Q2 2025 Equinox Gold Corp Earnings Call

Speaker #2: Thank you for standing by. This is the conference operator. Welcome to the Equinox Gold second quarter 2025 results and corporate update. As a reminder, all participants are in listen-only mode and the conference is being recorded.

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the Equinox Gold Second Quarter 2025 Results and Corporate Update. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Ryan King, Executive Vice President, Capital Markets for Equinox Gold. Please go ahead.

Speaker #2: After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad.

Speaker #2: Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Ryan King, Executive Vice President, Capital Markets for Equinox Gold.

Speaker #2: Please go ahead.

Speaker #3: Thank you, operator. Well, good morning, everyone, and thank you for taking the time to join the call this morning. Before we commence, I'd like to direct everyone to the forward-looking statement on slide two.

Ryan King: Thank you, Operator. Well, good morning, everyone, and thank you for taking the time to join the call this morning. Before we commence, I'd like to direct everyone to the forward-looking statement on slide two. Our remarks and answers to your questions today may contain forward-looking information about the company's future performance. Although management believes that our forward-looking statements are based on fair and reasonable assumptions, actual results may turn out to be different from these forward-looking statements. For a complete discussion of the risks, uncertainties, and factors which may lead to actual operating and financial results being different from the estimates contained in our forward-looking statements, please refer to our second quarter and year-to-date MD&A and Consolidated Financial Statements available on our website, as well as on CDAR Plus. And finally, all figures are in US dollars unless otherwise stated.

Speaker #3: Our remarks and answers to your questions today may contain forward-looking information. About the company's future performance, although management believes that our forward-looking statements are based on fair and reasonable assumptions, actual results may turn out to be different from these forward-looking statements.

Speaker #3: For a complete discussion of the risks, uncertainties, and factors that may lead to actual operating and financial results differing from the estimates contained in our forward-looking statements, please refer to our second quarter and year-to-date MD&A and Consolidated Financial Statements available on our website as well as on CDR Plus.

Speaker #3: And finally, all figures are in US dollars unless otherwise stated. Present today with me on the call are Darren Hall, Chief Executive Officer; Peter Hardie, Chief Financial Officer; and David Schumer, Chief Operating Officer.

Ryan King: Present today with me on the call are Darren Hall, Chief Executive Officer; Peter Hardie, Chief Financial Officer; and David Schumer, Chief Operating Officer. We will be providing comments on our second quarter 2025 production and cost results and an update on the Greenstone and the Valentine Gold Mines, after which we'll take questions. The slide deck we will be referencing is available on our website at equinoxgold.com under the Shareholder Events section. You can also click on the webcast to join the live presentation. And with that, I will turn the call over to Darren.

Speaker #3: We will be providing comments on our second-quarter 2025 production and cost results, as well as an update on the Greenstone and the Valentine Gold mines. After that, we'll take questions.

Speaker #3: The slide deck we will be referencing is available on our website at equinoxgold.com. Under the Shareholder Events section, you can also click on the webcast to join the live presentation.

Speaker #3: And with that, I will turn the call over to Darren.

Speaker #4: Turning to slide three, and thanks, Ryan. Good morning, everyone, and I appreciate you taking the time to join us on the call today. Firstly, I would like to acknowledge the efforts of our employees and business partners for their continued focus during the quarter to responsibly deliver over 219,000 ounces.

Darren Hall: Turning to slide three, and thanks, Ryan. Good morning, everyone, and I appreciate you taking the time to join us on the call today. Firstly, I would like to acknowledge the efforts of our employees and business partners for their continued focus during the quarter to responsibly deliver over 219,000 ounces during what can be a distracting time as you integrate two businesses together. So, well done, and thanks to everyone. With the completion of the merger, we have created a significant America's focus gold producer anchored by two cornerstone Canadian mines, Greenstone and Valentine. It is definitely exciting times as we build one Equinox with the leadership, team, and the entire organization focused on delivering on its commitments, operational excellence, advancing high-quality organic growth, rationalizing the portfolio, and importantly, disciplined capital allocation.

Speaker #4: During what can be a distracting time, as you integrate two businesses together. So, well done and thanks to everyone. With the completion of the merger, we have created a significant America's-focused gold producer, anchored by two cornerstone Canadian mines, Greenstone and Valentine.

Speaker #4: It is definitely an exciting time as we build one Equinox, with the leadership team and the entire organization focused on delivering on its commitments, operational excellence, advancing high-quality organic growth, rationalizing the portfolio, and, importantly, disciplined capital allocation.

Speaker #4: The benefits of bringing the teams together are already paying dividends. One example of which is reflected in improvements at Greenstone, which we'll talk to later.

Darren Hall: The benefits of bringing the teams together are already paying dividends, one example of which is reflected in improvements at Greenstone, which we'll talk to later. The company has entered into a pivotal phase with production, cash flow, and earnings expected to grow meaningfully in the coming quarters. Turning to slide four, Q2 financial results predominantly reflect Equinox's pre-merger assets. On an attributable basis, the company sold just over 148,000 ounces at an average realized price of $3,200 an ounce. Interestingly, had the caliber transaction been effective January 1, the pro forma consolidated revenue for H1 would have been approximately $1.33 billion from 401,000 ounces, which clearly underscores the enhanced scale and earnings power of the new company. Looking forward, Q3 and Q4, we'll see increasing production as we benefit from a full quarter of contribution from the caliber assets, continued improved performance at Greenstone, and first gold from Valentine.

Speaker #4: The company has entered into a pivotal phase with production cash flow and earnings expected to grow meaningfully in the coming quarters. Turning to slide four, Q2 financial results predominantly reflect Equinox's pre-merger assets.

Speaker #4: On an attributable basis, the company sold just over 148,000 ounces, at an average realized price of $3,200 an ounce. Interestingly, had the caliber transaction been effective January 1, the probe former Consolidated Revenue for H1 would have been approximately $1.33 billion.

Speaker #4: From 401,000 ounces, which clearly underscores the enhanced scale and earnings power of the new company. Looking forward, Q3 and Q4 will see increasing production as we benefit from a full quarter of contribution from the caliber assets, continued improved performance at Greenstone, and first gold from Valentine.

Speaker #4: Turning to slide five, Greenstone is a key focus. The ramp-up is progressing, and we are seeing tangible improvements. Q2 delivered solid results, with mining rates increased by 23% and processing rates improved by 20% over Q1.

Darren Hall: Turning to slide five, Greenstone is a key focus. The ramp-up is progressing, and we are seeing tangible improvements. Q2 delivered solid results where mining rates increased 23% and processing rates improved 20% over Q1. Building on that momentum, Q3 is off to a strong start, with quarter-to-date mining rates 10% higher than Q2, with month-to-date August mining rates averaging 200,000 tons per day. Over the 30 days ending August 10th, we processed an average of 24,500 tons per day, with more than one-third of the days above the nameplate capacity of 27,000 tons per day. There is still work to do as we focus on minimizing dilution and mining losses around historical workings, concurrently with targeted programs to improve fleet productivity and operating discipline. I'm pleased to introduce Dave Schumer as Equinox's Chief Operating Officer, who brings over 35 years of mining experience to the business.

Speaker #4: Building on that momentum, Q3 is off to a strong start. With quarter-to-date mining rates 10% higher than Q2, month-to-date August mining rates are averaging 200,000 tons per day.

Speaker #4: Over the 30 days ending August 10th, we processed an average of 24 and a half thousand tons per day. With more than one-third of the days above the nameplate capacity of 27,000 tons per day.

Speaker #4: The restore work to do, as we focus on minimizing dilution and mining losses around historical workings, concurrently with targeted programs to improve fleet productivity and operating discipline.

Speaker #4: I'm pleased to introduce Dave Schumer as Equinox's Chief Operating Officer, who brings over 35 years of mining experience to the business. Dave and I worked together at Newmont and, most recently, Calibre, and he has been working closely with the Greenstone team since mid-May to accelerate the ramp-up, improve efficiencies, and safely deliver reliable performance.

