Thank you for standing by. This is the conference operator. Welcome to the West Red Lake Gold Mines first quarter 2026 results webcast. As a reminder, all participants are in listen-only mode, and the event is being recorded. After the presentation, there will be a Q&A session. Participants are encouraged to submit their questions using the form at the bottom of the webcast frame. If management is unable to make it through all the questions during the allotted time, someone will follow up with you by email in the days that follow. I would now like to turn the conference over to Shane Williams, Chief Executive Officer. Please go ahead. Ladies and gentlemen, we have lost connection with the speakers. Please stand by as we reconnect. I would now like to turn the conference over to Shane Williams, Chief Executive Officer. Please go ahead.
Thank you and good morning, everyone. We appreciate you joining us here today for West Red Lake Gold Mines' first quarter earnings call. Joining me on the call today is Harpreet, Chief Financial Officer of the company, and Jaclyn, our Vice President of Corporate Communications. Before we begin, I would encourage listeners to review the cautionary language regarding forward-looking statements contained in our news release and MD&A issued yesterday, which are available on SEDAR+ and on our website. Today's call is an important milestone for the company. In just over two and a half years since acquiring Madsen, we successfully transitioned the mine back into production, achieving commercial production in January of this year. During the period, the company has completed an immense amount of work. We have drilled over 150,000 meters. We have advanced over 10,500 meters of underground development.
We've rebuilt the operation and workforce with approximately now 250 employees and contractors supporting the operation. We've invested roughly $150 million into development and resource growth. As we've stated, we took a disciplined approach centered on responsibly restarting Madsen and rebuilding the foundation for long-term operation in Red Lake. We said we would do it. Today Madsen is back in production. This is our first earnings call. The first quarter represents the start of post-commercial production ramp-up at Madsen and a period where we made deliberate operation decisions focused on positioning the mine for consistent and sustainable production throughout the balance of 2026 and beyond. During the quarter, we produced 5,667 ounces of gold and sold 6,165 ounces of gold at an average realized gold price of approximately $4,938 per ounce. With that generating approximately CAD 42 million in revenue.
Q1 production and financial results reflect the prioritization of underground development activities, infrastructure advancement, and access into additional mining areas, including the higher-grade mining complexes. While this impacted near-term ounces, we believe that this resequencing was the right operational decision as production is expected to continue to build throughout 2026, with approximately 60% weighted towards the second half of the year. During the quarter, mining activities were primarily focused on sill and access development within the South Austin area and the 4447 mining complex, and also focused on broader operational activities across the mine, including better access to mining areas and improvements to the shaft. Importantly, we are now in Q2 mining this 4447 area, which is a higher grade and more importantly, non-remnant portion of the Madsen ore body.
Overall, we continue to view 2026 as a transition and ramp-up year as Madsen evolved into a multi-complex underground ore operation. With that, I turn the call over to Harpreet to review the financial results for Q 1.
Perfect. Thank you, Shane, and good morning, everyone. As Shane outlined, for the first quarter of 2026, the company reported revenue of approximately CAD 42 million based on sales of 6,165 ounces of gold at an average realized gold price of $4,938 per ounce. This generated income from mine operations for the quarter of CAD 15.3 million and in turn provided a 37% operating margin. Adjusted net earnings for the quarter were approximately CAD 6.4 million, or CAD 0.02 per share. The company also generated positive EBITDA of CAD 3.3 million and adjusted EBITDA of CAD 14.4 million. Cash cost per ounce of $2,594 and All-In Sustaining Cost per ounce of $4,678 during the quarter reflected the lower production profile associated with the planned operational resequencing discussed earlier, in addition to ongoing underground development and infrastructure activities associated with the ramp-up phase of the operation.
As mining rates and production levels continue to build through the year, the company expects the All-In Sustaining Cost per ounce to improve. The company is also pleased to announce that beginning in March, we began making our monthly principal repayments on the Nebari facility, as well as our first payment to note holders of the gold-linked notes. In addition to the note holders receiving their scheduled principal payment, they also received an additional premium of approximately 177%, based on the spot price of $4,995 on the day the gold ounces were sold. It was a great premium for our note holders. Overall, we exited the quarter with approximately $36 million in cash, providing a solid position as the company continues advancing the Madsen Mine through commercial production ramp-up.
Additional details regarding the company's financial results can be found in our Q1 financial statement and MD&A filed yesterday evening on SEDAR+ and our website. I'll now turn it back to Shane.
Thanks, Harpreet. As we move into the remainder of 2026, our primary focus, as we said, is on the completion of our operational ramp-up, overall operational execution, and advancing the progress at Madsen. We're also going to be establishing greater production consistency, including the development and technical work across the broader Red Lake package. Also prioritizing a number of different areas, including Rowan. The Rowan project within Madsen focused on our Austin 904 complex, which is quite exciting, and we've had some really good drill results. Fork, and also this eastern connection drift, which moves the mine laterally towards the Derlak complex, which represents an important non-remnant mining area within the broader mine plan. As well, work related to phase one of the shaft refurbishment is advancing and remains on track for H2 2026.
