Earnings call transcript: Aya Gold & Silver’s Q2 2025 revenue misses forecast

Aya Gold & Silver Inc. (AYA) reported its financial results for the second quarter of 2025, showing a slight miss in both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $0.06, just below the forecast of $0.0601, while revenue came in at $38.62 million, missing the expected $40.35 million. The stock reacted negatively, with a pre-market decline of 2.26%.

Key Takeaways

• Aya Gold & Silver’s Q2 revenue was $38.6 million, below the forecast.
• The company experienced a 15% increase in plant throughput.
• Aya maintains a strong cash position with $114 million.
• Silver market positioning remains robust, with sales at premium prices.
• The stock dropped 2.26% pre-market following the earnings release.

Company Performance

Aya Gold & Silver demonstrated solid operational progress in Q2 2025, with revenue increasing from $33 million in Q1 to $38.6 million. Despite missing revenue forecasts, the company improved its processing plant’s throughput and recovery rates, indicating operational efficiency. The firm continues to focus on the Moroccan market, leveraging its first-mover advantage and expanding its land portfolio.

Financial Highlights

• Revenue: $38.6 million, up from $33 million in Q1.
• Cash flow from operations: $8 million in Q2, totaling $15 million for the first half of 2025.
• Cash position: $114 million, supported by an equity raise of approximately $100 million.
• Silver production since April 2020 reached 10 million ounces.

Earnings vs. Forecast

Aya Gold & Silver’s Q2 EPS of $0.06 narrowly missed the forecast of $0.0601, representing a minor negative surprise of 0.17%. Revenue fell short by 4.29%, marking a slight deviation from expectations. This performance contrasts with previous quarters where the company met or surpassed forecasts, indicating a temporary setback.

Market Reaction

Following the earnings release, Aya Gold & Silver’s stock fell by 2.26% in pre-market trading, reflecting investor disappointment over the earnings miss. The stock’s decline positions it closer to its 52-week low of $8.52, contrasting with a high of $19.56, indicating potential investor concerns about near-term growth prospects.

Outlook & Guidance

Looking ahead, Aya Gold & Silver projects continued operational improvements with a target of 3,500 tons per day processing capacity. The company plans to enhance mining grades and expects stronger cash flow in the second half of 2025. The Boumazin Preliminary Economic Assessment (PEA) is anticipated in Q4 2025, with a larger drill program planned for 2026.

Executive Commentary

CEO Benoit Lassalle emphasized the company’s commitment to production targets, stating, "We are fully committed to our production guidance." He highlighted the transformational potential of the Boumazin project, describing it as a "Tier one asset." Lassalle also noted the company’s achievement of producing 10 million ounces of silver over the past five years.

Risks and Challenges

• Market volatility in silver prices could impact revenue.
• Operational challenges such as grade dilution in mining require ongoing management.
• The success of exploration initiatives is not guaranteed, posing a risk to future growth.
• The company’s reliance on the Moroccan market may limit geographic diversification.

Q&A

During the earnings call, analysts inquired about the company’s July production, which exceeded 400,000 ounces. They also addressed concerns regarding grade dilution and sought details on the company’s exploration strategy and upcoming results. Executives responded with confidence in operational improvements and exploration potential.

Full transcript - Aya Gold & Silver Inc (AYA) Q2 2025:

Conference Operator: Good morning. I will now turn the call over to Elizabeth Hamaue, Aya Gold and Silver’s Director of Corporate and Financial Communication. Please go ahead.

Elizabeth Hamaue, Director of Corporate and Financial Communication, Aya Gold and Silver: Thank you, operator, and welcome, everyone, to Eyal’s second quarter twenty twenty five earnings conference call. Here with me today are Benoit Lassalle, President and CEO Hugo Landry Tolstrochuk, Chief Financial Officer Elias Elias, Chief Legal and Sustainability Officer Rafael Baudouin, Vice President of Operations and David Lalonde, Vice President of Exploration. We will be referring to a presentation on this conference call, which will be available via the webcast and is also posted on our website. We will be making forward looking statements during the call. Please refer to the cautionary notes included in the presentation, news release and MD and A as well as the risk factors included in our annual information form.

Technical information in this presentation has been reviewed and approved by Rafael Baudoin, IELTS’ Vice President of Operations and David Lalonde, IELTS’ Vice President of Exploration, both of whom are IELTS qualified persons as defined under National Instrument 40 three-one 101 Standards of Disclosure for Mineral Projects. I would also like to remind everyone that our presentation will be followed by a Q and A session. With that, I will turn the call over to Benoit Hassan. Benoit?

Benoit Lassalle, President and CEO, Aya Gold and Silver: Thank you, Elizabeth. Welcome everybody to our Q2 twenty twenty five earnings call. Before I start the presentation, I would like to tell you and announce that we have reached the 10,000,000 ounce of silver production last week and since we took over as management in April 2020. So we did produce, now we are over 10,000,000 ounces of pure native silver in the last five years. I thought it’s worth mentioning.

