Good morning, everyone. Welcome to the Amaroq Q2 2025 Financial Operational Results. We'll follow the normal course today. Eldur, some of the Chief Executives, will take you through some highlights and then some operational detail. Ellert, the CFO, will take you through some of the financial highlights, and then Eldur will finish off with a summary. We'll then head to Q&A. If you have any questions, please use the Q&A tab on the screen there, and I will read those out and we can deal with them point by point thereafter. Thanks again for joining. I'll hand over to you, Eldur, to start proceeding.
Thank you very much, Ed. It's a pleasure being with you there, on this relatively good summer day here in Iceland. I hope you had some good holidays, already finished. I want to take your attention to the first slide, which is Amaroq Minerals. Today, what we have been working on creating within Amaroq is effectively an integrated infrastructure and mine development company. We need to do that to make sure we can unlock the potential in Greenland. Our companies and business styles are a gold business, which we own 100% called Nalunaq A/S. We then own Gardaq, 51% of Gardaq. This is a strategic mineral company. We then own Suliaq, which we just formed and we'll speak about later, which is a servicing entity, which acquires critical equipment and consumables to be able to conduct the work in mining and infrastructure in Greenland.
Last but not least, we are about to form EMEC, which is a renewable energy company mainly focused on hydropower. As you know, hydropower has a great potential within all Greenland. By doing this, we can leverage the management of Amaroq in things like permitting, governmental relations, engineering, and various other aspects of things to give investors exposure on Greenland in the main industries that are important. We are solely focused on Greenland, and we'll be focusing on developing these opportunities until the end of this year and obviously into next year as well. Go to the next slide, please. On main things in the Q2 highlights, our continuation of the trial mining and ongoing construction of the plant has been progressing well. We had our first gold export, and made a revenue of $3.4 million by the end of Q2.
As previously told, we were ramping up more slower in the beginning of the year, but what we are seeing already right now is that the gold being produced over just the past few weeks is increasing a lot, and we're really happy about that. The stability of the operation is very, very good. We also got certificated through a single mine origin code, meaning our gold from Greenland can be bought with the understanding of how it's being produced, what are the sustainability characters of it, et c . Our initial gold for jewelry purposes will be sold only in Greenland, but we will then look together with the government to increase that exposure elsewhere.
As I mentioned earlier, the sequential improvement of processing rate during the quarter and actually post-quarter in July and August have been very good and gives us a good comfort that by the end of the year, we should reach our 300-ton per day, which sets us up for a full year of production next year. We successfully completed an oversubscribed and upside equity raise of GBP 45 million. Approximately 36 international investors participated in this fundraise. It strengthened, obviously, the balance sheet and our working capital, but more importantly, it also gave us a strong backing by U.S. and European, as well as Icelandic investors.
We acquired the past producing mine of Black Angel in West Greenland, as well as the high-impact form license called Kangerluarsuk, which gives us the opportunity to continue developing our critical mineral business, which we intend to do exactly the same model as we've now done with gold. You start with a past producing mine, you bring that through a bulk sample and into production, you use that foundation to further explore in the region to look for elephant or world-class deposit. Last but not least, we've incorporated our joint venture company, which is our servicing company called Suliaq, and we signed with a third-party investor to be a joint venture party in that. This is highly important in Greenland. Greenland, as you can imagine, is a very large country. It does not have a lot of people in there, and therefore, services are not abundant.
We understand exactly what services we want and what we need. We also understand the services that other parties in Greenland will need. Due to the fact that we are ahead of the curve with all of other developers in Greenland, this both gives us the opportunity to service Greenland, but also to access potentially other projects within Greenland, and do that in conjunction with others. I'm going to hand over now to Ellert to walk through our financials, and we'll come back to operation.
