Hello everyone, and welcome to Endomines' half-year results webcast. My name is Anni Turpeinen. I am the Chief Communications Officer here at Endomines, and with me here in the studio, we have our CEO, Kari Vyhtinen, and our CFO, Minna Karttunen.
Afternoon.
Our agenda today is that first Kari will share the highlights of the second quarter and the first half of the year. Then he will continue with an exploration update, and after that, Minna will give you a deeper look into the financials. Then Kari will come back to the stage with strategy and our future plans. As always, we are having questions and answer session at the end of the presentation. So feel free to send your questions via chat during the presentation, and please remember to type your questions in English. Before we start, I want to remind you that this event is recorded and the recording will be available on our website later today. Now it is time to start. Let us enjoy the great results. Go ahead, Kari.
Thank you, Anni. Extremely pleased to be here today. We had the best six months in the company history and very, very strong second quarter. If you look at the financial highlights of Q2 and H1, during Q2 we had a very high growth in the revenue, so 46% growth to EUR 6.2 million. During the six months, the growth was even greater, so the revenue grew by 61% to EUR 34.7 million. So very significant growth, very happy about it. This was also profitable growth, so the group EBITDA increased 38% during the second quarter to EUR 5.5 million. If you look at the six months, then the EBITDA grew by 86%, so very significant growth again to EUR 14.3 million. Then the net result grew by almost 300% during the second quarter to EUR 3.3 million.
During the six months, the net result grew by even 356% to EUR 10.4 million, which is close to 30% of the revenue, and it is over 40% more than during the whole year 2025. So very, very happy about the financial result, and I want to thank the whole Endomines team for the great work done. It is really fantastic to see the progress. During the H1, we also had a strong operational cash flow, EUR 11.2 million. We are a growth company, so the cash flow that we make, we invest to the future because our goals are very ambitious and the main goals lie a few years ahead. So we are investing the cash that we make to the future.
Also on top of the excellent financial result, there were many strategic milestones during the second quarter. We also had a lot of important milestones during the first quarter.
For example, we sold the three assets in Idaho and simplified the company structure. During the second quarter, there were industry-leading, thrilling results from the UKKO deposit, which is our main exploration target, and we will discuss about it a little bit later. We also received EUR 1.5 million funding from European Union and the state to develop our tungsten project within the Southern Gold Line. We also refinanced our financing. We had a EUR 12 million financing package before, and now we refinanced this package to EUR 21 million with much better terms. So very happy about it. Our balance sheet is extremely strong and Minna Karttunen will share the details a little bit later in the presentation. We also got the first tungsten and molybdenum results from the Southern Gold Line.
A lot of the activities we will discuss today, they focus on the Southern Gold Line, which is the place that we are permitting to take us to the next level in the production volume. These results that we got regarding tungsten and molybdenum, they clearly demonstrate the potential we have in the Southern Gold Line to actually produce also critical minerals in addition to gold. So the golden journey is accelerating. If you go back to the basics, what is Endomines? Endomines is a gold mining and exploration company. Our operations, they focus on the Karelian Gold Line. It's in the Eastern Finland. We are very focused to Finland, very focused to Karelian Gold Line, and it's a greenstone belt. Greenstone belts are very prospective for gold production and gold exploration.
Like many of the largest gold production areas in the world, they are greenstone belts similar to ours. It's a 40 km long belt. Our production facilities, they are located in Pampalo. Pampalo is also our ticker in Nasdaq, but that's the place where we have the production facilities, so we produce a gold concentrate. The feed to the mill comes from underground mine, open pit mine, and then we also have a small underground mine at Hosko. So those three different feed materials come to the processing plant at Pampalo, and then we produce the concentrate. We have two main exploration areas that we focus on, the Southern Gold Line and the Northern Gold Line.
The Southern Gold Line is more advanced, so we are permitting the Southern Gold Line to be in production around 2030. We started the permitting in January 2024, and that has gone according to our plan.
