Ora Banda ready to rock with Riverina underground development after $30 million raising

Ora Banda Mining has secured the funds to develop its Riverina underground mine, opening a fresh new phase in the history of its Davyhurst project near Kalgoorlie ahead of a two year ramp up to a production rate of over 100,000 ounces a year.

Ora Banda’s (ASX:OBM) reset is almost complete after a $30 million, 11.25c per share equity raising that will provide the capital to commit to the Riverina development, where it made a final investment decision last week.

Subject to shareholder approval, major investor Hawke’s Point will commit $8m to the placement from existing and new institutional, professional and sophisticated investors.

There will be additional skin in the game from directors as well, who will commit to $1.2m of total investment in the Euroz Hartleys-led raising.

The funds will also bankroll drilling to progress resource development and exploration activities, with a renewed focus on exploration a key to the miner’s turnaround story.

Ora Banda sold almost 61,000oz of gold in FY22, but has set ambitious plans to become a 100,000ozpa player by FY25 under new boss, former Northern Star executive Luke Creagh.

“We are very pleased with the strong support received for the Placement from our existing shareholders and look forward to welcoming a number of new institutional, professional and sophisticated investors to the company’s share register,” Creagh said on the placement.

“The placement provides Ora Banda with funds to meet the estimated capital costs for the development of the Riverina underground mine which will set Ora Banda on the path to achieving a +100kozpa production profile in FY25.

“The placement also ensures that we have sufficient funds to continue our exploration efforts, which are focussed on expanding our high-grade resource inventory.”

Riverina approval

It comes after a presentation last week from OBM, which said its board of directors had approved the Riverina underground subject to funding.

It expects to move fast from this point, with an underground mining contract to be awarded in April and portal excavation expected to start in May.

That would come ahead of underground diamond drilling and first ore in the first quarter next financial year, with first stopes (economic ore zones contained within the mine plan) to be blasted in the December quarter.

OBM expects to hit steady state production of 600,000tpa at a reserve grade of 4.3g/t and attractive all in sustaining costs of $1650/oz from the June quarter of 2024.

That would be part and parcel of a radical shift down the cost curve which would transform Davyhurst as OBM heads from open pit to underground, falling from ~$2600/oz in FY23 to $1750/oz in FY25.

In US dollar terms that would place OBM in the bottom half of the global gold cost curve on the most recent numbers available from the World Gold Council and Metals Focus.

Riverina contains an underground resource of 303,000oz at 4.1g/t which is open in all directions, with a Phase-2 drilling program to target extensions south and at depth, while Ora Banda recently posted a 73,000oz reserve at 4.3g/t for the new mine.

Regionally OBM is exploring multiple areas including Riverina South, Missouri and Callion, where an underground resource already exists of 80,000oz at 5.8g/t to find its next high-grade underground mine.

This article was developed in collaboration with Ora Banda Mining, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.