Earnings call transcript: Amaroq Minerals Q2 2025 sees gold export revenue

Amaroq Minerals, a company focused on mineral development in Greenland, reported its financial results for Q2 2025. The company announced its first gold export, generating revenue of $3.4 million, but faced an operating loss of $4.9 million for the quarter. Despite the loss, Amaroq raised £45 million through an equity raise, demonstrating strong investor interest. According to InvestingPro, the company maintains a "Fair" financial health score of 2.22/5, with a notable beta of -0.16, indicating the stock typically moves opposite to market trends. The stock saw a 4.97% decline, closing at $74.5, reflecting market concerns about its current financial performance.

Key Takeaways

• Amaroq achieved its first gold export with $3.4 million in revenue.
• The company reported an operating loss of $4.9 million for Q2 2025.
• Amaroq raised £45 million through a successful equity raise.
• Stock declined by 4.97% following the earnings announcement.
• The company is targeting 5,000 ounces of gold production in 2025.

Company Performance

Amaroq Minerals reported a mixed performance for Q2 2025, with the highlight being its first gold export. The company is making strides in Greenland’s mining sector, focusing on infrastructure and mineral development. InvestingPro analysis reveals the company is quickly burning through cash, with negative free cash flow of $83.9 million in the last twelve months. The operating loss reflects ongoing challenges as the company ramps up production and development efforts, though analysts expect profitability this year.

Financial Highlights

• Revenue: $3.4 million from gold exports.
• Operating loss: $4.9 million for Q2 2025.
• Cash balance: $86 million, indicating strong liquidity.
• Total assets: $342 million.
• Equity ratio: 80%, showcasing financial stability.

Outlook & Guidance

Amaroq is optimistic about its future, targeting full-year production by 2026 and planning an ambitious exploration program through March 2026. The company is also preparing for a potential London main market listing, which could enhance its financial standing and investor base. InvestingPro data suggests the stock is currently undervalued, with analysts setting a consensus target price up to $1.68. Get access to 8 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Executive Commentary

CEO Eldar Wilson emphasized the company’s infrastructure capabilities, stating, "We are effectively an infrastructure company who can generate cash flow through mine development and services." He also highlighted the strategic importance of their hydropower feasibility study, which aims to reduce diesel consumption significantly.

Risks and Challenges

• Production delays: Concerns about meeting production targets could affect investor confidence.
• Market conditions: Fluctuations in gold prices might impact revenue.
• Operational risks: Transitioning mining operations from contractors poses potential challenges.
• Regulatory environment: Operating in Greenland requires navigating complex regulations.
• Infrastructure development: The success of hydropower and other infrastructure projects is crucial.

Q&A

During the earnings call, analysts raised questions about production delays and the company’s approach to construction and processing. With a current ratio of 0.84 and short-term obligations exceeding liquid assets, financial flexibility remains a key focus. Amaroq addressed these concerns by emphasizing a prudent approach and ongoing discussions about potential acquisitions, such as Black Angel and Kangaloosa. Discover more detailed insights and metrics in the comprehensive Pro Research Report, available exclusively on InvestingPro.

Full transcript - Amaroq Minerals Ltd (AMRQ) Q2 2025:

Ed Westrop, Moderator/IR, Amarok Minerals: Good morning, everyone. Welcome to the Amarok q two twenty twenty five financial operational results. We’ll follow the normal course today. Eldar Wilson, the chief executive, will take you through some highlights and then some operational detail. Elliot will the CFO will take you through some of the financial highlights, and then Eldar will finish off with a summary.

We’ll then head to q and a. If you have any questions, please use the q and a tab on the screen there, and I will I’ll read those out, and we can deal with them point by point thereafter. So thanks again for joining. I’ll hand over to you, Elder, to start proceed. Thank you very much, Ed.

Eldar Wilson, Chief Executive Officer, Amarok Minerals: It’s a pleasure being with you here on this relatively good summer day here in Iceland, and I hope you had some good holidays already finished. I want to take your attention to the first slide, which is Amarok Minerals today. What we have been working on creating within Amarok is effectively a integrated infrastructure and line development company. And we need to do that to make sure we can unlock the potential in Greenhold. Our companies and business are a gold business, which we own 100% called NalakIS.

