Aurelia Metals Secures Future with Great Cobar Copper Project
Aurelia Metals (ASX: AMI) has received Board approval to develop the Great Cobar Project, marking a significant milestone in the company's growth strategy. The project, located within the New Cobar Mine at the company's Peak operation, promises to deliver substantial copper production in a market forecasting strong demand for the critical metal. Investors looking for opportunities may consider investing in mining stocks like Aurelia to gain exposure to copper and precious metals.
Great Cobar Set to Drive Future Growth with Compelling Economics
The Great Cobar Project by Aurelia Metals Ltd presents a strong investment case with 77,000 tonnes of copper, 84,000 ounces of gold, and 505,000 ounces of silver expected over an 8-year mine life. Production is scheduled to commence in FY28, with mining rates reaching 500,000 tonnes per annum from FY30.
The project features impressive economics with a base case NPV8 of $51 million at long-term prices, but shows significant upside potential in the current market, with an estimated $164 million NPV8 at spot prices. With global tensions rising, critical minerals like copper are becoming increasingly strategic assets.
Aurelia Managing Director and CEO Bryan Quinn emphasised the project's strategic importance: "Great Cobar and copper are the future of our Peak mines. The transition of mining operations to Great Cobar has been sequenced to optimise value from our Peak operation."
Efficient Capital Deployment with Low Execution Risk
One of the project's most attractive aspects is its capital-efficient development approach. The total capital estimate stands at $91.8 million (nominal), including a $10.9 million contingency. This investment will be spread over approximately three years, with the following breakdown:
| Capital Cost Category | Amount ($M) |
|---|---|
| Mine Development (incl. ventilation) | 51.0 |
| Mine Equipment | 5.1 |
| Underground Infrastructure | 13.0 |
| Surface Infrastructure | 9.1 |
| Owner's Costs | 2.7 |
| Contingency | 10.9 |
| TOTAL | 91.8 |
Importantly, Aurelia is positioned to fund this development internally, with cash reserves of $106.7 million as of March 2025 and strong cash flow generation from existing operations. The Peak Mine alone generated $44.6 million in cash flow during the March 2025 quarter. Having substantial cash reserves provides Aurelia with stability and flexibility for their capital expenditure plans.
Significant Resource Base with Exploration Upside
The Great Cobar Project by Aurelia Metals Ltd is based on a substantial mineral resource, with the production target comprising 3.57 million tonnes of ore grading 2.3% copper, 0.9g/t gold, and 5g/t silver. Approximately 65% of this production target is in the higher-confidence Indicated Resource category.
A key aspect of the project is its significant exploration upside. The Great Cobar deposit remains open at depth and along strike, with excellent prospectivity to expand the copper resource once underground access is established. Geophysical surveys show anomalies extending to depths of more than 2km.
Understanding Net Smelter Returns (NSR) in Mining Valuation
For investors new to mining economics, the Net Smelter Return (NSR) is a key concept used throughout this project evaluation. NSR represents the revenue a mining company receives from selling its metal concentrates to a smelter, minus the costs associated with refining and transportation.
For the Great Cobar Project by Aurelia Metals Ltd, Aurelia uses an NSR cut-off value of A$175/t for stopes (mining areas) and A$80/t for development ore. This calculation considers factors including:
- Metal grades (copper, gold, silver content)
- Metallurgical recoveries (95% for copper, 84.9% for gold)
- Concentrate grade (24% copper)
- Metal prices (using US$9,500/t copper, US$2,300/oz gold)
- Treatment/refining costs
- Transportation expenses
Using NSR allows for a comprehensive economic assessment that accounts for all value-driving factors beyond simple metal grades.
Project Timeline and Implementation
The Great Cobar Project will be delivered over a 33-month period, with key milestones including:
- Infrastructure design commencing in Q4 FY25
- Exploration decline development starting in Q1 FY26
- Surface shaft raiseboring in Q2 FY27
- First stope ore production in Q3 FY28
This phased development approach allows Aurelia to manage capital expenditure efficiently while maintaining production from existing operations.
Long-Term Copper Market Outlook Supports Investment
The copper market remains in a structural deficit, underpinned by copper's essential role in electricity consumption, economic growth, and the global shift toward decarbonisation and energy transition. This supply-demand imbalance is expected to drive copper prices higher over the coming years, making the Great Cobar Project's timing particularly advantageous. Major miners like Rio Tinto are increasing copper investments to capitalize on growing demand from clean energy technologies.
At current spot prices (as of March 22, 2025), the project's economics are significantly enhanced, with an estimated post-tax NPV8 of $164 million and an IRR of 33%, generating $444 million in free cash flow over the project life.
Why Investors Should Follow Aurelia Metals
Aurelia Metals represents a compelling investment opportunity for several key reasons:
-
Strong Balance Sheet: With $106.7 million in cash and an undrawn loan facility, Aurelia is well-positioned to fund the Great Cobar Project internally.
-
Operational Excellence: The company has a proven track record of operating in the Cobar Basin, with established infrastructure and operational expertise.
-
Commodity Diversification: The Great Cobar Project adds significant copper exposure to Aurelia's portfolio, complementing its existing precious metals production.
-
Exploration Upside: The significant potential to expand the Great Cobar resource through future exploration provides substantial long-term value potential.
-
Copper Market Exposure: As a critical metal for the global energy transition, copper offers strong long-term price fundamentals.
The Great Cobar Project by Aurelia Metals Ltd has positioned itself for sustainable long-term growth by sequencing the Great Cobar development to coincide with the natural decline in production from its Peak (South) Mine, ensuring optimal utilisation of its processing facilities and maintaining strong operational cash flows throughout the transition. Moreover, the company is making strategic investments in human capital to ensure they have the skilled workforce needed to execute their plans.
For investors seeking exposure to both precious and base metals with a focus on copper, Aurelia Metals offers a compelling investment case with near-term production growth and significant resource upside potential.
Seeking Early Access to the Next Major Copper Discovery?
Discovery Alert's proprietary Discovery IQ model provides instant notifications when significant mineral discoveries are announced on the ASX, giving you the edge in identifying potential winners like Aurelia Metals before the broader market. Explore historic returns from major discoveries by visiting the Discovery Alert discoveries page and position yourself to capitalise on the next resource opportunity.
