Hemlo Mining Corp.

Good morning. My name is Ben and I will be your conference operator today. At this time, I would like to welcome everyone to Hemlo Mining Corp.'s second quarter 2026 financial and operating results conference call. 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 a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would like to turn the meeting over to Jason Banducci, Vice President, Corporate Development and Investor Relations. Please go ahead, Mr. Banducci.

Thank you, operator. I would also like to welcome everyone to Hemlo Mining's second quarter 2026 financial and operating results conference call. Before we begin, I would like to note that we will be making forward-looking statements during today's call. I will direct you to the second slide of our earnings presentation, which contains important cautionary notes regarding these forward-looking statements. The earnings presentation, including the cautionary notes, can be found on Hemlo Mining's corporate website. All dollar amounts discussed today will refer to U.S. dollars, unless otherwise indicated. Our news release, MD&A, and financial statements for the second quarter of 2026 are available on CDAR+, and on our corporate website at hemlomining.com. On the call today, I'm joined by our President, CEO, and Director, Jason Kosick, Chief Financial Officer, John Case, Chief Operating Officer, Eric Tremblay, Vice President, Operations and General Manager, Garrett McDonald, and Vice President, Exploration, Raphael Duteau. Also joining the call is our Executive Chair, Jonathan Odd. Today, we are pleased to provide an operating and financial update for the second quarter of 2026, followed by a live Q&A session. With that, I would like to hand the call over to Jason Kosick to kick things off.

Thanks, Jason. Good morning, everyone. Q2 2026 was our first full quarter under our owner-operator model And it was a quarter of real progress, resource growth, changes to the mining sequencing, discipline execution, and several key corporate milestones. For those new to this story, Hemla Mining is a Canadian gold producer operating the Hemla Gold Camp in Northwestern Ontario. The Hemla Gold Mine has produced roughly 25 million ounces since 1985, making it one of the most prolific gold mines in Canadian history. Our vision is to build the next Canadian gold champion, a nimble owner-driven company that's scaled into an intermediate multi-asset producer through an unrelenting focus on performance and zero harm. Turning to slide four, on an attributable basis, the Hemel Mine produced 25,188 gold ounces and sold 27,858 gold ounces during the quarter. All in sustaining costs were $2,561 an ounce sold. Revenue was 142 million on an average realized price of $4,467 an ounce. Net income was 31 million or 10 cents per share. Adjusted net income was 27 million or 9 cents per share. And we ended the quarter with a cash balance of $130 million. As we highlighted in our production results, plan changes to the mining sequencing temporarily weighed on the grade profile to the mill. Arup will provide additional color on this shortly. But the underlying operations strengthened significantly. Importantly, we executed across our strategic priorities. Zero lost time injuries and three straight years without an LTI. An updated mineral resource assessment that grew the measurement in indicated resources by 34%, adding 1.2 million ounces of gold. We also graduated to the TSX and made our debut on the OTC QX in the U.S. We also signed an impact benefit agreement with and appointed Eva Kochi to our board. Together, This quarter's operational resource and corporate progress reinforces the confidence in the long-term value creation opportunity here. I'll now hand the call over to Eric to walk you through the operational results.

Thanks, Jason. Good morning, everyone. On slide five, we have highlighted operational metrics for the quarter on the left and key takeaways on the right. Starting with safety. The MLO mine recorded no last time injuries and no environmental noncompliance during the quarter and achieved three years consecutive without last time injury. This reflect a deeply embedded safety culture that we are committed to preserving and building on. The second quarter marked our first full quarter operating under the owner operator model. The first time the mine has operated this way since Recruiting and training progress well. The mine now employs 529 full-time employees alongside 269 contractors, approximately 75% from local communities. Turning to operations. The MLU mine produced 25,188 attributable gold ounce in the quarter, with William processing 289,000 ton at an average grade of 2.53 gram per ton gold and Interlake processing 61,000 ton at an average grade of 3.05 gram per ton gold. Recovery for the combined operation was 94.3%. Attributable production of 25,188 oz was down approximately 4,500 oz from the first quarter. The decline in production quarter over quarter was preliminary driven by planned rebuild of one of our three underground crushers. which require all tonnage to be diverted to the remaining two crossers, together with a planned transition from top-down to bottom-up mining sequence across a portion of William and Interlake zones. This sequencing change temporarily delayed access to high-grade stoves and increased the proportion of low-grade development or process, reducing average mill feed grade. Importantly, because of the incremental lower grade ton were sourced from wholly owned area of the mine, attributable production represent a higher percentage of the total production than in the first quarter.