The plan is that that will take our gold production to 70,000 oz-100,000 oz level. If we think about last year's 16,630 oz of production, so it's approximately 5x more, so big step change and then at the same time we will start to produce tungsten and molybdenum. In our strategy, the growth is of course connected to production. So we have the existing facilities in Pampalo. There is spare capacity at the mill, and we have been increasing the production each year. On the right side, you can actually see that from 2022 - 2025, we almost doubled our production. If you think about this year, H1, our production increased by 9.7% compared to last year and over 24% compared to previous six months, so July-December period last year.
Last year, during the autumn, we acquired the business activities of our underground subcontractor, and that affected the production during the second half, but now we actually see the benefits. Now we see the benefits, that it was the right decision to acquire the activities so that we can invest and grow our production also in the future. Very positive about the production. The comparison period now against H2 will be significantly lower, so we expect higher growth. The gold market has been very interesting lately. Historically, when Fed is lowering the interest rates then the gold price increases. There has been now the war in Iran, and that has affected gold prices due to the fact that these interest rate expectations, they have really changed.
There was the expectations that the interest rate will be lowered, but now there has been this will be actually increased during 2026. Despite this short-term volatility, our view is positive, and this is supported by many consensus forecasts. If you look at the consensus forecast from different banks or financial institutes, the average consensus is that late in 2026 and during 2027, the gold price will be at higher level than today. We also view that that's a realistic forecast and that's something that we have based our forecast on. We also expect that there will be an increase in the gold price. Just lately, in July after the reporting period, the gold price went to EUR 4,000 but since then it has recovered to almost EUR 4,400 where it is today. Almost by 10% in a very short time.
During the Q2, the gold price was $4,516 per ounce. On a good level still, but much lower than what it was on the Q1. The key fundamentals, they haven't changed, and that's the reason why the forecasts predict higher gold price levels, and the key fundamentals are that there is a lot of global uncertainty, geopolitical uncertainty. It's very difficult to predict the future. The central banks, they are buying a lot of gold. China is buying a lot of gold. Poland is buying a lot of gold. There is a lot of buying activities by the central banks. Also a lot of the nations, they are decreasing the dependency on the U.S. dollar because the U.S. dollar is the main reserve currency, and countries are reducing the dependency, and gold is an excellent tool for that.
There is also elevated levels of debt, printing money, and so on, which creates a perfect environment for a safe haven like gold. The view on the future gold prices is positive. Sustainability, very important. That's the key. That's the backbone of our business. We want to do things in the right way. We want to take care of the environment. We want to take care of the people, also the people who live close by, and then the governance. Now I'm very happy to inform we have had always ambitious plans, but now it's going to action. We truly see that there is a very significant increase in the actions that we are doing. If you think about, for example, fossil-free gold, it's one of our strategic targets to achieve fossil-free gold production by 2035.
Our CO2 emissions, they decreased to 0.22 tons of CO2 per ounce of gold. The reduction was over 70%. That's a very significant reduction, and it's well below global averages in gold production. We also completed the climate transition plan Water. We are in Finland. People love the water. They have summer cottages near the lakes and so on. We also personally feel that we really want to protect the waters. They are something that is very unique in Finland, very precious. Our target is that the discharge waters do not weaken the surrounding waterways or their ecosystems. We used 100% recycled water, so we didn't take any water from lakes or rivers or something like that. Everything is recycled. We are currently running two water treatment plants. We have one in Pampalo. We also have one in Hosko. Very excited about it.
The first results have been really promising, and this is something that we will also take into our expansion plans. This is something that we will publish information later when we have more results. But I'm personally very excited about it. Then biodiversity. Our idea is that we consider nature values throughout the mine life cycle. Not just what is happening now, we think about the whole mine life cycle, even after the mine is closed. We completed the nature values roadmap. That's a very important item, and very happy that also the biodiversity is moving forward. Personnel. One key item why we have made a successful turnaround is the personnel. We have been able to recruit really the best team possible, and we want to offer a place that is safe and a pleasant place to work.
