Aya Gold & Silver Inc.

Good morning. I will now turn the call over to Elisabeth Amawi, Higher Gold and Silver's Director of Corporate and Financial Communications. Please go ahead.

Thank you, Operator, and welcome to everyone who has joined IA's third quarter 2025 earnings conference call. Here with me today, I have Benoit Lassalle, President and CEO, Hugo Landry-Tolschak, Chief Financial Officer, Elias Elias, Chief Legal and Sustainability Officer, Raphael Beaudoin, Vice President of Operations, and David Lalonde, Vice President of Exploration. We will be referring to a presentation on this conference call, which is available via the webcast and is also posted on our website. As we will be making forward-looking statements during the call, please refer to the cautionary notes included in the presentation, news release and MD&A, as well as the risk factors included in our AIF. Technical information in this presentation has been reviewed and approved by Raphael Beaudoin, AYA's Vice President of Operations, and David Lalonde, AYA's Vice President of Exploration, both of whom are AYA's qualified persons as defined under National Instrument 43-101, Standards of Disclosure for Mineral Projects. I would also like to remind everyone that our presentation will be followed by a Q&A session. With that, I would now like to turn the call over to Benoit Lassalle. Benoit?

Elizabeth, thank you very much. Hello, everybody, and welcome to our Q3 conference call. Q3 is a strong quarter. We're delivering across all key pillars of our strategy. On the production side, we have solid operational KPIs. We have produced for the quarter 1,347,000 ounces. The mill... Plant ramp up is near complete. And we have ongoing targeted improvement to the mine plan. So for the financial results, we have $54 million of revenue in Q3 only. And we have $22 million of cash flow from operation. So it is a very strong quarter. We finished the quarter with $129 million in cash that's not restricted and $16 million in restricted cash with EBRD. On the drilling program, on the exploration front, we had a very strong quarter. We'll review this. The drill programs are continuing both at Gunder and at Boumadine. And just after the end of our quarter, we've announced the BUMADZIN PEA results, which I will review with you as well. On the ESG front, we continue to progress in the strengthening of our positioning in-country. We're also advancing towards an ISO 14001 environmental certification. So 14,001 environmental certification is being done at the moment. Focusing on health and safety, we had another strong quarter on site at Scoundare. So the financial position is strong, the balance sheet is strong, and we have the money to develop Scoundare to what it is right now and to continue the drilling. But most important is we have the money to develop Boumadine. And that is extremely important as Bumadzin is becoming a world-class tier one asset. Going to slide on page number five, just a couple of KPIs for you to see that we are really, really progressing. So as you know, let's look at the plant to start. So the ore process. and the milling rate. So the ore process here, you recall the plant's been built for 2,700 ton a day. This is where we were at Q1 2025. Then we went up to 3,000 ton a day in Q2. By Q3, we were running at 3,300 ton a day. We've also indicated that at the end of September, we were at 3,600. And currently in November, we've been hitting 4,000 ton a day. We don't believe that the 4,000 ton a day will be sustained throughout the quarter. We're more towards 3,700, 3,008 ton per day. But understanding that from a design and a construction of 2,700 ton a day, This is a major success. And I recall again, we did this for $140 million less the money we've received from the EPC contractor for the damage that, you know, the fact that they were late delivering to us the plant. So technically we did this construction for about $133 million. So it's, it's quite spectacular in the mining space on mail recoveries. Well, the mill recoveries, you know, is always something very sensitive. In silver, mill recoveries often are more in the mid-70s. Well, we were in Q3 at 92.5%, and on mill availability or plant availability, Let's call it this way. We were at 96%. There was a little bit of preventive maintenance in the quarter because on the previous quarter in Q2, we were at 98% plant availability. So you see if the ramp up momentum is continuing, we are now at capacity. The ramp up has been very smooth and the execution is on track with a very strong plant that is processing way above the plant capacity. For the mine, the mine is also on slide number six. The mine is running smoothly. The underground mine at a steady state of 1.3 or 1,300 ton per day running at 159 gram per ton. So you recall the KPI that was giving us a little bit of headache was the grade and the dilution of the grade are getting better every quarter with the underground line. So that's where it started at the beginning of the year where we were having issues. This is now really coming through and the grade of the underground line is better and it's getting better every quarter. On the open PIP, we have been focusing on the Northeast stripping. We've done a lot of stripping and this is why on the slide When you look at the total tonnage done in the quarter, it looks like the total tonnage done is lower. It's true because that's ore, but actually we are much higher in total ore transported because we did focus on opening up the large pit. So we're currently running on a daily basis at moving 45,000 to 50,000 ton of not only ore, but also of sterile. And this is because we're preparing the large pit. So we have been doing extremely well at the underground mining. The throughput is increasing. The grade is getting much better. And now we're working on the open pit where we do still need to improve in the open pit mining selectivity and operational control. We know, and this is of the five KPIs, that was the last one, and now it's half of it that we still need to attend to it, but we are attending to the grade in the open pit. But the throughput of the underground and the throughput of the open pit is there. You know our objective is to be at 4,000 tons per day. at 1,500 ton coming from the underground. We're there today and 2,500 ton coming from the open pit. We're not there right now, but we'll be there for year end. So of the five KPIs that we've been managing for the ramp up, all the plant KPIs are done and are doing better than expected. The throughput of the mine is there and it's only still we are working on on the grade coming from the open pit. So it is a ramp-up process, and this is why going to page number seven, you look at on the left-hand side, if you look at the cost, the cost for the quarter is a little bit higher than what we wanted it to be. The cost, though it's lower than Q2, it's at $20. Our goal was to be more towards 18.5, and the reason for the cost, it's not the cost per ton. Our cost per ton is excellent. It's the cost per ounce, and the reason is the grade coming from the open pit. Also, in 2025, the price of cyanide really went up considerably, And right now we can see it coming down on a per ton basis. It's coming down almost like $3 per ton. Now we are seeing it. We are, you know, completing our purchasing