Austral Gold’s Q1 Production Falls 15.4%, Costs Rise Amid Mill Repairs

Production Challenges at Guanaco

Austral Gold Limited (ASX: AGD) has released its Q1 2025 Quarterly Activity Report, highlighting a notable 15.4% decline in gold equivalent ounces (GEOs) produced at its flagship Guanaco mine in Chile. The drop to 3,105 GEOs from 3,669 in Q4 2024 is primarily attributed to the depletion of the Amancaya underground operation at the end of 2024 and a temporary reduction in mill throughput caused by damage to the mill’s pinion teeth during the quarter.

Despite this production setback, the company successfully maintained operational continuity by sourcing all ore from the Heap Reprocessing Project and installing a reconditioned pinion shaft in April 2025. The average realised gold price remained robust at US$2,837 per GEO, supporting gross margins despite the production dip.

Rising Costs Reflect Lower Volumes

Operating cash costs (C1) increased 5.3% quarter-on-quarter to US$1,977 per ounce, while all-in sustaining costs (AISC) rose 4.9% to US$2,166 per ounce. These cost escalations reflect the lower production volumes and the fixed nature of many operational expenses. Austral Gold reaffirmed its 2025 guidance, targeting 18,000 to 20,000 GEOs for the full year, with expected C1 costs between US$1,500 and US$1,700 per ounce and AISC ranging from US$1,700 to US$2,000 per ounce, anticipating improved production in the second half of the year.

Casposo Plant Refurbishment Progresses

Meanwhile, Austral Gold’s Casposo plant in Argentina continues its refurbishment journey, with key mechanical and electrical works advancing on schedule. The company expects to commence commercial toll processing operations in the second half of 2025. Major milestones achieved include the completion of crushing circuit works, repairs to leaching tanks and thickeners, and significant progress on electrical cabling and valve replacements. The refurbishment aims to unlock additional processing capacity and support future production growth from the Casposo-Manantiales complex.

Exploration and Resource Modelling Efforts

Exploration activities in Q1 were focused on geological modelling and resource validation at both the Guanaco-Amancaya complex in Chile and the Casposo-Manantiales district in Argentina. At Guanaco, geologists completed an extensive reinterpretation of the district integrating historical data and new spectrometry results, with a new in-situ geological model expected to be validated during 2025. In Argentina, detailed mapping and sampling in the Julieta sector aim to better understand vein structures and mineralisation controls, potentially informing future drilling and resource expansion.

Financial Position and Governance Updates

Austral Gold ended Q1 2025 with cash reserves of US$3.7 million and total financial debt of US$28.2 million, including US$12.6 million in related-party loans. The company successfully drew down the second tranche of its US$7 million secured loan facility to fund the Casposo refurbishment. Additionally, Austral announced the appointment of BDO as its new auditor, replacing KPMG, and confirmed the dispatch of Annual General Meeting documents to shareholders ahead of the May 29, 2025 meeting in Sydney.