Q2 2026 West Red Lake Gold Mines Ltd Earnings Call

August 26, 2026

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

Operator: Thank you for standing by. This is the conference operator. Welcome to the West Red Lake Gold Mines second quarter 2026 results webcast. As a reminder, all participants are in listen-only mode and the event is being recorded. After the presentation, there will be a Q&A session. Participants are encouraged to submit their questions using the form at the bottom of the webcast pane. If management is unable to make it through all the questions during the allotted time, someone will follow up with you by email in the days that follow. I would now like to turn the floor over to Shane Williams, Chief Executive Officer. Please go ahead.

Operator: Thank you for standing by. This is the conference operator. Welcome to the West Red Lake Gold Mines Q2 2026 results webcast. As a reminder, all participants are in listen-only mode and the event is being recorded. After the presentation, there will be a Q&A session. Participants are encouraged to submit their questions using the form at the bottom of the webcast pane. If management is unable to make it through all the questions during the allotted time, someone will follow up with you by email in the days that follow. I would now like to turn the floor over to Shane Williams, Chief Executive Officer. Please go ahead.

Speaker #1: After the presentation, there will be a Q&A session. Participants are encouraged to submit their questions using the form at the bottom of the webcast screen.

Speaker #1: If management is unable to make it through all the questions during the allotted time, someone will follow up with you by email in the days that follow.

Speaker #1: I would now like to turn the floor over to Shane Williams, Chief Executive Officer. Please go ahead.

Speaker #2: Good morning, everyone. Thank you for joining us today to discuss West Red Lake Gold's second quarter results. Joining me on the call today are Harpreet Dhaliwal, Chief Financial Officer of the company, and Jacqueline Ruptash, our Vice President of Corporate Communications.

Shane Williams: Good morning, everyone. Thank you for joining us today to discuss the West Red Lake Gold second quarter results. Joining me on the call today is Harpreet Dhaliwal, Chief Financial Officer of the company, and Jaclyn Ruptash, our Vice President of Corporate Communications. Before I begin, I would like to encourage listeners to review the cautionary language regarding forward-looking statements contained in our news release and the MD&A issued yesterday and are available on SEDAR and on our website. I just want to start today by stepping back a little and looking at where we have come over the first 6 months of commercial production at Madsen. A significant part of our focus earlier this year was on underground development and establishing and setting up additional mining areas to give us greater flexibility within the operation.

Shane Williams: Good morning, everyone. Thank you for joining us today to discuss the West Red Lake Gold second quarter results. Joining me on the call today is Harpreet Dhaliwal, Chief Financial Officer of the company, and Jaclyn Ruptash, our Vice President of Corporate Communications. Before I begin, I would like to encourage listeners to review the cautionary language regarding forward-looking statements contained in our news release and the MD&A issued yesterday and are available on SEDAR and on our website. I just want to start today by stepping back a little and looking at where we have come over the first six months of commercial production at Madsen. A significant part of our focus earlier this year was on underground development and establishing and setting up additional mining areas to give us greater flexibility within the operation.

Speaker #2: So before I begin, I'd like to encourage listeners to review the cautionary language regarding forward-looking statements contained in our news release and MD&A issued yesterday.

Speaker #2: And are available on Sedar and on our website. So I just want to start today by stepping back a little and looking at where we've come over the first six months of commercial production at Madison.

Speaker #2: A significant part of our focus earlier this year was on underground development and establishing and setting up additional mining areas to give us greater flexibility within the operation.

Speaker #2: In Q2, we started to see the Cedar benefits come through in our operating results. This quarter, we achieved a number of milestones. We mined approximately 75,000 tons of material during the quarter, which was a 40.6% increase over Q1.

Shane Williams: In Q2, we started to see the benefits of that work come true in our operating results. This quarter, we achieved a number of milestones. We mined approximately 75,000 tons of material during the quarter, and that was a 46% increase over Q1. The grade improved to 4.3 grams per ton, resulting in just over 10,000 mined ounces, which was a large increase quarter over quarter. Gold production increased to 8,576 ounces, which was a 51% increase, and gold sales increased 34% to 8,200 ounces. We are pleased with the progress the team have made during the quarter. I think it is important to remind everybody that this improvement was not isolated to one part of the operation.

