Galiano Gold Inc (GAU) 2026 Q2 法說會逐字稿

( Operators Instructions )

It is now my pleasure to turn the call over to Matt Bale, CEO, please go ahead.

Thank you, operator, and good morning everyone.

We appreciate you taking time to join us today to review Galliano Gold's second quarter 2026 financial and op operating results we released yesterday after market closed.

In today's call we'll be making forward-looking statements and referring to non-IFRS performance measures.

Please refer to the cautionary notes on slide 22 of the webcast presentation and to the risk disclosures in our most recent MD.

Yesterday's news release should be read together with our second quarter financial statements and MD&A, which are available on our website and filed on CEDA plus and EDA.

Unless otherwise noted, all dollar amounts discussed on the call today are in US dollars.

Joining me today are Michael Cardinals, our Chief Operating Officer, Matt Freeman, our Chief Financial Officer, and Chris Hetman, our Vice President exploration.

I'll begin with an overview of the quarter.

Michael will then discuss mining and processing, and that will review the financial performance, and Chris will update you on exploration.

I'll then return to provide some perspective on our near term catalysts and close the prepared remarks before we open the call up for questions.

Turning to slide 4.

Our first half performance has put us in a solid position to deliver our 2026 plan.

We produced 34.4 1,000 ounces of gold in the second quarter, bringing the first half production to just over 69,000 oz near the upper end of our previously communicated indicative range of 60,000 to 70,000 ounces.

This provides a solid foundation as we enter the high production portion of the mine plan which generates, which with grades expected to improve.

As mining advances at a bore rate.

A 4 year production guidance from 80,000 and our all in sustainable cash cost guidance remains unchanged at 2,300 to $2600 per ounce.

Safety remains our highest priority.

We recorded no lost arm injuries and no total recordable injuries during the quarter.

At June 30th, our team has worked approximately 11 million hours without a lost time injury and achieved 456 consecutive incident-free days.

These are meaningful milestones, and I'd like to recognize our employees and business partners for the discipline and care that made this possible.

We also maintained a strong financial position and in the quarter with total cash of $105.9 million.

This includes approximately $26 million of restricted cash which Matt will expand on shortly.

Importantly, the company remains debt free, and we continue to invest in the future of the Sanko gold mine.

This includes waste stripping at Eran and exploration activities at Asasi and Abora.

Overall, Q2 was a quarter of both delivery and preparation, we delivered against our current mine plan while putting the building blocks in place for the next phase of growth.

With that, I'll turn the call over to Michael to review our operating performance.

Thank you, Matt, and good morning everyone.

Here on slide 5, mining performance in the second quarter remained aligned with our plan and continues to support our fully guidance.

During the quarter we mined approximately 1.8 million tons of ore at an average grade of 0.9 g per ton.

4 tons increased approximately 15% from the first quarter.

While grades remained consistent with expectations.

This increase in ore availability keeps us on track for the planned production growth in the second half of the year.

Arbora remained our primary source of milk feed, contributing to law during the quarter.

Mining advanced into deeper phases of the pit where we expect to access higher grades as the year progresses.

This mining sequence is a key driver of our anticipated second half production profile.

Mining at Asasi also continued as planned and provided supplemental fee to the mill.

At N Cran CUP3, we continue to make strong progress on development activities.

The team mined 6.1 million tons of waste during the quarter.

Representing a 30% increase from Q1.

We invested $22.1 million pre-stripping during Q2.

Bringing year-to-date investment to $35.6 million.

Additional equipment is scheduled to arrive during the 3rd quarter to support the planned ramp up in mining rates.

The work underway today is critical to unlocking access to the higher grade ore that supports our future production profile.

Importantly, this progress was all achieved while maintaining our strong safety performance, which Matt highlighted earlier.

Turning to slide 6, processing performance remained solid during the quarter, despite some unplanned maintenance activities.

Average feed grade was approximately 0.9 g per ton.

Metallurgical recovery was 90% and gold production totaled 34,391 ounces.

Mil availability was impacted by maintenance on the 4 mill gearbox in June while work on the primary crusher pit and continued throughout the quarter.

Despite these interruptions, the processing team maintained strong recovery rates and delivered production in line with expectations, demonstrating the resilience and stability of the operation.

The remaining crusher work is expected to be completed during the 3rd quarter.

So looking ahead, our priorities for the

The remaining repairs of the critical spares for the primary crusher, continue advancing the mining sequence instead of bore and deliver the higher grade ore planned for the balance of the year with more than 69,000 ounces produced in the first half, we are well positioned to achieve our full year production guidance.

I will now hand the call over to Matt.

Freeman to review the financial results.

Thanks, Michael, and good morning everyone.

Slide 7, the second quarter again demonstrated the earning and cash generation capacity of the business, even as we continue to fund significant development activity.

