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The Silver Price Was Not The Problem | Quanajuato Silver Q2 Earnings 2026

The Deep Dive Sep 1, 2026 13:42

Summary

Guanajuato Silver's Q2 was nominally profitable, but AISC (All-In Sustaining Cost, the full cost to produce an ounce) at $71.66 topped per-equivalent-ounce revenue of $70.62.

Operating five Mexican mines, the company retired most of its Ocean Partners gold debt using $9.2M of cash this quarter.

Bolañitos, the mine acquired in January, is the most expensive ounce in the portfolio at $90.11 AISC, while contract-mined Topia is cheapest at $45.19.

At a 24% EBITDA margin (peer median 47%), the stock looks cheap on assets but expensive on earnings at 25x P/E versus 14x.

Management expects costs to fall once Bolañitos integrates; the Q3 scorecard hinges on higher tons, AISC starting with a 5, and working capital direction.

Key points on Avino Silver & Gold Mines Ltd

  • Realized $68.90/oz silver in Q2, between AYA's $68.29 and Endeavour's $70.16 in the host's peer price ranking.
  • Per the host's methodology note, Avino's $38.75 AISC spreads costs over equivalent ounces priced at a budget silver price of $45.30, a different denominator than Guanajuato uses.

Key points on Endeavour Silver Corp

  • Realized $70.16/oz silver in Q2, third-highest among the Mexican silver peers cited.
  • Per the host, Endeavour's $36.89 AISC is net of gold and base metal credits, so the headline gap to Guanajuato's cost is narrower than it first appears.

Key points on Guanajuato Silver

  • True margin was negative in Q2 2026 once denominators are matched: $70.62 of revenue per silver equivalent ounce against $71.66 in all-in sustaining costs, rather than the 'give-or-take $2' figure in the release.
  • Even in what the host calls the best silver market in living memory, with silver realized at $73.68/oz, AISC of $43.1M ran above $42.5M of revenue; EBITDA fell 61% QoQ to $5.8M and net income dropped 90% to $555K from $5.7M in Q1.
  • Opportunistic hedging captured roughly a third of silver and a quarter of gold production above market — 20,000 oz/mo at $84.50, plus a 20,000 oz collar at $80-$93, and 300 oz gold/mo at $52.20 — but only through December 2026.
  • Retired most of the Ocean Partners gold loan at a discount (costing $9.2M of cash plus 737 oz of gold), leaving only a 2,400 oz bullet payment not due until 2028.
  • Screens cheap on enterprise value per ounce ($124 vs a $524 pure median, a 76% discount) but expensive on earnings (25x vs a 14x pure median); EBITDA margin of 24% trails the pure median of 47% and FCF yield is -0.3% vs +2.4%.

Key points on Santacruz Silver Mining Ltd

  • Realized $72.17/oz silver in Q2, second only to Guanajuato among the peer set.
  • Per the host, Santa Cruz strips out zinc and lead entirely from its cost metrics, which makes its headline AISC look lower than Guanajuato's.

James Anderson's takeaways

  • Top takeaway Anderson argues that once Bolognese is fully integrated and 'really well functioning' in the mix, Q3 and Q4 2026 will be 'very powerful' and 'people will be shocked' by how much money the company can make.
  • Anderson acknowledges Balenitos is 'not quite operating on all eight cylinders' due to an inherited lack of development, with the Q2 press release flagging elevated operating costs there.
  • Anderson frames the gold-loan retirement as opportunistic ('We've taken advantage of those lower prices with an early payment discount'), saying the company now has no payment to make until 2028.
  • Anderson defends the hedging program as taking advantage of swings to sell forward silver and gold at 'considerably higher than what you see on the screen right now', running through December 2026.
  • Two months before Q2 printed, Anderson told the channel costs would only come down incrementally, not dramatically in Q2 or Q3 — a stance the Q2 results now confirm.

Steve Hyland's takeaways

  • Top takeaway Hyland delivers a clear negative verdict on the quarter: 'Was it a good quarter? No' — noting revenue went sideways, EBITDA fell 61%, AISC consumed more than revenue, and working capital went the wrong way.
  • Hyland restates the margin math: the 'give-or-take $2' margin in the release compares different denominators, and once revenue is divided by equivalent ounces produced ($70.62), the real margin versus $71.66 AISC is negative.
  • Hyland frames the central valuation tension: Guanajuato screens cheap on enterprise value per ounce ($124 vs a $524 pure median, a 76% discount) but trades at 25x earnings vs the pure median of 14x, with the gap explained by a 24% EBITDA margin versus 47% for the pure median.
  • Hyland sets a Q3 scorecard: Bolognese tons must rise (2,500m of development was supposed to buy mining phases), AISC must start with a 5, and working capital must stop going the wrong way.
  • Hyland flags that Guanajuato's AISC is the most conservative on the board because it takes no by-product credits and uses actual quarter prices, so the cost gap to peers is smaller than it first looks.