Amaroq Ltd. (AMRQF) Earnings Call Transcript

Thank you. Good morning, everyone, and welcome to the Amaroq Q2 and H1 2026 results presentation. My name is Edward Westropp. I'm the Corporate Development Strategy Officer for Amaroq. And this morning we'll follow the usual course. Eldur will take you through the highlights for the period, operationally and strategically, and Ellert will take you through the financials, and then we'll follow up with some Q&A from the line. So if you have any questions, please follow the usual form on the webcast portal and we'll endeavour to try and answer all your questions. So without further ado, let's...

straight into it. Well done. Thank you.

Good morning, everybody. Thanks all for being here. I can see how there are a lot of viewers online and questions already coming in. To begin with, I just want to say how absolutely pleased we are with the result of the quarter. This has been mainly due to hard work of all the individuals involved in terms of planning, people getting the things done. And the results are that we have done already 9,000 ounces for H1 this year, upper end of that guidance, 7,000 to 10,000. We continue to have a much higher grade than we planned in the beginning of the year, approximately 20 grams per ton. The revenue is now starting to pick up, $56 million. Phase 2 is already in operation, and I'm pleased to be able to tell you that during all of June when we were commissioning, that commissioning went really well. In July, we're reaching already 90% recovery, and Phase 1 and Phase 2 processing plant is operating literally in a way that we want to see. Result of that is that you've already seen that we have a new upsized RCF on better terms. This is a testament not only to the liquidity we have now to move other projects as well as increase the liquidity position, but it's also a testament of the financial strength of the company, which we'll go into in two minutes with Ellert. We are running now the largest exploration and development program in the history of the company. We started the exploration at Ilua in June, and we finished that by drilling three different areas in Ilua, a rare earth element, a pegmatite zone, which we're very interested in, and a large rare earth play in [ Greece ]. So all in all, we're really, really pleased with the quarter, and a lot of the work that you cannot see here on the highlights has also gone into making sure that we will deliver on our guidance this year, which we are confident on. And again, I want to thank the team and everybody else for their hard work and effort so far. Post-period highlights. We are in the active season, so we... The first one to mention here is the Nalunaq drilling. And I will go into more detail on the Nalunaq drilling in a minute. But what you're seeing here is that once we are underground, and are able to utilize the underground infrastructure, I mean the tunnels, to drill into the deposit. This drilling is now on a 20-meter spacing. This has never been drilled so dense ever. And out of the 27 holes, we could already see 2,300 visible gold. We're getting average grade of 42.8 grams per ton, absolutely fantastic. This drilling is to confirm when we are mining, we mine on the east and we mine on the west. So this is to confirm all of the eastern block, which is now double the grade we anticipated originally. So an absolute high-grade area. This level is from 800 to up to 860 and constitutes about 2027 into 2028 of resources. Now, we have been focusing on those resources and put in the MRE file where we updated the resource statement alongside the main listing on 31st. That did not take into account any of the underground drilling this year whatsoever. So now that we're drilling every month, defining more and more, the focus is to, on the one hand, increase the resources, but also confirm the grade. We've done more than 100 bags of flotation bags. We're already at the 90% recovery or total recovery. So I'm really pleased to be able to tell the market that this is just going like clockwork, as I mentioned earlier, and we'll be continuing operating the plant as is. And Nanoq and [ Minton ], we started drilling there, and Nanoq is a gold area that we drilled last year, later on, and [ Minton ] is an IOCG, which is iron oxide copper gold deposited high up in North Greenland, which we are now already drilling. I mentioned earlier we went to the main market on the 31st of July. This was an important milestone for the company. I want to emphasize that we have been working on the kind of how liquidity, how access to the company through the capital market is best secured. When we were on free market, we were distributed in liquid in the OTC market, Canada, AIM, and Iceland. We delisted from Canada, to focus to get as much liquidity on one market, which we are now focused to be on the London market. Iceland has been a strong investor base, a long-term investor base, but it is a more shallower market, so all of our focus is now to increase and build up liquidity on the main market in London. This was an important date for us to get on 31st of July. It's actually in the middle of a summer holiday here in Iceland, but this gives us the opportunity to be admitted to indexes prior to 1st of September. And we will focus on not only indices in the FTSE or FTSE 250, but more importantly also in the Gold Junior index like GDXJ, where we need to uphold a certain liquidity over a period of two quarters. In addition to that, we finalized the Gardaq JV funding. That is with our funding partner, ACAM, where we funded in total approximately $10 million, $10 million, to fund both the Ilua and [ Minton ] drilling programs. Now, I thought I would take this opportunity here after six months to give you a little bit of insight into our strategic objectives for what we are starting to name as three mine focus for Amaroq. In fact, we have three operating mines being built. Now, each of these mines have the opportunity to grow in both resources and in production. Our focus point there is to have, is to focus on four different sections. On the geology side, our short-term focus, as I mentioned earlier, is to drill underground as close to where we are mining to establish what we call reserves. This will give us better opportunity to guide next year and the following year. And we really started this underground drilling very late last year, once we have established the infrastructure and underground drill route. Underground drilling was never done in Nalunaq by our predecessors. So we are doing that and we are learning a lot. We are learning structurally how the thickness of the ore body keeps the high-grade pocket. And, you know, most of it is high-grade, as you can see. So we are seeing much more understanding that while we're doing this in the immediate, a long-term target is that we're defining and building up exploration tunnels to go deeper and access more years of development or I should say production, meaning to be able to drill out 2028, 2029, 2030, and I'll show you that in a picture in the next slide. Furthermore, we are looking to do exploration tunnels into areas such as the Target Block, 75, and South Block, and this is in anticipation to start increasing production in Nalunaq. So we need the mine to deliver a lot. On the mining end, we are focused on reaching nameplate capacity. That is all about getting the development meters per day into a systematic approach to have the people, the equipment, the maintenance program, and so on all in good shape. And this is progressing really well. In the medium-long term, we will then push more development meters and more throughput to be able to access new ore zones and to drill up more resources. For our investors, what is key is to grow the resources, both reserves and resources, as well as growing production. On the plant side, the short term is to reach that nameplate capacity of 27 days or 300 tons per day. Medium and long term, so call it next year, on an annual basis, we want to be producing 100,000 tons of ore through that plant. And what we've already started to do is to do studies on increasing the plant throughput to 450 tons per day and beyond. And there are two ways to do that. On the one hand is to install another mill next to the current mill as well as flotation cells, but we're also looking into what is called an optical ore sorting technology, which will allow us to sort the ore that goes to the plant, to only take that ore rather than any waste material or effectively bring a more high-grade ore through it, which will have the same effect. On the permitting side in Nalunaq, we are all permitted in place for our current operation. For the medium long-term, we are looking to build more efficiency around dry stack tailings facility, put that in place as well as increased throughput and so on. But