Q2 2026 Trekor Metals Ltd Earnings Call

Speaker #1: Thank you for standing by and welcome to Tracker Metals Limited, Q2 earnings conference call. I'd like to remind everyone that this call is being recorded and that all lines have been placed on mute to prevent any background noise.

Speaker #1: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during rest time, simply press star followed by the number 1 on your telephone keypad.

Speaker #1: If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Brian Bergu, Vice President Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Joyce. Welcome, everyone, and thank you for joining Tracker's second quarter 2026 conference call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market close and is available on our website at trackermetals.com and on CedarPlus.

Brian Bergot: Thank you, Joyce. Welcome everyone, and thank you for joining Trekor's Q2 2026 conference call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market close, and is available on our website at trekomentals.com and on SEDAR+. I am joined today in Vancouver by Trekor's President and CEO, Stuart McDonald, Trekor's Chief Financial Officer, Bryce Hamming, and our COO, Richard Tremblay. As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will contain forward-looking information. This information, by its nature, is subject to risks and uncertainties. Actual results may differ materially from the views expressed today.

Speaker #2: I am joined today in Vancouver by Tracker's President and CEO, Stuart McDonald, Tracker's Chief Financial Officer, Bryce Hamming, and our COO, Richard Tremblay. As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will contain forward-looking information.

Speaker #2: This information, by its nature, is subject to risks and uncertainties. As such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our second quarter MD&A and the related news release.

Brian Bergot: For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our Q2 MD&A and the related news release, as well as the risk factors particular to our company. These documents can be found on our website and also on SEDAR+. I would also like to point out that we will use various non-GAAP measures during the call. You can find explanations and reconciliations regarding these measures in the related news release. Finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we will open the phone lines to analysts and investors for questions. I will now turn the call over to Stuart for his remarks.

Speaker #2: As well as the risk factors particular to our company, these documents can be found on our website and also on CedarPlus. I would also like to point out that we will use various non-GAAP measures during the call.

Speaker #2: You can find explanations and reconciliations regarding these measures in the related news release. And finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified.

Speaker #2: Following opening remarks, we will open the phone lines to analysts and investors for questions. I'll now turn the call over to Stuart for his remarks.

Speaker #3: Brian, and welcome, everyone. Thanks for joining us today for the Tracker Metals second quarter earnings call. It was a solid quarter for the company.

Stuart McDonald: Hi, and welcome everyone. Thanks for joining us today for the Trekor Metals Q2 earnings call. It was a solid quarter for the company. A steady operating performance at Gibraltar allowed us to capitalize on a great copper price. We've often talked about the leverage that we have to copper, and that was shown this quarter with very strong EBITDA and operating cash flows. Bryce can provide some more specifics on the financials in a minute, but first, I'll start with a review of the operating highlights from the quarter. Starting with Florence, as it was the first full production quarter for the new operation. We're very pleased with the progress on the ramp-up to date. We were able to produce just over 5 million pounds of cathode in the quarter at Florence.

Speaker #3: A steady operating performance at Gibraltar allowed us to capitalize on a great copper price. We've often talked about the leverage that we have to copper and that was shown this quarter with very strong EBITDA and operating cash flows.

Speaker #3: Bryce can provide some more specifics on the financials in a minute, but first, I'll start with a review of the operating highlights from the quarter.

Speaker #3: Starting with Florence, as it was the first full production quarter for the new operation. And we're very pleased with a progress on the ramp-up to date.

Speaker #3: We were able to produce just over 5 million pounds of cathode in the quarter at Florence. The operating team there has done a great job of stabilizing all the key process circuits: balancing injection and recovery wells in the well field, solution flows from the well fields to the SXEW plant, and all the way through to plating and harvesting of copper cathode.

Stuart McDonald: The operating team there has done a great job of stabilizing all the key process circuits, balancing injection and recovery wells in the well field, solution flows from the well fields to the SX/EW plant, and all the way through to plating and harvesting of copper cathode. The SX/EW plant is running smoothly with no significant issues. On the well field, the team is continuing to adjust and optimize operations, but generally, the initial wells have achieved expectations in terms of flow rates and copper grades, or specifically our PLS grade. Going forward, the key to the ramp-up is well field expansion. In June, we added the first group of 20 new production wells. Those wells are now providing additional copper flows to the plant.

