Hemlo Mining Reaches Net Cash as Q3 Profit Drops $27 Million

Hemlo Mining (HMMC.TO ) reported third-quarter 2026 revenue of $135.5 million on November 9, 2026, as lower realized gold prices reduced revenue from the second quarter. Net income fell $27.0 million quarter over quarter to $3.5 million for the period ended September 30, 2026, even as the Canadian gold producer generated positive free cash flow and ended September with a net-cash position.

All amounts are in U.S. dollars.

Revenue mainly reflected 32,424 gold ounces sold at an average realized price of $4,234 per ounce. Hemlo attributed the quarterly revenue decline to a $233-per-ounce decrease in that price, while total gold sales volumes were nearly unchanged.

Adjusted net income was $15.6 million, a company-defined measure intended to reflect underlying operating performance.

Fair-Value Swings Compress Earnings

Hemlo said the earnings decline principally reflected fair-value movements. Contingent consideration produced a $6.5 million unrealized loss, compared with a $20.7 million gain in Q2, while gold derivatives also swung from gains to losses. Lower gross profit and higher finance costs added pressure, partly offset by the absence of an Impact Benefit Agreement expense recorded in Q2.

Operating Cash Flow Supports Net-Cash Position

Operating cash flow reached $54.6 million. Hemlo said the improvement from Q2 mainly reflected the collection of $14.8 million for gold sold near the end of the prior quarter, highlighting the role of payment timing in the stronger cash generation.

Free cash flow, which Hemlo defines as operating cash flow net of cash used in investing activities, was $25.5 million.

The miner ended September with $2.3 million of net cash, defined as cash less principal borrowings, compared with net debt of $93.0 million at December 31, 2025.

Higher Grades Offset Substation Disruption

Attributable gold production, counting all Williams output and half of Interlake’s, rose 2% to 25,652 ounces. Interlake’s average grade increased to 6.15 grams per tonne from 3.05 grams in Q2, helping support output despite the power disruption.

An underground electrical-substation failure serving part of the Alimak production area reduced available power, constrained mining rates and delayed the planned production ramp-up. Hemlo temporarily rescheduled the mine plan, shifted production to other areas and reorganized power distribution before relocating a similar substation to restore power. A spare substation remained on track for delivery in December 2026, the company said.

Fleet Spending Lifts Sustaining Costs

Attributable cash costs declined as higher sales volumes spread fixed and semi-fixed costs over more ounces. Attributable all-in sustaining cost, a company-defined measure covering cash costs and sustaining investment, nevertheless rose to $2,660 per ounce sold from $2,561. Hemlo linked the increase to fleet investment and sustaining capital spending of $25.1 million, up from $17.5 million in Q2.

Seven mobile-equipment units arrived during Q3, bringing deliveries to 17 of 21 planned units since Hemlo acquired the mine in November 2025.

The quarter leaves Hemlo with a stronger cash position but an unresolved operating trade-off: Interlake’s higher grades and payment collections supported cash generation, while the planned ramp-up remains delayed and sustaining costs are rising. The key question for subsequent results is whether restored power and the expanded fleet can lift production while reducing all-in sustaining costs per ounce.