From WG's Far East Capital Newsletter this week.Aguia is Selling...

From WG's Far East Capital Newsletter this week.

Aguia is Selling Gold, now it has to ramp up

For those of you who are regular readers you will be aware
that Aguia Resources (AGR) is one of my favourite stocks.
Being Chairman and a large shareholder certainly focuses
my mind, but I also have a mission to make this a company
of which shareholders can be proud.

Drilling has started, to assess resource potential

With this little introduction I am pleased that last week the
Company made two very significant releases. The first one
documented the commencement of exploration/extensional
drilling at the Santa Barbara Gold Project, in Colombia.

Aguia has been an unusual case in that it has started
mining and processing ore but the ASX has refused to
recognise that there is a gold mine there because there is
not yet a JORC Resource. That means the Company has
been precluded from giving any guidance. AGR isn’t yet
allowed to call it a mine. Hopefully that will change soon.

First gold sales achieved

The second announcement detailed the sale of the gold
that was produced from the “no mine”. There isn’t a mine,
but gold is being produced. Where does the ASX think that
gold came from? I think it could be from a mine!

So, the processing plant is operating well now after a
drought that affected production for two months, limiting
what the plant could handle and impeding the operation of
the thickener. That has changed with the breaking of the
drought and the installation of additional water supplies.
The capacity will be at the 50 tpd level any day now with
the installation of an additional four agitator tanks, taking
the total to 10. The “mine” now has to ramp up production
with accelerated underground development, to enable the
plant to operate at full capacity.

Plant & mining improvements are continuing

Another plant improvement is likely to happen with the
installation of a flotation cell, after the material passes
through the thickener. A simple flotation cell will remove
approximately 50% of the material from the circuit before it
goes to the agitator tanks. Think of it as beneficiation. This
could mean that there will be a doubling of the treatment
capacity i.e. a fast track to 100 tpd because the grade to
the agitation tanks is boosted. However, we shouldn’t get
ahead of ourselves with predictions yet. There will be a
week or two of test work to do before committing to this
modification.

The plant capacity causes us to focus on the deliverability
of vein material (ore) from the mine. That is now the final
bottleneck to be overcome. Ore production is a function of
how much development has been conducted, so
development needs to be increased. This will happen with
the installation of more labour efficient equipment and as
the ASX release says, with the increasing of the drilling
rounds from 1.8m to 2.4m and eventually to 3.0m. More
development means more ore extraction, and increasing
gold production. That is normal for underground mines.

Some arm waving on what the drilling could mean

Getting back to the drilling announcement, it is important
because it could lead to a JORC ore resource in a relatively
short period of time. This would allow the Company to call it
a mine and enable official guidance projections without
upsetting the ASX.

The program of 25 holes is more like extensional drilling.
We know where the “orebody” sits in terms of direction, dip
and plunge. It is really just a matter of proving that it goes
to where we already believe it to be.

Think about the economics for a minute. If the drilling
demonstrates 100,000 oz - entirely possible, but not
guaranteed - it could have a dramatic effect on the value of
the Company. Consider the gold price at US$3,200/oz and
consider that 30 gpt orebodies can produce gold at circa
US$400-500/oz. It is a simple step to say 100,000 oz times
a margin of US$2,800/oz implies a US$280m value uplift.
Adjust this for mine and metallurgical recovery, and for time
value of money, and you still get an impressive figure. If
you then adjust for royalties and taxation, and unknown
events, and you still get a multiple of the current market
capitalisation. If the vein system extends by 50-100m
vertical, you could extrapolate the numbers over
500-1,000m depth and get a stunning number. Talk about
leverage! I’ll stop there because some people don’t like me
talking my own book. If you want further insight, click on the
following links to a couple of videos made recently.

https://oceania.mjoll.no/shares/KToPpQNqTKayjPmmLW2q_w


WeeklyComm 23 May 2025a.pages