Speaker #3: So the SXEW plant is running smoothly with no significant issues. On the well field, the team is continuing to adjust and optimize operations but generally the initial wells have achieved expectations in terms of flow rates and copper grades, or specifically our PLS grade.

Speaker #3: So, going forward, the key to the ramp-up is well field expansion. In June, we added the first group of 20 new production wells. Those wells are now providing additional copper flows to the plant.

Speaker #3: We have another set of new wells which were just approved by the state regulator and 18 of those are being integrated into the well field this week.

Stuart McDonald: We have another set of new wells, which were just approved by the state regulator, 18 of those are being integrated into the well field this week, with more to come later this month. Drilling is progressing well, we should soon be into a more regular cadence where new wells are being added every month. To be clear, when we talk about new wells, that includes recovery wells, injection wells, and hydraulic control wells. They can all be repurposed and used in different ways as the well field advances. In addition, the well field is expanding into an area of the deposit that is a thicker portion of the ore body, and we expect wells in that area to be higher producing. Not all wells will be equal.

Speaker #3: With more to come later this month. Drilling is progressing well and we should soon be into a more regular cadence where new wells are being added every month.

Speaker #3: To be clear, when we talk about new wells, that includes recovery wells, injection wells, and hydraulic control wells. And they can all be repurposed and used in different ways as the well field advances.

Speaker #3: In addition, the well field is expanding into an area of the deposit that is a thicker portion of the ore body. And we expect wells in that area to be higher producing.

Speaker #3: So not all wells will be equal. We're still targeting 30 to 35 million pounds of production for this year, and still have the goal of running the plant at capacity by the end of the year.

Stuart McDonald: We're still targeting 30 to 35 million pounds of production for this year and still have the goal of running the plant at capacity by the end of the year. That's a run rate of about 7 million pounds per month capacity. Operating costs at Florence are generally tracking in line with plan, with no big surprises so far. Florence generated positive operating margins and contributed roughly CAD 10 million of EBITDA in the Q2. We also reported a C1 cost of $4.72 per pound. It's still early in the ramp-up, this is not indicative of where we will be in the future. A high portion of our site operating costs are fixed, as the ramp-up continues, those fixed costs will be spread over a much bigger production base, which will drive down the C1 cost significantly.

Speaker #3: And that's a run rate of about 7 million pounds per month capacity. Operating costs at Florence are generally tracking in line with plan, with no big surprises so far.

Speaker #3: Florence generated positive operating margins and contributed roughly 10 million of EBITDA in the second quarter. We also reported a C1 cost of $472 US per pound, but it's still early in the ramp-up and this is not indicative of where we will be in the future.

Speaker #3: A high portion of our site operating costs are fixed and as the ramp-up continues, those fixed costs will be spread over a much bigger production base which will drive down the C1 cost significantly.

Speaker #3: Sulfuric acid is the largest component of Florence's cost structure. We have a fixed price contract for this year at $270 US per ton. And that's a good price considering what's happened in the acid market recently.

Stuart McDonald: Sulfuric acid is the largest component of Florence's cost structure. We have a fixed price contract for this year at $270 per ton, and that's a good price considering what's happened in the sulfuric acid market recently. This fall, we will be engaging with suppliers to establish 2027 pricing. We can expect there will be some price escalation in 2027. Once ramped up, Florence's cost structure is so low that even with high acid prices, we still expect very strong margins. Turning to Gibraltar now, which had another quarter of strong operating performance. The mine produced 30 million pounds of copper, which is the third consecutive quarter at that level. Grade recoveries and mill throughput have all been quite consistent over the last nine months, as ore release has been coming from the lower benches of the connector pit.

Speaker #3: This fall, we will be engaging with suppliers to establish next year's pricing. And we can expect there will be some price escalation in 2027.

Speaker #3: But once ramped up, Florence's cost structure is so low that even with high acid prices, we still expect very strong margins. Turning to Gibraltar now, which had another quarter of strong operating performance.

Speaker #3: The mine produced 30 million pounds of copper, which is the third consecutive quarter at that level. Grade recovery is a mill throughput have all been quite consistent over the last nine months, as ore release has been coming from the lower benches of the connector pit.

Speaker #3: We will be moving back into some of the more challenging ore later this year, which will impact recoveries. But still on track for our annual guidance of 110 to 115 million pounds.

