Wesdome Gold Mines (OTC:WDOFF) held its second-quarter earnings conference call on Friday. Below is the complete transcript from the call.

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The full earnings call is available at https://events.q4inc.com/attendee/255950472

Summary

Wesdome Gold Mines reported a strong Q2 2026, with net income of $94 million, free cash flow of $42 million, and a cash balance of $390 million after a significant share buyback program.

The company has extended mine life at Eagle River and Kiena to approximately eight years, supported by reserve-based mine plans, and is focusing on increasing production and operational flexibility.

All-in sustaining costs (AISC) per ounce were $1,763 US, with expectations for reduced AISC at Eagle River in H2 2026.

Operational highlights include the first production stope at Presqu'ile and increased mill throughput at Eagle River, with expectations to fill the mill by 2027.

Management emphasized a strategic shift towards district-scale opportunities, leveraging existing infrastructure, and a focus on intrinsic value per share rather than scale for its own sake.

The company plans to maintain its production and cost guidance for 2026 and has initiated a quarterly dividend and expanded its share buyback program.

Exploration efforts are robust, with 270,000 meters planned for 2026, and recent discoveries like the Norbert Knight are expected to enhance Kiena's long-term resource profile.

Full Transcript

OPERATOR

Okay. Good morning. Welcome to Wesdome Gold Mines' conference call to discuss the company's financial and operating results for the three and six months ended June 30, 2026. As a reminder, this call is being recorded. Your host for today is Trish Moran, Wesdome's Vice President of Investor Relations. Ms. Moran, please go ahead.

Trish Moran, Vice President, Investor Relations

Thank you and good morning everyone. Before we get started, I'd like to point out that during today's call we may make forward-looking statements as defined under Canadian securities law. I ask that you view our slide presentation for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Please note that all figures discussed on this call are in Canadian dollars. Unless otherwise noted, our press release, MD&A and financial statements are available both on SEDAR+ and on our corporate website wesdome.com.

With us on today's call are Anthea Bath, Wesdome's CEO; Phil Yee, our Chief Financial Officer; Tyler Mitchelson, our COO; Jonah Lawrence, Senior Vice President, Exploration; and Kevin Lonergan, SVP, Technical Services. Following management's formal remarks, we will then open the call to questions. And now over to Anthea.

Anthea Bath, CEO

Thank you, Trish, and good morning everyone. Q2 was another strong quarter for Wesdome and another demonstration of how fundamentally this company has changed. We delivered net income of $94 million and $42 million of free cash flow and ended the quarter with more than $390 million in cash after returning more than $80 million to shareholders through our share buyback program. At Eagle River, increasing throughput reflects our deliberate move towards a larger, more productive operating model.

We're beginning to leverage our fixed cost infrastructure and we expect those benefits to become increasingly visible as throughput grows. Kiena also delivered a strong quarter on production and costs. In July, we blasted the first production stope at Presqu'ile, establishing three active mining horizons and achieved the breakthrough of our new ramp from surface. There's another number from the quarter worth highlighting and that number is eight.

For the first time in Wesdome's history, both Eagle River and Kiena are underpinned by reserve-based mine plans extending approximately eight years. Last week we filed the independent technical report supporting those plans, culminating nearly three years of work to build longer-life, more predictable and more resilient operations. And that changes the conversation. We now have greater time, financial capability and operational flexibility. We can now move beyond asking the question about extending our mine lives and increasingly ask what can these two mining districts ultimately become?

Importantly, the plans are not the limits of either asset. Opportunities dependent on further optimization, exploration, resource conversion and technical work are not actually even included. The technical reports establish the foundation. Our opportunity is now to build beyond that. At Kiena, immediate priority remains operational execution, reliable production across multiple mining fronts and continued productivity improvement. We see a pathway over time to increase annual production.

That opportunity comes from two reinforcing drivers: improving mine productivity and exploration success that increases ounces per vertical meter and creates additional high quality mining fronts. The recent Norbert Knight discovery is just one example. Together with additional mining fronts, with better equipment utilization and higher productivities, this creates the potential to grow production while leveraging the existing infrastructure that's already in place.

