Terrible news unfortunately... a poor Jan production update from to 5-4 days plant downtime due to primary crusher repairs and lower grade dues to "some modelling and operational variances' (read lower grade/thickness lodes and more dilution mining the lodes).
The low grades delivered to mill extend a trend that refuses to turn around, despite actively targeting the highest grade 'core-veins' to demonstrate long-term upside and potential mine viability. 5.3% avg Pb grade mined in Jan is down on 5.6% Dec Qtr, 5.5% Sep Qtr and 5.4% Jun Qtr... how long can Abra mine an average 5.5% grade before that figure is inserted into the mine-plan as a probability?
I look at the photo from 1210mRL drive along the sub-vertical core-vein and it tells me that it must be wandering around along strike and up-dip. The 2.4m of high-grade steeply dipping core vein material is rightly on the RHS of the ore-drive (hanging wall side) to try and minimise stope dilution, but it shouldn't be continuing into the HW (ore is obviously in the RHS HW along the last jumbo cut). Bottom photo is early Jan from 9th Jan Op Update showing the vertical with quite different thickness and dip.
One explanation for continually lower grades than expected is simply that the ore lodes wander around between drives, and the stopes are larger than expected to capture the ore and/or because ground conditions are poor such that more HW/FW rock falls from blasted stopes than hoped for.
There is undoubtedly high grades in core-veins, problem all started in 2022 when new interp savagely reduced the continuity of these core-veins and proportionally dropped the Abra deposit resource in size and grade... Today's update puts a sword to the geological and mining recovery confidence of the orebody they were hanging hopes on imo.
So there is hope that one month they will get to stope a particularly rich and sizable core-vein without huge dilution and it will deliver much better grade to the plant. A realistic mine plan has to work on month-in, month-out achievable averages accepting the good, bad and ugly parts of the orebody and mining dilution. Same with the mill plant... things break down over time, planned and unplanned maintenance requires downtime, rain events happen most years etc. You can run a plant flat strap above nameplate for periods but over the long-run average annual plant throughput is constrained by multiple and ongoing breakdowns, repairs, maintenance, weather events. Plant availability might be 85 or even 80% of the hours available in a year...
Reading between the lines, Jan started with ~5000t con stockpiled (ie produced 25kt con in Dec Qtr but only sold $20kt), which led to a 9.25kt con sale 14th Jan (~3-4kt con produced first two weeks Jan before breakdown and shares suspension). As of yesterday, Abra has 4,000t con in stock on site, who knows how little at Geraldton but if Feb was worse than Jan with more downtime, Abra produced less than 15kt con 2 month s into Mar Qtr. I'm guessing Mar Qtr will drop back to ~20kt con which is obviously hugely cash negative.
If Abra mine review can demonstrate the ability to be cash-flow positive, and I say if, then creditors may be inclined to provide enough working capital to keep it alive and hope the lead price rides to their long term recuse. This would almost certainly include a debt haircut and restructure plus wiping out shareholders in the hope of re-list or industry sale down the track. The review of high-grade core-vein development and stoping is the last roll of the dice to demonstrate grade upside, which is the only way Abra makes sense short of a big jump in the lead price. Given development of core-vein lodes has been underway since Dec, I'd say by end of March the reality of what that means to ore grades LOM will be locked and the answer clear to certain stakeholders.
GLTAH, but sorry to say, too many fundamental problems all stemming from that 2022 MRE downgrade are coming home to roost as predicted...
G1A Price at posting:
5.9¢ Sentiment: None Disclosure: Not Held
(20min delay)