Executive Summary / Key Takeaways

• Americas Gold and Silver has completed a transformational consolidation of its Galena Complex and is ramping the high-grade EC120 project, positioning the company for a step-change in silver production and cash flow generation by 2026.
• Q3 2025 results provide early evidence of this inflection: silver production surged 98% year-over-year, revenue grew 37%, and the company posted positive adjusted EBITDA of $1.9 million versus a $1.3 million loss in the prior year.
• With approximately 80% of revenue expected from silver by year-end 2025, no hedging, and significant operational leverage, USAS offers pure exposure to a structural silver deficit market driven by industrial demand.
• However, the company remains high-risk: negative operating cash flow of $10.7 million in Q3, a debt-to-equity ratio of 1.25, and execution challenges at both operations create potential for equity dilution or financial stress if ramp-ups falter.
• The investment case hinges on flawless execution of EC120 commercial production by end-2025 and successful ramp-up at Galena to 1,200 tonnes per day—both of which must occur while managing debt service and cost inflation in a capital-intensive industry.

Setting the Scene: A Junior Silver Producer at the Tipping Point

Americas Gold and Silver Corporation, incorporated in 1998, has spent much of its history as a marginal player in the precious metals space, defined by undercapitalized assets and inconsistent production. The company's early acquisition of the Galena Complex in 2011 occurred just as silver entered a prolonged bear market, leading to years of deferred development and missed potential. This history explains why a mine that produced 5.3 million ounces of silver annually at 600 tonnes per day in 2002 was operating at just 300 tonnes per day in 2024, capturing only a fraction of its potential cash flow.

Today, the company operates through two distinct complexes: the Galena Complex in Idaho's Silver Valley and the Cosalá Operations in Mexico. The business model is straightforward—mine high-grade silver ore, process it through owned mills, and sell concentrates to smelters—yet the execution complexity is immense. Galena represents a brownfield redevelopment story, requiring capital to rebuild infrastructure and access deeper, higher-grade veins. Cosalá, anchored by the San Rafael mine and the emerging EC120 project, represents a transition story, shifting from lower-grade, base-metal-rich ore to high-grade silver-copper zones that can fundamentally alter unit economics.

The industry structure could not be more favorable for a company positioned as USAS is. The silver market faces a persistent structural deficit that reached 184 million ounces in 2023, with industrial demand from photovoltaics quadrupling since 2015 to 232 million ounces while mine production stagnates at 835 million ounces in 2025—down 7% from 2016 levels. This supply-demand imbalance creates pricing power for producers, but only for those that can reliably deliver ounces to market. Against this backdrop, USAS's strategy of maximizing production from existing assets while maintaining no silver hedges creates maximum leverage to what management describes as a "very strong bull market for silver."

Technology and Operational Differentiation: The Path to Lower Costs

While USAS lacks the technological moats of a software company, its operational differentiation lies in polymetallic processing capabilities and brownfield redevelopment expertise. The Galena Complex isn't just a silver mine—it's the nation's leading active antimony producer, a critical mineral for defense applications where China controls 98% of global supply. In September 2025, the company achieved over 99% antimony extraction from copper concentrate, a breakthrough that could transform a byproduct into a primary revenue stream and position USAS as a strategic domestic supplier. This breakthrough diversifies revenue beyond silver prices and opens potential government support channels, reducing the company's cost of capital over time.

At Cosalá, the EC120 project represents a technical de-risking story. The pre-feasibility study projected 2.5 million ounces of annual silver production from high-grade zones, with grades "four or five times" the 50-55 grams per tonne currently mined at San Rafael. The mill's nameplate capacity of 1,600 tonnes per day, already being pushed beyond 1,700 tonnes, provides headroom for this ramp without major capital outlay. This operational leverage is critical for a company with limited financial flexibility, as it means incremental production flows directly to cash flow at minimal marginal cost.

