AngloGold Ashanti Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2025

Key Takeaways

  • Positive Sentiment: The company posted a very strong Q2, with gold production up 25%, EBITDA more than doubling to $1.44 billion, and free cash flow up 150% to $535 million.
  • Positive Sentiment: The balance sheet strengthened further, with adjusted net debt down to $92 million and leverage near zero, while liquidity remained around $3.4 billion.
  • Positive Sentiment: Management highlighted disciplined cost control, saying cash costs and AISC have stayed roughly flat in real terms since 2021 despite inflation and higher royalties, and Q2 managed-operation AISC rose only 4% nominally.
  • Positive Sentiment: The company reaffirmed full-year 2025 guidance and said the second half will be production-weighted, while also flagging higher Q3 capex tied to fleet replacement and other planned investments.
  • Positive Sentiment: Management reiterated a shareholder-friendly capital return policy, declaring a larger-than-usual half-year dividend and saying it will evaluate additional buybacks or debt reduction later in the year.
AI Generated. May Contain Errors.
Earnings Conference Call
AngloGold Ashanti Q2 2025
00:00 / 00:00

There are 10 speakers on the call.

Operator

Please note that this event is being recorded. I'll now hand you over to Mr. Stewart Bailey. Please go ahead, sir.

Speaker 1

Thanks, Judith, and good morning, good afternoon to everybody. Thank you for joining us for this Q2 2025 results call. We have Alberto and Gillian in the room and then also other members of our executive team available. Before we start, I would ask you just to look at our safe harbor statement at the beginning of the presentation, which requires important information, including regarding forward-looking statements. It is important, and we urge you to read it. I'll hand over to Alberto.

Speaker 2

Thank you, Stewart. I'm pleased to report another excellent quarter showing continued momentum in the business. The result, which is very good by any measure, is underpinned by steady delivery to plan, a strong financial result with growth in free cash flow and earnings. Production from our managed operations was up 25% year-on-year. Earnings and cash flow were the strongest in recent memory due to EBITDA doubled year-on-year, and free cash flow was almost up 150%. With almost $1 billion of free cash flow in the first half and leverage close to zero, the balance sheet is at its strongest level ever. Costs were again well controlled despite inflationary pressures and importantly higher royalties. Our performance bucks the long-term industry trend of costs rising in tandem with the gold price.

Speaker 2

Since 2021, our cash costs and all-in sustaining costs have remained remarkably stable in real terms, up just 2% and 1% respectively. This outcome reflects our focus on ruthlessness, cost control, disciplined execution, and operational excellence. Safety remains our highest priority, and we're committed to eliminating injuries from our sites. We're proud of the strides we've made, but always mindful that we're only ever as good as our last injury-free day. We work hard to mitigate risk and to learn from our mistakes and near misses. Our TRIR improved 17% year-on-year to 0.8 injuries per million hours worked. That's the lowest ever, and it remains well below the 2024 ICMM member average. What we can control, we continue to control very well. That's clear when you look at our managed operations. Production benefited from Sukari's inclusion and higher contributions from Geita, Obuasi, Siguiri, and Koulyouba.

Speaker 2

Sukari has established itself as one of our top operations. Geita delivered another strong performance with increases in ore tons and higher grades from the open pits. Obuasi continued its ramp up. Total cash costs for managed operations were only 6% higher, driven predominantly by inflation and higher royalties. By the way, higher royalties is what we believe is the only good cost. Free cash flow was $535 million, more than double last year's result. You see it too in our overall profitability. EBITDA also more than doubled to $1.44 billion. Headline earnings were up 151% to $639 million. We have ample liquidity, no material, near-term maturities, and leverage of zero. Our dividend policy provides for a 12.5% payout each quarter of around $63 million. It also provides for an annual true-up of up to 50% of free cash flow.

Speaker 2

We've used discretion to make that true-up at the half year, which reflects not only the extraordinary cash flow generation of the first six months, but also our confidence in the outlook of the business. That takes the dividend declaration to $0.80 a share or approximately $406 million. It brings the total dividends declared for the first half of the year to approximately $469 million. Clearly more than double at least what we've done in the past 15 years. That provides one of the most generous yields in the sector. All things being equal, we expect more of the same in the second half. We will continue to evaluate further capital allocation options over the remainder of the year with a particular focus on buybacks of shares or debt. Our Tier 1 assets account for around two-thirds of production and 80% of reserves.

