Aeris Resources raises fresh capital to support gold and copper exploration in FY22

Aeris Resources Ltd (ASX:AIS) (OTCMKTS:ARSRF) has secured a A$50.4 million cash injection after it executed an institutional placement to fund exploration at its operational base and precious metals assets. The substantial cash injection will position Aeris to accelerate exploration at its 100%-owned Tritton Copper and Cracow Gold operations in FY22. By the end of FY21, Aeris’s Tritton asset is forecast to have produced as much as 23,500 tonnes of copper, while Cracow is poised to have generated up to 75,000 tonnes of gold. As it prepares for a new financial year, Aeris intends to rally its resources and carry out work that brings it closer to achieving one overarching goal: becoming a mid-tier mining company. Placement details Under the equity raise, around 287.8 million shares were issued to institutional stakeholders at 17.5 cents each. Ultimately, that price represents a 14.6% discount to the 20.5-cents-per-share closing price of AIS shares on Wednesday, June 9. It also signifies a 13.9% markdown compared to the five-day volume-weighted average price of Aeris shares at market close on the same date. The placement is slated to settle just under a week from now on Thursday, June 17, with new shares expected to be issued and quoted the following day. Aeris has already revealed how it intends to utilise the fresh funding. The ASX lister has earmarked $15 million in funding to progress exploration at Tritton, $13 million for a work program at Cracow, $19.8 million for general working capital and $2.5 million to cover the cost of the equity raise. “An exceptional outcome” Aeris Executive Chairman Andre Labuschagne said: “This is an exceptional outcome for Aeris and its shareholders and provides the balance sheet strength to accelerate exploration at both our operations in FY22, while progressing in parallel, life extension projects at Tritton. “The strong institutional support for the placement I believe is a reflection of not only the transformation of the company over the last 12 months but also an endorsement of our strategy focusing on copper and gold and adding value through organic and acquired growth. “We acknowledge the support of our current and new shareholders and completion of the Placement ensures that FY22 will be both a busy and exciting year for Aeris.” Targeting Tritton As it prepares to move into the new financial year, Aeris is gearing up to conduct further exploration at the Tritton copper play in western New South Wales. The project is an operating base metals asset, situated in a highly endowed copper region and spanning a 2,160-square-kilometre tenement package. As much as 750,000 tonnes of copper have been discovered within the Tritton project area to date, while more than 320,000 tonnes of copper has been produced at the play since operations began in 2005. The copper asset also bears a multi-stage project pipeline; two Tritton tenements are already producing, three are development-ready and six are under exploration. Because of this, Aeris is invested in expediting exploration at Tritton in FY22. Constellation leads to high-grade copper Recently, the ASX-lister doubled down at Tritton’s Constellation deposit, uncovering 47 metres of mineralisation at 3.9% copper during a reverse circulation (RC) exploration campaign. Plan view showing the location of drill holes completed at the shallower end of the Constellation deposit. Executive chairman Andre Labuschagne said at the time that the latest copper assays exceeded Aeris’ expectations. “The footprint of this near-surface copper mineralisation is also larger than we expected and remains open along strike to the south.” The robust results have encouraged Aeris to continue exploration across the broader Tritton operation, with plans laid to drill another 40 RC holes at two tenements that neighbour the Constellation deposit. Additionally, Aeris expanded Constellation's mineralisation footprint just yesterday with a diamond drilling campaign. In FY22, drilling will continue at Constellation with the aim of establishing a maiden mineral resource for the deposit’s open pit and underground operations. First-pass drill testing is also on the cards for multiple greenfields exploration targets in the broader project area. An emerging gold asset Along with its copper exploration and production in New South Wales, Aeris has turned its attention to a prospective gold project in Queensland that it credits with “transforming” the company. The Cracow operation ‑ Aeris’ flagship gold producing asset ‑ is situated just 500 kilometres northwest of Brisbane. It is described as a high-grade, low-cost gold mine with a proven operating history. The gold and base metals company acquired the Cracow Gold Operation from Evolution Mining Ltd (ASX:EVN) (OTCMKTS:CAHPF) (FRA:WE7) in July last year. Aeris paid $60 million upfront to purchase the gold play, with another $15 million payment invoiced for June 30, 2022. The buy also includes a 10% net value royalty, effective from July 1, 2022, to June 30, 2027, capped at $50 million. Aeris believes it can reinvigorate exploration at the goldfield, which has produced over 1.4 million ounces of gold since mining began in 2004. Since it acquired the operation, the ASX-lister has completed a prospectivity review and is now reviewing a suite of priority targets. To follow up on the gold potential, an aggressive exploration campaign is planned for the coming financial year. Sepcifically, at the Ballymore target, Aeris has identified a prospective gold structure along the southern margin of the current mining footprint. Limited historical drilling has been conducted in the area, although what has been carried out has delivered promising results. Aeris intends to conduct drilling over the property in FY22 based on the target’s current underground workings. Broader M&A strategy and performance As it continues to explore its existing base and precious metal operations, Aeris maintains it is on the lookout for further merger and acquisition (M&A) opportunities. Primarily, the company is focused on gold and copper assets in Australia and offshore and wants any new buys to leverage its existing operational expertise. Aeris also believes It is well-positioned for further growth following its recent financial performance. In December 2020, the company tabled $214 million in revenue – effectively double what it recorded in the previous corresponding period. The company also brought in $72 million from operating activities, well up from the $6 million recorded over the same period in 2019. Aeris also moved from a $29 million loss in December 2019 to a $46 million profit in 2020, while it consolidated its net debt position from $37 million to $11 million. Over the current financial year, Aeris’ market capitalisation has grown from $19 million to $393 million, reflecting its overall growth. Investors will be watching how upcoming exploration endeavours position the company for further development in FY22.