That upside is not included in the current reserve plan and requires further operating execution, drilling and technical evaluation. Beyond existing mine Kiena East, which includes Zone 134, Dubuisson and Shawkey, point to a broad opportunity that we're systematically evaluating. These are early stage and require considerably more work. But they are changing how we think about Kiena not simply as a mine, but as an infrastructure platform within a much larger mineralized district.

At Eagle River, the reserve plan provides a larger, more resilient operating base and sees us filling the mill as early as next year. It also preserves important flexibility. If we continue replacing high-grade reserves at the pace that we've been achieving, we retain the ability to resequence this plan and potentially defer global model material for years. Beyond the underground mine, Mishi, Magnacon and other bulk deposits provide the opportunity to evaluate an integrated open pit and underground development leveraging existing Eagle River infrastructure.

We expect to advance conceptual work over the next 12 to 18 months to assess mining and processing scenarios and guide future investment. Increasingly, we see Eagle River as a high-grade underground mine at the centre of a far broader regional mining and infrastructure opportunity. Finally, the technical reports identify conceptual exploration targets of approximately 2.4 to 6.3 million ounces across Eagle River and Kiena. These are conceptual targets.

They're not resources or reserves, but they illustrate the scale of the opportunity beyond our current plans. Importantly, much of the infrastructure and the operating platform required to systematically test these opportunities is already in place. Eight years is an important milestone, but it's not the destination. It's the platform from which we can build the next generation of Wesdome. Since 2023, we have strengthened our operations, extended our reserve life, built our balance sheet and significantly increased the capability of the organization.

Collectively that has changed what is possible for this company, Wesdome. Our ambition is to progressively build two premier Canadian mining districts capable of supporting multiple mining centers around established infrastructure, while generating significant long-term value. We increasingly see our opportunity at district scale and not mine scale. The model is straightforward: exploration creates more and better mining opportunities; operational improvement allows us to extract more value from them; and existing infrastructure allows us to translate both into growth efficiently. And our competitive advantage extends beyond geology. The technical capability, the leadership, the capital discipline, the culture and the community relationships we have built are increasingly important to our ability to capture that opportunity. We are not pursuing production or scale for their own sake. We are focused on growing intrinsic value per share. Scale should be the outcome of creating value, not the objective.

Our longer reserve lives, strong balance sheet and cash generation give us the ability to be prudent in investing where returns are justified, returning capital where appropriate, and remaining selective on external opportunities. Three years ago our priority was to strengthen the foundations of Wesdome. Today those foundations are largely in place. We believe the opportunity in front of Wesdome is considerably larger than the company you see today.

Our responsibility now is to convert that opportunity into value deliberately, systematically and per share. And with that I'll hand over to Phil to walk you through the financials.

Phil Yee, Chief Financial Officer

Thank you, Anthea. Good morning everyone. Turning to slide 8, Q2 2026 was a strong quarter. Revenue came in at 267 million, leading to net income of 94 million or 64 cents per share, adjusted for a 2.3 million impact of non-recurring payments. Adjusted earnings per share was 65 cents per share. EBITDA and net cash flow from operating activities were 170 million and 88 million, respectively. Free cash flow in the quarter was 42 million or $0.28 per share, compared to 53 million or $0.35 per share in the second quarter of last year.

The year-over-year decrease reflects several items, most notably the timing of a 21 million prepaid tax installment in Q2 of 2026. We expect quarterly free cash flow to significantly increase in the second half of the year. Turning to slide 9, on a consolidated basis, AISC per ounce of gold sold was 1,763 US in the quarter. At the site level, Eagle River came in at just over $2,000 US per ounce sold, reflecting a 17% increase in ounces sold and certain one-time costs, which taken together make it difficult to see the positive underlying cost trend we are seeing at the operation.

We expect AISC per ounce sold at Eagle River to be lower in the second half of the year. At Kiena, AISC was $1,497 US per ounce sold, driven by higher contractor costs supporting the development of Presqu'ile. Year over year, sustaining capital also decreased due to timing. Corporate G&A of nearly 11 million included costs primarily relating to unplanned corporate development and the technical reports. We continue to diligently manage our corporate G&A costs.

