Wesdome Gold Mines Ltd. (WDO) Earnings Call Transcript & Summary

Good morning. Welcome to Wesdome Gold Mines conference call to discuss the company's financial and operating results for the 3 and 6 months ended June 30, 2026. As a reminder, this call is being recorded. Your host for today is Trish Moran, Wesdome's Vice President of Investor Relations. Ms. Moran, please go ahead.

Thank you, and good morning, everyone. Before we get started, I'd like to point out that during today's call, we may make forward-looking statements as defined in the Canadian securities law. I ask that you view our slide presentation for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Please note that all figures discussed on this call are in Canadian dollars, unless otherwise noted. Our press release, MD&A and financial statements are available both on SEDAR+ and on our corporate website, wesdome.com. With us on today's call is Anthea Bath, West Elm's President and CEO; Phil Yee, our Chief Financial Officer; Tyler Mitchelson, our COO; Jono Lawrence, Senior Vice President, Exploration; and Kevin Lonergan, SVP, Technical Services. Following management's formal remarks, we will then open the call to questions. And now over to Anthea.

Thank you, Trish, and good morning, everyone. Q2 was another strong quarter for Wesdome and another demonstration of how fundamentally this company has changed. We delivered net income of $94 million and $42 million of free cash flow and ended the quarter with more than $390 million in cash after returning more than $80 million to our shareholders through our share buyback program. At Eagle River, increasing throughput reflects our deliberate move towards a larger, more productive operating model. We're beginning to leverage our fixed cost infrastructure and expect those benefits to become increasingly visible as throughput grows. Kiena also delivered a strong quarter on production and costs. In July, we blasted the first production stope at Presqu'ile, establishing 3 active mining horizons and achieved the breakthrough of our new ramp from surface. There's another number from the quarter worth highlighting, and that number is 8. For the first time in Wesdome's history, both Eagle River and Kiena are underpinned by reserve-based mine plans extending approximately 8 years. Last week, we filed the independent technical report supporting those plans, culminating nearly 3 years of work to build longer life, more predictable and more resilient operations. And that changes the conversation. We now have greater time, financial capability and operational flexibility. We can now move beyond asking the question about extending our mine lives and increasingly ask what can these 2 mining districts ultimately become. Importantly, the ATF plans are not the limits of either asset. Opportunities dependent on further optimization, exploration, resource conversion and technical work are not actually even included. The technical report established foundation. Our opportunity is now to build beyond that. At Kiena, our immediate priority remains operational execution, reliable production across multiple mining fronts and continued productivity improvement. We see a pathway over time to increase annual production. That opportunity comes from 2 reinforcing drivers: improving mine productivity and exploration success that increases ounce per vertical meter and create additional high-quality mining fronts. The recent Norbenite discovery is just one example. Together with additional mining fronts, the better equipment utilization and higher productivity, this creates the potential to grow production while leveraging the existing infrastructure that's already in