Speaker 2

We expect to see that production share rise as Obuasi ramps up. Our Tier 2 assets are also making a big contribution. What you see here are healthy margins and exceptionally cash flow leverage. We remain active managers of our portfolio. The sale of Serra Grande ensures we properly allocate management time and further sharpen our focus on the core of the business. During this extraordinary turnaround journey we've been on since 2021, we've continually assessed where we can generate the most value. The answer is clear. The best opportunities remain within. First, we are committed to lifting performance from our core assets. Driving margin growth through cost discipline. Full Asset Potential has been invaluable in this regard, keeping costs flat in real terms. Has improved our position on the cost curve and helps us to reliably deliver on our guidance.

Speaker 2

This is now embedded in how we work. We see more opportunity to drive value. The insights from this program have helped us to unearth a pipeline of organic growth options that are beginning to reveal themselves. This pipeline extends well beyond Obuasi, which itself is starting to develop a consistent operating cadence as it ramps up. There are other equally exciting projects to build scale and extend life at Cuiabá, Siguiri, Geita, and Iduapriem. These are relatively low risk, low capital intensive opportunities that allow us to leverage our existing footprint, infrastructure, and knowledge. The returns are, as you can imagine, more than competitive. We'll flesh out in the coming quarters, helping to daylight more value in this extraordinary portfolio of ours. In November, we will start talking about Geita in more detail.

Speaker 2

Third, we're laying the foundations for the next stage of growth in Nevada, a world-class gold camp where we're building scale, size, and optionality. We continue to uncover value in the U.S., where the overall quality of our discovery in Southern Nevada will deliver value to shareholders and a host of other local stakeholders for decades to come. The proposed acquisition of Augusta Gold consolidates this important district and improves our ability to unlock significant synergies across permitting infrastructure and development sequence. It improves our ability to optimize capital, reduce execution risk, and streamline stakeholder engagement. I will now hand over to Gillian to go over the financial results.

Speaker 3

Thank you, Alberto. The gold price maintained its upward trend, with the average price during the quarter $3,287 an ounce, a 41% increase year-on-year. The stronger gold price was influenced by sustained central bank buying, heightened geopolitical tensions, interest rate expectations, and uncertainty around U.S. fiscal policy. U.S. CPI eased to 2.7% from 3% in 2024, with oil prices 27% lower than Q2 of the last year. Inflation moderated across most of our jurisdictions, with significant disinflation in Argentina down to 39% from 272% a year ago. Inflation in Brazil moderated to 5.4% from 4.2% a year earlier. Our realized inflation rate, which represents CPI changes in the jurisdictions that we operate, was around 4.6%, maintaining upward pressure on costs. We continue to look for opportunities to offset cost impacts from the macro factors we are exposed to.

Speaker 3

Our managed operations drove the production outperformance for Q2, with gold production up 25% year-on-year to 729,000 ounces, compared to 529,000 ounces in Q2 of last year. This reflects the contribution from Sukari and improved performances at key assets, including Obuasi up 31%, Geita up 20%, CVSA up 7%, Cuiabá up 6%, and Siguiri up 6%. The increase was partially offset by the 9% lower production from Kibali, due mainly to lower tons and grade. Sukari contributed 129,000 ounces in its second full quarter, firmly establishing its role as one of the top producers. Obuasi delivered strong 71,000 ounces in Q2 of 2025, a 31% year-on-year increase as grades improved and production ramped up steadily. Siguiri continued its strong operating performance from Q1, achieving 85,000 ounces in Q2, 5,000 higher year-on-year, supported by improved throughput and recoveries.

Speaker 3

Iduapriem experienced a challenging quarter, with production down due to lower grades at Ajopa and processing of lower grade stockpiles. Total cash costs for managed ops increased by 6%, stemming from continued inflation and a higher gold price linked royalties. These cost pressures were partially offset by Full Asset Potential operational excellence and the addition of Sukari to the portfolio. All-in sustaining costs at managed operations remained more or less flat in real terms. On a nominal basis, AISC increased by 4%, reflecting inflationary pressures and higher royalties. We remain focused on strong cost discipline, driving operational efficiencies and prudent capital allocation. These results reflect another strong performance from the business. Earnings and free cash flow more than doubled, driven by continued cost discipline, a 21% increase in gold production, and a higher average gold price.

