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Operator
Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Galliano Gold, Inc. Second Quarter 2024 Financial Results Conference Call. Note that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask questions during this time, simply press star then number one on your telephone keypad. And if you would like to withdraw your question, please press star then number two. Thank you. Mr. Matt Badalak, President and CEO of Galliano Gold, you may begin your conference.
Matt Badalak
Thank you, Operator, and good morning, everyone. We appreciate you taking time today to join us on this call to review our second quarter 2024 Galliano Gold results that we released last night. 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&A as well as this slide of the webcast presentation. Our release yesterday details our second quarter 2024 financial and operating results. These should be read in conjunction with our second quarter financial statements and MD&A available on our website and filed on CDAR and EDGAR. Also, please bear in mind that all dollar amounts mentioned on the conference call today are US dollars, unless otherwise noted. With me on the call today, I have Matt Freeman, our Chief Financial Officer, and Chris Petman, our Vice President of Exploration. I'll initially go through the highlights, then take you through the operations. Matt will then discuss financials. Chris will present a high-level exploration overview, and I'll wrap it up and open up for Q&A. On slide five, starting with safety, during the quarter we had zero lost time injuries onsite and no total recordable injuries. This results in a 12-month rolling LTI and TRI frequency rate of 0.15 and 0.6 million man hours worked respectively. Health and safety remains at the forefront throughout our organisation, particularly as activity has ramped up onsite with the recommencement of mining activities. We consistently strive to reinforce our commitment to zero harm and the implementation of best safety practices at the Sanko Gold Mine. As we ramped back up into hard rock mining operations at the Abore Pit, our gold production during the quarter totaled just over 26,000 ounces of gold. We were partially impacted by the rainy season in Ghana, which resulted in wet ground conditions, slower mining rates and ultimately lower mill throughput. I'll get into this in more detail shortly. On the flip side, through our 2023 and early 2024 infill drilling program at Abore, we have increased our Abore reserve base by 45% or 151,000 ounces, which has led to a larger pit shell at Abore, also increasing near-term strip ratios as we've moved more waste material. As a result of the slower-than-expected ramp-up and more backfill waste material in an older portion of the Abore pit, we are reducing our full year guidance to between 120 to 130 ounces of gold. On the cost front, we have recorded all in sustaining cash costs of $17.95 per ounce. Our costs on an absolute basis are in line with expectations, but we are revising all in sustaining cash costs higher for the full year to between $19.75 and $20.75 per ounce as we expect lower production and investments in additional stripping at the Bore Pits. Galliano's liquidity remains at the top of our peer group with zero debt and $123 million in cash. As we continue to generate positive cash flows from our operations and maintain a robust balance sheet, we remain uniquely positioned to execute on our strategy of becoming a leading mid-tier gold producer. I won't steal Chris's thunder and leave it to him to discuss our exploration progress during the quarter.
Chris
Taking a look at our corporate slide, we've had a very busy quarter.
