• Arafura “increasingly confident” it will be a producer in 2025
  • Sandfire down +11% on weaker earnings
  • Perseus cements reputation as gold sector outperformer with record production, reduced costs

The important mid to large cap mining news for Thursday, October 20.


Arafura (ASX:ARU) has been exploring the Nolans tenements in the NT for all sorts of minerals since 1999.

It established a singular focus on rare earths around 2008 and has been trying to get its monster NdPr project up and running ever since.

It is now “increasingly confident” it will be a producer in 2025.

“Forecasts show that the EV outlook will outperform earlier market expectations with manufacturers continuing to set ambitious goals for EV production targets,” Mark Southey said today in his Chairman’s Address.

“Supply constraints remain a major challenge for OEM’s and automotives [and] Arafura is clearly in the sweet spot for EV demand.

“Your Board is increasingly confident that market demand, supply chain and sustainability factors, together with a firming and robust NdPr price are all moving in the direction required to enable us to undertake FID to commence construction of the Nolans Project, targeting first production of NdPr Oxide in 2025.”

However, Southey did caution that a volatile macro environment could upset the company’s best laid plans.

“We cannot ignore the challenges the economic environment brings,” he said.

“Among the many items now being carefully monitored by the Board is the inflationary impact of economic events on the potential cost of our development, particularly in materials and labour.”

ARU share price chart


Reporting season: Mixed day for miners Sandfire, Evolution and Perseus

Despite lifting full year guidance mid-tier copper play Sandfire Resources (ASX:SFR) is down +12.7% on weaker than expected earnings in the September quarter.

The key driver of the earnings miss was the recently acquired MATSA complex in Spain (US$40m actual vs RBCe $52m and consensus $60m), on higher costs, lower than forecast sold payable metal and lower price received for copper and zinc.

“This translated to lower cash generation,” RBC says.

“At end -Sept, SFR reported 1Q Cash of US$190m and net debt of US$374m, missing our ~US$210m and US$360m forecasts, respectively, namely on operating cash flow and QP adjustments.

“On costs, the company has indicated “Site controllable costs at MATSA continue to track within expectations”, despite being well above guidance expectations.

“However, mining, processing and transportation unit costs were all above guidance and expectations. These should track down over the year as both copper and zinc are 2H weighted.”

The $1.4bn stock is down 50% year-to-date.

SFR share price chart


Gold miner Evolution Mining (ASX:EVN) says the company is track to hit production and cost guidance in FY23 followed a “solid start” in the September quarter.

The boffins at RBC disagreed, saying that Q1 production of 161,000oz and an all-in sustaining cost of $1,513/oz came in 10% below and 10% above their expectations, respectively.

“We expect production to improve through FY23 but the Q1 annualised rate of 644kozpa and AISC are a relatively slow start vs FY23 guidance of 720koz at A$1240/oz,” it says.

“Higher grades at Red Lake and ongoing Cowal and Red Lake project delivery are some positives in the quarter.

“We could have underestimated the Q1 mill shuts [planned maintenance occurred at Cowal, Red Lake and Ernest Henry] however, we are broadly in-line with consensus and today’s result could lead to FY23 consensus downgrades.”

$3.4bn market cap EVN traded weaker today, down ~7% by mid-afternoon. It is down an enormous 55% year-to-date.

EVN share price chart


Consistent, can-do-no-wrong African goldie Perseus Mining (ASX:PRU) fared much better.

Q1 highlights for PRU included record gold production of 137,460oz, 12% more than in the June 2022 quarter. Perseus is on track to achieve 240,000-265,000oz guidance for the December 2022 half year, it says.

Remarkably, costs actually reduced.

PRU’s average AISC dropped 12% to US$879 per ounce during the quarter — well below market guidance of $1,000 – $1,100 per ounce for the December 2022 half year.

Notional cashflow from operations was US$112 million, a 32% increase from the prior quarter.

The $2.2bn stock is up ~2.2% in arvo trade, and flat year-to-date.

PRU share price chart