Speaker 3

Adjusted EBITDA rose 111% year-on-year to $1.44 billion. The jump in both gold price and sales volumes drove this increase. This was partly offset by higher total cash costs, which reflects higher volume, inflation, and those royalty costs linked to gold price. In addition, adjusted EBITDA was also impacted by planned costs to manage legacy tailings facilities in Brazil, in line with our ICMM commitments and the care and maintenance costs at our CVSA operations. Basic earnings rose to $669 million from $253 million a year earlier. Net cash flow from operating activities was up 142% to just over $1 billion, reflecting improved operating fundamentals and cash conversion. Free cash flow of $535 million was more than double last year's number. Adjusted net debt fell 92% versus June 2024, reducing net debt to EBITDA to almost zero, significantly increasing our financial flexibility.

Speaker 3

Our aim remains to close the valuation gap with our North American peers by sustaining operational improvements, maximizing cash conversion, extending mine life, and maintaining disciplined capital allocation. Our cash cost performance continues to highlight the progress we are making to strengthen our position on the cost curve. Group total cash costs were $1,266 an ounce in Q2, 8% higher year-on-year due to the macro factors I described earlier. You can see from the chart, uncontrollables, that Kibali's performance affected our overall cash cost position by around $18 an ounce, and we managed to claw back most of this through a strong performance from our managed operations. If we pause for a moment to talk about royalties, again, as Alberto mentioned, we view as a good cost.

Speaker 3

We continue to see royalties move in lockstep with the gold price, which in turn ensures that our host governments and communities feel the direct benefit from our improved operations and the stronger gold price. A useful rule of thumb as you work through your models is that for every $100 per ounce move in the gold price, causes roughly just around $5 an ounce corresponding move in cash costs linked to royalties. Full Asset Potential continues to play an important role for us in mitigating the ongoing pressure on our costs. Group AISC rose 7%, while AISC for managed operations increased by just 4%, demonstrating continued strength in delivery of our sustaining capital program. We remain focused on converting higher gold prices into stronger earnings and free cash flow, which rose to $535 million in Q2 2025, up from $215 million in the prior year.

Speaker 3

The stronger gold price gave us a $700 million impact. Higher gold sales driven by Geita and Siguiri, and the contribution from Sukari added another $353 million to free cash flow. Operating cost increases of $216 million reflect targeted investments in asset integrity and inflation-linked inputs. The $140 million working capital outflow reflects a combination of normal operating cycle effects, seasonal timing issues, and a few one-off items. Receivables absorbed $145 million, driven by the timing of gold sales, particularly at Sukari, VAT claims at Geita, Iduapriem, and Obuasi, tax-related prepayments in Australia. Inventories released $19 million, mainly related to inventory and process, and payables absorbed $14 million, with the biggest component being the payment of our landholder duties in Australia linked to our 2023 redomicile. Capital expenditure rose in line with plan and reflects the integration of Sukari, reinforcing our commitment to sustaining and growing our asset base.

Speaker 3

You'll see the $150 million in dividends to non-controlling interests, reflecting the strong performance from Sukari and the consequent payments to our partner, EMRA, in Egypt. The second graph illustrates free cash flow margin over time. It has our free cash flow return as a percentage of revenue, with the profile demonstrating improvement in returns as the gold price has increased over the last 18 months. Its strong year-on-year expansion reflects improved operating cash flow and disciplined capital allocation across the portfolio. We maintained a strong liquidity position and a robust balance sheet during the quarter, underpinned by continued financial discipline. Adjusted net debt decreased to $92 million at the 30th of June 2025, with the adjusted net debt-to-EBITDA ratio improving to 0.02 times from 0.21 times at the 31st of December 2024, reflecting strong cash generation and a more efficient capital structure.

