I would now like to hand the conference over to James Palmer, CEO. Please go ahead.
Thank you. Good morning, and thanks for joining. James Palmer here, and with me today are Ed Cooney, our Chief Operating Officer, Peter Herbert, our Chief Financial Officer, and Ash Bloor, our new Group Manager, Investor Relations. Today we will be talking through our September quarterly report and presentation released to the market today. First, why invest in 29Metals? We produce copper and other metals critical to driving the global energy transition. There is high-demand challenged supply with a lack of new discoveries and grade decline of existing mines that are getting deeper and more complex to mine. 29Metals, we are well-positioned. We have more than 2 million tons of contained copper in mineral resources, two Australian-based assets with long life potential and geological upside, and exciting near-term opportunity to potentially double production volumes with Capricorn Copper.
We are one of the few copper pure plays on the ASX. We have significant resources in Golden Grove in W.A. and Capricorn Copper in Queensland, and we are on track to deliver the guidance of 20,000 tonnes to 24,000 tonnes of copper this year, with significant growth potential in years to come. Golden Grove is nearing the end of the investment phase to bring on additional high-grade ore sources, and Capricorn Copper is on a pathway to reestablish 30,000 tonnes of copper production at low capital intensity. So excited by the work underway to see us potentially 80,000 ton per annum of copper equivalent across the group. With the size of the resources at each asset, further expansion is certainly possible. Now I will talk to slide 5, to talk through the high points of the September quarter.
A challenging quarter as we were ore constrained, but we have now brought Xantho Extended online post-quarter end. It is a significant achievement. The mill is now flat out with plenty of ore ahead of it. Pleasingly, we safely executed the 11-day planned maintenance shutdown, our longest shutdown for the year, and our TRIF declined again this quarter. As a result of the planned outage and the low ROM stocks, production was lower, copper of 4.2 kt and zinc of 2 kt. However, we built ROM stocks in front of the mill before and during the shut, which has set us up for a really strong quarter to close out the year. Higher maintenance costs associated with the shutdown, largely increased labor and diesel and lower production volumes, of course, flowed through to higher C1 unit costs of US $5.24 per pound. Critically, we made great progress at Golden Grove.
As I mentioned, Xantho Extended, our highest-grade ore source came back online in October. Gossan Valley achieved multiple milestones and remains on track for first ore in the December quarter. First development ore was achieved at Oizon during the quarter, with first production expected this coming quarter. Healthy ROM stocks and additional ore sources all coming online. We are well-positioned for a much stronger Q4 to finish the year, and accordingly, production guidance remains unchanged. The progressive ramp-up of mining from these high-grade ore sources is expected to provide mine plan flexibility and support metal production growth at Golden Grove from hereon in. We remain confident that liquidity is sufficient for ongoing funding of growth capital commitments to develop and ramp up Xantho Extended, Gossan Valley and Oizon. At Capricorn Copper, we continue to reduce water levels, which remain well below the required levels for restart.
The response to the RFI was submitted to the regulator to support TSF3 approval. As we wait approval, we advanced our restart DFS, which remains on track for completion by the end of 2026, which will enable a restart FID subject to TSF3 approval. In parallel, we also progressed the evaluation alternatives to fully fund the restart of operations at Capricorn Copper with continued focus on non-dilutive low cost of capital options, and we like what we are seeing. In Chile, we reached an agreement for the sale of Redhill to Narryer Metals Limited. This allows management to focus on key priorities at Golden Grove and Capricorn Copper and maintains exposure to the project upside through the transaction terms. A strong quarter ahead to finish out what has been a challenging year, with mine production flexibility now improving to deliver more stability.
Unit costs will improve from this quarter as we progressively ramp up Xantho Extended and these new ore bodies. I will now pass to Ed to provide some more details on the operations. Ed?
Great. Thanks, James, and good morning, everyone. Turning to operational performance for the September quarter on slide 7, and starting with safety. As James mentioned, we safely completed a planned 11-day major shutdown in the quarter, injury-free. That is our largest and longest scope of the year, involving approximately 200 additional personnel on site. It covered a broad range of scope, including mill relines, the SAG mill, cleaner remediation, and maintenance to the site's electrical infrastructure. Mine performance improved relative to the June quarter, so we mined 351,000 tonnes of ore, up 17%. Importantly, we closed the quarter with higher developed and underground broken stocks and higher surface ROM stocks. This is setting ourselves very well for the December quarter. With the mill offline, during the major maintenance and combined with lower opening stock positions, ore milled was 17% lower in the September quarter.