We were pleased to see underlying operating matrix improving in the quarter.

Relative to the first quarter, development meter increased 42%, long-goal production drilling increased 65%, total ton move increased 5%, and ore mill increased 7%. We also established several new daily operating record during the quarter, including 1,051 meter of long-goal drilling, 46 meter of lateral development, 4,800 tons of paste backfill place, 7,118 tons of ore oisted, and a new daily processing record of 5,035 tons per day. We expect this leading indicator to support improved production and future period of newly development mining area are brought into sequence. On unit costs, mining costs decreased to $105.60 per ton mine, and milling costs decreased to $25.50 per ton mill, reflecting higher mining and processing volume, while mine site G&A was $26.84 per ton mill, reflecting continuous buildup of owner-operator workforce. Attributable total site cash costs were $1,880 per ounce sold, and attributable mine site all-in sustaining costs were $2,561 per ounce sold, with an increase relative to the first quarter primarily reflecting fewer attributable ounces sold alongside continuous investment in the fleet and workforce. On the fleet, we received seven additional mobile equipment units during the quarter, including three bolter, one sizzle lift, one 40-ton all-truck, and two 11-cubic-yard scoop tram, bringing the total fleet addition to 10 of 21 planned new units on site for 2026. Together with planet ventilation upgrade expected to improve blast reentry time on the second half of the year, these investments are expected to support high development rate and greater production flexibility. I will now pass the call to Garrett to walk through the key upside opportunities and the deep bottlenecking work underway at the mine.

Thanks, Eric. Turning to slide six. I want to walk through the key upside opportunities we see across the mine and the work that underpins our path to higher, more consistent production. The first area to mention is optimizing the mining sequence, involving the move from a top-down to a bottom-up sequence that allows for more efficient material handling, keeping development waste rock underground, and the drilling of downholes rather than upholes that will improve stole performance by reducing dilution and ore loss. Optimizing the mine sequence provides us with greater flexibility, ultimately leading to increases in production rates, lower unit costs, and ultimately lower cutoff rates. The second opportunity in front of us is to begin utilizing the open pit portal for haulage from the underground mine, which will increase our operational flexibility by having another option for delivering ore to the mill. Nearby is the newly defined E-Zone. which presents significant potential with multiple mining fronts available, and we are fast-tracking access and development to this zone. The EVE Zone is an independent mining area that can supplement the remainder of the underground mine to maximize mill utilization. The third opportunity is bringing additional ore mining areas into the plan. We have identified areas outside the mine plan in the Upper Sea Zone, which presents additional lawn hole and atomax sloping areas, and the B-Zone West, which we have identified for bulk mining potential, giving us proximity to existing infrastructure and a short haul to the underground pressure. Design work is progressing to incorporate these areas into the mine plan. And finally, a number of other notable opportunities that are being developed, including extending Alamak mining to maximize resources through this proven, efficient, high-tonnage-to-development method, completing underground infrastructure upgrades, including crusher rebuilds and ventilation system expansion, and optimizing and accelerating mining in the past producing areas such as the B-Zone main and the Golden Giant mine. Turning to slide 7, alongside those growth opportunities, we have identified numerous initiatives to increase productivity and lower our operating costs across the mine site. These include implementing a modern mine dispatch system to optimize manpower and fleet utilization, re-engineering our paced backfill fences and moving to down-the-hole versus up-hole drilling to accelerate the mining sequence, and installing an on-demand ventilation system to direct air flow where it is needed most while reducing operating costs. We are also optimizing ground support standards and reintegrating the use of McLean bolters combined with the drill jumbles to accelerate development across multiple phases, re-establishing automated drilling between shifts and developing narrower zones under geological control to minimize dilution. These efforts are foundational to converting the operational momentum we saw this quarter into sustained production growth to achieve our goals of materially increasing mining and processing throughput in 2026 and 2027. In addition to this, we are well underway on an open pit trade-off study that we look forward to sharing with the market by an updated technical report and mine plan expected in the second half of 2027. With that, I will now hand the call over to Raphael to discuss our updated mineral resource estimate and exploration drill program.

