Aeris Resources has committed $13 million for exploration at the Cracow gold mine in Queensland over the next two years after completing a takeover of the mine.
The acquisition from Evolution Mining includes a tenement package covering 903 square kilometres, which Aeris intends to aggressively explore.
The company is also targeting a production range of 70,000 to 75,000 ounces of gold at a cash cost of $980 an ounce at Cracow for the 2021 financial year.
At the current gold price, Cracow is forecast to deliver significant cashflow over the first two years of Aeris’ ownership.
Aeris’ exploration plan could also extend Cracow’s mine life, which is currently estimated to go until 2023.
“We are very pleased to have closed this transaction. … The Cracow gold operations are a great fit for Aeris and we welcome the on-site team into the Aeris family,” Aeris chairman Andre Labuschagne said.
“We are very excited at both the production and exploration potential at Cracow and have committed some $13 million to exploration over the next two years.”
Evolution has received a $60 million upfront cash payment from Aeris, and retains a 10 per cent royalty for any gold produced at Cracow from July 2022 to June 2027.
Aeris is required to also pay an additional $15 million by June 2022.
The Cracow mine has been operating since 2004, producing more than 1.4 million ounces over its life.
Evolution claimed that Cracow would hold more value in the hands of Aeris than in its portfolio. Evolution intends to only hold six to eight assets with an average mine life of 10 years at minimum.
Aeris also beat its production guidance at the Tritton copper operations in New South Wales.
The company produced 25,041 tonnes at Tritton, which was around 2 per cent above the upper limit of the 23,500–24,500 tonnes guidance for the 2020 financial year.
Labuschagne said this was a fantastic result, particularly when one considered that Tritton was materially impacted by water availability and water quality issues.
“Once again, the Tritton team has shown what can be achieved when we are all working towards a common goal,” he said.
“(The 2021 financial year) is shaping up to be an exciting year for the company. … The demand fundamentals for our primary commodities, copper and gold, are looking strong and we have exciting brownfields and greenfields exploration opportunities at both of our operations.”
Aeris’ copper production guidance at the Tritton mine remains the same – at 23,500–24,500 tonnes – and a cash cost of $2.80–$2.95 per pound.