Highlander Silver Corp 6-K, filed Aug 13, 2026
Highlander Silver Corp. (HSLV)
About this 6-K
Highlander Silver Corp filed this 6-K on August 13, 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August 2026
Commission File Number 001- 43170
Highlander Silver Corp.
(Translation of registrant’s name into English)
2500 – 100 King Street West
Toronto, Ontario, M5X 1A9 Canada
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40F:
Form 20-F ☐ Form 40-F ☒
The following documents are being submitted herewith:
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Highlander Silver Corp. | ||
| (Registrant) | ||
| Date: August 12, 2026 | By: | /s/ Purni Parikh |
| Name: | Purni Parikh | |
| Title: | SVP Corporate Affairs and Corporate Secretary | |
2
Exhibit 99.1
Highlander Silver Corp.
Condensed Consolidated Interim Financial Statements
For the three and six months ended June 30, 2026 and 2025
(Unaudited)
| Highlander Silver Corp. |
| Condensed Consolidated Interim Statements of Financial Position (Unaudited – in thousands of United States Dollars) |
| Note | June 30, 2026 | December 31, 2025 (Restated – Note 3) | October 1, 2024 (Restated – Note 3) | |||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | 99,304 | $ | 78,942 | $ | 1,853 | ||||||||
| Inventory | 5 | 9,095 | – | – | ||||||||||
| Receivables | 6, 21 | 1,652 | 66 | 81 | ||||||||||
| Prepaids and other | 1,722 | 148 | 19 | |||||||||||
| Tax receivable | 7 | 10,097 | 156 | 134 | ||||||||||
| 121,870 | 79,312 | 2,087 | ||||||||||||
| Non-current assets | ||||||||||||||
| Receivables | 6 | 1,124 | – | – | ||||||||||
| Reclamation deposits | 8 | 3,430 | 44 | 44 | ||||||||||
| Property and equipment | 9 | 163,426 | 210 | 70 | ||||||||||
| Mineral property interests | 10 | 285,000 | 8,892 | 7,970 | ||||||||||
| Right-of-use assets | 482 | 8 | – | |||||||||||
| Tax receivable | 7 | 2,429 | 247 | 66 | ||||||||||
| Total assets | $ | 577,761 | $ | 88,713 | $ | 10,237 | ||||||||
| Liabilities and Equity | ||||||||||||||
| Current liabilities | ||||||||||||||
| Accounts payable and accrued liabilities | 11, 21 | $ | 27,745 | $ | 1,780 | $ | 269 | |||||||
| Community projects obligation | 12 | 1,171 | – | – | ||||||||||
| Consideration payable | 10a | – | 1,250 | 1,250 | ||||||||||
| Lease liabilities | 217 | 9 | – | |||||||||||
| Tax payable | 5,425 | 15 | 7 | |||||||||||
| Other liabilities | 60 | – | – | |||||||||||
| 34,618 | 3,054 | 1,526 | ||||||||||||
| Non-current liabilities | ||||||||||||||
| Community projects obligation | 12 | 8,643 | – | – | ||||||||||
| Consideration payable | 10a | – | – | 1,250 | ||||||||||
| Lease liabilities | 200 | – | – | |||||||||||
| Reclamation provision | 13 | 16,633 | 475 | 365 | ||||||||||
| Deferred tax liability | 4 | 113,449 | – | – | ||||||||||
| Other liabilities | 1,510 | – | – | |||||||||||
| Total liabilities | 175,053 | 3,529 | 3,141 | |||||||||||
| Equity | ||||||||||||||
| Common shares | 14 | 400,023 | 100,291 | 14,575 | ||||||||||
| Reserves | 14 | 15,115 | 2,546 | 1,348 | ||||||||||
| Commitment to issue shares | 14 | – | 547 | 37 | ||||||||||
| Foreign currency reserve | (542 | ) | 2,363 | (364 | ) | |||||||||
| Deficit | (11,888 | ) | (20,563 | ) | (8,500 | ) | ||||||||
| Total equity | 402,708 | 85,184 | 7,096 | |||||||||||
| Total liabilities and equity | $ | 577,761 | $ | 88,713 | $ | 10,237 | ||||||||
Nature of operations and going concern (Note 1)
Commitments (Note 24c)
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Page 1
| Highlander Silver Corp. |
| Condensed Consolidated Interim Statements of Net Income (Loss) and Comprehensive Income (Loss) For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, except share and per share amounts) |
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
| Note | 2026 | 2025 (Restated – Note 3) | 2026 | 2025 (Restated – Note 3) | ||||||||||||||
| Revenue | 15 | $ | 37,897 | $ | – | $ | 56,227 | $ | – | |||||||||
| Cost of sales | 16 | (25,243 | ) | – | (37,704 | ) | – | |||||||||||
| Depletion, amortization, and depreciation | (12,163 | ) | – | (17,958 | ) | – | ||||||||||||
| Gross profit | 491 | – | 565 | – | ||||||||||||||
| Exploration expenses | 17 | (11,825 | ) | (2,498 | ) | (13,779 | ) | (2,916 | ) | |||||||||
| General and administrative expenses | 18 | (5,662 | ) | (1,251 | ) | (13,777 | ) | (2,234 | ) | |||||||||
| Loss before other items | (16,996 | ) | (3,749 | ) | (26,991 | ) | (5,150 | ) | ||||||||||
| Finance cost | (685 | ) | (69 | ) | (772 | ) | (160 | ) | ||||||||||
| Interest and other income | 1,966 | 152 | 3,085 | 232 | ||||||||||||||
| Foreign exchange gain | 998 | 85 | 2,019 | 82 | ||||||||||||||
| Remeasurement gain on previously held equity interest in Bear Creek | 4 | – | – | 28,466 | – | |||||||||||||
| Write-off of receivables | – | (4 | ) | – | (127 | ) | ||||||||||||
| Other expenses | (98 | ) | – | (135 | ) | – | ||||||||||||
| Net income (loss) before income taxes | (14,815 | ) | (3,585 | ) | 5,672 | (5,123 | ) | |||||||||||
| Current income tax expense | (969 | ) | – | (1,048 | ) | – | ||||||||||||
| Deferred income tax recovery | 4,051 | – | 4,051 | – | ||||||||||||||
| Net income (loss) | (11,733 | ) | (3,585 | ) | 8,675 | (5,123 | ) | |||||||||||
| Other comprehensive income (loss) | ||||||||||||||||||
| Items that may be reclassified to profit or loss: | ||||||||||||||||||
| Foreign currency translation | (1,329 | ) | 1,203 | (2,905 | ) | 1,478 | ||||||||||||
| Total comprehensive income (loss) | $ | (13,062 | ) | $ | (2,382 | ) | $ | 5,770 | $ | (3,645 | ) | |||||||
| Net income (loss) per share attributable to: | ||||||||||||||||||
| Shareholders of the Company | ||||||||||||||||||
| Basic | 19 | $ | (0.06 | ) | $ | (0.03 | ) | $ | 0.05 | $ | (0.05 | ) | ||||||
| Diluted | 19 | (0.06 | ) | (0.03 | ) | 0.04 | (0.05 | ) | ||||||||||
| Weighted average number of shares outstanding | ||||||||||||||||||
| Basic | 19 | 203,418,380 | 105,053,403 | 189,560,309 | 96,018,775 | |||||||||||||
| Diluted | 19 | 203,418,380 | 105,053,403 | 196,165,068 | 96,018,775 | |||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Page 2
| Highlander Silver Corp. |
| Condensed Consolidated Interim Statements of Cash Flows For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars) |
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
| Note | 2026 | 2025 (Restated – Note 3) | 2026 | 2025 (Restated – Note 3) | ||||||||||||||
| Cash provided by (used in): | ||||||||||||||||||
| Operations | ||||||||||||||||||
| Net income (loss) for the period | $ | (11,733 | ) | $ | (3,585 | ) | $ | 8,675 | $ | (5,123 | ) | |||||||
| Adjustments for: | ||||||||||||||||||
| Accretion of community projects obligation | 12 | 153 | – | 235 | – | |||||||||||||
| Adjustment to other liabilities | 29 | – | 26 | – | ||||||||||||||
| Depreciation | 257 | 5 | 372 | 7 | ||||||||||||||
| Depletion, amortization, and depreciation | 12,163 | – | 17,958 | – | ||||||||||||||
| Deferred income tax recovery | (4,051 | ) | – | (4,051 | ) | – | ||||||||||||
| Finance cost | 424 | 83 | 511 | 174 | ||||||||||||||
| Foreign exchange | 165 | (196 | ) | (1,350 | ) | (211 | ) | |||||||||||
| Interest income | (1,307 | ) | (151 | ) | (1,966 | ) | (198 | ) | ||||||||||
| Remeasurement gain on previously held equity interest in Bear Creek | – | – | (28,466 | ) | – | |||||||||||||
| Reclamation provision | 2 | 31 | 5 | 31 | ||||||||||||||
| Share-based compensation | 14 | 2,217 | 345 | 4,012 | 669 | |||||||||||||
| Write-off of receivables | – | 4 | – | 127 | ||||||||||||||
| Net changes in non-cash working capital items: | ||||||||||||||||||
| Accounts payable and accrued liabilities | 12,257 | 509 | (1,335 | ) | 522 | |||||||||||||
| Inventory | 345 | – | 4,339 | – | ||||||||||||||
| Prepaid and other | 894 | (95 | ) | 85 | (90 | ) | ||||||||||||
| Receivables | (944 | ) | 15 | (1,042 | ) | (3 | ) | |||||||||||
| Tax payable | 190 | 5 | 3,327 | 5 | ||||||||||||||
| Tax receivable | (2,755 | ) | (95 | ) | (2,044 | ) | (97 | ) | ||||||||||
| 8,306 | (3,125 | ) | (709 | ) | (4,187 | ) | ||||||||||||
| Financing | ||||||||||||||||||
| Proceeds from non-brokered private placement, net of share issue costs paid | 14 | (77 | ) | – | 39,723 | – | ||||||||||||
| Proceeds from bought deal equity financing, net of share issue costs paid | 14 | – | – | – | 20,785 | |||||||||||||
| Finance costs paid | (35 | ) | (160 | ) | (35 | ) | (160 | ) | ||||||||||
| Payment of lease liabilities | (117 | ) | – | (150 | ) | – | ||||||||||||
| Proceeds from exercise of options and warrants | 14 | 50 | 65 | 2,559 | 126 | |||||||||||||
| Share issuance costs paid | (183 | ) | – | (183 | ) | – | ||||||||||||
| (362 | ) | (95 | ) | 41,914 | 20,751 | |||||||||||||
| Investing | ||||||||||||||||||
| Investment in Bear Creek | 4 | – | – | (13,219 | ) | – | ||||||||||||
| Debt settlement | 4 | – | – | (10,352 | ) | – | ||||||||||||
| Cash acquired on acquisition of Bear Creek | 4 | – | – | 16,194 | – | |||||||||||||
| Mineral property interest | – | (16 | ) | – | (16 | ) | ||||||||||||
| Milestone payment under acquisition agreement with SSR Mining | 10a | (1,250 | ) | (1,250 | ) | (1,250 | ) | (1,250 | ) | |||||||||
| Interest and royalty income received | 1,590 | 151 | 2,220 | 197 | ||||||||||||||
| Payment of community projects and other liabilities | 12 | (8 | ) | – | (1,169 | ) | – | |||||||||||
| Property and equipment | 9 | (11,700 | ) | (27 | ) | (11,947 | ) | (56 | ) | |||||||||
| Proceeds from sale of Tassa Project | 6 | 500 | – | 500 | – | |||||||||||||
| (10,868 | ) | (1,142 | ) | (19,023 | ) | (1,125 | ) | |||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (971 | ) | 1,087 | (1,820 | ) | 1,197 | ||||||||||||
| Increase (decrease) in cash and cash equivalents | (3,895 | ) | (3,275 | ) | 20,362 | 16,636 | ||||||||||||
| Cash and cash equivalents, beginning of the period | 103,199 | 21,073 | 78,942 | 1,162 | ||||||||||||||
| Cash and cash equivalents, end of the period | $ | 99,304 | $ | 17,798 | $ | 99,304 | $ | 17,798 | ||||||||||
Supplemental cash flow information (Note 22)
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Page 3
| Highlander Silver Corp. |
| Condensed Consolidated Interim Statements of Changes in Equity For the six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, except number of shares) |
| Number of Shares | Amount | Reserves | Commitment to issue shares | Foreign currency reserve | Deficit | Total equity | ||||||||||||||||||||||
| Balance, December 31, 2025 (Restated)1 | 130,910,687 | $ | 100,291 | $ | 2,546 | $ | 547 | $ | 2,363 | $ | (20,563 | ) | $ | 85,184 | ||||||||||||||
| Shares issued on acquisition of Bear Creek (Note 4), net of share issue costs | 36,225,457 | 256,850 | – | – | – | – | 256,850 | |||||||||||||||||||||
| Bear Creek warrants (Note 14c) | – | – | 8,610 | – | – | – | 8,610 | |||||||||||||||||||||
| Non-brokered private placement, net of share issue costs | 8,060,226 | 39,723 | – | – | – | – | 39,723 | |||||||||||||||||||||
| Shares issued on exercise of warrants | 23,277,048 | 2,612 | (53 | ) | – | – | – | 2,559 | ||||||||||||||||||||
| Share-based compensation | – | – | 4,012 | – | – | – | 4,012 | |||||||||||||||||||||
| Reclassification of commitment to issue shares to common shares | 5,000,000 | 547 | – | (547 | ) | – | – | – | ||||||||||||||||||||
| Net income and comprehensive income | – | – | – | – | (2,905 | ) | 8,675 | 5,770 | ||||||||||||||||||||
| Balance, June 30, 2026 | 203,473,418 | $ | 400,023 | $ | 15,115 | $ | – | $ | (542 | ) | $ | (11,888 | ) | $ | 402,708 | |||||||||||||
| Balance, December 31, 2024 (Restated)1 | 81,720,985 | $ | 14,887 | $ | 1,531 | $ | – | $ | (418 | ) | $ | (9,672 | ) | $ | 6,328 | |||||||||||||
| Bought deal equity financing, net of share issue costs (Restated)1 | 23,000,000 | 20,785 | – | – | – | – | 20,785 | |||||||||||||||||||||
| Fair value reversal on expired stock options | – | – | (10 | ) | – | – | 10 | – | ||||||||||||||||||||
| Shares issued on exercise of stock options and warrants (Restated)1 | 750,000 | 166 | (40 | ) | – | – | – | 126 | ||||||||||||||||||||
| Share-based compensation (Restated)1 | – | – | 669 | – | – | – | 669 | |||||||||||||||||||||
| Net loss and comprehensive loss (Restated)1 | – | – | – | – | 1,478 | (5,123 | ) | (3,645 | ) | |||||||||||||||||||
| Balance, June 30, 2025 (Restated)1 | 105,470,985 | $ | 35,838 | $ | 2,150 | $ | – | $ | 1,060 | $ | (14,785 | ) | $ | 24,263 | ||||||||||||||
| 1 | Refer to Note 3 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Page 4
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
| 1. | Nature of Operations and Going Concern |
Highlander Silver Corp. (the “Company” or “Highlander”) was incorporated under the laws of the Province of British Columbia, Canada. The Company’s head office is located at 2500 – 100 King Street West, Toronto, Ontario, Canada, M5X 1A9. Its records office is located at 1200 Waterfront Center, 200 Burrard Street, Vancouver, British Columbia, Canada, V6C 3L6. The Company’s principal business activity is the acquisition, exploration and development of mineral properties located in Peru, and the production and sale of gold and silver in Mexico. On February 26, 2026, the Company acquired Bear Creek Mining Corporation (“Bear Creek”), which holds the Corani Project in Peru and the Mercedes Mine in Mexico (Note 4). These condensed consolidated interim financial statements of the Company as at and for the three and six months ended June 30, 2026 and 2025 comprise the Company and its subsidiaries. The Company’s common shares are traded on the Toronto Stock Exchange (“TSX”) and on the NYSE American LLC under the symbol HSLV.
The Company has not yet determined whether its mineral property interests contain mineral reserves that are economically viable. The Company’s continued operations, and the underlying value and recoverability of the amounts shown for mineral properties, are dependent upon the existence of economically recoverable mineral reserves in the mineral properties in which the Company holds an interest. The continued exploration and development of projects will depend primarily on the Company’s ability to obtain financing, as required, and on its ability to generate cash flows from operations.
These condensed consolidated interim financial statements are prepared on the basis that the Company will continue as a going concern, which assumes that the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of operations. The mining and exploration business involves a high degree of risk, and there can be no assurance that current mine production, exploration, and development projects will be profitable. The Company has historically relied on share capital financing, as well as property option or sale proceeds, to fund its property acquisition, exploration and evaluation expenditures, and operating expenses.
As at June 30, 2026, the Company had cash and cash equivalents of $99,304 (December 31, 2025 – $78,942). The Company has financed its operations primarily through the issuance of common shares.
| 2. | Basis of Preparation |
| a) | Statement of compliance |
These condensed consolidated interim financial statements have been prepared in accordance with International Financial Accounting Standard 34 (“IAS 34”), Interim Financial Reporting, and do not include all of the information required for annual financial statements prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual financial statements.
These condensed consolidated interim financial statements were approved and authorized for issuance by the Board of Directors on August 12, 2026.
| b) | Summary of material accounting policies |
These condensed consolidated interim financial statements follow the same accounting policies and methods of application as the Company’s most recent annual financial statements, except as described below, and should be read in conjunction with the annual audited consolidated financial statements of the Company for the fifteen months ended December 31, 2025.
Basis of consolidation
These condensed consolidated interim financial statements include the financial information of the Company and its subsidiaries.
Subsidiaries are entities controlled by the Company and are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries are amended as necessary to align with the policies adopted by the Company.
