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01/10 16:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals significant issues impacting the company's operations and financials, such as the uncontrolled material movement at Camino Rojo, resulting in reduced production guidance and increased costs. Additionally, permitting challenges and regional security risks pose further uncertainties. Although there are positive aspects like strong production at Musselwhite and debt reduction, the overall sentiment is negative due to the operational disruptions and lack of clear guidance on permitting issues. The company's small market cap suggests a potentially stronger reaction, supporting a negative stock price movement prediction.
Gold production at Camino Rojo 25,145 ounces of gold produced in Q2 2025. This was impacted by the resequencing of the mine due to the material movement event on July 23, which required adjustments to maintain the yearly plan.
Gold production at Musselwhite 53,000 ounces of gold produced in Q2 2025. This was the first full quarter of production following the acquisition, contributing to a record production period for the company.
Revenue $264 million in Q2 2025, driven by the sale of 79,000 ounces of gold at a realized price of $3,251 per ounce.
Net income $48 million or $0.15 per share in Q2 2025. Adjusted net earnings were $64 million or $0.20 per share.
Cash flow from operating activities $103 million or $0.32 per share in Q2 2025, before changes in non-cash working capital.
Capital expenditure $25.5 million in Q2 2025, including $6.4 million for non-sustaining capital related to exploration and engineering, and $19.1 million for sustaining capital, primarily for mine development and equipment purchases.
Debt repayment $30 million repaid towards the revolving credit facility in Q2 2025, reducing net debt to approximately $205 million.
Cash balance $215 million as of June 30, 2025.
Musselwhite production: First full quarter of production from Musselwhite following acquisition, contributing to strong earnings and cash flow.
Camino Rojo underground resource: Initial underground resource update released for Camino Rojo, including Zone 22 discovery, aiming to expand resource and extend mine life.
South Railroad project permitting: Engagement with stakeholders and regulators in the U.S. for South Railroad project permitting, with construction expected to start in 2026 and production in 2028.
Camino Rojo pit wall event: Uncontrolled material movement event led to temporary pause in mining; action plan implemented to ensure safety and resume operations.
Revised production guidance: Camino Rojo's gold production guidance revised to 95,000-105,000 ounces for 2025 due to pit resequencing.
Exploration programs: Active exploration in Canada, U.S., and Mexico, including Zone 22 drilling and South Railroad project engineering.
Sustainability initiatives: Published 2024 sustainability report, advanced environmental standards, and community engagement projects.
Uncontrolled Material Movement at Camino Rojo: An uncontrolled material movement event occurred at Camino Rojo on July 23, involving 390,000 tonnes of material. This led to a temporary pause in mining operations, requiring a geotechnical assessment and a revised action plan to ensure safety. The incident resulted in deferred production and increased costs, impacting the company's gold production guidance and financial metrics for 2025.
Revised Production and Cost Guidance: Due to the material movement event, gold production guidance for Camino Rojo was reduced from 110,000-120,000 ounces to 95,000-105,000 ounces. Cash costs and all-in sustaining costs also increased, affecting overall financial performance and profitability.
Labor Practices and Regional Security Risks: The company is reviewing labor practices and potential criminal activity at the Camino Rojo mine in Mexico. Regional security risks affecting the mine and neighboring communities are also under review, posing potential operational and reputational challenges.
Permitting Challenges: The company is engaged in ongoing permitting processes in Mexico and Nevada, facing additional questions from regulators. Delays or unfavorable outcomes could impact project timelines and future operations.
Economic and Financial Risks: Increased cash costs and all-in sustaining costs for 2025, combined with deferred production, could strain financial performance. The company also faces the challenge of financing the South Railroad project while managing existing debt.
Revised 2025 Consolidated Guidance: Gold production is now expected to be in the range of 265,000 to 285,000 ounces at cash costs of $900 to $1,100 per ounce sold and all-in sustaining costs of $1,350 to $1,550 per ounce sold. This is a revision from the previous guidance of 280,000 to 300,000 ounces of gold at cash costs of $850 to $1,050 per ounce sold and all-in sustaining costs of $1,300 to $1,500 per ounce sold.
Camino Rojo Guidance Adjustment: Gold production guidance for Camino Rojo has been revised to 95,000 to 105,000 ounces at cash costs of $800 to $900 per ounce sold and all-in sustaining costs of $850 to $950 per ounce sold. This is a reduction from the initial guidance of 110,000 to 120,000 ounces of gold at cash costs of $625 to $725 per ounce sold and all-in sustaining costs of $700 to $800 per ounce sold.
South Railroad Project Timeline: The company expects the publishing of the notice of intent for the South Railroad project in the coming weeks. Following this, the record of decision is anticipated in Q3 2026, allowing construction to start with commissioning in Q4 2027 and gold production in early 2028.
Exploration and Resource Updates: An updated underground resource estimate for the Camino Rojo deposit is expected in 2026, supported by ongoing infill drilling programs. The company plans to expand the drilling program by an additional 5,000 meters in 2025.
Permitting Milestones: Positive resolution for the permitting process in Mexico is expected late in 2025. In Nevada, the company is preparing for a public scoping period and anticipates further permitting progress for the South Railroad project.
The selected topic was not discussed during the call.
The earnings call presents mixed signals. Financial performance shows strong gold production and revenue, but high costs and regulatory uncertainties in Mexico pose risks. The Q&A reveals positive developments like FAST-41 status for South Railroad, but management's vague responses on key issues like Camino Rojo permits and dividends create uncertainty. Revised guidance with lower production and higher costs further tempers optimism. Given the company's small market cap, the stock price is likely to remain stable, resulting in a neutral prediction.
The earnings call reveals significant issues impacting the company's operations and financials, such as the uncontrolled material movement at Camino Rojo, resulting in reduced production guidance and increased costs. Additionally, permitting challenges and regional security risks pose further uncertainties. Although there are positive aspects like strong production at Musselwhite and debt reduction, the overall sentiment is negative due to the operational disruptions and lack of clear guidance on permitting issues. The company's small market cap suggests a potentially stronger reaction, supporting a negative stock price movement prediction.
The earnings call presents a mixed picture. The acquisition of Musselwhite Mine and strong cash flow are positive, but the lack of a shareholder return plan and a net loss due to financial instruments are concerning. The Q&A section reveals uncertainties around CapEx and exploration plans, which may dampen investor confidence. The company's small market cap suggests potential volatility, but the absence of strong catalysts or deterrents keeps the sentiment neutral, likely resulting in a stock price movement between -2% to 2%.
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