Matt Badalak
We have strengthened our board of directors with two new additions. I'm pleased to welcome Navan Dial and Dr Moira Smith and look forward to working with them in the future. I would also like to thank Dr. Michael Price for his 10 years of service as he stepped down from his seat at the last AGM in June. I'm pleased to announce that we have hired Michael Cardinals as Executive Vice President and Chief Operating Officer. Michael will be joining us effective September 3rd. He brings over two decades of mining experience across various commodities, having held progressively senior operational roles throughout his career. Most recently, he was the general manager of the Aore mine after a successful five years at the Susingui mine, both with Perseus Mining Limited. In early July, we released our 2023 annual sustainability report, where we examined our 2023 performance against objectives and laid out our 2024 goals, which we continue to track towards achieving. On slide seven, I'd like to highlight the progress we have made ramping up mining operations at Abore. Our mining contractor will complete final mobilisation in August, which has occurred slightly slower than expected. That said, we have seen significant mining rates increasing production by 50% quarter on quarter since Q4 2023. During the quarter we have experienced some challenges with the rainy season, in particular saturated ground conditions in the upper part of the waste material. I want to stress that these are normal core start-up issues and we anticipate these are largely behind us. As mentioned previously, the significant increase in our Boré Mineral Reserve is expected to give us more flexibility and enhance the optimised life of my plant. We anticipate this to be completed later this year in Q4. On slide eight, I cannot emphasize enough the impressive growth that we've seen at Abore, which highlights the value that we are continuing to add to the AGM since the delivery of the 2023 technical report. This ore body remains open at depth and potentially amenable to further expansion through additional drilling and potentially high gold prices. On the back of positive drill results and increase of mineral resources in Q1, coupled with a rising gold price environment, we anticipated an expansion in mineral reserves would follow. At this time we proactively stepped out and began mining a larger pit shell in Q2. This larger pit shell impacted strip ratios and deferred some ore production during quarter. Looking at some of our key optimisation projects underway at the AGM, our tailings storage facility evaporators have been commissioned in early Q2 and are now fully operational and I am pleased with the results we are seeing thus far. The CIL tags were unfortunately delayed due to a port incident in Turkey that hit one of our containers and we had to wait for one new tag to be replaced. That said, we are back on track now and are eager to get them up and running in the circuit. This is expected to be completed in Q4 this year. Looking at the secondary crusher installation, this is an upgrade that will maintain the plant mainplate capacity at 5.8 million tonnes per annum when treating harder material. The engineering and early earthworks are already underway, and we expect commissioning in the first half of 2025. With that, I'm now going to hand the time over to Matt Freeman, our CFO, to discuss Galliano's financial results.
Matt Freeman
Thanks, Matt. Good morning, everyone. On slide 10, as you can see, Galliano generated revenues of 64 million in the second quarter, which culminated in net income of 8.8 million and adjusted EBITDA 17.6 million. As Matt outlined, Q2 production was lower than we had anticipated, but from a financial perspective, operating costs in aggregate remain consistent or slightly below recent quarters. In particular, I'm pleased that we're able to report mining costs per tonne below $3 per tonne mined, which is in fact lower than estimated in the technical report from early 2023. We've also remained disciplined with capital deployment, only spending where critical, and with clear line of sight to value creation. The largest ongoing projects, as Matt mentioned, include the construction of two CL tanks that will increase residency time and expected to have a positive increase in recovery rates across our deposits. And secondly, the installation of a secondary crushing circuit, which will assist in maintaining throughputs at or above nameplate levels even when processing harder fresh ore from Inkran and Abore. On to slide seven, you can see that this close attention to cost, allied with the strong gold price environment, has meant that even while undertaking a significant stripping campaign to access Abore, our liquidity and balance sheet remains very strong. We ended the quarter with 123 million of cash and still have no debt. Here it really demonstrates how our cash balance has benefited from the transaction, consolidate the Ithaca goldmine and how it has remained strong since. Moving on to slide 12, as previously mentioned, we were pleased to see the increase of 45% in the borough mineral reserve on the back of the successful infill drilling in 23 and early 24. This increase in reserve requires a substantially larger pit to deliver those ounces, and in the current price environment provides significant additional value to the company. The implication of this large pair, however, as Matt mentioned, is that it will be required to strip more waste material over the balance of 2024 than we originally planned and therefore access less fresh ore in 2024. So we supplement in production with low-grade stockpile material. Along with the lower Q2 production than planned, this means that we now expect to produce between 120,000 and 130,000 ounces this year, rather than the 140,000 to 160,000 ounces that we previously guided to. Overall, though, we're pleased that deferring some ounces this year ultimately leads to more than 150,000 ounces added to the life of the mine plan. Additionally, given the lower expected production, our all-in sustaining cost per ounce is expected to increase to between 1975 and 2075 ounces per ounce sold, which does include all of the stripping activities at Abore. But I'd like to reiterate that underlying operating costs are actually trending quite well, So we're confident that once production starts to increase on the back of high-grade material, we'll start to see those oil and sustaining cost numbers come back down in 2025 and beyond. So although Q2 was a lower production quarter, Galeano remains in good financial shape to execute on our corporate strategy and to continue to add value to the AGM. With that, I'll turn the call over to Chris.