We then own Karolak, 51% of Karolak, which is a strategic mineral company. We then own Souliak, which we just formed and we speak about later, which is a servicing entity, which acquires critical equipment and consumable to be able to conduct work in mining and infrastructure in Greenland. And then last but not least, we are about to form EMEC, which is a renewable energy company mainly focused on hydro. And as you know, hydro has a great potential within the oil agreement. By doing this, we can leverage the management of Amarok in things like permitting, governmental relation, and engineering, and various other aspects of things to give investors a exposure on Greenland in the main industry that are important.

And we are solely focused on Greenland, and we’ll be focusing on developing these opportunity within the end until the end of this year and obviously into next year as well. Go to the next phase, please. On main things in the q two highlights, our continuation of the trial mining and ongoing construction of the plant has been progressing well. We had our first gold export and made a revenue of 3,400,000.0 by the ’2. As previously told, we were ramping up more slower in the beginning of the year, but what we are seeing already right now is that the the gold being produced over the just the past few weeks is increasing a lot, and we’re really happy about that.

And the stability of operation is is very, very good. We also got certificate through a single mine origin. Gold, meaning our gold from Greenland can be bought with the understanding of how it’s being produced, what are the sustainability characters of it, etcetera, etcetera. And our initial goal for purely purposes will be sold only in Greenland, but we will then look together with the government to increase that exposure elsewhere. As I mentioned earlier, the sequential improvement of processing rate during the quarter and actually post quarter in July and August have been very good and gives us a good confident that by the end of the year, we should reach all 300 ton per day, which sets us up for a full year of production next year.

Okay? We successfully completed and oversubscribed an upside equity raise of 45,000,000 sterling. Approximately 36 international investors participated in in this fundraise. It strengthened, obviously, the balance sheet and our working capital. But more importantly, it also gave us a strong backing by US and European as well as Icelandic investors.

We acquired the past producing mine of in the West Green on top called Black Angel as well as the high impactful license called Kangaloosa, which gives us the opportunity to continue developing our critical mineral business, which we intend to do exactly the same model as we’ve now done with gold. So you you start with a past producing mine. You bring that through a bulk sample and into production. You use that foundation to further explore in the region to look for elephant or world class deposit. Last but not least, we’ve incorporated our joint venture company, which is our servicing company called Zuliek, and we signed a third party with a third party investor to be a joint venture party in there.

This is highly important in Greenland. Greenland, as you can imagine, is a very large country. It does not have a lot of people in there, and therefore, services are not abundant. We understand exactly what services we want and what we need, and we all also understand it understand the services that other parties in Greenland will need. And due to the fact that we are ahead of the curve with all of other developers in Greenland, this both gives us the opportunity to service ePay, but also to access potentially other projects within Greenland and do that in conjunction with others.

I’m gonna hand over now to Alec to walk through our financials, and we’ll come back to operation. Thanks, Aldeb.

Elliot, Chief Financial Officer, Amarok Minerals: Before diving into the balance sheet, worth mentioning, as Aldev mentioned before, we had our first exports and recorded our first revenues in Q2 of 3,400,000.0 After cost of sales, G and A and other expenses, the operating loss for the quarter is $4,900,000 Next quarter, we’ll discuss these numbers in more detail, by which time we’ll have a quarter on quarter comparison. The main movements on our balance sheet in Q2, as before, are related to an increase in capital assets of SEK 17,300,000.0 to SEK 200,800,000.0 at quarter end, which is attributable to the Nalanag project as we’ve continued to capitalize site costs in the quarter, and we’ll continue to do so until the plant reaches commercial production. Prepaid supplies inventory and escrow is more or less in line with last quarter end, but we are seeing a continued increase in metals inventory, which stands at 9,200,000.0 at quarter end compared to 7,800,000.0 at the end of q one. This represents our gold contained in ore stockpiles outside the mine and processing plant as well as gold in circuits associated with processed but not yet smelted material. And on the bottom, you can see the associated cash flow movements, which represent the main quarter on quarter variance in capital assets and metals inventory.

