Aurelia Metals Limited

Book Profit at Current Levels: Mineral development and exploration company, Aurelia Metals Limited (ASX: AMI) is based out in Orange NSW. Recently, the company has provided an update on the progress of exploration and Resource infill drilling in the upper North Pod lode at the Hera Mine. As per the released, the company initially has received the final assay results for a further 34 drill holes wherein the program has returned multiple new high-grade base metal, silver and gold intercepts. Some of the latest significant results from a 34-hole resource definition program included 18.5 metres @ 3.7% lead (Pb)+ zinc (Zn), 27g/t Ag & 8.0g/t Au (incl. 7 metres at 4.4% Pb+Zn, 27g/t Ag & 19.6g/t Au), 7 metres at 45.1% Pb+Zn, 229g/t Ag & 0.3g/t Au, 14 metres at 18.3% Pb+Zn, 188g/t Ag & 0.8g/t Au (incl. 6 metres at 35.4% Pb+Zn, 222g/t Ag & 0.3g/t Au), 12 metres at 23.1% Pb+Zn, 106g/t Ag & 0.6g/t Au, etc. Moreover, the company has received strong high grades ore particularly from two drill holes named as HRUD642 and HRUD651, and promising grades from other drill holes supported the strong high-grade. The high-grade ore form HRUD642 and HRUD651 extended high-grade trend along the North Pod beyond the existing inferred resources and current-life-of-mine (LOM) Stoping plan.The company stated that these exciting results in North Pod will add to the resources and reserves.

It announced its half-yearly report on February 19, 2019 where it reported an increase in its sales revenue by 140% to $165.4 million in H1 FY2019 from $68.9 million in the previous corresponding period. The strong revenue growth attributes to a significant increase in peak gold production and a small increase in Hera mine production. It reported a 4% decrease in its EBITDA margin due to an increase in its operating (AISC) all-in-sustainable cost at $794/oz from $503/oz in the previous period.


1HFY19 Financial Metrics (Source: Company Reports)

What to Expect From AMI: The company expects progress in its peak Pb/Zn plant expansion with $35 Mn spending planned in CY2019. It expects expedition in regulatory approvals to commence 1.8 km decline to Great Cobar.It is most likely to complete Nymagee metallurgical test work to support PFS for Nymagee Copper, Lead, Zinc project.

Stock Recommendation: AMI’s share price has generated a positive YTD return of 32.59%. It is trading near to its 52-week higher level, and, therefore, has a probability to correct in near future. Hence, we would recommend a “Sell” rating on the stock at the current market price of $0.895 per share (up 1.705% on 1 March 2019) and advise to investors that they may book profit at the current levels.
 

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