Capricorn Metals has completed and commissioned the Karlawinda expansion, lifting the project to a targeted 6.5Mtpa throughput rate while maintaining FY27 production guidance. The company also reported A$113.1 million in quarterly operating cash flow, a larger resource base and federal approval for its next major growth project at Mt Gibson.
- 31,218 ounces produced at Karlawinda in the September quarter
- 6.5Mtpa expanded processing rate achieved on schedule and within budget
- A$113.1 million quarterly operating cash flow and A$535.0 million cash and gold on hand
- FY27 guidance maintained at 137,000-147,000 ounces
- Federal environmental approval received for the Mt Gibson expansion
Karlawinda expansion reaches operating milestone
Capricorn Metals Ltd (ASX:CMM) has moved Karlawinda into its expanded operating phase after completing the Karlawinda Expansion Project on schedule and within budget. The Western Australian mine produced 31,218 ounces in the September quarter, up from 30,437 ounces in the June quarter, while the enlarged crushing, milling and carbon-in-leach circuits reached their targeted steady-state throughput of 6.5 million tonnes a year.
The result keeps Capricorn’s FY27 production guidance unchanged at 137,000 to 147,000 ounces. The company expects Karlawinda to operate at approximately 150,000 ounces a year for the remaining three quarters of FY27, although the new plant initially processed low-grade ore before its planned transition to run-of-mine grade feed in the December quarter. A previous update had recorded the expansion reaching its 6.5Mtpa target, and the latest report now provides the first quarterly operating result after that commissioning milestone: Karlawinda expansion commissioning.
Higher production came with higher quarter costs
Quarterly all-in sustaining costs rose to A$2,005 an ounce from A$1,648 in the prior quarter, while net cash costs increased to A$1,654 an ounce. Capricorn attributed the cost profile to increased earthmoving and pre-stripping as the project transitioned into expanded operations. Its FY27 AISC guidance remains A$1,900 to A$2,100 an ounce, leaving the next few quarters to demonstrate whether the added processing capacity can be sustained at the planned cost range.
Mill throughput was broadly stable at 1.13 million tonnes, with head grade improving to 0.94 grams per tonne and recovery reaching 91.7%. The mine moved 4.4 million bank cubic metres of material during the quarter and lifted ore stocks to 8.4 million tonnes, supporting the expanded feed requirements while reducing the total stripping ratio to 5.1 from 6.5 in the June quarter.
Cash generation supports dividends and growth spending
Karlawinda generated A$113.1 million in operating cash flow during the quarter. Capricorn reported A$535.0 million of cash and gold on hand at 30 September, including 4,442 ounces of gold valued at A$26.8 million; the Appendix 5B separately reported cash of A$508.3 million. Gold sales of 27,516 ounces at an average realised price of A$6,115 an ounce produced A$168.3 million in revenue.
The balance sheet also supported a fully franked final dividend of 5 cents per share, taking FY26 dividends declared to 10 cents per share, or A$45.7 million. A sizeable A$90 million to A$100 million income-tax payment is expected in the December quarter as Capricorn moves into a higher tax-paying position. Capital expenditure was A$42.7 million in the quarter, principally for Karlawinda, with a further A$2.1 million directed to Mt Gibson.
Mt Gibson approvals clear a major hurdle
The next leg of the growth plan also advanced. Capricorn received federal approval for the expansion and operation of the Mt Gibson Gold Project, submitted its Environmental Review Document for the Western Australian assessment process and lodged secondary approvals. Detailed engineering is complete and major contracts have been finalised, but remaining state approvals are still required before full development can proceed.
The updated Mt Gibson pre-feasibility study outlines a 19.25-year project producing 3.51 million ounces over its life, with average steady-state production of 260,900 ounces a year and life-of-mine AISC of A$1,870 an ounce. Those figures are modelled using a A$5,500 an ounce gold-price assumption and therefore remain projections rather than operating outcomes. Capricorn has also started studying a second processing hub at Golden Range as part of its ambition to reach a 500,000-ounce annual production rate within five years.
Underground drilling adds to Mt Gibson growth case
Exploration continued to provide the more speculative upside. Drilling at Lexington, Hornet and Orion South returned high-grade intersections, including 6.0 metres at 57.38 grams per tonne gold and 7.0 metres at 40.01 grams per tonne at Lexington-Hornet, alongside 21.8 metres at 9.54 grams per tonne at Orion South. A maiden Lexington underground mineral resource is expected in the December quarter, but the reported intersections are exploration results and have not yet become reserves. The latest results build on the Mt Gibson drilling results, which showed mineralisation extending beyond existing pit and underground designs.
At group level, Capricorn’s mineral resource rose to 8.66 million ounces and its ore reserve to 5.24 million ounces, based on conservative gold-price assumptions ranging from A$2,200 to A$2,800 an ounce. The immediate operational question is less whether the company has growth ambitions than how smoothly it can convert them: Karlawinda must sustain its expanded rate and cost guidance, while Mt Gibson still needs final approvals, development execution and further resource conversion.
Bottom Line?
Karlawinda has cleared the construction and commissioning hurdle; the next test is sustained production at the expanded rate while Mt Gibson moves through its remaining approvals.
Questions in the middle?
- Can Karlawinda maintain approximately 150,000 ounces a year without pushing AISC above the FY27 guidance range?
- When will the remaining Western Australian approvals for Mt Gibson be secured, and what development timetable will follow?
- How much of the high-grade Lexington and Orion South drilling will convert into an underground resource and eventual reserve?