I would now like to hand the conference over to Mr. James Palmer, CEO. Please go ahead.
Thank you, and good morning, all. James Palmer here, thanks for joining the 29Metals update for the March quarter 2026. Today we'll be speaking to the presentation released this morning alongside our March quarter report. Joining me are Ed Cooney, our Chief Operating Officer, Peter Herbert, our Chief Financial Officer, and Kristian Stella, our Group Executive, Corporate Development. A quarter with some strong results and post-quarter end, a challenging decision to undertake additional work to further de-risk Xantho Extended, which are now underway. Zooming out first before I talk to the quarterly, the 29Metals investment thesis remains strong. The company's intrinsic value underpinned by two large copper resources across Golden Grove and Capricorn Copper. As outlined on slide four, both assets have long life potential and significant geological upside.
At Golden Grove, we're nearing the end of a significant investment phase to enable mining of high-grade ore sources. From the end of 2026, we expect reduction of capital expenditures and progressive ramp-up of mining from the high-grade ore sources of Xantho Extended, Oizon, and Gossan Valley to support metal production growth and free cash flow generation. At Capricorn Copper, the team are progressing rapidly towards a restart of production. Water levels have been significantly reduced and are no longer an impediment to a restart. Focus is firmly on an approval for a new tailings storage facility and the study towards a restart of options. Prior to the production disruptions at Xantho Extended, we were guiding to over 50,000 tons of copper equivalent production per annum at Golden Grove. Once Xantho's back, we'll be back at that run rate.
At Capricorn Copper, we have a low capital intensity pathway to reestablish up to 30,000 tons of copper production per annum. We're progressing this business towards its potential as an 80,000 ton per annum copper equivalent producer. With the size of the resource of each asset, optionality exists to expand from there. Now to slide six to talk through the quarter and how we're progressing both assets towards their full potential. Working through the challenges at Xantho Extended and in everything we do, we live by our most important company value of safety first, which is also reflected in our single-digit TRIF and zero LTIF. We completed ground support upgrades at Xantho Extended post the quarter end as planned. This enabled re-entry into the mine post the impacts of seismicity from last year.
In parallel with the implementation of the ground support upgrades, further geotechnical review work increased our understanding of the Xantho Extended decline and level accesses areas impacted by seismicity. Based on this further assessment, additional works to further reduce the risk of future potential production interruptions are being progressed prior to the recommencement of mining. Upon implementation of the ground support upgrades, we had the option to recommence mining. We chose to undertake the additional work to provide further de-risking of production from the end of 2026 and for the life of the mine. Since the temporary suspension of mining at Xantho Extended last year, a dedicated team was established to incorporate remnant and extension ore sources into the 2026 mine plan. So far, this team is ball out of the park.
We produced 6.4 kilotons of copper in the March quarter, a run rate beyond the top end of our 2026 full year copper guidance. This work is ongoing to incorporate additional copper and gold ore sources into the rest of the year mine plan to maximize mill throughput and production outcomes, and it's expected to partially offset the impact of delayed restart of mining at Xantho Extended. The team delivered this result all while continuing to build a new mine at Gossan Valley, which remains on track for AUD 112 million capital expenditures to first ore by the end of 2026. At Capricorn Copper, a successful wet season concluded and water is no longer an impediment to a restart. The team are now having reduced surface water levels by more than 2 GL since the suspension of operations are in a great place.
Focus is now firmly on the approval for a long-term tailings storage facility, which is now the critical path imperative for restart of production. We're planning for success with the commencement of a definitive feasibility study during the quarter to enable a restart of production upon approval of a new tailings storage facility. We have a lot to deliver for the rest of the year, and with Golden Grove generating AUD 10 million of free cash flow for the March quarter and a liquidity position of AUD 238 million, we have the balance sheet to deliver through 2026 with a focus on long-term value creation. I will now pass to Ed to talk through the operations in some additional detail. Ed?
Great. Thanks, James, and morning, everyone. I'll move straight to slide 10 to talk to some additional detail on our plans at Xantho Extended. As James mentioned, we completed ground support upgrades post-quarter end as planned. In parallel, the team have continued to progress our geotechnical understanding of the impacts to production we experienced last year. A key learning was that although ground support upgrades alone may be sufficient to mitigate future production interruptions, there are specific locations on the existing decline susceptible to higher rock stresses. These locations are situated where the decline crosses over and are coincident with seismically reactive fault structures. To further reduce risk of future production interruptions, we've made the decision to commence new accesses to the footwall drives, which effectively bypass these higher stress zones.
