Orezone Gold Corporation (ORE) Earnings Call Transcript

Thank you for standing by. My name is Pril, 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.

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 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 Bombore, we produced just over 38,000 ounces of gold during the quarter. And as previously discussed, we expect a very strong second half at Bombore 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 20,000 -- sorry, 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 Bombore and Casa Berardi, highlighting the potential to continue growing the resource at both operations. Stage 2A at Bombore remains on schedule for the commission 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.

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 [indiscernible] 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.

Thanks very much, Peter. I'll go right into Bambore operations. So Bambore produced, as we stated, 38,063 ounces during the quarter, which was as we expected. Mining performance remained strong with approximately 8.3 million tons 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 [indiscernible] 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 gain 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 projects, 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, on budget again. And this is the large tailings. 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've remained 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 AF160-pit. Underground ore mine totaled approximately 82,000 tonnes and we had 406 meters of lateral development completed during the quarter. Since the acquisition, the key focus we've 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%. And Mill throughput also performed ahead of plan at approximately 4,000 tonnes per day compared with the planned rate of approximately 3,900. Just after Q2, we actually had 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 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 AF160 pit is expected to be complete in Q3, position 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 through 2026 to 2027. At Bombore, as I stated, we expect production to strengthen through the second half as access to the higher grade hard rock improved, which should also have a positive impact on cost. 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 plan for the operation. And 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 of both assets with active programs underway at Casa and Bombore. We did release exploration results from Bombore 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'd hand it back to the operator to -- and we'll be happy to take your questions.

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

Good to see the cost improvement in the quarter. Good cost performance at both Bombora 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 Bombora and Casa Berardi to just better understand how you get to your guidance there.

Okay. Well, I'll let Peter answer that he's got the data out of his hand.

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 Bombore 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 wrap as well as the Stage 2a, which will be commissioned or plan 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 lifts. So hopefully, that's the color. If you feel that more color is needed, certainly, you can reach out to Patrick afterwards.

So maybe I'll reach out specifics at both assets. And maybe, Patty, on Casa Berardi and good to see the good 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?

Yes. We just made some changes around the gravity circuit, added an additional Nelson concentrator. We may change some of the feed around the mills. And we've just placed some of the throughput in and around the CIO 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 guides little bit. We've made some tailings line improvements as well. We further expect that to see how that goes on a consistent basis as we test that as we test that the mill throughout.