Addendum: Aurelia Metals

A few quick additions/amendments to the note on Aurelia Metals earlier in the week (“The Cobar Comeback… Pt 2”)

1. Zinc processing synergies

I quantified a A$50m pa “synergy” that a potential CSA/AMI tie up could generate by taking the shallow easy to mine zinc lodes at CSA’s Merrin mine and treating them at Peak (swapped with copper ores going to CSA). In this calculation I used an all-in processing cost at Peak of A$70/t ore. In reality the incremental volume through Peak/CSA is only going to incur variable costs… so the synergy could be much larger if you can believe that (I estimate A$75m pa on a A$20/t variable cost). This doesn’t change for the Endeavour toll treat as in that agreement CSA is charged an all-in processing fee (fixed + variable).

2. Other synergies - plant infrastructure

There were three components to the Peak plant expansion and optimisation project to take it from 0.8mtpa to 1.1-1.2mtpa

1. Process water & tailings optimisation - A$10m: to improve recovery, reduce cyanide consumption and expand tailings thickener and pump capacity to support added throughput.

2. Ball mill upgrade - A$9m: to allow additional liberation of copper ores to support higher throughput

3. Materials Handling Upgrade - A$10m: Adding a crusher and conveyor to integrate copper ores into Peak live piles.

The company has all but executed on the first two of these projects but have postponed the third… indefinitely. The reasoning they have provided is that in the near term the company will seek added volume of zinc/lead ores from the Peak South mine… and this project is only required for the treatment of copper ores.

If Peak is used solely for Zinc/Lead ores and CSA takes all the copper ore.. then I imagine this project is no longer required and you can add this A$10m to your list of “synergies” (and maaaybe there is a reason it was deferred indefinitely).

3. CSA Life of Mine plan

Harmony have been having a hard time of it at CSA if their announcements are anything to go by. They closed the transaction to acquire CSA back in October last year (was bid in May)… so they’ve had their feet under the table for ~9mths. As the below shows - they have committed to the market to release a life of mine plan for CSA with their full year results on August 27th. What comes out of this plan will be a big tell on the direction they wish to go and if any potential tie up with Aurelia may occur.

4. Investor Presentation

Lastly - I do note Aurelia is due to speak at the Noosa Mining Conference tomorrow (don’t ask me why they are grouped to talk as a “critical minerals” company). Worth keeping an eye out on anything new here (but I suspect it will be much the same).

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