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Akobo Minerals AB (AKOBO) reported its Q2 2025 earnings, highlighting significant strides in gold production and financial restructuring. The company is set to become profitable in the upcoming quarter, with an expected positive cash flow. Akobo's stock saw a modest increase of 1.72%, reflecting cautious optimism among investors. According to InvestingPro data, the company's market capitalization stands at $35.45 million, with the stock showing strong momentum, having gained over 33% in the past six months despite current market challenges.
Key Takeaways
- Akobo produced 45 kilos of gold by August, with a projected increase in Q3.
- The company anticipates its first profitable quarter in Q3 2025.
- A $3 million investment from Ethiopian Investment Holdings strengthens financial stability.
- New operational strategies include a vertical shaft development to boost efficiency.
- Akobo's stock rose 1.72% post-earnings call.
Company Performance
Akobo Minerals has transitioned from exploration to production, having produced 45 kilos of gold by the end of August 2025. The company expects at least 20 kilos of gold production in Q3, marking a significant increase from previous quarters. This shift positions Akobo as a key player in the Ethiopian gold market, supported by favorable national policies and a strategic investment of $3 million from Ethiopian Investment Holdings.
Financial Highlights
- Gold production: 45 kilos by August, 15 kilos in Q3
- Investment received: $3 million from Ethiopian Investment Holdings
- Loan interest reduced from 30% to 22%
Outlook & Guidance
Akobo is optimistic about its future, aiming for a monthly production target of 50 kilos by year-end. The company is exploring additional license areas and recruiting an international exploration manager to enhance its discovery potential. The development of a vertical shaft is expected to further increase mining efficiency and output. InvestingPro subscribers have access to additional insights, including 8 more exclusive ProTips and comprehensive financial analysis that can help evaluate the company's growth potential and execution capabilities.
Executive Commentary
Company representatives expressed strong confidence in the company's trajectory. "It's never been this good. It's looking better than ever," one executive stated, emphasizing the company's transition to a gold producer. Another noted, "The higher gold price, the better for the project," highlighting the favorable market conditions.
Risks and Challenges
- Potential delays in vertical shaft development could affect production targets.
- Market volatility in gold prices may impact revenue projections.
- Regulatory changes in Ethiopia could pose operational challenges.
- Competition from other gold producers could affect market share.
- Dependence on local partnerships may introduce operational risks.
Akobo Minerals is navigating a transformative phase, with promising prospects for profitability and growth in the Ethiopian gold sector. As the company continues to expand its operations and enhance efficiency, its strategic initiatives and market positioning will be crucial in maintaining investor confidence and achieving long-term success. With revenue of $2.17 million in the last twelve months and an EBITDA of $1.38 million, investors can access detailed valuation metrics and Fair Value estimates through InvestingPro's comprehensive research reports, available for over 1,400 stocks.
Full transcript - Akobo Minerals AB (publ) (AKOBO) Q2 2025:
Company Representative/CEO, Akobo Minerals: Good morning and welcome to Akobo Minerals' Q2 presentation. For those still with us, I'm truly sorry for the delay. I just arrived from an overnight trip from Addis. Of course, today there were technical issues and delays, both here on the train and on the plane and everything. We're here now, and I will take you through the latest developments in Akobo Minerals. I will not focus that much on Q2 since we've kept you more or less updated every month since that period. We will talk about the latest developments. I can say that my last trip now, the two weeks I spent in Addis, I'm seeing a great positive movement and development. The team is working hard. They're doing the right things. We have great support from the Sutton Global team that is managing our mining operations. We're getting great support from Monetary Metals, our lenders.
We are getting great support from the government and from stakeholders and shareholders. I'm very happy to present the latest news. It's looking better than ever, and the plan is sound, and we are executing on the plan. We'll move forward. As always, Akobo Minerals, we are an Ethiopian gold producer, not only exploring anymore, but a producer of gold. We've been in Ethiopia for 15 years. We've done it the right way, and now we're ready to move forward with the mine operating and generating gold and cash. We will then now start to look more towards the future and the next phase of the company. Looking at the latest key events, first of all, we produced 45 kilos at the end of August. For those waiting for the September report, we are preparing for smelting and processing these days.