Page 5
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
The condensed consolidated interim financial statements include the following entities:
| Entity | Location | Ownership interest | Principal activity | |||||
| Highlander Silver Corp. | Canada | 100 | % | Parent company | ||||
| Bear Creek Mining Corporation | Canada | 100 | % | Holding company | ||||
| Pacific West Exploration Services Inc. | Canada | 100 | % | Exploration company | ||||
| Cappex Mineral Ventures Inc. | Canada | 100 | % | Holding company | ||||
| Cappex Exploraciones S.A.C. | Peru | 100 | % | Exploration company | ||||
| Reliant Ventures S.A.C. | Peru | 100 | % | Exploration company | ||||
| San Luis Resource (BVI) Inc. | British Virgin Islands | 100 | % | Holding company | ||||
| San Luis Minerals (BVI) Inc. | British Virgin Islands | 100 | % | Holding company | ||||
| Silver Standard Peru (BVI) Inc. | British Virgin Islands | 100 | % | Holding company | ||||
| BCMC Corani Holdings Ltd. | Canada | 100 | % | Holding company | ||||
| Bear Creek Resources Company Ltd. | Canada | 100 | % | Holding company | ||||
| Bear Creek Exploration Company Ltd. | Canada | 100 | % | Holding company | ||||
| Bear Creek (BVI) Ltd. | British Virgin Islands | 100 | % | Holding company | ||||
| Corani Mining Ltd. | British Virgin Islands | 100 | % | Holding company | ||||
| Bear Creek Mining S.A.C. | Peru | 100 | % | Exploration company | ||||
| Bear Creek Mining Company Sucursal del Peru | Peru | 100 | % | Exploration company | ||||
| INEDE S.A.C. | Peru | 100 | % | Exploration company | ||||
| Electro Antapata S.A.C. | Peru | 100 | % | Electrical power distribution | ||||
| Minera Mercedes Minerales S. de R.L. de C.V. | Mexico | 100 | % | Production company | ||||
| Mercedes Gold Holdings S. A. de C.V. | Mexico | 100 | % | Holding company | ||||
| Premier Mining Mexico S. de R.L. de C.V. | Mexico | 100 | % | Services company | ||||
| Premier Gold Mines (Netherlands) Cooperative U.A. | Netherlands | 100 | % | Holding company | ||||
| Premier Gold Mines (Netherlands) B.V. | Netherlands | 100 | % | Holding company | ||||
| 2536062 Ontario Inc. | Canada | 100 | % | Holding company | ||||
Inter-company balances and transactions, and any unrealized income, loss and expenses arising from inter-company transactions, are eliminated in preparing these condensed consolidated interim financial statements. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Company’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
When control of a subsidiary is lost, the Company: (a) derecognizes the assets and liabilities of the former subsidiary from the consolidated statement of financial position; (b) recognizes any investment retained in the former subsidiary at its fair value when control is lost and subsequently accounts for it and for any amounts owed by or to the former subsidiary in accordance with the relevant provisions of IFRS; and (c) recognizes the gain or loss associated with the loss of control attributable to the former controlling interest.
Business combinations
A business combination requires that the assets acquired and liabilities assumed constitute a business. A business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income (such as dividends or interest) or generating other income from ordinary activities. A business consists of inputs and processes applied to those inputs that have the ability to create outputs. Although businesses usually have outputs, outputs are not required for an integrated set to qualify as a business as the Company considers other factors to determine whether the set of activities or assets is a business. The Company has an option to apply a ‘concentration test’ to assess whether an acquired set of activities and assets are not a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single, identifiable asset or group of similar identifiable assets, the concentration test is met, and the transaction is accounted for as an asset acquisition. In such cases, the acquirer identifies and recognizes the individual identifiable assets acquired and liabilities assumed. The cost of the net assets is allocated to the individual identifiable assets and liabilities on the basis of their relative fair values at the date of purchase. Such a transaction or event will not give rise to goodwill. Acquisition-related costs in an asset acquisition are recognized as part of the cost of the assets acquired.
Page 6
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
Business combinations are accounted for using the acquisition method whereby acquired assets and liabilities are recorded at fair value as of the date of acquisition with the excess of the purchase consideration over such fair value being recorded as goodwill. Non-controlling interests in an acquisition may be measured at either fair value or at the non-controlling interest’s proportionate share of the fair value of the acquiree’s net identifiable assets. The excess of (i) total consideration transferred by the Company, measured at fair value, including contingent consideration, and (ii) the non-controlling interests in the acquiree, over the acquisition-date fair value of the net of the assets acquired and liabilities assumed, is recorded as goodwill.
If the fair value attributable to the Company’s share of the identifiable net assets exceeds the cost of acquisition, the difference is recognized as a gain in the consolidated statement of net income (loss) and comprehensive income (loss).
Should consideration be contingent on future events, the consideration for the acquisition recorded includes management’s best estimate of the fair value of the contingent amounts expected to be payable.
Provisional fair values allocated at the reporting date are finalized within one year of the acquisition date with retroactive restatement to the acquisition date as required.
Transaction costs, other than those associated with the issue of debt or equity securities, which the Company incurs in connection with a business combination, are expensed as incurred.
Property and equipment
The Company allocates the amount initially recognized for property and equipment to each asset’s significant components and depreciates each component separately. Property and equipment, other than mineral properties and deferred stripping costs, are depreciated on a straight-line basis over their estimated useful lives, typically ranging from 1 to 12 years.
Once a mineral property has been brought into commercial production, defined as the ability to consistently maintain production metrics, as determined by management for specific properties, the costs of any additional work on that property are expensed as incurred, except for exploration and development programs that constitute a betterment. Betterments are deferred and amortized over the remaining useful life of the related assets. Mineral properties include decommissioning and restoration costs related to the reclamation of mineral properties. Mineral properties are derecognized upon disposal or written off when no future economic benefits are expected to arise from the asset’s continued use or the cash-generating unit’s carrying value exceeds its recoverable amount. Any gain or loss on disposal of the asset, determined as the difference between the proceeds received and the carrying amount of the asset, is recognized in the consolidated statement of net income (loss) and comprehensive income (loss).
Mineral properties and deferred stripping costs are amortized on the unit-of-production basis using the mineable ore tonnes extracted from the mine in the period as a percentage of the total mineable ore tonnes to be extracted in current and future periods based on mineral reserves and units produced during the period. Mineral properties are recorded at cost, net of accumulated depreciation and depletion, and accumulated impairment losses and are not intended to represent future values. Recovery of capitalized costs depends on the successful development of economic mining operations or the disposition of the related mineral property. Residual values, depreciation and depletion methods, and useful lives are reviewed at each financial period end and adjusted on a prospective basis, if required.
Revenue
The Company follows a five-step process in determining whether to recognize revenue from the sale of precious metals:
| ● | identifying the contract with a customer, |
| ● | identifying the performance obligations, |
| ● | determining the transaction price, |
| ● | allocating the transaction price to the performance obligations, and |
| ● | recognizing revenue when performance obligations are satisfied. |
Revenue from contracts with customers is generally recognized on the settlement date when the customer obtains control of the delivered asset and the Company satisfies its performance obligations. The Company considers the terms of the contract in determining the transaction price. The transaction price is either fixed on the settlement date or based on the contract’s pricing terms.
Any Net Smelter Returns (“NSRs”) or royalties to which the Company is subject are considered as costs to the Company and are recorded in the consolidated statement of net income (loss) and comprehensive income (loss) in the period such NSRs or royalties are incurred.
Page 7
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
Inventory
Material extracted from the mines is classified as either ore or waste. Ore represents material that, at the time of extraction, is expected to be processed into a saleable form and sold at a profit. Ore is accumulated in stockpiles and subsequently processed into gold and silver in a saleable form. Work-in-process represents gold and silver in the processing circuit that has not completed the production process and is not yet in a saleable form. Finished goods inventory represents gold and silver in saleable form, respectively.
Mine operating supplies represent consumables and other raw materials used in the production process, as well as spare parts and other maintenance supplies that are not classified as capital items.
Inventories are valued at the lower of cost and net realizable value (“NRV”). Cost is determined on a weighted average basis and includes all costs incurred to bring each product to its present location and condition. Cost of inventories includes direct labor, materials, and contractor expenses, depreciation of property and equipment, including capitalized development costs.
Provisions to reduce inventory to NRV are recorded to reflect changes in economic factors that impact inventory value and to reflect present intentions for using slow-moving and obsolete supplies inventory. NRV is determined with reference to relevant market prices less applicable selling expenses. Provisions recorded also reflect an estimate of the remaining costs of completion to bring the inventory into its saleable form. Provisions are also recorded to reduce mine operating supplies to NRV, generally calculated by reference to salvage or scrap values when it is determined that the supplies are obsolete. Provisions are reversed to reflect subsequent recoveries in NRV where the inventory is still on hand.
Segmented information
The Company manages its segmented information and continuously reviews the information that aids the decision-making process for the officers of the Company.
The Company considers any component of the Company to be a segment:
| ● | that engages in business activities from which it may earn revenues and/or incur expenses; |
| ● | whose operating results are reviewed regularly by the entity’s chief operating decision maker; and |
| ● | for which discrete financial information is available. |
| c) | Material accounting judgments and significant estimates and uncertainties |
Other than the material judgments, estimates and uncertainties described below, the material judgments and estimates applied in the preparation of the Company’s condensed consolidated interim financial statements for the three and six months ended June 30, 2026, are consistent with those applied in the Company’s annual audited consolidated financial statements for the fifteen months ended December 31, 2025.
Business Combinations
Business combinations are accounted for using the acquisition method of accounting. The allocation of the purchase price requires estimates as to the fair value of acquired assets and liabilities. The information necessary to measure the fair values as at the acquisition date of assets acquired and liabilities assumed requires management to make certain judgments and estimates, including but not limited to the most appropriate valuation methodology, estimates of mineral reserves and mineral resources and exploration potential of the assets acquired, value of resources outside life of mine plans including assumptions for market values per ounce, future production levels, future operating costs, capital expenditures and closure costs, discount rates, future metal prices and long term foreign exchange rates. Changes to the preliminary measurements of assets and liabilities acquired may be retrospectively adjusted when new information is obtained until the final measurements are determined within one year of the acquisition date. Refer to Note 4 for further details on the acquisition of Bear Creek.
Page 8
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
Assessment of impairment and reversal of impairment indicators for property and equipment
The application of the Company’s accounting policy for impairment of mineral properties, property and equipment requires significant judgment to determine whether indicators of impairment exist, or whether there’s an indication of a reversal of previously recorded impairments. The review of impairment and reversal of impairment indicators includes consideration of significant changes in both external and internal sources of information, including factors such as:
| ● | a significant decline in the market value of the Company’s share price; |
| ● | changes in quantity of the recoverable resources and reserves; |
| ● | market and economic conditions impacting the precious metals industry; |
| ● | metal prices and forecasts, capital expenditure requirements, expected future operating costs and production volumes; |
| ● | and site restoration costs to the end of the mine’s life. |
Uncertain tax positions
The Company’s operations involve the application of complex tax regulations in multiple international jurisdictions. Determining the tax treatment of a transaction requires the Company to apply judgment in its interpretation of the applicable tax law. These positions are not final until accepted by the relevant tax authority. The tax treatment may change based on the result of assessments or audits by the tax authorities often years after the initial filing.
The Company recognizes and records potential liabilities for uncertain tax positions based on its assessment of the amount, or range of amounts, of tax that will be due. The Company adjusts these accruals as new information becomes available. Due to the complexity and uncertainty associated with certain tax treatments, the ultimate resolution could result in a payment that is materially different from the Company’s current estimate of the tax liabilities.
Mineral reserves and resources
Mineral reserves are estimates of ore that can be economically and legally extracted from the Company’s mineral property. The Company estimates its mineral reserves and mineral resources based on information compiled by appropriately qualified persons. Such estimates require complex geological assessments to interpret the data. Additionally, the estimation of recoverable mineral reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, metallurgical recoveries, permitting and production costs along with geological assumptions made in estimating the size and grade of the ore body. Changes in the mineral reserve or mineral resource estimates may impact the carrying value of mining interests, mine restoration provisions, depreciation and amortization charges and royalty obligations.
Value added taxes
The Company incurs indirect taxes, including value-added tax, on purchases of goods and services at its operating mines and exploration projects. Indirect tax balances are recorded at their estimated recoverable amounts within current or long-term assets, net of provisions, and reflect the Company’s best estimate of their recoverability and timing of receipt under existing tax rules. Management’s assessment of recoverability considers the probable outcomes of claimed deductions and/or disputes. The provisions and balance sheet classifications made to date may be subject to change and such change may be material.
| d) | New accounting policies issued but not yet effective |
Certain pronouncements have been issued by the IASB or International Financial Reporting Interpretations Committee that are not mandatory for the current period have not been early adopted. The Company has reviewed these pronouncements, and the amendments that are applicable to the Company are discussed below:
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 Presentation and Disclosure in Financial Statements, which will replace IAS 1, Presentation of Financial Statements aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new principles for aggregation of information. IFRS 18 is accompanied by limited amendments to the requirements in IAS 7 Statement of Cash Flows. IFRS 18 is effective from January 1, 2027. Companies are permitted to apply IFRS 18 before that date. The Company is currently assessing the impact of the new standard.
Page 9
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
| e) | Accounting policies adopted during the current period |
Effective January 1, 2026, the Company has applied the following new accounting standard which was issued by the IASB:
The amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures. The amendments include the clarification of the date of initial recognition or derecognition of financial liabilities, including financial liabilities that are settled in cash using an electronic payment system.
The adoption of this amended standard had no material impact on the Company’s condensed consolidated interim financial statements for the three and six months ended June 30, 2026 and 2025.
| 3. | Change in Presentation Currency |
On January 1, 2026, the Company elected to change its presentation currency from Canadian dollars to United States dollars. The change in presentation currency is to better reflect the Company’s business activities and to improve comparability of the Company’s financial results with peer companies in the mining industry.
The change in presentation currency has been made in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, and has been applied on a full retrospective basis.
For years prior to January 1, 2026, the statements of financial position for each year presented have been translated from Canadian dollars to United States dollars at the rate of exchange prevailing at the respective financial position date with the exception of equity items which have been translated at accumulated historical rates.
The consolidated statements of net income (loss) and comprehensive income (loss) were translated at the average exchange rates for the reporting period, or at the exchange rate prevailing at the date of the transactions. Exchange differences arising on translation from the Canadian dollar to the United States dollar presentation currency have been recognized in other comprehensive income (loss) and accumulated as a separate component of equity. In addition to the comparative financial statements, the Company has presented a third statement of financial position as at October 1, 2024.
Equity has been restated using historical average exchange rates other than for significant transactions for which the actual historical rate was used with the difference being presented as an adjustment to the foreign currency exchange reserve.
The exchange rates used to reflect the change in presentation currency in the accompanying condensed consolidated interim financial statements were as follows:
| October 1, 2024, closing rate (C$/US$) | 1.3499 | |||
| December 31, 2025, closing rate (C$/US$) | 1.3706 | |||
| Average rate for the three months ended March 31, 2025 (C$/US$) | 1.4352 | |||
| Average rate for the three months ended June 30, 2025 (C$/US$) | 1.3841 |
| 4. | Acquisition of Bear Creek |
On December 18, 2025, the Company entered into a definitive arrangement agreement (the “Arrangement Agreement”) with Bear Creek to acquire all issued and outstanding common share of Bear Creek (“Bear Creek Shares”) that it did not already own by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia), pursuant to which Bear Creek shareholders would receive 0.1175 Highlander common shares (the “Exchange Ratio”) for each Bear Creek Shares (the “Arrangement”) held immediately prior to the effective time of the Arrangement. On January 9, 2026, the agreement was amended to remove the requirement for a Highlander shareholder meeting; all other material terms remained unchanged. The Company also agreed to a concurrent non-brokered private placement with Bear Creek pursuant to which the Company subscribed for 50,000,000 Bear Creek Shares at a price of C$0.36 per share for a total subscription price of C$18 million.
In connection with the execution of the Arrangement Agreement, Highlander also entered into definitive agreements to settle Bear Creek’s indebtedness owing to affiliates of Royal Gold, Inc. (“Royal Gold”) and Equinox Gold Corp. (“Equinox”) (the “Debt Settlement Arrangements” and together with the Arrangement, the “Bear Creek Transaction”). Under the Debt Settlement Arrangements, Highlander agreed to: (i) settle outstanding debt obligations owing by Bear Creek to Equinox and certain affiliates of Royal Gold; and (ii) terminate the gold and silver stream obligations between Bear Creek and an affiliate of Royal Gold under the Mercedes streaming arrangement.
Page 10
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
The acquisition of Bear Creek was completed on February 26, 2026 (“Acquisition Date”). Immediately prior to closing, Highlander held 50,000,000 Bear Creek Shares. Pursuant to the Arrangement, Highlander acquired an aggregate of 308,301,938 Bear Creek Shares, increasing its holdings to 100% of the issued and outstanding Bear Creek Shares. In connection with the closing, Highlander issued 36,225,457 common shares to the former shareholders of Bear Creek as consideration for the Bear Creek shares acquired. As a result, Bear Creek became a wholly-owned subsidiary of Highlander.
Royal Gold received cash consideration of $6,200, an incremental 1.75% secured net smelter return royalty (“NSR”) on the Corani Project and an unsecured 2% NSR on the Mercedes Mine, together with certain parent guarantees from Highlander. Royal Gold’s existing 1% secured NSR on the Corani Project remained in place, such that Royal Gold holds an aggregate 2.75% secured NSR on the Corani Project (the “Corani NSR”). Highlander is permitted to buy back 0.5% of the Corani NSR for $25,000 until the earlier of: (i) January 1, 2033; and (ii) the date that is 6 months after a final investment decision (“FID”) is made. If the FID is obtained before December 31, 2028, Highlander will be permitted to buy back 0.75% of the Corani NSR for $30,000.
Equinox received $1,600 of cash consideration and a 0.5% unsecured NSR on the Corani Project (the “Equinox NSR”). Highlander is permitted to buy back 0.167% of the Equinox NSR for $8,300 until the earlier of: (i) January 1, 2033; and (ii) the date that is six months after an FID.
Concurrently with the closing of the Arrangement and the Debt Settlement Arrangements, Highlander repaid the advance and outstanding interest owed to Wheaton Precious Metals International Ltd. (“Wheaton”) pursuant to the support agreement dated November 22, 2022, as amended, between Bear Creek and Wheaton.
Accounting treatment of the acquisition
The Company evaluated the acquisition of Bear Creek under IFRS 3, Business Combinations (“IFRS 3”), and concluded that Bear Creek constituted a business. Accordingly, the acquisition has been accounted for as a business combination, with Highlander identified as the acquirer. On February 26, 2026, the Company acquired control of Bear Creek Mining Corporation and its subsidiaries. The Company began consolidating the operating results, cash flows and net assets of Bear Creek from February 26, 2026, onward.
The purchase consideration has been allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the Acquisition Date. The determination of the fair value of assets acquired and liabilities assumed is based on a detailed valuation of Bear Creek’s net assets, utilizing income, market and cost valuation methods conducted with the assistance of an independent third party. The purchase price is allocated to the assets acquired and liabilities assumed on a preliminary basis until the final valuation report is received and is based on management’s best estimates at the time these condensed consolidated interim financial statements were prepared.