Worth mentioning as well is cash inflow due to finalizing the equity capital raise, Eldar mentioned earlier, in Q2 with net proceeds of 81,200,000.0, which you will see reflected in our cash balance in the next slide. On liquidity and assets, at the end of the quarter, our cash balances are sitting at $86,000,000 And in the quarter, we made a drawdown on our revolving credit facilities, resulting in $10,700,000 of net proceeds, decreasing our undrawn facilities to EUR 9,700,000.0. Subtracting payables of EUR 19,800,000.0 results in EUR 75,100,000.0 in liquidity compared to EUR 23,400,000.0 at the end of Q1. This liquidity position is on the back of a very healthy balance sheet with $342,000,000 in total assets and 80% equity ratio. The last four lines on the slide are connected to our investment in the Gardak joint venture.

Gardak’s cash balance sits at $3,600,000 at quarter end compared to 4,400,000.0 at the end of Q1. Almaroc’s receivable balance from Gartech increased and amounted to $7,700,000 at quarter end. As a reminder, this represents allocated G and A costs to manage the joint venture, which will be converted to shares in Kartak in 2026. Activity has now been picking up in Kartak in q two, where the focus has been on initiating exploration activities after finalizing all planning and scheduling. More on that later in the presentation.

And back over to you, Andres.

Eldar Wilson, Chief Executive Officer, Amarok Minerals: Enjoy that. Yeah. So just as a reminder where we are with Nalmanac, we have a resource that was upgraded from about approximately 320,000 ounces to 484,000 ounces. It’s it’s approximately ten years worth of mine life. We have an indicated resource, which is a higher confident in the resources of 151, and we’re working towards getting into reserves with underground drilling that is happening right now as well as increasing the resources with the South Greenland South block drilling, which is in the valley.

Our long haul stoping and development on on the mining activity have been progressing well. We have developed the ramp fairly advanced, and we have many levels ahead of us. And our kind of a reconciliation from mind development to mind model, it looks good. We we have approximately or will have approximately by the end of the year about 150, 160 people on our payroll. And there are a few things that are of importance here.

Towards September or around October 3, the agreement with will come to an end. They had a two year agreement. We will be taking over mining to gain, obviously, more control, and we have been building up our mining team over the past one and a half year. Through that, we are also leasing equipment ourselves rather than renting it from t SN, and that equipment will be coming into into site in q four. We will continue improving the rates on mining and processing as we have been doing so far.

We are on the permitting side of things. All permits are in good standing and good order. The government has pushed back the impact benefit agreement to have in place by December. But, otherwise, everything else is in in good good shape. On the construction and commissioning activities, we are installing already and and doing work on phase two flotation.

That is why we have already committed to 5,000 ounces this year. It is to be allow us to finalize as much of the work pre winter in both gravity or phase one and phase two. This will include finalizing the building, finalizing all of the concrete work, and installing as much of the equipment as humanly possible. Higher recovery means more cash flow quicker, and we wanna set those up up for a full year of production next year. Furthermore here, so that means that we will shut down the plant in October to to keep all of our staff focused on that.

Currently, in our processing plant, we are operating the plant on a single shift per twenty four hours. So that means twelve hours. So the processing plant is operated during the night, whereas the construction activities are during day. This what we’re seeing so far is the processing plant per day now have been operated on full capacity in within the shift. Once the people who are in construction activity will be leaving site, we can then start running both shifts on processing, meaning reaching that 300 ton per day, which we feel very confident about.

To give you an opportunity, we have pictures shares of gold bars, and these gold bars were all made within the last twenty five days. So we are seeing more and more recovery and and and throughput already, which is a great success for the team on-site and and gives us a great comfort for for the year to to end. Last but not least, also, the decision to focus on 5,000 ounces versus reaching somewhere in the midpoint of the range is the fact that when we run our material through the plant and if you imagine we are running 12 gram sorry, 15 gram per ton through the plant, Effectively, where the processing of gravity where it stands out now, we’re getting in around 50% recovery. This means that you would have to you would have to run this material through the plant, and then you have to run it again through the plant later time. This means topple handling of the water.

