Vertex faces funding risk after Reward resource falls 35%

Reward’s first production year remains a commissioning story

Vertex Minerals Limited (ASX:VTX) entered its first year as a gold producer, but the numbers still belong more to a mine under construction than a settled operation. The Reward Gold Mine produced 679 ounces and sold 657 ounces in the year ended 30 June 2026, generating A$4.24 million in gold and silver sales. Commercial production had not yet been declared at year end.

Production improved through the year, reaching 284 ounces in the March quarter before easing to 195 ounces in the June quarter. June nevertheless delivered a monthly sales record of 113 ounces and gross revenue of about A$670,000. The improvement was not enough to offset the cost of the ramp-up: Vertex reported a A$16.41 million net loss, compared with a A$5.85 million loss a year earlier, and operating cash outflow widened to A$5.07 million.

Rehabilitation delays consumed the critical path

The central operational problem was underground access. Reward’s three declines had been submerged for about 14 years, and re-entry revealed ground conditions requiring substantially more bolting, meshing, stripping and grouting than anticipated. That rehabilitation absorbed development capacity that would otherwise have been directed towards ore drives and stoping.

Vertex says all three declines were rehabilitated by the time of the report, with Decline 1 completed after year end. A transition to mechanised narrow-vein long-hole open stoping is planned from October 2026, supported by additional loaders, haulage equipment and a purpose-built Muki production rig. The company also narrowed development drives and established multiple airleg mining fronts, including on the Paxtons Reef, to reduce dilution and reliance on a single working area.

The resource is smaller, although confidence has improved

An updated Reward Mineral Resource estimate released after year end cut contained ounces by 35% to 146,900 ounces at 16.68 grams per tonne gold. The reduction followed a 200 grams per tonne top-cut on a small number of extreme assays and the removal of interpreted lodes that no longer met the JORC requirement for reasonable prospects of eventual economic extraction.

The downgrade is not unqualified bad news. The overall grade was broadly unchanged from the previous estimate, while the Indicated portion rose to 54,700 ounces and its grade increased 36% to 21.17 grams per tonne. Vertex says the updated estimate does not materially change the current mine plan or the lodes being developed, and has identified three priority underground drilling areas for a planned 2027 programme.

Funding remains the immediate financial constraint

The balance sheet leaves little room for a slow ramp-up. Vertex held A$2.32 million in cash at 30 June, against A$23.38 million of current liabilities, including A$13.40 million of current borrowings and A$3.16 million of derivative financial liabilities. The company’s auditor accepted the accounts but highlighted a material uncertainty that may cast significant doubt on its ability to continue as a going concern.

That uncertainty is tied to the need for additional capital or refinancing while Reward moves towards sustained production. The A$9 million convertible loan facility drawn in June, subsequent convertible facilities of up to A$4.2 million, and the A$858,000 share purchase plan provide funding avenues, but conversions are subject to shareholder approval. A failure to secure those approvals could leave some instruments repayable in cash, while a A$1.5 million term loan has been extended only to 2 November 2026.

EPA investigation adds a separate operational liability

The funding pressure is accompanied by an unresolved environmental matter. A slurry pipeline breach between 31 January and 3 February released approximately 91 tonnes of slurry into Hill End Creek. The NSW Environment Protection Authority has alleged three offences, including pollution of waters and failures relating to a clean-up notice; Vertex has recognised a A$90,000 provision based on the possible penalty-notice outcome.

The potential exposure is not capped at that provision. The company says the EPA could prosecute, seek clean-up and restoration orders, recover investigation and remediation costs, or take regulatory action affecting its environmental licence. Vertex says it cannot currently estimate the financial effect of the matter.

October must convert development into cash flow

Vertex now has the approvals it says were needed for underground operations and blasting around the clock, and the rehabilitation bottleneck has largely been removed. The next test is less geological than financial: whether long-hole stoping can deliver enough tonnes and grade quickly enough to support operating cash flow before debt maturities and conversion decisions arrive.