Good morning. Welcome to second quarter presentation for Akobo Minerals. I will take you through the latest updates today, so let's dive straight into it. I am very pleased to announce another record quarter for Akobo Minerals. Strong performance. We have never seen such numbers before. We produced approximately 37 kilos of doré in the second quarter. Not only that, if you look at the grade here, we had an average recovered grade of 38.5 gram per ton, which is in the very high range of what is normal, even for us. Approximately 134 kilos total doré produced as of end of Q2. If you look at the numbers here, the value in US dollar, around $6.1 million. So far, we have accumulated sales of around $17.7 million. In Q2, we also did a large repayment to Monetary Metals of around $3.4 million.
Also interesting is that we are continuing our strong production and our strong performance into Q3. We are estimating around another 35 kilos of doré produced at least. That is based upon an estimate of 10 kilos for September. That might change as we continue producing from the plant as we speak. Given 35 kilos, we will then be up at around 170, 169 kilos in total doré production to date.
You can see we also have a stockpile around 700 tons. We estimate around 20 gram per ton. That is also by the end of September. So we have a strong backlog, to call it like that. We are not keeping it just because we cannot process it. It is because we are using it as part of running a smooth and as stable operation as possible once we run the processing plant. So this is just a stockpile that we are using.
Cash position, we have around $3 million at the end of September in cash and gold inventory. We repaid also another $3 million to Monetary Metals in September. So all in all, we repaid approximately $7 million to Monetary Metals in 2026. When it comes to the capital structure, we are still working with Verdant Capital to do and finalize a debt restructuring. The preparations are still ongoing, and we will expect an official launch in October once everything is finalized. Just looking at the left side here, what is worth mentioning is obviously the strong increase in EBITDA from Q1 - Q2, and this proves a lot of the business model of Akobo. We have stable operating costs, and any increase in production, the majority there will hit our EBITDA and the operating results. Current operations and key approvals. We are working hard these days.
We have a great team at Segele and in Addis. All in all, we are around now 390, call it employees and associated people. I just spent two weeks in Addis, came back here the other day, also visited Segele, so I am very happy and pleased on progress and what I am seeing. We have never had this consistent production and consistent improvements before. So we are continuing mining from the existing winzes, the two tunnels that we have. The vertical shaft is progressing. We did have a ball mill issue on the plant. We have repaired it. It says a lot about the team who is there 24/7 at Segele in a remote area, fixing and keeping everything up and running. We have also done some tailings, and retesting of the tailings, and that could indicate a recovery upside.
The tailings is, let's call it what leftover is from the current production, and we're saving that for later processing. We might process it sooner rather than later because we see there is a good potential of getting more gold out of it. Still strong processing performance and good normal site operations. We are working on expanding our site accommodation. We were very lucky to have four mining engineer students visiting us for a month. They were hard at work underground and above ground, and this is part of our mandate to support and develop the mining industry in Ethiopia. You can see also from the picture, we're spraying in our area and local areas. We're working on containing malaria.
It's part of the area, but we are trying to do what we can to reduce the effect of the malaria, not only for us but also in the surrounding communities. Milestone now is the first payment to the community fund. It's been completed. It's a yearly yearly exercise based upon the 2025 results. We're happy to be able to contribute from our operations into local community projects. On the licensing and approval side, we do have renewal of the mining license that's happening every fifth year. It's a formality, but it still needs to be done. As long as you're producing, this is really not an issue. Going back to the Gilo exploration license that we talked about for quite some time, I believe we're close to finalizing that. All regional and local and governmental agencies have approved the license.
We're now waiting for the Environmental Protection Authority to give their final go-ahead based upon baseline studies and what we call ESIA review. I think that will happen in a short period of time. We've also talked about our gold export. Since this is the first time happening out of Ethiopia since 2018, it is a bit of a puzzle, but we're getting there. We're signing up with the LBMA-approved refinery and opening the account there these days and looking to do our first gold export very, very soon. Just looking at the pictures, you can see some miners hard at work, drilling and preparing for blasting, the spraying, our students, and also the plant running well and producing the gold. We're actually getting close to our second year anniversary. Our first gold bar, as you can see here on the picture, was produced back in October 2024.
Time obviously, it flies, but we have been producing now consistently for two years. I think that's a major achievement for us. We've moved from being a development company into a proper junior miner, producing. Not many can say that these days. Definitely not with what we can see here on the average recovered grade that we're getting on a monthly basis. It's improving and from the beginning, it's stable, and you can see also that we have some pretty fantastic results a couple of months here in June, July of 100 gram per ton. It tells a lot about the Segele mine and what it's actually giving us month by month by month. We're very, very pleased. From what the guys at site are saying to me, it's the gift that keeps on giving.