Stuart McDonald: We will be moving back into some of the more challenging ore later this year, which will impact recoveries, but still on track for our annual guidance of 110 to 115 million pounds. Gibraltar cathode production in Q2 was a bit lower than expected, as the SXEW plant experienced some electrical issues after the restart in late April. We believe those have been addressed now. We should see a good step-up in cathode production in the coming months with improved plant performance and the second leach pad now running. Total site costs at Gibraltar were in line with the previous quarter as cost pressures continue in the area of fuel, explosives, and parts and equipment. Timing of repairs and maintenance activity was also a factor as some mill maintenance activities were pulled forward into June.

Speaker #3: Gibraltar cathode production in the second quarter was a bit lower than expected as the SXEW plant experienced some electrical issues after the restart in late April.

Speaker #3: We believe those have been addressed now, so we should see a good step up in cathode production in the coming months. With improved plant performance and the second leach pad now running.

Speaker #3: Total site costs at Gibraltar were in line with the previous quarter as cost pressures continue in the area of fuel, explosives, and parts and equipment.

Speaker #3: Timing of repairs and maintenance activity was also a factor, as some mill maintenance activities were pulled forward into June. Offsetting some of the inflationary pressure is a strong molybdenum by-product credit.

Stuart McDonald: Offsetting some of the inflationary pressure is a strong molybdenum byproduct credit, and moly prices have been back over $30 per pound recently. Smelter treatment and refining costs also continue to trend lower. We've now contracted almost all of the 2027 tonnage. We're seeing an average TC next year in the range of -$140 a ton. That's an amazing rate that we've never seen before. With our contracted terms for next year, we also expect to get paid for the gold content in Gib concentrate, which is a small but further additional benefit. Sustaining capital expenditures at Gibraltar were about CAD 48 million in H1 2026. That's higher than we've seen in the past, and we expect that elevated spending level to continue.

Speaker #3: And molly prices have been back over $30 per pound recently. Smelter treatment and refining costs also continue to trend lower. We've now contracted almost all of the 2027 tonnage.

Speaker #3: And we're seeing an average TC next year in the range of negative $140 a ton. That's an amazing rate that we've never seen before.

Speaker #3: And with our contracted terms for next year, we also expect to get paid for the gold content and gib concentrate. Which is a small but further additional benefit.

Speaker #3: Sustaining capital expenditures at Gibraltar were about $48 million in the first half of 2026. That's higher than we've seen in the past and we expect that elevated spending level to continue.

Speaker #3: The main driver of the increased spend has been implementing design changes at the tailing storage facility. To better utilize the TSF's existing footprint. And also for improvements to site water management.

Stuart McDonald: The main driver of the increased spend has been implementing design changes at the tailings storage facility to better utilize the TSF's existing footprint and also for improvements to site water management. Lastly, a comment on our Yellowhead copper project, our longer-term development project. The permitting continues to steadily advance. We've had a few notable milestones recently. Last week, the BC EAO issued a positive readiness decision. The project is now moving into the next stages of the EA process. The BC government recently highlighted Yellowhead as one of its priority projects. We believe it's a supportive environment right now, and we'll keep moving the project forward. There are very few copper development projects of this scale in North America. We continue to believe Yellowhead will be a very valuable asset for us. We're also continuing to work on other opportunities in our portfolio.

Speaker #3: Lastly, a comment on our yellowhead copper project. Our longer-term development project. The permitting continues to steadily advance and we've had a few notable milestones recently.

Speaker #3: Last week, the BCEAO issued a positive readiness decision and the project is now moving into the next stages of the EA process. The BC government recently highlighted yellowhead as one of its priority projects.

Speaker #3: So we believe it's a supportive environment right now and we'll keep moving the project forward. There are very few cooperative element projects of this scale in North America.

Speaker #3: And we continue to believe yellowhead will be a very valuable asset for us. We're also continuing to work on other opportunities in our portfolio.

Speaker #3: In July, we were invited by the Chilquot National Government into their community for a ceremony to recognize the new prosperity agreement that we signed a year ago.

Stuart McDonald: In July, we were invited by the Tsilhqot'in National Government into their community for a ceremony to recognize the New Prosperity Agreement that we signed a year ago, and that's a relationship that we continue to build on. For the Harmony Gold Project, we just extended our option agreement with JDS, and at our Aley Niobium Project, we continue to advance network and product marketing initiatives, and we'll be able to share some additional updates on that work in the coming weeks. So there's lots happening and lots of opportunities to unlock value that are still in front of us. I'll leave it at that for now and turn the call over to Bryce for his commentary on the financials.