Resiliency is a priority for us and we are taking concrete steps to make improvements across three areas. The first area is supply chain. Over the past six months we have strengthened the team and improved structure and processes around inventory and supplier management and key contract improvements. Already savings of several million dollars have been identified with several more million expected by year end. Savings are anticipated to flow through progressively over the next 12 months.

Supply chain is a structural and meaningful opportunity to optimize costs and improve efficiencies across our operations. The second area we are reviewing is reducing our reliance on contractors. We see a meaningful economic opportunity to transition certain roles from external contractors to our permanent workforce. Our HR team is actively developing plans and programs to support this transition at both sites. Thirdly, we are reviewing maintenance practices across business with a focus on further reducing unplanned downtime and lowering overall costs and capital costs.

These three initiatives represent a coordinated effort to drive improved margin resiliency over time. Our ambition is to be a sector leading low cost producer. Turning to guidance on slide 10, while we are reaffirming full year production and cost guidance, we have made a few updates to the guidance table to align with our internal forecast. At Eagle River we continue to expect full year production of 105,000 to 150,000 ounces at an average grade of 11.5 to 12.5 grams per tonne compared to initial guidance of 13 to 14 grams per tonne in the second half.

The continued integration of global model ore into the mine plan is anticipated to reflect higher mill throughput and slightly improved grades relative to the first half of the year. We are also reducing our depreciation and depletion guidance to 100 million from 130 million previously. This reduction is a direct result of the meaningful increase in our minimum reserves announced in June. With respect to CapEx, we continue to invest in high return organic growth initiatives to improve operational flexibility, increase mine life, execute on our fill the mill strategy and pursue growth.

Based on our most recent forecast, full year consolidated capital could track up to 10% higher than the initial guidance of 205 million, primarily driven by the timing of growth expenditures at Kiena. Management continues to diligently assess the timing of these costs. Turning to slide 11, we closed the second quarter with a cash balance of 391 million. Importantly, that is after returning more than 80 million to shareholders through our normal course issuer bid during the second quarter.

Including our revolving credit facility, total liquidity was roughly 746 million as of June 30, and we expect that figure to remain strong as we move through the year. Our balance sheet remains debt free and flexible and we are deploying capital with discipline. Our priority is to return meaningful capital to shareholders while investing in our organic growth strategy. I'm pleased to highlight two recent important milestones in our capital return program.

First, at the end of June, we initiated a quarterly dividend. The first payment is due at the end of September. On an annualized basis, the dividend amounts to approximately $0.12 per share. While modest to start, it reflects our confidence in the durability of our free cash flow profile and our commitment to a disciplined shareholder first approach to capital allocation. Second, alongside the dividend announcement, we expanded our share buyback program to up to 6% of shares outstanding.

Since last November, we've repurchased nearly 8 million shares at roughly $24 per share, or approximately $190 million in total, a meaningful demonstration of our conviction in the intrinsic value of this business. Commensurate with the implementation of the NCIB last year, our board approved the repurchase of up to 10% of our public float. As we progress through the program, our capital allocation thinking continues to evolve alongside our business.

Buybacks are one tool in the toolkit and we will continue to use that opportunistically. We believe our financial flexibility is a strength and shareholders can expect us to deploy capital where we see the highest return. Whether that's in the ground, on the balance sheet, returning value directly to you. Metrics such as return on capital remain paramount in our decision making. According to the latest calculations, we continue to rank third across the industry on this measure, reinforcing our disciplined approach to deploying capital.

With that, I'll turn it over to Todd to walk you through our operational performance.

Anthea Bath, CEO

Thank you, Phil, and good morning, everyone. I'll begin where we always begin. Safety. In the second quarter, we recorded zero lost time incidents. Our TRIFR was 1.67, slightly above the prior-year quarter, serving as a reminder there's always more work to do. What is particularly encouraging is a significant improvement this quarter in our high potential incident frequency rate, which declined 69% year over year to 0.67. This reflects the strong commitment to safety across our organization, focusing on critical risks and the continuous improvements being made every day.