overall, this has given us, and this kind of a strategic objective you see here in front of you has given us a game plan for the next two mines which we're going to take on. Now, here you can see the kind of key areas that we are developing. I want to draw your attention to the green bit on the slide there. You can see where you have numbers 792 all the way to 874. What we have already drilled, and this is where the drilling results are coming from which we reported on the middle of July. We are currently starting to drill on the other side to the west where you see 810 exploration drift and the start of that drilling, and that will drill from the same 792 all the way to 875. This will constitute roughly for all of 2026, 2027 and into 2028, and we will have secured that. Mind you, that area there on the east or close to the weather you see the number 792 to 825, this is where we have an average of 42 grams per ton. And then you see below the mineral resources shown, that's the Target Block. Over time we will start putting a friction drift underneath there and start drilling that. Now the 810 exploration drift, as you can see, it goes directly under the area we are mining at 800 level right now. The mountain goes all the way to 1,350 and this outcrop we've been sampling this year all the way to the top of the mountain. These are years' worth of production as well as you have 75 Mountain Block above the main vein there. So this exploration drift every 100 meters be able to drill. And so after we've done exploration drill for 100 meters, expecting to be done before end of the year, because I start drilling into the area in 2028, 2029 and 2030. Now, we have a new mine based on an old mine called Maarmorilik. Maarmorilik, or previously known as Black Angel, is something we've been evaluating now for this whole year. And we have hired WSP, which is a world-known engineering firm, to do an updated mineral resource estimate and preliminary economic assessment on the current resource and any potential future resource for the Maarmorilik area. On the geological side, we currently have already 4.4 million tons. Now, previous operators, they looked to develop a mine directly where the old Black Angel mine was, where you take up the high-grade pillars and you mine that for maybe two years. This would have been equivalent of maybe up to 1 million tons. However, there are 4.4 million tons. We have changed it around to focus on the whole Maarmorilik area. When the glacier has been retreating, there's a lot of resources coming to surface, and we already have known resources who are drilled in six different areas, and there are a lot more areas coming to surface. So the scale there is much, much, much larger. Now the idea here is that we will do a string of pearls, we will follow the tunnels we have and follow each of these resources to develop a mining activity on the 4.4 or up to 5 or even larger, and then grow the resources through in the redevelopment area of the mine. On the mining front, we are very much focused on the same mining rate that Boliden and [ PAK ] mined from the mine previously. So this was about 700,000 tons on an annual basis. We're doing all LIDAR scanning of the old previous mine work, King's Prevost tunnels, and we are working towards a new mineral resource estimate and PEA, economic assessment. On the processing plant, we're leveraging all the previously operated plant that was on site, which produced 60% flotation concentrate, 60% zinc, lead, silver, and obviously germanium and gallium. And we have previously had a metabolic test work and a lot of data on the ore, which is very clean and good ore. Effectively, this is also leveraging off what we've already done. On the permitting side, we'll follow the same permit process with Nalunaq. Same camp, same redevelopment of tunnels, same roads, same dry-stack tailings, everything the same, which is going to work really well for us. We are really hopeful and know that this will be a very good project. This is most likely a redevelopment time of three years, but obviously we will update the market on our update on MRE and PEA this year. And we feel that this will be a very, very accretive company. Here you can see on the Maarmorilik side, how it looked, Maarmorilik Camp, this is where the old processing plant, where the current camp is, where the harbor is, where all of the infrastructure already is. And what they did previously was to build a cable car from this area, 800 meters high up to that, what you see, pillar resources. We don't want to do that because we've never operated a cable car. So what we're going to do is that we're going to go back to our own strategy. We're going to redevelop the N2 tunnel, which is a nine-kilometer tunnel from the Maarmorilik camp to the N2 ore body. I was in this tunnel fairly recently. These tunnels are in good shape, so we'll redevelop them. We will then come to surface through a new portal and build a road for approximately five to seven kilometers, going first to the Ark Zone, which is an ore body of 500,000 tons, then to the Glacier Zone, which is 1.7 million tons, then we will go to the area where you see the new portal, and from there we will go to Deep Ice Zone where you already have seven meters over 40% in lead, silver, and the old Black Angel mining. So we'll turn this completely around, do something we feel very comfortable about doing, redeveloping tunnels, doing roads, and actually accessing all of the 4.4 million ton ore. What is important in each of these spots here, you are probably missing 10 other spots of outcrop, which has not been, and we are now doing sampling of all of these different areas that are outcropping. Each of these areas, the outcrop has only been drilled, maybe down to 100 meters. Nothing has been drilled that's right where the outcrop is then extending or at that. So this is again, another moment where we start with the resource and we grow the resource while the redevelopment area is to increase the economic value for the company. Really interesting and exciting project that we're taking on here. It's Nanoq. You can think of that as obviously our main focus there. If we go back a second, we drilled 4.5 kilometers last year, after drilling two holes the year before that. We got this unbelievable thickness of nine meters, very high grade on surface and only down to 70-meter depth. We are doing similar program this year to drill both infill and step-out drilling to hopefully declare our initial maiden mineral resource. Once that is in place, we then can assess how we could potentially mine this to begin with. The mining will be open pit, a small open pit on surface, most likely. We have to be guided by the drilling, as well as underground mining once we develop that. Now, what is important that we are already assessing how we put up a simple harbour and a road or a track towards the deposit. This is only 1.5 kilometers. What will that, that will give us is the opportunity to start shaping out what we call a bulk sample, where we don't have to process that on site, we can actually move that to Nalunaq. All ore is amenable to any kind of a processing plant. And we don't know that yet if the Nanoq ore will be amenable to the Nalunaq processing plant. So we are doing studies now on the outcrop on the ore in Nanoq to see if the ore can be used or processed in the Nalunaq plant. If it can't be, it would be a huge, huge impact for us because you can imagine we don't then have to build in the beginning a processing plant in Nanoq. We only have to set up a camp, road, and some mining equipment which we feel very comfortable doing. I just want to remind you it's about 70-80% of our cost in Nalunaq was to build that plant, and it's the biggest impact on a cost structure for a project like this. So with Nanoq, you can see how we can grow the knowledge of the region and the scale of the region by setting a road and harbour in place. It will eliminate the helicopter. It will allow us to have a camp that will extend the season, and we can potentially start generating cash for wellness assets. Here you can see the distances from Nanoq over to Nalunaq. What is important here is that in mining, there's nothing better than bringing material onto a sea. Trucking or handling of all trucking or trains and so on is something that is complex and expensive. Being able to bring this on sea and being so close to shore is very, very beneficial. Nanoq is certainly in a different location to Nalunaq in terms of weather, in terms of ice, and so on. But overall, and the same thing applies with Maarmorilik, but overall, Suliaq, our service company, which we mentioned earlier, will have the ability to give us access to any area that we want to operate in. Sorry, I want to hand over to Ellert here to run through the financials of the quarter. Do you want to do it?