Speaker #3: And that's a relationship that we continue to build on. For the Harmony Gold Project, we just extended our option agreement with JDS. And at our Ally Niobium Project, we continue to advance metwork and product marketing initiatives.

Speaker #3: And we'll be able to share some additional updates on that work in the coming weeks. So there's lots happening and lots of opportunities to unlock value that are still in front of us.

Speaker #3: And I'll leave it at that for now and turn the call over to Bryce for his commentary on the financials.

Speaker #2: Thank you, Stewart. It was a very good quarter for Trekker in terms of financial performance. Supported by a strong average LME copper price over $6 a pound.

Bryce Hamming: Thank you, Stuart. It was a very good quarter for Trekor in terms of financial performance, supported by a strong average LME copper price over $6.00 per pound. We are seeing an arb on the COMEX copper pricing again, which is approximately $0.35 per pound higher than LME. As a reminder, this year, most of Florence's sales are COMEX-based pricing, as is our cathode at Gibraltar. Sales in the quarter were 32 million pounds from Gibraltar and 5.3 million pounds from Florence. This sale of 37 million pounds of copper generated revenue of CAD 331 million, which is the highest ever for Trekor. It also includes CAD 26 million from moly sales. Moly prices today are $33 per pound, so moly is helping to buffer some of the inflation pressures we are seeing in diesel and explosives at Gibraltar.

Speaker #2: We are seeing an ARB on the COMEX copper pricing again, which is approximately 35 cents per pound higher than LME. As a reminder, this year most of Florence's sales are COMEX-based pricing as is our cathode at Gibraltar.

Speaker #2: Sales in the quarter were $32 million pounds from Gibraltar and $5.3 million pounds from Florence. This sale of $37 million pounds of copper generated revenue of $331 million, which is the highest ever for Trekker.

Speaker #2: It also includes $26 million from moly sales. Moly prices today are $33 per pound, so moly is helping to buffer some of the inflation pressures we are seeing in diesel and explosives at Gibraltar.

Speaker #2: Cash flow from operations was $183 million and adjusted EBITDA for the quarter was $125 million. Adjusted EBITDA reflects a realized loss on our hedging derivative.

Bryce Hamming: Cash flow from operations was CAD 183 million, and adjusted EBITDA for the quarter was CAD 125 million. Adjusted EBITDA reflects a realized loss on our hedging derivative position of CAD 24 million in the quarter for our $5.40 copper calls that we had in place for last year to support our construction ramp-up at Florence into 2026. Going forward, for Q3, we have callers with a ceiling price of $7.50 and $8.50 per pound to protect a $4.75 minimum copper price. Beyond Q3, we don't expect to have any additional ceiling price limits, but we'll continue with our long-standing practice of protecting the downside with purchasing out-of-the-money put options. We have recently acquired straightforward options, and that's put protection at $4.75 for Q4, and we will look to extend that put protection into 2027 as these higher copper prices prevail in the current market.

Speaker #2: Position of $24 million in the quarter. For our $5.40 copper calls that we had in place for last year to support our construction and ramp up at Florence into 2026.

Speaker #2: Going forward for Q3, we have callers with a ceiling price of $750 and $850 per pound to protect a $475 minimum copper price. Beyond Q3, we don't expect to have any additional ceiling price limits.

Speaker #2: But we'll continue with our longstanding practice of protecting the downside with purchasing out-of-the-money put options. We have recently acquired Straightforward Options that's put protection at $475 for Q4.

Speaker #2: And we'll look to extend those that put protection into 2027 as these higher copper prices prevail in the current market. Net income for the quarter was $22 million or $0.06 per share.

Bryce Hamming: Net income for the quarter was CAD 22 million or CAD 0.06 per share, and adjusted net income was CAD 40 million or CAD 0.11 per share after backing out unrealized losses and accretion.

Speaker #2: And adjusted net income was $40 million, or $0.11 per share, after backing out unrealized losses and accretion. Total site costs at Gibraltar for the quarter were $146 million, slightly higher than the previous quarter.

