Massive Miss: - Early quarter was development - lower grade. And rushed too, so getting diluted more than anticipated. (Why rushed though? Maybe to build up stockpiles for the plant expansion plan.) - Combined with a fault, which I guess slowed stope production. - Late quarter was expected to be strong grade, but from a blind stope, on the edge of the ore body, so I assume lower drilling confidence.
The stope turned out to be weaker than expected. That is possible when the drilling density is lower. It should be less likely on the inner parts of the resources, with lots of drill holes intersecting.
Possibly the mine can still produce higher ounces per year, upwards of 200koz, but it's probably safer to stick to this reduced plan. At least until the operations are more proven, and all assumptions can be trusted...
We were having big assumptions (eg. able to rush development without issue), and had high hedges coming due relative to the grade assumptions.
After another year of production (with more conservative practices and promises), we'll be learning what 'realistic' assumptions truly are eg. faults, grade, meters per rig. Then they can know whether it's realistic to target >200koz again. If they targeted it again, it would be with higher odds of meeting it, having more financial and timing flexibility to get there.
Quarters of >40,000oz: We're still targeting that, before long, when quarters have good grade. We'll have 1 less rig, and ignore the last part of the plant expansion for the moment.
They probably want more certainty with production numbers (using the conservative assumptions and practices), as long as the hedge book is a risk (it's a particular risk if it's far out of the money, and it's possible that you can't deliver the ounces).
There's no hedges until end of year. But I think they'll want to safely meet guidance, to being back some confidence, so less risk taking for a while. I think they'll play it safe until late 2026, until they can accumulate cash, and deliver on more of the hedgebook. After that, I think it'll be possible to resume plant expansion, if everything else is going to plan (if they can fit in an extra rig without issue).
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