for 2026 and the cost of cyanide is coming down lower than it was for 2025. But again, as we've been saying, quarter over quarter, look at the margin on that chart, look at the margin. In Q1, we were working with $13 margin, 31 less 18. In Q2, we were working with 12, $13 margin. In Q3, we're working with almost $20 or $19 margin. And in Q4, at the moment, as we speak, silver is at $50. We've been selling in Q4 silver between $48 and $51. So you're looking at your $28 margin for Q4. So yes, and the costs have to come down. And this is the objective that we have for Q4 and for 2026, but the margin is really strong and getting stronger. So when you look on the right-hand side of that slide on page seven, you see the growth in revenue, which is of course due to the increase in production. but also the increase in silver price. So the higher volume is about plus 20% and silver price is plus 18%. So for Q3, you have record revenue of $54 million and you have record net income of 12.4 million, which when we convert that on a per share basis, it is 9 cents per share. I would like to draw your attention, when you look at the cost, we have the stock option costs that are put into each quarter, which amounts to 2.4 cents per share. This is a program that was put into place in 2020 and that we've repeated in 2025, for the year 2025. It's the retention program of the senior management team Those options vest over time, and the cost of the option, if you look at the GNA section of the financial statement, it's $0.02.4, so on an adjusted earnings per share if you remove those which are continuing over time for quite a long period. If you look at the option package that I have or Mustafa El-Wafi has, we haven't touched on those options in the past five years, and we don't intend to touch them in the near future, but we do take the expense on a quarterly basis. So we're looking at $0.09 per share. after stock option plan or stock option cost, but before it's more 11.4 on a per share basis. The actual cash flow is also very, very strong. As we've indicated, we've generated cash flow from operation, and you have that on page eight, or I didn't say that earlier. On page eight, you have cash flow from operation of $22 million, and this Again, was working with a much smaller margin in Q3 than we have in Q4. You have the capex and the exploration program of 22. The EPC compensation is a tribute to how well we structured the construction contract and we were able to get a compensation of $8 million. less the legal fees associated with the court case or the negotiation of that in Spain. So we had legal fees of close to $1 million. So we did receive $8 million, but we've accounted for $7 million, and that $7 million goes against the CAPEX on our balance sheet. So it doesn't go against the cost. It goes against the CAPEX. We have a strong cash position of 129 US, obviously, million dollars. And we do have an undrawn credit facility with EBRD of 10 million. Talking about expiration, moving to slide number nine. Again, you see Morocco. Morocco, again, is more and more now seen as, you know, a top, top-tier jurisdiction in the world. It's because of the speed of permitting, because of the quality of the geology. As you know, there's three elements that count. It's geology, it's jurisdiction, and the people who run this. In this case, jurisdiction is fantastic, geology is fantastic. So, at Gounder, our budget for the year was $20,000 to $25,000. thousand meters of drilling we are at quarter end at 19 659 meters drill the cost of drilling in all in in morocco is 150 a meter always us so it's it's it's really a fraction of the price of drilling anywhere else around the world so we've been drilling at gunda we've been drilling at gunda at the mine and i've been putting out fantastic results We're drilling on what we call Gunder proximal, so very close to the mine, and Gunder regional as well, where we do have many, many targets. So you've seen over the quarter some very good results of, you know, 1,164 gram per ton over three meters, and we're continuing to have very, very good grade coming out of the drill program. the regional as well and at one point we'll have you know much more uh a longer presentation on the regional players going there but we're adding permits to the region we're doing a lot of work on the region and we're finding and we're you know a lot of very good structures that we are drilling and that we intend to drill in 2026 as well. So it's continuing to be a fantastic project with a very, very strong geological potential. The next one, the Boumadine, is our bigger asset because it's got a bigger resource, because we have a bigger footprint. We have a goal to drill 140,000 meters this year. By quarter end, we were at 109,000 meters drilled, and it's continuing. All drills are turning. We have shown you the PEA, which requires additional drilling, but the drilling this quarter confirmed continuity of the Boumadzin main zone, the Tizi zone, and we've been extending the zone continuously in the Imari-Rennes zone as well as now a striking of 1.2 kilometers. In the PEA, we only took into account the main permit, which is 32 square kilometers out of a district that we control of about 800 square kilometers. we took into account just these three zones, Goumadine, Tirsie, and Imaviren into the PEA. We had other very important hits on these three zones, but also on new satellite zones that we have discovered in the past few years, and one which is called Assirem, which is very, very interesting because it's a gold zone. It has also a little bit of copper. It's been drilled in very wide spacing on eight kilometers. We are seeing the mineralization on eight kilometers, but we have now extended the anomaly on more than 20 kilometers. So that's not in the PEA. This is a new zone, which is more gold and polymetallic, but also very interesting. And in the quarter, we've added two new mining licenses, which is quite spectacular. We have many, many mining licenses in this district because you understand that we control a district. It's not just a permit or two. It's a mining district where we are the only player in the district. We've increased our land package that's permitted to 339 square kilometers, but we also have a 600 square kilometer exploration license. So It's just showing us the footprint that we have at Boumadzine is really exceptional. So just quick on the outlook, we're confirming the outlook that you have on page 11. that is not changing. We know that the recovery will be a bit higher, that the grade will be a bit lower, but globally the production will be aligned with the guidance, most likely the lower part of the guidance, but our goal is to be within the guidance. Continuing with the presentation, going to the following page on the Boumadzine PEA. Just a quick summary. It's the most today important project, I believe, in the mining world because of the fact that it is permitted, that the financing is spoken for with our financial partner, EBRD, with the offtaker who are going to be buying the concentrate, and the fact that we have as well liquidity And we're bankable in country with banks in Morocco. So the funding is spoken for. It's not done because obviously you understand that the bankable feasibility is not completed. We're missing the drilling. And we are