Thanks, Garrett. Turning to slide eight. In June, we announced an updated mineral resource estimate for the Hemlo mine, incorporating additional drilling completed since the 2025 technical report, as well as updated assumptions to reflect the current metal prices. On a 100% basis, measured and indicated mineral resources now total 96.9 million tons at 1.55 grams per ton gold for 4.8 billion ounces, an increase of 1.2 million ounces, or 34% from the 2025 technical report. Underground measured and indicated mineral resources grew to 24.9 million tons at 3.53 grams per ton for 2.8 million ounces, up 40%. And Open Pit grew to 71.9 million tons at 0.87 grams per ton for 2 million ounces, up 25% for the 2025 technical report. Inferred Mineral Resources increased to 12.1 million tons at 2.22 gram per ton for 0.9 million ounces, An increase of 240,000 ounces, or 39%, with underground inferred gold ounces at 48%. There are a few takeaways. Overall, the mineral resource estimate exceeds our internal expectations. We see historical resource-to-reserve conversion of approximately 85%, which gives us confidence in the potential for future reserve growth at EMLO. Importantly, the overhaul grade profile is essentially unchanged from the 2025 technical report, despite a reduced cutoff driven by stronger resource growth underground compared to open pit. We are also seeing multiple parallel zones being developed with significant upside. A-zone and South Streams are good examples. And importantly, meaningful future growth potential exists outside of Interlake. These updated estimates represent a key milestone toward a comprehensive mineral resource and mineral reserve update and technical report targeted for the second half of 2027. Turning to slide nine. This illustrates the 34% growth in measured and indicated resources, the 1.2 million ounces increase from the 2025 to 2026 on a 100% basis and compare the 2025 and the dated 2026 resource shapes. The growth reflects the combined impact of increased gold price, additional drilling, geological reinterpretation, and identification of new mineralized zones. Notably, the 2026 mineral resources defined larger pit shell, converting a portion of the 2025 underground resources into open pit resource this year. The image on the right side of the slide highlight the current resource shape as well as the location of conversion drilling, which is focused on upgrading resource confidence, expanding non-mineralized zones, and testing multiple potential extension located near existing underground infrastructure. Turning to slide 10. Beyond the headline growth, the 2026 estimate demonstrates increased continuity across the deposit On the left, you can see the underground reserve and the resource shakes. On the right, we have illustrated the sensitivity of the underground resource to gold price. The sensitivity underscored the leverage in the minimization at 2,500 per ounce gold price. Underground, measured and indicated, stands at approximately 2.8 billion ounces, and the resource growth meaningfully had higher price assumptions while remaining robust at lower prices. The improved geological continuity give us greater confidence as we advance mine planning and the broader technical work ahead. Turning to slide 11. We continue to execute our approximately 130,000 meters drilling program, one of the largest single asset drill program underway in Canada this year. Year to date, we have completed approximately 60,000 meters with drilling now fully ramped up and 10 drill rigs on site, including three surface drills. The program is structured across three pillars, resource conversion, high definition, and growth. During the quarter, we announced the first growth drilling results from the program, focused on the South Rim Zone, a newly recognized high-grade mineralized domain hosted within the regional metasediments and located adjacent to active mining in sea zone. The first seven of 20 plans holds confirmed mineralization, with top hole intersecting 16.07 grams per ton goal over 8.1 meter, including 59.67 grams per ton over two meter. South Stream remain open along strike and down plunge, and we will continue to release results for the program through the remainder of 2026 and into 2027. I will now hand the call over to John to walk through the financial results.