Looking at the income statement, you can see the transformation in the business between years. Revenue reached $56.2 million in the first half, compared with just $3.4 million in the same period last year, reflecting the successful ramp-up of Nalunaq and sales of 8,610 ounces at an average realized gold price of $4,696 per ounce. Year-to-date, we generated $37.3 million in revenue from 5,640 ounces sold. G&A costs increased as expected as we continue to build the organization and progress the main market listing in Q2, which carries with it some one-off costs. While exploration spend increased as the 2026 field season commenced. And that revenue growth is now translating into profitability. The H1 gross profit was $34.9 million compared with a small gross loss in the prior year period, while operating profit increased to $15.1 million and net income reached $13.6 million, an improvement of almost $24 million compared to the previous year, compared to H1. Get the balance sheet up there, please. There we are. On the balance sheet, total assets increased from $354 million at year-end to $426 million at the end of June, which continues to be driven primarily by continued investment in Nalunaq, i.e., the processing plant, mine development, and infrastructure, as well as higher inventory levels. Inventory increased to $38.8 million, including $24.4 million of metals in inventory, reflecting higher production levels as operations continue to ramp up. The shift you see there from current assets to investment in the joint venture reflects the conversion of Amaroq's receivable from Gardaq into equity in Gardaq in accordance with the existing management agreement, which has since been renewed. On the liability side, the increase in loan balances reflects the expanded revolving credit facility completed in Q2 with Landsbankinn and Gunvor. And we've now drawn down on $57 million of the $70 million. The increase in current liabilities primarily reflects deferred revenue relating to a shipment in progress at period end, for which partial payment had already been received and which was subsequently delivered and sold in full in July. And even after the investment program we've been conducting over the last 18 months, we've continued to retain a strong equity ratio, which stands at 69%, which gives us substantial financial flexibility moving forward. And Gardaq's cash balance as of 30th of June was quite low, as you can see. That was recorded just prior to the recapitalization after quarter end and announced in July, which included an injection of approximately $6.5 million to fund the current field season. In the first half of 2026, operating activities generated $20.4 million of cash flow, compared to the first half of 2025 where operating activities consumed $13.4 million of cash. And that's a swing over $33 million and represents a significant milestone for us. The main operational cash flow adjustments related to the buildup of inventory has production increase offset by the deferred revenue. And even with that working capital investment, we continue to generate strong operating cash flow. In the first half of the year, we continued in investment mode with $44 million invested during the period, primarily in the ongoing construction and optimization of the Nalunaq processing plant, investment in mining equipment as we took over mining operations from our contractor the beginning of this year, the completion of the flotation circuit, which has been mentioned here before. Financing cash inflows of $30 million, perfect the expanded facility agreement. And as a result, from a liquidity perspective, we ended the period with $28.5 million of cash and access to a further $18.5 million of undrawn facilities. Together that represents approximately $47 million of available liquidity at quarter end, which provides a strong base to continue executing on operational and growth plans. And with that, I'll hand back over to Eldur.