launching as of now a 360,000 meter drill campaign that is going to be executed over the next two years. But the project at our base base at $2,800 gold and $30 silver has an NPV on a post tax of 1.5. And as I said during the presentation, we're looking at both the post and the pre-tax because we have not yet done the tax structuring of this project. Something that we've discussed today, because as I'm talking to you, I am in Casablanca. We have had meetings on Boumadine and on the tax structuring and how we want to position this project if we have time, because the project needs two years of drilling and the feasibility study. So there is time, but it's super important that we have the proper track structure. The NPV to CAPEX, the CAPEX intensity is absolutely unique. It's between 3 to 1 to 5 to 1, and this is at the base case. The internal rate of returns between 47% and 69%, and the payback between two years and 1.3 years. So it's a very robust project. Why? It's because of the low initial capex. at $446 million, capex that we control extremely well because 50 million of it is pre-strip of the open pit, it's the water system, it's the electricity, all the things that we've just done at Gounder, which we're going to repeat at Boumadzine. And the beauty of it is it's low ASIC. The ASIC for the first five years is $928. The ASIC over demand life is 1,021, but all of that is, does not take into account the 140,000 meters of drilling of 2025 and the, all the additional drilling that we're going to be doing over the next two years. So, so why we're focusing on the first five years, because that's where we have kind of clear visibility after that it's, it's, it's, yes, it's what we have, but it's going to be a lot bigger than this. Like there's no doubt in our mind that this is going to be a lot bigger. So when you look at it as a silver company, because we are a silver company, this project is, as silver equivalent, is adding 37.5 million ounces per year of silver production on an equivalent basis. So moving to the next slide, why this is such a compelling story, because it's a district scale land package. If I, you know, we, we owned the red Lake district, we own the belt, we own all of the Cardinal trend. Like it's all part of the same company. It's got exceptional economics because it's low capital because. In Morocco, the cost of construction is about one third. the cost of construction of any other asset around the world. And it's very, very well built. So it's low capital intensity and very rapid payback. It's a low-risk project. It's based on a simple model. It's three concentrate, a lead, a zinc, and a pyrite concentrate. We have MOUs with three of them for all the concentrates. So we will then be selecting how we're going to go forward with this. Financing, I said it, it's spoken for. We just have not finalized it. We have many, many options. The proven track record in the region is because we just built Gunder. So whoever is doing the excavation at Gunder and the open pit mining will be bidding to do the open pit mining at Boumadine. It's five times the size. whoever is doing the underground development will be bidding for the underground development. So we're looking at a situation where the same suppliers are going to be coming in to work with us. We know them, they know us, we work very well together. And don't forget, all of that is possible because we build it, because the money is available in country, and because we do have a mining license in hand. We're not waiting for the government to approve an environmental license or a mining license. We have our mining license in hand and we can start. We cannot start now because we need to complete the drilling on a 50 by 50 meter spacing so that we can move our resource into the measured and inferred category in order to put them into the feasibility study. You know, we've covered the main point of the PEA, which we have on the next slide, the low capex, strong economics, revenue driven with gold, silver, lead and zinc. It's open pit and underground, but the first two years will be open pit. And based on the extension, because you will see over the coming months, there's going to be more drill results. showing additional structures that can be attacked either through open pit or underground mining. We keep drilling, and we have been putting out results, because don't forget, all the drilling of 2025 is not in the study. So to conclude, what are the catalysts for 2025? We're, of course, almost done. This is mid-November, but the drill programs which you have on slide 15, the drill programs are continuing. We will finish the year with almost 200,000 meters of drilling. We're heading into 2026 with most likely 250,000 meters, maybe 300,000 depending on the drill contractors and how fast we can do the drilling. We are moving into between 250 and 300,000 meters. We've delivered in 2025 as we wanted the PEA on Boumadzine, which is a starting PEA because it only takes the resource until the end of 2024. In our catalyst for 2025, we wanted to reach 3,000 tons per day processing. We're actually now touching 4,000 tons. ton-per-day processing, so we are really, really showing that the plant is well-built, very robust, and exceeding nameplate capacity. People were looking for an update on the Bumazin metallurgy, so that is checked. There's no metallurgy issue because we're going to be sending the concentrate to a smelter or to smelters, not one, but many. So the recoveries are in the high 90s. The payability is lower because we do share on the payability, but the recoveries are in the high 90s. And we also have shown you that we can also use a roaster if we want to reduce our cost of transport. Because if you look at the ASIC, at $1,000, there's $300 of transport and process and all that. We want to remove that and we do a roaster or a smelter in country and I say we won't do that ourselves, but with partners, we know that people are looking at this project and there is a source of sulfuric acid in country to the country that's probably the largest buyer in the world. of of sulfur for for the fertilizer well that source of of sulfur is something that's you know drawing a lot of attention right now because it's in country it's it's it's it's it's available to produce sulfuric acid it can produce power and it would also liberate the gold and silver so on the metallurgy boomadzin it's done it's we should never talked about that anymore it is done it's either going to go through a a smelter in Asia or in Europe, or it will go through a smelter in Morocco or a roaster in Morocco. That discussion is done. The last element that we're now working on, which I said last time after we're done the PEA and we will finish the updated Zgounder model, we're almost there. Again, something we were discussing today, we're almost there. and we will be updating the market about the new Gunder model, the new Gunder mine plan, and going forward. And again, as I said, Gunder has a lot of upside potential. The geology is there, and now it's a question of working and getting more drilling done and new structures to have a very long mine life. It has already a long mine life, but even a longer mine life. So that completes my presentation for Q3 2025. Operators, I would like to turn it over to you for the question period. Thank you.

