Mill Downtime Pushes Ora Banda’s FY25 Costs Higher, Production Lower

Production Update and Operational Challenges

Ora Banda Mining Limited (ASX, OBM) has provided a revised production outlook for its Davyhurst Project in FY25, revealing that gold output will fall short of earlier guidance due to operational delays. The company reported that gold production for April and May reached 12,100 ounces, with a forecast of up to 12,500 ounces for June. This sets the June quarter production at approximately 24,500 ounces.

The shortfall stems primarily from extended downtime at the processing plant, necessitated by upgrades to the primary mill’s lifters and linings. These essential maintenance activities, while aimed at improving long-term throughput, delayed the commissioning process and slowed the ramp-up to the targeted daily throughput rates of 3,700 to 4,000 tonnes per day.

Mill Performance and Mining Operations

Ora Banda confirmed that the processing plant upgrades and commissioning are now complete, with the mill demonstrating the required performance of up to 4,000 tonnes per day. This improvement underpins the June production forecast and is critical to achieving the company’s annual production target of 150,000 ounces.

Mining operations continue to perform well, with the Riverina and Sand King deposits expected to contribute approximately 14,500 ounces in June alone. Riverina remains a steady source, while Sand King is ramping up to steady-state production as planned. However, the commissioning delays have led to an accumulation of ore stockpiles, with medium and low-grade ore totaling around 197,000 tonnes at the end of May.

Revised Guidance and Financial Implications

Reflecting these operational realities, Ora Banda now expects total FY25 gold production to be around 95,000 ounces, which is 5% below the lower end of its previous guidance range of 100,000 ounces. Despite this, the forecast still represents a significant 35% increase over FY24’s production of 70,000 ounces.

The company also anticipates all-in sustaining costs (AISC) to rise slightly to approximately $2,600 per ounce, about 4% above the top end of prior guidance. This increase is attributed to the extended downtime and the associated operational inefficiencies during the mill upgrade period.

Looking Ahead

Ora Banda’s update underscores the challenges mining companies face when balancing necessary infrastructure upgrades with production targets. While the company has navigated the mill upgrade successfully, the impact on FY25 output and costs highlights the delicate timing and execution required in such projects. Investors will be watching closely to see if the company can maintain momentum and meet its longer-term production ambitions.