Revenue for the second quarter was 156.6 million on sales of just over 35,000 ounces of gold, and now if we've realized gold price before the impact of the hedging losses of $4,432 per ounce.

This translated into strong earnings with adjusted EBITD of 78.5 million and adjusted earnings per share of $0.09.

Also, as we have discussed previously, we're getting close to the end of our hedge book such that from 2027 our financial results will be able to fully participate in the gold price, leading to a natural inflection point in our cash flows.

I must note that at the end of the quarter, approximately 26 million of our cash became restricted following a court order relating to a long-standing contractual dispute with a former service provider.

This is in direct contravention of the existing court order, and as such we're confident the restriction will be lifted in a timely manner.

Excluding the IFRS presentation of the restricted cash in our cash flow statement, the mine generated cash flows from operations of 31.9 million, which shows that the operation continues to generate meaningful cash flows.

The key point here is that our balance sheet remains very healthy, we've maintained substantial liquidity while funding the in campaign at Assassi and accelerating the pre strip program at Enron CUP3.

Turning to slide 8, we're pleased that despite elevated diesel prices since the start of the Iranian conflict, all in sustaining costs with $2,473 per ounce for the quarter and 2,418 per ounce for the first half of the year.

And as production increases and grades improve in the second half of 2026, we expect better unit cost leverage and therefore our 2026 ASIC guidance remains unchanged at 2,300 to $2600 per ounce.

It's through this disciplined cost management that we continue to be able to direct capital towards value enhancing projects such as the Eran Strip and exploration work which is expected to provide the foundation for my life extension of the asset.

And now I'll turn the call back to Chris to discuss the progress made on these exploration priorities.

Thanks, Matt.

Exploration work through Q2 was primarily focused on executing our aggressive drilling campaigns at Assasi and Abore in order to deliver results in time for the addition in the 2027 MRMR update.

The exploration budget for 2026 has been expanded to a very healthy 25 million from the previous 17 million, meaning we are well resourced to deliver on our objectives.

Following Q1 drilling success in the first phase of the Assassy insulin conversion drilling program, the full expanded program consisting of approximately 32,000 m was approved, and drilling was immediately ramped up with a total of 7 drill rigs turning at Assassi by.

The program was approximately 50% complete by the end of Q2, with the team achieving a total of 13,748 m in the quarter, and drilling remains on schedule for completion in Q3.

Results red received to date continue to indicate the program will meet its objectives of converting a high percentage of the targeted inferred resource to the indicated category ahead of the 2027 MRMR update.

This work is specifically designed to dramatically increase the open pit mineral reserve at Assasi, which will anchor the future life of mind transformation.

Drilling also continued at Bore as we worked to expand the underground resource which was first released last quarter, 4,565 ms were drilled through Q2, bringing the full year program of 30,000 m to 54% complete, we remain excited by the growth we are seeing in the drilling fora by early Q4.

That excitement is reflected in our ongoing planning efforts for potential construction of the underground exploration at the Abore permitting and planning efforts advanced well through Q2, and we are on track to make an investment decision for potential construction start in 2027, this project will be a significant milestone for ex exploration and the AGM as it would represent the first steps to transitioning the Sanro belt deposits towards underground operations, as has been done very successfully, both the Sefi and the shanty both that lie immediately adjacent to us.

Back to you, Matt to discuss our nutrient catalyst.

Thank you, Chris, turning to slide 10.

Here I'll point out that Chris's update is important because exploration is an integral part of our strategy to extend mine life and strengthen the future production profile.

Our immediate priority remains the safe delivery of our 2026 guidelines.

Looking beyond this year, however, we expect the operating and financial profile of the business to change meaningfully.

Production is expected to increase in 2027 and once the hedge program rolls off, we expect to benefit from higher production and full exposure to the gold price supporting stronger free cash flow.

This combination represents the key financial inflection point we see ahead.

Beyond that near-term inflection, and crank cut 3 is a key driver of a production profile of more than 200,000 ounces per year.

Asasipore also contribute to that scale and provide opportunities to sustain and extend the production profile through reserve conversion and underground resource growth.

Together, Eran, Asasi, and Obore support both scale and the longevity of the AA gold mine.

The chart on the left shows that Gaiano trades at a discount to many of our peers on an enterprise value per reserve ounce basis, we believe this discount does not reflect the value of our existing operations, the strength of our balance sheet, the visibility of the expected cash flow inflection or that organic growth opportunities

The current valuation understates the strength of our business today and its long-term growth potential.

Let me close by bringing the quarter back to our broader strategy.

In the near term, our task is clear, operate safely and deliver our 20 plan.

A first half production of 69,000 ounces near the upper end of our indicated range provides a solid foundation for the balance of the year.

A full year production and all in sustaining cash guidance remains unchanged.