Shane Williams: In Q2, we started to see the benefits of that work come true in our operating results. This quarter, we achieved a number of milestones. We mined approximately 75,000 tons of material during the quarter, and that was a 46% increase over Q1. The grade improved to 4.3g per ton, resulting in just over 10,000 mined ounces, which was a large increase quarter over quarter. Gold production increased to 8,576 ounces, which was a 51% increase, and gold sales increased 34% to 8,200 ounces. We are pleased with the progress the team have made during the quarter. I think it is important to remind everybody that this improvement was not isolated to one part of the operation.

Speaker #2: The grade improved 4.3 grams per ton, resulting in just over 10,000 ounces mined, which was a large increase quarter over quarter. Gold production increased to 8,576 ounces, which was a 51% increase, and gold sales increased 34% to 8,200 ounces.

Speaker #2: So, we're pleased with the progress the team have made during the quarter. And I think it's important to remind everybody that this improvement was not isolated to one part of the operation.

Speaker #2: We had higher mining rates underground, improved grades, and higher mill throughput, all of which contributed to the higher gold production and are part of the ongoing ramp-up of a high-grade underground mine.

Shane Williams: We had higher mining rates underground, improved grades, higher mill throughput, all of which contributed to the higher gold production, all of which are part of an ongoing ramp-up of a high-grade underground mine. The mill averaged about 842 tons per day, which is higher than current capacity during Q2, up 47% from Q1, while recoveries maintained at approximately 95%. We have been very pleased with the ramp-up of the mill. It is holding its recovery, which is design recovery, and also we are getting the tonnage above its permitted capacity. At the same time, our mining rates allowed us to build a surface stockpile at the end of the quarter, which obviously gives us that important indicator of progress we have made. It provides operational flexibility between the mine and the mill, which is a key part of our strategy as we look into the rest of the year.

Speaker #2: The mill averaged about an 842 tons per day, which is near it's higher than current capacity, during Q2, up 47% from Q1, while the recoveries maintained at approximately 95%.

Speaker #2: We've been very pleased with the ramp-up of the mill. It's holding its recovery, which is design recovery, and we're also getting the tonnage above its permitted capacity.

Speaker #2: At the same time, our mining rates allowed us to build a surface stockpile at the end of the quarter, which obviously gives us that important indicator of the progress we've made.

Speaker #2: It provides operational flexibility between the mine and the mill, which is a key part of our strategy as we look into the rest of the year.

Speaker #2: So we're building flexibility on the ground. We've talked consistently about the importance of developing ahead of ourselves and establishing multiple mining fronts. That gives the operating team more optionality around mine sequencing.

Shane Williams: We are building flexibility on the ground. We have talked consistently to the importance of developing ahead of ourselves and establishing multiple mining fronts. That gives the operating team more optionality around mine sequence. Q2 demonstrated considerably higher operating levels than Q1, and importantly, that operational progress is translating into significant stronger financial performance. With that, I will turn the call over to Harpreet Dhaliwal to review the financial results for Q2.

Speaker #2: So, Q2 demonstrated considerably higher operating levels than Q1, and, importantly, that operational progress is translating into significantly stronger financial performance. With that, I'll turn the call over to Harpreet to review the financial results for Q2.

Speaker #3: Perfect. Thank you. Thank you, Shane, and good morning, everyone. As Shane outlined, the increase in production during Q2 translated directly into stronger financial performance, including a significant improvement in our unit costs.

Harpreet Dhaliwal: Thank you, Shane, and good morning, everyone. As Shane outlined, the increase in production during Q2 translated directly into stronger financial performance, including a significant improvement in our unit costs. All-in sustaining costs decreased 30% quarter over quarter to US$3,284 per ounce sold, compared to roughly US$4,700 per ounce in Q1, bringing our Q2 all-in sustaining costs within our 2026 guidance range of US$2,800 to US$3,600 per ounce. Cash costs also decreased 23% to US$2,000 per ounce sold. Importantly, given the relatively high fixed cost base at Madsen, the increase in production and gold sales during the quarter allowed those costs to be spread across a greater number of ounces, contributing to the improvement in unit costs. The 8,260 ounces of gold that was sold in the quarter generated approximately CAD 49 million in revenue, which is an increase of 17% quarter over quarter.

Speaker #3: All in sustaining costs decreased 30% quarter over quarter to US $3,284 per ounce sold, compared to roughly US $44,700 per ounce in Q1. Bringing our Q2 all in sustaining costs within our 2026 guidance range of US $2,800 to US $3,600 per ounce.

