Amaroq (LSE:AMRQ) Q3 2026 Earnings Call

0:00 In the central zone we drilled last year approximately 5000 meters where we intersected on average 3.3 meters thickness of an ore body on average 10 gram per ton. So extremely good thickness. We only went down to about 70 meter depth. This year, due to the shape of the ore body there, we wanted to infill drill that area. That means we drilled on a tighter spacing. We then also drilled deeper and then we started stepping out, step out drilling to extend that central zone several hundred meters in each direction because this is outcropping mineralization. Now, the reason for that is that we have to understand very quickly the geometry of ore body prior to us starting to mining it.

0:53 Once we understand the geometry, we then understand the drilling pattern we have to do for these other lines on site. We plan to have a mating resource as early as Q1 this year. We're waiting for the assays to come back. They are now in transit over the Atlantic Ocean, and so we are excited to bring that to the market. We did a map sample. Map sample means that we tested the ore on surface that we found there in a lab to see if that ore could be processed in Nalumat. That showed really positive results where we're getting recoveries all the way up to well above 95% recovery with this ore in Nalumat.

1:42 Subsequently, we started building a road and a port facility both to be able to access the ore depositors with and many others. We also have the possibility to set the location up for bulk sample, which we can then move from this location to Nalona and start running that ore through the Nalona plant. Now, to be clear, we only started on the port facility and we've done the first a few hundred meters of the road and we are now doing assessment waiting for the resource statement prior to us doing more work than next year or in the years to come but we very much see us being able to leverage off the infrastructure in NALNAC and that is a study we are now doing to see how can we grow the production in NALNAC effectively expand the plant in NALNAC with more ore from NALNAC and ore from NALNOC while we grow this resource into, hopefully, a world class deposit.

2:55 Black underneath is the Marmor Illygeria. I want to highlight the string of pearl concepts here. Again, this is based on the task producing mine in Black Angel. So what you see on the picture is Angel cover and banana. Over this area, about more than 11 million tons were mined over 17 years. This was the most profitable mine that Greenland has ever had. It was one of the highest grade zinc lead silver mines in the world, operated by Tech and later Boletan. Now, the glacier, which is a light blue shade there on the picture, covered all of these dark blue areas there, which are the lakes which are going from Myers all the way to Garp.

3:44 Now that glacier has retreated back and on this part there are Myers, Glacier, Garte, Ask, that these are outcrop on surface as you can see on the picture there on the right. Glacier has been drilled only short at that and then haven't been drilled fully at strike so that glacier deposit is now approximately two million tons can be expanded in our opinion rapidly. and also in the Archangel. Archangel has the potential to be larger than the whole old Black Angel mine where previously they mined 11 million tons. There are holes there that go through seven meters of zinc lead silver that are more than 40% zinc lead silver.

4:30 In Nørngrut we have an ore body that can be expanded, in Maies, Vest, Apt, all of these areas can be expanded. We believe that even though the resources there today are about 3.7 million tons, that we could be looking all the way up to 20 million tons of potential here, which we can then build up. And the whole idea here is to leverage of the current infrastructure, where we have the harbour and the camp, and update the tunnel there from existing tunnel you see on the picture, then set up a road towards these string of pearls and to a tunnel into Archangel and Archangel effectively giving us access to multiple ore bodies to be able to produce hybrid zinc lead silver in the future. We will deliver the market this concept in more detail through a study that we are now preparing for the studies and we'll update in due course.

5:26 Thank you. Thanks, Eldur. I'll take you through the financials, starting with the income statement. Revenue for the third quarter was 65.4 million, generated from sales of 11.1 thousand ounces of gold. This brings revenue for the first nine months of the year to 121.6 million compared to 16.3 million in the corresponding period last year. This increase reflects the continued ramp up at Nalunag with higher gold sales volumes alongside the strong gold price environment.

6:13 Following the commissioning of the flotation circuit at the end of Q2, recoveries have increased and we are now selling both gold dory and gold concentrate with our first export of flotation concentrate completed during Q3 as Eldur mentioned. Our average realized gold price during the quarter was strong at $4,184 per ounce. Growth prompted of $45.6 million in Q3 and $80.5 million for the first nine months, demonstrating the strong cash cost margin Malanac is capable of delivering as the operation continues to wrap up. This translated into an operating profit of 26.6 million and net income of 24.4 million for the quarter.

