Aeris Resources on track to deliver following “transformational” Cracow Gold Mine acquisition

By Deputy Chief EditorJune 22, 2020

146 2 minutes read

Aeris Resources Ltds (ASX:AIS) recent acquisition of the Cracow Gold Mine in Queensland is forecast to deliver free cashflow of more than A$100 million over the first two years of ownership at the current gold price.

The company has a proven track record operating its Tritton Copper Operations and other gold mines, which will be applied to driving value creation at Cracow.

This mine is on track to produce between 82,500 and 87,500 ounces of gold in the 2020 financial year as well as generate net mine cash flow of $84 to $89 million.

Aeris believes the acquisition of the mine from Evolution Mining (ASX:EVN) is a compelling value-add to the companys portfolio as its a low risk, high-grade, cash-flow generative mine in an attractive location.

“Asset and commodity diversity”[hhmc]

Executive chairman Andrew Labuschagne said: “This is a truly transformational transaction for Aeris and will immediately be accretive in value.

“The acquisition provides us with asset and commodity diversity, strong cashflow generation and high-value synergies.

“Cracow will be a perfect fit for the unique skill set of our management team, who have a track record of extracting value and life extensions, as demonstrated at the Tritton mine, and previously with Norton Gold Fields at the Paddington gold mine.

“Our immediate focus will be on transitioning Cracow into the Aeris culture and aggressively investing in the mine life extension opportunities we have identified.”

Investing in exploration[hhmc]

Cracow has a strong track record of reserve and resource replacement and Aeris plans to aggressively invest in brownfield and greenfield exploration with the aim of growing the resource base to extend mine life.

Multiple near-term opportunities for resource conversion have been identified with A$13 million budgeted over the next two years for exploration and key priorities including both underground near-mine extensions (eg Killarney) as well as nearby open pit deposits (eg the Golden Plateau and Roses Pride).

During the March 2020 quarter, the companys Tritton Copper Operations produced 6,083 tonnes of copper – a 12% increase on the prior quarter.

Trittons nearby underground mine, Murrawombie, produced 273,000 tonnes of ore during the quarter, which was in line with predictions, however, was a decrease compared to the previous quarter of 296,000 tonnes.

Copper grades of 1.62% were higher than the previous quarter (1.43%) as a result of mining sequence.

Exploration and project development[hhmc]

The Tritton tenement package covers 2,160 square kilometres in Central West New South Wales.

To date, more than 750,000 tonnes of copper, including the current mineral resource deposits, has been discovered within the bottom half of the tenement package.

During the previous quarter, a regional ground-based electromagnetic (MLTEM) survey was completed and was designed to confirm whether priority AEM anomalies represented legitimate bedrock conductors.

A total of 23 potential AEM conductors were surveyed and interpretation of the results were finalised during the current quarter.

MLTEM surveying over an AEM anomaly toward the northern margin of Aeris exploration tenement boundary confirmed the presence of a bedrock conductor.

Current modelling indicates plate dimensions varying from 200 metres x 200 metres to 325 metres x 325 metres with modelled conductance ranging between 100S to 150.

An exploration licence (EL) application was submitted to the Department of Planning, Industry and Environment during the previous quarter to cover the additional area.

Additional MLTEM surveying will be required over the northern half of the modelled plate and this will occur once the exploration licence application is approved, which is expected in the June quarter.