Last month we completed the implementation of our company-wide 10-point critical hazards program. Building on that progress, we are now developing a comprehensive mobile equipment safety standard focusing on addressing our highest risk hazards. At Wesdome, safety is non-negotiable and our actions reflect that commitment every day. Moving to Eagle River on slide 13, before diving into the details, I want to step back and frame 2026 in the proper perspective.

Both Eagle River and Kiena are in the midst of a deliberate value-creating transition to new long-term mine plans, and while there is meaningful work still ahead, we are committed to shaping these assets into the low-cost, predictable, scalable producers we know they can be. Eagle River has been fundamentally changing for several years and that pace has picked up in H1 with the integration of the Global Model ore as part of our updated mine plan.

This reflected a strategic shift towards a value-focused operation, one that prioritizes improved mill and mine utilization over the long term, not just quarter-to-quarter ounce maximization. The change has started, but it is far from done. Eagle River performed in line with our mine plan. During the second quarter we processed over 72,000 tons through the mill, producing 22,000 ounces at an average grade of 9.7 grams per tonne. As mine output increases, the mill is responding well by increasing throughput.

Quarterly grade variation is a natural feature of our ore bodies and sequencing; grades on a given level can range from 6 all the way up to 30 grams per tonne. In July, grades averaged nearly 12.5 grams per tonne, reinforcing our confidence in a stronger second half. The operational setup also supports our confidence. The next 300 Zone stope is fully drilled off with approximately 25,000 tons ready to mine in the coming months at grades reaching up to 25 grams per tonne.

Analysts who joined our mine site tour in mid-July saw this impressive stope and our preparations firsthand. Based on our forecast, we remain confident in delivering Eagle River's full-year production guidance. The fill-the-mill story at Eagle River is gaining real traction and the numbers back it up. Throughput averaged nearly 800 tons per day in Q2, a nearly 50% improvement year over year, and we are targeting a further 10% increase in the second half.

This puts us firmly on track to fill the mill in 2027 as outlined in our recently filed technical reports. At Eagle River, our eight-year reserve mine life plan projects average daily mill throughput of approximately 988 tons per day, but we are not satisfied with stopping there. We are actively assessing opportunities to push the mill. As we continue to optimize and embed operational improvements, we see a credible path to ratcheting up tons per day beyond the current 80% overall equipment effectiveness.

The operational improvements behind this throughput growth are broad based and measurable, as you can see on slide 14. Since 2025, milling rates are up 14%, unplanned downtime down 60%. Mill operating time and energy efficiency are both up 12%. These are not one-off wins. They're a result of a fundamental shift from reactive to proactive system-based maintenance embedded across scheduling, mining practices, and site management. The mine is running more reliably and more efficiently than ever and we expect that trajectory to continue.

Moving now to costs, Eagle River's cost per ton in Q2 was $631, essentially unchanged from $626 in Q2 of 2025, a result we are pleased with given the inflationary pressures broadly felt across the industry. And while tonnage costs are essentially flat year over year, it is worth noting that the quarter included identifiable one-off items that added approximately $45 a ton. Additionally, it is important to highlight that we are starting to see the fixed cost benefits of a nearly 50% year-over-year increase in daily mill throughput and its positive impact on the fixed cost leverage that underpins our fill-the-mill strategy.

We expect this to be more visible in our unit costs for the balance of the year as one-time items roll off. As grades normalize in the second half and production strengthens, we expect Eagle River's all-in sustaining cost to return in line with full-year guidance. In the first half of the year, Eagle River invested 27 million against a full-year budget of 105. Capital deployment will ramp up meaningfully in the second half with spending focused on critical infrastructure investments that are required for the long-term future of the operation.

Turning now to Kiena on slide 16, the updated mine plan at Kiena is focused on improved operational flexibility and the implementation of the operating model for stability first, then growth. Kiena delivered an exceptional second quarter with production rising 28% year over year to more than 22,000 ounces, driven by a 13% increase in tons processed and a strong average grade of just over 11 grams per tonne. This performance reflects expanding mine flexibility and executing with discipline.

