Kristie Batten: Billion dollar baby Ora Banda joins exclusive club

One of Australia’s top mining journalists, Kristie Batten writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene.

Despite a more than 500% increase in Ora Banda Mining’s share price in the past year, managing director Luke Creagh says the gold miner is just getting started.

In the last few days of August, Ora Banda (ASX:OBM) reached 54c, cracking the $1 billion market capitalisation mark in the process.

As of market close on Friday, the stock was up 533% over the past 12 months and the market cap had hit $1.07 billion after another positive week of trade.

When Creagh joined in mid-2022, the stock was just 3c and the company was seen as a basket case.

“Two years ago, we had $20 million in the bank and we were losing $4 million a month – it was quite unpleasant,” he told the Resources Rising Stars Conference on the Gold Coast last week.

Despite leading to the demise of several companies before Ora Banda, Creagh, a mining engineer and protégé of Bill Beament, could see the potential of the Davyhurst project, 100km north of Kalgoorlie.

“It had a pretty solid mill, but everyone got caught in the trap of trying to fill it with anything they could find, so it created this hub-and-spoke operating model where people would get a few open pits going and try to fill the mill from that,” he said.

“The problem with that is it’s a small mill, 1.2 million tonnes per annum, and with lower grade [open pit ore], you ultimately cap out at 70,000 ounces, which is really, really hard to build a company off.”

Creagh said it was “mildly amusing to people” when he first spoke of transforming Ora Banda into an underground miner.

“It’s certainly not amusing to them now because people are seeing us deliver consistently against what (were) pretty strong headwinds,” he said.

Growing production profile

Davyhurst produced 48,000oz of gold in the 2023 financial year, improving to 69,900oz in FY24.

Ora Banda is now at a “massive inflection point” with most of the ore now coming from the Riverina underground.

Guidance for this financial year is 100,000oz, increasing again to 140,000-150,000oz in FY26 once the new Sand King mine hits its straps in the June 2025 quarter.

“We’re moving out of fix-it phase and into the value and the growth phase,” Creagh said.

“You go from investing, investing to investing and breaking even to making a bit of money, to making $200 million in that year.”

Last week, Canaccord Genuity analyst Tim McCormack increased his price target for Ora Banda by 14c to 65c.

He forecasts $63 million of free cashflow will be generated this financial year, or $73 million at the spot gold price.

“We continue to highlight Ora Banda’s strong production growth outlook and expect FY25 to mark the transition to meaningful free cashflow generation,” McCormack said.

He expects free cashflow generation to hit $194 million in FY26.

Further value

Despite the value creation, Creagh said the company was still only at the start of its journey.

“You must have a balance sheet that can support liberating [the tenement package] so you need a balance sheet that can support continued and sustained investment into exploration and a strategy that is not quarter-by-quarter, it’s multi-year to create value in the long-term,” he said.

Creagh said the 1160 square kilometre Davyhurst project covered 140km of strike on some of the most prospective, unfollowed-up hits he’d seen in his career.

Until two years ago, less than 5% of the drill holes on the project had been drilled to more than 100m vertical depth.

Just $15 million of exploration in the past two years led to the discovery of Riverina and Sand King.

Ora Banda will spend $25 million on exploration this financial year alone, increasing to $40 million in FY26.

“The prospectivity and our ability to execute has gone up exponentially and this is what gets exciting for us going forward,” Creagh said.

Riverina, which has a resource of 500,000oz and a reserve of 50,000oz, remains open to the depth and to the north and south

“I cannot stress enough how much we’re in the infancy of unlocking this,” Creagh said.

“We’re probably $50 million off calling this well-drilled.”

Grade control drilling results reported last week included 2.7m at 65.9 grams per tonne gold, including 2.1m at 85.6g/t and 1.6m at 46.7g/t gold, including 0.9m at 79.9g/t.

The company will add a second underground rig this quarter, followed by two surface rigs in the December quarter.

Creagh said the work would triple the data points in the system over next 10 months, including drilling to 800m depth.

He also sees the potential for the 65,000oz per annum Sand King mine to grow to have multiple declines in the future.

Ora Banda is also looking to do some work along the 10km Mulline trend, which features old open pit mines, multiple surface anomalies and high-grade results yet to be followed up.

“This could float an exploration company in its own right,” he said.

“The value here is still very much an exploration play.”

At Stockhead, we tell it like it is. While Ora Banda Mining was a Stockhead advertiser at the time of writing, it did not sponsor this article.