7:06 For the first nine months net income was 38 million compared with a 15.4 million dollar loss in the prior year period. Moving to costs, exploration and devaluation expenses, they increased in the quarter to 9.8 million. This reflects The largest component is our approximately five kilometer drilling program at NALNOC, which is now complete, alongside continued activity at Marmorillik. Currently, all exploration expenditure outside NALNOC is expensed. I just wanted to note that projects such as NALNOC and Marmorillik predominantly advanced through exploration and potentially into development.

7:56 The nature and accounting treatment of some of that expenditure may change over time and that would naturally affect this line item. G&A was 8 million in the quarter and elevated this quarter. Part of that is due to the uplisting project which we completed in the end of July when we moved to the London main market. and we are also seeing the impact of increased activity across the wider portfolio, which is always peaking in and around Q3. That includes NAMROC, One More Lake, SULIAC and GARDAC. For GARDAC, we already have a management fee structure in place that upsets some of the corporate costs of supporting the project, but that income appears separately further below within other income. You see that towards the bottom, rather than reducing the GMA line.

8:49 As these projects continue to grow, we will look at similar structures for other projects and subsidiaries and make them more operationally independent so that costs will increasingly be allocated to the projects they support rather than remaining within the corpus G&A. Turning to the balance sheet, we ended September with 51.5 million of cash. So a solid liquidity position while continuing to invest across the business. Inventory also increased to 38 million including 22 million of metals inventory and this is a reflection of ramp-up introduction with more inventory moving through the system as well as some seasonal build-up of supplies ahead of the winter period and the normal timing between production, shipment and final settlement.

9:48 The largest movement on the asset side continues to be on capital assets. They increased to 315 million, reflecting the significant investment we continue to make in bringing Nalovac into production. On the financing side, worth noting here is that loan payables, they increased to 102 million. This primarily reflects the full drawdown of our up-sized two-year RCF. that we secured in the second quarter. And overall, we entered the quarter with a 68% equity ratio and no current loan balance. And moving to cash flow, I'll draw your attention mainly to the middle column, which shows Q3, and we generated 21.4 million of operating cash flow during the quarter, driven by higher gold sales and first concentrated shipment.

10:44 more than covered the 14.6 million of investment during the quarter. We see now also that this investment spend is ratcheting down. It's down from around 22 million per quarter in the first half as the main construction program winds down at Nalunak. Q3 spend was more focused on site infrastructure, winterization and efficiencies. Financing contributed a further 16.5 million, principally from the RCF drawdown, which we made in August. So overall cash increased by 23 million during Q3, ending the quarter at 51.5 million.

11:30 Back over to you, Edvin. Thank you. Now, guidance versus nine-month actual. So in gold production, we're on guidance. We've guided 25,000 to 35,000 ounces, and we are going to focus on coming in the mid-range of that guidance for this year. Average free trade is higher than we've guided. It's been on average 21.6 grams per tonne. In relation to gold recoveries, on average throughout the whole year, we are at 73%. During this quarter we've been as high as well above 90% and for an average we've been around 85%. Null and cash costs within guidance are 30 million point six and we maintain guidance for the full year as well. Null and ASICs we also maintain guidance for this year between 60 and 73, we're currently at 50.

12:30 And gross capital again we are within guidance there as well. Everywhere within the operation, we are within guidance. For Outlook, production continues in line with guidance. We're confident in the mid-range of 25 to 35,000 ounces. and we continue producing and developing the work around what we're doing in Alna. For Marmorillik project studies are progressing with a group called WSP and time for reference has been submitted for which is a key document to the government of Greenland prior to us starting the process of applying for an exportational license.

13:21 In Gardaik, asset results from Illua and Mintern are going to be in the next two quarters arriving to the market from the highly prospective Mintern and Illua. On Sjuljerg, we continue acquiring assets that support our operation in-country. Sjuljerg is our service company. We work in corporate development and are in the middle of our financing process there. With regards to Nanoc, we are targeting a maiden MRE in Q1 2027 and then we are operating or developing an approach to do a project study or potentially a PEA for increased throughput in Nanomag supported by or from Nanoc and Nanomag targeted as well in Q1 2027.