Speaker 3

Liquidity remains substantial at approximately $3.4 billion, including $2 billion in cash and cash equivalents, allowing us to fund our pipeline, return capital to shareholders, and navigate commodity price cycles with confidence. We are pleased to reaffirm our 2025 guidance on all metrics. Production is slightly second half-weighted. With that, I'll now hand back over to Alberto to wrap up.

Speaker 2

Thank you, Gillian. Before we close, I want to take a moment to reflect on the broader picture. The business is in good health. We've made tangible progress on every one of our strategic priorities. More importantly, we're operating safely, and that's a credit to every person across our business. We're delivering consistent growth from a portfolio anchored by high margin tier 1 assets, backed by a strong pipeline of options. We maintain cost discipline despite persistent inflation. Since 2021, our cash cost and oil sustaining costs in real terms have risen by just under 2%, while our peer average is significantly higher than 15%. That gap matters, especially in a strong gold price environment, and it speaks to the resilience we've built into this business. Financially, we're in an exceptionally strong position. No leverage, strong liquidity, long-dated maturities.

Speaker 2

While we rebuilt the business between end 2021 and Q1 of this year, we paid $1.2 billion in dividends. At the same time, we've ensured our assets and growth projects are properly capitalized. Our new dividend policy will ensure shareholders see the fruits of the improved operating cadence, a higher gold price, and much higher cash flow we're seeing now. We've been included in the Russell Indexes, increasing visibility and relevance amongst U.S. institutional investors. For as long as this company has been in existence, we've struggled with the disconnect of our production size and relative size to our North American peers. We know that this isn't the result of a single thing, but rather the cumulative effect of a number of factors. We've gone about systematically addressing the issues over the past 3 years.

Speaker 2

Today, the fundamentals of the business are strong. The outlook even better. We're doing what we promised, and we're taking meaningful strides to achieve and reach our Full Asset Potential. As you screen the valuation metrics, we believe AngloGold Ashanti continues to offer an attractive investment proposition, strong cash flows, a shareholder-centric approach to returns, market-leading yield, and a valuation that is far from demanding. With that, I'll take your questions.

Operator

Thank you, sir. Ladies and gentlemen, we will now be conducting the question and answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star and then two to leave the question queue. To the participants who have joined via the webcast, you're welcome to submit your questions in the text box provided on your screen. While we wait for the question queue to build, I will hand over for a question from the webcast.

Speaker 1

Thanks, Judith. At the moment, there is only one, but I'll start with that. Which is, as you look at further options for capital returns, how do you think about share buybacks versus debt buybacks? Is there a risk buying back shares at the current price?

Speaker 2

Thanks, Stewart. We just declared the highest dividend in memory. We went as an exception to the policy. The policy is at the 50% is at the end of the year. Because of the strong results, it was agreed with the board that we would anticipate this, and that's where we have the $465 million of dividends for the H1. We've said already that we will again contemplate options of buybacks or paying on debt at the end of the year. We'll analyze that when the time comes. Right now, we're again happy to be able to provide this massive dividend, and at the end of the year, we'll see where we land.

Speaker 1

Thanks, Alberto. There's one more that's just popped up, which is, could you just talk a little bit to your view on when that value gap with the North American peers will close?

Speaker 2

It has already closed with probably the largest of the peers. I think it has closed in some of them 100%, in others two-thirds. At this stage, I think that is not an issue anymore. Look at the returns as you compare it with others that we provided, they're probably as high as anybody else. Look at the cash flows. I think we're really in a very solid position right now, but we won't stop. I think that we are very excited by the Full Asset Potential program, it's the potential to keep improving the business. We will just keep going. With the same momentum and the same inertia that we have been doing in the past years. Let me probably just say we are very excited by what we're seeing in Sukari.

Speaker 2

I won't talk about numbers because we prefer to talk about when we deliver them. I'm just saying we're very excited. Yeah, keep tuned.

Speaker 1

Great. Thanks, Alberto. I think, Gillian, let's go to the phone lines then we'll come back to the webcast afterwards.

Operator

Okay, thank you. Our next question comes from Adrian Hammond of SBG Securities. Please go ahead.