place. That upside is not included in the current reserve plan and requires further upgrading execution, drilling and technical evaluation. Beyond the existing mine, Kiena East, which includes Zone 134, Dubuisson and Shawkey are pointing to a broad opportunity that we're systematically evaluating. These are early stage and require considerably more work, but they are changing how we think about Kiena, not simply as a mine, but as an infrastructure platform within a much larger mineralized district. At Eagle River, the reserve plan provides a larger, more resilient operating base and sees us filling the mill as early as next year. It also preserves important flexibility. If we continue replacing high-grade reserves at the pace that we've been achieving, we retain the ability to resequence this plan and potentially defer global model material for years. Beyond the underground mine, Mishi-Magnacon and other bulk deposits provide the opportunity to evaluate an integrated open pit and underground development, leveraging existing Eagle River infrastructure. We expect to advance conceptual work over the next 12 to 18 months to assess mining and processing scenarios and guide future investment. Increasingly, we see Eagle River as a high-grade underground mine at the center of a far broader regional mining and infrastructure opportunity. Finally, the technical reports identify conceptual exploration targets of approximately 2.4 million to 6.3 million ounces across Eagle River and Kiena. These are conceptual targets. They're not resources or reserves, but they illustrate the scale of the opportunity beyond our current plans. Importantly, much of the infrastructure and operating platform required to systematically test these opportunities is already in place. 8 years is an important milestone, but it's not the destination. It's a platform from which we can build the next generation of Wesdome. Since 2023, we have strengthened our operations, extended our reserve life, built our balance sheet and significantly increased the capabilities of the organization. Collectively, that has changed what is possible for this company, Wesdome. Our ambition is to progressively build 2 premier Canadian mining districts capable of supporting multiple mining centers around established infrastructure while generating significant long-term value. We increasingly see our opportunity is district scale and not mine scale. The model is straightforward. Exploration creates more and better mining opportunities. Operational improvement allows us to extract more value from them and existing infrastructure allows us to translate both into growth efficiently. And our competitive advantage extends beyond geology. The technical capability, the leadership, the capital discipline, the culture and the community relationships we have built are increasingly important to our ability to capture that opportunity. We are not pursuing production or scale for their own sake. We are focused on growing intrinsic value per share. Scale should be the outcome of creating value, not the objective. Our longer reserve lives, strong balance sheet and cash generation give us the ability to be prudent in investing returns justified, returning capital where appropriate and remaining selective on external opportunities. Three years ago, our priority was to strengthen the foundations of Wesdome. Today, those foundations are largely in place. We believe the opportunity in front of Wesdome is considerably larger than the company you see today. Our responsibility now is to convert that opportunity into value deliberately, systematically and per share. And with that, I'll hand over to Phil to walk you through the financials.

