Emerald Resources (ASX:EMR) remains well positioned for production growth despite weaker-than-expected September quarter output and higher costs, with strong cash generation and healthy stockpiles providing operational flexibility, Euroz Hartleys said in a Wednesday note.

Okvau gold mine production was around 20,300 ounces for the quarter, below the broker's 26,500 ounces forecast, with all-in sustaining cost (AISC) expected at around $1,200 per ounce due to stage six ramp redesign-related mining sequence changes, wet-season material movement, and the timing of gold sales.

The investment firm cut its fiscal 2027 production forecast by 6% to around 106,000 ounces and raised its AISC estimate to $1,108 per ounce, while the company retained its guidance of 100,000 to 115,000 ounces at an AISC of $980 to $1,080 per ounce, with dry-season mining expected to support a recovery in production.

The company added about AU$60 million to cash, lifting cash and bullion to AU$512.6 million and total liquidity to AU$540.9 million, with stockpiles providing a buffer against disruptions and blending flexibility.

Euroz Hartleys estimates an indicative AISC margin of around $3,055 per ounce, based on an average quarterly gold price of $4,255 per ounce.

The broker said the company remains on track to increase production to 300,000 to 400,000 ounces per annum in the near term, with longer-term potential to reach its target of 600,000 to 800,000 ounces per annum, supported by a fully funded growth pipeline.

Euroz Hartleys maintained its buy recommendation on Emerald Resources while lowering its price target to AU$7.95 from AU$8.10.

Emerald Resources' shares shed about 2% in recent Thursday trade.