Capricorn Metals Surges with Record Cash Flow and Hedge Closure Boost
Capricorn Metals delivered a strong March quarter with rising gold output at Karlawinda, record operational cash flow, and significant progress on Mt Gibson development. The company also closed its gold hedging contracts, increasing exposure to gold price gains.
- Karlawinda Gold Project Q3 production up 7% to 30,599 ounces at improved AISC
- Record quarterly operating cash flow of $80.8 million generated
- Mt Gibson Gold Project development advances with accommodation village completed and process plant design 30% done
- Closure of 55,000-ounce gold hedge contracts via equity issuance to Macquarie Bank
- Exploration drilling reveals high-grade intercepts supporting underground mining potential
Robust Production and Cost Control at Karlawinda
Capricorn Metals Ltd reported a solid operational performance for the March 2025 quarter, with gold production at the Karlawinda Gold Project (KGP) rising to 30,599 ounces, a 7% increase from the previous quarter. The all-in sustaining cost (AISC) improved to A$1,390 per ounce from A$1,490, reflecting enhanced mining efficiency and processing performance. Year-to-date production stands at 84,860 ounces, positioning Capricorn well to meet its FY25 guidance range of 110,000 to 120,000 ounces at an AISC between A$1,370 and A$1,470 per ounce.
The increase in total material movement, particularly from the Bibra open pit, enabled the company to maintain budgeted pit face positions and accelerate pre-stripping activities ahead of schedule at the Southern Corridor extension, part of the Karlawinda Expansion Project (KEP). This operational discipline has contributed to a steady quarter-on-quarter production increase and cost containment.
Record Cash Flow and Strong Financial Position
Capricorn generated a record quarterly operating cash flow of A$80.8 million, up from A$52.6 million in the prior quarter, underscoring the robust cash-generating capacity of the KGP. The company’s cash and gold on hand increased to A$404.6 million, reflecting a cash build of A$57.6 million before capital expenditures. Net cash and bullion position rose to A$354.6 million, providing a strong financial foundation for ongoing development and exploration activities.
Strategic Hedge Closure Enhances Gold Price Exposure
In a significant corporate move, Capricorn closed out its remaining 55,000 ounces of gold forward sale hedge contracts through a bilateral transaction with Macquarie Bank Limited. This involved issuing approximately 17.7 million new shares to Macquarie, representing a modest 4.3% dilution. The closure increases Capricorn’s direct exposure to any upside in the Australian dollar gold price, while put options purchased on 50% of the volume provide downside protection at A$4,500 per ounce. This strategic shift is expected to materially enhance free cash flow in FY26 and FY27, aligning the company’s earnings more closely with gold market movements.
Progress on Mt Gibson Gold Project Development
Development at the Mt Gibson Gold Project (MGGP) continues apace, with the completion and handover of a 400-room accommodation village marking a key milestone. The process plant design advanced to approximately 30% completion, with critical long lead items such as the ball mill committed. Environmental permitting remains on track, with the Public Environmental Report (PER) update scheduled for final submission in early Q4. Capricorn’s parallel approach to construction and permitting aims to compress the overall project timeline and optimize capital deployment.
Exploration Success Fuels Growth Prospects
Exploration activities delivered encouraging results across Capricorn’s portfolio. At MGGP, deep diamond drilling at the Orion Deposit confirmed significant high-grade mineralisation extending at depth, supporting plans for a maiden underground mineral resource estimate targeted for Q1 FY26. The Highway project area near MGGP yielded promising near-surface satellite resource potential from maiden RC drilling, with mineralisation open along strike and at depth. Capricorn also expanded its tenement holdings with strategic acquisitions including the Deadman Flat, Mummaloo, and Kings Find projects, consolidating its position in highly prospective gold belts.
These exploration successes underpin Capricorn’s growth strategy, complementing ongoing development efforts and positioning the company for increased production and resource base expansion in the medium term.
Bottom Line?
Capricorn’s blend of operational discipline, strategic hedge closure, and exploration momentum sets the stage for enhanced shareholder value amid a supportive gold price environment.
Questions in the middle?
- How will the closure of gold hedges impact Capricorn’s earnings volatility in a fluctuating gold market?
- What is the timeline and capital requirement for the full commissioning of the Mt Gibson Gold Project?
- How might further exploration results at the Highway and Orion deposits influence Capricorn’s reserve upgrades and mine planning?