Aura looking to next growth phase

Aura 360° Mining will continue to sniff out M&A opportunities in 2024, including in North America as it continues to grow its gold production towards 450,000ozpa, chief executive Rodrigo Barbosa told Mining Journal.

Aura expects to become one of the larger mid-tier producers in 2025 as its Barborema development in Brazil comes on stream, and it consolidates production from its 36,000ozpa of gold equivalent Almas mine in Brazil, its most recent development.

"We know how to get to 450,000ozpa at the end of 2025, and we know that if we push production towards 1Mozpa, the change in [company valuation] multiple is significant, passing from 0.3-0.5x NAV (net asset value) to 0.7-0.8x NAX when we get to 600,000, 700,000 or 800,000ozpa," said Barbosa.

Aura declared commercial production at Almas in 2023 with 2024 as its first full year of operation. It began building Barborema in late 2023, producing 83,000ozpa during its first three years. It is 16% complete and on track to begin operations in 2025. Next will be Matupá in Brazil, which is in the final licensing stage and will produce 54,000ozpa over its first four years. "It should be ready in June or July, so we can start construction right after," said Barbosa. Barborema will cost $188 million and Matupá $115-120 million, to be funded from cash flow.

The company has focused on projects that are relatively modest and simple to build, which has enabled it to develop mines on time and on budget. In turn, with record gold prices and an all-in sustaining cost of less than $1300/oz, it enjoys healthy margins and a growing cash position. "We have not acquired large projects, but ones that are easy to build and operate, such as open pit with CIL processing in areas already developed. We also have a management culture with decentralised decision-making that gives managers the autonomy to run and build projects with more flexibility to make changes," said Barbosa.

With the market not recognising the value of many junior developers, Barbosa sees an opportunity to make the leap into North America, where companies typically enjoy higher valuation multiples. "We continue to look at M&A at projects close to construction or in production to plant the seeds for future projects in our portfolio in the next five years. We are not a pure exploration company and prefer junior explorers to do that for us. … Companies like us that produce with a low cash cost are generating healthy cash flow, but juniors cannot fund. It is intriguing how prices are behaving and it is good timing," said Barbosa.

The company is also looking to continue growing in Brazil. In 2023, it invested C$3 million to take a 17% stake in explorer Altamira Gold. "The mining sector in Brazil has to be stable. The new government understands that it is an important sector to generate jobs and taxes, and that if mining is done correctly, it generates value for all stakeholders.  Brazil still has room to explore and discover new deposits, it has strong mining schools, managers and legal framework. Mining in Brazil will grow in the next decade," said Barbosa.

Shares in Aura 360° Mining are trading at C$8.65, valuing the company at C$629 million.