Bellevue trims hedges as Barminco ramp-up sets up FY27 recovery

Contractor transition takes the edge off September production

Bellevue Gold Limited (ASX:BGL) produced 35,585 ounces in the September quarter, down from 41,643 ounces in June, as new underground mining contractor Barminco took longer than expected to reach operating speed. The handover from Develop Global was completed in August, but workforce availability, equipment commissioning and restricted access to some planned high-grade stopes constrained mining activity.

Bellevue said the disruption should be largely confined to the September quarter, with deferred production expected to be recovered in later periods. That remains a forward-looking expectation rather than an achieved result. Management has nevertheless left FY27 production guidance unchanged at 150,000-170,000 ounces and project all-in sustaining cost guidance at A$2,800-A$3,100 per ounce.

The quarter produced 35,979 ounces of gold sales at an average realised price of A$4,980 per ounce, including voluntary early deliveries into forward contracts. Project AISC rose to A$3,096 per ounce from A$2,604 per ounce in the June quarter, while processed tonnes fell to 250,702. Surface stockpiles helped bridge the lower underground ore delivery, leaving Bellevue with about 10,000 tonnes of stockpiled ore at quarter-end, compared with 47,000 tonnes three months earlier.

Hedge reduction keeps the spot-price question alive

The more consequential financial movement was in the hedge book. Bellevue delivered a further 11,150 ounces early against contracts due in the June and September 2027 quarters, cutting forward sales commitments from 68,650 ounces to 57,500 ounces. The remaining commitments average A$3,061 per ounce, and the company says it is targeting complete elimination during FY27.

That strategy extends the company’s future exposure to prevailing gold prices, but it also makes operating delivery and cost control more important. Bellevue’s link is not used; the company had previously reduced its hedge book while entering FY27, and the latest quarter takes that process further through voluntary pre-deliveries. Bellevue reported an average realised price of A$4,980 per ounce in the quarter, while its cash-flow commentary valued indicative spot sales at an average A$6,054 per ounce before the effect of early hedge deliveries.

Cash generation absorbs transition and paste plant spending

Underlying free cash flow before voluntary hedge pre-deliveries was A$47.6 million, down from A$110 million in the June quarter. The decline reflected fewer gold sales, higher cash expenditure and working-capital movements, with A$41.7 million spent on non-sustaining and exploration capital. After about A$39 million of voluntary hedge pre-deliveries, reported free cash flow was A$8.9 million.

Cash and gold on hand increased to A$213.2 million from A$206.4 million, although cash and cash equivalents alone fell to A$188.5 million from A$195.4 million. The company retained A$100 million of bank debt, with mandatory quarterly repayments of at least A$25 million scheduled from March through December 2027. Bellevue expects non-sustaining spending to ease as the contractor transition and the heaviest phase of paste plant construction pass, with commissioning still scheduled for mid-FY27.

Deacon North drilling adds higher-grade operating optionality

Operationally, Bellevue reported consistent mined grades from its five established mining areas, with 203,013 tonnes mined at 4.7 grams per tonne and 250,702 tonnes processed at 4.6 grams per tonne. Infill drilling at Deacon North returned intersections including 9.3 metres at 62.1 grams per tonne and 4.6 metres at 50.3 grams per tonne. The company says the newly defined shoots have been incorporated into mine planning and expects Deacon North to contribute more materially in the second half of FY27.

The results build on the link reported earlier, when Deacon North drilling returned an intersection of 9.3 metres at 62.1 grams per tonne and the slower Barminco ramp-up was expected to reduce September-quarter output. Bellevue is also drilling at Westralia, where a downhole electromagnetic survey identified several anomalies, while new underground drill platforms from the Southern Belle Decline will support work towards Tribune South and the Southern Belle position.

December quarter becomes the first operational test

The next quarterly report should show whether Barminco’s promised workforce improvement translates into higher development rates, stronger ore delivery and rebuilding stockpiles. Bellevue expects labour availability to improve when workers transfer from another Western Australian project completing in the December quarter, but the company’s unchanged annual guidance now depends on recovering production without losing control of AISC.

At the same time, the hedge book is moving towards its intended end-state and the paste plant remains on schedule. The combination could materially change Bellevue’s cash-generation profile, but only if production recovery, capital-cost reductions and hedge elimination arrive in the sequence management currently anticipates.