Speaker #3: Cash costs also decreased 23% to US$2,000 per ounce sold. Importantly, given the relatively high fixed cost base at Madison, the increase in production and gold sales during the quarter allowed those costs to be spread across a greater number of ounces, contributing to the improvement in unit costs.

Speaker #3: The 8,260 ounces of gold that was sold in the quarter generated approximately $49 million in revenue, which is an increase of 17% quarter over quarter.

Speaker #3: Income from mine operations increased 31% to approximately $20 million, and our operating margin improved to 41%, compared with 37% in Q1. We also saw significant improvement in our adjusted EBITDA and our adjusted net earnings.

Harpreet Dhaliwal: Income from mine operations increased 31% to approximately CAD 20 million, and our operating margin improved to 41% compared with 37% in Q1. We also saw a significant improvement in our adjusted EBITDA and our adjusted net earnings. Adjusted EBITDA increased 54% to approximately CAD 22 million, compared with CAD 14 million in Q1. Adjusted net earnings increased 98% to approximately CAD 13 million, or CAD 0.03 per basic share, compared with CAD 6.4 million or CAD 0.02 per basic share in the first quarter. Another result I would highlight is our free cash flow. During Q2, the company generated CAD 9.7 million of positive free cash flow. We also invested CAD 6.3 million of non-sustaining growth capital during the quarter, primarily related to continued advancement of the Fork access drift and the Madsen Shaft refurbishment project. The company ended Q2 with approximately CAD 31 million in cash and cash equivalents.

Speaker #3: Adjusted EBITDA increased 54% to approximately $22 million, compared with $14 million in Q1. Adjusted net earnings increased 98% to approximately $13 million, or $0.03 per basic share, compared with $6.4 million, or $0.02 per basic share in the first quarter.

Speaker #3: Another result I would highlight is our free cash flow. During Q2, the company generated $9.7 million of positive free cash flow. We also invested $6.3 million of non-sustaining growth capital during the quarter.

Harpreet Dhaliwal: Another result I would highlight is our free cash flow. During Q2, the company generated CAD 9.7 million of positive free cash flow. We also invested CAD 6.3 million of non-sustaining growth capital during the quarter, primarily related to continued advancement of the Fork access drift and the Madsen Shaft refurbishment project. The company ended Q2 with approximately CAD 31 million in cash and cash equivalents.

Speaker #3: Primarily related to continued advancement of the Fork Access drift and the Madison shaft refurbishment project. The company ended Q2 with approximately $31 million in cash and cash equivalents.

Speaker #3: As future cash generation from operations grows, our approach will be to balance reinvestment in Madison with our ongoing debt repayment obligations.

Harpreet Dhaliwal: As the future cash generation from the operation grows, our approach will be to balance the reinvestment in Madsen with our ongoing debt repayment obligations. From a balance sheet perspective, our focus is really on maintaining financial flexibility as the operation continues to advance. With Madsen now in commercial production, capital management continues to be a priority for the company. I would say that overall Q2 demonstrated the financial impact of the higher operating levels Shane discussed with the higher gold sales contributing to stronger margins, lower unit costs and positive free cash flow. Additional details regarding our financial results can be found in our Q2 financial statements and MD&A. With that, I will turn it back to Shane.

Speaker #3: From a balance sheet perspective, our focus is really on maintaining financial flexibility as operations continue to advance. With Madison now in commercial production, capital management continues to be a priority for the company.

Speaker #3: I would say that overall, Q2 demonstrated the financial impact of the higher operating level Shane discussed, with the higher gold sales contributing to stronger margins, lower unit costs, and positive free cash flow.

Speaker #3: Additional details regarding our financial results can be found in our Q2 financial statements and MD&A. With that, I'll turn it back to Shane.

Speaker #2: Thanks, Harpreet. So, looking ahead, our focus for the balance of 2026 is really on continuing the progress we've made, while building greater flexibility across the operation.

Shane Williams: Thanks, Harpreet Dhaliwal. Looking ahead, our focus for the balance of 2026 is really on continuing the progress we have made by building greater flexibility across the operation. A big part of that and focus of us is the underground development. We are continuing to develop ahead of our current mining areas and build production inventory. We are also advancing development and technical work across the 904 complex and the Satellite Fork deposit, both of which we are expected to be a key part of our 2027 production. Importantly, both of those are also non-remnant areas, which will allow us to obviously de-risk the operation. At Fork, we are advancing the access drift. We are now 50% complete of that access drift and the 904 underground complex. Development and drilling continues as we establish additional access to these large non-remnant areas.