The company's R&D is minimal compared to tech sectors, but operational improvements are evident. The Galena No. 3 Shaft upgrade completed four days ahead of schedule in September 2025, delivering 100% productivity improvement. Long-haul mining methods and five new equipment purchases are modernizing a mine that suffered a 27-day shutdown in Q2 2018 due to hoist failure, which cost 90,000 ounces of production and $1 million in maintenance. These improvements directly address the operational inconsistency that has plagued USAS and kept its costs elevated versus peers.

Financial Performance: Evidence of Inflection in Q3 2025

The Q3 2025 results represent the first tangible evidence that USAS's transformation is gaining traction. Revenue increased 37% year-over-year to $30.6 million, driven by a 98% surge in consolidated silver production to 446,000 ounces and improved realized silver prices. Critically, adjusted EBITDA turned positive at $1.9 million, a $3.2 million swing from the $1.3 million loss in Q3 2024. This demonstrates operational leverage—fixed costs are being absorbed by higher volumes, validating the company's strategy of maximizing existing assets rather than building new mines.

However, the financial picture remains fragile. The company posted a net loss of $15.7 million in Q3, only modestly improved from $16.1 million a year prior, as higher metal prices increased metals-based liabilities and corporate G&A expenses weighed on results. Operating cash flow was negative $10.7 million, and free cash flow was negative $21.7 million, reflecting the heavy capital investment required for the ramp-up. This creates a timing mismatch: the company must invest heavily today to capture future cash flows, but its balance sheet provides limited cushion for execution missteps.

Segment dynamics reveal the strategic shift in real-time. At Galena, Q1 2025 production of 314,000 ounces was "in line with expectations" as development focused on accessing the high-grade 034 vein, which returned intercepts of 983 grams per tonne silver over 3.44 meters. The mine is targeting a ramp to 1,200 tonnes per day, quadruple the 2024 rate of 300 tonnes, which would unlock the 54 million ounces of known resources. At Cosalá, the transition is more advanced: Q1 2025 EC120 pre-production contributed $2.3 million in revenue and 59,000 ounces of silver, with full production targeted for mid-2025 and commercial production by year-end. This timing is critical, as Q1 2025 silver production from Cosalá's main zone fell to 132,000 ounces due to lower grades, demonstrating the urgency of the EC120 ramp.

Cost trends show both progress and persistent challenges. Consolidated cash costs per silver ounce were $23.87 in Q3 2025, up from $7.12 in Q3 2024, primarily due to decreased zinc and lead production reducing byproduct credits. All-in sustaining costs (AISC) remain elevated, though the company doesn't report consolidated AISC in Q3. For context, full-year 2024 AISC was $28.13 per ounce, well above the $15-20 per ounce range of larger peers like Hecla (HL) and Pan American Silver (PAAS). This cost disadvantage reflects USAS's small scale—producing 1.7 million silver ounces in 2024 versus Hecla's 15-20 million and Pan American's 20-25 million—which prevents the company from spreading fixed costs across a large production base.

Competitive Context: Small Scale in a Big Player's Market

USAS's competitive positioning reveals both opportunities and vulnerabilities. The company holds less than 0.5% of global silver production, making it a junior producer in a market dominated by mid-tier and large-cap players. Hecla Mining, the largest U.S. primary silver producer, generates 15-20 million ounces annually with revenue of $410 million in Q3 2025 alone—13 times USAS's quarterly revenue. Pan American Silver produces 20-25 million ounces annually with $855 million in Q3 revenue and $252 million in free cash flow, demonstrating the scale advantages that translate directly to lower costs and financial flexibility.

This scale differential explains USAS's cost disadvantage. Hecla's AISC averages $15-20 per ounce, materially lower than USAS's $28+ levels, because fixed costs like mill overhead and corporate G&A are amortized across 6-10 times more production. Similarly, Pan American's gross margins of 47% and operating margins of 29% reflect operational leverage that USAS, with its negative 6.5% operating margin, has yet to achieve. The "so what" for investors is clear: USAS must execute its ramp-up flawlessly to reach cost competitiveness, as any production shortfall will disproportionately impact unit costs and cash flow.

