US$300 Million Convertible Notes Transform Vizsla Silver's Capital Profile & Why a Fully Financed Path to Production Resets the Investment Case

• Vizsla Silver closed a US$300 million convertible senior notes offering on November 24, 2025, receiving approximately US$286 million in net proceeds that provide approximately two times coverage of the initial US$238.7 million capital expenditure required to construct the Panuco silver-gold project in Sinaloa, Mexico.
• The 5% unsecured, covenant-light structure materially reduces financing risk and enhances the project's post-tax net present value of US$1.802 billion at a 5% discount rate and internal rate of return of 111% based on US$35.50 per ounce silver pricing.
• Immediate access to full net proceeds, rather than milestone-based tranches characteristic of traditional project finance, accelerates development toward a targeted second quarter 2026 construction decision and targeted second half 2027 first silver production, subject to permitting approvals and board authorization.
• A capped call structure with a US$5.84 strike price representing a 25% premium to the US$4.67 share price at pricing reduces dilution risk and allows Vizsla Silver to raise capital at an effectively higher valuation.
• Fully financed status materially de-risks project execution and amplifies near-term development catalysts, improving visibility for institutional investors seeking exposure to high-grade silver production growth.

Why Vizsla Silver's Financing Event Matters Now

The mining sector has faced a structurally elevated cost of capital environment since 2022. Central bank tightening cycles increased borrowing costs across commodity markets, while traditional project lenders implemented stricter covenant requirements and reduced their appetite for single-asset developers. This credit environment disproportionately impacts early-stage developers, many of which face financing gaps that delay construction timelines or force dilutive equity raises at depressed valuations.

Vizsla Silver's Panuco project in Sinaloa, Mexico possesses tier-one attributes: a 425-gram-per-tonne silver equivalent head grade, life-of-mine all-in sustaining costs of US$10.61 per silver equivalent ounce, and post-tax economics demonstrating a 111% internal rate of return. These metrics provided the foundation for securing US$300 million in convertible senior notes from global institutional investors, including many of the world's largest asset managers, with Cantor Fitzgerald serving as sole book-running manager.

This article examines how the convertible notes offering changes Vizsla Silver's risk profile, enhances strategic execution options, and strengthens the investment case for a company transitioning from resource development to mine construction.

The Capital Markets Context: Why Securing Low-Cost Capital Is a Competitive Advantage

Mining project finance has experienced a structural repricing over the past three years. Traditional project lenders have been requiring interest rates ranging from 10% to 12% for single-asset precious metals developers, with lenders implementing completion tests, cash sweep mechanisms, and restricted distribution provisions that limit operational flexibility. Standard project finance structures deploy capital in milestone-based tranches, requiring developers to meet technical completion criteria before accessing subsequent funding, creating execution risk when construction timelines extend or costs escalate.

Vizsla Silver's covenant-light unsecured notes eliminate these constraints. Without completion tests or cash sweep obligations, the Company maintains full control over cashflow allocation decisions throughout construction and production ramp-up. The 5% coupon represents approximately 50% lower than the annual interest rate on many traditional project financing facilities, reducing annual debt service requirements by several million dollars while preserving net present value.

The unsecured nature of the notes further differentiates this transaction. Traditional project finance requires comprehensive security over project assets, creating potential conflicts if developers pursue strategic alternatives. Vizsla Silver's unsecured structure preserves strategic optionality without subordinating shareholders to secured creditors in the capital structure.

How the US$300 Million Notes Reshape Vizsla Silver's Financial Position

Vizsla Silver received US$286 million in net proceeds from the convertible notes offering, representing approximately 2 times the US$238.7 million initial capital expenditure outlined in the Panuco feasibility study. This initial capital cost includes US$24 million in contingency. The additional liquidity beyond initial capex accommodates potential construction cost escalation, funds working capital requirements during ramp-up, and maintains financial flexibility without jeopardizing project completion.

The immediate availability of full proceeds contrasts sharply with tranche-based project finance structures. Developers using traditional debt must demonstrate substantial completion milestones before accessing capital tranches, creating potential gaps if construction progress encounters delays. Vizsla Silver eliminates this structural risk through upfront liquidity that covers the full development pathway from construction decision through first production.

