Discovery Mining Ltd. (DSV) Q2 2026 Earnings Call Transcript

Good morning. My name is Alexandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Discovery Mining second quarter 2026 conference call and webcast. 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by the number one again. Thank you. I will now turn the call over to Mark Utting, Senior Vice President of Investor Relations for Discovery. Mr. Utting, you may now begin your conference.

Thank you, Operator. Good morning, everybody. Thank you very much for joining us on Discovery's second quarter, 2026 conference call and webcast. As you just heard, I'm Mark Gutting, Senior Vice President, Investor Relations. Joining me today are many members of Discovery's senior executive team. Speaking today will be Tony McCooch, our President, CEO, and Chairman. Allison White, our Chief Financial Officer. Duncan King, our Senior Vice President, Canadian Operations. Ford Leiboy, our Senior Vice President, Mineral Processing. Harold Byrd, our Vice President, Mineral Processing. Eric Calio, our Senior Vice President of Exploration. Jose Javallera, our Senior Vice President in Mexico. We'll then turn it back over to Tony for concluding remarks. Just before we get started, as always, I'll remind you that during today's call, we will be making forward-looking statements. These statements are based on current expectations and projections about future events. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. and for more information please refer to slide two on our slide deck as well as other disclosures on our website in addition we will also be making reference to non-GAAP measures during the presentation these measures do not have any standardized meaning prescribed under GAAP and therefore may not be comparable to other issuers slide three in the deck deals with cautionary language around non-GAAP measures uh lastly for me um all dollar amounts today