Chris
Great. Thanks, Matt. For the next few minutes, I'll be discussing our exploration activities and results from the first half of the year. As always, our exploration efforts are focused on maximizing the value of our existing deposits through our near-mine work, while also generating new organic greenfields opportunities through our regional generative efforts. We've had another successful near-mine campaign so far this year that's been focused on three of our main deposits, those being Abore, Midrest, and the Dubiaso. Now, as Matt discussed, the bore reserves were increased by 45% on the back of our 2023 and our Q1 2024 drilling. 2024 drilling has proved that mineralization is continuous and robust, at least 30 meters below the current reserve pit, and is open at depth for intercepts, including 22 meters at 3.8 grams a ton and 9 meters at 10.8 grams a ton below the south pit, amongst others. Phase 2 of the Midrass South conversion drilling program that consisted of approximately 7,600 meters was completed successfully in Q2, and results will now support a 2024 maiden reserve expected by the end of this year. A small infall program at Adubiaso confirmed the robust nature of mineralization, and results will now be used to support planning for potential mining. Our focus on generating and testing new regional targets at the AGM continued throughout the quarter, with the continuation of follow-up drill testing at Jajatreso and first path drilling at Acoma, which is formally known as Target 3, which I'll touch on in a bit more detail in the next slide. Preparatory work and crop compensation activities at SkyBold B were undertaken throughout the quarter, with the first drill test on schedule to begin in the next two weeks, which we're very excited about. The Acoma target is located on the northern extension of the Miradani Shear Zone and sits approximately 5 kilometers from the process facility at NCRAMP. It was identified as a priority drill target following prospect activities in 2023, and our initial drill test of three primary targets in the area was completed in Q2, totaling just under 4,600 meters. We're very pleased with the initial results of gold mineralization intercepted in all three zones. Mineralization is associated with quartz shear veins as is typical of the AGM deposits, and our best intercepts were seen in the northern zone and include all three with four meters at 31.57 grams per tonne, Hole 8, 16 meters at 3.57 grams per ton. Hole 6, 7 meters at 6.89 grams per ton. Hole 15, 10 meters at 2.63 grams per ton. And hole 4 at 6 meters at 6.96 grams per ton coal. Now of note is hole T3RC24003, which ended in 31.57 gram material. This is a hole we weren't able to complete due to ground conditions, so it remains open at depth and a long strike. Interpretation of these results is underway, which will support likely follow-up work in the near future. We're very happy with progress in the first half of 2024 as we are efficiently moving targets through our exploration pipeline. Aside from near-mine successes and new encouraging results at targets such as Acoma, we are continuing to identify and prioritize additional targets through early-stage ground activities across the AGM tenement package and are excited to continue drill testing in the second half of the year. With that, I'll turn it back to Matt.
Matt Badalak
Thank you, Chris. Before I close out the official presentation here, I want to remind the listeners of how much the company has changed in the last 12 months. Notably, we have completed the transaction with Goldfields, which in turn puts us on the path to becoming a mid-tier gold producer. While we've had a challenging quarter with the ramp up, we remain confident and steadfast in our vision for long-term value creation and growth as a company. With that, I'd like to turn it back to the operator and open up for the Q&A session.
Operator
Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by 1 on your touch-tone phone. And if you would like to withdraw from the question queue, you will need to press star followed by 2. And if you're using a speakerphone, please lift the handset first before pressing any keys. Please go ahead and press star 1 now if you have any questions. And your first question will be from Aiko Ile at HC Wainwright. Please go ahead.
Dave
Hi there. Thanks for taking my questions and welcome to Michael, assuming you're already listening in on this call.
Matt Badalak
Thanks. Hi, Dave. Good to have you this morning.
Dave
Always. It actually gets me pretty giddy asking a junior miner that question, but with your 250 million shares outstanding, we're looking at a market cap of 330-ish million today. You've got $123 million of cash. That's $0.48 a share. At one point, is that just... enough. I mean, at what point do you think you actually start paying out some incentives to your shareholders, be it through a dividend, a buyback? I'm not looking for definite answers here, but maybe just walk me through your thought process on that issue, please.
