Q2 2025 Equinox Gold Corp Earnings Call
Speaker #1: 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.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Equinox Gold Q3 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 #1: After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press * then 1 on your telephone keypad.
Speaker #1: Should you need assistance during the conference call, you may signal an operator by pressing * then 0. I would now like to turn the conference over to Ryan King, Executive Vice President, Capital Markets for Equinox Gold.
Speaker #1: Please go ahead.
Speaker #2: 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. Good morning, everyone, and thank you for taking the time to join the call this morning. Before we commence, I would 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 SEDAR Plus. Finally, all figures are in US dollars unless otherwise stated.
Speaker #2: 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 #2: For a complete discussion of the risks, uncertainties, and factors that 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 CDR Plus.
Speaker #2: 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 Gold Mines and the Valentine Gold Mine, after which we will 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. With that, I will turn the call over to Darren.
Speaker #2: 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.
Speaker #2: 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 #2: And with that, I will turn the call over to Darren.
Speaker #3: 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 Americas-focused 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 #3: During what can be a distracting time as you integrate two businesses together, well done, and thanks to everyone. With the completion of the merger, we have created a significant Americas-focused gold producer, anchored by two cornerstone Canadian mines: Greenstone and Valentine. 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 #3: 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 will 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 Calibre 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.
Speaker #3: 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.
Speaker #3: 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.
Speaker #3: 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.
Darren Hall: Looking forward, Q3 and Q4 will see increasing production as we benefit from a full quarter of contribution from the Calibre assets, continued improved performance at Greenstone, and first gold from Valentine. 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 10, 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.
Speaker #3: 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.
Speaker #3: 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 #3: 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 #3: The restored 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.
Darren Hall: 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 am 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 to safely deliver reliable performance. With that, I will ask Dave to discuss a little more color on some of the team's recent progress at Greenstone.
Speaker #3: I am pleased to introduce Dave Schumer as Equinox's Chief Operating Officer. He brings over 35 years of mining experience to the business. Dave and I worked together at Newmont, our most recent caliber, 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.
Speaker #3: With that, I'll ask Dave to discuss a little more color on some of the team's recent progress at Greenstone.
Speaker #4: 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 haulage 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 #4: 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 #4: On the haulage 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 #4: 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 today of 227,000 tons per day. 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 #4: As Darren mentioned, month-to-date August mining rates have been around 200,000 tons per day, with the best demonstrated performance today of 227,000 tons per day. The focus remains on driving dilution down and fine-tuning the process plan to steadily improve operating time, throughput, and recovery.
Speaker #4: Turning to slide six and back to you, Darren.
Speaker #3: 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.
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 has been working symbiotically with Kyle Kunz and Pierre Lagarde, who are leading the construction front over the last year.
Speaker #3: 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. Our operations have not been impacted, but we remain vigilant and are supporting those that have been.
Speaker #3: 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 #3: Over the last year, 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 have been tested, and commissioning crews are 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 have been 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 ore 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 Gold Mines ramping towards nameplate capacity and Valentine Gold Mine on track to deliver first gold, we are entering a period where production and cash flow will materially increase.
Speaker #3: 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.
Speaker #3: The 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 #3: 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 #3: 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 #3: Our strategy is clear: quality over quantity. We focus on production that moves the needle in terms of free cash flow and valuation. We aim to advance high-return organic growth.
Speaker #3: 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 #3: A recent example of this is the sale of our Nevada assets for $115 million. We deliver tangible returns, share price appreciation through margin expansion, disciplined cost control, and production growth while positioning the company to return capital directly to shareholders.
Speaker #3: 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 am confident in our ability to realize our vision to be a top quartile valued gold producer. With that, we are happy to take questions, and back to you, Operator.
Speaker #3: With that, we're happy to take questions. Back to you, operator.
Speaker #1: Once again, to join the question queue, you may press * then 1 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 #1: If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press * then 2. Our first question comes from Oveas Habib, Wiscosia Bank.