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Benoit Lassalle, President and CEO, Aya Gold and Silver: a presentation that you where you can follow my comments. You have the forward looking statement on page two and three, and then we will start on page four. The Q2 highlights, it is a very strong quarter, a very good quarter. We’ve delivered across all the key pillars of our strategy. First, the production, 1,042,000 ounces in Q2, very similar to Q1.

Gold and silver, but in our case, it’s silver revenue of US38.6 million dollars we report in U. S. Dollars. Cash flow from operation in Q2, 8,000,000. And I’d like to point that we are now at $15,000,000 after Q1 and Q2 of cash flow from operation.

Remembering that this is a ramp up period. We commissioned the plant at the December. We started the ramp up in January 2025. We are now completing the ramp up as we will see while we’re evaluating our KPIs at the end of Q2. So during ramp up, during the first six months of ramp up, we did produce $15,000,000 of cash flow from operation.

At the end of the quarter, our balance sheet is strong. We have $114,000,000 in cash in our bank. We have a line of credit of 25,000,000 and we have a very strong working capital position. So reviewing some of the key milestone on production, we’ve had a very good quarter, solid operational KPIs that I will review with you. And we did reach 1,000,000 ounces of production.

On the exploration front, drilling programs are on track. We have many drills starting both at Gundair and Boumazil, and we are continuously giving you results that positive. We’ve also have been acquiring new permits as Gundair and at Boumazin, which is part of our strategy. We really do take advantage of the fact that we’re first in country and we add a lot of ground every quarter at Gundair and at Boumazin. On the development of our second asset, which is Boumazin, the work supporting the upcoming Boumazin PEA is going extremely well and according to plan.

On the ESG front, in the quarter, we published our 2024 sustainability report. We are always focusing on health and safety and we had a clean quarter in Q2, 2025, no incidents, nothing. And we always strengthen our community engagement. We actually in Q2 have accepted 26 new initiatives that were presented to us by local communities. They actually presented 18 initiatives.

We selected in Q2 twenty twenty six that we will be implementing. So strengthening our community engagement is part of our core value. Financing position, cash from operation, as I mentioned, $8,000,000.15000000 after two quarters, extremely pleased with this number. We’ve completed an equity raise in June of CAD140 million, so let’s say US100 million dollars hence giving us a very, very strong balance sheet. Taking you to Slide number five, we’re going to go through the KPIs.

You recall, I always say in the ramp up, we have five KPIs that we need to manage. The first three ore process and milling rate, well, as you can see in Q1 twenty twenty five, we were at 2.8 tonne per day. In Q2 twenty twenty five, we’re at 3,000 ton per day. So we are moving up the ladder. Remember that the nameplate capacity when we build the plant was 2,700 ton per day.

By the end of Q1, we’re at 2,800. By the end of Q2, we’re at 3,000. And we are now approaching it for Q3, 3,500 ton per day. So, this KPI is well managed, well under control and exceeds nameplate capacity by more than 20%. Recovery rate has always been something extremely delicate.

We know that metallurgy is an important element of a good mine. And currently in Q2, the average was 86.5%. We have reached 92% recovery in June. You recall that at the beginning of the ramp up, the oxygen plant was creating the main issue that’s been solved and working according to plan. And we are now above 90% recovery, which is better than what we had in the feasibility study.

The availability of the plant, this is another key KPI. And for Q2 twenty twenty five, we were at 98%. We wrote exceeding industry standard. I’ve been in this business more than thirty years, and I’ve rarely seen plant availability better than 95%, sometimes 96%, and here we are at 98%. So the operational KPIs are sustainable into H2.

We expect that the ramp up is near completion. We’re going to be at cruising speed at 3,500 ton a day, good recovery and good availability. Moving on to Slide number six, does Gundair ramp up phase on ore mine? Well, so when you look at the ore mine, the tonnage is there. In Q1, we did 195,000 ton, which is 2,100 ton a day.

And you recall, we started at 900 ton a day when we had the two smaller plants. Our goal is to go to 3,500 ton a day. We were at 2,100 in Q1. We’re at 2,600 now in Q2. And this is increasing as we’re ramping up the open pit in Q3.

In Q2, we were preparing the open pit. We did a lot of stripping. We’ll continue to do that in Q3 for our objective to go to 3,500, which is equal, so the mining will be equal to the processing. So another KPI that is green that we manage very well and is according to plan. The only KPI where we’ve talked about in the previous quarter that we’re still working on and that we need to improve is the average grade.

And the issue here in the ramp up as we move from 900 ton a day to 3,000 ton a day and 3,500 ton a day is not a metallurgical or a metal issue. It’s not a metal issue. The metal is there. What we need to address is dilution. So it’s the way we mined it, the way we mined the underground and the way we mined the open pit.

I mean, historically, we were doing a lot of selective mining and we had the time because we were mining originally 200 ton a day, then 500 ton a day, 900 ton a day. So the dilution was not a big problem. But currently with the speed of execution, the dilution is becoming our number one enemy. We know this. We are all focusing on improving or reducing, should I say, the dilution.

