464,000oz AuEq Indicated at Copalquin as Mithril reports A$5.268m loss

Target 1 resource reaches 464,000 ounces AuEq

The most important number in Mithril Silver and Gold Limited’s (ASX:MTH) annual report is not its loss. It is the 464,000 ounces of gold equivalent now classified as Indicated at the Copalquin Target 1 project in Durango, Mexico. That is up from 157,000 ounces in the previous estimate, with Indicated material now making up about 75% of the reported AuEq inventory.

The upgraded estimate covers the El Refugio and La Soledad areas and totals 3.391 million tonnes at 3.15 grams per tonne gold and 77.8 grams per tonne silver. It also includes 151,000 ounces of Inferred AuEq resources. The increase reflects infill drilling and improved geological confidence, but also revised geological domains, a different reporting basis and the inclusion of internal dilution. It is therefore not simply a measure of newly discovered metal.

Mining assumptions still need to be tested

Mithril has constrained the resource within preliminary underground mining shapes and modelled long-hole open stoping with an average mining width of about four metres. That approach produces a diluted Indicated grade of 4.26 g/t AuEq, compared with 6.85 g/t AuEq in the undiluted base case. More selective cut-and-fill mining could reduce dilution in some areas, although the company says that method would carry higher costs.

The distinction matters because the estimate is a Mineral Resource, not a Mineral Reserve, and has no demonstrated economic viability. Detailed mine planning is expected to feed into a future scoping study or preliminary economic assessment. No production target, project valuation or forecast financial outcome was reported.

Exploration expands beyond the core resource

The year’s work was not confined to Target 1. Mithril completed 3,039 metres of drilling at Target 3, reported high-grade results from Apomal and La Maquina at Target 5, and continued mapping, channel sampling and geophysical work across the district. Geological mapping now covers about 25 square kilometres of the southern Copalquin concessions, with mineralised occurrences identified across a nine-kilometre trend.

At Target 5, selected results included 2.75 metres at 2.28 g/t gold and 500 g/t silver at Apomal, while channel samples returned individual high-grade results at Tasolera and Candelaria. These are exploration intersections and channel samples rather than a resource estimate. Target 3 also produced narrow, high-grade intersections, but the company said further drilling is required to establish continuity and scale. A Mineral Resource had not been reported for either target by year-end.

Cash position brings the funding issue into focus

Mithril spent A$15.294 million on exploration during the year and used A$1.875 million in operating activities. It ended 30 June with A$7.256 million in cash, compared with A$11.056 million a year earlier, and reported no debt. A C$11.5 million placement completed in July 2025 helped fund the expanded programme, while total shares on issue rose to 187.5 million from 145.9 million.

The financial statements recorded a loss of A$5.268 million, more than double the A$2.122 million loss in the prior year. Share-based payments accounted for A$2.982 million of the expense, while exploration and evaluation assets rose to A$55.025 million. BDO gave an unmodified audit opinion but separately highlighted a material uncertainty related to going concern: the company remains dependent on additional capital raisings and controlling expenditure within available cash reserves.

La Dura adds a second option-funded workstream

Mithril also holds a four-year option to acquire 100% of the nearby La Dura gold-silver property, covering five concessions and 20.5 square kilometres. LiDAR identified 18 shafts, 44 adits and 134 historic mining or prospecting pits, with first drilling scheduled for early 2027. The option carries a US$4 million acquisition price during the option term, alongside interim payments and exploration commitments.

The next phase therefore has two competing demands: convert the improved Target 1 geological model into a credible economic study, while continuing to test the wider district and meet the obligations attached to La Dura and the option to acquire Copalquin’s remaining 50% by 7 August 2028. How much exploration the balance sheet can support before another financing becomes necessary is now as important as the next drill result.