Eldorado Gold Corporation (EGO) Q2 2026 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold Second Quarter 2026 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions]. I would now like to turn the conference over to Lynette Gould, Vice President, Investor Relations, Communications and External Affairs. Please go ahead, Ms. Gould.

Thank you, operator, and good morning, everyone. I'd like to welcome you to our conference call to discuss our second quarter 2026 results. Before we begin, I would like to remind you that we will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary statements included in the presentation and the disclosure on non-IFRS measures and risk factors in our management's discussion and analysis. Joining me on the call today, we have George Burns, Chief Executive Officer; Christian Milau, President; Paul Ferneyhough, Executive Vice President and Chief Financial Officer; and Simon Hille, Executive Vice President and Chief Operating Officer. Our release yesterday details our second quarter 2026 financial and operating results. The release should be read in conjunction with our Q2 2026 financial statements and management's discussion and analysis, both of which are available on our website. They have also both been filed on SEDAR+ and EDGAR. All dollar figures discussed today are U.S. dollars unless otherwise stated. For clarity, we have rounded some figures for the purposes of this conference call. We will be speaking to the slides that accompany this webcast, which can be downloaded from our website. After the prepared remarks, we will open the call for Q&A, at which time we will invite analysts to queue for questions. I will now turn the call over to George.

Thank you, Lynette, and good morning, everyone. I'll begin with an overview of our second quarter and provide a brief update on Skouries. I'll then hand the call over to Paul to review the financials and then Simon with an update on McIlvenna Bay and our operations. Following that, Christian will make some concluding remarks before we open up the call for questions. Before getting into the second quarter, I want to note that as previously announced, I will be transitioning out of the CEO role this quarter as we reach our key milestone of first concentrate production in Skouries. After 9 years with Eldorado, I expect this to be my last quarterly conference call in this capacity. It's been a meaningful journey for me personally, and I'm proud of what we've accomplished. We have strengthened our operations, advanced our pipeline and built a deeper bench of talent across the organization. I'd also like to thank our teams across the business for their support and commitment over the years, which has been fundamental to that progress. As we ramp up both Skouries and McIlvenna Bay towards commercial production, Christian has been closely engaged across the business and is well positioned to step into the role with continuity. I'm pleased to remain on the Board to support the transition as the company enters into its next phase of growth and meaningful cash flow generation. I would also like to acknowledge the recent Board leadership transition. On behalf of the company, I want to thank Steve Reid for his many years of leadership and guidance as Chair. We are pleased to welcome Dan as Chair, and Patrick as Lead Independent Director, and I look forward to continuing to work with them and the Board in my ongoing role as Director. Turning to the quarter. We've had a solid start to 2026 with Q2 delivering production in line with the plan. McIlvenna Bay has achieved first copper and first zinc concentrate and continues to ramp up towards commercial production. While Skouries remains on track for first concentrate in Q3, having recently achieved first ore crushed. 2026 is a pivotal year for Eldorado as we advance Skouries in Greece into operation and ramp McIlvenna Bay in Saskatchewan. Together, these assets are expected to enhance our production profile and cash flow generation. I'd also like to highlight a few achievements from the quarter that reflect the strength of our culture and our commitment to responsible mining. During the quarter, we published our annual sustainability report, which outlines the progress we continue to make across our environmental, social and governance priorities. I'm also very proud of our Eldorado Quebec team, which received several significant industry recognitions. Most notably, the team was awarded 2025 F.J. O'Connell Trophy for underground operations. This long-standing award recognizes excellence in workplace health and safety and reflects the consistency, discipline and commitment our teams bring to maintaining a strong safety culture every day. The team was also recognized by the Quebec Mining Association for their leading environmental management practices and for excellence towards sustainable mining framework. These awards highlight innovative approaches to environmental performance, operational efficiency and responsible development. Together, these achievements reflect the dedication, engagement and professionalism of our teams and reinforce the values that underpin our success across the organization. Finally, earlier this month, Eldorado was recognized on Time's 2026 list of Canada's Best Companies for the second consecutive year. This recognition reflects the strength of our culture, engagement of our people and our commitment to creating long-term value through responsible business practices. I want to thank our employees across the global organization for the role they play in making achievements like this possible. Turning to Skouries on Slide 5. I spent 2 weeks on site in July and came away extremely encouraged by the progress being made across the project. Seeing the work firsthand reinforced my confidence in both the quality of the execution and the readiness of the operations and commissioning teams as we move towards first concentrate production in this quarter. As construction activities continue to wind down and commissioning activities increased, the workforce at site has declined from a peak of approximately 3,200 people to approximately 2,650 this week, reflecting the project's transition into final stages of execution. The team achieved an important milestone in July with first ore crushed in the primary crusher, marking the start of commissioning of the crushing circuit. The process plant is substantially complete, with wet commissioning well underway. Water circulation testing through the entire circuit to the tailings thickener and filter feed tanks is underway. Two tailings thickeners are ready for first ore commissioning. At the filtered tailings plant, mechanical and electrical work on 2 of the 6 filters has been completed with both filters ready for commissioning. On the power infrastructure, construction of all 12 towers and conductors is complete. Final site energization and receipt of final sign-off remains contingent on inspection, which includes final testing and installation of metering equipment by the relevant Greek authority. In the interim, we have added additional gensets to support commissioning activities. These gensets will allow us to test the full processing circuit and produce first concentrate. However, full-site energization remains necessary for achieving stable, consistent production ramp-up to nameplate. Mining activities continue to perform well ahead of start-up. We have approximately 4 million tonnes of ore stockpiled, representing the full planned mill feed for 2026 and into '27, providing a strong foundation for ramp-up as we will process higher-grade ore in 2026. In the interim, we have added additional gensets to support commissioning and start-up. Together, Skouries and McIlvenna Bay are expected to transform Eldorado's production profile, providing a foundation for meaningful growth in cash flow, copper production and portfolio diversification in the years ahead. With that, I'll turn the call over to Paul to review the financial results.