The 129 and 136 levels within Kiena Deep remained our primary sources of mill feed, contributing roughly 540 tons per day. Importantly, we have added Presqu’île as an active mining horizon at Kiena. The first production stope was blasted in July and we expect commercial production in Q4. This brings us to three active mining horizons with a fourth at level 142 expected to come online in 2027. Expanding optionality at Kiena is a meaningful de-risking of the asset and a foundation for greater growth, predictability, and planning stability going forward.

With multiple active mining horizons and a growing platform, we have built the infrastructure for sustained, scalable growth at Kiena. While we expect operational momentum to continue, this is still an emerging program. The benefits are still coming through and we are not finished building. The implementation of the operating model is driving meaningful improvement paired with the major projects to enhance operational flexibility, including additional mining horizons and site infrastructure upgrades to move people and equipment more efficiently.

This model is foundational to Kiena's long-term growth plan. While it is early days, productivity metrics are trending positively. Mobile equipment availability is up 10% to 15% year to date. Daily average tonnes for the mill have risen by about 30% since last September, and milling rates have increased by 10% to 15% from 2025, and stope cycle operating delays have declined by approximately 30% year over year. Continuing our focus on these improvements and the additional mine flexibility gives us confidence in the H2 ramp-up to deliver on our guidance.

Kiena's Q2 costs per ton were $526, flat compared to the prior-year quarter. This reflects the deliberate cost of building operational flexibility, including bringing additional mining horizons online, investing in maintenance, and our current reliance on contractors. We view these as transitional and not structural. As Kiena Deep and Presqu’île ramp up to full utilization following commercial production in Q4, fixed cost leverage will become increasingly evident in the ton cost profile.

Total capital expenditures in the first half of 2026 were 54 million, including approximately 36 million in growth capital. Elevated spending reflects contractor costs tied to the completion of the new ramp construction as well as accelerated development at Presqu’île and Kiena Deep. Both investments directly advance our long-term production capacity. The breakthrough of the new ramp in Q2 represented a significant operational milestone. It established direct access from surface to the bottom of Kiena mine.

This enhances the flexibility for material and equipment movement and, critically, enables our ventilation expansion project. The project, which will double ventilation, is a key enabler for higher mining rates and underpins our three-year production outlook. For the balance of the year, growth capital will continue to further push for scale development and the ventilation fan upgrades. Sustaining capital will further extend the Kiena Deep ramp to the 142 level with additional investment in exploration, ventilation on demand, and power factor improvements to enhance efficiency and reduce our operating costs over time.

Collectively, these investments position Wesdome to deliver on its production growth targets. While we have a way to go yet, stability is gradually taking hold at Kiena. Equipment availability has improved following several quarters of disciplined maintenance work. Since implementing our new operating model in H1, stoping delays relative to plan have declined by 30%. That is a clear and measurable indication the changes we are making are delivering results.

The implementation of the operating model is now advancing and we are focused on embedding processes, improving schedule adherence, and reducing variability across the operation. The achievement of these milestones will position Kiena as more stable and operationally flexible than at any point since its commercial production began and provide the foundation that can deliver on Kiena's long-term growth profile. With that, I'll turn it over to Jono to review exploration.

OPERATOR

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Harrison Reynolds with RBC Capital Markets. Your line is now open. Please go ahead.

Harrison Reynolds, Analyst at RBC Capital Markets

Hi, good morning Wesdome team. Congratulations on a good first half of the year and appreciate the detail provided so far. Just on the buyback, been buying back stock at a good pace, 8 million of 9 million authorization, big buyback in July. Can you talk a bit more about what you're seeing in terms of value in the buyback, what drove that large buyback in July, and how we should think about the cadence going forward?

Phil Yee, Chief Financial Officer

Hi Harrison. I would say it's really reactive to the market, coinciding with the drop in the gold price. The way we set up our buyback is based on our trailing P/NAV. So I think you would see the volume increases really tied to the dips in the gold price. I think that pretty well answers the question, I think.

Harrison Reynolds, Analyst at RBC Capital Markets

Yeah, no, understood. And then shifting to operations. It was great to see both sites earlier this summer and at Eagle River. Good to hear about the ongoing conceptual study on Mishi and regional potential at Eagle River. Obviously it's early days, but could you outline some of the potential trade-offs you're looking at with Mishi and how incremental you think that could be for Eagle River's output?

