Why is this ASX gold share racing 14% higher today?

This gold stock is glittering on Thursday. But why?

| More on:
A woman blowing gold glitter out of her hands with a joyous smile on her face.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Gold

A woman in a business suit sits at her desk with gold bars in each hand while she kisses one bar with her eyes closed. Her desk has another three gold bars stacked in front of her. symbolising the rising Northern Star share price
Gold

Goldman Sachs says this ASX gold stock is a buy

Here's what the broker is saying about this gold miner.

Read more »

An older female ASX investor holds a gangster-style fist pump pose showing off gold rings with dollar signs on them.
Gold

Big ASX news: Newmont shares hit new record high

If you own Newmont stock, you're in for a treat today.

Read more »

rising gold share price represented by a green arrow on piles of gold block
Gold

This ASX 200 gold stock was just tipped for 22% gains

The ASX 200 gold stock is poised to outshine the market, according to this leading broker.

Read more »

Woman holding gold bar and cheering.
Gold

Meet the ASX gold stock that could double in value

Bell Potter thinks big returns could be on the cards for buyers of this gold miner.

Read more »

A woman in a business suit sits at her desk with gold bars in each hand while she kisses one bar with her eyes closed. Her desk has another three gold bars stacked in front of her. symbolising the rising Northern Star share price
Gold

Goldman Sachs says these ASX gold stocks are buys

These gold miners could be top options according to the broker.

Read more »

a man wearing a gold shirt smiles widely as he is engulfed in a shower of gold confetti falling from the sky. representing a new gold discovery by ASX mining share OzAurum Resources
Gold

2 ASX 200 gold stocks racing higher on record results

These gold miners are glittering and catching the eye on Monday. But why?

Read more »

a man wearing a gold shirt smiles widely as he is engulfed in a shower of gold confetti falling from the sky. representing a new gold discovery by ASX mining share OzAurum Resources
Gold

Will ASX gold shares again outshine the market in FY 2025?

Following a strong year, what can investors expect from ASX gold shares in FY 2025?

Read more »

Female miner standing smiling in a mine.
Share Gainers

Why has this ASX mining stock exploded 128% in 2 days?

Investors are sending this ASX mining stock to the moon. But why?

Read more »