At the same time, we are using our debt-free balance sheet to fund NRA cut 3, progress reserve conversion at Assasi and underground growth out of bore while maintaining substantial liquidity.

We are therefore able to invest in the future of the mine while continuing to execute the current plan.

The result is a clear path to improved operating and financial profile beginning in 2027, higher production, stronger free cash flow, greater participation in gold price and multiple opportunities to expand reserves, resources, and mine life.

That combination gives us confidence in Galliano's ability to create meaningful long-term shareholder value.

Thank you to our employees and our business partners for their continued commitment, and thank you to our shareholders and analysts for your interest in Galliano Gold.

Operator, we are now ready to take questions.

( Operators Instructions )

Our first question comes from the line of Hyko Island with HCW, please go ahead.

Hey guys, it's Haiku Ele with HC Wainwright.

Thanks for taking my question, sorry for the background noise I'm standing at the airport here.

Hello, good morning, administrative costs on a dollar mill basis, you went from, you went from 7 bucks to essentially 850, and I get that that's a small number overall, but on a percentage basis, the change is quite pronounced.

Can you maybe give a bit of color on where we should, model that out going forward and what exactly happened, I assume some of that is just labor costs.

Morning, hi coach Matt Freeman here, I think simplistically, the large part of it is just the denominator there, the tons milled was obviously a bit lower this quarter, given some of the

The issues that Mick alluded to, otherwise, nothing really substantial in there, we have a few other maintenance costs that maybe floated a little bit of some sort of not kind of plant-related ones, but really it's just the denominator, so your tons mill, so modeling going forward, I would think this was a bit of an anomaly, I would think you can look back at the previous couple of quarters and that would be a much better way of looking at it going forward.

We're certainly not seeing any major unexpected movements in our general cost base at all across the.

In.

That's what I would.

Would have expected and hoped you guys would say, okay, so that makes a lot of sense.

And then also you mentioned the diesel prices and the release you discussed it briefly earlier on this call, can you just give a bit of color on how much you actually spend on fuel per quarter and what you can see with this figure throughout the first half of Q3, is that something where the analysts can just, once we have the total, we could just essentially take it and then take, like, global diesel prices and sort of like

Model it like that.

Yeah, I think, on average we're about 3.5 to 4 million L a month and and obviously as as

As we increase the profile of strippingodendron over the next sort of, I guess, 18 months or so, we would expect that to increase a little bit over time.

H1stly, we're not seeing it being particularly material to the business.

Obviously we've seen the spike through the summer, particularly in pumps in Ghana.

But I think they we're guiding, we're comfortable in our guidance range, we're certainly comfortable where the cost are sitting hopefully the, Middle Eastern situation will calm down a bit and we'll see the reversion in prices, but, so at the moment, it's not that material.

To us and we're keeping an eye on things and managing where we can.

Fair enough, and essentially on a usage basis, flat for the rest of the year is the way to go.

Yeah, I mean, we're modeling it within our expectations of being kind of around where it is now slightly elevated, and hopefully, say things could come off lower than that, and we might have a slight benefit there, but like, as of now, we're very comfortable with our cost guidance, so you can kind of expect us to fall within that range comfortably.

I'll get back in queue, thanks for taking my questions.

Thanks Io, safe travels.

Your next question comes from the line of Frederick Bolton with BMO Capital Markets.

Please go ahead.

Morning, team, thank you for taking my call.

So I've got a few questions here.

You've reduced your guidance this year, can you just talk us through the primary drivers of that reduction, cos I noticed that your guidance for the crown cut 3 hasn't changed at all,

I might just go through the questions, if you stop with that please.

Hi Fred, it's Matt Freeman here, yeah, we've, as we said in the MDA, we expect development costs to be slightly down on what we'd originally said, there's a bit of a delay in some of our, relocation projects in terms of the timing, but, no change in sort of overall cost structure for the life of mine, it's just a timing shift between, probably between this year and next year.

Okay, thank you.

And, spoke to this, about this,

She,

What's the current status on the appeal process and what sort of

King factors and milestones are needed, before you can unlock some of that restricted cash.

Yeah, as I said, this is actually a very recent thing, so as we've said, we believe it to be a contravention of an existing order out there, so we're working with local council going through a legal process in Ghana to get that rescinded.

Difficult to give, indications of the exact timing, obviously because of these legal processes and through the summer there's various court delays and holidays and things, so, we, we're expecting, hopefully something to be resolved in the short-term, can't give you precise timings, but certainly

We, we're working as diligently as we can with council to get it resolved.

Okay, great.

And,

And so, I think I have one more question on the,

On the Q3, mobilization, not the Crown fleet in Q3, who are the additional, please, can you just give us a bit more color on what was driving that particular timing, for this additional fleet, and whether there's a chance to

And to expedite, some of that fleet sooner than what, than NATO.

Hi Fred, it's Michael here.

