G2 Goldfields Inc. ($GMIN)

Good morning. My name is Dan, and I'll be your conference operator today. At this time, I would like to welcome everyone to the conference call to discuss an exciting transaction in the market, G Mining Ventures acquisition of G2 Goldfields. [Operator Instructions]. This call is being recorded. I will now turn the conference over to J.S. Lemonde, Vice President, Investor Relations. Please go ahead, sir.

Thank you, operator, and thanks to everyone for attending this morning's conference call to discuss G Mining's acquisition of G2 Goldfields. In addition to myself, we have on the line today from G Mining, Louis-Pierre Gignac, President and Chief Executive Officer; and from G2 Goldfields, we have Daniel Noone, Chief Executive Officer. We have a prepared presentation to accompany the conference call, which is available for viewing through the webcast and for download on G Mining and G2's websites. Before we begin, please note the disclaimer on Slide 2 of today's presentation concerning forward-looking statements. We will be making some forward-looking statements during our conference call today, which are subject to several assumptions, risks and uncertainties as disclosed in each of G Mining and Q2's public securities filings. Actual results could differ materially from those projected in the forward-looking statements. Our remarks today will also refer to certain non-IFRS financial measures such as, for example, free cash flow and all-in sustaining costs. Various disclosures and limitations with respect to these non-IFRS financial measures are also included in those filings. Also, please bear in mind that all of the dollar amounts mentioned in this conference call are in U.S. dollars unless otherwise stated. I'll turn the call over to Louis-Pierre Gignac to make some opening remarks.

