All right. Good afternoon, everyone. Thank you for joining us. Today we have an update with Talisker Resources' CEO, Terry Harbort. The company released an operations update earlier this week and sorting test results from Bralorne this morning. The format of today's session will be Q&A. We have investor questions ready to go, and if you have additional questions, please enter them into the Q&A box at the bottom of your screen. Before we begin, as always, today's session will contain forward-looking statements. You can learn more about those in the presentation on the company's website.
Welcome, Terry. Thank you. Good to see you again.
Hi, Magda. Yeah, it's been a while. I apologize to you and all of our viewers. We've had a very busy last few months, so good to get some of this news out and show all the good work our team's been doing.
We have you here today. We're going to start off with covering some questions on the year-to-date operations. Regarding the press release, I think it was Monday this week.
Yep.
We have over 19,000 tons mined to date, an average grade of 7.99 g/ ton of gold, and production of just over 4,800 oz. How does that performance compare with your internal expectations going into 2026?
Of course, we've got some variation. The total tons are lower than we expected, simply because the development plan was based on full blast for each round, but we've been doing split blasts or resuing, where we blast the ore and then we blast the waste. The tons are reduced. The ounces are pretty close to on track for where we expected to be. Our ramp up really with ounce count was to be in the final quarter, so that really hasn't changed. That's really just a reflection of we have to do development to get to the stopes before we can mine the stopes. A lot of this early ore has all been development ore, not stoping ore.
From the press release, everyone would've seen that the volume of development that we've been doing, and the stopes that are laid out there, a very good image showing the stopes that we'll be hitting here in final quarter. Relatively on track. The grade is a little bit higher than we expected. I think we were targeting this year grade average of about 6.3. That's a significant increase in that. Some of that is a reflection of the change in that mining method, so removing that dilution by blasting ore and waste. If we added that waste that we'd removed back in, then we'd probably be right on target with that 6.3.
Our reconciliations come back very good. That's always a concern in the beginning, early days, because not a lot of volume or not a lot of tonnage and ounces that have come through. But our reconciliation's been coming back quite good, probably slightly on the positive. That shows that our modeling and our block models are very solid.
Excellent. Thank you. Looking into future quarters, can you elaborate a little bit more how investors should think about that 7.99 g/ ton grade mined thus far? How do you believe is that representative of what we would expect as Mustang moves into a more sustained production program?
It's a little bit hard to tell, Magda, at this stage, mainly due to the nuggety nature of orogenic gold deposits. I think I'd be happy to say that we're going to track at 6.3 to 6.5. Certainly what we've seen in the last few press releases, there are some very big ore shoots. Some of these ore shoots didn't weigh heavily into our original resource estimate and our block models, simply because of the drill spacing and the capping and the cutoff. We cap everything above 100 g. But when you have a lot of material that's above or close to 100 g, that changes that capping strategy once we've sampled it.
Also, the sampling density. In our development, we're sampling every 2.4 m, so it's very close-space sampling. Our measured and indicated sampling is at 25 m. It's really helping us to define this much higher grade. At this stage, I'd be cautiously optimistic that our grade would significantly increase. But it all depends on mining and dilution as we're coming out. But yeah, at this stage, it looks very positive.
Okay. Got it. Thank you. You note that production has been supplemented by material from legacy mining areas. Can you tell us a little bit about how much of the year production was from legacy areas, and how should investors think about that going forward?
We haven't really taken any material from legacy areas yet. That'll be extracted here in final quarter. Much of that's relative to untargeted veins, the M series, M1 and M2 veins. They're third-order structures, so they're not things we target. We target second-order structures, which are a very long strike length. The third-order structures, the M structures, sit in between these. They develop as initial on sets. They're oriented to a different area to our drilling, so we don't often hit them in our drilling. But certainly when we're developing along the veins, we can hit these as cross-structures. Historically, at Bralorne, they've been shorter and fatter and higher grade, but also lower angle. More challenging to mine than traditional long-hole stoping.
We're continuing on our long-hole longitudinal retreat. That's our bread-and-butter mining method. We develop along the veins at different levels, and we stope in between them and backfill. But if we opportunistically come across some of these very high-grade areas, then we will modify the short-term mine plan to extract those areas. That will be what is happening, and it is in the upper levels of the mine. We are coming up into the mountain from surface, and some of these sit between the 1120 and 1105 levels, and 1105 and the 1090 levels. They are up well in the mine, well above where we are currently developing in the new areas from the 1045 lower.