So it’s much better for next year that we topple handle as little amount of the water and actually get as high recovery once all the way through. Again, this is where we are taking the prudent decision to focus on constructing everything as we can this year prior winter hitting because, obviously, last quarter, that was not very successful growth for to try to build during winter. And then the second part is we don’t want to be moving all back in and out the plant and try to get as much out of it in one go. So we feel very confident on what we’re seeing in the process, what we’re seeing in the mine, what we’re seeing in the drill court, and and the construction is also developing very, very well. So so that gives us all of those targets we want to do, and we are very optimistic on on next quarters.

As for the exploration program that has been ongoing since June, July, we have been doing copper target generation. That means sampling on surface, looking at various different outcrop of of of copper and various different things. We have been doing some exploration into the rare earth licenses that are in blue on surface with some next to the big rare earth deposits in in Greenland called Tamprys and and Fanefeld. We have been doing a lot of exploration work looking at satellite deposit in the gold system. So Varga, Ecolnest, and and and and are now starting to drill in.

I actually just got news from site that we’re we’re starting that drilling campaign as we speak. And what does this all mean? Well, now, like, we have built and put up huge amount of effort in permitting, getting the processing plant up to date. We’re increasing the resources, getting the throughput, generating more cash flow. And then the intention is to drill up Nanog, define Nanog to hopefully become a world class deposit.

Then we can, in the beginning stage, move material from nano to nano lock and increase cash flow from that perspective. And this is why it’s important to have permits and license in a different stage to have the infrastructure and then be able to leverage that infrastructure to bring in more material within within the area. And, again, this is exactly the same as we’re doing in the West Greenland hub. And then we look at the West Greenland hub similar to South Greenland. What do we see in South Greenland?

Well, we have the Gold District. You have the Rare Earth District where Mitch is being very interest being being very well sought after by by various different governments and and and and companies. Same thing here in the West Greenland hub. Here, we are operating a past producing mine called Black Angel. A lot of knowledge is on that mine.

It historically produced around 11,000,000 tons of combined 16% zinc lead silver, first by Kominko and Teck and later Bolivian over seventeen years, a very profitable and good mine. It already has a resource of 4,400,000 tons of of approximately 12% zinc. It has a camp. It has a conveyor system to go into the mine. It has a full mine.

It has a large shipping hut. It has a hangar. All of this infrastructure is in place. And most importantly, it also has a huge potential to grow resources. Because up in Black Angel, the glacier has been retreating, which means that sink layers are coming to surface quite dramatically.

Again, we also acquired Kangaloosaak. If you think can Black Angel is to Malamac, and then Kangaloosaq would be similar to Nammog, it’s the same model where we will be drilling next year in Kangaloosaq looking at a world class potential there and, again, utilizing the infrastructure in Black Angel. This whole foundation of this is that there is a saying in mining, where do you start mine? Where do they stop? There’s more known things.

There’s less risk, and you can actually develop and build a base for our strategic mineral company to grow within all Greenland. And that is our intention with Plaquemines and Nicaragua. As for Zuliak, we as I said earlier, we’ve formed the company. We put in place a board and and manager for that entity. We will be acquiring drill rigs, the new mining equipment.

We the remote exploration camp, maritime vessels, and other things, and leasing them back both to our businesses, but also to other businesses within Greenland. This gives us the equipment that is needed to operate in Greenland. To give you example, our mining equipment to date was in the ownership of our contractor. Now we will be owning or having equipment in Greenland, servicing equipment in Greenland, which will be able to service hydroelectric project, infrastructure project, as well as mining project. Understanding how you get consumable in, explosive into these are all quite complex items, and we are we are there as the only developer agreement to understand all of these aspects.

And we can leverage on that not only for our projects, but also other project. That is a very exciting business unit that is being set up at the moment. On the hydropower, we are forming a hydropower company, we intend which we intend to call EMEC. EMEC is water in Green Atlantic. And this hydropower feasibility study we put or or develop under under the leadership of Auske and Markuson is next to our processing plant or very close to our processing plant and the road.

So the installation of this plant should be relatively simple. It’s approximately one megawatt plant. It will reduce our diesel consumption on-site by 1,300,000 liters a year, which is a significant saving. Diesel is one of the things that that we have to acquire and bring on-site and are quite expensive for us. But more importantly, we will be the first private individual to build something of this scale in all of Greenland.

