AUREKA LTD (AKA.ASX)

Aureka Limited (formerly Navarre Minerals) is an Australian gold exploration company with a portfolio of advanced exploration projects across Victoria. The company’s flagship project, the Stawell Corridor Irvine prospect, has a mineral resource estimate of 304 koz and an exploration target of 280-420 koz. The company also holds three other high-mineralisation gold projects: the Tandarra Joint Venture (JV), the St Arnaud and the Jubilee Gold Projects.

Bought at a Discount, Recapitalised and Relisted

Following a failed acquisition of a gold mine, AKA, which previously traded at a peak market cap of $159m, entered into administration. However, James Gurry, the current Executive Chairman and Managing Director, purchased the company’s Victorian gold projects at a significant discount to the portfolio’s capitalised exploration spend. The company’s share structure was then restructured, and AKA was successfully relisted on the ASX.

Extensive Exploration Program Planned

AKA recently completed an oversubscribed $6m placement to fund an extensive exploration program across its portfolio of tenements. This exploration program is anticipated to generate substantial news flow commencing in late 2024, including the potential expansion of the Stawell Corridor’s JORC mineral resource estimate.

Trading at a Significant Discount to Peers

With an EV/Ounce of $14.6, AKA trades well below the peer median EV/Ounce of $43.9. This substantial valuation gap suggests potential for considerable upside in AKA’s market capitalisation as it aligns more closely with its peer group. AKA offers investors a rare opportunity to invest in a significantly undervalued gold explorer with a clear business strategy focused on developing its highly prospective gold assets.

Aureka Research Report

 

Aureka Website Latest Aureka News

 

 

Corporate History

Acquisition of Queensland Operations

On 15 December 2021, NML completed the acquisition of the Mt Carlton gold mine and tenements from Evolution Mining for $90m in total consideration. Mt Carlton was an established gold operation located 150km south of Townsville in Queensland. Since 2013, the mine had operated continuously, producing gold with copper and silver as by-products. The newly acquired Queensland operations were placed in Navarre Minerals Queensland (NMQ), a wholly-owned subsidiary of NML.

Difficulty Fulfilling Financial Obligations Relating to the Acquisition

As part of the acquisition, Evolution Mining provided a transitional environmental bond on behalf of NMQ. The bond was a financial provision made for the end-of-life rehabilitation of the Mt Carlton operation. The bond totalled $32m and was to be amortised over 24 months, during which NML was required to make regular payments to Evolution Mining. The operations at Mt Carlton were pledged as security for the bond, meaning that if NML failed to meet its financial obligations, Evolution Mining would have the right to repossess the operation.

NML expected to generate sufficient cash to make the required payments to Evolution. However, during 2022, the processed gold grades and gold recovery rates declined substantially. This resulted in the Mt Carlton mine’s All-In Sustaining Cost (AISC) increasing significantly from ~$1,650/oz at the time of the acquisition to $3,539/oz by the September 2022 quarter. Faced with difficulty in making the bond-related payments due to insufficient cash generated by the mine, NML was forced to renegotiate an extension of the agreement with Evolution Mining to June 2025.

Insolvency, ASX Suspension and Execution of DOCA

Despite the extension of the amortisation schedule, NML failed to make the required payments to Evolution Mining. The company became insolvent and requested voluntary suspension from ASX quotation on 14 June 2023 at a market cap of $28.6m. This was followed by the appointment of BDO as administrator on 19 June 2023. A Deed of Company Agreement (DOCA) was executed with the administrator where NML’s assets were to be sold, excluding the Queensland operations held by NMQ. The proceeds would be distributed to creditors, allowing NML to remain a publicly traded company.

Navarre Relaunch as Aureka

In April 2024, AKA’s managing director, James Gurry, proposed to recapitalise the company and relaunch it as a Victorian gold explorer. To release the company’s Victorian assets from the DOCA, a $1.7m convertible note capital raise was completed. With $525k paid to release the assets from DOCA, the balance funded diamond drilling at the Tandarra Gold Project JV and ASX recompliance work. On 3 June 2024, the DOCA was effectuated, and Navarre Group was released from external administration, leaving the Queensland operations and historical debt behind.

Mining Projects Overview

Aureka’s flagship asset is the Stawell Corridor Gold project. Within the project, the Irvine prospect has a maiden inferred mineral resource of 304 koz gold and an additional exploration target of 280-420 koz. The Langi Logan and Morning Bill prospects are the other gold targets within the Stawell Corridor Gold project. Aside from the Stawell project, AKA holds the St Arnaud, Jubilee and Tandarra JV gold projects in its portfolio. All AKA’s projects are at the advanced exploration stage and have strong gold mineralisation backed by drilling results, far from the greenfield targets we see in ASX gold explorers of similar market capitalisation.