We’re improving mining selectivity. We’re improving operational control. We have hired more people. We’ve hired more senior underground managers. So the last KPI of the five that we need to address in the ramp up is really the dilution of the grade from the mining.

On the open pit, we need to monitor better blast movement because we see where the grade is, we blast it, then it moves, and then we dilute it again too much. Then the ground is definitely even more difficult. So all of that is something we understand, it’s something we it’s our key priority right now is to stabilize the mining rate, reduce the dilution, control the ore and send all the ore to the plant and all the waste to the waste dump. Going to slide number seven, which is the financial highlights. Of course, on the revenue side, it’s a record quarter, dollars 38,600,000.0 of revenue, obviously driven by the ramp up and the higher silver price.

So we’ve moved from $33,000,000 in Q1 to $38,000,000 in Q2. The average selling price is excellent, and that is even getting better now in Q3. On the left side of the slide, you see the average net realized silver price. And when you compare that to the cash cost, just to show you the margin, we do have a $12 margin. We had a $12 margin in Q1 as well.

And we expect that margin to increase in the coming quarters as the selling price is higher than what it is right now. And really, as we’re completing the ramp up phase and as we’re improving the grade or reducing the dilution of the grade, you can expect the cost to come down, the selling price to go up and the margin therefore to increase. Slide number eight shows that we have a very strong balance sheet and that’s something extremely important as we are really stepping up now the Boumatsun development. So this quarter, we discussed this, we had $8,000,000 of cash from operation, 15,000,000 after two quarters. CapEx and exploration in line with our budget of 13,000,000 We spent about 3,500,000 to $4,000,000 per quarter on exploration.

As you know, we have two large drill programs. The cash position is extremely important at 114,000,000 as we plan to increase the drilling at Boumazin and really get into a more detailed feasibility study next year. So that cash position is instrumental. And when we raised the money in June, it was clearly identified that it was for the Boumazim development. So strong cash flow, CapEx completely under control and a recent development.

Some of you saw that, that we did receive two weeks ago now or a week and a half ago, dollars 8,000,000 payment in compensation for the EPC contractual breach. You recall that last October, the plant was delivered to us with a delay. And you recall that we had a fixed date for plant delivery. We had obtained in the EPC contract some contractual obligation, which there was a breach. And because of this breach, we were able and have received $8,000,000 in compensation.

So that, of course, is not accounted for right now in the cash position because that came after the quarter end. But it just now tells us that we’ve built this new plant at Gundane, we’ve built it. It was already on budget, but now it’s $8,000,000 below budget. And the on time of delivery was late. And you recall, we explained that in Q3 of last year, but the commissioning was very quick, much quicker than expected.

And we did the commissioning in three weeks. So the commercial production was declared in December, and that was aligned with the plan. So to conclude, the balance sheet portion, balance sheet, enough balance sheet to really develop Boumazin and continue with the exploration at Gunde and at Boumazin. On Page nine, just we gave you a few pictures. I know many of you have been to site.

It’s beautiful. There’s no more snow on the top of the mountains as last week it was 48 degrees. So a little bit warmer than Canada, but not that much. And so you can see all of those pictures. Now talking about exploration, because as you know, we are a producing company.

We have a beautiful pure silver mine at Gunda, but the exploration portion of AYA is extremely important. The exploration at Gunde at the mine and the exploration at Gunde Regional. So at Gunde at the mine, we’ve drilled 4,700 meter and that drill is in the structure. You remember our structure is 1.4 kilometer long, about 700 meter deep, 20 meter thick. And we’ve been drilling the bottom left of the structure.

I mean, we’ve been drilling everywhere, but at the bottom left, the drill results outlined significant down plunge extension, which we show you when we put out a press release with good thickness, very good grade, and it confirms the continuity of the high grade mineralization beyond the current resource boundary. Extremely important because it is a major system. It’s very well understood, but we’re seeing extension. To the West at depth, we’ve also seen extension to the East in the open pit, because we’ve showed you new results in the open pit over time. So the Zugundeir Main Zone is still growing.

Zugundeir Regional, which I’ll show you a slide in one minute, we’ve drilled 1,000 meters there. It’s more exploration drilling. So we have an area called Far East permits that we’ve obtained and that we’ve done the work in Q2. We have identified many very interesting targets through geochemistry, through satellite imaging and spectral imaging, and we are drilling some of those targets now. The drills are turning, we’re drilling some of those targets.

So as I said, detailed geology is being done and is being carried at Tushka, at Gundar Far East, and we’ll see this on the next slide. So you see the next slide is showing you where the mine is, which is the permit right in the middle. And then you have the 10 kilometer, 20 kilometer, 30 kilometer. And we are focusing on finding a new structure, which is a distance that we can track to the plant to either increase plant capacity to maybe depending what we find to use. We have three plants, a small leaching plant, a flotation plant and the bigger plant that we just completed.

