Aeris Resources sets sights on organic and strategic growth.

THE INSIDE STORY: By rights, investors should be extremely familiar with Aeris Resources (ASX: AIS), especially in the current environment which is demonstrating an appreciation of developed, producing resource companies.

Aeris Resources is Australia’s fifth largest, independent copper producer by volume produced.

Its flagship asset is the Tritton Operations, located in New South Wales, which has delivered record production in three consecutive years.

Tritton delivered annual copper production for FY16 of 30,425 tonnes, far exceeding Aeris’ upgraded guidance for the financial year of 29,500 tonnes.

Aeris has completed a JORC 2012-compliant upgrade of the Mineral Resource and Ore Reserve estimates for the Tritton deposit, taking the Proved and Probable Ore Reserve estimates for the deposit to 6.4 million tonnes at 1.6 per cent copper for 100,000 tonnes of contained copper metal.

This was a substantial rise, representing a 32 per cent increase by contained metal on the company’s previous reported Ore Reserve estimate from June 2015 of 4.4 million tonnes at 1.7 per cent copper for 76,000 tonne of contained copper.

What is also important to note, is that the upgrade followed depletion by mining for the year of 28,000 tonnes of contained copper metal.

The updated Mineral Resource and Ore Reserve estimates for the Tritton deposit also underpin an extension of the mine life at the Tritton Operations to 2023.

The Tritton deposit remains open at depth, which has encouraged Aeris to commence planning further resource drilling earmarked for when suitable underground drill locations become available.

The Tritton Operations consist of a 1.8 million tonne per annum processing plant, nourished by ore mined from the Tritton underground mine and supplemented by ore from the new Murrawombie underground mine that will reach full production in FY17.

The Aeris Board approved development of the Murrawombie mine in the March quarter of FY16 following the positive completion of a Feasibility Study.

Production from Murrawombie is set to replace production from the Larsens and North East mines.

With current Ore Reserves of 3.3 million tonnes at an average grade of 1.3 per cent copper Murrawombie has emerged as a worthy replacement bringing with it a higher volume and longer life deposit, which Aeris expects to sustain and increase the supply of ore to the processing plant.

“By combining the ore from Murrawombie with the existing ore being mined at Tritton we can increase throughput of our processing plant to a rate of about 1.8 million tonnes per annum in FY17 and beyond,” Aeris Resources executive chairman André Labuschagne told The Resources Roadhouse.

“The development of the Murrawombie underground mine is expected to reach full production capacity in the second half of FY17.

“The Murrawombie deposit is the largest known concentration of copper metal to be identified to date on our tenements – outside of the Tritton deposit.

“That made it an obvious choice to supplement the ore we are currently mining at Tritton.”

As it builds a solid production base from the development of the Murrawombie mine and the continued mining at Tritton, Aeris has flagged intentions to find and develop more prospects.

To do so it will be actively exploring across the company’s 1,800 square kilometres of tenements surrounding the Tritton Operations, as it considers the region to be highly-prospective for discovering more copper orebodies.

To that end, Aeris is planning to spend some $7.5 million as it seeks to reinvigorate greenfields exploration activities at Tritton, on the lookout to find more Tritton-sized orebodies measuring over the 10 million tonne mark.

“We have been steadily evolving an exploration strategy for the region, which has been extremely effective in both identifying and testing for VMS sulphide systems, as demonstrated by exploration success at Avoca Tank, Kurrajong, Carters and Budgery,” Labuschagne said.

“We consider the quality of the remaining targets in the Tritton region and the potential for further discoveries in this large VMS copper district to be excellent.

“Our previous success, and knowledge of Besshi VMS systems – like Tritton – characterised by repeats along strike, multiple horizons and lenses and significant depth potential, provides confidence for discovery of additional deposits along the multiple prospective horizons within the region.”

Exploration and mining aside, Aeris has also been beavering away on the corporate front.

The company signed agreements to restructure and reduce debts owed to with its current financier, Standard Chartered Bank (SCB) and for a new financier, Special Portfolio Opportunity V Limited (PAG SPV) to provide the company with a US$25 million Working Capital Facility.

This reduced the SCB debt by 55 per cent to US$50 million, which is to be repaid over a period of seven years, and provided financial flexibility through the Working Capital Facility.

As an added sweetener, Aeris was able to redeem/convert US$7 million in Convertible Notes held by Credit Suisse at a substantial discount.

However, it seems Aeris is not prepared to just comfortably rest on its laurels having established a sound production path at Tritton, supported by a strong financial footing.

The company has signalled its goals for the future involve sounding out opportunities to grow, both organically and through activity in the area of mergers and acquisitions.

Aeris Resources has assembled a Board and management team with a compelling track record in corporate strategy and operational efficiency.

The company has outlined a clear vision to become a mid-sized, multi-mine company, delivering shareholder value through a focus on operational excellence.

Its focus on planning, people and maintenance has been proven by record production levels, unit cost decreases, life of mine extensions and identification of new exploration targets in the company’s extensive landholding in the prospective, under-explored copper region surrounding the Tritton Operations.

Aeris Resources Limited (ASX: AIS)
…The Short Story

HEAD OFFICE
Suite 2.2, Level 2, HQ South Tower,
20 Wickham Street,
Fortitude Valley, Brisbane QLD 4006 Australia

Ph: +61 7 3034 6200

Email: info@aerisresources.com.au
Website: www.aerisresources.com.au

DIRECTORS
André Labuschagne, Alastair Morrison, Michele Muscillo, Marcus Derwin

MAJOR SHAREHOLDERS
Standard Chartered Private Equity (Hong Kong) 15.32%
Glencore Finance (Bermuda) Ltd 9.39%
DGJ Keet Investments (Singapore) 9.34%