As a result, production of both copper and zinc decreased this quarter. As James touched on, we continue to progress our development projects to improve mine plan flexibility and support more consistent operating performance. I will expand on these in a moment, but importantly, with the first blast successfully completed last week, Xantho Extended is now officially back online, which is a huge milestone for the team at Golden Grove. This provides access back into our highest value ore source. Gossan Valley also made solid progress towards first ore later this year. Oizon achieved first development ore, with first production expected late in 2026. With healthy underground developed stocks, the restart of Xantho Extended, good surface ROM stocks, and no further planned major mill outages for the year, Golden Grove is well-positioned for a good step-up in copper and zinc production volumes this quarter.
On to slide 8. I want to take a couple of minutes to talk about Xantho Extended and to outline how important a milestone this is to have the deposit back online. As I mentioned, we safely fired the first stope last week, and that is approximately 12 months since production from the ore body was suspended in late September 2025, following a damaging seismic event. A lot has happened over this time, and we approached the restart of production with the safety of our people and sustainability of operations front of mind. Geotechnical processes have been strengthened following engagement of an independent geotechnical review board, including additional structural geology resources onboarded and a significant update to the structural model. Development of a detailed numerical model, which has been well-calibrated to the 2025 seismic events. An expanded underground seismic monitoring system, and strengthened re-entry processes.
We have also made solid progress on the new access drives. The first two bypasses are now complete. Development of the third is well underway and scheduled for completion during the current quarter, and the fourth is expected to be complete early in the March quarter of 2027. A progressive ramp-up of production from the ore body is planned, with three stopes scheduled for mining in the December quarter, the first of which has already been fired. Fantastic news. We have now restarted production from the ore body and really full credit to the site team who have systematically worked through enhanced governance processes and completed the required ground support upgrades and new level accesses to enable this to occur. Moving on to slide 9. We are also pleased with the progress made at Gossan Valley during the quarter.
The project remains on track to deliver first ore by the end of 2026, with multiple milestones achieved in the past three months, including the first raise bore to surface now completed, which enables the fresh air ventilation fans to be relocated from the portal to underground. The surface power station has been upgraded, with the first underground substation installed and commissioned. A progressive ramp-up of production from Gossan Valley is planned for 2027, with development to continue into the main ore body, followed by first stope ore expected sometime during Q2, ahead of mid-2027. Once fully ramped up, Gossan Valley is expected to enhance the Golden Grove operation by providing production flexibility as an additional mining front, higher-grade ore to replace the declining production from Scuddles, mining simplicity, given its relatively shallow nature, and the potential to extend Gossan Valley mineral resources, which remain open at depth.
I'll now pass over to Peter to provide an overview of costs and capital for the quarter.
Thanks, Ed. At Golden Grove, site costs of AUD 108 million in the quarter were approximately AUD 12 million or 12% higher than the prior quarter. This was on account of maintenance costs of AUD 7 million incurred to execute the major planned shutdown during the quarter, and incremental diesel costs of approximately AUD 2 million, a result of inflated prices, higher consumption as on-site diesel power generators were required during the shutdown, and increased trucking activity in the quarter to deliver a 17% increase in ore mined. C1 unit costs were also higher due to the elevated site costs as discussed, materially lower copper sales down 30% by volume, and lower byproduct credits. This was partially offset by a stockpile movement credit as inventories rebuilt during the quarter as mining volumes increased from September.
We expect to deliver materially reduced unit costs in the December quarter through sustained improvement in mined tonnes from additional ore sources, which became available during the current quarter. In turn, improved concentrate sales volumes, higher by-product sales following the resumption of mining at Xantho Extended, and reduced one-off costs with no major maintenance planned for the remainder of the year. Ongoing efforts to manage site costs will focus on opportunities to reduce diesel consumption, identify cost offsets, noting sustained increases in diesel prices and expected higher mining volumes, including increased tonnes from depth post restarting Xantho Extended. As we build mine plan optionality at Golden Grove, investment in Gossan Valley contributed to higher growth capital in the quarter, being the highest quarterly spend for the year. Growth capital is expected to remain elevated through December quarter as we deliver first production. Full-year cost and CapEx guidance remains unchanged.
