Aura Minerals’ Earnings Call: Record EBITDA Amid Challenges

Aura Minerals ((TSE:ORA)) has held its Q1 earnings call. Read on for the main highlights of the call.

Aura Minerals’ recent earnings call painted a picture of robust financial health, marked by record EBITDA and successful project completions, yet overshadowed by a net loss due to hedging and a decline in production. Despite these challenges, the company remains optimistic about its growth prospects, underscored by ongoing projects and a commitment to maintaining high dividends.

Record High EBITDA

Aura Minerals achieved a record high EBITDA of $81 million for the quarter. This impressive figure was reached despite facing production challenges, thanks to increased gold prices that bolstered the company’s financial performance.

Strong Dividend Yield

The company announced a $30 million dividend for the quarter, resulting in an 11% dividend yield over the last 12 months. This move underscores Aura’s commitment to delivering value to its shareholders.

Successful Project Completion

Aura successfully completed the construction of the Borborema project on time and within budget, with commercial production expected to commence in the third quarter. This achievement is a testament to the company’s operational efficiency and project management capabilities.

Growth in Net Revenues

The company reported net revenues reaching a record high of $624 million over the last 12 months, highlighting its ability to generate substantial income despite market challenges.

Safety Milestone

Aura achieved a significant safety milestone, recording only one lost time incident over two years during major project completions. This reflects the company’s strong commitment to maintaining a safe working environment.

Continued Growth Prospects

Progress on the Bluestone and Matupa projects indicates potential for significant production increases, showcasing Aura’s strategic focus on expanding its production capabilities.

Net Loss Due to Hedging

The company reported a net loss of $72 million for the quarter, primarily due to market-to-market losses on gold hedges. This highlights the volatility and risks associated with hedging strategies in fluctuating gold markets.

Production Decline

Gold equivalent production for the first quarter was 60,000 ounces, marking a 9% decrease from the previous quarter and a 7% decline from the same quarter last year. This decline was attributed to ongoing investment phases at certain sites.

Increased All-In Sustaining Cash Costs

Aura experienced an increase in sustaining cash costs due to the investment phase at the Apoena site, which affected overall cost stability.

Higher Leverage

The company’s net debt increased to $272 million, attributed to the construction of the Borborema project and the acquisition of Bluestone, reflecting its strategic investments in growth.

Forward-Looking Guidance

Looking ahead, Aura Minerals emphasized its strong performance and growth strategies. The company expects the Borborema project to significantly boost production in the second half of the year. Despite a net loss, Aura maintained a recurring free cash flow of $27 million and continued its share buyback program, highlighting its commitment to shareholder returns. The updated 43-101 report extends the life of its mines and increases production, while the company prepares for a potential U.S. public offering to enhance liquidity.

In conclusion, Aura Minerals’ earnings call reflected a company navigating challenges with resilience and strategic foresight. While hedging losses and production declines posed hurdles, record EBITDA and successful project completions underscored a robust financial performance. The company’s forward-looking guidance suggests a focus on growth and shareholder value, promising an optimistic outlook for the future.