However, USAS's polymetallic focus creates a partial offset. While pure-play silver producers like Endeavour Silver (EXK) face full exposure to silver price volatility, USAS's lead and zinc byproducts provided 20-30% of revenue in prior years, offering natural hedging. The challenge in 2025 is that the transition to high-grade silver-copper ore at EC120 temporarily reduces these byproduct credits, elevating cash costs precisely when the company needs to demonstrate cost control. This creates a timing risk: if silver prices falter before EC120 reaches full production, USAS lacks the base metal cushion that larger diversified peers maintain.

Strategically, USAS's U.S. exposure via Galena provides a unique moat as the nation's only antimony producer, a critical mineral where China controls 98% of supply. Hecla and Coeur Mining (CDE) have U.S. operations but lack this critical minerals angle, potentially limiting their access to government incentives. Conversely, USAS's 100% Mexican exposure at Cosalá creates geopolitical risk that U.S.-focused Hecla avoids, particularly as Mexico's mining policies evolve. This jurisdictional split is both a strength and vulnerability—diversifying political risk but exposing the company to potential disruptions in its largest growth project.

Outlook and Execution Risk: The 2025 Catalyst Year

Management's guidance frames 2025 as a pivotal year where investments translate to production and cash flow. The EC120 project is expected to reach commercial production by year-end 2025, "significantly boost our silver output and our free cash flow," according to CEO Paul Andre Huet. At Galena, the company is "working towards an optimal path to ramp up mining to approximately 1,200 tonnes per day," targeting the historical peak of 5.3 million ounces achieved in 2002. These aren't incremental improvements—they represent a potential tripling of silver production from 2024 levels of 1.7 million ounces.

The feasibility of this ramp depends on three critical factors. First, the EC120 development must stay on schedule, with full production rates expected by mid-2025. Any geological surprises or development delays would push cash flow generation into 2026, extending the period of negative free cash flow and increasing reliance on external financing. Second, Galena's infrastructure upgrades must deliver productivity gains as promised. The $50 million financing in December 2024 funded five new equipment purchases and shaft upgrades, but underground mining remains inherently risky, as the 2018 hoist failure demonstrated. Third, the company must manage its debt service while burning cash. The $100 million senior secured debt facility with SAF Group provides liquidity, but at a cost—debt-to-equity of 1.25 is manageable for a profitable miner but creates pressure for a company with negative operating cash flow.

Management's long-term outlook anticipates $343 million in revenue and $98.5 million in earnings by 2028, implying 52.6% annual revenue growth and a dramatic swing from the current $59.6 million net loss level. This forecast relies on silver production reaching multi-million ounce levels and AISC falling below $20 per ounce through operational leverage. While achievable if both ramps execute perfectly, it leaves no margin for error. A 10% production shortfall or $2 per ounce cost overrun would delay profitability by years, forcing additional equity dilution.

Risks and Asymmetries: What Can Go Wrong—and Right

The primary risk is concentrated operational execution. If EC120's ramp encounters geological issues or Galena's development faces equipment failures, production growth could stall, leaving the company with high fixed costs and minimal revenue growth. This would trap USAS in a negative cash flow cycle, requiring either asset sales or dilutive equity raises despite the recent $132.25 million financing. The company's small scale amplifies this risk—a single quarter of downtime at Galena cost 90,000 ounces in 2018, representing 5% of annual production. For Hecla or Pan American, such an event is an annoyance; for USAS, it's a material financial setback.

Debt service creates a second-order risk. The $100 million SAF facility and $132.25 million bought deal financing strengthened the balance sheet, but quarterly operating cash burn of $10-20 million means liquidity can evaporate quickly if operations disappoint. As of September 30, 2025, cash stood at $39.1 million—sufficient for two quarters at current burn rates. While the Crescent Mine acquisition could provide processing synergies with Galena, it also consumes capital and management attention at a critical juncture.

Geopolitical risk in Mexico represents a wildcard. The Cosalá Operations generate the majority of near-term growth, yet operate in a jurisdiction where regulatory changes and community relations can halt production. USAS's 100% exposure here contrasts sharply with Hecla's predominantly U.S. footprint, creating vulnerability that larger peers diversify away. A permitting delay or blockade could push EC120's commercial production into 2026, derailing the entire investment thesis.