So we’re looking at different things. We have identified structures that are gold bearing. We’ve identified structures that are silver copper. And hence, we’re really working to find that other structure, which we believe is there. And we’re also using AI.

Probably in the next quarter, we’ll be able to tell you what a massive AI program has done in reviewing all the data that we have, all the data, geophysics, geochem, satellites, spectral, stream sediment, and we’re using AI now to do the work of many, many geos that would do in a number of years and that’s being done in a couple of months. The next project, as we all know, is Boumad Din. Boumad Din is our Tier one asset. It’s we’ve completed 33,000 meters of drilling in Q2. You know that 33,000 meters for most companies is they don’t even do that in one year.

This is what we’ve done in one quarter. We are at 79,000 meters after two quarters and there’s more coming. There’s more coming because we’re finding new structures. So this time we’ve done a lot of drilling on the main trend, on the TZ trend and on the MRN trend, which are all parallel. So those are the parallel structure to the main trend.

And we’ve confirmed continuity and extension. The PEA is only on these three structures, the TZ, AmeriRen and the MainTrend. Everything else that we’re looking at is not going to be included in the PEA. It’s going to come in a second step as we are developing other satellite deposits at Boumazin. But the main trend TZ and Imaren have enough quantity of ore and grade to become a Tier one producing asset.

In addition to the surface work, we have identified a new zone, which you’re going to hear over the next couple of weeks and months called ACRM, which is a permit that we knew because we had done the geophysics that we were able to acquire. Because as I say, we do acquire permits every quarter. David and his team are picking up additional ground based on additional information. So we have acquired this permit. It has a nine kilometer traceable structure where we discovered gold and copper.

So gold at three gram per ton, copper at 4%, and we can see it on nine kilometers. So this is the you can see the color, you can see the anomaly. This is what you see on the northwest corner. You see this elongated structure. We are covering it on nine kilometer.

We’re also buying additional ground to the north, but that is a geochem and a geophysics anomaly and where we are very positive about the grab sample, what we’re seeing, and we will be drilling that in the coming few weeks. So Boumatsun is again a world class asset. You’ve seen that slide many times. We have done a lot of work on the main trend, on the parallel trend. We are doing work now on the West structure and over the next few quarters, we’re also going to be doing work to the South on these very long geochem and geophysics anomaly.

That completes the geology. David will be on the call with us if you have questions. Also on the outlook, we’re confirming what we’ve put out in the past. We’re really motivated to meet all of this guidance. The production guidance is between 5,000,005,300,000 ounces.

And we are committed to meet this production number. So, as a summary and before we get into the question period, the catalyst for 2025 were and are commence the drill program. And of course, we have done that. We have commenced and are way into 140,000 meters of drilling at Boumazim and 25,000, 30,000 meters of drilling Gundai. Our second catalyst was to commence the Boumazin PA that was for 2025.

We are way into this Boumets in PA. As indicated, we expect that this will be released in 2025. We wanted to reach 3,000 ton per day of processing at the new plant. It was part of the ramp up plan. We have reached that throughout the quarter of Q2 and we are 15% above this already in Q3.

So the ramp up is following a steady state on the plant. I would say the ramp up is complete, on the infrastructure it’s complete. And the only KPI left and we’re fully aware of this is the dilution of at the mine and that’s something that we’re addressing. Provide updates on Bumadzin metallurgy and PA, and it’s mainly Metallurgy because that’s been kind of a question mark for many shareholders. And there will be a complete update on the Metallurgy.

The studies are coming to an end and we will have a full update for you in 2025. And publishing the updated Gundair technical report, we are working on this. The beauty of it is we keep adding beautiful structures and beautiful grade and new extension, but we are on it right now and want to have that done before year end or in 2025. So this completes the official presentation. We are open for business and for question.

So this concludes my formal remarks. I would like to now hand the call back to the operators for a Q and A session. Thank you.

Conference Operator: Our first question comes from Bryce Adams with Desjardins.

Bryce Adams, Analyst, Desjardins: Thank you, Benoit, and I appreciate the presentation. A couple of weeks ago, you put out July month to date production numbers. When we extrapolate those data points, for the full month of July, it gets to over 400,000 ounces produced. Can you talk to those July results? And if it cleared that 400,000 level, maybe got closer to four fifty thousand?

Benoit Lassalle, President and CEO, Aya Gold and Silver: Yes, Bryce, thank you. We did give you two July 3. And yes, for July, we have surpassed the 400. As we indicated, we will stop giving monthly production numbers because it does create some turbulence sometimes when you were in the ramp up. The ramp up is pretty much done.

Now you saw the steady state in Q2 at the plant. So yes, so July is above 400. It’s really it’s on our goal to go towards the 500. And we had a good July. The grade was better.

The throughput was excellent. Yeah, no, so July is a good month.

Bryce Adams, Analyst, Desjardins: Okay. Yeah. Sounds like it. I’ll I’ll mark that down more than 400. For the for the full second half results, in the open pit, what’s the key factors to managing the grade there?