This financial positioning materially reduces financing risk, historically a primary cause of mining project failures or severe shareholder dilution. Projects with inadequate liquidity buffers often face capital calls during construction that force equity issuance at distressed valuations. Vizsla Silver's substantial capex coverage mitigates this risk vector while enabling multiple strategic options: accelerating exploration programs to expand resources, pursuing merger and acquisition opportunities to consolidate regional land positions, or returning capital to shareholders when appropriate.

Impact on Project Execution: Panuco's Path to Production Accelerates

The Panuco feasibility study, completed with an effective date of November 4, 2025, established the economic foundation supporting Vizsla Silver's financing structure. Post-tax net present value at a 5% discount rate reaches US$1.802 billion, while the post-tax internal rate of return of 111.1% positions Panuco competitively among development projects in the precious metals sector. The project's 425-gram-per-tonne silver equivalent head grade significantly exceeds industry averages. First five years of production average 20.1 million silver equivalent ounces annually, generating operating cashflows that can rapidly amortize construction capital.

Vizsla Silver is targeting a second quarter 2026 construction decision, subject to permitting approvals and board authorization. The Manifestación de Impacto Ambiental was submitted in February 2025, with approval targeted for the first half of 2026, alongside other well-advanced permits. Construction duration for underground mining operations of Panuco's scale is targeted to start 2H 2026. First silver production is targeted for the second half of 2027, subject to construction decision, permitting timelines, and successful execution.

Vizsla Silver commenced test mining activities in the fourth quarter of 2024 at the Copala portal to collect a 10,000-tonne ore sample. The test mine is fully permitted and ongoing, accessing high-grade mineralization in the Copala zone that will anchor first years of production. Test mining validates mining methods and ground conditions against feasibility study assumptions, provides bulk samples for metallurgical testing, and generates early stockpiles of high-grade ore for plant commissioning. The test mine has delivered ore development of 169 meters and waste development of 902 meters while stockpiling material to de-risk startup.

Jesus Velador Vice President of Exploration explained the company's dual-track focus:

"Our focus is going to be discovery-oriented… Our strategy is a dual strategy. We have the plan of developing the mine in Copala Napoleon. We started already with a test mine and developing of the decline to access the high-grade mineralization in Copala… Our second objective, what we call our project two, is to continue exploring with making a discovery of an additional center of mass or a mineralized center in the project."

Strategic Positioning: Why Investors Value Dual-Track Developers

Vizsla Silver's strategic framework combines near-term production development with sustained exploration investment, creating dual value creation pathways. The Copala zone provides defined production targets supporting feasibility study economics and debt service capacity, while ongoing exploration across the broader land package offers resource expansion optionality without compromising development timelines.

The Panuco project contains over 150 mapped vein targets across the district, of which only 28% have received systematic drill testing. This creates substantial exploration upside. Each untested vein represents potential resource additions that could materially expand the existing resource base of 222.4 million silver equivalent ounces in measured and indicated categories, with an additional 138.7 million ounces in inferred resources.

Jesus Velador provided context for the company's exploration potential:

"We started focusing on de-risking the mineral resource and particularly in the Copala area where we envision the first years of production for the Panuco project… Just within that area we have over 150 vein targets that we have either mapped or discovered… Copala has the highest grades, it has the widest mineralization. "

Panuco's current feasibility study economics and life-of-mine plan utilize a small fraction of the district's mineralized system. Resource expansion through exploration does not require proportional capital investment, creating positive operating leverage if additional zones can be incorporated into the mine plan or justify future processing capacity expansion.

Dilution Management: Why the Capped Call Structure Matters to Equity Investors

The convertible notes carry an initial conversion price of US$5.84 per share, representing a 25% premium to the US$4.67 share price at the time of pricing on November 19, 2025. This conversion premium reduces immediate dilution risk compared to equity offerings at market prices. If notes convert at maturity, existing shareholders will have benefited from substantial share price appreciation before dilution occurs.

Vizsla Silver entered into capped call transactions concurrent with the convertible notes issuance. The capped call structure provides partial offset against potential dilution from note conversion by allowing Vizsla Silver to receive shares from counterparties if the stock price exceeds the US$10.5075 cap at conversion. This mechanism reduces net dilution to existing shareholders while maintaining upside participation. The capped call transactions allow the Company to effectively raise capital at a higher valuation relative to net asset value.