Back to you, James.
Thanks, Peter. Thanks, Ed. While it was a challenging quarter from a production and cost point of view, as we've executed the major maintenance and we're constrained with lower ore stocks, there's a lot to be excited about moving forward. Xantho Extended is now back online, and we've seen first ore from Oizon, and we'll see first ore from Gossan Valley in the next quarter, which will significantly improve operational stability and flexibility from here through 2027 and beyond.
There's more upside potential from our exploration program, as slide 11 shows. Every intercept on this page released in the last 12 months, all of them resource extension intercepts, so lots of high-grade copper and zinc, and gold and silver. Further resource extension drilling was completed during the quarter, and assay results are expected in the December quarter. To further complement the drill program, the installation of an innovative underground electromagnetic transmitting loop has commenced at Gossan Hill. Rather than relying solely on traditional drilling methods, the 4km loop serves as a tool to identify highly prospective areas for further exploration. The asset has a decade-long history of mine life extensions, and the ongoing exploration program continues to provide confidence that Golden Grove will continue to operate for decades to come.
Just to wrap on Slide 12 on Golden Grove, as we progressively ramp up the high-grade ores feeding the mill, we expect improved throughput and recoveries to enable a step up in production volumes, including by-products. This will, in turn, reduce unit costs, and capital requirements will start to come down through 2027. We'll continue with exploration drilling so we can keep producing more of the metals the world needs for years to come. Moving to Queensland, Capricorn Copper, where we have a large copper metal endowment and a plan to restart operations utilizing this existing infrastructure. Capricorn Copper presents a significant opportunity. 64 million tonnes of mineral resources, 1.2 million tonnes of contained copper, established surface infrastructure, established underground development directly to the ore body, all within the highly prospective Mount Isa Inlier Province. A low capital intensity brownfields restart project.
Capricorn Copper is expected to double our group copper metal production and contribute significant EBITDA. Slide 15 serves as a reminder of the potential of Capricorn Copper. In the 2 years prior to the extreme weather event, which forced us to temporarily suspend operations, we were producing an average of 24.5 kilotonnes of copper at an all-in sustaining cost of US$3.60 per pound, generating EBITDA of AUD 88 million, and importantly, this was at a copper price 60% lower than today. On slide 16, with water levels no longer an impediment to a restart of production, approval for TSF3 from the regulator is the critical path imperative to enable a restart decision. A response to the RFI from DESI was submitted during the September quarter as planned, and a response to the EPBC Act referral process will be made in the December quarter following feedback received.
In parallel, progress on the restart DFS continues, with completion expected by the end of the year. We are making good progress on a range of non-dilutive options to fully fund the restart, which Peter will touch on shortly. As you can see on slide 17, we see a bright future at Capricorn Copper. Tier 1 location, large copper metal endowment, low capital intensity pathway to reinstate 30,000 tonne per annum of copper production, and lots of geological upside to enable future potential expansion of resources and production. I am going to hand over to Peter to talk through the balance sheet prior to wrapping up. Peter?
Thanks, Jas. Gross revenue was AUD 94 million for the quarter. This was approximately AUD 70 million lower than the prior quarter result, with reduced copper and by-product sales realized. This result was materially below recent quarters, the result of challenges in bringing new ore sources online, given the suspension of operations at Xantho Extended. Lower realized sales in the September quarter impacted group liquidity. 29Metals finished the quarter with liquidity of AUD 142 million, consisting of AUD 128 million in cash and available headroom under the group's offtake facility of US$10 million. Importantly, improved ore sources, which came online during the quarter, in addition to the restart of mining at Xantho Extended post-quarter end, will support materially higher sales in the December quarter. Our liquidity position is sufficient to fund the completion of development and ramp-up of Xantho Extended, Gossan Valley, and Oizon.