will be expressed in u.s dollars unless otherwise indicated uh with that i'll now turn the call over to tony mccouch okay thanks mark and good morning everyone that it's really good to be able to be here actually you know a lot of i think maybe before we saw it i mean we had a really i think you know we we had a we had some pretty good results in the quarter things things went went went well or progressed well i i know that you know like there's a lot of stuff hiding in the background that maybe people all don't see and i don't talk about a lot of people did a lot of a lot of good work a lot of people that did a lot of good work some of the results aren't really shown in this quarter they'll be you'll be seeing them in future quarters but you know you know what we talk about and all the all the benefits that we that we see and all the all the results to see it's really and you know we get the chance to talk about it uh and and tell you about it but there's a lot of really good people working in the company uh throughout the operations and they're the ones who did all the good work so you know before we start and thank them for the results and you know and we recognize really what what what everybody's doing and so stay stay tuned we're going we're going to talk about good things that happened here but stay tuned there's still a long. Anyway, I'll start with slide four. This is a slide that we use a lot in the past to try to you know show things in terms of where we are in value creation that talks about our growth to over half a million ounces of gold in production over the next three to five years. It looks at our potential for Cordero and what we think we can bring Cordero of you know 14 million ounces of silver production rate but you know on an equivalent silver equivalent basis depending on on silver prices there's significant zinc and lead production there and and definitely a you know one a world-class uh silver project in mexico just waiting for a permanent and then looking at a gold business you know and and what we're doing we now believe that that has a potential to be significantly greater than than what we show here and and you know make that foreign looking statement as mark talked about earlier and during this presentation we will show you why we are confident that this can be achieved going to slide five uh you know and you know like you know second quarter was favorable and we did have a lot of good good works and you know definitely we've done a lot of progress in advancing our growth plans plans and you know and maybe there are three key developments during the quarter that maybe we highlight when we get first we completed the acquisition of kid operations uh second we second we continue to achieve outstanding exploration results and uh you know we you know and on the expiration results like you know we we we originally were putting all in one press release now we put out three press releases in the last three weeks you know instead of lumping them into one there's so much in good information all we realized we we probably have to start presenting them each individually and you can see there's excellent results at all of our exploration targets and and we expect that to continue You know, we really think that this is as much as this is a production and business story and a going to certain operation that's financially viable. And as much as this is a growth story, this could be an exploration story as well on steroids. And, you know, so we had a lot of good exploration results and we did ramp up our investments in the quarter. and and then we've had definitely you know we're focusing on trying to improve our operations but uh you know going to slide six this looks at the kit acquisition you know you know i think when in our last call we did talk a lot about it about it but you know if summing it up we know the growth we talked about this is the really a big enabler besides the expiration besides the uh you know have the people and what we're doing it for doing in in in the park fine camp but besides all the the the geology etc that we see here and the infrastructure in place you know the you know and actually the acquisition of the kid operations really helps us to achieve the growth and that we're targeting over the time frame that we plan to achieve it you know and and a big part of it is the kid metallurgical site and and and what we can do there and we'll probably be talking in more and more future uh as the year progresses in terms of the benefits of that um we're not going to get into too much of the details of that but you know that that that was a significant acquisition that really enables us to move forward and you know and you know maybe you know you know when we talk about it there's a current processing capacity there but for us to grow our operation optimize oil plantings at panmore without this infrastructure and the geography the land position the power of the water that comes with hit operations maybe i can i i can talk too long about that maybe i shouldn't and you know this is a very important acquisition for discovery slide seven shows it shows what we know from from the last quarterly call and sort of gives a sort of concept that lays out our plan construction the new conventional gold circuit incorporated into space that was the a division you can see that some of the conceptual diagrams of where the infrastructure will go we're we are currently reviewing what this circuit will look like and our advancing engineering design work and i can tell you that we have moving parts the exploration success and and sort of our productivity rates that we might design for them are there's still a lot to being added to the story so we got a lot of blank pages we might have a lot of uh headings on on and chapters written in the book but that all the all the content is being rewritten as we speak in terms of what we're doing there the b circuit you know that that's that kid there is four circuits as we talked about before the b circuit will continue to be used as a base metal circuit and now processing the kid creek material at least uh for for 2026 and all of 2027 for the c circuit you know we are doing test work now and we expect that this circuit will be used to process board and ore starting sometime sometime next year uh and and we don't wait we see this this could add sometime something up to 40 000 ounces in annual production just in a current form uh you know and and you know and and where did we get that from well it will add 2 000 tons a day of added availability at dome we can see improved metallurgical recoveries at at all at the the the ore process at the Dome mill currently, plus we think we're gonna get that improvement in recoveries from Borden, right? And it also gives us the ability to process higher levels of Borden ore at KID. So maybe it gives us the ability to increase productivity from Borden because we were limited how much Borden ore could be intermingled into the gold circuit at Dome. And, you know, with the KID MET site, we also investigated future plans for the D circuit. our goal would be to have the pvz and or other materials processed here and you know so so we still have a lot a lot about the work there have been reading and reading an enabler in a lot of ways slide eight looks at the expiration and i mentioned we had three press releases over the last three weeks all with excellent results eric's going to talk about this later so i know i'm not you know i'll just focus on a couple of things and then maybe highlights you know we're excited about panor based on recent drilling and you know tied into into past drilling we've established that the minimalizing system over if we've identified over strike length of board in four kilometers the system remains open in all directions and at depth and you know and we we've talked previously about the depth potential in in this region of the camp in terms of depth of oil pond where it's down to 16 2 000 meters i should say and you know and and the depth that was at the hallmark project which is on strike on the same system we it's not it's not it's not it's not a mine that we have but it was mined down to 5 000 feet so there's a significant upside here we're currently working on a mine redesign for for the hammer pit and and we expect pounder to become a much larger producer and you know with that you know as i talked about earlier in terms of the processing capacity of what we might build at KID, at KID A circuit to support a much larger open pit operation here. And the other point that I'll make is that, you know, Dome is the second large open pit operation we expect to be able to bring online. It has transformation growth potential and by, you know, what we do at KID with the KID A circuit and being able to move panel there, this enables the dome mill in its current form to be used to process and to start the dome open pit this is again if this is all future looking stuff we we do also have longer term the hollander macintyres and central thirds broad scale open pit but again you know there's that that's maybe we just we just start with the pamor and then see how hammer goes to dome but you know we we truly believe that the made common discovery operates three of canada's largest old big gold mines all located in the tenants camp going to slide nine it looks at our q2 capital expenditures as expected our capex went up in q2 totaling 86 million dollars that reflects our our progress on on you know of a number of fronts you know our tailings we're advancing our tennis project at dom to build up our tailings capacity uh we continue to do pre-stripping at panmore our goal is is is to bring pamper to commercial production, and we're investing in new fleets of equipment and infrastructure that will follow up on important, and we expect to see further progress and further investments in CapEx over the year, et cetera, and that's been our goal here to invest back into these operations to build, to not only build production, but also to improve the operating performance, you know, so not just growing production, but improving performance and reducing costs. In terms of slide 10, it highlights our Q2 operating performance. Again, on the other side, I'll leave the financial results for Allison to review, but I'll say that virtually every financial metric improved substantially from last year's second quarter. We achieved record revenue in Q2 2026. Adjusted earnings increased significantly compared to both prior periods. and speaking of record results we achieved record gold production in q2 production we increased over 10 percent from the previous quarter Duncan and Gord will get into the details but the increase was largely largely due to higher throughput and a key highlight for the quarter was that both mining and milling rates showed strong growth at every operation finally for me in this part before I pass it on to Allison slide 11 shows our 2026 guidance and you know again we'll tell that we are tracking well to achieve all of our guides for the year and with that I'll turn the call over to Allison.

