Hemlo Mining’s flagship is the Hemlo gold mine near Marathon, northwestern Ontario, bought from Barrick last year. In this interview with CEO Jason Kosec, I asked about the mine’s history under Barrick, the current operational turnaround, the resource and mine plan rebuild, the Franco-Nevada and Wheaton encumbrances, the contingent payment owed back to Barrick, exploration on the wider land package, and the balance sheet.

TL;DR

The base of the thesis is filling a mill that is permitted for 13,500 tonnes per day and currently runs at roughly 3,800. CEO Jason Kosec told me they want to exit 2026 at 4,800 tpd, exit 2027 at 6,000 tpd for roughly 200,000 attributable ounces, and get to 10,000 tpd within about three years for roughly 250,000 ounces plus or minus 25,000 over a 16 to 20 year life. Q2 attributable production actually fell to a bit over 25,000 ounces from almost 30,000 because they are re-sequencing the mine from top-down to bottom-up and pushing lower grade development ore through the mill, and he says the payoff shows up in Q4. There is no production or cost guidance out, which he attributes to a heavy transition year. He put about 60% of his net worth into the deal, roughly 3 million shares, and reporting insiders hold about 5.5%. Cash is US$130 million against a US$142 million term loan and a repaid revolver, so net debt is about US$12 million, and he says the entire growth plan, roughly US$800 million of life-of-mine growth capital in the existing technical report, is fundable from cash flow.

What have they done for shareholders lately?

Since closing, they added about 1.5 million ounces they had modelled at the time of the financing, which came through in the June resource update and lifted resources about 38% in six months, to nearly 5 million ounces measured and indicated at roughly 1.5 g/t plus just under 1 million ounces inferred at 2.2 g/t on a 100% basis, or 4.45 million and 733,000 ounces attributable after Franco-Nevada’s 50% net profit interest on the Interlake claims. Kosec says those extra ounces added roughly US$500 million of net asset value on top of the US$1.1 billion in Barrick’s commissioned study and extended the mine life from 14 to about 18 years. They took the mine owner-operated, dropped contractor Barminco in mid-March, added 21 pieces of mobile equipment, doubled the fleet, hired over 100 people, and got off Barrick’s transition services agreement in June, four months early. Ten rigs are turning on a 130,000 metre program with about 60,000 metres done, a new South Rim drill release came out the day of the interview, they repaid US$75 million on the revolver in their first quarter of ownership, and the site won the John T. Ryan national underground safety award.

How much money do they have and what are they spending it on?

They had US$130 million in cash at the end of Q2, a US$142 million term loan after a first payment, and the US$100 million revolver drawn down to nil, for net debt of about US$12 million. The last equity raise was October of last year at $3 per share alongside the acquisition, part of a US$1.1 billion financing that Kosec calls the largest ever done by a shell in mining, cornerstoned by Wheaton Precious Metals and Orion Mine Finance with Scotiabank leading debt and equity. About 296 million shares are out, roughly 309 million fully diluted with 4 million RSUs, DSUs and PSUs and 8.5 million options, and no warrants, against a market capitalisation of roughly $2.4 billion. Spending this year is roughly US$130 million into the mine, including a $38 million drill budget that he expects to fall materially next year, and he frames growth capital including drilling at around 20% going forward. Going from 3,800 to 6,000 tpd costs roughly $50 million. Marketing is about $1 million a year, with the 2026 budget nearer $850,000. Corporate G&A was around $7 million in Q2 and $8 million in Q1, inflated by the TSA exit, TSX uplisting and NYSE prep, and he expects it to come down slightly but not materially. Mine-site G&A rose almost 30%, which he puts down to raising wages that Barrick and Barminco had kept below Ontario peers, roughly $5 per tonne of labour inflation, plus the fact that he spends a week a month and the COO three weeks a month on site with part of their salaries charged there.

Upcoming catalysts

Technical: continued drill results, particularly from the South Rim, through the rest of the 130,000 metre program, plus two bulk test stopes under the open pit taken this year and in Q1 2027 to test rock mechanics, and an updated technical report after drilling wraps in September 2027, due out before conference season in 2027, which will set the path from 6,000 to 10,000 tpd and whether that comes from the open pit push-back or bulk underground mining.

Operational: exiting 2026 at 4,800 tpd on the back of a second Alimak stope, with the effect of the re-sequencing meant to show in Q4, and an updated closure plan for the pit push-back scheduled for 2028.

Corporate: possible GDXJ index inclusion at the September rebalancing, which he says is 5 to 7 million shares of demand, a NYSE listing that is the focus of their marketing push, and production and cost guidance next year.

Risks

The risk the CEO named first and last is people. He calls the labour market the biggest constraint on the growth plan, needs another 30 hires this year and roughly 100 next year, and gave the example of hiring four jumbo operators and two failing their drug test on arrival. Second is aging infrastructure and critical spares, specifically no spare hoist motor until December 3, which would force them to truck material up the ramp at higher cost if the motor goes, and they carry business interruption insurance against that. Q2 already showed production and head grade falling during the transition, attributable all-in sustaining costs ran about $2,800 in Q2 and roughly $2,200 for the half, and he only expects them to settle near $2,000 once 6,000 tpd is reached rather than going lower. The reserve number next year rests on an assumed 85% resource-to-reserve conversion that has not been demonstrated yet, a gold-linked contingent payment of up to US$160 million to Barrick starts accruing next year with the first payment in 2028, Franco-Nevada takes half the economics on roughly 20% of ounces, Wheaton’s stream deliveries ratchet down after set delivery thresholds, and only about 10% of production hedged, so cash flow is directly exposed to the gold price.

Hemlo CEO Interview

VERY IMPORTANT WARNING

Please note that this company has not paid Resource Talks for the creation of this content. This website is a business that charges for the creation and publication of content. This means there will always be a potential conflict of interest which means you can never rely on anything said herein.

By consuming this content, you acknowledge that Resource Talks and/or its affiliates and/or their personnel may own, have owned, or will own interests in and/or may have a business relationship with some or all companies/entities mentioned/featured in this publication. You further acknowledge that entities which may be referenced or featured in this publication or their related parties may hold an interest in Resource Talks or its affiliates, which may create further conflict of interest.

The information provided herein is general & impersonal in nature and meant for entertainment purposes only. The reader acknowledges and agrees that the information does not constitute a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. The author is not a licensed investment advisor. He is just another talking head on the internet. He might own shares of companies mentioned in this publication. Always assume he doesn’t know much more than a potato does. The mining & exploration space is among the riskiest sectors to invest in. The risk of anything mentioned in this publication is 100% loss of capital. If you don’t read the official documents provided by the company on http://www.SedarPlus.ca, you will lose all of your money.