This is an automatically generated transcript. Denver Gold Group cannot accept responsibility for mistakes, errors, omissions, or any action taken in reliance thereon. Use of this transcript is governed by Denver Gold Group’s Terms of Use.
Um, I’ll get started. First of all, the standard legal disclaimers and the forward-looking statements. So now going back into business, I’m gonna try to be brief. The presentation is always available in the conference’s materials. But this is our ninth year since our company was born. It was born out of a private acquisition that I did into the San Bartolomé facility in Bolivia from Kur mining, my predecessor. We went public into the TSX Venture in March of 2021. In November 2023, we purchased the Golden Queen heap leach mine in Kern County, California. On January 2025, we graduated from the TSXV to the big board. We got included in March 2026 into the GDXJ and others like the MSCI ETFs as well. And we believe that we’re now well-focused for additional growth with a very resilient and strong financial statements.
Our two producing assets are, as I mentioned just briefly ago, the Golden Queen heap leach open pit in California, and our flagship asset is the San Bartolomé, which is an oxide processing facility in the city of Potosí, Bolivia. Roughly it’s a 1.8 million tons per year mill facility. Our capital structure is very strong. We have 149 million shares roughly. Based on [chuckles] last week’s, we’re probably roughly around $900 million market cap, and our 52-weeks high and lows are there. But what is unusual out of our company is that we, the insiders, own 48% of the equity of the company, so we’re heavily invested in it, which means that we are very conscious about all of the management decisions that we take in our company because the bottom line, we are heavily invested in it. We have 36% of institutional and retail. Eric Sprott also owns 13% and another 3% owned by ETFs.
On another topic, earlier in the year, we were named and ranked number 11 under the TSX30 just a few days ago in September of this month. We were also named on other recognitions: the TSX Venture Best 50 in 2024 and Best 50 OTCQX in 2024 and 2025. Our top institutional shareholders include people like the Abu Dhabi Investments Authority, Merck, some of the CLJ, JDX, Global X miners, Adage Capital, and some other ones.
Our company is well-positioned for growth. We’re interested in organic growth as well as inorganic growth. We have a proven cash flow model that it’s been very resilient in Bolivia, and it’s growing constantly our cash reserves. As we will get into in a few minutes, we have a very strong cash flow. We are balanced in precious metal exposures. We’re roughly on a production basis almost half and half between gold and silver. But on a revenue basis, based on the gold to silver ratio tilting more for silver than for gold, we have roughly, give or take, approximately 65% of our revenues arising from silver and the remaining portion, the other 35%, coming from gold. Our strong balance sheet has liquid assets out of Q2, June 2026, of more than 170 million.
We have organic growth potential, meaning the organic growth potential is that we’re investing in exploration in Golden Queen to increase heavily the life of mine. We’ve done drillings in 2024, 2025, 2026, and we’re putting together the budget for 2027 as well. And we also have a very clear path to long-term value creation inorganically through mergers and acquisitions because our balance sheet plus our cash flow generation allow us to be aggressive and opportunistic, and we’re still looking actively for a merger and acquisition possibility.
With respect to the Golden Queen Mine, we have an asset that is strongly producing. We have about 1,100 acres in Kern County, California. We have an open pit leach of 12,000 tons per day that we’re putting, and we’re heavily extending the life of mine through exploration. We have expressed to the market that we intend to release before year-end a technical report that will be extending the life of mine of Golden Queen.
And there’s also a very good business opportunity in California. We are also permitted to sell our waste for aggregates, and we have a permit that extends for almost 40 more years that will allow us to do that. We’re getting started into the aggregate business by looking into how we could actually ship out all of our waste from the site and start getting into the aggregate possibility. Currently, we’re doing that, but it’s not significant. We have a revenue of approximately $1 million, which we’re getting started on, but it’s not significant. But we’re putting together a business model for that.
On the mine life extension, we have done basically the drilling campaigns. The technical report will include up to 2025. That’s where we cut the line because of the overwork that all the labs and all the technical facilities are having these days. We will be including only up to 2025. We will then continue, as we’re continuing, the 2026 mine life extension through exploration. We’re having another budget for 2027. But we’re now also including the budgeting of an extension of our leach pad currently that will allow us to continue roughly for another 3 million ton capacity. And we will be also securing permitting to construct a new leach pad that will also be used for the growth that we’re foreseeing based on the mine life extension.
On throughput improvement, we have purchased two more haul trucks. These have a 100-ton hauling capacity, and that supports all of the operation flexibility for purposes of hauling the ore. On recovery, we have a new stacker and a new agglomeration drum installed, and we’re looking also to improve ore stacking and quality of the blending and the implementation of grade ore control as we go along. This is basically an exploration chart. I don’t want to get too deep because of the restrictions of time, but roughly the program of 2026 consisted of approximately 15,000 meters of core drilling with two rigs, which later got increased to three rigs, and also 12.5 kilometers of geophysics and surface sampling as well.
Getting into the San Bartolomé facility, initially it was a traditional mine. But when we did the acquisition, it only had an eight-month life of mine, no reserves. So what we did is we reinvented the entire business model into what I call an industrial processing facility complex. What does that mean? That means that we were securing the ore by buying, not tolling, just to be clear, from many sources around the facility. And that’s where you see up from the right side. That’s where San Bartolomé facility is located, up until probably approximately 400 kilometers away. That is where we get the ore from.