Thank you, George, and good morning, everyone. Turning to Slide 6. Eldorado delivered another strong quarter, reflecting the benefits of a higher gold price environment, solid operating performance across the portfolio and disciplined execution as we advance both Skouries and McIlvenna Bay toward meaningful value creation. In the second quarter, we produced 105,000 ounces of gold and sold 103,000 ounces. While production and sales were lower than the prior year period, primarily due to planned lower tonnes and grades at Kisladag and lower grade at Efemçukuru, this was partially offset by stronger performance at Lamaque, which benefited from increased throughput and the contribution of higher-grade Ormaque ore. Revenue increased to $487 million, up from $452 million in the prior year period as a significantly higher realized gold price of $4,379 per ounce more than offset lower sales volumes. Production costs were $185 million compared to $162 million in Q2 2025. The increase primarily reflects higher royalty costs associated with stronger metal prices, particularly in Turkiye and Greece, together with increased labor, contractors and maintenance in both Turkiye due to inflation and planned maintenance as well as Lamaque, as mining activities continue to advance deeper into the Triangle Complex. Total cash costs averaged $1,432 per ounce sold, while AISC averaged $1,926 per ounce sold. The year-over-year increase was driven by higher production costs and lower ounces sold, partially offset by lower sustaining capital expenditures. Depreciation and amortization declined to $54 million, largely reflecting lower production volumes at Kisladag. We also recorded a $14 million foreign exchange gain compared to a loss in the prior year period, driven primarily by movements in the euro relative to the U.S. dollar on our euro-denominated debt and payables. Other income was $23 million in the quarter, reflecting gains associated with our project financing derivatives, while finance costs increased to $10 million, primarily due to the change in fair value on embedded debt redemption option derivatives. Income tax expense was $55 million compared to $33 million in the prior year period, reflecting higher profitability and current taxes and mining duties from operations in Canada and Turkey. Net earnings attributable to shareholders from continuing operations were $173 million or $0.68 per diluted share compared to $139 million or $0.67 per diluted share in Q2 2025. Adjusted net earnings increased to $137 million or $0.54 per share compared to $90 million or $0.44 per share a year ago. Overall, the quarter demonstrates the strength of our operating platform and the leverage of the business to higher gold prices while continuing to invest aggressively in the next phase of Eldorado's growth. Turning to Slide 8. We ended the quarter with $555 million of cash and cash equivalents, providing substantial liquidity as we move through the final stages of development and commissioning at Skouries and ramp up at McIlvenna Bay. In addition, we maintained approximately $300 million of available capacity on our revolving credit facility, reinforcing our overall liquidity position. Net cash generated from operating activities was $150 million compared to $158 million in Q2 2025. The modest decline reflects higher taxes paid, lower gold ounces sold, increased production costs and acquisition-related expenditures associated with the Foran transaction, partially offset by the benefit of significantly stronger realized gold prices. Free cash flow was negative $334 million during the quarter, reflecting planned investment in our 2 cornerstone growth projects. During Q2, we invested approximately $214 million at Skouries, including project and accelerated operational capital and $78 million at McIlvenna Bay as we progress towards commercial production. Importantly, excluding these 2 growth projects, the underlying operating business generated approximately $41 million of free cash flow, highlighting the continued cash-generating capacity of our producing asset base. Looking ahead, our capital allocation priorities remain unchanged. First, we will continue to fund the development, commissioning and ramp-up of Skouries and McIlvenna Bay. Second, we remain committed to maintaining a strong balance sheet and preserving financial flexibility. And third, we will continue to return capital to shareholders through our quarterly dividend and when appropriate, share repurchases under our NCIB. During the first 6 months of the year, we repurchased approximately 2.4 million shares for $84 million and paid $34 million in dividends, reflecting our commitment to balanced shareholder returns and disciplined capital allocation. With that, I'll turn it over to Simon for an operational update.