Thank you, J.F., and good morning to everyone. Today, we're thrilled to announce the acquisition of G2 Goldfields. This marks the key milestone for our company as we continue to grow our -- into a multi-asset intermediate producer in the Americas. What excites us about the G2 transaction is the ability to combine GMIN's Oko West project and G2's directly adjacent Oko-Ghanie project to deliver a Tier 1 world-class gold mine. We believe the combined Oko project will surpass all current development stage projects in the market. Additionally, there is a unique opportunity to unlock significant near- and long-term value through unparalleled synergies since these properties are direct neighbors. In the mining industry, it's rare to see on the ground realizable synergies, which this transaction has in abundance. We're also very excited to become this combined asset and are proud to bring this mine into production for Guyana. Guyana is truly a supportive mining jurisdiction where the government of Guyana has shown exceptional support of G Mining Ventures and Oko West project. Let me walk you through what makes this combination so compelling. First, we are consolidating an entire district by bringing together the Oko West and Oko-Ghanie projects into a single integrated Tier 1 asset. By doing so, we expect to unlock more than CAD 1 billion in synergies driven by shared infrastructure, optimized mine planning and increased plant throughput. Second, the combined project has the potential to deliver over 500,000 ounces of gold annually on a life-of-mine basis, placing it firmly in the top tier of global gold operations. Third, we are accelerating value creation by leveraging G Mining Ventures proven mine-building expertise and deep experience in the Guyana Shield to deliver Oko on time and on budget. The combined project is expected to be fully funded, supported by GMIN's long balance sheet and cash flow from TV. And finally, integration enables a reduced environmental footprint with a single centralized processing facility, tailings storage facility and shared infrastructure across the district. Turning to the transaction structure. G Mining will acquire 100% of G2 Goldfields fields through a plan of arrangement. Under the terms of the agreement, G2 shareholders will receive 0.212 GMIN shares, along with exposure to a new and well-funded exploration vehicle, the G3 SpinCo, which will hold interest in the Tiger Creek property, Peter's Mine property, Property B being all remaining G2 properties outside of Oko-Ghanie, Amsterdam, Aremu Partnership and Aremu and Property A. SpinCo will be funded with CAD 45 million of cash and given the unexplored potential of the acquired properties, will also be granted a contingent value right, providing for payments to be made to G3 SpinCo and the maximum aggregate amount of USD 200 million based on the establishment of various increments of M&I resources at the acquired properties. The exchange ratio implies an offer price of CAD 1,084 per G2 common share, excluding the value of G3 SpinCo based on the closing price of GMIN shares on the TSX as of April 8, 2026 and a premium of 72% based on the 3D VWAPs of GMIN and G2's common shares on the TSX as of the same date. The fully diluted in-the-money equity value of the transaction, excluding the value of G3 SpinCo is estimated to be approximately CAD 3 billion. Upon completion of the transaction, existing GMIN and G2 shareholders will own approximately 80.1% and 19.9% of GMIN, respectively and G2 shareholders will also own 100% of G3 SpinCo. The transaction has been unanimously approved by both boards and expected to close in the second quarter of 2026, subject to customary shareholder regulatory and court approvals. The transaction will require approval by 66 2/3%of G2 shareholders. In addition, G2's 2 largest shareholders, together with directors and members of senior management, have entered into lockup agreements in support of the transaction, representing 37% of its shares outstanding. As part of the transaction, GMIN will benefit from a dramatically increased district scale land package with the inclusion of the acquired properties. This materially enhances the exploration upside potential of the combined Oko project, all of which are located within approximately 20 kilometers of the planned infrastructure. Likewise, G2 shareholders will benefit from the continued exploration upside exposure through the spinout of the Peters Mine Property B and Tiger Creek properties into the G3 SpinCo, which will be managed by the successful G2 exploration team. This transaction delivers several benefits to GMIN and shareholders, creating a really transformational growth profile, taking our production from roughly 160,000 to 190,000 ounces as guided for 2026 and scaling to more than 700,000 ounces annually with minimal incremental execution risk and before even factoring in the upside potential from Gurupi. It also establishes a Tier 1 gold district in Guyana with scale and infrastructure to support more than 500,000 ounces of gold production per year. Most importantly, we believe we can unlock over CAD 1 billion in synergies driven by meaningful efficiencies across capital spending, operating costs, higher throughput through shared infrastructure, improved mine sequencing and the potential for accelerated permitting time lines. This transaction also significantly expands our exploration footprint, increasing our land position to 362 square kilometers in a highly prospective geological adults. Finally and critically, we expect the transaction to be highly accretive on a NAV per share, reflecting the relative valuation multiples of the 2 companies and the impact of more than CAD 1 billion in synergies compared to an acquisition equity value of approximately CAD 3 billion. I'd like to now pass it over to Dan to go over the benefits for G2 shareholders.

Thanks, LP. For G2 shareholders, the transaction provides both immediate value and continued upside. Our shareholders will receive an attractive premium and ownership in a larger, more liquid and more visible company. At the same time, there is retained exposure to exploration upside through G3 SpinCo and a continued [indiscernible]. And importantly, the Oko-Ghanie project benefits from a fully funded development path, supported by GMIN's building expertise, balance sheet and free cash flow. Back to you, LP.

