Q2 2026 Torex Gold Resources Inc Earnings Call

August 7, 2026

Speaker #1: Thank you for standing by. This is the conference operator. Welcome to the Torex Gold second quarter 2026 results conference call and webcast. As a reminder, all participants are in a listen-only mode, and the conference call is being recorded.

Operator 3: Thank you for standing by. This is the conference operator. Welcome to the Torex Gold Q2 2026 results conference call and webcast. As a reminder, all participants are in a listen-only mode and the conference call is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star one using a telephone keypad. You will hear a tone acknowledging your request. Should you need assistance during the conference call, you may reach an operator by pressing star zero. I would now like to turn the conference call over to Laura Totan, Manager, Investor Relations. Please go ahead.

Operator: Thank you for standing by. This is the conference operator. Welcome to the Torex Gold Q2 2026 results conference call and webcast. As a reminder, all participants are in a listen-only mode and the conference call is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star and then one using a telephone keypad. You will hear a tone acknowledging your request. Should you need assistance during the conference call, you may reach an operator by pressing star and zero. I would now like to turn the conference call over to Laura Totan, Manager, Investor Relations. Please go ahead.

Speaker #1: After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star and then one using a telephone keypad.

Speaker #1: You will hear a tone acknowledging your request. Should you need assistance during the conference call, you may reach an operator by pressing star and zero.

Speaker #1: I would now like to turn the conference call over to Laura Toten, Manager of Investor Relations. Please go ahead.

Speaker #2: Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q2 2026 conference call. Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be found under the Investors section of our website, at www.torexgold.com.

Laura Totan: Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q2 2026 conference call. Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be found under the Investors section of our website at www.torexgold.com. I would also like to note that certain statements to be made today by the management team may contain forward-looking information. As such, please refer to the detailed cautionary notes on page two of today's presentation, as well as those included in the Q2 2026 MD&A. On the call today, we have Andrew Snowden, President and CEO, and Dan Rollins, CFO. Following the presentation, Andrew and Dan will be available for the question and answer period. This conference call is being webcast and will be available for replay on our website.

Laura Totten: Thank you, operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q2 2026 conference call. Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be found under the Investors section of our website at www.torexgold.com. I would also like to note that certain statements to be made today by the management team may contain forward-looking information. As such, please refer to the detailed cautionary notes on page two of today's presentation, as well as those included in the Q2 2026 MD&A. On the call today, we have Andrew Snowden, President and CEO, and Dan Rollins, CFO. Following the presentation, Andrew and Dan will be available for the question and answer period. This conference call is being webcast and will be available for replay on our website.

Speaker #2: I would also like to note that certain statements to be made today by the management team may contain forward-looking information. As such, please refer to the detailed cautionary notes on page 2 of today's presentation as well as those included in the Q2 2026 MD&A.

Speaker #2: On the call today, we have Andrew Snowden, President and CEO, and Dan Rollins, CFO. Following the presentation, Andrew and Dan will be available for the question-and-answer period.

Speaker #2: This conference call is being webcast and will be available for replay on our website. Last night's press release and the accompanying financial statements and MD&A are posted on our website and have been filed on Cedar Plus.

Laura Totan: Last night's press release and the accompanying financial statements and MD&A are posted on our website and have been filed on SEDAR+. Also note that all amounts mentioned in this call are US dollars unless otherwise stated. I will now turn the call over to Andrew.

Laura Totten: Last night's press release and the accompanying financial statements and MD&A are posted on our website and have been filed on SEDAR+. Also note that all amounts mentioned in this call are US dollars unless otherwise stated. I will now turn the call over to Andrew.

Speaker #2: Also note that all amounts mentioned in this call are US dollars unless otherwise stated. I will now turn the call over to Andrew.

Speaker #3: Thanks. Thank you, Laura. And good morning, everyone, and welcome to the Torex Gold Q2 results call. And first results call for me in the role as President and CEO following Jody's retirement last month.

Andrew Snowden: Thank you, Laura, and good morning, everyone, and welcome to the Torex Gold Q2 results call, and first results call for me in the role as President and CEO following Jody's retirement last month. The main takeaway from the quarter is that our Morelos operation is performing to plan with production very much on track to achieve our annual production guidance. For those of you following along on the slides, I'm talking first to slide four, which summarizes our Q2 results. This tracked to expectations as we mined through planned lower grade and lower gold recovery stopes in the quarter, producing just over 96,000 ounces, putting us at around 197,000 ounces gold equivalent year to date. I expect Q2 to be the lowest production quarter of the year as we return to higher grade areas of the mine in Q3 and Q4.

Speaker #3: The main takeaway from the quarter is that our morale operation is performing to plan with production, very much on track to achieve our annual production guidance.

Speaker #3: For those of you following along on the slides, I'm talking first to slide 4, which summarizes our second quarter results. And this tracked to expectations, as we mined through planned lower grade and lower gold recovery stopes in the quarter, producing just over 96,000 ounces, putting us at around 197,000 ounces gold equivalent year to date.

Speaker #3: I expect Q2 to be the lowest production quarter of the year as we return to higher grade areas in the mine in Q3 and Q4.

Speaker #3: And we are already seeing the benefit of these improved grades with production of over 43,000 ounces gold equivalent in the month of July, which is setting us up well for a good step up in production here into Q3.

Andrew Snowden: We are already seeing the benefits of these improved grades with production of over 43,000 ounces gold equivalent in the month of July, which is setting us up well for a good step-up in production here into Q3. All-in sustaining costs of $2,459 an ounce were elevated in part due to this lower production quarter. Importantly, our margins remained robust at 46%. We also continued to generate strong free cash flow of $94 million, supporting about $55 million in capital returns to shareholders during the quarter. Most importantly, we delivered yet another safe quarter with no lost-time injuries for the fifth consecutive quarter, maintaining a zero lost-time injury frequency rate per million hours worked for both our employees and contractors.

Speaker #3: Following sustaining costs of 2,459 an ounce were elevated in part due to this lower production quarter. But importantly, our margins remained robust at 46%.

Speaker #3: We also continued to generate strong free cash flow of 94 million supporting about 55 million dollars in capital returns to shareholders during the quarter.

Speaker #3: Most importantly, we delivered yet another safe quarter with no loss time injuries for the fifth consecutive quarter, maintaining a zero loss time injury frequency rate per million hours worked for both our employees and contractors.

Speaker #3: And turning next to slide 5, you can see our own sustaining costs on a year-to-date basis of 2,165 an ounce, which is elevated compared to our typical run rate due to three key factors.

Andrew Snowden: Turning next to slide five, you can see our all-in sustaining costs on a year to date basis are $2,165 an ounce, which is elevated compared to our typical run rate due to three key factors. Firstly, the impact of the lower grades on production and sales. As I mentioned, these grades will, though, pick up and improve costs in the H2. Secondly, we saw higher plant reagent costs, that was due to both consumption rates and unit pricing. This was required to process the lower recovery ore we were working through in the quarter and the H1. Thirdly, a stronger peso, which year to date has averaged about 17.5 to 1, that compared to our original guidance of 19 to 1.

Speaker #3: Firstly, the impact of the lower grades on production and sales. And as I mentioned, these grades will, though, pick up and improve costs in the second half of the year.

