Austral Gold Boosts Q4 Production While Cutting Costs, Eyes 2025 Growth

Q4 Production and Cost Improvements

Austral Gold Limited (ASX: AGD) closed out 2024 with a notable uptick in quarterly production, delivering 3,669 gold equivalent ounces (GEOs) in Q4, an 8.5% increase over Q3. This improvement was driven by the successful repair of high-pressure grinding rolls at the Guanaco mine in Chile, which boosted throughput at the heap leaching project. Alongside rising output, the company achieved meaningful cost efficiencies, reducing cash operating costs (C1) by 12.6% to US$1,877 per ounce and all-in sustaining costs (AISC) by 14.6% to US$2,064 per ounce.

These cost reductions reflect operational improvements and strategic equipment upgrades completed in January 2025, including a fleet replacement initiative designed to enhance equipment availability through contractors. The average realised gold price also rose 7.3% quarter-on-quarter to US$2,658 per GEO, contributing to a stronger gross margin despite ongoing operational challenges.

Full-Year Production Shortfall and 2025 Outlook

Despite the Q4 rebound, Austral Gold’s full-year 2024 production totaled 15,573 GEOs, falling short of the revised guidance range of 17,000 to 18,000 GEOs. The shortfall primarily stemmed from delays in repairing critical equipment, including the high-pressure grinding rolls, as well as mechanical failures and downtime related to crusher linings and cooling systems. These issues constrained ore throughput, particularly at Heap 4, and limited overall output.

Looking ahead, Austral Gold has set an ambitious 2025 production target of 18,000 to 20,000 GEOs, with expected cash costs between US$1,500 and US$1,700 per ounce and AISC ranging from US$1,700 to US$2,000 per ounce. The company anticipates production will ramp up significantly in the second half of the year, aiming for a monthly average of 1,800 GEOs starting in Q3. This growth will be supported by ongoing integration of agitation and heap leaching processes and the recently completed equipment upgrades.

Strategic Developments at Casposo and Financing

Austral Gold’s Argentine operations at the Casposo mine remain on care and maintenance, but the company is actively advancing plans to restart processing. A key milestone was the execution of a toll processing agreement with ASX-listed Challenger Gold Limited, under which Casposo will process mineralised material from Challenger’s Hualilan project. Operations are expected to commence in the second half of 2025, contingent on refurbishment progress.

To fund this refurbishment, Austral Gold secured a US$7 million loan from Banco San Juan, with an initial tranche of US$1.5 million already received. The loan is structured with staged disbursements tied to refurbishment milestones and carries an 8% annual interest rate. The Casposo plant and associated farmland serve as collateral. This financing, alongside related party loans totaling US$12.4 million, underpins the company’s strategy to bring Casposo back into production and diversify its asset base.

Financial Position and Equity Investments

Austral Gold ended Q4 2024 with US$3.6 million in cash (US$4.9 million including unrefined gold inventory) and total financial debt of US$26.6 million. Net financial debt rose to US$23 million, reflecting increased borrowings to support capital projects and working capital needs. Notably, net current liabilities decreased significantly due to new debt financing and extended maturities, improving short-term liquidity.

The company also maintained its largest shareholding in ASX-listed Unico Silver Limited, despite a reduced ownership percentage following non-participation in recent private placements. Austral holds 22.9 million Unico shares and 15 million options, representing a strategic equity investment in the silver sector.

Exploration and Growth Prospects

Exploration activity in Q4 was focused on refining geological models at the Guanaco-Amancaya mine complex, particularly the Dumbo cluster, to better understand gold and copper distribution. In Argentina, mapping efforts at Casposo and Manantiales aim to delineate mineralisation controls and identify new targets. These efforts support Austral Gold’s longer-term growth strategy of expanding resources and extending mine life across its portfolio.

Overall, Austral Gold’s Q4 report highlights a company navigating operational challenges while making tangible progress on cost control, production recovery, and strategic initiatives. The upcoming year will be critical as the company seeks to meet its production guidance, successfully refurbish Casposo, and capitalise on exploration upside.