Speaker #1: Please go ahead.
Speaker #5: Thanks, operator. Hi, Darren, and the Equinox team. Congrats on a Q2 beat. It's really great to see the Greenstone Mill hitting 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 over nameplate 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 tons per ton in Q1. When should we start seeing grades improve going into the second half? What measures are you taking to manage and improve grade dilution? Essentially, what I'm asking is, are you expecting grade to improve quarter over quarter, kind of going into Q3, or is this more of a Q4 situation?
Speaker #5: 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 #5: When should we start seeing grades improve going into the second half? You know, and what measures are you taking to manage and improve grade dilution?
Speaker #5: Essentially, what I'm asking is, are you expecting grade to improve in a quarter-over-quarter sense going into Q3, or is this more of a Q4 situation?
Speaker #3: 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. 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 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 are doing right now, it is about ensuring we get the quality as well as the quantity.
Speaker #3: So, improving over what was Q2, we will continue to see improved grades because of face position, and face position driven by, you know, kind of where we sit in the pit.
Speaker #3: 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.
Speaker #3: 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.
Speaker #3: So you know, Simon and Dave and the team are, you know, absolutely focused on moving as many tons as we can, but importantly, minimizing dilution so to be able to segregate out the waste from the ore.
Darren Hall: Simon and Dave and the team are absolutely focused on moving as many tons as cheaply as we can, but importantly, minimizing dilution, so to be able to segregate out the waste from the ore. Secondly, that is also to minimize the ore losses in and around historical workings. It is a work in progress, and as we go forth, I anticipate that we will see quarter-on-quarter improvements in grade. But I would anticipate that Q3 grades probably will not be too dissimilar to Q2. Right? Yeah, maybe marginally better, but we are also ensuring that we make face positions so that additional capacity that we have is ensuring that we end up with nice areas to work in that provide really, really effective gold mining areas that will positively impact unit gold mining costs as well, which will then flow through to margin escalation as well.
Speaker #3: And then secondly, this is also to minimize the ore losses 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 #3: But you know, I would anticipate that Q3 grades probably won't be too dissimilar to Q2, right? You know, maybe marginally better, but you know, 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 #5: 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 fleet in place, or do you think you need to beef that up?
Oveas Habib: Got it, and thanks for the color on that. Just in terms of the fleet that you have in place, 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 #3: No, I think for what we've, you know, what we've 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. 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. We have seen over the last quarter a significantly higher level of engagement from both Komatsu, Caterpillar, and SMS as well. That's great to see. No, the short answer is that we have the equipment. The board 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 #3: 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 #3: 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 #3: So, but no, the short answer is that we have the equipment. The board has afforded us some additional support equipment, which is positively impacting things, as well as, as Dave indicated, by increased haul speeds for the truck fleet.
Speaker #3: 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: No, we have what we need, and it's really about ensuring that we maximize the value out of that invested capital.
Speaker #5: Got it. Thanks for that, Darren. And just moving on to lost filos, you know, obviously you've kind of, you know, had the agreements in place now with the communities.
Oveas Habib: Got it. Thanks for that, Darren. 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 #5: Are you, I mean, now I'm forgetting the name of the third community I'm 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 the lost filos?
Speaker #3: 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: In every jurisdiction that we operate in, we maintain regular and engaged communication and coordination with all of our stakeholders, whether it be in Mexico, Nicaragua, or Ontario. We maintain open dialogue with everyone. The third community that we are having discussions with is Carouseleo. What we have done is that we do have fully executed agreements in place with two of the three communities, and we are 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. We are hopeful that we will work towards a solution, but as we do everywhere, for those that want to work with us, we will work constructively and responsibly with every stakeholder.
Speaker #3: So no, we maintain open dialogue with everyone. The third community is that we're that we're having in discussions with is Carouselia. 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 lost filos as well.
