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Galiano Gold

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September 17, 2024 at 10:50 AM (MDT)|Broadmoor Hotel & Resort

Matt Badylak

President and CEO

Mr. Badylak is a seasoned mining professional with 20 years of operations experience including a number of senior management roles with Eldorado Gold. In his most recent role as General Manager Kisladag Mine, Mr. Badylak was responsible for multiple cost saving initiatives and optimization of the heap leaching operations, allowing the company to avoid construction of a capital-intensive milling facility and extend the operation of the heap leach. Prior to his role at Kisladag, Matt held various corporate and operations management roles in Eldorado Gold, including Managing Director of China Operations and prior to that, General Manager of the Tanjianshan Gold Mine located on the Tibetan Plateau in China’s Qinghai Province. Prior to Eldorado Gold, he worked in various technical roles across Australia and Asia. He holds a Bachelor of Science in Extractive Metallurgy & Chemistry from Murdoch University in Perth and is a member of the Australian Institute of Mining and Metallurgy.

This is an automatically generated transcript. Denver Gold Group cannot accept responsibility for mistakes, errors, omissions, or any action taken in reliance thereon. Use of this transcript is governed by Denver Gold Group’s Terms of Use.

Thank you. So good morning everyone. And thanks for joining me today to listen to the Galiano Gold presentation. So, cautionary statements, these are on our website, I'm not gonna spend the time to review them with you today. OK, so getting straight into it, the corporate snapshot, who are we, who is Galiano Gold? Well, we own and operate the Seco gold mine in Ghana, West Africa. It is a cash generating ounce producing asset that was historically owned in a joint venture with Goldfields since 2018. And we're really happy to announce that earlier this year, we consolidated the ownership of that asset under the Galliano umbrella. We are listed on the Toronto and New York Stock Exchanges and we currently have a market cap of around $350 million. And importantly, we have no debt and a strong balance sheet of 100 and $23 million which equates to an ev of about approximately $2 million on the back of the Goldfields transaction where we consolidated the ownership, goldfields, ownership of the, of the stock increase to just under 20%. And you can see there are a list of our other shareholders, very strong long-term support of shareholders and also on the back of that transaction, we did see an influx of, of new names into the registry which we are very happy and pleased about as well. With regards to analyst coverage and research, you can see that we have six analysts covering the story at the moment and some of their target prices are listed there. The most recent analysts taking up coverage is Bert from beacon securities. And you can see the the target price is there listed. And B and Burke's got us at a 4 $4 target price. Obviously, there's a bit of a delta between where we're trading right now and, and those, those target prices to the right there. But I think over the course of this presentation, I intend to explain to you why we think we can get to those levels. So just zooming in on the asset itself. This photo shows our 5.8 million ton per annum processing facility is fully B built, it's permitted and all the associated infrastructure is, is already in place. We are actually at the moment progressing away from a period of treating low grade stockpiles and reinvesting in the asset. And you can see here on the top four top four rectangles here, I'm showing both the 2024 costs and all instating. targets or guidance as well as our steady state. all instating cash costs and production ranges. There's a big delta with between the two. And again, this is as a result of our current investment period. And, and we feel that once we're through that, which includes investment in stripping of our current deposits, we'll see a significant reduction in the all in sustaining ca cash costs and an increase in in gold production on the back of higher grade material being fed to the processing facility. in terms of reserves and resources, we sit at 2.1 million ounces in reserve at a grade of 1.41 g per ton. And then in terms of mineral resources on the M and I category, we have 3.6 million ounces at a similar grade. Over the last 18 months, we've spent a significant amount of time and energy and investment in the near mine exploration space and we expect to update our mineral reserves and resources, our global mineral reserves and resources in January this year. And that will also be accompanied with an update to our, to our life of mine plan. The importance of updating that life of mine plan is the fact that the current technical report was delivered in a point in time and that point in time was when we were in a joint venture with Goldfield. So we only owned half the asset we didn't have access to the same balance sheet as we do right now and we didn't have a gold price that was running at 2500. So we are looking to update that life of mine plan in, in Q one next year on the back of those reserves and resources. Just a quick few comments on, on the jurisdiction which we operate in. We do believe that it's a premier jurisdiction in Africa. It's obviously the number one gold producer in, in Africa on the continent. It is a country that has a long history of mining and as a result of that, there's a lot of mature, well understood, well defined mining regulations that we can we can draw on. We also have an ability to draw on a very skilled workforce. due to the history of mining in the country, it's a stable democracy and it's undergone multiple decades of stable political transition of political power. And obviously we're joined in the country with some majors as well that operate alongside us. Just to name a few. We have Newmont, we've got Anglo Go, we've got goldfields, perseus Shandong are all operating alongside us. And that little image here on the, on the left of the the screen here is a zoom in of our tenements. We hold the largest consolidated land package on the Asanga Gold Belt and that's straddled on either side by the very much more