Bellevue’s Shrinking Hedge Book Exposes More FY27 Gold to Spot Prices

Bellevue Gold is trying to prove that its difficult ramp-up phase is over. At the Resources Rising Stars conference on September 9, management said the Bellevue mine had moved into steady-state production and that the remaining hedge book should be eliminated during FY27, setting up a cleaner test of how much cash its high-grade Western Australian operation can generate at spot gold prices.

The latest operating numbers support that shift. Bellevue produced 41,643 ounces in the June quarter and 143,539 ounces for FY26, finishing in the upper half of its 130,000-150,000 ounce guidance range. FY26 all-in sustaining cost was A$2,827 an ounce, within guidance, while underlying June-quarter free cash flow before voluntary hedge pre-deliveries was about A$110 million. Cash and gold on hand ended June at roughly A$206 million.

The key balance-sheet change is the hedge book. Forward sales commitments were cut by about 83,000 ounces during FY26 to roughly 68,700 ounces, and there are no contractual deliveries required until June 30, 2027. Management says it intends to continue pre-delivering against those commitments and expects to become hedge-free during FY27. That matters because Bellevue has been selling part of its production below prevailing spot prices while the mine was still absorbing ramp-up risk.

FY27 guidance now calls for 150,000-170,000 ounces at AISC of A$2,800-A$3,100 an ounce. The production midpoint is about 11% above FY26 output, but the cost range is not materially lower. In other words, the near-term equity case is less about dramatic unit-cost compression and more about stable grades, higher volumes and a steadily rising proportion of ounces sold without legacy hedges.

The mine has more operational depth than it did a year ago. Bellevue says five long-term mining areas - Deacon, Deacon North, Marceline, Viago and Tribune - are now established. Development rates and access to higher-grade stoping areas improved through FY26, while a paste plant is under construction and exploration has resumed around Tribune South, Bellevue South, Deacon extensions and Westralia.

The resource base remains substantial for a single-asset producer. Bellevue reports a 3.1-million-ounce mineral resource at 8.9 grams a tonne and a 1.29-million-ounce probable reserve at 4.7 grams a tonne. That supports mine-life optionality, but the company still needs continued reserve replacement because a high-grade underground operation can lose valuation support quickly if development sequencing or stope performance slips.

There is also strategic optionality around the asset. Australian media reported last week that Bellevue had examined a potential scrip merger with Catalyst Metals, which would diversify the single-mine exposure of both companies. That remains speculative and should not be treated as a base-case catalyst, but it highlights the strategic value attached to a producing high-grade asset in Western Australia.

The more immediate test is simpler. Bellevue must deliver the FY27 production range, keep AISC near guidance, finish running down the remaining 68,000-ounce hedge position and show that quarterly free cash flow remains durable after sustaining and growth spending. If it does, FY27 could mark the point where investors stop valuing Bellevue as a ramp-up story and start valuing it on unhedged cash generation. If grades, development or costs disappoint, the high gold price will make operational misses harder, not easier, to excuse.