Full Transcript: Galiano Gold Q1 2026 Earnings Call

On Thursday, Galiano Gold (AMEX:GAU) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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The full earnings call is available at https://www.gowebcasting.com/events/galiano-gold/2026/05/14/first-quarter-results-conference-call/play

Summary

Galiano Gold reported a solid first quarter with no lost time injuries, maintaining a strong safety record for over 12 months.

The Sanco Gold Mine marked its 10th year of operations, producing 34,500 ounces of gold in Q1 2026, aligning with full-year production guidance of 140,000 to 160,000 ounces.

The company extended its mining contract with Rabotec, enhancing local content compliance in Ghana, and ended the quarter with $115 million in cash, positioning well for future operations.

Exploration activities progressed, with significant steps towards expanding reserves at Asasi and underground resources at Abore, supported by an increased exploration budget from $17 million to $25 million.

Financial results were impacted by losses on hedges, but the company generated record revenues of $166 million, with an adjusted net income of $0.11 per share.

Future outlook remains positive with anticipated cash flow growth in 2027 as hedges roll off and production increases, leveraging high gold prices for shareholder value.

Full Transcript

OPERATOR

Hello and welcome to the Galiano Gold First Quarter Results Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press Star one again. I'll now turn the conference over to Matt Badlock, Galiano CEO. Please go ahead.

Matt Badlock (CEO)

Thank you operator and good morning everyone. We appreciate you taking time to join us on this call today to review Galiano Gold's first quarter 2026 results we released yesterday after market close. We will be making forward looking statements and referring to non IFRS measures during the call. Please refer to the cautionary notes and risk disclosures in our most recent MDA as well as this slide of the webcast presentation. Yesterday's Release Details Our First Quarter 2026 Financial and Operating results. They should be read in conjunction with our first quarter financial statements and MDA available on our website and filed on SEDAR+ and EDGAR. Also, please bear in mind that all dollar amounts mentioned in the conference call are in US Dollars unless otherwise noted. With me on the call today I have Michael Cardinals, our Chief Operating officer, Matt Freeman, our Chief Financial Officer and Chris Peppman, our Vice President, Exploration for this presentation I will initially provide a brief overview of the quarter. Michael will discuss operations, Matt will discuss financials, and then Chris will highlight the exciting growth potential at Asasi and our ongoing exploration success at Abore. I'll then provide some closing remarks and open the call for Q1 and A Turning to slide 5 here we can see the team delivered another solid operational quarter in line with our expectations for the period. Let me walk you through some of the key highlights. Safety continues to be our top priority and I am pleased to report that we recorded no lost time injuries in Q1, extending our LTI free period to more than 12 months. This milestone reflects the team's ongoing focus and commitment to maintaining a strong safety culture across the operation. Turning to production, the Sanco Gold mine reached an important milestone during the quarter, marking its 10th year of continuous operations. Over that period, the mine has produced more than 1.9 million ounces of gold, or just over 190,000 ounces per year on average. In Q1 we produced 34,500 ounces of gold, slightly above the midpoint of our first half forecast. Our full year production guidance remains unchanged at between 140,000 and 160,000 ounces during the quarter, we executed a four year extension to our mining contract, Ravitec, who have been actively mining at Asasi and at Abore since 2024. This strengthens an existing relationship with a highly qualified domestic service provider and highlights our commitment to local content requirements in Ghana. Our balance sheet remains strong and we ended the quarter with $115 million in cash. Despite increased stripping activities at Nkran and an impact of higher royalties, including the $75 million revolving credit facility added in Q4, total liquidity now stands at approximately $190 million. Positioning the company well moving forward. Exploration activities also progressed well during the quarter with the team advancing work streams focused on expanding mineral reserves at Asasi and growing underground mineral resources at Abore. With that, I'll now pass it over to Mick to discuss production in more detail.

Mick

Thank you Matt and good morning everyone. Starting with safety, our improvement from last quarter continued into 2026. We recorded no lost time injuries and no recordable injuries. And I'm pleased to report that at the end of March we reached 12 months lost time injury free. That milestone brought our lost time injury frequency rate down to zero and our total recordable injury frequency rate to 0.11 per million hours worked. Turning to mining, Tarsi ramped up production in Q1 as planned and together with Abore, we increased total tonnes mined by 9%. Mill feed in 2026 is planned from these two pits. Abore and Asasi and ortons mined increased 6% compared to the previous quarter. As the year progresses, strip ratios, especially at Abore, are forecast to decrease. That gives us access to more ore and allows us to preferentially feed higher grade material to the mill, supporting higher gold production in the second half of 2026 at Nkran cut 3 stripping continued volumes mined increased modestly by 8% in the quarter and we expect material movement to build through the year as additional equipment is mobilised to site. Now, if we move to the next slide, I'll walk you through our processing performance for the quarter. Overall, the year has started well. In Q1 we completed a substantial planned maintenance program including relines for both mills and replacement of the primary crusher pitman. As a result, tonnes treated were lower but as expected. Importantly, with the circuit optimisations we've implemented, throughput is now performing in line with expectations. Grades and recovery met plan or were better during the quarter. That translated into gold production of 34,747 ounces and sales of just over 34,000 ounces. We are well positioned to achieve the upper end of our previously communicated production range of 60 to 70,000 ounces for the first half of the year and we remain on track to meet our full year guidance. So, in summary, both mining and processing areas are performing as expected and we're tracking well against our 2026 guidance. I will now hand over to Matt Freeman to discuss the Q1 financial results.