Okay. Thank you, Terry . I think it was 13 new mineralized headings available in Lower Mustang, and there are five currently producing. When should we expect additional headings to come online, and what operational hurdles have been cleared recently to support that addition?
Sure. Really the bread-and-butter front of the ground mining is dependent on two things that need to be out in front of your development. The first one of those is your resource conversion. That is all the drilling that we are doing. Kyle , our VP of Exploration, and his team is well-focused on that, with three rigs and a fourth rig to come online in a few months. Of course, development, both waste development, which is access to new areas. We have been developing the Bralorne, lower Mustang ramp. It is currently just past the 1015 level. We have developed that from the 1060 elevation through 1045, 1030, now 1015. We will be continuing down there to the 1000 level this year, and then continuing beyond that, continuing to ramp that down. Then there is the lateral development.
Lateral development, sometimes it is in waste as we get across to the veins with crosscuts, and then we develop along the veins themselves. We like that ore magnet, because it can pay for itself. It is along the vein, so it can be very high grade. But we need to get all of these things out of the way. That has been our focus of this year. That is why this year, the ratio of development to production, we are doing a lot of development with not a lot of production, is because we have to get this development done, so we can follow this ramp up. It has been very heavily this year, and will be in the first half of next year to support our ramp-up to 750 tons per day.
We are developing these working faces, we are extracting from them. In a few weeks, we'll be starting to stope between them, but we'll be continuing to develop more levels, more lateral development, more working faces, because the number of working faces you have is directly related to the production you can have. We developed across to Bralorne West, and now towards the end of the year and the first half of next year, we'll be doing, again, that ramping in waste development to get access to multiple levels, and development of lateral development, lateral work along the veins to support that ramp-up through 2027 and then into 2028.
Got it. Thank you. You touched on reconciliation a little bit. Overall, are you seeing the dilution mining widths and grades that you expected when you designed the Mustang mine ?
In this early stage, it's been quite variable. In the beginning, last year when we first started, it was our first attempts in the rocks. We didn't have a great understanding, at the very early stage, of deviation with long-hole there. The drills between the levels that we use to blast, our blasting pattern, overbreak, all things that you need to learn, and that's one of the reasons why we started off at a small mining rate. Initially we had a lot of overbreak, a lot of dilution, a lot of larger stopes than we'd planned, and that's all part of early-stage mining and why a lot of the early material we had was significantly lower than the grade we're seeing now.
Our plan or our mining plan, the design from the engineers is 1.8 m, and what we were seeing sometimes up to 2.5 or 3 m where we'd have block caving, and that impacts on the grade. With a lot of work from the team, looking at re-sawing and split blast, looking at the blasting pack, and the guys have changed from a dice five, which looks like a five dice, into a zipper pattern with stage blasting, and that's had a very good impact on reducing that. It's brought the as-built or the final void coming back much closer to our design.
In some cases, significantly. Some cases are up to 1.5 m from design. That's always good. It is very early days and new areas change, but I think the team's really got that under control, and we're starting to see that in the increasing grade as we reduce that dilution.
Thank you. Touching on inventory, you currently have approximately 80 or just over 8,000 tons in inventory. Is that stockpile intentional as part of the shipping strategy, or is it effectively like a processing backup?
No, it's all part of filling the pipeline. We have multiple stockpiles in multiple different areas that basically fill the pipe or fill the flow. We're always moving material, we're always filling up our ore bins at surface and also stockpiles underground, material that hasn't been crushed at our Lillooet crossing facility, material that has been crushed that we've got a holding certificate for and we've been paid for. Once we've been paid for that and it's been signed off, then we start to transport that down to the shipping facility. It's always moving between one place and the other. We never want to have a point where we don't have any ore anywhere. It's really important for us to keep that pipeline full of material.
Okay. Thank you. Touching on power, you're installing 1.2 MW of power with 100% redundancy and the ability to expand to 2.4 MW. At what production level do you actually need the entire 2.4 MW of capacity?
