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Aeris Resources ahead of guidance as it reviews base metals and gold M&A opportunities

Snapshot

The copper producer is beating guidance and looking to grow through M&A opportunities.

Aeris Resources Ltd - Aeris Resources ahead of guidance as it reviews base metals and gold opportunities

Quick facts: Aeris Resources Ltd

Price: 0.054 AUD

ASX:AIS
Market: ASX
Market Cap: $24.61 m
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  • The producer mines copper at the Tritton Copper Operations in NSW which houses Tritton and Murrawombie underground mines. 
  • Tritton’s tenement package extends over 2,160 square kilometres and features a 1.8 million tonnes a year processing plant.
  • The Tritton mines produced 26,852 tonnes of copper last financial year at C1 costs of $2.78 (US$1.91) a pound. 
  • The company produced 6,835 tonnes at C1 cash costs of A$2.06/pound in the September 2019 financial quarter, putting it ahead of 2019-20 guidance of 24,500 tonnes at $2.80-2.95 a pound. 
  • Another project is the majority-owned Torrens iron-oxide copper-gold joint venture project in South Australia, which has a larger footprint than Olympic Dam. 

Our focus is on delivering on our strategy of becoming a mid-tier, multi-mine company, using Tritton and our talented team as a base to grow from.

Aeris Resources executive chairman André Labuschagne

What does Aeris Resources do?

Aeris Resources Ltd (ASX:AIS) is a copper producer in New South Wales and iron-oxide copper-gold (IOCG) explorer in South Australia where it holds ground with a bigger footprint than BHP Group Ltd’s (ASX:BHP) (LON:BHP) (NYSE:BHP) (NYSE:BBL) Olympic Dam.

The copper company reduced its debt levels with a capital raising last financial year and is continuing to purse a mergers and acquisitions strategy to drive growth in the business.

Aeris executive chairman André Labuschagne confirmed the plan in the company’s annual report released this month, saying “Our focus is on delivering on our strategy of becoming a mid-tier, multi-mine company, using Tritton and our talented team as a base to grow from.

“The board believes Aeris’ balance sheet is sufficiently robust to pursue growth through suitable M&A opportunities … and we continue to explore M&A opportunities with a focus on copper, other base metals and gold.”

Labuschagne said this month the company’s growth strategy also included continued exploration within two key tenement packages.

Aeris previously outlined its ambitions on the M&A front, reporting it hoped to find near-mine projects that could draw on existing infrastructure and drive shareholder value.

Who leads Aeris Resources?

Executive chairman André Labuschagne leads the company, backed by an experienced senior executive team.

Labuschagne is a mining executive with more than 25 years’ industry experience who previously led Norton Gold Fields as its managing director.

He was a project director at Mount Morgan Mine and has held a number of key leadership posts during his career, including chief executive officer, chief operating officer and chief financial officer.

What does Aeris Resources own in NSW?

The key producing asset is the Tritton Copper Operations in New South Wales.

More than 750,000 tonnes have been discovered on the NSW tenement package which includes its two main deposits Tritton and Murrawombie.

The Tritton and Murrawombie underground mines have a combined reserve of 69,000 tonnes of copper, 80,000 ounces of gold and 742,000 ounces of silver, according to June 30, 2019 estimates released in October 2019.

A third deposit known as the Budgerygar is 600 metres from the Tritton mine and has an inferred resource of 2.3 million tonnes grading 1.5% copper, 0.2 g/t gold and 5.2 g/t silver for 34,000 tonnes of copper, 15,000 ounces of gold and 380,000 ounces of silver, according to an estimate also released in October 2019.

Producer Aeris beat forecasts with 2019 financial year production of 26,852 tonnes of copper for the company at C1 direct cash costs of $2.78 (US$1.88) a pound at the across the two-mine operation.

Aeris went on to produce 6,835 tonnes at C1 cash costs of A$2.06/pound (US$1.41/pound) in the September 2019 financial quarter, putting it ahead of 2019-20 guidance of 24,500 tonnes at $2.80-2.95 a pound (US$1.92-2.02).

The current copper price is about US$2.643 a pound (A$3.85).

Earlier this year Aeris identified 25 new anomalies at the mine through an airborne electromagnetic (EM) survey of 617 square kilometres at the northern end of the tenements designed to find deep conductor bodies.

Tritton has regional exploration prospects of value to Aeris, such as the Kurrajong prospect where the company has set an exploration target of between 3 and 4 million tonnes at a 1.5-2% copper grade.

The company plans to conduct more exploration at its projects and raised $35 million towards its strategies and forward plan in the first half of the 2019 financial year.

A $20 million sum was used to pay down debt, with the company retaining $14.5 million cash by the end of September 2019 that it can use towards continued exploration at the Torrens operation and a secondary project, and for M&A transaction evaluation efforts.

What does Aeris Resources own in South Australia?

A secondary asset for Aeris is the Torrens Copper Project joint venture in the Olympic Dam province of South Australia.

The world-class province hosts notable mines such as BHP’s Olympic Dam and OZ Minerals Limited’s (ASX:OZL) Prominent Hill and Carrapateena mines.

Torrens is near BHP’s standout iron oxide copper-gold (IOCG) discovery Oak Dam West.

Aeris holds 70% of the project in a joint venture while minority partner Argonaut Resources NL (ASX:ARE) has a 30% stake.

The partners hope to explore at the operation Aeris manages, with the Brisbane company planning continued exploration activity.

What is Aeris Resources’ reporting schedule?

Aeris posted its annual report to shareholders on October 4, 2019, and followed the reporting with the release of its September quarter activities report on October 17, 2019.

The company is expected to share its December 2019 quarter budget later this month with a quarterly cashflow report for the September quarter.

Aeris’ last half-year report was released on February 26, 2019, with the reports tending to be released in the half-year that the company does not report annual results.

Inflection points

  • Tritton operations production milestones
  • Successes in regional parts of Tritton operations and at secondary project Torrens
  • Copper market sentiment
  • Shareholder support for Aeris corporate strategy
  • Major miner interest in Aeris and Argonaut
  • Mergers and acquisition activity

Aeris Resources will hold its annual general meeting in Queensland at 11.30am local time (12.30pm EST) on November 15, 2019 at the offices of HopgoodGanim Lawyers at Waterfront Place, 1 Eagle Street, Brisbane.

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