Galiano Gold Inc. (GAU) Q4 2025 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the Galeano Gold Full Year 2025 Results Release Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, February 13, 2026. I would now like to turn the conference over to Matt Badalak-Preza and CEO of Galeano Gold. Please go ahead.

Thank you, Operator, and good morning, everyone.

We appreciate you taking time to join us on the call today to review Galeano Gold's fourth quarter 2025 results that we released yesterday after market close. We will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary notes and risk disclosures in our most recent MD&A, as well as this slide of the webcast presentation. Yesterday's release details our fourth quarter 2025 financial operating results. They should be read in conjunction with our fourth quarter financial statements and MD&A available on our website and filed on CDAPus and EDGAR. Please also bear in mind that all dollar amounts mentioned on the conference call today are in US dollars unless otherwise noted. With me on the call today, I have Michael Cardinals, our Chief Operating Officer, Matt Freeman, our Chief Financial Officer, and Chris Petman, our Vice President of Exploration. For this presentation, I'll initially provide a brief overview of the quarter. Michael will discuss operations and touch on our updated mineral reserve and resource statement. Matt will discuss the financials and then Chris will review the recent exploration success his team has had at the AGM. I'll then provide some closing remarks and open the call for Q&A. Here on slide five, we can see the team continue to build momentum during the fourth quarter towards an improved operational outlook in 2026. Let me walk you through some highlights on this slide. Safety remains our top priority and I'm proud to report that again, no lost time injuries were reported for Q4, maintaining a strong safety record and demonstrating our unwavering commitment to our workforce. Turning to production, we produced 37,500 ounces of gold in Q4, up 15% from the 32,000 ounces produced in Q3. As you can see from the chart, this marks the fourth consecutive quarter of improved gold production at the AGM, with Q4 production 80% higher than Q1 and full year production totaling 121,000 ounces in line with our revised production guidance. Importantly, meal feed grades improved quarter on quarter and throughput in December exceeded the targeted 5.8 million tonne per annum run rate. Cost control remains robust on site with all its sustaining cash costs reducing quarter on quarter to $2,033 per ounce and ending the year in line with the guidance range. Irving You came in at a record $160 million, up 40% quarter over quarter from $114 million. This was driven by higher production and improved gold prices. Our balance sheet remained solid, with cash balance remaining stable, despite increasing our rate of spend on stripping at NCRAN and making a $25 million of nerd payment to gold fields. During the quarter, we also established a $75 million revolving credit facility, providing us with further financial flexibility to continue to invest in our operations, particularly as we advance stripping at NCRAB and invest heavily in exploration activities in 2026. The inclusion of a maiden underground mineral resource reshapes the future potential of resource growth at the asset. We have planned an aggressive exploration program for 2026, targeting the expansion of these underground resources and reserve growth at Asafsi through conversion drilling of inferred ounces. The momentum we have built throughout the year positions us strongly to meet our production guidance target of between 140,000 to 160,000 ounces this year, which is a 25% increase from 2025 levels. Mick will provide more colour on this later. And with that, I'll hand it over to Mick to discuss operations in more detail.

Thank you, Matt, and good morning, everyone.

With safety, the previous quarter's improvement continued without any lost time or recordable injuries in Q4. We finished the year with a lost time injury frequency rate of 0.24 and a total recordable injury frequency rate of 0.48, both per million hours worked. In terms of mining production, Esasi Mining restarted in early November and is currently ramping back up production in Q1 2026. Wet season rains had a slight impact on mining movement, but the necessary switch to concentrate on production from a boré in 2025 provided positive movements in terms of mined ore tons, and the average grade of ore mined increased 9% compared with the previous. N-ground pre-stripping continued ahead of plan with 23% more material moved compared with Q3, including some small quantities of oxide oil which are being identified during the mining process and opportunistically blended with a boré fresh oil to supplement the plant feed. An additional excavator fleet is expected to be operational before the end of Q1 2020 to continue the expansion of Q3. We plan to mine in excess of 30 million tonnes this year, which is three times the movement of 2025, for an approximate spend of between $100 and $120 million of development capital. This maintains NCRAN cut-3 is scheduled to deliver city-state ore production from early 2029.

