Aura Minerals' Sees Surge in Gold Production and EBITDA in Q3

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Aura Minerals' Sees Surge in Gold Production and EBITDA in Q3

Aura Minerals Inc. (ORA.TO) reported significant increases in gold production and earnings before interest, taxes, depreciation, and amortization (EBITDA) in its Q3 2024 earnings call. The company achieved a record production of 270,000 gold equivalent ounces last year, representing a 10% increase compared to the same period in 2023.

Aura's quarterly EBITDA reached $78 million, indicating a substantial increase over the previous quarter, supported by high gold prices averaging $2,500 in Q3, which have since exceeded $2,700. The company's free cash flow remained strong at $65 million, a significant portion of which was reinvested into growth projects, notably the Borborema project, which is more than half completed and scheduled to begin production in early 2025.

Key Highlights:

  • A record production of 270,000 gold equivalent ounces last year, a 10% increase compared to Q3 2023.
  • EBITDA rose to $78 million in Q3, approximately 40% higher than the previous quarter.
  • Free cash flow amounted to $65 million, with $54 million invested in growth projects like Borborema.
  • Strong demand led to an increase in debt capital to 1 billion BRL.
  • A quarterly dividend policy was initiated, offering an annual return of 9.3%.
  • Production guidance for the year is set between 244,000 and 292,000 ounces, with cash costs at $1,022 per ounce.
  • CapEx guidance ranges from $188 million to $219 million, primarily for the Borborema project.

Company Outlook:

  • The NPV of the Borborema project is $540 million with an IRR exceeding 81%.
  • 20% to 25% of expected production from 2025 to 2027 has been hedged at a gold price ceiling of $2,400 per ounce.
  • Ongoing improvements at the Almas mine and expansion plans for the Apoena mine beyond 2025.
  • Positive outlook for gold prices, independent of political factors.

Downside Highlights:

  • A net loss of $12 million in Q3 due to non-cash valuation losses on gold hedges.
  • Low ore grades in Honduras operations may affect recovery rates.

Upside Highlights:

  • Strong demand for the increase in debt capital doubled the initial amount.
  • Acquisitions of projects in Guatemala and Bluestone are set to be completed in January.
  • Production targets have been raised from 200,000 ounces to 400,000 ounces, with plans for further growth up to 450,000 ounces.

Shortcomings:

  • Bottlenecks in production have been identified, but efforts to manage costs and improve efficiency are ongoing.

Q&A Highlights:

  • CEO Rodrigo Barbosa emphasized that construction at Borborema is the top priority and mentioned plans to explore the Matupa project and potentially commence construction by the end of next year.
  • The company aims to list on a second exchange in Brazil, backed by a strong history of dividend yields.
  • Exploration efforts continue with new acquisitions, including Pezão and Pé Quente, with a preliminary feasibility study targeted within 3 to 4 years.

Aura Minerals Inc. demonstrated a strong performance in Q3 2024, bolstered by increased gold production and high gold prices. The company's focus on strategic growth and shareholder returns, combined with disciplined cost management, positions it favorably for the upcoming quarters. With the Borborema project progressing as planned and new acquisitions coming online, Aura Minerals Inc. appears ready for further expansion and operational efficiency.