Meeka Metals made a solid transition from developer to gold producer in the September quarter, producing 7148 ounces of gold for an extraordinary $2133 an ounce AISC at its Murchison gold project in WA. The company says its quickly ramped-up operations generated notional free cash for the quarter of $12.5m when considering gold that was produced but not sold by the end of the quarter.
In something of a rarity, Meeka says its first quarter gold production, all in sustaining costs, processing tonnes and processing costs beat its feasibility study, putting paid to the often repeated notion that the best a project is ever going to look is in the feasibility study.
As at the end of the quarter, Meeka was awash with cash and gold totalling $59.3 with $34M cash in the tin and $25.3M in gold.
Even with the $21.8 million in growth capital for new open pits and its Andy Well underground development, Meeka has managed to remain debt-free with the exception of underground mining equipment finance. Notably, it is also totally unhedged giving it a full tilt at selling into a rampaging gold market at spot prices of around $6340 per ounce – which compares handily against its AISC per ounce for the quarter of just $2133.
Operationally, the company processed 84,000 tonnes of ore at an average grade of 2.7 grams per tonne (g/t) gold, achieving a solid 98% recovery rate. Processing costs at $43 per tonne were 19% below the feasibility study, with further reductions expected as throughput rises in the second quarter.
The company’s accelerated open pit strategy, settled at a steady state for now with three fleets, has seen 236,400t mined at 1.6g/t gold for 12,300 ounces of the yellow metal.
This company’s current approach is prioritising high-grade ore access and it has built its ore stockpiles up through the period to 68,000t at 1.9g/t gold for the high-grade material and another 110,000t at 0.6g/t gold for the low-grade ore, which helps to de-risk potential plant expansion.
Managing Director Tim Davidson said: “It is pleasing to see operations ramping-up with both processing plant performance, mining productivity and unit costs largely tracking in line with or beating the start-up plan...The plant performed slightly better than planned with good throughput and gold recovery. Unit costs were slightly better than planned and we should continue to see unit costs reduce as plant throughput increases over the coming quarter."
Open pit production outperformed the feasibility study mineral resource model by 38%, as revealed by a positive reconciliation.
The Andy Well Underground operation advanced with 447m of development completed with ore development beginning in late September, while a third jumbo – a heavy-duty, multi-boom drill rig used in underground mining - is set to boost progress in the next quarter.
Financially, Meeka generated $15.3 million in revenue against production costs of $10.1m, however the company only got around to selling 2773 ounces of gold of the 7148 ounces produced. The average achieved gold price was $5523 per ounce, setting the scene for an even better December quarter with production ramping up and the spot gold price now hovering around $6300 an ounce.
Meeka’s exploration spend was minimal at $125,000, which reflects the company’s almost total focus on in-pit grade control, with mine extensional drilling planned to resume in October.
The company’s $62 million in tax loss carry-forwards adds a comforting buffer for FY26, while safety statistics have remained exemplary, with zero lost time injuries and no environmental incidents.
Meeka has opened the batting well at its new gold mine. Not only has it completely nailed the timing with the gold price rampaging, but it also managed to get first gold out just 12 months after breaking ground which in itself is something of a herculean feat.
Meeka’s feasibility study shows its Murchison gold project throwing off a billion dollars in free cash over the next ten years……assuming the gold price is A$4100 an ounce. With gold rampaging currently at 50 per cent more than that, this project is likely to turn into a cash machine at least in the short term.
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By Doug Bright
