Executive Summary / Key Takeaways

• Galiano Gold is undergoing a significant operational transformation, marked by a ramp-up in gold production and strategic infrastructure investments, including the commissioning of a secondary crusher, which is critical for achieving higher throughput and processing harder ore.
• The company maintains a robust financial position with $115 million in cash and no debt as of Q2 2025, enabling self-funded growth initiatives like the accelerated waste stripping at the Nkran deposit and extensive exploration programs.
• Exploration efforts at the Abore deposit are yielding promising results, with deep step-out drilling confirming significant mineralization at depth and infill drilling expanding high-grade zones, providing a strong foundation for potential resource growth and future underground operations.
• Despite a slower start to 2025 due to a mill shutdown and external cost pressures from increased royalties and currency appreciation, Galiano anticipates stronger production in the second half of the year, maintaining its 2025 guidance towards the lower end of 130,000 to 150,000 ounces.
• Galiano's market valuation is currently less than 40% of analyst consensus net asset value, suggesting a compelling investment opportunity given its robust organic growth profile, leverage to high gold prices, and strong balance sheet.

A Golden Transformation in Ghana

Galiano Gold Inc. ($GAU), a Vancouver-headquartered mining, development, and exploration company, has been meticulously reshaping its future as Ghana's largest single-asset gold producer. Incorporated in 1999 and rebranded from Asanko Gold Inc. in May 2020, Galiano now holds a 90% interest in the Asanko Gold Mine (AGM) located on the prolific Asankrangwa Gold Belt in West Africa. This strategic consolidation, moving from a joint venture structure, has empowered the company to execute a focused, self-funded growth strategy.

The company's journey has been marked by a deliberate shift from processing low-grade stockpiles to recommencing active mining operations. A pivotal moment arrived on October 1, 2023, with the restart of mining, following 18 months of intensive technical work to refine its understanding of existing deposits and chart a sustainable path forward. This period saw the joint venture's cash balance swell by over $88 million, providing a solid financial bedrock for its ambitious plans. By Q4 2024, Galiano had terminated its offtake agreement, gaining full exposure to market gold prices, a significant advantage in the current high-price environment.

Competitive Dynamics in the Gold Sector

Galiano Gold operates within a competitive global gold mining industry, where it positions itself as a specialized, regionally focused player. While larger, more diversified entities like Barrick Gold , Newmont Corporation , AngloGold Ashanti , and Kinross Gold dominate the global landscape, Galiano leverages its deep expertise and established presence in Ghana.

Barrick Gold (GOLD), a global giant, benefits from immense operational scale, diversified assets, and substantial investments in advanced mining technologies. Its financial performance typically reflects robust revenue growth and strong profitability margins. Newmont Corporation , another industry leader, emphasizes large-scale, sustainable operations with consistent revenue growth and solid margins. AngloGold Ashanti (AU), with significant African operations, shares Galiano's regional focus but possesses a broader asset base and greater diversification. Kinross Gold , known for its cost-efficient production, competes on operational efficiency across multiple regions.

Galiano's strength lies in its localized execution and intimate knowledge of the Ghanaian operating environment, which can translate into more agile decision-making and potentially lower operational overheads in its specific market. This regional adaptability allows Galiano to navigate local challenges effectively, a potential differentiator against larger, more globally dispersed competitors. However, Galiano's single-asset concentration presents a vulnerability, exposing it to regional risks and potentially limiting its overall growth rates and strategic adaptability compared to its more diversified rivals. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Galiano's strong performance in Ghana suggests a robust local standing.

In terms of financial health, Galiano's profitability and growth rates, while improving, can be more volatile due to its narrower asset base. For instance, Galiano's latest TTM Net Profit Margin is -1.76%, contrasting with the generally positive margins of its larger peers, though this reflects a period of significant capital investment. Its Debt/Equity Ratio of 0.19 indicates a healthy balance sheet, particularly when compared to some larger players who may carry more substantial debt. The company's current P/E ratio of -102.92 reflects its recent net loss, while competitors like Newmont (NEM) and Kinross (KGC) show positive P/E ratios of 14.84 and 21.25, respectively, for 2025, indicating their established profitability.

Technological Edge and Operational Enhancements

Galiano's strategic vision is underpinned by a commitment to operational excellence and technological integration, crucial for maximizing resource recovery and efficiency. A key differentiator is its state-of-the-art Photon assay lab, which provides rapid turnaround of grade control samples. This technology significantly enhances operational decision-making, allowing for more precise ore sorting and blending, thereby optimizing mill feed and overall gold recovery.

The company has also made substantial investments in its processing infrastructure. The commissioning of the secondary crusher in late July 2025, slightly ahead of schedule and on budget, marks a significant milestone. This technology is critical for processing the harder Abore ore, enabling the mill to reach its design throughput of 5.8 million tonnes per annum. The tangible benefit is a material feed size that overcomes previous crushing limitations, directly impacting mill throughput and, consequently, gold production. Further optimizations to the secondary crusher's performance, including adjustments to conveyor drives, primary crusher settings, vibrating screen optimization, and SAG mill discharge grade size, are expected to be completed by the end of Q3 2025.

Beyond crushing, Galiano has enhanced its processing circuit with the installation and commissioning of a new carbon regeneration kiln in Q2 2025, designed to deliver long-term economic and operational benefits. Additionally, the expansion of the oxygen generation plant and upgrades to the gravity circuit were nearing completion by the end of 2024, all contributing to improved metallurgical recoveries and overall plant efficiency. These technological advancements collectively contribute to Galiano's competitive moat by lowering unit costs, increasing throughput, and enhancing gold recovery, directly impacting its financial performance and market positioning.