Thank you, Paul. Starting with McIlvenna Bay on Slide 8. We achieved an important milestone with first copper concentrate produced in June and first zinc concentrate in July. Our focus through the third quarter is optimizing operations, ramping up the paste plant and increasing throughput towards design capacity. As expected for a new operation, we continue to work through normal commissioning and ramp-up activities as we progress towards commercial production later this quarter. Looking beyond start-up, McIlvenna Bay is a long-life asset supported by a robust resource base and significant district-scale exploration potential. We have commenced an integrated study that will evaluate the potential mill expansion from 4,900 tonnes per day to approximately 7,000 tonnes per day and an addition of a silver-lead circuit, both of which have the potential to enhance future value subject to the completion of project evaluation, receipt of required permits, indigenous and stakeholder engagement and final positive investment decision. We are targeting commissioning of the silver-lead circuit in 2028 and expansion in 2030. In parallel, exploration continues to demonstrate the broader potential of the district, and we remain on track to deliver inaugural mineral resource for the Tesla Zone in fourth quarter. An updated technical report is expected to be published in the first quarter of 2027. On Slide 9, we show a long section looking south. The underground development continues to advance well. In addition to the 400,000 tonnes of ore stockpiled on surface, the underground mine has an inventory of approximately 20,000 tonnes of ore, more than 330 kilometers of production drilling and approximately 2 million tonnes of fully developed reserves within Block 1. Moving to Slide 10 and the Lamaque complex. The team delivered another solid quarter with production of 52,340 ounces of gold. Results reflect strong mill performance and recoveries supported by the contribution from Ormaque ore following the receipt of the operating authorization in March. Cost performance also remained strong with all-in sustaining costs of $1,192 per ounce sold in the quarter. Continuing to Slide 11 at Kisladag. Production totaled 19,108 ounces of gold in the quarter. The planned lower grade and tonnes stacked as the mine develops Phase 6 and the western strategic pushback resulted in lower production year-over-year. All-in sustaining costs were $2,407 per ounce sold in the quarter, primarily reflecting lower sales volumes, along with higher labor costs, reagent costs and the impact of higher royalty rates. We continue to advance initiatives to optimize future mining phases and support more consistent long-term operating performance at Kisladag. Increased waste stripping is underway to support future mining phases, address geotechnical considerations and provide greater flexibility in the sequencing of ore and waste movement. Progress on the whole ore agglomeration circuit remains on track with commissioning and ramp-up expected in the first half of 2027. The recently completed geometallurgical study has further improved confidence in future mine planning and recovery assumptions. Together, these initiatives are expected to support improved operational consistency and long-term performance. Turning to Efemçukuru on Slide 12. The operation produced 18,019 ounces of gold in the second quarter, all-in sustaining costs were $2,252 per ounce sold, primarily reflecting higher royalty rates, labor and maintenance costs and the impact of lower production. Efemçukuru continues to be a consistent contributor to the portfolio. While grades were lower in the quarter, the team continued to deliver strong throughput and advance the development work in the Kokarpinar deposit that is required to support extensions to the mine life going forward. Turning to Slide 13. At Olympias, we produced 15,125 ounces of gold in the second quarter. Strong flotation performance and stable ore blend supported higher metal recoveries, partially offsetting the impact of lower grades during the quarter. All-in sustaining costs increased to $2,465 per ounce sold, mainly driven by the higher total cash costs and higher sustaining capital expenditures. Higher total cash costs were a result of increased royalties and higher labor costs. Sustaining capital was driven by increased underground development, underground resource classification drilling, filter press refurbishment and mobile mining equipment rebuilds and purchases. Operationally, Olympias has stabilized over the past 3 quarters with flotation recoveries returning to model levels. Completion of the 650,000 tonnes per annum project is expected to end in 2026, with ramp-up anticipated in 2027. Across the portfolio, our focus remains on safe, disciplined execution while advancing operational improvements and growth initiatives that support Eldorado's next phase of production and cash flow growth. With that, I'll turn it over to Christian for closing remarks.