Thanks, Dan. Turning to Slide 11, which shows the snapshot of the combined group with a pro forma market cap of $11.1 billion and a strong net cash position of approximately $218 million. Let's now turn to the combined Oko project. What is driving the substantial synergies of this transaction is the proximity of the 2 projects, the combined projects creates a continuous land package of approximately 362 square kilometers in a highly prospective region. This addition gives us a district scale control, not just of the currently identified deposits but an entire system with long-term expansion potential, which we intend to continue exploring aggressively even as we are focused on construction. The 2 deposits are right beside each other, and as a result, the incremental haul distance from Oko-Ghanie deposit to the Oko West mill is approximately 3 kilometers. The Oko West and Oko-Ghanie deposits are essentially part of the same continuous mineralized system. The deposits contain a combined indicated mineral resources of 7 million ounces at an attractive grade of 2.28 grams per tonne. Combining the data sets from both projects enhances our geological understanding and improves targeting going forward. For example, in Block 1, at the junction of the 2 properties, where sparse drilling is already highlighting the presence of another high-grade ore shoot. The system remains untested at depth but intercepted down to 1 kilometer on Block IV and along strike, essentially forming a continuous 4.5-kilometer long open pit when combining the deposits. Ongoing drilling continues to demonstrate continuity and expansion potential. In addition to the existing resource, the property presents significant exploration upside. This includes brownfield potential through the expansion of known deposits and numerous greenfield targets distributed across the water land package. The project is located in a highly fertile geological environment with mineralization focused along structural and lithological controls at the contact of the main intrusive as shown with the regional geophysics. Numerous targets are already planned to be tested on a broader property. We see synergies across all of our key operating metrics. Life of mine average annual production is expected to increase 42% to over 500,000 ounces per year. Contained M&I resources increases by 30% to 7 million ounces. Combined M&I resource grade increases 12% to 2.3 grams per tonne and allows for mine sequencing optimization. Mine life is expected to increase beyond 14 years and CapEx intensity is expected to decrease on a per contained ounce basis. The various synergies that we expect to realize from the transaction that we can identify immediately total approximately CAD 1 billion over the life of mine on a pretax basis. This includes approximately CAD 850 million in capital savings primarily from eliminating duplicate infrastructure and roughly CAD 275 million in operating savings over the life of mine. In simple terms, instead of building 2 projects, we build 1 that we will expand and do it more efficiently. In addition, there is material value in bringing Oko-Ghanie into production faster as part of a combined project. The synergies that will be generated are very unique, and our objective will be to generate an updated feasibility study for the combined expanded project. The integration of both lines, also helps accelerate the development of Oko-Ghanie while reducing overall project risk. Since Oko West is already fully permitted, we can bring Oko-Ghanie into the existing framework through an amendment process rather than restarting the permitting process from the beginning. We'll also be able to leverage existing government agreements and the strong community relationships that we already have in place. Altogether, this supports a faster, more efficient and more streamlined path to production. At the same time, we do not expect to delay or interrupt the current Oko West project or introduce delays. Slide 19 shows the overall progress of construction activities at Oko West. As of the end of 2025, total project commitments amount to approximately $424 million, representing 43% of the initial capital budget. Detail engineering almost at 60% at year-end and is expected to be finalized by Q3 2026. Main construction activities are now underway in the process plant area with the grinding circuit representing the project's critical path. Both mills are expected to arrive in Guyana in July of this year, with commissioning and first gold production targeted for the fourth quarter of 2027. The project remains well within budget and on schedule with first gold pour targeted in the second half of '27 in commercial production in January 2028. Regarding the plan for an integrated project, it involves completing the definition drilling of the Oko-Ghanie deposits and technical studies to verify the optimal mine plan sequencing and throughput for the expanded project. The intention is to release a technical report in 2027, targeting expanded production by first half of 2029. The current Oko West project and an expanded combined Oko project will be derisked from a funding perspective. At a gold price of $4,000 per ounce, our estimated TZ free cash flow will more than cover the remaining capital expenditures to complete construction of Oko West without using our undrawn credit facility and current cash on the balance sheet. Let's now turn to how this project compares globally. On a global basis, the combined Oko project ranks amongst the largest advanced stage go projects in terms of production. At over 500,000 ounces annually, it sits firmly in the top tier of advanced development projects worldwide. Beyond scale, the project also stands out in terms of quality. When we look at resource size and grade together, the combined Oko is in a class of its own among comparable projects in the Americas. In our view, this combination of size and grade is rare and should command a premium valuation. This transaction also drives a compelling production growth profile. We moved from roughly 200,000 ounces today to over 700,000 ounces annually over time, which positions GMIN as one of the fastest-growing producers globally. Despite this growth, GMIN currently trades at a discount to peers, the PNAF multiple shown on this slide is based on consensus multiples of GMIN and G2 and does not factor the synergies of putting the 2 projects together into one. As we execute on construction, deliver key milestones and realize synergies, we believe there is a compelling opportunity for a re-rate. To conclude, this transaction creates a Tier 1 gold asset in Guyana with scale, strong economics and significant synergies. It is fully funded, supported by a proven execution team and positioned for meaningful production growth. Thank you for your time, and we'll now be happy to take any questions.