Stawell Corridor Gold Project

Project Overview

The Stawell Corridor Gold Project is AKA’s flagship, 100%-owned project, situated 237 km northwest of Melbourne, Victoria. Spanning a 60 km stretch of a highly prospective multi-million-ounce gold zone, the project encompasses seven key targets, extending south from the renowned Magdala Mine in Stawell. This region is home to the Stawell (~6 million ounces) and Ararat (~1 million ounces) goldfields. Within the project, AKA reported its maiden inferred Mineral Resource of 304koz at 2.43 g/t and an additional exploration target of 280-420koz on the margins of the Irvine basalt dome (Irvine Gold Prospect). The company is currently focused on undertaking drilling and exploration activities to expand its reported maiden mineral resource. Besides the Irvine gold prospect, AKA is also looking at advancing the Langi Logan high-grade gold prospect.

Irvine Gold Project

Prospect Overview. The Irvine Gold prospect is located 20 km south of the operating Stawell Gold Mine. The project occupies the north end of the Ararat Goldfield, estimated to have produced approximately 1 million ounces of gold between 1854 and 1925.

Mineral Resource and Exploration Target. On 30 March 2021, AKA announced its maiden mineral resource and exploration target for the Resolution and Adventure prospects at the Irvine Gold Prospect. A cut-off grade of greater or equal to 0.6 g/t and a gold price of A$2,500/oz were used to estimate the mineral resource. This resulted in an inferred gold resource totalling 3.89 million tonnes with a gold grade of 2.43 g/t to yield 304,300 ounces of gold.

Using increased geological knowledge gained from diamond drilling campaigns that had happened at the time, AKA was also able to delineate an exploration target at the Adventure and Resolution lodes.

Planned Exploration Activities. AKA plans to initiate a 3,200-meter diamond drilling program to enhance its current 304 koz JORC resource. An air-core drilling campaign will also target the Western Flank of the Irvine Basalt Dome, extending further south to explore potential discoveries. This program seeks to identify deposits similar to the Magdala-style system found at the operating Stawell Gold Mine.

Langi Logan Gold Prospect

Prospect Overview. The Langi Logan Gold Prospect is the next key basalt dome target, located just south of the flagship Irvine Gold Prospect. While the exact hard rock source of this alluvial gold remains unclear, its proximity to the Langi Logan basalt dome is a promising indicator of a potential Stawell-style gold deposit in the area.

Recent Exploration and Drilling Activities. On 24 June 2022, AKA announced significant assay results from the AC drilling program that intersected gold mineralisation with anomalous silver, zinc, lead and copper. Below are some of the prominent drilling results:

• 4m @ 1.5 g/t Au, 3,2 g/t Ag and 0.1% Zn
• 1m @ 2.4 g/t Au from 76m and 1 m @ 0.2% Zn from 101m
• 1m at 2.0 g/t Au within a broader zone of 7m @ 0.4 g/t Au from 56m

Morning Bill Gold Prospect (Glenlyle Intrusive Complex)

Prospect Overview. Situated 25 km southwest of Ararat, the Glenlyle tenement captures a large circular intrusive complex within the Dryden-Stavely Volcanic Belt. The tenement contains the Morning Bill prospect, a large gold, high grade silver and base metal discovery identified in 2018 by AKA’s geological team.

Recent Exploration and Drilling Activities. In August 2021, AKA announced results from a diamond core drilling program consisting of 2,994 metres across 8 holes. The drilling confirmed substantial mineralisation at depth below a broad gold, silver, copper, lead and zinc footprint. Notable assay results included the following:

• 9m @ 10.1 g/t Au from 142.6m, including 1.0m @ 16.5 g/t Au, 216 g/t Ag, 2.0% Zn from within a broader interval of 46.8m @ 0.5 g/t Au from 120.5m
• 5m @ 3.7 g/t Au from 364.9m, including 0.9m @ 9.1 g/t Au
• 9m @ 2.8 g/t Ag from 70.2m, including 1.4m @ 117.1 g/t Ag

Tandarra Gold Joint Venture Project

Project Overview

The Tandarra Gold Project is a gold discovery located 40 km north of the 22-million-ounce Bendigo Goldfield along the Whitelaw Fault Corridor and approximately 50 km northwest of Agnico Eagle’s world-class Fosterville Gold Mine. The project is made up of three main prospects which are Tomorrow, Macnaughtan and Lawry. AKA has a 49% interest in the Tandarra Gold Project JV with Catalyst Metals (ASX:CYL) holding the remaining 51% interest.

Recent Exploration and Drilling Activities

On 28 August 2024, AKA announced its latest assay results from the Tandarra Gold JV project diamond drilling program at the Lawry prospect. These drilling results showed that there are now multiple zones of gold mineralisation extending well into the fresh rock. The results also showed that the gold distribution at the Lawry prospect may be similar to that of the historic Bendigo Goldfield. Below are the highlights of the assay results:

• 40m @ 5.97 g/t Au from 118.60m downhole including 0.80m @ 14.46 g/t from 118.6m and 1.10m @ 5.94 g/t from 120.90m
• 80m @ 1.43 g/t Au from 201.80, including 0.80m @ 7.18 g/t from 202.80m

Planned Exploration Activities

Over the next 12 months, AKA plans to work with Catalyst Metals to define a large economic gold system at the Tandarra Gold Project. This will be accomplished through a diamond and air-core drilling program that is expected to commence later this year.

