Austral Gold lifted third-quarter production by 50% and moved into a US$2.5 million net cash position, but operational problems at Guanaco have forced a substantial reduction in full-year output guidance. Casposo is ramping up, although its cost outlook has also worsened.
- Q3 production rose 50% to 6,479 GEOs
- Net cash reached US$2.5 million after US$4.4 million debt reduction
- 2026 production guidance cut to 24,000-27,000 GEOs
- Guanaco guidance reduced after weather, moisture and maintenance disruptions
- Casposo cost guidance raised as mining and stripping costs increased
Production rises as Guanaco loses momentum
Austral Gold Limited (ASX:AGD; TSXV:AGLD) delivered a strikingly mixed third quarter: production from company-owned material jumped 50% quarter-on-quarter to 6,479 gold equivalent ounces, while full-year production guidance was cut to 24,000-27,000 GEOs from 27,000-33,000 GEOs.
The increase was driven by Casposo, which processed its own ore for the first full quarter and produced 3,166 GEOs, up from 932 GEOs in the previous quarter’s single month of owned production. Output rose each month from 803 GEOs in July to 1,334 GEOs in September. Guanaco, by contrast, produced 3,313 GEOs, broadly steady quarter-on-quarter and 47.6% above the corresponding period last year.
Guanaco’s quarter began strongly after a second secondary crusher lifted conventional crushing capacity from about 100 tonnes an hour to 160 tonnes an hour. Severe winter weather, moisture in reclaimed ore and unplanned mill and conveyor maintenance then curtailed throughput in August and September. The company said the issues reduced crushing throughput by approximately 16,500 tonnes in September.
Debt reduction brings Austral into net cash
The balance sheet provided the more favourable half of the update. Financial debt fell by US$4.4 million during the quarter to US$17.6 million, while cash and cash equivalents stood at US$20.1 million. That left Austral with net cash of US$2.5 million, compared with net financial debt of US$1.7 million at the end of June and US$16.1 million at the end of 2025.
The improvement builds on the HY debt reduction, when the company reported net financial debt of US$1.7 million and cash of US$20.3 million. Austral repaid US$4.2 million of borrowings during the quarter, including US$2.8 million owed to related parties, although related-party debt still represented 45% of total financial debt at quarter-end.
Revenue fell to US$23.4 million from US$32.4 million in the June quarter, largely because the prior period included US$6.5 million of toll-processing fees. Austral sold 5,354 GEOs against production of 6,479 GEOs because of export-shipment timing, increasing bullion and gold-in-process inventory by US$3.5 million. Operating cash flow after working-capital movements was US$8.5 million, helped by the collection of outstanding toll-processing fees.
Casposo ramps up but costs climb
Casposo’s restart is producing volume, but not yet cheaply. Quarterly C1 costs rose to US$3,123 per GEO and all-in sustaining costs to US$4,032 per GEO, compared with US$2,245 and US$3,148 respectively in the prior quarter. Austral attributed the increase to lower head grades, winter-related disruption and US$579 per GEO of capitalised waste stripping.
The company has therefore raised Casposo’s full-year C1 guidance to US$2,400-2,600 per GEO and AISC guidance to US$3,000-3,200 per GEO. Production guidance remains 11,000-13,000 GEOs. The toll-processing agreement with Challenger Gold was terminated on 1 October, with Challenger agreeing to pay a deferred US$1.0 million access fee by the earlier of 2 April 2029 or the start of commercial production at Hualilan.
Guanaco mine life supports longer-term case
Austral is still pointing to a substantial long-term asset base at Guanaco. Its updated technical report supports a 14-year mine life through February 2040 and an after-tax NPV of US$192.1 million at a 10% discount rate. The report had featured in the company’s 14-year Guanaco plan, alongside the stated reserve and resource estimates.
Near-term execution is now the more immediate test. Guanaco’s production guidance has been reduced to 13,000-14,000 GEOs from 16,000-20,000 GEOs, while its cost guidance remains unchanged at US$2,400-2,700 per GEO for C1 and US$2,600-2,900 per GEO for AISC. Austral expects full-year unit costs towards the upper end of those ranges as fourth-quarter production increases against a largely fixed cost base.
Exploration continues across Chile and Argentina
Austral spent US$1.2 million on exploration during the quarter, including US$0.4 million in Chile and US$0.8 million in Argentina. At Guanaco, 31 Los Nanos holes totalling 1,602 metres were completed, with follow-up drilling of up to 8,000 metres planned. A 6,700-metre induced-polarisation survey at Juncal is being interpreted ahead of maiden drilling, extending the Juncal target program that had previously advanced through surface sampling and geophysical work.
At Casposo, 23 holes totalling approximately 2,033 metres were completed across Casposo Norte, Julieta and Amanda as part of a broader 8,500-metre program. Results are expected in the fourth quarter, although progress has been slowed by drill-rig availability and winter weather. Austral also continues to prepare the Environmental Impact Declaration for the New Guanaco Mining Project, with submission targeted for December 2026.
The December quarterly report should put the operational story into sharper focus: whether Guanaco’s crushing problems were temporary, whether Casposo can sustain its monthly production ramp and what 2027 guidance looks like after a year of restarting one mine while repairing the reliability of the other.
Bottom Line?
Austral has repaired its balance sheet, but the next quarter must show that net cash can coexist with reliable production and tighter unit costs.
Questions in the middle?
- Can Guanaco restore crushing throughput and deliver the higher fourth-quarter production assumed in its revised cost outlook?
- Will Casposo maintain its production ramp while absorbing higher open-pit mining and waste-stripping costs?
- How much value, if any, will the current exploration programs add to the 14-year Guanaco plan and Casposo resource base?