14:17 I think this gives you a good idea of what the progress is. We're really pleased with the quarter. This shows the market that you can mine profitably in Greenland even for relatively small operations such as NALNA. This gives a very good basis for our 3x3x3 strategy where from mid to end of next year we intend to build Nanok to support increased throughput in Nalunak. We intend to start building Marmarillik to be in production three years later so this gives an increased three cash flow and development and more legs to the stool of the Amroq story alongside us developing work class deposit within the Karadag company which we own 51% and underpinning all of this work we are doing we have this we have the servicing company Zuliek that provides equipment, consumables and other things which are desperately needed now in Greenland Due to the fact, like we have always said and we are continuing to say, the main bottleneck could have been for us that we didn't have the equipment to do work in Greenland because in the last one and a half year more than a billion dollars have been raised for projects in Greenland and therefore things like everything from helicopters to boats to drill rigs are not available to many operators except us because we set this company up.

15:51 So this gives you effectively three minds, three companies and from the end of next year over three years strategy. Thank you. Thanks Eldur. I think we'll go to Q&A now and we'll just take them as they come. If we take the first one here from Tim Hough. In Q3, you continue to deliver ahead of grade guidance for the year. Do you have any insight on how you expect to see grade track during the next two quarters or winter months?

16:31 Yeah, so I mean, I think what we can say from the drilling we have seen and the mining we have done, the best way to look at the Orkut and Malun life is that we have The eastern side of the orkutti and the western side. The eastern side is closest to the outcrop and there is where you've seen the most recent drilling results which are an average 40 gram per tonne. And on the western side it is lower grade, it is helpful because we want ideally to run on a kind of average grade around 20 to 25 gram per tonne. So, that order body is giving us some confidence. Now, some of the drilling is yet to get assays from, and then we also did some assays on the surface outcrop, which is yet to come to the market, hopefully in a week's time. That will even further confirm the grade, not only through 27, but into 28, so I would highly ask the market to take a good care and focus on those results.

17:39 They will give even more insight in that. Thanks Ola. Maybe one for you here. Do you have any guidance on the rough range of costs for the operation enhancements in 27 to support production in 27, sorry, which you mentioned the R&S and also if you expect them to be carried out over the coming two, three, four quarters? Thanks. Yeah, we've already started on some of these initiatives, as I mentioned in the presentation. However, for the rest, we were finalizing the scope and timing and we'll provide this in detail in our 2027 guidance. But yeah, I can say that the investment, it will be phased over the coming quarters and is expected to be funded from existing sources and operating cash flow.

18:28 Thanks a lot. This one is on volumes and throughput at the mill. Mining volumes and throughput at the mill have run in line with expectations year to date. Do you expect to see a slightly reduced rate in the mill line over the winter months?

18:44 Not necessarily. I think what our focus is is to get into the rhythm of operations such that we focus on a certain amount of blast per day, moment of war per day, etc. Now, some of these investments that Ellert answered you in the previous question, what we are doing while we're learning how to operate is we are making investments to make that whole process I can give you an idea we constructed at the end of our processing plant building a building that covers the dry stack tailing or a fit depressed area from any kind of a Thanks, Eldur.

19:56 When calculating NALAC cash costs in the quarter, what exchange rate do you use and is it safe to say that all selling, refining and royalty costs plus cost of sales are equal to NALAC cash costs as it's stated in the Q3 presentation and therefore for your guidance? Yes, so we use the average exchange rate for the reporting period. If I recall correctly, it's 1.38 E1 One US dollar equals 1.38 Canadian dollars. And yes, the second point is also true. All NALNAC costs are in there, including selling costs. Thanks very much. The next one, there's a couple of lessons like this actually so I think we'll take this and this should answer some of the others.

20:49 Following 12.6 thousand ounces of production in Q3 and 21.6 for the year to date, keeping the full year range at 25 to 35 is an implied Q4 variance of roughly We're already halfway through Q4. Can you walk us through the exact mine sequencing grade or commissioning bottlenecks that give that 10,000 ounce swing and why the range wasn't tight today? There's a few questions like this on range today. We set out at the beginning of the year 25,000 to 35,000 ounces. This is our first full year of production. and so that 10,000 ounce guidance range was put in place to be conservative to ensure that in our first full year where there is some space either side of it. Today we didn't tighten the range because again we want to be conservative we're in our first year but clearly you can see from Q3 and the nine month performance things are tracking very well for that range.