Thanks, Rafael. Turning to slide 12, the second quarter yielded strong earnings and showed a continued improvement in our balance sheet. Revenue for the quarter was 142.5 million, generated from 32,425 gold ounces sold. Revenue decreased relative to the first quarter, driven by 6,260 fewer gold ounces sold and a 456 per ounce decrease in the average realized price. EBITDA in the quarter was 77.2 million, while operating cash flow was 35.6 million, and free cash flow was 11.3 million. Net income was 31 million in the quarter, or 10 cents per share, an increase of 8.9 million over the previous quarter. I note in our disclosures we have added the new metric of adjusted earnings to help investors and analysts adjust for the noise in our earnings from Goldstream accounting, non-recurring items, and the quarterly mark-to-market of derivatives. The calculation for underlying adjusted earnings can be located in the management discussion analysis section of our financial statements. Our adjusted earnings in the quarter was $27.3 million, or $0.09 per share. Total capital expenditures during the quarter were $24.4 million, an increase of $4.3 million over the previous quarter. Those capital expenditures in the quarter comprised $17.5 million from sustaining capital directed primarily to underground development, mining fleet additions, and tailing storage facility work, Growth capital in a quarter was $6.9 million, largely for exploration drilling, mobile equipment from growth, and processing plant improvements. Switching to the balance sheet, we closed the quarter in a strong liquidity position with cash on hand of $130.2 million and net debt was $19.8 million. Net debt decreased quarter over quarter by $6.6 million due to the buildup in our cash balance. Finally, on our transition service agreement with Barrick, we have successfully implemented and transitioned key information technology systems, and we are on track to terminate the transition service agreement with Barrick before the end of the third quarter. With that, I will hand the call back to Jason Banducci to walk through our key objectives and corporate timeline.

Thanks, John. Turning to slide 13, we have outlined key objectives and corporate milestones through 2027. On the corporate front, we achieved several key important milestones during the first half of the year, including graduating to the Toronto Stock Exchange, commencing trading on the OTCQX in the United States, and completing our impact benefit agreement with BN. We also recently hosted our first formal site tours of the MLO operation in more than 25 years, welcoming nearly 30 analysts, investors, and lenders to the site in July. Looking ahead, we remain focused on a number of strategic initiatives, including pursuing additional index inclusion opportunities. In July, we were added to the selective Canada Broad Market Index, representing our first equity index inclusion, and we continue to target broader inclusion in indices such as the GDXJ. We are also actively evaluating our future U.S. exchange listing to further expand our access to global capital markets. Operationally, our priorities remain centered on optimizing mine sequencing, advancing the development of our owner-operated workforce, upgrading site infrastructure, commissioning new equipment, and completing planned maintenance programs. Together, these initiatives support our targeted throughput increase to 4,800 tons per day by year-end 2026, with a phase ramp-up towards approximately 6,000 tons per day to exit 2027. On the exploration and geology front, in addition to the 130,000-meter drill program Rafael highlighted earlier, we are also advancing updated technical work to support a report targeted for the second half of 2027, which will incorporate updated reserves, resources, and mine planning assumptions. With that, I will turn the call back to the operator to begin the Q&A session.

At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Ralph Profiti with Stiefel Financial. Your line is open.

Thanks, operator, and good morning, everyone. There was some discussion in the MD&A about hiring and execution and sort of labor tightness. I'm just wondering, are any of the labor shortages and challenges you're facing preventing you from commissioning any of the new equipment? Or are you keeping pace in that respect? And I'm just trying to get a sense of the confidence in the 4,800 ton per day exit rate at the end of the year. Are you sort of needing to execute that by allocating more of the hiring plan by prioritizing getting to that rate as opposed to sort of, you know, taking on some of the other labor-dependent debottlenecking initiatives?