Speaker #3: Secondly, we saw higher plant reagents costs, and that was due to both consumption rates and unit pricing. And this was required to process the lower recovery oil we were working through in the quarter and in the first half of the year.

Speaker #3: Thirdly, a stronger peso, which year to date is averaged about 17.5 to 1. And that compares to our original guidance of 19 to 1.

Andrew Snowden: That's created a meaningful impact, given about 50% of our operating costs are peso denominated. Although production is expected to step up over the coming quarters and accordingly, costs will decrease significantly, we have revised our full-year All-in Sustaining Cost guidance to a range of $2,000 to $2,100 an ounce. Note that these costs are based on the updated full-year guided metal prices of $4,500 an ounce gold, and that used to be $4,000 gold in our original guidance, as well as updates to our silver and copper assumptions of $72.50 silver for the year and $6 a pound copper for the year, which are more reflective of the metal prices we've seen year-to-date. Sustaining capital guidance has also been revised upwards to $135 to 145 million, and that primarily reflects the impact of the peso as well as some additional equipment leases at Media Luna.

Speaker #3: And that's created a meaningful impact given about 50% of our operating costs are peso denominated. Although production is expected to step up over the coming quarters and accordingly costs will decrease significantly, we have revised our year or full-year oil and sustaining cost guidance to a range of 2,000 to 2,100 dollars an ounce.

Speaker #3: Note that these costs are based on the updated full-year guided metal prices of 4,500 dollar an ounce gold, and that used to be 4,000 dollar gold in our original guidance, as well as updates to our silver and copper assumptions of 72 dollars 50 silver for the year and 6 dollar a pound copper for the year, which are more reflective of the metal prices we've seen year to date.

Speaker #3: Sustaining capital guidance has also been revised upwards to 135 to 145 million. And that primarily reflects the impact of the peso as well as some additional equipment leases at Media Luna.

Speaker #3: Importantly, we're still tracking to plan for our original full-year production guidance of 420 to 470 thousand ounces, and will be generating significant free cash flow through the course of the year.

Andrew Snowden: Importantly, we're still tracking to plan for our original full-year production guidance of 420,000 to 470,000 ounces, and we'll be generating significant free cash flow through the course of the year. Operationally, Q2 was a very strong quarter, as you can see here on slide six. Mining rates at both Media Luna and ELG continue to outperform at 7,700 tons per day at Media Luna and nearly 3,100 tons per day at ELG. We're expecting rates at each mine to stay around these levels through the remainder of the year. On the processing side, throughput in Q2 was also ahead of design at nearly 10,800 tons per day, and you can see this shown on slide six on the left-hand chart here. This is a level we expect we'll be able to continue to achieve through the remainder of the year.

Speaker #3: Operationally, Q2 was a very strong quarter, as you can see here on slide 6. You know, mining rates at both Media Luna and ELG continue to outperform at 7700 tons per day at Media Luna, and nearly 3,100 tons per day at ELG.

Speaker #3: And we're expecting rates at each mine to stay around these levels through the remainder of the year. On the processing side, throughput in Q2 was also ahead of design at nearly 10,800 tons per day.

Speaker #3: And you can see this shown on slide 6, on the left-hand chart here. This is a level we expect we'll be able to continue to achieve through the remainder of the year.

Andrew Snowden: Our copper and silver recoveries both saw meaningful improvements in Q2, and while gold recovery showed some improvements quarter-over-quarter, it remains slightly below the targeted 90% set out in the technical report. As noted earlier, we are expecting an improvement in recoveries through the remainder of the year, and have already begun to see better recoveries in July, where we saw about 88%. Turning next to slide eight for an update on our projects. Media Luna North continues to progress on schedule with first production still expected by the end of the year. A few milestones in the quarter, notably, we broke through on the north vent adit in June, which will enable installation of our ventilation fans, which will support first ore production and mine level development.

Speaker #3: Copper and silver recoveries, both saw meaningful improvements in Q2. And while gold recovery showed some improvements quarter over quarter, it remains slightly below the targeted 90% set out in the technical report.

Speaker #3: As noted earlier, we are expecting an improvement in recoveries through the remainder of the year, and we've already begun to see better recoveries in July, where we saw about 88%.

Speaker #3: Turning next to slide 8 for an update on our projects. Media Luna North continues to progress on schedule with first production still expected by the end of the year.

Speaker #3: A few milestones in the quarter, notably we broke through on the north vent add it in June, which will enable installation of a ventilation fans, which will support first oil production and mine level development.

Speaker #3: We also broke through on the one kilometer haulage drift, which is connecting the Media Luna North deposits into the existing Media Luna oil handling system.

Andrew Snowden: We also broke through on the 1-kilometer haulage drift, which is connecting the Media Luna North deposit into the existing Media Luna ore handling system, another key milestone for the project. Our focus now is on expediting the procurement and construction contracts to commence construction activities in the underground mine. At Los Reyes, with the compelling results of the preliminary economic assessment that we walked through on the call we had last month, with that PEA now in hand, work has commenced on the PFS, which is expected to be completed by late 2027. Drilling is also well underway, with 4 rigs on site now actively working. The 20,000 meters of drilling planned for this year will be focused on de-risking and upgrading the resources across the 3 main trends.

Speaker #3: Another key milestone for the project. Our focus now is on expediting the procurement and construction contracts to commence construction activities in the underground mine.

Speaker #3: At Los Reyes, with the compelling results of the preliminary economic assessment that we walked through on the call we had last month, with that PEA now in hand, work has commenced on the PFS, which is expected to be completed by late 2027.

Speaker #3: Drilling is also well underway with four rigs on site now actively working. And the 20,000 meters of drilling planned for this year will be focused on de-risking and upgrading the resources across the three main trends.

Speaker #3: I was down in Los Reyes myself last month visiting the team of the property. And the ramp-up of activities is going exceptionally well there at the Los Reyes site.

Andrew Snowden: I was down in Los Reyes myself last month, visiting the team at the property, and the ramp-up of activities is going exceptionally well there at the Los Reyes site. On the subject of drilling, we also recently released our quarterly Morelos Drilling and Exploration update, which is summarized on slide nine. I'm very pleased to say that with the exceptional results we've seen to date to the east and south of Media Luna, we're accelerating the program in this area with an additional over 13,000 meters of drilling planned for this year. This is targeting to add new resources in this area with our year-end MRMR updates expected to be released in March of next year. As a result, our overall budget for exploration has increased from $77 million to a record $85 million across our portfolio of assets.

Speaker #3: On the subject of drilling, we also recently released our quarterly Morales Drilling and Exploration update, which is summarized on slide 9. And I'm very pleased to say that with the exceptional results we've seen to date to the east and south of Media Luna, we're accelerating the program in this area with an additional over 13,000 meters of drilling planned for this year.

Speaker #3: And this is targeting to add new resources in this area with our year-end MRMR update expected to be released in March of next year.

Speaker #3: As a result, our overall budget for exploration has increased from 77 million dollars to a record 85 million dollars across our portfolio of assets.

Speaker #3: This accelerated program will begin to explore the potential that the San Miguel corridor between Media Luna and Media Luna West may be mineralized, with the San Miguel fault likely acting as the main source of mineralizing fluid.

