Asanko Output Rose 19% to 40,922 Ounces. Hedges Cost $690 an Ounce. The Last 15,000 Are Set to Settle This Quarter.

Galiano Gold owns 90% of the Asanko Gold Mine in Ghana, its only mine: four main open pits feeding a 5.8 million tonne a year carbon-in-leach plant. Third-quarter production rose 19% to 40,922 ounces, all-in sustaining costs, a non-IFRS measure, fell 5% to $2,346 an ounce, and revenue reached $172.1M. Zero-cost collars took $690 an ounce off the realized price, and royalties, now on Ghana's sliding scale, cost about $504 an ounce. The last 15,000 hedged ounces are expected to settle this quarter, while the company spends heavily stripping Nkran Cut 3 toward ore in late 2028 and 2029.

Analysis

Galiano Gold is a Vancouver company, incorporated in British Columbia in 1999 and renamed Galiano Gold in April 2020, whose shares trade on the Toronto Stock Exchange and NYSE American under the symbol GAU. It owns 90% of the Asanko Gold Mine on the Asankrangwa Gold Belt in Ghana; the Government of Ghana holds the other 10% as a free-carried interest. The mine declared commercial production in April 2016. It has four main open-pit deposits, Abore, Nkran, Esaase and Miradani North, satellite deposits, and a carbon-in-leach plant with capacity of 5.8 million tonnes a year. It is the company's only operating mine. Galiano reports under IFRS and files on Forms 40-F and 6-K.

The third quarter of 2026, reported on November 5, is why the desk is writing now. The mine produced 40,922 ounces, up 19% from the second quarter and 26% from a year earlier. Revenue was $172.1M, up 51% from $114.2M a year earlier. All-in sustaining costs, a non-IFRS measure, were $2,346 an ounce, down 5% from the second quarter. Net income attributable to common shareholders was $40.5M, or $0.15 a share, against a loss of $38.6M a year earlier, and operating cash flow was $57.0M. Management kept full-year guidance of 140,000 to 160,000 ounces at $2,300 to $2,600 an ounce. The hedge book now has one quarter left to run.

The Human Translation: Galiano runs one gold mine in Ghana that digs low-grade ore from several open pits and treats it in a single plant. Output is rising, but two items take a large share of the gold price first. Price hedges set at lower levels cost about $690 an ounce last quarter and end in December. Ghana's new royalty takes about 12% of revenue. Meanwhile the company is spending heavily to reach richer ore at the Nkran pit around 2028 and 2029.

The 90% stake is recent. Until March 4, 2024, the mine was a joint venture in which Galiano and Gold Fields each held 45%, with Galiano as operator. Galiano bought the Gold Fields half for $65.0M in cash, 28.5 million shares, which brought Gold Fields' holding to about 19.9% of those then outstanding, and $55.0M of deferred cash: $25.0M paid in the fourth quarter of 2025 and $30.0M due by December 31, 2026, up to 20% of it payable in shares. Another $30.0M is due once Nkran produces 100,000 ounces, and Gold Fields holds a 1% net smelter return royalty on Nkran production after those ounces, capped at 447,000 ounces. In December 2024 the company paid $13.1M to end an offtake agreement with Red Kite.

Abore carried the quarter. The mine moved 1.7 million tonnes of ore at 1.0 grams per tonne with a strip ratio of 4.4 to 1, not counting Nkran Cut 3 waste, and about 82% of it came from Abore, at 1.1 grams. Esaase, where mining was suspended from September to early November 2025, supplied 0.3 million tonnes at 0.8 grams with a strip ratio of 10.9 to 1. The plant milled 1.4 million tonnes at a head grade of 1.0 grams, recovered 90% of the gold, and was available 92% of the time. Processing cost rose to $15.40 a tonne from $14.05, which the company attributed to mill liner replacement and maintenance.