Darren Hall: Dave and I worked together at Newmont and most recently Caliber, and he has been working closely with the Greenstone team since mid-May to accelerate the ramp-up, improve efficiencies to safely deliver reliable performance. With that, I'll ask Dave to discuss a little more color on some of the team's recent progress at Greenstone.

Speaker #4: With that, I’ll ask Dave to discuss a little more color on some of the team’s recent progress at Greenstone.

Speaker #5: Thanks, Darren. We've moved quickly to put more horsepower behind Greenstone's ramp-up. This includes bringing in seasoned advisors with decades of load and haul experience, improving shovel loading cycle times through operator training, the addition of auxiliary equipment to maintain pit floors and shovel dig faces, and the introduction of double-side loading to essentially eliminate haul truck spotting time.

David Schumer: Thanks, Darren. We've moved quickly to put more horsepower behind Greenstone's ramp-up. This includes bringing in seasoned advisors with decades of load and haul experience, improving shovel loading cycle times through operator training, the addition of auxiliary equipment to maintain pit floors and shovel dig faces, and the introduction of double-side loading to essentially eliminate haul truck spotting time. We've also recently taken steps to bring in technical specialists to optimize and monitor our blast designs and performance, targeting improved fragmentation, reduced dilution, and improved ore presentation to the mill. On the hauling side of things, improved road designs and construction, tighter dump exchanges, and recently added support equipment are all helping us move material much more efficiently through increased average speed across the haulage fleet.

Speaker #5: We've also recently taken steps to bring in technical specialists to optimize and monitor our blast designs and performance. Targeting improved fragmentation, reduced dilution, and improved ore presentation to the mill.

Speaker #5: On the hauling side of things, improved road designs and construction, tighter dump exchanges, and recently added support equipment are all helping us move material much more efficiently through increased average speed across the haulage fleet.

Speaker #5: These enhancements along with a concerted effort to reduce operating delays specifically through the implementation of an efficient hot change between shifts are already contributing significantly to stronger daily performance.

David Schumer: These enhancements, along with a concerted effort to reduce operating delays, specifically through the implementation of an efficient hot change between shifts, are already contributing significantly to stronger daily performance. As Darren mentioned, month-to-date August mining rates have been around 200,000 tons per day, with best-demonstrated performance to date of 227,000 tons per day. And the focus remains on driving dilution down and fine-tuning the process plant to steadily improve operating time, throughput, and recovery. Turning to slide six and back to you, Darren.

Speaker #5: As Darren mentioned, month-to-date August mining rates have been around 200,000 tons per day, with best demonstrated performance today of 227,000 tons per day. And the focus remains on driving dilution down and fine-tuning the process plan to steadily improve operating time throughput and recovery.

Speaker #5: Turning to slide six and back to you, Darren.

Speaker #4: Thanks, Dave. Valentine is a conventional crush-grind CIL plant and will be our second Canadian cornerstone mine and a significant contributor to cash flow. Before providing the Valentine update, it is important to note there are currently active wildfires in Newfoundland Labrador.

Darren Hall: Thanks, Dave. Valentine is a conventional crush grind CIL plant and will be our second Canadian cornerstone mine and a significant contributor to cash flow. Before providing the Valentine update, it is important to note there are currently active wildfires in Newfoundland and Labrador, with a number of communities on evacuation alert. Our thoughts and best wishes go out to those impacted, and our operations have not been impacted, but we remain vigilant and supporting those that have been. In Q2 2024, we assembled an operating team with significant commissioning experience, led by Jason Sear, who's been working symbiotically with Kyle Kunz and Pierre Lagarde, who are leading the construction front over the last year.

Speaker #4: With a number of communities on evacuation alert, our thoughts and best wishes go out to those impacted. Our operations have not been impacted, but we remain vigilant and are supporting those that have been.

Speaker #4: In Q2 2024, we assembled an operating team with significant commissioning experience, led by Jason Sear, who's been working symbiotically with Kyle Kunz and Pierre Lagarde, who are leading the construction front.

Speaker #4: Over the last year, this investment in talent is paying off, as evidenced by our current state of operational readiness. This includes the process plant being fully energized, key circuits having been tested, and commissioning crews working through performance verification.

Darren Hall: This investment in talent is paying off, as evidenced by our current state of operational readiness, which includes the process plant is fully energized, key circuits are being tested, and commissioning crews are working through performance verification. Maintenance systems are live, operating procedures have been developed, and crews have trained. We have invested over $25 million in critical spares to support a smooth ramp-up. First order to the plant is scheduled to commence before the end of August, with first gold anticipated approximately a month later, followed by a steady ramp-up to nameplate capacity in Q1 2026. Turning to slide seven. With Greenstone ramping towards nameplate capacity and Valentine on track to deliver first gold, we are entering a period where production and cash flow will materially increase.

Speaker #4: Maintenance systems are alive, operating procedures are being developed, and crews have trained. We have invested over $25 million in critical spares to support a smooth ramp-up.

Speaker #4: First door to the plant is scheduled to commence before the end of August, with first gold anticipated approximately a month later. Followed by a steady ramp-up to nameplate capacity in Q1 2026.

Speaker #4: Turning to slide seven, with Greenstone ramping towards nameplate capacity and Valentine on track to deliver first gold, we are entering a period where production and cash flow will materially increase.

Speaker #4: These two cornerstone Canadian assets, combined with our diversified portfolio, give us the scale, stability, and leverage to gold price required to drive a step change in margins, earnings, and therein shareholder value.

Darren Hall: These two cornerstone Canadian assets, combined with our diversified portfolio, give us the scale, stability, and leverage to gold price required to drive a step change in margins, earnings, and therein shareholder value. Our strategy is clear: quality over quantity. Focus on production that moves the needle in terms of free cash flow and valuation. Advance high-return organic growth. Invest where we create the most value per dollar spent. Rationalize and streamline. Continuously assess the portfolio to focus our human and financial capital on our best opportunities, a recent example of which is the sale of our Nevada assets for $115 million. Deliver tangible returns. Share price appreciation through margin expansion, discipline cost control, and production growth, while positioning the company to return capital directly to shareholders through dividends and/or share buybacks once our delivery objectives are achieved.

Speaker #4: Our strategy is clear: quality over quantity. Focus on production that moves the needle in terms of free cash flow and valuation. Advance high-return organic growth.

Speaker #4: Invest where we create the most value per dollar spent. Rationalize and streamline. Continuously assess the portfolio to focus our human and financial capital on our best opportunities.

Speaker #4: A recent example of which is the sale of our Nevada assets for $115 million. Deliver tangible returns. Share price appreciation through margin expansion, discipline cost control, and production growth while positioning the company to return capital directly to shareholders.

Speaker #4: Through dividends and/or share buybacks, once our delivery unit objectives are achieved. We are focused on executing with discipline and I'm confident in our ability to realize our vision to be a top quartile valued gold producer.

Darren Hall: We are focused on executing with discipline, and I'm confident in our ability to realize our vision to be a top quartile valued gold producer. With that, we're happy to take questions, and back to you, Operator.

Speaker #4: With that, we're happy to take questions. Back to you, operator.

Speaker #2: Once again, to join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request.

Ryan King: Once again, to join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. Our first question comes from Oveas Habib, Wisconsin Bank. Please go ahead.

Speaker #2: If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. Our first question comes from Oveas Habib, Wiscosia Bank.

Speaker #2: Please go ahead.

Speaker #6: Thanks, operator. Hi, Darren and Equinox team. Congrats on a Q2 beat. It's really great to see Greenstone Mill hitting, you know, over nameplate capacity.

Oveas Habib: Thanks, Operator. Hi, Darren, and Equinox team. Congrats on our Q2 beat and really great to see Greenstone Mill hitting the overname plate capacity. Darren, a couple of questions from me, just starting off with Greenstone. The grade at Greenstone came in at around 0.92, down from around 1.06 transplant in Q1. When should we start seeing grades improve going into the second half? And what measures are you taking to manage and improve grade dilution? Essentially, what I'm asking is, are you expecting grade to improve in quarter by quarter, kind of going into Q3, or is this more of a Q4 situation?

Speaker #6: Darren, a couple of questions from me just starting off with Greenstone. The grade at Greenstone came in at around 0.92, down from around 1.06 grams per ton in Q1.

