Shares in Ora Banda Mining Limited (ASX: OBM) still have a way to run, Macquarie Group (ASX: MQG) analysts say, following the Western Australia-focused gold miner's profit announcement this week.
The junior miner reported record revenue of $404.3 million earlier this week, while its net profit surged 575% to $186.1 million, benefitting from a one-off tax benefit of $73.1 million.
The company, which mines across a number of deposits to the northeast of Kalgoorlie, said it sold a record 91,687 ounces of gold from its Davyhurst Mill during the financial year.
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Dual mines drive increased production
"The group achieved record production for the year with a total of 92,399oz produced, representing a 32 per cent increase on FY24," the company said.
"The increase was driven by a larger percentage of higher-grade Riverina Underground ore being processed in FY25, together with the introduction of Sand King material from February 2025.
"The increased production coupled with a higher realised gold price ($1159/oz higher than FY24) resulted in record revenue of $404.3 million.
"Riverina Underground production reached commercial production on 1 August, 2024, following two consecutive months of steady state production and achieved payback of its capital investment within 18 months."
Best is yet to come
Ora Banda managing director Luke Creagh said the quality of the Riverina project had allowed the company to self-fund its second underground mine at Sand King.
"The operating margins of the business continue to improve, as reflected by the 575% increase in net profit after tax," Mr Creagh said.
"Supported by the current gold price environment, we expect this trend to continue to grow in FY26 with two underground operations filling the mill with high-grade ore, targeting record production of 140,000-155,000oz."
Mr Creagh said the company's strong cash and financing position also positioned it well to rapidly advance other opportunities in its portfolio. This financial year, $160 million was earmarked for exploration, resource development, and growth capital.
Macquarie analysts rated the stock as outperform, with a price target of 95 cents.
They said the $73m tax benefit was unexpected, but Ora Banda also estimated it had a further $277 million in carried-forward tax losses it could use in future years.
"This is materially higher than the circa-$130m we previously assumed,'' Macquarie said.
Ora Banda did not declare a dividend.
