Ora Banda Mining Ltd (ASX:OBM) notched up record gold production for the fourth consecutive quarter with 19,271 ounces produced at the Davyhurst operations in Western Australia, one of numerous key value milestones that have set a strong growth platform for the company going into FY25.
Gold production for the three months was 11% higher than the previous quarter and came with no lost time injuries.
This output was achieved despite significant rainfall in the second half of June which restricted processing throughput by ~25,000 tonnes and impacted production by about 2,600 ounces.
Ore stockpiled
Unprocessed ore was consequently stockpiled for future treatment, with high-grade Riverina stockpiles at ~25,000 tonnes at 3.7 g/t for 2,900 ounces as well as the remaining open pit medium grade of 182,700 tonnes at 1.4g/t for 8,300 ounces at quarter's end.
In FY24 a total of 69,932 ounces were produced, which was within guidance of 67,000-73,000 ounces, and there were 67,255 ounces sold, representing a 46% and 35% increase on the previous year respectively.
“Another big quarter”
Ora Banda’s managing director Luke Creagh said: "This has been another big quarter of activity for the Ora Banda team, having consolidated Riverina as our base load source of plant feed and now planning to bring on Sand King as an additional supply source as we progress our growth strategy.
"There is no doubt that the higher-grade ore being processed out of Riverina Underground is lifting our production profile rapidly and we expect this and improving mining and processing efficiencies, to significantly lower our costs in the next half.”
Ora Banda's AISC for the quarter was A$2,878/ounce and totalled A$2,767/ounce for FY24 which was 12% above cost guidance (A$2,475).
The quarterly AISC rise was predominantly due to the reduction in ounces produced caused by poor weather and $3.9 million in open pit demobilisation/off-hire charges.
Riverina Underground ramps up
A highlight of the quarter was the company's first underground operation, Riverina Underground, ramping up to a steady state of production with more than 7,800 ounces mined in June at 4.9 g/t.
As the number of available headings increased, development advance increased to 2,335 metres for the quarter and stoping increased to deliver 37,102 tonnes at 6.2 g/t for 7,375 ounces.
This contribution of high-grade ore from Riverina was a key driver for a record month in June of more than 7,000 ounces produced at an AISC of A$2,157/ounce, despite poor weather constraining output. Open pit mining operations ceased with the Missouri pit finishing in April 2024.
Sand King is next
The period was also marked by progressing preparations for development of the Sand King Underground mine.
This mine, which is expected to cost ~A$39 million to develop (from operating cash flows and existing cash), will have annual steady state production of ~60,000 ounces from the June 2025 quarter.
Preparations have begun to start the mine with first development ore expected in the December 2024 quarter. Like Riverina, Sand King Underground's orebody is underexplored and remains open at depth and along strike.
These two high grade underground projects will form the key pillars of Ora Banda's broader growth strategy, the ‘Drive to 150’, which entails lifting the gold production level to ~150,000 ounces in FY26 at an AISC of A$1,740-$1,890/ounce.
The plan is underpinned by the forecast allotment of approximately $88 million in exploration and growth capital expenditure in FY25.
Drive to 150
"The company is now fully committed to the Drive to 150 project, which aims to see Ora Banda produce approximately 150,000 ounces in FY26. We are actively recruiting new people to fill a variety of roles to make this happen," Creagh said.
As a stepping-stone to the Drive to 150, Ora Banda has lifted its FY25 guidance to a forecast production of 100,000-110,000 ounces with an AISC of A$1,975-$2,125/ounce.
This represents a 49% increase in production and ~25% reduction in AISC/ounce, benefitting from Riverina Underground entering steady state in Q1, 2024, process plant initiatives and production from Sand King Underground in H2 2024.
Financially, the WESCEF JV deal was completed during the quarter with the company receiving the final proceeds of $16 million.
Following the receipt of these proceeds, Ora Banda repaid $7 million in debt to Hawke’s Point and the remaining $4 million debt owing will be settled on completion of final royalty documentation, which is estimated in Q1 of FY25.
Ora Banda ended the quarter with $26.8 million in cash after spending $20 million on growth capital including $13 million on Riverina Underground, $3.5 million on growth infrastructure and $3.5 million on resource definition & exploration activities.
The quarter also included a one-off royalty, Ni JV purchase and legal payments of ~$4 million.