Speaker #6: When should we start seeing grades improve going into the second half? And what measures are you taking to manage and improve grade dilution?

Speaker #6: Essentially, what I'm asking is, are you expecting the grade to improve quarter over quarter, kind of going into Q3, or is this more of a Q4 situation?

Speaker #4: Yeah, no, thanks for those. I appreciate your support and questions. You know, we are seeing improvements in grade. Month-to-date August grades are right around a gram per ton.

Darren Hall: Yeah, no, thanks, Avase. Appreciate your support and questions. Grade, we are seeing improvements in grade. Month-to-date August grades are right around a gram a ton, so improving over what was Q2. We will continue to see improved grades because of face position and face position driven by kind of where we sit in the pit. But obviously, the more material we move, it means the more face positions we make, which means the deeper we get, the more material we have. The more material we move, it allows us to be able to operate more effectively along that grade tonnage curve. But importantly, in everything we're doing right now, it's about ensuring we get the quality as well as the quantity. So, you know, Simon and Dave and the team are absolutely focused on moving as many tons as cheaply as we can, but importantly, minimizing dilution.

Speaker #4: So improving over what was Q2. We will continue to see improved grades because of face position, and face position is driven by, you know, kind of where we sit in the pit.

Speaker #4: But obviously, the more material we move, the more face positions we make, which means the deeper we get, the more material we have.

Speaker #4: The more material we move, the more effectively we can operate along that grade tonnage curve. But importantly, in everything we're doing right now, it's about ensuring we get the quality as well as the quantity.

Speaker #4: So, you know, Simon and Dave and the team are, you know, absolutely focused on moving as many tons as cheaply as we can. But importantly, we are minimizing dilution, so as to be able to segregate out the waste from the ore.

Darren Hall: So to be able to segregate out the waste from the ore, and then secondly is that is also to minimize the ore losses in the random historical workings. So it is a work in progress, and as we go forth, I anticipate that we'll see quarter-on-quarter improvements in grade. But you know, I would anticipate that Q3 grades probably won't be too dissimilar to Q2. Right? Yeah, maybe marginally better, but you know, we are also ensuring that we make face positions so that additional capacity that we've got is ensuring that we end up with nice areas to work in that provide really, really effective mining areas that will positively impact unit mining costs as well, which will then flow through to, you know, margin escalation as well.

Speaker #4: And then secondly, is that is also to minimize the ore losses in around historical workings. So it is a work in progress. And as we go forth, I anticipate that we'll see quarter on quarter improvements in grade.

Speaker #4: But, you know, I would anticipate that Q3 grades probably won't be too dissimilar to Q2, right? You know, maybe marginally better. But we are also ensuring that we make face position, so that additional capacity that we've got is ensuring that we end up with nice areas to work in that provide really, really effective mining areas that will positively impact unit mining costs as well, which will then flow through to, you know, margin and escalation as well.

Speaker #6: Got Got it. And thanks for the color on that. And just in terms of the fleet that you have in place, you know, in terms of improving the mining rates as well, do you have all the equipment and money fees in place, or do you think you need to be caught up?

Oveas Habib: Got it, and thanks for the color on that. And just in terms of the fleet that you have in place, you know, in terms of improving the mining rates as well, do you have all the equipment and money seat in place, or do you think you need to beef that up?

Speaker #4: No, I think for what we've, you know, socialized vis-à-vis the feasibility study, or more recently, is that all the equipment that we require is in place.

Darren Hall: No, I think for what we've, you know, what we've socialized vis-a-vis the feasibility study or more recently is that all the equipment that we require is in place. It's really about, you know, maximizing the value of our committed capital and what we've delivered into. And that's working with our business partners and our vendors as well to ensure that they have skin in the game and are focused on our performance as well. And we have seen over the last quarter a significantly higher level of engagement from both Komatsu, Caterpillar, and FMS as well. So that's great to see. So, but no, short answer is that we have the equipment. The board of it afforded us some additional support equipment, which is positively impacting things as well, as Dave indicated, by increased haul speeds for the truck fleet.

Speaker #4: It's really about, you know, maximizing the value of our committed capital and what we've delivered into. And that's working with our business partners and our vendors as well to ensure that they have skin in the game and are focused on our performance as well.

Speaker #4: And we have seen over the last quarter a significantly higher level of engagement from both Komatsu, Caterpillar, and SMS as well. So that's great to see.

Speaker #4: So, but no, short answer is that we have the equipment. The board have afforded us some additional support equipment, which is positively impacting things as well as we've, as Dave indicated, by increased haul speeds for the truck fleet.

Speaker #4: So no, no, we have what we need and it's really about ensuring that we maximize the value out of that invested capital.

Darren Hall: So no, no, we have what we need, and it's really about ensuring that we maximize the value out of that invested capital.

Speaker #6: Got it. Thanks for that, Darren. And just moving on to Los Filos, you know, obviously you've kind of had the agreements in place now with the two communities.

Oveas Habib: Got it. Thanks for that, Darren. And just moving on to Los Filos, you know, obviously you've kind of, you know, had the agreements in place now with the two communities. Are you, I mean, now I'm forgetting the name of the third community, I apologize, but in terms of, are you in discussion with that third community as well right now, or are you dealing with just the two communities that basically have signed on to move forward with Los Filos?

Speaker #6: Are you, I now I'm forgetting the name of the third community, I apologize, but in terms of, are you in discussion with that third community as well right now, or are you dealing with just the two communities that basically have signed on to move forward with Los Filos?

Speaker #4: Well, in every jurisdiction that we operate in, we maintain regular and engaged communication and coordination with all of our stakeholders. And that's in, you know, whether it be in Mexico, Nicaragua, or Ontario.

Darren Hall: Well, in every jurisdiction that we operate in, we maintain regular and engaged communication and coordination with all of our stakeholders, and that's in, you know, whether it be in Mexico, Nicaragua, or Ontario. So no, we maintain open dialogue with everyone. The third community that we're having in discussions with is Carouseleo. But what we have done is that we do have fully executed agreements in place with two of the three communities, and we're currently working with those communities to recommence exploration activities and look at a two-community plan to be able to exploit Los Filos as well. But no, we are hopeful that we will work towards a solution, but you know, as we do everywhere, for those that want to work with us, we will work constructively and responsibly with every stakeholder.

Speaker #4: So no, we maintain open dialogue with everyone. The third community is that we're that we're having in discussions with is Carasolia. But what we have done is that we do have fully executed agreements in place with two of the three communities, and we're currently working with those communities to recommence exploration activities and look at a two-community plan to be able to exploit Los Filos as well.

Speaker #4: But no, we are hopeful that we will work towards a solution. As we do everywhere, for those that want to work with us, we will work constructively and responsibly with every stakeholder.

Speaker #6: Got it. And just my last question over here, Darren. You know, I mean, great to see you know, you've started, you know, selling off non-core assets.

Oveas Habib: Got it. And just my last question over here, Darren, you know, I mean, great to see, you know, you've started, you know, selling off non-core assets, and we saw that with Pan. Are we going to see more of that going into the second half or early 2026? Any color there would be appreciated.

Speaker #6: And we saw that with Pan. Are we going to see more of that going into the second half or early 2026? Any color there would be appreciated.

Speaker #4: Yeah, no, Obeas is that, you know, we love all of our children, but, you know, again, if we find that some of our assets can create value for you and our other shareholders, and for us, more value in the hands of someone else, then we will actively explore those opportunities.

Darren Hall: Yeah, no, Avase, is that, you know, we love all of our children, but you know, again, if we find that some of our assets can create you and our other shareholders and us more value in the hands of someone else, then we will actively explore those opportunities. So are we running processes? No, but have we seen a level of engagement and inbounds as a consequence over the last quarter or two? Yeah, absolutely. And as we demonstrated with the Nevada assets, you know, we will move agilely to be able to surface those values as they present. But that will all be focused on ensuring that they positively impact share price, and that's where our focus will be.

Speaker #4: So you know, are we running processes? No. But have we seen a level of engagement and inbounds as a consequence, you know, over the last quarter or two?