Thank you. Ladies and gentlemen, to ask the question, please press star 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Justin Chan with SCP Resource Finance. Your line is open.

Hi. Congrats, Benoit, Raf, and David, and the rest of the team, if you're on, Alex. My first question is... On the open pit, I'm just curious how the next few quarters look. When I was at site, you know, in my notes, I had about 2,000 tons a day from the open pit and 1,000 from the underground. The underground is doing really well. You're already above that rate. I'm just curious on the open pit, when in the next few months or quarters do you think you'll be done the stripping you want? And how many tons do you think is your new target for tons per day or is it still that 2,000 number?

Hi, Justin. Thank you. Yeah, we're very happy with the underground. Let me start with that. We've been working all very hard. We've got new stops going. We're comfortably about 1,000 tons per day, and grey has been sustained around 150 lately, 160 even, above the open pit. As you all know, we increased the total tonnage move per day in the open pit by essentially tenfold. We were at 4,000 tons per day by the beginning of the year. In September, we were close to 40,000 tons per day total material move, and now we set at around 45. We will continue marginally increasing it. We had a high stripping in the third quarter. That's why the ore per day was a bit lower, but we did a lot of ways to put us comfortable, especially in the northeast section of the open pit, to have flexibility in the open pit. So everybody worked really hard, especially in Q3, to ramp up, to finalize the stripping of the northeast sector. And we now have 45,000 tons per day of total material move. And to answer your question, that brings us to 2,000 tons per day, even on higher strip months, On lower strip months, we'll reach even 3,000 tons per day and perhaps even a little bit more depending on the month. But we're trying to plan conservatively to make sure we always have the flexibility in the pit. And I would say at this point, the ramp up is essentially done. the short-term stripping is also done. We have a longer-term stripping. Next year, we'll do another pushback, but that's toward the end of next year. For the year to come, we're well-positioned for the open pit to sustain above 2,000 tons per day in the open pit.