Colin

Harrison, I'll comment here, then I'll hand over to Tyler as well. I think right now we're still in the early stages of that. I think we're getting quite excited about what we're seeing. We're looking at it in a phased approach as well as from a larger perspective. So phased-wise, first of all, how do we incrementally grow the operation with what we have quickly so we can get it quicker into the mill? But secondly, what is the scale of the region itself?

The work we're doing in conceptually understanding the potential targets across all of these open pits is going to define the scale of the potential opportunity in front of us, which we'll then use to actually work on the processing and mining options that are available to Wesdome to do that. My feeling is that this is going to be quite a substantial growth opportunity for Wesdome. It's just a function of time. We are currently working on the technical review initiatives that are needed to actually unlock this, which includes the metallurgical test work, the sampling, as well as the opportunity to do ore sorting in certain ways as well to maximize the value of the region. There are many things that are influencing this right now. The only thing I do know is it's going to be substantially larger than what we thought it would be. We just need to do the work. Tyler, do you want to add?

Tyler Mitchelson (Chief Operating Officer)

I think you've captured it well. I think the exciting part about this is the optionality that's sitting in front of us right now. We did see the portal as we drove by into Mishi as some near-term potential there, but also what does that whole district look like? And every time we drill a hole it seems to be getting bigger and more potential there. So it's great. Having the optionality gives us tons of flexibility in the short, but also in the long term as well.

Colin

I think, Harrison, what's happened in the last while is with us having put out these technical reports and having the opportunity to review these mines from what we thought they were before as discrete systems. I think the fact that we understand them now as more big complexes, and even Eagle River Mine itself, looking at it from more of a "what is this" perspective rather than a discrete mining opportunity. I think this is a question this entire team needs to ask itself: what is the scale even of what we know, let alone the scale of what the region offers?

I think that's going to be the learning work that we're going to do over the next short while—just really reflecting on what is Eagle River actually from its own perspective, what is the region actually from that perspective, and then that will articulate into the work we'll do from a conceptual study perspective. But yeah, it's still early, but it's quite exciting.

Harrison Reynolds, Analyst at RBC Capital Markets

Understood, yeah, that's great. Colin, thank you very much for taking my questions.

OPERATOR

Next question comes from the line of Don DeMarco with National Bank Financial. Please go ahead.

Don DeMarco, Analyst at National Bank Financial

Thank you, operator, and good morning. Maybe just to dig into the Eagle grade guidance adjustment a little bit. I saw the reference that you're bringing more of the global domains into the model, but really what prompted the reduction? Was there a change in sequencing, maybe more dilution, difference in reconciliation since the guidance was laid out? Maybe if you just add some incremental color on this. Thank you.

Anthea Bath, CEO

Tyler, can you grab this one here?

Tyler Mitchelson (Chief Operating Officer)

Sure. Hi Don. I think as we were starting to get the global model information and we updated the models and started running through what is optimizing the sequence that we could from the stopes that we had in there. Some of this is, as you saw when you were on the tour, on a level you've got anywhere from 6 grams to those 30 gram areas, and so we extended some of those drifts out, picking up some of the lower grade, high-margin material because we're already there.

So this has been an ongoing process, I'd say for the last three months of looking at the sequence. I think what we have in place now for the second half of the year, the sequence is pretty much set and we'll just continue to try to drive productivity and keep pushing. You saw the tonnes going through increased in the second quarter. I'm pushing even harder for the third and fourth quarter, bringing more of this material forward. So it's opportunistic to take those value-adding tonnes through as we drive the productivity.

Don DeMarco, Analyst at National Bank Financial

Okay, thanks. And, you know, the Kiena costs were pretty strong in Q2. You're in front of a back-end loaded year, so do you expect the costs to trend lower into H2 commensurate with the production increase, or will the introduction to Presqu'ile sort of moderate those costs a little bit?