Richard Tremblay: Total site costs at Gibraltar for the quarter were CAD 146 million, slightly higher than the previous quarter. This amount includes CAD 28 million of capitalized stripping costs for the connector pit. We had a higher strip ratio in the quarter, which was 3.3 to 1, which contributed to this higher stripping rate. At Florence, we provided some more details on its cost this quarter in the MD&A, and show the contribution of Florence in our operating segment note, which is in note 22, and we'll do so going forward. Site operating costs at Florence were $24 million, compared to approximately CAD 30 million in revenue. Unlike Q1, we didn't capitalize any of these site operating costs in the quarter. While Florence did generate some EBITDA in the period, as Stuart indicated, at these copper prices, we are still funding a portion of the wellfield development.

Speaker #2: This amount includes $28 million of capitalized stripping costs for the connector pit. We had a higher strip ratio in the quarter, which was 3.3 to 1, which contributed to this higher stripping rate.

Speaker #2: At Florence, we provided some more details on its costs this quarter in the MD&A and show the contribution of Florence in our operating segment note, which is in note 22.

Speaker #2: And we'll do so going forward. Site operating costs at Florence were $24 million US compared to approximately $30 million in revenue. And unlike Q1, we didn't capitalize any of these site operating costs in the quarter.

Speaker #2: While Florence did generate some EBITDA in the period, as Stewart indicated, at these copper prices we are still funding a portion of the wellfield development.

Speaker #2: Our total wellfield development costs were $26 million US in the quarter. Total liquidity at the end of June increased by $20 million to $342.

Richard Tremblay: Our total wellfield development costs were $26 million in the quarter. Total liquidity at the end of June increased by CAD 20 million to CAD 342 million, and it includes CAD 186 million of cash. Growing production from Florence, as well as no expected ceiling on our realized copper price going forward, will further improve our liquidity in future quarters. We are beginning to review and prioritize debt repayment strategies as we look to de-lever in the quarters ahead, given this copper backdrop, coupled with our two producing assets. With that, I'll turn it back to the operator to open the lines for questions. Thank you.

Speaker #2: And it includes $186 million of cash. Growing production from Florence as well as no expected ceiling on our realized copper price going forward will further improve our liquidity in future quarters.

Speaker #2: We are beginning to review and prioritize debt repayment strategies as we look to delever in the quarters ahead given this copper backdrop coupled with our two producing assets.

Speaker #2: And with that, I'll turn it back to the operator to open the lines for questions. Thank you.

Speaker #3: We will now begin the question and answer session. If you would like to ask a question, please press start given number one on your telephone keypad to raise your hand and join the queue.

Operator 2: We will now begin the question and answer session. If you would like to ask a question, please press star key then number one on your telephone keypad to raise your hand and join the queue. To withdraw your question, press star key then number one again. Your first question comes from the line of Craig Hutchison from TD Cowen. Please go ahead.

Speaker #3: To withdraw your question, press star, then the number one again. Your first question comes from the line of Craig Hutchison from TD Cowen. Please go ahead.

Speaker #4: All right, guys. Good morning. Thanks for taking my questions. Just the first questions on Gibraltar, just in terms of the cadence of the back half this year.

Craig Hutchison: Hi, guys. Good morning, and thanks for taking my questions. Just some first questions on Gibraltar, just in terms of the cadence of the H2 this year. You mentioned that you're moving up in the benches and get back into more of the difficult ore, I guess, the transitional ore, where we have some oxides and recoveries fall off. I was Question just around grades and throughput. Obviously, grade's been quite strong H1 of this year. Do they fall with the movement to the upper portions of the pit? My second question is around throughput. You've been trending a fair bit below design here. Is the expectation that throughput increases in the H2 of this year? Is the ore softer in these upper benches? Thanks.

Speaker #4: You mentioned that you're moving up in the benches and get back into more of the difficult or I guess the transitional or we have some oxides and recoveries fall off.

Speaker #4: But I was questioning just around grades and throughput. Obviously, grades have been quite strong first half this year. Do they fall with the movement to the upper portions of the pit?

Speaker #4: And my second question is around throughput. You've been trending a fair bit below design here. Is the expectation that throughput increases in the second half of this year?

Speaker #4: Is the ore softer in these upper benches? Thanks.

Speaker #2: Hi Craig, it's Stewart here. I'll start. And, yeah, in terms of the production outlook for the second half, as I said, moving into some transitional ore, that's more a fourth quarter thing.