Andrew Snowden: This acceleration program will begin to explore the potential that the San Miguel Corridor between Media Luna and Media Luna West may be mineralized, with the San Miguel fault likely acting as the main source of mineralizing fluid. ELG underground continues to return strong results that demonstrate potential both at depth and along strike of the main mineralized trends in second-order structures. The program continues to support our target of replacing reserves and resources with our year-end update in March. With that, I'll turn the call over to Dan to walk us through the financial results.

Speaker #3: ELG Underground continues to return strong results that demonstrate potential both at depth and along strike of the main mineralized trends in second-order structures.

Speaker #3: The program continues to support our target of replacing reserves and resources with our year-end update in March. And with that, I'll turn the call over to Dan to walk us through the financial results.

Speaker #2: Thanks, Andrew. And good morning, everyone. Starting on slide 11, while all in sustaining costs were elevated this quarter due to the factors noted earlier on the call, margins remained robust with an all in sustaining margin of 46%.

Dan Rollins: Thanks, Andrew, and good morning, everyone. Starting on slide 11. While all-in sustaining costs were elevated this quarter due to the factors noted earlier on the call, margins remained robust with an all-in sustaining margin of 46%. Free cash flow of $94 million was net of $39 million in Mexican profit-sharing payments, which you recall we pay annually each May. With production and costs expected to improve through the back half of the year, and period of elevated tax and profit sharing payments now behind us, we expect to generate strong free cash flow through H2 of the year. Turning to slide 12. AISC guidance has increased to a range of $2,000 to 2,100 per ounce from a range of $1,750 to 1,850 per ounce, reflecting both internal and external cost pressures. The main drivers of the increase in AISC guidance are as follows.

Speaker #2: Free cash flow of 94 million was net of 39 million of in Mexican profit-sharing payments, which you recall we pay annually each May. With production and costs expected to improve through the back half of the year, and period of elevated tax and profit-sharing payments now behind us, we expect to generate strong free cash flow through the second half of the year.

Speaker #2: Turning to slide 12, AISC guidance has increased to a range of $2,000 to $2,100 per ounce from a range of $1,750 to $1,850 per ounce, reflecting both internal and external cost pressures.

Speaker #2: The main drivers of the increase in AISC guidance are as follows. One, a combined 130 dollar per ounce impact from higher plant reagent consumption and higher reagent prices with the increase in unit pricing a reflection of increased costs for key inputs, such as ammonia in the production of sodium cyanide, a key consumable for us.

Dan Rollins: One, a combined $130 per ounce impact from higher plant reagent consumption and higher reagent prices, with the increase in unit pricing a reflection of increased costs for key inputs such as ammonia in the production of sodium cyanide, a key consumable for us. Two, a $70 per ounce impact from continued FX headwinds, with guidance now assuming a Mexican peso of 17.5 to 1 versus original guidance of 19 to 1. Three, a $40 per ounce combined impact from higher mining volumes and lower gold recoveries. Four, a $30 per ounce impact from higher forecast sustaining CapEx, which really is a reflection of the stronger peso on underground development rates and some additional capital equipment leases. We are targeting to reduce reagent consumption rates as we utilize additional strategies to manage cyanide consumption levels within the plant.

Speaker #2: Two, a 70 dollar per ounce impact from continued FX headwinds with guidance now assuming a Mexican peso of 17.5 to 1 versus original guidance of 19 to 1.

Speaker #2: Three, a 40 dollar per ounce combined impact from higher mining volumes and lower gold recoveries and four, a 30 dollar per ounce impact from higher forecast sustaining capex, which really is a reflection of the stronger peso on underground development rates and some additional capital and equipment leases.

Speaker #2: We are targeting to reduce reagent consumption rates as we utilize additional strategies to manage cyanide consumption levels within the plant. This includes the recent introduction of lead nitrate, the addition of another mock reactor, and, when we begin to leverage a new geomet model that our team has recently completed.

Dan Rollins: This includes the recent introduction of lead nitrate, the addition of another MAC reactor, and when we begin to leverage a new geometallurgical model that our team has recently completed. If successful, we expect reagent consumption levels to improve in 2027, noting inflationary pressures related to reagent pricing and the Mexican peso may persist. Moving to slide 13. Despite the higher costs, cash flow during the quarter was robust, and our cash balance increased to $169 million from $130 million, which includes $55 million of capital returned to shareholders and the $39 million in annual profit-sharing payments I discussed earlier. During the H2 of the year, we expect income tax installments to average around $55 million a quarter. As illustrated on slide 14, our overall liquidity position continued to improve. We exited the quarter with no debt and now have available liquidity of over $500 million.

Speaker #2: If successful, we expect reagent consumption levels to improve in 2027, noting inflationary pressures related to reagent pricing and the Mexican peso may persist. Moving to slide 13, despite the higher costs, cash flow during the quarter was robust and our cash balance increased to $169 million from $130 million, which includes $55 million of capital return to shareholders and the $39 million in annual profit-sharing payments I discussed earlier.

Speaker #2: During the second half of the year, we expect income tax installments to average around 55 million, a quarter. As illustrated on slide 14, our overall liquidity position continued to improve.

Speaker #2: We exited the quarter with no debt and now have available liquidity of over 500 million. During the quarter, we also extended the term on our undrawn credit facility by one year to June 2030, which along with the 200 million accordion feature provides us with additional financial flexibility should we need it.

Dan Rollins: During the quarter, we also extended the term on our undrawn credit facility by one year to June 2030, which along with the $200 million accordion feature, provides us with additional financial flexibility should we need it. With the highest cash outflowing quarters now behind us and production at AISC expected to strengthen, we are well-positioned to generate strong free cash flow through the H2 of the year, which will fund our capital allocation priorities, including returning $350 million of capital shareholders during the year and exiting the year with a minimum cash balance of $200 million. Turning to capital returns on slide 15. During the Q2, we returned $55 million to shareholders, including $11 million in dividends and $44 million in share buybacks. On a year-to-date basis, we have returned $176 million of capital, representing approximately 50% of our full-year target of $350 million.

Speaker #2: With the highest cash outflowing quarters now behind us and production and AISC expected to strengthen, we are well positioned to generate strong free cash flow through the second half of the year.

Speaker #2: Which will fund our capital allocation priorities, including returning 350 million of capital shareholders during the year, and exiting the year with a minimum cash balance of 200 million.

Speaker #2: Turning to capital returns on slide 15, during the second quarter, we returned 55 million to shareholders, including 11 million in dividends, and 44 million in share buybacks.

Speaker #2: On a year-to-date basis, we have returned 176 million of capital, representing approximately 50% of our full year target of 350 million dollars. Before moving to the question and answer period, I wanted to reiterate that we are well positioned to deliver a strong half to the year as grades improve and gold recovery stabilize.

Dan Rollins: Before moving to the question and answer period, I wanted to reiterate that we are well-positioned to deliver a strong H2 to the year as grades improve and gold recovery stabilize. These production factors, combined with a strong metal price backdrop, are expected to lead to robust free cash flow and strong capital returns. With that, I'll hand the call back over to the operator for the question and answer period.

