Everyone, welcome. Thanks for joining today's Q3 2026 Investor Webcast, the Black Cat Syndicate, ASX code BC8. I'm Stewart Walters from MarketOpen, and today we're joined by James Bruce, Managing Director, and Nick Dwyer, Chief Financial Officer of Black Cat Syndicate. James and Nick will take you through the company's March quarter, Q3 financial year 2026 results, followed by a live Q&A session hosted by Andrew Lai, the Group Manager of Corporate Development at Black Cat. If you'd like to ask a question during the Q&A, you can click the hand icon at the bottom of your screen to ask a question live. Please state your name and where you're calling from. You can also submit any written questions at any time via the Q&A tab at the bottom of your screen. With that, I'll hand over to James Bruce, Managing Director of Black Cat Syndicate.
Thanks, Stewart, and good morning, everyone. Thank you for joining us today. This is my first quarterly webcast as Managing Director. I appreciate your time for joining us today. I've been with the business now for about two months, and before getting into the details of the quarter, I wanted to share a few initial reflections. Firstly, I wanted to acknowledge and thank Gareth Solly, one of the founders of Black Cat, who played a pivotal role in successfully transitioning the company from an exploration business that IPO'd at AUD 0.20 a share in 2018 to become a multi-asset gold producer today. It's a rare and significant achievement in this industry. I thank Gareth for his leadership and contribution to the company and wish him all the best in his future endeavors.
Building on Gareth's foundations, one of the things I've been impressed with most since joining the company is the culture of the business. There's a strong can-do attitude across Black Cat with people who take ownership, thinking collaboratively and effectively, and who are focused on getting things done safely and responsibly. Second, I'm pleased with the senior management team. The team brings deep operational experience and a proven capability to build, own, and operate assets across the full life cycle. Importantly, that capability is demonstrated through the successful delivery of two gold operations into production over the last 18 months. Third, having spent some time across the operations, I'm genuinely invigorated by the opportunities ahead for Black Cat.
With a strong balance sheet, robust cash flow, and the right people, and with 100% owned package of exploration tenure across Western Australia, we're well-positioned to deliver near-term growth as our production momentum builds while also progressing longer-term value across the broader portfolio. My mandate is very clear. To grow the business significantly in Australia and to do so in a capital-efficient manner. Firstly, at our two existing operations, Kal East and Paulsens, we'll increase our own production and fill the mills for longer. Secondly, at our two development projects, Coyote and Mount Clement, we'll define the potential to bring them into development over the next few years. Finally, we'll look at opportunities to acquire mineral leases and projects where we can leverage our in-house build, own, operate capabilities. That clarity is important, and it underpins how we think about capital allocation, growth opportunities, and decision-making across the business.
With that context, I'll now walk through the March quarter performance from an operational perspective before handing over to Nick to cover the financials and the balance sheet in more detail. Looking at the last quarter, I want to start with people and safety. During the March quarter, the group increased employee and contractor numbers by 12% to 618 people, reflecting the continued scale-up of our operations and investment across the business. Investing in people is a high priority. As we continue to expand the business, we expect employee numbers to continue to increase, supported by ongoing investment in capability, leadership, and operational depth. Safety remains a core priority of the business, and the hazard reporting culture is strong at both our operations, and I've observed that on multiple occasions. Our focus is on continuous improvement, ensuring that everyone goes home safe every day.
Disappointingly, during the quarter, we had one LTI. As I often say, we only earn the right to exist if we are productive, and safe, disciplined operations are fundamental to that productivity. By leveraging the combined experience across the group, we continue to focus on improving the operational performance while maintaining a strong safety culture. Turning to gold production. Group production was 23,952 ounces during the quarter, which was below the outlook range of 25,000-28,000 ounces, primarily due to the lower grade at Paulsens. Talking about that and Paulsens itself, production was 7,110 ounces. Processing increased by 13% on a quarter-on-quarter basis to 102,000 tons. However, the grade was lower as we mined lower-grade stopes. Production is expected to increase going forward as higher-grade stopes are accessed. Paulsens is a high-grade but nuggety ore body, and this can result in variability between quarters.
Importantly, processing volumes increased quarter-on-quarter, reinforcing that the outcome was driven by grade rather than throughput or operational disruption. I've been impressed by the cost management of Paulsens with disciplined cost control over the last quarter, which was only impacted by grade variability rather than operational disruption. Turning to Kal East, gold production in the March quarter was 16,842 ounces, representing a 4% increase quarter-on-quarter. This included 11,553 ounces from third-party ore, which contributed from the company-owned Fingals and Majestic mines, which processed their first batch of 100% Black Cat ore. Ore processed declined by 5% quarter-on-quarter to 305,000 tons. However, this was more than offset by the higher realized feed grades, with the average head grade coming in around 10% higher.