Thank you, Ellert. Yes, and I think just to kind of give you a quick outlook of the next few years, I think as you can see, Nalunaq now is in that mode where we are delivering a lot more tonnage on a higher grade. And we continue the ramp-up effectively right now, because we're running on a 90% recovery already, which is really exciting for the company. And as you can see from how the financial changes in terms of liquidity and others, this is really exciting for the company and in plan where we are. For Maarmorilik, we have a new approach here on an old mine, which is using the strength of Amaroq how we want to approach things. And we look forward to update you on the progress of the mineral resource estimate and the preliminary economic assessment for that project. For Gardaq, we're drilling really high impact pool iron oxide copper gold because of the [ Minton ]. And then the rare earth pegmatites that we're drilling in Ilua have ultimately drilled, and we look forward to update the market on that. These are both assets which we are going for drilling and assessment of something that could potentially be very, very large. And that's what the purpose of Gardaq is for. In Suliaq, we did continue to develop our asset register in Suliaq. As Harald mentioned, we have mining equipment, various different sorts of equipment for the organization. And in end of June, we acquired one of few or the only icebreaker available to the North Atlantic effectively used to be owned by the Danish Navy. And we are very pleased because we've been looking at acquisition for the past, I want to say eight years, and this will seriously strengthen our capability in operating in various different regions in Greenland. On Nanoq, the research drilling is underway with the focus on maintenance resource, as well as setting up the company for a bulk sample, which will then hopefully become available for the Nalunaq plant, subject to the results from the SGS mass sample study. So there's a lot coming into the market in the next few months. We'll continue updating on production. We are on guidance. And I'm really pleased to be in a position where we are delivering quarter by quarter. Thanks, Ellert. Thanks very much.