Speaker 4

Good day, Alberto and Gillian. Thanks for the presentation. Firstly, for Alberto, just to get a better understanding of the benefits of these indices. You've included yourself into three new indices with Russell. Do you have a sense of the capital that attracts to Quantum and has it mixed right?

Speaker 2

I know it's about indices, the expert is Stewart and Yatish. I will hand it over to them. I didn't understand the last part, maybe you did. Stewart.

Speaker 1

Thanks, Alberto, thanks, Adrian. I think obviously June 27th was the day that we entered those indices. If you go and look at the volume charts on the AU line in the stock, you will have seen we did about 30 million shares that day. actually, Yatish is saying closer to 40 million. There was a big sort of entry into the stock. From what we understand by the people who know these things, is that the real gain will come in the months that follow as the passives are in and that as the actives who benchmark against those Russell indices start to come in. A really good start, we hope it's just the beginning.

Speaker 4

If I could ask another question for Gillian, just to get a sense of how we should think about working capital in 2H. Certainly, in 1H, it was quite a draw. Should we be thinking some of this reverses out? There was also quite a few one-off costs relating to tax and restructuring. Is that now largely done, or should we expect to see some more in 2H? Then if you could just remind us about the Kibali shareholder loan. How are the monies from the assets split between that loan and dividends, and where does that balance stand with the loan piece? Thanks.

Speaker 3

I think, thanks, Adrian, for your question. Your line is a little fuzzy. I'll address the first part of your question, which I think is in relation to working capital build in the first half and what we're anticipating for the second half. It really is just the timing impact. It's largely driven by our receivables, as you will have seen in the financials. It's predominantly receivables at Sukari, actually. Of course, they're just embedding into our sort of systems and processes, and we effectively didn't get the funds for the last shipments out of that asset. That's the timing impact. There's some increased VAT, as I mentioned. You'll look and you'll see that inventories and payables are actually relatively flat.

Speaker 3

We would want to see that unwind of receivables in the second half and maintain that sort of pressure intention on the other elements of working capital as well. Not anticipating any sort of further drawdowns there. I think your second question was related to Kibali loan?

Speaker 4

Yes.

Speaker 3

Okay.

Speaker 4

Great

Speaker 3

I suppose the key message there is we received $18 million in dividends and $77 million loan repayments for the first half. When we think about those contributions, they're effectively the return on the EAU. The structure of whether it's a loan or a dividend is kind of irrelevant to us in the context of cash receivable. There's no more taxes expected from any restructuring. The landholder duty that we paid in Australia was the last outflow that we're expecting from restructuring.

Speaker 4

That's clear. Thanks so much.

Speaker 3

Thank you.

Operator

The next question comes from Josh Wolfson of RBC. Please go ahead.

Speaker 5

Yeah, thanks. A couple of questions. First off, on the capital. Spending was light in the first quarter. It was an improvement in the second quarter. The overall spending in the first half of the year is relatively light versus the full-year guide. Just wondering what we should be thinking about there in the second half, and if the full year numbers still are applicable.

Speaker 3

Would you like me to answer, Alberto?

Speaker 2

I think we are keeping the guidance. We expect a much higher number in the third quarter just from we're acquiring capital equipment in several of the assets, and you'll see that in the third quarter. I think we're keeping the guidance as is. Gillian, any more?

Speaker 3

Yeah, that's exactly right. I think there's a little bit of lumpy spend in quarter three for fleet replacement. As Alberto mentioned, we're maintaining guidance at this point in time very nicely. Yeah, that's on track.

Speaker 5

Thanks. Second question. I commend the company on cleaning up some of the portfolio with the non-core assets. There have been some articles in the press and views out there potentially about either consolidation or the divestiture of some of the company's non-100% owned assets, specifically Tropicana and maybe Kibali. Any views there on how the company sees those assets in their portfolio today?

Speaker 2

I haven't seen anything about Kibali, funny enough, but obviously it's a tier 1 fabulous asset, so why would we? Tropicana, look, we don't comment on market speculation. I can say that we routinely receive inquiries about many of our assets. I'll probably repeat what I've said in the past. Tropicana, Sunrise, they're a very important part in our portfolio in balancing between developed and developing countries. At this stage, nothing is changing in that regard.

