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ASX BRIEFS
ASTRAL RESOURCES NL (AAR) - Unlocking Value in Western Australia's Gold Belt: Inside Astral Resources' Growth Strategy
Gold is commanding over $5,000 per ounce in the Australian market, and Astral Resources is poised to capitalize on this opportunity with their growing portfolio of gold assets in Western Australia's renowned Kalgoorlie region. Managing Director Marc Ducler pulls back the curtain on how this emerging producer is methodically advancing toward development with a remarkable discovery cost of just $20 per ounce.
The conversation centers on Astral's flagship Mandilla Gold Project, which already boasts a 1.43 million ounce resource that could support up to 20 years of processing. With the Pre-Feasibility Study nearing completion and scheduled for release before the end of June, Marc reveals they've already secured the essential technical inputs needed to generate "very, very good financials." The company isn't stopping there – they're immediately transitioning to a Definitive Feasibility Study targeting completion in mid-2025, maintaining momentum toward a production decision.
What sets Astral apart is their strategic approach to resource growth and project optimization. Rather than simply accumulating ounces, their recent acquisition of Maximus Resources provides both the physical space needed for infrastructure and additional exploration upside at the Spargoville project. Meanwhile, drilling at both Spargoville and Feysville specifically targets higher-grade material that could displace lower-grade Mandilla ore, potentially boosting the project's net present value significantly. With $22 million in the bank and additional funding possible from in-the-money options, Astral is fully funded to execute this strategy while maintaining continuous exploration across their expanded land package.
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Andrew Musgrave Host
Welcome to another episode of ASX Briefs, where we speak with the leaders shaping Australia's listed companies, and today we're joined by Marc Ducler, the Managing Director of Austral Resources Limited, a gold-focused exploration and development company operating in the prolific Kalgoorlie region of Western Australia. Marc, thanks for joining me today and welcome to the ASX Briefs podcast.
Marc Ducler Guest
Yeah, thank you very much for having us on.
Andrew Musgrave Host
Okay, now Mark, for investors that may be unfamiliar with Astral Resources, can you just provide a brief overview of the company?
Marc Ducler Guest
Certainly so. Astral Resources we're a gold-focused exploration and development company. Our assets are located in the heart of the Kalgoorlie goldfields. We have three projects. The flagship project is the Mandilla Gold Project, which is 70 kilometres south of Kalgoorlie. We've recently acquired another project, the Spargoville Gold Project, right adjacent to Mandilla. And then Feysville is the third project that we have, which is only 14 kilometres south of Kalgoorlie. Yes, we've been working through, growing the resources and working on the technical studies. So, gold-focused exploration and development company.
Andrew Musgrave Host
Okay, and you've just completed the acquisition of Maximus Resources, integrating key assets into your portfolio, so can you walk us through the strategic rationale behind this acquisition and how it transforms the company's trajectory?
Marc Ducler Guest
Yeah, so the opportunity to acquire Maximus presented itself late last year. We have a growing resource position at Mandilla 1.43 million ounces, but we have a rather small tenement land holding there at Mandilla. So, the strategic rationale for this Maximus transaction was about increasing our footprint. We needed a bigger footprint simply so we could fit on the infrastructure that we need for the development of Mandilla. So that was the key rationale behind it, notwithstanding that it has added an extra 120 square kilometres of what's really quite prospective exploration ground which we'll have our teams on, or they'll be drilling that project later this month and through the month of June as well.
Andrew Musgrave Host
Okay, and the Spargoville mineral resource estimate was restated recently under Astral's methodology. So, while the contained ounces decreased, you've described this as a strategic alignment. So how should investors interpret this revision within the broader project economics?
Marc Ducler Guest
We would probably describe ourselves as conservative might be the wrong word, but we really want to make sure that when we're putting information out to the market, it is well considered and shareholders will have a really good opportunity to understand what it is that we're doing, and what we have done with Mandilla and Feysville is, obviously, we'll estimate our resources within a pit shell, which is derived using a gold price and, in this instance, $3,500 Australian but, with the resource model, we go through a process of regularising it, which basically grabs the blocks and makes the block each individual block a size that you would expect to be able to dig with a digger. So, in terms of the selective mining unit that you use, and by doing that regularisation process, it actually did reduce the contained metal. We knew that that reduction was coming, and we want all of our ounces to be stated using that same methodology, which is effectively why we went through that process. The key advantage with that, though, is that, as you go to convert those resources into a production target, you end up with a very, very high conversion rate, so I would prefer rip the Band-Aid off state those ounces as they are, but it also means that when we go to mine them and generate income from those ounces, the majority of those ounces will fit into that production target.
Andrew Musgrave Host
Okay Now Mandilla remains the cornerstone of your portfolio. So, what are the most promising aspects emerging from the Mandilla PFS and how are they shaping your development strategy for the rest of the year?