We had progress in both of those areas. Our lost time accident rate decreased to 9.7. We had one lost time accident, which is too many, but anyway, we are moving to the right direction. The PeoplePower index was AA+ and we got a recognition, Finland's Most Inspiring Workplaces. Our employee satisfaction is on a high level and therefore we got also this recognition. Then local community. We want to strengthen the local trust and vitality. During the second quarter, we purchased EUR 5.5 million from local suppliers. That's always something. We work with local businesses, ensure that everybody has work in the area. We keep a lot of events for stakeholders. Like for example, tomorrow we have an open house at the mine site. Buses will come from Ilomantsi and people can come to the mine site and see how we operate.
We also launched Endomines News. It's something that is very unique. With the local newspaper, we deliver Endomines News twice a year so that people know what we are doing because when the information is shared, then the people are happy also around the mine site. Then a good governance basis for the company being a listed company, so responsible and transparent operations. We have updated policies and operating principles supporting responsibility, and we have an active whistleblowing process where anybody can report something if they want to report that something is not done in the right way. Very happy about the sustainability side, that it's moving to actions from the ambitious plan that we had previously. Exploration. The company growth is based on exploration. The idea is that we have a production which is growing.
We invest the money in exploration so that we have a higher amount of gold resource, so the amount of gold that we know is in the ground and can be later mined. That will enable us to increase the production levels and grow the company significantly. We started the exploration activities in 2023, and it has been hugely successful. We have more than tripled our gold resource. It was in 2022 below 200,000 oz. We are currently almost at 620,000 oz of gold. It has been very successful. It is worth noting that during the last three years, we have drilled 52,500 m in total, and this year we are doing a record campaign. We are the biggest exploration company in Finland, and we are drilling 50,000 m i n one year.
That is something that is really a huge amount. If we think about it, that we had this success during the last three years in building the gold resource, and now we are doing the amount of work in one year that we did in three years. We are well on track. We have drilled approximately half of the planned 50,000 during H1. The results, of course, because they go to laboratories, they come a little bit delayed. I think the results that we have published is probably somewhere like one-third. There will be a busy autumn and busy winter ahead. The next resource update will be published during Q1 2027. There is a slight chance that the UKKO resource would be published late this year, but most probably next year. Key exploration targets.
There are two targets, like the Southern Gold Line and Northern Gold Line. During Q1, we did some drilling in Kartitsa. During Q2, everything was focused in the Southern Gold Line as that is coming to production. We need to increase the resource. We need more information to ensure that our plans are accurate. There, the UKKO is the biggest item. It was discovered last year. I will come back to that, but that is something that, for example, currently we have two drill rigs at UKKO, and we have one near Kuittila looking at the tungsten and molybdenum areas. Big focus on the UKKO. If you think about the UKKO deposit, it is really almost unbelievable that we only discovered this in April last year, considering where we are now.
In a short time, we have advanced the exploration activities in the area very, very much. UKKO is located 15 km south from Pampalo. It is a very big area. We have done electromagnetic measurements, and those show, like in this map you can see these purple areas, and those are anomalies which indicate that there is iron formation. When we did the first drilling, then we noticed that with iron, there is also gold. That is very common in the world. This is the first one in Finland, but it is a very common banded iron formation type of deposit. If you think about big gold deposits in Australia or Canada, for example, it is very common that the deposit type is this kind of banded iron formation, where the gold is associated with the iron.
What we did late last year, we also had a look, because it was discovered in the northern part, so we had a look if there is gold on the other sections. We did some drilling on the other sections, and we identified four more areas where there was gold in these anomalies. Currently, UKKO is approximately 650 m long. Our plan is to connect those two locations where we have drilling results with gold. Now we target that we connect those two areas. That's the plan for the H2 that we drill the areas between the two sections and try to connect these together, which would almost double the size of UKKO. So make it really significant.
If you think about 1 million ounces, for example, 1 million ounces is a deposit which is 1 km long, 300 m deep, 20 m wide, and has a grade of 2 grams per ton. That's what is needed. If you think about this area with the iron anomalies, for example, that's 7 km long and there is two different sections. We have only discovered now gold on this section which is on the west side. On the east side, there hasn't been indications on the gold, but this is a very significant 7 km long section on the west. If you look what is below the surface, if we look at the previous slide, there is these anomalies, and between the anomalies it doesn't show that it would continue.
