Auric Mining (ASX: AWJ) and its joint venture (JV) partner BML Ventures have pulled in another cash haul, this time with $23.5 million in gold sales after completing the second toll milling campaign for this year at the Jeffreys Find mine near Norseman in Western Australia.
The campaign, which ran for six weeks until the beginning of last month, processed 127,610 dry metric tonnes, spitting out 6295 ounces of gold and significantly, taking total production for the year to more than 7500 ounces at a time when the precious yellow metal’s price has been hovering around all-time highs.
Although Auric admits the throughput was slightly less than the 150,000 tonnes that was originally envisaged, primarily due to localised power failure issues at the Greenfields Mill and a marginally lower head grade of 1.65 grams per tonne, management says the “exceptional” 93.2 per cent recovery of gold more than made up for the shortfall.
However, the key factor in delivering the $23.5 million from the second campaign was Auric’s ability to lock away a remarkable average sale price per ounce of AU$3731, with a peak price of AU$3859.
The price today is still sitting at about AU$3853 per ounce. The JV partners have already pulled out $4.7 million each in free cash from the 2023 campaign at Jeffreys Find.
We are in the sweetest possible place with the mining of Jeffreys Find. Another toll milling campaign is scheduled for the end of November. It will be a mighty run home for Auric as the project draws to conclusion. It has been an outstanding investment.
Auric Mining Managing Director Mark English
Next month, the JV will gear up to process the further 142,000 tonnes of ore from Jeffreys Find at the Greenfields Mill, completing the 300,000 dry-tonne contract BML’s has with the mill.
But here is a twist – even after the mill contract wraps up early next year, there will still be still another 100,000 tonnes of ore sitting at the bottom of the pit and the JV is currently looking to line up a milling deal to get that processed, too. If gold prices stay as strong as they are at the moment, the coming months could be extremely rewarding.
In the meantime – and as part of the JV agreement with BML – Auric has received a further $2 million in cash surplus from the latest campaign and a $1 million cash repayment for a loan towards the mining costs. However, there is still also a considerable amount of additional surplus cash sitting in the JV accounts which will be added to after the final campaign.
If an historic cost of production of $1993 per ounce in 2023 at Jeffreys Find, including haulage and milling costs, was applied to the 2024 campaign, it is not hard to extrapolate a potential profit of $15 million per partner from the estimated production of 20,000 ounces by generating a sales price in excess of AU$3700 per ounce. Once finalised, the surplus would then be distributed post-costs and tax, as a special dividend to both parties.
Punters may remember the gold market as far back as 2000. It was then, at the height of the “dotcom” boom when everything was supposedly going “virtual” and the wonder days of gold were written in history, that the United Kingdom’s then Chancellor of the Exchequer, Gordon Brown, famously announced that the nation would be selling its entire gold reserve at US$250 (AU$365) per ounce.
That moment turned out to be the bottom of a multi-year bear cycle for the gold price and a seminal point in time for Brown, who has not been allowed to forget the disastrous decision. So, to see gold at more than 10-times higher than its 25-year low prices would surely now be warming the cockles of the most ardent goldbugs’ hearts.
Auric is a remarkable story of good timing. Few other junior explorers with limited cash and virtually no infrastructure have been able to capture and profit from the bonanza gold price as well as it has.
And savvy market investors would be grinning like the Cheshire Cat. A year ago, the company’s share price sat at less than 4c and it recently hit a 12-month high of 39c – marking a jump in the realm of some 900 per cent in its journey from nanocap entity to microcap.
And with Jeffreys Find getting closer to finishing, Auric will now be hoping that it can do an equally profitable “rinse-and-repeat” exercise at its much bigger Munda mine near Widgiemooltha next year.
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