This development was kicked off over the last 24 hours, with the first two cuts on the deck as of this morning. We considered a range of scenarios to complete these works, such as progressing the works in parallel with production. We do continue to test our thinking on the potential to accelerate recommencement of mining in the upper levels of Xantho Extended whilst development of the new accesses is being completed. The current plan is to defer recommencement of mining until the new accesses are complete, which is expected to be in the December quarter. This approach allows for higher development rates by progressing multiple headings without interruption or interaction from production activities. It gets us to our desired endpoint faster and provides greater production certainty at Xantho Extended from the end of 2026 onwards.
Importantly, although this decision does result in deferral of metal from Xantho Extended, no impact to the reserve is currently contemplated. On to slide 11. The team at Golden Grove are doing a phenomenal job in reworking the mine plans and evaluating alternate ore sources whilst we progress works at Xantho Extended. As shown on slide 11, Xantho Extended contains high zinc and precious metal grades in addition to copper. However, there are other areas in Gossan Hill and Scuddles that have similar copper grades. Hence, we maintain copper production guidance as we complete the additional access development. Ahead of greater mine plan flexibility from Gossan Valley, Oizon, and Xantho Extended in 2027, the site team remain laser-focused on identifying and incorporating additional remnant and extensional ore sources into the rest of year plan.
With a focus on maximizing value from the best available ore sources and the key objective of replacing the tonnes from the deferred restart of mining at Xantho Extended and finding additional ore sources to push the mill and metal production outcomes harder for the remainder of the year. Excellent progress on this front in the March quarter, James mentioned, with over 6,000 tonnes of copper production. We do still have a lot of 2026 to go, with the early wins on the board, the team are pushing hard to keep the momentum going. I'll now hand over to Peter to discuss costs and capital.
Okay. On slide 12, we summarize costs and capital for the March quarter. Across the business, we continue to maintain a focus on cost and productivity improvements. The ongoing containment of site costs is a testament to the excellent work done by the team, with AUD 97 million in site costs in the March quarter, in line with that achieved one year ago. That is despite ongoing inflationary pressures across the industry. Even as we work through the interruption to mining at Xantho Extended, we continue to maintain our healthy unit cost margins. AISC unit costs of $5.10, and C1 unit costs of $4.30 per pound of copper sold respectively, was a strong result. Diesel supply and costs have been a focus in the current quarter.
As a high-grade, low-tonnage operation on grid power, Golden Grove is relatively insulated from diesel cost increases. We estimate that based on current diesel prices, diesel costs will increase from approximately 2% to 3% of total site costs. That said, we are engaging with our fuel suppliers regularly to understand any potential disruptions resulting from global events. Pleasingly, we are not seeing any disruptions currently. On capital, Gossan Valley remains on track for AUD 112 million capital expenditure to first ore by the end of the year, with total capital for the quarter of AUD 28 million versus the prior quarter of AUD 48 million, reflecting the step-down in activity during the quarter upon completion of surface civil works at Gossan Valley and subsequent demobilization of the civil contractor in January.
The additional works at Xantho Extended to reduce the risk of further interruptions are estimated to cost between AUD 10 million-AUD 15 million. With reduced need for capital development activity in 2026 from the delayed recommencement of mining, we expect to manage the cost of these additional works within our preexisting total capital cost guidance of AUD 160 million-AUD 185 million. Work to identify opportunities to reduce and defer non-critical capital expenditures to better align with the resumption of mining at Xantho Extended remain ongoing. Back to you, James.
Great. Thanks, Peter, and thanks, Ed. Before I move on to progress at Capricorn Copper, I want to touch on the Golden Grove drill results released from the 2025 drill program during the quarter and post-quarter end. Slide 15 shows some of the highlights from the 2025 program. Every hole bar one is a resource extension hole, so wide, high-grade intercepts out some preexisting mineral resource estimates. Overall, the 2025 drill program added mine life and provided mine plan flexibility, which then flows into the important work talked about earlier, incorporating and accelerating additional remnant and extensional ore sources into the 2026 mine plan and beyond. As this work bears fruit over 2026, the additional works at Xantho Extended are completed and Gossan Valley is brought online.
You can see how the pieces of the puzzle for Golden Grove come together in 2027 and beyond. We're really excited to bring that to fruition. While the decision to undertake the additional works at Xantho Extended have come at a cost to production in 2026, they're essential to delivering this potential. Now on to Capricorn Copper on slide 20. A huge milestone achieved during the quarter. Our site water levels now sufficiently reduced to no longer be an impediment to a restart of production. The team have had an extremely successful wet season, with significant water level reductions that now see the total water inventory significantly below the maximum operating level and surface water levels comparable to the levels prior to the extreme weather event in March 2023.
