Meeka’s underground pivot gives its first gold profit a sharper edge

First Gold Profit Arrives After Heavy Investment

Meeka Metals Limited (ASX:MEK) has crossed the most obvious threshold in a miner’s life: its first full year of gold production produced a statutory net profit. The Murchison Gold Project generated $160.8 million of revenue and $51.3 million of profit after tax in FY26, compared with a $4.2 million loss a year earlier.

The accounting profit was accompanied by $89.8 million of net operating cash flow, although the figure needs to be read alongside $107 million of growth capital spent on underground development, mine infrastructure and plant expansion. Cash fell to $37.9 million at 30 June 2026 from $55.7 million a year earlier, while equipment finance increased the company’s borrowings to $19.5 million.

Open Pit Problems Force a Change in Mine Strategy

Production totalled 28,829 ounces from 423,290 tonnes milled, at an all-in sustaining cost of $2,956 an ounce. The headline numbers conceal a sharp split between the two halves of the year: output reached 9,174 ounces in the December quarter, then fell to 6,083 ounces in March and 6,424 ounces in June as heavy rain and lower-than-planned open pit contractor productivity delayed access to higher-grade ore.

Meeka responded by ending open pit mining in July 2026, preserving an estimated 300,000 ounces of open pit Mineral Resource for a possible future Stage 2 development. That decision removes an underperforming mining stream, but it also places more weight on the company’s underground ramp-up and its ability to convert stockpiled ore into consistent mill feed.

Andy Well Becomes the Centre of the Operation

Andy Well is now the operational centrepiece. Underground development accelerated from 447 metres in the September quarter to 1,619 metres in the June quarter, reaching a steady state of about 600 metres a month under Meeka’s owner-operator model. Development costs fell from $12,381 a metre to $6,746 a metre across the same period.

Stoping began at the high-grade Wilber lode in late May, with ore entering the mill blend near the end of FY26. Meeka expects underground ore to account for about 40% of the blend in the September 2026 quarter, while portal development at a second underground mine at Turnberry is scheduled to begin in September.

Plant Expansion and Mt Holland Add the Next Layer

A processing expansion comprising an additional crushing circuit, wash plant and Steinert multi-sensor ore sorter is targeted for commissioning in the September quarter, with the company also referring to early October for the ore sorter. The equipment is intended to increase capacity, remove hard waste from the feed and improve the blend available to the underground operation. Meeka had already built an 806,000-tonne surface stockpile containing about 25,414 ounces of gold by year end.

The growth story has expanded beyond Murchison. Exploration delivered the Rosapenna discovery within the Fairway shear zone, while drilling extended mineralisation at Turnberry and Andy Well. The completed Mt Holland South acquisition added deposits with a combined 270,000-ounce Mineral Resource, taking Meeka’s total Mineral Resource to about 1.485 million ounces at 2.8 grams per tonne. The transaction cost $20 million in cash and 117.8 million shares, with the remaining $10 million cash payment due in November 2026.

FY27 Must Prove the Underground Thesis

Meeka’s next test is less about whether it can report a profit and more about whether that profit can become repeatable cash generation. The company remains unhedged, giving shareholders direct exposure to the gold price, but also leaving results sensitive to price movements, grades and operating costs. FY26’s second-half AISC rose to $4,146 an ounce in the March quarter and $3,589 an ounce in June as lower-grade stockpiles filled more of the mill.

The September quarter should provide the first meaningful evidence of the new configuration: higher-grade Andy Well stoping, the start of Turnberry portal work, and commissioning of the processing upgrades. The open pits have been removed from the immediate equation. What remains is a cleaner underground proposition, but one that now has considerably less room for execution errors.