Galiano Gold

This is an automatically generated transcript. Denver Gold Group cannot accept responsibility for mistakes, errors, omissions, or any action taken in reliance thereon. Use of this transcript is governed by Denver Gold Group’s Terms of Use.

OK, we're moving on to the, the last talk in this session, Galliano Gold, and I'd like to invite to the stage Matt Badyla, president and CEO. Now, now Matt has more than 20 years progressive experience in the mining sector all around the world, and, he was appointed to this position as CEO in, in 2021. Prior to that, he was the COO at Galliano, and, and, prior to, joining Galliano, he was the, GM at Quesada with El Dorado, as well as a number of other positions prior to that. It's a pleasure to have you with us. Thanks, Don, cheers, cheers. OK, I think you can all hear me quite well. Yes, OK, good. thank you, Don, for that introduction. and thank you all for your interest in in Galliano today. so for the presentation today, I'm gonna give you a quick summary of the company, but also I think most importantly, I'm gonna highlight three near-term catalysts that I think are gonna drive value for our shareholders in the short-term. So, quickly here, obviously forward-looking statements they're contained on our website, so I'll direct you to the website if you're that way inclined. So starting off with, with the company itself, Galliano Gold owns and operates the Sanco Gold Mine, which is located in Ghana, West Africa. We're a single asset producer, and we own that asset at a 90% basis, with the government of Ghana holding a 10% free carried interest. We are listed on the New York and Toronto Stock exchanges, and we've recently been included. In the, GDXJ index as well. with regards to our shareholders, we have a very strong institutional share ownership base. 71% of the stock is, is held in institutional hands, with only 29% in the retail, so there's an opportunity there for us, certainly. but going back to the institutional holders, we've listed the top 5 here on the left, on the right-hand side, I believe, yes, right-hand side. you know, you can see some of those names are obviously, you know, very well understood and, and, and strong names in, in the mining space as well. From a market cap perspective, we currently sit at $650 million and we have no debt, and a strong balance sheet with $108 million of cash. and we also have an undrawn $7575 million dollar revolving credit facility that, you know, provides us with enough capital to be able to optimize our operations and also grow the business. From a guidance perspective, from a, production guidance perspective, we are looking at 140 to 160,000 ounces produced, this year, and that is basically 25% increase from 2025 levels. And we have seven deposits that make up a total reserve base of 2 million ounces at a grade of 1.29 g per ton. Regarding investment rationale, I think this is quite important, a few key highlights here. You know, we are trading at a discount, to our PNA as most companies are, but what we've chosen to do here is to highlight our enterprise value, divided by our reserve ounce, compared to other companies that are currently operating and producing, In Africa, and you can see here from this chart that we are trailing the pack and so therefore, you know, if you were to purchase Galliano shares at this point in time, you'd be getting a reserve ounce for relatively cheap compared to our peers, and it's also important to highlight that in the context of the jurisdiction in which we operate in, you know, if all these other. Companies Obviously operating in Africa. Ghana is a premier jurisdiction within that continent. The largest gold producer on the continent and a strong, long history of, of large scale mining as well. So jurisdictionally, comparatively based, you know, you're you're getting a cheap ounce, in a, in a stable jurisdiction. With regards to size and scale, the asset is significantly sized, as I mentioned, 14,000 to 160,000 ounce production this year, but we also have an organic production growth profile that is, you know, very unique to us and in the region. we are ramping up to to produce on average life of mine 200,000 ounces per year, and that profile in itself, results in the Sanco gold mine being one of the largest gold producers in, West Africa that is currently not owned in a mid-tier or a senior gold producer's portfolio. So it provides a very good platform for us to be able to grow the business and expand into, into jurisdictions that we're we're comfortable in. With regards to near-term cash flow, there is an inflection point that we see in early 2027. and the reason behind that is we've currently got 60,000 ounces hedged at $3000 per ounce, and we also have a $30 million payment, to Goldfields, who are our, ex-joint venture partner. That is, due in December this year. And once those hedges expire and we make that final payment, we're exposed to gold prices, the current gold prices, and we see significant cash flow being generated in January next year, so it's not too far away. With regards to expansion of the reserves and resources, we're very, very clear in terms of where that reserve growth will come from, both from an open pit perspective and also recently we've, declared a maiden underground resource that I'll speak a bit, a bit about later on in the presentation, and we're looking to aggressively spend our cash to grow our reserves, and extend our, our mine life. The last point on this slide is, you know, building momentum throughout 2025. I'll show you this on the next slide. It is really important to point this out. here we've chosen three, metrics that we want to highlight, gold production, cash flows from operations, as well as all in sustaining cash costs. And you can see here that quarter on quarter over the last 12 months, the asset has performed very well. from a gold production perspective, we've seen 80% growth, quarter on quarter, over the last 12 months. 