Earnings call transcript: Galiano Gold Q2 2025 beats expectations, stock surges

Galiano Gold Inc. reported a strong performance for the second quarter of 2025, surpassing analysts’ expectations with an earnings per share (EPS) of $0.08 against a forecast of $0.05, marking a 60% surprise. Revenue also exceeded forecasts, reaching $97.3 million compared to the expected $90.25 million. Following the announcement, Galiano Gold’s stock surged by 16.5% to $1.84 during after-hours trading, reflecting positive investor sentiment. According to InvestingPro data, the company maintains a strong financial health score of 3.21 (rated as "GREAT"), with particularly robust price momentum and relative value metrics. The stock has delivered an impressive YTD return of 28.46%.

Key Takeaways

• Galiano Gold’s Q2 2025 EPS and revenue exceeded forecasts significantly.
• The company witnessed a 46% increase in gold production from Q1.
• Stock price rose by 16.5% post-earnings announcement.
• Galiano Gold maintains a strong production outlook for H2 2025.

Company Performance

Galiano Gold demonstrated robust performance in Q2 2025, with a notable increase in gold production and financial metrics. The company produced over 30,000 ounces of gold, a 46% increase from the previous quarter. This performance is set against a backdrop of high gold prices, which bolstered the company’s revenue and net income. Galiano Gold continues to leverage its position as Ghana’s largest single asset gold producer, with strong exploration results and a positive five-year production outlook.

Financial Highlights

• Revenue: $97.3 million, exceeding forecast by 7.81%
• Earnings per share: $0.08, surpassing forecast by 60%
• Net income: $21.6 million
• Adjusted EBITDA: Just under $40 million
• Cash flow from operations: $35.8 million
• Cash balance: $115 million with no debt

Earnings vs. Forecast

Galiano Gold reported an EPS of $0.08, beating the forecast of $0.05 by 60%. Revenue reached $97.3 million, surpassing expectations by 7.81%. This significant earnings surprise reflects the company’s operational efficiency and favorable market conditions, notably the record high gold prices.

Market Reaction

Following the earnings announcement, Galiano Gold’s stock price surged by 16.5%, closing at $1.84 in after-hours trading. This movement places the stock closer to its 52-week high of $1.8989 and indicates strong investor confidence in the company’s future prospects.

Outlook & Guidance

Galiano Gold has maintained its production guidance for 2025, expecting to produce between 130,000 to 150,000 ounces of gold. The company anticipates stronger production in the second half of the year and is advancing development at the Nkran deposit while exploring potential underground mining opportunities at the Obore site.

Executive Commentary

CEO Matt Badalak emphasized the company’s robust five-year production outlook and strong financial discipline. He highlighted the progress at the Encran deposit, stating, "The stripping to access high-grade ore at the Encran deposit is progressing ahead of schedule." VP Exploration Chris Pepman noted the ongoing integration of exploration results, saying, "Results from this work will be integrated with the assays being received from the current phase two infill drilling."

Risks and Challenges

• Market volatility in gold prices could impact future revenue.
• Operational challenges in scaling production efficiently.
• Geopolitical risks in mining jurisdictions like Ghana.
• Potential delays in exploration and development projects.

Q&A

During the earnings call, analysts inquired about the pre-stripping costs for the Nkran deposit and potential shareholder returns. Executives also detailed modifications to the secondary crusher and clarified capital expenditure expectations, indicating ongoing efforts to optimize operational efficiency and shareholder value.

Full transcript - Galiano Gold Inc (GAU) Q2 2025:

Jenny, Conference Operator: Good morning. My name is Jenny, and I will be your conference operator today. At this time, I would like to welcome everyone to the Galiano Gold, Inc. Second Quarter twenty twenty five Financial Results Thank you. Mr.

Matt Badalak, President and CEO of Galeana Gold, you may begin your conference.

Matt Badalak, President and CEO, Galiano Gold: Thank you, Jenny, and good morning, everyone. We appreciate you taking time to join us on the call today to review Galliano Gold’s second quarter twenty twenty five results that we released yesterday after market close. On slide two, we’ll be making forward looking statements and referring to non IFRS measures during the call. Please refer to the cautionary notes and risk disclosures in our most recent MD and A as well as this slide of the webcast presentation. Yesterday’s release details our second quarter twenty twenty five financial and operating results.

