AYA — Q2 2026 Financial Report Analysis

Q2 2026: record tonnes at Zgounder, but a lower silver price cut profit from Q1's peak

Aya Gold & Silver, a Montreal-based miner whose only producing asset is the Zgounder silver mine in Morocco, reported second-quarter revenue of $96.8 million, up 151% from a year earlier, and net income of $35.0 million ($0.23 per diluted share), up from $8.6 million. Two things did the work: the average price Aya received per silver-equivalent ounce rose 90% to $64.22, and it sold 32% more ounces (1.51 million). The mine also processed a record 3,889 tonnes of ore a day, which pushed cash cost per ounce down. The year-on-year comparison flatters the trend, though: against the first quarter of 2026, revenue fell 17% and net income fell 28%, because the realized silver price dropped from $83.42 to $68.29 an ounce. All figures are in US dollars; Aya reports under IFRS and files its quarterly statements with the SEC on Form 6-K as a Canadian issuer.

At a glance

• $17.69 cash cost per silver ounce at Zgounder (17% lower than a year ago, and well below the ~$21.50 the company guided for 2026). Each ounce sold for $68.29, so the mine kept roughly $50 an ounce before depreciation, overhead and tax.
• $48.4 million of operating cash flow against $35.0 million of net income. Cash came in ahead of reported profit, and after $21.7 million of investment spending the quarter still generated about $26.7 million of free cash.
• 2.75 million ounces of Zgounder silver in the first half, 50% of the midpoint of the 5.2–5.8 million-ounce 2026 guidance. Production is on track; the part of the plan that still has to catch up is the pyrite side-operation at Boumadine.

Key metrics

"Silver-equivalent" (AgEq) converts the small amount of gold Aya now sells into silver ounces at the relative metal prices, so everything can be counted in one unit. Net income above is the total figure; $34.6 million of it belongs to Aya's shareholders, with the rest going to the 15% minority partner in Boumadine.

What drove the quarter

Zgounder ran faster and cheaper. The mill processed 353,888 tonnes of ore (3,889 tonnes a day, up 29% on a year ago and 7% on Q1) at a 141 g/t silver grade, and recovered 91.2% of the silver in it, up from 86.5%. Silver output reached 1.49 million ounces, up 43% year on year and 18% on Q1, which management attributes to "continued operational improvements and a rebound from the seasonally lower first quarter". Mining hit a record 4,880 tonnes a day, more than the mill can take, so the ore stockpile grew to 373,884 tonnes.

Costs fell while volumes rose. Total production cost at Zgounder was $19.7 million versus $22.5 million a year ago, even though tonnage processed rose 29%, so cost per tonne processed dropped from $82.41 to $55.61. The MD&A gives two specific reasons: the open pit's strip ratio (tonnes of waste rock moved per tonne of ore) fell from 14 to 10 because the crew was building the second phase of the tailings dam rather than stripping waste, and underground development was "significantly lower than originally planned". Both cut cost this quarter, but both are partly deferrals rather than permanent efficiencies (see below).

Cash cost, and why there is no AISC here. The cost figure Aya reports is cash cost per ounce sold: what it spends in cash to mine, process and refine an ounce, excluding depreciation and stock-based pay. Many miners also report all-in sustaining cost (AISC), which adds corporate overhead and the capital spending needed just to keep the mine running, and is a better guide to how much an ounce really costs. Aya's Q2 filing does not report an AISC figure, so readers should treat the $16.82 consolidated cash cost as a floor, not the full cost. For a sense of what sits on top: in the quarter Aya spent $11 million on capital projects at Zgounder (tailings dam, underground decline, ventilation) and $7.9 million on cash general and administrative costs, against about 1.5 million ounces sold.

The pyrite side-business is small but cheap. Since Q4 2025 Aya has been reclaiming and selling an old stockpile of gold- and silver-bearing pyrite at its Boumadine project, a temporary operation expected to last 20–24 months from November 2025. It produced 187,784 AgEq ounces at a $10.58 cash cost and brought in $6.5 million of revenue. Its realized price per AgEq ounce ($35.08) is much lower than Zgounder's; the filing does not break this down, but concentrate buyers typically pay for only part of the contained metal and deduct processing charges, unlike Zgounder's refined silver doré.

Tax took a much bigger bite. Income tax rose to $21.5 million from $1.8 million, an effective rate of 38.0% versus 17.3%. Higher taxable profit at Zgounder explains most of it, but so does a rule change: Moroccan companies earning more than MAD 100 million a year now pay 35% corporate tax, versus the 31.25% Zgounder paid a year earlier. That is a permanent change, not a one-off.

