Rising Costs and Seismic Risks Cloud 29Metals’ Zinc Production Outlook
29Metals reports a steady copper output but significant zinc production decline due to seismic disruptions at Golden Grove, alongside rising operational costs and ongoing progress at Capricorn Copper.
- Copper production steady at 5.8kt despite operational challenges
- Zinc output sharply down to 2.0kt due to seismic activity restricting access
- C1 costs surged to US$3.74/lb copper sold amid major shutdown and stockpile movements
- Gossan Valley project remains on track for first ore by end 2026
- Capricorn Copper suspension continues with water inventory reductions and regulatory progress
Operational Highlights and Safety
29Metals Limited’s September 2025 quarterly report reveals a mixed operational landscape. The company achieved a commendable safety milestone with zero lost time injuries recorded over the past 12 months, underscoring its commitment to workplace safety and sustainability. However, the quarter was marked by significant operational challenges, particularly at the Golden Grove mine.
Golden Grove Production and Seismic Impact
Copper production at Golden Grove edged up slightly to 5.8 kilotonnes, buoyed by higher copper grades and improved recovery rates. In contrast, zinc production plummeted to 2.0 kilotonnes, a steep decline from the previous quarter’s 12.3 kilotonnes. This drop is attributed to restricted access to high-grade zinc stopes at the Xantho Extended section, following seismic events that necessitated a temporary mining halt and the establishment of an exclusion zone for safety reasons.
Management has responded by revising 2025 guidance downward for zinc and precious metals, while maintaining copper production targets. The company is sourcing alternate ore from other parts of Gossan Hill, including Tryall and Oizon, where recent drilling has uncovered promising high-grade copper intercepts that could extend mine life and support future growth.
Cost Pressures and Project Development
Operational costs have risen notably, with C1 costs climbing to US$3.74 per pound of copper sold, up from US$2.09 in the prior quarter. This increase is largely due to a major planned shutdown and significant stockpile movement charges. Despite these cost pressures, the Gossan Valley project is progressing well, with box cut excavation underway and on track to deliver first ore by the end of 2026. This project is expected to provide production flexibility and replace declining ore sources, potentially extending the overall mine life.
Capricorn Copper Status and Regulatory Advances
At Capricorn Copper, operations remain suspended as the company focuses on reducing water inventory and securing regulatory approvals critical for a sustainable restart. The site has achieved a 1.5 gigalitre reduction in water levels since suspension began in March 2024. Notably, 29Metals submitted an application for a long-term Tailings Storage Facility during the quarter, which has progressed to detailed assessment. Additionally, an Environmental Enforcement Order has been issued, removing previous limits on treated water releases during the upcoming wet season, a key step in environmental compliance and operational readiness.
Financial Position and Legal Developments
Financially, the group maintains solid liquidity at $168 million, though down from $202 million last quarter, with net drawn debt at US$130 million. The company also resolved a significant legal matter favorably, with the Victorian Court of Appeal ordering the release of Capricorn Copper Holdings from a share mortgage related to prior litigation, removing a potential encumbrance on the asset.
Looking ahead, 29Metals faces the dual challenge of safely restoring mining at Xantho Extended and advancing Capricorn Copper towards a restart, all while managing cost pressures and capitalising on promising exploration results that hint at extended mine life and growth opportunities.
Bottom Line?
As 29Metals navigates seismic disruptions and cost headwinds, its ability to restore zinc production and progress Capricorn Copper will be pivotal for sustaining growth.
Questions in the middle?
- When will mining safely resume at the Xantho Extended zinc stopes?
- How will rising C1 costs impact 29Metals’ profitability through 2026?
- What is the timeline and likelihood for Capricorn Copper’s operational restart?