Speaker #3: But no, we are hopeful that we will work towards a solution. However, as we do everywhere, for those that want to work with us, we will work constructively and responsibly with every stakeholder.
Speaker #5: Got Got it. And just my last question over here, Darren. You know, I mean, great to see, you know, you've started the, you know, selling off non-core assets.
Oveas Habib: Got it. And just my last question over here, Darren, great to see you've started 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 #5: And we saw that with PAN. Are we going to see more of that going into the second half or early 2026? Any color that would be appreciated?
Speaker #3: Yeah, no, Oveas 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.
Darren Hall: Yeah, no, you know, we love all of our children, but 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. As we demonstrated with the Nevada assets, 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 is where our focus will be.
Speaker #3: 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 #3: 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.
Speaker #3: But they will all be focused on ensuring that they positively impact share price, and that's where our focus will be.
Speaker #5: Perfect. Thanks for taking my questions, Darren. And again, congrats on a Q2 beat.
Oveas Habib: Perfect. Thanks for taking my question, Darren, and again, congrats on your Q2 beat.
Speaker #3: Thank you, Oveas.
Darren Hall: Thank you, Avase.
Speaker #1: 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 #6: 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. 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 Gold Mines. 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? Secondly, what would the block model have predicted just so that we can get a benchmark of the kind of ore losses that you are experiencing right now?
Speaker #6: 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 #6: Can you give us an idea of what those actual numbers were in terms of the grades that you mined out of the pit this quarter and last quarter? Secondly, what would the block model have predicted, just so that we can get a benchmark of the kinds of ore losses that you're experiencing right now?
Speaker #3: Yeah, Anita, and thanks for the questions. And I don't have the mined information in front of me right now. And I guess is that 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 or minimizing mining dilution and ore losses.
Darren Hall: Yeah, Anita, thanks for the questions. I do not have the mined information in front of me right now. I guess there are 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 or minimizing mining dilution and ore losses. Secondly, 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. What we see is that from a high level, we see the reconciliation of total metal being pretty consistent with that.
Speaker #3: 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.
Speaker #3: 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 is where our focus on dilution and ore loss. As we work through the balance of the year, I think we will be in a better position to be able to talk about what those shorter-term grades look like. I am 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 in around what the long term looks like because I do not have the actual mined on one grade because, as of end of month July, we had about right around 6 million tons on stockpile. There is a large stockpile of material as well and how that figures into the as mined versus the as milled. Happy to.
Speaker #3: 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 #3: 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 #3: 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 the end of July, we had about right around 6 million tons on stockpile.
Speaker #3: 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 we're not happy to.
Speaker #6: 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 I'm trying to understand.
Anita Soni: Yeah, I can appreciate that, but I think that grades were supposed to be in the order of about 1.3 this year. That is where we are, you know, the 0.92 is where I am trying to understand. Secondly, you also mined 50% more than you milled. Did you just direct ore feed what you mined, or was there, like, I am trying to understand the movement between what is happening at the mine, is there any stockpiling happening? 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 am trying to get an understanding of the material movement and what is happening there.
Speaker #6: And then secondly, you also mined 50% more than you milled. Did you just direct ore feed what you mined, or was there like... I'm trying to understand the movement between what's happening at the mine?
Speaker #6: 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.
Speaker #6: So I'm trying to get an understanding of the material movement and what's happening there.
Speaker #3: Yeah, no, 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.
Darren Hall: No, and again, it is probably worthwhile just sitting down and walking through what that looks like. But, absolutely, right, there is a stockpile and there is a surge capacity in front of the plant. I mean, I do not 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, the stockpile is a critical part of the process here because we do not go direct mine to mill.
Speaker #3: 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 #3: I think the majority of the material is actually re-handled from the stockpile to ensure that we get a consistent feed from not only gray, but also arsenic and sulfur. This allows us to achieve a nicely blended product that provides a stable feed into the plant, which will have a positive impact on recovery.