Speaker #2: So a big part of that, and a focus for us, is the underground development. So we're continuing to develop ahead of our current mining areas.

Speaker #2: And build production inventory. We're also advancing development and technical work across the 904 Complex and the Satellite Fork deposit, both of which are expected to be a key part of our 2027 production work.

Speaker #2: Importantly, both of those are also non-remnant areas, which will allow us to—obviously, which will de-risk the operation. So at Fork, we're advancing the access drift.

Speaker #2: We're now 50% complete on that access drift. And the 904 underground complex development and drilling continues as we establish additional access to these large, non-remnant areas.

Speaker #2: I was on site last week, and I also viewed this 904 area. It's a very exciting area of the project, as we see lots of open headings and lots of stopes. It really opens up the potential of the ore body and our ability to ramp up much higher.

Shane Williams: I was on site last week and I also viewed this 904 area, and it is a very exciting area of the project as we see lots of open headings, lots of stopes, and it really opens up the potential of the ore body and our ability to ramp up much higher. There is a lot happening underground. We are mining today, we are developing ahead of ourselves, drilling and preparing additional areas that become part of the future production inventory. Alongside that, we are also investing in infrastructure. As you saw, the Madsen Shaft refurbishment project is a key part of that. As mining and development move deeper, the shaft becomes an increasingly important part of the operation. It is intended as we move deeper, it improves the efficiency of moving ore and waste through the mine and also contributing to lower operating costs.

Speaker #2: So there’s a lot happening on the ground. We’re mining today. We’re developing ahead of ourselves, drilling and preparing additional areas that will become part of the future production inventory.

Speaker #2: So, alongside that, we're also investing in infrastructure. As you saw, the shaft refurbishment is a key part of that. As mining and development move deeper, the shaft becomes an increasingly important part of the operation.

Speaker #2: So it's intended that as we move deeper, it improves the efficiency of moving ore and waste, to remind, and also contributes to lower operating costs.

Speaker #2: Obviously, the cost of shafting the material versus trucking is a much lower cost. So the equipment for the shaft, as we talked about, we laid out a Phase One and a Phase Two.

Shane Williams: Obviously, the cost of shafting the material versus trucking is a much lower cost. The equipment for the shaft, as we talked about, we laid out a phase 1 and a phase 2. Most of that equipment is on-site and the refurbishment is ongoing towards the next phase. That will allow us to increase hoisting capacity to about 700 tonnes a day. At the mill, we are also focused on increasing capacity. We have reached our throughput quicker than we expected, and for the H2, we are also working towards increasing processing rates to approximately 1,000 tonnes per day. We are seeing good process on the mine, the ability to ramp up, and we are looking at in the last half of the year, ramping the production up to 1,000 tonnes per day through the mill.

Speaker #2: Most of that equipment is on site, and the refurbishment is ongoing towards the next phase. And so, that will allow us to increase hoisting capacity to about 700 tons a day.

Speaker #2: In the middle, we're also focused on increasing capacity. We have reached our throughput more quickly than we expected. So, for the second half of the year, we're working towards increasing processing rates to approximately 1,000 tons per day.

Speaker #2: You know, we're seeing good progress on the mine, the ability to ramp up. And so we're looking at, in the last half of the year, ramping the production up to 1,000 tons per day through the middle.

Speaker #2: So, we've demonstrated the mill can operate at these and potentially higher rates, looking at closer to 1,300 tons a day. As we look to expand, we're looking to add another crusher to support this higher throughput rate.

Shane Williams: We have demonstrated the mill can operate at these and potentially higher rates, looking at closer to 1,300 tonnes a day. We are looking to add another crusher to support this higher throughput rate, and we are working through the permitting process required to support sustained processing rates on the longer term. That said, as we operate at high operating levels, naturally, there are risks needed to manage across the operation. We are working on multiple mining fronts at higher mining rates and moving more material to the mine than mill. There are a number of factors that can influence this performance from one period to another. As we go underground, we are experiencing variable ground conditions in some areas, and this has resulted in higher dilution than we typically target as we target and we hit more oversized material and more dilution.

Speaker #2: And we're working through the permitting process required to support sustained processing rates over the longer term. That said, as we operate at high levels, naturally there are risks that need to be managed across the operation.

Speaker #2: We're working on multiple mining fronts at higher mining rates, and moving more material to the mine than the mill. There are a number of factors that can influence this performance from one period to another.

Speaker #2: As we go underground, we are experiencing variable ground conditions in some areas. This has resulted in higher dilution than we typically target, as we encounter more oversized material and increased dilution.

