Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Galiano Gold Inc (GAU, Financial) reported zero lost time injuries and no total recordable injuries during the quarter, highlighting their strong safety record.
- The company increased its Abore reserve base by 45%, adding 151,000 ounces, which enhances future production potential.
- Galiano Gold Inc (GAU) maintains a strong liquidity position with zero debt and $123 million in cash, positioning them well for strategic growth.
- The company has strengthened its Board of Directors with two new additions, enhancing governance and strategic oversight.
- Galiano Gold Inc (GAU) reported a net income of $8.8 million and adjusted EBITDA of $17.6 million for the second quarter, indicating solid financial performance.
Negative Points
- Gold production was lower than expected due to wet ground conditions and slower mining rates, leading to a reduction in full-year guidance.
- All-in sustaining cash costs have been revised higher to between $1,975 and $2,075 per ounce due to lower production and increased stripping costs.
- The rainy season in Ghana impacted mining operations, causing delays and challenges in production ramp-up.
- The installation of CIL tanks was delayed due to a port incident, affecting operational timelines.
- The company anticipates higher strip ratios and deferred ore production due to a larger pit shell at Abore, impacting short-term production.
Q & A Highlights
Q: With a market cap of $330 million and $123 million in cash, at what point might Galiano Gold consider shareholder incentives like dividends or buybacks?
A: Matt Badylak, President and CEO, explained that the focus is on long-term value creation, which requires capital investment in projects like the Nkran pit. They are also considering M&A opportunities to enhance shareholder value. While buybacks are not off the table, the current priority is strategic investments.
Q: Payments for mining service contracts were higher year-over-year. What are the expectations for Q3, and how does the gold price affect contractor costs?
A: Matthew Freeman, CFO, stated that mining costs are fixed through contracts and are volume-driven. There is no gold price participation in the contractor's agreement, meaning any increase in gold price directly benefits Galiano Gold's bottom line.
Q: Can you comment on the Nkran mining contract and whether costs align with forecasts?
A: Matt Badylak confirmed that the tender process for the Nkran deposit is nearly complete, and costs are in line with expectations from the technical report, with no significant deviations.
Q: Are capitalized waste stripping costs at Abore included in sustaining CapEx?
A: Matthew Freeman clarified that all Abore stripping costs are included in sustaining capital, which is a major factor in the higher all-in sustaining costs.
Q: What changes have occurred with respect to hedges and executive compensation since taking full ownership of the project?
A: Matthew Freeman noted that the hedging strategy remains focused on risk mitigation during high capital periods. Executive compensation changes are largely due to share price increases, not new awards, and the cost structure remains stable.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