They should be read in conjunction with our second quarter financial statements and MD and A available on our website and filed on SEDAR plus and EDGAR. Also, please bear in mind that all dollar amounts mentioned on the conference call today are in US dollars unless otherwise noted. Moving to slide four. With me on the call today I have Michael Cardinals, our Chief Operating Officer Matthew Freeman, our Chief Financial Officer and Chris Pepman, our Vice President Exploration. For this presentation, I will initially provide a brief overview of the quarter, Michael will give an operations update, Matthew will discuss the financials, and then Chris will review the recent exploration success his team has had at Aboure.

I’ll then provide some closing remarks and open the call for Q and A. Here on slide five, we can see the team commence building momentum during the quarter towards a stronger second half of the year. I’m pleased to report that we saw a reduction in significant safety incidents during the period with no lost time injuries and no total recordable incidents. Looking at operations, our mining contractor increased ore production from the Bore and Esasi by 5% quarter on quarter, and the stripping of the Nkran deposit advanced ahead of schedule during the period. On the processing side, progress on the secondary crusher accelerated towards completion during the quarter, and I am pleased to report that the commissioning of the circuit commenced slightly ahead of schedule in late July.

Michael will provide more details on this and highlight the production benefits we expect to realise post commissioning and optimisation of the circuit. Gold production increased to just over 30,000 ounces in Q2. This is an increase of 46% from Q1 and brings our year to date production to just over 51,000 ounces. Moving to our financial performance, we saw a 10% reduction in all in sustaining cash costs during the quarter, which saw us generate $36,000,000 in cash flow from operating activities, ending the period with $115,000,000 in cash and no debt. Matt will provide more details on this shortly.

Finally, I’ll briefly touch on exploration. We saw positive results from our deep step out drilling program at the Abore deposit with mineralization intercepted in all four holes across a 1,200 meter strike length. This included a particularly strong intercept of 36 meters at 2.5 grams per tonne. The program confirmed that the borate granite and mineralizing system continues 200 meters below our current mineral reserve pit shell over a significant strike length. Chris will provide more commentary on the program later on the call.

Now turning it over to Michael and a discussion on our progress in operations during the quarter. Slide six, please.

Michael Cardinals, Chief Operating Officer, Galiano Gold: Thank you, Matt, and good morning, everyone. As Matt just highlighted, we saw positive momentum in the second quarter of the year. We focused on operational safety and rolled out several safety campaigns to increase awareness around key areas that impacted previous quarters, such as hand injury prevention, fatigue management and energy isolation with our staff and our business partners. I’m happy to report there were no recordable injuries during the quarter, and our lost time injury and total recordable injury frequency rates both improved to zero point four two and zero point nine seven respectively per million hours worked. Looking at our mining performance during the quarter, we continued to see strong production performance at the Abore Pit with an 18% increase in ore mined versus Q1 extracting 800,000 tons.

And Assassi continued steady production also producing 500,000 tons of ore, which enabled us to execute on our plan to feed a blend of fresher Borre ore and softer Assassi ores. The forecast for the second half of the year continues to be on track to deliver more ore tonnes than the first half of the year. EngraN waste stripping continued and benefited from a full quarter’s production, increasing 113% compared to Q1. The mining contractor is also mobilizing additional fleet, and we expect to see further increases in volumes in the second half of the year. On to slide seven, please.

On the processing performance, we also saw some positive momentum in the plant with an increase in the number of tonnes treated on the back of improved plant availability and an increase in overall recovery, which contributed to a quarter on quarter increase in gold produced and sold. We sold just over 29,000 ounces and produced just over 30,000 ounces for the quarter. Following the encouraging performance in Q2 and the installation of the secondary crusher, we are maintaining production guidance towards the lower end of the range that was outlined at the start of the year between 130,150 ounces. Another key project completed during Q2 was the installation and commissioning of the new carbon regeneration kiln, which we expect to deliver long term economic and operational benefits to the milling circuit. On to Slide eight, please.