While mine ramp-ups are never perfectly linear, we are encouraged by the operational momentum we are seeing as we progress through the second quarter. I am proud of the focus, operational discipline and strong safety culture demonstrated by our team during this important transition period. Importantly, the work today is not solely focused on near-term production growth at Madsen, but the advancement of underground development, access to additional mining areas, and early work related to Fork and continued progress at Rowan, which are all intended to serve as important building blocks towards the company's broader focus on this long-term hub-and-spoke vision in Red Lake that we have talked about and one of the real opportunities we saw when we purchased the Madsen Mine.
We believe the strategy centered around the mill, Madsen Mill, has really the potential to create a scalable production profile over time, and the work completed today is expected to contribute towards that larger vision and really provide a platform of growth for West Red Lake as we move forward. Also going forward, the company intends to provide quarterly production updates shortly followed at the end of each quarter, with financial statements being filed within 60 days after each quarter and 120 days for the year-end material. Hopefully, this will provide shareholders and the investment community with a more consistent expectation regarding timing of production-related numbers as well as operational updates and financial updates. In addition, we expect ongoing news flow throughout 2026, including drill results in the exciting area of this 904 in Austin, Lower Austin.
We will have further updates on Rowan and Fork, which we had some encouraging drill results earlier this year in Q1. We drilled both Rowan and Fork. Also we're working on our updated pre-feasibility, which will really combine and, I believe, really show the vision of the hub-and-spoke model in Red Lake when we combine the Rowan and Madsen. With that, operator, we can now open the line for questions submitted through the webcast platform.
Thank you. Once again, participants are encouraged to submit their questions using the form at the bottom of the webcast frame. If management is unable to make it through all the questions during the allotted time, someone will follow up with you by email in the days that follow. The first question is, "Your AISC guidance is higher relative to peers. Can you discuss the drivers behind that and how you expect cost to trend moving forward?
Sure, I can take that question. I think it's important that we first frame 2026 appropriately. We called commercial production on January 1st, and it really is a year of ramp-up and transition for the operation. The higher All-In Sustaining Cost is really a function of the fact that we had lower plant production volumes in the first half of the year as we had ongoing underground development and infrastructure. These were key items because this is what's going to establish our long-term mining profile. It's also important to note that like many of our underground Canadian mines, Madsen also carries a higher fixed cost base. There's more of an impact of that in the earlier stages of ramp-up. With the production levels lower, your All-In Sustaining Cost is going to be higher.
However, as we mentioned in our guidance as well, approximately 60% of our annual production is going to be weighted in the second half of 2026. As our production levels and ounces increase throughout the year, we'd expect our operating costs to improve accordingly. Two other major factors I think it's key to bring up as well is, as Shane mentioned earlier, we're now accessing Q2, the higher grade, non-remnant mining areas. That includes the 4447 complex. This will obviously impact our overall operations positively. On top of that, as once phase one of the shaft refurbishment is completed in the second half of the year, we would expect to see further improved efficiencies with lower haulage costs, and this again, would impact positively to our All-In Sustaining Cost per ounce.
Overall, I think it's really important that we reemphasize that many of the costs and the operational decisions that we made during the first half of the year are really focused for us to position the company for greater flexibility, consistency, and scale for the longer term. As we progress through the year, we do expect our All-In Sustaining Costs to decrease.
Next question. Another question there?
Can you provide an update on your current cash position?
At the end of Q1, we had approximately CAD 36 million of cash. Operationally, as I mentioned, we continue to see improvements through April and May as additional mining areas are brought into the production profile. Overall, we believe that our current position does provide the company with continued financial flexibility as we continue to focus on our operational execution and building our production through the balance of the year. With that, we can move on to the next question.
There's a next question there. Thank you.
What was the average grade processed during Q1?
Yeah. We've had quite a few questions on this, so this I think is an important. Again, it needs to be framed a little bit. The average grade in Q1 was around three to four grams material, this was really primarily focused on the operational decisions we made. As we pivoted from mining the 4447 area, pushed it into Q2, we really focused on access development. In underground mining, access and sill development, which is access to the stopes, is always lower grade than the stopes itself. When we made that decision to focus on the access and development, that has always been lower grade, and that's a result of the lower grade coming through in Q1.
As we develop back into those areas and mining areas, more importantly now as we get into Q2, we are in those stope areas in that 4447 complex, and these are higher grade mining areas. We would expect the grades to improve relative to Q1 and as we go forward into the rest of the year. It's important, usually when you focus on access and development, the grade you set yourself up for the higher grade material later in the quarter. That's what we're experiencing to date as we've gone into Q2. Next question.