Collectively, these additional ore sources will provide significantly more flexibility in the mine plan and generate more consistent revenue moving forward, supporting lower production costs and improved operating cash flows. Furthermore, as these projects progressively ramp up, operating cash flows improve and capital investment reduce, improving group cash flow generation. Evaluation of options to fully fund the restart of Capricorn Copper and materially strengthen the group's balance sheet position are now well progressed and moving in parallel with the work on the restart DFS and project approvals. We have received strong interest across a range of non-dilutive, low-cost funding solutions, which we believe deliver on the group's objectives. Timing for completion and terms remain subject to ongoing commercial discussions.
Lastly, we reached agreement for the sale of Redhill to Narryer Metals Limited, with transaction terms comprising upfront equity consideration of 20 million Narryer shares, a AUD 1 million milestone-linked contingent payment, and a AUD 1 million strategic investment into Narryer Metals. This transaction allows the group to focus its efforts on delivering the ramp-up of Golden Grove and the restart of Capricorn Copper while maintaining exposure to the future upside of the Redhill project. Thank you, and back to you, James.
Great. Thanks, Peter. As you can see from the quarterly today, 29Metals, we remain well positioned to capitalize on the favorable copper supply-demand dynamics. Over 2 million tonnes of contained copper and mineral resources across two Australian-based assets, both with long LOM potential and significant geological upside. The team will remain focused on leveraging this position, delivering safe production, prudently allocating capital, and delivering long-term value to all stakeholders. With Xantho Extended back online and Gossan Valley and Oizon on track and to plan, we're working towards getting Golden Grove back to over 50,000 tonnes of copper equivalent production per annum. At Capricorn Copper, we have a low capital intensity pathway to reestablish another 30,000 tonnes 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 resource of each asset, further expansion potential exists. With that, we are happy to take your questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Daniel Morgan with Barrenjoey. Please go ahead.
Hi, James and team. My first question is just on, oddly, on Capricorn, and you seem to highlight that there's non-dilutive equity options you're looking at in terms to finance any restart to production. I presume that that involves Are you talking stream options here?
Thanks, Daniel. Yeah, exactly. We've been trying to be as clear as we can on that, on what we're looking at. But of course, yeah, stream royalties, minority sales are all in the mix. But Peter, anything you'd like to add?
We're looking at a range of options. Naturally, we can't comment on specifics, but there's a lot of things that we're looking at, and as I say, focused on trying to bring the lowest cost of capital and a holistic solution for the business. So they're the objectives, and we are encouraged by what we've seen so far, Daniel. But yeah, lots of different things in the mix.
Just to. We see such value in Capricorn, Daniel. So yeah, looking at what can we do to bring that forward rather than wait for free cash flow from Golden Grove.
Yeah. So just on that alternative, I guess I'd like to explore a bit more why not pursue a go-slow approach? Because obviously, the company at the present time, you've had a troubled few years, that's well documented, operationally, financially. But things are potentially looking better for next year as Golden Grove gets back on track, and would be, I would believe, in a strong free cash flow position, hopefully in 2027. So over the course of next year, your balance sheet, instead of deteriorating, should be improving. So why not go a bit slower and then you're in a position of strength to have these discussions rather than accelerate them on what could be very high-cost options versus the strategic value of Capricorn. Can you just comment on that?
Yeah. It's probably back to my last comment, Daniel. We see huge value in Capricorn Copper, so bringing that value forward certainly makes a lot of sense. Everything else you said on your Golden Grove, now on a good footing, and therefore that's what we've been doing for the last couple of years, is to get into those new ore sources. We've been delivering on that strategy for Golden Grove. But we see the value in Capricorn Copper, so waiting is always an option. But we believe that we can get these low cost of capital options to bring that value forward.
Okay. Thanks, James and team. Appreciate the perspectives.
Thanks, Daniel.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Daniel Roden with Jefferies. Please go ahead.
Good day, guys. Hopefully you can hear me all right. Just wanted to ask on, probably Capricorn as well, but the TSF3 and EPBC. I guess timing, you are expecting it by the end of calendar year 2027. I guess in the environment where those do not come back in a timely manner, if there is another request for information or, let us call it unlikely, but in the event that it does get rejected on the TSF3 development pathway. What is the next, I guess, tranche or next pathway for getting the Capricorn restart? I imagine in that scenario, the FID and studies will be deferred just given there is no, in that event, there is no tailings approved pathway. Just how are you guys thinking about that? Is that continued option something that you are thinking about at the moment? Yeah. Pause there.
