With gold prices soaring, Auric Mining has seized an opportunity of a lifetime to grab full control of its production cycle by buying the 180,000 tonne per annum (tpa) Burbanks gold plant near Coolgardie, in Western Australia’s Goldfields region, for a cool $4.4 million.

Auric says the plant comes with all the necessary infrastructure and permits to fast-track Auric’s production plans, and the decision to acquire it will save the company considerable time and effort positioning itself for substantial growth as a fully integrated miner and producer of gold in the next few years.

The exclusive deal is subject to due diligence at Auric’s sole discretion and was locked-in after the company paid a $100,000 non-refundable deposit to corporate advisory BDO Queensland, which acted as agents for the mortgagee in possession. The deal is slated for completion in March next year.

The 180,000-tonne per years Burbanks facility is strategically positioned just 15km south of Coolgardie.

Although it has been non-operational since 2019, it remains fully equipped, with crushing, grinding and carbon-in-leach (CIL) processing facilities. Auric plans to conduct due diligence in the coming months, examining the plant’s potential for refurbishment and to increase capacity to 500,000tpa or more.

‘The plant... has all the key infrastructure and approvals in place to fast-track Auric towards becoming a fully integrated sustainable gold producer’

Auric Mining managing director Mark English

Auric says the job of expanding the plant and returning it to full operations may take at least two years.

The real value of the deal, according to management, lies in time and money. The replacement value of the plant or the cost of starting from scratch would easily supersede its $4.4m price tag. The cost of connecting power to the site from Coolgardie, the nearest town which is about 11km away, would not leave Auric much change out of $5m.

The timeline for setting up an entire new mill with all the necessary environmental, water, power, mining and processing permits required would take at least five to six years to complete.

Burbanks already has all of those pieces of the puzzle in place, including a permit to expand the operation’s capacity, four granted mining leases and 10 granted infrastructure leases.

Notably, the mining leases are also close to mineralised ground already held by local miner and fellow ASX-listed junior Horizon Minerals, which could potentially lead to mutually beneficial discussions between both companies further down the road.

Auric Mining managing director Mark English said: “The plant has name plate production of 180,000 tonnes per annum, is ideally located and - most importantly - has all the key infrastructure and approvals in place to fast-track Auric towards becoming a fully integrated sustainable gold producer in the heart of the Goldfields with complete control over our production.”

As English points out, Auric has always firmly believed that buying quality assets at depressed prices makes bigger value creation more likely.

The company managed to live up to those beliefs when buying the unloved Jeffreys Find gold mine for $1.4m cash a few years ago and turning it into an asset which it says is expected to generate more than 10 times the purchase price in free cash.

It appears to have also employed the same rinse and repeat philosophy to its newest gold mining operation at Munda near Widgiemooltha in WA, which is expected to initially produce 6100 ounces of gold by toll treating ore from a starter pit before moving onto a bigger 145,000-ounce resource at site.

With the purchase of Burbanks at a heavily discounted price, it looks as if the company may have set itself up to do it again. And the market certainly appears to think that too, pushing the Auric share price 14 per cent higher to 36c today on strong turnover.

The well-worn but appropriate reference to “literally sitting on a gold mine” has never been truer than in the current high gold price environment, but it seems Auric has taken the idiom to heart by buying the processing plant as well.

With the acquisition of Burbanks, Auric has secured a valuable asset at a discounted price and has laid the foundation for long-term growth in Australia’s gold-rich Coolgardie region.

Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au