The Majestic decline in infrastructure is well-established. I'm pleased to say that yesterday, we successfully fired the first long-hole stope at Majestic. This is an important milestone, and we'll see increased tonnages of high-grade material in the months ahead. The Fingals open pit is now well established and will produce more tons than we can treat through the Lakewood mill over the next year. This will provide us operational flexibility. Overall, the June quarter will demonstrate an important transition for Kal East operations, with 100% Black Cat ore being fed in from both Fingals and Majestic for the first time. We'll talk more about that later. Nick will cover off on what that means. Just wanted to discuss fuel for a while. The company has not been immune to the events in the Middle East and the impact on fuel.
To give an idea of exposure to fuel costs, it's increased as a proportion of operating costs during the quarter from 6% of total costs in January, pre-war, to 8% in March. It remains manageable within the group's cost structure. Even more importantly, the company has managed to maintain fuel suppliers during the quarter. A new bulk fuel supply agreement was executed, providing long-term supply certainty. Together with Lakewood's grid-connected power, the group is not experiencing any fuel supply constraints, which has supported uninterrupted operations across the portfolio. I'll now hand over to Nick to take you through the March quarter financial performance and the balance sheet in more detail. Thanks, Nick.
Thank you, James, and good morning, everyone. I'll step through the March quarter performance in a bit more detail, starting with gold sales and cash flow, before finishing with the balance sheet and capital deployment across the business. Turning to sales and cash flow. Gold sales for the quarter totaled 10,374 ounces at an average realized price of AUD 6,817 per ounce, generating AUD 77 million in gross revenue. In addition to gold sales, AUD 18.5 million of revenue was generated from third-party tolling at Lakewood, and this resulted in operating cash flow of AUD 61 million after AUD 32 million in operating costs. During the quarter, the group invested AUD 54 million in project sustaining and exploration capital. Turning to the balance sheet and capital deployment. The group continues to maintain a strong balance sheet and liquidity position.
At quarter end, the group held AUD 53 million of cash, AUD 4 million of investments, and 5,323 ounces of gold bullion on-hand, which was valued at roughly AUD 36 million. These amounts totaled AUD 90 million, which was held at quarter end. This quarter-end balance was broadly stable compared to the previous quarter, with profits from Paulsens, the Myhree joint venture, and third-party tolling being used to fund the start-up costs of Fingals and Majestic and other capital. As a result of this capital investment at these mines, ore stockpiles increased to 184,000 tons by quarter end, providing increased processing flexibility going forward.
In addition, the board approved the AUD 20 million expansion of the Lakewood processing facility to 1.5 million tons per annum from the current 1.2 million ton annual rate, which will be spent over the coming 12 months. The investment is expected to be funded from operating cash flow and is aligned with the group's disciplined capital-efficient growth strategy. Looking ahead to the June quarter, an important milestone is the fact that production across Kal East is expected to be sourced from 100% Black Cat ore following the successful transition away from third-party feed. As a result, and combined with the investments that we have made during this March quarter, we expect cash flow generation to be stronger in the coming quarters at these gold prices.
In summary, while the March quarter reflected some operational variability, the financial position of the group remains strong and capital continues to be deployed into assets that will underpin future production and cash flow. I'll now hand it back over to James to cover the operational outlook and the path forward.
Thanks, Nick. I see a significant opportunity to leverage potential within the portfolio. First of all, just wanted to state that I've commenced a strategic review to look at these opportunities and growth initiatives. This review is focused on ensuring that we are well-positioned to deliver the mandate, to grow the business significantly while maintaining a strong focus on capital discipline and execution. We expect to provide an update on the outcomes of the strategic review within the next three months. The purpose of this review is twofold. Internally, it's about aligning our people around clear priorities, goals, and KPIs so that everyone across the business understands where we're heading and how success will be measured.
Externally, it's about improving transparency and disclosure to the market, clearly articulating our growth strategy and being explicit about what we will do and what we won't do as we execute this strategy. Following completion of that process, the company intends to provide annual guidance, including All-in Sustaining Costs and production profiles as part of three-year reporting cycle. I'd like to provide some context of what I see as the future growth opportunities. The company has been exploiting and delivering two growth projects. My observation is there's been little in the way of exploration over the last couple of years. This will change as we go forward. We now have cash on the balance sheet, and there's a clear potential to build on the resource base that we have.
The investments will be selective in organic and near mine opportunities as well. They'll be pursued in a disciplined manner that focus on supporting the near-term production momentum while building longer-term optionality across the portfolio. We'll only deploy capital if we can demonstrate strong return on investment, and value will be created on a debt-adjusted per share basis in gold production and reserves in Australia. Across all four assets, there is significant opportunity to increase exploration, and I'll update you in the next three months as to our plans on that. With that, I'll hand over to Andrew. Andrew Lai recently joined Black Cat from Fidelity in Japan to manage our investment strategy and corporate development activities.
