In a stunning business turnaround, Ora Banda Mining (ASX: OBM) has set a quarterly production record, delivering 24,327 ounces of gold at a grade of 3.4 grams per tonne from its Davyhurst project in Western Australia’s renowned Goldfields region and lifted its cash pile by 81 per cent up to $48.7 million.
And ASX punters today rewarded the company with a share price jump that saw the stock surge by nearly 15 per cent to an intraday trading high of 77c on turnover of just shy of 11 million units.
Just two years ago, the Davyhurst project was flat-lining at 12,000 ounces of gold per quarter, with grades peaking at 1.5g/t. But the appointment of savvy mining operator Luke Creagh as managing director triggered the successful transformation of an asset considered by many market critics as being long as past its prime.
Wind the clock forward and today’s numbers tell the true story, with quarterly gold production jumping 26 per cent on the previous quarter – confirming the company’s fifth quarterly rise – while gold sales surged by 40 per cent to a record 25,536 ounces.
The lift in production also gave Ora Banda’s cash balance a supercharge to the $48.7 million, a $21.9 million lift from the end of June. And that was after management spent $23 million on capital expenditure and development exploration.
Adding to the good news, all-in sustaining costs (AISC) of A$2285 per ounce were 21 per cent lower than the past quarter and broadly in line with the company’s current guidance for the financial year of between $1975 and $2125 per ounce. It attributed part of the AISC uptick to one-off dewatering costs at Riverina and the cost impact of low-grade stockpiles, which are expected to be depleted soon.
But it was the Riverina underground mine that was the star performer. After reaching commercial production at the start of August, 164,600 tonnes of ore were mined at a head grade of 5.5g/t, easily surpassing its reserve grade target of 4.2g/t.
Not surprisingly, with the operation firing on all cylinders, stoping output soared by 139 per cent, with grades hitting 5.8g/t. In knocking out 1918m of development metres – some 1047m in operating development – Riverina’s main lodes are proving high-grade with strong stoping conversions, confirming the efficiency of its low-cost decline development model.
This quarter marked a key inflection point for the Company, as we consolidated Riverina Underground as our base load feed source and established our second high-grade underground mine with the commencement of operations at Sand King. We are getting more excited about the potential of Riverina Underground as it continues to deliver upside on grade and we gain a greater understanding of the very high-grade shoots that are present, reiterating that we are still in the early stages of unlocking this potentially large, high-grade system.
Ora Banda Mining Managing Director Luke Creagh
With a $16.3 million slice of the cash currently earmarked for underground development, Ora Banda’s second underground mine, Sand King, is already underway and on schedule, with a new portal and 257m of decline in solid ground conditions now completed.
As the Riverina Underground mine only half fills the processing plant, getting Sand King up to speed is a priority for the next nine months in order to fill the 1.3 million-tonne mill full of high-grade feed in a bid to provide another significant inflection point for increased production and cash flow.
The commissioning of both the Riverina and Sand King mines forms the backbone of Ora Banda’s strategy to ramp up production to 150,000 ounces annually by June next year.
Management has also escalated its exploration game, spending $2.7 million on 3300m of resource drilling during the quarter, including surface programs at Riverina and Sand King. With a second underground rig now active, 3200m of diamond drilling was also completed for the quarter to expand the life-of-mine.
The company is also now planning to fast-track the surface drilling at Riverina, with two additional diamond rigs arriving in December to explore for the southern extension to the deposit and to look for further depth extensions as part of a $25 million annual exploration budget.
Ora Banda’s latest quarterly report paints a picture of a company in a hurry to capitalise on its underground potential – particularly as the gold price runs rampant. It is currently sitting at an all-time high of AU$4020 an ounce, almost 90 per cent above the company’s 2025 AISC guidance.
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