Thanks Tony and good morning everyone. Overall it was another solid quarter reflecting the continued momentum that we built in Q1 and certainly that we've continued to build over the past year of operations. We had robust revenues during Q2 of 319 million dollars an increase of 12 percent quarter over quarter primarily reflecting higher ounces sold and the impact of the KID operations from the closing on June 1st, which did contribute $30 million to revenue during Q2. Revenue has increased steadily since the same quarter of the prior year, our fourth consecutive quarter of growth, driven by the operational team effort to lift production and by higher gold prices over the same period of time. We've moved more tons during the quarter compared to the prior quarter at a lower cost per ton, coupled with higher number of ounces sold during the period and partially offset by a planned reduction in grades. As a result, cash costs per ounce were $1,387 per ounce sold. As we've said before, we expect unit costs to be the highest in the first half of the year and improve during the second half of 2026 as production and sales volumes build. All-in sustaining costs averaged $2,154 per ounce sold, reflecting expected higher sustaining capital expenditures partially offset by the lower cash cost the ramp up of sustaining capital reflected capital development and infrastructure improvements at hoyle pond and borden additional deliveries of new mobile equipment and construction work at the tailings tma6 project evita of 170 million dollars was similar to the prior quarter as the contribution from the kid operations offset the decrease in the average realized gold price that said and similar to my comments on revenue we've carried strong EBITDA momentum from last year free cash outflow of 11 million dollars reflected the ramp up of our capital expenditures program and the impact of 56 million dollars in working capital changes reflecting accelerated payments of accounts payable prior to a new system implementation that occurred at the end of the quarter funding of the kid operations that were offset by the first month's impact where no cash was received for KID revenues in June due to the timing of the receipts in the month following for sales according to the new offtake agreement. Discovery deployed $86 million in capital expenditures to further advance the asset base at Porcupine, consistent with our capital allocation plan, and toward our vision of reinvesting in the business to build value over the long term. Operating and free cash flow reflect the reinvestment in the business through the company's capital expenditure programs and the impact of working capital described earlier. Let's move on to the next slide to review net income and adjusted net income. On an adjusted basis, earnings were $92.3 million, or $0.11 per share, compared to $82.7 million, or $0.10 per share, in the prior quarter and $28.4 million, or $0.04 per share, during Q2 2025. The primary differences between net income and adjusted net income during 2-2-2026 included the exclusion of a one-time deferred tax expense resulting from a change in the discount rate methodology from the acquisition date fair value for the KID acquisition subsequent to re-measurement which had a two cent impact. TSA and other one-time costs had a one cent impact. The purchase price allocation adjustments related to the KID acquisition for the fair value also had a 1% impact. And finally, another cent for payments to First Nations in relation to the closing of the KID acquisition and reclamation expenses for non-operating sites. To summarize, adjusted earnings were up quarter over quarter and nearly three times from only one year ago when the company initiated operations through the acquisition of Porcupine. Let's turn to the next slide to review our capital priorities. First, we are actively investing to drive future growth. Our capital spend program is robust during the current year with $195 to $235 million planned for growth capital at Porcupine, including an additional $25 to $35 million for capitalized exploration and $120 to $165 million planned for sustaining capital. The capital spend program includes replacing equipment, expanding mill capacity, and working to enhance future production levels through exploration and conversion drilling across the business that continues at a rapid pace. Second, we are strengthening our balance sheet. Despite the period of reinvestment that I just spoke about, we had over $600 million in liquidity at the end of the quarter, with $364 million in cash, and since the close of the quarter during July, have upsized the company's revolving credit facility to $400 million, bringing total current liquidity to over $750 million. As we look to continue to expand and grow, our financial strength will be fundamental to our success. We've continued to build on the momentum that began last year across all of our key financial metrics. Revenue and EBITDA have remained robust each of the last four quarters and equally proved strong earnings generation. Let's take a look at our liquidity position on the next slide. Discovery's cash balance totaled $364 million at the end of the quarter. The gold price environment translated into $130 million of operating cash flow, partially offset by the working capital adjustments and continued capital investments that were covered earlier. This leaves us with a strong balance sheet and the financial flexibility to fund our capital programs and advance our strategic priorities that underpin our vision with confidence. And I'm now going to pass it over to Duncan King, our Senior Vice President of Canadian Operations.

