Aya Gold & Silver (AYA) Q2 2026 earnings review
Operations Roar, But Silver Prices Dictate the Bottom Line
Aya Gold & Silver is proving that the Zgounder mine expansion was a resounding success. The plant is processing 3,889 tonnes per day—massively outperforming its 2,700 tpd nameplate capacity. Year-over-year, the results are explosive: Revenue is up 151% and Net Income is up 305%. However, earnings decelerated sequentially from Q1's record highs. Why? The realized silver price cooled from $82/oz to $64/oz. While the operational engine is running perfectly, the bottom line faces two structural ceilings: total reliance on the volatile silver macro environment, and a punishing 38% effective Moroccan tax rate.
🐂 Bull Case
Zgounder processed 3,889 tpd in Q2, with mining rates hitting a record 4,880 tpd. The company has essentially unlocked 40%+ more capacity out of the plant than it was originally designed for.
With $183M in cash and equivalents, Aya can comfortably internally fund its massive 200,000-meter Boumadine drill program and upcoming feasibility studies without diluting shareholders.
🐻 Bear Case
Aya paid $21.5M in taxes on $56.5M of pre-tax income—a 38% effective rate driven by Morocco's 'solidarity tax'. This severely limits the amount of operational outperformance that flows to shareholders.
Cash costs hit a low $17.69/oz, but this is a mirage. Management delayed waste stripping to use trucks for tailings facility construction, pushing the strip ratio down to 10. Costs will spike in H2 as the strip ratio normalizes to 13-16.
⚖️ Verdict: 🟢
Bullish. Management is executing flawlessly on the ground. Throughput and recoveries are excellent. While H2 will see higher cash costs and the tax rate is a structural annoyance, the sheer volume of high-margin silver being pulled out of the ground overshadows the headwinds.
Key Themes
Zgounder Operational Ramp-Up Accelerating
The operational metrics are exceptional. Milling operations reached 3,889 tpd, up 7% sequentially and 29% YoY. A temporary contractor crusher is boosting capacity while a permanent tertiary crusher is installed for early 2027. Combined mill recovery hit 91.2%. The physical stockpile has grown to 373,884 tonnes, providing roughly three months of buffer to smooth out future underground development.
Leverage to the Silver Macro Cycle
The primary macro driver for Aya remains the silver price. Average realized silver equivalent prices dropped sequentially from $82.22/oz in Q1 to $64.22/oz in Q2, causing a 17% deceleration in revenue despite a 6% acceleration in total ounces sold. However, compared to a year ago ($33.86/oz), current prices represent a massively elevated plateau that makes Aya highly profitable.
Unsustainably Low Cash Costs
Aya reported a consolidated cash cost of $16.82/oz AgEq, down 9% sequentially. However, this is a contradictory data point. It was artificially suppressed because the open-pit strip ratio dropped to 10. Trucks were diverted from stripping waste to building Phase 2 of the Tailings Storage Facility. With the TSF complete, management admits the strip ratio will increase in H2 to align with the 13-16 mine plan average. Expect a reversing trend in cash costs in Q3 and Q4.
The 38% Tax Ceiling
Aya's profitability is being actively handicapped by Moroccan tax policy. The company incurred $21.5M in income tax expense on $56.5M of pre-tax income. This translates to an effective rate of roughly 38%, driven by a 35% base rate for large earners plus a temporary 'solidarity tax' that has outstayed its welcome. This remains a significant structural concern for cash flow conversion.
Boumadine Pyrite Reclaim Generating Cash
The short-term Boumadine pyrite reclaim project is functioning perfectly as a bridge asset. In Q2, it produced 187,784 AgEq ounces at an incredible cash cost of $10.58/oz. Sales actually outpaced production as logistics bottlenecks cleared, with 184,536 AgEq ounces sold (up 266% sequentially). Bulk shipments will accelerate in H2 to meet the 1M oz annual target.
Litigation and Corporate Expenses Spiking
General and Administrative (G&A) expenses surged 168% YoY to $7.8M. Approximately $5M of this was driven by non-recurring items: professional fees fighting an ongoing EPC contract litigation with Duro Felguera in Spanish and ICC courts, and costs associated with the new Nasdaq listing. While the Nasdaq listing is a one-off, the legal battle requires monitoring.
Other KPIs
Decelerating sequentially from $70.1M in Q1, but up a massive 522% YoY. The sequential dip was driven purely by the lower realized silver price. Working capital changes were a minor $3.5M benefit. This cash generation allows Aya to comfortably internally fund its heavy exploration budget.
Stable and growing. The cash pile expanded by $11.1M in the quarter, even after Aya fully extinguished its $15M Boumadine loan with the EBRD early. The balance sheet is pristine, carrying only $83.6M in long-term debt against $182.8M in unrestricted cash.
Guidance
Stable. The company maintained full-year guidance. With 3.17 million AgEq ounces produced in H1, Aya is perfectly on pace. This implies stable production in H2 (roughly 3.3 million ounces needed to hit the midpoint).
Accelerating costs expected. Since H1 cash costs averaged $18.18/oz, reaching the annual $21.50/oz guidance demands a significant cost spike in H2. This aligns perfectly with management's commentary about the strip ratio reverting to the 13-16 range in the coming quarters.
Key Questions
H2 Cost Inflation Trajectory
You've maintained full-year cash cost guidance of $21.50/oz despite a $17.69/oz print in Q2. How steep will the sequential jump in costs be in Q3 as the strip ratio normalizes, and is there any risk of costs overshooting the $21.50/oz mark to average out the year?
Duro Felguera Litigation Impact
Q2 saw a $5M hit largely due to litigation and listing costs. What is the expected run-rate for legal fees associated with the Duro Felguera dispute in the second half of the year?
Tax Relief Timing
The 38% effective tax rate remains a heavy burden. Are there any active dialogues with the Moroccan government regarding the removal of the 'temporary' 5% solidarity tax, or should investors underwrite 38% indefinitely?