Speaker 5

All right. Then, last question on Arthur. There have been a couple of transactions on the royalty side that, from my perspective, would support some very constructive views on what the outlook is for the asset. Information so far is pretty light here. I'm just wondering if there are any kind of indications on what the thoughts are for the production rate. Similarly, when can we expect to see maybe some more official numbers for the asset? Is that something late this year or earlier next year? Thank you.

Speaker 2

Okay. Thank you for that. We did notice. I did read and by the way, I asked ChatGPT to try to calculate the value of what they were thinking, and I'm very excited by that because values of Arthur according to ChatGPT are obviously in the $10s of billions. We're very excited by their views. Obviously they don't have our views. Our views are also very exciting. We are working on the pre-feasibility study. We will finish it this year. I don't know if we will have time for the November results, but if not, we will discuss them in the February results, where we are with the pre-feasibility study. I can tell you that the more we see about Arthur, the more we are excited by it.

Speaker 2

I just saw a picture of results of 50 meters and 50 grams of ton and other sort of results. This will definitely, without any doubt, will be the preeminent asset in the portfolio in the surface of AngloGold Ashanti. The production numbers will be very surprising. Let me leave it at that for now.

Speaker 5

Great. I am very much looking forward to that February update. I hope your ChatGPT is calibrated correctly. Thank you.

Speaker 2

Our Perplexity did the same.

Operator

Thank you. Our next question comes from Joseph Reagor of Roth Capital Partners. Please go ahead.

Speaker 6

Hi, Alberto and team. Thanks for taking the questions. Most of my stuff was already answered, but just kind of following up on the extra capital spending, in Q3 with the refresh of the fleet. Should we see any benefit in Q4 and onwards from that reinvestment on the cash cost side?

Speaker 3

Maybe I'll quick, if you like, Alberto, I'll take it. I think the fleet replacement strategy is obviously kind of fairly well thought through and long-dated in advance. That's really to support the 2026 plan. The good thing is in the last 18 months, we've been able to build out a sort of a group fleet management strategy that our COO takes the lead on. We're managing the fleet management replacement strategy really, really well, and we're happy with that. That spend in Q3 is related to 2026 production volumes.

Speaker 6

Okay. Go ahead.

Speaker 2

Yeah, go ahead, please.

Speaker 6

Just following on that, what we could see some benefit in 2026 then?

Speaker 3

We've guided 2026 volumes for now earlier in the year, so yes.

Speaker 2

Look, if you want a cash cost upside, apart from Full Asset Potential. What hit us particularly hard this semester was Kibali. They were 30,000 ounces below 2024, and their cash costs were up 40%. At some point, we hope that they will return to sort of the better production days that they had in the past. That would certainly help reducing their cash costs, because obviously that was a big hit, a 40% increase. I would expect again, as they do better and hopefully they will, that should be a benefit. The other one where I would expect further improvement is Iduapriem. Iduapriem, we talked about last time, had issues around the JV, too protracted, the uncertainty that that implies. We've now taken control. There's new management coming in. We've rearranged technical support. I'm excited.

Speaker 2

It's not in six months, but probably in a year to 18 months, you'll also see the benefits from that. There's still a lot of improvements that we see and positive impacts on the cash cost that will allow us to continue this trend of basically flat in real terms or even slightly below.

Speaker 6

Okay. All right, thanks. I'll turn it over and congrats on a great quarter.

Speaker 2

Thank you.

Operator

Our next question comes from Raj Ray of BMO. Please go ahead.

Speaker 7

Thank you, operator, and good morning, Alberto, Gillian, and team. Got a couple of questions. First, great production results. Good to see the consistency continue. In comparing costs for Q2 over Q1, and Gillian, if I use your metric, gold price was up around $400 an ounce. That's $20 an ounce increasing cost just driven by gold price. Your production was up almost 9%, so 68,000 ounces Q2 over Q1. I'm wondering why the total cash cost, I was expecting it to be lower than Q1, but it's slightly higher. Anything else other than royalties that impacting that?

Speaker 3

No.

