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AI Earnings SummaryQ2 2026
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Earnings Call Transcripts

Q2 2026Earnings Conference Call

Operator: Thank you for standing by. My name is Prilla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Orezone Q2 2026 Results Webcast and Conference Call. [Operator Instructions] I would now like to turn the conference over to Patrick Downey, President and CEO. You may begin.

Patrick Downey: Thank you, operator, and good afternoon, everyone, and thank you for joining us for Orezone's second quarter 2026 results conference call and webcast. Joining me today is Peter Tam, Executive Vice President and Chief Financial Officer. Before we begin, I'd ask everyone to take note of the forward-looking statements and other disclosures on Slides 2 and 3 of the presentation, and I'll start on Slide 4 with an overview of the quarter. Q2 marked our first full quarter operating as a multi-mine gold producer following the acquisition of Casa Berardi Mine in late March. At Bomboré, we produced just over 38,000 ounces of gold during the quarter. And as previously discussed, we expect a very strong second half at Bomboré as we gain full access to the higher-grade hard rock ore, and that is happening in Q3. At Casa Berardi, we produced just over 20,500 ounces of gold in our first full quarter of ownership. Since closing the acquisition, our focus has been investing in the operation, particularly in underground development, equipment and exploration, and we're making excellent progress in each of those areas. We also continue to advance a number of growth projects during the quarter. We released exploration results from both Bomboré and Casa Berardi, highlighting the potential to continue growing the resource at both operations. Stage 2A at Bomboré remains on schedule for commissioning in October. And in Quebec, we're working towards the release of both the updated Casa Berardi life of mine study in September, followed closely by the Heva-Hosco PEA later in the fall. With that, I'll turn it over to Peter to take us through the financial results.

Peter Tam: Thanks, Patrick. In Q2, combined gold sales from our 2 mines was 60,654 ounces, reflecting the first full quarter of contribution from Casa Berardi, a step change in our sales and production profile moving forward. All-in sustaining cost per ounce sold was $2,449 for Q2 and $2,371 for the first half of 2026, in line with our annual guidance range. EBITDA was $119.6 million for Q2 and $211 million for the first half of 2026. After removing the effects of the PPA adjustments from the Casa Berardi purchase accounting for gold inventory sold and stockpiles processed in the quarter, adjusted EBITDA was higher at $134.4 million for Q2 and $228.7 million for the first half of 2026. Net earnings attributable to Orezone shareholders was $45.2 million and $0.07 per share, while adjusted net earnings to Orezone shareholders was higher again at $55.2 million and $0.08 per share with the removal of the PPA adjustments. Cash flow from operations was strong in Q2 with $109 million generated from the continued sale of gold ounces at a healthy all-in sustaining cost margin approaching $2,000 per ounce. Operating cash flows were further aided by VAT recoveries in Burkina Faso of over $19 million in the quarter. We exited the quarter with cash of $96.7 million and bullion inventory with a market value of $21.2 million, a very healthy balance sheet. With the recent recovery in gold prices in this past week and improved feed grades planned for both operations in Q4, cash flow generation should remain robust in the second half of 2026. We expect our liquidity outlook to further improve at year-end, while at the same time, continue to pay down our senior debt. With that, I'll hand it back to you, Patrick.