Speaker #3: So you know, the stockpile is a critical part of the process here. It could be because we don't go direct from mine to mill.
Speaker #5: 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: It is 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 #6: 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 will leave it at three, but the second question, just in terms of the disclosures that you have 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 Orizona legal matter. Can you give me some color on, 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? Secondly, on Orizona, a similar question. Would that impact your ability to execute on asset sales if you were thinking about asset sales in Brazil?
Speaker #6: 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 #6: And secondly, on ore zones, a similar question: would that impact your ability to execute on asset sales if you were thinking about asset sales in Brazil?
Speaker #5: Yeah, as 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 are actually reasonably confident we will come to a beneficial resolution there. As to a timeline on when that might be settled, I do not know, but we did not record a provision with regards to it, which indicates our expectation of likelihood of a successful resolution. With respect to Orizona, the legal wheels in Brazil turned very slowly, so we do not expect that to be resolved in the near term. We do not expect that to, there is no process on Orizona. I just want to reiterate that, or on any of the Brazil assets or any of the other assets for that matter.
Speaker #5: 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 #5: As to the timeline on when that might be settled, I don't know. However, we did not record a provision with regard to it, which indicates our expectation of the likelihood of a successful resolution.
Speaker #5: 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 #5: We do not expect that to happen; there is no process on the ore zone. I just want to reiterate that for any of the Brazil assets or any of the other assets, for that matter.
Speaker #5: 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: We would not expect that kind of thing to interfere. If there was one, we would not expect it to interfere with the process.
Speaker #3: Yeah, as it didn't, we're given this recent merger between Caliber and Equinox.
Darren Hall: Yeah, as it did, we've given this recent merger between Calibre Mining Corp. and Equinox Gold Corp.
Speaker #5: Exactly. Yeah.
Peter Hardie: Exactly, yeah.
Speaker #6: Okay. And then, last question, I guess I'll move to Lost Filos. So, Lost 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 will move to Los Filos. Los Filos, you know, in the last two years, Peter, as you guys had indicated previously, has been a bit undercapitalized. You were preserving capital to get their ramp-up at Greenstone Gold Mines 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 #6: You know, you were preserving capital to get their ramp-up at Greenstone up and running. So if Lost Filos comes back, outside of the CIL, what kind of CapEx should we be expecting in terms of a recapitalization of that mine?
Speaker #3: Yeah, and Anita, I mean, we're working through what a potential restart may look like at Lost Filos. As we have visibility into that, we'll be absolutely transparent with what those requirements are.
Darren Hall: Yeah, Anita, we are working through what a potential restart may look like at Los Filos. As we have visibility into that, we will be absolutely transparent with what those requirements are. Our focus right now is working with the two communities on developing a two-community plan, which would involve the construction of a CIL. That is starting with recommencing exploration activities here in the next, we will call it weeks, and then continuing the studies in the background to be able to look at refreshing some of those longer-term economics. It is really about the longer-term capital requirements and what that asset looks like as a world-class gold asset. If we are faced with a first-world problem of being able to restart, then we will start to provide that information because those numbers change on a pretty regular basis.
Speaker #3: 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 #3: 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 #3: And you know, if we're faced with, you know, with the 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.
Speaker #3: 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.
Darren Hall: 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. We are comfortable that the provisions that we have made and the progress that we have made is preserving our ability to recommence when we do have those agreements in place.
Speaker #3: 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 #6: All right, thank you. That's it for my questions. Sorry, go ahead.
Anita Soni: All right, thank you. That is it for my questions. Sorry, go ahead.
Speaker #5: Yeah, no, I was just going to say, Anita, it's Peter again. Yeah, and given the longer history, perhaps with lost Filos, than 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. 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 #5: So looking forward to the day when we do.
Speaker #6: All right, thank you. That's it for my questions.
Anita Soni: All right, thank you. That is it for my questions.
Speaker #1: The next question is from Mohammad Sudaib with National Bank Financial. Please go ahead.