Speaker #2: These production factors, combined with a strong metal price backdrop, are expected to lead to robust free cash flow and strong capital returns. With that, I'll hand the call back over to the operator for the question-and-answer period.

Speaker #1: Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star and then one on your telephone keypads.

Operator 3: Thank you. We will now begin the question and answer session. To join the question queue, you may press star and then one on your telephone keypads. You will hear a tone acknowledging your request. If you are using a speakerphone, we do ask you please pick up your handset before pressing the keys. To withdraw your questions, you may press star and two. Again, that is star and then one to join the question queue. We'll pause for a moment as callers join the queue. Our first question today comes from Allison Carson from Desjardins. Please go ahead with your question.

Operator: Thank you. We will now begin the question and answer session. To join the question queue, you may press star and then one on your telephone keypads. You will hear a tone acknowledging your request. If you are using a speakerphone, we do ask you please pick up your handset before pressing the keys. To withdraw your questions, you may press star and two. Again, that is star and then one to join the question queue. We'll pause for a moment as callers join the queue. Our first question today comes from Allison Carson from Desjardins. Please go ahead with your question.

Speaker #1: You will hear a tone acknowledging your request. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys.

Speaker #1: To withdraw your questions, you may press star and two. Again, that is star and then one to join the question queue. We'll pause for a moment as callers join the queue.

Speaker #1: Our first question today comes from Alison Carson from Desjardins. Please go ahead with your question.

Speaker #3: Thank you operator. Good morning, Andrew and team. Thanks for taking my questions today. My first question is just on costs. Can you just give us a bit more color on which one is the bigger impact to cost?

Allison Carson: Thank you, operator. Good morning, Andrew and team. Thanks for taking my questions today. My first question is just on cost. Can you just give us a bit more color on which one is the bigger impact to cost? Is it the peso or consumables? If you are in the higher grade stopes now with better gold recoveries, is there a chance that the cyanide consumption comes down for some cost savings outside of guidance?

Speaker #3: Is it the peso or consumables? And if you're in the higher grade soaps now, it's better gold recoveries. Is there a chance that the cyanide consumption comes down for some cost savings outside of guidance?

Speaker #2: Yeah, I can take that. So as we said on the call, the bigger driver really is the combined impact on consumable costs with respect to consumption rates.

Dan Rollins: Yeah, I can take that. As we said on the call, the bigger driver really is the combined impact on consumable costs with respect to consumption rates and actual pricing. The consumption rates are at about $100 an ounce to the AISC guidance, while the pricing added around $30 an ounce, versus the peso, which is added around $70 an ounce. We are expected to still go through some lower recovery stopes here in the H2 of the year, but the recoveries are expected to improve a little bit. We are definitely seeing the higher grades. We expect consumption rates for cyanide to be consistent with the H1, around 6.5 kilograms per ton.

Speaker #2: And actual pricing. So the consumption rates are at about $100 an ounce to the AISC guidance, while the pricing added around $30 an ounce.

Speaker #2: Versus the peso, which is added around 70 bucks an ounce. We are expected to still go through some lower recovery soaps here in the second half of the year, but the recoveries are expected to improve a little bit.

Speaker #2: But we are definitely seeing the higher grades. So we expect consumption rates for cyanide to be consistent with the first half, so around 6 and a half kilograms per ton.

Speaker #2: But as we start to deploy some of these new initiatives and we test to see their effectiveness, we expect that as we get into better recovery slopes in 2027, we should see cyanide consumption levels decline and potentially get back to more normalized levels that we experienced through 2025.

Dan Rollins: As we start to deploy some of these new initiatives and we test to see their effectiveness, we expect that as we get into better recovery stopes in 2027, we should see cyanide consumption levels decline and potentially get back to more normalized levels that we experienced through 2025.

Speaker #3: Okay, great. Yeah, that's very helpful. Oh, sorry, go ahead, Andrew.

Allison Carson: That's great. Yeah, that's very helpful. Oh, sorry. Go ahead, Andrew.

Speaker #4: Alison, sorry, just to add to that as well and to reiterate some of the comments that Dan made. Our metallurgical team have been working really hard for the first half of the year here in working through adjustments to the plant to be able to manage cyanide levels so much more reasonable levels and to maximize recoveries.

Andrew Snowden: Allison, sorry, just to add to that as well and to reiterate some of the comments that Dan made. Our metallurgical team have been working really hard for H1 of the year here in working through adjustments to the plant to be able to manage cyanide levels to much more reasonable levels and to maximize recoveries. We've seen a slight improvement in recoveries here through Q2. We expect we'll see some further improvement through H2 of the year. With that, I think with these changes that are being made, which Dan touched on, around adding lead nitrate into the leach circuit in terms of replacing a MAC reactor in our process as well to increase oxygen pumping into the process, that we're already seeing some signs of that driving improvements in our cyanide consumption.

Speaker #4: We've seen a slight improvement in recoveries here through Q2. We expect we'll see some further improvements through the back half of the year. And with that, I think with these changes that are being made, which Dan touched on around adding lead nitrate into the leached circuit, in terms of a replacing a MAC reactor in our process as well to increase oxygen pumping into the process, we're already seeing some signs of that driving improvements in our cyanide consumption.

Speaker #4: And so we're, although we'll see some pressure through the course of 2026 here, we are expecting to see some of that pressure being relieved into 2027 and beyond.

Andrew Snowden: Although we'll see some pressure through the course of 2026 here, we are expecting to see some of that pressure being relieved into 2027 and beyond.

Speaker #3: Okay, great. I know that's very helpful additional color there. And just my other question is just on those rates. I know you did touch on it, but I was just wondering you said drilling is going well.

Allison Carson: Okay, great. Yeah, no, that's very helpful additional color there. Just my other question, just on Los Reyes, I know you did touch on it, but I was just wondering, you said drilling is going well. Has everything remained on track, and do you still expect to get through the whole program this year with a slightly later start? Is there any chance you can sort of advance drilling a bit this year to maybe pull forward the PFS next year?

Speaker #3: Has everything remained on track? And do you still expect to get through the whole program this year with a slightly later start? And is there any chance you can sort of advance drilling a bit this year to maybe pull forward the PFS next year?

Andrew Snowden: Look, you're right, Allison, the drilling commenced back in May. Everything's tracking well so far, and we're very much on track to be able to deliver the 20,000 meters that are planned through the course of this year. I think just given the timing of when we got started and given the drill started turning in May, we've got four drills currently turning. Being able to achieve anything more than 20,000 meters is probably unlikely at this stage. I think hitting our target for this year would be a good outcome. Then we'll look to continue that drilling, both from upgrading and expanding resources, as well as drilling to support our geotech and metallurgical work for the PFS. That will also start through this year and into next year, and support the PFS coming out kind of late next year.

Speaker #4: And so, look, you're right, Alison, the drilling commenced back in May. Everything's tracking well so far, and we're very much on track to be able to deliver the 20,000 meters that are planned through the course of this year.

Speaker #4: I think just given the timing of when we got started and given the drill started turning in May, we've got four drills currently turning.

Speaker #4: Being able to achieve anything more than 20,000 meters is probably unlikely at this stage. I think hitting our target for this year would be a good outcome.