Galiano reports total cash costs and all-in sustaining costs per ounce sold, both non-IFRS measures. Total cash costs follow the Gold Institute Production Cost Standard and include royalties; AISC adds mine-site administration, sustaining capital and stripping, reclamation accretion and sustaining lease payments. Neither includes hedge losses, and AISC excludes Nkran Cut 3 pre-stripping, which is treated as development capital. Third-quarter total cash costs were $1,875 an ounce, down 12% from $2,128 in the second quarter and up 21% from $1,554 a year earlier, and AISC was $2,346 against $2,283 a year earlier. Nine-month AISC was $2,391 against $2,319. Royalties were $20.3M in the quarter, about $504 an ounce sold, or 11.8% of revenue on the desk's arithmetic. Adding the quarter's $26.8M of development capital and Nkran stripping to AISC gives about $3,009 an ounce.

The realized price is where the quarter lost most of its leverage to gold. Gold sold for an average of $4,247 an ounce before hedges and $3,557 after realized hedge losses, a gap of $690 an ounce. The positions are zero-cost collars with a weighted-average floor of $2,300 and ceiling of $3,060; the company says it hedges periodically during periods of planned heavy capital investment. It settled 22,500 ounces in the quarter and 50,000 in nine months, with $73.4M of realized losses. At June 30 the book held 30,000 ounces for 2026 and 7,500 for 2027; all 15,000 remaining ounces are now expected to settle in the fourth quarter. Chief executive Matt Badylak said the company expects a significant inflection in cash flow generation in 2027.

Earnings show both effects. Third-quarter income from mine operations was $72.2M, against $10.0M a year earlier. Net income was $45.4M, of which $40.5M went to common shareholders and $4.9M to the non-controlling interest. The net hedge loss in the income statement was $7.3M: $27.9M of losses realized on settled positions, less $31.0M of losses on those same positions already booked as unrealized in earlier periods, plus a $10.4M unrealized loss on the remaining positions. Adjusted net income and adjusted EBITDA, both non-IFRS measures, were $23.2M, or $0.09 a share, and $93.3M. Current income tax was $15.3M; Ghana taxes mining income at 35%. For nine months, revenue rose 72% to $495.2M, attributable net income was $135.1M, or $0.52 a share, and adjusted EBITDA was $265.7M, against $103.0M.

Cash generation improved, and most of it went back into the ground. Operating cash flow was $57.0M against $6.0M in the second quarter, when a court order froze $25.9M; nine-month operating cash flow was $135.6M before that restriction and $109.6M after it. Third-quarter capital spending was $36.3M on the desk's arithmetic: $5.0M sustaining, $2.2M development, $4.5M sustaining stripping and $24.6M of Nkran Cut 3 pre-stripping. Nine-month investing outflows of $116.9M exceeded operating cash flow by about $7.3M, and inventories rose $50.3M to $121.1M. Unrestricted cash rose $6.8M in the quarter to $86.8M.

Nkran Cut 3 is the investment the plan is built around. Nkran holds 570,000 ounces of probable reserves at 1.67 grams, the highest reserve grade of the main deposits and 29% of reserve ounces on the desk's arithmetic. Waste mined at Cut 3 rose to 8.5 million tonnes in the third quarter, up 40% from the second, after more equipment was mobilized, and to 19.4 million tonnes in nine months. Capitalized pre-stripping was $60.2M in nine months against guidance of $100M to $120M. The company expects steady-state ore delivery from Nkran by early 2029, and chief operating officer Michael Cardinaels said on the company's second-quarter 2026 results call on August 7 that Nkran would start to produce ore at the back end of 2028 and into 2029.

