Santacruz Silver Mining Ltd.

Santacruz Silver Mining Ltd. is a junior silver producer headquartered in Vancouver, Canada, operating primarily in South America. The company's portfolio consists of 5 projects, comprising 4 operating mines and 1 development project. Key assets include Bolivar and Caballo Blanco. The business model is centered on an integrated operational approach, combining production from proprietary sources with a feed sourcing and trading business. This structure utilizes excess capacity at multiple milling facilities, processing material sourced from independent third-party mining groups. A key operational characteristic is the ability to process different feed types separately, employing adaptable reagent strategies to optimize metallurgical performance based on ore characteristics. The organization enhances concentrate value and recovery rates through strategic blending and process modifications, such as isolating specific ore streams to dedicated circuits. Operational synergies are realized through shared infrastructure, including extensive underground haulage tunnels that connect distinct mining areas directly to central processing plants. This integrated system, which includes capabilities like differential flotation to produce multiple concentrate types, provides significant operational flexibility and allows for continuous process optimization to improve efficiency and output quality.

The core strategic objective is to strengthen the company's financial position to support future growth. This is pursued through two primary initiatives: debt reduction and operational optimization. The financial strategy involves actively managing obligations, including exercising options for accelerated repayment plans to reduce long-term liabilities. Operational priorities are focused on enhancing efficiency across all mining and milling activities. Key objectives include optimizing production costs while simultaneously improving metallurgical recovery rates to increase the quality and value of concentrates. Management also seeks to identify and implement synergies between its various operations to foster greater integration and process improvements. The capital management philosophy emphasizes maintaining financial flexibility to support growth and maximize shareholder returns, guided by a rigorous annual budgeting and quarterly forecasting process to manage capital requirements effectively. These initiatives are designed to improve cash flow generation and build a robust platform for sustainable expansion.

A significant corporate transaction occurred on March 18, 2022, with the acquisition of 100% ownership of the Sinchi Wayra and Illapa businesses from Glencore plc. This acquisition fundamentally shaped the current operational structure. A key component of this structure is the Illapa business, which is managed as a joint operation with Corporación Minera de Bolivia (COMIBOL), a state-owned entity. The company serves as the operator of this joint operation. For financial reporting purposes, the organization records its 45% interest in the assets, liabilities, revenues, and expenses of the joint operation directly in its consolidated financial statements. However, for certain transactions where the company is solely responsible, the assets, liabilities, revenues, and expenses are recognized at 100%, resulting in balances payable to or owed from its partner, COMIBOL, for its respective share.