Galiano Gold Inc. (GAU) Q2 2026 Earnings Call Transcript

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2026 Financial and Operating Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question, press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Please limit questions to one and one follow-up. It is now my pleasure to turn the call over to Matt Badalak, CEO. Please go ahead.

Thank you, Operator, and good morning, everyone. We appreciate you taking the time to review Galeano Gold and Operator's market close. During today's call, referring to non-IFRS performance measures, please refer to the course in our most recent, MD&A. yesterday's newsroom mdna which are available on our unless otherwise noted joining me today i'm matt freeman our chief michael will then discuss the financial performance i'll then return to provide some perspective on our near-term catalysts and close the prepared remark we produced 34.4 thousand ounce near the upper end of our previous year community this provides a solid which generates it which with grades expected to improve as mining advances 60,000 ounces. June 30, our team has worked approximately 11 million out in three days. These are meaningful mines and care. Overall, Q2 was a quarter of both delivery and preparation. We delivered against our current...

And good morning, everyone. Our planning continues to make million tonnes of... With expectation, it keeps us on track for the planned production... Remained our primaries, contributing approximately 77% of... Mining advanced into deeper phases of the pit, where we... As the year progresses, Mining sequence is a key. Mining at ASASA at NCRAN Cut 3, we continue to make the team mine 6% increase from Q1. We invested $22.1 million pre-stripping due to date investment $1 million. Additional equipment is scheduled to support the planned ramp-up. Importantly, maintaining our strong turning to slide 6. I think performance remains land maintenance activity. Metallurgical and gold production was impacted, continued throughout and delivered production, demonstrating looking ahead after the year a straightforward... Thanks, Michael.

Good morning, everyone. Turning to slide 7, the second quarter again demonstrating 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, a average realised gold price before the impact of the hedge. This translated into strong earnings with adjusted EBITDA of £78.5 million and adjusted earnings per share of $0.09. As discussed previously, we were 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 flow. 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. Contravention in the position 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. The key point here is that our balance sheet remains very healthy while funding the investment in our growth projects such as the significant infield drilling campaign at Nkren Cup. Turning to slide eight 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 production increases and grades improve and therefore our 2026 ASIC guidance remains unchanged. Continue to be able to direct capital towards value enhancing projects.

In the 2027 MRMR update 5 million. Following Q1 drilling success in the first phase of the SASE inhaling conversion drilling program, the full expanded program consisting of approximately 32,000 meters was approved and drilling was immediately ramped up with a total of seven drill rigs turning it with the team achieving a total of 13,748 meters in the quarter. The program will meet its objectives of converting a high percentage of the targeted inferred resource to the indicated category. This work is specific 65 meters were drilled through Q2 and are anticipating completion of the remainder of the drilling at Eboré. Our ongoing planning efforts for potential construction and underground exploration added at Eboré. Permitting and planning efforts advance well through Q2 and we are on track to make an investment decision for a potential construction start in 2027. This project will be a significant milestone for exploration and the AGM as it would represent the first steps to transitioning the Sankragoa Belt as has been done very successfully at both the Cephi and Ashanti Belt that lie immediately adjacent to us. Back to you Matt to discuss our near-term catalysts.

Thank you Chris. Turning to slide 10, a particular part of our strategy to extend mine life and strengthen the future production profile. Our immediate pro-age meaningfully. This combination represents the key financial inflection point beyond that near-term inflection, 200,000 ounces per year. As SASE and provide opportunity, 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 an improved operating and financial profile beginning in 2027.

As a reminder to ask a question, simply press star 1 on your telephone keypad. Please limit questions to one-on-one follow-up. Again, that is star one to ask a question. Our first question comes from the line of Heiko Island with HCW. Please go ahead.

Hey, guys. It's Heiko Elick with HC Wainwright. Thanks for taking my questions. Sorry for the background noise. I'm standing at the airport here. Good morning, my guys. Life is good. Hey, let's talk about the general administrative costs on a dollar-a-mill basis. You went from $7 to essentially $8.50, 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.

Ronnie, 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 issues that Mick alluded to. Otherwise, nothing really substantial in there. We had a few other maintenance costs that maybe floated a little bit on some sort of not kind of plant-related ones. But really, it's just the denominator, so your tons milled. 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.

That's what I 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 in 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 can just essentially take it and then take, you know, like global diesel prices and sort of like model it like that?

