A$189,000 operating cash outflow after Freehill’s weather-hit quarter

September sales rebound after weather disruption

Freehill’s Chilean aggregates business recovered sharply from a rain-disrupted start to the quarter, producing record gross sales of A$506,121 in September. Quarterly sales reached A$1.293 million, down from A$1.356 million in June, while cash receipts increased to A$1.107 million from A$1.058 million.

July flooding forced a shutdown and added site-protection costs at Islón, but the company said production costs still edged lower to A$896,000 from A$944,000. Net operating cash outflow fell to A$189,000, compared with A$372,000 in the June quarter. Islón generated 71% of quarterly sales, with Yerbas Buenas contributing the remainder, and stockpiles at Islón were reported to cover about three months of supply.

The result builds on the A$600,000 placement and entitlement offer announced earlier in October, which was intended to fund plant upgrades, working capital and Blanco y Negro permitting. Freehill said October sales were expected to exceed September’s record, although that remains a company forecast rather than reported quarterly performance.

Islón upgrades target capacity and transport costs

Work has begun on Islón’s second VSI crusher and three-deck screen, alongside new conveyors and a larger feed hopper. The company expects construction to finish by the end of October, with commissioning scheduled for November before the benefits are reflected in operations later in the quarter.

Freehill’s proposed entitlement offer could raise up to A$606,943 at A$0.001 a share. The funds are earmarked for further plant improvements, company-owned trucks and land needed to connect Islón to electricity, reducing reliance on diesel generation. The offer is non-underwritten, so the final amount raised remains uncertain.

Cash runway improves, but funding still matters

The quarterly cash flow report recorded A$459,000 in cash at 30 September, up from A$157,000, alongside A$495,000 of unused invoice-factoring capacity. On the report’s calculation, total available funding of A$954,000 represented 5.05 quarters of coverage against relevant quarterly outgoings of A$205,000.

That stronger funding position includes A$540,000 recorded from an equity issue and does not mean the aggregates business was cash-flow positive: operating activities remained negative, while A$47,000 was spent on investing activities. The company also reported A$194,000 of borrowing proceeds and A$158,000 in repayments during the quarter.

Blanco y Negro moves towards mine-plan submission

Freehill is preparing to submit a mine plan for its Blanco y Negro copper-gold project to Chile’s SERNAGEOMIN in early November. The project has a JORC 2012 mineral resource of about 1.5 million tonnes at 1.4% copper and 0.5 grams per tonne gold, containing approximately 20,000 tonnes of copper and 24,000 ounces of gold.

The company has appointed Chilean mining engineer Marco Meneses to lead the remaining permitting and technical work. The project is about 30 kilometres from ENAMI’s SX-EW plant, which Freehill identifies as a possible low-capital toll-treatment option. A proposed increase in Chile’s small-scale mining processing limit from 5,000 to 10,000 tonnes a month could also support a larger operation, but the legislative change was still progressing at the reporting date.

A non-binding memorandum with Austral Gold (ASX:AGD) provides for the companies to assess and develop copper and copper-gold projects in Chile, with Austral potentially supplying services on a cost-plus basis. The arrangement is not yet a formal cooperation agreement, and the shared directorship of Freehill chairman Ben Jarvis and Austral means the proposed relationship will warrant careful attention as negotiations continue.