We will probably have that result ready in one to two weeks, and it's looking good. We are expecting our third quarter to be the first quarter where we actually make a profit on the operations. We will deliver positive cash flow. That will be a big milestone for the company after 15 years of what I would say hard work. Just some of the key points here. We managed 8 kilos in July, 7 in August, totaling 15 so far in Q3. We even achieved 45 grams per ton in average grade in July and hitting a purity way above 90%. This is pretty amazing. As you can see, the all-time average is hovering around 20 grams per ton, which fits well with the overall grade of the resource. The gold price remains strong. I think today it also, or yesterday, it passed $3,800 per ounce.
That will have a huge positive benefit for the Sagera deposit going forward and the cash flow. Will it continue? Who knows? All indications say so, but we will see. Any kind of increase in the gold price will merely be pure margin for the company, except for some royalties and taxes along the way. Very important milestone for us, of course, EIH, the Ethiopian Investment Holdings, became a shareholder in Akobo Minerals, investing $3 million. We'll have a more detailed look at that later. We also concluded our financial restructuring with Monetary Metals, and we also now converted the two remaining convertible bonds we had towards existing shareholders. A very important appointment for us, Johnny from Sutton Global. He is now our new Operations Manager. He is one of the best you can get.
He can get gold out of anything, and we're seeing major improvements already after he arrived at site. The team is working very well these days. Most importantly, maybe right now, is the fabrication of the vertical shaft gear, the head gear. It has started. It's on track. Also a very important point, it's the end of the rainy season. We managed well through the season this year. It's hard work, and I must say the team has really stepped up and done a great job. Let's move to the most important project we do have right now, which is the development of the new shaft that will take the company to the next level. We will increase our revenues significantly once that shaft is up and running.
As you can see here from a few pictures that we just took recently, visiting the gold mine site where they are fabricating everything. It's in process. It's in good process. We're planning the logistics already. We're going to fabricate it at the gold mine site. Then it will be assembled, and it will be disassembled and then packed into two containers. Just to give you an idea of the complexity here, doing the mine and the processing plant, we imported more than 60 containers for that. This is nowhere as complicated as what we've done previously. I'm not going to say it's straightforward, but this is a much smaller project, and we have a very good follow-up from our local team and from the Sutton Global team. I'm quite sure this will be delivered on time.
We're planning to ship this from Durban to Djibouti, and we do expect arrival before the end of the year. It's a close follow-up from our team in South Africa from Sutton Global, and as you can see, it's all in progress now. Just to give you an idea of what the head gear looks like, this will sit on top of the sink shaft, the vertical shaft, and you'll have a, looks like a, well, something you can jump off from. This will be on the ground, and it will be connected to a big winch that will pull the elevator coach up and down that you see in the middle. You see a bit more close up. I'll also have the elevator in itself will look, and you can see the rails there.
That's for the cocoa pans that will go into the mine or into the ore body. We will have a much more efficient way of taking out considerable tonnage in a very safe manner. This is all progressing well. The other part of this is actually making the incline shaft. Oops, it's not an incline. It's a vertical shaft. A small misunderstanding there. It's vertical that will go straight down. You can see some pictures from another project. This is more or less the same that we will do. We already started the site preparation. It's with heavy machinery that's being mobilized on that site. You need to flatten the area and then start the civil works for the head gear and the shaft, so that's secure and will carry all the load that will go up and down.
A solid amount of rebar and cement is now in progress of being bought and shipped to site. Also the blasting then after that, after the construction is ready on top, we will remove the first 12 meters of overburden, and the next stage will blast down to 60 meters first and then extending down to 100 meters later or deeper if necessary. From that point, we will consider putting down the small drill rigs for continued exploration from the bottom of this vertical shaft. This shaft will give us access to the whole ore body in a very efficient way and can produce a considerable amount of tonnage. Again, it's not an incline. It's a vertical shaft. You can see here how it will look.