Gotcha. Thanks, Raf. And with the plant doing 3,700 tons a day now, I guess in the long term, how do you envisage filling that mill? What's the split between open pit and underground? And Could you push even beyond that 37, right? And what would you need to do on the mining front?

So in the underground, we can probably push a bit at $1,500. We're not looking to go really above that. We want to take our time and do it right to make sure we control the cost. For the open pit, we'll take the rest. We have options. Either we go... Either we mine faster in the open pit because we have room. We can even include, we still have stockpile, right? Don't forget, we still have 150,000 pounds of stockpile and it's decreasing slower now and we want to stabilize it. And finally, we still have marginal ore. We do stockpile marginal ore. We compile it as weight. It's included in our cost, but it still has silver grade and especially at this silver price. the mill will always be full. This is not the issue here.

Okay, gotcha. Thanks, Raf. And on grade from the open pit, when we were on set, we talked a lot about managing dilution. Is the current grade situation more about managing dilution going forward to improve it, or is it more of a sequencing issue where you'll get higher grades in the sequence naturally? Just curious how the path to improvement is.

So when we, as we did stripping in the Northeast, there was still ore in it. Like we did produce about a thousand tons per day of ore. So those were in more sparse and disseminated region in the open pit. So it's a bit harder to control. And as we mine the open pit and we get to more bulky ore zone, dilution will be easier to control. So we also focus on our recovery. And as I explained a bit before, we increase the tonnage in the open pit by tenfold. So there's also the learning curve for the team. We need to stabilize the work routine, the work procedures. And the first step was to do stripping, make a nice surface area to be able to work comfortably. And now we can focus on steady-state tonnage, and we can focus the team on great control rather than stripping and ramping up and making room to work.

Gotcha. Thanks, Ralph. Just one last follow-up, and I'll free up the line. So modeling that grade inflection from the open pit, is that something you're hoping to do in Q4, or is it first half of next year? Just trying to get a sense of how to model it timing-wise.

Ralph, Justin's asking, when do you see grade change, grade inflection for the open pit? Is it in Q4, or is it at the beginning of next year?

Well, I would say the beginning of next year. Justin, we're finalizing to tidy up the pit. There was a lot of ways to move. Now we're slowly getting into ore, and we produce ore, but the highest grade is as we go deeper in the pit. So we should see that coming more in Q1.

Okay, great. Thanks so much, Raph, and Benoit and team. I'll trade the line. Thank you.

Thanks, Justin.

Our next question comes from the line of Bryce Adams with Desjardins. Your line is open.

Thank you, operator, and thanks to all on the call. Just to follow on to those questions just asked now about the revised open pit underground split for filling the mill at 3,800 tons per day, I was wondering what's the base case processing rate that will be included in the new Zagunda mine plan? Is that going to be 3,000 tons per day and those 3,700, 3,800 tons per day are upside scenarios? or is it 3,800 tons per day? Is that the new base case that will be included in the Zagunda Mine Plan?

Bryce, this is Benoit. So look, the new Zagunda Mine Plan is going to be done in the next two to three weeks. We are still reviewing it. We're looking at all the scenario. The plant is capable to run at 3,800. We're showing it, but we haven't yet finished the new case or the the new mine plan where we're working on it at the moment. Also something very interesting is that we've just have recruited somebody on the team that's working with Ralph and Mustafa on mining underground and open pit mining. So we are bringing somebody with many, many years of experience to just complete the team. And so we're working with that person and our own team to have this new mine plan available, as we always said, in Q4. So look, obviously we're not going to bring the throughput down to 2,700, but we're going to look at different scenarios, different grade, as you know, different cutoffs. So we haven't yet finalized the plan, so it's hard to comment on throughput and grade and all of that, but that will be available in a couple of weeks.

Thanks, Ben White. That's a key input to the study. If that's still up in the air and you haven't yet settled on sizing the mine and the mill and the long-term throughput capacity, what's the chance that the Zagunda mine plan update goes into next year? Could it be a January update versus a December?

Well, 99% it's a December update. And it's not that we haven't decided on throughput and all of that as we're just going through the final reviews, the final analysis, what we have. David and his team have completed the resource. Patrick and his team have completed the new mine plan. Ralph is looking at it with his team. So we're putting all of that together. So we're almost there. We've committed that it would be coming out in December and we will We are 99% confident that we're going to meet that. But if somebody comes through and says, you know what, oh, by the way, we've just found this, or there's a new sector that we should look at, I mean, it could get delayed, but I would tell you it's very, very unlikely.

