Lunnon Metals Starts Mining at Lady Herial, Expands Gold Resources to 84,400 Ounces

Mining at Lady Herial Generates Positive Cash Flow

Lunnon Metals Limited (ASX:LM8) has transitioned from exploration to production at its Lady Herial gold deposit, marking a significant milestone with mining now underway and delivering positive free cash flow. Over the March 2026 quarter, the company moved 256,434 bank cubic metres of material and delivered more than 38,000 tonnes of ore grading 1.56 g/t gold to Gold Fields under a binding Ore Purchase Agreement (OPA). This translated to approximately 1,752 ounces of gold, with Lunnon Metals receiving initial proceeds exceeding $2 million and accruing nearly $7.8 million by quarter-end, exclusive of GST.

The mining schedule remains on track to complete the open pit by August 2026, with ore tonnage and grade forecasts aligning with the January 2026 Feasibility Study (FS). Despite external challenges such as volatile diesel prices and geopolitical tensions impacting resource sectors, the company’s realised Australian dollar gold price has been higher than FS assumptions, helping offset rising operating costs. This strong operational start is detailed in the company’s recent positive cash flow at Lady Herial update.

Gold Resource Expansion and Exploration Progress

Alongside production, Lunnon Metals significantly expanded its gold Mineral Resources, now totaling 1.47 million tonnes at 1.8 g/t Au for 84,400 ounces. This includes the Lady Herial deposit with an updated resource of 789,000 tonnes at 2.1 g/t Au for 54,200 ounces, representing a 41% increase since November 2025. The maiden Mineral Resource Estimate (MRE) for the nearby Hustler prospect added 682,000 tonnes at 1.4 g/t Au for 30,200 ounces, located just 400 metres southeast of Lady Herial, positioning it as a potential near-term satellite deposit.

Drilling continued at the Foster-Baker project with 5.8 kilometres completed during the quarter, including follow-up programs at Paringa West and Plentiful prospects. The latter is supported by the Western Australian government’s Exploration Incentive Scheme, with results pending. A new gold structure, Agnes, was delineated post-quarter, showing promising grades at depth that could support future underground development. These developments underscore the company’s dual focus on near-term production and longer-term discovery potential, with ongoing resource definition and permitting activities planned.

Potential Gold-Nickel Synergies in Kambalda

Lunnon Metals highlighted intriguing geological intersections between its gold and nickel assets in the Kambalda district. The Lady Herial gold system plunges over 550 metres and approaches within 200 metres of the Foster nickel mine’s underground workings, suggesting potential for integrated mining strategies. This proximity echoes successful models like the Beta/Hunt mine, where nickel and gold mineralisation coexist and have been mined in tandem. The company is actively exploring these synergies, which could unlock further value in its portfolio amid improving nickel market conditions and renewed strategic interest in the metal.

The nickel portfolio, including the fully approved Baker underground nickel mine, remains on a watching brief with no on-ground activity during the quarter. However, rising nickel prices near US$19,500 per tonne and potential divestment moves by BHP Nickel West add to the strategic importance of these assets.

Financial Position Bolstered by Loan Facility and Cash Reserves

Financially, Lunnon Metals ended the quarter with a robust cash balance of $12.25 million, up from $9.9 million at the end of 2025. This includes a $6 million secured term loan facility drawn down in late February 2026 from Evolution Trustees Limited, intended to support working capital and Lady Herial’s pre-production costs. The facility carries a base rate of at least 3.6% plus a 10% margin and requires maintaining a minimum cash balance of $2.5 million.

Operating cash flows reflect the transition to production, with $2 million received from customers under the OPA and $2.4 million spent on exploration and evaluation. Development and production costs totalled $2.1 million for the quarter. The company’s strategy to generate free cash flow from small to modest open pits has so far avoided the need for dilutionary capital raises, strengthening its balance sheet ahead of potential nickel sector opportunities.

Outlook Focuses on Resource Growth and Operational Delivery

Looking ahead, Lunnon Metals aims to maintain scheduled ore deliveries under the OPA, commence a second government co-funded drill program at Plentiful, and complete technical assessments for possible open pit expansions at Lady Herial and Hustler. The company also plans to ramp up exploration drilling at Foster-Baker to build a development pipeline beyond Lady Herial, targeting thick, high-grade, shallow gold deposits.

With mining operations generating positive cash flow and the company’s gold-focused discovery program continuing, Lunnon Metals is well positioned to advance its projects in the heart of the St Ives gold camp. The potential interplay between gold and nickel assets adds an intriguing dimension to its growth prospects, particularly as nickel market sentiment improves.

These developments build on the company’s earlier gold resource boost at Lady Herial and the Hustler resource announcement, reinforcing Lunnon Metals’ emerging status as a notable player in the Kambalda-St Ives mining district.

Safety, Community and Regulatory Compliance

During the quarter, Lunnon Metals reported one medically treated safety incident at Lady Herial, which was fully investigated with preventive measures implemented. The company also completed a compliance audit of its Mine Safety Management System and fulfilled regulatory requirements for key statutory positions.

Importantly, the company maintains a Land Access Deed with the Ngadju People, traditional owners of the area, who will receive royalties and milestone payments linked to gold production at Lady Herial. An Implementation Committee will oversee ongoing collaboration, reflecting Lunnon Metals’ commitment to responsible community engagement.