The rest of the growth case sits at Esaase and underground. In February the company declared maiden underground resources at Nkran and Abore: 303,000 indicated ounces at 2.74 grams and 525,000 inferred ounces at 2.52 grams, at a $2,400 gold price. Drilling has reached about 20,600 metres of a planned 32,000 at Abore, and the company has approval for an underground exploration adit there and is selecting a contractor. About 32,900 metres of conversion drilling are complete at Esaase. Exploration guidance is $24M to $26M, with $17.6M spent. The Abirem and Miradani mining leases, which host Nkran, Adubiaso, Miradani North and the plant, were extended to 2041 and 2043.

Mineral reserves were 1.97 million ounces at December 31, 2025: 47.5 million tonnes at 1.29 grams, including 2.0 million tonnes of proven stockpiles. Esaase holds 531,000 ounces, Abore 346,000 and Miradani North 310,000. The pit designs use gold prices of $1,500 to $1,900, and the Miradani North and Dynamite Hill reserves are unchanged from December 31, 2022. Measured and indicated resources, inclusive of reserves, were 3.44 million ounces and inferred resources 1.28 million. Reserves fell 90,000 ounces, or 4.4% on the desk's arithmetic, in a year when the mine produced 121,191 ounces. The current technical report is the 2023 SRK feasibility study, effective December 31, 2022, which set out an 8.5-year life averaging 217,000 ounces a year; that plan predates the current reserve estimate and 2026 guidance. A revised life-of-mine plan is due with the reserve update in the first quarter of 2027.

The annual record is short because Galiano has consolidated the mine only since March 2024. In 2025 production rose 5% from 115,115 ounces to 121,191, revenue was $447.8M, and AISC was $2,233 an ounce, against $2,063. A SAG mill repair halted gold output for 14 days in the first quarter. On September 9 an incident between illegal miners and military personnel at Esaase left a community member dead, and mining there stopped until early November. In November the company cut production guidance to 120,000 to 125,000 ounces from 130,000 to 150,000 and raised AISC guidance to $2,200 to $2,300 from $1,750 to $1,950 plus a further $100 an ounce for higher royalties; results landed inside both. The attributable net loss was $29.3M after $44.8M of realized and $74.5M of unrealized hedge losses, while operating cash flow was $158.0M.

The 2026 production range of 140,000 to 160,000 ounces has held all year, below the 180,000 to 210,000 ounces that a January 2025 five-year outlook had shown for 2026. AISC guidance began at $2,000 to $2,300 an ounce, excluding Ghana's proposed royalty change, which the 2025 annual MD&A said would add about $375 an ounce at spot prices. In May the company raised the range to $2,300 to $2,600 once the royalty became law, and added $7.5M to exploration. In August it cut development capital to $105M to $125M from $120M to $140M because village relocation projects were delayed. Nine-month production was 110,060 ounces, so the fourth quarter needs 29,940 to 49,940 ounces on the desk's arithmetic.

The balance sheet has no borrowings but several claims on cash. At September 30, Galiano held $86.8M of cash and $25.9M of restricted cash, and its $75.0M revolving credit facility with Rand Merchant Bank, signed in December 2025 at SOFR plus 3.95%, was undrawn. Against that sit the $30.0M payment due to Gold Fields on December 31, the $16.9M hedge liability, the $30.0M Nkran contingent payment and Gold Fields' Nkran royalty, carried together at $29.4M ($20.7M and $8.7M), and lease liabilities of $72.1M, up from $37.1M at the end of 2025. There were 262,054,430 shares outstanding and 273,792,912 fully diluted, including 8,655,175 options.

Leadership is stable. Matt Badylak is president and chief executive. Matt Freeman became chief financial officer in 2022 under the company's succession plan, after serving as senior vice president of finance. Michael Cardinaels became executive vice president and chief operating officer in September 2024. The company has never paid a dividend and says it does not expect to in the foreseeable future, and the 2026 quarterly reports describe no buyback. Capital is committed to Nkran Cut 3, drilling, the Abore adit and the Gold Fields payments, and management has framed 2027 as the year cash flow changes. Chris Pettman, vice president of exploration, said on the same August 7 second-quarter call that the company was on track to make an investment decision for a potential 2027 construction start of underground exploration at Abore.