The acquisition constitutes a business combination achieved in stages, as Highlander previously held an equity interest in Bear Creek immediately prior to obtaining control, with a carrying amount of $13,153 (C$18,000). In accordance with IFRS 3, this previously held equity interest was remeasured to its acquisition-date fair value of $41,685 (C$57,046), with the resulting gain of $28,466 (C$39,046) recognized in the consolidated statements of net income (loss) and comprehensive income (loss).
Purchase consideration
The total purchase consideration for the acquisition of $298,718 was determined based on the number of Highlander common shares issued to Bear Creek shareholders in exchange for Bear Creek’s issued and outstanding common shares, valued at Highlander’s closing share price on February 25, 2026, as well as the previously held equity interest of Bear Creek remeasured to its acquisition-date fair value. The closing share price on February 25, 2026 was used as a proxy for the fair value of the Highlander common shares at the effective time of the Arrangement.
In-the-money stock options, restricted share units (“RSUs”) and deferred share units (“DSUs”) of Bear Creek outstanding immediately prior to the effective time of the Arrangement, whether vested or unvested, vested immediately and were converted, as a step in the Arrangement, into Bear Creek Shares, net of withholding taxes. The options were exercised on a cashless basis. Holders thereof received the number of Highlander common shares to which they were entitled for such Bear Creek Shares under the Arrangement based on the Exchange Ratio. Out-of-the-money options of Bear Creek were cancelled without any payment.
The outstanding warrants of Bear Creek were treated in accordance with their terms and, after giving effect to the Arrangement, continued to trade on the TSX-V under the symbol “BCM.WT”. The warrants became exercisable for Highlander common shares, with the number of warrants and exercise price adjusted based on the Exchange Ratio.
Page 11
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
| Bear Creek outstanding common shares as at February 26, 2026 | 308,301,938 | |||
| Exchange Ratio | 0.1175 | |||
| Total Highlander shares issued | 36,225,457 | |||
| Highlander share price1 | C$ | 9.71 | ||
| Purchase consideration | 351,749 | |||
| Fair value of previously held interest in Bear Creek2 | 57,046 | |||
| Total purchase consideration | C$ | 408,795 | ||
| Total purchase consideration3 | $ | 298,718 |
Preliminary Purchase Price Allocation
The table below summarizes the preliminary allocation of the purchase consideration to the identifiable assets acquired and liabilities assumed.
| Assets | ||||||
| Cash and cash equivalents | $ | 16,153 | ||||
| Short-term investments | 41 | |||||
| Inventory | 13,412 | |||||
| Receivables | 636 | |||||
| Prepaids and other | 1,623 | |||||
| Tax receivable | 7,782 | |||||
| Long-term assets | ||||||
| Receivables | 1,907 | |||||
| Reclamation deposit | 3,385 | |||||
| Property and equipment | 173,361 | |||||
| Mineral property interests | 311,136 | |||||
| Right-of-use assets | 557 | |||||
| Tax receivable | 2,175 | |||||
| Total assets | $ | 532,168 | ||||
| Liabilities | ||||||
| Accounts payable and accrued liabilities | (b) | $ | (29,658 | ) | ||
| Community projects obligation | (1,190 | ) | ||||
| Current portion of stream arrangements | (a) | (24,859 | ) | |||
| Lease liabilities | (254 | ) | ||||
| Tax payable | (2,098 | ) | ||||
| Other liabilities | (61 | ) | ||||
| Short term loan | (a) | (383 | ) | |||
| Note payable | (a) | (8,885 | ) | |||
| Convertible debenture and notes | (a) | (16,273 | ) | |||
| Warrant liability | (8,610 | ) | ||||
| Long-term liabilities | ||||||
| Accounts payable and accrued liabilities | (770 | ) | ||||
| Community projects obligation | (9,728 | ) | ||||
| Deferred tax liability | (117,500 | ) | ||||
| Lease liabilities | (244 | ) | ||||
| Reclamation provision | (12,175 | ) | ||||
| Other liabilities | (762 | ) | ||||
| Total liabilities | $ | (233,450 | ) | |||
| Net assets acquired | 298,718 | |||||
| Total purchase consideration | $ | 298,718 | ||||
| 1 | Closing price of Highlander’s common shares on the TSX on February 25, 2026. |
| 2 | Fair value of the previously held 50,000,000 Bear Creek Shares was determined based on the Exchange Ratio and the closing price of Highlander’s common shares on the TSX on February 25, 2026. |
| 3 | The exchange rate used to translate U.S. dollar amounts into Canadian dollars was US$1.00 = C$1.3685, based on the closing exchange rate effective as of February 25, 2026. |
Page 12
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
The Company incurred acquisition-related transaction costs of $164 and $4,137 during the three and six months ended June 30, 2026, respectively, which have been recorded in general and administrative costs in the condensed consolidated statement of net income (loss) and comprehensive income (loss) (Note 18).
For the six months ended June 30, 2026, Bear Creek contributed revenue of $56,227 and net loss before income taxes of $15,159. Total consolidated revenue and net income before income taxes of the Company for the six months ended June 30, 2026, were $56,227 and $5,672, respectively. Had the acquisition of Bear Creek taken place on January 1, 2026, pro forma total consolidated revenue and net income before income taxes for the Company would have been $78,419 and $919 respectively, for the six months ended June 30, 2026.
As at June 30, 2026, the fair values of the assets acquired and liabilities assumed were determined on a provisional basis and are subject to change pending completion of the valuation process. If new information is obtained during the measurement period about facts and circumstances that existed as at the acquisition date and would have affected the recognition or measurement of the assets acquired and liabilities assumed as at the acquisition date, the provisional amounts recognized will be adjusted retrospectively as at the acquisition date. The measurement period ends when the Company obtains the information it was seeking about facts and circumstances that existed as at the acquisition date, or determines that such information is not available, and must not exceed one year from the acquisition date.
Deferred income tax liabilities recognized in the preliminary purchase price allocation were based on management’s preliminary estimates of the applicable tax bases of the Mercedes Mine and Corani Project. Management has not yet completed its assessment of acquisition-related tax attributes, including unused tax losses, other deductible temporary differences and applicable tax planning strategies. Accordingly, no deferred tax assets have been recognized in respect of these acquisition-related tax attributes, as management has not yet determined that their realization is probable. Any related adjustments identified during the measurement period will be reflected in the preliminary purchase price allocation.
| a) | Debt Settlement Arrangements |
The liabilities associated with the Debt Settlement Arrangements related to Bear Creek’s outstanding indebtedness owing to Equinox and affiliates of Royal Gold, were settled concurrent with the closing of the Bear Creek Transaction.
| i. | The Equinox obligations were settled with a cash payment of $1,600 and a 0.5% Corani NSR. The fair value of the 0.5% Corani NSR was estimated to be $7,756. |
| ii. | The Royal Gold obligations were settled with a cash payment of $6,200 and an amended and restated Corani NSR with an aggregate rate of 2.75%, reflecting an incremental 1.75% over the prior 1%, and a new 2% NSR on the Mercedes Mine. The fair value of the amended and restated Corani NSR, being the incremental 1.75% NSR, was estimated to be $27,144, and the fair value of the 2% NSR on the Mercedes Mine was estimated to be $7,700. |
The combined fair value of the NSR royalties issued was $42,600, consisting of $34,900 related to the Corani Project and $7,700 related to the Mercedes Mine. Post-acquisition, these amounts have been deducted from mineral property interests and property and equipment, respectively, as the NSR royalties represent a partial disposition of the Company’s interest in the underlying mineral properties.
| b) | Wheaton support agreement |
Accounts payable and accrued liabilities assumed on acquisition include the cash payment of $2,552 to settle the outstanding advance and accrued interest owing to Wheaton under the support agreement pursuant to the Arrangement Agreement.
| 5. | Inventory |
The inventory balance as at June 30, 2026 relates to materials and supplies, finished goods, work in process inventory and current ore stockpiles at the Mercedes Mine. During the three and six months ended June 30, 2026, the Company recorded a NRV adjustment to materials and supplies inventory of $735 and $741, respectively (three and six months ended June 30, 2025 – $nil).
| Note | June 30, 2026 | December 31, 2025 | October 1, 2024 | |||||||||||
| Materials and supplies | a | $ | 2,534 | $ | – | $ | – | |||||||
| Mineral inventory | b | 4,945 | – | – | ||||||||||
| Work in progress | c | 851 | – | – | ||||||||||
| Current ore stockpiles | d | 765 | – | – | ||||||||||
| $ | 9,095 | $ | – | $ | – | |||||||||
| a) | Materials and supplies represent consumables and other raw materials used in the production process, as well as spare parts and other maintenance supplies that are not classified as capital items. |
Page 13
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
| b) | Mineral inventory contains finished goods inventory in the form of gold or silver. |
| c) | Work-in-process represents gold and silver in the processing circuit that has not completed the production process and is not yet in a saleable form. |
| d) | Ore is accumulated in stockpiles that are subsequently processed into gold and silver in a saleable form. Milled ore undergoes agitated leaching, counter current decantation Merrill-Crowe precipitation and smelting. |
| 6. | Receivables |
| Note | June 30, 2026 | December 31, 2025 (Restated – Note 3) | October 1, 2024 (Restated – Note 3) | |||||||||||
| Amount due from a related party | 21 | $ | – | $ | 20 | $ | – | |||||||
| Other receivables | a | 2,764 | 46 | 81 | ||||||||||
| Trade receivables | 12 | – | – | |||||||||||
| Total | $ | 2,776 | $ | 66 | $ | 81 | ||||||||
| Less: current portion | a | (1,652 | ) | (66 | ) | (81 | ) | |||||||
| Non-current portion | $ | 1,124 | $ | – | $ | – | ||||||||
| a) | Other receivables |
In connection with the acquisition of Bear Creek, the Company acquired the deferred consideration receivable related to the sale of a 100% interest in the Tassa Project to a wholly owned subsidiary of Colque Holding Pty Ltd (“Colque”), a private Australian company.
Total consideration for the sale is $3,500, payable over a 30-month period as follows:
| (i) | $30 signing fee, received; |
| (ii) | $470 upon execution, received; |
| (iii) | $500 on or before 6 months following the sale, received; |
| (iv) | $1,000 on or before 18 months following the sale; and |
| (v) | $1,500 on or before 30 months following the sale. |
The remaining deferred consideration payments are secured in favour of Bear Creek by a first-ranking security interest over the Tassa concessions and include a significant financing component. Accordingly, the receivable was recognized at fair value on the acquisition date and is subsequently measured at amortized cost using the effective interest method.
Upon settlement of Colque’s acquisition of Tassa, Colque or its successors granted Bear Creek a 2% NSR in respect of all minerals produced from Tassa, of which Colque may buy back 1% through the payment of an additional $2,500.
As at June 30, 2026, the deferred consideration receivable of $2,004 is recorded in receivables.
| 7. | Tax Receivable |
| June 30, 2026 | December 31, 2025 (Restated – Note 3) | October 1, 2024 (Restated – Note 3) | ||||||||||
| Income tax prepayment | $ | 23 | $ | – | $ | – | ||||||
| Value-added tax receivables | 9,870 | 403 | 77 | |||||||||
| Other tax receivables | 2,633 | – | – | |||||||||
| Receivables from Peruvian tax authority | – | – | 123 | |||||||||
| Total | $ | 12,526 | $ | 403 | $ | 200 | ||||||
| Less: current portion | (10,097 | ) | (156 | ) | (134 | ) | ||||||
| Non-current portion | $ | 2,429 | $ | 247 | $ | 66 | ||||||
Page 14
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
| 8. | Reclamation Deposits |
In accordance with regulatory requirements, as at June 30, 2026, the Company holds restricted cash deposits totaling $3,430 (December 31, 2025 – $44) with financial institutions in Peru to collateralize guarantees issued in support of environmental bonding requirements for environmental licenses in Peru, presented as deposits for reclamation in the condensed consolidated interim statements of financial position. This balance includes $3,385 of restricted cash pledged as collateral in support of a surety bond related to the Corani Project mine closure plan. In addition, the Company has posted a surety bond of $3,983 in favour of the Peruvian Ministry of Energy and Mines for the Corani Project mine closure plan, which is supported by the restricted cash collateral noted above. These amounts represent regulatory financial assurance and do not constitute a present obligation arising from site disturbance or closure activities. As at June 30, 2026, no significant environmental disturbance had been caused by the activities conducted on the Corani Project. The bonding security will be released once the Company fulfils its applicable regulatory obligations.
| 9. | Property and Equipment |
| Mineral Property | Mining and Other Equipment | Total | ||||||||||
| Balance, October 1, 2024 (Restated)1 | $ | – | $ | 70 | $ | 70 | ||||||
| Additions (Restated)1 | – | 148 | 148 | |||||||||
| Amortization and depletion (Restated)1 | – | (30 | ) | (30 | ) | |||||||
| Foreign exchange adjustment (Restated)1 | – | 22 | 22 | |||||||||
| Balance, December 31, 2025 (Restated)1 | $ | – | $ | 210 | $ | 210 | ||||||
| Additions | 11,046 | 1,065 | 12,111 | |||||||||
| Acquisition of Bear Creek (Note 4) | 121,332 | 52,029 | 173,361 | |||||||||
| Issuance of NSRs pursuant to Debt Settlement Arrangements (Note 4) | (7,700 | ) | – | (7,700 | ) | |||||||
| Change in estimate (Note 13) | 3,662 | – | 3,662 | |||||||||
| Amortization and depletion | (11,966 | ) | (6,246 | ) | (18,212 | ) | ||||||
| Foreign exchange adjustment | – | (6 | ) | (6 | ) | |||||||
| Balance, June 30, 2026 | $ | 116,374 | $ | 47,052 | $ | 163,426 | ||||||
| 1 | Refer to Note 3 |
| 10. | Mineral Property Interests |
| San Luis (Peru) (Note a) | Corani (Peru) (Note b) | La Estrella (Peru) (Note c) | Total | |||||||||||||
| Balance, October 1, 2024 (Restated)1 | $ | 7,937 | $ | – | $ | 33 | $ | 7,970 | ||||||||
| Acquisition of concession (Restated)1 | 20 | – | – | 20 | ||||||||||||
| Transfer of concession (Restated)1 | 14 | – | (14 | ) | – | |||||||||||
| Foreign exchange adjustment (Restated)1 | 900 | – | 2 | 902 | ||||||||||||
| Balance, December 31, 2025 (Restated)1 | $ | 8,871 | $ | – | $ | 21 | $ | 8,892 | ||||||||
| Acquisition of Bear Creek (Note 4) | – | 311,136 | – | 311,136 | ||||||||||||
| Issuance of NSRs pursuant to Debt Settlement Arrangements (Note 4) | – | (34,900 | ) | – | (34,900 | ) | ||||||||||
| Foreign exchange adjustment | (128 | ) | – | – | (128 | ) | ||||||||||
| Balance, June 30, 2026 | $ | 8,743 | $ | 276,236 | $ | 21 | $ | 285,000 | ||||||||
| 1 | Refer to Note 3 |
The Company’s wholly-owned projects are comprised of the rights to explore the mineral claims and tenures at various stages of exploration. Unless otherwise noted they are not subject to any option or sale agreements. Certain of the claims are subject to an NSR, as detailed below.
| a) | San Luis |
The San Luis Project is a gold-silver exploration property located in the Ancash department of central Peru. SSR Mining and Esperanza Resources Corp. (“Esperanza”) jointly established Reliant Ventures S.A.C. (“Reliant”) to develop the project. In 2011, SSR Mining acquired Esperanza’s interest in the San Luis Project, consolidating full ownership of the project under SSR Mining.
Page 15
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
On May 23, 2024, the Company acquired the project from SSR Mining, through the purchase of 100% of the shares of Reliant, which holds the rights to the San Luis Project. As part of the acquisition agreement, the Company paid SSR Mining an initial cash payment of $5,000 and agreed to pay up to $37,500 in contingent consideration upon the achievement of specific project milestones. These milestones include the commencement of drilling, completion of a feasibility study, and milestones related to commercial production.
In June 2025, the Company made a payment of $1,250 to SSR Mining related to the achievement of the first milestone for the commencement of an initial drilling program in June 2025.
In June 2026, the Company made a payment of $1,250 to SSR Mining related to the achievement of the second milestone for the first anniversary of the commencement of an initial drilling program.
Other potential milestone payments (milestones 3 to 6 that are related to the completion of a feasibility study and reaching commercial production), which could increase the total contingent consideration to up to $37,500, are not recognized due to the current uncertainty in their likelihood.
Additionally, SSR Mining retained a 4% NSR on the project. The Company has the option to buy back 2% of this royalty for $15,000 at any time prior to the commencement of mine construction.
In addition to the 4% NSR granted to SSR Mining, the San Luis Project is also subject to a 1% NSR on 24 claims payable to Esperanza and a 1% NSR on 2 claims to Metalla Royalty & Streaming Ltd.
In May and November 2025, through its wholly owned subsidiary, Reliant, the Company staked an additional eight concessions covering a total of 6,300 hectares within the overall project area, for aggregate cash payments of $20.
| b) | Corani |
Following acquisition of Bear Creek, the Company has a 100% interest in the Corani Project. The Corani Project is a silver-lead-zinc exploration property located in the Puno Department of Peru.
Royal Gold holds an aggregate 2.75% secured NSR on the project, which includes an incremental 1.75% NSR granted in connection with the Bear Creek Transaction. The Company has the option to buy back 0.5% of this royalty for $25,000 until the earlier of: (i) January 1, 2033; and (ii) the date that is 6 months after a final investment decision (“FID”) relative to the Corani Project is made. If the FID is obtained before December 31, 2028, the Company has the option to buy back 0.75% of this royalty for $30,000.
The Corani Project is also subject to a 0.5% unsecured NSR to Equinox in connection with the Bear Creek Transaction. The Company has the option to buy back 0.167% of this royalty for $8,300 until the earlier of: (i) January 1, 2033; and (ii) the date that is 6 months after an FID.
| c) | La Estrella |
On August 10, 2021, the Company purchased from Compañía Minera Ares S.A.C. mining claims known as the Estrella claims located in central Peru in consideration for a cash payment of $3 and a 2% NSR. The Company, at its sole discretion and at any time may purchase 50% of the NSR for a consideration of $200 and the remaining 50% for a consideration of $300.
| 11. | Accounts payable and accrued liabilities |
| Note | June 30, 2026 | December 31, 2025 (Restated – Note 3) | October 1, 2024 (Restated – Note 3) | |||||||||||
| Amount due to a related party | 21 | $ | 26 | $ | 593 | $ | – | |||||||
| Trade payables | 24,100 | 858 | 108 | |||||||||||
| Salaries payable | 2,500 | 309 | 126 | |||||||||||
| Other payables | 1,119 | 20 | 35 | |||||||||||
| Total | $ | 27,745 | $ | 1,780 | $ | 269 | ||||||||
Page 16
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
| 12. | Community Projects Obligation |
On April 8, 2013, Bear Creek entered into a Framework Agreement for the Sustainable Use of Natural Resources in the Mining Project Corani (the “Framework Agreement”) with the Corani District Municipality, five surrounding communities, and relevant ancillary organizations. The Framework Agreement was for an initial payment (the “Initial Payment”) and 22 successive payments (the “Successive Payments”) of 4 million Peruvian soles (“S/4 million”) to be made into a trust designed to fund community projects. These Successive Payments of S/4 million per year were dependent on the Company receiving permits to build the processing facilities and the mining installations, which were received during 2018.