Right. Thanks, Daniel. I will start then I will throw to Ed for any more details. What we are doing is really setting it up so that by the end of the year, we have got options. So we have been doing everything we can do as far as getting the, responding to the RFI, et cetera, in with government. Of course, the approval process itself, we do not control from government. We have certainly been having very good conversations directly. We have got the Coordinator-General in the process as well. Everything is progressing that we can control really well and the conversations are very positive. So we are very positive that we will get an approval. We are also therefore making sure that we do the DFS so that we are in a position to make a decision with an approval in hand, and that is why we are having the funding.
Essentially, we are lining up everything that we can control so that we can make a positive decision. But of course, as you pointed to, we do not actually control the approvals process. But the conversations we are having at all levels, so right from the top of the company and government, right through to those that are doing the technical work on the decisions, we are having good conversations at all levels. Ed, anything you would want to add on that?
Yeah. So a couple of things. I think the engagement with both state and federal agencies has been very good. We have hosted site visits, been very open and transparent, shared a lot of technical information supporting the TSF3 application. Should it be rejected, we would need to pivot to an alternative tailings facility location, being what we call Magazine Creek, which we have preliminary concept level work done. Clearly, that is not as mature as TSF3, and that would be a real disappointment. But as James mentioned, we are confident in the application we have put forward, supported by robust technical documentation, good engagement. We continue to keep dialogue well and truly open. Just a matter of time now for the agencies to complete their work and land a decision.
Awesome. Thanks. Thanks, guys. Let's hope for a good outcome there. On costs at Golden Grove, obviously you called out that there was diesel and power costs were a contributor in this quarter. Are you able to delineate the specific cost inflections there? Quantify specifically what the diesel increase attribution was on the cost base? Then, if we're thinking about the assumptions and carrying forward those assumptions into Q4, how much is transitory versus sticky costs into Q4?
Yeah, thanks for the question. The incremental costs for this quarter were approximately AUD 2 million. We're probably seeing that as an uplift of round numbers, 40 cents or 50 cents in the diesel price for the quarter impacting that. I think we're assuming those price pressures remain for Q4. In particular to deliver the mining tons at depth, there will continue to be some pressures there. We probably don't see that full impact coming through in Q4 because a big chunk of that diesel was to run the temporary power sites. Sorry, the diesel generation while we were doing the shutdown. A portion of that will flow through, but we don't expect that full amount in the full quarter, in the final quarter, rather.
Yeah. No, thank you. Excellent. At the risk of being a bit premature, you've got Gossan Valley, Oizon and Xantho Extended, kind of all ramping up into 2027. Everyone's thinking about potentially from an ore contribution split going into calendar year 2027. Are you able to guide on specific timing and when those ore sources might be ramping up and what the proportion that they might account for 2027 feed?
Obviously, we've got our LOM and we're following our normal budget process. We'll give guidance at the end of next quarter. So in late January, when we'll have all those refined. But we have been pretty clear on when those are coming through, but then they're ramping from there. Yeah, Xantho back on and then there will be a ramp up, then getting that up through early 2027. Oizon comes on late 2026, obviously ramping from there. Gossan Valley comes in second quarter of 2027 before it starts to give meaningful tons. But we'll give full guidance in 2027. But anything else on LOM?
No, I think you covered it. Yeah. No, nothing else. Yep.
I would add one more, Daniel, just on Do you see the remnant production? We have really begun to ramp that up. We've got Xantho back, the remnant production that we had to face with the Xantho issues, come from a standing start. We've now got lots of ore sources in the broader Gossan Hill as well as Xantho, as well as Oizon, as well as GV coming on. Yeah, much healthier position than we were.
Yep. No, crystal clear. Thanks, guys. I'll hand it over. Appreciate it.
Thanks.
Thank you. There are no further phone questions at this time. I'll now hand back to Mr. Palmer for closing remarks.
Great. Well, thank you. Thanks for the time. Thanks for the questions. Certainly challenging quarter on outputs, but excellent on inputs. We are seeing the benefits of that flowing into the quarter just now and our run into 2027. Thank you. Have a safe and productive day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.