Thank you. I'll discuss our production numbers and then ask Gord Levoy to review our processing performance. During Q2, we achieved record production of 67,300 ounces, 12% higher than in Q1. Gold Ford and Gold Sold were both 66,000 ounces. The increase in production was due primarily to higher tons processed, which more than offset the impact of an anticipated reduction in the average grade. the lower grade was largely a result of a mix of mill feed we had a higher proportion of feed from the open pit sources stockpiles as tony mentioned a highlight of the quarter was our mining rate which increased at every operation we mined 1.1 million tons during the quarter and ended the quarter with 14 million tons in stockpile site level operating cash costs averaged $1,878 per ounce, a 2% improvement from Q1. Site-level AISC has increased to $2,028 per ounce, with the increase entirely due to the pickup in the sustaining capital. You may recall we were below plan for sustaining CAPEX in Q1, mainly due to the timing for the delivery of our mobile equipment.

We made up for a lot of that in Q2. i'll now call on lord levoy to talk about the milling good morning we milled 904 000 tons in q2 2026 that was up almost 30 from the previous quarter some of the issues we had in q1 in the crushing circuit did impact to some extent in early q2 but overall the mill performed much better for the quarter we exceeded 11 000 tons per day on 49 days in q2 and we exceeded 12 000 tons a day on 11 days supported by the higher throughput our milling costs for the quarter were 21.50 per ton 14 better than in q1 and just slightly higher than our best quarterly average

to date of 21.20 per ton in last year's third quarter i'll now turn over the call to harold bird vice president mineral processing to discuss the kit operations thanks gory good morning overall kit operations had good performance in the first month since its actual acquisition excuse me contributing a positive revenue of 30 million dollars versus production cost of 19 million kids growth capital primarily related to tailings buttressing and mill modifications to support the processing of board and ore which is targeting to begin in the first half of 2027. further study work has commenced to expand to the KID mill process to process PAMOR in future years. KID operations continues to be a safe, reliable operating mine that currently has a total recordable injury frequency rate of zero. I'd now like to turn the fall over to Eric Calio, our Senior Vice President of Exploration.