The Framework Agreement with the local communities and the Corani Environmental and Social Impact Assessment (“ESIA”) requires the Company to undertake certain development work, such as access roads, mine camp and maintenance and storage facilities, and an electrical substation. The Company began development work in 2018 in accordance with the ESIA and the Framework Agreement.
As at June 30, 2026, the total undiscounted obligation remaining under the Framework Agreement was $15,226 (December 31, 2025 – $nil).
A continuity of the Company’s community projects obligation per the Framework Agreement is as follows:
| June 30, 2026 | ||||
| Balance, start of the period | $ | – | ||
| Acquisition of Bear Creek (Note 4) | 10,918 | |||
| Accretion | 235 | |||
| Payment | (1,158 | ) | ||
| Foreign exchange adjustment | (181 | ) | ||
| Balance, end of period | $ | 9,814 | ||
| Less: current portion | (1,171 | ) | ||
| Non-current portion | $ | 8,643 | ||
| 13. | Reclamation Provision |
| June 30, 2026 | December 31, 2025 (Restated – Note 3) | October 1, 2024 (Restated – Note 3) | ||||||||||
| Balance, start of the period | $ | 475 | $ | 365 | $ | – | ||||||
| Acquisition of Reliant | – | – | 342 | |||||||||
| Acquisition of Bear Creek (Note 4) | 12,175 | – | – | |||||||||
| Additions | – | 23 | – | |||||||||
| Accretion | 404 | 23 | 6 | |||||||||
| Settlement | – | (4 | ) | – | ||||||||
| Post-acquisition change in estimate | 3,387 | – | – | |||||||||
| Change in estimate | 280 | 33 | – | |||||||||
| Foreign exchange adjustment | (88 | ) | 35 | 17 | ||||||||
| Balance, end of the period | $ | 16,633 | $ | 475 | $ | 365 | ||||||
On February 26, 2026, as part of the acquisition of Bear Creek, the Company assumed a provision for environmental rehabilitation related to the Mercedes Mine, including the mill, mining equipment, and previously mined property interests. The provision consists primarily of costs associated with mine reclamation and closure activities. These activities generally include costs for decommissioning the mill complex and related infrastructure, ensuring the physical and chemical stability of the tailings area, post-closure site security, and monitoring costs. The Company considers such factors as changes in laws and regulations and requirements under existing permits in determining the estimated costs. Such analysis is performed on an ongoing basis.
The Company initially recognized the provision for environmental rehabilitation related to the Mercedes Mine assumed on acquisition at its acquisition-date fair value, in accordance with IFRS 3. The provision was subsequently remeasured in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets, resulting in a $3,387 increase in the provision. The increase was attributable to the change in discount rate methodology applied in measuring the provision subsequent to the acquisition date. There were no changes to the underlying estimated reclamation and closure cash flows.
Page 17
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
The Company estimates that the undiscounted future cash flows required to settle the closure provisions at the Mercedes Mine and at the San Luis Project is $26,350 (December 31, 2025, and October 1, 2024 – $481 and $425, respectively). The Company expects these liabilities to be settled between 2027 and 2034. In calculating the June 30, 2026, estimate, management used the risk-free interest rates ranging from 4.16% to 8.49% (December 31, 2025, and October 1, 2024 – 4% and 5.25%, respectively), and inflation rates ranging from 2.16% to 3.94% (December 31, 2025, and October 1, 2024 – 1.95% and 1.98%, respectively).
| 14. | Share Capital |
| a) | Share Capital |
Authorized: Unlimited common shares, with no par value
Issued and fully paid: 203,473,418 (December 31, 2025 – 130,910,687)
Transactions for the issue of share capital during the six months ended June 30, 2026:
| ● | On June 29, 2026, upon the exercise of common share purchase warrants, 50,000 common shares were issued at C$0.15 per share for proceeds of $6. |
| ● | On April 22, 2026, upon the exercise of common share purchase warrants, 11,750 common shares were issued at C$3.57 per share for proceeds of $31. |
| ● | On April 2, 2026, upon the exercise of common share purchase warrants, 125,000 common shares were issued at C$0.15 per share for proceeds of $13. |
| ● | On February 26, 2026, the Company closed the Bear Creek Transaction. 36,225,457 shares for $257,033 were issued to the former shareholders of Bear Creek. The Company incurred share issuance costs of $183 in connection with the closing. |
| ● | On February 4, 2026, upon the exercise of common share purchase warrants, 25,000 common shares were issued at C$0.15 per share for proceeds of $3. |
| ● | On January 30, 2026, the Company closed a non-brokered private placement with Mr. Eric Sprott, pursuant to which the Company issued 8,060,226 common shares of the Company at a price of C$6.80 per common share for aggregate gross proceeds of $40,000. The Company incurred share issuance costs of $277 in connection with the financing. |
| ● | On January 16, 2026, upon the exercise of common share purchase warrants, 525,000 common shares were issued at C$0.15 per share for proceeds of $56. |
| ● | On January 13, 2026, upon the exercise of common share purchase warrants, 40,298 common shares were issued at C$0.15 per share for proceeds of $4. |
| ● | On January 12, 2026, upon the exercise of common share purchase warrants, 2,500,000 common shares were issued at C$0.15 per share for proceeds of $270. |
| ● | On January 6, 2026, upon the exercise of common share purchase warrants, 25,000,000 common shares were issued at C$0.15 per share for proceeds of $2,723. Of the total proceeds, $547 was received in December 2025 in respect of the exercise of 5,000,000 share purchase warrants. The related warrants were exercised, and the corresponding common shares were issued, on January 6, 2026. |
Transactions for the issue of share capital during the six months ended June 30, 2025:
| ● | On June 12, 2025, upon the exercise of common share purchase warrants, 500,000 common shares were issued at C$0.15 per share for proceeds of $55. |
| ● | On April 15, 2025, upon the exercise of common share purchase warrants, 100,000 common shares were issued at C$0.15 per share for proceeds of $11. |
| ● | On March 12, 2025, the Company issued 150,000 common shares through the exercise of stock options. This issuance resulted from the exercise of 15,000 stock options at an exercise price of C$0.54 per share, 50,000 stock options at an exercise price of C$0.55 per share and 85,000 stock options at an exercise price of C$0.60 per share. |
Page 18
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
| ● | On March 11, 2025, the Company closed its previously announced bought deal private placement, pursuant to which the Company issued 23,000,000 common shares of the Company at a price of C$1.40 per common share for aggregate gross proceeds of $22,282, which includes the full exercise of the underwriters’ option of 3,000,000 shares. The Company incurred issuance costs of $1,497 in connection with the financing. |
Subsequent to June 30, 2026, upon the exercise of warrants, 50,000 common shares were issued for proceeds of $5.
| b) | Stock options |
For the three and six months ended June 30, 2026, the Company recognized a share-based compensation expense included in general and administrative expenditures of $2,217 and $4,012, respectively (three and six months ended June 30, 2025 – $345 and $669, respectively). The following table shows the change in stock options during the six months ended June 30, 2026 and 2025:
| For the six months ended June 30, | 2026 | 2025 | ||||||||||||||
| Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | |||||||||||||
| Balance, start of the period | 6,720,000 | C$ | 0.83 | 5,595,000 | C$ | 0.75 | ||||||||||
| Granted | 5,460,000 | 6.31 | 1,650,000 | 1.07 | ||||||||||||
| Exercised | – | – | (150,000 | ) | 0.58 | |||||||||||
| Balance, end of the period | 12,180,000 | C$ | 3.29 | 7,095,000 | C$ | 0.83 | ||||||||||
The assumptions used in the Black-Scholes option pricing model for the options granted in the six months ended June 30, 2026 and 2025 were as follows.
| Weighted average | 2026 | 2025 | ||||||
| Exercise price per share issuable | C$ | 6.31 | C$ | 1.07 | ||||
| Expected term (years) | 5 | 5 | ||||||
| Volatility | 88 | % | 93 | % | ||||
| Expected dividend yield | – | – | ||||||
| Risk-free interest rate | 2.91 | % | 2.95 | % | ||||
| Weighted average fair value per option | C$ | 4.24 | C$ | 0.73 | ||||
The following is a summary of the Company’s outstanding and exercisable stock options as at June 30, 2026:
| Outstanding | Exercisable | |||||||||||||||||||
| Expiry date | Exercise price | Number of options | Weighted average remaining contractual life (years) | Number of options | Weighted average remaining contractual life (years) | |||||||||||||||
| November 3, 2026 | C$ | 0.60 | 75,000 | 0.35 | 75,000 | 0.35 | ||||||||||||||
| March 12, 2027 | 0.55 | 600,000 | 0.70 | 600,000 | 0.70 | |||||||||||||||
| March 3, 2028 | 0.42 | 175,000 | 1.68 | 175,000 | 1.68 | |||||||||||||||
| October 21, 2029 | 0.80 | 4,220,000 | 3.31 | 2,030,000 | 3.31 | |||||||||||||||
| January 2, 2030 | 1.04 | 1,600,000 | 3.51 | 400,000 | 3.51 | |||||||||||||||
| April 7, 2030 | 1.90 | 50,000 | 3.77 | 12,500 | 3.77 | |||||||||||||||
| January 15, 2031 | 6.17 | 5,110,000 | 4.55 | – | 4.55 | |||||||||||||||
| May 12, 2031 | 8.42 | 350,000 | 4.87 | – | 4.87 | |||||||||||||||
| C$ | 3.29 | 12,180,000 | 3.73 | 3,292,500 | 2.71 | |||||||||||||||
| c) | Warrants |
As an incentive to complete a private placement, the Company may issue units which include common shares and common share purchase warrants. Using the residual value method, the Company determines whether a value should be allocated to the warrants attached to the private placement units. Finders’ warrants may be issued as a private placement share issuance cost and are valued using the Black-Scholes option pricing model.
Page 19
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
Pursuant to the Arrangement, each Bear Creek warrant became exercisable for 0.1175 common shares of the Company. The exercise price of each Bear Creek warrant is C$0.42, which is the amount the Company will receive upon exercise of each Bear Creek warrant.
Upon completion of the acquisition of Bear Creek (Note 4), the Company reassessed the classification of the Bear Creek warrants from Highlander’s perspective. As the exercise price is denominated in Canadian dollars, Highlander’s functional currency, the Bear Creek warrants have been classified as equity instruments.
The continuity of the Company’s shares issuable pursuant to exercise of warrants is as follows:
| Shares issuable on exercise of warrants | Weighted average exercise price | |||||||
| Outstanding, September 30, 2024 | 29,975,000 | C$ | 0.15 | |||||
| Exercised | (734,702 | ) | 0.15 | |||||
| Outstanding, December 31, 2025 | 29,240,298 | C$ | 0.15 | |||||
| Acquisition of Bear Creek4 (Note 4) | 1,896,693 | 3.57 | ||||||
| Exercised | (28,265,298 | ) | 0.15 | |||||
| Exercised | (11,750 | ) | 3.57 | |||||
| Outstanding, June 30, 2026 | 2,859,943 | C$ | 2.40 | |||||
The remaining contractual lives of the outstanding warrants and Bear Creek warrants are 0.30 years and 2.25 years, respectively.
| 15. | Revenue |
The Company’s revenues are primarily from sales of gold and silver from the Mercedes Mine, following the acquisition of Bear Creek on February 26, 2026. From the Acquisition Date to June 30, 2026, the Company’s only customer for gold and silver products was Asahi Refining USA Inc. However, the Company is not economically dependent on any specific customer for the sale of its products because gold and silver can be sold through numerous precious metals traders and refiners worldwide.
| 16. | Cost of Sales |
The Company’s cost of sales from the Acquisition Date to June 30, 2026, is as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||
| 2026 | 2026 | |||||||
| Raw materials and consumables | $ | 6,770 | $ | 9,272 | ||||
| Salaries and benefits | 4,425 | 5,576 | ||||||
| Contractors and outside services | 10,302 | 13,538 | ||||||
| Other expenses | 3,811 | 5,443 | ||||||
| Changes in inventory | (65 | ) | 3,875 | |||||
| $ | 25,243 | $ | 37,704 | |||||
| 4 | Each Bear Creek warrant is exercisable for 0.1175 common shares of the Company at an exercise price of C$0.42 per Bear Creek warrant. This is equivalent to an implied exercise price of approximately C$3.57 per the whole issuable common share of the Company issuable. |
Page 20
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
| 17. | Exploration Expenses |
The Company’s exploration expenditures by activity are as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 (Restated – Note 3) | 2026 | 2025 (Restated – Note 3) | |||||||||||||
| Assay and analysis | $ | 174 | $ | 74 | $ | 184 | $ | 74 | ||||||||
| Community relations | 298 | 32 | 472 | 43 | ||||||||||||
| Concession fees | 2,166 | 1,484 | 2,166 | 1,484 | ||||||||||||
| Depreciation | 14 | 5 | 29 | 7 | ||||||||||||
| Drilling and drilling related costs | 2,880 | 139 | 2,880 | 139 | ||||||||||||
| Environmental, regulatory and permitting | 220 | 7 | 314 | 13 | ||||||||||||
| Geological and geophysical investigations | 389 | 26 | 519 | 26 | ||||||||||||
| Reclamation provision | 2 | 30 | 5 | 30 | ||||||||||||
| Salaries, contractors and project administration | 3,800 | 436 | 4,766 | 729 | ||||||||||||
| Site preparation, camp and field expenses | 1,882 | 260 | 2,430 | 366 | ||||||||||||
| Studies | – | 5 | 14 | 5 | ||||||||||||
| $ | 11,825 | $ | 2,498 | $ | 13,779 | $ | 2,916 | |||||||||
The Company’s exploration expenditures are incurred in Peru.
| 18. | General and Administrative Expenses |
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 (Restated – Note 3) | 2026 | 2025 (Restated – Note 3) | |||||||||||||
| Filing and regulatory fees | $ | 117 | $ | 157 | $ | 627 | $ | 209 | ||||||||
| Marketing and travel | 111 | 51 | 182 | 105 | ||||||||||||
| Office and other | 1,439 | 108 | 2,023 | 196 | ||||||||||||
| Professional fees | 961 | 143 | 1,590 | 232 | ||||||||||||
| Salaries and benefits | 653 | 447 | 1,206 | 823 | ||||||||||||
| Share-based compensation | 2,217 | 345 | 4,012 | 669 | ||||||||||||
| Transaction costs | 164 | – | 4,137 | – | ||||||||||||
| $ | 5,662 | $ | 1,251 | $ | 13,777 | $ | 2,234 | |||||||||
| 19. | Net Income (Loss) per Share |
Net income (loss) per share has been calculated using the weighted average number of common shares outstanding for the three and six months ended June 30, 2026 and 2025 as follows:
| a) | Basic |
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 (Restated – Note 3) | 2026 | 2025 (Restated – Note 3) | |||||||||||||
| Net income (loss) for the period | $ | (11,733 | ) | $ | (3,585 | ) | $ | 8,675 | $ | (5,123 | ) | |||||
| Weighted average number of common shares | 203,418,380 | 105,053,403 | 189,560,309 | 96,018,775 | ||||||||||||
| Basic net income (loss) per share | $ | (0.06 | ) | $ | (0.03 | ) | $ | 0.05 | $ | (0.05 | ) | |||||
Page 21
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
| b) | Diluted |
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 (Restated – Note 3) | 2026 | 2025 (Restated – Note 3) | |||||||||||||
| Net income (loss) for the period | $ | (11,733 | ) | $ | (3,585 | ) | $ | 8,675 | $ | (5,123 | ) | |||||
| Weighted average number of common shares | 203,418,380 | 105,053,403 | 189,560,309 | 96,018,775 | ||||||||||||
| Dilutive potential ordinary shares | ||||||||||||||||
| Warrants | – | – | 1,032,356 | – | ||||||||||||
| Options | – | – | 5,572,403 | – | ||||||||||||
| Weighted average number of ordinary shares | 203,418,380 | 105,053,403 | 196,165,068 | 96,018,775 | ||||||||||||
| Diluted net income (loss) per share | $ | (0.06 | ) | $ | (0.03 | ) | $ | 0.04 | $ | (0.05 | ) | |||||
| 20. | Mercedes Mine Tax Audits |
Bear Creek acquired the Mercedes gold mine from Equinox on April 21, 2022. The agreement governing the purchase of the Mercedes Mine includes tax indemnity provisions. Minera Mercedes Minerales S. de R.L. de C.V., the subsidiary of the Company that directly owns the Mercedes Mine, is currently under income tax audit by the Mexican Tax Authorities for the 2016 tax year. The primary issue under examination relates to income recognition and deductibility of certain expenses.
Since no final assessment has been issued by the Mexican tax authorities, the Company has determined that it is not possible to reasonably estimate the potential range of outcomes or determine if the Company has a present obligation related to this as of June 30, 2026. The amount and timing of any final assessment in the audit is uncertain, may be appealed, and subject to the tax indemnity provisions from Equinox as previously mentioned. Accordingly, no liability has been recorded in the financial statements for this matter. The Company will continue to monitor developments and will recognize a liability when the Company has a present obligation to pay income tax and the amount can be reliably estimated.
| 21. | Related Party Transactions |
Key management personnel
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company, and comprises the Company’s President and Chief Executive Officer, Chief Financial Officer, President Peru, Senior Vice President Corporate Affairs and Corporate Secretary and Directors.
Key management compensation for the three and six months ended June 30, 2026 and 2025 is comprised of the following:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 (Restated – Note 3) | 2026 | 2025 (Restated – Note 3) | |||||||||||||
| Share-based compensation | $ | 1,649 | $ | 263 | $ | 2,962 | $ | 521 | ||||||||
| Salaries and benefits | 277 | 250 | 560 | 507 | ||||||||||||
| Professional fees | 36 | – | 67 | – | ||||||||||||
| $ | 1,962 | $ | 513 | $ | 3,589 | $ | 1,028 | |||||||||
As of June 30, 2026, there were no outstanding amounts receivable from or payable to the key management personnel noted above. As of December 31, 2025, accounts payable and accrued liabilities included $593 due to key management personnel referred to above.
