en.Wedoany.com Reported - Marc Ducler, Managing Director of Australia's Astral Resources (ASX:AAR), stated that the valuation of the company's Mandilla gold project shows a significant gap compared to other gold developers in the same region. The company's share price has fallen over 55% year-to-date, with a market capitalization just above $200 million.
On an enterprise value (EV) per ounce basis, Minerals 260 (MI6) values its orebody, located 70 kilometers from Kalgoorlie with a grade of 1 gram per tonne, at $200 per ounce, while Astral's similar orebody is valued at just $70 per ounce. MI6 released a pre-feasibility study earlier this month for its Bullabulling project, which holds 4.5 million ounces of resources, with a net present value (NPV) of $2.3 billion. Astral's Mandilla project has an NPV of $2.1 billion, and Ducler noted that Astral's NPV has been adjusted to a 5% discount rate to match MI6's. MI6's EV as a percentage of future NPV is 51%, compared to just 7% for Astral. Ducler pointed out that while MI6's project is three times the size of Astral's, this does not explain the vast valuation disparity. He commented that, based on each pre-feasibility study, MI6's EV-to-NPV5 ratio is seven times that of Astral, suggesting either MI6 is overvalued, Astral is undervalued, or a combination of both.
The Mandilla project has initial capital expenditure of $227 million and is planned as a long-life operation, producing 95,000 ounces of gold annually with all-in sustaining costs of A$2,140 per ounce. Based on a gold price assumption of A$4,250 per ounce, the project's post-capital expenditure NPV8 is $1.4 billion, with a payback period of 12 months. If the gold price rises to A$6,000 per ounce, the NPV8 would increase to $2 billion, with the payback period shortening to six months. At this gold price, the project would generate $5.2 billion in free cash flow, compared to $2.8 billion at A$4,250 per ounce. Ducler emphasized that the project can generate significant cash in the current gold price environment.
A definitive feasibility study (DFS) is underway, expected to be completed in the first quarter of 2027, with a final investment decision to follow immediately. The DFS timeline is delayed by approximately six months from the original plan, but Astral aims to offset the delay through early revenue opportunities from the Think Big deposit. The company has signed a letter of intent with contractor Mineral Mining Services for the Think Big project, aiming to establish a development partnership and joint venture. Think Big holds 85,200 ounces of resources at a grade of 1.1 grams per tonne of gold. Ducler stated that this early revenue opportunity could generate $50 million in free cash flow, which, combined with the $73 million in cash already in the bank, would quickly fill the funding gap for Mandilla's development.
Astral has a total resource base of 2.1 million ounces across its Mandilla, Spargoville, and Feysville projects. Two drill rigs are continuously operating on site, with a resource update for the entire portfolio expected in early 2027. The diamond drilling program targeting the main Theia deposit has been expanded from the original 3,000 meters to 7,500 meters. Ducler noted that visible gold has been found in every drill hole, indicating significant growth potential for Theia's scale, and the vertical extent of the deposit could effectively double. The latest results show 52.6 meters of mineralization at a grade of 1.48 grams per tonne of gold from a depth of 389.4 meters, including intervals of 0.45 meters at 17.9 grams per tonne, 0.3 meters at 16.4 grams per tonne, and 0.3 meters at 18.3 grams per tonne. Ducler believes that ongoing exploration work and the DFS will drive a revaluation of Astral and confirm Mandilla as a long-life, low-cost, high-margin gold project.
