The Jaguar deposit, discovered in 2002, became an underground operation in 2007 under Jabiru Metals' management. Following various ownership changes, it ended up under Aeris Resources (ASX:AIS) in July of the previous year.
Exactly a year later, on 5th July, Aeris confidently conveyed to the market the "significant potential to increase the resource at the Jaguar Operations … through additional drilling, notably down-plunge from the current MRE."
Aeris subsequently revised its mineral resource estimate (MRE) for the high-grade Jaguar deposit within its wholly-owned Jaguar Operations in Western Australia to encompass 840,000 tonnes at 2.28% copper, 4.66% zinc, and 61 g/t silver.
Within this resource, 19,000 tonnes of copper metal, 39,000 tonnes of zinc metal, and 1.65 million ounces of silver metal are found, with a noteworthy 88% classified as measured and indicated.
The statement disclosed, "These areas are being assessed for geotechnical stability and mining accessibility and are considered to have reasonable prospects for eventual economic extraction by selective underground mining methods.”
Surprisingly, the phrase "geotechnical stability and mining accessibility” would become pivotal, as on 2nd August, Aeris astonished the industry by announcing the suspension of operations at Jaguar. This move was made to reevaluate the mine's viability and reassess the figures.
"Aeris disclosed on 2nd August that due to anticipated operational losses in FY24, Jaguar will be placed on care and maintenance starting September." The reasons stated for this decision were multifaceted:
"Challenges in operations, particularly seismic events in the latter half of FY23, led to sub-optimal mine plans for FY24; This decision safeguards the value of the existing ~8 million tonne Mineral Resource across the Jaguar Operation; A feasibility study will begin for a restart strategy at higher production rates," as stated in the 2nd August ASX release.
Aeris outlined that its 2023-24 group guidance had been adjusted to 40,000 to 50,000 tonnes of copper equivalent, factoring in increased Tritton (located in central western NSW) production but minimal contribution from Jaguar. This marks a decline from the 51,500 tonnes in 2022-23.
The company noted, "Tritton copper production is projected to substantially rise due to the development of higher-grade Avoca Tank and Budgerygar mines in FY23. Copper production at Tritton is forecasted to grow from 17.2kt in FY23 to 19kt – 24kt in FY24, owing to the availability of high-grade mining areas, particularly at Avoca Tank and Budgerygar."
Furthermore, Aeris secured a new financing source: a $50 million "non-dilutive 2-year working capital facility secured with major shareholder Washington H. Soul Pattinson," intended to replace the previous ANZ $20 million working capital facility.
On 7th August, Aeris revealed that $40 million of the new facility had already been utilised.
According to Andre Labuschagne, Aeris’ Executive Chairman, in the 2nd August statement: “We have made the tough but appropriate decision to place the Jaguar Operation onto care and maintenance, with operations ceasing in September."
He further explained, "Between operational challenges, a lower zinc price, and cost inflation, it became evident that pausing production at Jaguar was in the best interest of our shareholders. We firmly believe this decision offers the greatest opportunity for shareholders to realise value from Jaguar in the medium term."
Labuschagne emphasised, "In the last quarter, the mine also faced three mining-induced seismic events that disrupted production and hindered access to high-grade stopes. To ensure safety, all operations in the Bentayga mining area have been halted until further geotechnical assessments can be conducted."
“…Jaguar was projected to incur a substantial operating loss in FY24. The call to suspend production at Jaguar and place it under care and maintenance from September 2023 was made to manage cash outflows and protect the considerable value of the in-ground resource.”
This challenging decision took its toll on Aeris’ share price, leading to a 36% decrease in value from the end of July to the recent level. Share prices slid from 38 cents at the end of July to 24 cents on Friday, even dropping as low as 22 cents.