We are increasing production, and combined with these exceptional grades, we have a strong foundation going forward. Not only that, the strong cash generation this mine is giving us, is quite unique. I just tried to illustrate here from the first three quarters of this year how the strong EBITDA is, the strong cash flow generation is actually covering our investments and debt service, and we will continue to develop accordingly. This is only now based upon the current two winzes that we have. Obviously, we all look forward to getting the vertical shaft up and running and these numbers will look even more impressive. You can see it here on the right-hand side on the approved operating leverage, what I talked about on the first page. Obviously, these numbers are quite significant.
71% EBITDA margin, 65, and it tells us something about the leverage here with stable operating costs and any increase in revenue, the majority will hit the EBITDA and the operating cash flow as an increase. Obviously, we still have some investments going forward into the vertical shaft and the underground development, but we expect them to be lower as the majority of the infrastructure is done, and it is more about now normal development and blasting and hoisting. Next financial steps. We talked about refinancing our high-cost debt that we have with Monetary Metals. We have a very good relationship with Monetary Metals. We are working together on this. We are all eager to find a good solution for all parties involved. That might be a partial restructuring or a full restructuring, and we might also have a default option that we will fall back on.
We will inform the market as we go forward. It is all about reducing our financial cost. Obviously, we are in a different situation now than we were four years ago when Monetary Metals came on board. We had a scoping study and a grass field. That was it. Now we have a producing mine with a good track record. Obviously, we are looking at extending the maturity profile somewhat, and all of this will increase our financial flexibility going forward. The vertical shaft, the one that everyone is waiting for, it will unlock higher capacity, flexibility, and deeper access. We are getting closer every day. As you all know, we have had issues with soft rock formation that has also been an issue in September. From what we can see now, it is getting less, and we do expect and hope October will be a strong, good month.
Interestingly enough, we have seen visible gold now during the shaft development. We are not talking about the 20, 30 gram per ton, but it is very rare to actually have gold when you are developing, and it is not what we expected to see. It is a good indication maybe of more gold to come in the area that is not part of the existing resource measurements. We are now, instead of talking about going to the bottom, I think it is better to focus on the first lateral, which is about 25 meters.
We put that a bit lower than initial, just to make sure that we cover bigger area on top of the first lateral. Our current focus now is to start gold extraction from that first lateral, while the shaft sinking continues. That is our main focus these days, to get the first lateral up and running.
In general, industry standard, you can say that during a month with competent hard rock, you can do approximately 28, 30 meters a month. If you have semi-competent rock, maybe half of that. We are getting close during October to reach the first lateral. That means by the end of October. We are doing all the ground support, and it is all doing in line with development requirements, and the progress is continuing. Just to remind ourselves, the production impact, definitely an increased hoisting capacity, will have faster access to deeper mining levels and more operational flexibility. If you look at the small picture here, what is very exciting is obviously to continue exploration at the bottom of the shaft, the red one, the bar you see here, and continuing development deeper and maybe to the right, lower west or east.
All of this will unlock new opportunities in developing the Segele mine. You can see the current design of the shaft will cover at least the 40,000 oz of the indicated mineral resource that has an average grade of 40 gram per ton. This is a very strong, good setup for current operations, but also future development. We know Segele is open at depth. We have seen gold, visible gold in drill holes, way below current resource limits. We see indicators that suggest a larger mineralized system, and we have not even started to explore potential parallel zones or extensions. All of this will enable us to continue developing the Segele for the years to come. This is an interesting sketch from our team at site just a few days ago, because we do see already that the mining is going outside of the current resource estimate.
It is a bit early to give indications, but we have continued beyond the block model where the current resource estimate lies. Again, we have seen gold in the vertical shaft where we thought we would not see gold. We have done underground surveying and geological evaluations are underway. If this will lead to a geological gain and an upgrade of our resource estimate, it is too early to say, but it is a positive upside regardless, because we are now mining outside of the 69,000 oz that we thought we had. This is exciting, and we will get back as soon as we have more information about this. Good. Akobo 2.0, that is what I like to call it. We are transitioning from producer to growth company.
We still have a few elements to get in place by the end of the year, but I expect 2027 to be a different year for Akobo. We will be in a state and stage where we have the opportunity to look beyond the Segele mine and really start growing. The strong foundation already in place is obviously the local and federal government support EIH, the Ethiopian Investment Holdings ownership, the export approval that we have already secured from the National Bank of Ethiopia. We do have the offshore account already up and running and operational with Standard Bank in South Africa, the biggest bank in Africa. We do have the right to retain 70% of our export proceeds in dollars. I just got some news today that this might even change in the very near future, enable us to keep 100% of our export proceeds in U.S. dollars.
That says something about the general development in Ethiopia these days. It's a strong focus on continuing economic reforms, continuing adapting to the international financial environment communities, and I'm really happy to see all the good progress happening. We have a few points left, as I mentioned. I expect most of them to be closed out by the end of the year. We'll see about the resource growth potential. That will be exciting based upon, again, the surveying and what we've done lately. I do expect the first gold export to happen. We will continue the vertical shaft development. That's obviously strong focus, getting to the first lateral. I expect the geo exploration license to be awarded finally. I do expect us to do the balance sheet restructuring. If that is done by the end of the year or into Q1 next year, we will see.