On slide eight, we can see the processing performance.

Ongoing modifications in the circuit to fully optimize the performance after the commissioning of the secondary crusher continued in Q4 and yielded further positive results. Milling rates increased approximately 7% compared to Q3, with December production achieving an annualized rate at the target 5.8 million tons per annum. MILF feed grade also improved approximately 9% compared to Q3, with an average of one grand per tonne for the quarter. The increased grade in feed plant also had a positive impact on plant recovery, with Q4 achieving an average of just above 91%. The increased grade throughput and recovery all culminated in an increase in gold production for Q4, up 15% of 32,500 ounces to 37,500 ounces. We finished the year producing just over 121,000 ounces, which was in line with our revised forecast. Overall, you can see a production increase for each of the last four quarters, showing a strong positive trend for performance across all of our metrics.

On slide nine, we're providing information on the guidance.

Looking forward to 2026, we once again expect the majority of ore supply to come from the aborate pit, where we have made modifications to our reserve pit design to take advantage of higher gold prices. This will result in a slightly slower ramp up of gold production in 2026, but enables us to further increase the recovery of our resource. We'll continue to increase with depth at aborate, as we're seeing in the last quarter of 2025. production will be somewhat weighted towards the latter half of the year and continue into 2027 as we recover the higher grade material at depth, 20,000 ounces in the first half of the year and 80,000 to 90,000 ounces in the second half of the year. We are providing production guidance for the full year in the range of 140,000 to 160,000 ounces at an all-interstate cost of between $2,000 and $2,300 per ounce. I will now hand over to Matt Freeman to discuss Q4 financial results.

Thanks, Michael.

Good morning, everyone.

As Michael has outlined, the fourth quarter's strongest operation in 2025 and assisted by the very strong price of gold generated record revenues of $160 million and generated cash flows and operations of $56 million. Our headline earnings numbers continue to be impacted by the losses on the hedges, but we now have only 60,000 ounces left to settle, which represents a lower percentage of production in 2016. This therefore allows us to more fully participate in the price of gold going forward. Adjusting the unrealised losses on hedges to be settled in 2026, we recognise adjusted net income of 15 cents per share. From a Treasury perspective, the balance sheet remains very healthy with over 100 million in cash, even after paying the first and third payment to gold and goods. Additionally, we're pleased to close the $75 million credit facility, which remains undrawn for the IOS with additional liquidity should the need arise. Slide 11 illustrates that our operating costs remain consistent period on period, and have generally been well controlled by the site. In particular, you can see posting costs have consistently fallen on a unit basis through 2025 as the throughput has improved. CAPEX remains focused on critical projects such as the tailings that raise. at the previous preceding quarters in 2025. This is primarily due to the high production levels that demonstrate the leverage and margins have to high production. We've guided ASIC for 2026 to between 2,000 and 2,300 pounds, that period. Much of the elevation compared with Q4 2025 is due to the growing royalty burden with the consistently high gold prices being forecast in 2026. Ultimately, this is good for business, but it does increase ASIC and MANA, which is beyond out of control. The chart did demonstrate the increasing royalty burden we've seen through 2025 as a result of a significant increase in gold prices, but it also demonstrates that the unit costs we can control have continued to fall as production improves. As many of you know, a new royalty regime has been proposed by the Ghanaian government, so we will assess that impact on ASIC if it finally becomes enacted.

As noted in my opening remarks, we have been able to maintain our strong capitalization at around $100 million.

We're very happy with this given we've now settled our first deferred payment to Goldfields, continue to ramp up stripping activity at Encrant, having invested approximately $35 million in 2025, and have made our first annual income tax payments in Garner. As we look forward, we do expect 2026 to be another year of investment in the mine, with further acceleration of stripping at Encrant and the final deferred payment of Goldfields to Goldfields. This year is a real inflection point because in 2027, we'll be fast past the fixed payments with old bills and fully exposed to the gold price. This means even assuming the new royalty regime comes into play as proposed or there is a significant reversion in gold prices, the company will be well positioned to generate significant cash flows for shareholders.

