Polymetals Resources fell short of its September production plan as ventilation work and a switch to contract mining disrupted Endeavor Mine operations. The company is betting on the Upper Main Lode and higher December-quarter throughput to restore momentum, but unrestricted cash fell to A$7.4 million after the rehabilitation bond exchange.
- 230,256 ounces of silver produced, below the planned 330,000 ounces
- A$7.4 million unrestricted cash, with A$28.0 million locked against the rehabilitation bond
- Endeavor resource rises to 20.7Mt containing 54.3Moz of silver
- Upper Main Lode development begins, with first ore expected in the December quarter
- December target exceeds 350,000 ounces of silver from 105,000 to 115,000 tonnes processed
Endeavor production falls below quarterly plan
Polymetals Resources Ltd (ASX:POL) produced 230,256 ounces of silver at its Endeavor Mine in the September quarter, well below its planned 330,000 ounces. Zinc production was 1,714 tonnes and lead production 1,146 tonnes from 68,334 tonnes of ore processed.
The shortfall came as underground mining was suspended for 10 days to complete ventilation upgrades, while the company began shifting to contract underground labour through RND Resources. Polymetals said some production was deferred into the December quarter and that early signs of improved productivity were encouraging, although the benefits are expected to emerge progressively.
Higher-grade Upper Main Lode moves towards production
The operational recovery depends heavily on the Upper Lodes, including the newly defined Upper Main Lode. Development began after quarter end, with first ore expected during the December quarter.
The Upper Main Lode carries a Mineral Resource of 1.6 million tonnes grading 234 grams per tonne silver, 8.5% zinc and 6.0% lead. That resource was built on drilling that identified mineralisation in areas previously considered affected by the historic 1996 subsidence zone. The company’s 20.7Mt resource upgrade also lifted Endeavor’s total Mineral Resource to 20.7 million tonnes at 7.5% zinc, 4.2% lead and 82 grams per tonne silver.
Not all of the geology is equally ready for mine planning. Oxidised and supergene mineralisation above the Upper Main Lode was excluded from the September resource estimate because broken, friable material caused core loss and reduced confidence in grade continuity. Development mapping and sampling will determine whether parts of that material can support direct shipping ore.
Cash position tightens after full Endeavor acquisition
Polymetals completed the A$27.956 million rehabilitation bond exchange during the quarter, securing 100% ownership of Endeavor and the associated Cobar property portfolio. The replacement bank guarantee is backed by restricted cash, leaving the company with A$35.4 million of total cash but only A$7.4 million unrestricted at quarter end.
Debt rose to A$18.1 million from A$10.7 million at 30 June, while net payable metal inventory fell to A$4.8 million from A$22.6 million. Operating cash flow was negative A$2.211 million for the quarter. Subsequent to quarter end, the company added a further US$10 million to its Ocean Partners working capital facility, taking total availability with the offtake partner to US$20 million; the US$10 million facility carries interest of 5% per annum on drawn amounts.
December quarter sets a demanding recovery test
Polymetals is targeting 105,000 to 115,000 tonnes of ore processed in the December quarter, compared with 68,334 tonnes in September, and silver production above 350,000 ounces. The plan also includes continued Upper Main Lode development, further work above the lode and release of an updated Endeavor Ore Reserve.
That target is materially higher than the latest quarter and must be delivered while the contract mining model becomes established. The company also plans to pursue an approximately A$50 million enlarged financing facility, intended to release cash currently supporting the rehabilitation bond and provide additional working capital flexibility, with a targeted close in the first half of calendar 2027. The next quarter therefore has two tests running in parallel: whether the mine can lift physical output, and whether that output can translate into unrestricted cash.
Bottom Line?
The Upper Main Lode offers a credible production catalyst, but December-quarter throughput and cash generation will determine whether the resource growth becomes operational progress.
Questions in the middle?
- Can Endeavor process 105,000 to 115,000 tonnes while the transition to contract mining is still being completed?
- Will first ore from the Upper Main Lode arrive during the December quarter as planned?
- How quickly can higher production rebuild unrestricted cash and reduce reliance on Ocean Partners funding?