Thanks, Simon, and good morning. As George highlighted, 2026 is a pivotal year for Eldorado. Our operating mines continue to provide a solid foundation, while the successful integration of McIlvenna Bay and the transition of Skouries from construction to production underscore the company's long-term growth trajectory. Before I continue, I'd like to acknowledge George's leadership over the past 9 years. Under his direction, Eldorado strengthened and focused its operating platform, financed and advanced a number of important projects and built an outstanding team and culture. Eldorado is positioned to enter one of the most exciting periods in its history. I look forward to working closely with George and the Board as we continue this transition. What excites me most is the quality of the people across the organization, having spent considerable time with our teams over the better part of the year. I'm confident in the technical capability and leadership we have in place and have added in recent months. We are entering the next chapter from a position of strength. Looking ahead, our focus is straightforward, safe and reliable execution, disciplined capital allocation and delivering on our long-term commitments. We have 2 exceptionally long-life, high-quality mines entering production, a portfolio of long-life operations and a deep pipeline of organic growth opportunities, both exploration and projects. Our priority is to execute well, generate strong returns from these investments and continue creating long-term value for our shareholders. As Skouries and McIlvenna Bay ramp up towards full production through the second half of the year and beyond, we expect to enter a period of meaningful growth in production, cash flow and financial flexibility. Importantly, we remain disciplined in the deployment of that cash flow, balancing investment in future growth with a continued focus on shareholder returns and value creation. Our whole team is very excited about the future of Eldorado and confident in our ability to build on the strong foundation that has been established. Thank you for your time today, and I'll turn it back to the operator for questions from our analysts.

[Operator Instructions] Our first question is from Cosmos Chiu with CIBC.

All the best, George. Thanks for all these years. Maybe my first question is on McBay. Great to see that, of course, concentrate was produced in June. And you've given us some numbers, 5,405 tonnes produced in terms of throughput in Q2. But it's hard for me to try to figure out how the ramp-up is in relation to the 4,900 tonnes per day nameplate capacity. So maybe if you can help me put that in context in terms of plant availability or percentage of nameplate and what that means as you work towards commercial production later on in Q3? And then also, we're now through a lot of July, most of July. And any comments in terms of what you can say in terms of the continued ramp-up of McBay into July?

Thanks, Cosmos. It's Simon. Great question. We're really -- the commissioning has been going really well through July. We -- as with all commissioning, it's all about availability in the early days, just debugging instruments and other things. And that's been our focus through the July phase. But when we are operating, we're operating in the sort of 70% range of our throughput already. And so we see an easy path to get us through to full nameplate in terms of the grinding capacity. flotation circuits are operating as expected. And so really it's more about availability through July, that ramping up through August and then into September.

Great. And then, I guess, Simon, what's your definition in terms of commercial production for later on in Q3?

Cosmos, it's Paul. I'll pick up that. As a management team, we have some flexibility as to when we call commercial production. But really, this is about us achieving intended use for the assets. And so as far as mine and mill is concerned, that's around meeting throughput of somewhere between, let's say, 60% and 80% of nameplate or intended daily and that's also consistently producing salable concentrate. So we're going to be keeping an eye on that. And as we move into that and are able to maintain those levels for somewhere between 30 to 60 days, and again, this is about us being confident that we've reached a consistent and stable level. That is when we will strike that definition of commercial production. And certainly, we're intending to get there at some point in Q3.

That's great to hear. And then maybe, Paul, since I have you here, I'm seeing that, I guess, for McBay, you are budgeting $90 million in CapEx in Q3, slightly up from what you spent in Q2. Just wondering if -- when I look at it, is that potentially the last quarter of higher CapEx at McBay?

Yes. So Cosmos, I think just remember, of course, we're going to have ongoing growth and sustaining capital at this asset, just like you have at any mine. And until we get to that commercial production level, we have to capitalize those costs into the full project cost of the asset. Now we have had some expenditures with us taking, say, 4 months longer to get to commercial production than the most recent estimates that has to be capitalized. And we've changed some of the scope. As a company with a stronger balance sheet, we've been able to bring forward the investment in things like increases in throughput for water treatment plant. And so all of these items are going to be incorporated. And then the final thing I'd say is we've been able to invest in some additional critical spares to ensure consistent operation going forward that a single asset development company just wouldn't have had the balance sheet to support. So that will be the last quarter where we see stuff going into the project cost estimate.

Okay. And so I guess, Paul, in that context, turning to Skouries. I guess, Skouries, the CapEx budget has been maintained at $1.315 million (sic) [ $1.315 billion ]. $1.27 billion has been spent cumulatively until the end of Q2. And then in terms of accelerated operating capital, $260 million is budgeted, of which $201.3 million have been spent to the end of Q2. I guess my question is, could this happen at Skouries as well, like in terms of higher CapEx kind of dragging on a little bit? Because if I work out these numbers, there isn't much left in that budget for Skouries into Q3.