Thank you, Anthea. Good morning, everyone. Turning to Slide 8. Q2 2026 was a strong quarter. Revenue came in at $267 million, leading to net income of $94 million or $0.64 per share. Adjusted for a $2.3 million impact of nonrecurring payments, adjusted earnings per share was $0.65 per share. EBITDA and net cash flow from operating activities were $170 million and $88 million, respectively. Free cash flow in the quarter was $42 million or $0.28 per share compared to $53 million or $0.35 per share in the second quarter of last year. The year-over-year decrease reflects several items, most notably the timing of a $21 million prepaid tax installment in Q2 of 2026. We expect quarterly free cash flow to significantly increase in the second half of the year. Turning to Slide 9. On a consolidated basis, AISC per ounce of gold sold was USD 1,763 in the quarter. At the site level, Eagle River came in at just over USD 2,000 per ounce sold, reflecting a 17% increase in ounces sold and certain onetime costs, which taken together make it difficult to see the positive underlying cost trend we are seeing at the operation. We expect AISC per ounce sold at Eagle River to be lower in the second half of the year. At Kiena, AISC was USD 1,497 per ounce sold, driven by higher contractor costs supporting the development of Presqu'ile. Year-over-year sustaining capital also decreased due to timing. Corporate G&A of nearly $11 million included costs primarily relating to unplanned corporate development and the technical reports. We continue to diligently manage our corporate G&A costs. Margin resiliency is a priority for us, and we are taking concrete steps to make improvements across 3 areas. The first area is supply chain. Over the past 6 months, we have strengthened the team and improved structure and processes around inventory and supplier management and key contract improvements. Already, savings of several million dollars have been identified with several more million expected by year-end. Savings are anticipated to flow through progressively over the next 12 months. Supply chain is a structural and meaningful opportunity to optimize costs and improve efficiencies across our operations. The second area we are reviewing is reducing our reliance on contractors. We see a meaningful economic opportunity to transition certain roles from external contractors to our permanent workforce. Our HR team is actively developing plans and programs to support this transition at both sites. Thirdly, we are reviewing maintenance practices across business with a focus on further reducing unplanned downtime and lowering overall costs and capital costs. These 3 initiatives represent a coordinated effort to drive improved margin resiliency over time. Our ambition is to be a sector-leading low-cost producer. Turning to guidance on Slide 10. While we are reaffirming full year production and cost guidance, we have made a few updates to the guidance table to align with our internal forecast. At Eagle River, we continue to expect full year production of 105,000 to 115,000 ounces at an average grade of 11.5 to 12.5 grams per tonne compared to initial guidance of 13 to 14 grams per tonne. In the second half, the continued integration of global model ore into the mine plan is anticipated to reflect higher mill throughput and slightly improved grades relative to the first half of the year. We are also reducing our depreciation and depletion guidance to $100 million from $130 million previously. This reduction is a direct result of the meaningful increase in our mineral reserves announced in June. With respect to CapEx, we continue to invest in high-return organic growth initiatives to improve operational flexibility, increase mine life, execute on our fill-the-mill strategy and pursue growth. Based on our most recent forecast, full year consolidated capital could track up to 10% higher than the initial guidance of $205 million, primarily driven by the timing of growth expenditures at Kiena. Management continues to diligently assess the timing of these costs. Turning to Slide 11. We closed the second quarter with a cash balance of $391 million. Importantly, that is after returning more than $80 million to shareholders through our normal course issuer bid during the second quarter. Including our revolving credit facility, total liquidity was roughly $746 million as of June 30, and we expect that figure to remain strong as we move through the year. Our balance sheet remains debt-free and flexible, and we are deploying capital with discipline. Our priority is to return meaningful capital to shareholders while investing in our organic growth strategy. I'm pleased to highlight 2 recent important milestones in our capital return program. First, at the end of June, we initiated a quarterly dividend. The first payment is due at the end of September. On an annualized basis, the dividend amounts to approximately $0.12 per share. While modest to start, it reflects our confidence in the durability of our free cash flow profile and our commitment to a disciplined shareholder-first approach to capital allocation. Second, alongside the dividend announcement, we expanded our share buyback program to up to 6% of shares outstanding. Since last November, we've repurchased nearly 8 million shares at roughly $24 per share or approximately $190 million in total, a meaningful demonstration of our conviction in the intrinsic value of this business. Commensurate with the implementation of the NCIB last year, our Board approved the repurchase of up to 10% of our public float. As we progress through the program, our capital allocation thinking continues to evolve alongside our business. Buybacks are one tool in the toolkit, and we will continue to use that opportunistically. We believe our financial flexibility is a strength and shareholders can expect us to deploy capital where we see the highest return, whether that's in the ground, on the balance sheet or returning value directly to you. Metrics such as return on capital remain paramount in our decision-making. According to the latest calculations, we continue to rank third across the industry on this measure, reinforcing our disciplined approach to deploying capital. With that, I'll turn it over to Tyler to walk you through our operational performance.