Thank you, Gerald, and good morning, everyone. I'm on slide 18, and happy to say that it's been another good quarter for exploration with excellent success at operating mines and new growth projects. With this in mind, let's look at it. I'll start here with Pan Amor, where we drilled another 47 holes and continue to contain some very exciting new results. showing the image the main focus here has been remained on three main targets including the main pits primoral west and the north contact zone additionally we added a new targeting to the next it's called tiara trend and which is located west of the main pit results for each of the areas are shown in the current image indicated extremely positive but some of the best results continue to come from the main pit including highlights of 305 over 30 meters and 208 over 2.08 over 24 meters this will continue to see strong results from the tamar west and for our contact areas including several holes with multiple zones and excellent grades and widths and then finally we have the qr trend where we're very happy to report a high grade result of 17.36 grams per ton over 5.9 meters in the very first hole drilled 200 meters west of the current resource now turning to my next slide number 19 you see the first two images providing different angles for the areas drilled with this first one looking to the north and focused on the south side of what's called japan more trend key things to note here are the main pit and panor west areas which are on the central and left sides of slide as well as as well as the overall size of the target area which we're looking at here which at this point measures a little over four kilometers long and at least 400 meters deep also notable is the very shallow depth of drilling to date to both areas and the large areas still remaining to be tested below and between then turning to the next slide which is number 20 you see a view looking to the southwest providing a better view for the north side of the trend key things to note here would be the current resource sit sits in the background as well as all in intersections in the north contact and kiara areas which sit directly to the north also provided here is another good angle of the tambour west area so given all about we're very pleased with progress today the tambour is continuing here with four hills additionally work has now begun on a new resource update and on track for this year what we believe will be a very positive result so then going on next slide number 21 you see the dome which we did which was another project which we believe has a lot of potential that's previously described dome as a historic mining property which already has over 17 million ounces mined where we already and where we have a resource of over 11 million ounces but also now working to upgrade and expand for an updated estimate this year indicated on the image all the new building is in the areas surrounding the current resource which focused on the areas to the southwest north and northeast portions of the property with results continue to look very encouraging drilling in the southwest portion of the property so there's nine holes to evaluate mineralization near the south limits and continue to indicate excellent grazing width at very shallow depths this need to have eight more holes in the north part of the property and under the north wall of the pit which were also very disgusting with multiple excellent intercepts including a pilot of 9.09 over 17.3 meters and then finally we had one new hole to the northeast intersecting court scheme near the east limit and containing a very high grade rate of 278.48 grams over 1.5 meters So then turning to my next slide 22 you see another image related dome which provides two different viewing angles across the target area and a little more detail on the new results with the one on the top part in the south part of the pit looking northwards and the other covering areas to the north and looking west. These things to note here would be the red and green outline which represents current pit shell and underground working as well as the shallow depth and excellent rates in both areas to remain open for future testing and expansion so with this i'll conclude by saying that similar to panmore drilling here is looking very good standing with two drills two to three drills work is also now begun on a new resource update and on track for year end so then turning on to my next slide 23 you see the tv's end where we also have very good progress as described in the past tv's end is a significant zone of mineralization in the southeast part of the fall pond that was partially drilled and defined by past operators which were remaining in those related to support and made an estimate for later this year shown on the screen there are two different angles of the on the deposit with both being long sections and providing different levels of detail turning to the one left we see more of an overall view of the size the shape of the zone is indicated looking at a large northeast turning structure just south of the line between 850 and 1700 levels and where mineralization is containing mostly in the series of lenses that are highlighted here in the brighter colors also important to note here on this slide is the close proximity of the zone to the current line workings and location of various drill platforms including 1210 and 1680 levels which we have been using for most of the drilling to date Referring now more to the right-hand side, we see details for the new drilling, which as indicated are all located, has been focused really on the 12, 10, and 16, 80 levels and looking very positive. And just to give you a few examples, what we're seeing, basically looking at values of 5.13 over 18.2, 7 over 16.9, 5.7, 5.17 over 21. important to note that all of these intersections are similar to or better than previously drilled holes in these areas. Aside from the above, I'd also like to point out that as part of the latest program work is also initiated to collect samples from metallurgical testing from holes near the 1210 with a total of four samples now collected and shipped out with results expected later this year. Given the above, we're very happy with the progress so far. The program is continuing with drills on 1210 and 1680 levels. Turning now to the next slide, which is 24, you see Owl Creek, where we completed another 10 holes and continued to confirm and expand mineralization near the Owl Creek pit. Just for context, the Owl Creek pit is located one and a half kilometres west of the Falcon Mine on the south side of the Falcon belt, which is the same contact that hosts the mine. That's the pit, as well as two underground ramps, which you see here on the image, were to both develop by Falken Bridge Gold in the 1980s. Shown on the screen are two images, the one on the left being a plan of the drill area and the one on the right being a long section providing more details. Referring to the left, you see the new drilling targeted two main areas on the east and west sides of the pit and continue to obtain very positive results. With some of the key values on the east side being 7 grams, 10.09 over 17 and 6.35 over 9.4, Highlights to the west, 4.72 over 24, and 19.35 over 5.4. So turning now to the right side, we see a view looking northwards across the zone. They give it again another angle on the result. It's showing the overall pattern of holes going to depth from west to east. Important to know here is the holes on the left are the ones drilled directly below the pit, and the ones on the right are what we call into the wide high-grade zone. Also important to know here is what we think is very good continuity between the areas and limited drilling which exists below the 650-meter level and in areas going to the In terms of current activities, drillings continue here with two drills on site focused on further confirmation expansion. Additionally, in light of the good success, work has now been initiated on a new exploration route from Hohan Mines which allow more detailed drilling both here and in the areas between although not shown the image expected the ramp will enter the zone from the east side near the 300 meter level and allow quick access to the zone the expected completion date is in q3 2027. and then turning to slide 25 we see an overall view of the board in mind where we have also been very bitten as described in the past board is located west of Timmins and centered on a major east-west trending shear zone called the main zone which has now been traced and partly mined for distance of over four over two kilometers. In terms of recent exploration pretty much all work is focused on the far east side and on extending the main and east lower zones from platforms underground near the 585 level as well as from surface northeast of the mine of the main zone. In terms of results they've all been very positive with excellent gradient width both within and outside the current resource sheets in both zones targeted with some of the key highlights from underground reaching levels such as 9.16 over 29.0 meters and the highlight of the program i think a new intersection on surface of 6.34 over 8.7 500 meters down plunge from the inverted resource so then moving on to slide 26 I have one more image related to this area which is a 3D looking northwards across the area drilled and showing more detail on all the new holes. The key things to know here might be that all the new holes will drill from the 585 level which is the green line at the top of the drawing and targeting at and beyond the current limit of the Inford resource which is shown here in light blue. I'll also point out locations to the new surface hole, field 26-0-11-19, which is in the far left side and located 500 meters from the current resource. So with this being my last slide, I'd just like to say in the summary, things still continue to go well and a lot more to come. So with that, I'll pass over to Jose Zabalera, our VP of Corporate Affairs and Sustainability Pinesco. Thanks, Eric.

