The Ora Banda Mining Ltd (ASX: OBM) share price is having a day to remember on Thursday.
At the time of writing, the ASX gold share is up 14% to a 52-week high of 40.5 cents.
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Why is this ASX gold share surging today?
Investors have been fighting to get hold of the gold miner's shares today after it released an update on the 100% owned Davyhurst Gold Project.
According to the release, the ASX gold share's board has approved the development of the Sand King Underground mine at the project in the Eastern Goldfields of Western Australia.
Management notes that this final investment decision (FID) aligns with the company's strategic objective of owning and operating at least two high-grade mines and to achieve mid-tier status by the end of June 2025.
Ora Banda revealed that the mine, which will become the second to be developed by the company in less than two years, is expected to hit a steady state production level of approximately 60,000 ounces per annum in the June quarter of 2025. This puts it on course to achieve production of 150,000 ounces of gold in FY 2026.
The underground mine will require investment capital of ~$39 million, with a maximum cash draw down of ~$32 million. This will be funded by operating cashflows from Riverina Underground and existing cash.
The ASX gold share's managing director, Luke Creagh, was pleased with the FID and the company's production growth outlook. He said:
This is a very exciting time for the Company as the Ora Banda team has achieved a significant amount in a short period, finding two underground mines in less than two years since changing strategies – a success rate which also indicates the significant prospectivity of the belt.
The Riverina Underground continues to ramp up well and with the support of Sand King Underground, is expected to deliver 40% year-on year growth and ~34% reduction in AISC/oz over the same period. "Our DRIVE to 150 plan to target 150,000 ounces in FY26 firmly places us on the pathway to becoming a mid-tier gold producer, and the most exciting part is that we are only just getting started on unlocking this highly prospective and under-explored tenement package"
FY 2025 guidance
Also giving the ASX gold share a boost was the release of its guidance for FY 2025.
Management is forecasting production of 100,000 ounces to 110,000 ounces with an all-in sustaining cost (AISC) of A$1,975 per ounce to A$2,125 per ounce.