Thank you, Phil, and good morning, everyone. I'll begin where we always begin, safety. In the second quarter, we recorded 0 lost time incidents. Our TRIFR was 1.67, slightly above the prior year quarter, serving as a reminder, there's always more work to do. What is particularly encouraging is the significant improvement this quarter in our high potential incident frequency rate, which declined 69% year-over-year to 0.67. This reflects the strong commitment to safety across our organization, focusing on critical risks and the continuous improvements being made every day. Last month, we completed the implementation of our company-wide 10-point critical hazards program. Building on that progress, we are now developing a comprehensive mobile equipment safety standard, focusing on addressing our highest risk hazards. At Wesdome, safety is a nonnegotiable, and our actions reflect that commitment every day. Moving to Eagle River on Slide 13. Before diving into the details, I want to step back and frame 2026 in the proper perspective. Both Eagle River and Kiena are in the midst of a deliberate value-creating transition to new long-term mine plans. And while there is meaningful work still ahead, we are committed to shaping these assets into the low-cost, predictable, scalable producers we know they can be. Eagle River has fundamentally -- has been fundamentally changing for several years, and that pace has picked up in H1 with the integration of the global model ore as part of our updated mine plan. This reflected a strategic shift towards a value-focused operation, one that prioritizes improved mill and mine utilization over the long term, not just quarter-to-quarter ounce maximization, the change has started, but it is far from done. Eagle River performed in line with our mine plan. During the second quarter, we processed over 72,000 tonnes through the mill, producing 22,000 ounces at an average grade of 9.7 grams per tonne. As mine output increases, the mill is responding well by increasing throughput. Quarterly grade variation is a natural feature of our ore bodies and sequencing. Grades on a given level can range from 6 all the way up to 30 grams per tonne. In July, grades averaged nearly 12.5 grams per tonne, reinforcing our confidence in a stronger second half. The operational setup also supports our confidence. The next 300 zone stope is fully drilled off with approximately 25,000 tonnes ready to mine in the coming months at grades reaching up to 25 grams per tonne. Analysts who joined our mine site tour in mid-July saw this impressive stope and our preparations firsthand. Based on our forecast, we remain confident in delivering Eagle River's full year production guidance. The fill-the-mill story at Eagle River is gaining real traction, and the numbers back it up. Throughput averaged nearly 800 tonnes per day in Q2, a nearly 50% improvement year-over-year, and we are targeting a further 10% increase in the second half. This puts us firmly on track to fill the mill in 2027, as outlined in our recently filed technical reports. At Eagle River, our 8-year reserve mine life plan projects average daily mill throughput of approximately 988 tonnes per day, but we are not satisfied with stopping there. We are actively assessing opportunities to push the mill. As we continue to optimize and embed operational improvements, we see a credible path to ratcheting up tonnes per day beyond the current 80% overall equipment effectiveness. The operational improvements behind this throughput growth are broad-based and measurable. As you can see on Slide 14, since 2025, milling rates are up 14%, unplanned downtime down 60%. Mill operating time and energy efficiency are both up 12%. These are not one-off wins. They are a result of a fundamental shift from reactive to proactive system-based maintenance embedded across scheduling, mining practices and site management. The mine is running more reliably and more efficiently than ever, and we expect that trajectory to continue. Moving now to costs. Eagle River's cost per tonne in Q2 was $631, essentially unchanged from $626 in Q2 of 2025, a result we are pleased with given the inflationary pressures broadly felt across the industry. And while tonnage costs are essentially flat year-over-year, it is worth noting that the quarter included identifiable one-off items that added approximately $45 a tonne. Additionally, it is important to highlight that we are starting to see the fixed cost benefits of nearly 50% year-over-year increase in daily mill throughput and its positive impact on the fixed cost leverage that underpins our fill-the-mill strategy. We expect this to be more visible in our unit costs through the balance of the year as onetime items roll off. As grades normalize in the second half and production strengthens, we expect Eagle River's all-in sustaining costs to return in line with full year guidance. In the first half of the year, Eagle River invested $27 million against the full year budget of $105 million. Capital deployment will ramp up meaningfully in the second half with spending focused on critical infrastructure investments that are required for the long-term future of the operation. Turning now to Kiena on Slide 16. The updated mine plan at Kiena is focused on improved operational flexibility and the implementation of the operating model for stability first and then growth. Kiena delivered an exceptional second quarter with production rising 28% year-over-year to more than 22,000 ounces, driven by a 13% increase in tonnes processed and a strong average grade of just over 11 grams per tonne. This performance reflects an expanding mine flexibility and executing with discipline. The 129 and 136 levels within Kiena Deep remained our primary sources of mill feed, contributing roughly 540 tonnes per day. Importantly, we have added Presqu'ile as an active mining horizon at Kiena. The first production stope was blasted in July, and we expect commercial production in Q4. This brings us to 3 active mining horizons with the fourth at Level 142 expected to come online in 2027. Expanding optionality at Kiena is a meaningful derisking of the asset and a foundation for greater growth, predictability, planning stability going forward. With multiple active mining horizons and a growing platform, we have built the infrastructure for sustained scalable growth at Kiena. While we expect operational momentum to continue, this is still an emerging program. The benefits are still coming through, and we are not finished building. The implementation of the operating model is driving meaningful improvement. Paired with the major projects to enhance operational flexibility, including additional mining horizons and site infrastructure upgrades to move people and equipment more efficiently, this model is foundational to Kiena's long-term growth plan. While it is early days, productivity metrics are trending positively. Mobile equipment availability is up 10% to 15% year-to-date. Daily average tonnes for the mill have risen by about 30% since last September and milling rates have increased by 10% to 15% from 2025. Stope cycle operating delays have declined by approximately 30% year-over-year. Continuing our focus on these improvements and the additional mine flexibility gives us confidence in the H2 ramp-up to deliver on our guidance. Kiena's Q2 cost per tonne were $526, flat compared to the prior year quarter. This reflects a deliberate cost of building operational flexibility, including bringing additional mining horizons online, investing in maintenance, our current reliance on contractors. We view these as transitional and not structural. As Kiena Deep and Presqu'ile ramp up to full utilization following commercial production in Q4, fixed cost leverage will become increasingly evident in the per tonne cost profile. Total capital expenditures in the first half of 2026 were $54 million, including approximately $36 million in growth capital. Elevated spending reflects contractor costs tied to the completion of the new ramp construction as well as accelerated development at Presqu'ile and Kiena Deep. Both investments directly advance our long-term production capacity. The breakthrough of the new ramp in Q2 represented a significant operational milestone. It established direct access from surface to the bottom of Kiena Mine. This enhances the flexibility for material and equipment movement and critically enables our ventilation expansion project, the project, which will double ventilation is a key enabler for higher mining rates and underpins our 3-year production outlook. For the balance of the year, growth capital will continue to further push for scale development and the ventilation fan upgrades. Sustaining capital will further extend the Kiena Deep ramp to the 142 level with additional investment in exploration, ventilation on demand and power factor improvements to enhance efficiency and reduce our operating costs over time. Collectively, these investments position Wesdome to deliver on its production growth targets. While we have a way to go yet, stability is gradually taking hold at Kiena. Equipment availability has improved following several quarters of disciplined maintenance work. Since implementing our new operating model in H1, stoping delays relative to plan have declined by 30%. That is a clear and measurable indication that changes we are making are delivering results. The implementation of the operating model is now advancing, and we are focused on embedding processes, improving schedule adherence and reducing variability across the operation. The achievement of these milestones will position Kiena as a more stable and operationally flexible than any point since its commercial production began and provide the foundation that can deliver on Kiena's long-term growth profile. With that, I'll turn it over to Jono to review exploration.