Thanks, Eldur. Before diving into the balance sheet, worth mentioning, as Eldur mentioned, before we had our first exports and recorded our first revenues in Q2 of $3.4 million. At the cost of sales, G&A, and other expenses, the operating loss for the quarter is $4.9 million. Next quarter, we'll discuss these numbers in more detail, by which time we'll have a quarter-on-quarter comparison. The main movements on our balance sheet in Q2, as before, are related to an increase in capital assets of $17.3 million, to $200.8 million at quarter end, which is attributable to the Nalunaq Project, as we've continued to capitalize site costs in the quarter and will continue to do so until the plant reaches commercial production.
Prepaids, supplies, inventory, and escrow are more or less in line with last quarter end, but we are seeing a continued increase in metals inventory, which stands at $9.2 million at quarter end compared to $7.8 million at the end of Q1. This represents our gold contained in ore stockpiles outside the mine and processing plant, as well as gold in circuits associated with processed but not yet smelted material. On the bottom, you can see the associated cash flow movements, which represent the main quarter-on-quarter variance in capital assets and metals inventory. Worth mentioning as well is cash inflow due to finalizing the equity capital raise Eldur mentioned earlier in Q2 with net proceeds of $81.2 million, which you will see reflected in our cash balance in the next slide. On liquidity and assets, at the end of the quarter, our cash balances are sitting at $86 million.
In the quarter, we made a drawdown on our revolving credit facilities, resulting in $10.7 million of net proceeds, decreasing our overall facilities to $9.7 million. Subtracting payables of $19.8 million results in $75.1 million in liquidity compared to $23.4 million at the end of Q1. This liquidity position is on the back of a very healthy balance sheet with $342 million in total assets and an 80% equity ratio. The last four lines on the slide are connected to our investment in the Gardaq joint venture. Gardaq's cash balance sits at $3.6 million at quarter end compared to $4.4 million at the end of Q1. Amaroq's receivable balance from Gardaq increased and amounted to $7.7 million at quarter end. As a reminder, this represents allocated G&A costs to manage the joint venture, which will be converted to shares in Gardaq in 2026.
Activity has now been picking up in Gardaq in Q2, where the focus has been on initiating exploration activities after finalizing all planning and scheduling. More on that later in the presentation. Back over to you, Eldur.
Thank you, Ellert. Yeah, so just as a reminder where we are with Nalunaq, we have a resource that was upgraded from approximately 320,000 oz - 484,000 oz. It's approximately 10 years' worth of mine life. We have an indicated resource, which is a higher confidence in the resources, of 151, and we're working towards getting into resource with the underground drilling that is happening right now, as well as increasing the resources with the South Greenland block drilling, which is in the valley. Our long-haul scoping and development on the mining activity have been progressing well. We have developed the run fairly advanced, and we have many levels ahead of us. Our kind of a reconciliation from mine development to mine model looks good. We had approximately, or will have approximately by the end of the year, about 150-160 people on our payroll.
There are a few things that are of importance here. Towards the end of September or around the 3rd of October, the agreement with Thyssen will come to an end. It had a two-year agreement. We will be taking over mining to gain, obviously, more control. We have been building up our mining team over the past one and a half years. Through that, we are also leasing equipment ourselves rather than renting it from Thyssen, and that equipment will be coming into site in Q4. We will continue improving the rates on mining and processing as we have been doing so far. We are on the permitting side of things. All permits are in good standing and good order. The government has pushed back the impact benefit agreement to have in place by the end of December. Otherwise, everything else is in good shape.
On the construction and commissioning activities, we are installing already and doing work on phase II flotation. That is why we have already committed to 5,000 oz this year. It is to allow us to finalize as much of the work pre-winter in both gravity or phase I and phase II. This will include finalizing the building, finalizing all of the concrete work, and installing as much of the equipment as humanly possible. Higher recovery means more cash flow quicker, and we want to set ourselves up for a full year of production next year. Furthermore here, that means that we will shut down the plant in October to keep all of our staff focused on that. Currently, in our processing plant, we are operating the plant on a single shift per 24 hours, so that means 12 hours.