Now, this facility, just to summarize it, we buy the ore, and what happens is that if spot prices go down, we pay less for the ore, and if spot prices go up, we pay more for the ore. But what we’re looking for is margin spreads. Our margin spreads, as we have expressed to the market, we look for a 30% to 40% margin spread, which gets affected by many items such as foreign exchange rates, among other things. San Bartolomé has been producing, as the chart says, between 4.7 up all the way to 5 million ounces, 4.9 ounces. That was the guidance that we did for this. But we view it as a low risk and a very profitable operation because we do not have a break-even on our ore or our facility. What happens is that we just buy based on spot prices, which gets translated into paying a certain amount of money per ton that we buy based on grade and based on how far it is from our facility, because we also have to take into account the cost of transportation hauling the ore to the plant.
On optimization initiatives that we have done, we are increasing more ore. We have expanded long-term supply. We’re seeking and actively pursuing more meat to long-term ore supplies, which is intended to later on be translated into ounces on a 43-101. We’re looking to actually be in a position to release an updated technical report by the end of Q2, June, July of next year as well, based on all of the ore that we can secure and meet to long-term contracts. Why do I say that? Because out of the purchases of all of our ore in San Bartolomé, we roughly get about 40%. It varies, but we can get 40%, 45% of our production from purchases from artisanals, miners and smaller community people that are FOB our gate. These are people that actually bring the ore to us, and we pay them basically on a flat scale that is based on grade per ton. So those FOB purchases, it’s impossible to put on a 43-101. But if you look at the track record that we have had, they’ve constantly been there for the past nine years.
On transportation logistics, we have got improvements, and we’ve also had process optimization, updated geological models, mine plans when we are obtaining the ore, and we’re seeking to increase 21% in our throughput. Recovery optimization, we’re including various measures, among which we are building an additional thickener, which we expect will introduce better recovery rates.
On expanding the life of mine and long-term support growth, as we have said, we’re expanding through mineralization, looking into geological exploration that will enhance the visibility going forward. In San Bartolomé, we’re including and securing additional oxides, advancing the exploration through partnering, looking at different targets, whether it be in partnership with the COMIBOL, which is the state-owned entity, or other private or cooperative enterprises. Now, another very important point that I want to emphasize in San Bartolomé: our plant currently only processes oxides. We’re also beginning to consider the possibility of getting into a parallel sulfides train in our facilities, which will also increase the availability of significant ore that is available in Bolivia, which will significantly extend the life of mine of the facility in San Bartolomé for many years to come.
While creating value for the communities, we focus pretty much on where we spend our money and our OPEX. In the case of Bolivia, 97% of our employees live in the city of Potosí, and there’s a study from Oxford Economics and the University of Potosí which says that our OPEX that’s being expended, with the multiplier factor that usually is on an economy, we actually contribute approximately 25% of the GDP of the city. And this is a 250,000 people city, so we’re very conscious about the importance of what San Bartolomé means for the community and the city of Potosí. Among that, we have also done contributions in Kern County to the local communities, and actually, in the case of California, 61% of our employees reside in Kern County. So we are conscious about the social license, that we keep it very much, and try to spread the benefits of the mining industry to the local communities as well as part of our social license.
What’s really important is the financial strength of our balance sheet. We have increased significantly our cash flows. Our liquidity as of June 30, 2026, was in the range of $170 million. We also made public in our last MD&A when we published Q3 that we deferred the sale in June of a significant portion of our Q2 production and announced as a subsequent event when we published Q3 that all of those were sold in Q3. But why? Because the spot prices at the end of Q2 were significantly below, and the trend was to have spot prices increase, and that gave the company a significant profit just for holding on to the bullion three to four weeks more.
On the debt side, we have very little debt out of the $40 million credit facility that we have with National Bank. We have withdrawn initially 30 million. We have prepaid 15. We only have outstanding another 15 million. And in our current financing equipment leases, financial leases, we’ve got roughly about another 15.4 million. So our total debt is roughly about 30 million, which, when compared to all of our significant liquid assets, gives us a very resilient balance sheet. And with that, I’ll try to leave a couple of minutes just for questions and—
Sure…
…happy to address any questions.
Any questions from the audience for Alberto? We got a mic coming to you if you do. Well, I’ll start. So I’ve actually walked the Golden Queen grounds many, many years ago. So—
Oh.
The place is a very special place in my heart. You got a $300 spread in your AISC and in your cash costs for the year. Can you give us a little bit of the factors we should look for, for reaching the higher or the lower end of that range?
You’re talking in San Bartolomé?
Yes.
Okay. Well, in San Bartolomé, what we really look at is we changed the metrics from the all-in sustaining cost. I don’t know if this is where you’re headed. But we changed the all-in sustaining cost and the operating cash cost metrics to two different metrics which actually measure better our profitability, which is gross margin ratio. It’s the difference between our all-in cost and what we get from the spot prices by selling the ore. So that gives us the margin ratio that we’re looking for and tries to keep us in check on what we’re looking for on a consolidated basis. And we have the gross cash margin ratio as well, which basically gives us the differential on the cash, that is our total cash costs versus the selling price. So we reflect those two metrics in cash and in a percentage basis vis-à-vis the all-in sustaining cost, averaging on a quarterly basis the sales, the LBMA average spot prices. And that’s how we keep it. So we keep it on a percentage basis because we buy a lot of ore, and the spot prices are so volatile. [chuckles] Look at what has happened in the last three weeks. It’s so volatile. So we have to keep in check our purchasing system to be able to keep in check our margin ratio.
Alberto, that was very good. Thank you very much.
Thank you. [applause]