St Arnaud Gold Project

Project Overview

The 100% owned St Arnaud Gold Project is located 244 km northwest of Melbourne. The project encompasses 1,459 km² of granted tenements, including the historic St Arnaud Goldfield, which produced 0.4 million ounces of high-grade gold. This gold was extracted from quartz lodes situated within a structural framework that aligns with many other prominent gold deposits in central Victoria, such as Bendigo and Fosterville.

Recent Exploration and Drilling Activities

On 21 January 2022, AKA announced assay results from its maiden diamond drilling program on St Arnaud’s Nelson line to test for shallow gold potential beneath the old Comstock open pit. The program consisted of 17 holes across 4,580m. The assay results showed that the drilling intersected two prominent quartz-sulphide-bearing structures containing broad zones of gold mineralisation and rare visible gold. Notable results include:

• 0m @ 13.9 g/t Au within a broader zone of 25.3m @ 1.7 g/t Au
• 6m @ 3.2 g/t Au and 26.9 g/t Ag from 194m
• 0m @ 2.4 g/t Au and 15.9 g/t Ag from 165.8m

Jubilee Gold Project

Project Overview

The 100% owned Jubilee Gold project is situated 25 km southwest of the operating Ballart Gold Mine. The project includes the historical 619m deep Jubilee Gold mine that was active between 1887 and 1913 and yielded approximately 130,000 ounces of gold at a recovered grade of ~12 g/t. The project aims to identify extensions and repetitions of a historically mined transverse, gold-bearing quartz reef. These structures share a similar geometry to the high-grade Swan-Eagle system of the prolific Fosterville Gold Mine.

Planned Exploration Activities

Following a previously completed air-core drilling campaign and geophysical study, AKA plans to carry out broad 100 x 100-metre spacing diamond drilling downdip of the historic workings to target high-grade discoveries.

KEY PEOPLE

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  James Gurry

  Executive Chairman and Managing Director

  James is a former stockbroker analyst with extensive research experience covering mineral resource companies, particularly in the gold sector. Prior to joining AKA as managing director, he was a Director and Senior Analyst at PAC Partners Securities, specialising in small resource companies. Before joining PAC Partners, James was the Director and Head of Natural Resources Equity Research at Deutsche Bank Australia and spent 11 years in similar roles at Credit Suisse in both Sydney and London.

  James has previously held the position of Non-Executive Director at ASX-listed Red Hawk Mining (ASX:RHK). He holds a Bachelor of Commerce (Honours) from the University of Melbourne and is a member of Chartered Accountants Australia & New Zealand.

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  Richard Taylor

  Non-Executive Director

  Richard has deep experience in executive leadership through the numerous senior executive roles he has held in the resources sector over more than 15 years. Besides AKA, Richard is currently a Non-Executive Director at Premier1 Lithium (ASX:PLC), a Western Australian lithium explorer. Richard was previously CEO at Terramin Australia (ASX:TZN), a base and precious metals explorer, and SensOre Ltd, a technology company applying machine learning to resource discovery. Richard holds an MBA from the University of Cambridge and a master’s degree in law from ANU.

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  Angela Lorrigan

  Non-Executive Director and Technical Director

  Angela brings a wealth of geological experience to AKA, having worked on numerous gold projects. This includes Southern Cross Gold’s (ASX:SXG) Sunday Creek, Redcastle and Whroo projects in Victoria. Prior to Southern Cross Gold, she was instrumental in the extension of the K Lens Resource at Roseberry Mine in Tasmania and was general manager in the PYBAR Group, which drove the re-opening of the Henty Gold Mine in Tasmania. Angela is a current member of the Tasmanian Minerals, Manufacturing and Energy Council (TMEC) – Land Management Committee and, in 2023, was awarded the Twelvetrees Medal for outstanding contributions to Tasmanian Geology.

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  Peter de Vries

  Exploration Manager and Engineer

  Peter brings extensive expertise in both underground and open-pit mining operations. As Operations Manager at E79 Resources, he led key initiatives such as drill contract development, managing government relations, and contributing to the discovery of a major gold deposit at the Happy Valley Project. He has also previously held the position of Geology Manager/Acting CEO at AuStarGold Ltd, leading to the discovery of two new gold-bearing reefs. Before that, Peter was the Manager of Geology at Centennial Mining Ltd and played a significant role in bringing the A1 Gold Mine into production

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  Kenneth Bush

  Exploration Strategy and Technical Advisor

  Kenneth has extensive experience working across numerous high-grade gold mines and exploration projects around the world. This includes the Costerfield Mine, Fosterville Mine, and most recently the Southern Cross Gold Sunday Creek project. Kenneth holds a Master of Economic Geology from the University of Tasmania and a Bachelor of Science (Honours) in Geology from Monash University.