Thank you, Benoit. I look forward to that update. Thanks again. and all the best for the rest of the year. Thanks, Bryce.

Our next question comes from the line of Ingrid Rico with CIFL. Your line is open.

Yeah, good morning, Benoit and Aya team. I have a couple of follow-up questions on Sieg Linder and the throughput, which clearly has outperformed and now aiming to that 3,700 tons per day. I guess my question is the sustainability, the bottleneck, the buck end of the plant, but the sustainability and perhaps what are the risks that you can't really maintain that throughput rate?

So, yes, thank you for the question. We've been, it goes without saying, we've been milling also a bit of oxidized ore from the top of the pit. And as we get deeper in the pit, the ore hardness also change, but we have experience with that mining from underground. So it will be a question of blending, and we also have time to continue working and adjusting the plant. That plant has been running for less than a year. We're still learning. We've done some changes over the year to get there, and we also have other ideas to get there. If we're ever to get in trouble with ore hardness as we go deeper and deeper in the open pit. I mean, we have solutions for that, relatively cheap solutions. If we must, we can add a tertiary crusher. This is something that can be done relatively fast. It's not something I'm nervous about. We can address it. We can address it. The ore has been a bit soft, so the bottleneck was more in the tailing, on the refinery, and we've been working on that. So that's been the bottleneck. And we have good visibility for the near future. And as we go down the mine, if we must add another crusher, we'll just do that.

Okay, understood. And then just on the grade and your answer to Justin's question and seeing the open pit grade having that inflection point more into 2026. So perhaps just to understand and going back to the site visit in June that you were already kind of making some implementation on the dilution minimization. So how can we, should we see an improvement in Q4? Or what's happening on that, implementing that?

So in the open pit of Gunder, we focus on several aspects. Productivity, so we have to increase productivity, keep the mill flow, that's done. we also started to modelize our movement, okay, to make sure to recover every single ounce possible in that open pit. And as we go faster and our mining rate increases, we need to make sure to have with our recovery, we also need to make sure we don't make mistakes, meaning we want to minimize external dilution as much as possible. So there's a bit of a change in philosophy, whereas what we've been doing, at very small tonnage versus what must be done at higher tonnage. Now that we mine at over 2,000 tons per day, which is 50,000 ton maternal move, our main focus is to reduce external dilution, mine a bit larger block, make sure to modelize it properly, and then recover the whole thing. So that will result into less external dilution, because we'll control the block, we'll mine bigger blocks, and we'll make less mistakes. It will also include partially into an increase in internal dilution. As we want to control block movement, we want to mine bigger blocks and make sure to have good ore recovery and reduce costs and sustain productivity. So a bit more internal dilution, and what we predict is we'll have much less external dilution, so we'll see a great increase. The reason why I'm seeing, we'll see that more in Q1, is there is also a learning curve. We've been implementing Orpro as a software and implementing good procedure in the pit to control our movements with blasting. Also working with our contractor for blasting method. There's also an incurring to that. So we're about one month into a month and a half into implementing this and we need to let the team to work before we start judging of the results of that. So I'm expecting results the faster we can, even maybe in Q4. But that's the reason why I say I think Q1 is to make sure that we'll have the time, the team, to really implement these fundamental changes with an increase in productivity of tenfold.

Excellent. Thank you. If I can just squeeze one more question and more on the sort of cash flow and looking at You drew down $15 million on the credit facility, yet your cash flow is pretty strong and your operating cash flow was strong this quarter. So just a bit of understanding why you drew down that $15 million.

Yes, Ingrid, this is Benoit. If you recall, when we... put the 25 million facility with EBRD at the time, which was at the beginning of the year 2025. Many people were questioning our balance sheet because our cash position was below 50 million as an operating company. So when we negotiated with EBRD the 25 million line of credit, there was an undertaking that we would draw at least one time on the facility because they've put it into place and they went to credit committee and we went to board and so it was just part of our undertaking. Of course, the money as we have it is in our bank account. The difference between what we earn and what we pay is extremely small. We have very good return and we're taking no risk on our liquidity And as you know, EBRD is on SOFR plus and SOFR has been coming down. So the little amount of the points in between what we pay and what we receive is super small. And that was part of the agreement. Clearly, we do not need to have that money. There's still 10 million available, but that was part of the undertaking when we put the money, the debt in the company. You know that we did after that in June a financing of 100 million US, obviously made the 25 million really, really not necessary, but we did have an agreement with EBRD and EBRD is our financial partner. They gave us 100 million, they gave us 25 when we wanted to strengthen our balance sheet. They've committed themselves to be there for Boumadine, to be the main lender. They are our financial partners, and we just respected our agreement. But I understand your question. It's kind of bizarre why did we draw on it, but it was part of the agreement.