Continuing on with projects, I’d like to give an update on the secondary crusher. As we have previously communicated, the hardness of a bore ore was a limiting factor to our mill throughput, and the installation of the secondary crusher is critical in achieving a material feed size that will enable us to process harder ore and reach design throughput of 5,800,000 tonnes per annum. I’m extremely happy to report that the crusher was brought online at the July, on budget and without incurring any incidents or injuries. We are currently working to optimize the secondary crusher performance and will be completing several small upgrade projects during August. But we are very pleased with the initial performance.

The delivery of this project marks a significant milestone for the AGM, and we expect to ramp up production in the latter part of the year as planned. And with that, I would like to turn it over to Matt Freeman to discuss the company’s financial results. Slide nine, please.

Matthew Freeman, Chief Financial Officer, Galiano Gold: Thanks, Michael. Good morning, everyone. Here on slide nine, we’ve outlined some of the key financial metrics for the quarter. We recognized revenues of $97,300,000 in the second quarter at an average realized price of $3,317 per ounce before the impact of hedges. We earned income from mine operations of £37,200,000 while net earnings continue to be negatively affected by the fair value adjustments to our hedge book following the run up in gold prices, we still recorded net income of 21,600,000.0 or $0.7 per share.

Adjusted EBITDA was just under 40,000,000. We generated 35,800,000.0 cash flows from operations and ended the period with a strong cash balance of approximately $115,000,000 and that included having paid a $6,000,000 income tax instalment to the Ghanaian Revenue Authority. Given these strong cash flows, we intend to allocate additional capital to accelerating the waste strip at Encran. And as Michael noted, we expect to see Encran mining volumes ramp up in the second half of the year accordingly. As production has increased substantially since Q1, we’ve also seen a meaningful reduction in ASIC and we expect this trend to continue as production rises in the second half of the year.

We anticipate that ASIC will trend towards the top end production guidance as we’ve mentioned previously due to the production expectations following a slow start up to the year. We also want to reiterate that there continue to be factors outside of our control that were not envisaged when we set guidance that have impacted ASIC. The effect of higher royalty costs resulting from both high gold prices and the additional 2% growth in sustainability levy that the Ghanaian government levied from April, these are expected to add a further $100 per ounce to AISC at current spot prices. Furthermore, during the second quarter, there was some unexpected appreciation of the Ghanaian CD against the U. S.

Dollar, which will add additional pressure to ASIC is sustained over the balance of the year. Despite our overall cost structure still being predominantly US dollar based. Moving to slide 10. Notwithstanding these pressures on reported ASIC, we continue to focus on the cost structure of the mine and are pleased to report that fixed operating costs such as processing and G and A in aggregate remain consistent with recent quarters. Of note, costs per ton have reduced throughput has improved quarter on quarter, seeing a 10% decline in unit costs since Q1.

And we expect further decreases on a unit basis as the full impact of the secondary crusher is realized in the second half of the year. Mining costs at our producing deposits, namely Aboriginal and SRC remained consistent on a per tonne mined basis and in line with the fixed unit rates of the mining contract. Although I expect to see mining rates marginally increase as we drive deeper into these deposits where haul distances increase. MRAM mining costs are also subject to a fixed rate mining contract and we expect to see unit costs decrease as volumes increase over the next twelve months as fixed management costs under this contract are shared over more tons. We also remain disciplined with capital allocation, only spending where critical and with clear value lines, clear line of sight to value creation.

We’re pleased that the secondary crusher project is coming on budget and the largest project ongoing currently is raise eight at the tailings facility, which is expected to be completed in 2026. Overall costs have been well managed and we should see improvement in unit rates as the year progresses. Now the secondary crusher is online and we expect to process more tonnes and subsequently produce more ounces. This will generate higher operating margins and cash flows for the business. Slide 11.

As our ASIC trended down in Q2 as expected, such that the cash margins have improved dramatically with the run up in gold prices. This has meant that despite investment in development capital for the secondary crushing project and stripping at Encran and the tax instalment, we continue to maintain a very strong balance sheet with approximately $115,000,000 in cash and no debt. And with that, I’ll turn it over to Chris to discuss the exciting drilling results we continue to see at Obuori. Thanks, Matt.