Thank you, Tyler, and good morning, everyone. Exploration at Wesdome continues to be the engine of long-term organic value creation for shareholders. With 1.4 million ounces of mineral reserves, the largest in company history and 8-year reserve-based mine plans at both Eagle River and Kiena, we are building from a position of strength. Our focus is on extending that runway, growing inventory and covering the next phase of value. Increasingly, technology is accelerating our ability to do that. Better tools, richer data sets and artificial intelligence, which I will address in a moment, are allowing us to allocate exploration capital with greater precision and confidence than ever before. Our 2026 exploration program totaled 270,000 meters, one of the most ambitious programs we have undertaken. Year-to-date, we have drilled approximately 110,000 meters across the portfolio, representing more than 40% of the plan. Drilling is second half weighted with a particularly aggressive third quarter already underway. Underpinning all of this is capital discipline. Our exploration management system guides capital deployment to meet short, medium and long-term objectives. The EMS enables upscaling of drill programs efficiently and cost effectively whilst maintaining quality in financial and technological returns. Every exploration target is assessed on size, geologic confidence and cost metrics with the objective of derisking target ounces by efficiently designed drill programs. The completion of exploration drifts on Levels 109 and 134 at Kiena is a good example of this, where underground development was executed with the aim of converting previously expensive drill target areas into areas that could be tested with efficient, effective drill programs. That is how we run an aggressive exploration program while protecting returns on every dollar of capital invested. At the same time, operating some of the best gold endowed districts globally means we maintain a healthy risk appetite. Testing new ideas and those conventional targets is inherent to systematically exploring these districts, and it is how exploration ideas ultimately convert into gold bars. Let me now walk you through the key highlights asset by asset. Turning to Slide 19. At Eagle River, our exploration program is built around 4 interconnected objectives: replacing annual depletion at grade to sustain the reserve base, scaling our asset through reserve and resource growth, advancing new discoveries within the Eagle River Mine complex as well as in the broader highly prospective land package and unlocking bulk scale lower grade potential as part of uncovering the district's potential. At Eagle River, our 2026 program totals 145,000 meters with approximately 82,000 meters completed through the end of June, split roughly equally between growth drilling and delineation conversion. On the bulk scale opportunity, the Mishi-Magnacon area continues to demonstrate meaningful brownfield potential. Surface drilling targeting both open pit and underground mineralization at Mishi continued in Q2 and will continue throughout the second half of the year. We are also advancing other prospective bulk scale targets along the Mishibishu Deformation Zone, namely Magnacon East and the Feather River area and in other areas, including Dorset West and the Cameron Lake iron formation. These are areas that broaden the long-term optionality of the Eagle River land package. Turning to Slide 20. In conjunction with the updated technical reports, we published initial exploration targets at Eagle River. We identified over 160 opportunities that were distilled into 11 priority targets, representing a combined exploration potential of 1.5 million to 3.4 million ounces. This is not a speculative target list. It is grounded in a structured data-driven methodology that clearly defined near, medium and long-term catalysts. Each opportunity was ranked and prioritized to ensure capital is deployed where it has the highest probability of converting into shareholder value. To sharpen our targeting, we engaged specialized consultants to apply AI-based modeling to Eagle River's extensive data set. At its core, this tool works by aggregating multiple level datasets, including drilling, geophysical, geochemical and geologic information to generate prospective areas for hosting gold mineralization. The workflow does not run in a vacuum. We've built a feedback loop with our teams where geologists review the AI-generated opportunities against their own field knowledge and interpretation. The result of that iteration is geoanalytical targeting. It's not a black box producing a target list, but an interactive process led by our exceptional team that grows with every round of review, converting data into forward-looking opportunities that we can act on. Slide 21 shows the output of that AI initiative overlaying on the same plan view as the previous slide. The AI models generated prospectivity rankings across the entire property with area scoring above the 90th percentile flagged as high priority. Five new high-priority prospectivity areas have already emerged from this work, including Feather River South hosting 2 areas with minimal surface work; Mishi West at the convergence of the Iron Lake deformation zone with the Abbey Lake structure; North of Mishi in a strain shadow of intrusion and possible second thrust zone similar to the Mishibishu deformation zone. Rook Lake West and a strain shadow of intrusion where the Dorset Deformation Zone may be trending. The Southeast portion of the Cameron Lake iron formation is a complex area with favorable host lithologies and structure. The takeaway is straightforward. AI is accelerating our ability to identify potential high-value targets earlier with greater capital efficiency and increased confidence than a traditional approach would allow. These efficiency maximizing tools, they optimize time for our teams and their programs and will play an increasingly important role in how we advance our growth pipeline. Incorporating AI into our workflow leverages time and the skills of our excellent exploration teams to increase the potential of delivering more ounces per meter drilled. Moving to Slide 22. Let's look at the progression of our high-grade underground program at Eagle River. Drilling in the first 6 months of the year is focused on the 6 Central, 800 and 700 zones. 