Speaker #4: And then we'll look to continue that drilling, both from upgrading and expanding resources, as well as drilling to support our geotech and metallurgical work for the PFS. That will also start through this year and into next year.

Speaker #4: And support the PFS coming out kind of late next year. We're kind of thinking late Q3 into Q4. Accelerating something ahead of that is probably unlikely at this stage.

Andrew Snowden: We're kind of thinking late Q3 into Q4. Accelerating something ahead of that is probably unlikely at this stage. We do have a number of trade-off studies that still need to be performed, and we can't undertake those trade-off studies until we've got more results from the geotech and metallurgical testing that we'll be doing from the drilling that's underway at Los Reyes.

Speaker #4: We do have a number of trade-off studies that still need to be performed, and we can't undertake those trade-off studies until we've got more results from the geotech and metallurgical testing that we'll be doing from the drilling that's underway at Los Reyes.

Speaker #3: No, you know, that makes sense. Well, that's it for me. And thanks for taking my questions this morning.

Allison Carson: No, that makes sense. Well, that's it for me, and thanks for taking my questions this morning.

Speaker #2: Thank you.

Dan Rollins: Thank you.

Speaker #4: Thanks, Alison.

Andrew Snowden: Thanks, Allison.

Speaker #1: Our next question comes from Cosmos 2 from CIBC. Please go ahead with your question.

Operator 3: Our next question comes from Cosmos Chiu from CIBC. Please go ahead with your question.

Operator: Our next question comes from Cosmos Chiu from CIBC. Please go ahead with your question.

Speaker #5: Thanks. Andrew and Dan. Maybe my first question is on provisional pricing. I saw that you booked a 8.7 million dollar realized loss in Q2.

Cosmos Chiu: Thanks, Andrew and Dan. Maybe my first question is on provisional pricing. I saw that you booked a $8.7 million realized loss in Q2. I guess my question is more with, you mentioned there's no more QP hedges in place, at the end of Q2. With the silver prices up today, gold prices up today, copper prices has been up year to date. If metal prices were to stay where they are, could we see a positive provisional pricing adjustment in Q3? Can you remind me, like, how long is it between shipment and the final realized price? How long is that going to be? How long is that period between settlement now that there's no more QP hedges in place?

Speaker #5: But I guess my question is more, with you mentioning there are no more QP hedges in place at the end of Q2—and with silver prices up today, gold prices up today, and copper prices up year to date—

Speaker #5: So, could we—if metal prices were to stay where they are—could we see a positive provisional pricing adjustment in Q3? And can you remind me, how long is it between shipment and the final realized price?

Speaker #5: How long is that going to be? How long is that period between settlement now that there's no more QP hedges in place?

Speaker #2: Yeah, thanks, God. So for those that aren't aware, the provisional pricing really reflects the fact that we have a right now, we have a delta about one month between when we sell the concentrate and we finally get the final price on the concentrate.

Dan Rollins: Yeah. Thanks, Cos. For those that aren't aware, the provisional pricing really reflects the fact that right now we have a delta about one month between when we sell the concentrate and we finally get the final price on the concentrate. There's about a one-month risk on that. Going into last year, we had a bit of a wider period where we had a spread of potentially up to three months. With the new contracts we put in place this year, we've been able to pull that down to one month. That's one of the reasons we're no longer doing QP hedges. We don't have that same exposure. When we do start to sell to one of the smelters later this year, we will see a bit of a longer term between when we ship and when we get final pricing.

Speaker #2: So there's about a one-month risk on that. Going into last year, we had a bit of a wider period where we had a spread of potentially up to three months.

Speaker #2: But with the new contracts, we put in place this year, we've been able to pull that down to one month. So that's one of the reasons we're no longer doing QP hedges.

Speaker #2: We don't have that same exposure. When we do start to sell to one of the smelters later this year, we will see a bit of a longer term between when we ship and when we get final pricing.

Speaker #2: So, we'll likely have some QP hedges in place there. But right now, no QP hedges. The provisional pricing really reflects that material that is unpriced or hasn't had a final price on it.

Dan Rollins: We'll likely have some QP hedges in place there, but right now, no QP hedges. The provisional pricing really reflects that material that is unpriced or hasn't had a final price on it. That exposure is mark to mark at the end of the quarter. As metal prices were stronger at the end of Q1, where we ended Q2, especially for gold and silver, that's what created that loss. With the return of stronger gold and silver prices here and continued strength in copper, if everything were to stay the same, we would expect to see a bit of a benefit on provisional pricing gain on material that was outstanding at the end of June. Again, would be minor because if everything stays flat, you would see no provisional pricing going forward on anything shipped August, September, and October because metal prices haven't changed.

Speaker #2: That exposure is mark to mark at the end of the quarter. And as metal prices were stronger at the end of Q1, where we ended Q2, especially for gold and silver, that's what created that loss.

Speaker #2: With the return of stronger gold and silver prices here and continued strength in copper, if everything were to stay the same, we would expect to see a bit of a benefit on a provisional pricing gain on the material that was outstanding at the end of June.

Speaker #2: But again, would be minor because if everything stays flat, you would see no provisional pricing going forward on anything shipped August, September, and October because metal prices haven't changed.

Speaker #2: So, in short, if metal prices stay where they are, we'd see a provisional price gain. And we'll look to use the QP hedges when we start to see pricing risk of more than a month.

Dan Rollins: short, if metal prices stay, we see a provisional price gain, and we'll look to use the QP hedges when we start to see pricing risk of more than a month.

Speaker #5: Great. Thanks, Dan. And hopefully, commodity prices stay keep going up. And then maybe my next question is on media Luna North. As you mentioned, production is still on track for late 2026.

Cosmos Chiu: Great. Thanks, Dan. Hopefully, commodity prices keep going up. Then, maybe my next question is on Media Luna North. As you mentioned, production is still on track for late 2026. I think Andrew kind of mentioned the vent shaft, vent raise, and also the haulage drift. Could you maybe summarize for us in terms of the key deliverables you need to target and to meet between now and year-end to get to production by the end of 2026?

Speaker #5: I think, Andrew, you kind of mentioned the vent shaft vent raise and also the polish drift. But could you maybe summarize for us in terms of the key sort of deliverables you need to target and to meet between now and year end to get to production by the end of 2026?

Andrew Snowden: Sure. The key things that we're working on right now to support underground development costs would be completing the ventilation system within the North Vent adit. Although we've broken through and we have just received at site the ventilation fans, they will now be installed over the next month. We've got a contract crew mobilizing to be able to complete the installation of those ventilation fans. As well as now that we've got some of the main drifts and connections in place, we're also looking to install and implement the UDS system to be able to distribute paste into the plants. The piping and elbows and all the equipment needed to install the UDS system is being procured. Some of it's been delivered to site already, and that will be installed here over the coming months.

Speaker #4: Sure. And so the key things that we're working on right now to support underground development costs would be completing the ventilation system within the north vent added.

Speaker #4: So although we've broken through and we have just received at site the ventilation fans, and so they will now be installed over the next month.