[Operator Instructions] Your first question comes from the line of Ralph Profiti with Stifel Financial.

Just wondering what we can how we think about this $850 million in capital cost savings? And what items did you include in that bucket? Your preamble comments mentioned the mill and the processing facility. I was wondering if there's work being done on synergies through tailings fleet? And what are the things we can throw into that bucket?

Yes, that's a good question. There's actually a lot of things that we can throw into that bucket, starting with all the shared infrastructure. So when we think of just the access road, all the logistics infrastructure, such as the Wharf, the permanent camp facility, communications infrastructure. There's also the tailings facility, as you mentioned, because, at that point, all we need to do is do a raise to the tailings down at minimal cost as opposed to building a new facility. And then on the process plant side, we're looking at an expansion as opposed to building a whole separate plant. So yes, the synergies on the CapEx side are quite significant. And to be honest, we've highlighted some of the initial ones through that number, but that will be further refined through the feasibility study that we'll be completing.

Okay. And I'd also like to get your thoughts in your due diligence on Oko-Ghanie underground potential. Where are you at on that?

Yes. Obviously, that was part of the due diligence. As you know, I mean, both deposits have an open pit and underground component. So that's obviously part of how we see the combined project. And we see a lot of opportunities in terms of optimizing the mining plan, both in terms of sequencing and the mix that we see of both open pit and underground contributing to the mill feed. So yes, that's part of the project. As we kind of highlighted, there is definition drilling that needs to take place on the Oko-Ghanie deposits, and that's a work stream that we need to pull into an updated feasibility study.

Next question comes from the line of Josh Wolfson with RBC Capital Markets.

Just going back to Rob's question on the CapEx, the old G2 CapEx was about $660 million and then now with the capital cost savings in U.S. dollars, it's over $600 million. So the CapEx, I guess, implied to build the project looks extremely low -- and I'm wondering how much additional capital could there be beyond project construction that might not be included in these numbers, for example, just to build the expansion at the existing plants? Or is there something we're not fully understanding here in terms of capital cost savings.

Yes. I mean, the capital cost savings that we're referencing are life of mine CapEx savings. So it does include the initial and sustaining. So that's one aspect. And as you know, with the underground aspects of these projects and the staging, there is significant sustaining CapEx in both projects. So that saving that we're referring to includes both initial and sustaining. But yes, going back to your question also what initial CapEx we see for the expansion. Obviously, we've done preliminary work as part of our due diligence process, but that's what we need to refine as part of the feasibility study. And we envisioned initially a 25% to 30% expansion of the plant throughput. And there, again, that's something that we want to revisit in more detail. There's maybe potential to go bigger. That's the whole optimization exercise that we want to undergo as part of the feasibility.

That's very helpful. And then another question, there's sort of been some discussion about sequencing when you think about combining the 2 projects, is there any ability to consider maybe deferring underground development, if that would help improve the IRR or anything like that? Or is this mainly just a great exercise of accelerating some higher-grade portions that Q2 might have?

Yes, that's part of the optimization exercise, G2 does have sections of deposits that have higher grade. So with a view of maximizing head grade in a life of mine schedule, there's that will be possible. One of the key balancing acts that we have is really maintaining a blend of open pit and underground production. Obviously, if we're expanding the mill 30%, that assumes that we're always having a continuous feed from the open pit. So yes, that's part of the optimization that we'll be doing, but there will be a mix of G2 deposits coming in earlier into the schedule and displacing some of the Oko West mineralization.

Next question comes from the line of Sherry Miho with Canaccord Genuity.