What the headline numbers hide

• The +151% revenue headline is mostly the silver price. Ounces sold rose 32%; the realized price rose 90%. And quarter on quarter the price fell 18% at Zgounder, which is why Q2 revenue ($96.8M) and net income ($35.0M) were below Q1's $117.3M and $48.5M even though Q2 was the better operating quarter. Aya's profit now moves roughly in line with silver: with about $17 of cash cost per ounce, a $10 move in the silver price changes the roughly $47 cash margin per ounce by about a fifth.
• The year-ago base contains a one-off. Q2 2025 operating income of $7.7 million included $5.8 million of "other operating income" (a $4.0 million impairment reversal and a $1.8 million gain on selling the Amizmiz property). Stripping that out, last year's operating margin was about 4.8%, not 19.9%, so the real improvement is even larger than the table shows.
• About $5 million of this quarter's costs are unusual. Cash general and administrative expense jumped to $7.9 million from $2.9 million. The company says roughly $5 million of Q2 costs were professional fees for its legal fight with Duro Felguera (the Spanish contractor that built the Zgounder plant; Aya collected $7.2 million of performance-bond money from it in 2025, and both sides now have arbitration claims of about $13 million) and costs of the May 2026 Nasdaq listing. Aya has booked no provision for repaying the bond money, saying repayment is not probable; an adverse ruling would be a future hit.
• Cash conversion was strong and clean. Operating cash flow of $48.4 million was 1.4 times net income; before working-capital changes it was $44.9 million, so the beat was not driven by stretching payables. Year to date, operating cash flow is $118.6 million on $83.6 million of net income.
• Some output went into inventory, not sales. Zgounder produced 1.49 million ounces but sold 1.32 million, so about 167,000 ounces (roughly $11 million at Q2's realized price) sat in silver-bar inventory at quarter-end. At Boumadine, another 298,977 AgEq ounces of crushed pyrite were waiting at ports for shipment. Both should turn into revenue in coming quarters, provided prices hold.
• Per-share growth trailed profit growth because of more shares, not fewer. Diluted shares rose 7.6% to 148.4 million after the June 2025 share sale that raised $105 million. EPS growth came entirely from operations; there were no buybacks.
• Low strip ratio and low underground development flatter costs. Management says unit costs "benefited from a strip ratio of 10, reflecting continued mining of ore-rich zones", and underground development ran below plan. When waste stripping and development catch up, cost per ounce should drift back toward the ~$21.50 guidance.

Takeaway: Zgounder is now operating well above its design rate at a cash cost about $4 below guidance, so Aya's earnings depend mainly on the silver price rather than on whether the mine works. The quarter's profit dip versus Q1 came from silver falling 18%, not from operations, and a permanent rise in Moroccan tax to 35% means less of each extra dollar of silver price now reaches shareholders.

Balance sheet and spending

Cash rose to $182.8 million (plus $16.3 million restricted in a debt-service account required by EBRD, the European Bank for Reconstruction and Development) from $136.3 million at the end of 2025, even after Aya repaid $29.3 million of EBRD debt in the first half: the first $14.3 million scheduled repayment on the Zgounder expansion loan in January and a $15 million early repayment of the Boumadine loan in Q2, which is now fully paid off. Non-current financial liabilities fell 32% year on year to $57.1 million.

The growth spending is at Boumadine: $10.6 million of exploration in Q2 ($24.6 million in the first half) on a 200,000-metre 2026 drilling program, 47% done by June.

Outlook

Management kept its 2026 guidance unchanged:

Zgounder is on pace for the middle of its range at a lower cost than guided. Boumadine is behind: 0.42 million ounces in the first half against ~1.0 million for the year. Part of that is a measurement effect (guidance converts gold to silver at 80:1; the actual ratio was about 59:1 year to date, which the company says cost 66,229 reported ounces), and the rest depends on the bulk pyrite shipments management says will start in H2 2026. The Q3 results will show whether those shipments happened.

After the quarter, on September 9, Aya published an updated preliminary economic assessment for Boumadine: an after-tax net present value of $3.5 billion at a 5% discount rate, a 93% internal rate of return and $463 million of initial capital, assuming $3,500 gold and $50 silver. A PEA is an early-stage study that includes inferred resources, so those figures are less firm than a feasibility study. The practical point for now: the $463 million build cost is about 2.5 times Aya's current cash, so building Boumadine will likely need new debt or equity on top of Zgounder's cash flow. Aya itself says it "continues to assess financing alternatives, including equity or debt".

Our read: at current silver prices Zgounder should keep producing $40–50 million of operating cash a quarter, enough to fund the $60 million exploration budget and keep cash building. The things to watch in Q3 are whether cash cost stays below $20 as stripping resumes, whether the Boumadine pyrite shipments arrive, and how the company plans to pay for Boumadine.