The processing plant is operated during the night, whereas the construction activities are during the day. What we've seen so far is that the processing plant per day now has been operated on full capacity within the shift. Once the people who are in construction activity will be leaving site, we can then start running both shifts on processing, meaning reaching that 300 ton per day, which we feel very confident about. To give you an opportunity, we have picture shares of gold bars. These gold bars were all made within the last 25 days. We are seeing more and more recovery and throughput already, which is a great success for the team on site and gives us a great comfort for the year to end.
Last but not least, also the decision to focus on 5,000 oz versus reaching somewhere in the midpoint of the range is the fact that when we run our material through the plant, and if you imagine we are running 12 gr, sorry, 15 gr per ton through the plant, effectively where the processing or gravity, where it stands out now, we're getting in around 50% recovery. This means that you would have to run this material through the plant, and then you have to run it again through the plant at a later time. This means double handling of the ore. It is much better for next year that we double handle as little amount of the ore and actually get as high recovery once all the way through.
Again, this is where we are taking the prudent decision to focus on constructing everything as we can this year prior to winter hitting, because obviously last quarter that was not very successful for us to try to build during winter. The second part is we don't want to be moving ore back in and out the plant and try to get as much out of it in one go. We feel very confident on what we're seeing in the process, what we're seeing in the mine, what we're seeing in the drill core, and the construction is also developing very, very well. That gives us all of those targets we want to do, and we are very optimistic on next quarters. As for the exploration program that has been ongoing since June, July, we have been doing copper felt target generation.
That means sampling on surface, looking at various different outcrops of copper and various different things. We have been doing some exploration in the rare earth licenses that are in blue on surface with some next to the big rare earth deposits in Greenland called Tanbreez and Kvanefjeld. We have been doing a lot of exploration work looking at satellite deposits in the gold system. Vagar, Eagle Nest, and we are now starting to drill in Nalunaq. I actually just got news from site that we are starting that drilling campaign as we speak. What does this all mean? In Nalunaq, we have built and put a huge amount of effort in permitting, getting the processing plant up to date. We're increasing the resources, getting the throughput, generating more cash flow. The intention is to drill up Nalunaq, define Nalunaq to hopefully become a world-class deposit.
In the beginning stages, we can move material from Nalunaq to Nalunaq and increase cash flow from that perspective. This is why it's important to have permits and licenses at a different stage to have the infrastructure and then be able to leverage that infrastructure to bring in more material within the area. This is exactly the same as we're doing in the West Greenland Hub. If we look at the West Greenland Hub, similar to South Greenland, what do we see in South Greenland? We have the gold district. You have the rare earth district, which is being very interesting, being very well sought after by various different governments and companies. Same thing here in the West Greenland Hub. Here we are operating a past producing mine called Black Angel. A lot of knowledge is on that mine.
It historically produced around 11 million tons of a combined 16% zinc lead silver, first by Cominco and Teck and later Boliden, over 17 years. A very profitable and good mine. It already has a resource of 4.4 million tons of approximately 12% zinc. It has a camp. It has a conveyor system to go into the mine. It has a full mine. It has a large shipping harbor. It has a hangar. All of this infrastructure is in place. Most importantly, it also has a huge potential to grow resources. Up in Black Angel, the glacier has been retreating, which means that zinc layers are coming to surface quite dramatically. We also acquired Kangerluarsuk .
If you think Black Angel is similar to Nalunaq and then Kangerluarsuk would be similar to Nalunaq, it's the same model where we will be drilling next year in Kangerluarsuk , looking at the world-class potential there, and again utilizing the infrastructure in Black Angel. The whole foundation of this is that there is a saying in mining, where do you start mine, where they stop. There's more known things, there's less risk, and you can actually develop and build a base for our strategic mineral company to grow within all Greenland. That is our intention with Black Angel and Kangerluarsuk . As for Suliaq, as I said, we've formed the company. We put in place a board and a manager for that entity.