Speaker #2: The larger material is difficult to handle through the existing crushing circuit, which is why we've made some adjustments to underground sequencing as we move through these areas.

Shane Williams: The larger material is difficult to handle through the existing crushing circuit, hence why we have made some adjustments to underground sequencing as we move through these areas. This is also part of the reason we are looking at adding another crusher. It is expected to improve the handling of oversized material and increase throughput, making the crushing circuit more efficient and support higher throughput through the mill. One of the key areas that is also happening in the market today is labor shortage. We are experiencing some labor constraint in the industry, particularly for experienced underground miners. That is another consideration with activity level increase. This is something that is happening in the industry as a whole as we continue to work through. That is where it becomes key to having a large stockpile on surface.

Speaker #2: This is also part of the reason we're looking at it. It's expected to improve the handling of oversized material and increase throughput, making the crushing circuit more efficient and supporting higher throughput through the mill.

Speaker #2: One of the key areas also happening in the market today is the labor shortage. We are experiencing some labor constraints in the industry.

Speaker #2: Particularly for experienced underground miners, that's another consideration with activity level increases. This is something that's happening in the industry as a whole as we continue to work through.

Speaker #2: That's where it becomes key to having a large stockpile on surface. It gives us more flexibility between the mine and the mill, and helps maintain a steady source of mill feed.

Shane Williams: It gives us more flexibility between the mine and the mill and helps maintain a steady source of mill feed. We are processing material from the stockpile while also replenishing it with newly mined ore, and we are maintaining the inventory as we work through different operating conditions. As we look to the balance of the year, the focus is really on execution and greater consistency at these operating levels, from development and sequencing underground to how efficiently we move and process material through the mill. As we do that, we are positioning Madsen to support our broader growth strategy with Madsen as the operating and processing hub, and additional ore sort feed being advanced around it. Rowan is a key part of that opportunity.

Speaker #2: We're processing material from the stockpile while also replenishing it with newly mined ore, and we're maintaining the inventory as we work through different operating conditions.

Speaker #2: So as we look to the balance of the year, the focus is really on execution and greater consistency at these operating levels. From development and sequencing underground, to how efficiently we move and process material through the mill.

Speaker #2: As we do that, we're positioning Madsen to support our broader growth strategy, with Madsen as the operating and processing hub, and additional ore source feed being advanced around it.

Speaker #2: So, Rowan is a key part of that opportunity. We filed the technical report, and we also supported the updated Rowan resource, which included a 70% increase in the indicated resources while maintaining that high grade of approximately 13 grams per ton.

Shane Williams: We filed the technical report and we also supported the updated Rowan resource, which included a 70% increase in indicated resources while maintaining that high grade of approximately 13 grams per tonne that we have seen consistently at this deposit. That work gives us greater confidence in Rowan as we evaluate it alongside Madsen as part of our proposed updated pre-feasibility study, which the team are working on and coming to a conclusion. It also provides an additional source of feed for the Madsen mill. We have made progress through the first six months of commercial production. It provides a solid foundation for the work ahead, both at Madsen and our broader Red Lake portfolio and strategy.

Speaker #2: That we've seen consistently at this deposit. So that work gives us greater confidence in Rowan, as we evaluate it alongside Matching, as part of our proposed updated pre-feasibility study, which the team are working on and coming to a conclusion.

Speaker #2: And it also provides an additional source of feed for the matching mill. So, we've made progress through the first six months of commercial production.

Speaker #2: It provides a solid foundation for the work ahead, both at Madsen and our broader Red Lake portfolio and strategy. So, we also expect to continue news flow through the remainder of '26, including updates from our recently completed drilling and the started Olson satellite deposit.

Shane Williams: We also expect to continue news flow for the remainder of 2026, including assets from our recently completed drilling at Starratt-Olsen satellite deposit, assets from ongoing drilling in the 904 complex, further progress at Fork as we advance the decline, and also key for us is the updated pre-feasibility study, where we are looking to combine Madsen and Rowan in a single operating entity, and we do expect that to be released in mid to late September, and we are still tracking towards that timeline. With that, operator, I think we can open the line for questions.

Speaker #2: Assets from ongoing drilling in the 904 Complex. Further progress at FORC as we advance the decline, and also key for us is the updated pre-feasibility study.

Speaker #2: We're looking to combine Matching and Rowan into a single operating entity, and we do expect that to be released in mid to late September.