Ryan King: The next question is from Mohamed Saddab with National Bank Financial. Please go ahead.
Speaker #5: Hi, Darren. I'm Tim. Thanks for taking my question. Just maybe on the cost front in the quarter, I just wanted to dive in a little bit deeper into the Brazilian operations' cost.
Mohamed Saddab: Hi Darren and team, thanks for taking my question. I just, maybe on the cost front in the quarter, I just wanted to 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 cost out of the Brazilian operations? Thank you.
Speaker #5: 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 #5: Thank you.
Speaker #3: 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 thereabouts, we reestablished guidance for the full year.
Darren Hall: Well, maybe I will start with a kind of a 30,000-foot view and then see if Peter Hardie has got anything to add to it. But on June 13th, I think, or thereabouts, we reestablished guidance for the full year, and we are very comfortable with our consolidated and pro forma guidance for all of our assets going into it. I think 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 reaction too. But again, holistically for the year, we are very comfortable with the guidance. Peter Hardie, anything you would lay around on that?
Speaker #3: 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 #3: But again, holistically for the year, we're very comfortable with the guidance. I mean, Pete, anything you'd layer on that?
Speaker #5: 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 Hall said, very solidly in range for delivering on our updated guidance.
Speaker #5: But, as Darren said, we are very solidly in range for delivering on our updated guidance.
Speaker #3: Yeah, and I think that just to layer in this is that, you know, someone, I think, well, 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 capital constraints that we had seen over the last few years, in terms of where we deploy capital, as our organization changes and as we generate that capital, it is allowing us to look at that capital deployment throughout the assets. I think that, you know, we will 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 is in front of them and then be able to more reliably produce as well.
Speaker #3: 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 #3: 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 portfolios.
Darren Hall: Whether that be exploration through 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. I think that, you know, with this pivotal change we are seeing with Greenstone Gold Mines coming on board, or sorry, ramping up, and then, you know, we are imminent with respect to Valentine Gold Mine, that very much changes the paradigm, which is Equinox Gold Corp., and will allow us to then be able to reinvest back into some of these assets that arguably probably have not seen a lot of over the last couple of years. So, again, very exciting times for our entire portfolio of assets.
Speaker #3: 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 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 #3: So, you know, again, very exciting times for our entire portfolio of assets.
Speaker #5: Great. Thanks for that color. And then, if I could shift maybe to Greenstone, perhaps just a follow-up on a great question there, but maybe as you relate to the stockpile, you noted an increase in the stockpile that you have at the asset there quarter over quarter.
Mohamed Saddab: Great, thanks for that caller. If I could shift maybe to Greenstone Gold Mines, maybe just a follow-up on a 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 6 million tons, what grade the 6 million tons are at for the stockpile? Thank you.
Speaker #5: 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 #5: Thank you. And, sorry, you broke up there right at the end. Do you mind just repeating that question?
Peter Hardie: Sorry, you broke up there right at the end. Do you mind just repeating that question? Apologies.
Speaker #3: Yeah, apologies.
Speaker #5: Would you be able to tell us what the grades are for the stockpile, the 6 million tons of stockpile that you have at Greenstone?
Mohamed Saddab: Would you be able to tell us what are the grades for the stockpile, the 6 million tons of stockpile that you have at Greenstone Gold Mines?
Speaker #3: In terms of splits, there are different grade splits. And, if I remember correctly, Mohammad, I think we're looking at about 6 million tons at just over half a gram.
Darren Hall: In terms of splits, there are different grade splits. From memory, Mohamed, I think we are looking at about 6 million tons at just over half a gram as a total. I believe there is about 1.5 million tons at about a 0.7x, right, in terms of the higher grade portion. We will call it the bin two. We can get it offline and provide more color than you would like. Again, we have got a significant stockpile that is very similar to what we have processed year to date, and then a larger stockpile of lower grade material. We talk about a 1.5 million ton, basically the average grade processed year to date.