Yes. So again, I think at the current time, we're confident that $1.315 billion is approximately the final project cost for the development. But the exact cost will come down to when we strike that commercial production. If we're a few weeks later than we think, then you're going to have to capitalize a bit more cost in there. If we were a couple of weeks early, then it will be -- it could be a little bit less. So that exact date is going to be important. But at the current time, we have a little bit more capital put in. You'll see we still have a letter of credit for around EUR 43 million that is outstanding. We're going to be funding that over the next few weeks, and we're coming to the end here. So we're not expecting the cost for the development to be significantly different from that $1.315 billion that we have put out as guidance.

Great. And one last question maybe on Olympias. The wording changed maybe a little bit, if I'm not mistaken, expansion to the 650,000 tonnes per annum now by the end of 2026 and ramp up in Q1 2027. Previously, it was Q3, Q4 2026 sequentially. Just I think, Simon, you mentioned some of the key drivers driving that change. But I guess my question is, any kind of potential read-through to timeline at Skouries? And -- or is it really separate in terms of productivity and efficiency at Olympias versus Skouries?

Thanks, Cosmos. Yes, the 2 projects are separate, workforce and geographically. So they're running independently in that regard. In terms of the Q1 ramp-up, the efficiency of some of the construction work has taken a little longer through Q2 than originally planned. And so we wanted to make sure that we were setting realistic targets going forward. We have some complexity in some of the work in the brownfields with an operating plant. But the team has got a good plan to work through that as we now project end of the year completion.

Cosmos, it's George. Maybe just a few comments on the read-through to Skouries. So I mean, Skouries were in commissioning. There is a bit of wrap-up construction that will happen in the month of August. We're rapidly going to be reducing the construction workforce to near 0 at the end of Q3. In terms of our position for ramp-up, I'd say we're in really good shape. And I'd say the remaining risk is just that, how efficiently do we work through the commissioning phases. I'm quite comfortable with the estimate we have in our production and our costs associated with getting to commercial production. But to the point you added, if you're late, then as Paul described, costs that we would spend anyways end up hitting the capital cost rather than the operating cost. So I mean that's probably the remaining risk is exactly precisely when do we get to that commercial production date. And again, confident that our estimate is good.

The next question is from Tanya Jakusconek with Scotiabank.

George, again, congrats on your next adventure and Christian on your new role. Let me start with Olympias, maybe that's the easier one with Simon. So Olympias, Simon, what is left to do at Olympias to get us to be completed on that 650,000 tonnes per day so that we then start ramping up in Q1 of '27?

Tanya, thanks for the question. The scope remains the same in terms of the sort of 4 key areas of expansion. There's a grinding expansion. So we're adding a tower mill. We're adding some flotation capacity to the lead and the zinc circuit. We're adding a thickener to help with the water balance, and we're adding a filter to help with the extra throughput in the long run. All of the equipment that we need to install is already on site as well as all the construction materials. So it's just a matter of executing on the plan right now. And so we don't see much complexity other than it is a brownfield type expansion, and therefore, you're working in a live operation. And so it takes a little more care and planning to do that effectively.

So there's not much to do in the underground is what I'm hearing. It's all in the mill and all the pieces...

That's correct. Yes. Sorry, maybe to clarify, it's just a mill-only expansion. The underground has already ramped up to these capacity levels, and that's been the work for the last couple of years. And so we're comfortable that the underground mine can deliver the ore. In fact, what we call ore-bound in the underground right now and really waiting for the mill capacity to be available to get to that higher run rate that we're looking for.

Do we have any stockpiles on surface or no?

We maintain a small surface stockpile and then a short high turnover mixing zone that we use to help get the steady ore blend that we've been talking about over the last 3 quarters. So that's one of the strategies that we've employed.

Okay. All right. So everything on slide just needs to be put together just that the mill, the underground is ready. Okay. Thank you for the Olympias update. Maybe I'll go to McBay since I have you still, Simon, on. So maybe for myself to understand, just to get to commercial production, you mentioned the mill that we've seen just the normal stuff we're at 70% or thereabout consecutively. Maybe just to understand on the processing side, on the throughput side, what are you seeing that -- are there anything that you're seeing that is of concern to get to that 70%? And then producing salable concentrate, is that what -- tell me where we are on that, just so that we can go commercial? And then lastly, is G Mining still there to help you with this ramp-up?

Okay. So maybe just talking to the construction activity. So essentially, all of the primary scope of construction is complete. And so that's, I think, an important milestone. We do have G Mining there to support optimization, construction activities and just organization of contractors. Tell us, close out opportunity and optimization elements through August. But these are fairly minor and facilitating better availability and throughput down the road. And beyond that, in terms of the concentrate production, we have produced zinc and loaded that in through Flin Flon and out onto the railcars so that we've already sent one shipment. And zinc is also being trucked and shipped. So we're in pretty good shape there in terms of the concentrate specifications. Obviously, quality will continue to improve as we continue to optimize the flotation process through the next few months.

