AGI

Financial Overview

• Total Q2 2026 revenue was $594 million, from selling 130,800 ounces of gold. Total cash costs were $1,303 per ounce, all-in sustaining costs were $1,728 per ounce.
• Operating cash flow before working capital changes was $287 million ($0.68 per share). Reported net earnings were $270 million ($0.64 per share); adjusted net earnings were $248 million ($0.59 per share).
• Free cash flow was $144 million in Q2, and $245 million for the first half of 2026. The company ended the quarter with $637 million in cash, $437 million in net cash, and $1.2 billion in total available liquidity.
• The company returned $67 million to shareholders in Q2 ($50 million in share buybacks, $17 million in dividends), bringing year-to-date shareholder returns to $84 million, exceeding full-year 2025 returns. All remaining 2026 legacy Argonaut Gold hedges were eliminated for $92 million, funded by free cash flow.

Operational Updates

• Consolidated Q2 production was 130,600 ounces of gold, 5% higher than Q1, in line with revised guidance. Island Gold's strong performance offset lower output at Young-Davidson and Mulattos.
• Island Gold District: Phase 3 Plus shaft expansion is nearly complete, with shaft equipping and infrastructure work ongoing; commissioning is expected in Q1 2027, which will lift underground mining rates to 2,400 tons per day in Q1 2027 and 3,000 tons per day by 2029. Maginot Mill expansion reached a quarterly record milling rate of 8,900 tons per day (9,800 tons per day in June), on track to average ~10,000 tons per day for the rest of 2026. Full expansion completion is targeted for Q1 2028.
• Young-Davidson: A seismic event in June caused localized underground infrastructure damage (no injuries) and limited access to high-grade stopes on the 9410 level. Rehabilitation work and enhanced ground support are ongoing, with $10 million in additional sustaining capital required. No ore reserves were lost, and access is expected to be re-established by the end of 2026.
• Mulattos District: A slower leach pad cycle at Yaqui Grande has delayed gold recovery, though total expected ounces recovered remain unchanged. The PDA expansion project remains on budget and on schedule for first production in mid-2027.
• Lynn Lake: $36 million in growth capital was spent in Q2, advancing key construction milestones. The project remains on budget and on schedule for completion in H1 2029.

Exploration Highlights

• Multiple high-grade discoveries were made across the Island Gold District, including a new high-grade zone 250-500 meters west of existing reserves that remains open down-plunge. Significant high-grade mineralization was also expanded at the Island Gold West up-plunge and the past-producing Klein Pick and Edwards mines.
• Total Island Gold District reserves and resources have grown from less than 2 million ounces in 2017 to nearly 7 million ounces (net of 1.7 million ounces produced to date), with high-grade mineralization defined down to 1,600 meters depth, and the deposit remains open laterally and at depth. New high-grade ore could support production above current expansion targets by displacing lower-grade open-pit feed in the expanded mill.

• 2026 Consolidated Production Guidance: Revised downward to 510,000 – 560,000 ounces, a 12% reduction from prior guidance, driven by the Young-Davidson seismic event and delayed recovery at Yaqui Grande.
• 2026 Cost Guidance: Full-year all-in sustaining cost guidance increased 18% to a midpoint of $1,825 per ounce. The increase reflects $190 per ounce impact from lower production volume, $90 per ounce from higher labor and contractor costs in Canada, and $15 per ounce for Young-Davidson rehabilitation, partially offset by a $20 per ounce benefit from a weaker Canadian dollar. Total cash cost guidance increased 14% to a midpoint of $1,225 per ounce. The cost increase is expected to be temporary.
• Segment-Specific 2026 Guidance: Young-Davidson full-year production guidance revised to 100,000 – 115,000 ounces; Mulattos full-year production guidance revised to 120,000 – 135,000 ounces. Island Gold's full-year production guidance remains unchanged, with the guidance range only tightened to reflect the completed first half of the year.
• Long-Term Guidance: The company remains on track to reach 1 million ounces of annual gold production by the end of the 2020s, with significant production growth and cost decreases expected from 2027 onward. All growth projects remain on schedule and on budget, and will be internally funded via free cash flow.

