Cobre’s Sierra Atacama turnaround reaches a new operating milestone

Sierra Atacama delivers record revenue and positive EBITDA

Cobre Limited (ASX:CBE) has posted its strongest operating quarter since taking control of the Sierra Atacama copper project, with revenue reaching approximately US$11.8 million and EBITDA turning positive at about US$0.5 million. The figures are unaudited management results, but they mark a third consecutive quarter of operational improvement at the Chilean underground mine and SX-EW processing operation.

Copper recovery rose to 78%, compared with 70% in the June quarter and 66% in March. Cathode production was 818 tonnes for the September quarter, below June’s 879 tonnes but above March’s 771 tonnes. Cobre said the quarter’s improvement was driven chiefly by stronger processing performance, while temporary suspensions at several mining faces during geotechnical surveying limited parts of the operation.

Control, capital and feed reshape the project

The quarter-end balance sheet showed A$67 million in cash, with Cobre reporting approximately A$90 million on a pro forma basis after the second tranche of its A$90 million equity raising and cash acquired with Sierra Atacama control. The company’s creditor exposure fell by about 38% from US$51.7 million at takeover to approximately US$32.2 million at 30 September, although structured debt of roughly US$16 million remains and is being serviced at about US$600,000 a month.

Control of the asset was secured after quarter-end through the US$12 million control option exercise, lifting Cobre’s interest to 62.86% and giving it the right to appoint three of the project entities’ five directors. The project was still equity-accounted in the September quarter; Cobre expects consolidation, including attributable copper sales, to begin in the December quarter.

Additional ore should provide another test of the plant’s ability to turn utilisation into earnings. Third-party tolling began in September, with 31,820 tonnes received during the quarter, while Cobre has also secured approximately 150,000 tonnes of ENAMI oxide material at an estimated purchase-and-delivery cost of about US$9 a tonne. The 150,000 tonnes of ENAMI material is expected to be delivered at roughly 30,000 tonnes a month, but the leaching cycle means the full benefit is expected to build through the December quarter rather than appear immediately in September production.

Expansion targets depend on engineering and permitting

Cobre has outlined a staged route from the current operation to approximately 18,000 tonnes per annum of cathode capacity, then about 25,000 tonnes, with a possible longer-term case of up to 50,000 tonnes per annum. The first stage would refurbish the solvent-extraction circuit, recommission a second electrowinning bay and expand supporting leach-pad and crushing infrastructure. The second would recommission the second SX line and add further electrowinning capacity.

These are indicative targets rather than production guidance. They remain subject to studies, permits, financing and board approval. Cobre’s three-stage copper expansion plan is now being supported by open-pit planning, an environmental baseline campaign and engineering work on a potential 110 kV grid connection. The company is targeting a tender award for Stage 1 in the December quarter and submission of the relevant environmental documentation by the end of 2026.

Drilling adds a higher-risk growth layer

Exploration has also moved up a gear, with four rigs active and a 40,000-metre resource drilling programme underway. The first diamond hole reached 986.9 metres, the deepest in the mine’s history, and intersected visually logged chalcopyrite-pyrite mineralisation at depth. Those observations are not assay results: 571 samples have been submitted to an independent laboratory, with certificates still undergoing validation before release.

In Botswana, Cobre completed the initial Ngami in-situ copper recovery demonstration well field and is preparing hydrogeological testing, while partner-funded drilling at Okavango had completed approximately 1.6 kilometres of a planned three-kilometre programme. Those assets add exploration optionality, but the immediate financial burden and execution focus sit in Chile, where capital expenditure is expected to increase as the Sierra Atacama programme ramps up.

December quarter will test cash conversion

The immediate question is not whether Cobre has produced an attractive operating scorecard. It is whether the improvement can survive the more demanding phase ahead: ramping third-party and ENAMI feed, restoring higher-grade underground areas, managing acid costs, servicing debt and funding expansion work at the same time. Acid represented about 24% of September operating costs, while total operating costs were approximately US$5.8 million for the month.

Cobre has scheduled a creditors’ meeting for 26 November to progress a possible discounted single-payment settlement of structured debt. It also expects to collect approximately US$2.2 million from September sales of off-grade cathode and scrap. By the next quarterly report, the market should have a clearer view of whether Sierra Atacama’s positive EBITDA is becoming positive operating cash flow, and how much of the project’s headline expansion case is moving from engineering ambition toward funded execution.