Magda, you're showing me up as a non-engineer. I'd have to ask our engineering team how their design works for that. I suspect this increase is really to support production ramp-up at Bralorne West, so my expectation, it'll be the 750-ton per day level. Electricity requirements in underground mines, it's all about airflow, it's all about exhaust, it's all about the number of diesel pieces of equipment that you have in site, and being able to bring in fresh air and move out fresh air. It's all part of the strategy there. We're developing to a historic raise called the Black Bird raise that'll bring in airflow directly from surface, and also connecting development down to the 980 level.
If any of our listeners have been to the site, that's the portal that comes out right at the camp. Very strong airflow drawn in from there. It's quite an integrated strategy. But I will ask our Senior Engineer, Hugh Boden , and he'll be able to give an answer for that, and I'll answer it in your next webinar.
Okay. I will try and remember that.
I don't know who asked that question there, but it must've been an engineer who sent that one in.
Switching to Bralorne West. You have completed the first two phases of the decline there and started phase III. When does Bralorne West transition from development to contributing mineralization, whether it is development or scoping?
It will be late this quarter or early next quarter, probably in January, I would say, we would start to have material coming out of there, assuming our production rates stay the same. The process from now is continuing to develop the straight decline that gives us access all along those veins that our listeners can see in the press release there. We start a spiral decline, a four-by-four development that takes us down multiple levels. We develop across to the Black Bird raise. I do not know if it is on those images, but that is a raise to surface that gives us significant airflow. And we are starting now the cross-cuts that will develop across the veins and then allow lateral development along those multiple veins.
All of that is underway now. And it will depend on how all that goes when we are starting to extract ore, but it will be lateral development ore initially. And then once the lateral development is done on multiple levels, we will be looking to stope between those levels. And at this stage, I believe that is scheduled in the second half of 2027.
Okay. Thank you. What has the close to 12,000 m of drilling at Bralorne West told you so far? Has anything materially changed from your original interpretation of that area?
Interesting question. We will be having a press release coming out here within a few weeks. Our previous drilling there hit a lot of high-grade material, and it was quite wide spacing. We cautiously downgraded the grade of the resource there in expectation that we would lose some grade when we drill it at closer spacing. The drilling that is starting to come back is starting to indicate we might have been a bit overly cautious there, but it is always better to be overly cautious than be able to come back. All I can say to the asker of that question, please hang on a couple of weeks. We have got results coming in all the time for Bralorne West. It certainly looks very good.
Particularly the 55 Hanging Wall Vein. It is showing very consistent thickness, very consistent continuity. The 55 Vein as well, and in some places, the 100 or the 101 Vein. What we certainly see over there is a lot more coarser gold. We see a lot more visible gold. I know we are seeing a lot in where we are developing in Mustang, but on general, we are seeing a lot more over there. That is quite encouraging as well.
Thank you. Touching on the sorting program, I believe the TOMRA XRT sorter is expected in Q4. When should investors expect that facility to begin processing material?
It will be broken down into a couple of stages. What we are focused on at the moment is having a crushing circuit, screening circuit in and operational, so that can help us to reduce costs on our mineral processing. The second part of that is the installation of the ore sorter. It has been delayed a bit, and the shipments were in a bit of a chaotic world when it comes to shipment. We are expecting it. The crushing circuit, screening circuit, that is all in storage at Lillooet, so that is all arrived. Some of the delays, the ore sorter will be in and installed, but it is the electrical management system. That is basically a big black box that manages the flow and turns on and off in the right sequence all of the conveyors, crushing plant and ore sorter.
Anyone who has tried to buy a phone or a computer of late, you will notice there is a big AI thing going on with microprocessors, and we are not immune to that as well. There has been a bit of a delay. It looks like we will have that operational here in first quarter as opposed to fourth quarter this year. We will be suffering a bit of delay. There is not much we can do about it. It is a global phenomenon that is occurring. It is very important that these systems have a good command and control system that runs everything in the right order. Our plan is to start testing on the ore sorter not long after that.
We have a significant amount of material that is sub-economic ore, so waste material that has gold in it. We have been stockpiling that underground in our stopes and in our void areas. We will be looking to extract that, and looking to upgrade that to an economic ore base. That will be our first task. We will be looking to transition across to run of mine material in second quarter of next year. Just to be clear with everybody, we are not running all of our material through the ore sorter. If we are mining material that is 18 or 20 g/ ton, then it is a direct ship. We will just be shipping that straight away. We get good payable.