mature from an ex race perspective, a very much more mature Greenstone belt in the sew and the Shanti Gold Belt. We do believe that there's significant exploration upside on our tenements to increase our life and mind beyond the current levels, I spoke a little bit about about the transaction with goldfields to consolidate this this asset at the start. I won't talk too much in detail about the structure of the transaction, but I will highlight the fact that it was a a highly accretive transaction to our shareholders. It resulted in very minimal dilution of about 10%. And then on a per share basis, you can see that our reserves grew by about 75% and our production rose by about 100% on a per share basis. We also benefited from consolidating the balance sheets we had prior to the transaction, a corporate balance sheet and then also a joint venture, joint venture balance sheet. Those were consolidated at the end of that transaction upon close and we actually gained $65 million on the balance sheet on the back of that. So it was a very unique transaction where you acquired half of an asset and your bank balance actually grew as a result of that. And obviously all of this has resulted in a very positive share price reaction. And we ran up about 100 and 20% 25% on the back of tho that news, I will point out however, that our P NAV is still trailing our peers and, and we currently trade at about a 0.58 P NAV. And I'm showing a slide there of our peers up the top in terms of our upcoming value drivers. I will start off by saying that we are looking to increase our production by about, double o, double our production in the near term. You can see the chart here where we started off on a on a attributable basis in 2023 65,000 ounces, we now have 100% of the asset and we're producing about 100 and 25,000 ounces of gold. This year, we are expecting to plateau off at a steady state of about 240,000 ounces over the life of mine. And this will result in a decrease in, in capital requirement to, to strip those ounces and, and to expose those those ounces and, and that all it'll also correspond with a incr decrease in oil in sustaining cash costs as our as our production levels rise. With regards to reserve growth, we are bullish on that and we feel that that will drive a sequence of the life of mine plan. I spoke about that a little bit earlier that we feel that it is the right time to update that and look at accelerating cash flows and bring forward cash flows to the beginning of the life of mine plan. The technical report that we currently have published when it was delivered in early 2023 was met with a little bit of resistance from our shareholders as a result of us pushing back and tail ending some of our cash flows and that was on the back of one deposit in particular en cran, which requires a relatively high strip. but it is the highest value ounces that we have in the ground and that resulted in a, in a large cash production towards the end of the, the life of mine. What we're trying to do now is bring the cash flow forward and accelerate in cran. I'm pleased to say that we are accelerating and advancing our negotiations with contractors to start mining that deposit. And we think that we'll have some good news on that front relatively quickly to share with the market. Obviously, we're, we're again very bullish on the exploration upside to increase our life of mine as well. So we feel that all these significant value drivers for the stock in the near term, the bore is the pit that we're currently mining and obviously has plays a significant role in our ability to execute our, our ramp up in production. I'm pleased to say that the contractor is now fully mobilized on the right hand side here of the chart. you're seeing their productivity on a month by month basis, they've been on site. It's been a slow mobilization, but they've been on site for quite some time. And you can see that they've increased steadily, their productivity month on month, last month, just to give you a bit of a metric last month, they moved 4 million tons for us. And so, you know, that shows that there are now pretty much well established on site. And we're pleased with their, their ramp up. The other thing that we're really happy about is that through that exploration effort, the near mine exploration effort, we've seen reserves at a bore rate grow by about 45%. We announced that on the back of our Q two production numbers. And what that does for us is, is it, it expands the pit that the mine contractor is currently working on and allows them to focus on that pit for longer, which is somewhat of a risk mitigation process as they get bedded in and, and comfortable in at the operation itself. And it does also provide us with a little bit additional flexibility in terms of how we sequence the life of mine plan as well. Just touch on a few other optimization projects that we're working on at the moment. The first one here is evaporators on the TSF those those were installed in March this year and we're pleased to say that we're very happy with the results we're seeing thus far. even during the, the wet season where we generally see an increase of water levels in the, in the Tailings Dam, they've remained steady and actually started to taper off. So we feel that this will have a material impact in our ability to reduce costs with regards to subs subsequent Tailings Dam lifts in the future. We're also currently installing a couple of cil tags which will have the the impact of increasing residents time and increasing recovery in the cil circuit. So they're due to be commissioned in Q 4 2024. So this year and then we're also moving ahead with a secondary crusher installation that will allow us to maintain our current throughput of 5.8 million tons per annum. and also have the impact of reducing cost on site. Currently, what we're doing is we're, we're using or utilizing three mobile crushes to do the same job. And as a result of that, it's elevating our cost. It's creating additional unnecessary human equipment interactions which we all remove on the back of the installation on this, of this crusher. So from a safety perspective, from a cost perspective and throughput perspective, these, this ticks all the boxes I'll speak quickly about exploration. So again, very bullish here and we