Yeah, thanks, Ralph. You know, this is something that plagues the entire industry from a labor perspective, obviously, and it has caused some slight delays. We are still very confident in executing our plan and executing on that 4,800 ton per day run rate by the end of the year. I can pass it over to Eric to give you a little bit more color.

Yes, good to be late. Every company I have with the manpower, we're lucky to have 30 years of working with Manrock, who's been there with us. We use also Manrock. to have a little bit extra manpower to help us during the ramp up of that manpower. So they're helping out a lot there.

Okay, thanks. And I want to also come back to the accelerated KPIs, specifically the long-haul drilling being up by 65%, which is a significant improvement. I'm just wondering, how are you able to achieve that? Were there any one-offs there? Can we continue to expect to see improvement And how has that aspect of KPI performed July through August?

First of all, we know that when we took over, all the equipment used by the contractor was their own equipment, owned by Barrick and us, and pretty bad trade. So how we did achieve that is, first of all, to put a good driller on the seat of those drills using a board there. And also... doing all the refurbished of all the front of those drills. So we did a lot of work on refurbishing the drill and reusing the automatization. So now they drill between shifts, and they were not doing that in the past. So it's all those kind of an addition of all those little things that we did there.

I see. Thanks very much.

Your next question comes from the line of Oves Habib with Scotiabank. Your line is open.

Thanks, Aubrey. Hi, Jason and Hemlo team. Congrats on the earnings beat. Just a couple of questions from me. Starting off with just the guidance for this year. So you decided not to provide guidance for 2026 in Q3, which I completely agree with, as I believe 2026 is really a transition year with the new people joining the team, the new equipment. new mining method that you guys are implementing. Jason, what targets do you have in place to exit the year in terms of hiring additional equipment, maybe mining rates and winning rates? Maybe some color there, please.

Yeah, I'll kick it off of Ace and then pass it over to Eric. As we discussed at the site tour, we got feedback from both the analysts and the buy side and obviously discussed that with the board with respects to guidance. You know, I think we were a little bit aggressive at the beginning of the year on what we could achieve and how quickly we could achieve it. You have to remember that we really couldn't do any of our kind of deep bottlenecking exercises or any of the changes we wanted to make due to the constraints of the Burminko contract that was in place. So, you know, we phased them out in the middle of March. So we put those, we implemented all those changes starting in April. Coupled with the slight equipment delays and the constraints and the competitive labor market has pushed that out. But I think we are, as a team, we're very confident to beat what was delivered last year under Barrick and, you know, over the last, call it roughly five years. So we're very confident in that and to exit at that 4,800 ton per day run rate by the end of this year. As Eric highlighted too, given the competitive labor market, we have brought in extra crews from Manrock to help bridge that gap for the time being. Right now we have... basically about 30 positions left to bring in to have that full crew ready to go to hit that 4,800 ton per day run rate. We currently have, as of last week, I believe, 11 of the 21 pieces of equipment arrived. We will see the remainder of that fleet arrive in middle of October. So that's giving us a lot more confidence in that exit rate. And then, like I said, there's still 30 people left and of the 30 positions open, there's about 15 in kind of the hiring process. So that's giving us a lot more confidence. And again, we thought that that would have happened a month or two ago. So I'll leave it at that.

Any additional color from Eric, or can I move to my next question?

Does that answer your question? Because at the end of the day, also for the question about the 4,800 tons per day, so we have bulk and stoke coming in. We have more alumac coming in. So really, we're in a good direction to hit those targets.

Yeah, Oves, to add to just what Eric said, is that we have three LMAX ready to go. Of the 42 stopes remaining for this year, 95% of them are pretty much ready to go.

Sounds good. So it looks like, I mean, in terms of the confidence you guys have, it looks like you guys are setting up really nicely for Q4 and kind of going into 2027.

Correct.