Stuart McDonald: Hi, Craig. It's Stuart here. I'll start. In terms of the production outlook for H2, as I said, moving into some transitional ore, that's more a Q4 thing that we're seeing right now. That will include some reduction in grade as well as part of that. I don't think we'll be dropping off quite as much as we experienced in the H1 last year, but certainly there'll be, I expect, lower grades and slightly lower recoveries in the last few months of the year. I forgot the second part of your question.

Speaker #2: That we're seeing right now. And yeah, that will include some reduction in grade as well as part of that. And we'll be I don't think we'll be dropping off quite as much as we experienced in the first half last year, but certainly there'll be I expect lower grades and slightly lower recoveries in the last few months of the year.

Speaker #2: Yeah. And I forgot the second part of your question.

Richard Tremblay: Yeah.

Speaker #4: Yeah, I'll just. Just to clarify.

Craig Hutchison: Just the throughput

Speaker #2: Yeah, it really comes down to watching how the mills are performing overall and taking advantage of where it's possible to turn up the throughput and get more tons through while not giving up significant drops in recovery or challenges meeting the grind size that we're targeting.

Richard Tremblay: I'll chime on the throughput side. It really comes down to watching how the mills are performing overall and taking advantages where it's possible to turn up the throughput and get more tons through while not giving up significant drops in recovery or challenges meeting the grind size that we're targeting.

Speaker #4: Okay. Great. And then from a CASCO perspective, with the SXCW plant backup running, can we expect sort of a similar cadence we've seen in past quarters or just under a million pounds per quarter type thing?

Craig Hutchison: Okay. Great. From a cathode perspective, with the SX/EW plant back up and running, can we expect a similar cadence we've seen in past quarters or just under a million pounds per quarter type thing?

Speaker #2: I don't—Craig Richard again. Actually, with the second leach dump brought online now, which we did back in April, we'll see production kind of tick up from that.

Richard Tremblay: Craig, Richard again. It'll actually, with the second leach brought online now, which we did back in April, we'll see production kind of tweak up from that.

Speaker #2: So, we are envisioning stronger performance here in the second half of the year.

Craig Hutchison: Okay

Richard Tremblay: We are envisioning a stronger performance here in the H2 of the year.

Speaker #4: Okay. That's good to hear. And then in your comments, you mentioned about the TCRCs next year I think around negative $140 a ton. Have you guys locked that in already or are you still kind of waiting to lock in next year's TCRCs?

Craig Hutchison: Okay. That's good to hear. In your comments, you mentioned about the TCRCs next year, I think around CAD -140 a ton. Have you guys locked that in already, or are you still kind of waiting to lock in next year's TCRCs? Thanks.

Speaker #4: Thanks.

Speaker #2: No, that's our contracted rate. That's kind of a weighted average of several contracts that we have got in place. So yeah, it's firm. Yeah, it's pretty amazing.

Stuart McDonald: No, that's our contracted rate. That's kind of a weighted average of several contracts that we have got in place. Yeah, it's firm. Yeah, it's pretty amazing. It's actually a different type of byproduct credit, really.

Speaker #2: It's actually a different type of byproduct credit really. It's yeah. Quite a change from where we were five or ten years ago.

Craig Hutchison: Yeah

Stuart McDonald: Yeah, quite a change from where we were 5 or 10 years ago.

Speaker #4: That's great to hear. Maybe one last question for me. Just on Florence, you mentioned the plans to start contracting for next year on sulfuric acid later this fall.

Craig Hutchison: That's great to hear. Maybe one last question from me. Just on Florence, you mentioned the plans to start contracting for next year on sulfuric acid later this fall. Just, can you tell us what the spot prices are right now in that region, and do you have a sort of fixed amount you want to contract for next year, or are you going to maybe do a blend of term contracting and spot contracting? Thanks.

Speaker #4: But just can you tell us what the spot prices are right now in that region? And do you have a sort of fixed amount you want to contract for next year?

Speaker #4: Are you going to kind of maybe do a blend of kind of term contracting and spot contracting? Thanks.

Speaker #2: Yeah, on the sulfuric acid front, we're really just starting to engage in kind of more formal discussions with suppliers and exploring all a number of different scenarios or a number of different options.

