Auric Mining’s Re-Rating Delivers Cash Boost From Options Exercise

Auric Mining Ltd (ASX: AWJ) has been a stand-out gold performer on the ASX recently following investor support for its West Australian cash-generating gold strategy.

Shares in the company this week peaking at a 12-month high of $0.215.

The positive re-rating in the stock has delivered a financial boost to the company with 99% of the March 2024 $0.15 in-the-money options being exercised by shareholders.

The total of 12,993,780 options equates to $1,949,067, pre-costs. Auric has also issued the shortfall notice to underwriter KS Capital Pty Ltd for 4,500,000 shares for an additional $675,000, pre-costs.

Behind the re-rating

Auric generated a maiden adjusted profit of $2.8 million for the full year to December 2023, delivering a net cash surplus from operating activities of $4.22 million.

The company benefited from a rising gold price as they undertook stage one mining at Jeffreys Find where 176,000 tonnes of ore was processed.

Better-than-expected production delivered 9,741 gold ounces selling at an average of A$3,006 per ounce.

Mining at Jeffreys Find has commenced for the 2024 year, with the first processing scheduled at the Greenfields Mill in mid-late April.

A contract to process a minimum of 300,000 tonnes of ore has been signed for 2024.

Auric is well-positioned to continue generating cash through enhanced economics. The gold price has climbed another 17% since that time, and is trading around A$3,500 an ounce, along with the additional tonnes.

The project has been a sound investment for the company costing to date only $1.425 million. It shares 50:50 in cash surpluses with BML Ventures of Kalgoorlie as the joint venture contractor – which bears the brunt of risk and assumes all the overheads.

Cash generated from Jeffreys Find ensures Auric is self-funding throughout 2024.

The project is due for completion in early 2025.

All roads lead to Munda

Munda is the flagship asset of the company, hosting around 200,000 ounces with an average grade exceeding 2g/t gold at a 0.5g/t cut-off.

Once mined, ore would be hauled to a nearby mill for toll treating.

A scoping study in mid-2023 envisaged extracting between 112,000 and 129,000 ounces of gold from the project over a three to five-year mine life.

The study base case suggested a free cash surplus for the project to be $77 million based on a gold price of A$2,600 an ounce. With the surging gold price this projected surplus would be considerably higher.

The net result: it provides a strong financial upside for Auric, and the opportunity to potentially acquire other gold assets in the heart of the Goldfields.

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