And with that, we'll turn back over to Mick to run through our updated mineral reserve resource statements. Thank you, Matt.

Here on slide 14, the key highlight for this year is the declaration of our maiden underground resource. Open-cut resources for Encrand and Amore have been limited to the current reserve pit shells to allow us to target higher-valued underground ounces in our underground maiden resource definition as we look to the future for both pits transitioning to underground operations. Chris will outline the potential for reserve expansion that we see at ASARCE over the next 12 months. The table shown is a summary of our MRMR as at December 31st, 2025.

For detailed tables, please refer to the appendices and the recent news releases. Slide 15.

This section through the NCRAN deposit shows the current reserve shell and the newly defined underground resource stokes. As you can see, we have a strong correlation between drilling density and stoke generation, which gives us a great deal of confidence that this resource will likely expand with additional drilling. On slide 16, we show a comparable long section view for the aboré deposit. And again, it shows a similar story that stokes are able to be generated where we have drilling And because, like NCRAN, these mineralised systems are open in multiple directions, the There is a likelihood that additional drilling will also yield additional underground resources here at Aboray. And with that, I will turn the call over to Chris to outline the recent exploration successes at the mine and future exploration finance.

Thanks, Michael. It was another busy quarter in exploration as we ended the year making a concerted effort to maximize the amount of infill and step-out drilling at Aboray completed by the end of December in order for results to be included in the maiden underground resource outlined by Michael. I'm very pleased with the team's ability to safely and cost-effectively deliver an additional 10,950 metres of the bore in partnership with our drilling contractors in Q4. As we discussed in prior orders, drilling results in bore were excellent in 2025, leading to the expansion of the program to include a total of over 33,000 metres by the end of the year. Q4 drilling continued to deliver excellent results, including expanding the high-grade zones at Abore, Maine, Abore, North, further proving continuity of high-grade mineralization at Abore, South, and expanding the footprint of mineralization up to 200 meters below previous drilling, as outlined in our January 22nd press release. Some of the highlighted intercepts of this drilling are shown here on slide 17. Slide 18 shows a gram-meter-long section of Abore with Q4 drilling locations and intercepts, along with areas where high-grade mineralization has been expanded and continuity improved at Aborea South, Main, and North Pits. This image also shows the location of four step-out holes drilled between 100 and 200 meters below existing drilling. These holes were designed to test for continuations of the Aborea granite and further high-grade mineralization. All four holes successfully intercepted mineralized Aborea granite, showing once again that the Abore system has significant growth potential. Particularly encouraging is hole 448 which intercepts 87 meters of granite containing three zones of mineralization at grades of 2.5, 3 and 3.4 grams a ton over 27, 11 and 15 meters respectively in an area that is 200 meters below sensing drilling and open in all directions. Hole 448 is shown in cross-section here on slide 19 along the hole 444 which intercepted a wide high-grade zone consisting of 30 meters at 4.4 grams a ton and 18 meters at 2 grams a ton immediately below the previous open pit resource. This is a really good example of the room we have to grow the mineral resource in 2026 while we have conference in Abore as the driver of future value at the AGM. Creation work in 2026 will focus on continuing to build on the momentum generated by the success of the 2025 program. With an initial budget of $17 million, work will focus on the three primary growth objectives as we look to support a potentially transformational life of mine update in 2027. We see significant opportunities to grow the underground resources and reserves at Aborea, where we're planning for a minimum of 30,000 meters of drilling in 2026. At SASB, we will be focused on growing the open pit reserves at higher gold prices with up to 35,000 meters of conversion drilling. We will also continue to advance our portfolio of greenfield targets, where our focus will remain on early stage work and drill testing of targets in the Enseroma area, located approximately 6 kilometers southwest of Enkran. First pass drilling in 2025 confirmed the extension of the Enkran shear through this area, along with favorable hose rocks, quartz veining, and alteration patterns, and we remain enthusiastic about the potential for discovery of new open-fit resources in this area. At Abore, we will continue to aggressively test for continuation of mineralization through step-out and infill drilling designed to increase the underground mineral resource, while also conducting targeted conversion drilling to increase the amount of indicated resource available for inclusion in a potential maiden underground reserve in 2027. Slide 21 here shows a long section through Abore with the locations of Q4 drilling and the new underground resource showing all grades greater than two grams a ton. High priority targets for 26 are shown by these yellow stars. As part of our short to medium term exploration strategy, we will also be working in conjunction with the mining team to advance the necessary studies and workflows for potential development of an underground portal and exploration drilling edit that would be used to conduct future underground delineation drilling and deeper exploration target testing. Due to the density of existing drilling below the current mineral reserve of the SASE, we are uniquely positioned to realize immediate reserve growth at higher gold prices without additional drilling, allowing us to add value to the AGM quickly in the current gold price environment. In order to maximize that value, exploration will return to the SASE in 2026 with a campaign of conversion drilling designed to convert additional inferred resources to indicated category at a gold price of $2,500 ahead of the 2027 MRMR and long. Here on slide 22, we're showing a cross-section through a SASE with an example of a target area for conversion drilling in 2026 and is indicative of our targets across the entire deposit, where drill density limits the extent of the indicated resource. Our 2026 program is well underway with RIDs active in both Abore and SASE, and we anticipate 2026 will be even busier than 2025 for our exploration team. But we are well resourced and well positioned to deliver significant dive to the AGM to resource and reserve growth this year.