Richard Tremblay: Yeah. On the sulfuric acid front, we're really just starting to engage in more formal discussions with suppliers and exploring a number of different scenarios or a number of different options, I think that's probably all I can say at this point.

Speaker #2: And I think that's probably all I can say at this point.

Stuart McDonald: Stuart here. I would add on the spot pricing, what we're seeing and learning, I guess, in the market is that there's not a lot of trade or volume that happens at spot prices, right? Most of the big suppliers and buyers are buying on long-term contracts. I'm not sure how much to read into spot prices. Certainly, as I indicated, we expect some escalation next year given what's happened. Yeah.

Speaker #5: And Stewart here. I would add on the spot pricing, what we're seeing and learning, I guess, in the market is that there's not a lot of trade or volume that happens at spot prices, right?

Speaker #5: Most of the big suppliers and buyers are buying on long-term contracts. So I'm not sure how much to read into spot prices. But certainly, as I indicated, we expect some escalation next year given what's happened.

Speaker #5: Yeah.

Speaker #4: Okay. Thanks. Appreciate the color.

Craig Hutchison: Sure. Thanks. Appreciate the color.

Speaker #3: Again, if you would like to ask a question, please press start given the number one on your telephone keypad. Our next question comes from the line of Dalton Barretto from Conocord Genuity.

Operator 2: Again, if you would like to ask a question, please press star key, then number 1 on your telephone keypad. Our next question comes from the line of Dalton Baretto from Canaccord Genuity. Please go ahead.

Speaker #3: Please go ahead.

Speaker #4: Thanks, guys. I'm glad Craig left some questions for me there. Just staying on that asset theme, can you provide some sensitivity around the C1 cost at Florence relative to asset prices?

Dalton Baretto: Thanks, guys. I'm glad Craig left some questions for me there. Just staying on that acid theme, can you provide some sensitivity around the C1 cost at Florence relative to acid prices?

Speaker #2: Sure. I mean, we're going to use when we ramp up, we'll be in the range of, I think, 220,000 tons 220, 240,000 tons a year of assets.

Stuart McDonald: Sure. We're going to use, when we ramp up, we'll be in the range of, I think, 220,000 tons.

Richard Tremblay: 240, yeah.

Stuart McDonald: 220,000, 240,000 tons a year of acid. You can do the math on there. What, $100 a ton would be $24 million US dollars. That gives you a rough sensitivity. Yeah. That would be after ramp-up, right? When we're running at full run rates.

Speaker #2: So you can do the math on there, what 100 dollars a ton would be 24 million US dollars. So that gives you a rough sensitivity.

Speaker #2: Yeah. And that would be after ramp up, right, when we're running at full run rates.

Speaker #4: That's right, Stewart. Yeah, it's steady. Thanks. That's usually helpful. And then you mentioned that you guys are transitioning the welfare now into higher grade portion of the ore body.

Dalton Baretto: That's right, Stuart. Yeah, at steady state. Thanks. That's usually helpful. You mentioned that you guys are transitioning the well field now into a higher grade portion of the ore body. How long do you think you'll stay in that portion of the ore body for, and how homogenous is the mine plan over the next couple of years?

Speaker #4: How long do you think you'll stay in that portion of the ore body for? And how sort of homogenous is the mine plan over the next couple of years?

Richard Tremblay: The wells that we put in this higher, thicker grade zone will likely last for 4 to 7 years, depending on how hard we run them in the overall mine planning. As the well field expands out, we have areas that are thicker and other areas that are thinner, and that is adjusted for or incorporated into the mine plan. Part of our mine planning exercise is to balance out how the development advances and ensure we have that consistent copper production profile over the long term, is really the work that goes on at Florence.

Speaker #2: The wells that we put in this higher, thicker grade zone will likely last for four to seven years, depending on how hard we run them in the overall mine planning.

Speaker #2: And this is, as the welfare expands out, we get into areas we have areas that are thicker and other areas that are thinner. And that's an adjusted for our incorporated into the mine plan.

Speaker #2: So part of our mine planning exercise is to kind of balance out how the development advances and ensure we have that consistent copper production profile over the long term is really kind of the work that goes on at Florence.

Speaker #4: Thanks, guys. That's very helpful. That's helpful to me.

Dalton Baretto: Thanks, guys. That is very helpful. That is helpful to me.

