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Why Aurelia Metals Ltd (ASX:AMI) looks a golden opportunity

miner holding gold nugget
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Aurelia Metals Ltd (ASX: AMI) has had a good run over the past year. The company’s share price has gained more than 190% while gold production was up and costs went down.

The favourable conditions helped Aurelia Metals post a net profit for FY 2018 of $99.1 million, a 413% increase on the prior corresponding period, and eliminate all debt.

Aurelia Metals continues to attract investor interest with its market cap now exceeding $620 million as the company makes further headway in establishing itself as a significant ASX gold producer.

The exploration and mining company’s key assets include the Hera Project in Central New South Wales, where it extracts silver, copper, lead and zinc in addition to gold, and Peak Mines which has made a hefty contribution to the company’s recent production increases.

And Aurelia Metals indicated that the good times will continue when the company announced on Monday that it expects capital to increase in the second half of FY 2019.

Although Aurelia Metals has stated that “gold production is planned to be relatively even on a quarterly basis over the year” it expects to reduce costs by introducing contract mining at its Peak Mines operation which it acquired earlier this year.

Peak Mines produced 21,753 ounces of gold for the September quarter, a sizeable chunk of the Group’s combined production of 35,499 ounces for the quarter.

Aurelia Metals’ quarterly update also showed that the Group’s gold production was down on the previous quarter when it posted quarterly gold production of 54,746 ounces with 37,552 of those ounces coming from Peak.

But the figures for the September quarter would indicate that that the company is still on track to meet its total FY 2019 gold production target of between 115,000 and 130,000 ounces.

And investors weren’t put off by the quarterly contraction as the Aurelia Metals share price climbed another 2% on Monday, the day of the announcement.

Aurelia Metals also stated that is has moved into a taxable position and expects to start making tax payments this financial year.

While Aurelia Metals has been a standout performer among the ASX gold companies, St Barbara Ltd (ASX: SBM), which has seen its share price gain more than 40% over the past year, and Northern Star Resources Ltd (ASX: NST), which is up 81%, are also worth keeping an eye on.

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Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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