I can provide a little color on that.

Our mining business partner Rockshore have actually mobilized the full complement of trucks to site at this point in time, and there's 2 additional excavators which are currently sitting on the ground on site and going through commissioning phases, so it's in Q3 and then put into operation, so it was just primarily a timing delay for

Acquisition of those new excavators from the manufacturer.

Okay, and so therefore, Q4 is when we should start to see, really see the ramp up of the road.

That's correct, we'll see an increase in Q3 as we put those new units to,

To work and then they should be full complement by Q4 as well, as you say, and further increase.

Okay, great.

I'm sorry, I didn't mean to halt the court, the line, but, can I just ask one more question on the prioritization of the drilling,

At, I read in the release that

The sausage drilling's been prioritized against, a head of Obore.

What was driving that, is that because you were trying to prioritize the resource conversion there.

As opposed to a piece of drilling that's been done at the bore and so on, so

And a big colors to that please?

Sure, Chris, yeah, you're absolutely right, so we moved the rigs to Assasi, we wanted to make sure we could get that drilling done, in a timely manner for modeling ahead of the 2027 MRMR update as it is a significant,

Increase in our potential reserve base there, so we wanted to make sure we could get that done, obviously abore is still, important to us, and we've gotten over half that program finished already, and we still feel like, given our timelines, we have all the time to be able to finish that drilling in a boring, we are seeing good growth in the resource there to be able to get that in by the end of the year as well.

Yeah, so I mean that's our, at abo, that's our underground resource, right, so we released that last quarter, so it was really about getting the open pit over ground resource growth, we think we'll still see it at a board as well.

Okay, great.

No, that's all I have, for today, thank you, I'm looking forward to seeing the site in October.

Your next question comes from Barriket.

Were he with Beacon Securities, please go ahead.

Hey, congratulations guys on another solid quarter, I'm noticing that production is actually stabilizing, the last 3 quarters have been really good and obviously that's been helped, by the grade stabilizing as well, closer to the 0.9.

Grams per ton, but I was wondering when do we start to see what a Boris contribution those grades to start to take up, closer to the reserve grade of a brow, let's say, I understand that the world is only contributing about 75% at the moment, of the ore.

I also want to add, basically want to ask the same question that the guys have been asking, but in a different way, and Crown C 3, if I remember correctly, started somewhere early in the year 2025, February, I believe it was.

And we're still at it and it's ramping up, when do we expect Iran to sort of

Felt a complete push back and start to contribute decently to the mine to the processing plant.

And those are my questions for today.

Hi Bereket, it's Michael here, I can answer that for you.

So we are seeing increases in a bore grades coming into Q3 and then further into Q4, we made a slight modification to our bore pit design which has increased the reserves ounces included in that, and as we in Q4, we will be starting to see an increase in those grades, and bore will contribute approximately 80% of our malfeed in

In the last half of the year, so we should be expecting that.

As I said, H2, and as far as Angran goes, we will be ramping up our production profile over the balance of 2026 to be a full complement of fleet and increase

At the end of the year, so 2027 should be a full complement of fleet, and as we've previously indicated Engran will start to produce ore at the back end of 2028 and into 2029, meaningful contribution to the grade for the production profile.

Okay, thank you.

Our next question is from the line of Medina.

Adelina with Freedom Broker, please go ahead.

Hello.

Thank you for your presentation.

So I have several questions.

Your youth development capital guidance by approximately $15 million due to delays in village relocation.

Can you clarify whether these relocations are now expected in early.

27 and whether the delay has any impact on first or timing from and then crime or simply shift cash spending between years?

Hi there, it's Matt, see here again, yes, it's purely a timing difference, a little bit of a delay getting some of the organization together with the community, and we'd expect that to slide into 2027, but that won't have any impact on our, production profile, at all, so just the cash timing difference.

Okay, thank you.

And also, mining unit costs increased 27% year over year due to lower tonesite and higher pressure shock exposure, and as a board transitions further into lower phases during the remainder of year.

Should we expect money cost per ton to decline meaningfully or thus for rock mining.

Offset most of that benefit?

Slightly le on a cost per ton basis this period, which was driven largely by slightly lower tons and also the diesel price increase had an impact on that as well, but going forward, I think we should expect it to kind of be fairly stable, hopefully if mining rates ramp up a bit, we could see a bit of a reduction there, but obviously as you go deeper in pits, horse cycles increase, so there's a few offsets up and down, but, maybe slightly better, but we're not expecting anything too dramatic to change.

Mm, got it.

Thank you.

And with no further questions, thank you, I will now hand the call back to Mark.

Cool.

Thank you operator, and thanks again to everyone who joined the call today and for your continued interest in Gulia Gold.

We certainly look forward to providing you with further updates throughout the course of the year as we progress.

This year, thank you very much.

( Operators Instructions )