Speaker #4: Yeah, absolutely. And as we demonstrated with the Nevada assets, we will move agilely to be able to surface those values as they present.

Speaker #4: But there will all be focused on ensuring that they positively impact share price and that's where our focus be.

Speaker #6: Perfect. Thanks for taking my question, Darren. And again, congrats on a Q2 beat.

Oveas Habib: Perfect. Thanks for taking my question, Darren, and again, congrats on our Q2 beat.

Speaker #4: Thank you, Obeas.

Darren Hall: Thank you, Avase.

Speaker #2: Your next question is from Anita Soni with CIBC World Markets. Please go ahead.

Ryan King: The next question is from Anita Soni with CIBC World Markets. Please go ahead.

Speaker #7: Hi, good morning, Darren. And firstly, congratulations, David, on your appointment. I think we crossed paths when you were at New Gold in 2014 and 2016.

Anita Soni: Hi, good morning, Darren, and firstly, congratulations, David, on your appointment. I think we crossed paths when you were at New Gold in 2014-2016. My first question, just to follow up on the grades at Greenstone, you did indicate that the grades increased quarter over quarter of what was mined. Can you give us an idea of what those actual numbers were in terms of what the grades that you mined out of the pit this quarter and last quarter? And then secondly, what would the block model have predicted just so that we can get a benchmark of the kind of ore losses that you're experiencing right now?

Speaker #7: My first question, just to follow up on the grades at Greenstone, you did indicate that the grades increased quarter over quarter of what was mined.

Speaker #7: Can you give us an idea of what those actual numbers were, in terms of what the grades that you mined out of the pit this quarter and last quarter?

Speaker #7: And then secondly, what would the block model have predicted, just so that we can get a benchmark of the kind of ore losses that you're experiencing right now?

Speaker #4: Yeah, Anita, and thanks for the questions. And I don't have the mined information in front of me right now. And I guess there's two parts, I think we want to focus in on here, is that we will see an improving grade quarter on quarter as we get deeper in the pit and as we improve our practices in around mining dilution.

Darren Hall: Yeah, Anita, and thanks for the questions. And I don't have the mined information in front of me right now. And I guess there's two parts I think we want to focus in on here is that we will see an improving grade, you know, quarter on quarter as we get deeper in the pit and as we, you know, improve our practices in around mining dilution or minimizing mining dilution and ore losses. And secondly, is that the volumes of material will also impact the grade that we see presented to the process plant. If we step back and look at the veracity of the feasibility study over the longer term, from memory, I think it was around 300,000 ounces a year or thereabouts. And that what we see is that from a high level, we see the reconciliation of total metal being pretty consistent with that.

Speaker #4: We're minimizing mining dilution and ore losses. Secondly, the volumes of material will also impact the grade that we see presented to the process plant.

Speaker #4: If we step back and look at the veracity of the feasibility study over the longer term, from memory, I think it was around 300,000 ounces a year or thereabouts.

Speaker #4: And that what we see is that from a high level, we see the reconciliation of total metal being pretty consistent with that. We are seeing more tons at a lower grade.

Darren Hall: We are seeing more tons at a lower grade, and that's where our focus on dilution and ore loss. And as we work through the balance of the year, I think we'll be in a better position to be able to talk about what those shorter-term grades look like. But you know, I'm comfortable with the ability for the asset in the long term to deliver into the feasibility, which is not specifically answering your question. I just want to provide a little bit more color in around what the long term looks like because I don't have the actual mined on mine grades because, you know, as of end of month July, we had about right around 6 million tons on stockpile. So, you know, there's a large stockpile of material as well and how that figures into the as mined versus the as milled.

Speaker #4: And that's where our focus on dilution and all loss. And as we work through the balance of the year, I think we'll be in a better position to be able to talk about what those shorter-term grades look like.

Speaker #4: But you know, I’m comfortable with the ability for the asset in the long term to deliver into the feasibility. Which is not specifically answering your question; I just wanted to provide a little bit more color.

Speaker #4: In around what the long term looks like, because I don't have the mine, the actual mined or mine grades. Because you know, as of end of month July, we had about right around 6 million tons on stockpile.

Speaker #4: So you know, there's a large stockpile of material as well and how that figures into the as mined versus the as milled. So, but no, happy to.

Darren Hall: So, yeah, but happy to.

Speaker #7: Yeah, I can appreciate that. But I think that grades were supposed to be in the order of about 1.3 this year. So that's where we're, you know, the 0.92 is where I'm trying to understand.

Anita Soni: Yeah, sorry, I can appreciate that, but I think that grades were supposed to be in the order of about 1.3 this year. So that's where we're, you know, the 0.92 is where I'm trying to understand. And then secondly, you also, you mined 50% more than you milled. Did you just direct ore feed what you mined or was there, like, I'm trying to understand, like, the movement between what's happening at the mine, is there any stockpiling happening? And then, you know, like, and then you also, you guys also talked about the grades being, you know, the lower availability, like lower grade availability within the stockpile that you pulled going to the mill. So I'm trying to get an understanding of the material movement and what's happening there.

Speaker #7: And then secondly, you also you mined 50% more than you milled. Did you did you just direct ore feed what you mined? Or was there like, I'm trying to understand like the movement between what's happening at the mine?

Speaker #7: Is there any stockpiling happening? And then you know, like, and then you also talked about the grades being, you know, the lower availability, like, lower grade availability within the stockpile that you pulled going to the mill.

Speaker #7: So I'm trying to again understand an understanding of the material movement and what's happening there.

Speaker #4: Yeah, no, and again, it's probably worthwhile for us to sit down and walk through what that looks like. But, you know, absolutely, right? There's a stockpile and there's a surge capacity in front of the plant.

Darren Hall: Yeah, and again, it's probably worthwhile us sitting down and walking through what that looks like. But, you know, absolutely, right, there's a stockpile and there's a surge capacity in front of the plant. I mean, I don't have the number at hand, maybe Dave does, but I would anticipate that probably less than one-fifth of the material that is direct dumped into the primary crusher. I think the majority of the material is actually re-handled from the stockpile, you know, to be able to ensure that we get a consistent feed from not only gray, but also arsenic and sulfur. And we get a nice blended product to get a nice stable feed into the plant that will have a positive impact on recovery. So, you know, the stockpile is a critical part of the process here, because we don't go direct mine to mill.

Speaker #4: I mean, I don't have the number at hand. Maybe Dave does. But I would anticipate that probably a lot less than one-fifth of the material that is direct dumped into the primary crusher.

Speaker #4: I think the majority of the material is actually re-handled from the stockpile. You know, to be able to ensure that we get a consistent feed from not only grade, but also arsenic and sulfur. We get a nice blend of product to get a nice, stable feed into the plant that will have a positive impact on recovery.

Speaker #4: So you know, the stockpile is a critical part of the process here. It could be because we don't go direct mine to mill.

Speaker #2: And as Peter here, Anita, we did see an increase in the stockpile from the end of Q1 to the end of Q2. But we can address some of those items, perhaps in more detail, offline.

Peter Hardie: And it's Peter here, Anita. We did see an increase of the stockpile from the end of Q1 to the end of Q2, but we can address some of those items perhaps in more detail offline.

Speaker #4: Yep.

Speaker #7: Okay. Second question, in a series of questions, and I'll leave it at three. But the second question, just in terms of the disclosures that you provided on both the tax and the legal front in the MD&A: one on taxation in Nicaragua and a dispute on the tax rebate, and secondly, the Ore Zone legal matter.

Anita Soni: Okay, second question in the series of questions, and I'll leave it at three. But the second question, just in terms of the disclosures that you provided on both the tax and the legal front in the MD&A, one on taxation in Nicaragua and a dispute on the tax rebate, and secondly, the Arizona legal matter. Can you give me some color on, you know, firstly on the tax, do you like the on the tax issue there? I mean, do you expect a resolution in the near term, or is that something that we should be concerned about? And secondly, on Arizona, a similar question. And, you know, would that impact your ability to execute on asset sales if you were thinking about asset sales in Brazil?

Speaker #7: Can you give me some color on, you know, firstly on the tax, do you like on the tax issue there? I mean, do you expect a resolution in the near term or is that something that we should be concerned about?