We will be acquiring drill rigs, new mining equipment, the remote exploration camp, maritime vessels, and other things, and leasing them back both to our businesses but also to other businesses within Greenland. This gives us the equipment that is needed to operate in Greenland. To give you an example, our mining equipment to date was in the ownership of our contractor. Now we will be owning or having equipment in Greenland, servicing equipment in Greenland, which will be able to service hydroelectric projects, infrastructure projects, as well as mining projects. Understanding how you get consumables in, explosives in, these are all quite complex items, and we are there as the only developer in Greenland to understand all of these aspects, and we can leverage on that not only for our projects but also other projects.
That is a very exciting business unit that is being set up at the moment. On the hydropower, we are forming a hydropower company, which we intend to call EMEC. EMEC is Water in Greenland. This hydropower feasibility study we put or developed under the leadership of Oskar Markusson is next to our processing plant, or very close to our processing plant, and the road. The installation of this plant should be relatively simple. It's approximately one megawatt plant. It will reduce our diesel consumption on site by 1.3 million liters a year, which is a significant saving. Diesel is one of the things that we have to acquire and bring on site and is quite expensive for us. More importantly, we will be the first private individual to build something of this scale in all of Greenland.
There is a huge interest for data centers, for heavy industry in hydroelectric opportunities in Greenland. There are not many people or companies that have gone through all of the permitting process, all of the design process, and understanding of how you can do that. This is something we are looking towards having in place or starting construction of end of next year, 2026. As an outlook going forward, we are going to continue the uptime in the mine development and with the processing rate that is running on a single shift. That de-risk, that 300-ton per day part is not only about the fact that now the machines and the crusher and the mill and all of that is working very well. It's also about training our people. It's bringing all of these commissioning standards in place, which are going really, really well.
We have a better, much better liquidity position. When we started looking at both re-handling of ore, as well as giving us time to finalize construction before winter, it tees us up for a full year of production next year. Rather than if we try to delay that long into next year, it will not give us as good opportunity to have a full year of production next year. We have not much left to finalize on construction. We are going to have a shutdown in October to finalize certain things in connection, and we are focusing on 5,000 ounces, which for sure is on the kind of a lower end of our outlook. It gives us that tees us up for this full year next year, and we feel very confident about what we're going to achieve there.
We have a very ambitious exploration program this year, which we will be reporting on in September, October, November, and all the way into March. We will have a very busy reporting season coming up. We finalized our initial sustainability report in July, where we are focusing on key areas of corporate governance, environment, people, and community, which is important. We've said to the market that we have our aspiration to look towards the main market in London. These are all items that we're putting in place. We are in the best position to attract investors if and when we would take that decision. In July, we also changed the name to Amaroq. It is not Amaroq Minerals. It is to represent, obviously, Greenland as a focus. Therefore, this is a very Greenlandic name.
More importantly, it's also to emphasize on the fact that we have four different business plants underneath the company. We are effectively an infrastructure company who can generate cash flow through mine development and services and the support units there are exploration and hydroelectric. All of this is coming really well in place. We feel very good about all of the progress to date, and we'll continue to update the market as we grow by.
Thanks, Eldur. I'm going to move to some questions that we've received online, and I'll just take them from the top if that's okay. This is from an anonymous attendee. It's very disappointing how you raise money from investors then miss on production numbers straight after. This is especially frustrating considering your track record of delays in the past. Indeed, one of your lead brokers has been tracking your numbers and price targets. How do you plan on addressing these realistic expectations going forward and hopefully meeting or beating those?
I think the key thing here, and I get the frustration, and I've heard a lot, but the decision here is a prudent one, right? We learned that from last winter that you don't want to be constructing or doing complex things over January, February, March, right? We also saw the amount of material we have running through our plant and so on will mean a backlog of handling. We can't handle it. We can't produce lemon or in that mid range, but it just means that we then have to reduce construction, more double handling, and we're not as well set up for next year. This is why the decision was taken to focus on this, and we also feel confident that we will reach our goal towards the end of the year. Hope that answered that question.
Thanks. A question here on grades or gold grades and how they're looking, and what grades are we sort of getting at the moment?