It looks like open pit grade is more of a problem than underground. When we were on-site a few months ago, the upper benches were a little bit constrained, little bit tight for space. I mean, that could be normal course when you’re opening up the bigger pit, but operational flexibility was maybe not that great a few months ago. How has that improved? And is that the big factor in managing the open pit grade profile through the rest of the year?

Benoit Lassalle, President and CEO, Aya Gold and Silver: Yes, so look, you’re absolutely right. I mean, there’s no grade issue at Gundair. So let’s be very clear about this. There’s no grade issue. There’s a mining learning curve, and the mining learning curve was slower than what we had anticipated.

And at the beginning, and we were in kind of a honeymoon with the open pit, we were hitting all the structures that was pretty straightforward. It was lower tonnage and the open pit was quite steady. And the underground, as we were really pushing up the underground, it created dilution that we didn’t expect. So we changed the focus, we pushed more the open pit, we reduced the underground. By doing that, we did not solve the dilution of the underground, but we kind of got that under control a bit more and are getting good grades from the underground.

But the open pit, then we realized we need a bigger open pit. So we started doing some stripping, moving some of the infrastructure that you saw, the ventilation and getting our contractor to bring in more trucks in order to prepare for the better structure. So that was part that was Q2. So the open pit execution in Q2 was excellent. The dilution was not, and we therefore had lower grade than expected in the open pit.

So we know that in Q3, this is getting better, but you’re right, the open pit preparation to go on a much bigger pit is definitely the issue why the grade was a little bit lower. But we expect that to correct itself in Q3 and definitely getting even better in Q4.

Bryce Adams, Analyst, Desjardins: Okay. So expand that footprint gives you more flexibility.

Benoit Lassalle, President and CEO, Aya Gold and Silver: It does. It does.

Bryce Adams, Analyst, Desjardins: The last one for me, Benoit, is on exploration. In your newsroom, on your website, the last drill results from Zagunda were back in June. Should we be expecting another batch of drilling results in the near term? And how have assay lab times been? Is that a factor in the timing of drilling updates?

Benoit Lassalle, President and CEO, Aya Gold and Silver: Yes. So you’re absolutely right that the exploration results have lagged a little bit. It’s because we gave the focus to the development drilling and the drilling at the mine site. So at the lab, there’s so much capacity and we’ve told the lab, look, we want to have a priority on all the samples coming from production because with better definition, we have better grade, we have less dilution. So we gave priority to that.

But now that, look, the team is back, August is the month on holiday in Africa and mainly also in Morocco, but we’re working at capacity and David will have press releases both on Zgundeir and on Boumazin, I would say, at the very, very September as we are getting we’re drilling. You see the meters that we’ve done. We’ve done like almost 45,000 meters in Q2. So yes, there’ll be more results coming out. The reason we’re a little bit behind is because we gave priority to the production samples than the exploration samples.

Bryce Adams, Analyst, Desjardins: Okay. I get it. Thanks so much for all of that. I’ll jump back in the queue.

Benoit Lassalle, President and CEO, Aya Gold and Silver: Thank you for your questions, and thank you very much for your support.

Conference Operator: Our next question comes from Justin Chan with SCP Resource Finance.

: Hi, Benoit, and hi team. Congratulations on progress in the quarter. I was just curious maybe to get an update at where the plant is now because it’s been it was making steady improvements and thanks to Alex and the team for hosting us a couple of months ago. Was just curious where the oxygen plant is at, if that’s a nameplate now and I think recoveries were trending up associated with better oxygen performance. And as you mentioned, tons were getting above 3,000.

I was just wondering if you could give us a snapshot now of what the plant performance is like.

Benoit Lassalle, President and CEO, Aya Gold and Silver: Yes. Thanks, Justin. Rafael came back from the plant to Montreal for the call. So he’s here still wearing his working boots. So he can give you a very fresh summary of where we are right now.

So in July, we

Rafael Baudouin, Vice President of Operations, Aya Gold and Silver: had a two day shutdown during which we did some improvement. So recovery stands above 90% now for the last two months and that’s continuing around at 92. Throughput would be around 3,400 and we have days above that. But on average, stand about 3,400 and, yeah, availability is good, and we continue to test the limit, but right now, this

Benoit Lassalle, President and CEO, Aya Gold and Silver: is where we stand. The oxygen plant, the question is back to normal?

Rafael Baudouin, Vice President of Operations, Aya Gold and Silver: Yeah, the oxygen plant is no longer a limiting factor in recovery. We fixed what had to be fixed. There’s still tune ups to do, but it’s no longer a limiting factor for recovery, and the case for the last three months now. And then, yeah, like I said, we stand around 92% recovery, and we are in excess of oxygen in our reactors.

: Okay. Excellent. Now that sounds like there’s been really great progress in that side of things. And I know you have a healthy stockpile, but I suppose that will put some pressure on the mining side of things. I guess just curious where you see mining rates in Q3 and Q4 this year.

