One of Australia’s top mining journalists, Kristie Batten writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene.
There’s no shortage of junior gold explorers and developers on the ASX but what Astral Resources (ASX:AAR) is sitting on is increasingly rare.
Gold has been breaking new all-time highs all year but for most of that time, only the producers attracted investment dollars as the commodity price rose.
However, in the past 1-2 months, the market has been waking up to the smaller names, including Astral.
Astral holds the 1.27 million ounce open-pittable Mandilla gold development just 70km from Australia’s gold mining capital Kalgoorlie.
Mandilla is the only plus-1Moz deposit held by a junior in the region.
Astral managing director Marc Ducler often points out that if something is increasingly difficult to find, it becomes more valuable over time.
Euroz Hartleys analyst Kyle De Souza agrees.
“There are only three open pit gold development projects on the ASX which are on granted mining leases that can produce over 100,000 ounces per annum. Astral is one of them, and its location is second to none between Kalgoorlie and Kambalda,” he said in a note earlier this month.
“The majority of the ore is coming from what is the single largest open pit deposit in Kalgoorlie that is not held by a major (namely the Super Pit and Red Hill which are both owned by Northern Star Resources) – it’s called Theia.”
De Souza noted Theia’s proximity to two hungry processing plants, Gold Fields’ 4 million tonne per annum St Ives and Westgold Resources’ 2Mtpa Beta Hunt.
“But key to our support of the story is the scale (110,000ozpa for eight years) and grade (average life-of-mine 1.3 grams per tonne),” he said.
“The simplicity of the project (thick, shallow open pit mining), coupled with a team that has track record of building mines and doing accretive M&A (see Egan Street Resources’ deal with Silver Lake Resources), provides the base case scenario for the next gold developer story – with exploration upside in one of Australia’s most prolific gold centres – Kalgoorlie.”
Mandilla being de-risked
Astral completed a scoping study on Mandilla last year, which outlined a A$123 million, 2.5Mtpa operation to produce 845,000oz of gold over 10.4 years at all-in sustaining costs of $1643 an ounce.
The study returned an unleveraged, pre-tax net present value of $442 million, internal rate of return of 73% and payback period of just nine months, based on a conservative gold price of $2750/oz and an 8% discount rate.
Life-of-mine free cashflow is forecast at $740 million.
Using a gold price of $3000/oz, the NPV improves to $579 million with an IRR of 92% and payback period of less than six months.
The gold price was trading at $3880/oz on Friday.
Astral is now in the process of completing a prefeasibility study, due to be released in the June quarter of 2025.
Earlier this month, the company released metallurgical results, which demonstrated gold recoveries of 96.5-99.5% across the Hestia, Eos and Iris deposits, consistent with earlier results from Theia.
The strong gold price, combined with the metallurgical results, means the 115,000oz Iris deposit, which was excluded from the scoping study, will be included in the PFS.
Resource updates for the Kamperman, Rogan Josh and Think Big deposits are due any day now. The deposits are part of the 116,000oz Feysville project, near Mandilla, and were also not included in the scoping study.
Growing market interest
At Diggers & Dealers in early August, Astral shares were trading at below 7c. The stock has traded as high as 12c this month, the highest since early 2022 and pushing the company’s market capitalisation through $100 million.
Average daily turnover has also increased this month.
Earlier this month, Ducler told the Resources Rising Stars Conference on the Gold Coast that US institutions had been buying on market.
Astral had no trouble raising $25 million last week – a quarter of its market cap – in a strongly supported placement at 9.5c per share. The stock closed at 10.5c on Friday.
It is now fully funded for the PFS and definitive feasibility study, as well as further exploration.
Euroz has a price target of 22c per share.
At Stockhead we tell it like it is. While Astral Resources is a Stockhead advertiser at the time of writing, it did not sponsor this article.
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