Page 22
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
Related party arrangement
On October 21, 2024, the Company entered into an arrangement to share office space, equipment, personnel, consultants and various services with other companies related by virtue of certain directors and management in common. A management company equally owned by each company party to the arrangement pays for these shared expenses as agent for the Company and the other companies. These costs incurred by the management company as agent are allocated and funded by the shareholders of the management company based on time incurred and use of services and goods. The management company recovers its costs incurred in managing expenses and procuring goods and services on behalf of the Company without a markup. If the Company’s participation in the arrangement is terminated, the Company will be obligated to pay its share of the rent payments for the remaining term of the office space rental agreement. The Company’s obligation for future rental payments if the Company’s participation in the arrangement was terminated on June 30, 2026, was approximately $999 (December 31, 2025 – $529), determined based on the Company’s average share of rent paid in the immediately preceding 12 months.
The Company was charged for the following with respect to these arrangements in the three and six months ended June 30, 2026 and 2025:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 (Restated – Note 3) | 2026 | 2025 (Restated – Note 3) | |||||||||||||
| Salaries and benefits | $ | 504 | $ | 469 | $ | 1,857 | $ | 921 | ||||||||
| Office and other | 103 | 125 | 215 | 246 | ||||||||||||
| Filing and regulatory fees | – | – | 45 | – | ||||||||||||
| Marketing and travel | 6 | 4 | 11 | 8 | ||||||||||||
| $ | 613 | $ | 598 | $ | 2,128 | $ | 1,175 | |||||||||
At June 30, 2026, amounts in accounts payable and accrued liabilities include $26 due to a related party (December 31, 2025 – included in receivables is an amount due from a related party of $20) with respect to this arrangement.
All related party balances are unsecured and are due within thirty days without interest.
| 22. | Supplemental Cash Flow Information |
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 (Restated – Note 3) | 2026 | 2025 (Restated – Note 3) | |||||||||||||
| Non-cash investing and financing activities: | ||||||||||||||||
| Reclassification of commitment to issue shares | $ | – | $ | 10 | $ | 547 | $ | 10 | ||||||||
| NSR royalties issued as part of debt settlement (Note 4) | – | – | 42,600 | – | ||||||||||||
| Share issued on acquisition of Bear Creek (Note 4) | – | – | 257,033 | – | ||||||||||||
| Accrued finance costs | 2 | – | 2 | – | ||||||||||||
| Addition to property and equipment included in accounts payable and accrued liabilities | $ | 164 | $ | – | $ | 164 | $ | – | ||||||||
| 23. | Segmented Information |
The Company has determined that it has two reportable segments, consisting of mineral exploration and development activities in Peru and mining operations in Mexico. The other category primarily comprises corporate and unallocated items that are not considered reportable segments and is presented solely to facilitate reconciliation.
The following is an analysis of the long-term assets by geographical area:
| June 30, 2026 | December 31, 2025 (Restated – Note 3) | |||||||
| Peru | $ | 298,936 | $ | 9,392 | ||||
| Mexico | 156,947 | – | ||||||
| Canada | 8 | 9 | ||||||
| $ | 455,891 | $ | 9,401 | |||||
Page 23
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
Results for the three months ended June 30, 2026
| Revenue | Cost of Sales & other operational costs | Depletion, Depreciation & Amortization | Exploration expenses | Other income (expenses) | Net income (loss) | |||||||||||||||||||
| Mercedes | $ | 37,897 | (26,098 | ) | (12,163 | ) | – | 3,931 | 3,567 | |||||||||||||||
| Corani | – | – | – | (8,843 | ) | 167 | (8,676 | ) | ||||||||||||||||
| San Luis and La Estrella | – | – | – | (3,175 | ) | (43 | ) | (3,218 | ) | |||||||||||||||
| Other | – | (560 | ) | – | 193 | (3,039 | ) | (3,406 | ) | |||||||||||||||
| $ | 37,897 | (26,658 | ) | (12,163 | ) | (11,825 | ) | 1,016 | (11,733 | ) | ||||||||||||||
Results for the six months ended June 30, 2026
| Revenue | Cost of Sales & other operational costs | Depletion, Depreciation & Amortization | Exploration expenses | Other income (expenses) | Net income (loss) | |||||||||||||||||||
| Mercedes | $ | 56,227 | (38,948 | ) | (17,958 | ) | – | 4,425 | 3,746 | |||||||||||||||
| Corani | – | – | – | (9,593 | ) | 562 | (9,031 | ) | ||||||||||||||||
| San Luis and La Estrella | – | – | – | (4,295 | ) | (68 | ) | (4,363 | ) | |||||||||||||||
| Other | – | (3,461 | ) | – | 109 | 21,675 | 18,323 | |||||||||||||||||
| $ | 56,227 | (42,409 | ) | (17,958 | ) | (13,779 | ) | 26,594 | 8,675 | |||||||||||||||
Results for the three months ended June 30, 2025
| Revenue | Cost of Sales & other operational costs | Depletion, Depreciation & Amortization | Exploration expenses | Other expenses | Net loss | |||||||||||||||||||
| San Luis and La Estrella (Restated) | $ | – | – | – | (2,498 | ) | (1,087 | ) | (3,585 | ) | ||||||||||||||
| $ | – | – | – | (2,498 | ) | (1,087 | ) | (3,585 | ) | |||||||||||||||
Results for the six months ended June 30, 2025
| Revenue | Cost of Sales & other operational costs | Depletion, Depreciation & Amortization | Exploration expenses | Other expenses | Net loss | |||||||||||||||||||
| San Luis and La Estrella (Restated) | $ | – | – | – | (2,916 | ) | (2,207 | ) | (5,123 | ) | ||||||||||||||
| $ | – | – | – | (2,916 | ) | (2,207 | ) | (5,123 | ) | |||||||||||||||
| 24. | Financial Instrument Risk Exposure and Risk Management |
The Company’s financial instruments are exposed to certain financial risks, including credit risk, interest rate risk, liquidity risk and currency risk.
| a) | Credit risk |
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s financial assets.
The Company is primarily exposed to credit risk on its cash and cash equivalents, receivables, reclamation deposits and tax receivable. Credit risk exposure is limited through maintaining its cash with high-credit quality financial institutions. The carrying value of these financial assets of $118,036 represents the maximum exposure to credit risk.
Page 24
| Highlander Silver Corp. |
| Notes to the Condensed Consolidated Interim Financial Statements For the three and six months ended June 30, 2026 and 2025 (Unaudited – in thousands of United States Dollars, unless otherwise noted) |
| b) | Interest rate risk |
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Company’s interest rate exposure mainly relates to interest earned on cash and term deposits. For the three and six months ended June 30, 2026, every 1% fluctuation in interest rates up or down would result in an increase or decrease of approximately $261 and $506 to the Company’s income, respectively (three and six months ended June 30, 2025 – $50 and $63, respectively).
| c) | Liquidity risk |
Liquidity risk is the risk that the Company is unable to meet its financial obligations as they come due. The Company manages this risk by careful management of its working capital to ensure its expenditures will not exceed available resources.
On June 30, 2026, the Company had contractual cash flow commitments as follows:
| 2026 | 2027 | 2028 | 2029 | 2030 and beyond | Total | |||||||||||||||||||
| Accounts payable and accrued liabilities (Note 11) | $ | 27,745 | $ | – | $ | – | $ | – | $ | – | $ | 27,745 | ||||||||||||
| Community projects obligations (Note 12) | – | 1,171 | 1,171 | 1,171 | 11,713 | 15,226 | ||||||||||||||||||
| Office and warehouse rent obligations | 493 | 720 | 447 | 460 | 226 | 2,346 | ||||||||||||||||||
| Other liabilities | 281 | 63 | 748 | 6 | 750 | 1,848 | ||||||||||||||||||
| Reclamation provision (Note 13) | – | 507 | – | 3,468 | 22,375 | 26,350 | ||||||||||||||||||
| Tax payable | 5,425 | – | – | – | – | 5,425 | ||||||||||||||||||
| $ | 33,944 | $ | 2,461 | $ | 2,366 | $ | 5,105 | $ | 35,064 | $ | 78,940 | |||||||||||||
| d) | Foreign currency risk |
The Company is operating in Canada, Peru and Mexico and is exposed to currency risk on transactions and balances in currencies other than the functional currency, primarily with respect to Canadian dollars, Peruvian soles, Mexican pesos and US dollars. On June 30, 2026, the Company had not entered into any contracts to manage foreign exchange risk.
As at June 30, 2026, the Company was exposed to currency risk through the following assets and liabilities denominated in Canadian dollars, Peruvian soles, Mexican pesos and US dollars.
| Canadian dollars (000’s) | Peruvian soles (000’s) | Mexican pesos (000’s) | US dollars (000’s) | |||||||||||||
| Cash and cash equivalents | $ | 5,507 | $ | 517 | $ | 2,478 | $ | 25,299 | ||||||||
| Receivables and tax receivable | – | 2,482 | 270,985 | – | ||||||||||||
| Reclamation deposit | – | – | – | 45 | ||||||||||||
| Accounts payable and accrued liabilities and tax payable | (41 | ) | (5,226 | ) | (422,307 | ) | (1,244 | ) | ||||||||
| Lease liability | – | (401 | ) | – | – | |||||||||||
| Community projects obligation | – | (33,030 | ) | – | – | |||||||||||
| Reclamation provision | – | – | (298,629 | ) | – | |||||||||||
| $ | 5,466 | $ | (35,658 | ) | $ | (447,473 | ) | $ | 24,100 | |||||||
For the six months ended June 30, 2026, if the US dollar to Canadian dollar, Peruvian soles and Mexican pesos currency exchange rate changes by 10% with all other variables held constant, the impact on the Company’s net loss is $6,053 (six months ended June 30, 2025 – $126).
Page 25
Exhibit 99.2
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
INTRODUCTION
This Management’s Discussion and Analysis (“MD&A”) of Highlander Silver Corp. (the “Company” or “Highlander”) provides information on the Company’s business activities, financial condition, financial performance, cash flows and outlook for the three and six months ended June 30, 2026, with comparative information for the three and six months ended June 30, 2025. This MD&A is dated August 12, 2026 and takes into account information available up to and including that date.
The Company reports its financial position, financial performance and cash flows in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). This MD&A should be read in conjunction with the Company’s condensed consolidated interim financial statements for the three and six months ended June 30, 2026, and the annual consolidated financial statements for the fifteen months ended December 31, 2025, which are available on the Company’s website at www.highlandersilver.com and on the SEDAR+ website at www.sedarplus.ca and on EDGAR at www.sec.gov. Additional information relating to the Company, including the Company’s Annual Information Form, is also set out on the SEDAR+ website at www.sedarplus.ca and on EDGAR at www.sec.gov.
All dollar amounts reported herein are expressed in thousands of United States dollars (“US dollars”) unless otherwise indicated.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This document includes certain statements that constitute “forward-looking statements”, and “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”). Words such as “intends”, “expects”, “will be”, “underway”, “targeted”, “planned”, “objective”, “expected”, “potential”, “continue”, “estimated”, “would”, “subject to” and similar expressions are intended to identify these forward-looking statements. Forward-looking statements herein include, but are not limited to: statements regarding the Company’s exploration and development plans, timing, costs and expected results at the San Luis Project (including the recommended phased exploration program, future drilling, the development of a 3D geological model, and anticipated permitting activities); the Company’s plan for the San Luis Project is to advance the project through integrated exploration, environmental and community development programs; the Company’s aim of employing its participatory development model based on community capacity building through skill and safety training, employment, entrepreneurship, infrastructure development and environmental, cultural, health and education programs; intended use of proceeds from the offerings; the Company, upon approval from its Board of Directors, intends to balance its overall capital structure through a combination of equity financing and/or other forms of financing; that the Company’s planning and budgeting will ensure the Company has appropriate liquidity to meet its business activities, including planned corporate expenditures, exploration expenses, as well as the development activities for the San Luis Project, the Corani Project and the Mercedes Mine; the Company’s exploration objectives and planned work at the La Estrella Project (including follow-up on the identified mineralized structures and ongoing community engagement); the continued integration of the Corani Project and the Mercedes Mine into the Company’s business, including the implementation of the exploration plan for the Corani Project and the optimization plan for the Mercedes Mine; the scope, timing, costs and results of the Corani exploration drilling program; performance of site preparation activities at Corani (including camp and facilities, internal and external roads, earthworks, the electrical substation, commencement of the transmission line in August 2026 and placement of long-lead-time equipment orders); the timing, completion, scope, results and recommendations of the updated Feasibility Study at Corani; the establishment of a detailed go-forward plan at Corani; significant improvements at Mercedes across worker safety, production and operating costs expected in the coming years with a rejuvenated workforce, and all proposed work programs at Mercedes in connection therewith; the establishment of a bonding program at Mercedes; expectations regarding continued generation of revenue and sufficient operating cash flow from the Mercedes Mine; and the Company anticipates being able to generate sufficient cash flow to continue in operation for the foreseeable future, to realize its assets and discharge its liabilities and commitments in the normal course of operations, as well as to meet the Company’s planned growth and to fund planned development activities.
Page 1
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, undue reliance should not be placed on forward-looking statements since the Company can give no assurance that such expectations will prove to be correct. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements, including risks related to the business of the Company; the ability of the Company to raise sufficient capital; general business, economic, competitive, political and social uncertainties; the Company’s ability to execute its exploration, development and operating plans on the anticipated timelines and budgets; the actual results of current exploration, drilling and operating activities; conclusions of economic evaluations, including the updated Corani Feasibility Study; changes in project parameters as plans and studies continue to be refined; future prices of precious and base metals; accidents; geopolitical risks; criminal activity and social unrest or instability; global outbreaks and contagious diseases (including COVID-19); business and economic conditions in the mining industry generally; supply chain risks including with respect to supply chain disruptions; the supply and demand for labour and other project inputs; the Company’s ability to maintain labour relations and avoid any disruptions related thereto; the Company’s ability to maintain community relationships and social license; changes in commodity prices; unanticipated exploration, development, construction and operating challenges (including failure of equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters); adverse weather conditions; political risk and social unrest; changes in interest and currency exchange rates; the ability to obtain, maintain or renew required permits, approvals and authorizations in Peru and Mexico (including the timing of any permitting processes); the Company’s ability to implement the planned improvements at Mercedes and generate anticipated production, cost savings and cash flow; the integration of Bear Creek’s business, assets, operations, systems and personnel, as well as the potential diversion of management attention; and the possibility of liabilities, obligations or risks (including operational, technical, environmental, reclamation, contractual, labour or regulatory matters) becoming known or crystallizing following the integration of Bear Creek; and the risks, uncertainties and other factors identified in the Company’s periodic filings with Canadian and United States securities regulators.
These forward-looking statements were derived using numerous assumptions, including assumptions regarding general business and economic conditions; the Company’s ability to develop and maintain relationships with local communities; commodity prices; interest rates and currency exchange rates; anticipated costs, expenditures, schedules and results of exploration, drilling, site development and operating initiatives; the Company’s ability to advance exploration efforts at its properties and the results of such exploration efforts; the ability to obtain and maintain necessary permits and approvals; the updated Corani Feasibility Study being completed on the anticipated timeline and providing recommendations that support a viable go-forward plan; the Mercedes Mine continuing to operate and the planned initiatives producing the anticipated safety, production, productivity, cost and cash flow benefits; the Company’s ability to access capital (including through equity or other financings) and to deploy proceeds as intended; the Company’s ability to generate sufficient cash flow to continue operations, meet its obligations and fund planned growth and development activities; the successful integration of Bear Creek’s business, assets, operations, systems and personnel, including the realization and timing of anticipated benefits; and the due diligence conducted in connection with the acquisition of Bear Creek having identified all material risks or liabilities. While the Company considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking statements speak only as of the date those statements are made. Except as required by applicable law, the Company assumes no obligation to update or to publicly announce the results of any change to any forward-looking statement contained herein to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements. If the Company updates any forward-looking statements, no inference should be drawn that it will make additional updates with respect to other forward-looking statements. All forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.
Page 2
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
DESCRIPTION OF BUSINESS
Highlander Silver is a high-quality silver-growth company developing a portfolio of advanced-stage assets in Peru which includes the Corani silver project, the largest silver deposit in development globally, and the bonanza-grade San Luis gold-silver project, which ranks among the 10 highest-grade projects globally in both gold and silver categories (as per the S&P Global rankings including the San Luis gold-silver project). The Company also operates the Mercedes gold-silver mine in Mexico. Highlander Silver’s major shareholders include the Augusta Group, Lundin family, and Eric Sprott.
Highlander is listed on the Toronto Stock Exchange (the “TSX”) under the ticker symbol “HSLV” and on the NYSE American LLC (“NYSE American”) under the same symbol.
HIGHLIGHTS AND ACTIVITIES
The following activities and developments were achieved during the quarter:
On April 7, 2026, Highlander provided a portfolio update following the successful completion of its combination with Bear Creek (see press release dated February 26, 2026).
On May 13, Highlander announced the appointment of Ms. Poonam Puri to the Company’s Board as an independent Director.
On June 11, 2026, Highlander made a $1,250 payment to SSR Mining Inc. (“SSR Mining”) in relation to the second contingent cash consideration of the share purchase agreement (stated below) between the Company and SSR Mining.
On June 25, 2026, Highlander reported on a comprehensive geophysical study of the Corani Silver Project integrating historical datasets with the first airborne magnetic survey and more extensive induced polarization-resistivity surveys than historically undertaken. The results provide a geophysical signature for the Corani mineral system that is far more extensive than historical drilling coverage, with extensions and untested potential zones to the west and south concealed beneath shallow post-mineral cover.
Highlights include:
| ● | Completed induced polarization-resistivity and airborne magnetic surveys totaling over 90 km and 600 km, respectively; defined geophysical signatures of the Corani mineral system through integration with lithology, alteration and resources models, incorporating mapping and core logging datasets; performed magnetic lineament analysis highlighted network of north-south and northwest-trending structures interpreted as first order controls on mineralization |
| ● | Identified a series of high-priority exploration targets with combined geological, structural and geophysical characteristics analogous to the Corani deposit |
| ● | Corani West represents a newly-generated, high-priority target with a large coincident zone of chargeability, resistivity, and magnetic susceptibility consistent with the Corani deposit, concealed under shallow post-mineral cover along a major northwest-trending structure |
| ● | Results support the interpretation that Corani represents a large-scale intermediate sulphidation epithermal system extending well beyond the current resource footprint |
Page 3
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Subsequent event
On July 7, 2026, Highlander provided a photo update showcasing key milestones achieved in the site development of its Corani Silver Project in Peru.
