Lunnon Metals Reports Positive Cash Flow and On-Schedule Mining at Lady Herial

March Quarter Sees Lady Herial Move into Positive Cash Flow

Lunnon Metals Limited (ASX:LM8) has marked a significant milestone at its Lady Herial open pit gold mine, reporting positive free cash flow for the first time in March 2026. Since mining began in late January, the company has moved over 250,000 bank cubic metres of material and delivered 38,287 tonnes of ore grading 1.56 grams per tonne gold to Gold Fields under an Ore Purchase Agreement (OPA). This translated to approximately 1,752 ounces of gold, applying a metallurgical recovery of 91%.

Under the OPA with St Ives Gold Mining Co. Pty Ltd, a subsidiary of Gold Fields Limited, Lunnon Metals receives 70% of free cash flow generated monthly based on recoverable gold revenue, calculated using the Western Australian government’s published average gold price. While February saw no free cash flow due to start-up costs, March’s positive cash flow reflects the mine’s transition into steady production.

Financials Show Healthy Revenue Against Operating Costs

For the March quarter, Lunnon Metals invoiced Gold Fields nearly AUD 9.9 million (exclusive of GST), with related operational expenses around AUD 5.5 million. These figures remain unaudited and will be included in the company’s upcoming quarterly report. The positive cash flow outcome is notable given that operating costs have increased by approximately 10%, primarily driven by diesel price inflation.

The company’s Managing Director, Edmund Ainscough, highlighted that the average gold price realised under the OPA so far has exceeded the base case price of AUD 6,250 per ounce modelled in the January 2026 Feasibility Study (FS). This premium has helped offset the rising input costs, supporting the project’s financial resilience amid challenging cost pressures.

Mining Progress Aligns with Feasibility Study Schedule

Mining activities at Lady Herial remain on track despite some wet weather in March. The company expects to complete the open pit by August 2026, consistent with the FS timeline. Ore tonnage and grade forecasts for April through August align closely with the January 2026 FS projections.

Importantly, there have been no reported disruptions related to diesel availability, an issue that has affected other operations in the region. The company continues to monitor cost fluctuations closely but remains confident in the underlying assumptions driving the project’s forecast production and financial outcomes.

Strategic Position in a Prolific Gold Camp

Lady Herial sits within the Kambalda Gold & Nickel Project (KGNP), a district with a rich history of gold and nickel production. Lunnon Metals holds exclusive rights to all gold prospects within the Foster-Baker area, with significant infrastructure nearby, including the Lefroy plant operated by Gold Fields. This proximity and the existing Ore Purchase Agreement with Gold Fields underpin a strong operational foundation.

The recent update builds on the company’s earlier findings on the gold system’s extent and potential synergy with nickel resources, as detailed in the Lunnon Metals Spots Gold-Nickel Overlap at Lady Herial and Foster Mines. These geological insights could influence future exploration and development strategies within the KGNP.

Outlook Hinges on Commodity Prices and Operating Costs

While the current gold price environment supports the project’s economics, the company cautions that actual results may vary due to commodity price swings, operational performance, and other external factors. The FS sensitivity analysis suggests that even with a 10% increase in operating costs, a gold price of AUD 6,500 per ounce could deliver pre-tax free cash flow of approximately AUD 40.6 million for the remainder of the mine life.

As Lady Herial moves into steady-state production, Lunnon Metals is positioned to grow its cash balance progressively, provided gold prices remain favourable and operating costs are managed effectively. The upcoming quarterly report will provide audited financials and further clarity on the mine’s cash flow trajectory.