Do you think you can match the processing rates or will that still be ramping up over that period of time?

Rafael Baudouin, Vice President of Operations, Aya Gold and Silver: So our mining ramp up plan is through the year. And as we discussed a bit earlier on this call, we need to make more room in the open pit, which we’re doing. That’s our super pit progress is a project is doing well. So we will continue to ramp this up through the year. And of course, target is to have the same mining rate as the milling rate.

: Got you. Thanks. And maybe just the last one, Raf, when we were outside, you mentioned improvements on blast monitoring as

Rafael Baudouin, Vice President of Operations, Aya Gold and Silver: part

: of the open pit improvements. Just curious, like what the timeline for that is? And is that will that starts coming to the numbers this year also?

Rafael Baudouin, Vice President of Operations, Aya Gold and Silver: Well, we’re putting in place a team, we have the software, we have the procedure. Now this is going to be a continuous improvement journey that we’re putting in place for the second half of the year. So I would say Q3 is the implementation and by Q4 will be in place and we expect to see good results from that.

: Okay, great. Thanks a lot, guys. I’ll free up the line for other people and jump back in if there’s any more. Thanks so much.

Benoit Lassalle, President and CEO, Aya Gold and Silver: Thanks, Justin.

Conference Operator: Our next question comes from Don DeMarco with National Bank.

Don DeMarco, Analyst, National Bank: Thank you, operator, and good morning, Ben, Juan, team. Congratulations on these improvements and recoveries throughput on a quarter by quarter basis. But maybe I’ll return to grades just to see if I can get a little more color. Where do you see the most opportunity, whether open pit or underground, both in terms of addressing dilution or also in terms of mine sequencing? Do you have any higher grade zones that you might be geared up for the second half of the year?

Benoit Lassalle, President and CEO, Aya Gold and Silver: Yes. Thank you, Don. Of course, your question is right on. This is something that we manage. I looked in doing the review because we do review this on a weekly basis with the team.

I looked at the original budget that we approved and our average grade in the ramp up for Q1, Q2 in our original budget was 155 gram per ton. That was the original budget that we had. So we were very clear on what needed to be done. And finally, the average grade for H1 or for Q1, Q2 is 151. So yes, we’re a bit lower, but we because we knew as of last year that the dilution was something that we needed to manage.

Now, when we look at what we will be mining in Q3, Q4, it’s between 180 to 200 gram per ton. So that’s what’s out there in the mine plan. So we know it’s there. Now we also know that we still have dilution issue, which about blast control on the open pit and reducing the dilution, which we’re addressing. We’re now using new software where we have hired new people to be with us because that’s something we’ve realized is we just need more bench strength because our learning curve was slower than what we wanted.

So we have higher bench strength. We have more people. We are mining in Q3, Q4, January gram per ton. July was already better. We know that.

And because of the nature of the deposit, we can go into some high grade zone and that’s your question sequencing. So we do have in the sequencing better grade than Q1 and Q2, Q1 and Q2 knowing it was a ramp up. And again, when you compare yourself, you see that finally our ramp up, we still made 15,000,000 of cash flow in the ramp up in Q1, Q2. So we want to get into better grade in Q3, Q4. We are going into better grade, but we also absolutely need to reduce the dilution.

And that’s going to come in the open pit with better blast control and in the underground, which is just better geological control. We do have three by three spacing, drill spacing in the open pit. We cannot do that in the underground, but we are improving. We are improving, not where we want to be, but we are improving. And that’s the last KPI of the five KPIs that we’re managing in the ramp up.

So we are mining in the mine plan 180 to 200 in the Q3, Q4 period. And for us to meet guidance, all we need is to be in the mid-one 160. So we are very comfortable with our guidance because we need 160. We’re going to be mining 180 to 200. So we’re quite comfortable.

Don DeMarco, Analyst, National Bank: Okay. Thank you very much. That’s helpful. Well, we’ve got a catalyst later in the year with the Boumediene PEA, and and I know you’ve considered a range of different processing options. So with the PEA, have you sort of made your decision?

I know you’ve talked about a roaster at some point. So will you go with that method in the PEA? And also, will there be perhaps options presented that show what the economics might look like if you were to just sell the concentrate and not roast it?

Benoit Lassalle, President and CEO, Aya Gold and Silver: The answer is yes. Exactly that. We will have a two step project, one with the concentrate, step one, two with the roaster, step two. We indicated that last year that the roaster was ahead of the game on the others, and it’s clearly coming out that way. So Ralph and his team are working on this.

We’ve actually even this week started to work on the org chart of how many people we need to recruit to fast track this project. So that’s where we are. We’re very happy with what we’re seeing right now. We’ll have something in Q4 available, but you’re absolutely right. Step one, do a concentrate, see the economics of that step one, much lower CapEx, lower or easy OpEx, easy to build.

It’s about a logistic game. Step two, talk about the roaster, which we’ve always said would be done with the state, with a partner. That’s becoming a very important project in the country, and that’s something that is a step two, but yeah, it will be part of the PA.