Speaker #7: And secondly, on the ore zone, a similar question: would that impact your ability to execute on asset sales if you were thinking about asset sales in Brazil?

Speaker #2: Yeah, it's Peter here. On Nicaragua, without getting into too much detail because it is an ongoing discussion with the tax authority, tax law changed.

Peter Hardie: Yeah, it's Peter here. On Nicaragua, without getting into too much of the detail, because it is an ongoing discussion with the tax authority, tax law changed. We are quite confident that the Nicaragua operations are grandfathered under the pre-existing regime. And we're actually reasonably confident we'll come to a beneficial resolution there. As to a timeline on when that might be settled, I don't know. But we did not record a provision with regards to it, which indicates our expectation of likelihood of a successful resolution. And then with respect to Arizona, the legal wheels in Brazil turned very slowly. So we don't expect that to be resolved in the near term. We do not expect that to, there is no process on Arizona. I just want to reiterate that, or on any of the Brazil assets or any of the other assets for that matter.

Speaker #2: We are quite confident that the Nicaragua operations are grandfathered under the pre-existing regime, and we're actually reasonably confident we'll come to a beneficial resolution there.

Speaker #2: As to the timeline on when that might be settled, I don't know. But we did not record a provision with regards to it, which indicates our expectation of the likelihood of a successful resolution.

Speaker #2: And then, with respect to the ore zone, the legal wheels in Brazil turned very slowly. So we don't expect that to be resolved in the near term.

Speaker #2: We do not expect that to happen; there is no process on the ore zone. I just want to reiterate that, or on any of the Brazil assets, or any of the other assets for that matter.

Speaker #2: But we wouldn't expect that kind of thing to interfere. If there was one, we wouldn't expect it to interfere with the process.

Peter Hardie: But we wouldn't expect that kind of thing to interfere. If there was one, we wouldn't expect it to interfere with the process.

Speaker #4: Yeah, as it didn't, we're given this recent merger between Caliber and Equinox.

Darren Hall: Yeah, as it didn't, we've given this recent merger between Caliber and Equinox.

Speaker #2: Exactly. Yeah.

Peter Hardie: Exactly. Yeah.

Speaker #7: Okay. And then, last question, I guess I'll move to Los Filos. So, Los Filos, you know, in the last two years, Peter, as you guys had indicated previously, has been a bit undercapitalized.

Anita Soni: Okay. And then last question, I guess I'll move to Los Filos. So Los Filos, you know, in the last two years, Peter, as you, you know, you guys had indicated previously, had been a bit undercapitalized. You know, you were preserving capital to get the ramp-up at Greenstone up and running. So if Los Filos comes back outside of the CIL, what kind of, you know, capex should we be expecting in terms of a recapitalization of that mine?

Speaker #7: You know, you were preserving capital to get their ramp-up at Greenstone up and running. So if Los Filos comes back, outside of the CIL, what kind of CapEx should we be expecting in terms of a recapitalization of that mine?

Speaker #4: Yeah, and Anita, I mean, we're working through what a potential restart may look like at Los Filos, and as we have visibility into that, we'll be absolutely transparent with what those requirements are.

Darren Hall: Yeah, and Anita, I mean, we're working through what a potential restart may look like at Los Filos. And as we have, you know, visibility into that, we'll be absolutely, you know, transparent with what those requirements are. But our focus right now is working with the two communities on developing a two-community plan, which would involve the construction of a CIL. And that's starting with, you know, recommencing exploration activities here in the next, we'll call it weeks, and then continuing the studies in the background to be able to look at, you know, refreshing some of those longer-term economics. So it's really about the longer-term capital requirements and what that asset looks like as a world-class gold asset.

Speaker #4: But our focus right now is working with the two communities on developing a two-community plan, which would involve the construction of a CIL. And that's starting with, you know, recommencing exploration activities here in the next, we'll call it, weeks.

Speaker #4: And then continuing the studies in the background to be able to look at, you know, refreshing some of those longer-term economics. So it's really about the longer-term capital requirements and what that asset looks like as a world-class gold asset.

Speaker #4: And you know, if we're faced with the first world problem of being able to restart, then we'll start to, you know, provide that information.

Darren Hall: And, you know, if we're faced with a first-world problem of being able to restart, then we'll start to, you know, provide that information because those numbers change on a pretty regular basis. And depending on the commitments we make and the agreements we have in place with the communities, that will also impact what that capital start looks like. But we're comfortable that, you know, the provisions that we've made and the progress that we've made is preserving our ability to recommence when we do have those agreements in place.

Speaker #4: Because those numbers change on a pretty regular basis. Depending on the commitments we make and the agreements we have in place with the communities, that will also impact what that capital start looks like.

Speaker #4: But we're comfortable that, you know, the provisions that we've made and the progress that we've made is preserving our ability to recommence when we do have those agreements in place.

Speaker #7: All right, thank you. That's it for my questions. Sorry, go ahead.

Anita Soni: All right, thank you. That's it for my question. Sorry, go ahead.

Speaker #2: Yeah, no, I was just going to say, Anita, it's Peter again. Given the longer history, perhaps with Los Filos, then others in the room, no one will actually be happier than me to have to come forward with that information.

Peter Hardie: No, I was just going to say, Anita, it's Peter again. Yeah, and given the longer history perhaps with Los Filos than others in the room, no one will actually be happier than me to have to come forward with that information. So looking forward to the day when we do.

Speaker #2: So looking forward to the day when we do.

Speaker #7: All right, thank you. That's it for my questions.

Anita Soni: All right, thank you. That's it for my questions.

Speaker #2: Your next question is from Mohamed Sudaib with National Bank Financial. Please go ahead.

Ryan King: The next question is from Mohammed Sadaib with National Bank Financial. Please go ahead.

Speaker #6: Hi, Darren and team. Thanks for taking my questions. Just maybe on the cost front in the quarter, I just wanted to dive in a little bit deeper into the Brazilian operations cost.

Mohammed Sadaib: Hi Darren and team, thanks for taking my question. I just, maybe on the cost front in the quarter, I just wanted to maybe dive in a little bit deeper into the Brazilian operations cost. They seem to have been doing better than guidance and better than what I was expecting there. Should we expect those similar unit costs to continue into the back half of the year, or how should we be thinking about costs out of the Brazilian operations? Thank you.

Speaker #6: They seem to have been doing better than guidance and better than what I was expecting there. Should we expect those similar unit costs to continue into the back half of the year, or how should we be thinking about costs out of the Brazilian operations?

Speaker #6: Thank you.

Speaker #4: Well, maybe I'll start with a kind of a 30,000-foot view and then see if Pete's got anything to add to it. But, you know, on June 13th, I think it was thereabouts, you know, we reestablished guidance for the full year.

Darren Hall: Well, maybe I'll start with a kind of a 30,000-foot view and then see if Pete's got anything to add to it. But, you know, on June 13th, I think, or thereabouts, you know, we reestablished guidance for the full year, and we're very comfortable with our consolidated and peace guidance for all of our assets going into it. And I think, you know, with that, we'll see variation on a quarter-by-quarter and a month-by-month basis as we see different levels of spend and different reaction too. But again, holistically for the year, we're very comfortable with the guidance. I mean, Pete, anything you'd layer in on that?

Speaker #4: And we're very comfortable with our consolidated and peace guidance for all of our assets going into it. I think, you know, with that, we will see variation on a quarter-by-quarter and a month-by-month basis as we see different levels of spend and different reactions to.

Speaker #4: But again, holistically for the year, we're very comfortable with the guidance. I mean, Pete, anything you'd layer on that?

Speaker #2: Just that, you know, Brazil, as those who are familiar with the company would know, is very seasonality-driven. We tend to generate most of the production cash flow in the second half of the year, which has obviously an impact on the unit costs overall.

Peter Hardie: Just that, you know, Brazil, as those who are familiar with the company would know, is very seasonality-driven, and we tend to generate most of the production cash flow in the second half of the year, which has obviously an impact on the unit costs overall. But as Darren said, very solidly in range for delivering on our updated guidance.