Speaker #3: 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 #3: 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 #3: 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 #5: 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.
Mohamed Saddab: Great. 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. 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 or non-sustaining CapEx for that asset in the second half of the year? Thank you.
Speaker #5: 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?
Speaker #5: On non-sustaining CapEx for that asset in the second half of the year, thank you. So the spend on the project itself that’s in the MD&A takes us through to the first gold pour?
Peter Hardie: The spend on the project itself that is in the MD&A takes us through to first gold pour. That is a fairly, you know, it is the tail end of the project. That spend, you know, it becomes less lumpy than earlier in the project. If you are trying to understand it, the easiest way to look at it is just a smooth spend through first gold. Subsequently, it is your very typical working capital buildup and ramp-up and the costs that are typically associated with that. We have not guided on Valentine Gold Mine costs as of yet, and we will not do that in all likelihood until commercial production. You can make, I suppose, typical assumptions on a 2.5 million ton for your plant and gold mining operation.
Speaker #5: And so, when you're thinking of that, and that's fairly, you know, it's the tail end of the project. And that spend, it's, you know, it becomes less lumpy than earlier in the project.
Speaker #5: 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.
Speaker #5: 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.
Speaker #5: But you know, you can make, I suppose, typical assumptions on a 2.5 million ton for your plant and mining operation.
Speaker #3: Yeah, and I think that, you know, again, if I were sitting in your shoes, Mohammad, 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, Mohamed, I mean, you know, I would be taking average gold mining costs and average processing costs and using them as the basis for. There is no, there is no surprise in terms of we deferred $100 million worth of spend, and now it is going to come out in Q4 as opposed, you know, for additional capital. There is none of those shenanigans that have been played out. I mean, you know, we have played a pretty straight bat at this at providing updates as we have gone through. And the EAC estimates that we have foreshadowed, we are tight on, we are comfortable with.
Speaker #3: 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.
Speaker #5: Yeah, yeah, that's right.
Speaker #3: 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.
Speaker #3: And the EAC estimates that we've foreshadowed, we're tight on, we're comfortable with. 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.
Darren Hall: And as Peter Hardie mentioned, it is 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 booth.
Speaker #5: And I'd just add to that, funded. You know, fully funded.
Peter Hardie: I would just add to that funded, you know, fully funded.
Speaker #3: 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.
Darren Hall: Oh yeah, no, absolutely, absolutely funded out of cash and cash flow. Part of the reason that we did not provide all-in sustaining and cash cost guidance for the tail end of the year when we provided guidance just recently is that the production, I think we are 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 is concerning there from a delivery in the back half of the year or being able to fund it. Our focus is on getting to close to nameplate, hopefully by the end of Q1, but definitely in Q2. Again, we have afforded, the board has afforded us, significant investment there in terms of capital spares as we have talked about.
Speaker #3: And then it becomes distractive 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 #3: 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 #3: 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 the additional time that we've had through the build has allowed the operating team to come in, do that redundancy checks.
Darren Hall: The redundancy, the additional time that we have had through the build has allowed the operating team to come in, do that redundancy checks, and we have $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 #3: And we've got $25 million worth of additional 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 #5: Right. Thanks a lot for answering my question.
Mohamed Saddab: Great. Thanks so much for answering my questions.
Speaker #3: Well, you're all factored into the initial project capital, so.
Darren Hall: We're all factored into the initial project capital.
Speaker #5: Amazing. Yeah, thanks for answering my questions and congrats on the quarter.
Mohamed Saddab: Amazing. Yeah, thanks for answering my questions and congrats on the quarter.
Speaker #3: Appreciate it. Thank you very much for your support.
Darren Hall: Appreciate it. Thank you very much for your support.
Speaker #1: The 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 #7: Thanks for taking the 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?
Oveas Habib: Thanks for taking my question. Remaining on the topic of Valentine Gold Mine, could you let us know what the key metrics we should be watching are during the ramp-up process?