The asymmetry lies in silver price leverage. With no hedging and 125 million ounces in reserves and resources, USAS offers pure exposure to a market facing 200+ million ounce annual deficits. If silver prices sustain above $30 per ounce—driven by solar demand acceleration or China's November 2025 export controls—USAS's operational leverage could generate cash flows that dwarf current market capitalization. The company trades at 11.48 times sales, a premium to peers, but this multiple compresses dramatically if production hits 5+ million ounces and AISC falls to peer levels. In a bull scenario, USAS could generate $100+ million in EBITDA by 2026, making the current $1.25 billion market cap appear conservative.

Valuation Context: Premium Pricing for Execution Risk

At $4.58 per share, Americas Gold and Silver trades at an enterprise value of $1.28 billion, or 11.70 times trailing revenue. This represents a significant premium to larger, profitable peers: Hecla trades at 9.41x EV/Revenue, Coeur at 6.05x, Endeavour at 7.87x, and Pan American at 5.75x. The premium valuation reflects the market's expectation of transformational growth, but it also leaves no room for execution missteps.

Profitability metrics highlight the gap between promise and reality. USAS's gross margin of 16.9% lags Hecla's 49.5% and Pan American's 47.4% by more than 30 percentage points, reflecting higher unit costs and lower byproduct credits during the transition period. Operating margin of -6.5% contrasts with Hecla's 37.6% and Pan American's 29.2%, demonstrating the lack of operational leverage at current production levels. Return on assets of -10.1% and return on equity of -120.6% indicate capital inefficiency that must be reversed through production growth.

For a pre-cash flow company, traditional earnings multiples are meaningless. What matters is the path to profitability and the margin of safety. USAS's $39.1 million cash position provides limited runway, but the $100 million undrawn debt facility offers flexibility. The key valuation metric to watch is enterprise value per ounce of production capacity. If USAS can reach 5 million ounces of annual production, the current EV implies $256 per ounce of capacity—reasonable in a $30+ per ounce silver market but expensive if production stalls at 2 million ounces. Peers trade at $150-200 per ounce of capacity, reflecting their lower risk profiles.

The recent $132.25 million financing, upsized from $115 million and supported by Eric Sprott's increased stake, signals institutional confidence but also dilutes existing shareholders. The company now has the capital to execute its 2025 plan, but the market has priced in near-perfect execution. Any deviation from the production ramp timeline or cost guidance will likely result in multiple compression back to peer levels, implying 30-40% downside to the stock price.

Conclusion: A High-Reward Story with High Execution Hurdles

Americas Gold and Silver has methodically assembled the pieces for a transformational 2025: consolidated ownership of Galena, financing to fund development, a high-grade project in EC120 ready to ramp, and exposure to a silver market in structural deficit. The Q3 2025 results provide the first tangible evidence that this strategy is working, with 98% production growth and positive adjusted EBITDA demonstrating operational leverage. For investors seeking pure exposure to silver prices without hedging, USAS offers a compelling, if risky, vehicle.

The investment case, however, remains fragile. The company must execute two complex ramp-ups simultaneously while managing debt service and cost inflation, all at a scale that provides minimal margin for error. Unlike larger peers Hecla or Pan American, which can absorb operational setbacks across diversified asset bases, USAS's fortunes are concentrated in two mines that must perform flawlessly. The premium valuation reflects market optimism, but it also magnifies downside risk if execution falters.

The next 12 months will define the company's trajectory. Successful commercial production at EC120 and measurable progress at Galena's 1,200 tonne per day target would validate management's $343 million revenue forecast and likely drive substantial stock appreciation. Failure on either front would trap the company in a negative cash flow cycle, forcing dilutive financings that erode shareholder value. For risk-tolerant investors, the asymmetry is attractive; for those seeking stable cash-generating miners, the execution risk remains too high. The story is no longer about potential—it's about delivery.