Page 35 - pd292-Apr21-mag-web

Cracow gives Aeris balance

t seems counterintuitive to buy a new as-
Iset to help clear previous debts, but the
bold move is paying off for Aeris Resources
Ltd.
In March, the Queensland-based miner
made its $7.5 million quarterly payment on
its $30 million Tranche C facility two weeks
early. At the same time, it made a voluntary
$US2.5 million repayment on its Tranche B
facility.
In all, the company has paid down $28
million in debt since it acquired the Cracow
gold mine in Queensland from Evolution
Mining Ltd on July 1. Net debt is now close
to zero, having been $48.1 million at the
time of acquisition.
Aeris managing director Andre La-
buschagne said the purchase of Cracow The Tritton mine has been a solid producer for Aeris over the last five years
had heralded a major reversal in the com-
pany’s fortunes. “It was run very well, and Evolution didn’t “Tritton has been consistently producing
“It has been a big turnaround for the hold back on capex so there were no sur- 22-23,000 tpa for a long time, the exciting
company in the last eight months, but it is prises or big investments required,” La- bit is that after eight years of debt and low
something we’ve been working towards for buschagne said. “It has been about ensur- prices, we have started looking at new pro-
eight years, ever since the management ing production results deliver, allowing us to jects and there a lots of opportunities,” La-
team came into Aeris,” Labuschagne told have an immediate focus on exploration.” buschagne said.
Paydirt. The exploration opportunities are abun- “With the balance sheet in place, we
Aeris was saddled with expensive debt dant, according to Labuschagne. The com- have the capacity to fund growth projects
when Labuschagne and the former Norton pany has committed $14 million over the and there is substantial opportunity to ex-
Goldfields team arrived at the company; an first two years of ownership to exploration tend the mine life at Tritton. We have done
issue compounded by underperformance on underground extensions and near-mine exceptionally well but can do even better
at the flagship Tritton copper mine in opportunities as well as greenfields pros- with capital to invest.”
New South Wales. Debt finance was re- pects. Investment has also taken in exploration
structured several times as the company Objectives are already being met. In with Aeris turning up the Constellation dis-
searched for ways to survive a soft cop- December, the company announced an covery last year defined by high-grade hits
per price environment. However, with Trit- updated resource for the Roses Pride ore- of 19.95m @ 2.42% copper, 0.64 g/t gold
ton now consistent and Cracow proving a body of 26,100oz gold @ 4.6 g/t, up from and 4.6 g/t silver from 197m and 27.1m @
valuable addition, the company’s ambitions 7,300oz @ 8.7 g/t. 1.61% copper, 0.43 g/t gold and 3.4 g/t sil-
have expanded. Cracow is forecast to produce 70- ver from 234m.
“Over the years we’ve had a lot of chal- 75,000oz gold at AISC of $1,525-1,575/oz Such is the enthusiasm for Constellation,
lenges so when the Cracow opportunity in FY2021 but tailing off to 57-62,000oz in the company is already considering how it
came up and we realised it would gener- FY2022. Labuschagne, however, is confi- may be included in mining schedules.
ate good money, it became about how we dent the trend will be reversed. It has also reinvigorated Aeris’ regional
could deleverage ourselves quickly,” La- “We have already announced Roses approach to exploration.
buschagne said. Pride and we are drilling other opportuni- “Constellation is a great find which came
Cracow’s performance has allowed the ties which we will bring to the market on a after the exploration team did an amazing
company to achieve its aims. The mine pro- quarterly basis,” he said. “By May-June we job with the groundwork,” Labuschagne
duced 36,000oz gold at AISC of $1,484/oz will update the resource, reserve and life- said. “We think we can repeat that with
over the first eight months under the Aeris of-mine plan with these new resources. some of the other EM targets and will re-
banner, ensuring cash was available to “The other benefit is that Aeris runs the look at other areas up north using that
support the balance sheet restructure. operation slightly differently. When you’re a knowledge.”
“The crucial part was that with current pure play gold producer your biggest driv- A secure balance sheet and success-
operations doing really well, it allowed us ers are costs and grade. We are more fo- ful acquisition has also injected Aeris with
to pay some of the historical debt – which cused on how much money we can make more M&A confidence.
is much more expensive – faster,” La- out of it. We have broken all the models and “We are looking for opportunities in both
buschagne explained. “So, we paid $US2 started again. There are low-grade stock- copper and gold,” Labuschagne said. “A
million, having paid $US2.5 million in Sep- piles of 900,000t @ 1 g/t which we can put copper project would be nice but finding
tember quarter. It means we are very quick- through the mill and we are looking at cut- one is not that simple. We’ve had a look,
ly getting the debt under control.” off grades and what was left behind that we but we need to find the right fit.”
Most acquisitions of operating assets can make money from.”
come with a big “to-do” list, but the early Performance at Cracow is being backed – Dominic Piper
production figures betray the fact Aeris was up at Tritton, a benefit which is all the more
handed the keys to an asset with a smooth- valuable given copper’s current environ-
running engine. ment.

aUSTRaLIa’S PaYDIRT aPRIL 2021 Page 35