Patrick Downey: Thanks very much, Peter. I'll go right into Bomboré operations. So Bomboré produced, as we stated, 38,063 ounces during the quarter, which was as we expected. Mining performance remained strong with approximately 8.3 million tonnes of total material mined during the quarter. However, intermittent and delayed emulsion deliveries earlier in the year required us to adjust the mining sequence, which did reduce the amount of higher-grade hard rock available to the mill during the first half as originally planned. Since then, we have secured 2 additional emulsion suppliers with consistent deliveries now being achieved, which will provide greater supply reliability as we advance the revised mine plan through the second half, which we are already seeing. As a result, we expect the grade and production profile to improve significantly through H2 as we regain access to these higher-grade hard rock areas. Unit cost increased compared to Q2 of last year, really reflecting the addition of the hard rock mining and processing. And despite the lower grades experienced in the first half, we were able to produce within our guidance and our 2026 production and cost guidance remain unchanged, and we do expect to see a reduction in overall costs as we mine the higher-grade hard rock throughout the second half of 2026. Switching to Casa Berardi -- sorry, capital project, pardon me. This is a quick look at Stage 2A. This is the rock breaker already installed and commissioned. Oxygen plant well advanced. Thickener well advanced for commissioning in October, and we expect full commissioning and ramp-up during Q4, on time and on budget again. And this is the large tailings cell. We've now completed the full footprint for the tailings storage facility, and we completed that in the second quarter. So that's now fully ready and operating. So testament to the team yet again, even though we had some supply chain logistics throughout the first half of the year, we remain on budget, on schedule for Stage 2A. So switching over to Casa. The operation produced 20,503 ounces of gold during the quarter, which was its first full quarter under our ownership and was right on our budget. At Casa, the open pit mining totaled 1.15 million tonnes during the quarter, reflecting the planned waste stripping underway at the F160 pit. Underground ore mined totaled approximately 82,000 tonnes, and we had 406 meters of lateral development completed during the quarter. Since the acquisition, the key focus has really been increasing the underground development rates, which really ramped up from a 0 start in beginning of Q2. We're ramping it up now, and it will continue to ramp up during Q3 and Q4. We've got a contractor on site. We're now rebuilding the stope inventory to support higher underground production over time. And we are obviously ramping up our exploration. We've also added mobile mining equipment throughout the quarter, and that will continue through the year with further purchases in 2027 and expanding our preproduction drilling to support that ramp-up. The mill processed approximately 364,000 tonnes during the quarter at an average head grade of 2.01 grams per tonne and a recovery rate of 86.8%. Mill throughput also performed ahead of plan at approximately 4,000 tonnes per day compared with the planned rate of approximately 3,900 tonnes per day. During -- just after Q2, we actually hit a rate of 4,700 tonnes a day. So we're very excited about what we've been able to do with the mill, and we hopefully will be able to ramp that up over 4,000 tonnes a day continuously through the life of the mine. Exploration activity continues to ramp up since the acquisition with 5 drill rigs currently active and a sixth expected to be added shortly. Initial drill results released in May included several high-grade intercepts near surface, and we will have further results later in the quarter and results throughout the year. Looking ahead, waste stripping at the F160 pit is expected to be complete in Q3, positioning the operation for higher grades in Q4. Our 2026 production and cost guidance for Casa remains unchanged. So finally, looking ahead in 2026, the key catalysts, which are expected to drive value throughout 2026 into 2027. At Bomboré, as I stated, we expect production to strengthen through the second half as access to the higher-grade hard rock improves, which should also have a positive impact on costs, while Stage 2A remains on schedule for commissioning in October. In Quebec, September will be a very important month for us. We expect to release the updated Casa Berardi life of mine study, which will outline our longer-term plans for the operation. We will also release the Heva-Hosco PEA shortly thereafter, providing our first economic assessment of another potential growth opportunity within our Quebec portfolio, which we are very excited about along the Cadillac-Larder Break, not that far from the Cadillac mining operation on the other side of the border, the Kerr Addison. Exploration also remains obviously a key focus at both assets with active programs underway at Casa and Bomboré. We did release exploration results from Bomboré earlier this week. We are very, very pleased with those, and we expect further results later in the year. So it's going to be a very busy second half, strong production expected across both operations and several very important milestones to come over -- coming up over the next few months. With that, I'll hand it back to the operator to -- and we'd be happy to take your questions.

Operator: [Operator Instructions] And your first question comes from the line of Mohamed Sidibe with National Bank.

Mohamed Sidibe: Good to see the cost improvement into the quarter, the good cost performance at both Bomboré and Casa Berardi there. I think you've detailed the production profile into the second half of the year. Could you give us some guidance in terms of CapEx spend into Q3 and Q4 at both Bomboré and Casa Berardi to just better understand how you get to your guidance there?

Patrick Downey: Okay. Well, I'll let Peter answer that. He's got that data at his hand...