6 Central is an increasingly important focus area at Eagle River. Growth drilling continues to confirm down plunge continuity at grades and widths, consistent with prior reporting. At 800 Zone, we targeted a gap in drill coverage coinciding with up plunge extension intersecting shear zones with quartz veining. Assays are pending. At 700 Zone, highlight intercepts include 28.9 grams over 2 meters, confirming mineralization continuity in the shallower parts of the mine. Taken together, these results reinforce that Eagle River continues to deliver at depth and along strike. Grade and continuity are holding. The pipeline of targets is active, and we are systematically building the confidence needed to convert exploration success into future reserves. Eagle River is a mine that continues to deliver to the upside. Moving to Kiena on Slide 23. At Kiena, our primary exploration objectives mirror Eagle River, replace at grade, convert and expand, deliver new discoveries and advance lower-grade bulk tonnage opportunities. and we are making tangible progress on all fronts. In the first 6 months of the year, we've drilled approximately 29,000 meters with approximately 55% focused on growth and 45% on delineation and conversion. On the bulk tonnage opportunity, a land-based rig has commenced drilling at Shawkey South. Shawkey South is part of a group of targets, including Zone 134 and Dubuisson, collectively known as Kiena East. The drilling will evaluate a bulk tonnage style quartz-tourmaline vein associated mineralization at depth. These Kiena East targets exhibit mineralization characteristics analogous to other significant Abitibi operations and represent a meaningful source of incremental long-term value. While we have a lot of great results so far this year, the standout story at Kiena is the Norbenite footwall discovery announced in June and shown on Slide 24. Drilling from the new Level 134 exploration drift has confirmed the mineralized zone beyond the Norbenite fault in areas previously interpreted as barren footwall. The results were exceptional. Hole 52W1 returned 6.9 grams over 42.1 meters, including 8.3 over 29.5 meters. Hosted in basalt, a potentially more favorable host rock than the schist mineralization typical of Kiena Deep. This intercept sits approximately 40 meters beyond the Norbenite Fault and correlates with a 2022 hole, which returned 9.9 grams per tonne over 83 meters located roughly 150 meters vertically below. Together, these results define a new mineralized corridor spanning at least 150 meters vertically. It's open in all directions with untested ground extending above it to the footwall zones. The scale of this corridor and its openness and grade is what makes this discovery so compelling. Two follow-up holes were drilled in Q2 that we're looking to infill the 150-meter zone between holes 52W1 and 52W10. Whilst assay results are pending, the new holes intersected geology with similar thickness, veining and localized observations of visible gold as the previously reported holes, growing confidence in the continuity of the mineralization. We believe the Norbenite footwall has the potential to be transformational for Kiena's long-term resource profile. Drilling continues to delineate the geometry and extent of this corridor, and it is a program we'll be tracking closely for the remainder of 2026. Beyond the Norbenite footwall, our teams have been active across multiple fronts, as you can see on Slide 25. On the 109 level drift, drilling of the VC zone has intersected basalt hosted mineralization within 100 meters of the drill bay. The mineralization is interpreted as a potential new zone separate from the VC zone itself. Follow-up holes are underway to confirm. Notably, the VC zone shows a mineralization style analogous to Kiena Deep and remains open at depth. VC is close to infrastructure. It projects approximately 350 meters from the 107 level at Kiena Deeps even closer from the 109 exploration drift from where we are drilling, and it has the potential to grow our reserve ounces per vertical meter at the shallower levels. On the 134 level, 2 drills are confirming continuity of the high-grade Kiena Deeps A and the Kiena Deep footwall zones and will remain in place for the balance of the year. From the 33 level, drilling targeting the Northwest continuation of the Shawkey Main towards the Wish deposit has intersected quartz vein at target depths with assays pending. Finally, similar to the AI initiative at Eagle River, we are planning to deploy AI-based targeting at Kiena beginning in Q4. This will allow us to incorporate data from this year's deep drilling programs into the workflow before modeling begins. The results at Eagle River have given us confidence that this approach will generate material value at Kiena as well. Looking into the second half of the year, Q3 will be our most active drilling quarter. Summer barge and land-based drilling are underway at Kiena alongside our deep continuous drilling. And at Eagle River, helicopter supported drill programs are active. Every meter we drill this summer is building the density and confidence required ahead of our next mineral resource and reserve update. Several assay results are expected back through the third quarter, and we plan to issue press release updates in late Q3 and into Q4. Every meter drilled this year is drilled with the objective of conversion into mineable ounces, mine life extension and the optionality that will define Wesdome's next decade. We remain focused on unlocking value across the portfolio, and we'll continue to share results as they become available. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from the line of Harrison Reynolds with RBC Capital Markets.