• Island Gold District: Produced a record 67,500 ounces of gold in Q2 2026, up 10% from Q1. Record underground mining rates averaged 1,550 tons per day, with total milling rates reaching a new high of over 10,000 tons per day. Generated record mine-site free cash flow of $100 million. Total cash costs were $1,304 per ounce, and mine-site all-in sustaining costs were $1,715 per ounce. Accounts for 51.7% of total Q2 consolidated production.
• Young-Davidson: Produced 33,000 ounces of gold in Q2 2026, 10% higher quarter-over-quarter but below plan due to the June seismic event and weather-related power outages. Mining rates averaged 7,132 tons per day with an average grade of 1.75 grams per ton. Generated mine-site free cash flow of $67 million. Accounts for 25.3% of total Q2 consolidated production.
• Mulattos District: Produced 30,100 ounces of gold in Q2 2026, 8% lower quarter-over-quarter, driven by slower-than-expected leach pad recovery at Yaqui Grande. Generated mine-site free cash flow of $61 million, consistent with Q1, while funding PDA project construction and paying $27 million in cash taxes. Accounts for 23.0% of total Q2 consolidated production.

• The June seismic event at Young-Davidson created localized underground infrastructure damage and limited access to planned high-grade ore for the rest of 2026, reducing full-year production and temporarily increasing costs. Seismicity is a normal risk of deep underground mining, and while no injuries occurred, future events could cause additional operational disruptions as the mine deepens.
• Persistent labor inflation and higher contractor costs in Northern Ontario have created unexpected cost pressure across Canadian operations, requiring implementation of a new unbudgeted retention and compensation program that will increase ongoing structural cost.
• Longer-than-expected leach pad cycles at the end-of-life Yaqui Grande operation have deferred gold production into 2027, reducing 2026 output, though total recoverable ounces remain unchanged.
• Forest fires in Northern Canada caused a one-week evacuation of the Lynn Lake construction site, resulting in an approximately two-week delay to construction activities, with no material long-term impact.
• Execution risk remains for the multiple large ongoing construction and expansion projects, including the Island Gold shaft and mill expansion, PDA, and Lynn Lake.

Q: How much of the $90 per ounce 2026 cost increase from labor inflation is structural for 2027, and what changed from original annual guidance assumptions?

A: Original guidance assumed 4% annual increases in labor and contractor rates. Higher than expected cost pressure emerged in Q2 2026, especially for underground development contractors that ALMOS relies on more heavily during the Island Gold ramp-up. A $30 per ounce portion of the increase comes from a new unbudgeted mid-year employee retention program for Canadian operations, which is a permanent structural cost increase that will persist into future years to support recruitment and retention in the tight labor market.

Q: What is ALMOS' current appetite for M&A, given recent operational disruptions at Young-Davidson and strong balance sheet liquidity?

A: M&A is not a current focus for ALMOS. The company has a large pipeline of high-return organic growth projects already underway, including returning Young-Davidson to full operations, completing the Island Gold expansion, advancing PDA construction at Mulattos, and building the new Lynn Lake mine. Management notes there is plenty of internal work to focus on for the foreseeable future, even with available liquidity.

Q: What is causing longer leach cycles at Yaqui Grande, and will this impact 2027 production or total recoverable ounces?

A: Longer cycles are caused by higher leach pad height and specific ore characteristics of the remaining stacked ore. No total ounces are lost—all expected gold will still be recovered, just deferred from 2026 into 2027. Yaqui Grande is at the end of its mine life, so this is a temporary timing issue limited to the remaining ounces already stacked, not an ongoing long-term problem.

Q: What is the upside potential for underground mining rates at Island Gold above the current 3,000 tons per day 2029 target?

A: The new shaft infrastructure has total capacity to handle 5,500 tons per day of ore and waste. Newly discovered high-grade mineralization in the shallow Upper West Zone, accessible via the existing ramp, could add up to 1,000 tons per day of additional high-grade feed by 2029 with minimal capital, as it uses existing infrastructure and permitted areas. Additional regional targets could also provide more high-grade feed to displace lower-grade open pit ore in the expanded mill, lifting overall annual gold output without increasing total mill throughput.

Q: When can the newly discovered high-grade Upper West Zone at Island Gold be added to the formal mine plan?

A: The zone is still in active exploration. Management aims to grow the inferred resource to ~500,000 ounces before developing a mine plan. The zone is low capex, uses existing infrastructure, and is a high exploration priority. The target is to have the resource defined and ready for mine planning by the end of 2026, with potential production startup by 2029, or earlier if exploration progresses faster than expected.