Busy time. So we'll just take some questions from the line here. We've got a few questions and I'll just run through them as they come. Can you provide some additional detail about your exploration plans that Nanoq can explain the potential value of this asset? I think you've just been through the plans for it, but can you elaborate a little bit on the potential value of it for us?

Yes, okay, so I mean, this is us. We are obviously guided by the process we have to take in terms of mineral resources and then we have to undergo through our [ EU compliant ] code of preliminary economic assessment and BFS and so on. But with that in mind, I'm going to try to paint the picture how easy things. What we do know is that the central zone, so in total, sorry let me start again, in total we have outcropping vein or structures on surface more than 6 kilometers. We have actively drilled 600 of those 6 kilometers. Of that 600 meters, we only drilled down to 70 meters, 80 to 120-meter spacing. So this year we're drilling in between that to understand the geometry of the ore body. Once you understand the geometry of the ore body, the grades and these things, you can then, are then in a position to declare resources. What is important to us is that when we're doing this drilling, this drilling is fairly expensive for us because we have to use camp and helicopter, and we're doing it in a short period of time. A helicopter is maybe a third of the total cost, and it also has an impact on how long you can operate. So for us to be able to build a road towards that deposit, it serves two purposes. It allows us to drill this deeper, further, and on a lower cost over a longer period every year. That gives you the answer to grow the resources quite substantially quicker, which will have an impact on how the market will value this in terms of resources. The market will value these ounces higher, we expect, once we can produce revenue from these resources. And so when you have an outcrop of more than 1.5 meters on surface for 600 meters, we can literally scrape that resource up from surface, put it into small containers, 20-foot containers, put it on our [ silver optical ] ship and ship it over to Nalunaq and bring it over. We're doing the same thing with the concentrate by the way in Nalunaq. So we're used to these operational capabilities in Greenland. By doing that then the discount on that NPV of that [ Henshaw ] resource will be lower and it will do two things. It will allow us to really quickly get it good and it will also start generating additional ores towards Nalunaq while we're growing this opportunity.

Thanks a lot. Next question is regards to the main market listing and share price reaction since. I'll take that, yes, sorry. 1st of July confirmed the uplisting, obviously an interesting time to do it in the middle of most people's summer holidays, but very, very pleased to have got it done at that time. It was a view that we've got from shareholders and potential future shareholders has been very positive. Share price reaction since then, we can't really comment on market reaction to that, but we clearly see it as a big potential value up this course and access to a much more liquid market and international investors. So very pleased to have got that done. Another question here is on grade. The grade seems exceptionally high. How confident are you that this grade is sustainable for future production at Nalunaq?

