Meeka Metals is transitioning to underground mining at its Murchison Gold Project, with capital investment tapering and exploration drilling underway to support resource growth and production expansion.
- Transition from open pit to underground mining in FY27
- $128 million invested in infrastructure over FY25 and FY26
- Capital expenditure tapering from June 2026 quarter
- Exploration drilling targeting resource expansion at multiple sites
- Ore sorting upgrade to boost throughput and grade in September 2026
Underground Mining Set to Drive Grade and Margin Inflection
Meeka Metals Limited (ASX:MEK) is steering its Murchison Gold Project toward a pivotal shift as underground mining ramps up through FY27, promising improved grades and stronger margins. After investing $128 million in FY25 and FY26 to establish extensive mining and processing infrastructure, the company is preparing to taper capital expenditure starting the June 2026 quarter. This transition aligns with the commissioning of its second underground mine at Turnberry in September 2026, expanding owner-operator mining operations that offer a cost advantage over contractors.
The move from open pit to underground mining is expected to drive a meaningful increase in production quality and cash flow. Currently, underground ore contributes about 20% of mill feed, with a target to reach 100% by mid-2027, supported by the upcoming commissioning of an ore sorting facility designed to enhance grade and throughput. This upgrade, scheduled for the September quarter, aims to raise processing capacity by 200,000 tonnes per annum and improve operational efficiency.
Capital Investment Tapering and Operating Cost Reduction
Following a period of aggressive capital investment to build a stable, long-life mining base, Meeka Metals anticipates a tapering of expenditure as growth projects such as camp expansions, open pit stripping, and ore sorting installation conclude. Operating costs are forecast to decline through FY27 as open pit contractor mining fleets reduce and owner-operator underground mining expands, notably at Andy Well and Turnberry. This strategic shift is expected to crystallise a lower cost profile, with underground mining unit costs targeted below $5,000 per metre, down from current levels.
Open pit mining has faced challenges, including weather disruptions and lower than planned productivity, leading to increased reliance on processing stockpiled ore. However, stockpiles have grown to approximately 670,000 tonnes containing 22,000 ounces of gold, supporting potential expanded milling scenarios. The company is evaluating a Stage 2 open pit development with around 300,000 ounces at 1.4 g/t, which could underpin a milling capacity increase to 2-3 million tonnes per annum.
Exploration Drilling Fuels Resource Growth Prospects
Exploration remains a key pillar of Meeka Metals’ growth strategy, with internally funded drilling campaigns underway at Rosapenna, Turnberry underground, Andy Well, and the southern Fairway trend. These efforts target expansions of both open pit and underground resources within the largely underexplored 25-kilometre Archean greenstone belt. Recent successes, such as the extension of gold mineralisation at Rosapenna, underscore the potential for new discoveries missed by historical, broad-spaced drilling.
At Andy Well, ore development is progressing rapidly with multiple drills active across the Wilber, Judy, and soon Suzie lodes. Stoping is scheduled to commence late in the June 2026 quarter, marking a step change in ore production and productivity. This development phase is crucial to de-risking FY27 production plans and aligns with the company’s broader underground expansion.
Operational Progress and Market Positioning
Meeka Metals’ processing plant is ramping up toward nameplate capacity, with throughput holding steady despite weather-related setbacks in open pit mining. Recovery rates remain consistent at 94%, matching definitive feasibility study estimates, while processing unit costs are trending down toward $30-40 per tonne as throughput and productivity improve. The company holds a cash balance of $50 million as of March 2026, with no debt, supporting its ongoing development and exploration activities.
With a market capitalisation of approximately $339 million and a management team led by Managing Director Tim Davidson, Meeka Metals is positioned to capitalise on its long-life asset base and infrastructure investments. The company’s strategic focus on underground mining and exploration-driven resource growth could reshape its production profile in the coming years.
These developments build on Meeka’s recent progress in ore development at Judy North, where grades are aligning with resource estimates and further improvements are expected at depth, reflecting a disciplined approach to underground mine expansion. Meanwhile, the ore sorting upgrade scheduled for September 2026 promises to enhance feed grade and processing efficiency, underpinning the company’s production growth ambitions.
Bottom Line?
Meeka Metals’ transition to underground mining and ongoing exploration set the stage for improved production and margins, but execution risks and exploration uncertainties remain key factors to monitor.
Questions in the middle?
- Will the ore sorting upgrade deliver the anticipated boost in throughput and grade on schedule?
- How will underground mining productivity evolve as new stoping areas open in FY27?
- Can exploration drilling convert resource potential into economically viable reserves to support expanded milling?