Yeah, Heiko, I think on average we're about 3.5 to 4 million liters a month. And obviously as we increase the profile of stripping at NCRAN over the next sort of, I guess, 18 months or so, we would expect that to increase a little bit over time. Honestly, we're not seeing it being particularly material to the business. Obviously, we've seen the spike through the summer, and obviously it's been hugely volatile, particularly what we're seeing at the pumps in Ghana. But I think, say, we're guiding, we're comfortable in our guidance range. We're certainly comfortable where the costs are sitting. Hopefully, the Middle Eastern situation will calm down a bit and we'll see the reversion in prices. But, say, at the moment, it's not that material to us. we're keeping an eye on things and manage it where we can fair enough and essentially on a usage basis flat for the rest of the year 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 say 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, ICO. Safe travels.

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

Good morning, team. Thank you for taking my call. So I've got a few questions here. You've reduced your development this year. Can you just talk us through the primary drivers of that reduction? Because I noticed that your guidance for the Crown Cut 3 hasn't changed at all.

I don't mind just go through the questions so if you would start with that please Hi Fred it's Matt Freeman here yeah we've as we said in the MZNA we expect development costs to be slightly down on what we 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 Thank you.

And with respect to the hub, this legacy issue, what's the current status on the appeal process and what sort of taking factors or milestones are needed before you can unlock some of that restricted path?

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 exact timing obviously because of these legal processes and through the summer there's various court delays and holidays and things so we're expecting hopefully something to be resolved in the short term, can't give you precise timings but certainly we're working as diligently as we can with council to get it resolved.

I think I have one more question on the Q3 mobilisation of the NACRAN fleet, in Q3 this is the additional pleat. Can you just give us a bit more colour on what was driving that particular timing for this additional pleat and whether there's a chance to exit the NATO?

It's Michael here. I can provide a little colour at this point in time in Q3 and then put a increase in Q3 as we put those new units to work and then they should be full complement

I'm quite cute for the line, but I read in the release, what was you trying to drill in that's been done at the bore and so on? So can you answer that, please?

Sure, Fred, it's Chris. Yeah, you're absolutely right. So we moved the rigs to a SASI. We wanted to make sure we could get that drilling done in a timely manner for modelling ahead of the 2027 MRMR update, as it is a significant increase in our potential reserve base there. It's still, you know, 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 at Abore. We are seeing good growth in the resource there to be able to get that in by the end of the year as well. So, I mean, that's our, you know, at Abore, that's our underground resource, right? So we released that last quarter. So it was really about getting the open pit reserve prior to the underground resource growth we think we'll still see.

I'm looking forward to seeing the site in October.

Your next question comes from Baraket Burhi with Beacon Securities. Please go ahead.

Hey, congratulations, guys, on another solid quarter. I'm noticing that production is actually stabilizing. The last three quarters have been really good, and obviously that's been helped by the great stabilizing as well, closer to the 0.9 grams per ton. But I was wondering, when do we start to see, with Abore's contribution, those grades to start to pick up closer to the reserve grade of Abore, let's say. I understand that Abore 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. NCRAN Cut 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. But when do we expect NCRAN to sort of start to complete a pushback and start to contribute decently to the mine, to the processing plant? Those are my questions for today.

Hi, Barakat. It's Michael here. We are seeing increases in Abore grades coming into Q3. We made a slide into Q3 and will be an increase. 27 should be a fleet and indicated and into 2029 meaningful.

Our next question is from the line of Medina Abdelina with Freedom Broker. Please go ahead. Hello. Thank you for your presentation.

So I have several questions you reduce development capital guidance by approximately 15 million dollars due to the late 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 crann or simply shift cash spending between years Hi there.

It's it's not human here again. Yes it's purely a timing difference, a little bit of a delay getting some of the organization together with the communities and we'd expect that to slide into 2027 but that won't have any impact on our production profile at all so just to catch timing difference.

Okay thank you and also mining unit costs increased 27 percent here over here due to lower tons mined and higher fresh rock exposure and as a board transitions further into lower strip phases during the remainder of the year, should we expect mining costs per tonne to decline meaningfully or does fresh rock mining offset most of that benefit?

I think, as you highlighted, we were slightly elevated on a cost per tonne basis this period, which was driven, say, largely by slightly lower tonnes 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.

Got it.

Thank you. And with no further questions in queue, I will now hand the call back to Mark Bedalek for closing remarks.

Thank you, Operator. And thanks again to everyone who joined the call in Galliano Gold.

Thank you again for joining us today. This does conclude today's presentation. You may now disconnect.