Ora Banda Mining (ASX: OBM) has further bolstered its bank balance after pocketing $11.71 million as its lucrative joint venture (JV) deal with business goliath Wesfarmers at the Davyhurst project in Western Australia’s Goldfields region nears completion.
The company confirmed today that all conditions relating to the deal had been satisfied and it now expects to receive a final $4.29 million next week to complete the Davyhurst transaction with Wesfarmers Chemicals, Energy and Fertilisers (WesCEF) subsidiary, Davyston Exploration. It will bring the funds received through the JV agreement to $26 million.
Ora Banda’s sale of 65 per cent of the project’s non-gold mineral rights to Davyston, coupled with a recent $30 million placement at 22c per share, has enabled the cashed-up company to focus on growth initiatives to increase its gold resource.
And the institutions that stumped up the $30 million appear to have made a wise choice, with the current share price sneaking to as high as 33c in today’s intraday trading. The stock slumped to as low as 7.8c in August last year.
The company also today revealed that it had ended the March quarter with $31.5 million on hand – and that was before it received the $11.71 million Davyhurst JV proceeds.
We are delighted to reach completion on this deal with a world-class joint venture partner focused on lithium and other base metal prospectivity. We are now looking forward to what WesCEF and Ora Banda’s combined efforts can achieve as we continue to unlock the full exploration potential of the Davyhurst belt.
Ora Banda Mining managing director Luke Creagh
The company says it has recently spent $10 million on developing its Riverina underground mine and $6.5 million on resource and exploration activities as it fast-tracks the promising Sand King operation towards a final investment decision as a potential second underground mine.
Ora Banda today reported a 7 per cent increase in gold production in the March quarter to 17,368 ounces and the sale of 16,894 ounces at a time when the global price for the precious yellow metal has been running wild. It has produced 50,661 gold ounces to date this financial year, which is more than the last complete financial year … and Riverina ore from underground activities will add further to the increase.
Ora Banda is transitioning from open pit mining to solely mining underground. The current quarter will see the end of open pit mining at its Missouri pit that is part of the Siberia project.
The immediate future for the company’s gold production is its Riverina underground mine, where 22,591 tonnes of ore at 4.3 grams per tonne gold recently produced 3110 ounces.
Management says its ramp-up of Riverina remains on schedule, with stoping having started on the first level resulting in 161 ounces of gold at 2.9g/t. The grade is expected to increase as mining moves into the main part of the orebody, with the company finding the lode widths and grade are meeting or exceeding its pre-development expectations.
Underground diamond drilling has returned several stunning intersections, with results of 4m at 83.8g/t gold, 2.9m going 103.5g/t and 2.8m at 58.5g/t including 1.6m at 105.4g/t.
The Sand King prospect’s recent phase-two drill program was extended to follow up successful results in the north of the area. Assays have returned solid hits of 10m at 8.2g/t, 4m at 17.4g/t and 8m going 7.1g/t.
The company believes the results demonstrate a mining scenario may be feasible and will advance its mining study to determine Sand King’s potential to become its second underground mine.
Ora Banda is targeting production of more than 100,000 ounces of gold in the next financial year, with Riverina becoming its primary driver of the gold ounces.
Management appears to have kicked plenty of goals in recent times and with the market also liking what it is seeing, there will be plenty watching to see if the company can continue its golden outlook.
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