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01/09 21:20
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong production growth, improved mining rates, and cash flow, alongside strategic focus on deleveraging and portfolio rationalization. Positive developments at Greenstone and Valentine mines, and the Phase II expansion plan, suggest optimistic future prospects. Despite management's reluctance to provide specific cash flow details, analysts' sentiment remains positive, indicating confidence in the company's performance. The market cap suggests a moderate reaction, likely in the positive range (2% to 8%).
Gold Production Over 236,000 ounces during the first full quarter, including Calibre assets. This marks an increase due to the expanded Americas-focused gold portfolio and the addition of two new cornerstone gold mines, Greenstone and Valentine.
Gold Sales 239,000 ounces sold at an average cost of $1,434 per ounce and an all-in sustaining cost of just over $1,800 per ounce. This reflects the enhanced scale and earnings power of the new company.
Adjusted Net Income $147 million or $0.19 per share. This is attributed to improved operational performance and cost management.
Adjusted EBITDA $420 million. This reflects the enhanced earnings power of the company post-expansion.
Cash Balance $348 million at the end of the quarter, not including $88 million from the sale of Nevada assets. This increase is due to asset sales and operational cash flow.
Year-to-Date Gold Production 634,000 ounces, positioning the company to deliver the midpoint of its 2025 production guidance of 785,000 to 915,000 ounces. This is supported by divesting Nevada assets and production from Valentine.
Greenstone Mining Rates Exceeded 185,000 tonnes per day in Q3, a 10% increase over Q2 and a 21% increase over Q1. This improvement is due to better equipment maintenance, efficient shift changes, and enhanced grade control protocols.
Greenstone Mill Grades Improved 13% in Q3 to 1.05 grams per tonne. This is attributed to additional dilution management measures and improved tracking systems.
Valentine Plant Throughput Averaged nearly 5,000 tonnes per day or 73% of nameplate for the first 66 days of operation. October performance improved to over 6,200 tonnes per day or 91% of nameplate. This improvement is due to robust design and disciplined execution by the teams.
Greenstone Mine: Performance improved significantly in Q3 with mining rates exceeding 185,000 tonnes per day, a 10% increase over Q2 and 21% over Q1. Process grades improved by 13% to 1.05 grams per tonne. October mining rates exceeded 205,000 tonnes per day, a 10% increase over Q3. Mill grades improved to 1.34 grams per tonne, a 27% increase over Q3.
Valentine Mine: Commissioning ahead of expectations with first gold poured on September 14. October throughput averaged over 6,200 tonnes per day, 91% of nameplate capacity. Recoveries exceeded 93%. Expected to reach nameplate capacity by Q2 2026 with 2026 production anticipated between 150,000 to 200,000 ounces. Phase II expansion studies underway to increase throughput to 4.5-5 million tonnes per year.
Nevada Asset Sale: Sold for $115 million, including $88 million in cash, post quarter end.
Production and Costs: Sold 239,000 ounces in Q3 at an average cost of $1,434 per ounce and an all-in sustaining cost of just over $1,800 per ounce. Year-to-date production of 634,000 ounces positions the company to meet 2025 guidance of 785,000 to 915,000 ounces.
Debt Reduction: Retired $139 million of debt during Q3 and an additional $25 million in October.
Castle Mountain Permitting: Accepted into the U.S. Federal Permitting Improvement Steering Council's FAST-41 program, with an anticipated record of decision in December 2026.
Market Conditions: The company acknowledges a disconnect between its intrinsic value and current trading price, indicating potential challenges in market perception and valuation.
Operational Risks: Greenstone mine faced operational challenges, including downtime due to planned maintenance events and the need for additional process improvements to ensure consistent material delivery to the grinding circuit.
Ramp-up Challenges: Valentine mine is still in the ramp-up phase, with full nameplate capacity expected by Q2 2026, posing risks to achieving production targets in the interim.
Regulatory and Permitting Risks: Castle Mountain's permitting process under the FAST-41 program anticipates a record of decision by December 2026, which could delay project timelines if not achieved as planned.
Economic Uncertainties: The company’s financial performance is sensitive to gold price fluctuations, which could impact cash flow and earnings.
Strategic Execution Risks: The company is undergoing significant operational and strategic transitions, including asset optimization and portfolio rationalization, which carry execution risks.
Production Guidance: The company is well positioned to deliver the midpoint of its 2025 production guidance of 785,000 to 915,000 ounces after divesting Nevada and prior to considering any production from Valentine.
Greenstone Mine Performance: Greenstone's performance improved significantly in Q3, with mining rates exceeding 185,000 tonnes per day, a 10% increase over Q2. October mining rates exceeded 205,000 tonnes per day, a 10% increase over Q3. Mill grades improved to 1.34 grams per tonne, a 27% increase over Q3. Greenstone is expected to deliver a strong Q4 and continue momentum into 2026.
Valentine Mine Ramp-Up: Valentine commissioning is ahead of expectations, with first gold poured on September 14. The plant averaged 6,200 tonnes per day in October, or 91% of nameplate capacity. Valentine is expected to reach nameplate capacity by Q2 2026, with 2026 production anticipated between 150,000 to 200,000 ounces. Phase II expansion studies are underway, targeting throughput of 4.5 to 5 million tonnes per year, with full funds approval expected in early Q2 2026.
Exploration Potential at Valentine: Exploration drilling has accelerated with four drills in operation. Several new discoveries, including the Frank Zone, are being followed up. Assays are pending for significant intercepts, which could meaningfully add to the resource base in the coming years.
2026 Outlook: Continued improvement in production and cash flow is expected in 2026, supported by increasing contributions from Greenstone and Valentine mines.
The selected topic was not discussed during the call.
The earnings call highlights strong production growth, improved mining rates, and cash flow, alongside strategic focus on deleveraging and portfolio rationalization. Positive developments at Greenstone and Valentine mines, and the Phase II expansion plan, suggest optimistic future prospects. Despite management's reluctance to provide specific cash flow details, analysts' sentiment remains positive, indicating confidence in the company's performance. The market cap suggests a moderate reaction, likely in the positive range (2% to 8%).
The earnings call summary and Q&A reveal strong financial performance, with increased production and operational improvements. While there are some uncertainties, such as ongoing discussions with communities and legal matters, the overall sentiment is positive due to the merger's potential, improved mining rates, and cost management. Additionally, the company's focus on debt reduction and potential share buybacks further supports a positive outlook. Given the market cap, a positive stock price movement of 2% to 8% is likely over the next two weeks.
The earnings call presents a mixed picture: record high gold production and planned debt reduction are positive, but ongoing issues at Los Filos, high costs, and a lack of immediate resolution for operational suspension are concerning. The Q&A reveals cautious optimism about Greenstone but highlights uncertainties. With a market cap of $2 billion, these factors suggest a neutral short-term stock price movement.
Despite increased revenue and EBITDA, the company faces significant risks: slow production ramp-up, increased costs, regulatory challenges, and community relations issues. The Q&A revealed concerns about cost trends, recovery rates, and unresolved community negotiations. The conversion of convertible notes dilutes shares, and while liquidity is improved, the overall sentiment is negative due to operational uncertainties and cost pressures. Given the mid-cap size, these factors likely lead to a stock price decline in the range of -2% to -8%.
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