We have always been confident in the grade in Nalunaq. Now, when we built this mine, we did not build this on the basis of having a full PFS called a preliminary feasibility study. A main reason for that is that to be able to drill it and define this ore body, you need to do underground drilling and you need to do drifting, which is a high upfront cost. So we took the focus of developing this mine on the back of a preliminary economic assessment. Sorry, this means that you can only use it for resources. So we studied previously how much a drilling grade became when it became a developing grade and how much that developing grade became. And we saw a call for in the previously operated mine. But wherever you were drilling, the grade usually was 60% higher. We're not saying that will be the case going forward, but we estimated that would have a potential to be continuously in Nalunaq. What we are learning more now is about the whole structure, the definition of things. So we very much are confident in the grade in the short term for one and a half, two years ahead of us, and with the exploration drift we're putting in, we will see more and more drilling, which will deliver the same confidence, hopefully to you in the market. We are also sampling that outcrop of main vein from 800 level all the way to 1350 level. So that is basically like a drill hole. We sampled the whole outcrop there on a meter-by-meter basis all the way to the top and we got some brave Australian army to do that for us this year. To very peaceable.

Thanks, Eldur. There's a couple of questions on AISC, but all-in sustaining costs, and I think we'll punch them into one, Ellert, which is, how you maintain or lower the AISC and what is the current AISC that we're running at?

Yes, on AISC, it's a few factors as we mature into steady-state operation. One of the biggest opportunities for us is to continue to reduce our reliance on contracted services. During the ramp-up phase, we've utilized contractors across areas such as drilling, construction, and also certain operational activities. And over time, we expect to bring more of those in-house, and that should improve cost and control over operations. We also see benefits from greater purchasing power across the group, particularly through Suliaq, our services venture, and that would allow us to consolidate procurement and achieve better pricing on key consumables and services. And yes, that is mostly it. Basically we continue to focus on owning and controlling or at least controlling critical equipment and logistics where it makes economic sense. The more control we have, the better positioned we are to control the cost. And for the first half of the year, going by the numbers, AISC per ounce is in and around $4,000, but in Q2, it was down to $3,300, and we should see it on kind of a full year basis that continues to go down as the denominator increases on a fixed cost base, but for the year as a whole, using the mid-range of guidance, we should be after around $1,400 for us.

Thanks, Ellert. Next again, a bunch of couple of questions together. I've been asked this a couple of times. The U.S. continues to make noises about Greenland, and have we had any interest from U.S. investors or U.S. government investors, more specifically in Amaroq?

Yes, so I think I would expect all serious mining companies in Greenland would have had dialogue or discussion with one or multiple U.S. agencies. Any discussion about potential investment is confidential.

Thanks very much. On that, when do we expect a maiden mineral resource?

So what we're hoping is that we will have a maiden mineral resource on the back of this year's drilling. And back of this year's drilling is based on, you know, we started drilling fairly recently as we mentioned. So once we have all the core, we need to ship the core out of Nalunaq. We then need to ship that core over to Ireland for independent assay results. And so the reason why I can't answer you if this is going to be October, or this is going to be January, has a lot to do with logistics. And what we are trying to tell the market here, and this goes back into Suliaq, why Suliaq is so important and will be mentioned. Have full control of costs and the execution in Greenland, we need to control the logistics and the logistics is very much dependent on equipment, and we enable sure that your supply line delivers that. We are getting better and better at it, and we are getting more and more control around Suliaq, and we are obviously pursuing that financing around Suliaq to have that in place. As for the mineral resources, I am very confident there will be a mineral resource on Nanoq. It is all determined on how much drilling you need to do. And we have to remember the geometry of the ore body is into the ground and is in the 3D nature. So it can take time to get there, but we are very hopeful with this infill drilling, you know, we will have our initial maiden resource this year.

Super. Thanks, Eldur. Again, there's a couple of similar questions here, which I'll pull together on costs and variability of costs. Previously, we said that we had diesel up to the midsummer. What are we seeing as the most sort of variable in our cost base at the moment and has it been impacted by any of the geopolitics or inflationary pressures we've seen?

No, diesel prices have been marginally higher than we budgeted for the year. Whereas usage has been lower, so we're actually trending according to the plan on diesel costs. So, as of yet, that's not a factor that's...