The named risks begin with Ghana. From March 10, 2026, gold royalties moved to a sliding scale that starts at 5% and reaches 12% when gold exceeds $4,500 an ounce, and on March 13 the Growth and Sustainability Levy was cut from 3% to 1%, less than a year after it was raised from 1%; the company puts the net effect at a rise in total royalty rates from 8% to 12% at gold prices between $4,000 and $4,500 an ounce. Nine-month royalties were $55.2M against $21.5M. Artisanal and illegal mining is a named risk, as the Esaase incident showed. A legal dispute adds another: in a case a former service provider filed in 2019 claiming about $25.0M, an arbitrator found no breach of contract yet awarded it about $13.0M plus interest for services rendered. On March 26 the Court of Appeal dismissed the case on a procedural matter without considering its merits, and a June 22 garnishee order froze $25.9M. The company has appealed the order and sought a stay, disputes the interest, and has provided $7.0M.

The operating risks are concrete. The pits run at about 1 gram a tonne, so throughput and plant availability decide output, and Abore supplies most of the ore until Nkran arrives. Once the last collars settle, and unless new hedges are added, the realized price will follow gold both ways, without a ceiling or floor. Diesel is the energy exposure the filings name: Ghanaian diesel prices rose about 60% after early March as Middle East tensions restricted tanker traffic through the Strait of Hormuz, adding about $95 an ounce to nine-month AISC. Mining and other services run under contracts whose variable fees were $50.6M in the quarter. Funding risk sits in the Nkran schedule: the stripping is paid for years before the ore arrives.

The scenario map has three branches. In the first, the fourth quarter lands inside guidance, the hedges and the Gold Fields payment are settled, and 2027 brings unhedged prices, Nkran stripping on schedule, and a reserve update that adds Esaase and underground ounces; the cash flow inflection management describes then appears in 2027. In the second, production holds near 2026 levels, royalties and diesel keep AISC near the top of the range, and Nkran stripping absorbs most of the cash that the end of hedging releases. In the third, a grade or throughput problem, another security incident, an adverse garnishee ruling or a fiscal change cuts output or cash while Cut 3 still needs funding, and the company turns to its credit facility or its shares.

The checkpoint set, stated fully. First, fourth-quarter production against the implied 29,940 to 49,940 ounces, and full-year AISC against $2,300 to $2,600 an ounce. Second, settlement of the final 15,000 hedged ounces and the realized price after hedges. Third, the $30.0M deferred payment due December 31, and whether any part is paid in shares. Fourth, Nkran Cut 3 waste tonnes and capitalized stripping against the $100M to $120M range, and any change to ore timing. Fifth, the first-quarter 2027 reserve and resource update and revised life-of-mine plan. Sixth, 2027 production and cost guidance, the first without hedges. Seventh, the garnishee appeal and the $25.9M of restricted cash. Eighth, any further change to Ghana's royalty, levy or tax terms.

The Human Translation

Galiano runs one gold mine in Ghana, digging low-grade ore from several open pits and treating it in one plant. Output rose this year, but two items take a large share of the gold price first. Price hedges set at lower levels cost about $690 an ounce last quarter and end in December. Ghana's new royalty takes about 12% of revenue. At the same time the company is paying to strip waste from the Nkran pit, whose richer ore should start arriving in late 2028 and 2029.

Bottom Line

Watch fourth-quarter production against the 140,000 to 160,000 ounce range and AISC against $2,300 to $2,600, the settlement of the final 15,000 hedged ounces, and the $30.0M payment to Gold Fields on December 31. Then watch the first-quarter 2027 reserve update and life-of-mine plan, Nkran Cut 3 stripping toward ore in late 2028, and the garnishee appeal.

Quick Facts

More from the research desk: GROY, GSM, OIS, REPX, and the full library