We will find and spend the time needed to really find the best structure and solution and partner for Akobo Minerals going forward. And obviously then, the additional growth and exploration opportunities that we already have in our existing exploration license area, but we're also looking at other exciting targets, and we will come back obviously once we have more information on that.
Financial performance, the operational leverage, we're happy obviously seeing the development here. It's going in the right direction, both on the revenue side, the EBITDA side. On the debt side, the debt is decreasing and the equity is improving, and that's according to the plan. That's been the plan all along, and now we see that the mine is delivering. And again, this is just based upon the two existing winzes that have a theoretical capacity that we're running at max capacity, that we're running at right now.
Really pleased to see this. And, again, when you look at the operating cost here, it's pretty stable. It's not really changing much, even though we're more or less doubling the revenue side. We expect that to continue going forward, even with the vertical shaft up and running. With the vertical shaft up and running, we'll probably have a lower unit cost or not probably, we'll have a lower unit cost. We will shut down most of the winze operations and move the team to the vertical shaft, and we'll probably be even more efficient in running over the vertical shaft. So what will increase is obviously cost to diesel for running the plant 24/7 and running the operations 24/7. But that's the cost we will be very happy to take. The financials, please have a look.
If there's anything, you can get back to me and I will explain more in details. But I think that's it for today. No major changes on the top shareholder side. Very stable. They've been with us for a very long time. Obviously, great support for the company. They're all eager to see the next stage for Akobo Minerals, and no really changes there. With that, I will go over to our Q&A session and see if there are questions. Expectations for Q4 regarding the vertical shaft and gold production output. As I mentioned, we do expect to start hoisting from the vertical shaft from the first lateral. I do expect that to happen before the end of Q4. But again, I must say that with the soft rock formation and the hard rock formation, it is difficult to say.
There's nothing we can do, and we can't compromise on safety for our people. We'll have to take the time it will take. We're getting close to the first lateral, and once we hit through there, we will start hoisting from the vertical shaft. Outlook regarding future dividends. That's obviously a question to shareholders. What I can say is that before we can do any dividend, we need to repay our debt. Once that's in place, there might be a dividend. Obviously, looking at the cash generation potential here, there should be room for dividend. But again, it's up to shareholders. If any dividend is to be allocated, then I guess that will be from year 2028. Good. Connection to other zones, which has a lower grade, but much larger lifespan of 15-20 years. I just have to read here.
We are expecting to proceed from the 120-meter shaft and develop out from there. That's the main objective with the shaft, but mainly to go to connect more in between the shaft and the existing resource estimate. There's a big area there, and since we're seeing gold now in the vertical shaft, that could potentially indicate that there is a relationship between the shaft and the existing Segele resource estimate. That has to be looked into, but we're not stopping there, obviously. We have plenty of near-term targets around Segele, and we expect to be able to restart a lot of work by the end of the year once we have ticked some of the last few boxes that I mentioned here on the other slide. There are obviously some questions on the conflict up in the north in Tigray. It's a valid point to ask.
There's been some writing in the newspapers. It's doom and gloom. It's obviously very unfortunate, and it has a negative impact on the population and people living there. Compared to the conflict a few years ago that we managed well, I don't see any issue with it for us. We're 1,500 km away. We're in the most stable, secure area in Ethiopia. Again, we have operated for 16 years without any incidents. The fact that we do have a strong local community partnership and been part of the community for a long time, that gives us a good security situation in general. Obviously, for the country, this is challenging, but I don't foresee this being a big or returning to what we saw five years ago or four years ago. It's a different situation, and I think and hope this will actually be resolved pretty soon. Yes.
Again, news about refinancing. We're launching it this week, no, this month in October. We see already good interest. There aren't that many junior producers out there with a consistent production track record and the grades and the operational cash flow that we have. I'm optimistic and very positive around that. But we have to do the process, and we will spend the time needed to really find the right partner and the right structure. We won't rush this at all. The production facility, is it big enough? It won't be a bottleneck. Yes, it is big enough to handle everything that will come out of the shaft. It's also modular so that we can add another ball mill and increase the production capacity significantly. I don't see any bottleneck issues with the processing plant.
Why we are not, again, running the stockpile and why we are not running everything all the time, it is because we are running currently just in batches. We are running one to two weeks at a time, and we want to make sure that we try to blend as much as possible and keep the production stable when we produce through the processing plant. No bottlenecks there. All in all, that was it. No more questions. I am going to leave you there. I just want to say that we have a great team working hard every day. I have been there, as I said, the last two weeks at site down in Addis. It is a strong team working hard and delivering strong results these days. Q3 is looking very good. I do not see any major changes into Q4 either.
We expect to continue the current operational setup that we are having right now and make improvements here and there. Thank you for joining, and if there are any questions, please do reach out, and I will get back to you. Thank you.