Speaker #2: But, as Darren said, we are very solidly in range for delivering on our updated guidance.

Speaker #4: Yeah, and I think that just a layer in is that, you know, someone— I think Anita maybe had raised it— but in terms of the capital constraints that we had seen over the last few years in terms of where we deploy capital, you know, as our organization changes and as we generate that capital, it's allowing us to look at, you know, that capital deployment throughout the assets.

Darren Hall: Yeah, and I think that just to layer in is that, you know, someone, I think, well, Anita maybe had raised it, but in terms of the, you know, the capital constraints that we had seen over the last few years in terms of where we deploy capital, you know, as our organization changes and as we generate that capital, it's allowing us to look at, you know, that capital deployment throughout the assets. And I think that, you know, we'll see assets like Brazil be able to better perform as we can deploy more capital that will positively impact their ability to be able to see what's in front of them and then be able to more reliably produce as well.

Speaker #4: And I think that, you know, we'll see assets like Brazil be able to better perform as we can deploy more capital that will positively impact their ability to be able to see what's in front of them and then be able to more reliably produce as well.

Speaker #4: And whether that be exploration, through, you know, results of exploration through the drill bit, or whether it be investing in capital for equipment to be able to lower unit costs, all those things will positively impact our portfolio.

Darren Hall: And whether that be exploration through, you know, results of exploration through the drill bit, or whether it be investing in capital for equipment to be able to lower unit costs, all those things will positively impact their portfolio. So I think that, you know, with this pivotal change we're seeing with, you know, Greenstone coming on board, or sorry, you know, ramping up, and then, you know, we're imminent with respect to Valentine, you know, that very much changes the paradigm, which is Equinox, and will allow us to then be able to reinvest back into some of these assets that arguably probably haven't seen the love over the last couple of years. So, you know, again, very exciting times for our entire portfolio of assets.

Speaker #4: So I think that, you know, with this pivotal change, we're seeing with, you know, Greenstone coming on board, or sorry, you know, ramping up, and then, you know, we're imminent with respect to Valentine, you know, that very much changes the paradigm. This is Equinox. This will allow us to then be able to reinvest back into some of these assets that arguably probably haven't seen the love over the last couple of years.

Speaker #4: So you know, again, very exciting times for our entire portfolio of assets.

Speaker #6: Great. Thanks for that color. And then if I could shift maybe to Greenstone, perhaps just a follow-up on the great question there, but maybe as it relates to the stockpile. You noted an increase in the stockpile that you have at the asset there, quarter over quarter.

Mohammed Sadaib: Great, thanks for that caller. And then if I could shift maybe to Greenstone, maybe just a follow-up on the great question there, but maybe as it relates to the stockpile. You noted an increase in the stockpile that you have at the asset there for a quarter. Would it be possible to know which the six million tons, what grade the six million tons are at for the stockpile? Thank you.

Speaker #6: Would you be, would it be possible to know which the 6 million tons, what grades the 6 million tons are at for the stockpile?

Speaker #6: Thank you.

Speaker #2: I'm sorry, you broke up there right at the end. Do you mind just repeating that question? Apologies.

Peter Hardie: Sorry, you broke up there right at the end. Do you mind just repeating that question? Apologies.

Speaker #4: Would you be able to tell us

Mohammed Sadaib: Would you be able to tell us what are the grades for the stockpile, the six million tons of stockpile that you have at Greenstone?

Speaker #6: What are the grades for the stockpile, the 6 million tons of stockpile that you have at Greenstone?

Speaker #4: In terms of splits, there are different grade splits. And from memory, Mohamed, I think we're looking at about 6 million tons at just over half a gram.

Darren Hall: In terms of splits, there's different grade splits. And from memory, Mohammed, I think we're looking at about six million tons at just over half a gram as a total. And I believe there's about a million and a half tons at about a 0.7x, right, in terms of the higher grade portion. So we'll call it the bin two. So, but we can get it offline and provide more color than you would like. But, you know, again, we've got a significant stockpile that's very similar to what we have processed year to date, and then a larger stockpile of lower grade material. So we talk about a million and a half ton, you know, basically the average grade processed year to date.

Speaker #4: As a total, and I believe there's about 1.5 million tons at about a 0.7X, right? In terms of the higher grade portion.

Speaker #4: So we'll call it the bin two. So, but we can get offline and provide more color that you would like. But you know, again, we've got a significant stockpile that's very similar to what we have processed year to date.

Speaker #4: And then a larger stockpile of lower-grade material. So we talk about a million and a half tons, you know, basically the average grade processed year-to-date.

Speaker #6: Right. And then just a final question on Valentine. In the MD&A, you noted that you have about $54 million Canadian left on your total CapEx there.

Mohammed Sadaib: Great. And then just final question on Valentine. So in the MD&A, you noted that you have about $54 million Canadian left on your total capex there. How should we think about the capital spend at the asset as you ramp up, you know, specifically as it relates to development capex or initial capex or non-sustaining capex for that asset in the second half of the year? Thank you.

Speaker #6: How should we think about the capital spend at the asset as you ramp up, specifically as it relates to development CapEx or initial CapEx on non-sustaining CapEx for that asset in the second half of the year?

Speaker #6: Thank you.

Speaker #2: So the spend on the project itself that's in the MD&A takes us through to first gold pour? And so when you're thinking of—and that's a fairly, you know, it's a tail end of the project.

Peter Hardie: So the spend on the project itself that's in the MD&A takes us through to first gold pour. And so when you're thinking of, and that's a fairly, you know, it's the tail end of the project. And that spend, you know, it becomes less lumpy than earlier in the project. So I suppose if you're trying to understand it, the easiest way to look at it is just a smooth spend through first gold. And then subsequently, it's your very typical working capital buildup and ramp up and the costs that are typically associated with that. We haven't guided on Valentine costs as of yet, and we won't do that in all likelihood until commercial production. But you know, you can make, I suppose, typical assumptions on a two and a half million ton for your plant and mining operation.

Speaker #2: And that spend, you know, becomes less lumpy than earlier in the project. So I suppose if you're trying to understand it, the easiest way to look at it is just a smooth spend through first gold.

Speaker #2: And then subsequently, it's your very typical working capital buildup and ramp-up, along with the costs that are typically associated with that. We haven't guided on Valentine costs as of yet.

Speaker #2: And we won't do that, in all likelihood, until commercial production. But, you know, you can make, I suppose, typical assumptions on a 2.5 million ton for your plant and mining operation.

Speaker #4: Yeah, and I think that, you know, again, if I was sitting in your shoes, Mohamed, I mean, you know, I'd be taking average mining costs and average processing costs and using them as the basis for.

Darren Hall: Yeah, and I think that, you know, again, if I was sitting in your shoes, Mohammed, I mean, you know, I'd be taking average mining costs and average processing costs and using them as the basis for. There is no surprise in terms of we deferred a hundred million dollars' worth of spend, and now it's going to come out in Q4 as opposed, you know, for the capital. There's none of those shenanigans that have been played out. I mean, you know, we've played a pretty straight bat at this at providing updates as we've gone through. And the EAC estimates that we've foreshadowed, we're tight on, we're comfortable with. And as Pete mentioned, it's really going to be the operating ramp-up, which are tied into basically, you know, capital demands from an operating cost perspective as opposed to capital injection per se from a lumpy piece.

Speaker #4: There is no surprise in terms of we deferred $100 million worth of spend, and now it's going to come out in Q4 as opposed, you know, for capital.

Speaker #4: There's none of those shenanigans that have been played out. I mean, you know, we've played a pretty straight bat at this, providing updates as we've gone through.

Speaker #4: And the EAC estimates that we've foreshadowed, we're tight on, we're comfortable with. And as Pete mentioned, it's really going to be the operating ramp-up, which is tied into basically capital demands from an operating cost perspective, as opposed to capital injection per se from a mine.

Speaker #2: And I'd just add to that—fully funded.

Peter Hardie: And I'd just add to that funded, you know, fully funded.

Speaker #4: Oh yeah, no, absolutely, absolutely funded out of cash and cash flow from. So, and part of the reason that we didn't provide all-in sustaining and cash cost guidance for the tail end of the year when we provided guidance just recently is that, you know, the production I think we're pretty comfortable with an estimate of.