Just to give you an illustration of the amount of rebars and how this will look, it's a lot of steel and cement that will go into the top part before you reach the solid rock deeper. This is mainly from the top where you have the overburden. Once you hit competent and solid rock, it will not be this kind of structure. Let's look at some of the production and sales development we've had and also how we are getting paid. You can see the development here. We had a very good Q4. Actually, it was remarkably good. We hit a very gold-rich pocket at that point, much earlier than we expected and probably also outside of the resource model. We had some issues in Q1 and the beginning of Q2. We saw that from May and June, things started to pick up and really become efficient.
If you look at Q3 here as an estimate, we're estimating at least 20 kilos to be produced. That's based on us reaching a minimum target of five kilos now in September. We do hope/believe that it is possible to get more than that five kilos also. We will see in the next couple of weeks. That will also drive our gold sales for the third quarter to the highest ever. Of course, it's affected by both the increase in volume and the increase in gold price. If you look at the right-hand side here, you will see what you can find on the web page of the National Bank of Ethiopia. This is being updated every day. This is what you'll get paid if you deliver gold to the National Bank of Ethiopia. They are pretty competitive.
They do give you more or less the spot price that is in dollars, but paid in BID, local currency. So far, we've delivered everything to the National Bank. We are getting local currency, BID, paid, and that's fine so far. We do have a lot of expenses in local currency. We also now have the opportunity, which was very difficult before, to actually convert local BID into dollars and pay suppliers out of the country. It's really a big, big improvement in the foreign currency situation in Ethiopia these days. You can see here, when you read about the all-time high, $3,800 per ounce, that's based on the gold spot price on the LBMA Good Delivery Standard, which has a minimum of 99.5% purity. We are, of course, not delivering DORE bars from site at that kind of purity. That's what you get off.
They're shipping it to a refinery such as MKS PAMP in Switzerland. What we are getting out of the DORE bars and the smelting at site has been more in the range of 80 to plus 90% purity. We are working now every day to improve that purity and get better payments from what we deliver. Important to note here that once you deliver, or if you deliver more than 10 kilos at a time, you will also get a 15% premium. We are trying to now plan for selling in batches of more than 10 kilos every time so we get that 15% extra. That is also why there is not always a correlation, exact correlation between what is produced and what is sold on a monthly or a quarterly basis.
Here you see where you can find the daily rates if you want to have a look and see what's being offered every day. Also, to illustrate the gold loan versus the free cash flow from the mine, I've had a few questions, and most people think that, wow, the increase in the dollar or the gold price really gives us a very, very expensive and large gold loan in dollars, which is true. It increases with the value of the gold. You can see here in the beginning, I think we actually took the loan at $1,750 per ounce. I've just given an illustration from $2,000 up to $5,000 here. The good thing is that this is a natural hedge between the resource and the gold loan.
If the gold loan increases in value, the value of the deposit and the cash flow from the deposit increases much, much more. It's a natural hedge. It's the way it's planned. You can see here there is no reason to fear the increase in gold price. On the opposite, the higher, the better. This is just an illustration with rough estimates. It's not directly related to the Sagera deposit, but it will give you an idea. I've said that here, the gold loan around 10,000 ounces. Let's say we produce 60,000 ounces and estimating a total cash cost or a total cost of operations at $1,500 per ounce. You can see here that the higher gold price, the better for the project. Let's just go through the latest financial restructuring that we've done. Ethiopian Investment Holdings, of course, historic milestone for Ethiopia and for Akobo Minerals.