Don DeMarco, Analyst, National Bank: Okay. Great. Well, thank you for that. That’s all I’ve got. So thanks again, good luck with the rest of the quarter.

Benoit Lassalle, President and CEO, Aya Gold and Silver: Thanks, Don. Thank you.

Conference Operator: Our next question comes from Charles Ed Yemen with Scotiabank.

Charles Ed Yemen, Analyst, Scotiabank: Thank you for taking my question. So I’m I’m asking you on behalf of Ovez. Maybe I can just start from, Filmidine. I just wanted to be clear on the, the PEA year. So the expectation is that you’ll be putting out the PEA in Q4 of this year?

Benoit Lassalle, President and CEO, Aya Gold and Silver: Yes, if the question is, PA Q4 this year, the answer is absolutely Q4 this year.

Charles Ed Yemen, Analyst, Scotiabank: Yes. Okay, thank you. I guess my next question is just going to be on the MIND grades, I think there’s a comment in the outlook that talks about targeted initiatives. Are you able to speak to some of that? Sorry if I missed that already.

Benoit Lassalle, President and CEO, Aya Gold and Silver: I’m sorry. I didn’t get the question precisely. What’s your question?

Charles Ed Yemen, Analyst, Scotiabank: So in the outlook section of the press release, you talked about targeted initiatives to strengthen mine grades as operations maintain a steady state. And I was asking if you could Yes,

Benoit Lassalle, President and CEO, Aya Gold and Silver: yes, yes. You want to what kind of initiatives we have? Absolutely. So we first initiative was stronger bench strength. So that was number one, is bring more people in that have underground or open pit expertise and just bring senior management that can support the operating team.

So that we’ve done that. Two, in the open pit, we’re using software on blast control. We’re using better definition. We’re using we have a contractor with whom we work closely. There’s a change of equipment as well.

The contractor has purchased new trucks that have bigger capacity, more trucks for the preparation of the open pit so that we can have access to better benches. So that is being done as we speak. And in the underground, it’s similar, mining bench strength, better definition, more geologists, more mine production geologists, so that we have a better planning of what is out there and compare that to execution. We were doing this, but we’re now going to increase the bench strength on the underground mining. I don’t know, Rafael, from what I just said that you would add that to make us better open pit and underground?

Rafael Baudouin, Vice President of Operations, Aya Gold and Silver: Yes. We also continue the underground development and we’re sinking the ramp, which will give us access to new always new levels. In the open pit, blast movement, we know the blast movement is a big contributor to the dilution, and this is what we’re tackling head on. And as we go down the pit, we also refine our understanding of the deposit, which will also contribute to help us out. So in a nutshell, I would say, blast movement for open pit underground as we open new levels, we learn from the levels above, and we have a bit more manpower, especially on the geology for mapping on the ground.

Charles Ed Yemen, Analyst, Scotiabank: Alright. Thank you. And just on exploration, I I mean, when when could we expect results from the regional exploration project? I know you have talked about Zigunda and Dumadin exploration results coming soon, like the regional bit of it, like when could we expect results?

Hugo Landry Tolstrochuk, Chief Financial Officer, Aya Gold and Silver: Yes, thanks for the question. So exploration results, especially for what’s regional, it really depends on what we hit. A lot of it is greenfield. And right now, there is as Benoit was mentioning before, we’re putting priority we were putting priority to what was near mine, Forsgunda specifically what was near mine and with development. And so regional, it really depends.

But on Boumazin, as Benoit mentioned, there’s some nice there’s some interesting things that we’ve seen. And so those I would think is more back half of the year in terms of results from that.

Rafael Baudouin, Vice President of Operations, Aya Gold and Silver: Right.

Benoit Lassalle, President and CEO, Aya Gold and Silver: But we will be putting out results on the drilling in September, October, I mean, on a regular basis because it’s we’re doing a lot of drilling and so we’ll keep you informed.

Charles Ed Yemen, Analyst, Scotiabank: Thank you very much.

Elizabeth Hamaue, Director of Corporate and Financial Communication, Aya Gold and Silver: Our

Conference Operator: next question comes from Justin Chan with SCP Resource Finance.

: Hi, guys. Thanks. Just a small one maybe for Hugo. But just on you now have some income taxes built up on your payables. I’m just curious if there’s any guidance you can give us about the schedule for tax payments this year.

Hugo Landry Tolstrochuk, Chief Financial Officer, Aya Gold and Silver: Yeah, so tax payments are in Morocco are a little bit different than in Canada. We do not have our provisional accounts or taxes that we have to pay are based only on last year’s numbers. And so we don’t have to make provisional accounts based on expectations as we would in Canada, for example. And a lot of our taxes payable are derived from unrealized foreign exchange gains because our debts by our local company are in USD and the functional currency there is the Moroccan dirham. And the Moroccan dirhams appreciated quite a bit compared to the USD.