Understood. Thank you for that, Benoit, and looking forward for the U2Gunder mine plant.

Thanks.

Thanks, Ingrid.

Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone. Our next question comes from the line of Don DeMarco with National Bank. Your line is open.

Thank you, operator. And good morning, Benoit and team. Good to see the just continued improvement in operational metrics. So, Raf, I think I heard you say that grades are running at 150 to 160-ish per underground improving quarter-by-quarter. Is that the range that you're looking for for Q4 to reach the guidance? Or would the open pit come in at the same or higher grade?

Well, I'll try not to speculate too much on future grade. Right now, we're focusing on a metric I've mentioned before. Underground, grain has been stable, even improving, even with higher tonnage. And underground, when you get a good stope, you get good stope, and we have many good stoves ahead. So in underground, there'll be more volatility as we had, and now we're in very good stope, and that's the result of the work we've been doing over the last year. So in underground, we're at 150, 160, and that's quite stable, whereas the open pit, I've commented already in the open pit, we want to stabilize throughput, we want to control dilution, and we'll keep on learning to this. So I do expect grade to increase, especially early next year.

Okay, great. And with this upcoming Zagunder mine plan, Bryce had asked about throughput. Just continuing with grade, I'm just curious about your approach for forecasting grades over the life of mine. in light of the volatility that you've had and some variability stope by stope and dilution and so on. Are you feeling pretty comfortable with your ability to estimate the reserves and have that reflected in the mine plan?

So as we review our reserves and our approach to the mine plan, Don, it goes without saying we learned quite a bit in the last few years of Gunder. So we'll have a more aggressive approach just like we've been having over the last year on tonnage mining bigger blocks and controlling dilution with bigger blocks and focusing on unit cost and focusing on tonnage and production.

Okay, great. And then just as a final question, year-to-date the costs are running above the guidance range. Are you looking for a significant improvement into Q4? I heard some comments about the consumable cost dropping and so on. Just curious about what your expectations are looking ahead to this quarter.

Look, this is Benoit Don. Definitely, we're managing the cost per ton extremely well. We just had a board meeting. We reviewed every line item on a per ton basis. and and the one that was the outlier was the cyanide a little bit on the consumption because of the oxide material and and but definitely on on the variance on price so there was a quantity variance but there was mainly a price variance with cyanide i would tell you the rest is pretty straight on budget where we want it to be so uh it is coming down though the contract that we were referring to were mainly for 2026 because you know as you know you buy these these bouts of cyanide ahead of time. So look, we'd love to see Q4 being below 20. There are many things that come into play, the strip ratio, a couple of expenses that we know we won't have in Q4, but the target is absolutely to bring costs down. Yes, in Q4 it is a target, and it is a target for next year as well we would like it to be lower there's no doubt about that no doubt so we don't expect it to be higher in q4 that's for sure and our goal would be to be below 20 but again it's it's too early to tell but but and cyanide is going to kick in more in 2026 than 2025. okay okay well thanks for that that's all for me and uh thanks again for taking my question good luck with the rest of the year thank you thank you

We have a follow-up question from the line of Justin Chan with SCP Resource Finance. Your line is open.

Hi, guys. Thanks. I just wanted to follow up on the underground. I mean, it improved so much. I think no one's asking about it anymore. But I guess what were the steps for getting tons and great to both improve so much? And I guess going forward, you know, was it just a matter of getting more faces open and it's majority cut and fill? Or is there still some long hold in there? Yeah, Raf, can you give us a bit of color on how you improved so much this quarter, and then what, if any, changes you expect going forward?

Well, Justin, the whole team has been working on this for a while, and we kept on saying tonnage is going to increase, grade is going to increase. As you all are aware, on the ground, it's all about planning, multiplying phases, multiplying levels. So we're still in cotton field. The team is getting better. We have some continuity within levels. We've been opening new levels, especially at deeper levels. So this is, I mean, this is the result of the last year's work. And now we're also, if you remember, initially we're targeting more 2,000 tons per day on the ground. We've reduced that a little bit. to 1,000, 1,500 tons per day, depending on the sequence. That also allows more time for better planning, better grain control. We're also working a bit more in bulk, and we've really improved our geological control, channel sampling, remodeling the fronts, remodeling the stoves, and closing the loop of planning. So that's all work. that we owe to the team on site and they've been very good at it. So now what's next for Underground is to continue our mine plan and to get to the lower level at a good rate to make sure we can close the upper levels in a timely manner to leave room for the open pit.