Speaker #4: And so, we've got a contract crew mobilizing to be able to complete the installation of those ventilation fans. As well, now that we've got some of the main drifts and connections in place, we're also looking to install and implement the UDF system to be able to distribute paste into the plants.

Speaker #4: And so the piping and elbows and all of the equipment needed to install the UDF system is being procured. Some of it's been delivered to site already, and that will be installed here over the coming months.

Speaker #4: And so, they're really the big, maybe, construction activities which are remaining. Otherwise, it's really just development of the mine that we've obviously been tracking well at.

Andrew Snowden: They're really the big maybe construction activities which are remaining. Otherwise, it's really just development of the mine that we've obviously been tracking well at. Now we've got at least the ventilation adit open. We've got air passing through the mine, which allows us to stick to plan on first ore in late 2026.

Speaker #4: And now we've got at least the ventilation added open. We've got air passing through the mine, which allows us to stick to the plan on first ore in late 2026.

Speaker #5: Great. And then maybe one last question, there was a lot of discussion on the strengthening Mexican paste. So and the impact it's had on cost.

Cosmos Chiu: Great. Maybe one last question. There was a lot of discussion on the strengthening Mexican peso and the impact it's had on cost. I seem to remember, and I checked last night, you do have some hedges, currency hedges in place. There are some puts at 18.50 to 1, so they're kind of in the money, but I guess there's just not enough. There was only about $15 million of exposure as of the end of the quarter. I guess in the end, what's your strategy in terms of potentially hedging out that risk, the Mexican peso risk? How much exposure would you need? Clearly not $15 million, but can you remind me what's your exposure in terms of Mexican peso in cost?

Speaker #5: I seem to remember, and I checked last night, you do have some hedges currency hedges in place. There's some puts at 1850 to 1.

Speaker #5: So they're kind of in the money. But I guess there's just not enough. There was only about 15 million dollars of exposure as of the end of the quarter.

Speaker #5: So I guess in the end, what's your strategy in terms of is there a strategy in terms of potentially hedging out that risk that Mexican peso risk?

Speaker #5: And how much exposure would you need? Clearly not 15 million, but can you remind me—what's your exposure in terms of Mexican peso in cost?

Speaker #2: Yeah. So on an on-sustaining cost basis, Cosmo about 50% of our costs are denominated in peso. And that's direct peso exposure. There has been a lot of volatility within the peso over the last few years.

Dan Rollins: Yeah. On an all-sustaining cost basis, Cosmos, about 50% of our costs are denominated in peso, and that's direct peso exposure. There has been a lot of volatility within the peso over the last few years. We've seen it from a weak point of north of 20 to, during the Media Luna build, where we saw it to a strength of low, high 16 level. We are going to look to try to mitigate some of the exposure going forward. You would have seen during this quarter, we've extended the period of hedging, so we've added another quarter. We'll look to have a more of a dynamic hedging process going forward, where quarterly we'll look to lock in some additional pricing, more to balance out future swings in pesos versus trying to take a bet on the peso.

Speaker #2: We've seen it from a weak point of north of 20 to during the media loan build where we saw it to a strength of low high 16 level.

Speaker #2: So we are going to look to try to mitigate some of the exposure going forward. So you would have seen during this quarter, we've added to—we've extended the period of hedging.

Speaker #2: So we've added another quarter. We'll look to have more of a dynamic hedging process going forward, where quarterly, we'll look to lock in some additional pricing.

Speaker #2: More to balance out future swings in pesos versus trying to take a bet on the peso. We're just trying to minimize the swings we've experienced the last few years.

Dan Rollins: We're just trying to minimize the swings that we've experienced the last few years. I expect the peso will continue to remain strong. It's an economy that's benefiting from a lot of foreign direct investment as a lot of manufacturing starts to move back there for a bit of a nearshoring. I think that will continue, but we'll look to mitigate that going forward. Obviously, we're not going to hedge 100% of our exposure, but we'll try to target probably up to about 60% of our peso exposure to have hedged at any one time.

Speaker #2: I expect the peso will continue to remain strong. It's an economy that's benefiting from a lot of foreign direct investment as a lot of manufacturing starts to move back there for a bit of a nearshoring.

Speaker #2: So I think that will continue, but we'll look to mitigate that going forward. Obviously, we're not going to hedge 100% of our exposure, but we'll try to target probably up to about 60% of our peso exposure to have hedged at any one time.

Speaker #5: Great. Thanks, Dan and Andrew, for answering all my questions. That's all I have. Have a good weekend.

Cosmos Chiu: Great. Thanks, Dan and Andrew, for answering all my questions. That's all I have. Have a good weekend.

Speaker #2: Thank you.

Dan Rollins: Thank you.

Speaker #4: Thanks, guys.

Andrew Snowden: Thanks, Kos.

Speaker #1: Our next question comes from Lauren McConnell from Paradigm Capital. Please go ahead with your question.

Operator 3: Our next question comes from Lauren McConnell from Paradigm Capital. Please go ahead with your question.

Operator: Our next question comes from Lauren McConnell from Paradigm Capital. Please go ahead with your question.

Speaker #6: Hi, good morning, guys, and thanks for taking my question. I was just looking at that July number of 43,000 ounces, which is quite encouraging.

Lauren McConnell: Hi. Good morning, guys, and thanks for taking my question. I was just sort of looking at that July number of 43,000 ounces, which is quite encouraging. Do you see that as a representative run rate to expect through Q3, and did it really benefit from timing or particularly a favorable stope sequencing, or is it grade, or is it recoveries, or is it kind of a blend of all of those? Just wanted to get some color on that and how you're seeing it through Q3 and Q4.

Speaker #6: Do you see that as a representative run rate to expect through Q3? And did it really benefit from timing, or particularly a favorable stope sequencing, or is it grade, or is it recoveries, or is it kind of a blend of all of those?

Speaker #6: Just wanted to get some color on that and how you're seeing it through Q3 and Q4.

Speaker #4: Yeah, thanks for the question, Lauren. And I mean, I agree, July production was definitely very encouraging, and we were seeing the those high-grade stokes that we were expecting to hit through July.

Andrew Snowden: Thanks for the question, Lauren. I agree, July production was definitely very encouraging and we were seeing those higher-grade stopes that we were expecting to hit through July. That's always nice to see that come through. To set expectations for Q3, I would say building in an expectation of about 115,000 ounces is a good estimate for Q3, a step up from that in Q4. August and September production are probably going to be a little bit softer than July. The grade will step down a touch, then pick up more through the course of Q4. I would kind of model 115 plus for Q3, a further step up here in Q4.

Speaker #4: And so that's always nice to see that come through. I mean, to set expectations for Q3, I would say building in an expectation of about 115,000 ounces is a good estimate for Q3.

Speaker #4: And then a step up from that in Q4. And so August and September production are probably going to be a little bit softer than July.

Speaker #4: The grade will step down a touch. And then pick up more through the course of through the course of Q4. And so I would kind of model 115 plus for Q3, and then a further step up here in Q4.

Speaker #6: Okay, perfect. Thank you. And then, just on the cost front and sort of looking out to next year, if the peso stays around 17.5 or even ends up being a bit stronger, and reagent pricing remains where it is today, does the new 2026 range provide a better starting point for 2027?