Marc Ducler Guest
Well, the pre-feas is very well advanced now. We expect to be releasing that before the end of June. And yeah, we have the mining cost inputs, we have the processing cost inputs, we have the capital inputs for the process and non-process infrastructure. We've only just received the geotechnical assumptions so that we can do our detailed designs for the Feysville deposits, being Kamperman, Think Big and Rogan Josh. So, because we have so much of that data, we are very confident that we are going to generate a very, very good set of financials when we do release this pre-feasibility.
So, in terms of what we're driving for, we're driving to get that pre-feas out. We're already working in the background to prepare ourselves to move straight into the DFS, the Definitive Feasibility Study, by appointing our contractor that will do that work on the process and non-process infrastructure. So that is our core focus and while we're doing all that technical work from a market-facing perspective sometimes that can look a bit boring, but it's the essential technical work that you need to do and whilst that's underway, we'll make sure that we're maintaining a one to two drill rig effort, whether it's at Feysville, Spargoville or additional infill at Mandilla.
Andrew Musgrave Host
Okay now, Feysville and Spargoville both complement Mandilla in proximity and potential feedstock. So how do you see this interplay between these assets, evolving particularly around processing infrastructure and production planning?
Marc Ducler Guest
Yeah, well, the interesting thing is with Mandilla, we already have completed the detailed designs for the four Mandilla deposits so Theia, Hestia, Iris and Eos and we will have close to 20 years’ worth of processing feed once we complete mining at those deposits.
We're still running through the scheduling, but we'll be mining for somewhere between 10 and 15 years here. But we'll be mining for somewhere between 10 and 15 years here. So, if we're going to spend our shareholders' money today doing exploration at Feysville and Spargoville, then it needs to be focused on finding higher-grade material that we can use to then basically push out some of the Mandilla low-grade. Because if we can achieve that, then we can actually increase that production target and run it there for longer as part of the mine life. And if we can do that within that first eight years certainly, but even out to 10 years, then you can really drive an increase in the net present value. So that's where Spargoville and Feysville are important, because it gives us the opportunity to find high-grade ounces that we can display some of the Mandilla low-grade with and drive that increased NPV for the project that we're looking to put out, obviously as a pre-fees in June of this year and then a DFS in June of next year.
Andrew Musgrave Host
And brownfields and greenfields, drilling are underway at Mandilla and Spargoville, so where are you seeing the greatest potential to grow the resource base further?
Marc Ducler Guest
Well, I probably don't have a clear answer for that, but we are very confident in our ability to continue to drill on that granite sediment contact at Mandilla and we will continue to find 0.9 to 1 to 1.1 gram resources along that contact. So, there is certainly plenty of growth opportunity that continues to present at Mandilla. But yeah, certainly within Feysville and Spargoville and I'm talking specifically around Spargoville there is a lot of lightly explored tenure to the south at Spargoville that we believe certainly has the capacity to generate some 100,000-ounce accumulations of gold and potentially as high as 2 to 3 grams, and if we can generate those deposits then they will make a significant difference to the financial outcomes at Mandilla. So that's our focus there as well.
Andrew Musgrave Host
Okay, and Astral has consistently demonstrated low discovery costs, particularly at Mandilla. So how does this efficiency position put you in comparison to some of your peers?
Marc Ducler Guest
I don't spend a great deal of time looking at our peers in terms of their exploration costs. I just look at it through the lens that gold is currently worth $5,000 to $5,200 an ounce. The market is currently pricing Astral on an EV per ounce basis of somewhere between $180 an ounce or sorry, $80 to $100 an ounce, and in that context, if we can continue to grow at $20 an ounce, then we are certainly a value-accretive business and that's why it's important. You've got to demonstrate your ability to grow effectively, because otherwise where's the imperative for our shareholders to continue to fund our business?
Andrew Musgrave Host
Okay, now, just to wrap things up, you're sitting on a strong cash balance of over $22 million. So, what's your capital allocation strategy, moving forward, particularly as you approach key development and feasibility milestones?
Marc Ducler Guest
So that cash position certainly allows us to be funded all the way through to a final investment decision which will be by the end of the June quarter next year. So, we are well enough capitalised to deliver our pre-feasibility, deliver the DFS and maintain a one to two drill rig effort throughout that period. So, we are in a very strong cash position. We also have some options AARO is the ASX ticker. They expire in October, and they are currently inthe money and they have the potential to bring in another $5 to $6 million. So certainly, well cashed up to maintain a strong expiration effort and all of the technical studies that we require to do to get to a final investment decision in the June quarter of next year.
Andrew Musgrave Host
Okay, Marc. Well, it's been great to chat today to get an update on the company, and we look forward to further updates from Astral Resources in the upcoming months.
Marc Ducler Guest
Cheers Thanks very much for having us, Andrew.
Andrew Musgrave Host
That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.