Andrew has significant experience in the investment market and provides an important contact for you all as we expand our investor base and engage more effectively with the market. Andrew, with that, please open the Q&A.
Thank you, James. We will now move to the Q&A session. We will start with live questions from the audience, and then we'll work through the written questions as well. As a reminder, if you'd like to ask a question live, please click the raise hand icon at the bottom of your screen. When you are invited to speak, please state your name and where you're calling from before you ask your questions. We'll take our first live question now. Paul, please go ahead.
Good day, guys. Can you hear me okay?
Yeah, I can, Paul. How are you?
Yeah, great. Thanks. Good to chat. Just a couple of, no, housekeeping questions first, I guess. So just to be clear, Will, the conclusion or I guess update of your strategic review and that sort of longer-term commentary, just to be clear, so prior to your FY 2026 result, so ahead of August, James, would be your expectation?
Yes, Paul. I think, definitely within the next three months.
Yep, great. I know you've spoken about this before, but at the same time or potentially separately, we'll hear a bit more about a framework around your bullion strategy. Still intending to sort of flesh that out a little bit more for investors?
Yeah, I think it comes as part of that same review.
Great. Okay. Then just a couple of other ones around, I guess, the nearer- term, just to close out this fiscal year. In terms of CapEx, we're all sort of flying blind a little bit here at the moment. Certainly on my numbers, the CapEx for the March Q was a bit higher. I mean, you're obviously investing in the business. Could we expect a similar kind of run- rate into the fourth quarter ahead of that more fulsome guidance, which we'll get at a later date?
Paul, in this quarter, yes, I think it will be similar. A lot of those activities are the stripping activities, particularly around the Fingals open pit.
Perhaps maybe a question for Nick, too, just on that, in terms of commercial production at Kal East and therefore when we'll likely see these expenses go from being capitalized potentially to manifesting on the P&L, likely June 30, Nick, or maybe later?
Yeah, it'll likely be in the June quarter, Paul. You can see that we've been building some stockpiles from Fingals, and we are. You know, that is early stage ore development there. You know, I think going forward, we should be hitting our straps in terms of run- rate and mining there. Yeah, sometime in the June quarter.
Okay, great. Just two more quick ones, if I may. Earlier, I understand you have processed some small amounts of Fingals and Majestic material. I was just curious to get a, I guess, an early indication of how that's performed from a, I guess, an expectation perspective, both or in terms of recoveries, I guess. Throughput and recovery of that new material, everything's going well?
It's actually gone extremely well and better than our expectations, Paul. Certainly, the throughput rates have been higher than we expected. The recoveries again have been very good and reagent use and other consumables have been better than expected. All around, you know, it's gone extremely well. We're very pleased with how it's going through. We first started feeding this material through the plant, and they've been 100% Black Cat material since the 28th of March. We've had a good couple of weeks since then to really see this performance coming through.
Great. Last question, how far away do you think we might see a revised or refreshed mineral resource or reserve update, James?
I think that we'll go through the year-end process, and it'll be provided at that point. I think the expectation is we'll do that every year. As I stated, Paul, we'll also be doing a significant amount of drilling over the next, in the periods ahead. Obviously, as we do those exploration programs, we'll also be announcing those to the market, as relevant results come through.
Yep. Late Q1, FY 2027, something like that?
Something like that, yep.
Yep. Okay, great. All right. That'll do for me. Thanks very much.
Thanks, Paul.
Thank you, Paul. Next, we have Janice. Janice, please go ahead with your question.
Oh, hi, James. It's actually Richard at Barrenjoey.
Yeah, Richard. Nice having you on the call.
Yes. Hi, guys. Just a quick one, pretty high level from me, just in terms of the exit run- rate that you'd sort of flagged of 100,000 ounces per annum at the end of this financial year. Obviously, it's a bit hard to predict given the spotty nature of Paulsens, but are you sort of comfortable with that exit run- rate and I suppose a trajectory that sees you moving into the second half at well above that level?
Yeah. No, absolutely, Richard. That's correct. That's the way I see it. Maybe if I can just put some color around all of that. There's a couple of things. Firstly, the Majestic underground mine is ramping up and that we blasted our first stope yesterday. That's an important milestone for the company. The stoping grades will be well over 3 grams a ton, whereas the development material is sort of more around the 2 grams a ton. Majestic over the next month will significantly increase this grade profile and over the next four or five months it will ramp up to full production at Majestic. Secondly, the Majestic as a percentage of the mill feed will obviously increase through those months going forward. The grade profile for the Lakewood mill will therefore increase. I also just want to point out, Paulsens, well, we have great throughput.