This was achieved through a very heavy wet season. It was a 95th percentile wet season, so only 5% of wet seasons have had more rainfall. One in 20 year event. The outcomes achieved during this wet season demonstrate that a sustainable water balance footing is possible at Capricorn Copper with the right focus and the appropriate water treatment infrastructure. A great job by the team. Approval for a long-term tailings storage facility is now the critical path for restart of production, and we're working towards a response to the regulator's request for information in the September quarter. We're planning to success with the commencement of a definitive feasibility study during the quarter to enable a restart of production upon approval of a tailings storage facility. I'll now hand back to Peter to talk through the balance sheet prior to wrapping up.
Thanks, James. Gross revenue for the March quarter was AUD 165 million. That was AUD 28 million higher relative to the prior quarter result. That result was driven by higher payable copper and zinc metal sales. 29Metals finished the quarter with unaudited available liquidity of AUD 238 million, consisting of AUD 223 million of cash and undrawn liquidity under the group's offtake facility of $10 million. Golden Grove generated AUD 10 million of free cash flow after all capital expenditures for the quarter, inclusive of its Gossan Valley investments. The decision to undertake further de-risking works at Xantho Extended prior to the recommencement of mining provides us with greater certainty over production outcomes from the end of 2026 and beyond. It allows us to deliver on the long-term potential of the assets.
The decision follows consideration of our March quarter performance, available liquidity, the macro environment, options to manage group operating capital expenditures, and the ongoing efforts to identify additional ore sources in the rest of the year mine plan. Back to you, James.
Thanks, Peter. Wrapping up here, we've seen globally mines are becoming harder to find, lower grade and harder to mine. On the demand side, as the world electrifies, the world is gonna need a lot more copper. 29Metals remains well-positioned to capitalize on this favorable copper supply-demand dynamic with over 2 million tons contained copper in our mineral resources across two Australian-based assets, both with long life potential and significant geological upside. The team remain focused on leveraging this position by delivering safe production and prudently allocating capital to deliver long-term value to all stakeholders. Prior to the production disruptions at Xantho Extended, Golden Grove, 50,000 tons of copper equivalent, and we'll be back at that run rate. Capricorn Copper, a low-intensity pathway to reestablish another 30,000 tons of copper.
We are progressing this business towards its potential as an 80,000 ton per annum copper equivalent producer. With the size of the resources at each asset, the optionality exists to expand from there. With that, I'm happy to take your questions.
Your first question comes from Daniel Roden with Jefferies. Please go ahead.
Good day, guys. Thanks for taking my question. I just wanted to, I guess, understand, with, I guess at Xantho Extended, you know, I guess the indicated mining rates there, when we do get back in, so production kind of year-end. Probably a couple of questions in here actually, but, I guess what's the decision and guiding factor for bringing that forward? You know, I guess you're assessing it against seismicity, and safety in the area, but, like, what do you need to see to be able to accelerate mining in that area?
I guess follow on, like, any of the work that you've done at the moment, has that indicated that, you know, we need to be reviewing, I guess, the mining intensity and mining rates longer term from, you know, from that area, just given to manage that seismicity impact and make sure that you're not causing any safety, implications for your workforce down there?
Yeah. Great. Thanks, Daniel. Thanks for the question. I mean, the first thing, safety, yeah, as I said, I'll certainly reiterate it, that's been the primary focus, the ground support works that we've done, they've certainly allowed that. We've had re-entry into the mine. Yeah, safety first, always. The decision for the additional works is all around minimizing the production potential interruptions going forward. That's first work focused on safety, of course, making sure that we can safely and without interruption progress the performance of Xantho Extended. Within that, while we're doing those works, that's where we are considering the upsides to accelerate both outside Xantho Extended as well as Xantho Extended itself.
I'll just hand to Ed to give a little bit more detail on some of those.
Thanks, James. To inform a decision on any earlier commencement of mining, i.e. in parallel with development, we do want to undertake some more technical work, and principally that will be some numerical modeling. In terms of your other question about run rate, in January, we did revise the production rate, the maximum production rate from Xantho Extended to about 600,000 tons per annum. That absolutely remains the goal and objective, nothing that we've seen from the technical work done to date would suggest that that target is not achievable once we restart production. That's certainly the objective. Once we complete the bypass development, we can get back into production.
Thanks. I suppose part of the question is just looking at Golden Grove was able to give a AUD 10 million net mine cash flow in the quarter. I think it just goes to show that the NSR profile of the production zones isn't just Xantho Extended. You do have some other obviously areas with high NSR tons that are coming out. Is there any additional color on what that might look like into the end of the year until you get into Xantho Extended? Are you looking at similar NSR profiles to what you've delivered in the March quarter?
Or would you expect that to change modestly and you've kind of, you know, targeted some higher areas first to improve, I guess, the operations now?