Speaker #2: And we're still tracking toward that timeline. With that, operator, I think we can open the line for questions.

Speaker #1: Thank you. Once again, participants are encouraged to submit their questions using the form at the bottom of the webcast screen. If management is unable to make it through all the questions during the allotted time, someone will follow up with you by email in the days that follow.

Operator: Thank you. Once again, participants are encouraged to submit their questions using the form at the bottom of the webcast frame. If management is unable to make it through all the questions during the allotted time, someone will follow up with you by email in the days that follow. The first question is, given the H1 production at around 14K ounces, how are you thinking about full year guidance?

Speaker #1: The first question is: Given first half production at around 14,000 ounces, how are you thinking about full year guidance?

Speaker #2: Thank you. Yeah, we expect full-year production to be within our 2026 guidance. The production profile in the first half of the year was set up to be weighted towards the second half.

Shane Williams: Thank you. Yeah, we expect full year production to be within our 2026 guidance. Our production profile in the H1 of the year was set up to be weighted towards the H2. I think when you look at our step-by-step we saw from Q1 to Q2, as you can see, progress has been made operationally. As we hit more mining areas available, mining rates have increased, and we've established a surface stockpile, which give us flexibility between the mine and the mill. For us, the focus for the H2 of the year is really on building that consistency as we move through the balance of the year.

Speaker #2: And I think when you look at our step-by-step, we saw from Q1 to Q2, as you can see, progress has been made operationally. As we hit more mining areas available, mining rates have increased.

Speaker #2: We've established a surface stockpile, which gives us flexibility between the mine and the mill. So, for us, the focus for the second half of the year is really on building that consistency as we move through the balance of the year.

Speaker #1: For the next question, can you provide the company's strategy to manage its current debt, and how you're thinking about the balance sheet as you move through the rest of the year?

Operator: For the next question, can you provide the company's strategy to manage its current debt and how you're thinking about the balance sheet as you move through the rest of the year?

Speaker #3: Sure, I can do this. I'll take this one. Well, as you know, we ended Q2 with $31 million in cash, and we generated around $9 million of positive free cash flow.

Harpreet Dhaliwal: Sure, I can do this. I'll take this one. Well, as you know, we did end Q2 with CAD 31 million in cash, and we generated around CAD 9 million of positive free cash flow. Overall, we're definitely in a much different position today than we were when we originally put these debt facilities in place. During the H1 of the year, we did start making principal repayments towards the Nabari loan. It's also important to remember that when we did put these existing debt structures in place, it was designed as short-term back and loaded financings, and it was really meant to provide capital needed to restart Madsen and bring that mine into commercial production.

Speaker #3: So overall, we're definitely in a much different position today than we were when we originally put these debt facilities in place. During the first half of the year, we did start making principal repayments towards the Navarre loan.

Speaker #3: But it's also important to remember that when we did put these existing debt structures in place, they were designed as short-term, back-end loaded financings.

Speaker #3: And it was really meant to provide the capital needed to restart milling and bring that mine into commercial production. And on top of that, separately, the Goldlink notes were also part of our early financing strategy.

Harpreet Dhaliwal: The Gold Link notes were also part of our early financing strategy, and the payments were structured to increase over time, really alongside the ramp-up of the ounces from the operation. Saying that, now that we are on the other side of the transition from development to production, we really are actively looking at options to lower our cost of capital, which really, at the end of the day, is a prudent capital management measure. Saying that, obviously, the current gold price definitely helps us, and we are generating cash from operations. Also just to note, we do also have the CAD 0.68 warrants that are outstanding and that expire this November. That is really here just in a couple of months, and that could provide an additional source of capital if exercised.

Speaker #3: And the payments were structured to increase over time, really alongside the ramp-up of the ounces from the operation. So, saying that, now that we’re on the other side of the transition from development to production, we really are actively looking at options to lower our cost of capital, which really, at the end of the day, is a prudent capital management measure.

Speaker #3: And saying that, obviously, the current gold price definitely helps us, and we're generating cash from operations. And also, just to note, we do also have the $0.68 warrants that are outstanding.

Speaker #3: And that expired this November, so that's really just here in a couple of months. That could provide an additional source of capital if exercised.

Speaker #3: And really, to put it in context for the warrant holders, if they were to exercise at, let's say, today's price—around $0.95—that would give these warrant holders an additional 40% return on top of the return they made on the share portion of that equity financing.