And there is a huge interest for data centers for heavy industry in hydroelectric opportunities in Greenland, but there are not many people or companies that have gone through all of the permitting process, all of the design process, and understanding of how you can do that. And so, again, this is something we are looking towards having in place or or starting a process construction of end of next ’26. So as an outlook going forward, we’re gonna continue the uptime in the mine development and with the processing rate that is running on a on a on a on a single shift. That derisk that 300 ton per day part is not only about the fact that now the machines and the the the crusher and the mill and all of that is working very well. It’s also about training our people.

It are bringing all of these commissioning centers in place, which are going really, really well. We have a better much better liquidity position. And when we started looking at both rehandling of ore as well as giving us time to finalize construction before winter, it teases us up for a full year of production next year. Whereas rather than if we try to delay them long into next year, it will will will not give us as good opportunity to have a full year of production next year. And and we have not much left to finalize on construction.

We are gonna have a shutdown in October to finalize certain things in connection, and we are focusing on 5,000 ounces, which, for sure, is on the kind of a lower end of our outlook. But it gives us that teases up for this full year next year, and and we feel very confident about what we’re gonna achieve there. We have a very ambitious exploration program this year, which we will be reporting on in September, October, November, and all the way into March. So we we will have a a very busy reporting season coming up. We finalized our initial sustainability report in in July where we are focusing on key areas of corporate governance, environment, people, and community, which is important.

And and, you know, we’ve said to the market that we have our aspiration to to look towards the main market in London. These are all items that we’re putting in place, so we are in the best position to attract investors if and when we would take that decision. On in July, we also changed the name to Amarok. It is not Amarok Minerals. It is to represent, obviously, Greenland as a focus.

Therefore, this is a very Greenlandic name. But more importantly, it’s also to emphasis on the fact that we have four different business staff brands underneath the company. We’re effectively an infrastructure company who can generate cash flow through mine development and services and and and the support units there are exploration and and and hydroelectric. So all of this is coming really well in in place. We feel very good about all the progress to date, and we’ll continue to after the market as we grow by.

Ed Westrop, Moderator/IR, Amarok Minerals: Thanks, Ola. So I’m gonna move to some questions that we’ve received online, and I’ll just take them from the top, if that’s okay. So this was an anonymous attendee. It’s very disappointing how you raise money from investors and miss on production numbers straight after. This is especially frustrating considering your track record of delays in the past.

Indeed, one of your lead brokers has been starting your numbers and price targets. How do you plan on addressing these realistic expectations going forward and hopefully meeting or beating those?

Eldar Wilson, Chief Executive Officer, Amarok Minerals: I think that the key thing here and I I get the frustration, and I’m fair enough. But the decision here is a prudent one. Right? We don’t we learned that from last winter that you don’t want to be constructing or doing complex thing over January, February, March. Right?

We also saw the amount of material we are running through our plant and so on will mean a backlog of handling it. We can handle it. We can produce lemon or or in within that midrange. But it just means that we then have to reduce construction, more double handling, and we’re not as well set up for next year. This is why the decision was taken to focus on this, and we also feel confident that we will reach our goal towards the end of the year.

Hope that answered answered that question.

Ed Westrop, Moderator/IR, Amarok Minerals: Thanks. Question here on on grades or gold grades and how they’re looking and what grades are we sort of getting at the moment? Yeah.

Eldar Wilson, Chief Executive Officer, Amarok Minerals: So in in the mountain block, we are seeing that the reconciliation between the mine model and actually what we are mining is very good, especially the Eastern Drive are are are really, really high grade. So that is from the round towards outcrop. On the Western Drive, it is more erratic, and that’s what we’re drilling right now. But, effectively, we have developed all the way up almost up to 800 meters, and we’re only mining or stoping at seven twenty meters and seven thirty. So we have a lot of levels ahead of us.

So, again, this is to prepare ourselves for full year production next year. Saying that, what we have to remember, this is a trial mining, which means that a lot of the grace and the development we see through the development tunnels, but so far, so so good.

Ed Westrop, Moderator/IR, Amarok Minerals: Thanks a lot. This is from Duncan from. How long do you expect the plant to be shut down for? And how long will phase two construction commissioning take, and can this work be finalized through winter if needed?

