VAU’s 2QFY25 result was mixed with production and sales 5% and 6% lower than we had expected. The weaker volume result was largely offset by lower group AISC, which came in 8% below our forecast. VAU has trimmed its production guidance range, and we note that our forecasts now sit at the upper end of range for production and middle of the range for AISC. Improving grades and the expansion of the process plant at King of the Hills should offset declining production at Defector, enabling VAU to deliver average production of ~400kozpa for the next seven years. We have upgraded our medium-term earnings outlook due to changes to our grade profile and AISC assumptions, which underpins an 8% lift in our price target to A$0.65 and we reiterate our BUY rating.
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