Darren Hall: Oh yeah, no, absolutely, absolutely funded out of cash and cash flow from. So, and part of the reason that we didn't provide, you know, all in sustaining and cash cost guidance for the tail end of the year when we provided guidance just recently is that, you know, the production I think we're pretty comfortable with an estimate of, but you get some really wide swings there in terms of unit costs, and then it becomes distractive to the discussion. But we see nothing that's, you know, that's concerning there from a delivery in the back half of the year or being able to fund it. You know, our focus is on getting to, you know, close to nameplate, you know, by hopefully the end of Q1, but definitely in Q2.

Speaker #4: But you get some really wide swings there in terms of unit costs, and then it becomes distracting to the discussion. But we see nothing that's concerning there from a delivery in the back half of the year or being able to fund it.

Speaker #4: You know, our focus is on getting to, you know, close to nameplate by hopefully the end of Q1, but definitely in Q2.

Speaker #4: So, and again, we've afforded the borders, afforded us, you know, significant investment there in terms of capital spares. As we've talked about, the redundancy and the additional time that we've had through the build has allowed the operating team to come in and do those redundancy checks.

Darren Hall: So, and again, we've afforded, the board has afforded us, you know, significant investment there in terms of capital spares, as we've talked about, the redundancy, the additional time that we've had through the build has allowed the operating team to come in, do that redundancy checks, and we've got $25 million worth of additional spend or a spend associated with pumps and redundancies to ensure that when things do go bump in the middle of the night as we ramp up, we can just switch between and minimize those impacts.

Speaker #4: And we've got $25 million worth of additional spend or a spend associated with pumps and redundancies to ensure that when things do go bump in the middle of the night as we ramp up, we can just switch between and minimize those impacts.

Speaker #6: Great. Thanks a lot for answering my questions.

Mohammed Sadaib: Great, thanks a lot for answering my questions.

Speaker #4: Well, you're all factored into the initial project capital, so.

Darren Hall: We're all factored into the initial project capital, so.

Speaker #6: Amazing. Yeah, thanks for answering my questions and congrats on the quarter.

Mohammed Sadaib: Amazing. Yeah, thanks for answering my questions and congrats in accord.

Speaker #4: Appreciate it. Thank you very much for your support.

Darren Hall: Appreciate it. Thank you very much for your support.

Speaker #2: Your Your next question is from Jeremy Hoy with Canaccord Genuity. Please go ahead.

Ryan King: The next question is from Jeremy Hoy with Canaccord Genuity. Please go ahead.

Speaker #8: Thanks for taking my question. Remaining on the topic of Valentine, could you let us know what the key metrics we should be watching are during the ramp-up process?

Mohammed Sadaib: Thanks for taking my question. Remaining on the topic of Valentine, could you let us know what the key metrics we should be watching are during the ramp-up process?

Speaker #4: Yeah, it'll be tons mill, Jeremy. And you know, as soon as we commence production there, we'll provide, you know, regular updates on throughput. And I think that that's going to be the measure.

Darren Hall: Yeah, it'll be tons mill, Jeremy. And you know, as soon as we commence production there, we'll provide, you know, regular updates on throughput. And I think that that's going to be the measure. This is a long-life asset. And there'll be dips and weaves along the road with respect to grade. I mean, we're comfortable with respect to grade, as we've demonstrated, you know, through the releases we've provided and through, you know, recent kind of, you know, production results. But no, I'm comfortable with it's really going to be about showing that steady state or that ramp-up in throughput. That's going to be the key measure. Everything else is a kind of a, how do you say, a consequential related to that. Mining rates are going to be fine. We've had good mining performance. We've got all the material, all the assets ready to turn on.

Speaker #4: This is a long life asset. And there'll be dips and weaves es along the road with respect to grade. I mean, we're comfortable with respect to grade as we've demonstrated, you know, through the releases we've provided and through, you know, recent kind of, you know, production results.

Speaker #4: But no, I'm comfortable with it. It's really going to be about showing that steady state or that ramp-up in throughput. That's going to be the key measure.

Speaker #4: Everything else is a kind of a, how do you say, inconsequential related to that. Mining rates are going to be fine. We've had good mining performance.

Speaker #4: We've got all the material, all the assets ready to turn on. We've actually had some delays in providing that as we've seen the project been delayed in terms of the bill.

Darren Hall: We've actually had some delays in providing that, as we've seen the project being delayed in terms of the bill. So we're very comfortable from a mining perspective. It's really going to be about mill throughput.

Speaker #4: So, we're very comfortable from a mining perspective. It's really going to be about mill throughput.

Speaker #6: Thanks, Darren. Appreciate it. One last one, and just thinking about the future, there's a lot of exploration potential at some of these assets and appreciate that there's, you know, focus on ramp-ups and, you know, operations at the moment.

Mohammed Sadaib: Thanks, Darren. Appreciate it. One last one, and just thinking about the future, there's a lot of exploration potential at some of these assets, and I appreciate that there's, you know, focus on ramp-ups and, you know, operations at the moment. But are you able to sort of give some sort of loose priority or ranking in terms of where you see the greatest exploration potential?

Speaker #6: But are you able to sort of give some sort of loose priority or ranking in terms of where you see the greatest exploration potential?

Speaker #4: Yeah, no, thanks, Jeremy. And again, even though there are a few things happening in the business, we haven't lost sight of the fact that our roots are very heavy in exploration.

Darren Hall: Yeah, no, thanks Jeremy. And again, and even though there's a few things happening in the business, we haven't lost sight on the fact that our roots are very heavy in exploration. You know, we continue to explore in Nicaragua. We provided a bit of a summary there. We spent about $70 to $90 million this year. We provided, sorry, consolidated. We did provide a release here on July 25th in terms of some very encouraging results out of Nicaragua, which are arguably some of the best results ever returned from the property. We have had good success in around Valentine as well, and we would anticipate maybe later this quarter providing an update on some recent exploration results out of Valentine.

Speaker #4: You know, we continue to explore in Nicaragua. We've provided a bit of a summary there. We spend about $70 to $90 million this year. We provided, sorry, consolidated.

Speaker #4: We did provide a release here on July 25th in terms of some very encouraging results out of Nicaragua, which are arguably some of the best results ever returned from the property.

Speaker #4: We have had good success in and around Valentine as well. We anticipate, maybe later this quarter, providing an update on some recent exploration results out of Valentine.

Speaker #4: But I think as we chatted a little bit earlier, is that as we're in the, as we generate cash, and we're coming out of the back of two significant builds and capital draws, it allows us to be able to refund or reinitiate some work in some of the areas that have been maybe a little bit underloved from an exploration perspective.

Darren Hall: But I think as we chatted a little bit earlier, is that as we're in the, as we generate cash and we're coming out of the back of two significant builds and capital draws, it'll allow us to be able to refund, reinitiate some work in some of the areas that have been maybe a little bit underloved from an exploration perspective. You know, Los Filos is a good example with the two-community plan going forward. Obviously, maintaining focus in Nicaragua will be key. Valentine, because the potential in both of those assets is significant. And then Mesquite as well. I mean, Mesquite has been an enduring asset with a long life. And, you know, again, it's been pretty low on the food chain from a capital deployment perspective over the last few years.

Speaker #4: You know, Los Filos is a good example with the two community plan going forward. Obviously, maintaining focus in Nicaragua will be key. Valentine, because the the potential in both of those assets is significant.

Speaker #4: And then Mesquite as well. I mean, Mesquite has been an enduring asset with a long life. And you know, again, it's been pretty low on the food chain from a capital deployment perspective over the last few years.

Speaker #4: So, you know, we'd like to see, and we will see, exploration programs recommence there here within the next few months. So, you know, I like to think of this as an exploration company backed by, you know, $3 to $4 billion of revenue.

Darren Hall: So, you know, we'd like to see, and we will see exploration programs recommence there here within the next few months. So, you know, I like to think of us as an exploration company backed by, you know, three to four billion dollars of revenue. And, you know, again, as you know us as Pedigree, you know, I would anticipate that if I was modeling, sitting on your side and modeling this, I would anticipate, you know, roughly $100 an ounce of exploration spend as kind of an operating cost going forward as well. I mean, we see great talk across all of our assets to exploration success.

