Rising Costs and Lower Grades Challenge Ten Sixty Four’s Recovery Path
Ten Sixty Four Limited’s latest quarterly report reveals a notable decline in gold output and cash reserves, alongside steady progress on key projects and a pivotal restructuring agreement.
- Gold production fell 16% to 12,817 ounces at Co-O Mine
- All-in sustaining costs rose to US$1,850 per ounce
- Cash reserves declined to US$5.6 million by quarter-end
- Tigerway Decline project reached 71% completion
- Restructuring Framework Agreement executed to resolve historical issues
Production and Cost Pressures
Ten Sixty Four Limited (ASX: X64) has reported a challenging quarter ending 31 March 2024, with gold production at its 40%-owned Co-O Mine in the Philippines dropping 16% to 12,817 ounces. This decline aligns with a reduction in ore tonnage milled and an anticipated decrease in average head grade to 5.05 grams per tonne, down from 5.97 g/t in the prior quarter. The company attributed the lower tonnage to inconsistent underground workforce attendance and the grade drop to depletion of higher-grade blocks mined earlier in the year.
Operational costs have also increased, with all-in sustaining costs (AISC) rising to US$1,850 per ounce from US$1,688 previously. Despite this, mill performance remained robust, maintaining a gold recovery rate of 95.3%, reflecting operational efficiency in processing.
Project Development and Exploration Highlights
The Tigerway Decline project, a critical infrastructure development for the Co-O Mine, advanced steadily with 389.92 metres of excavation completed during the quarter, bringing overall progress to 71.06%. However, the total construction cost and completion timeline remain under review, signaling potential adjustments ahead.
Exploration efforts continue to underpin the company’s growth strategy. Underground drilling increased by 16% quarter-on-quarter, delivering high-grade intercepts including a standout 2.30 metres at 99.14 g/t gold. Near-mine exploration at the Royal Crowne Vein project progressed with shaft sinking reaching 120 metres below surface, setting the stage for further underground drilling.
Financial and Corporate Developments
Financially, Ten Sixty Four’s consolidated cash and equivalents fell to US$5.6 million from US$8.5 million at the end of December 2023, reflecting ongoing operational expenditures and project investments. Corporate overheads were trimmed to US$1.5 million, down from US$2.0 million in the prior quarter.
Significantly, the company executed a Restructuring Framework Agreement in March 2024, marking a major milestone in resetting commercial arrangements among Ten Sixty Four and its subsidiaries. This agreement is a key step towards effecting the Deed of Company Arrangement (DOCA) and resolving longstanding issues that have weighed on the company’s operational and financial stability.
Leadership changes were also noted with the appointment of Simon Theobald as CEO in January 2024, signaling a renewed focus on operational turnaround and strategic execution.
Outlook and Challenges
While the quarter’s results highlight operational headwinds, particularly in production and costs, the company’s active exploration and infrastructure development efforts suggest a commitment to long-term value creation. The ongoing restructuring and management changes could provide the foundation for stabilising operations and improving financial health.
However, the suspension of trading since February 2023 remains in place, underscoring the need for investors to monitor forthcoming developments closely.
Bottom Line?
Ten Sixty Four’s next chapters hinge on successful restructuring and exploration outcomes to reverse recent production and financial setbacks.
Questions in the middle?
- How will the restructuring framework impact Ten Sixty Four’s operational autonomy and financial flexibility?
- What are the updated cost and timeline projections for the Tigerway Decline project completion?
- Can the recent high-grade drilling results translate into a meaningful resource upgrade to support future production?