Chris Pepman, Vice President Exploration, Galiano Gold: So Obuori was the primary focus of exploration efforts in Q2 and was the sole focus of our near mine efforts with the commencement of an expanded Phase two infill drill program and the completion of the first deep drill test, which I will discuss shortly. While we continue to have success in our near mine programs, we also continue to advance our regional generative program with work progressing at the Ensaroma and Skygold B targets through the quarter. The IP survey at Skygold was completed in June and initial results suggest a new interpretation of the underlying geology, which will likely lead to new potential drill targets. Q2 prospecting activities along the Encran shear at the Enceroma target area, which is located Southwest of Encran returned multiple high grade quartz vein grab samples within the initial five kilometer long golden soil anomaly, further highlighting the prospectivity of the area. An IP survey is currently underway and will be used for final refinement of drill targets planned for testing in the second half of this year.

The Phase two infill drilling at Borre began in early Q2 and is the immediate follow-up to the positive results of the first phase of drilling completed and announced in Q1 of this year. As a reminder, phase one drilling was focused largely on testing for continuations of mineralization immediately below the mineral reserve and resource at the southern end of the deposit and returned significant results, some of the highlights of which are listed at the bottom of this slide. Phase two has been expanded to cover approximately one and a half kilometers of strike length extending to the northern end of a bore. Next slide please. This image shows the priority target areas of the phase two infill drilling currently underway on a long section of a bore that shows the existing drilling including that from Q1 infill phase one holes.

Current drilling is focused on testing for the presence of potential north plunging low angle ore shoots across the entire strike length of the deposit, as well as possible self plunging conjugate structures carrying mineralization, as well as to determine the potential for open pit reserve and resource expansions. Drilling has progressed under budget and ahead of schedule with the majority of the planned 8,900 meters over 35 holes now complete, and we expect to be in a position to release results in the coming weeks. Slide 14. As discussed in our July press release, the primary objective of the deep drilling completed in Q2 was to test for continuations of the boring mineralizing system well below the current mineral resource and prove it is carrying grades and width that could support an underground bulk mining operation. In this, we were successful as all four drill holes intersected significant widths of mineralized granite, with three of them returning significant assay results, including as Matt has already mentioned, 36 meters at two and a half grams a ton, but also 16 meters at 3.1 grams per ton gold and 18 meters at 1.9 grams per ton.

The system remains open in all directions at depth and is the first proof of concept for an eventual transition to an underground mining at a boring. Results from this work will be integrated with the assays being received from the current phase two infill drilling at shallower depths to determine the next steps for further drill testing, which may result in additional open pit expansions. Next slide. This is a plan map showing the wide spacing of the four deep drill holes across approximately 1.2 kilometers of the total 1.8 kilometers strike of a bore and demonstrates how we really have only just begun to test the full strike extent of deeper mineralization. Next.

Here we show an image of a long section through a bore with gram meter contours for existing drilling as well as the four new deep holes. This provides a visualization of how these holes really just were really just our initial probe of the mineralizing system below the mineral resource, and how there is significant room for additional growth at depth. The next two images I’ll show are taken from the July press release. This first image shows Hole 350, which intersected 36 meters at 2.49 grams per tonne gold, approximately 90 meters below the mineral reserve at a Bore main pit. Seeing these widths and grades in our first pass testing of these deeper zones is a major success of the program.

And it confirms that the system does carry mineralization that could support a potential bulk underground mining operation. It’s also important to note the grades are significantly better than those currently modeled in the bottom of the inferred portion of the mineral resource at this cross section shows. The final image I’ll show today is a cross section through the northern end of Obori. In this area, our deep test intersected the Obore granite approximately 200 meters below the current reserve, again with very good width and grade. This image is one that shows how open the deposit remains for further drill testing and the scale of potential growth that we see at Obore.

We see Q2 as another successful one in the exploration space at the AGM, as we continue to advance our growth opportunities in both the near mine and regional programs. We are well funded and supported by Matt and the board and expect to put forward additional drilling at Bore in H2 to build on the continued successes we’re seeing there. With that, back to you, Matt.

