Aura Minerals lifts growth outlook with new Era Dorada feasibility

[Ben Graham]

The Era Dorada project marks the expansion of Aura’s operations in Central America. Credit: Aura Minerals

Aura Minerals (NASDAQ: AUGO) has raised its future production outlook after releasing a new feasibility study for its Era Dorada project in Guatemala and integrating the results into its portfolio.

In the coming years, the Florida-based miner said it envisions several development scenarios that could take its annualized gold-equivalent production to 600,000 oz., which is a third higher than its previous projection of 450,000 oz.

“Since 2020 our strategy has been very clear: grow production with greenfield projects and expansions, extend mine life with exploration to increase resources and reserves, and improve our valuation through smart M&A and higher trading liquidity — and we have been delivering on all of this,” Rodrigo Barbosa, president and CEO of Aura Minerals, stated in a press release on Monday.

Amongst the production drivers identified by Aura are the fully ramp up of its Borborema mine in Brazil, which entered commercial production in September, and the integration and operational turnaround of MSG (Mineração Serra Grande), a high-cost mine that it acquired from AngloGold during the summer.

In addition, the planned construction and ramp-up of the Era Dorada and Matupá projects and the potential expansion of production capacity at some projects, such as Almas and Borborema, could also boost its production profile, Aura said, though it did not commit to their timelines.

While the company cautioned that its production projections are preliminary and “remain subject to significant uncertainty,” investors reacted positively. Shares of Aura Minerals surged to a 52-week high of $43.33 on the NASDAQ during morning trading, before paring gains. The company has a market capitalization of $3.5 billion.

Era Dorada feasibility

Supporting Aura’s improved growth outlook was a new feasibility study for the Era Dorada project, which came with its acquisition of Bluestone Resources in January. Previously known as Cerro Blanco, the Era Dorada project is located in the Department of Jutiapa, about 230 km from the Minosa mine in Honduras, which is expected to deliver 64,000-73,000 oz. of gold-equivalent production this year.

According to the report, the proposed mine would produce a total of 1.75 million oz. in gold equivalent over a near 17-year life, including 111,000 oz. during the first four years. Using a weighted average consensus gold price ($3,177/oz.) over that period, Era Dorada would have an after-tax net present value of $1.34 billion and an internal rate of return of 35.6%. At spot prices, those figures would rise to $2.17 billion and 46.6% respectively.

Under the base case, the initial capex is estimated at $382 million, with a payback in approximately 2.82 years. The all-in sustaining cost is pegged at $1,178/oz., which Aura said is competitive and would fall within the first industry quartile.

“This feasibility Study is another clear example of our disciplined growth strategy in action – and more projects are in the pipeline,” Barbosa said. The next steps, according to the chief executive, to work “closely with local authorities and government agencies to advance Era Dorada consistent with applicable environmental and social standards.”

Under ownership of Bluestone, the project had previously faced issues with the Guatemalan government for its proposed transition to open-pit mining. Aura plans to keep the project as an underground operation, with all licences in place.