Currently, our view is that below the surface, it's a sort of wave type of folded structure where it comes to the surface and then it goes to the deeper levels, comes to the surface, goes to the deeper levels, but it continues. That's the current theory. The theories have changed many times during even the last 12 months, but that's the current theory. We believe that these sections are connected, however, they just go between the sections where there is no electromagnetic anomalies. It just dips into deeper levels, and then it comes back to the surface. So you can't see it when you do the surface measurements. You can't see it between when it goes to the deeper levels. There is currently approximately 600-m gap between the section where the UKKO was found and then the next one down south.
Now we are drilling the area between, and that's something that is done to extend the structure or almost double the structure. Then we hope to get those results already in the first resource update, which will be done either late this year or early next year. Most likely early next year. It's a very highly favorable place for gold mineralization. It's extensive, it's continuous, it's shallow, so we are very excited about it. This is something that it hasn't been found before in the Karelian gold line. Then tungsten and molybdenum. Still in the same area, the Southern Gold Line that we are permitting to be in production. There is UKKO, there is also the areas where we have tungsten and molybdenum. The tungsten and molybdenum, they are located near a deposit called Kuittila in the Southern Gold Line.
We published the results, and we are very pleased to see that there is tungsten and molybdenum also on a wider area. We did sorting tests. We were very happy that the sorting test increased the grade by 3.1 x. Our idea is to mine fairly low-grade deposit, then increase it by sorting before we feed it to the factory where we actually make the finished product that is sellable. We received EUR 1.5 million funding from the European Union and the States to take this project forward. We are very happy about it, and that also, I think it gives the signal that this is important for Finland, this is important for the European Union. It's used in the defense industry. 80% is controlled by China. There is a real need to have tungsten production within the European Union.
We signed a non-binding letter of intent with Wolfram Bergbau und Hütten, which is an Austrian company. It's part of the Sandvik group, and that was done so that we can ensure that this end product that we make is sellable, because they can help us with the technical support so that we can achieve a sellable product, and that's one of the key items. If you look at the tungsten price, it has really increased since 2024, and that's of course due to the fact that there is so much emphasis on the military side. Tungsten is used in the defense industry. It's very hard. It's one of the hardest metals in the world, so it's used there, and this demand is driving the price to new levels.
During the summer, there was some decrease in the pricing, but if you look at the long-term view, it's really on a high level. This is a map showing a little bit on the Kuittila where we had the gold deposit, and we went to the northern side of the gold deposit. The gold deposit is here described with this black line, and then we tested that does the tungsten and molybdenum veins, do they continue to the northern side? They do continue. We are drilling approximately 12,000 m here in this area. We have completed more than half, and now we will do the rest during this autumn just to see how much tungsten and molybdenum there actually is.
When we think about the mining, when this goes to production, like when we mine the gold ore from the pit, then as the pit shape is always like that, so a lot of the material which is directly outside of the pit, you have to mine it anyway. We see that a portion of this tungsten and molybdenum should be mined anyway, so the operational cost during the production is very low, and that's one of the benefits that we have, that we have a gold deposit next to the tungsten and molybdenum deposits. Exciting times ahead. The targets for this drilling program in Kuittila is to increase the size of the gold resource. There will be some drilling done also to the gold resource, but then to actually increase the resource of tungsten and molybdenum, that's the most important.
To increase the knowledge, because we are currently doing the environmental impact assessment report. It is really crucial that we get a lot of information so that we can design the processing facilities for the permitting purposes. Now I give the floor to Minna.
Thank you. All right. Good afternoon, everybody. I will go through the Q2 numbers a little bit more in detail. How the slides are structured here is that I have the first six-month highlight on the heading. Then in the graphs, you can see both the quarterly numbers as well as the comparison between each first half of the years to year before. Mostly, I will concentrate on the second quarter on my commentary. As Kari mentioned already, half-year revenue was EUR 34.7 million. That was a growth of 61% year-on-year and from our production, 9.7% production growth year-on-year. Q2 revenue, EUR 16.2 million, 46.1% growth year-on-year.
