Lunnon Metals (ASX:LM8) is well positioned to accelerate exploration and potentially extend mining at its Lady Herial gold project after strong free cash flow and a growing cash balance, Euroz Hartleys said in a Thursday note.

The company generated AU$9 million in free cash flow in June by delivering 62,000 tonnes of ore grading 1.73 grams per tonne, containing 3,500 ounces of gold, to Gold Fields at an average realized gold price of AU$6,027 per ounce.

Euroz Hartleys said Lady Herial mining remains on track, with 90% of the pit mined and 66% of contained gold delivered, while potential final "goodbye" cuts could provide additional ore before operations cease.

The research firm noted that the company ended June with AU$21 million in cash, with rising free cash flow expected to fund its planned 43-kilometer fiscal year 2027 drilling program, assuming stable gold prices.

It highlighted the potential for a second-stage open-pit cutback at Lady Herial, with continued mineralization potentially extending mining beyond the current plan, which includes just 45% of the global mineral resource on a contained-ounce basis.

The research firm retained its speculative buy recommendation and AU$0.84 per share price target on Lunnon Metals.