Harpreet Dhaliwal: To put it in context for the warrant holders is if they were to exercise at, let us say, today's price, around CAD 0.95, that would give these warrant holders an additional 40% return on top of the return they made on the share portion of that equity financing from that period. Overall, capital management is definitely a key for us. It is something we have a big focus on and will continue to focus on for the second half of the year. I think with that, we can move on to the next question.

Speaker #3: From that period. So overall, yeah, capital management is definitely a key for us. It's something we have a big focus on, and we'll continue to focus on it for the rest of the second half of the year.

Speaker #3: So, I think with that, we can move on to the next question.

Speaker #1: Q2 was a significant step up from Q1. What are the key risks to sustaining those operating levels in H2?

Operator: Q2 was a significant step up from Q1. What are the key risks to sustaining those operating levels in H2?

Speaker #2: Yeah, I think Q2 demonstrated that the mine is capable of operating at such a level. And for sure, from here, it's really about getting that consistency as we move forward.

Shane Williams: Yeah, I think Q2 demonstrated that the mine is capable of operating at such a level. For sure, from here, it is really about getting that consistency as we move forward. As I said earlier, activity has significantly increased across the operation. We are managing multiple mining fronts, higher mining rates, and we are moving more material through the mine and mill. One example I would like to address is in underground mining, there are a number of potential risks associated with it. There are various ground conditions. We have experienced some ground conditions in a number of areas, and it is not unusual in underground mining, but it can affect mining rates, grade, sequencing, and how efficiently material moves through the mill. That is really one of the focus of adding a secondary crusher.

Speaker #2: So, as I said earlier, activity has significantly increased across the operation. We're managing multiple mining fronts, higher mining rates, and we're moving more material through the mine and mill.

Speaker #2: So, as one example I'd like to address, in underground mining there are a number of potential risks associated with it. There are very, very challenging ground conditions.

Speaker #2: So, we have experienced some ground conditions in a number of areas, and it's not unusual in underground mining. But it can affect mining rates, grade sequencing, and how efficiently material moves through the mill.

Speaker #2: So as that's really one of the focus of adding a secondary crusher allows us to ramp up the production of the of the through the mill and increase our material handling and efficiency through that crusher surface.

Shane Williams: It allows us to ramp up the production of them through the mill and increase our material handling and efficiency through that crushing circuit. That is another reason why we focus on the stockpile, and it gives us another layer of flexibility. We are processing material from the stockpile while replenishing new material. So it gives us that consistency across the operation. Labor is another factor I would like to touch on. The availability of experienced underground miners is tight across the mining industry, and particularly established mining jurisdictions like Red Lake. As you know, there is lots of competition for experienced miners. I think that is an important point because there are a lot of operations experiencing people challenges across the industry. However, look, we have built a strong team at Madsen. However, we are experiencing some turnover.

Speaker #2: That's another reason why we focus on the stockpile, and it gives us another layer of flexibility. So we're processing material from the stockpile while replenishing it with new material.

Speaker #2: So it gives us that consistency across the operation. Labor is another factor I'd like to touch on. There is the availability of experienced underground miners.

Speaker #2: It's tight across the mining industry, and particularly in established mining jurisdictions like Red Lake. As you know, there is a lot of competition for experienced miners.

Speaker #2: I think that's an important point because there are a lot of operations-experienced people challenges across the strong team at Matching. And we are experienced.

Speaker #2: However, we are experiencing some turnover. Recruitment, training, and retention are always a focus. And as the operation is advanced, we're also developing a better understanding of the skills and experience we need across different areas of the mine.

Shane Williams: Recruitment, training, and retention is always a focus, and as the operations advance, we are also developing a better understanding of the skills and experience we need across different areas of the mine. Again, these are all normal parts of a typical ramp-up, but also really reinforces that we put much emphasis on developing ourselves and creating more optionality within the operation. The more developed mining areas we have, the more flexibility the team has to adjust sequencing when conditions change. So that focus is the thinking beyond the current Madsen Mine plan. Fork is a key part of that in 2027 production profile, and then longer term, Rowan is part of that, another source of high-grade feed ore into the Madsen mill.

Speaker #2: Again, these are all normal parts of a typical ramp-up, but it also really reinforces that we put much emphasis on developing ourselves and creating more optionality within the operation.

Speaker #2: So, the more developed mining areas we have, the more flexibility the team has to adjust sequencing when conditions change. So, that focuses the thinking beyond the current matching mine plan.