Daniel, I can grab the start of it, and Ed can add some more detail. Yeah, we've certainly had since the first seismic event, we've had a team really working on that. Everything, the rest of the mine. Xantho Extended, as you've seen from some of the work, is obviously the bottom, the new development area of the mine. We've still got the rest of the mine where the team are always looking at it. Exactly as you said, the NSR scripts are always targeting high value. Through the work they're doing, we're seeing more of that coming through. The other thing I'd add too is the exploration work and things like Oizon, Hougoumont, we're seeing those coming together, lots of potential upside. Things like Tryall right up in the top area of the mine.
Yeah, value always, and lots of that value drives you towards particularly copper, gold, which we've seen some of, and certainly looking to fill the mill with that through the rest of 2026.
Yep.
Yeah, I mean, yeah. All right, go ahead.
Sorry. No, you go ahead, sorry.
Some of the specific and recent extensional results that we've had have introduced additional inventory at Tryall, which is, you know, quite reasonable copper grades, 2.5% copper grades, very shallow. You know, from an NSR perspective, that is attractive. That will come into the plan sort of the back end of the year. Oizon as well, which will be a new ore body. You know, that will kick off in the latter part of the year into 2027. Ultimately, you know, a bit hard to pin down exact sort of range of NSR material because there is still some work ongoing and ultimately, there are trade-offs.
We are also looking at gold specific sulfide material that we could either blend in with copper or treat in isolation. There's a few variables to work through as we continue on this work.
Yep. No, thanks. That's appreciate that. I might ask a quick one and pass it over. You know, I guess the copper, the wet weather programs over the, I guess, cyclone and wet weather period in March seems to have been quite good. It was definitely better than my expectation given the level of rainfall that you've had. It must be pretty encouraging to, for the regulator to see that the, you know, the progress there and you were able to de-stock some of that water inventory. You know, how are those conversations going? You know, you mentioned that, you know, September you're gonna get a bit of a better view on, you know, what the TSF decision is gonna be.
You know, I guess what's the timing expectation on the, you know, DFS that you're doing at the moment and when should we expect to see some details from that?
Great. Thanks, Daniel. Certainly very pleased with the way the team have handled, I mean, all of the work. You can see that's been a downward trend, over 2 GL of water now reduced, over the last two years. Happy with the long-term trend. As you pointed to, really happy with the short-term trend, given how wet it was up and around North West Queensland. You've seen some of our neighbors certainly had a lot of water as well. The resilience of the site to be able to reduce water levels, not just when it's easy, but also when it's hard. Very, very pleased with that. You're right, that does mean the regulator. They can see the work. They can see the risk has reduced.
Very positive conversations in general with the, with the regulator. Specifically, DETSI themselves, we've got the OCG overlay. Again, all very positive, where the tailings permit is now the critical path. By removing water from the critical path, tailings becomes the critical path. We'll be responding to that request for information from the regulator. We've had technical meetings. All of that is going well. You mentioned the DFS. Obviously the team have been ramping that up during this quarter, and therefore we expect by the end of the year that we'll have a lot of detail. We've got some detail on some of the big packages, but we'll have a lot of that detail towards the end of the year.
Awesome. Thanks, James. Thanks, Ed. I appreciate your answers and your time. Cheers.
Bye. Thanks, Daniel.
Thank you. Once again, if you wish to ask a question, please press star one. Your next question comes from Richard Brown, Private Investor. Please go ahead.
Mine was just on the same lines for Capricorn. Is there any, you know, on a positive or pessimistic view as to when that might be open or how long a way for that mine to restart if everything went well?
Yeah. Great. Thanks, Richard. Yeah, we certainly do look at the glass half full side internally. I think what I'll do is I'll go back to having water not being the critical path. I think that obviously gives a lot of cause for optimism. Therefore, the tailings permit is the critical path. With that being, you know, ultimately in the hands of government, that's what makes it hard to really predict or forecast when we would have that permit in hand. That's why we're not waiting. We're doing the work on the DFS. We'll be in a position to be able to, you know, make a final investment decision once we know the outcomes of the study and then the outcomes of the tailings permit.
They're the two big things that we're focused on. One of them certainly firmly in our hands with the DFS. The work with the regulator progressing really well and very positively. Yeah, very hard to predict or forecast when the regulators are going to give us that approval. Thanks, Richard.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Palmer for closing remarks.
Okay, great. Well, thanks, yeah, thanks for the time. Today, I think as you've seen, certainly, we're focused on returning Xantho Extended to production, while we're developing Oizon, Gossan Valley through 2026, and we have the balance sheet to do this. We're also pursuing the DFS on Capricorn Copper and then strategic options to deliver the potential that this business offers. Thank you, and have a safe and productive day.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.