Speaker 2

I'll let Gillian have a go. I first talk about managed operations. On all-in sustaining, they were up 4%. Obviously, we got the benefits of Sukari increase and everything, but 11% of increase in inflation and royalties, it's just difficult to compensate. I actually think it is a good result giving those two forces. Now, there's other counterailing, but it's just massive, just the $60 an ounce in royalties. It's a good cost, but still significant. What else would you have, Gillian?

Speaker 3

I think it is well covered, Alberto. They're actually very close in terms of like for like. Of course, there's the production impact, and that's offset by those macro factors and a little bit of Kibali's challenged performance in the quarter. That's it.

Speaker 7

Okay, that's good. Alberto, with respect to the Augusta acquisition, does it help in your permitting, given that you already have a permitted project there? You've got the old Bullfrog Mine. Are you expecting any benefit with respect to getting North Bullfrog permitted sooner? Do you see further consolidation opportunities in Southern Nevada after this? Everything you now have the land mass that you needed.

Speaker 2

I'm here with Marcelo, I'll let him.

Speaker 8

Thanks, Alberto. In Nevada, our projects continue to evolve. We are increasingly viewing them as a cohesive region rather than individual operations. In this context, the acquisition of Augusta represents a logical next step in consolidating our strategic position in the region. More specifically, North Bullfrog can potentially be considered a satellite deposit of North Bullfrog, while Sterling proximity to Reward makes a compelling case for the two to be developed and mined in tandem. Obviously, the big prize in the region, as you know, is Arthur. All those projects will be scheduling time as value shows. Furthermore, this is an opportunity to further consolidate the region with unfettered access across the footprint. The acquisition allows us to revisit our plans for the surface infrastructure layout, which can be further optimized.

Speaker 8

Yeah, I think that was a very good deal. It's going to help us move the project forward having a commanding presence in the district. Thanks, Alberto.

Speaker 7

Yeah, that's great, Marcelo. If I may, Marcelo, a quick follow-up with respect to the whole permitting situation in the country right now. With the current administration, are you seeing things differently? Are things progressing faster than what you have seen over the last three years?

Speaker 8

Look, they are not progressing quite fast quite yet. Look, based on the latest information we have available, we anticipate that the Record of Decision from BLM will be at the end of 2026 for North Bullfrog. We are working collaboratively with BLM. The administration is involved, and we really look forward to progressing this opportunity because the administration does recognize it will bring significant investment and good-paying jobs that benefit the region. We haven't seen any process changes at this point that we can confirm that has changed those timelines for permits, but we'll surely let you know as soon as you have new information.

Speaker 2

Look, let me add this. There is no doubt that the conversations we've had at higher levels with the administration are extremely constructive, and they are determined to accelerate things. It still takes some time. There's teams that need to be appointed and all of that, but we're quite confident that this will definitely boost our development in the region.

Speaker 7

Okay. That's great, Alberto. Thank you. That's it from me.

Speaker 2

Thank you, Ross.

Operator

Our next question comes from Tanya Jakusconek of Scotiabank. Please go ahead.

Speaker 9

Oh, great. Good morning, everybody. Thank you for taking my three questions. I'm going to start still with Nevada. Just looking at your slides with the planned view of the property. Understand that there's a lot of drill rigs drilling the Arthur gold project. When that Pre-Feasibility comes out late this year or early next, should I be thinking of a bigger deposit than the 16 million ounces of all resources that you're going to model off, or should I be thinking that it's going to be portion of that 16 million ounces that goes into that study?

Speaker 2

Okay. Marcelo, yeah.

Speaker 8

Thanks for the question. In the case of Arthur, we expect that the reserves or the form is going to be less than that number. In general, we have the resource, the reserves will consume part of that. It's a normal process. It's going to be a really big number. We are now doing field drilling there so that we can get to reserves at the end of the year. The team is really pushing really hard to get to the end of the year, finish the feasibility study, and be able to declare reserves. It's only then that we're going to have an idea of how large that pit's going to be. We anticipate that, in time, we are going to be able to consume great part of those ounces that we have identified so far.

Speaker 2

I probably would add that with everything that we have, we've really consolidated a district for many decades, four decades or more, and we haven't explored it all. I would just say we are focusing on Arthur, let's say, in the first 15 or 20 years, and it's, as I said, what we see is quite extraordinary, but this will be around for decades at very high numbers.

