Aurelia Metals (ASX:AMI) Price: 41¢ Mkt Cap: $506m Cash
$75m (30/6/21) Debt $30m. Being a sizeable producer from
multiple mines, it is difficult to do the company justice in this
quick note, but I will try. Polymetalic operations are based
on the Cobar Basin and there is the Dargues Reef Gold
mine east of Canberra. NPAT was $57.4m (underlying) in
2020/21, or 5.7¢ a share. That gives a PE of 6.8x.
Annualised gold equivalent production is running at
180,000 p.a. The Peak Mine is producing at around 55,000
oz p.a., Hera is doing a more modest 20,000 oz. p.a. and
has recently decreased from 40,000 oz p.a. as the end of
the mine life is approaching. Add the copper, lead and zinc
also in the mix. None of these mines are world class, but
the newly discovered Federation orebody has been
described by the chairman as being “one of the most
exciting polymetallic discoveries in Australia’s recent
history”. This is currently 5.1 Mt at 5.5% Pb, 9.3% Zn, 0.9
gpt Au and 7 gpt Ag. The zinc grade equivalent is 19%, or if
you want to convert this to gold, it is around 8.5 gpt. The
beauty about this deposit is its close proximity to the Hera
treatment facility, which can be modified to take the
different style of ore. We expect that it will be in production
by late 2023, only four years since its discovery. Aurelia
Metal’s share price has been in a downtrend for more than
two years as it sought to recover operational performance
but it is showing signs of breaching the downtrend right
now. I was impressed with the CEO’s determination in the
presentation, having spent the last two years getting the
company back on an optimum footing. The new Federation
orebody looks set to usher in a period of higher profitability
and the strong emphasis on brownfields exploration going
forward offers opportunity for even more discoveries. So,
this is a turnaround situation; strongly funded from
operations and well managed. We expect a much stronger
share price over the next 12 months.
A F/East capital weekend article.
Champee
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