Anthea Bath, CEO

I can comment a little bit here and I'll let the guys follow on, if I may. I think what you'll see is, from an efficiency perspective at a cost per tonne level, yes, and as you know, from a cost per ounce perspective. But you'll also see sustaining capital increase as well. So I think they'll offset to some degree, Don. I think we guide towards—well, we said we'll remain within guidance. I think ultimately we should land there. But the two will have a bit of a countering effect.

I don't know if there's anything to add from my team.

Phil Yee, Chief Financial Officer

Yeah, Don, it's Phil here. I would also point out that for Kiena, because of the continued development at Presqu'ile, that growth capital, mainly due to timing of equipment, may trend upwards. I mean, we're still working on managing that process, but if the timing comes in as it may, it may result in slightly higher growth capital by the end of the year.

Tyler Mitchelson (Chief Operating Officer)

And Don, we're pushing development pretty hard as well, because I want to get more meters here if I can.

Anthea Bath, CEO

It's a wise thing to keep doing, Don. If we have the opportunity to use productivity levers to drive more development, we're going to do that, and we should do that, because that's going to create value forward ahead of ourselves.

Don DeMarco, Analyst at National Bank Financial

Okay, I appreciate the color. And then just for a final question, shifting over to exploration. John, I appreciate all the color you provided and obviously there's a lot going on. When we look ahead to the next resource update, and I know you just had one out, but looking ahead to next year, how is the program balanced between expectations for infill—that is, converting up some of the endowment you have right now—or expansion of what the endowment is?

And you kind of get the sense now you've been drilling for a few years that momentum is building with respect to resource accretion. Just trying to get some early insights into that next update given the magnitude of the current program.

John

Thanks, Don. Good question. Look, one thing that we got to highlight at the end-of-the-year update: we have been drilling all year and our efficiencies in drilling, especially with Boart Longyear at Eagle River over two months this year. In the six months they've breached 10,000 meters. The teams with the four rigs underground have been increasing in their efficiencies and it's been fantastic to see. We are actually holding them back whilst we adjust other areas for drilling.

We have a lot of assays coming through to build into it, and the design of our programs is broadly like 50% between the growth, conversion, and infill. So whilst we will see opportunities to push the growth side of things, we maintain that discipline. It may go to a 60/40% ratio, but we wouldn't change dramatically to, say, a 75/25 or even a 70/30% ratio on pushing the growth. We maintain our conversion and delineation work as we go through. I do see areas, as the results are coming through, of the step-out programs showing us that we have growth opportunities, and we are looking at a disciplined approach and a conversion of those so far.

But our ratios at the moment we are not looking at changing. It's a step process that we'll see each year. We grow and replace our reserves, and we start to step out and grow our geologic potential, which we'll infill to convert to inferred and give us that inventory that we can look forward to in years to come. We're slowly building the base for that now.

Don DeMarco, Analyst at National Bank Financial

Okay. Thank you very much. Thanks again for taking my questions.

OPERATOR

Your next question comes from the line of Wayne Lamb with—please go ahead.

Wayne Lamb, Analyst

Yeah, thanks, guys. Maybe just a follow-up to the grades at Eagle River. I was just curious if the grade revision was also mostly just a function of lower Q2, as I think it implies 12 grams per tonne, which is kind of close to what you did in Q1. So just want to confirm with the increase in tonnage over the coming quarters if you still see the sustained high grades kind of in the 12 gram range in the back half of the year.

Anthea Bath, CEO

I mean, I'll answer, then I'll let Tyler talk to you. He probably is jumping in to answer quicker. I mean, Wayne, the reality is I think Todd explained it to a large degree. We started to build in this better sequence. If you think about it, the mine plan was updated the first quarter of this year from the work we did at the end of last year. So you can imagine there has been a change in the mine-planning side, as you can imagine, because we only closed the models at the end of last year and only got the mine plans to Tyler first quarter this year.

So that is, it's natural, it's correct, there's nothing about, like, you know, somebody didn't deliver well or any of that. It's a function of that transition towards a value-based mining company that's driving tonnes and the right process. The big thing here is about making sure we, I can't say, we honor the orebody that Wesdome has and we look after it in the right kind of way, so that when we're in the areas we take advantage of leveraging those stopes that are there at the right time.