The convertible notes permit settlement in cash, shares, or a combination thereof at Vizsla Silver's discretion. This optionality becomes strategically important if silver markets strengthen materially or production cashflows exceed feasibility study projections. Cash settlement would eliminate dilution entirely, while mixed settlement allows calibrated balance between dilution management and cash preservation.

Jurisdictional Considerations: Why Mexico Continues to Attract Global Capital

The Panuco project benefits from established mining infrastructure in Sinaloa state. Federal 230-kilovolt power transmission lines cross-cut the Panuco property, providing direct access to high-voltage power. The Port of Mazatlán, located approximately one hour drive from the project, provides container shipping access for concentrate exports. Site access is via Highway 40 from Mazatlán to Concordia. Regional mining activity has created a skilled labor pool, with availability of labor for mining and industrial operations reducing recruitment costs and training timelines.

Vizsla Silver has secured 30-year operating agreements with all five local ejidos representing communities in the project area. These agreements provide land access security and demonstrate sustained community support. The Company has received four-time national recognition of sustainability efforts, awarded as a Socially Responsible Company.

The willingness of global institutional asset managers to deploy US$300 million in unsecured convertible notes demonstrates confidence in both Panuco's fundamental quality and Mexico's continued attractiveness as a mining jurisdiction.

The Investment Thesis for Silver

• Fully financed developers in established mining jurisdictions command premium positioning in capital markets where most peers face funding gaps or restrictive covenant structures that limit strategic flexibility.
• Panuco's combination of 425-gram-per-tonne silver equivalent grades, life-of-mine all-in sustaining costs of US$10.61 per ounce, and post-tax internal rate of return exceeding 111% provides economic foundation substantially above sector medians for development-stage projects.
• The convertible structure materially reduces financing risk through immediate liquidity access and covenant-light terms, while preserving dilution protections through conversion premiums and capped call mechanics that benefit existing shareholders.
• District-scale exploration upside remains significant with only 28% of mapped vein targets receiving systematic drill testing, offering long-term resource optionality that extends beyond current feasibility study mine life without proportional capital requirements.
• Strong institutional participation in the US$300 million financing signals confidence in project execution capability and management's track record, providing third-party validation that reduces due diligence burden for subsequent investors evaluating the opportunity.

A Reset in Vizsla Silver's Development Trajectory

The cause-effect relationship embedded in Vizsla Silver's convertible notes transaction creates multiple amplifying benefits for the investment case. Low-cost covenant-light capital reduces financing risk, eliminates restrictive covenants that constrain strategic options, and provides liquidity supporting accelerated development timelines toward targeted second quarter 2026 construction decision and targeted second half 2027 first production, subject to permitting and board authorization.

Fully financed status now differentiates Vizsla Silver within the silver development pipeline where most peers face funding gaps requiring either dilutive equity raises or expensive project debt with restrictive covenants. Projects demonstrating execution readiness through adequate liquidity and experienced management teams receive disproportionate investor attention, particularly when economic metrics and jurisdictional factors support favorable risk-adjusted returns.

Vizsla Silver now controls its development pathway without external financing dependencies or covenant restrictions limiting management discretion, maintaining operational flexibility to optimize production timing, pursue exploration upside, and respond to market opportunities as they emerge.

TL;DR

Vizsla Silver closed a US$300 million convertible senior notes offering in November 2025, receiving approximately US$286 million in net proceeds that provide roughly twice the US$238.7 million initial capital expenditure required for the Panuco silver-gold project in Mexico. The 5% unsecured, covenant-light structure eliminates traditional project finance restrictions while reducing annual debt service costs by approximately 50% compared to conventional financing. With a 425-gram-per-tonne silver equivalent head grade, life-of-mine all-in sustaining costs of US$10.61 per ounce, and 111% internal rate of return, Panuco's economics supported strong institutional investor participation. A capped call structure with US$5.84 conversion price (25% premium to pricing) reduces dilution risk while the Company targets second quarter 2026 construction decision and second half 2027 first production.

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