21:52 I think What we did give the market today was to say that we're very confident in the mid-range of that guidance. So that's a way of giving people comfort as to where we feel we're going to end up. Clearly, there's also points that we made in the release and presentation today that during Q4 and into Q1, we're going to be undertaking a number of enhancements, et cetera, to ensure that in 27, we then have a good run right ahead of us. So that gives some background as to why we haven't narrowed the range specifically, but we did give some comfort around the mid-range of the guidance that we're comfortable in coming to. And a number of the sales side who cover us can give you an example of where they think we're going to come in on that.

22:42 So we're comfortable with that. There's one look ahead for next year. Will the management put any effort next year to able to predict the realistic gold output?

22:54 Yes, that's kind of based on the drilling I mentioned earlier. This one's on cash flow. How do you expect to allocate your free cash flow in 2027?

23:07 We'll look at the market on that when we give the guidance for next year. Thanks a lot. This one's around SULIAC and the equity fundraise there. The equity fundraise for SULIAC continues to be progressed. How much are you looking to raise? Is this a non-dilutive item? We've been quite clear during the year that we are looking at bringing independent shareholders in at the SULIAC level. To give some background, Sulac is 100% owned currently by Amarok. It's 100% subsidiary of Amarok, the whole co. The equity fundraise will be done at the Sulac level, so non-diluted to the Amarok level, so to speak. But there will be new shareholders coming in on that.

23:53 That fundraise is progressing, and we're hoping to get some news out on that by Q1 next year. But lots of interest. It's going very well, and I think that's the message we want to give on that. Given that 2027 should see further accumulation of cash, are you considering the investment benefits to the company of introducing a dividend?

24:22 Not for this date, no, but we will update the guidance in early next year. Thanks very much. There's a couple of questions we've already answered here, so I'll just go down. Could you shed some light on the mined ore volumes? While Q3 processing is clear-hiding, H1, the mining volumes have not ramped up accordingly. When should we expect mining volumes at Nanolac to increase? And what should we expect for Q4 and when it reaches its steady state?

24:59 I would expect the Q4 to be in a similar state as we have had it in the past several courses. And then going into next year, we intend to have effectively focus the operation to be six plus per day with kind of a support and 150 meters of stove drilling every day which effectively supports the throughput. In addition to that also we have economic tailings also that supports the production up to 28,000 tons of those economic tailings or even more underground. So we have enough material on site to keep the plant going while we're wrapping up our production.

25:46 What is the status of the flotation circuit in actual gold recoveries? Have you seen gold recoveries stabilized above 90% yet and when should we expect this to happen if not?

25:57 The flotation circuit is working as designed. It's going really well. There's always some operated parameters. various different tweaks in there of things when you're operating a rotation circuit but we've already reached consistency 90% plus recovery during the quarter and so this is working well. Given the strength of the Q3 cash generation, what do you see as the biggest constraint to Nanonex sustainably producing above 30,000 ounces a year and at what point would you be comfortable guiding the market to a higher run rate?

26:37 Is this during the quarter, sorry? Yeah, I think this is looking at what would give us more comfort around...

26:46 Okay, so I think I can answer this like this. The best way to look at the annual run rate with the current set-up in Malmö is the following. We have three on September day and we offer it at three on September day or the opportunity to offer it at approximately 27 days of the month, right? So it is dependent on grade what the output of the mine is. So if the grade is running closer to 12, 13, 14 gram per ton, which is not running today, we're running about 8,000 ounces of water. If the grade is running where it is today, around 20 gram per ton, we're running close to 12, 13,000 ounces of water. So this gives you an idea of that. Hence why I spent most of my time earlier in the presentation talking about drilling ahead and developing ahead to give us that idea.

27:41 Maybe also one question on the mining volume. I want to make it very clear to our investors that we value value over volume. So the biggest sensitivity in our production as you saw in this quarter is grade. And so GRADE is keen and gives us the best potential way of generating the highest model customer. Thanks Ola. The one on geopolitics. Perhaps the elephant in the room is geopolitics. With the new US-Denmark-Greenland agreement and the Trump administration clearly a very clear strategic interest in Greenland, How has your assessment of the geopolitical risk and opportunity for Amarok changed? And more specifically, are you now seeing realistic prospect of US investment or strategic capital coming into Greenland?