Matt Badalak, President and CEO, Galiano Gold: Thank you, Chris. With the team building momentum and the secondary crusher now online, as we previously guided, we anticipate production will be stronger in the second half of the year. Galliano is well positioned as Ghana’s largest single asset gold producer with compelling fundamentals across many key areas. We maintain a robust five year production outlook with strong financial discipline, including a solid $115,000,000 cash position while remaining debt free. Our exploration program at Obare is delivering results, and we continue to advance multiple greenfields exploration targets across our extensive land package.

The stripping to access high grade ore at the Encran deposit is progressing ahead of schedule, and the mill throughput is expected to ramp up to 5,800,000 tonnes per annum now that the crusher is commissioned. Operating in Ghana provides us with a safe and stable jurisdiction with a mature regulatory framework under which we can execute our organic growth profile and drive value for our shareholders. I will highlight that our current market valuation is less than 40% of analyst consensus net asset value. With the AGM highly leveraged gold price, a robust organic growth profile, and record high gold prices, the potential for value creation as we continue to build on our current momentum remains high. With that, I’ll turn it back to the operator and open up for any questions.

Thank you.

Jenny, Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press the star followed by the one on the touch tone phone. Should you wish to cancel your request, please press the star followed by the two. And your first question is from Heiko Ihle from H.

C. Wainwright. Your line is now open.

Heiko Ihle, Analyst, H.C. Wainwright: Hey, there. Thanks for taking my questions.

Matt Badalak, President and CEO, Galiano Gold: Thanks, Heiko. Appreciate you joining the call.

Heiko Ihle, Analyst, H.C. Wainwright: Always and gladly. Hey. So your capitalized development pre stripping costs at ANCRAN were $6,900,000 during Q2, just over 10,000,000 year to date. Any idea what we should expect to model out for just pre stripping for the remainder of the year, just in general?

Matthew Freeman, Chief Financial Officer, Galiano Gold: Hi, hi, Coates, Matt here. Yeah, I think assuming like Mick and I have said, we’re going to be accelerating NCRM through the second half of the year. It’s not going to be too dramatic. Obviously, we have to get mobilized equipment sort of strategically in stage through the balance of the year. So a modest increase in Q3 and then a little bit more gain in Q4 would be the way I’d look at it.

So stepping up a bit from the 6.9 we have this quarter into next quarter and then a little bit more gain in the following quarter. We’re not talking like Dutch tripling or anything like that.

Heiko Ihle, Analyst, H.C. Wainwright: Got it. But trend line would be too conservative, so do take it up a notch.

Matthew Freeman, Chief Financial Officer, Galiano Gold: Yeah.

Heiko Ihle, Analyst, H.C. Wainwright: Okay, perfect. Yeah, because we didn’t have it like that before. Okay, awesome, and then just conceptually, mean your balance sheet keeps improving, you’re

Michael Cardinals, Chief Operating Officer, Galiano Gold: at almost 150,000,000,

Heiko Ihle, Analyst, H.C. Wainwright: 115,000,000 of cash, gold’s at 33.4, I mean I get that mining has things go wrong all the time and need a cushion, I mean, at what point is, for lack of a better word, is it enough? And when can you start distributing some money to your shareholders? And once that comes, what’s your preferred way to do it?

Matt Badalak, President and CEO, Galiano Gold: Heiko, thanks for that question. I mean, listen, I think we’re very cognizant of the fact that we’re building cash at the moment, but we’re also I’ll highlight that we’re also in a quite intensive capital allocation period towards Encrowd, right? And as we mentioned, we do want to and we see significant value accelerating that program cash permitting. And I think that that in itself is going to yield significant value for our shareholders as start to release material improvements in grade once we get into the ore from NCRANT. So that’s really our priority at the moment.

Certainly, as we do that and as cash becomes more accessible, we’ll have a look at other options in terms of returning value to shareholders. But our primary focus still remains reinvestment of capital into the asset itself, particularly while we’re still stripping Encrant.

Heiko Ihle, Analyst, H.C. Wainwright: Right, no, I fully agree that it should be your primary use of cash. I mean, you know how we we feel about growth of the company. Alright. I’ll get back in queue. Thanks so much for taking my questions, and and good job in the quarter.

Matt Badalak, President and CEO, Galiano Gold: Thank you, Pito.

Jenny, Conference Operator: Thank you. And your next question is from Raj Ray from BMO Capital Markets. Your line is now open.