On these bullet points below, you can see how that is divided between production and gold price, so 9.7% growth year-on-year on gold production and 37.6% year-on-year growth on average gold price for the quarter. I also wanted to highlight here, because I anticipated it will produce some questions, this decline from the previous quarter. Our revenue actually did fall about 12.6% quarter-on-quarter from Q1. That can be divided into a 4.4% decline in gold production and a 7.4% decline in gold price in USD on average. In euro terms, that was closer to 7%. The production decline was due to this replacement of a jaw crusher at our crushing plant in May, which made us to use a lot more open pit ore with a lower gold grade.
If we look at the EBITDA and profitability, so EBITDA for the first half, EUR 14.3 million, 86% growth, and 41.2% margin. Q2 EBITDA EUR 5.5 million and margin of 34%. In Pampalo, we made EUR 7.8 million of EBITDA and margin of 48.5%. On the operating expenses side, now we have started to accumulate inventory or inventory in Pampalo, so that is something that will have an effect on our results. For the second quarter, it was a negative impact of about EUR 700,000. I wanted to highlight here in comparison for Q1, the inventory actually improved our EBITDA in Q1 by EUR 1.4 million. The difference in profitability or EBITDA in Euro terms is a lot affected by these changes on inventory levels.
EUR 5.4 million was spent on materials, goods, and services, and our employee expenses increased mainly due to the increase in number of employees, and the cost was EUR 2.6 million. We have on average in Q2 37 more people than we did have a year ago in the second quarter, and the total number of employees at the end of June was 108. Other operating expenses were EUR 2.1 million, and here also want to highlight the Act on Mined Minerals Tax increase for this year. We booked a tax of EUR 0.5 million for the second quarter alone compared to EUR 100,000 last year. That's the biggest impact there. We have also, for example, invested somewhat on new machinery and equipment at the mine, and the leasing cost of those are already also included on these other operating expenses.
Cash cost in Pampalo, EUR 1,588 per ounce for the first half. Q2 was unfortunately even slightly higher. It was EUR 1,642. That's an increase of 23% year-on-year and about 14% for the full-year average compared to 2005 full-year on average. This was particularly affected by the higher use of open pit ore, especially during May. Also want to bring up the electricity price, which has increased 35.6% on the quarter versus previous year, so this is also relatively big effect on the cash cost. Net result-wise, net results we have done very well this year. We have nearly 30% net margin. We exceeded in the first half the net result we produced for the full-year last year.
I think it was EUR 7.3 million for the full-year last year, and now we made EUR 10.4 million just for the half year. Second-quarter net result was nearly 4x that of previous year at EUR 3.3 million, margin was 20.3%. Net financial expenses are around EUR 600,000 per quarter. Interest rates EUR 0.4 million, and then we had a non-recurring financial item for this quarter, which was related to rearranging and paying back early the previous financing facility we had in place. The extra cost there was about EUR 200,000. The expenses were reduced by FX gains of about EUR 100,000 for the quarter. The group EPS basic increased to EUR 0.10 per share for Q2, and for the first half it's EUR 0.30 per share.
These numbers are now adjusted with the share split that took place this spring. Balance sheet. The cash flow improved on all indicators from year-end.
The total of the balance sheet at the moment is EUR 102.4 million. Cash and equivalents, EUR 4.8 million at the end of June. The decline from end of March, is because we had quite a few, I would say, exceptional cash payments made. For example, we did pay Power Mining, the remaining payments related to business acquisition of Power Mining. We paid those in advance, so that was about EUR 1.9 million, and also we made a EUR 1.5 million cash security deposit against bank guarantee facility. I will come back to that on the next slide. Interest-bearing debt is EUR 12 million at the moment. Long term is EUR 5.6 million and short term EUR 6.4 million.
All of our convertible notes are now rolled into short term, so they all fall due within the next 12 months. Net interest-bearing debt is EUR 7.1 million. Our gearing increased slightly from March 10% to 10.1%.
That is because of the lower cash number. The equity ratio was 69.2%, which is on a healthy level. Net cash from operations, EUR 2.5 million for the quarter and EUR 11.2 million for the first half. Investing cash flow was minus EUR 7 million for the quarter, and that included this final payment for Power Mining Oy, this EUR 1.9 million, but also then the positive about 500,000 of grant we received as an advance payment for the tungsten project. Some details on the funding we signed. At the bottom here is a mention about this EUR 1.5 million grant we received or decision. We received a decision on EUR 1.5 million. We received funding of 500,000 so far, and the rest is payable against reported expenses, and they should come in.