28:35 First of all, I would say that on the geopolitical risk, we've always seen the three countries as very low risk jurisdictions. So having all of them supportive of the mining industry in Greenland is very good for Greenland. and obviously the debate around Greenland and the discussion around Greenland has raised their awareness which has been very good for various different things because people have had to educate themselves on Greenland and now having an agreement which gives clarity on how investment into Greenland and defense of Greenland and the sovereignty of the Greenland Ignatian as well is important. As you can see from generally around the world, not only from the US side, but if we take the US as an example, the US is actively investing in projects, critical mineral projects, not only looking at Greenland, but all around the world.

29:33 and of course we see that interest as well. I think this is the key for Amarok. What we have deemed to be the most critical thing for Amarok is not only to have the project but also to have the know-how. It's going to do a little bit into how we set up the company with the breadth of technological understanding, the logistics and everything. We can do things that we believe no one else can do in Greenland. That is to set up harbour roads, bridges, tunnels, blasting, run anything you need to do in these locations. And that is an operating skill that not many companies have, if anyone has in Greenland. That puts us, I think, in a really strong position to take on any process in country.

30:25 This is on the three times three times three strategy. Can you expand on the three times three times three strategy and how that related to the string of pearls and the end goal? So could you just talk a little bit about why the three times three times three strategy and I guess how we see it evolving over the next few years.

30:47 Yeah, so I think you're right. We've been introducing this concept in, I should say, interviews and places like this and where we will have more firm numbers and understanding of this concept is when we have finalized our project studies on Marmorillic on the one hand and then expansion of Nalermak and Namoth on the other hand. But to give you an idea of this, what we're looking at is that You can clearly see what the free cash flow potential is in Nalanak and what it can be going forward into next year. We are looking to see if we can topple that throughput in Nalanak with ore from Nanok, which would be the second mine, and from Nalanak. So that would obviously topple the throughput to potentially topple the cash flow.

31:36 The fixed cost is a very high number for us in Greenland, between 60-70%. So we benefit from increased throughput and it will lower our cost per tonne. Now, underline that we have then a full mine to be set up at the Marmarillik area. So towards the end of that three year, we could see that that mine could be operating similarly to what it operated from last when it was operating around 750,000 tonnes So this gives you Nalanak as a mine, then Nanak will supply ore to Nalanak as a second mine, and the third mine is then Marmorelli. So you can see over a relatively short period of time you can grow the cash flow significantly.

32:23 At the same time we intend to focus on growing the resource at each of these locations much larger than it is today. and it works hand in hand because as soon as you get access to these areas for the resource with the road, you are then able to operate on site for the whole year versus, for example, in Nanook and Marmarilli this year, we were only there for two months during the summertime when it was easiest to operate because we were running everything off helicopter. There's a last few now. What has the process grade been in Q4 so far?

33:06 It has been on the same level as we've seen it this year. Could you give an idea when you will be giving guidance for the 2027 production?

33:17 Towards the end of February, mid to end of February. Which is what we did this year as well. Yeah, same time this year. There's a couple more just on that, on guidance changes, etc. Is management at ease that its operations are going according to plan, whereas the markets are in the red because of conservative guidance, which are very open to interpretation?

33:41 Yes. Sorry, I didn't get that question. I think the question is, are we happy that production is going according to plan, given earlier today the market share price is down a bit?

33:54 Now the share price is up, so I don't know, I mean maybe it's down in a minute, I don't know, but it's up at the moment. So the market is weak, I mean this is a stellar quarter, we're doing everything on plan, we're really, all of our exploration programs are on budget and are on plan, and we wouldn't be that confident as we are at the moment where we're operating. I mean in the short term, We will have things over the past year which was where we were listed, where the float was coming, which had an impact on our share price. Now that is not a problem because 80% of our float is now in London, which has been great. The general gold miners in London are down some of them 10% due to gold price today. So I would argue that we are actually trading really, really well compared to where we are at the moment.

34:42 I think the message today is incredible confidence in the operations, confidence in our guidance range and confidence in operations in Q4 so a good quarter and another good quarter to come. That ends the questions if anyone has any other questions for us please send them straight through our details on the bottom of the press releases etc so thanks very much for listening and have a good