Matt Freeman (Chief Financial Officer)

Thanks, Michael. Good morning everyone. As Michael outlined, we're pleased with the first quarter delivered in line with our plan. The continued strong gold price environment enabled us to generate record revenues of $166 million and cash flows from operations 47 million pounds. Our headline earnings numbers continue to be impacted by the losses on the hedges, but we now have only about 45,000 ounces left to settle. And as production ramps up, these ounces will present a lower percentage of production, allowing us to more fully participate in gold prices going forward. Adjusting for the unrealised losses on hedges to be settled in the future. We recognise adjusted net income of $0.11 per share. From a Treasury perspective, the balance sheet remains very healthy with approximately 115 million pounds in cash and the 75 million pounds credit facility remains undrawn. This slide 9 illustrates our operating costs remain consistent period on period and have generally been well controlled by the site. As Matt mentioned, we're pleased to sign the extension to our mining contract Ravitec in April which provides some cost certainty over the next four years. While we're being able to ensure strict compliance with local content requirements in country. We have seen some inflation in recent months following the situation in the Middle East, notably on diesel, but on the general assumption that this will be short term in nature. We're not expecting material impact from the overall cost structure of the mine in 2026. Thus far we've also not experienced any supply issues for consumables needed to operate in the mine. Capex remains focused on critical projects such as the tailings dam raise. We're also starting to invest in some of the village relocations that are required. So we expect growth capital to increase through the year in line with guidance. With respect to our AISC guidance, we are in line with where we expected to be. Back in February, we guided AISC for 2026 as being between 2000 and $2300 per ounce, but noted that should the Ghanaian government implement the new royalty regime, it could add an additional $375 to the cost structure. As I think everyone is aware, the new sliding scale royalty regime was enacted in March. Where we sit currently with prices, the royalty rate is 12%. We were pleased, however, that the government did provide a marginal offset by reducing the growth and sustainability levy from 3% to 1%. Now we have certainty over the legislation, we have clarified the expectations reiterating guidance to between $2,300 and $2,600 per ounce, fundamentally no change to what we previously outlined. The chart on slide 10 clearly demonstrates the increasing royalty burden we have seen over the past five quarters as a result of the significant increase in gold prices and then in Q1 26 where we started to recognise the impact of the new regime. But it also demonstrates that the unit costs we can control have been consistently maintained and very much levered to production such that as production improves over the next several quarters we expect this to reduce. We're pleased that our cash balance has grown to $115 million with AISC margin growing to $1,760 per ounce. As we look forward, the end of this year marks a real inflection point in cash generation. 2027 and beyond should see another ramp up in production and will be part of the current hedge program and therefore fully exposed to the price of gold. The company expects to generate significant cash flows for shareholders from this point going forward and with that I'll turn the call over to Chris to run through the excellent exploration results we saw in Q1.

Chris Peppman (Vice President, Exploration)

