I (Aurelia Metals Ltd, flat 64.5cps, m.cap A$539m, Gold:...

I (Aurelia Metals Ltd, flat 64.5cps, m.cap A$539m, Gold: Producer): Mike Millikan

• This week we visited AMI’s Peak Mines in NSW.
• Peak Mines has been an outstanding purchase for the Company, with the acquisition (~A$93M) largely repaid in the first quarter of ownership.
• Peak delivered a record 37.6koz @ AISC of A$517/oz (net of credits) in the JunQ FY18, driven by the very high-grade Chronos Zone, which provided 32.4kt @ 31.4 g/t Au, 70.5 g/t Ag and 5.9% Pb, contributing some ~A$63M in EBITDA.
• Chronos is expected to positively influence production at Peak over the next 12 months, hopefully longer as mineralised extensions continue to be tested up-dip – current Chronos reserve is 128kt grading 16.6g/t Au, 49.4g/t Ag and 8.3% Pb (high-value NSR of ~A$987/t), with potential that the reserve grade is under-called (due to the high nugget-effect of the orebody).
• Chronos also has a halo of lead-zinc mineralisation which contains some 1.3Mt @ +12% Pb+Zn (NSR of ~A$258/t), which put in context is higher value than the entire current Hera reserve (1.1Mt @ NSR of A$256/t) – current drilling is infilling this zone, with further up-dip extensional drilling planned in the coming months.
• To maximise the returns from this zone AMI are planning to install a Pb-Zn circuit to the Peak processing infrastructure (+750ktpa), which is yet to be fully costed but likely in the range of