Barry FitzGerald: Why Aeris Resources could be one to watch
Mining & Resources
‘Garimpeiro’ columnist Barry FitzGerald has covered the resources industry for 35 years.
Barry FitzGerald writes his legendary Garimpeiro resources column weekly for Stockhead
Aeris Resources has worked its way back on to investor’s radars after spending years in the wilderness.
A corporate financial overhaul and a shake-up at its mainstay Tritton copper operation near Cobar in NSW means Aeris is no longer the ASX-listed copper producer the market was happy to overlook.
A big dose of blue-sky exploration appeal has also been injected in to stock thanks to the looming start to a highly anticipated exploration program in South Australia’s Gawler Craton at the Torrens project.
The combination has resulted in Aeris shares (ASX:AIS) edging up from 15c in early August to around 19c.
But analysts think there could be more to come for the “forgotten’’ copper producer.
Euroz has a 33c price target on the stock.
That is based on the emerging potential for mine life extensions at Tritton rather than what might come if Aeris (70% and manager) and its partner Argonaut (30%) hit something special in their Gawler Craton hunt for the next monster Olympic Dam copper-gold deposit.
Aeris was rightly ignored by the market in recent years. It was loaded up with debt and there was a lack of clarity over mine life at Tritton, currently based on two underground mines and a 1.8m tpa treatment plant.
But the balance sheet has been knocked in to shape, with Aeris reporting recently that total debt had been reduced to $US29 million after the $US20m repayment of one its debt facilities.
The repayment means that more than $US100m of debt has been erased since the current management team came on board in late 2012 when Aeris was known as Straits Resources, and when it was in need of some fix-up and clean-up work.
The market’s demand for more certainty about Tritton has also been met, with Aeris delivering a mine plan to produce 24,000t of copper annually over the next five years from reserves.
Targeted production in the 2019FY is 24,500t of copper (and about 5,000 ozs of gold). Production in the 2018FY was 26,686t of copper at a competitive cash cost of $A2.60/lb.
A renewed exploration effort across Aeris’s 1,800 sq km tenement package is also delivering the goods. A recent highlight has been the thick and high-grade hit (17m at 2.59% copper) at depth at the Kurrajong prospect.
While all that has been welcomed by the market, the real excitement in the months ahead will come from the Torrens exploration program.
As mentioned here by Garimpeiro on April 9, the joint venture has been waiting 20 years to drill numerous targets beneath the salt-crusted Lake Torrens in a region best known for the BHP’s Olympic Dam, and OZ Mineral’s Prominent Hill mine and its $900m Carrapateena development.
Similar mineralisation was encountered in a brief drilling campaign in 2007-2008 at the Torrens project area but follow up work had to wait until now because native title issues needed to be resolved.
Last month the joint venture approved a “Stage 1’’ drilling program which it expects to start before the end of the (calendar) year.
The program will involve an initial 8-10 holes of between 700-1,500m depth, and focusing on the highest priority drill targets.
The Torrens project area lies within 50km of the Carrapateena project, and 75km from Olympic Dam.
It contains what Aeris says is a regionally significant coincident magnetic and gravity anomaly with a footprint bigger than that at Olympic Dam. The anomaly sits under 400m of cover.
The eight-to-10 drill targets in the program are based on the refinement of 28 gravity anomalies identified in a March survey.
The way Aeris sees things, it is on the “verge of re-commencing drilling (after a 20 year wait) at one of the most exciting greenfields copper targets in Australia.’’
It could be one to watch.