Matt Badalak
Yeah, thanks for your question. It is a good one, and it's one that we do get quite often. I mean, I think Ultimately, what we want to do here is build a long-term value for our shareholders. And we see that that requires a little bit of investment of the capital that we currently have on our books, both with regards to implementing our life and mind plan, which you will note does require a significant amount of capital to access high-quality ounces in the NCRAN pit. And I think we've discussed that in the past. So there's a portion of that capital cash that's certainly allocated for that project. In addition to that, you know, I do feel that we're in a position to be able to use our cash to advance value for our shareholders in the current stock price environment by looking at very specific and unique M&A opportunities where we can utilise our cash to potentially add value to our, you know, a larger portfolio through M&A activities. So I think at this point in time, that's where we're focused on and those kind of activities are going to yield you know, longer-term shareholder value and potentially the short-term value that could be created through shareholder buybacks. Although, you know, those kind of things are never off the table. I might add that as well. I mean, these things are things that we can discuss regularly at the board and also at the executive management level.
Dave
Fair enough. And then just quick clarification, I'll get back to you. Payments to mining service contracts were, you know, $146 an ounce higher year over year, but mostly flat versus Q1. What are we seeing in Q3 dust farming? We're at this point, what, five or six weeks into the quarter? And how much correlation is there on gold pricing? Say, you know, gold goes up $100. How much does flow through to the contractor's placement?
Matt Freeman
Hi, it's Matt Freeman here. Just on the cost structure, the mining cost rates are kind of fixed rates through the contract. So it's obviously volume driven. So as you said, we've been pretty fixed around the $3 a ton or slightly less. And we expect that to carry on through this year. And indeed, as we mentioned, as we increase the volume of mining, as we've seen this good ramp up through this year, and it should come down on an overall basis because a certain element of the cost is a fixed management fee. So as you start adding tons into that, it brings the unit rates down. So yeah, so we're very comfortable with the contract with the miner, with the mining contractor, but those costs are going to remain very consistent for the near term. So no surprises to come there. With respect to the second part of your comment, the mining contractor has no gold price participation or anything like that in their contract, if that's how I understood your question correctly. And I think, as I said, the nice thing is that our basic cost structure of processing G&A and everything is relatively fixed period on period. So we're entirely grade dependent. So as production goes up or if gold price goes up, that goes straight to the bottom line. So it benefits us 100%.
Chris
Thank you.
Operator
Next question will be from Alfredo at Equinox Partner. Please go ahead.
Ankram
Hi, Matt. Thank you for taking my question. I have two. So first, the Enclan mining contract, so you mentioned that that is expected to close in half this year. Maybe comment on how the prices of that country, what are the, I guess, prices that you are seeing there and whether or not they're kind of in line with what you were forecasting.
Matt Badalak
Yeah, hi, Alfredo. Good morning and thanks for your question. Yeah, I mean, we're pretty much advanced in the tender process for the NCRAN deposit. We're coming to the tail end. of that process as we speak. And we're really encouraged by the responses from the contractors thus far. I think we're not seeing anything that's shocking or surprising or even a large deviation from what we anticipated those costs to be in our technical report. So largely speaking, what we've received thus far is costs that are in line with that report, with the cost described in our technical report for the mining of the Ankram deposit.
Ankram
And then my second question is related to the capitalized waste stripping cost at ABOR. Apparently, that's not included as part of sustaining CAPEX. Is that included as part of development CAPEX? And if not, how much is that CAPEX?
Matt Freeman
Hi, Alfredo. It's Matt Freeman here. All of the ABOR stripping costs we have included in sustaining capital. So they are all in sustaining costs, which is a large driver as to why those costs are relatively high relative to life of mine plan.
Ankram
Oh, OK. OK, thank you for confirming that. And maybe just the last one, very quickly on the lease payments. Is that something that is included as part of ASIC or as part of sustaining capex, or is something That's not included.
Matt Freeman
So the lease payments are also part of sustaining. As I'm sure you're aware, the accounting standards require us to classify the mining contract as a lease, which I think confuses things, unfortunately, but we're required to do that under IFRS. So because obviously the mining contractor is predominantly focused on Abore, all of those costs flow through, all the sustaining costs. Okay, perfect.
Ankram
Okay, that's all. Thank you very much.
Operator
Thank you. Next question will be from Raj Ray at BMO Capital Markets. Please go ahead.
