Aurelia Metals Ltd (AMI $0.39) Speculative Buy AnalystDatePrice...

Aurelia Metals Ltd (AMI $0.39) Speculative Buy Analyst Date Price Target Mike Millikan 29 March2021 $0.65/sh Exploration Update: Great Cobar, Kairos, Federation and Dargues Key Points Aurelia Metals (AMI) has released exploration updates from each of its main project areas (Peak, Hera and Dargues). Peak ·Resource upgrade drilling atGreat Cobarhas reported strong copper and lead-zinc mineralisation, with highlights of60.5m @ 2.2% Cu & 0.3g/t Au(incl. 11.7m @ 4.4% Cu & 0.6g/t Au) and 14.8m @ 26.2% Pb+Zn, 0.6g/t Au & 73g/t Ag. Great Cobar is located 7km north of the Peak processing infrastructure, and <1.5km from the underground workings of New Cobar. Current resource 4.1Mt @ 2.2% Cu, 0.8g/t Au (with silver, lead, zinc), with the aim of the program to improve resource confidence for mine designs and PFS works. ·Good infill drill results also reported fromKairos(Peak mine) with an impressive result of13.0m @ 50.7g/t Au & 16.0% Pb+Zn(incl. 1.0m @ 645g/t Au & 0.3% Pb+Zn) with strong copper (emerging copper trend) also intersected to the east of the deposit with a notable38.0m @ 2.3% Cu & 0.2g/t Au(incl. 16.0m @ 3.4% Cu & 0.2g/t Au). Kairos is under development with ore drives in place for first stoping ores in the JunQ, key high-grade ore feed for the Peak operation. Mineralisation remains open with drilling ongoing. Hera ·Resource upgrade drilling in full swing atFederationwith the latest results supporting resource upside in the lower parts of the deposit:16.0m @ 25.8% Pb+Zn, 2.8g/t Au& 0.4% Cu(incl. 5.15m @ 44.4% Pb+Zn, 8.6g/t Au & 0.7% Cu) and34.5m @ 19.5% Pb+Zn, 0.5g/t Au & 0.8% Cu(incl. 11.1m at 35.4% Pb+Zn, 0.5g/t Au & 1.6% Cu). Current resource is 3.5Mt @ 1.4g/t Au, 7g/t Ag, 5.5% Pb, 9.8% Zn and 0.3% Cu (ZnEq grade of 19.6%), Indicated resources make up 31% of the total resource, with the ZnEq grade an impressive 26.3%. Importantly, Federation remains open in multiple directions, 3 rigs now on site to accelerate drilling and resource conversion. The Scoping Study and permitting are advancing with the aim to bringing Federation into the processing mix for the Hera mine. The Federation Scoping Study is expected to be released this quarter (MarQ). Dargues ·First results from resource infill drilling by AMI, aimed at improving resource confidence and extending high-grade gold mineralisation: multiple results higher than resource and reserve grade (grades of +7g/t Au up to 27g/t Au). Results reported from underground drilling with 2 surface rigs now on site largely focused on extensional activities. Dargues Reserve is currently 1.1Mt @ 5.7g/t Au for 202koz (~5 year mine life) ·GROUP production for FY21 of 100-113koz @ AISC A$1,425-1,575/oz. We forecast 104koz @ AISC A$1,318/oz. ·Speculative Buy retained. Investment Case Some impressive exploration results from all three production centres highlights upside potential to production levels and mine life. The Cobar Basin production centres of Peak and Hera alone justify a higher than current trading level for AMI. Especially when you factor-in the near term high-value ore additions from Kairos (Peak) and future ores from Federation (Hera). We see multiple organic growth opportunities for the Company to extend mine lives and sustain higher than current production levels. AMI’s balance sheet remains strong and retains flexibility for growth options. Attractive EV/EBITDA multiples of 2.6x FY21 and 2.2x FY22, on our forecast production and commodity price deck. Speculative Buy, PT 65cps.