s continuous service. In 2025, we issued stock options to purchase 7,623,000 shares of common stock under the LTIP to certain directors, employees and consultants. These stock options are exercisable over a 10-year term and generally vest and become exercisable in equal installments on the first three anniversaries of the grant date, subject to the grantee’s continuous service.

In connection with our initial public offering, on May 10, 2026, our Board of Directors approved the Amended and Restated LTIP. As of the closing of the IPO, the maximum number of shares of common stock that may be issued under the Amended and Restated LTIP is 17,400,012, subject to adjustment upon certain changes in the Company’s capitalization and annual increase on the first day of each calendar year during the term of the Amended and Restated LTIP, beginning on and including January 1, 2027, and ending on and including January 1, 2036, equal to the lesser of 2% of the aggregate number of shares of common stock issued and outstanding on December 31 of the immediately preceding calendar year and such smaller number of shares of common stock as determined by the administrator (the “New LTIP Share Reserve”). Shares of common stock issued under the Amended and Restated LTIP will consist of authorized and unissued or reacquired shares of common stock, including shares of common stock repurchased by the Company.

The Amended and Restated LTIP provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights (“SARs”), performance awards, deferred stock units and cash awards to eligible participants. No awards will be granted under the Amended and Restated LTIP following the tenth anniversary of the effective date of the Amended and Restated LTIP.

We recognize all stock-based compensation as a cost in our consolidated financial statements.

We issued no stock options in the six months ended June 30, 2026 and 2025. We issued 71,432 and nil restricted stock units in the six months ended June 30, 2026 and 2025, respectively. The total stock-based compensation expense incurred for the three months ended June 30, 2026 and 2025, respectively, was $2.4 million and $0.1 million. The total stock-based compensation expense incurred for the six months ended June 30, 2026 and 2025 was $4.3 million and $0.2 million, respectively.

Off Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

There have been no significant and material changes in our critical accounting policies during the three months ended June 30, 2026, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2025 included in Form S-1.

Jumpstart Our Business Startups Act of 2012

The JOBS Act permits us, as an “emerging growth company,” to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to avail ourselves of this extended transition period and, as a result, we will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies that are not emerging growth companies.

Commodity Price Risk

We intend to engage in the production of concentrates containing silver and other minerals including copper, lead and antimony. We expect the principal source of future revenue to be the sale of concentrates containing silver, and to a lesser extent, copper, lead and antimony. A significant and sustained decrease in the price of these metals from current levels could have a material and negative impact on our business, financial condition and results of operations.

Bank Counterparty Risk

We have placed nearly all of our cash investments with a single, high-quality financial institution. All cash equivalents are invested in high-quality, short-term money market instruments, including government securities, bankers’ acceptances, bank notes, certificates of deposit, commercial paper and repurchase agreements of domestic and foreign issuers. At no time have we had funds invested in asset-backed commercial paper. We have not experienced any losses on our cash investments.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this report, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2026, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

Management has not identified any changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no material changes from the risk factors set forth under the heading “Risk Factors” in our registration statement on Form S-1 filed with the SEC on May 11, 2026, as amended, which risk factors are incorporated herein by reference. The risks described in our Registration Statement on Form S-1, as amended, and as otherwise herein are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, cash flows, and/or future results.