MINERAL PROPERTIES AND OUTLOOK
San Luis
The San Luis Project is a gold-silver exploration property located in the Ancash department of central Peru. SSR Mining and Esperanza Resources Corp. (“Esperanza”) jointly established Reliant Ventures S.A.C. to develop the project. In 2011, SSR Mining acquired Esperanza’s interest in the San Luis Project, consolidating full ownership of the project under SSR Mining.
On May 23, 2024, the Company announced closing of the acquisition of the San Luis Project from SSR Mining, pursuant to the share purchase agreement between the Company and SSR Mining dated November 29, 2023, as amended (the “SPA”). The project is located in the Ancash Department, which is well-known for mining in Peru with major past and present production from the Pierina gold mine and Antamina copper-zinc mine, respectively.
The Company acquired the San Luis Project for upfront cash consideration of $5,000 and an additional $37,500 in contingent cash consideration (the “Contingent Consideration”) upon completion of the following milestones in relation to the San Luis Project pursuant to the SPA:
| (a) | $1,250 after the commencement of an initial drilling program (paid); |
| (b) | $1,250 after the first anniversary of the commencement of an initial drilling program (paid); |
| (c) | $5,000 after the completion of a feasibility study; |
| (d) | $10,000 after the beginning of commercial production; |
| (e) | $10,000 after the first anniversary of commercial production; and |
| (f) | $10,000 after the second anniversary of commercial production. |
The Contingent Consideration is only accrued and payable if and when the above milestones are achieved.
Pursuant to the SPA, a 4% net smelter return royalty (“NSR”) on the San Luis Project was granted to SSR Mining. At any time before the commencement of mine construction on the San Luis Project, the Company may buy back half of this royalty for $15,000, which if, exercised, would reduce SSR Mining’s royalty interest to 2%.
In addition to the 4% NSR granted to SSR Mining, the San Luis Project is also subject to a 1% NSR on 24 claims payable to Esperanza and a 1% NSR on 2 claims to Metalla Royalty & Streaming Ltd.
Page 4
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Exploration Plans
The Company’s plan for the San Luis Project is to advance the project through integrated exploration, environmental and community development programs. The goal is to surface the resource potential of the project through exploration and undertake environmental studies to support future technical studies, permitting and evaluations of economic potential for development.
Since the acquisition of the San Luis Project in May 2024, the Company has performed field work including geological mapping and geochemical sampling around the Ayelen vein system, in the Bonita vein system and in the Cerro Colorado (porphyry/breccia system). Results have identified new veins and refined the footprint of the porphyry-related hydrothermal alteration. Additionally, the company completed a ~ 5,000 HA MAG drone survey covering the area between Bonita and Cerro Colorado (inclusive of both targets).
The primary focus of field activities has been the Bonita vein system, which has emerged as a key priority through the integration and analysis of existing data, drill core reviews, and validation from fieldwork.
Bonita is an epithermal gold-silver vein system hosted by a package of volcanic rocks situated 10 km south and 700 m lower in elevation than Ayelen. It is exposed in outcrop over an area of 800m by 200m and remains open in all directions.
On March 14, 2025, the Company released an updated technical report titled “Technical Report for the San Luis Property” with an effective date of January 15, 2025, prepared by independent qualified person, Martin Mount, MSc MCSM FGS CGeol FIMMM Ceng.
On May 12, 2025, Highlander announced the commencement of infrastructure programs with the participation of its community partners to support community development priorities and the start of exploration programs at the San Luis Project.
The Technical Report recommends a two-phase exploration plan. The Company previously initiated Phase 1 of the exploration program with detailed mapping and systematic channel sampling of the known mineralized structures at the Bonita vein system. On June 9, 2025, Highlander announced that it had commenced its maiden drilling program targeting recently sampled but previously undrilled high-grade mineralization in outcrop at the Bonita vein system using one drill rig. The Company then proceeded to map these areas with a drone-based geophysical survey, a technological breakthrough in high elevation settings. In addition, the Company has carried out prospecting, mapping and sampling at the adjacent areas to identify and follow up on additional veins, with the objective of defining further targets for drilling. The Company spent approximately $1.7 million to complete the Phase 1 activities.
The Company has incorporated the results of its Phase 1 exploration activities including the assay results of the drilling to-date, processed and analyzed the drone-based geophysical survey to identify permissive structural features across more than 5,000 hectares, and integrated the latest drilling and channel sample results collected in the Bonita area to design the optimal drilling campaign for the Phase 2 exploration activities.
Page 5
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
In addition, the Company is developing a 3D geological model to define the shape and orientation of the targeted structures and detailed controls on mineralization for target refinement. During the three months ended June 30, 2026, the Company continued to advance studies in support of permitting and appointed Fernando Valdez, a seasoned mining project executive, as General Manager at San Luis.
Community Relations
The property occupies community land and developing and growing social license is a priority for Highlander. The Company is actively engaged with the communities in the direct area of influence of the San Luis Project by employing its participatory development model based on community capacity building through skill and safety training, employment, entrepreneurship, infrastructure development and environmental, cultural, health and education programs. The Company has made a notable contribution in the development of infrastructure to ensure sanitary and health benefits to the communities. Major road rehabilitation work has been completed, and the contribution will continue with long-term development programs coordinated with, and agreed on by, the communities, government and regional agencies.
Bear Creek Assets (Corani and Mercedes)
The Company is progressing with the integration of the Corani Project and the Mercedes Mine into its business since the acquisition of Bear Creek. As part of this integration, the Company has developed an exploration plan for Corani and formulated an optimization plan for the Mercedes Mine.
Corani
The Corani open-pit silver project is located in province of Carabaya in the department of Puno in southern Peru.
Personnel
| ● | Carlos Ojeda was previously appointed Vice President & General Manager. Mr. Ojeda has held increasingly senior roles leading teams of up to 500 people in engineering, construction, ramp-up and optimization at Anglo American’s major Quellaveco open pit mine in Peru, with prior experience at other major open pit mines in the country, including Antamina, Mina Justa and Constancia. |
Exploration and Technical Drilling
| ● | First exploration drilling program in over a decade is underway with five rigs targeting high-impact exploration, resource growth, infill, as well as technical drilling to support studies. Drill results are expected to be released in Q3/26. |
Page 6
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
| ● | Completed the first airborne magnetic survey and more extensive induced polarization-resistivity surveys than historically undertaken. |
| ● | Results support the interpretation that the Corani mineral system is far more extensive than historical drilling coverage with extensions concealed beneath shallow post-mineral cover. |
Site Development
| ● | Development underway: (1) Camp and facilities; (2) Internal roads; (3) External access road; (4) Earthworks for site infrastructure, pits and collection ponds; (5) Electrical substation; transmission line commences in August. |
| ● | Long-lead-time orders to be placed in Q3/26. |
Studies, Consultants and Contractors
| ● | Updated Feasibility Study based on staged-development approach to be completed in Q4/26 aiming to maximize returns on a per share basis while mitigating capital expenditure, funding, timeline and execution risks. |
| ● | Respected international and specialist Peruvian consultants and contractors appointed for the majority of the main work packages, with further appointments to follow: |
| o | Resource, reserves and mine planning – AMC Mining Consultants |
| o | Processing plant and infrastructure – Ausenco Engineering |
| o | Geotechnical and hydrology — Andes Consulting |
| o | Contractors – ApuCorp, Xplomine and CumbrEx |
The updated Corani Feasibility Study is anticipated to set out recommendations that will establish the basis of the Company’s detailed go-forward plan at Corani.
Mercedes
The underground Mercedes Mine is located in the state of Sonora, within the Cucurpe municipality. The mine is located 250 km northeast of Hermosillo and 300 km south of Tucson, Arizona. Mercedes consists of 69,284 hectares of concessions and the mine has been in continuous operation since 2011, with the exception of a COVID-19 related mandatory closure.
Personnel
| ● | Orlando Chumpitaz was previously appointed Vice President & General Manager. Mr. Chumpitaz has held senior roles with leading companies operating major underground mines globally, including Senior Mine Manager for Lundin Gold at its 5,000 tpd Fruta del Norte gold mine in Ecuador, Project Manager for Endeavour Mining at its 6,000 tpd Mana Mine in Burkina Faso, General Manager for Minera Volcan at its 5,500 tpd Animon mine in Peru, and Operations Director for Fortuna Mining at its 3,000 tpd San Jose mine in Mexico. |
Page 7
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Restructuring
| ● | Extinguished excessive gold stream and settled debt such that we expect the Mercedes Mine to generate free cash flow net of the critical investments detailed below. |
| ● | Restored working capital, settled overdue payables and in the process of settling minor unpaid taxes and establishing bonding program. Settled union agreements. |
| ● | Resources and reserves estimation strategy based on a more reliable and achievable mine plan. |
| ● | Process Plant running on a daily basis from July and beyond. |
Recapitalization
Mercedes produced 30 koz of gold in 2025. Significant improvement across worker safety, production and operating costs are expected in the coming years with a rejuvenated workforce operating under the proven leadership of Mr. Chumpitaz, with the following programs planned:
| ● | Infill and definition drilling to support an improved reserve model. |
| ● | Accelerated mine development to improve access and enhance operational productivity. |
| ● | Upgrading critical infrastructure, including ventilation, electrical systems, surface water management and underground pumping capacity. |
| ● | Geotechnical drilling and implementation of support systems to improve safety and reduce dilution. |
| ● | Cost assessment and right-sizing mine contractor deployment to enhance productivity. |
| ● | Tailings Management Facilities expansion to support mine life extensions. |
| ● | Resumption of greenfield and brownfield exploration campaigns across extensive land packages in geologically favorable and prospective areas. |
These plans are based on new management’s oversight of Mercedes since the acquisition of Bear Creek on February 26, 2026, and is therefore not based on a technical report filed under National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
Page 8
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Operating Highlights
| Mercedes Mine | Unit | April 1, 2026 – June 30, 2026 | February 26, 2026 – June 30, 2026 | |||||||||
| Tonnes milled | kt | 106.95 | 142.13 | |||||||||
| Average gold grade milled | g/t | 2.50 | 2.56 | |||||||||
| Average silver grade milled | g/t | 25.16 | 24.99 | |||||||||
| Recovery rate gold% | 94.60 | % | 94.51 | % | ||||||||
| Recovery rate silver% | 39.98 | % | 39.11 | % | ||||||||
| Gold produced | oz | 8,147 | 11,075 | |||||||||
| Silver produced | oz | 34,583 | 44,670 | |||||||||
| Gold sold | oz | 7,640 | 11,201 | |||||||||
| Average realized gold price | $/oz | 4,528 | 4,682 | |||||||||
| Silver sold | oz | 44,584 | 50,561 | |||||||||
| Average realized silver price | $/oz | 74 | 75 | |||||||||
Mercedes was acquired as part of the Bear Creek transaction on February 26, 2026. As such, comparative figures to previous quarters are not presented. Operational results are for the three months ended June 30, 2026 as well as for the period from February 26, 2026 to June 30, 2026.
La Estrella
The La Estrella Project is located in the Huancavelica Department, Central Peru, about 250 km ESE of Lima, on the eastern slope of the Western Cordillera. It is within the prolific Miocene polymetallic belt, approximately 34 km NNE of the Julcani Mine, which has produced over 105 million ounces of silver from high grade vein mineralization averaging 16 ounces per ton since production started by Buenaventura in 1953.
During the three months ending June 30, 2026, the Company continued its community engagement by meeting with local authorities and collaborating on social programs. Exploration agreements with two of the communities were notably advanced and are pending only final notarization.
EXPLORATION EXPENSES
As disclosed in Note 3 of the Company’s condensed consolidated interim financial statements for the three and six months ended June 30, 2026, the Company has changed the presentation currency from Canadian dollars to US dollars to better reflect the Company’s business activities and to improve comparability of the Company’s financial results with peer companies in the mining industry. Prior period comparative figures have been restated to conform to the current period presentation.
The following tables summarize exploration expenses by activity and project.
For the three months ended June 30, 2026
| San Luis | Corani | La Estrella | Total | |||||||||||||
| Assay and analysis | $ | – | $ | 171 | $ | 3 | $ | 174 | ||||||||
| Community relations | 109 | 161 | 28 | 298 | ||||||||||||
| Concession fee | 1,651 | 505 | 10 | 2,166 | ||||||||||||
| Depreciation | 14 | – | – | 14 | ||||||||||||
| Drilling and drilling related costs | – | 2,880 | – | 2,880 | ||||||||||||
| Environmental, regulatory and permitting | 97 | 123 | – | 220 | ||||||||||||
| Geological and geophysical investigations | – | 389 | – | 389 | ||||||||||||
| Reclamation provision | 2 | – | – | 2 | ||||||||||||
| Salaries, contractors and project administration | 928 | 2,832 | 40 | 3,800 | ||||||||||||
| Site preparation, camp and field expenses | 288 | 1,589 | 5 | 1,882 | ||||||||||||
| $ | 3,089 | $ | 8,650 | $ | 86 | $ | 11,825 | |||||||||
Page 9
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
For the six months ended June 30, 2026
| San Luis | Corani | La Estrella | Total | |||||||||||||
| Assay and analysis | $ | 10 | $ | 171 | $ | 3 | $ | 184 | ||||||||
| Community relations | 151 | 283 | 38 | 472 | ||||||||||||
| Concession fee | 1,651 | 505 | 10 | 2,166 | ||||||||||||
| Depreciation | 29 | – | – | 29 | ||||||||||||
| Drilling and drilling related costs | – | 2,880 | – | 2,880 | ||||||||||||
| Environmental, regulatory and permitting | 148 | 166 | – | 314 | ||||||||||||
| Geological and geophysical investigations | 23 | 496 | – | 519 | ||||||||||||
| Reclamation provision | 5 | – | – | 5 | ||||||||||||
| Salaries, contractors and project administration | 1,612 | 3,085 | 69 | 4,766 | ||||||||||||
| Site preparation, camp and field expenses | 533 | 1,889 | 8 | 2,430 | ||||||||||||
| Studies | 5 | 9 | – | 14 | ||||||||||||
| $ | 4,167 | $ | 9,484 | $ | 128 | $ | 13,779 | |||||||||
For the three months ended June 30, 2025
San Luis (Restated)1 | La Estrella (Restated)1 | Total (Restated)1 | ||||||||||
| Assay and analysis | $ | 74 | $ | – | $ | 74 | ||||||
| Community relations | 28 | 4 | 32 | |||||||||
| Concession fees | 1,475 | 9 | 1,484 | |||||||||
| Depreciation | 5 | – | 5 | |||||||||
| Drilling and drilling related costs | 139 | – | 139 | |||||||||
| Environmental, regulatory and permitting | 7 | – | 7 | |||||||||
| Geological and geophysical investigations | 26 | – | 26 | |||||||||
| Reclamation provision | 30 | – | 30 | |||||||||
| Salaries, contractors and project administration | 405 | 31 | 436 | |||||||||
| Site preparation, camp and field expenses | 259 | 1 | 260 | |||||||||
| Studies | 5 | – | 5 | |||||||||
| $ | 2,453 | $ | 45 | $ | 2,498 | |||||||
For the six months ended June 30, 2025
| San
Luis (Restated)1 | La
Estrella (Restated)1 | Total
(Restated)1 | ||||||||||
| Assay and analysis | $ | 74 | $ | – | $ | 74 | ||||||
| Community relations | 35 | 8 | 43 | |||||||||
| Concession fees | 1,475 | 9 | 1,484 | |||||||||
| Depreciation | 7 | – | 7 | |||||||||
| Drilling and drilling related costs | 139 | – | 139 | |||||||||
| Environmental, regulatory and permitting | 13 | – | 13 | |||||||||
| Geological and geophysical investigations | 26 | – | 26 | |||||||||
| Reclamation provision | 30 | – | 30 | |||||||||
| Salaries, contractors and project administration | 673 | 56 | 729 | |||||||||
| Site preparation, camp and field expenses | 356 | 10 | 366 | |||||||||
| Studies | 5 | – | 5 | |||||||||
| $ | 2,833 | $ | 83 | $ | 2,916 | |||||||
| 1 | Restated for the change in presentation currency |
Page 10
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
The increase in exploration expenses to $11,825 and $13,779 for the three and six months ended June 30, 2026, from $2,498 and $2,916 for the three and six months ended June 30, 2025, respectively, was primarily attributable to the inclusion of the Corani Project following the acquisition of Bear Creek on February 26, 2026, as well as higher salaries, contractors and project administration costs at the San Luis Project to support ongoing operating and project development activities.
Drilling and drilling related costs were higher for the three and six months ended June 30, 2026, compared to the same periods in 2025, mainly due to the commencement of the Corani Project’s drilling program in April 2026. During the quarter, the program utilized five drill rigs focused on high-impact exploration, resource expansion, infill drilling, and technical drilling to support future studies.
Geological and geophysical investigations were higher for the three and six months ended June 30, 2026, compared to the same periods in 2025, mainly related to the comprehensive geophysical program undertaken at the Corani Project, including the completion of airborne magnetic and induced polarization-resistivity surveys to support exploration targeting and resource development.
Salaries, contractors and project administration mainly relate to personnel costs including salaries for site-based employees and contractor fees. The increase in the expenses in the three and six months ended June 30, 2026, compared to the same periods in 2025, was mainly due to the addition of personnel and contractors to support the increasing operating activities at the Corani Project and the ongoing project development activities at the San Luis Project.
The increase in site preparation, camp, and field expenses in the current periods compared to the same periods in 2025, is due to site development activities at the Corani Project, following the acquisition of Bear Creek on February 26, 2026. The increase was mainly attributable to higher site maintenance costs, supplies, camp operations and other general site-related expenditures.
Other expenses such as community relations and environmental, regulatory and permitting for the three and six months ended June 30, 2026 have also increased from the prior periods as the Company continued to invest in the community with programs based on community capacity building through skill and safety training, employment, entrepreneurship, infrastructure development and environmental, cultural, health and education programs, as well as to diligently comply with environmental monitoring and reporting of its activities at site.