Tanya, it's Paul. We're also shipping copper concentrate already. So the first deliveries occurred in July.

Okay. So the copper cons meet salable specs, the zinc, you've just sent it off. So hopefully, we get that to be a salable spec. And then we're just waiting, Simon, if I can just read from a higher level. You've essentially reached the scope of what you wanted. It's just within the mill, you're just doing this ramp-up to get the availability to be at that 70% for those consecutive days to deem this commercial. Is that a correct way of thinking of it?

I think that would satisfy. Yes. The mill is operating at a 70% level when it's operating. It's more about consistency as we debug instrumentation and other things through the circuit.

And is there anything in the circuit that's causing issues? Or is it just the normal ramp-up that we see at pretty much normal ramp-ups?

Yes, nothing fundamental that we're seeing most of the equipment that we've installed is operating within specification.

Okay. Look forward to getting some more data out of this operation with your Q3 results so we can kind of benchmark ourselves where everything is. And I guess we're getting more an updated plan next year for McBay or guidance, I guess.

Correct. That's correct. Yes.

Okay. George, my final question for you because this is your final question for me on a conference call. So I have to leave the best for last. Skouries. So you spent 2 weeks on site. You've gone through. You've talked about the front end of the mill being ready. We're wet commissioning. You've talked about the 2 filter presses being ready for -- get ready for commissioning. Can you just give me an update where are we then with the conveyor from the plant to the tailings? So let's starts there. Where are we with that?

Sure. So essentially 2 of the 6 filters are complete. We're well advanced on the other 4. Out of the filter building, we have a transfer pit, which is a series of conveyors and an ability to feed off-spec material back into the circuit, and that's nearly complete. And then we have a series of conveyors that bring that material over to the edge of the valley. We've got one conveyor completed. The second one is in construction will be completed in the coming weeks. From there, there's a series of fixed conveyors that go down the valley on a switchback road. They're mechanically all in place, and we're working to tie up the electrical on a couple of those. And from there, we have 6 grasshopper conveyors, 5 of the 6 are constructed, 6 is under construction, and we'll be positioning them into their final place over the next couple of weeks. So I'd say we're in good shape on the conveyance. And we'll really be working from what's already commissioned, the primary crusher through the rest of the facility. Comfortable, we'll have first con this quarter and comfortable we'll be in commercial production in the fourth quarter.

And maybe, George, if I can understand correctly, just we're all waiting for the Greek authorities to come. And as I said, it just turn on the switch so that this power line can be energized. But maybe I'm making it -- I'm simplistically putting this, but maybe you can tell us like what exactly from the time the Greek authorities come to site, I mean, is it just going to be a phone call, "Hi, we're at the gate. Let us? Like from the time they come to site, what is required to energize this line? And how fast does the whole mill go up? And sort of from then, how long is it going to take for the Greek authorities once they energize it, is there a procedure that within 5 days, you're going to get your permit? I'm just trying to understand the logistics of all of that from when they come to site.

Sure. Probably divide the answer into 2 phases. So specifically on the electrical power, we're connecting to the grid. The substation that we've built will be owned, will transfer ownership to the power authority. So we've constructed it under their design approval. We've tested it. We believe it's ready to connect. Then the Greek power authority is called IPTO. IPTO has 2 departments. They have a construction department. That's who we deal with. And they have signed off on our PAP, and they have also conducted inspections of all the electrical equipment, and we passed that test. Now once that's completed, they transfer the documentation over to IPTO Operations. This is the final step. IPTO Operations does their own inspection. It's about a 10-day inspection. It's currently scheduled for the middle of August. Once that inspection is completed, and as I say, the tests have already been done twice. So we're highly confident we'll pass the third test. And from there, it's a matter of paperwork within the agency a few days, we should be connected. So at this point, our best estimate is we'll be connected to the grid by the end of August. Now we've seen slippage in schedule. So there's some risk this could slip into September. But the second part of the answer is this isn't going to impact our ability to test, ramp up towards commercial production. So we had 10 megawatts of gensets in place, and we made the decision about a month ago to bring in another 26 megawatts. So we're now at 36 megawatts. The connected power will be 50 megawatts. So we're, I don't know, 70% of the capacity once connected with the gensets we now have on site. That will enable us to run all of the equipment. It will not enable us to get to nameplate throughput, but that's not expected to year-end. So I'm feeling very comfortable with our ability to start the entire plant to begin significant ramp-up of the facility and to be able to achieve the production we have in our guidance. So I'd say we've derisked the connecting to the grid power. And again, confident we'll get this done. Just maybe a couple of comments on it. Obviously, they need to make sure that this is a smooth transition that they don't impact the grid overall. So they've got lots of checks and balances to ensure that happens. And so we just derisked our ability to ramp up by bringing in these gensets. And that was about a $5 million commitment, both the rental of the gensets and our estimate to run these gensets for a couple of months. So anyway, I think we're in a really good position now to deliver the ramp-up, and I'm not concerned about the connection to the grid.