Speaker #3: Again, if you would like to ask a question, please press start given number one on your telephone keypad. Our next question comes from the line of Duncan Hay from Panier.

Operator 2: Again, if you would like to ask a question, please press star key, then the number 1 on your telephone keypad. Our next question comes from the line of Duncan Hay from Panmure Gordon. Please go ahead.

Speaker #3: Please go ahead.

Speaker #2: Yeah, thank you, morning everyone. Another question on Florence, just on the welfare rollout in the capital cost there. So 26 million US in Q2.

Duncan Hay: Yeah, thank you. Morning, everyone. Another question on Florence, just on the well field rollout and the capital cost there. $26 million in Q2. That presumably will drop off as you reach steady state, what do you think for Q3 and Q4, and what do you think it is going to be on a longer-term rolling basis?

Speaker #2: Is that presumably will drop off as you reach sort of steady state? But what do you think for Q3 and Q4? And what will it what do you think it's going to be on a sort of longer-term rolling basis?

Speaker #5: I would say, hi Duncan, it's Stewart here. Certainly Q2 was high. I think we had some catching up to do on the drilling because we got off to a bit of a slow start in the early months.

Stuart McDonald: I would say, Duncan, it's Stuart here. Certainly Q2 was high. I think we had some catching up to do on the drilling because we got off to a bit of a slow start in the early months of the year. I think now, certainly in H2, we expect to be into a more regular cadence. I think it remains to be seen exactly where the drilling settles out. That really is a factor, as Richard mentioned, a factor of our mine plan and how many wells do we need to have open to be feeding the plant with 85 million pounds of copper. I think there's a little bit of unknown still on that, and I think upside potentially in what we've disclosed in the technical reports.

Speaker #5: ...of the year. And I think now, certainly in the second half, we expect to be into a more regular cadence. I think it remains to be seen exactly where the drilling settles out.

Speaker #5: That really is a factor as Richard mentioned, a factor of our mine plan and how many wells do we need to have open to be feeding the plant with 85 million pounds of copper.

Speaker #5: I think there's a little bit of unknown still on that, but I think upside potentially in what we've disclosed in the technical reports. So I don't want to put too fine of a point on it for forecasting drilling costs, but in the second half, but I do think that they will be a little bit lower than what you saw in Q2.

Stuart McDonald: I don't want to put too fine of a point on it for forecasting drilling costs in H2, I do think that they will be a little bit lower than what you saw in Q2.

Speaker #2: Okay, great. Thank you. And just on what you said about COMEX, I missed that. So all your Gibraltar cathode, you're selling on a link to the COMEX price and then Florence as well.

Duncan Hay: Okay. Yeah, great. Thank you. Just on what you said about COMEX, I missed that. All your Gibraltar cathode you're selling are linked to the COMEX price, and then Florence as well for this year. That's going to be the case presumably going forward, is it?

Speaker #2: For this year, but is that that's going to be the case presumably going forward, is it?

Speaker #6: Yeah, hi Duncan, it's Bryce. Yeah, that's right. We have the ability to elect that annually, each year, to lock in the COMEX price for the majority—like 80%—of our production at Florence.

Bryce Hamming: Yeah. Hi, Duncan, it's Bryce. Yeah, that's right. We have the ability to elect that annually each year to lock in the COMEX price for the majority, like 80% of our production at Florence. So long as there's no tariff, Gibraltar will realize the COMEX price. It will have only LME if there is a tariff that's put in place.

Speaker #6: And so long as there's no tariff, Gibraltar will realize the COMEX price and it will have only LME if there is a tariff that's put in place.

Speaker #2: Oh, okay. All right, great. Okay, thanks, Bryce. And thanks to you. Thanks.

Duncan Hay: Okay. All right, great. Okay, thanks, Bryce. Thanks, Stuart. Thanks.

Speaker #5: Great.

Stuart McDonald: Great.

Speaker #3: That will conclude our question and answer session. I will now turn the call back over to Brian for closing remarks.

Operator 2: That will conclude our question and answer session. I will now turn the call back over to Brian for closing remarks.

Speaker #5: Okay, thanks everyone. It's Stewart here. And yeah, thanks again for joining our call. And we'll talk to you next quarter.

Stuart McDonald: Okay, thanks everyone. It's Stuart here, and thanks again for joining our call, and we'll talk to you next quarter.

Operator 2: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.