The run- rate at Paulsens is 410,000 tons per annum. In the last quarter, we expect that to continue into this quarter. In the last quarter, we were mining through a low-grade part of the mine plan, and progressively month-on-month, we expect those grades to increase going forward. My final point on all of this is that regardless of the production profile, which you pointed out, for us, it's very much about as we transition to 100% of Black Cat feed through the Lakewood mill, that's a really important milestone for the company in terms of the change in profitability that we are seeing right now and will continue as we go forward. We've got mine plans for both Majestic and Fingals that run out four years.
It's a profile of cash flow and production that set us up well for significant cash flow going forward.
Yep. Okay. That makes sense. Great. Thanks, James.
Thanks, Richard.
Thank you, Richard. As a reminder, if you would like to ask a question live, please pick the raise hand icon at the bottom of your screen. When you're invited to speak, please state your name and where you're calling from. We'll move to some written questions first in the meantime. We're getting a number of questions on Mount Clement. James, could you please update us on the latest with the Mount Clement and also, any feedback from your trip to the U.S.?
Yeah. Thanks, Andrew. Mount Clement, we announced in the quarterly some significant exploration results, and we've increased the resource base to just over 25,000 tons of antimony. At the same time, that drilling campaign was to provide us metallurgical data for met test work. A study is going on around the met test work and what the project scale can be and options around that. We expect that study to be completed by the year-end. In addition to that, there's another exploration program that will continue. The ore body is open at depth and along strike. In the months ahead, we will continue drilling out the ore body and all of that information will go into the study. In terms of the market itself, antimony is a critical mineral, and there's a significant opportunity.
Our ore body is a lead-silver-antimony deposit, and that means it can be processed outside of China very effectively, and ultimately could feed either the U.S. or European markets. There's an opportunity for us to explore offtake agreements with various parties. We'll consider that over the next six months or so, and hopefully come out with an updated study by the end of the year.
Great. Thank you, James. Next question from [Blair Spaulding] from [Shaw and Partners]. Can you comment on why the quarterly guidance was not provided for the June quarter? Obviously, we are working towards providing a full- year FY 2027 guidance, but just some explanation on why it was not kept consistent.
Yeah, thanks, Blair. Firstly, Blair, I'm new to the role and we've got a year-end budgeting process that's commenced. Full guidance will be provided once this is completed, including All-in Sustaining Costs. We expect this next quarter to be similar to the quarter that we've just had. There will be compositionally some very big changes that we've talked about in terms of feeding 100% of our own material and what that means for cash flow. I think as we ramp- up production at Majestic, as I've already talked about, as we get into better grades at Paulsens, I think we'll see the outcome of that, and that will be reflected in the forward guidance that we give in the June quarter. Yeah, hopefully that answers your question for you.
Great. Next, we have a question from Keith Goode. What's the production target for Paulsens, and when do you expect to achieve it?
Look, we've continued to operate Paulsens very well. My observations are that the cost structure of Paulsens is extremely well managed. It's a very stable cost structure. We've got production that we reported over the last few quarters. In the third quarter of 2026, we did 7,100 ounces. In the December quarter, we did 9,300 ounces, and in this last quarter, we did 7,700 ounces. The production rate will be a reflection of the grade of the stopes as we go through the mine plan. The grade of this ore body is very high, but it's also very nuggety. At any one time, we do go through some quarters through low-grade material, and then other quarters it's high grade. The grade does vary quite significantly.
If I talked about what we have in some of our drives right now, it's extremely high grades, and that we will mine those stopes in the next few months. We do expect over this quarter, the grade will pick up month-on-month.
Thank you, James. Next, we are getting a number of questions on CapEx and exploration. Could you run us through on the plan for CapEx across all four sites?
Yeah. Thanks, Andrew. I think with regard to that, I want to be really clear about our expectations for capital, for the returns that we expect to get from that capital investment. I expect to do that when we come out with our updated strategy and growth objectives for the next year. The way I think about it, as a gold mining company, we have significant opportunities to expand our existing portfolio of assets, to develop two new assets, and more broadly, to reinvest in the business. The way I think about things is about cash on cash returns and return on invested capital that needs to be significantly higher than 15%.
They're the sorts of returns that I expect to generate, and as we come out with those plans, we'll give you more detail so that you can determine our success or not at being able to achieve that capital deployment.
Great. Thank you, James. Thank you everyone for the questions. There were some good ones today. I'll now hand back to James for any closing remarks.
Well, thank you all very much. It's a pleasure to present to you for the first time. To wrap up, the March quarter was one of investment and transition. The underlying fundamentals of the business remain strong. We're investing in the right areas and have a strong balance sheet. We're working the portfolio for near-term production growth and a strong inflection in cash flow generation in the coming quarter and over the year ahead, and a meaningful longer-term opportunity. I'd like to thank the Black Cat team across all our operations for their efforts during the quarter, and thank you as well for your continued support and interest in Black Cat. With that, we'll close out. Thank you very much.