Ora Banda’s bold strategic move includes bringing on board a shiny new CEO

Ora Banda has released a plan to build itself into a highly profitable gold mining company with former Northern Star COO Luke Creagh at the helm.

Mining at Ora Banda’s (ASX:OBM) historic Davyhurst gold operation near Kalgoorlie was restarted in February 2021 with an initial 5.2-year mine life at 81,000oz per year production.

The aspiration was $68.8m in average annual profit at a ~$2,550/oz gold price.

This was not to be, with ongoing cost and performance issues prompting the company to initiate a strategic review and ‘reset’ of its operations earlier this year.

In July, OBM secured the services of a new chief exec to improve its fortunes.

Bustin’ out the Big Guns

Luke Creagh may be new to OBM, but he’s no newcomer to the industry, with 20 years’ of mining, engineering and leadership experience working for both contracting and mining companies at projects throughout Australia and overseas.

He most recently served as chief operating officer at Australia’s second biggest gold miner, Northern Star Resources (ASX:NST).

“We couldn’t be happier that Luke is joining us,” OBM chairman Peter Mansell says.

“He has had considerable experience managing mining operations and is highly qualified to guide Ora Banda through its current operational reset plan.

“We look forward to working with him for many years to come and are confident that, together, we can extract maximum value from Ora Banda’s highly prospective land package.”

A fresh plan

In the short term, OBM will focus on the operation’s fundamentals.

It aims to achieve processing nameplate of 1.2Mtpa, review mine plans to maximise value, and pursue cost reduction initiatives “with intent”.

The gold price used for reserve calculations has also been reduced from $2,200/oz to $1,850/oz, which adds value to the reserve base and increases focus on higher-margin ounces.

An updated ore reserves of 276,000oz at ~2g/t underpins more than four years of production at the company’s current run rate, it said today.

“Our change to the gold price assumption for our reserve calculation down to $1,850 per ounce fundamentally improves the economics on how we assess our projects,” Creagh says.

“This change improves the quality and value of our current reserve base as well as directing our focus to higher margin ounces – both from a production perspective as well as directing our drill programs.”

Drilling has now commenced at the Riverina deposit to focus on extensions to the deposit’s higher-grade mineral resource and convert more ounces to reserves.

Further drilling planned in FY23 will continue OBM’s strategy of growing higher-margin Mineral Resources at Siberia, Riverina and Callion.

A hugely prospective tenure

Exploration programs will also start later in FY23 across all projects to add to the +2Moz resource base.

The outstanding potential of OBM’s 1,200km2 landholding around Davyhurst has been overshadowed by its operational underperformance but the value proposition remains, the company says.

“I am very upbeat about increasing our [2Moz] resource and reserve base given the outstanding opportunities the company has with over 120 km of mineralised trends that are substantially under-explored,” Creagh says.

“This year we will be committing to a systematic, disciplined and continuous approach to our exploration pathway and we look forward to informing the market in due course.”

FY23 guidance is production of 56,000oz to 61,000oz at AISC of between $2,175-$2,275/oz – making Davyhurst profitable at current gold price above $2,520/oz – and the company remains positive that there are several opportunities to improve that further.

This article was developed in collaboration with Ora Banda, 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.