We have not agreed on the reporting schedule yet, but they should come in latest by September 28th, and those are most likely in several installments. About the bank loan. As Kari Vyhtinen mentioned, we increased the facility size from EUR 12 million -EUR 21 million, and we actually more than halved the margin from the previous facility. It structures as Euribor 12 month + margin. All the other terms and conditions on the funding basically remained unchanged. On the table you can see, we got the EUR 21 million is divided between we have two secured senior loans, two of EUR 5 million each. The one EUR 5 million tranche we used to repay the earlier facility and that with a three-year maturity, and that is a bullet payment.
The other loan is currently unused and when and if we will use it, there will be quarterly installments made for that. We have a bank guarantee facility, for example, the environmental guarantees. We used this to, I think EUR 2.7 million, EUR 2.8 million is used. Against that we had to make a cash deposit of EUR 1.5 million. That will then also cover any further use of the facility, so no further guarantee is needed. The overdraft facility for our bank accounts we increased from EUR 3 million - EUR 4 million, which is currently unused. There is still another EUR 2 million that we need to decide where it is at best use. I would think we will probably use it for leasing and new machinery purchases as the case may be. All right. Thank you.
Thank you, Minna Karttunen. Then heading back to our strategy. We are a growth company, so we have a focus on growth and on achieving the long-term targets. Naturally, on a short term, it sometimes requires that we need to recruit people and maybe some of the expenses will go higher, but we always have to look at the long-term view. That is the most important item. We have a strategy period from 2025 - 2029, and there we have five key points is the Pampalo production. That is the place where we increase the production each year, and then the cash flow is used to invest in exploration. That will increase the gold resource and enables us to really take the major step in the size of the production. Then critical minerals, they are part of the strategy.
This is in the Southern Gold Line where we are permitting, so there are also critical minerals. We also want to produce tungsten and molybdenum, which is used in the steel industry. The financial stability, as Minna described, that is something that is part of our strategy. It is very important that we have financial flexibility. We do not want to continuously raise money to do the exploration activities. We want to have a solid financial foundation where we can invest and make the company bigger fast. Sustainability, that is really backbone of our operations. That is the most important item. With the sustainability actions, we ensure that everything else can be done. If you look at the long-term targets, there are no changes. We have a target at 1.5 to 2 million ounces of gold resource by end of 2030, currently at approximately 620.
We want to increase it significantly, almost so that it is 3x bigger. The annual gold production to 70,000 oz- 100,000 oz around 2030 and taking tungsten and molybdenum into production at the same time. This means that if you compare the last year's production, it is approximately 5x more gold and then tungsten and molybdenum additional. Then fossil-free gold production by 2035. This is the whole basis, coming back to this same slide, so that we increase the resources every year as we have done successfully from 2023 - 2025. Next update will be early 2027.
From the history, from the last three years, we have identified that when we do the drilling, which increases the gold resource, when we drill 10,000 m, it results into a resource growth of approximately 100,000 oz. Our plan is how do we get from 620 to 1.5 million- 2 million, is that we drill 120,000 ounces more, and this year we will do the largest campaign in the company history, so 50,000 meters in a year. Ounces are very valuable when they are on the ground. If we think about, for example, there was a major acquisition in Lapland this year when Agnico Eagle bought three gold mining companies or their assets in Lapland. Then, for example, with Rupert Resources, the one ounce of gold was valued at approximately $500 per ounce.
They are valuable when they are on the ground already, when they are not yet in production. We see that this is the way that we increase the value of the company, so that we continuously increase the resource base. So take it to 1.5 million- 2 million ounces as quickly as possible. That will enable us to increase the production. Currently we have excess capacity at the Pampalo mill, so there is capacity to produce approximately 25,000 oz. The bottleneck has been the mine, and that is why we bought, for example, this business activities of the subcontractor so that we can increase the mining in a more flexible way. Our guidance this year is the production is increasing by 10%-20%, and then we increase it steadily to 29,000.