The first international investment, I think, in 100 years out of Ethiopia. I'm proud on behalf of the team and myself that Ethiopia actually decided to invest in our company. It's a private placement, $3 million. Everything goes into the company. They were issued 15 million shares at $0.20 per share. They ended up then with an ownership of close to 7.4% before we converted the loans. After the conversion, they will have an ownership of 6.5%. Also, very important for us was the restructuring of the Monetary Metals loan. They're definitely a very strong partner for us, not only in this funding here, but on the operations side, stakeholder engagement. They have a huge network, and they're supporting us in every way they can. They are really a good partner to work with. You can see here we managed to get the interest down from 30% to 22%.
It's still a good sizable interest, but it's manageable, and it's all now part of the new shaft and the cash flow from that. It's all been modeled together to see that this goes through. For the current period, we have an interest-free period from August to February next year. We will start repayments. We have a repayment scheme that starts slowly and then ramps up later so that we will have the most possible flexibility in the beginning when we ramp up and start the vertical shaft. We do not want that to create any issues in the beginning. They got some more warrants. They previously had 2%. That was increased to 3%. The strike of that warrant is the same as the price in the private placement against EIH, so $0.20 US dollar.
You can see here the loan can increase to a maximum of 10,490 ounces before default. We will not get close to that. We will probably peak around 9,500. With the repayment from March next year, it will start going down. Also, from our supporting long-term shareholders, we have now converted the two loans they've granted us previously. You can see some of the details here and the number of new shares from that and also the total number of new shares in the company after both the EIH transaction and the conversion of the loans. Do we now continue to search for money? Do we want to raise more? What's the cash situation? The company is in a good situation these days with the current cash flow coming out, the strong gold price. We're in a very good situation.
With the money we raised from EIH, we will be able to deliver on the gold and on the vertical shaft and continue our operations. Of course, some of my job is to continue focusing on improving our capital structure and getting flexibility. We will see if things can happen going forward. There is nothing really in process these days, but that's always something we will work on to see if we can improve the way our capital base is structured. Looking at the current mining operations, we are really doing consistent mining these days. I'm very happy to see that. We are blasting consistently, and we are really doing good on the mining side. The tonnage is coming up. Right now, we're actually focusing on blending the high grade and the low grade.
It is better for the processing plant to keep a consistent grade instead of very high, very low, or medium. Part of the job now is to stockpile and to start blending. Just to give you an illustration of where we're working right now in the mine, on the right-hand side, you can see the different blocks and the areas we're working in. It ranges, as you can see from the yellow parts here, 0.94 up to some 360, closer to the left-hand side. That's extremely rich. All of this needs blending to end around the 20 grams per ton, which is what we're aiming at. We're also developing new underground areas all the time, especially the eastern winds. We will extend that to access deeper ore, increasing the possibility to blend and get a more consistent grade out of the plant, which is the best for the plant.
If you look at the processing plant status, you have here a picture of the new shaking table. This is just a test, and you can really see the gold here, this nice, nice color coming out. It tells us that it's working and it's processing a very good grade. We've done a lot of cleanup now with Johnny coming to site. We've found a lot of gold that's sitting in the plants. That's been recovering now, and it will be part of the smelting for September. We've converted everything to pure gravity, so no more chemicals in use. We have two new shaking tables. This is one, and there's one just beside it. They will be able to accommodate all the tonnage coming out from the new shaft, and that's what we'll focus on in the beginning.
At some point later, we will evaluate if we want to start the CIL part of the plant or not. That's still to be decided. They're also optimizing their smelting techniques so that we consistently get high-grade DORE bars that we can deliver to the National Bank of Ethiopia. As I said earlier, the September batch is now being processed, and smelting is planned over the next couple of weeks. We expect or target at least five kilos, and we'll see how much more, if more, we can get out of it. ESG, health and safety, are a big part of our focus. You can see here some training on life support. We're also doing normal things every day, checking the wastewaters, checking noise and air, being compliant. We have a good relationship with the Ethiopian Environmental Agency, and they've done an audit. They had some minor corrective actions.
