Austral Gold Lifts Guanaco Output 17% and Extends Mine Life to 14 Years

Guanaco Production Rises as Crushing Capacity Expands

Austral Gold Limited (ASX:AGD) delivered a solid operational quarter with its Guanaco mine in Chile increasing production by 17% quarter-on-quarter to 3,381 gold equivalent ounces (GEO) in Q2 2026. This uplift was driven by commissioning a second secondary crusher, improved ore grades, and higher metallurgical recoveries, pushing monthly output steadily from 1,007 GEO in April to 1,247 GEO in June.

Unit costs also fell, with operating cash costs (C1) down nearly 10% to US$2,542 per ounce and all-in sustaining costs (AISC) dipping 2.6% to US$2,954 per ounce. These cost improvements came despite ongoing capital expenditures, including leach pad expansions scheduled for commissioning in August. Guanaco's dual heap and agitation leaching circuits continue to provide operational flexibility, contributing roughly equal shares to production.

Casposo Tolling Boosts Revenue Amid Owned-Material Pause

In Argentina, the Casposo mine completed a two-month toll processing campaign on ore from Challenger Gold’s Hualilan Project, processing 39,342 tonnes at gold equivalent recovery rates above 85%. This activity generated US$5.9 million in fee revenue, marking a new income stream during a period when Casposo’s own material production was limited to April (932 GEO) and resumed in July.

The toll processing arrangement was initially planned for up to three months, but Challenger Gold chose not to supply ore in July, prompting Casposo to revert to processing its own feedstock. While this shift reduced overall metal sales revenue in the quarter, the toll fees helped maintain a combined revenue of US$31.8 million, comprising US$25.9 million from gold and silver sales and US$5.9 million from toll processing.

Balance Sheet Strengthened by Debt Reduction and Cash Build

Austral Gold’s financial position improved markedly, with net financial debt slashed from US$16.1 million at the end of 2025 to just US$1.7 million by June 30, 2026. Cash and cash equivalents rose to US$20.3 million, supported by ongoing operating cash flow and the toll processing receivables. The company also repaid US$2.5 million in related party debt in July, further strengthening liquidity and reducing leverage.

Operating cash flow after working capital changes was modest at US$0.7 million for the quarter, down from US$10.4 million in Q1, primarily due to outstanding tolling fees and inventory build-up at Casposo. Capital investment continued at a steady clip, with US$2.1 million spent on plant and equipment and exploration.

Updated Guanaco Technical Report Extends Mine Life to 14 Years

Subsequent to quarter-end, Austral Gold filed an updated NI 43-101 Technical Report for Guanaco, extending the mine life to approximately 14 years through to February 2040. The report values the operation at an after-tax net present value (NPV) of US$192.1 million using a 10% discount rate and a life-of-mine gold price assumption of US$3,135 per ounce.

The updated Mineral Reserves total 18.1 million tonnes at 0.84 g/t gold and 5.43 g/t silver, underpinning average annual recovered production of around 24,800 ounces of gold and 105,000 ounces of silver. The life-of-mine plan incorporates sustaining capital of US$2.2 million and closure costs of US$11.7 million, with average all-in sustaining costs forecast at US$2,114 per ounce AuEq.

Environmental permitting remains a key factor, with approvals for the Inesperada and Dumbo areas expected by late 2026 or early 2027. These zones represent about 32% of reserve tonnage and over half of recoverable gold ounces, meaning any delays could impact production schedules and economics.

Exploration Advances in Chile and Argentina

Exploration activity progressed across Austral Gold’s Chilean and Argentine assets, targeting both resource growth near existing mines and new discoveries. At Guanaco, infill and step-out drilling commenced at Los Nanos, Dumbo Sur, Dumbo–Defensa, and Cerro Estrella, with initial results expected in early August.

In Argentina, an 8,500-metre drilling program launched at Casposo focused initially on Casposo Norte, with plans to follow up at Amanda and Manantiales later in the year. Greenfield exploration at the Juncal project in Chile revealed significant silver-gold mineralisation across seven veins, setting the stage for maiden drilling in Q4 2026. Similarly, geophysical surveys are planned at Cerro Amarillo (Manantiales) ahead of drilling.

Equity Investments Provide Additional Exposure

Austral Gold maintains a substantial equity stake in ASX-listed Unico Silver Limited, holding 15.7 million shares valued at US$6.2 million as of June 30, 2026. This investment offers financial flexibility and exposure to the silver sector alongside Austral’s producing assets.