Black Cat Syndicate (ASX: BC8) balances growth investment with transition to 100% company ore at Kal East

Black Cat Syndicate Managing Director James Bruce spoke with MarketOpen to further discuss the March 2026 quarterly activities report, focusing on operating cash flow, capital deployment, production performance, and the transition of Kal East to 100% company ore. The discussion also addressed the Mt Clement Resource update and the technical work programs outlined in the release.

You delivered $61M in operating cash flow with $53.9M in capital spend; how should investors assess the balance between reinvestment and free cash generation as Kal East ramps up?

We generated $61M in operating cash flow during the quarter alongside $53.9M in capital investment, largely directed toward the ramp up of Kal East at Fingals and Majestic. This reflects a period where capital is being deployed to bring these operations into steady production, with $46M allocated to growth capital across those assets.

This investment delivered measurable progress, with development completed ahead of schedule and in line with capital estimates, and ore stockpiles increasing to 184,000t. We also maintained balance sheet strength, with cash, bullion and listed investments increasing to $92M at quarter end.

As Kal East continues to ramp up and transitions to 100% BC8 Ore, the current phase remains focused on completing development while sustaining operating cash flow.

Production of 23,952oz was below the 25,000 to 28,000oz outlook; what drove the shortfall, and what supports maintaining production into the June quarter?

Production for the quarter was 23,952oz, reflecting a mix of operational factors across both assets. At Paulsens, production totalled 7,110oz, with mining occurring in lower grade zones during the period. At Kal East, production was 16,842oz, including 11,553oz from third party ore, as Fingals and Majestic continued to ramp up.

Looking ahead, June quarter production is expected to be similar to the March quarter. This is supported by continued ramp up at Kal East and improved access to higher grade stopes at Paulsens. The commencement of 100% BC8 Ore processing late in the quarter also marks a shift in the operating base as third party ore is phased out.

With the shift to 100% BC8 Ore at Kal East now underway, how does this change margins versus third party ore, and when should that be reflected in cash flow?

During the March quarter, Kal East production included 11,553oz from third party ore. The transition to 100% BC8 Ore commenced on 28 March 2026 as Fingals and Majestic ramp up and third party ore is phased out.

The Company has stated that, while overall production in the June quarter is expected to be similar to the March quarter, the transition to 100% BC8 Ore is expected to deliver significantly higher cash margins compared to processing third party ore. This reflects a change in ore source rather than production volume.

As the transition commenced late in the quarter, the margin impact is expected to become more evident in subsequent reporting periods.

The Mt Clement Resource increased contained antimony by 95% to 25.8kt; what does this enable in terms of development, and what remains before economic decisions can be made?

The updated Mt Clement Mineral Resource increased contained antimony in the Eastern Zone by 95% to 25.8kt following completion of drilling and receipt of final assay results. These results confirmed continuity of high grade antimony mineralisation and identified mineralisation outside the previous Resource envelope.

This update supports the scale and growth potential of the project and provides a foundation for further technical evaluation. Metallurgical test work has commenced to inform process design and economic studies.

Further work includes infill drilling to upgrade portions of the Resource, with drilling scheduled to recommence in the June 2026 quarter.

Positioning for margin transition and continued operational delivery

The quarter reflects continued execution across Black Cat’s operations, with the Kal East ramp‑up progressing as planned. Production is expected to remain consistent in the near term, while the shift away from third‑party ore toward internally sourced feed is expected to drive materially higher cash margins.

The Mt Clement Resource update and commencement of metallurgical work indicate ongoing advancement of the broader project pipeline. Black Cat Syndicate is also developing a Growth Strategy, with an update expected within three months, and intends to provide annual guidance from 1 July 2026.

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