Raj Ray, Analyst, BMO Capital Markets: Thank you, operator. Hi. Good morning, Matt and team. I’ve got a couple of questions. First one from Michael.

Michael, don’t know if you already spoke to it. My apologies if you did. But you did say that in the presentation that I was looking at with respect to the commissioning of the secondary crusher, there’s some modifications required for the downstream equipment. Can you highlight what kind of modifications and when I know you said you’re going to get to the steady state, but can we have some idea about timing? Is it towards the end of Q3 that you expect to be at steady state?

Around that 5.8 NTPA? And then I have a second question on it’s more for Matt. Matt, are we still expecting the non sustaining CapEx of 60 to 65,000,000 for the year? And the second part of that is, how should we look at modeling the sustaining part of call the, it, deferred strip for the second half? That’s it.

Thank you.

Michael Cardinals, Chief Operating Officer, Galiano Gold: Thanks, Raj. I’ll start here. Some of the upgrade projects that we’re looking at are involving primarily the drives for our conveyors. So we’re increasing speeds of the overland conveyor to now be able to accelerate the throughput off the back of better production out of the secondary crusher. We’re also looking at optimising the settings on our primary crusher.

And we’ve got a number of options to look at for our vibrating screen, which feeds the secondary crusher. So we’re looking at screen aperture sizing to optimize the feed to the secondary as well as total throughput. So we expect that to yield some benefits. We also have to do some modifications to the discharge great size in the SAG mill. So expect to have a lot of these modifications completed by the end of q three.

Raj Ray, Analyst, BMO Capital Markets: Okay, that’s good. Thank you.

Matthew Freeman, Chief Financial Officer, Galiano Gold: Hi, Raj. It’s Matt here on the other questions you’ve got. So from a development capital standpoint, I think the main components of that this year was the NCRM strip and then the secondary crushing upgrades. So obviously the majority of the secondary crushing upgrades, the costs were incurred in H1. Obviously, there’ll be some of those will be lagging through into the first part of Q2, Q3, sorry.

We’ve commissioned that now in July, so the lion’s share of costs have been spent then. So you can extrapolate a little bit more on the crushing circuit in H2. And as we mentioned to Heiko on the last question, we’re gonna see that increase through the balance of the year over and above the 7,000,000 roughly that we did in Q3. So you kind of need to extrapolate that through. They’re the main pieces.

There’s some other work on some of the project development costs that we have in terms of looking at sort of village relocations and things. Some of the early works on that will get picked up, but they’re not particularly material in this year. So I’m not sure we’ll quite get to the fully guided amount this year. We’ll probably be a little bit shy of that. But we kind of maintain that guidance as we see.

A lot of it’s gonna depend on how quickly we can mobilize equipment and how comfortable we are with the acceleration there. So it’s a little bit of a soft answer I know, they’re the main buckets and we shouldn’t expect anything else material.

Raj Ray, Analyst, BMO Capital Markets: Okay, that’s helpful. And then on the sustaining part of the deferred strip?

Matthew Freeman, Chief Financial Officer, Galiano Gold: Yeah, again, that’s always a tricky one to guide to as you know, because we’re looking at different phases of different pits and the way the county works on that. But essentially I’d say that we’re getting towards a more steady state mine plan with respect to Oboro. So I think you can probably extrapolate what we’ve seen in Q2 moving

Matt Badalak, President and CEO, Galiano Gold: forward for

Matthew Freeman, Chief Financial Officer, Galiano Gold: the next little while. Strip rate is starting to come to be more consistent both Borre and Esarcio, although Borre is gonna be the focus of the second half of the year. So I think you can kind of intimate that fairly well from what we’ve seen in the last quarter. That helps.

Raj Ray, Analyst, BMO Capital Markets: Okay. That’s great. Okay. No. That’s helpful.

Okay. Thank you. That’s it for me.

Jenny, Conference Operator: Thank you. There are no further questions at this time. Please proceed with the closing remarks.

Matt Badalak, President and CEO, Galiano Gold: Thank you, Jenny. I appreciate you moderating the call today, and I appreciate everyone dialing in and asking your questions. And I wish you all a good day. Thank you.

Jenny, Conference Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.

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