RESULT OF OPERATIONS
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| 2026 | 2025 (Restated)1 |
2026 | 2025 (Restated)1 |
|||||||||||||
| Revenue | $ | 37,897 | $ | – | $ | 56,227 | $ | – | ||||||||
| Cost of sales | (25,243 | ) | – | (37,704 | ) | – | ||||||||||
| Depletion, amortization, and depreciation | (12,163 | ) | – | (17,958 | ) | – | ||||||||||
| Gross profit | 491 | – | 565 | – | ||||||||||||
| Exploration expenses | (11,825 | ) | (2,498 | ) | (13,779 | ) | (2,916 | ) | ||||||||
| General and administrative expenses | (5,662 | ) | (1,251 | ) | (13,777 | ) | (2,234 | ) | ||||||||
| Loss before other items | (16,996 | ) | (3,749 | ) | (26,991 | ) | (5,150 | ) | ||||||||
| Finance cost | (685 | ) | (69 | ) | (772 | ) | (160 | ) | ||||||||
| Interest and other income | 1,966 | 152 | 3,085 | 232 | ||||||||||||
| Foreign exchange gain | 998 | 85 | 2,019 | 82 | ||||||||||||
| Remeasurement gain on previously held equity interest in Bear Creek | – | – | 28,466 | – | ||||||||||||
| Write-off of receivables | – | (4 | ) | – | (127 | ) | ||||||||||
| Other expenses | (98 | ) | – | (135 | ) | – | ||||||||||
| Net income (loss) before income taxes | $ | (14,815 | ) | $ | (3,585 | ) | $ | 5,672 | $ | (5,123 | ) | |||||
| 1 | Restated for the change in presentation currency |
Page 11
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Three Months Ended June 30, 2026, compared to Three Months Ended June 30, 2025
The Company incurred net loss before income taxes of $14,815 for the three months ended June 30, 2026 (June 30, 2025 – $3,585). The change in net loss before income taxes is due to the following factors:
| ● | Revenue increased to $37,897 for the three months ended June 30, 2026 (June 30, 2025 – $nil) from the sales of gold and silver from the Mercedes Mine following the acquisition of Bear Creek on February 26, 2026. During the current period, the Company sold 7,640 oz of gold and 44,584 oz of silver. The Company is not economically dependent on any specific customer for the sale of its products because gold and silver can be sold through numerous precious metals traders and refiners worldwide. |
| ● | Cost of sales of $25,243 for the three months ended June 30, 2026 (June 30, 2025 – $nil), represents costs associated with gold and silver production at the Mercedes Mine following the acquisition of Bear Creek on February 26, 2026, including raw material and consumables, salaries and benefits, contractors and outside services and other related expenses. |
| ● | Depletion, amortization, and depreciation increased to $12,163 for the three months ended June 30, 2026 (June 30, 2025 – $nil), reflecting the depletion of mineral properties and depreciation of plant and equipment at the Mercedes Mine following the acquisition of Bear Creek on February 26, 2026. |
| ● | An increase in exploration expenses of $11,825 for the three months ended June 30, 2026 (June 30, 2025 – $2,498) was mainly driven by the activities at the Corani Project following the acquisition of Bear Creek on February 26, 2026. Expenditures at Corani were driven by the commencement of the project’s first exploration drilling program, utilizing five drill rigs targeting high-impact exploration, resource growth, infill and technical drilling. The increase also reflects the continued advancement of the San Luis Project, including higher personnel and contractor costs to support ongoing operating activities. |
| ● | General and administrative (“G&A”) expenses increased to $5,662 for the three months ended June 30, 2026 (June 30, 2025 – $1,251). The increase was primarily driven by the following: |
| – | Office and other expenses: Increased to $1,439 (June 30, 2025 – $108), mainly reflecting higher insurance costs and the inclusion of Bear Creek’s office expenses following its acquisition on February 26, 2026. |
| – | Professional fees: Increased to $961 (June 30, 2025 – $143), mainly reflecting higher audit, legal and consulting costs during the period. Audit fees increased as a result of the Company’s growth, listing on the NYSE American, and the acquisition of Bear Creek, which expanded the scope and complexity of the audit requiring additional audit and review procedures. Consulting fees also increased, mainly due to transition and integration support following the Bear Creek acquisition, including assistance with aligning financial reporting processes, systems integration, and post-acquisition operational support and tax advisory services. Legal fees also increased, mainly due to increased general legal support services following the Bear Creek acquisition. |
| – | Salaries and benefits: Increased to $653 (June 30, 2025 – $447), mainly due to due to the inclusion of Bear Creek’s salary expenses following its acquisition on February 26, 2026. |
| – | Share-based compensation: Increased to $2,217 (June 30, 2025 – $345), primarily due to new options granted during 2026. |
| – | Transaction costs: Amounted to $164 (June 30, 2025 – $nil), reflecting remaining expenses incurred during the quarter in connection with the Bear Creek acquisition. These costs primarily consist of professional advisory fees, legal expenses, and other transaction-related services necessary to support and complete the Bear Creek transaction. |
| ● | Interest and other income increased to $1,966 for the three months ended June 30, 2026, compared to $152 for the three months ended June 30, 2025. The increase was primarily due to higher interest income earned from significantly higher cash balances as at June 30, 2026. The increase also reflects the inclusion of interest and royalty income from the Bear Creek operations following the acquisition completed on February 26, 2026. The Company earns royalty income from the Maria Jose property in Peru through a royalty interest retained by its subsidiary, INEDE S.A.C., following the sale of the property. The royalty rate is determined monthly based on the annualized gold production level and the weighted average gold selling price, in accordance with the terms of the agreement. |
| ● | Foreign exchange gain of $998 for the three months ended June 30, 2026 (June 30, 2025 – $85) relates to the strengthening of the US dollar against Canadian dollar, Mexican pesos and Peruvian soles. The higher foreign exchange gain in the current period was also attributable to the increase of cash balance in US dollar following the financing completed in January 2026. |
Page 12
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Six Months Ended June 30, 2026, compared to Six Months Ended June 30, 2025
The Company generated net income before income taxes of $5,672 for the six months ended June 30, 2026 (June 30, 2025 – net loss before income taxes of $5,123). The change in net income before income taxes is due to the following factors:
| ● | Revenue increased to $56,227 for the six months ended June 30, 2026 (June 30, 2025 – $nil) from the sales of gold and silver from the Mercedes Mine following the acquisition of Bear Creek on February 26, 2026. During the period of February 26, 2026 to June 30, 2026, the Company sold 11,201 oz of gold and 50,561 oz of silver. The Company is not economically dependent on any specific customer for the sale of its products because gold and silver can be sold through numerous precious metals traders and refiners worldwide. |
| ● | Cost of sales of $37,704 for the six months ended June 30, 2026 (June 30, 2025 – $nil), represents costs associated with gold and silver production at the Mercedes Mine following the acquisition of Bear Creek on February 26, 2026, including raw material and consumables, salaries and benefits, contractors and outside services and other related expenses. |
| ● | Depletion, amortization, and depreciation increased to $17,958 for the six months ended June 30, 2026 (June 30, 2025 – $nil), reflecting the depletion of mineral properties and depreciation of plant and equipment at the Mercedes Mine following the acquisition of Bear Creek on February 26, 2026. |
| ● | An increase in exploration expenses of $13,779 for the six months ended June 30, 2026 (June 30, 2025 – $2,916) was mainly driven by the activities at the Corani Project following the acquisition of Bear Creek on February 26, 2026. Expenditures at Corani were driven by the commencement of the project’s first exploration drilling program, utilizing five drill rigs targeting high-impact exploration, resource growth, infill and technical drilling. The increase also reflects the continued advancement of the San Luis Project, including higher personnel and contractor costs to support ongoing operating activities. |
| ● | G&A expenses increased to $13,777 for the six months ended June 30, 2026 (June 30, 2025 – $2,234). The increase was primarily driven by the following: |
| – | Filing and regulatory fees: Increased to $627 (June 30, 2025 – $209) mainly due to the Company’s listing on the NYSE American in March 2026. |
| – | Office and other expenses: Increased to $2,023 (June 30, 2025 – $196), mainly reflecting higher insurance costs and the inclusion of Bear Creek’s office expenses following its acquisition on February 26, 2026. |
| – | Professional fees: Increased to $1,590 (June 30, 2025 – $232), mainly reflecting higher audit, legal and consulting costs during the period. Audit fees increased as a result of the Company’s growth, listing on the NYSE American, and the acquisition of Bear Creek, which expanded the scope and complexity of the audit requiring additional audit and review procedures. Consulting fees also increased, mainly due to transition and integration support following the Bear Creek acquisition, including assistance with aligning financial reporting processes, systems integration, and post-acquisition operational support and tax advisory services. Legal fees also increased, mainly due to increased general legal support services following the Bear Creek acquisition. |
Page 13
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
| – | Salaries and benefits: Increased to $1,206 (June 30, 2025 – $823), mainly due to due to the inclusion of Bear Creek’s salary expenses following its acquisition on February 26, 2026. |
| – | Share-based compensation: Increased to $4,012 (June 30, 2025 – $669), primarily due to new options granted during 2026. |
| – | Transaction costs: Amounted to $4,137 (June 30, 2025 – $nil), reflecting expenses incurred in connection with the Bear Creek acquisition. These costs primarily consist of professional advisory fees, legal expenses, and other transaction-related services necessary to support and complete the Bear Creek transaction. They also include compensation payments made to former Bear Creek executives in accordance with the terms of the Bear Creek transaction. |
| ● | Interest and other income increased to $3,085 for the six months ended June 30, 2026, compared to $232 for the six months ended June 30, 2025. The increase was primarily due to higher interest income earned from significantly higher cash balances as at June 30, 2026. The increase also reflects the inclusion of interest and royalty income from the Bear Creek operations following the acquisition completed on February 26, 2026. The Company earns royalty income from the Maria Jose property in Peru through a royalty interest retained by its subsidiary, INEDE S.A.C., following the sale of the property. The royalty rate is determined monthly based on the annualized gold production level and the weighted average gold selling price, in accordance with the terms of the agreement. |
| ● | Foreign exchange gain of $2,019 for the six months ended June 30, 2026 (June 30, 2025 – $82) relates to the strengthening of the US dollar against Canadian dollar, Mexican pesos and Peruvian soles. The higher foreign exchange gain in the current period was also attributable to the increase of cash balance in US dollar following the financing completed in January 2026. |
| ● | Remeasurement gain on previously held equity interest in Bear Creek amounted to $28,466 (June 30, 2025 – $nil), reflecting the adjustment of the Company’s previously held interest in Bear Creek to its fair value at the completion of the Bear Creek transaction on February 26, 2026. |
Summary of Quarterly Results
The Company’s quarterly financial statements are reported under IFRS as issued by the IASB, as applicable to interim financial reporting. The following table provides highlights from the quarterly results of the Company’s unaudited condensed consolidated interim financial statements for the past eight quarters.
| 2026 Q2 | 2026 Q1 | 2025
Q5 (Restated)1 | 2025 Q4 (Restated)1 | |||||||||||||
| Revenue | $ | 37,897 | $ | 18,330 | $ | – | $ | – | ||||||||
| Loss before other items | (16,996 | ) | (9,995 | ) | (3,296 | ) | (3,196 | ) | ||||||||
| Net income (loss) | (11,733 | ) | 20,408 | (2,784 | ) | (3,108 | ) | |||||||||
| Total comprehensive income (loss) | (13,062 | ) | 18,832 | (1,317 | ) | (3,271 | ) | |||||||||
| Net income (loss) per share – basic | (0.06 | ) | 0.14 | (0.02 | ) | (0.03 | ) | |||||||||
| Net income (loss) per share – diluted | $ | (0.06 | ) | $ | 0.13 | $ | (0.02 | ) | $ | (0.03 | ) | |||||
Page 14
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
| 2025 Q3 (Restated)1 | 2025 Q2 (Restated)1 | 2025 Q1 (Restated)1 | 2024 Q4 (Restated)1 | |||||||||||||
| Loss before other items | $ | (3,749 | ) | $ | (1,401 | ) | $ | (1,096 | ) | $ | (806 | ) | ||||
| Net loss | (3,585 | ) | (1,538 | ) | (1,172 | ) | (833 | ) | ||||||||
| Total comprehensive loss | (2,382 | ) | (1,263 | ) | (1,227 | ) | (466 | ) | ||||||||
| Net loss per share – basic and diluted | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||
| 1 | Restated for the change in presentation currency |
The revenue in Q1/26 and Q2/26 was generated from the sales of gold and silver from the Mercedes Mine following the acquisition of Bear Creek on February 26, 2026. Revenue in Q2/26 reflected a full quarter of gold and silver sales, whereas Q1/26 reflected sales from February 26, 2026, the acquisition date, through March 31, 2026.
The increase in loss before other items in Q1/26 and Q2/26 was mainly driven by the incorporation of the operating expenditures at the Corani Project and Mercedes Mine, reflecting the inclusion of these assets following the Bear Creek acquisition on February 26, 2026. G&A expenses also increased in Q1/26 primarily due to transaction costs related to the Bear Creek acquisition, as well as higher share-based compensation expense recognized during the period.
The successive increase in loss before other items from Q4/24 to Q3/25 was mainly related to the increased exploration and operating activities at the San Luis Project following its acquisition by the Company in May 2024. These included costs related to concession fees, drilling and drilling related costs, salaries, contractor fees, project administration and site preparation costs, as well as expenses on camp and field operations. The commencement of the drilling program at the Bonita vein system at the San Luis Project in June 2025 further contributed to the increase.
The decrease in loss before other items in Q4/25 from the previous quarter was mainly due to timing of incurring certain exploration expenses to align with operational planning. The slight increase in loss before other items in Q5/25 from the previous quarter is attributable to higher G&A expenses, including salaries and benefits and legal costs. This was partially offset by lower exploration expenses resulting from the completion of Phase 1 drilling program at the San Luis Project in September 2025 prior to the commencement of the rainy season.
An increase in net loss in Q2/26 compared to Q1/26 was mainly due to a full quarter of expenses related to the Mercedes Mine and Corani Project in Q2/26, compared to expenses recognized only from February 26, 2026, the acquisition date, through March 31, 2026, in Q1/26. The increase was also driven by higher exploration activities at the Corani Project. These impacts were partially offset by higher revenue and interest and other income, lower general and administrative expenses, and a deferred income tax recovery in Q2 2026.
An increase in net income in Q1/26 compared to all preceding quarters was mainly due to the remeasurement gain on previously held equity interest in Bear Creek, reflecting the adjustment to its fair value at the completion of the Bear Creek transaction on February 26, 2026.
The change in total comprehensive income / loss was related to the foreign currency translation for the respective periods.
Page 15
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
LIQUIDITY AND CAPITAL RESOURCES
| June 30, 2026 | December 31, 2025 | |||||||
| Cash and cash equivalents | $ | 99,304 | $ | 78,942 | ||||
| Inventory | 9,095 | – | ||||||
| Receivables, current | 1,652 | 66 | ||||||
| Prepaids and other | 1,722 | 148 | ||||||
| Tax receivable, current | 10,097 | 156 | ||||||
| Accounts payable and accrued liabilities, current | 27,745 | 1,780 | ||||||
| Community projects obligation, current | 1,171 | – | ||||||
| Consideration payable, current | – | 1,250 | ||||||
| Lease liabilities, current | 217 | 9 | ||||||
| Tax payable | 5,425 | 15 | ||||||
| Other liabilities | 60 | – | ||||||
| Total current assets | 121,870 | 79,312 | ||||||
| Total current liabilities | $ | 34,618 | $ | 3,054 | ||||
| 1 | Restated for the change in presentation currency |
On January 30, 2026, the Company closed the Sprott Offering, pursuant to which the Company issued 8,060,226 common shares of the Company at a price of C$6.80 per common share for aggregate gross proceeds of $40,000. The Company incurred total share issuance costs of $277, for net proceeds of $39,723.
Cash provided during the three months ended June 30, 2026 and cash used during the six months ended June 30, 2026, from operating activities were $8,306 and $709, respectively (cash used during the three and six months ended June 30, 2025 – $3,125 and $4,187, respectively). The increase generation of cash is primarily attributable to cash inflows generated from gold and silver sales during the current periods, as the Company did not have revenue from mineral sales in the prior periods, as well as the timing of payments affecting changes in non-cash working capital items such as accounts payable and accrued liabilities, inventory, prepaids and other receivables and tax payable/receivable.
Cash used during the three months ended June 30, 2026, from financing activities was $362 (June 30, 2025 – $95). The increased use of cash for the three months ended June 30, 2026 was primarily attributable to the payment of share issuance costs of $183 attributed to the Bear Creek transaction (June 30, 2025 – $nil), payment of lease liabilities of $117 (June 30, 2025 – $nil), and payment of finance costs of $35 (June 30, 2025 – $160), offset by the exercise of warrants and options of $50 (June 30, 2025 – $65).
Cash generated during the six months ended June 30, 2026, from financing activities was $41,914 (June 30, 2025 – $20,751). The increase in cash from financing activities for the six months ended was primarily attributable to the net proceeds from the Sprott Offering that took place in January 2026 of $39,723 (June 30, 2025 – net proceeds from bought deal equity financing of $20,785), and the exercise of warrants and options of $2,559 (June 30, 2025 – $126), offset by the payment of share issuance costs of $183 (June 30, 2025 – $nil), payment of lease liabilities of $150 (June 30, 2025 – $nil), and payment of finance costs of $35 (June 30, 2025 – $160).
Page 16
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Cash used during the three and six months ended June 30, 2026, from investing activities was $10,868 and $19,023, respectively (June 30, 2025 – $1,142 and $1,125, respectively). The increased use of cash from investing activities for the three months ended June 30, 2026 was primarily attributable to the purchase of property and equipment of $11,700 (June 30, 2025 – $27), offset by the interest and royalty income received of $1,590 (June 30, 2025 – $151), and the proceeds from the sale of Tassa Project of $500 (June 30, 2025 – $nil). The increased use of cash from investing activities for the six months ended June 30, 2026 was primarily attributable to the acquisition of Bear Creek on February 26, 2026: investment in Bear Creek shares of $13,219 (June 30, 2025 – $nil), debt settlement of $10,352 (June 30, 2025 – $nil), purchase of property and equipment of $11,947 (June 30, 2025 – $56), payment of community projects at Corani of $1,169 (June 30, 2025 – $nil), offset by cash acquired on acquisition of Bear Creek of $16,194 (June 30, 2025 – $nil), as well as higher interest and royalty income of $2,220 received in the current period (June 30, 2025 – $197) earned from higher cash balances, and the proceeds from the sale of Tassa Project of $500 (June 30, 2025 – $nil).
The Company anticipates being able to generate sufficient cash flow to continue in operation for the foreseeable future to realize its assets and discharge its liabilities and commitments in the normal course of operations, as well as to meet the Company’s planned growth and to fund planned development activities.
FINANCING USE OF PROCEEDS
Net proceeds from the March 11, 2025 private placement offering of $20,785 (C$30,037), have been and will continue to be deployed to fund the advancement of exploration activities at the Company’s San Luis Project, as well as for working capital and general corporate purposes, consistent with the disclosed use of proceeds at the time of the private placement.