There will not be a lot of waste material involved in that. It is selective what we use. It is more material that would go on the waste pile because it is below our trucking cutoff, and Ocean Partners have given us a bottom threshold. It is to push that material up into the seven or 8 g material, and remove the waste. A lot of development ore will particularly be going in, and if we have got stope ore where we have got a narrow vein relative to our stope design, we will be certainly running that material through. At this stage, it is quite selective as we implement that system.
Thank you. Touching on the results announced today, they show that roughly 60% of the material is rejected while retaining around 85% of the gold, and roughly doubling the grade. How does that change the economics of the direct shipping model? How much more material are you able to ship?
Our amount of material, shipping will sort of stay the same. We can ship up to a maximum of 1,500 tons. It is more the total contained gold that we are trying to focus on. That is why we have been focused here on smaller tons, but higher grade tons, so higher value tonnage. That is really the big push with the ore sorter is to reduce the waste material. Anyone who saw our Monday press release would see a good representative example of the veins. Our veins are around 90 cm wide. But in our development, in particular, we are developing up to 3.5 m. In our stopes, again, the veins are around 80, 90 cm, but our stopes can be up to 1.8 or 2 m wide. We are incorporating low-grade material that dilutes that high-grade core.
Really what the focus of our split blasting has been and what the focus of the ore sorter is to remove that low-grade material that ordinarily we would not truck. The other 15% or 20% of material that we are extracting out is below what our economic threshold would be. It is sort of around 1 g and 1.5 g . We will be stockpiling that material back underground. When we have got a mill, we will be looking to blend and augment that. It is not going to waste. We are not losing that gold. It will go into an underground inventory that we can later extract and process.
At this stage of our mining strategy, particularly the DSO strategy, the impact for us is big if we can remove that and it has a direct view or direct impact on our trucking and shipping economics. It is almost equivalent. The material we remove, we do not have to pay trucking on it. We put that money back in our pocket and still get almost the same amount of gold.
Okay. Thank you. You achieved gold recoveries above 95% when laser sorting was added, but ultimately decided to go with the XRT only circuit. Can you walk us through that trade-off?
Yeah. Our early work was done looking at the laser. At this stage of our ramp-up and our capital, we're looking to minimize whatever the upfront costs are. We're always looking at trade-offs, how much money do we want to spend, and what's the money we get back out of it. We're fortunate here to be able to work with the University of Saskatchewan and TOMRA directly on their run-of-mine facility that they have there, and do a lot of testing. And look at different scenarios, which one's first, which one's second, which one's best as a primary sorter, which one's best as a scavenging sorter.
The final outcome was that, even though eventually we'll look to have a dual scanner system, the best bang for our buck with just one system is actually the XRT system. That's what we're looking at now. We've engineered the facility that we can incorporate a laser sorter later on, particularly when we have our own mill in several years' time, so we can squeeze the most out of our ore body.
Okay. Thank you. Can you speak to how we should think about the impact of diesel prices on operations?
Sure. Look, it's a significant increase for us all across the industry. We're not 100% diesel generated, so we're connected to grid power. We augment our current electricity with diesel. We use it as fail-safe backups. We're transporting our material. In our transport contract, it's still below what our penalty trigger is. Things maintain the rate they're at, and it's okay, but it certainly adds to in-cost, inflationary cost. The same as a mining upcycle does. It adds more cost to people, more cost to equipment, more delays to equipment, which costs money. All of this sort of factors into mining inflation.
I'm hopeful the geopolitical issues can get sorted out and we can see prices track back to where they were end of last year or early in January. But yeah, really, it has an effect as it would have to everybody, and that's pretty well directly related to the increase in price.
Terry, you touched on the mill in your previous answer. Can you speak to the possible timing for the mill?
I can tell you what my timing is, which is sort of seeing the mill coming in throughout the course of 2029 and be operational in 2029 or 2030. I'm not the guy who's designing that. That's in our project geologist's hands. That is subject to change on availability of equipment, availability of everything else, permitting timelines. But at this stage, that's sort of what I'm thinking around then.