Most of them were around the CapEx, and I think you provided enough color there. But just two more. Could you comment on the timing of the FS that you're planning to put out? And the additional exploration opportunities with the new properties? Can we expect an augmentation of the exploration budget this year and next.

Yes. So like we'll -- obviously, we'll be detailing out our time line further once the transaction closes. But assuming it's end of Q2, we would expect to have an updated fees in the second half of '27. And yes, G2 is currently progressing with the definition drilling currently. So once the transaction closes, we'll carry on with those activities to feed the fees. So that's kind of the planning. And as you mentioned, there's multiple targets on this land package. So yes, there'll likely be enhanced exploration budgets being put together to advance the work streams on the combined project in combined land package. Yes, we're contending with building a mine at the same time and ramping up workforce on the construction side to close to about 2,000 people by year-end. So yes, there's a continual battle for beds on site. So that's what we're juggling at the same time.

Got it. if I may, actually, one for Daniel. Could you comment on the prospectivity of the properties that are being spun out into G3>

Sure. Basically, it contains the piles mine and the Peroni area with Tiara as well at a historic producer from the only 90 high-grade 41,000 ounces -- 1 gram per tonne. So definitely a huge potential out there. We think we've got mineralization of about a 4K strike there. That will be our first up target and then up Area B to the Northwest more greenfields, but a lot of gold coming out of there. So we think we're on to the next one. That's what we're good at. And so we're pretty excited about that.

Next question comes from the line of Anita Soni with CIBC.

So I guess I was just going to follow up in terms of the manpower. Is there anyone in the management team at G2 that's going to be retained? Or is it just passing the ball over to you guys and run with it?

Yes. I think the plan is the G2 team will move over to the G3 SpinCo and then we'll just pick up the ball, like you say, and continue the work programs at that point with our teams.

Okay. And then so in terms of like the people, I mean, the next packet of work looks like it's infill drilling studies permitting. Those are people, I guess, who have just completed their tasks at GMIN and now are kind of looking for things to do. And so this is the next space for them. Is that the case?

Yes, that's basically it. We do have teams that are currently working on the detailed engineering, which will be completed in Q3. So we will be opening up new work streams to work on the updated feasibility study. So yes, that will be basically the same teams involved in both processes.

All right. And then if we're thinking about trying to early modeling of trying to figure out a valuation for NewCo ahead of this updated feasibility study. What kind of -- and I'm not -- I apologize if it somewhere in this press release, but what kind of throughput are you looking at in the plan?

Yes. We guided to some of our initial thoughts, which are in the range of 25% to 30% throughput expansion. And we do want to revisit that. It could be potentially higher. It's going to be a combination of maximizing value and making sure that we have a plant that's going to operate well as well. So -- but that's our current thinking based on a lot of work that went into the due diligence process so far.

And when do you think that you would actually get to sort of the 500,000 because I mean like I look at the -- so you're going to build the plant from in 2028 and you're commissioning the plant. But presumably, you're going to be doing some stripping and the mining earthworks for the other deposits on that might not -- it doesn't -- unless you start now or relatively soon ahead of the ahead of the project, like where is the earthworks in pre-stripping in the schedule here in the project integration?

Yes. So the way we're looking at it is this year and 2027 would be the infill drilling, the studies, the permitting and the procurement required for the expanded project. 2028 being, call it, the expansion of the plant facility in and pre-stripping like you say. So basically, preproduction on the expanded project would be 2028 and targeting an expanded throughput come 2029. So exact timing of that expanded throughput in '29 is to be fully buttoned down, but we do expect that to take shape in 2029.

[Operator Instructions] And we have our question from the webcast. Question is, does segue Resources 1 project located between Oko West and Oko-Ghanie on any land that could improve the overall project layout?

Currently, it's not a ground that is required for the project. So that's currently not in our plans.

[Operator Instructions] It looks like we don't have any questions from now. And that concludes today's call. Thank you all for joining. You may now disconnect.