Then there will be the Southern Gold Line that will take us to 70,000 - 100,000 level. Then after that, the Northern Gold Line, where we have this Kartitsa deposit and also the Kartitsa resource already. That will come approximately three years later. We will start production in the Northern Gold Line next year. We will start permitting activities also in the Northern Gold Line. What we are designing in the Southern Gold Line is actually a world-class, next generation gold production facility. New technologies, really visual, automated, AI, clean waters, really state-of-the-art facility. We are designing and permitting a facility that comes into production within two phases. The phase I is approximately 60,000 oz- 65,000 oz. We will still continue to produce gold at Pampalo. Then this new facility will be 60,000 - 65,000 additional, and that will take us to 85,000, 90,000.
We have stated publicly that it's 70,000 - 100,000, so there is a little bit flexibility depending on the grade, but the design criteria is 85,000 - 90,000. Then the phase II, which is permitted at the same time and it's also designed at the same time, so then it's just the investment decision at later phase, would take the production to 145,000 oz- 155,000 oz. Still the Pampalo would remain, but then the new facility would be double the size. This has been going according to the plan. We started the permitting already in early 2024. Early next year, we will launch the environmental impact assessment report. Then that will be followed very quickly with the environmental permit. We expect to get the permit late 2028, and then go to the investment decision as quickly as possible.
The estimated CapEx has been approximately EUR 200 million, excluding tungsten and molybdenum. Our goal is that we will get a partner who pays for the tungsten and molybdenum facilities. So it will be not paid by Endomines. Outlook for 2026, the growth is on track. Very pleased to present the results. It's a record result as mentioned. But the main thing is that our long-term plan is on track so that we can achieve our ambitious long-term targets. We haven't changed the guidance. We expect to increase the production by 10%-20% this year. We are performing the largest exploration campaign in the company history. We are well on track on that. That will be completed according to the plan that we drill 50,000 m. Then the Southern Gold Line is moving to the next phase.
We will early next year launch the EIA report. Then after that we go to also the PFS phase and environmental permit phase. We have a new streamlined structure that was also done this year. We sold three of the assets. We still have two in Idaho, two in Montana, and we are evaluating what to do. We still see that the Montana assets, for example, there is great potential and this is something that we are studying that do we just sell the assets or do we form some kind of partnership? It's something that we will keep working on, but the main thing is that we sold three assets where we had high operational costs, so the cost structure from the U.S.A. operations is very minimum at the moment. Then the global trends, they support the gold market. There are a lot of uncertainty.
The central banks are buying. Countries are printing money. There are a lot of financial difficulties with several countries, and that's a. Those are market conditions where gold is a very solid safe haven. I think that's also reflected in the central bank buying. Then the organization, as Minna also mentioned, we have recruited a lot of people. We will continue to recruit a lot of people. So we need the skilled people so that we can grow, because the targets are a few years ahead. Thank you. Happy to answer any questions then.
Yes. Thank you, Kari and Minna. Now it's time to move on to the questions- and- answer session. The audience has been quite active here, and we have received quite a bunch of questions, and we have only 10 minutes left. So let's start right away, and let's see how many we can go through. The first question concerns the development of the Southern Gold Line and the investments required. How challenging do you see the development timeline being, and what investments are needed to get the new processing plant up and running? How do you see the gold price affecting to the investment plans?
Yes. Very large question. I think the gold price, if we start from there, I think from our point of view, the critical phase is absolutely now and next year, so that we are still fairly small in size, and now it's really crucial that the gold price is higher and we have the solid cash flow that we can get everything done according to the timeframe. Then when we go to the big investment, we are very confident that the financing can be done, and we don't see a major problem there. Like all the forecasts, on a long term, they still support the fact that within the gold price, the price level will stay on a higher levels compared to what it was, for example, three, four years ago, that it would not return to even close to those levels.
