Rising Costs and Equipment Failures Cloud Austral Gold’s 2025 Outlook

Production Challenges at Guanaco

Austral Gold Limited’s latest quarterly report for Q2 2025 highlights a notable 6.9% decline in gold equivalent ounces (GEOs) produced at its Guanaco Mine in Chile, dropping to 2,891 GEOs from 3,105 in the previous quarter. This downturn is attributed primarily to equipment failures affecting key processing components such as conveyor belts, crushers, and tailings filters, which curtailed operational days and output.

Despite a favourable gold price environment, with realised prices rising 15.6% quarter-over-quarter to US$3,280 per ounce, the company faced rising operating costs. Cash operating costs (C1) increased by nearly 29% to US$2,548 per ounce, while all-in sustaining costs (AISC) rose 27% to US$2,749 per ounce. These cost pressures reflect the combined impact of lower production volumes and higher maintenance expenses.

Revised 2025 Outlook and Operational Response

In response to these operational setbacks, Austral Gold has revised its 2025 production guidance downward to between 14,000 and 16,000 GEOs, a significant cut from the initial 18,000–20,000 GEOs forecast. Correspondingly, the company has adjusted its annual average cost expectations upward, with C1 costs now projected between US$1,900 and US$2,100 per ounce, and AISC between US$2,100 and US$2,300 per ounce.

To address these challenges, Austral Gold is bolstering its Guanaco plant management and increasing staffing levels in processing and maintenance. Targeted capital expenditures and the acquisition of critical spare parts are underway to restore operational reliability and support higher production in the latter half of the year.

Casposo Plant Refurbishment Progresses

Meanwhile, refurbishment efforts at the Casposo Plant in Argentina are advancing steadily, with the company on track to commence commercial operations in the second half of 2025. The plant’s upgrade includes key equipment repairs and installation of new components, with most major tasks expected to be completed by mid-August.

Casposo’s restart is underpinned by a toll processing agreement with Challenger Gold, which will supply mineralised material from its Hualilan Project. Metallurgical testing indicates an expected gold recovery rate exceeding 80%, supporting the viability of the processing arrangement. Austral Gold is also investing in local workforce development, including operator training in the Calingasta community.

Financial Position and Equity Investments

Financially, Austral Gold ended Q2 2025 with US$1.1 million in cash and total financial debt of US$28.5 million, including US$12.8 million owed to related parties. Net current liabilities increased to US$11.6 million, reflecting a lower cash balance. The company amended a US$7 million secured loan facility to extend its maturity, aiming to improve cash flow from Casposo operations after debt servicing.

On the investment front, Austral Gold maintains a significant stake in ASX-listed Unico Silver Limited, holding 22.9 million shares and 15 million options. The value of this holding rose during the quarter, with Unico’s share price climbing to A$0.44, enhancing Austral Gold’s equity portfolio.

Exploration and Future Prospects

Exploration activities continue in both Chile and Argentina, with updated geological models and planned drilling campaigns aimed at expanding mineral resources. The company is validating new block models at Guanaco and advancing structural interpretations at Casposo, laying groundwork for future resource definition and potential development.

While operational challenges have tempered near-term production, Austral Gold’s strategic investments in plant refurbishment and exploration signal a commitment to stabilising and growing its asset base in the Americas.