Aeris pursues solid exploration and M&A strategy to boost Australian copper footprint
Aeris Resources is mapping out a clear and simplified path to expand its footprint in the prized Australian copper space after exceeding production targets at its flagship Tritton mine and continuing to reduce debt.
"Our growth strategy is twofold," Executive Chairman Andre Labuschagne said on the sidelines of the Noosa Mining & Exploration Investor Conference.
"First, we want to grow around Tritton itself, which has brownfields and greenfields exploration opportunities to expand the mine life beyond four years. We're busy increasing the reserve and resource base for that."
The majority of discoveries on the Tritton tenement package have been on or adjacent to a stratigraphic corridor referred to as “Budgery Sandstone”.
The Budgery Sandstone corridor has been identified to extend for 115 kilometres within the tenement package. Notably, all of the 750,000 tonnes of copper discovered at Tritton to-date has been within a 50 kilometre section of the Budgery Sandstone corridor, confined to the southern half of the tenement package, with exploration in the northern half limited until recently.
Aeris applied for and was granted an additional tenement (EL8810) adjacent to the northern end of its existing tenements, bringing the total area of the Tritton tenement package to 2,160km2.
The attractiveness of EL8810 is that the Budgery Sandstone corridor is interpreted to extend for an additional 40 kilometres into that tenement, increasing the Company’s exposure to this highly endowed geological corridor to potentially more than 150 kilometres.
"There is a huge upside," Labuschagne said. "The potential is maybe we find another Tritton or Murrawombie-sized deposit."
That would represent a significant boost for Aeris, given the recent performance of Tritton, which yielded 26,852 tonnes of copper at an average C1 Cash Cost of just $2.78 Australian dollars per pound in fiscal 2019.
In parallel with expanding existing operations, Aeris is also actively pursuing acquisitions.
“During the year the company announced it was in discussions with Glencore to acquire the CSA Mine (CSA) in Cobar, Australia, which would have given Aeris a copper footprint of around 75,000 tonnes of copper per year, comparable to Sandfire Resources. Aeris was unable to reach mutually agreeable terms with Glencore but remains undeterred and continues to aggressively pursue M&A opportunities," according to Labuschagne.
"Tritton is a great foundation to grow from, but we've always said we want to grow beyond Tritton and bring another operating mine in," Labuschagne said.
"Unfortunately, we were unsuccessful with CSA, but it shows we are serious about how we want to grow this company."
In the first half of fiscal 2019 Aeris successfully completed an equity raise (Placement and Entitlement Offer) for approximately A$35 million, the funds from which were used to reduce debt by US$20 million and accelerate exploration activities. Since the beginning of 2013, debt has been reduced by more than US$100 million.
“We have always said that our aim is to become a mid-tier, multi-mine company. The board believes Aeris’ balance sheet is sufficiently robust to pursue growth through suitable M&A opportunities,” Labuschagne said.
Hong Kong-based private equity fund PAG holds a fully diluted 30.9 percent equity interest in Aeris through one of its investment funds and continues to be highly supportive of the growth path underway.
"They came in to help grow the business are a very keen on the future,” Labuschagne said.
Jim Regan is a former Reuters finance and commodities reporter, and is a contributor to the Investor Insight content team. Cannings Purple is proud to be a sponsor of the Noosa Mining Conference.