Thank you. Switching to permitting, do you have a current estimate for receiving the 750 ton per day permit amendment?
Yes. Early in January is the guidance we've been given. Whether that holds true or not, I don't know. We'll see. But, certainly, on the timeline that the government has given to us, and it seems to be progressing without too many issues at this stage, I think that's still a solid estimate.
All right. Thank you. Touching on exploration, looking at the results from September 9th, on a 79 m strike length of high-grade mineralization along the BK Vein. What do these results suggest about the continuity of overall mineralization at Mustang? Do these affect your near-term mine plans? Was this in resource, out of resource, can you give us a bit of context there?
Yeah. Look, just to be clear to everyone, these weren't exploration results. These are actual underground development production results. They're sampling across every face, every 2.4 m along strike, and that added up to, I think it was 64 g average across there. We will admit we were a bit surprised with that. We have an indication that these high-grade shoots can come back like this. This is what Bralorne is well-known for historically. We certainly see a lot of visible gold when the production geologists are sampling. So a lot of visible gold. So that generally indicates this is going to be 20+ g material. But certainly, that was a pretty beautiful-looking shoot to come out.
The long strike continuity is what's very encouraging, and the intra-level, so in between the levels, to be able to follow this material down. It bodes very well for the stoping, so we'll stope between these and the previous cuts on the 1040 and the 1030. We're developing now down to the 1015, and we're expecting that these ore shoots will continue down plunge. The plunge of these historically has been 500 m up to 1,500 m, so very continuous down plunge. We're quietly confident that these higher grade shoots will continue, and we'll just keep developing down and mining them.
Thank you. Moving to the PEA, can you clarify when the release is expected, and does it assume 500 tons per day as the base case? What would be the timeline to that rate?
We're hoping next week. We're pretty close with it. The team's been very focused and our external QPs, SGS, have been dedicating a lot of time to it. Currently we're hopeful that it'll be throughout the course of next week. The expected range of base case production, the base case is probably going to be 2,500 tons per day, with a range potentially up to 3,000. That'll get finalized here in the next day or two, but that's certainly the scale and scope of the project that we're looking at.
Okay.
It'll include four to five mining areas. Mustang itself, Bralorne West, Mustang West, and the Olympus areas.
Okay. You beat me to the next question. It was how should investors think about that? Would it be one or multiple? This is like a multiple mining center picture.
Yes. Really, we have got to develop multiple mines and/or multiple mining centers to extract that volume of ore. I think this will be based on probably 60% of our current resource base, with a mine life of, I think the guys are looking at between 10 and 15 years at this stage. So quite robust, but a lot of upside, a lot of growth, of course, straight outside of this. Yeah, certainly building into a big project.
Okay. Got it. Would this incorporate a trucking and third-party processing model or the mill that we just spent on?
I believe there will be one or two years under our current trucking scenario, and then it is a transition to a full mill build.
Okay, thank you. Touching on the ramp up, you are currently averaging roughly 79 tons per day year to date. What specific milestones get you to 500, and by when? You touched on the PEA part, so I will not ask that, but how do you go from 79 to 500?
Sure. It is all about our development profile, and that is what the team has been focused on here for the last three or four months and will be focused on developing down to the 1,000 and down below the 1,000 level. Following the ore shoots and veins that we are currently mining, development across there to Bralorne West. We have got the decline finished on time, and now we are starting to do the auxiliary development there and the ventilation development. We are looking to have a lot of that waste work done here by the end of this year. Then, as the new permit comes in, that will coincide with the start of production, initially from lateral waste material and then stoping there into the middle of the year.
Second half of the year, I think the target is to get to about 500 tons per day and then increase that up to 750 as we get into 2028. But it is all about the development, so getting that development done out in front so we can extract the stopes.
Okay. Thank you. I am not sure if you will be able to answer this question, but I will ask it. At 250 tons a day PEA base case and direct shipping capped at 1,500 tons per shipment by Ocean Partners, what would be the rough gold annual production range, and what would be the AISC the PEA assumes?