George, if I was to understand it correctly, the last test is, and you're scheduled for this for mid-August. And then once this test is done, it's about 10 days to do paperwork plus others. So that puts you towards the end of August, if all goes well, to get the receipt that you can energize basically, start the -- go ahead.

Yes. So it's -- the inspection is scheduled for mid-August. There's 10 days of test work, a couple of days of administrative work. So we do expect to be connected at the end of August. And if that slips into September, it won't affect our ramp-up.

Because you can start ramping up with your 36 megawatts that you have and then ultimately connect when you connect even if it's September, October? Is that a fair way of looking at it?

That's correct. We have the ability to run the entire facility, not at nameplate. Throughput, but at significant throughput well ahead of what we expect to do in Q3.

So George, to finish off, when we're all there on September 15, 16, 17, 18, I'm hoping to see some sort of a pour.

You'll be disappointed because we're just producing concentrate, but you will see concentrate...

Okay. So you know what, I'll take concentrate. If I don't see a pour, I'll take the concentrate.

Yes, you definitely will.

The next question is from Don DeMarco with National Bank.

George, congratulations. Best wishes on next steps. A few quick questions from me. Starting, Paul, total debt is now at $1.75 billion. You've got the Foran debt on the balance sheet. What amount of leverage are you comfortable with or how would you approach derisking? What would a repayment schedule possibly look like?

Thanks, Don. So look, we're basically at peak leverage. We've drawn down all of the project financing facility at Skouries and in fact, at McIlvenna Bay that we brought on to our balance sheet. We still have obviously significant cash and liquidity available to us throughout the rest of this year and into 2027. Repayment and debt servicing for the project financing starts at the end of the year, both for Skouries and for McBay. And so as we move into next year, we'll start to see us reducing that debt pile. And in fact, when you think about the inflection that's coming for us, strategically how we fund the firm going forward and how we then get into the next set of opportunities is going to be something we're working on over the coming months. So we're about at the peak. And really, it's just continuing to manage us -- the strength of our balance sheet with the cash and liquidity that's available to us.

Okay. Great. And you mentioned inflection. Just shifting over to McBay. When would you expect to inflect to positive free cash flow on McBay?

So McBay, we're predicting as it goes through its commercial production rates and then continues to ramp up into the fourth quarter, we should start to see it producing positive cash flow at the end of the year there.

Okay. And just continuing on McBay, I mean, you've been delivering against targets for first concentrate. I heard earlier that the commissioning has been going well through July. Has there been any surprises since the project was handed over? And you touched on some of the processing and downstream elements. Has the mining been ramping up as expected? What's your balance of contractors versus labor? Do you expect that to decline? Maybe just any additional color would be great.

Thanks, Don. It's Simon. To sort of maybe just to pick on the underground operation. I was there last week. We're super happy with how the team has been progressing. The ramp is ahead of schedule where we want that to be in terms of the ramp depth. So that sets us up nicely for future production. We have -- as we sort of tried to show in the conference call, we've sort of broken the main ore zones into sort of Block 1 and Block 2, and we're well progressed on opening both of those blocks up to really allow us good access to multiple ore sources as we ramp up this mine. So the mine itself has been operating well and the team is well motivated to keep going.

Great. And you have contractors versus labor on site, you expect that to decline too? What's the current composition?

Sorry, I forgot the second half of that question. So the contractors -- in terms of construction contractors, they're almost all ramped down. So we should have that fairly well complete by the end of August other than ongoing longer-term water treatment plant and other things that we're building. So in terms of construction workforce, that has greatly diminished. In terms of underground contractors versus our own team, there's a reasonable split between the 2, and we're balancing off our ramp-up of our own workforce and supplementing with contractors as needed. That migration will continue to happen through Q3 and into Q4 as we build our own workforce with the availability of people and bringing up their skills.

The next question is from Josh Wolfson with RBC Capital Markets.

Just going back to McIlvenna Bay for a moment. Trying to get a better understanding of what the cost profile looks like. I appreciate some of the details in the release and there's probably still some forthcoming with the tech report. On the unit costs that were provided, I guess, is that a reasonable run rate that we should be assuming for 2027? Or should we expect that to decline? And then similarly along those lines, I guess, because there's one quarter of commercial production and there was sustaining capital of $20 million to $25 million, should we assume that as a run rate for sustaining capital going forward? Or is that going to vary from steady state?