Net proceeds from the public offering completed on September 29, 2025, including proceeds raised on the exercise of the over-allotment option, were $64,441 (C$89,777). In relation to this, funds were spent in the following manner, as compared with the planned use of net proceeds as at June 30, 2026.
| Use of Net Proceeds | Planned | Actual | Remaining | |||||||||
| Exploration, prospecting and project studies | $ | 21,534 | – | 21,534 | ||||||||
| Environmental, regulatory and permitting | 2,871 | – | 2,871 | |||||||||
| Property maintenance, concession fees and community relations and development programs | 5,742 | – | 5,742 | |||||||||
| Infrastructure and road development | 2,153 | – | 2,153 | |||||||||
| Property investigation and acquisitions | 17,945 | (30,552 | ) | (12,607 | ) | |||||||
| General corporate and working capital | 14,240 | – | 14,240 | |||||||||
| Additional share issuance costs | (44 | ) | – | (44 | ) | |||||||
| Total | $ | 64,441 | (30,552 | ) | 33,889 | |||||||
The actual use of proceeds of $30,552 in property investigation and acquisitions is related to the Bear Creek transaction including the private placement in Bear Creek. The remaining proceeds are expected to be used for the advancement of the Company’s mineral projects and for working capital and general corporate purposes.
The Company intends on using the net proceeds from the Sprott Offering to fund the advancement of the Company’s mineral projects and for working capital and general corporate purposes. The Company has not yet used any of the funds raised in the Sprott Offering.
Page 17
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
COMMITMENTS AND CONTINGENCIES
At June 30, 2026, the Company had contractual cash flow commitments as follows:
| 2026 | 2027 | 2028 | 2029 | 2030 and beyond | Total | |||||||||||||||||||
| Accounts payable and accrued liabilities | $ | 27,745 | $ | – | $ | – | $ | – | $ | – | $ | 27,745 | ||||||||||||
| Community projects obligations | – | 1,171 | 1,171 | 1,171 | 11,713 | 15,226 | ||||||||||||||||||
| Office and warehouse rent obligations | 493 | 720 | 447 | 460 | 226 | 2,346 | ||||||||||||||||||
| Other liabilities | 281 | 63 | 748 | 6 | 750 | 1,848 | ||||||||||||||||||
| Reclamation provision | – | 507 | – | 3,468 | 22,375 | 26,350 | ||||||||||||||||||
| Tax payable | 5,425 | – | – | – | – | 5,425 | ||||||||||||||||||
| $ | 33,944 | $ | 2,461 | $ | 2,366 | $ | 5,105 | $ | 35,064 | $ | 78,940 | |||||||||||||
SHARE CAPITAL INFORMATION
As at August 12, 2026, the Company had the following securities issued and outstanding:
| ● | 203,523,418 common shares |
| ● | 12,180,000 shares issuable pursuant to exercise of stock options |
| ● | 2,809,943 shares issuable pursuant to exercise of warrants |
As at August 12, 2026, no common shares were issued under the Company’s at-the-market program announced on April 10, 2025.
PROPOSED TRANSACTIONS
There are no undisclosed proposed transactions as of the date of this MD&A.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any material off-balance sheet arrangements, other than the Company’s obligation for future rental payments described in “Related Party Transactions”.
RELATED PARTY TRANSACTIONS
Key management personnel
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company, and comprises the Company’s President and Chief Executive Officer, Chief Financial Officer, President Peru, Senior Vice President Corporate Affairs and Corporate Secretary and Directors.
Page 18
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Key management compensation for the three and six months ended June 30, 2026 and 2025 is comprised of the following:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025
(Restated)1 | 2026 | 2025
(Restated)1 | |||||||||||||
| Share-based compensation | $ | 1,649 | $ | 263 | $ | 2,962 | $ | 521 | ||||||||
| Salaries and benefits | 277 | 250 | 560 | 507 | ||||||||||||
| Professional fees | 36 | – | 67 | – | ||||||||||||
| $ | 1,962 | $ | 513 | $ | 3,589 | $ | 1,028 | |||||||||
| 1 | Restated for the change in presentation currency |
As of June 30, 2026, there were no outstanding amounts receivable from or payable to the key management personnel noted above. As of December 31, 2025, accounts payable and accrued liabilities included $593 due to key management personnel referred to above.
Related party arrangement
On October 21, 2024, the Company entered into an arrangement to share office space, equipment, personnel, consultants and various services with other companies related by virtue of certain directors and management in common. A management company equally owned by each company party to the arrangement pays for these shared expenses as agent for the Company and the other companies. These costs incurred by the management company as agent are allocated and funded by the shareholders of the management company based on time incurred and use of services and goods. The management company recovers its costs incurred in managing expenses and procuring goods and services on behalf of the Company without a markup. If the Company’s participation in the arrangement is terminated, the Company will be obligated to pay its share of the rent payments for the remaining term of the office space rental agreement. The Company’s obligation for future rental payments if the Company’s participation in the arrangement was terminated on June 30, 2026, was approximately $999 (December 31, 2025 – $529), determined based on the Company’s average share of rent paid in the immediately preceding 12 months.
The Company was charged for the following with respect to these arrangements in the three and six months ended June 30, 2026 and 2025:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 (Restated)1 | 2026 | 2025 (Restated)1 | |||||||||||||
| Salaries and benefits | $ | 504 | $ | 469 | $ | 1,857 | $ | 921 | ||||||||
| Office and other | 103 | 125 | 215 | 246 | ||||||||||||
| Filing and regulatory fees | – | – | 45 | – | ||||||||||||
| Marketing and travel | 6 | 4 | 11 | 8 | ||||||||||||
| $ | 613 | $ | 598 | $ | 2,128 | $ | 1,175 | |||||||||
| 1 | Restated for the change in presentation currency |
At June 30, 2026, amounts in accounts payable and accrued liabilities include $26 due to a related party (December 31, 2025 – included in receivables is an amount due from a related party of $20) with respect to this arrangement.
All related party balances are unsecured and are due within thirty days without interest.
Page 19
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
MATERIAL ACCOUNTING POLICIES AND ESTIMATES
In preparing the accompanying condensed consolidated interim financial statements in conformity with IFRS, management has made judgements, estimates and assumptions that affect the application of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ. All estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognized in the period in which the estimates are revised and in any future periods affected. Information about material judgements and estimates in applying accounting policies that have the most significant effect on amounts recognized in the condensed consolidated interim financial statements are the same as those described in the consolidated annual financial statements for the fifteen months ended December 31, 2025, except as described in Note 2 of the condensed consolidated interim financial statements for the three and six months ended June 30, 2026.
New accounting policies issued but not yet effective
Certain pronouncements have been issued by the IASB or International Financial Reporting Interpretations Committee that are not mandatory for the current period have not been early adopted. The Company has reviewed these pronouncements, and the amendments that are applicable to the Company are discussed below:
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 Presentation and Disclosure in Financial Statements, which will replace IAS 1, Presentation of Financial Statements aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new principles for aggregation of information. IFRS 18 is accompanied by limited amendments to the requirements in IAS 7 Statement of Cash Flows. IFRS 18 is effective from January 1, 2027. Companies are permitted to apply IFRS 18 before that date. The Company is currently assessing the impact of the new standard.
Accounting policies adopted during the current period
Effective January 1, 2026, the Company has applied the following new accounting standard which was issued by the IASB:
The amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures. The amendments include the clarification of the date of initial recognition or derecognition of financial liabilities, including financial liabilities that are settled in cash using an electronic payment system.
The adoption of this amended standard had no material impact on the Company’s condensed consolidated interim financial statements for the three and six months ended June 30, 2026 and 2025.
Change in presentation currency
On January 1, 2026, the Company elected to change its presentation currency from Canadian dollars to US dollars. The change in presentation currency is to better reflect the Company’s business activities and to improve comparability of the Company’s financial results with peer companies in the mining industry.
Page 20
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
The change in presentation currency has been made in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, and has been applied on a full retrospective basis.
For years prior to January 1, 2026, the statements of financial position for each year presented have been translated from Canadian dollars to US dollars at the rate of exchange prevailing at the respective financial position date with the exception of equity items which have been translated at accumulated historical rates.
The consolidated statements of net income (loss) and comprehensive income (loss) were translated at the average exchange rates for the reporting period, or at the exchange rate prevailing at the date of the transactions. Exchange differences arising on translation from Canadian dollar to the US dollar presentation currency have been recognized in other comprehensive income (loss) and accumulated as a separate component of equity. In addition to the comparative financial statements, the Company has presented a third statement of financial position as at October 1, 2024.
Equity has been restated using historical average exchange rates other than for significant transactions for which the actual historical rate was used with the difference being presented as an adjustment to the foreign currency exchange reserve.
The exchange rates used to reflect the change in presentation currency in the accompanying condensed consolidated interim financial statements were as follows:
| October 1, 2024, closing rate (C$/US$) | 1.3499 | |||
| December 31, 2025, closing rate (C$/US$) | 1.3706 | |||
| Average rate for the three months ended March 31, 2025 (C$/US$) | 1.4352 | |||
| Average rate for the three months ended June 30, 2025 (C$/US$) | 1.3841 |
The financial results disclosed in this MD&A from prior periods that have been affected as a result of the change in the accounting policy will be indicated as such with “Restated.”
FINANCIAL INSTRUMENT RISK EXPOSURE AND RISK MANAGEMENT
The Company’s financial instruments are exposed to certain financial risks, including credit risk, interest rate risk, liquidity risk and currency risk.
Credit risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s financial assets.
The Company is primarily exposed to credit risk on its cash and cash equivalents, receivables, reclamation deposits and tax receivable. Credit risk exposure is limited through maintaining its cash with high-credit quality financial institutions. The carrying value of these financial assets of $118,036 represents the maximum exposure to credit risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Company’s interest rate exposure mainly relates to interest earned on cash and term deposits. For the three and six months ended June 30, 2026, every 1% fluctuation in interest rates up or down would result in an increase or decrease of approximately $261 and $506 to the Company’s income, respectively (three and six months ended June 30, 2025 – $50 and $63, respectively).
Liquidity risk
Liquidity risk is the risk that the Company is unable to meet its financial obligations as they come due. The Company manages this risk by careful management of its working capital to ensure its expenditures will not exceed available resources.
Page 21
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Foreign currency risk
The Company is operating in Canada, Peru and Mexico and is exposed to currency risk on transactions and balances in currencies other than the functional currency, primarily with respect to Canadian dollars, Peruvian soles, Mexican pesos and US dollars. On June 30, 2026, the Company had not entered into any contracts to manage foreign exchange risk.
As at June 30, 2026, the Company was exposed to currency risk through the following assets and liabilities denominated in Canadian dollars, Peruvian soles, Mexican pesos and US dollars.
| Canadian dollars (000’s) | Peruvian soles (000’s) | Mexican pesos (000’s) | US dollars (000’s) | |||||||||||||
| Cash and cash equivalents | $ | 5,507 | $ | 517 | $ | 2,478 | $ | 25,299 | ||||||||
| Receivables and tax receivable | – | 2,482 | 270,985 | – | ||||||||||||
| Reclamation deposit | – | – | – | 45 | ||||||||||||
| Accounts payable and accrued liabilities and tax payable | (41 | ) | (5,226 | ) | (422,307 | ) | (1,244 | ) | ||||||||
| Lease liability | – | (401 | ) | – | – | |||||||||||
| Community projects obligation | – | (33,030 | ) | – | – | |||||||||||
| Reclamation provision | – | – | (298,629 | ) | – | |||||||||||
| $ | 5,466 | $ | (35,658 | ) | $ | (447,473 | ) | $ | 24,100 | |||||||
For the six months ended June 30, 2026, if the US dollar to Canadian dollar, Peruvian soles and Mexican pesos currency exchange rate changes by 10% with all other variables held constant, the impact on the Company’s net loss is $6,053 (six months ended June 30, 2025 – $126).
CAPITAL MANAGEMENT
The Company’s primary objective when managing capital is to ensure that it will be able to continue as a going concern and that it has the ability to satisfy its capital obligations and ongoing operational expenses, as well as having sufficient liquidity to fund suitable business opportunities as they arise.
The capital of the Company includes the components of equity attributable to shareholders of the Company, net of cash and cash equivalents. Capital is summarized in the following table:
| June 30, 2026 | December
31, 2025 (Restated)1 | |||||||
| Equity attributable to shareholders of the Company | $ | 402,708 | $ | 85,184 | ||||
| Less: Cash and cash equivalents | (99,304 | ) | (78,942 | ) | ||||
| $ | 303,404 | $ | 6,242 | |||||
| 1 | Restated for the change in presentation currency |
The Company manages its capital structure and makes adjustments to it as necessary in light of economic conditions. In order to maintain the capital structure, the Company may, from time to time, issue or buy back equity, or sell assets. The Company, upon approval from its Board of Directors, intends to balance its overall capital structure through a combination of equity financing and/or other forms of financing.
Page 22
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
The Company did not have any externally imposed restrictions as at June 30, 2026. To effectively manage its capital requirements, the Company has in place a planning and budgeting process to help determine the funds required to ensure the Company has appropriate liquidity to meet its business activities, including planned corporate expenditures, exploration expenses, as well as the development activities at the Mercedes Mine and for the Corani Project and the San Luis Project.
RISKS AND UNCERTAINTIES
The Company is exposed in varying degrees to a variety of financial instrument related risks as discussed in the Company’s 2025 annual MD&A dated March 30, 2026 which is available on SEDAR+ at www.sedarplus.ca.
Highlander’s business activities are subject to significant risks, including, but not limited to, those described in previous disclosure documents. Any of these risks could have a material adverse effect on Highlander, its business and prospects, and could cause actual events to differ materially from forward looking statements related to Highlander.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING
The Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) have designed or caused to be designed under their supervision the Company’s disclosure controls and procedures (“DC&P”) to provide reasonable assurance that material information regarding the Company is accumulated and communicated to the Company’s management, including its CEO and CFO, in a timely manner. In addition, the CEO and the CFO have designed or caused to be designed under their supervision internal control over financial reporting (“ICFR”) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements, as well as an evaluation on whether there were changes to its ICFR during most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s ICFR.
The control framework used to design the Company’s ICFR is based on the 2013 control framework developed by the Committee of Sponsoring Organizations of the Treadway Commission.
For the three months ended June 30, 2026, except for the limitation of scope as described below, the DC&P have been designed effectively to provide reasonable assurance that material information relating to the Company is made known to the CEO and the CFO, particularly during the period in which the relevant annual filings are prepared and the information required to be disclosed by the Company in its filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified. In addition, except for the limitation of scope as described below, the ICFR has also been designed effectively to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that its objectives are met. Due to inherent limitations in all such systems, no evaluations of controls can provide absolute assurance that all control issues, if any, within a company are detected on a timely basis. Accordingly, our DC&P and ICFR are effective in providing reasonable, not absolute, assurance that the objectives of our control systems have been met.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”) requires Canadian public companies to disclose any changes in ICFR during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, ICFR. No material changes were made to internal controls in the three months ended June 30, 2026.
Page 23
Highlander Silver Corp.
Management’s Discussion and Analysis
For the three and six months ended June 30, 2026 and 2025
(Expressed in thousands of US dollars, unless otherwise noted)
Limitation on scope of design
The Company completed the acquisition of Bear Creek during the six months ended June 30, 2026, on February 26, 2026. Financial information for this acquisition is included in this MD&A and in Note 4 of the Company’s condensed consolidated interim financial statements for the three and six months ended June 30, 2026. NI 52-109 permits a non-venture issuer to limit its DC&P or ICFR to exclude controls, policies and procedures of a business that the issuer acquired not more than 365 days before the end of the financial period to which its certification relates. Due to the complexity associated with assessing internal controls during integration efforts, the Company has excluded controls, policies and procedures of Bear Creek in its management report on DC&P and ICFR for the three months ended June 30, 2026.
The tables below set out summary financial information for Bear Creek that is included in the Company’s condensed consolidated interim financial statements for the six months ended June 30, 2026. Results of operations from Bear Creek have been consolidated with those of the Company from February 26, 2026.
| From February 26, 2026 to June 30, 2026 | ||||
| Revenue | $ | 56,227 | ||
| Net loss before income taxes | 15,159 | |||
| As at June 30, 2026 | ||||
| Total current assets | $ | 42,363 | ||
| Total non-current assets | 121,158 | |||
| Total current liabilities | 116,270 | |||
| Total non-current liabilities | 27,018 | |||
QUALIFIED PERSON
Except as otherwise disclosed, the scientific and technical information in this document related to San Luis is derived from the technical report titled “Technical Report for the San Luis Property” with an effective date of January 15, 2025, prepared by independent qualified person (“QP”), Martin Mount, MSc MCSM FGS CGeol FIMMM Ceng., who is a QP as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). Remaining scientific and technical information in this document related to San Luis was based upon the Company’s news releases dated July 29, 2025, September 16, 2025, October 6, 2025, and December 1, 2025, which disclosure was approved by Dr. Sergio Gelcich, a QP under NI 43 101 and Vice President, Exploration of the Company. Scientific and technical information in this document related to Corani and Mercedes was based upon the Company’s news release dated April 7, 2026, which disclosure was approved by Dr. Sergio Gelcich, a QP under NI 43 101 and Vice President, Exploration of the Company.
Page 24
Exhibit 99.3
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Daniel Earle, President and Chief Executive Officer of Highlander Silver Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Highlander Silver Corp. (the “issuer”) for the interim period ended June 30, 2026. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | ICFR – material weakness relating to design: N/A |
| 5.3 | Limitation on scope of design: The issuer has disclosed in its interim MD&A |
| (a) | the fact that the issuer’s other certifying officer(s) and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of |
| (i) | N/A |
| (ii) | N/A |
| (iii) | a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and |
| (b) | summary financial information about the business that the issuer acquired that has been consolidated in the issuer’s financial statements. |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2026 and ended on June 30, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: August 12, 2026
| /s/ Daniel Earle | |
| Daniel Earle | |
| President and Chief Executive Officer |
Exhibit 99.4
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Sunny Lowe, Chief Financial Officer of Highlander Silver Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Highlander Silver Corp. (the “issuer”) for the interim period ended June 30, 2026. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | ICFR – material weakness relating to design: N/A |
| 5.3 | Limitation on scope of design: The issuer has disclosed in its interim MD&A |
| (a) | the fact that the issuer’s other certifying officer(s) and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of |
| (i) | N/A |
| (ii) | N/A |
| (iii) | a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and |
| (b) | summary financial information about the business that the issuer acquired that has been consolidated in the issuer’s financial statements. |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2026 and ended on June 30, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: August 12, 2026
| /s/ Sunny Lowe | |
| Sunny Lowe | |
| Chief Financial Officer |