If you think about the time schedule, it is very ambitious and we have been delivering as promised, I would say. So it requires that we do several things simultaneously. So we are doing a lot of drilling. One reason or the biggest reason why we decided to drill now 50,000 m this year, which is the biggest campaign in company history, is the fact that we need the data for permitting and to keep the schedule. So it's very challenging, ambitious, but we believe that it can be done. We have permitted four mines in the Karelian Gold Line. We have permitted the underground mine at the open pit. We have permitted Rämetpuro. We have permitted also Hosko underground mine. So we have done it 4 x, so we are very confident that we know how long it takes and what is required.
Okay, what about the pre-feasibility study? When do you think you are going to start that in the Southern Gold Line, and how much you have to have reported indicated resources in pre-feasibility phase so that you can proceed to the next phase with your plans?
That is a key question, actually. Somebody hit the point. I think here exactly that we need to have indicated resources to have a pre-feasibility study. Currently in the Southern Gold Line, we do not have those yet, so that is why we are drilling the 50,000 m. But even with this 50,000, still the biggest target for us is to increase the resource. Then the next phase is to actually drill between the existing drill holes and lift the category to indicate it so that it is suitable for pre-feasibility studies according to the JORC standards. That is something that early next year, that is where the focus will be. We are just planning that how much we need to do next year to actually complete everything within the timeframe.
Because we have not published yet this UKKO resource, I personally see that most of this will come from that area for this, or it will be the biggest part of the expansion plan. We have not published the resource yet, so cannot really comment that how much we think that we can make indicated resources. But the focus will be from really at UKKO that we first make the resource, and then we make it indicated. That is the plan. This year it will be to grow the resource and publish it, and then next year grow it further, and then make at least significant parts of that into indicated category.
Okay. Then we have a question about cash cost. How does the cash cost look like going into H2 2026?
Do you want to, or should I?
No, you can. Yeah.
Yeah. I think that, or, and I hope that the Q2 cash cost was exceptionally high, so at least in the forecasts we have made it should come down from this Q2 level and be on a slightly lower level for the rest of the year.
What about dividends? Is it possible that Endomines could start paying dividends based on this year's results?
Well, everything is always possible, but it hasn't been high on our priority list, because we just have ambitious plans and we are investing a lot. Of course, we have a very strong net result, but we are investing a lot, and that's where the focus is.
The next question is about tungsten plans. What are your plans for starting tungsten production in Ilomantsi? When do you expect mining to begin? What investments will be required? What role do you see the Wolfram Bergbau und Hütten having in the project?
If I start with this, what role does our partner have? We have signed a non-binding letter of intent, and the purpose is to get technical support so that we have a sellable product. Of course, both parties will evaluate will that lead into offtake agreement later. Our plan is that we start the production around 2030 at the same time with the gold production, so it's included in all the plans and in the permitting what we do. Our target is that we get a partner who pays for the production facility. It's quite common with these kind of side products that there is arrangement where the partner will also participate in the investments. There are a lot of interest on tungsten around the globe.
Basically, it's a critical mineral, because it's used in the defense industry and over 80% controlled by China, so there is a lot of interest. So it's something that we have to evaluate when we come back a little bit closer to the time when it comes to production.
Okay, I think we have time for one question here. I will choose a question about U.S.A. Endomines' primary focus is on Ilomantsi, but what are your plans regarding U.S. assets? How do you view the gold and silver potential in Montana?
The assets, they are actually very interesting, especially in Montana. With Idaho, our idea is to divest the remaining two. It is a very straightforward plan. In Montana, the idea is that we have applied for the exploration permit, which would allow us to do drilling at Kearsarge. Most likely, we will get the permit late this year, so it gives us flexibility next year. If we want to do any drilling, we will share items when that is something that has been confirmed. We keep all the options open with Montana, so it is possible that we would divest, it is possible that we just keep it and don't do anything for some time, or that we form some kind of joint venture where we have a partner who does the investment and development, and we stay as most likely minority shareholder. Still keeping the options open.
Those are interesting deposits.
Thank you, Kari. That concludes today's Q&A session. Thank you for the excellent questions, and thank you for all joining us today. As I mentioned in the start, the recording of this webcast and the presentation material will be available on our website later today. On behalf of Endomines, thank you again for participation, and we wish you a great rest of the day. Thank you. Bye bye.
Bye bye.