Josh, it's Simon. Maybe I'll take the cost profile. As you're ramping up the mine, obviously, those efficiencies, we've been able to estimate as best we can what our efficiencies look like in Q4. And Q4 is just a starting point for us. We expect those efficiencies into 2027 to continue to improve as the mill continues to ramp up through nameplate as well as the underground ramps up through nameplate. And so you would expect those costs to decline, and we'll be in a really solid position at the end of the year to be able to provide more accurate guidance as to what that's going to look like than we can today as we're still in that ramp-up mode.

Josh, it's Paul. Just to confirm, so we won't have any sustaining capital in the third quarter because we're still moving through to commercial production. So our guidance for the year is really just looking at the fourth quarter, okay, for McBay sustaining production -- sustaining capital, sorry.

Got it. Okay. And then just back to some of the questions on the debt side. What is the minimum cash balance the company needs just sort of to maintain steady operations?

Yes. So I mean, look, significantly less than we've got on the balance sheet at the end of the quarter. I mean there's no sort of real rule around this, but it really sort of looks to a number of months of what you would require to fund operations. And whilst I'm not saying we hold ourselves to this, I would say the minimum that we would want at any point in time is around $250 million.

And then on Lamaque, good results there with the contribution from Ormaque. The grades, I guess, improved quite a bit quarter-on-quarter in line with expectations. Is there any kind of additional visibility you can provide on maybe what the grade expectations are now that you're in the ore body for the second half of the year? I mean, is there a reasonable potential you'll exceed the grade guidance just given the performance in the second quarter?

Yes. Thanks, Josh. Yes, Lamaque is performing very, very well. Obviously, the team is well seasoned and performing as to plan. We probably see the grade in the second half maybe towards the top end of our range, which is between 6 and 6.5 grams, but we wouldn't see it being higher than that at this moment.

Got it. And if I can sort of tuck in one more. In terms of the discussion about the expansion and utilization of some of the spare throughput capacity there, is there any visibility on timing on when we could receive that update?

We're just working through our sort of business planning cycle right now to sort of really articulate what that's going to look like. We would probably be in a better position to talk about that in the Q1 of next year. But we're very excited by this opportunity, which is underpinned by the great performance from the team and underpinned by the exploration potential we see in the region. So all of these things are giving us great tailwinds into a future -- a very bright future for the Lamaque Complex.

The next question is from Lawson Winder with Bank of America Merrill Lynch.

And then I would just say congratulations to everybody moving to new roles and the best of luck to those moving on to other pursuits. And there's just a few discussion points that I kind of wanted to follow up on. So one would be the energization in Greece. I think we've covered almost everything. One thing I wanted to touch on, though, was the difference in power cost between running the gensets versus the grid. Is that a material difference? Are those relatively close?

No, the power grid is significantly cheaper than diesel generating, particularly with the high diesel cost these days. But as I said, the rental and the lease is included in our estimate, it's about $5 million for diesel and the sooner we get on grid power, the better.

Okay. Thanks for that, George. And then with McIlvenna Bay, other operators in the Flin Flon belt have been reporting labor shortages. And so as you transition from construction to operations, do you feel you'll have sufficient staffing to support that ramp-up and then full operations, I guess, in Q4 or whenever you hit that? And is there any need for contracted labor once you're in operation?

Yes. Thanks, Lawson. We did see pressure in terms of the labor in the Saskatchewan area. And I guess we have the ability right now to continue on and spread the load as we build our team with the contractors that are on site of helping us do both vertical and lateral development work. We have employed several strategies, both in the community and in terms of just recruitment to help us support the project in the long term. And we'll continue to work through that as things progress. But we're pretty comfortable that the team has a good strategy and we're supporting as well as we can to help make sure that working for a bigger organization, I think, has been a bit more attractive to help us gain some more retention. So we're pretty comfortable right now that we can move in the way we plan.

Okay. And then just finally, if I could ask, in the past, on these calls, you've sometimes provided some directional quarterly guidance for the gold production at Kisladag rather, just given the large heap leach cycles. Would you be able to provide just directionally where things are heading in Q3 versus Q2, whether that's just a range like -- are we up like a couple of percent, maybe 5%, a little bit more, that type of thing would be really helpful. And then that would be it for me.

Yes. Thanks, Lawson. So yes, we have -- obviously, as we've spoken about several times, this is a cutback year. So it's a low production year for Kisladag in the mining cycle due to cutback phase waste removal. And this year, we do see a sort of back-end loaded a little bit to sort of like a 45-55 split in terms of half 1, half 2 is what we would see. So we would expect more tonnage and grade to improve through Q3 as we're in the summer months and then on to Q4.

That is all the time we have for questions today. This concludes the question-and-answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.