Lauren McConnell: Okay, perfect. Thank you. Just on the cost front and sort of looking out to next year, if the peso stays around 17.5 or even ends up being a bit stronger and reagent pricing remains where it is today, does the new 2026 range provide a better starting point for 2027 than that original sort of $1,750 to $1,850? Maybe what are some of the biggest opportunities to offset these pressures next year that you guys see? Thank you.

Speaker #6: Then that original sort of $1,750 to $1,850, and maybe what are the biggest opportunities to offset these pressures next year that you guys see?

Speaker #6: Thank you.

Speaker #2: Yeah, on that front. So obviously, the peso is one of those external factors that we can't control. So if you went with our original guidance, which was at 19, versus the new guidance at 17.5, that's added around $70 an ounce.

Dan Rollins: On that front, obviously the peso is one of those external factors that we can't control. If you went with our original guidance, which was at 19 versus the new guidance at 17.5, that's added around $70 an ounce. You could take that from original guidance and add it. You have the impact of the higher metal prices that have an impact on both royalties, profit sharing, and our temporary occupation agreement. I'd say that's all there. The big one really is going to come down to reagent consumption. We had gone into the year looking to budget probably around 2.5 to 3 kilograms a ton cyanide. We're doubling that right now. That's the biggest cost driver.

Speaker #2: So you could take that from original guidance and add it. Then you have the impact of the higher metal prices, that have an impact on both royalties, profit sharing, and our temporary occupation agreement.

Speaker #2: So I say that's all there. The big one really is going to come down to reagent consumption. We had gone into the year looking to budget probably around 2.5 to 3 kilograms a ton cyanide, and we're doubling that right now.

Speaker #2: That's the biggest cost driver. If we can pull that back to more reasonable levels, then I'd say that the guidance—from the original guidance for this year, adjusted for the strength of the peso and metal prices—is a good place to start.

Dan Rollins: If we can pull that back to more reasonable levels, I'd say that the original guidance from this year, adjusted for the strength of the peso and metal price, is a good place to start.

Speaker #6: Perfect. Thank you so much. That’s all my questions for now.

Lauren McConnell: Perfect. Thank you so much. That's all my questions for now.

Speaker #2: Perfect. Thank you.

Dan Rollins: Perfect. Thank you.

Speaker #1: Our next question comes from Don DeMarco from National Bank Financial. Please go ahead with your question.

Operator 3: Our next question comes from Don DeMarco from National Bank Financial. Please go ahead with your question.

Operator: Our next question comes from Don DeMarco from National Bank Financial. Please go ahead with your question.

Speaker #3: Thank you, operator, and good morning, Andrew and team. Andrew, thanks for the additional color on Q3 and Q4. Certainly, it sounds like you're off to a pretty strong start in July.

Don DeMarco: Thank you, operator. Good morning, Andrew and team. Yeah, Andrew, thanks for the additional color on Q3 and Q4. Certainly sounds like you're off to a pretty strong start in July. It's encouraging. It provides conviction on the rebound, the H2-weighted year. I'm just wondering, free cash flow yields are still elevating Q2. What are the tailwinds do you see in Q3 to support that? Dan, you spoke about some of the tax payments and so on. Can you just give us a refresh of some of the other non-operational costs that you see over the balance of the year?

Speaker #3: It's encouraging. And it provides conviction on the rebound, the H2-weighted year. I'm just wondering, free cash flow yields are still elevated in Q2. What are the tailwinds do you see in Q3 to support that?

Speaker #3: I mean, Dan, you spoke about some of the tax payments and so on. Can you just give us a refresher on some of the other non-operational costs that you see over the balance of the year?

Speaker #2: Yeah, you'll see a bit of a step up in expiration spending because we always have a bit of a slow start to the year.

Dan Rollins: Yeah, you'll see a bit of a step-up in exploration spending because we always have a bit of a slow start to the year. Q1 usually is the slowest period for exploration spending. Q2 picks up, Q3, Q4 are usually the highest. We'll have a little bit more exploration spending in H2, but nothing material that's going to impact free cash flow. We'll see our CapEx increase a little bit in H2, especially as we get near finishing Media Luna North. The biggest driver for improving that free cash flow yield is going to be the gold price. Just alone, if gold's now trading at $4,350 and we have now budgeted at $4,250 for the year, that's $100 an ounce.

Speaker #2: So Q1 usually the slowest period for expiration spending, Q2 picks up. And then Q3, Q4 are usually the highest. So we'll have a little bit more expiration spending in the second half.

Speaker #2: But nothing material that's going to impact free cash flow. We'll see our capex increase a little bit in the second half, especially as we get near finishing medial and north.

Speaker #2: But ultimately, the biggest driver for improving that free cash flow yield is going to be the gold price. So, just alone, if gold's now trading at $4,350 and we have now budgeted it at sort of $4,250 for the year, that's $100 an ounce.

Speaker #2: And if we're doing, as Andrew said, probably between the 115 this quarter, that could add another 11.5 million dollars to free cash flow. And it's there.

Dan Rollins: If we're doing, as Andrew said, probably between the $115 this quarter, that could add another $11.5 million to free cash flow. It's there. The other risk would be continued strengthening in the Mexican peso. Again, that's a headwind that we're not able to absorb. It's been fairly stable. Right now it's trading around 17.25 versus our guidance at 17.5.

Speaker #2: The other risk would be continued strengthening in the Mexican peso. Again, that's a headwind that we're not able to absorb. It's been fairly stable.

Speaker #2: But right now, it's trading around 17.25 versus our guidance at 17.5.

Speaker #3: Yeah. Okay.

Don DeMarco: Yeah. Okay.

Speaker #2: But it sounds like there's no big payments. The $39 million profit sharing that was paid, the annual true-up on the mining tax, and any leftover on the corporate income tax was paid in Q1.

Dan Rollins: Aside that, Dan, there's no big payments. The $39 million profit sharing that was paid, the annual true-up on the mining tax and any leftover on the corporate income tax was paid in Q1. As I stated on the call, you can expect to model around $55 million of income tax installments both Q3 and Q4.

Speaker #2: And as I stated on the call, you can expect to model around $55 million of income tax installments growth in Q3 and Q4.

Speaker #3: Okay. That's great, caller. Thanks. And then just a second and final question. Given the ongoing mine plan Luna, should we view the current throughput assumptions as conservative?

Don DeMarco: Okay. That's great color. Thanks. Then just a second and final question. Given the ongoing mine plan optimization ramp up in Media Luna, should we view the current throughput assumptions as conservative? Maybe if you just, Andrew, give us your latest thoughts on the scope to increase the throughput at the mill.

Speaker #3: Maybe you could just, Andrew, give us your latest thoughts on the scope to increase the throughput at the mill.

Speaker #4: Yeah. And so look, for the time being, Don, assuming kind of current run rates of throughput of in that kind of 10.8 to 11,000 ton per day, rate, I think that's a good assumption to have.

Andrew Snowden: Yeah. Look, for the time being, Don, I'm assuming current run rates of throughput in that kind of 10,800 to 11,000 tons per day rate, I think that's a good assumption to have. As we talked about in previous calls and previous meetings, we are continuing to look at opportunities to upsize that throughput and increase that throughput through two different streams. One being the deep bottlenecking stream, which we're expecting the engineering results to come out in September, but potentially could see something up to 10% improvement in overall throughput. Something in the 11,000 tons per day range could be the output of that.