They've been implemented, and it's all looking good. Health and safety, also very important. We have our own clinic, and we now have Leon, a Senior Paramedic at site from Sutton Global, who is really making big changes to the way we focus on health and safety with training, PPE compliance. Also, you can see here, we're preparing a civil unrest plan. Even though the area is very quiet, we are preparing, and we are not, yeah, we are not naive in that way. Gold has a tendency to attract people. On the exploration side, this is really, yeah, it's close to my heart. This is where we started, and this is really where the upside lies going forward. The Sagera mine is now running, is producing, is generating cash, and it will continue to do it at an ever higher level once the shaft is up and running.
We will now, again, refocus back on the exploration. A lot of work has been done by the team. They have focused on more mapping, doing magnetic surveying, soil sampling, trenching, and rock samples. You can see here some of the work. We've also renewed our exploration license with the Ministry of Mines. Maybe the most important thing is the first point here. During all of this work, we have seen gold observed in the surface quartz vein system, and we've seen also this going all the way down to the northern part of Jordu. This, again, verifies a lot of the ideas and the ambitions we've had. It's not to say that this is a big economic viable deposit, but it gives us really strong indication that this now needs to be checked out further. This will be a very important work for us going forward.
I will get back to that a bit later. Actually, here. The focus going forward now is just to keep track on the vertical shaft development, make sure nothing slips, and get that going. We are in good progress there. We need to ensure the consistent mining. That's what will keep the basis now for our cash flow and make sure we keep the cash we have and maybe also increase it. Again, optimizing recovery and gold purity is very, very important so we don't miss out on what we're taking out of the mine. We will expand the mine to new areas. On the exploration side, we will continue exploring with trenching and sampling and surface mapping. We are now going to recruit a new national exploration manager so that we can strengthen the technical capability of the team.
Not only that, but also for us to understand what the national community is more looking for so we can be more savvy and more straight on the target of where to find the next interesting plot to start drilling or start working on. In that regard, we need to refine the exploration strategy, and we really need to work on the project development phase. There are three areas or four areas we would like to then look at. One is, of course, around existing Sagera where we still believe there will be more to be found. The next one is to work on the strike that you saw in the other picture going across the whole license area. As you can see here on the corporate and financial part, we want to secure the JLO exploration license that's been pending now for more than a year.
We are now in good dialogue with the Ministry of Mines to get that awarded. With those three in place, we have really a good setup to build a strong funnel going forward. That needs also good planning and good project execution. It does not necessarily mean that we will start drilling immediately. It probably means that we will start with some more high-level mapping to understand the wider area better, and then from there, going down more into the details. Finally, once you really define the target, you will start drilling. Looking at the corporate side, we are now working to open an offshore bank account that will facilitate international payments. I'm very happy to see and report that the Ethiopian government and the National Bank of Ethiopia, they are now really delivering on all their promises. This is not an easy task to do.
We might be one of the first companies to actually open an offshore account in Ethiopia, and it's a work in progress as we speak. That will really help in facilitating all international transactions. Again, securing this JLO exploration license is important for us, and we're also now working to close the export permit so that we'll have that in place once the shaft is up and running. All of these items here, I believe we will sort out very soon, and it will really have a big effect on the company, not only on the way we're working every day, but also as a way of showing to the world that Ethiopia is serious about supporting their mining industry. As you can see, and as I talked about, we're trying to strengthen our financial position by running a cash flow positive operation. Main focus going forward.
What does that mean? We will continue stable and now a very risk-reduced operation. We will advance the vertical shaft, and we will unlock value from both existing and new exploration areas. Financial performance overview, we're improving now quarter by quarter. Third quarter will be even better. We'll see a first profitable or at least a positive EBITDA. It's definitely going in the right direction. The equity debt development is what it is. That will improve as the cash flow improves. I would say we're at the turning point now and up until the end of the year. That has really not any effect on us as a company. We are going concerned, and we are paying all our invoices and more.