Speaker #4: And you know, again, as you know, us as pedigree, you know, I would anticipate that if I was modeling sitting on your side and modeling this, I would anticipate a, you know, roughly $100 an ounce of exploration spend as kind of an operating cost going forward as well.

Speaker #4: I mean, we see great talk across all of our assets to exploration success.

Speaker #6: Great. Thanks, Darren. Appreciate the color and looking forward to developments there. I'll step back in the queue.

Mohammed Sadaib: Great. Thanks, Darren. Appreciate the caller. I'm looking forward to developments there. I'll step back in the queue.

Speaker #4: I appreciate it. Thanks, Jeremy. Thanks for your support, and Canaccord.

Darren Hall: Appreciate it. Thanks, Jeremy. Thanks for your support and Canaccords.

Speaker #2: Your next question is from John Tomazos with John Tomazos Independent Research. Please go ahead.

Ryan King: The next question is from John Tomases with John Tomases Independent Research. Please go ahead.

Speaker #6: Thank you for the good job that's going on. Looking to next year, assuming Los Filos idle as it is at the moment, what is the reasonable target for cash cost?

John Tomases: Thank you for the good job that's going on. Looking to next year, assuming Los Filos idle as it is at the moment, what is a reasonable target for cash cost? 14 company-wide, 1,400, 1,300, 1,200, 1,100. How much better do you think things will get?

Speaker #6: 14 company-wide, 1,400, 1,300, 1,200, 1,100. How much better do you think things will get?

Speaker #4: I know I'm sitting back here a little bit. I mean, I'll maybe pass it to Pete to start with, and then I'll pick up the other, then I'll close out.

Darren Hall: I know I'm sitting back here a little bit. I mean, I'll maybe pass it to Pete to start with, and then I'll pick up the other, then I'll close out. As I kind of click my thoughts, thanks for the question though, John. He's sitting there thinking.

Speaker #4: As I kind of click my thoughts, thanks for the question though, John.

Speaker #6: He's sitting there, thinking.

Speaker #2: Well, you know, it's starting to become blessed with an embarrassment or riches. But, and John, we haven't obviously for everyone on the call, anything we say today is not guidance for next year.

Peter Hardie: Well, you know, it's starting to become blessed with an embarrassment of riches. But, and John, we haven't, I mean, obviously for everyone on the call, anything we say today is not guidance for next year. So if you're just thinking about, you know, ballparking, an example is for Q2. If we're looking at things on a combined basis, we're at about 14, a little under $1,400 per ounce cash cost. And that's with Greenstone not fully ramped up and Valentine not contributing. And so if you're trying to model it through John, you know, you could probably knock a hundred bucks an ounce off of that, $150 an ounce. But I do want to emphasize, we'll have that guidance in the new year as we normally do. But, you know, we're just starting to see the benefit of our larger lower cost producers coming online.

Speaker #2: So if you're just thinking about, you know, ballparking, an example is for Q2, if we're looking at things on a combined basis, we're at about 14, a little under 1400 dollars per ounce cash cost.

Speaker #2: And that's with Greenstone not fully ramped up and Valentine not contributing. So, if you're trying to model it through, John, you could probably knock $100 an ounce off of that, $150 an ounce.

Speaker #2: But I do want to emphasize, we'll have that guidance in the new year as we normally do. But you know, we're just starting to see the benefit of our larger lower cost producers coming online.

Speaker #2: And that's, you know, and getting, you know, I know that's where your question is getting to. So we're looking forward to being able to provide that information more confidently next year.

Peter Hardie: And, you know, I know that's where your question is getting to. And so we're looking forward to being able to provide that information at a more confidently next year. But if you're trying to look at it now, that's how I'd approach it.

Speaker #2: But if you're trying to look at it now, that's how I'd approach it.

Speaker #4: Yeah, and I think that, you know, kind of put Pete on the spot there. So sorry, Pete. But, you know, as you sit back and you look at the guidance we've provided this year, we've provided 14 to 15 hundred dollars an ounce.

Darren Hall: Yeah, and I think that, you know, I kind of put Pete on the spot there. So sorry, Pete. But, you know, as you sit back and you look at the guidance we've provided this year, we provided $1,400 to $1,500 an ounce. If you look at the profile as we move into 2026, right, as Pete foreshadowed, right, we're going to have Valentine and Greenstone being larger contributors on, which will lower our production cost per ounce. So, you know, in the current gold tape that we see, I mean, the ability for cash flow generation is going to be significant. When we're talking about, you know, $1,000 to $1,500 an ounce margin, right?

Speaker #4: If you look at the profile as we move into 2026, right, as Pete foreshadowed, we're going to have Valentine and Greenstone being larger contributors, which will lower our production costs per ounce.

Speaker #4: So, you know, in the current gold tape that we see, I mean, the ability for cash flow generation is going to be significant. When we're talking about, you know, a thousand to 1500 dollars an ounce margin, right, I mean, you know, we're going to be blessed in a very, in a very great situation by the one deal over the balance sheet, primarily, you know, primarily first, and then look at, you know, by this time next year, we'll be having I'm sure lots of animated discussions in around how additionally to be able to return value to shareholders through dividend or share buybacks as well.

Darren Hall: I mean, you know, we're going to be blessed in a very great situation to be able to, one, deliver the balance sheet primarily first, and then look at, you know, by this time next year, we'll be having, I'm sure, lots of animated discussions in around how additionally to be able to return value to shareholders through dividend or share buybacks as well. So, but yeah, no, I think that, you know, we need to work through the balance of the year so we can create expectations that we can deliver into in 2026. But taking the guidance that existed for this year and even rolling that forward, that puts us in a very, very favorable position, John.

Speaker #4: So, but yeah, no, I think that, you know, we need to work through the balance of the year so we can create expectations that we can deliver into in 2026.

Speaker #4: But taking the guidance that existed for this year and even rolling that forward, that puts us in a very, very favorable position, John.

Speaker #6: Thank you. If I could ask you to stick your neck out a little further, looking to 2027, is it a reasonable goal to be in a net assuming the Castle Mountain capital doesn't start? Los Filos mill doesn't start?

John Tomases: Thank you. If I could ask you to stick your necks out a little further, looking to 2027, is it a reasonable goal to be in a net, assuming the Castle Mountain capital doesn't start, Los Filos mill doesn't start, is it a reasonable target to be in a net cash position at current gold prices by the end of '27?

Speaker #6: Is it a reasonable target to be in a net cash position at the current gold prices by the end of '27?

Speaker #2: Yeah, I think that's reasonable.

Peter Hardie: Yeah, I think that's reasonable.

Speaker #6: Super. Thank you very much.

John Tomases: Super. Thank you very much.

Speaker #4: Thanks, John. I appreciate your support and continued support over the journey. It is much valued. Thank you.

Darren Hall: Thanks, John. Appreciate your support and continued support over the journey. It is much valued. Thank you.

Speaker #6: Thanks, John.

Peter Hardie: Thanks, John.

Speaker #2: This concludes the question and answer session. I would like to turn the conference back over to Darren Hall for any closing remarks.

Ryan King: This concludes the question and answer session. I would like to turn the conference back over to Darren Hall for any closing remarks.

Speaker #4: Yeah, no, I'd just like to thank everyone for joining the call today and taking the time. It is appreciated. You continued support is acknowledged, ed, valued, and respected.

Darren Hall: Yeah, no, I'd just like to thank everyone for joining the call today and taking the time. It is appreciated. Continued support is acknowledged, valued, and respected. And again, as always, myself and the entire team are available to field any questions after the call and anytime during the quarter. So no, look forward to continued engagement. And if anyone has any questions, reach out. But other than that, have a wonderful day and back to you, Operator.

Speaker #4: And again, as always, the myself and the entire team are available to field any questions after the call and anytime during the quarter. So no, look forward to continued engagement.

Speaker #4: And if anyone has any questions, reach out. But other than that, have a wonderful day. And back to you, operator.

Ryan King: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.