Yeah. In the mountain block, we are seeing that the reconciliation between the mine model and actually what we are mining is very good. Especially in the eastern drive, our really, really high grades, that is from the ramp towards outcrop. On the western drive, it is more erratic, and that's what we're drilling right now. Effectively, we have developed all the way up almost up to 800 meters, and we're only mining or scoping at 720 meters and 730. We have a lot of levels ahead of us. This is to prepare ourselves for a full year of production next year. Saying that, what we have to remember, this is a trial mining, which means that a lot of the grades and the development we see through the development tunnels, but so far, so good.
Thanks, Eldur. This is from Duncan from Panmure. How long do you expect the plant to be shut down for? How long will phase II construction commissioning take? Can this work be finalized through winter if needed?
Yeah, so the construction in October, we're taking all of October as the current plan. We're obviously trying to reduce this as much as possible. That will allow us to connect all of the electrics and automate the system to a gravity process. It will allow us to enclose the whole building, which again will then allow us to operate it inside of the building all the way while we're commissioning phase II into Q1 next year.
Thanks, Eldur. Next one's from Tim Huff at Canaccord. With regards to your phase II construction, is it currently expected to be completed mid-Q4? How long should it take to transition the second shift personnel back to site along with the newly leased equipment?
On the phase II construction, what we said is that the majority of the items for the phase II construction, such as civil works, equipment, and so on, will be constructed during Q4, I should say, not mid or towards during Q4. We will be ramping up the flotation production from then onward. The second question, yes, on the second shift personnel, we have a very good status on the kind of a second shift for the plant. As soon as we have finished the kind of October work and into November, we will be looking towards bringing those people on board, possibly even sooner, but we'll update you on that.
Super nice. Next one is about the Black Angel and Kangerluarsuk acquisition. Have we started conversations yet with Gardaq, and what's the status there?
Yes, so just a background, Gardaq is 51% owned by us and 49% owned by a group called GCAM, which has investors like GCAM and Louis Papenit. We have started the discussion with GCAM to give them the opportunity to effectively acquire the Black Angel mine and Kangerluarsuk into Gardaq. We'll be up to the market in the next coming weeks or months on those discussions.
Thank you. Last question we have online for the moment. Please, if you have one, please write it in now. Have you seen any interest from other operators in Greenland for your services business?
Yes, so there are various operators that have shown us interest there. Again, we have tent equipment, fuel, drill rigs in country. Just to give you an idea, what is the difference? If you don't have that in country and you cannot service it in country or cannot maintain it in country, you effectively need to buy a rig from elsewhere for a sometimes short program of exploration. We have those rigs over all of the country, and therefore we can bring those equipment to the drilling sites that people are looking at. We also have the experience of bringing things like plant and drill rig in and out over 10 years. We understand how all of that works, which is much harder for any operator who doesn't understand Greenland. The answer to your question is yes, and we see this as a huge benefit for the country.
Thanks, Eldur. One last question has just come in at the end there. Why are you confident you'll reach the 300 tons per day processing rate by the end of the year?
That's because what we are seeing is there are two things to it. One thing is the mining needs to deliver the 300 tons per day. We've seen it with our mining team that they have reached a very good throughput, and we will intend to make sure the mining can deliver what it needs to deliver. That is looking good. Secondly, what I want to say, we are running the plant now over the past July and all the way into August, on a one shift, and they are reaching every single day their 144 tons over 12 hours versus 24 hours. This is a very good sign for us that we are seeing all of these commissioning issues are retreating away. We're understanding how the flow rate and the recovery.
This is all in a very good nick, and therefore it's only a question of adding then the second shift, which would be a combination of the current shift and some of the construction team who are on site.
Thanks, Eldur. That actually ends the questions we've got from the line here. If anyone has any further questions, please drop me a line at IRBD. With that, I'll say thank you very much for everyone's time, and I look forward to speaking to you next time at the Q3 results in November. Thanks very much.
Thank you.
Thank you.
Thank you.