Oh, I'd be just making it up now because I haven't seen the final economics on the PEA. Hopefully we'll have that in a day or two. We won't be trucking large tonnage. We'll only truck a maximum of 750 tons per day. We really had that 1,500 in case there was challenges with the mill or the market wasn't good. But certainly at this stage, I think we're quite committed to working towards building our own mill. Maybe the next webinar I can answer that, or it'll be as part of the PEA, so that'll answer that question. What was the other component of that, Magda, sorry?
Let's go back a sec. What would be the AISC cost per ounce and annual gold production in ounces?
Yeah. I think the annual gold, we're probably looking at 150,000 oz, probably around that level, I think's the average across the PEA.
All right. Got it. Thank you. Can you speak to how sustainable the current operation is in terms of cash flows? To what extent is Bralorne self-funding currently? Is it like operations only, operations plus CapEx?
The answer to that, and look, anybody can. Welcome to have a look at our financials. It is all pretty clear there. Relative to mining, we would be cash flow positive, so our all-ins relative to mining. What our expenditure is on is capital work. It is all the work we have to do to support the ramp up over the next few years. If we factor that all in, then we are in a cash burn scenario where we are developing all of our development for that ramp up into production. The expectation here is it will be second half of next year that we arrive at a strong cash flow, positive position. And a lot of that is driven by the fact that we have finished that development and now we are mining those areas.
Okay. Thank you.
All really part and parcel with ramp up and mine growth.
Okay. Got it. Terry, can you remind us of the cash position as of your latest filing and the liquidity sources available?
Yeah. I will lead anybody to our last audited financial statements that came out the second half of the quarter. I can give you, I think we have sort of around the CAD 40 million cash in the bank at this stage. Yeah. I would prefer to direct everybody to our audited financial statements. That is much better.
Got it. Thank you. I do not see any further questions. Can you just remind us of the catalysts investors should watch for headed into the rest of this year?
Really the most or the strongest one coming out is our PEA coming out here within the next couple of weeks. That is really looking at, okay, what can this project be? What is it going to grow into? Following on from that, of course, is our permit amendment for 750 ton per day. We are also working on the baseline work for our large-scale permit amendment. That will be defined by the PEA and what the mine plan is. At this stage, it is looking at mill and full processing facility tailings waste and sort of in that 2,500-3,000 ton per day range is what we are expecting.
They are the two big major catalysts coming out. Interesting work here coming into the fourth quarter is the increase or ramp up of our production as we start to extract these stopes. Moving away from gold production from lateral development into gold production from the actual stope. We are pretty excited about that. I think that is pretty clear in the operational update, on figure three defines where those stopes are coming out. Then of course, continuing to develop these down to the areas where we are currently developing, so below the 1060, 1045, 1030, 1015, 1,000 level elevation and below.
Then a bit longer term is our first ore extraction out of Bralorne West. That is pretty exciting seeing that coming out. Of course, that will be prefaced by our high-grade drilling results, and they will be coming out periodically as we drill out Bralorne West.
Thank you. One more question just came in. Any focus on Ladner and Spences Bridge?
Oh, look, I'd love to have the money and the time and the people to bring all of those forward. But at this stage, we're just really focused on Bralorne. We see the whole Bralorne camp now 40 km strike length, 24,000 hectares as our main focus. It'd just be too challenging and I wouldn't want to direct my team's focus over into those other two assets. I believe they're great assets. I believe we've done great work there. I'd love to be able to put some drill holes into the Spences Bridge area, the Nova Cyclone discovery there. But we'll just have to see the strain on the team and how our capital position is before we make those decisions.
Okay. Got it. Thank you, Terry. Was there anything else you wanted to cover today we did not get to?
No, Magda, I think you've had some great questions. Everybody's obviously thinking about the press releases and reading them in detail, so very happy to hear that. Look, a big congratulations to our team who've been executing very well. Always the startup of a mine and ramp ups are challenging times. We've got some other challenging things here with geopolitical scenarios and AI booms. But the team's doing very well working through these. As everyone would have seen, we've got a lot of capital work going on. We're upgrading the camp here to be able to bring in more people, a larger kitchen, a larger dry. All of that's for 2027, 2028, and on. Building the platform for growth as we go forward as a company.
Great. Well, thank you so much, Terry, for answering all these questions. If anybody has any additional questions, please email info@adcap.ca. Thank you so much for joining us. Have a great afternoon, everyone. Thank you. Bye.