Speaker #3: 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 will be tons mill, Jeremy. As soon as we commence production there, we will provide regular updates on throughput. I think that is going to be the measure. This is a long-life asset. There will be dips and weaves along the road with respect to grade. We are comfortable with respect to grade as we have demonstrated through the releases we have provided and through recent production results. I am comfortable with it. It is really going to be about showing that steady-state or that ramp-up in throughput. That is going to be the key measure. Everything else is inconsequential related to that.
Speaker #3: 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.
Speaker #3: 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.
Speaker #3: Everything else is a kind of, how do you say, inconsequential related to that. Mining rates are going to be fine. We've had good mining performance.
Darren Hall: Mining rates are going to be fine. We have had good mining performance. We have got all the material, all the assets ready to turn on. We have actually had some delays in providing that as we have seen the project being delayed in terms of the bill. We are very comfortable from a mining perspective. It is really going to be about mill throughput.
Speaker #3: 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.
Speaker #3: So, we're very comfortable from a mining perspective. It's really going to be about mill throughput.
Speaker #5: Thanks, Darren. I appreciate it. One last one—just thinking about the future, there's a lot of exploration potential at some of these assets. I appreciate that there's a focus on ramp-ups and operations at the moment.
Oveas Habib: Thanks, Darren. Appreciate it. One last one, just thinking about the future, there's a lot of exploration potential at some of these assets. I appreciate that there's focus on ramp-ups and operations at the moment. Are you able to sort of give some loose priority or ranking in terms of where you see the greatest exploration potential?
Speaker #5: 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 #3: 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 routes are very heavy in exploration.
Darren Hall: Yeah, no, thanks, Jeremy. Even though there are a few things happening in the business, we haven't lost sight on the fact that our roots are very heavy in exploration. We continue to explore in Nicaragua. We've provided a bit of a summary there. We spent about $70 million 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 and around Valentine as well. We would anticipate maybe later this quarter providing an update on some recent exploration results out of Valentine.
Speaker #3: 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 #3: 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 #3: We have had good success in and around Valentine as well. We anticipate, perhaps later this quarter, providing an update on some recent exploration results from Valentine.
Speaker #3: But I think, as we chatted a little bit earlier, is that as we're generating 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: As we chatted a little bit earlier, as we generate cash and we're coming out of the back of two significant builds and capital draws, it will 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. 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. Then Mesquite as well. Mesquite has been an enduring asset with a long life. It has been pretty low on the food chain from a capital deployment perspective over the last few years. We would like to see, and we will see exploration programs recommence there here within the next few months.
Speaker #3: You know, Lost 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.
Speaker #3: And then mosquito as well. I mean, mosquito 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 #3: 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’d like to think of this as an exploration company backed by, you know, $3 to $4 billion of revenue.
Darren Hall: I like to think of us as an exploration company backed by $3 billion to $4 billion of revenue. As you know us as Pedigree, I would anticipate that if I was modeling, sitting on your side and modeling this, I would anticipate roughly $100 an ounce of exploration spend as kind of an operating cost going forward as well. We see great talk across all of our assets to exploration success.
Speaker #3: 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 a hundred dollars an ounce of exploration spend as kind of an operating cost going forward as well.
Speaker #3: I mean, we see great talk across all of our assets about exploration success.
Speaker #5: Great. Thanks, Darren. I appreciate the color and look forward to developments there. I'll step back in the queue.
Oveas Habib: Great, thanks, Darren. Appreciate the caller. I am looking forward to developments there. I will step back in the queue.
Speaker #3: Appreciate it. Thanks, Jeremy. Thanks for your support. And Canaccord.
Darren Hall: Appreciate it. Thanks, Jeremy. Thanks for your support and Canaccord's.
Speaker #1: The 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 #8: Thank you for the good job that's gone on. Looking to next year, assuming lost 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 is going on. Looking to next year, assuming Los Filos is idle as it is at the moment, what is a reasonable target for cash cost company-wide? $1,400, $1,300, $1,200, $1,100? How much better do you think things will get?