Thanks Matt. The year got off to a fast start for us in exploration. We started the 2026 Abore step out and infill drilling program in the first week of January in order to maintain resource expansion momentum on the back of a very successful 2025 campaign and the release of the maiden underground resource at the end of January. Drilling has progressed well with 11,570 of a planned 30,000 meters completed in the quarter, with another 3,000 meters completed in April as discussed in the company's press release issued earlier this week. Some of the headline results are shown here at the bottom of slide 12 and I'll discuss these further in a few minutes. The ESASI Resource Conversion Drilling Program was brought forward in the exploration schedule and was kicked off in the first week of February. This program is a critical pillar in the Galliano Organic Growth strategy. On the back of initial positive results from the first 2,500 meters drilled in Q1, we have significantly increased the program to its full scope and budget in order to aggressively grow the open pit reserve base ahead of the 2027 MRMR update. With the support of senior leadership and the Board of directors, the 2026 exploration budget has been increased from 17 million to 25 million. Asasi is the AGM's largest deposit with over 1.7 million ounces of inferred and indicated resource and a reserve of 532,000 ounces and through an aggressive campaign to maximize near term reserve growth will underpin Galliano's Strategic Organic Growth Plan for the agm. Because of the amount and density of historic drilling below the current reserve shell, ASASI is uniquely positioned to quickly leverage elevated gold prices and deliver significant near term value to the company. Multiple pit optimization studies have been completed using this data across a range of gold prices. These have demonstrated that the deposit is highly sensitive to higher gold prices and that the reserve can grow substantially while maintaining strip ratios in line with the current reserve pit as shown here in slide 13. A long section through ASASI shows the potential impact that successful conversion of inferred resources can have on the reserve shell at gold prices up to $3,000. The amount of historic drilling also means that we expect to see very high conversion rates from this program as a large portion of the inferred resource is spatially bound by indicated material. I'll show an example of this in a moment. As I mentioned on the last slide, drilling got underway at ASASI at the beginning of February with 2,500 meters of the first phase of the program completed in Q1. On the back of positive results from this initial drilling, the program has now been expanded to its full scope of 33,400 meters. Production has accelerated at site and we now have five drill rigs active at a SASE. On this slide 14, we're showing an example of a cross sectional view of a conversion drilling target zone in the central portion of ASASI main pit where inferred resources shown in red are spatially bound above and below by indicated resources shown in green. In areas such as this, we have high confidence in the model and our ability to convert a high percentage of these inferred ounces to indicated with a small amount of new drilling. This section also shows the impact converting these ounces can have in terms of the scope of potential pit expansions at higher gold prices. Increasing the open pit reserve at Assasi will not only provide near term value by unlocking quality ounces and tonnage that are currently undervalued, but is also a critical first pillar that will underpin Galliano's long term vision for a transformational life of mine plan that includes a future transition to underground mining. An expanded ASSASSI has the potential to be large enough to supply quality open pit tons to co feed with higher grade underground material from Abore and or Ncran well beyond the current life of mine. To that end, while we are growing the Asasi Open Pit Reserve, we are aggressively working to expand the underground resource at Abore, which I'll discuss in the next couple of slides. At Aborre we continue to be excited about the results we are seeing as we have now completed approximately half of the planned 30,000 meters of drilling for 2026. The maiden underground resource released by the company in Q1 provide the baseline from which we are now focused on growing the underground opportunity in Abore. Q1 drilling was focused on infilling areas adjacent to but outside the current mineral resource while also continuing to step out at depth to expand the known extent of the Abore mineralizing system. The image Here on slide 15 outlines the primary areas of drilling so far this year and and results to date are unlikely to drive resource growth. Current step out drilling has intersected mineralization up to 180 meters below the existing underground mineral resource, while infill drilling has significantly improved continuity across key mineralized zones that also sit outside the resource. Drilling below the main and south pit areas continues to confirm robust extensions of mineralization both down plunge and along strike of existing ore zones. A new high grade zone has been identified under the northern end of Abore main pit which is open a long strike and at depth representing a compelling new target area for follow drilling throughout 2026. A more detailed discussion of these results are available in the Company's press release issued on Monday of this week. Continued drilling success at Aborre provides increasing confidence in the ability of the underground resource to become a key pillar of an expanded life of mine. In conjunction with reserve growth at Asasi. In order to most efficiently delineate an eventual underground mineral reserve and test deeper targets, the Company is progressing the early stages of permitting an underground exploration at Abore. Permit applications have now been submitted to the relevant regulatory bodies in Ghana and dependent on both external and internal approvals. Our goal is to begin construction of the Portolan Drive in 2027 and with that I'll hand it back to Matt.

Matt Badlock (CEO)

Thanks Chris. In closing, I'd like to highlight the position of strength the company is operating from today and the deliberate steps we are taking in 2026 to drive additional shareholder value. Firstly, I'm pleased with another solid operational quarter and encouraged by the momentum we are building keeping us on track to meet our full year guidance. As production levels continue to improve, hedges roll off and the Deferred payment is settled in December. We expect a meaningful cash flow inflection beginning in January 2027. Secondly, as Chris outlined, the reserve expansion potential at Asasi is meaningful. The company has committed the required capital to execute the drilling program, positioning us to deliver a reserve Update in early 2027. We believe these results have the potential to extend mine life well beyond the current eight years. Lastly, drilling at Abore continues to return encouraging results and support resource growth. In parallel, we are advancing permitting efforts for an underground adder to test mineralisation continuity at depth, which represents additional upside. With these near term catalysts in mind, a brief comment on valuation. As shown in this image, when comparing our African peers on an enterprise value versus mineral reserve ounce basis, Galliano trades at a discount despite operating in one of Africa's premier mining jurisdictions. When we layer in the reserve growth potential discussed today, this valuation disconnect becomes even more compelling. Benefiting from being highly leveraged to gold price, a visible near term cash flow inflection point, and a clear line of sight to expanding mine life, Galliano is well positioned to deliver meaningful shareholder value in the near term. With that, I'll hand it back to the operator and open the call up for any questions. Thanks.

OPERATOR

Thank you. If you have a question, please press star one on your telephone keypad to join the queue. If you wish to remove yourself from the queue, simply press star one again. One moment please for your first question. Your first question comes from the line of Heiko Ilei of HC Rain White. Your line is open.