115% growth in, cash flow from operations, and a reduction of 19% in our all in sustaining cash costs. So I'm showing this slide in order to give you some comfort that the organic production growth that we are expecting is achievable, and it's proven by a track record here over the last 12 months. I spoke earlier a little bit about our cash flow inflection point, and again it's driven by those two reasons, the the hedges coming off and the final payment for gold fields. We are expecting in 2027 to generate between $200 and $250 million of free cash flow, and as you can see from this chart, That cash flow profile will continue to increase over the next 5-year period. This is not the full life of mine, ah, it is the 1st 5 years, or the next 5 years of operations, ah, and you can see that production also in the yellow increases year on year over the next 5 year period as well. With regards to reserve growth, again I said we were very, very clear in terms of where that reserve growth will come from, and this is an example of this. Ah, this deposit here is called a sasi. It is one of the seven that make up our total reserve of 2 million ounces. and at the moment it hosts about 550,000 ounces. and that 550,000 ounces is contained in that green, pitch shell that you can see there, And what we've done recently is we've rerun that pit shell and optimization at 2500 gold. Right, so 2500 gold is still $2000 below the current spot price of gold, and what we can see is that $2500 gold, that pit expands to that red pit shell there, so it's significantly larger. You can see that we've highlighted both the inferred and the indicated ounces within that volume. The indicated are shown in green, and the inferred are shown in red, and you can see number one that there's a lot of indicated within that pit shell as well, so we understand the geology quite well because there has been a long, a, a large amount of drilling that has taken place here previously. The red traces here are our 2026 exploration program. And we're expecting to complete that prior to the end of the year, such that we can declare an updated mineral reserve here at Asasi by Q1 next year. And currently, we, we can tell, and we know that there's about a million ounces, additional million ounces of potential reserves within, within that volume there. So that's what we're targeting in terms of expansion of reserves in the next, you know, 12 month period or even less than that. Again, I also spoke a little bit about underground, underground potential provides a new path for resource growth, within our, tenements. This is one deposit deposit called Eran, it's currently being stripped and we're investing heavily in the stripping of this pro of this of this deposit, I should say. it is our highest grade deposit, averaging about 1.67 g per ton, and where we have, Areas of high drill density, which is generally just below our currently $1700 reserve shell, we see that, those areas of high density are able to generate economic underground minable stokes, which we're showing here in these, in these blocks. We also know that, you know, some years ago, we drilled 8 holes well below this, this zone. And all 8 of those holes, intercepted grades, or intercepted mineralization at grades and widths that would also support underground mining as is shown here. So what's what's needed here is additional drilling. the mineralized envelope is significantly larger than what we're showing here, ah, and we will be looking to expand our drilling program at Ecra in the coming years as well. The other underground target here that we're looking at is a bore, and again this is slightly different to NCR in the fact that it's larger in terms of strike length. There's a 1.8 kilometer strike length at a bore. And the mineralization currently is relatively shallow, it's only about, you know, 200 m below surface. Throughout the course of 2025, ah, we drilled just below that 19 actually that's a $1700 reserve shell, and those pink magenta kind of dots there highlight the grades that we're seeing just below the open pit reserves. Right, significantly higher than the average grade of the current reserve at at a bore. What we'll be doing here at Arbore is we've already commenced permitting an underground adit that would allow us access to drill platforms, closer to to the areas of interest here and allow that drilling to occur at a cheaper, meter rate than what we're we're seeing from surface. we expect that we'll be able to break ground on that underground exploration at it by the end of this year, and again, expand the, the drilling, the, the resource on the back of that drilling. So just a comment on the greenfields exploration potential here. We own about 470 square kilometers of land, and we know that the mineralization that we currently have identified exists on 4 shear zones, right? And so, you know, we'll continue to explore heavily and invest heavily on discovery, Greenfield discovery on our tenants. this year we've, we've, allocated $17 million of drilling, budget for that purpose, and we do feel that, you know, not only is there brownfields expansion potential on, on our tenements here, but also greenfields potential as well. Now this brings me to my last slide. So just in terms of summary, I mentioned I'd highlight three things that we feel are near-term value drivers for for our shareholders, and just in terms of summary for that, number one is our organic growth profile that we're looking to execute on. you know, very unique in the space at the moment to be able to do that through grade alone. Without a significant amount of capital being required to, to realize those answers, so that's number 1. number 2 is obviously our, cash flow in inflection point that comes only, you know, 7 months from now, January next, next year. so that's important to note. And lastly, exploration upside and potential that we're already trying to hide. here and looking to convert, you know, upwards of a million ounces into