Raj Ray
Thank you, operator. Good morning, Matt and team. I have a few questions. The first one, Matt, is you did speak about the mining rates improving. Can you talk whether you are at steady state with your mining rate now or there's no form of improvement there? And when did you achieve steady state? And secondly, on the Boris Strip, you did highlight it looking at a bigger pit with a higher gold price. Did the instability that you saw have anything to do with the increase in the Strip as well, or was that just in the bubble levels? Because I do see that the Boris Strip has gone from like 4.8 to 7.2. You can answer that when I have a couple more questions after that.
Matt Badalak
Yeah, okay, Raj. Listen, I've got the first part of your question regarding mining rates. The second part was a little bit muted, so I didn't really get that one. But I'll start with the first part. With regards to the mining rates, they are ramping up, as I mentioned, and we're quite comfortable or happy with the way that we're seeing those rates increase quarter on quarter. There is some additional equipment to come in quarter three. It's basically towards the end of this month. And on the back of that, we expect the rates to continue to increase. What we are planning for us, just to give you a little bit of an indication, is that these mining rates on a monthly basis will continue to increase up and through until about November, December, where they hit steady state. And at that point, we're expecting about 4 million tonnes movement, total movement. So that will be probably our steady state. And we're ramping up. And you saw roughly we're about 3 million tons thereabouts in recent months. And so we'll be slowly ramping up over the course of the latter part of this half to that 4 million ton per month mark by November, December. Maybe you could just repeat that second part.
Raj Ray
The second part was on the borage trip. You did mention that you increased the gold price. And you're looking at a bigger pit. But has there been any changes to your pit design as a result of some of the stability issues you saw early on? Anything on that?
Matt Badalak
No, obviously we've increased the gold price slightly to $16.50, Raj, in terms of stability issues and the pit designs obviously changed in terms of it expanding across the deposit. We have done thorough geotechnical work to set the geotechnical parameters on a larger pit there, and we've held true to the consultants' views on what those pit slope parameters should be. So there shouldn't be any concern on that front in terms of the pit stability on the larger pit. And I will add, right, just to this... Maybe I'll just add one thing here that, you know, if you look at the grade in the new reserve here at Abore, I mean, the grade's slightly down compared to the previous reserve, but, you know, ultimately that's on the back of the slightly reduced cut-off grade with the higher gold prices. But, you know, that kind of points to the fact that we're not chasing lower-quality ounces here, right? The grade still remains relatively high. We're using a $16.50 gold price for this reserve. Gold prices at the moment are in the $23-plus range, So, you know, we're not going out there chasing low-quality ounces by this expansion, through this expansion.
Raj Ray
Okay, that's good. The other question I had was, I mean, look, it just started your mining, so you still don't have the flexibility. I'm guessing it's going to improve over the next little while. But in your original mine plan, if I'm not wrong, You were supposed to start initial mining activities at Passassi and Miradani North in the first half as well. Has that already started?
Matt Badalak
It's a really good question. And, you know, I think we've mentioned in the call here that this expansion in Abore actually gives us more flexibility in our mine plan. And this is kind of one of the aspects of that, that what we found now that the additional growth in Abore has allowed us to defer those commencement of the ASASI ore delivery and also the Miradani ore delivery. And the other benefit that it does also provide is, you know, we've got a new contractor on site with new equipment and new policies, procedures. You know, it does allow us now to have one contractor focused on one pit delivering, you know, all the ore tons that we need from one single pit rather than having that contractor spread out across Asasi, Miradani, et cetera. So, you know, we now believe that with this expansion, Abore is going to going to allow for longer and more sustained mill feed delivery from the single pit, which we're quite pleased with, actually.
Raj Ray
Okay, and then one last question on the installation of the new secondary crusher. Can you remind us, what's the part of the original mine plan, or is this something that you've decided to put in based on the hardness of the ore, and if so, is the ore harder than expected for a borane?
