Vault Minerals Faces Rising Costs Amid Waste Stripping but Confident on Expansion

Strong Quarterly Production and Financial Performance

Vault Minerals Limited (ASX: VAU) has reported a solid December 2024 quarter, producing 97,924 ounces of gold with sales of 96,899 ounces at an average realised price of A$3,446 per ounce. The company maintained a competitive all-in sustaining cost (AISC) of A$2,269 per ounce for the quarter, reflecting operational discipline amid elevated waste stripping activities.

Year-to-date, Vault has produced 195,417 ounces and sold 199,428 ounces of gold at an average price of A$3,369 per ounce, with an AISC of A$2,249 per ounce. These figures underscore the company’s ability to generate strong cash flow while investing in growth initiatives.

Strategic Expansion of King of the Hills Processing Facility

In a significant strategic move, Vault’s board has approved an internally funded investment of approximately A$80 million to expand the King of the Hills processing facility (KPF) to a throughput capacity of 6.0 million tonnes per annum (mtpa). This expansion aims to enhance throughput, improve plant reliability, and reduce unit costs, thereby strengthening Vault’s competitive position in the prolific Leonora gold district.

The expansion project is scheduled to commence in April 2025 and is expected to be completed within 15 months, with commissioning targeted for the fourth quarter of fiscal 2026. The company is also exploring the potential to further increase capacity to 7.0 mtpa, indicating confidence in the region’s resource upside and operational scalability.

Operational Highlights Across Key Regions

At Leonora, gold production rose 7% quarter-on-quarter to 50,717 ounces, with an AISC of A$2,129 per ounce. The company is actively reviewing open pit mining practices to reduce dilution and improve grade control, which could further enhance profitability.

The Deflector region produced 28,050 ounces of gold and 152 tonnes of copper, with an AISC of A$2,145 per ounce. Development work is set to begin in Q3 FY25 to access the Spanish Galleon mining area, which will add a new mining front and underground exploration platform by FY26.

Mount Monger delivered 19,156 ounces of gold at a higher AISC of A$2,791 per ounce, impacted by increased mining costs related to waste stripping. However, the company expects strip ratios to decline and ore grades to improve in the coming periods, supporting future cost reductions.

Robust Financial Position and Updated Guidance

Vault ended the quarter with cash and bullion of A$575.6 million, excluding gold in circuit and concentrate. Underlying free cash flow for the quarter was a strong A$52.2 million, despite delivering 45,220 ounces into the hedge book at an average price of A$2,653 per ounce.

The company has tightened its FY25 gold sales guidance to between 390,000 and 410,000 ounces, with an AISC range of A$2,250 to A$2,450 per ounce. Capital expenditure related to the King of the Hills expansion and Spanish Galleon development, estimated at A$8 million and A$6 million respectively, will be excluded from AISC calculations in the second half of FY25.

Corporate Update

Non-Executive Director Andrea Sutton will step down effective 31 January 2025, with the board acknowledging her significant contributions during a transformative period culminating in the formation of Vault Minerals.