Speaker #4: As we've talked about in previous calls and previous meetings, we are continuing to look at opportunities to upsize that throughput and increase that throughput through two different streams.

Speaker #4: One being the deep bottom necking stream, which we're expecting the engineering results to come out in September, but potentially could see something up to 10% improvement in overall throughput.

Speaker #4: And so something in the 11,000 ton per day range could be the output of that. Loosely, I would expect the that benefit to come in the earliest would probably be mid next year, but it's difficult to give you a precise timing until the engineering studies are finished.

Andrew Snowden: Loosely, I would expect that benefit to come in at the earliest, would probably be mid next year, it's difficult to give you a precise timing until the engineering studies are finished and we know exactly what work is required to deep bottleneck and how long the lead time is on anything we would need to procure. That would be, I think, a reasonable estimate at this point to think about. Then we're also working through both the engineering work and the business case on what a larger plant expansion could look like. That could take the plant up to 14,000 tons per day. That would obviously be a longer project. You should think about that being sometime around late 2028 as being available. That's subject to us making a decision early next year.

Speaker #4: And we know exactly what work is required to deep bottleneck and how long the lead time is on anything we would need to procure.

Speaker #4: But that would be, I think, a reasonable estimate at this point to think about. And then we're also working through both the engineering work and the business case on what a larger plant expansion could look like.

Speaker #4: That could take the plant up to 14,000 tons per day. That would obviously be a longer project. You should think about that being sometime in the around kind of late 2028 is being available, but that's subject to us making a decision early next year.

Speaker #4: And so we're kind of progressing that work to be able to have the data to make a decision in Q1 of next year. We'll see what that business case looks like, but that's the timing you should think about for any kind of potential larger expansion.

Andrew Snowden: We're kind of progressing that work to be able to have the data to make a decision in Q1 of next year. We'll see what that business case looks like, that's the timing you should think about for any kind of potential larger expansion.

Speaker #3: Okay. Thanks. Yeah, we'll certainly look forward to those catalysts. Thanks for taking my questions, and good luck with the rest of Q3.

Don DeMarco: Okay, thanks. Yeah, we'll certainly look forward to those catalysts. Thanks for taking my questions, and good luck with the rest of Q3.

Speaker #4: Thanks, Don.

Andrew Snowden: Thanks, Don.

Speaker #1: Once again, if you would like to ask a question, please press star one. Our next question comes from Jeremy Hoy from Canaccord Genuity.

Operator 3: Once again, if you would like to ask a question, please press star and one. Our next question comes from Jeremy Hoy from Canaccord Genuity. Please go ahead with your question.

Operator: Once again, if you would like to ask a question, please press star and one. Our next question comes from Jeremy Hoy from Canaccord Genuity. Please go ahead with your question.

Speaker #1: Please go ahead with your question.

Speaker #5: Thanks, Andrew. Dan, thank you for taking my question. I appreciate the extra color that you've provided on the costs and the detail there—it's very helpful. One question remains for me.

Jeremy Hoy: Thanks, Andrew and Dan, for taking my question. Appreciate the extra color that you've provided on the costs and the detail there. It's very helpful. One question remains from me. You've mentioned in previous press releases on exploration that regional drilling is underway currently on Atzcala and El Naranjo. Remember some of those targets being pretty sizable. Can you maybe give us a preview on what you're seeing there and how you're thinking about them? Are we thinking about them as incremental increases in resources, potential step changes, or is it just too early to say? When will we see the first results from the drilling there?

Speaker #5: You've mentioned in previous press releases on exploration that regional drilling is underway currently on that scala and El Naranho. Remember some of those targets being pretty sizable.

Speaker #5: Can you maybe give us a preview on what you're seeing there and how you're thinking about them? Are you thinking about them as incremental increases in resources, potential step changes, or is it just too early to say?

Speaker #5: And when will we see the first results from the drilling there?

Andrew Snowden: In short, Jeremy, I think it's too early to give you a whole lot of color there. We've actually just started to drill at Atzcala over recent weeks here. I expect we'll have first results there later on this year, and we can share those either end of this year or into the early part of next year. That will provide much more information on what the opportunity looks like there. Of course, the exploration team are excited. The testing and the work that we've done to date is very encouraging, so we're looking forward to seeing the output of those drill results.

Speaker #4: Any short, Jeremy, I think it's too early to give you a whole lot of color there. We've actually just started to drill at a scala over recent weeks here.

Speaker #4: And so we expect we'll have first results there kind of later on this year, and we can share those either end of this year or into the early part of next year.

Speaker #4: And that will provide much more information on what the opportunity looks like there. I mean, of course, the exploration team are excited. The testing and the work that we've done to date is very encouraging, and so we're looking forward to seeing the output of those drill results.

Speaker #4: And, of course, as we've talked about before, that could provide us an opportunity to think about a heap leach facility, which would be separate from the processing plant opportunity that we just talked about.

Andrew Snowden: Of course, as we've talked about before, that could provide us an opportunity to think about a heap leach facility which would be separate from the processing plant opportunity that we just talked about, so further growth of production within the Morelos Complex. If you think about resource expansion and resource increase, the nearer-term opportunity there, Jeremy, are the points we talked about on the call, which is bringing the Media Luna East and Media Luna South into our resource base. That's why we've increased our drilling investment in that region through the balance of this year. We are hopeful that we'll be in a position to be able to declare some resources within those new areas in March 2025. Near-term resource growth will come from Media Luna East and Media Luna West.

Speaker #4: And so further growth of production within the Morelus complex. As you think about kind of resource expansion and resource increase, I mean, the nearer term opportunity there, Jeremy, are the points we talked about on the call, which is bringing the Media Luna East and Media Luna South into our resource space.

Speaker #4: And that's why we've increased our drilling investment in that region through the balance of this year. We are hopeful that we'll be in a position to declare some resources within those new areas in March of next year.

Speaker #4: And so, near-term resource growth will come from Media Luna East and Media Luna West. Our scoping work will obviously take a bit more time as we undertake the drilling.

Andrew Snowden: Atzcala will obviously take a bit more time as we undertake the drilling and be able to show what that deposit potentially could look like.

Speaker #4: And be able to show what that deposit potentially could look like.

Jeremy Hoy: Great. Well, thank you. We'll look forward to those updates on both near mine and regional. All my other questions have been answered, I'll step back in the queue.

Speaker #5: Great, well, thank you. We'll look forward to those updates on both near-mine and regional, and all my other questions have been answered.

Speaker #5: So I'll step back in the queue.

Speaker #4: Perfect. Thanks, Jeremy.

Andrew Snowden: Perfect. Thanks, Jeremy.

Speaker #5: Cheers.

Jeremy Hoy: Cheers.

Speaker #1: And as there appear to be no additional questions, this will conclude today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.

Operator 3: As there appear to be no additional questions, this will conclude today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.

Operator: As there appear to be no additional questions, this will conclude today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.

Q2 2026 Torex Gold Resources Inc Earnings Call

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