Congratulations on a good first half of the year and appreciate the detail provided so far. Just on the buyback, you've been buying back stock at a good pace, $8 million of $9 million authorization, big buyback in July. Can you talk a bit more about what you're seeing in terms of value in the buyback? What drove that large buyback in July and how we should think about the cadence going forward?

I would say it's really reactive to the market coinciding with the drop in the gold price. The way we set up our buyback is really based on our -- basically our PNAV, our trailing PNAV. So I think you would see the volume increase is really tied to the dips in the gold price. I think that's pretty well answers the question, I think.

Yes. No, understood. And then shifting to operations. It was great to see both sites earlier this summer. And at Eagle River, good to hear about the ongoing conceptual study on Mishi and regional potential at Eagle River. Obviously, it's early days, but could you outline some of the potential trade-offs you're looking at with Mishi and how incremental you think that could be for Eagle River's output?

Harrison, I'll comment to that, and I'll hand over to Tyler as well. But I think -- I mean, right now, we're still in the early stages of that. I think we're getting quite excited about what we're seeing. We're looking at it in a phased approach as well as a larger -- from a larger perspective. So phase-wise, first of all, how do we incrementally grow the operation with what we have quickly so we can get it quickly into the mill. But secondly, what is the scale of the region itself? The work we're doing in conceptually understanding the potential targets across all of these open pits is going to define the scale of the potential opportunity in front of us, which we'll then use to actually work on the processing and mining options that are available to Wesdome to do that. My feeling is that this is going to be quite a substantial growth opportunity for Wesdome. It's just a function of time. We are currently working on the technical review initiatives that are needed to actually unlock this, which includes the metallurgical test work, the sampling as well as some of the -- even the opportunity to do all sorting in certain ways as well to maximize the value of the region. So there's many, many things that are influencing this right now. The only thing I do know is it's going to be substantially larger than what we thought it would be. We just need to do the work. Tyler, do you want to add?

I think you've captured it well. I think the exciting part about this is the optionality that's sitting in front of us right now. You've got -- we did see the portal as we drove by into Magnacon as some near-term potential there, but also what does that whole district look like. And every time we drill a hole, it seems to be getting bigger and more potential there. So it's great having the optionality gives us tons of flexibility in the short, but also in the long term as well.

I think, Harrison, what's happened in the last while is with us having put out these technical reports and having the opportunity to review these mines from what we thought they were before as discrete systems. I think the fact that we understand now is more big complexes and even Eagle River mine itself, looking at it for more of a what is this perspective rather than a discrete mining opportunity. I think this is a question this entire team needs to ask itself is what is the scale even of what we know, let alone the scale of what the region offers. And I think that's going to be the learning work that we're going to do over the next short while. This is really reflecting on what is Eagle River actually from its own perspective, what is the region actually from that perspective. And then that will articulate into the work we'll do from a conceptual study perspective. But it's still early, but it's quite exciting.

Next question comes from the line of Don DeMarco with National Bank Financial.

Maybe just to dig into the Eagle grade guidance adjustment a little bit. I saw the reference that you're bringing more of the global analysis into the model. But really, what prompted that reduction? Was there a change in sequencing, maybe more dilution, difference in reconciliation since the guidance was laid out? Maybe if you could just add some incremental color on this.

Tyler, can you take that?

Sure. Don, I think as we are starting to get the global model information and we updated the models and started running through what is optimizing the sequence that we could from the stopes that we had in there. Some of this is, as you saw when you were on the tour on a level, you got anywhere from 6 grams to those 30-gram areas. And so we extended some of those drifts out, picking up some of the lower grade, high-margin material because we're already there. So this has been an ongoing process, I'd say, for the last 3 months of looking at the sequence. I think what we have in place now for the second half of the year, the sequence is pretty much set, and we'll just continue to try to drive productivity and keep pushing. You saw the tonnes going through increased in the second quarter on pushing even harder for the third and fourth quarter, bringing more of this material forward. So it's the opportunistic to take those value-adding tonnes through as we drive the productivity.

Okay. And the Kiena costs are pretty strong in Q2. You're in front of a back-end loaded year. So do you expect the cost to trend lower into Q2, commensurate with the production increase? Or will the introduction of the Presqu'ile ore sort of moderate those costs a little bit?