In Cordero on July 24th we received an official visit from senior level seminar officials with very good outcome from the project and from the visit. So we right now are in the final stage of the environmental permitting process.

At the same time we are continuing with the studies to update capital and cost estimates as well as more detailed studies regarding water and part and power for the for the project so i will pass to our ceo tony mcuch thanks everybody and and this um hopefully the well not hopefully last slide it'll be the last slide slide 28 you know and you know i think when you get a sense there's a lot a lot a lot of things going on whether it's operated forms exploration development a lot of a lot of exciting projects here and this slide and and really this is a slide that maybe we put together when when we first started with the acquisition of flux fine with discovery we tried to show out how gold production could grow well over half a million ounces a year and by the way this doesn't include cordera in here which which is even over and above that but you can see from our uh quarter two results that the bills will be achieved in expiration of the acquisition of kid our continued investment in operations it's it's you know you can see how how we're demonstrating what's going on here that we're taking the vision from concept to reality and in terms of what we can build and purchasing and building discovery as a wall and looking at the slide you know hamburg now as we talked about now expected to become a much larger mind and 150 000 ounce a year producer outlines in last year's technical report that we showed 150 000 ounces a year up to 2047 i think in the report as i mentioned we're taking we're working on on a mine redesign for pammer and a new large scale processing plants dedicated to support this this then unlocks the dome mill for the dome mine which at current levels of greater could produce over 200 000 ounces a year we'll give you a better sense of what that looks like later this year when we update the resource we also have growth potential at borden as outlined by you know by eric in terms of what he sees plus the processing as you build processing capacity for borden and and and then you know looking at the investments to our planning and then there's tbz and elk creek like oil pond we have a you know we're planning an initial before 2101 resource for tbz later this year and we'll continue working towards a resource at elk creek uh there's still a lot of work to be still be done there's probably some of the exploration targets i know there is that we haven't even talked about here there's much more to our story lying ahead of us and a lot of exciting things to do i think one of the things though that's also important and i maybe we should acknowledge you know and harold talked about the safe performance a kid and a you know that tmifr zero and and i i know there's been a significant improvement in our kmifr and all the pork fine operations are down to one you know and so effectively you know uh we're running mines here uh underground mines and and little bit mines and and all processing plants in in the team's camp that's safer to work there than to be working at walmart or working at uh canadian tires so you know we're really proud of that and we want to you know, maintain that as we go forward. Anyway, with that, I want to thank everyone for being on the call and I'd be happy to take any questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Larry Liu with CIBC. Your line is now open. Please go ahead.