So I would really want everybody to understand there's nothing wrong in the grade. In fact, you should probably see this as an opportunity more than anything else. The only time it becomes a problem is when you can't keep your sequence or your productivity at the right level. And I think Tyler's explained to you how he's strongly working on marrying the two together, both tonnes as well as productivity, to drive that value through the mill. So yes, your grade does go up in the second half, and that's predominantly part of the sequence, and we said that before.

We made the comments in the technical report when we put out that release that we'll see double-digit grade, we believe, and we still believe that that's going to continue because what we would do is we're going to keep drilling out high grade and keep pushing on our efficiencies and drive that. That high grade, you know, remains the base of what Wesdome continues to do. So yes, the grade will go up purely because of the sequence, not because we've done anything special.

Tyler Mitchelson (Chief Operating Officer)

It's the mine plan we have in front of us, Wayne. And I think that, as Anthea said, that's the sequence we have. It's pretty much locked in right now. Focus of the team is really around pushing the productivity. If we can cycle faster, we bring more material through. But that is going to be at the grade that's in the sequence that we have.

Wayne Lamb, Analyst

Okay, yeah, thanks, understood, and thanks for the color. Kiena, just on the kind of expectations coming from Presqu’ile as you get into ore over the coming quarters, is there a ramp-up in grades at the mill expected from Presqu’ile as the amount of stoping ore increases from that area? And is the proportion of tonnage still in kind of the 250 tons per day range to start? And just curious what the exit run rate is for the year targeting from Presqu’ile.

Tyler Mitchelson (Chief Operating Officer)

Yeah, as we ramp up the stopes, it'll ramp up gradually going into Q4. Q4 we expect to be kind of at a run rate of that 300 to 400 tons per day, kind of 600 to 700 out of the Kiena Deep. So, you know, pushing towards the total of 1,000, and then we should be at that rate going in through 2020.

Wayne Lamb, Analyst

Okay, great, thank you. And then maybe just last one for Phil, just on the comment on the buyback in relation to your internal NAV model. I was just wondering if you might be able to share with us what kind of gold price you use on that internally. And just curious if you guys view the buyback as significantly accretive in using one times cash to buy back the shares.

Phil Yee, Chief Financial Officer

Yeah. Hi Wayne. Well, the gold price has an impact, but it's really the impact of the gold price on the share price. The approach we've taken to the buyback is really tied to a trailing P/NAV. So, as you've seen the gold price swing, you've seen the share price swing as well. And if the share price swings below the trailing P/NAV, it provides an opportunity to buy at a price that's going to be opportunistic. I mean, overall, our buybacks have been at an average around $24 a share, considerably below where the share price has been trading when it's been on an upswing.

Sorry, can you repeat the second question if you don't mind, Wayne?

Wayne Lamb, Analyst

Yeah, I was just wondering if you guys viewed the buyback as significantly accretive using one times cash to buy back the shares. And just on that comment, with the kind of share price that you're using as the swing factor, with the shares having performed pretty well, like does that kind of mean that as the share price continues to outperform then the buyback execution, like the pace of the execution, will slow down?

Phil Yee, Chief Financial Officer

Exactly. I mean, that's the opportunistic approach to it. And I think, given the amount of buyback at this point and the share price has been performing well, I would expect it to slow down. And we look at our capital allocation continuously as our business evolves, and we've seen the impact of the technical reports, for example, and how that's kind of changing the business. So when you're asking from an accretive perspective, I would say that buybacks are just one tool, and we look at it as purely an opportunistic tool.

But there are other things that we look at as well, and we need to continue to assess our position and our capital allocation going forward. As I've mentioned before as well, we've got a dividend being initiated in September. So that's one more tool. I hope that answers your question, Wayne.

Wayne Lamb, Analyst

Yeah, that's great. Thank you. For the color, nice to see the operational momentum with the fill-the-mill strategy and the strong buyback program. So best of luck in the months ahead.

Trish Moran, Vice President, Investor Relations

Thanks, Wayne.

OPERATOR

That concludes our Q&A session. Thank you all for joining, and you may all disconnect. Everyone, have a great day.

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