Matt Badalak
No, Raj, it wasn't captured in our technical report, but we knew that we were going to need to upgrade our system for multiple reasons. One is throughput related, particularly when we're treating the NCRAN material as it's harder than, say, for example, an ASASI. But the other reason that we did it um was from a cost perspective because certainly we're using mobile crushes at the moment which require a lot of re-handle and a lot of equipment to feed um feed the the final stockpile um and then you know probably more importantly than all of those is from a safety perspective you know we wanted to make sure that we we um manage safety on site better and at the moment there's a lot of equipment and human interactions in that mobile crushing circuit that we will remove through the addition of that secondary crusher. So it was something that we didn't capture in the technical report, but we knew we had to move on very quickly, and it's advanced quite quickly today.
Raj Ray
Okay. That's great, Matt. Thanks a lot.
Matt Badalak
Thank you, Raj. Cheers.
Operator
Again, a reminder, ladies and gentlemen, to please press star followed by one on your touchtone phone to get into the question queue. Next question is from Dan Ellsworth at World Micro. Please go ahead.
Dan Ellsworth
Yeah, quick question for you. If you could just highlight any changes that have occurred with respect to the hedges, because that seems to be something fairly new since we took over 100%. And then just overall, we've managed the whole project for several, several years. And then now we're kind of on our own. And it seems as if we're adding additional management and some cost structure to it. And I'm just wondering if you can kind of just explain what's changed, what's different now, Um, maybe then, you know, prior to us taking over as the manager, we've, we've kind of got a good visibility of what's occurred there along the way, but just talking about like executive compensation in terms of share compensation, I noticed some of those numbers seem to be up a little bit, the hedges, just understanding what's the strategy with the hedges. Um, if you could tackle those two topics and then also, you know, on a go forward basis, do we look at Q3 and Q4? and say, hey, we expect to have kind of similar, you know, $4 or $5 million used in terms of total cash based on where we are? Or is that, you know, usage of cash? We still have $128 million, which is great. But do we expect to use $4 million in the next couple of quarters? Or do we expect that, you know, to kind of get back to more of a simple normalized, you know, adding to that cash stockpile?
Matt Badalak
Hi, Dan. Good morning. Well, that's a lot to get through. Thanks for that. Let me try to start off quickly, and I'll pass the bulk of the answer to Matt to your question here. Maybe I'll just start with a little bit of colour around the changes in the executive team. Listen, we have made a few changes that were very necessary. The appointment of the COO is something that we've been looking to do for quite some time. It certainly wasn't driven by any movement in terms of the ownership of the company. That position has been vacant. really since I was appointed to the CEO role in early 2021. And we have gone through a very extensive search process to find the right candidate. So I'm really pleased to have Michael on board. And in parallel to that, we have made some other senior management changes as well that we've described in the MD&A as well. that have reduced some overall headcount costs with regards to the corporate G&A here as well. So none of these were specifically driven on the back of the change of ownership of the asset. So I'll just finish up there and I'll pass it on to Matt Freeman to answer the bulk of your other questions.
Matt Freeman
Yeah, hi, Dan. So I'll try, if I miss anything, let me know. So on the hedges side of things, Our strategy hasn't really changed with the change of ownership with Goldfields. Even during the period when we operated the joint venture, we did prudently put some hedges in place over periods of where we knew capital was going to be higher. So again, very much, and we've tried to reiterate this to everybody, that we're only doing it for risk mitigation standpoints during periods of known high stripping, high capital expenditure. As you know from the Life of Mine Plan, we know that's going to be for a few years when we are stripping a borer at the moment. And then as we move into stripping the anchor and deposit, we know our cash flows are skinny and we're highly leveraged to that price of gold. So if we can take advantage of the current price environment to protect ourselves, we thought that was a proven thing to do. So the specifics of the hedges that we've got in place at the moment, which run through the balance of 2025 only, are unchanged. We haven't actually entered in 20 new hedges during this quarter yet. And as I think the key for me, as we've said, we're moving towards updating a life of mine plan with updated reserves by the end of this year. That'll give us a greater visibility to what those cash flows look like in the medium short term. And then we'll consider where there's opportunistic times to potentially add some risk mitigation to that. So underlying strategy hasn't changed, again, with the change of ownership. And we believe we're being being prudent given where the company's at at the moment. Then