Peter Tam: Yes. Mohamed, obviously, that's in our disclosure in the MD&A. We're very confident in terms of the guidance range we've given for both operations there. So we've given obviously the color around Bomboré in terms of our growth CapEx, the 3 main items there being the Cell 2 expansion on the tailings, which, as Patrick has already pointed out, is completed; the ongoing RAP as well as the Stage 2A, which will be commissioned or planned to be commissioned in October. And then on to Casa Berardi, it's really additions that we have planned for in terms of the mobile mining fleet, primarily in the underground, but also in the open pit and then further additions around underground development and some plant improvements and ongoing tailings lift. So hopefully, that's enough color. If you feel that more color is needed, certainly, you can reach out to us afterwards.

Mohamed Sidibe: Sounds good. Yes, maybe I'll reach out to you in terms of specifics on at both assets. And maybe, Paddy, on Casa Berardi and good to see the throughput improvements. And I think you've noted that some days you've seen even the plant exceeding even 4,000 tonnes per day. Can you maybe provide us with some color on what's driving that outperformance versus your plan? Like what have you seen to date that's led to this positive update there?

Patrick Downey: Yes. We just made some changes around the gravity circuit, added an additional Knelson concentrator. We made change to some of the feed around the mills. And we've just pushed some of the throughput in and around the CIL to see where the recovery went. I mean you only know when the recovery drops off when you push the throughput. So we've sort of pushed the guys a little bit. We've made some tailings line improvements as well. So -- and we further expect to see how that goes on a consistent basis as we test the mill throughput.

Operator: And the next question comes from the line of Jeremy Hoy with Canaccord Genuity.

Jeremy Hoy: First one for me is on Bomboré. It's good to see those exploration results. It's got me thinking about a bigger resource there. On the 2B expansion, that spending is still on hold, and you've noted you're going to take a cautious approach there. What would you need to see to think about greenlighting 2B again?

Patrick Downey: Well, I think, obviously, there's the government purchase of Kiaka, and that hasn't been fully finalized yet. And once we know the full terms and conditions of that, we can better examine it. And we probably want to sit down with the government and talk about where we want to go with this to get some guarantees after that from what we want to spend. I mean on paper, yes, absolutely makes sense and in operation it makes sense. But we just want to spend our capital where we believe that we've got reasonable security and ownership.

Jeremy Hoy: Yes. Understood. Exciting to hear we've got the PEA coming for Heva-Hosco. Are you able to give us any more detail on that and how you're thinking about that? And might we see some drills at that site anytime soon?

Patrick Downey: Well, I'll answer the second part first. Yes, we are already planning a drill program. I can't remember what the meters that we were thinking about was, but it will obviously be 2-fold infilling on the inferred into M&I to bring it into P&P and then testing some of the higher-grade structures that we've identified. We have hired a regional exploration manager, so he will be focused on that. He's not on board yet, so I can't really say who he is. And in terms of the study, what I can give you, it will likely be sort of an 8,000 tonne a day size plant. We're well advanced on -- we've got a new resource completed. We're in the mine planning stage now. We've got test work ongoing to be completed in the coming weeks. We're starting the capital and operating cost estimate. So we keep pushing it and pushing it. The only thing we have faced like everybody else out there, August is holiday month for most consultants. And unlike us, whatever, they don't answer the phone when they're on holiday. So we'll get through that, probably about a 2-week hiatus and back at it again, and we'll drive it to the finish line, hopefully, early Q4, but we could get it earlier as we have a lot of the work done.

Jeremy Hoy: Great. Last one for me. I saw there you're expecting a resolution to the Genser claim shortly. Any expectations there?

Peter Tam: Yes, it's Peter. I'll answer that. We obviously expect a positive outcome on that. As to what the financial amount of that award may be, I would say, at this point, it's probably premature for me to say anything. But certainly, we feel comfortable how the arbitration went, how we sort of put our case forward. So we're very obviously keen to see this ruling come down for us.

Operator: [Operator Instructions] And I'm showing no further questions at this time. I would like to turn it back to Patrick Downey for closing remarks.

Patrick Downey: Thanks very much, and thanks for everybody for attending the call and the webinar. Obviously, steady Q2 for us, very happy with that, excellent financial results and really looking forward to the second half of the year for several reasons, including production, costs and several catalysts going forward. So look forward to continuing to report on those.

Operator: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.

Data is provided for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.