are looking to spend about $15 million this year on exploration activities across site that's split across both brownfields near mine. And then also greenfields exploration opportunities. You can see the kind of tabs here highlighted in green and brown that shows you the the the extent of greenfields targets that we're looking at the at the moment. I already in terms of near mine stuff, I already spoke about a bore that rose in in reserve by 45%. This year, we are looking at N Cran as well. There's a Southern extension of mineralization there that we targeted through that near mine exploration program. And Miris is another deposit that we're looking to bring into a maiden mineral reserve in January this year. So we are expecting those, those reserves to to be positively impacted on the back of that, that work. And then with regards to, to Greenfield exploration, I'll just speak on, on a couple of targets here. The first one is really interesting to us. It's a four kilometer long soil anomaly at Sky Gold B. This is the largest soil anomaly that we've encountered on our land package to date. And I'm pleased to say that we've got drills, drill rigs spinning there at the moment and expect to have some, some results from that. By the end of this year, the other one that I'll touch on is a, is a slightly smaller target in a coma. It's located about five kilometers away from the processing facility, but you can see some of those results there that we've already encountered. We've got 4 m at about 31.5 g per ton. We have 16 m at about 3.5 g, Batan, another 7 m at 6.8 g grams, Batan. So some really encouraging results there. And we'll continue to drill that deposit or that target during the course of this year. So this brings me to my last slide. So just in terms of recap, the company has certainly changed. It's, it's dynamic. We now own 100% of the asset. We have a very strong balance sheet. We've maintained no debt on the balance sheet and, and have s su sufficient cash to fund operations. We are in the process of executing our life of mine plan and near term organic growth profile. And at the same time reducing our cash costs, I will point out that once we reach that steady state of 240,000 ounces per, per year, we will become one of the largest gold producers in Africa that's currently not held within a mid tier or a senior producers portfolio which is important to note. And then obviously, we are continually bullish on the expansion of reserves and resources and we're looking to optimize our life and mine plan and bring cash flows forward. For all of those reasons, I do believe that we currently still remain a ve a compelling value proposition for our current and incoming shareholders as well. So I think that's it, I'll lend there. Thank you very much. Thanks very much, Matt. We do have time for some questions. If if anyone has a question, please raise your hand and, and let Bob allow a chance to get to you with the microphone right here in the front. Bob. Yeah. Ok. A great overview. 240,000 ounce run rate should be generating some pretty decent free cash flow. How do you guys think about capital allocation going forward in the medium and long term? Yeah, that's, that's a good question. Thanks in terms of capital allocation in the short term. I think ultimately, there is a fair bit of capital requirement to, to achieve that 240,000 ounces, there's stripping that's required there, there's about a $250 million strip that's required for the NC A deposit which is our highest value ounces in the in the reserve. But post that investment, post that initial investment, we are going to experience a period of significant cash flows. And we do feel that that could be utilized to, to grow the business, expand our foot bitt footprint jurisdictionally and add additional assets into the, into the portfolio. So that's what we'll be looking like looking at in terms of cal capital allocation at that point in time. Yep, thanks. Ok. Matt, just one question for me. Are there any deeper drilling targets in the strategy? Right? Because we talked about regional exploration, you talked about a long strike. What about either at a bore or in Canada deeper drilling? Yeah, it's a good question. And in previous presentations, I have spoken about that there is opportunities for what we feel is a potential underground deposit or underground mine at N Cran, we did drills about 400 m below the extent of the open pit resources. Back in 2223 we drilled eight holes and all eight holes intercepted mineralization where we expect it to be, it held grades that we feel are amenable to underground mining as well as the widths that we feel that are amenable to underground mining. The issue with that is at the moment it's put on a little bit of a back burner for, for us because the depth is quite, quite deep and cost prohibitive to drill from surface. So we do have a plan to address that because when we're gonna be mining, en cran, what we'll do is we'll actually split the the pit into an east and west push back and that will allow us to get to a certain elevation in the East Wall, seek an exploration added in into the East Wall and then drill out the underground deposit from underground from an underground exploration at it. We'll then transition to mine the west wall of, of en Cran. And by the time we deplete that, that open pit resource, we've, that we will have a better understanding of what the open pit potential is. We also feel that there is underground potential at our a bore deposit. We've encountered some of the highest grades ever intercepted on the land package at depth at the moment at a bore. And what's interesting about a bore is that actually the strike length is 1.8 kilometers, whereas N cran is only an 800 m strike length. And so therefore, if you're thinking about underground potential on a ounce per vertical meter basis, you know, I think that a bore is also very perspective because you do have the strike length that you don't have a at, at N Cran, right? And it's far shallower as well. You're not talking about extensively, you know, you're probably talking about a 400 m target zone. Whereas N Crans probably in the in the 800 m target zone. Yeah. Yeah, please join me in. Thanking Matt for his presentation. Thank you a.


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