Speaker #2: Fork is a key part of that in the 2027 production profile, and then longer-term, Rowan is part of that. Another source of high-grade feed over into the matching mill.

Speaker #2: As we build out those additional mine areas across here, we're reducing our reliance on one particular area of the mine and creating that broader production rate, which is really our strategy focused on this hub-and-spoke model.

Shane Williams: As we build out those additional mine areas across here, we are reducing our reliance on one particular area of the mine and creating that broader production rate, which is really our strategy focused on this hub and spoke model and working towards that in Red Lake with Madsen, Fork, and using its existing infrastructure of Madsen as the key hub. A key part of that really will come together when we update the updated pre-feasibility study. We are targeting on mid to late September, and I think that will really highlight the optionality and also the real value of the Red Lake area and our platform that we have established there. So there are lots of catalysts ahead, I think, for the company as we move forward. Yeah, look, with that, I will jump on to the next question.

Speaker #2: And working towards that in Red Lake with Matching Fork and using its existing infrastructure of Matching as the key hub. A key part of that will really come together when we update the updated pre-feasibility study.

Speaker #2: So that's what we're targeting—mid to late September. And I think that will really highlight the optionality and also the real value of the Red Lake area and our platform that we've established there.

Speaker #2: And so there are lots of catalysts ahead, I think, for the company as we move forward. And, yeah, with that, I'll jump on to the next question.

Speaker #1: Basic improved sustainability in Q2. How much further can costs come down?

Operator: If it improves sustainably in Q2, how much further can costs come down?

Speaker #3: Yeah, so the biggest driver of further cost improvement is really scale and consistency. As we mentioned, the Matching Mine has a relatively high fixed cost basis.

Harpreet Dhaliwal: Yeah. The biggest driver of further cost improvement is really scale and consistency. As we mentioned, the Madsen Mine has a relatively high fixed cost basis, and that is similar to many other Canadian mines. As we move more tons and we produce and sell more ounces, those costs are spread across a larger production base. We saw that operating leverage really come through quite clearly in Q2, which resulted in a 30% reduction in all-in sustaining costs. Saying that, in addition to that, there are also other efficiencies we are continuing to work on underground and through the mill. Over time, the shaft, it will provide another opportunity to improve material movement and it is going to obviously reduce haulage requirements and costs, and that will help us improve our costs further.

Speaker #3: And that's similar to many other Canadian mines. So, as we move more tons and we produce and sell more ounces, those costs are spread across a larger production base.

Speaker #3: And we saw that operating leverage really come through quite clearly in Q2, which resulted in a 30% reduction in all unsustaining costs. So, saying that, in addition to that, there's also other efficiencies.

Speaker #3: We're continuing to work underground and through the mill. So over time, the shaft will provide another opportunity to improve material movement, and it's going to obviously reduce—hopefully, well, it will reduce—haulage requirements and costs.

Speaker #3: And that'll help us improve our costs further, but there's certainly room for further improvement. The biggest lever for us is really going to be consistency in operating at higher levels, which we expect will really translate into better unit costs over time.

Harpreet Dhaliwal: But there is certainly room for further improvement, and the biggest lever for us is going to really be consistency at operating at higher levels, which we expect that will really translate into better unit costs over time. Yeah, we definitely do see the cost coming down, but it really comes back, like I said, to scale and consistency. The more we can produce, the better the costs will come up.

Speaker #3: So yeah, we definitely do see the costs coming down, but it really comes back, like we said—like I said—to scale and consistency.

Speaker #3: The more we can produce, the better the costs will come out.

Speaker #1: That concludes our question and answer session. I would now like to turn the conference back over to Shane Williams for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Shane Williams for any closing remarks.

Speaker #2: Yeah, thanks. Thank you, everyone, for joining us today. Look, we're pleased with the progress we've demonstrated in Q2, and I'd like to thank the entire team at West Red Lake Gold for the work that's gone into delivering these results.

Shane Williams: Yeah. Thanks everyone for joining us today. Look, we are pleased with the progress we have demonstrated in Q2, and I would like to thank the entire team at Madsen for the work that has gone into delivering these results. We are focused on continuing and carrying this work forward through the balance of the year while building the foundation for Madsen's long-term growth. Thank you to our shareholders for the continued support.

Speaker #2: So we're focused on continuing and carrying this work forward through the balance of the year, while building the foundation for Matching's long-term growth. Thank you to our shareholders for the continued support.

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

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Q2 2026 West Red Lake Gold Mines Ltd Earnings Call

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