Rising Costs and Production Challenges Cloud Ten Sixty Four’s Restructuring Path
Ten Sixty Four Limited’s latest quarterly report reveals a notable decline in gold production alongside increased all-in sustaining costs, as the company advances its mine development and navigates a complex restructuring process.
- Gold production fell 16% to 11,025 ounces in June quarter
- All-in sustaining costs rose to US$2,171 per ounce
- Tigerway Decline project 76.5% complete with US$45.3 million spent
- Underground drilling returned significant high-grade gold intercepts
- Company progressing restructuring under Deed of Company Arrangement
Operational Performance and Production Decline
Ten Sixty Four Limited (ASX: X64) has released its quarterly activities report for the period ending 30 June 2024, highlighting a 16% decrease in gold production to 11,025 ounces. This decline aligns with a reduction in ore tonnage milled to 75,415 dry tonnes and a drop in average head grade to 4.67 grams per tonne, down from 5.05 g/t in the previous quarter. The company attributes the lower output to both the depletion of higher-grade ore blocks mined in prior quarters and inconsistent underground workforce attendance.
Despite the production dip, mill performance remained steady with gold recovery rates holding at 95.4%, consistent with the prior quarter. However, the all-in sustaining cost (AISC) per ounce increased significantly to US$2,171, up from US$1,850, reflecting operational challenges and cost pressures.
Mine Development and Exploration Progress
Mine development continued with a total underground advance of 2,853 metres, slightly below the previous quarter’s 2,888 metres. The Tigerway Decline project, a key infrastructure initiative, progressed to 76.5% completion with 352.2 metres of excavation and support completed during the quarter. Project-to-date expenditure on Tigerway stands at US$45.3 million, with final costs and completion timelines under review.
Exploration drilling intensified, with 8,258 metres completed underground, an 11% increase from the prior quarter. Notably, reserve drilling targeted Levels 11 and 12, while resource drilling focused on Level 10. The campaign yielded impressive high-grade intercepts, including 2.00 metres at 176.32 g/t gold and several other significant hits exceeding 20 g/t, underscoring the potential to expand and upgrade mineral resources at depth.
Corporate and Financial Context Amid Restructuring
Financially, the company’s consolidated cash position slightly decreased to US$5.5 million. Corporate general and administrative expenses were reduced to US$1.0 million for the quarter. Ten Sixty Four remains under a voluntary ASX trading suspension since February 2023 and is actively progressing a restructuring framework agreement (RFA) as part of its Deed of Company Arrangement (DOCA). This restructuring aims to address inter-company commercial, operational, and financing arrangements, with several definitive agreements executed during the quarter.
Meanwhile, the company’s Queensland exploration projects remain on care and maintenance due to corporate constraints, with regulatory compliance work ongoing to maintain tenement status.
Outlook and Strategic Considerations
Ten Sixty Four’s June quarter report paints a picture of a company balancing operational challenges with strategic development and restructuring efforts. The decline in production and rising costs highlight near-term pressures, but the ongoing exploration success and infrastructure progress offer potential upside. The company’s ability to execute its restructuring and capitalise on high-grade resource extensions will be critical to restoring production momentum and financial stability.
Bottom Line?
As Ten Sixty Four advances its restructuring and exploration, investors will watch closely for signs of operational turnaround and cost control.
Questions in the middle?
- How will the restructuring framework agreement impact Ten Sixty Four’s operational and financial outlook?
- Can the high-grade drilling results translate into increased reserves and improved production grades?
- What are the revised timelines and budgets for the Tigerway Decline project’s completion?