Hi, Tony, Allison, Mark, and team. Thanks for taking my question. I guess I'll kick off the first question with free cash flow. So free cash flow turned negative this quarter, but for very good reasons, right? For time, your cash So from KID and other items, I guess my first question is, can you remind us what are some of the upside for the new enterprise resource planning system that was implemented and how that would help with further operation optimization from here?

Yeah, Larry. So I'll be happy to take that question and talk about the benefits for us in implementing the new system. So you may recall that when the company acquired the porcupine operations, there was an agreement to utilize some of the ERP system with Newmont. And so the company then simultaneously set up its own instance of SAP, and that SAP instance will allow us to have a lot more flexibility as well as a lot more visibility into the cost structure for all of our operations on a go-forward basis. It's also going to obviously be in our full control since it's a discovery implemented instance that has been set up in, you know, the full with the full complement of everything that we typically look at and that we typically like to track. So, we are anticipating that we will see some additional value going forward.

We also will be able to have a little bit more granularity into the business that the whole management team is used to seeing, and we'll be able to provide some additional clarity on all the growth that's coming in the future. yeah i mean really i mean in summary there like effectively we were we've been operating under the code of accounts and the accounting practices uh that that that we're limited to what how sdp was set up uh under newmont uh we're gonna we we can now implement it more uh on our way as as as alison mentioned and you know we have a different view on that on our management accounting and how how we how we can account for things so we see that as a big value driver in terms of, you know, maybe, as I say, we can turn the finance team and accounting team from, you know, into profit centers for the company.

Yeah, no, for sure. Good to hear that things are doing the discovery way, doing the best way possible. And I guess, you know, kind of on that note as well, Tony and Allison, can you remind us what's kind of your view for Kick Creek, both near term and longer term? I know this quarter, because of timing of cash flow, the operation kind of had a little bit negative free cash flow. But for the rest of the year, should we still expect a positive free cash flow? And how does it help the operation or hitting that 500,000 ounce in the near to medium term?

So, Larry, this is sort of the first and only month that we'll see this cash flow differential that we did see because of the timing of the offtake agreements and the way that the sales agreements were structured. The cash is remitted back to the organization in the following month after the sale, and so because the transaction occurred as of June 1st, this quarter, because it ended on June 30th, we do see that gap in terms of sale versus cash remittance. but on a go-forward basis, there will always be a one-month lag, but it will be a constant one-month lag, and we will have that catch-up in terms of cash and sales on a go-forward basis. So, we'll still be a month behind in cash collection, but that will be something that you'll see roll into the overall financials on a go-forward basis.

Yeah, effectively, as Harold mentioned, And we had almost $30 million in revenue with $19 million in costs. So, yeah, the cash is going to come in a month later based on the off-date agreements and how concentrates get moved.

But it really was positive. Amazing. Sounds good. Thanks again, Tony and Allison, for taking my question. And congrats on a strong quarter.

A reminder, if you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. There are no further questions at this time. I will now turn the call back to Mr. Utting for closing remarks.

Well, listen, thanks, everyone, for participating in today's call. You've heard we've got, you know, two key parts when we talk to the market that we address, and one is, you know, the significant improvement you're seeing in performance as we go quarter to quarter, and in this case, particularly compared to last year's second quarter. But we also have a lot to talk about in terms of our growth story, which we think is clearly one of the best in the gold industry today. And on that second quarter was a tremendous quarter for us, and we expect to continue to have a lot of progress and look forward to our next call when we can tell you about how much further we've come. Thanks very much.

This concludes today's call. Thank you for attending. You may now disconnect.