We are treating everything very, yeah, in a manner that we pay our royalties, we pay our taxes, we pay our suppliers, and that's important for us as a company doing mining. Not much change in the corporate structure, except that you can see here on the top shareholder list that we have welcomed Ethiopian Investment Holdings. They're now on the third place here with 7.38%. They will, as I said, go down to 6.8%, no, 6.5%. There will be some changes in all the others here when the convertible loan shares are issued. That's happening more or less as we speak. Apart from that, nothing has changed on the corporate structure. On the left-hand side bottom, you can see that the company had 9,240 ounces in gold loan from Monetary Metals. We expect that to increase to around 9,500 before the repayment then starts hitting in.
I think I will leave this for now. Reach out if you want to have a discussion on the more detailed part of the financial statements. Looks like we're now on the Q&A session. I have received some questions by email. I will then have to put on my glasses to read. What forms the decision for where to drill samples in new areas? Going back to what I just said, we now need to get a new exploration manager with international experience who can go through all the documents, all the data, and really make a new plan based on the more modern way of developing the exploration work. I'm looking forward to that. It will really be important for us to start that. Again, the several exploration areas, they show very promising results.
If production from these discoveries starts up, will tonnage be transferred to the main plant with trucks, or will it require a new plant? This is not a very big license. You can drive two hours across. At least we expect that the closest part, Gingebel and that area, will definitely easily be sent through the existing plant. There is no need to build a new plant. However, if we should, which we hope, discover a million-ounce deposit here or more, and it's a lower grade deposit, it will require a very different kind of plant. I can say if we reach that, we have done what we need to do, and we will be able to take that also to the next level. That's really the ambition we have right now. Any incoming interest from bigger gold producer majors? It's still early days.
I'm saying these days that we now need to prove the new shaft, get up to the next level. We'll produce up to 50 kilos a month, and that will really change the whole, yeah, the whole view on the company, not only from us internally, but also externally. By the end of the year, we will have a lot better visibility on that side. It's really not something we're focusing on right now. We're focusing on really getting the cash flow up and continue consistent mining and delivering on the shaft. Beyond the $3 million in capital from Ethiopian Investment Holdings, what more do they provide as a partnership? First of all, they're a shareholder like every other shareholder in Akobo Minerals. That's important to note. Secondly, of course, they're the sovereign fund of Ethiopia. They have big political capital. We will not abuse that in any way.
If we need some kind of help and support that we feel they can give, we will ask for it. We would also like to continue developing this on our own, knowing that we have a strong partner. One thing I can mention is that we are working on establishing a project together, looking at this aggregator model that I have talked about before. That will be a great thing to do together with them. They have experience working on aggregator models within the coffee sector, within the flower sector. They can bring a lot of knowledge into that project and how we can get all the local artisanal miners to deliver gold to our plants, making it better for everyone. That's probably where we will start with a more closer partnership working together. When can we expect some sort of resource updates?
Again, going back, we need to refine our structure on the development side, on the exploration side. Once we have that strategy in place, it will be easier to answer that kind of question. If we do this the right way and really narrow ourselves down to a few targets, I think this can be done, maybe by mid-next year if we can get the project up and running now. There is some worry about delays in the vertical shaft given the history. As I said on the first page, this is not comparable to what we've done so far. We're getting two containers in. We're getting a vertical or a sink shaft team in from Zimbabwe who do this every day. I'm quite sure that we will have a very different control on this project going forward.
We're also, as I said, done with the rainy season for this year. There are some questions here about how we are going to treat potential cash surplus going forward once we have repaid the debt to Monetary Metals. That's a bit too early to say. We will, of course, reinvest some. I'm sure there will be some dividends, but that's for the shareholders and the board to decide upon when that time comes. I think that's it for today. No more questions. Feel free to reach out if you have anything you would like to discuss or ask about. Closing remark, it's never been this good. It's looking better than ever. I think we will now continue to improve, continue to deliver, and move into the next phase of this company. Thank you for listening, and we'll see you soon.
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