Back to you, Matt.

In closing, I'd like to reiterate that the positive momentum built through 2025 places us in good steps to realise meaningful production growth in 2026 and to execute our medium and long-term organic growth plans. Our steadily growing production profile, execution of the final deferred payment to gold bills and the expiry of hedges later this year results in a near-term inflection point in cash flow generation, which should subsequently drive shareholder value. Beyond this, we have developed a robust expiration strategy and clearly understand where further expansion of mineral reserves and resources will come from. I'm excited about the potential for mine life extension beyond the eight years as we look to include underground mining and target expansion of open-fit reserves. Our strong cash balance access to the revolving credit facility allows us to aggressively invest in exploration while comfortably funding waste-stripping activities at Incran. Also, a reminder that Galliano is highly leveraged the gold price and remains Ghana's largest single-asset gold producer. With production increasing by approximately 25% in 2026, line of sight to reserve expansion and high gold and record gold prices, the potential for value creation for our shareholders remains high. With that, I'd like to turn it back to the operator and open up the questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Vitaly Kononov with Freedom Brokers. Your line is now open.

Yes.

Hello, gentlemen, and thank you for the presentation. I have several questions. With the production heavily weighted towards the second half of 2026, what are the key execution risks we should monitor and how kind of things are you achieving the ramp-up profile?

Well, I think the key risks that we see, obviously, we're aware of the fact that throughput has an important role to play here, and we're really pleased in terms of the way that the crusher has ramped up over the second half of 2025 and are comfortable that that crushing circuit will help deliver main plate production in the range of 5.8 million tonnes per annum. The other thing I think that Mick touched on here is the fact that we are expecting grades to increase steadily as we continue to mine through lower elevations of the borane. And those two factors will be driving that production higher in 2026 and, as we said, slightly wider to the tail end of the year as well.

Thank you. Well, given the downward revision to the guidance that was provided early in 2025, it was lowered down. How does that impact your five-year outlook from now on?

As I said, we have a slightly lower production profile than 2026, but we expect to ramp up further in 2027, and more in line with previous guidance in terms of production levels.

Thank you.

And just the last one. Following the maiden underground resources, Amore and Nifran, when should we expect the initial economic studies published for those mines?

We'll be working on, as Chris mentioned, additional drilling to supplement the underground resource that was just released. and we will be working through the studies this year with the aim of having something available in 2027.

So that will be early, well, released with the annual results in the next year, right?

Got it. Thank you.

Ladies and gentlemen, as a reminder, should you have a question, please press star 1. There are no further questions at this time.

I will now turn the call over to management for closing remarks.

Thank you, Alparato, and thank you for everyone who dialed in and took questions or asked questions. Thank you for your time today. I wish you a happy Friday and a good weekend. Thank you very much.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.