Okay, gotcha. So maybe to summarize that a bit. you've got your practices right and that's gotten pollution down improved grade and maybe the faces, getting more faces and open areas allowed you to get enough mining areas to hit the tons as well.

Yeah, that's correct. And we've always said that at Gunder, some stoves are larger, other are smaller. The larger stoves are definitely more continuous and the smaller ones have have some more challenges in the past, and now we are in a good zone. So we continue to learn from these, and we also mine larger blocks, like I said, and lower mistakes, and we want to repeat that experience in the open pit.

Okay, gotcha. Thanks very much. Just one last one, if I may. Just on income tax, I notice there's now tax going through the income statement line. What's the best way to model? Is it just maintain similar percentages of earnings? And then in terms of, I guess, paying cash tax, is there any timing to be aware of?

Yeah, hi, Justin. Yeah, income tax is 35%. You can take that. Obviously, it's not always a perfect divider just because we pay based on our local P&L and not on a consolidated basis. But I think On an average run rate, I think it's a pretty good estimate. And we pay, we have quarterly installments based on previous year's taxes. And so tax available year to year, a quarterly payment is a good approximation.

Okay, great. Thanks very much, Hugo. Thanks, guys. I'll free up the line. Thanks for the conference today.

Thank you. Ladies and gentlemen, that concludes our Q&A period. I would now like to turn the call back over to Beyant for closing remarks.

Thank you, everyone, for today's call. Look, we had a very good quarter. The questions were excellent, and you are questioning exactly what we are questioning and attending to. But, you know, today at Gunder, we have four top, top priorities. I mean, we know and we've always said it, we want to reach the 500,000 ounces of production per month. That's our goal. That's our target. That's what we're aiming for as quickly as possible. And the team is all aligned with this. The grade is something that we've been managing. And as Justin pointed out, we have managed it in the underground. We are very pleased the way the team is working in the underground. The open pit, we knew there was a learning process. We expected that. It's maybe taking a little bit longer than what we would have liked to, but it's getting better, and we know it's going to get better in Q4, and for next year, it's something that we hope will be stable. Obviously, because we want to do 500,000 ounces per month, and that requires a stable grade, obviously. Cost is an element that once the ramp up is done, once we're in steady state, we were reviewing the staff. Ralph was confirming that a lot of the consultants, you know, completed their jobs this quarter. We had many expats who were there helping with programming, helping with the plant, helping with different aspects of the business, which is normal. The ramp up team, most of them, I think, except for one, they're all gone. And we had many of them for a while. So that has a direct effect on our costs. And we are working on controlling our costs, obviously. Now, you also know that the price of silver is 51. And clearly, when we mine and we see a marginal or we expense that, but we take it out. We don't leave it underground or in the pit. We take it out. We have a pretty big pile of marginal and its expense. It's gone through the expense, but we have a stockpile of marginal ore. And the last item for Gounder is the optimal plan. And Ingrid asked the question, and we are not limited in our thinking. We have money, we are cash flow positive. You saw that we generated a very a strong 22 million last quarter. We believe that Q4 will be even stronger. So we're not limited to our thinking. We can think outside the box. But the beauty of Gounder, and you saw the pictures, some of you visited the plant, it's like open space construction. So we don't need to move the roof or to push some of the plant, it's open space. So we can add a crusher, we can add a ball mill if we want to, if the team decides that that's the way to go. The cost of increasing throughput is not very high. It can be done in our open space construction. And yes, we are looking at the optimal plan, given the new silver price, given the new grade, given the new cost. So that is taken into account, and obviously it was part of Bryce's question and Ingrid's question on where do we go next, and we understand. Boumadine, nobody was asking question about geology. David is right beside me. He was hoping for some very good question on geology. But, you know, Boumadine is a star asset with the main zone and all these regional zones. So that will be something that we will keep exploring and keep drilling. As we mentioned, we're looking for next year at probably over 200,000 meters of drilling, 180 on infill drilling, and between 20 and 40 on exploration drilling on the regional plate. So there's a lot of things coming from Boumadine over the next quarter and over the next year. And look, we are extremely pleased with where we are. And furthermore, the jurisdiction in Morocco is getting better as an investment jurisdiction. And we're seeing it now. There'll be a major event in Marrakech in two weeks on mining in Morocco. And we expect to see a lot of people there. So look, we have our first mover advantage. We do have a very large footprint. We have two well-understood assets. We need to work on them. And we expect to have another strong quarter in Q4. Thank you for your time. Thank you for being there. And we will see you some in Europe over the next few days or few weeks as there are many conferences. Otherwise, we'll see you in Toronto at the Scotia Conference or others. We will see you in Toronto as we are in town to meet some of our shareholders. Thank you very much and have a good day.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.