Polymetals Faces Financial and Operational Risks After Fatal Incident at Endeavor Mine

A Milestone in Production

Polymetals Resources Ltd has transitioned from development to production, marking a significant milestone with the first shipments of silver-lead and zinc concentrate from its Endeavor Mine in the Cobar Basin, New South Wales. The half-year ended 31 December 2025 saw the company generate $39.4 million in revenue, a first for the miner, reflecting the initial commercialisation of its underground operations.

However, this progress comes with challenges. The company reported a loss after tax of $34.5 million, a steep increase from the $6.9 million loss in the previous corresponding period. This widening loss reflects the high costs associated with ramping up production, operational disruptions, and ongoing exploration and development expenses.

Operational Setbacks and Safety Concerns

Operations were temporarily suspended in late October following a tragic mining incident that resulted in the deaths of two miners. This event not only halted production but also triggered a comprehensive internal and regulatory review. Mining activities resumed in mid-November on a staged basis, with continuous mining restored by the end of the month. Despite these setbacks, the operational team managed to stabilise production levels by December, demonstrating resilience under difficult circumstances.

The company’s workforce at Endeavor stood at 221 full-time employees by the end of the period, with leadership changes including the resignation of the General Manager and appointment of an acting replacement. Polymetals has also initiated an apprentice program to cultivate local talent, signalling a commitment to community engagement and sustainable operations.

Exploration and Development Initiatives

Polymetals is actively advancing its exploration and development pipeline. Access to the high-grade Upper North Lode (UNL) was achieved in September 2025, with ore extraction underway. The company plans to mine approximately 400,000 tonnes of this high-grade ore over the next two years, which is expected to improve mill feed grades and metal recoveries.

Development of the Deep Zinc Lode (DZL), located at the base of the existing mine, is progressing with plans to extend the main decline and commence mining in the first half of 2027. This project aims to maximise the mill’s capacity and extend the mine’s life. Additionally, near-mine exploration at the Carpark and Endeavor South corridors continues, with drilling targeting structural analogues to the main ore body.

Financial Position and Capital Management

To support its operational and exploration activities, Polymetals undertook significant capital raising during the half-year, issuing shares to raise over $49 million. This bolstered the company’s cash position to approximately $30 million by the end of December 2025, providing a buffer amid ongoing losses and investment needs.

The company also manages substantial environmental bond obligations totaling $34 million, with a payment plan accepted by New South Wales regulators to spread repayments over two years. This arrangement mitigates immediate liquidity pressures but remains a critical financial commitment.

Polymetals continues to rely on a US$10 million loan facility from Ocean Partners UK Ltd and has demonstrated an ability to raise equity when needed. However, the company acknowledges material uncertainties related to its going concern status, given current operating losses and net current liabilities exceeding assets.

Looking Ahead

While the Endeavor Mine’s first shipments mark a positive step, Polymetals faces a complex path forward balancing operational recovery, exploration success, and financial sustainability. The company’s ability to replace environmental bonds, advance the Deep Zinc Lode, and convert exploration targets into reserves will be pivotal in shaping its future trajectory.