Perfect. Okay, just moving on to my next question then. I get a question on this a lot from a couple of clients. So, I mean, obviously you guys have a lot of significance for milling capacity right now. Is there an opportunity to toll mill in the near term until the mine ramps up? and you release a trade-off study on the open bid?

Listen, we don't need to talk about that, quite frankly. Obviously, there's a number of inbounds from other parties, but we just need to focus on delivering what we told everyone we were going to deliver. And frankly, anything else is quite frankly a distraction. So the team has to be laser focused on Getting out at 4,800 tons this year and exiting next year at 6,000 tons. And those are our priorities. And everything else is, frankly, noise. We're not in it to make a couple of bucks on toll mailing.

Got it. Got it. Thanks for taking my questions. I'll get back to you.

No worries, Luis. Your next question comes from the line of Don DeMarco, National Bank. Your line is open.

Thank you, operator, and good morning, Jason and team. Maybe I'll just continue on with some questions to put the guidance deferral to rest. Yeah, of course, there was only two quarters left in the year, and you confirmed that you got guidance pending beginning of next year. Was the decision to defer the guidance, was it really looking at, you know, your forecasting was just coming up with wide ranges that just weren't that meaningful? Or was there something maybe that was more negative that needed to be de-risked before you put it out? Or just wondering if you could kind of just give us a sense of, you know, your thoughts when you made that decision. Because I look at a lot of the factors here that were cited, and a lot of those were largely known. Did one of them trend worse or better? But any additional incremental call would be great. Thanks.

Listen, Don, we're about a month or two behind, so then it's pushing guidance out until October-ish instead of September. So then feedback from the buy-side clients is, okay, if you get it done in October, what is the point in doing it for just Q4, really?

Yeah, okay. Right, exactly. Just kind of running up to the end of the year, I see. Thanks for that, Ben. You know, with that, you know, the quarter generated modest recash flow, you know, net debt declined, you know, repaying the facility. You know, with operations trending, I mean, would Q2, should we consider Q2 to kind of mark the low watermark of financial performance for the year?

I'll pass that off to Keith.

Yeah, Don, it depends what you mean by financial performance. If you're looking for sort of guidance on spend, everything that you've heard Jason and Eric talk about should lead you to believe that capital spending will continue to grow through the end of the year.

Yeah, I guess I was referring to free cash flow. I mean, you still, even though it was a tough quarter and you managed this transition, you still delivered like single digit free cash flow. So do you think this is kind of a platform that free cash flow is position to base with, you know, to grow from here?

You know, I think we position this year with our investor base that it's not a year to expect free cash flows. You know, we have a business plan that requires a lot of investment in the asset, which is all kind of coming to bear now. So our capital spending does step up in the summer as most Canadian producers do. And then into Q4, as we try and set the mine up for that 4,800 ton per day run rate, there's going to be more capital required. So What I was getting at your question is, you know, free cash flows, you know, operating cash flow, less investing cash flow, right? So the investing cash flow is going to step up. Whether or not that results in net free cash flow will really depend on the gold price here in Q3 and Q4 and how the operations deliver. But I think the message to investors and to, you know, people listening on the call is that, you know, this is a year that we're setting up the business for next year. So it's not one we're necessarily expecting strong free cash flows in the coming quarters.

There was a number of preventative maintenance things we had to do, tailings things we had to do, double the mobile fleet, one of the biggest drill programs in Canada. So it was quite a capital-intensive year. And just to hammer that point home is that we've always said that 2026 is, quite frankly, an investment year to set us up for success in 2027 moving forward.

Got it. Okay, it's really helpful. Thanks, guys. That's all for me.

There are no further questions at this time. Mr. Kosek, I will turn the call back over to you.

Thank you, operator, and thank you all for your questions. I just want to state that we're still in the early innings of a multi-year value creation story, and the progress we made this quarter sets us up well for the balance of 2026 and beyond. Thank you all for joining today, and please feel free to reach out to myself or anyone else on the HEMLO team. Have a great day, everyone.

This concludes today's call. Thank you for attending. You may now disconnect.