Speaker #8: 14 company-wide, 1400, 1300, 1200, 1100. How much better do you think things will get?
Speaker #3: Oh, no, 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 am sitting back here a little bit. I will maybe pass it to Peter Hardie to start with, and then I will pick up the other, then I will close out as I kind of collect my thoughts. Thanks for the question though, John. He is sitting there thinking.
Speaker #3: As I kind of click my thoughts, thanks for the question though, John.
Speaker #5: He's sitting there, thinking.
Speaker #8: Well, you know, it's
Peter Hardie: Well, you know, it's for eternity I'm blessed with an embarrassment of riches. But, 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 $1,400 per ounce cash cost, a little under. And that's with Greenstone Gold Mines not fully ramped up and Valentine Gold Mine not contributing. So if you're trying to model it through, John, you know, you could probably knock $100 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 #5: Starting to become blessed with an embarrassment of riches. But, John, we haven't, you know, obviously for everyone on the call, anything we say today is not guidance for next year.
Speaker #5: 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 #5: 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 know, you could probably knock a hundred bucks an ounce off of that, 150 dollars an ounce.
Speaker #5: 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 #5: And you know, and getting, 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, you know, more confidently next year.
Peter Hardie: And that's, and 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. But if you're trying to look at it now, that's how I'd approach it.
Speaker #5: But if you're trying to look at it now, that's how I'd approach it.
Speaker #3: 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 $1,400 to $1,500 an ounce.
Darren Hall: Yeah, I think that, you know, I kind of put Peter on the spot there. Sorry, Peter, but you know, as you sit back and you look at the guidance we've provided this year, we've provided $1,400 to $1,500 an ounce. If you look at the profile as we move into 2026, as Peter foreshadowed, we're going to have Valentine Gold Mine and Greenstone Gold Mines being larger contributors, which will lower our production cost per ounce. You know, in the current gold tape that we see, 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.
Speaker #3: If you look at the profiles 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 costs per ounce.
Speaker #3: 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 $1,500 an ounce margin, right? I mean, you know, we're going to be blessed in a very, in a very great situation about a one-derivative the balance sheet primarily, you know, primarily first.
Darren Hall: I mean, you know, we're going to be blessed in a very, in a very great situation to be able to one de-level 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 and around how additionally to be able to return value to shareholders through dividend or share buybacks as well. But yeah, 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 #3: 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.
Speaker #3: 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 #3: 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 #8: 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 cash position, assuming the Castle Mountain Capital doesn't start Lost Filos Mill? Is it a reasonable target to be in a net cash position at the current gold prices by the end of 2027?
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 2027?
Speaker #5: Yeah, I think that's reasonable.
Peter Hardie: Yeah, I think that's reasonable.
Speaker #8: Super, thank you very much.
John Tomases: Super. Thank you very much.
Speaker #3: Thanks, John. I appreciate your support and continued support throughout the journey. It is greatly valued. Thank you.
Darren Hall: Thanks, John. Appreciate your support and continued support over the journey. It is much valued. Thank you.
Speaker #5: Thanks, John.
Peter Hardie: Thanks, John.
Speaker #1: 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 #3: Yeah, no, I'd just like to thank everyone for joining the call today and taking the time. It is appreciated. Your continued support is acknowledged, valued, and respected.
Darren Hall: I would just like to thank everyone for joining the call today and taking the time. It is appreciated. Continued support is acknowledged, valued, and respected. Again, as always, myself and the entire team are available to field any questions after the call and anytime during the quarter. I look forward to continued engagement. If anyone has any questions, reach out. Other than that, have a wonderful day and back to you operator.
Speaker #3: And again, as always, my team and I are available to field any questions after the call and anytime during the quarter. So, no, I look forward to continued engagement, and if anyone has any questions, please reach out.
Speaker #3: 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.