So we’ll see how the end of the year ends and then a determination will be made or a calculation will be

Bryce Adams, Analyst, Desjardins: made at the end of

Hugo Landry Tolstrochuk, Chief Financial Officer, Aya Gold and Silver: the year and then we have to pay taxes kind of in the March or early April timeframe if taxes are payable.

: Okay, gotcha. So I guess maybe for the rest of this year, should we just model that as you accrued taxes, but don’t pay them or just maybe model them as matching like what’s accrued? So

Hugo Landry Tolstrochuk, Chief Financial Officer, Aya Gold and Silver: we pay our provisional accounts as per what we had last year. And so we do pay taxes on a quarterly basis, but based on last year’s results. And then if there’s additional income tax, then right now we accrue them on our balance sheet and we show them as a liability.

: Okay, gotcha. All right, thanks, Hugo. Appreciate

Charles Ed Yemen, Analyst, Scotiabank: That’s Yeah. That was that was

: my question for this one. Thanks very much, guys.

Conference Operator: That concludes today’s question and answer session. I’d like to turn the call back to Ben Wallace Al for closing remarks.

Benoit Lassalle, President and CEO, Aya Gold and Silver: Thank you, operator. Thank you everyone for being on the call today. Thank you for all the questions. I’d like to close in saying and coming back to the fact that we’ve already produced 10,000,000 ounces of silver production from Gundair in the last five years. There’s much, much more coming as we will present the new mine plan before the end of the year.

I also would like to comment that due to the fact that we have a strong balance sheet, we can be very selective on how we sell the silver. We’re never in any rush to sell. And we this week, we were able to sell 100,000 ounces at 38.5 and kept 130,000 for a better price. And we also have 100,000 ounces delivery next Monday in Geneva. So we do have a very smart selling strategy and that pays off.

We always get a very good selling price. And as well, we did talk about new hires, but let me tell you that AYA is a very good name in country. It’s now a very it’s a very well recognized name, and we are bringing in some new senior managers at the mine level where which will be complement to the existing team, which will allow us to correct that last KPI that has been an issue. So this Gundeer ramp up, it’s six months. It’s done at the plant.

As Rafael said, consistently between 3,400, 3,500, even some little peaks above this. So with this kind of throughput, with an improving grade and strong recoveries, you can expect a very strong H2 coming. Focus is 100% on underground and open pit operation. This is the last KPI, and we are focusing on this on a daily basis. And we are fully committed to our production guidance.

Boumaden PA, two questions on it. It is a transformational PEA. As we all know, it’s a multimillion ounce silver equivalent or gold equivalent. It’s a Tier one asset and it’s staged for massive growth of our production profile and also grow in other structures that are in this portfolio in Boumazin, which as you know, we have now over 700 square kilometers of land. So from that, we’re heading into a very exciting time on exploration and resource growth.

We have ongoing success at Gundel, you see the results. We have also ongoing success at Boumatsin on the main structure. We will continue to drill and have a very extensive drill program. We are also looking next year at a larger drill program at Boumatsin than what we have this year because we will be heading into resource conversion from inferred to M and I and to reserves. So you can expect a very large drill program next year.

And Boumazin, it’s a district scale project, and there’ll be also regional drilling at Boumazin where we have some very, very strong anomalies that we need to drill. And we will continue to add ground at Gundair and Boumatsin. The fact that we were the first one in, what we as referred as first mover advantage is absolutely true, and we keep adding ground at Gundair and at Boumediene. So very exciting time next year for exploration. Cash flow is continuing.

We expect a stronger cash flow for H2. Of course, we don’t control the silver price, but assuming that is constant, we expect a very strong cash flow position for the rest of the year. In our when we will be we are cash flow positive now and we’ll continue to be in the next few quarters. Margin are expanding, throughput is stable and recovery is strong. In our strategic positioning in Morocco, we are continuing to be focused exclusively on Morocco.

We’re looking at additional ground on default. There are some families that have good assets, good projects that are dormant. We’re always continuing to review those and bring them in under the name and under the AYA portfolio. And to close on cost, because we did talk about grade, grade has a direct effect on cost. And we looked at that very, very precisely.

But I just want to also tell you that when we look at the team here and how they manage the Zugundeer mine, when we looked at the cost per ounce, it’s a certain amount, but we manage cost per ton, which is the cost of each ton that we move. In our budget, open pit and underground, we add $50 $56 a ton. The actual for the first two quarters is $46 We are almost 20% below our budgeted cost. In processing, the budget was 31.5, the actual is 32. The difference is additional cyanide that was needed.

So you see that the costs are very well managed. The plant is doing extremely well. There’s one element, We need to reduce dilution. By reducing dilution, we will reduce cash costs, we will reduce ASIC, we will improve cash flow, and we will come back to where we want this project to be so that we can focus on developing and building Boumediene in the next few years. Thank you very much for your time.

Thank you for being there and supporting us. And we will talk to you over the coming months, and we will be together in November for the Q3 conference call. Thank you so much.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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