🧾 What This Document Is

This is Management's Discussion and Analysis (MD&A) from Highlander Silver Corp.’s annual report (Form 40-F). It explains the company’s performance, strategy, and risks for the 15 months ended December 31, 2025 (due to a fiscal year-end change). Expect a deep dive into finances, projects, and future plans.

🏢 What The Company Does

👉 In simple terms: Highlander Silver is a silver-focused mineral explorer developing projects in Peru. Their main asset is the San Luis Project (acquired May 2024), where they’re actively drilling high-grade gold-silver veins. They recently acquired Bear Creek Mining (Feb 2026), adding producing mines in Mexico and Peru.

💰 Financial Highlights

Losses grew significantly as exploration scaled up:

• Net Loss: $16.97M (15 months) vs. $3.09M (prior year)
• Exploration Expenses: $9.07M (15 months) vs. $1.43M (prior year)
• Cash Position: $108.2M (Dec 2025) vs. $2.5M (Sep 2024)

Why it matters: Losses ballooned due to aggressive spending at San Luis, but massive cash reserves ($108M) fund operations.

🚀 Key Moves

1. San Luis Focus: Sold/dropped weaker projects (Alta Victoria, Politunche) to concentrate resources on San Luis.
2. Bear Creek Acquisition: Completed in Feb 2026 (post-year-end), adding the Mercedes Mine (Mexico) and Corani Project (Peru).
3. Equity Financings: Raised $119.86M (net) from share sales in 2025.

Why it matters: Highlander transformed from a pure explorer to a developer with near-term production potential.

📦 Financial Position

• Assets: $121.59M (Dec 2025) vs. $13.82M (prior year) — driven by cash influx.
• Liabilities: $4.84M (minimal debt).
• Working Capital: $104.52M — ample runway for development.

👉 Big shift: The Bear Creek deal (completed after year-end) will significantly change these figures in 2026.

💸 Cash Flow Story

• Operating Cash Burn: $14.29M (15 months) — funding exploration.
• Financing Inflow: $120.59M — from share issuances.
• Interest Income: $1.23M — earned on cash holdings.

Why it matters: Cash burn is high, but financings fully covered it and left a large cushion.

🔮 What's Next

1. Advance San Luis: Use $89.78M from 2025 financings for drilling, permitting, and infrastructure.
2. Integrate Bear Creek: Merge operations, optimize Mercedes Mine (producing), and advance Corani.
3. Permitting: Secure approvals for San Luis development.

Risk: Delays in permits or integration could strain cash and timelines.

⚖️ Strengths & Risks

👍 Strengths:

• Strong cash position ($108M)
• High-grade San Luis project
• Bear Creek acquisition adds production assets

⚠️ Risks:

• Exploration Failure: No guarantee San Luis becomes a mine.
• Integration Risk: Merging Bear Creek’s operations is complex.
• Political/Community Issues: Projects in Peru/Mexico face regulatory, social, and security challenges.
• Commodity Prices: Silver/gold price swings impact viability.

🧠 The Analogy

Like a startup scaling rapidly: Highlander raised venture capital ($120M) to fund its "R&D" (exploration at San Luis), then acquired an "established business" (Bear Creek) to accelerate growth. Success hinges on executing both projects without burning cash too fast.

📇 Key Contacts & People

The filing doesn’t list direct contacts. Key management personnel referenced include:

• President & CEO
• Chief Financial Officer
• President Peru
• Senior VP Corporate Affairs & Corporate Secretary
• Directors
  (Full names/contacts are likely in the annual report’s proxy statement or corporate directory.)

🧩 Final Takeaway

Highlander is betting big on San Luis while adding production through Bear Creek. Its huge cash pile funds this transformation, but execution risks—from exploration to integration—are high. Investors should watch permitting progress and 2026 financials post-acquisition.