What do you expect grades to look like in Q2?
Look, we're very early in the quarter, and we don't really provide inter-quarter guidance, and that will come at the end of Q1, as we said, in production. We do expect an improvement in grade in Q2, and we are actually seeing that on the mine. We're seeing grades are going to vary quarter to quarter and as we sequence different mining areas. Part of the strategy of West Red Lake is these mining complexes we talked about, because we have a mix of remnant and non-remnant areas. Grade will vary between these areas. Overall, we're seeing grade increase, and we're expecting grade to increase over the balance of the year. At the moment, we're focused on building up the mine underground tonnage so that we have in parallel, we have the tonnage being increased, and we have the grade increased.
That's really primarily the decision why we pivoted for that one. We needed both the tonnage and grade to continue to increase at the same time, and subsequent, the gold ounce production. Next question, please.
Will you be raising money in 2026?
Yeah, look, we are still in ramp-up, and the company remains focused on advancing ramp-up responsibly while maintaining financial flexibility. As any operating company in the ramp-up phase knows, we're continually evaluating capital allocation and funding alternatives as part of normal business. Any future capital decisions, if required, would be approached with a focus of long-term development. As I said, we are seeing Q2 improve materially, which will translate to greater ounces and obviously greater revenue for the company. At this stage, we're focused on operational execution and improving production and operating performance and setting ourselves up for the balance of the year. I don't know if there's another question there. Can you?
Can you comment on how operational performance has trended since quarter end?
I've answered that quite a few times, but I'll just give a little bit of context to the listeners. As we've gone into April and May, we are seeing grade and tonnage trend up in line with our planned ramp-up profile. Just to remind, we put a profile as a guidance between 35,000 ounces and 45,000 ounces, which was back-ended towards 60%, back-ended towards the H2 of 2026. We are seeing that ramp up according to that guidance and that ramp up as according to plan. We are seeing the tonnage ramp up considerably that the mine is doing. The mine have done a fantastic job of setting ourselves up to ramp up that tonnage. Also, encouragingly, we are seeing grade increase as we get into that 4447 complex .
Overall, we are seeing things progressing in line with ramp-up, and we're quite happy with the progress we're seeing in Q2. Another question.
Why did the company choose to prioritize development work instead of maximizing near-term production?
Yeah, again, this is based on more longer-term operational decision. In any underground mine, really, in long hole stoping, which is the way the mine is run underground, there is also a focus on development and production. The development production is a balance that you've got to get right. You've also got to hit the high-grade material when your tonnage is at the highest level. We focused on and set, and we had to always plan to do back-end loaded on our production. In order to set that up right and to make sure that once we get into the second half of the year, we're in full force, we focused on development in the first half, in the first quarter of the year, so we would be set up for Q2, Q3, and Q4.
That's really where that decision was made and that pivot was made. We're seeing actually the results of that now where in Q2, the tonnage is ramping up to where we want it to be, and also the grade is ramping up. We think it was the right decision to set ourselves up for the back half of the year, Q2 and the back half of the year. That is translating into the success we're seeing at the moment.
Can you explain the debt situation, including Nebari and how the gold-linked note is structured?
Yeah, I'll just turn that back over to Harpreet here.
Sure. The company's current debt structure, as everybody's aware, we did establish it early on to help with the restart of the ramp-up of Madsen Mine. That included our Nebari facility of $35 million, as well as our gold-linked note. In Q1, as I mentioned earlier, we did begin the principal repayments on both of these facilities. When it comes to the gold-linked note and its structure, it is unique and it's different from the traditional fixed loan, and it's partly because the value is really linked to the gold price. This is a more anti-dilutive, non-dilutive financing structure, and it was really designed to support us while we restarted the mine while minimizing equity dilution for our shareholders.
It is a complex instrument, but we have disclosed the full accounting treatment, the obligations of the gold-linked note in both our annual and our quarterly statements. I would encourage any of the listeners that would like more information on it to refer to those public filings. With that, I'm happy to. Is there any other follow-up questions?
Yes. What are your plans to repay the Nebari facility?
I think for us, as the ramp-up progresses and our production levels increase, we do expect that obviously our operational performance and our cash flow generation is also going to increase in line and strengthen. This is going to really provide us with the greater flexibility so we can evaluate options, capital structure optimizations for potential debt restructuring opportunities over time. That would really be our plan for the Nebari facility.
That concludes the question and answer session. I would like to turn the conference back over to Shane Williams for any closing remarks.
Thank you, everyone. Thank you everyone for joining us today in this important milestone for the company and your continued interest in West Red Lake Gold Mines. We do appreciate the ongoing support of our shareholders and look forward to continuing to update the market as we progress through 2026. We are highly encouraged by what we're seeing in Q2, as we have laid out, and so that's an exciting milestone as we move into Q2 and beyond in 2026. Thank you very much.
This brings to an end today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.