Eldar Wilson, Chief Executive Officer, Amarok Minerals: Yeah. So the construction road talk, we we’re taking all of October as the current plan. We’re obviously in to try to reduce this as much as possible. That will allow us to connect all of the electrics and automate the system to our gravity process. It will allow us to enclose the whole building, which, again, will then allow us to operate it inside of the building all the way while we’re commissioning phase two into into q ’1 next year.

Ed Westrop, Moderator/IR, Amarok Minerals: Thanks, Next one’s from Tim Huff at Canaccord. With regards to your phase two construction, is it currently expected to be completed mid q four? And how long should it be take to transition the second ship personnel back to site along with the newly leased equipment?

Eldar Wilson, Chief Executive Officer, Amarok Minerals: Yeah. So on the phase two construction, what we said is that majority of the item for the phase two construction, so such as civil works equipment and so on, will be constructed during q four, I should say, not mid or or or towards during mid q four. And then we will be ramping up the flotation production from then onward. The second question, in terms of yeah. So on the second shift personnel, we have a very good status on the kind of a second shift for the plant.

So soon as we have finished the kind of October work and into November, we will be looking towards bringing those people on board, possibly even sooner, but but we’ll we’ll update you on that.

Ed Westrop, Moderator/IR, Amarok Minerals: Super nice. Next one is about the Black Angel and Kangaloosa acquisition. Have we started conversations yet with Gardak, and what’s the status there?

Eldar Wilson, Chief Executive Officer, Amarok Minerals: Yes. So just a background. Gardak is 51% owned by us and 49% owned by a group called GCAM. Well, ECAM and or GCAM, which is has investors like GCAM and and LewisPayton. So we have started the discussion with GCAM and and to give them the opportunity to effectively acquire the Black Angel and Kangaloosa into Cadillac, and we will be updating the market in in in the next coming weeks or or months on on that those discussion.

Ed Westrop, Moderator/IR, Amarok Minerals: Thank you. Last question we have online for the moment. Please, if you have one, please let it please write it in now. Have you seen any interest from other operators in Greenland fuel services business?

Eldar Wilson, Chief Executive Officer, Amarok Minerals: Yes. So there are various operators that have have shown us interest there. Again, we have tent equipment, fuel, drill rigs in country. Just to give you an idea of what what what the what what is the difference? Well, if if you don’t have that in country and you cannot service it in country or cannot maintain it in country, you you effectively need to buy a rig from elsewhere for a sometimes short program of exploration.

But as we have those rigs over all the country, and therefore, we can bring those equipment to the the drilling sites that people are looking at. We also have the experience of bringing things like camp and drill rig in and out over ten years. So we understand how all of that works, which is much harder for any operator who doesn’t understand green. So the answer to your your question is yes, and and and and we see this as a huge benefit for the. Thanks.

One last question just come in at

Ed Westrop, Moderator/IR, Amarok Minerals: the end there. Why are you confident you’ll reach the 300 tons per day processing rate by the end of the year?

Eldar Wilson, Chief Executive Officer, Amarok Minerals: That’s because what we are seeing why is there are two things to it. One thing is the mining needs to deliver the 300 ton per day. We’ve seen it with our mining team that they have reached a very good throughput, and we will intend to make sure the mining can deliver what needs to deliver. So that that is that is looking good. Secondly, what I wanna say, we are running the plant now over the past, well, call it July and all the way into August on a one shift, and they are reaching every single day their 144 tons over twelve hours versus twenty four hours.

So this is a very good sign for us that we are seeing all of these commissioning issues are are retrieving away. We’re understanding how the flow rate and the growth and and and the recovery. So this is all in a very good nick. And, therefore, it’s only a question of adding then the second shift, which will be a combination of the current shift and and some of the construction team who are also.

Ed Westrop, Moderator/IR, Amarok Minerals: Thanks, Aldit. That actually ends the questions you we’ve got from the line here. If anyone has any further questions, please drop me a line. Ed Westrop, I’m at IRBD here. But with that, I’ll say thank you very much for everyone’s time, and I look forward to speaking to you next time at the q three results in November.

Thanks very much. Thank you. Thank you. Thank you.

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