reserve within less than 12 months, you know, and then you have the underground, you know, expansion potential that also exists, that's going to take a little bit longer, but we're actively moving forward with that, and there's always the the greenfields potential also that we're looking to, to execute on. So I think I've given you about 6 minutes here, so I don't know if that's a good thing or a bad thing for me, but over to you then, done. OK, well we do have some time, so just pull the audience. OK, we have a question right here, go ahead. Tanya, go ahead. A loud enough voice, but here we go. So Matt, thank you. just I have two questions for you. The first one is just on your, your expansion of your production. I saw that it's grade. Is it just grade or do you have to do anything to the processing facility? No, the processing facility stays as it is. It's currently, like the nameplate is about 5.8 million tons per annum. So it's largely driven from grade, and as I mentioned before, we've got like. 7 deposits that make up that, you know, 2 million ounces. So depending on schedule and where higher grade comes in, you're gonna see, you know, you know, those grades increase. And the good thing about this right now is that we're in a low point of grade. So once we get to that 200,000 ounce, you know, production rate, all the other deposits produce at a grade that will be able to sustain that 200,000 ounce. Per annum run rate as well, so at the moment we're at the dip, we're at the low point. And, and are those deposits like close enough to the processing facilities that you offset the costs of transport? Yeah, sure, I mean obviously they're spread across, I mean the, the furthest away from the processing facility is a deposit, the Sai deposit that I've mentioned, the growth story. and that's about 28 kilometers away from the processing facility. We are actually mining there currently, and there's infrastructure available to be able to transport that. Like there's a haul road already that we're hauling across to, deliver that ore to the mill. So that's all in place. There's no additional capital required to, to realize those ounces. So that additional volume should give you better costs. Absolutely, yeah, that's right. And then just my second question was when I was looking at your, you know, underground. Potential and also you mentioned you were looking at maybe adding another asset. So how are you going to balance that internal growth versus external opportunities? Yeah, I, I mean we're very, very clear on that, that we don't believe that we're seeing full value or appropriate value for our current asset, and there's work to be done in order to realize that value. The good thing is that we're well funded and we have $108 million of cash to be able to invest in that process and that path. but certainly at a point in time where we feel we have reached an appropriate valuation, growth will be, you know, looked at more seriously. And you know, obviously the cash that we have and expect to generate in 2027 will allow for discussions between us and the board about share buybacks, etc. that may, you know, help in that revaluate revaluation that we're we're expecting to see as well. and in terms of growth, I mean, where we're comfortable to grow, like we, we feel that the the the best growth path for us is to move either laterally or up in terms of jurisdiction. Right, so we are comfortable in certain regions in West Africa. but as you know, Tanya, like my background is, is Eldorado, and the team that we've built also has an Eldorado background and an Eldorado lens to, to growth, and so we don't view ourselves as currently as being a only, in terms of a growth story, only an African centric, you know, company, you know, we're open to growth in other jurisdictions as well, you know, and, and we'll be exploring that if the right opportunity came, came across. OK, so obviously, you know, South America, certain areas in South America we're comfortable in, particularly Brazil, you know, we actually, you know, to be honest, we have, we have a team on the ground in Brazil at the moment looking at opportunities that aren't that obvious. you know, and, and so we've got a very good strong connection there, and we have an ability to build a team in Brazil because of the Eldorado connection quite, quite quickly. so that's one jurisdiction that we're comfortable in, obviously North America, you know, that's also areas that we'll be looking at, once we get our valuation to a point where we can actually move, yep. No, OK. maybe time for one more question. so Matt, you're approaching, as you mentioned, there's an imminent free cash flow inflection. Can you tell us about how that might change your capital allocation, decisions? you know, will you deploy that free cash flow toward delevering or dividends, share buybacks potentially? And if so, how would you kind of weight each of those? Yeah, so the first thing is, is we are expecting growth at the asset, in terms of resource growth and reserve growth, and so there's gonna be a small portion of that that's gonna need to be reallocated into things like TSF expansions, tailing stem expansions, things like that, but that's not a huge amount. from a capital allocation, externally looking, as I mentioned, share buybacks are something that, you know, we're very actively discussing with our board, and that's something that we'll probably consider. Into next year with regards to dividends, you know, we're we're still a relatively small company and you know, I think I'll prioritize at this point growth through M&A ahead of dividends at this stage of our development. But certainly buybacks are gonna help in us positioning ourselves from a valuation perspective to be more aggressive in, in, in, in growth and using our paper for growth, so that's certainly on the table. OK, yeah. Thank you, thank you, Matt. Thanks again for joining us. That's Matt Battalla at Galliano Gold. Thank you. Cheers. Thank you.