on the executive G&A, I think as Matt outlined, I think from a basic cost, we're pretty neutral through the changes that have happened this year. The books look a bit different. I think when we're consolidating the Asanko gold mine, and I would say it's relatively modest, but part of our financial statements we do add some sort of new G&A expenses that come from managing a corporate office in Accra that we didn't used to have on the books. So that does provide a modest increase in our base G&A cost that wasn't there pre-transaction on Galliano's books, but has always been there under the joint venture rates. So there's kind of really been no change in that cost structure, just the way it's reported a little bit. And then turning to stock-based compensation particularly, I think it's very apparent to anybody reading the financials that that number has been grown significantly this year. And that's purely driven on the back of the increase in gold price, sorry, in our share price that's obviously on the back of the strong performance through the last 12 months plus the gold price environment. So what we've seen there is that under the accounting rules that where you have of units that are settled in cash so we have performance share units and deferred share units with the directors we receive they get marked to market each period based on share price so we've seen that big run-up in share price over the last 12 months which obviously ultimately i think everybody's happy with but that does impact the um the short-term uh cost structure there Well, see, through the last, most of that run-up happened through to the mid part of Q2, and then we sort of flattened off through the summer. So I wouldn't expect, unless there's another material increase in share price, that to go up significantly. The base structure of people's compensation across the company is unchanged. So there's not been new awards or bonus awards or anything like that, purely based upon share price movement. And there's no... plan to change strategy there either. A lot of the full details are in the information circular you can see on that compensation strategy that was approved by a strong shareholder support at the AGM back in June.
Operator
Thank you. Next question will be from Mericat Array at Beacon Securities. Please go ahead.
Mericat Array
Hi, Matt. A very basic question for me. I was wondering what sort of proportions are you going to be going forward for Q3 and Q4, relying upon the stockpiles and relative contribution from Abore? And if you just could give me, you know, average percentages, that would be great.
Matt Badalak
Yeah, no, good. Thanks for that, Birkett, and good morning. It's good to have you on the call. We're looking at, you know, probably about a, you know, Three quarters of the balance of the year will be coming out of a borough and then roughly around a quarter of the mill feed will probably be coming off the lower grade stockpiles. So that should give you enough to do your numbers on. And maybe I will add something else to this, and I think this is important for all listening in, is as we're stripping more and we won't be as deep in the deposit by the end of the year, the grades out of the Boré are probably lower in the upper portions and they start to get higher as we mine below the... the old resolute pit. So, you know, just to bear in mind that, you know, when we're saying three quarters out of the bore, that will be slightly lower grade than the average grade of the deposit as well.
Mericat Array
Perfect. That answers everything I need.
Matt Badalak
Okay. Thank you very much.
Operator
Thank you. Next is a follow-up from Alfredo at Equinox Partner. Please go ahead.
Ankram
Yeah. Matt, sorry. Just wanted to reframe maybe my first question on the sustaining capital. So basically, your guidance for sustaining capital excluding waste stripping is 10 million. So I guess my question is, how much is only the waste stripping?
Chris
Hi, Alfredo. It's Matt here.
Matt Freeman
I think, as Matt alluded to, you can assume a ramp up in mining costs to mining rates to approximately 4 million tons per month by the end of the year. And you can see from the numbers we put out sort of what we're averaging through Q3. So I think if you extrapolate that through, that should give you an indication that obviously the strict ratios are there that are high and you can see that from the reserves. So you should be able to kind of work out good proxy. We can circle back maybe offline if you need a bit more help on that one. But I think from From what we've said, you should be able to get a reasonably good estimate of what our stripping cost is. And as we've said, it is high through the balance of H2 because we're stripping this larger pit. So that is driving our oil and sustain cost number up on a per ounce basis.
Ankram
Okay. Yeah, that makes sense. Okay. Thank you.
Operator
Thank you. At this time, I would like to turn the call back over to our speakers for any additional remarks.
Matt Badalak
Thank you, Operator. I think nothing more to add from our side. And I appreciate everyone joining the call this morning. And if there's any further follow-up, we'll be happy to take them online one by one. Sorry, separately offline one by one. Thanks, Operator.
Operator
Thank you, sir. Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect your lines. Have a good weekend.
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