Monsters of Rock: Aeris plunges as it puts Jaguar mine on ice

We wish we had brighter news to deliver as this wet and windy hump day winds up.

Alas it was not to be, with copper, gold and zinc miner Aeris Resources (ASX:AIS) emerging from a trading halt to deliver the disappointing edict it has delivered to shut its Jaguar mine and place it on care and maintenance.

It’s a bitter pill for Aeris Resources to swallow. Many couldn’t be bothered, selling out as the share price plunged 29% to a market cap of ~$185 million.

The company has sieved around two-thirds of its value since February with falling base metals prices combining with inflationary pressures hurting its operational performance.

It comes just over a year since Aeris snared Jaguar along with the Mt Colin copper project in Queensland and undeveloped Stockmans asset in Victoria as part of its more than $200 million acquisition of Washington H. Soul Pattinson’s (ASX:SOL) Round Oak Minerals business.

The company will produce 40-50,000t of copper equivalent product in FY24, with minimal contribution from Jaguar as it wraps up in September.

Executive chairman Andre Labuschagne says the company needed to preserve the in ground value of the 8Mt resource at the polymetallic zinc and copper mine once owned by IGO (ASX:IGO).

“We have made the tough but appropriate decision to place the Jaguar Operation onto care and maintenance, with operations ceasing in September. Between the operational challenges, lower zinc price and cost inflation it became obvious that the best value for our shareholders was to pause production at Jaguar.

“We firmly believe this decision provides the greatest opportunity for shareholders to realise value from Jaguar over the medium term.

“Jaguar has a significant metal inventory across four deposits, and an underutilised processing plant. Leaving the metal in the ground until we have an optimised restart plan, at higher production rates, was clearly the better alternative than continuing a loss-making operation. We will now commence feasibility work on restart options.”

“FY24 production guidance is forecast to be 40kt – 50kt copper equivalent with minimal contribution from Jaguar and down from 51.5kt in FY23. Of particular note, Tritton copper production is forecast to increase significantly on the back of the higher grade Avoca Tank and Budgerygar mines developed in FY23.”

Soul Patts will provide a two year $50m loan to replace a $20m ANZ working capital facility as Aeris tries to steer a course back. Jaguar was impacted through the last quarter with three seismic events which prevented access to high grade stopes, along with a 20% drop in zinc prices over the March and June quarters.

The company produced 27,400t of copper, 22,500t zinc, 59,600oz gold and 884,000oz of silver in FY23, but has seen its cash on hand fall steadily across FY23 from a peak of $81.6m at the end of the December quarter to $29.5m at the end of June.

Aeris Resources (ASX:AIS) share price today:

Westgold down on guidance

While not as savage as the selldown in the junior copper miner, WA gold producer Westgold Resources (ASX:WGX) copped its own 8.88% whack from investors after releasing its FY24 guidance.

It’s become a common theme, with a number of other gold producers disappointing investors with their conservative, growth poor 2024 numbers.

Westgold produced around 260,000oz in FY23, and has only a small chance of exceeding that if it hits the upper end of guidance, set at 245,000-265,000oz, with all in sustaining cost guidance down from $1900-2100/oz last year to $1800-2000/oz this.

But it will spend more than double the $60m committed last year to growth capital, guiding spending of $130m on things like underground development and camp assets, with exploration expenditure guidance lifted from last year’s $20m to this year’s $25m.

That spending commitment is expected to fund an expansion pipeline at its Mid West WA gold mines ahead of FY25, including at Great Fingall and the flagship Big Bell, as well as the restart of the Fender underground near Cue.

An FID is due at Great Fingall this quarter, with the first new ore expected to be accessed in the second half of FY25.