Speaker 9

No, I appreciate that we will have a reserve which is obviously going to be smaller than the 16 million ounces overall. I just wondered if we were going to have an increase in that resource as well, plus a declared reserve. Just trying to clarify that.

Speaker 8

Tanya, we're going to have to wait to let you know when the drilling finishes, we expect increases for sure.

Speaker 2

I would expect increases, yes.

Speaker 9

Okay, perfect. Just on the acquisition of Augusta, just so that I understand, you're viewing the Bullfrog project as a satellite for North Bullfrog, you'll be using the infrastructure at North Bullfrog. Is that what I understood?

Speaker 8

Tanya, we don't have that definition right now. The acquisition, we just made the acquisition. As was mentioned, we have optionality, and we can choose to put that project before, sequence the way you see better. We are very focused on getting the permits for North Bullfrog at the moment, and that's the next step for the region, why we continue to develop Arthur. If Bullfrog comes, which will be at a later stage at the end of the North Bullfrog life, because we also would have all the time for permits and things like that. It is something that gives optionality for North Bullfrog, and we are going to be sequencing as required.

Speaker 9

Okay. No, thank you for that. I just want to move to the financial side, if I could. Maybe for Gillian. Just wanted to ask on the capital allocation so that I understand it correctly. You've got this 50% of your cash flow, free cash flow being paid back as a top-up at the end of the year. You've done it a bit earlier. As we go into 2026, I think you mentioned that we'd be reviewing maybe share buyback, buying back some of your debt. Should I be thinking that this would be in addition to the 50% of the free cash flow, or should it be part of that as a total overall capital return?

Speaker 2

I'll start there. Tanya, it's in addition, obviously. We would expect that with the 50, if the gold price continues where it is and operational performance continues where it is, we would end up the year after the 50% payout with positive cash. We will contemplate options of what to do with that. That's what we are referring to.

Speaker 9

Okay. Thank you for that clarification. If I could squeeze in one technical question. I really like the performance at Geita. Could someone just maybe explain to me what exactly is happening at that operation? I'm just trying to understand if it's grade-related, if it's less dilution, but it's doing quite well, and just wanted to have a little bit more on that one if possible.

Speaker 8

Yeah. If you look at the comparison H1 to H1, I think Geita was 30,000 ounces more and Obuasi was 35,000 ounces more. I think it's just

Speaker 2

All the four sources of ore are performing very well, and we expect it to be sustainable. I think it's just better operational performance, but Full Asset Potential also as well.

Speaker 8

Yeah. Thanks, Alberto. We did work quite a lot at Geita on the processing side. We are getting pretty good recovers right now. Changes we are making, the plant improvements we are making, the processing plant, as a result of Full Asset Potential, have been showing really strong results. As well as mine productivity. We have improved quite a lot our development rates and the general performance at Geita. We are pretty happy with the performance at Geita right now.

Speaker 2

I think that also better grades just in the semester. Look, I think grade improved from 2.6 to 3.2. It's a combination of everything. We were actually visiting Geita some weeks ago, and it's just performing, I described it like a Formula One car. It's going very well. Great leadership and, yeah, everything. This way that was really constructed when Richard was there, Jordanson, of having four sources of ore and having optionalities paying off.

Speaker 9

Perfect. It's a real Ferrari. Congratulations.

Speaker 2

Yeah. Thank you.

Operator

At this stage, I will hand back for questions from the webcast. Thank you.

Speaker 1

Thanks, Judith. Alberto, maybe I'll just take these in no particular order, but could you give your current long-term goal price in evaluating projects and M&A activity? Are there any assets that you'd be interested in that could form part of your core assets?

Speaker 2

Look, we're currently using the same that we have, I think for resource, which is $1,900. We want to make sure that any project that we pursue makes decent returns at $1,900. Obviously, if the price is higher, much the better. That's probably the answer there. The second part is what? On M&A? What is the second part of the question?

Speaker 1

I think just generally, have you got your eye on any assets that could form part of your core assets?

Speaker 2

Primarily, as I said before, we're focused mainly internally. There is a BD team whose job is to look at things. It's always very difficult. As I've said, it took us a long time, 18 months to get to

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