Aeris Resources Ltd (ASX:AIS) has released guidance for the new financial year, and its first since it purchased Round Oak Minerals in July.
Group guidance for the coming year reveals a significant increase in production across four saleable metals thanks to the inclusion of the Round Oak Minerals assets.
Growth in copper production
Copper production is forecast to grow from 18,600 tonnes in FY22 to 32,000 to 40,000 tonnes in FY23 with the addition of the Mt Colin and Jaguar operations, as well as increased production at Tritton.
The Jaguar Operation will also add zinc to the tune of 24,000 to 29,000 tonnes to the company’s production portfolio and is also the main contributor to an approximately tenfold increase in silver production.
“Integration of the Round Oak assets has occurred smoothly and all operations in our business are now focused on delivering on their plans,” said Aeris executive chairman Andre Labuschagne. “I am more convinced than ever that the acquisition has created a more robust business that will add significant value to Aeris shareholders.
A better-balanced business
“Compared to the Aeris of FY22 we now have a better-balanced business with a larger production base spread across four attractive commodities from four operating centres.
‘We remain of the view that the long-term supply/demand fundamentals for our commodity mix, particularly copper and zinc, are very attractive.
“As with all other Australian miners we are currently facing headwinds around input price inflation and we are working hard to manage costs and mitigate impacts across the business.
“We also have a significant project pipeline, with life extension opportunities at each of our operating centres and also at the Stockman project, which already has a substantial ore reserve base in our key commodities.
“FY23 is a significant year as we invest heavily in these life extension projects while continuing to aggressively explore on our fertile tenement packages.
“I look forward to updating our shareholders across the year ahead.”
As averred by Labuschagne, the industry faces rising operating costs due to inflation, particularly in labour, diesel, steel products and electricity.
Growth capital and exploration
During the 2023 financial year the company plans to invest heavily in growth capital and exploration, with key growth capital projects including the Avoca Tank development and Constellation project at Tritton, the Turbo project at Jaguar and the Stockman feasibility study.
On the exploration front, Aeris will progress its activities at the Kurrajong (Tritton) and Golden Plateau (Cracow) deposits towards defining maiden mineral resource estimates and a follow-up drill program at the Barbara deposit (North Queensland).
Production stable; lower EBITDA
In relation to the Round Oak transaction, in April Aeris noted proforma group production of 63,000 tonnes copper equivalent and EBITDA of $306 million for FY23.
Under the price, cost and production assumptions used in the latest guidance, FY23 copper equivalent production will be 57,000 to 71,000 tonnes copper equivalent, while FY23 EBITDA is estimated to be $140 to 170 million. The 63,000-tonne copper equivalent production target previously advised is within the current guidance range, though EBITDA is forecast to be materially lower.
The reduction in EBITDA has been driven by significantly weaker metal prices, particularly for copper, since the April transaction modelling, along with increased operating costs.
At Tritton, reduced capital expenditure due to the decision to delay the Murrawombie open pit cutback has been partially offset by additional tonnes mined and operating costs at the Tritton and Murrawombie underground operations.
In addition, a number of transaction costs originally forecast for the 2022 financial year have now moved into 2023.