Financial Performance and Strategic Capital Allocation

Galiano Gold's financial performance in recent quarters reflects its strategic investments and operational ramp-up. In Q2 2025, the company reported revenues of $97.3 million, achieving an average realized gold price of $3,317 per ounce, inclusive of hedge impacts. Gold production surged to just over 30,000 ounces, a 46% increase from Q1, bringing year-to-date production to over 51,000 ounces. This was driven by improved plant availability and enhanced overall recovery. Income from mine operations reached $37.2 million, and adjusted EBITDA was just under $40 million. Despite negative fair value adjustments to its hedge book due to the run-up in gold prices, Galiano recorded a net income of $21.6 million, or $0.07 per share.

The company demonstrated strong cost control, with a 10% reduction in all-in sustaining cash costs (AISC) during Q2 2025. Processing costs per tonne declined by 10% since Q1, with further reductions anticipated as the secondary crusher's full impact is realized. Mining costs at Abore and Esaase remained consistent, and Nkran mining costs are expected to decrease as volumes increase over the next 12 months.

Q1 2025 saw gold production of just under 21,000 ounces, impacted by an unscheduled two-week mill shutdown that reduced production by approximately 5,000 ounces. Revenues for Q1 2025 were $77 million at a realized price of $2,833 per ounce. The quarter's AISC was $2,500 per ounce, elevated due to lower production and the processing of historical low-grade stockpiles in Q1 2024.

Galiano's balance sheet remains exceptionally strong, ending Q2 2025 with $115 million in cash and no debt.

The company generated $35.8 million in cash flow from operating activities in Q2 2025, even after a $6 million income tax installment to the Ghanaian Revenue Authority.

This robust liquidity enables significant capital allocation, particularly for accelerating the waste stripping at the Nkran deposit, which saw $6.9 million in capitalized development pre-stripping costs in Q2, bringing year-to-date costs to just over $10 million. Management views this reinvestment as crucial for unlocking future value from higher-grade Nkran ore. The largest ongoing capital project is Raise 8 at the tailings facility, slated for completion in 2026.

Exploration Success and Future Growth Trajectory

Galiano's aggressive exploration program is a cornerstone of its long-term growth strategy. In Q2 2025, deep step-out drilling at the Abore deposit yielded highly positive results, intercepting mineralization in all four holes across a 1,200-meter strike length. A particularly strong intercept of 36 meters at 2.5 grams per tonne confirmed that the Abore Granite and mineralizing system extends 200 meters below the current mineral reserve pit shell over a significant strike length. This provides the first proof of concept for a potential transition to an underground bulk mining operation at Abore, with the system remaining open in all directions at depth.

Phase 2 infill drilling at Abore, covering approximately 1.5 kilometers of strike length, is progressing ahead of schedule and under budget, with results expected soon. This follows significant success in Q1 2025, which identified a promising high-grade zone beneath the main pit and expanded the strike length of the South high-grade zone from 90 meters to 180 meters. A new high-grade zone was also discovered below the reserve pit at the south end of the Abore main pit, with an intercept of 50 meters at 3.1 grams per tonne, suggesting the mineralizing system is much larger than currently understood. Regional generative programs at Sky Gold B and Akoma are also advancing, with IP surveys identifying new drill targets.

The company's 5-year outlook, published in Q1 2025, projects a 75% increase in production from 2024 levels over the next 18 months. Galiano is maintaining its 2025 production guidance towards the lower end of 130,000 to 150,000 ounces, anticipating stronger production in the second half of the year as the secondary crusher optimizes throughput to 5.8 million tonnes per annum. AISC is expected to trend towards the top end of guidance for the year due to the slow start. Management is also focused on developing a maiden underground resource at the AGM by year-end.

Risks and Considerations

While Galiano Gold presents a compelling investment case, several risks warrant consideration. A recent incident on September 9, 2025, involving a confrontation between community members and military personnel at the Asanko Gold Mine, resulted in a fatality and damage to contractor equipment. This led to the temporary suspension of operations at the Esaase deposit, though Abore and the processing plant remain unaffected. Such geopolitical and community relations risks are inherent in mining operations in certain jurisdictions.

Furthermore, external factors are impacting the company's cost structure. Higher royalty costs, driven by elevated gold prices and an additional 2% growth and sustainability levy imposed by the Ghanaian government from April 2025, are expected to add a further $100 per ounce to AISC. An unexpected appreciation of the Ghanaian Cedi against the U.S. dollar in Q2 2025 also poses additional pressure on AISC if sustained, despite the predominantly U.S. dollar-based cost structure. Fair value adjustments to the company's hedge book continue to negatively affect net earnings following the run-up in gold prices. Operational safety, while improving in Q2 2025 with no recordable injuries, remains a continuous focus after two lost-time injuries in Q1 2025.

Conclusion

Galiano Gold is at an inflection point, transitioning from a period of strategic repositioning and capital investment to one of accelerated production and resource expansion. Its robust balance sheet, devoid of debt and fortified by significant cash reserves, provides a strong foundation for executing its organic growth strategy. The successful commissioning of the secondary crusher and the promising deep exploration results at Abore are critical enablers, poised to unlock substantial value by enhancing operational efficiency and extending mine life.

Despite inherent operational risks and external cost pressures, Galiano's disciplined capital allocation and focus on high-grade ore development position it for a stronger second half of 2025 and beyond. The company's current market valuation, significantly below analyst consensus net asset value, coupled with its strong leverage to record gold prices and a clear growth trajectory, presents a compelling opportunity for discerning investors seeking exposure to a transforming gold producer in a stable African jurisdiction.