Aura Minerals: An Undervalued Copper and Gold Producer with Visible Growth

• Aura Minerals is a growing gold and copper producer focused on the Americas, ranked #1 performer on TSX last 2 years.
• Grew production by over 90% since 2018 to 240,000 gold equivalent ounces in 2022. Targeting 450,000 ounces by 2025.
• 3 expansion projects underway - Almas starting production in Q2 2023, Borborema in late 2024 and Matupa in 2025.
• Strong financials with $130M cash, 0.5x net debt/EBITDA. Committed to dividends, 6% yield in 2022.
• Trading at discount valuation with a clear path to production growth and, a strong track record of execution.

Aura Minerals is a diversified copper and gold producer delivering strong operational performance and production growth. Ranked the top-performing mining stock on the TSX for two consecutive years, Aura Minerals has significantly expanded production while maintaining cost discipline. With three mines generating cash flow and a pipeline of low-cost projects, the company is on track to grow output by over 85% by 2025. Despite this visible growth path, Aura trades at a discounted valuation relative to peers. For investors, the company offers an attractive value opportunity with upcoming catalysts to potentially re-rate shares higher.

Strong Operational Track Record Driving Production Growth

Since 2018, Aura has increased gold equivalent production by over 90% to 240,000 ounces in 2022 across three operating mines in the Americas. This growth has driven a more than 150% increase in revenues over the period. Through its consistent operational execution, Aura has expanded profitably while keeping costs contained – its all-in sustaining-cost declined from over $1,300/oz in 2018 to under $900/oz in 2022.

Aura’s management team expects to build on this track record, targeting consolidated production of 450,000 gold equivalent ounces in 2025. With three low-cost projects fully funded and in development, the company has clear visibility on this 86% growth in the coming years.

Funded Growth Pipeline and Strong Financial Position

Aura is currently constructing its Almas project in Brazil, which is on track to commence production in Q2 2023 after only 16 months of construction. The project is expected to have costs below the corporate average and an exceptional internal rate of return above 100%. This demonstrates Aura’s ability to develop value-accretive expansions.

The company is also advancing its Borborema and Matupa projects in Brazil, with the first output from Borborema targeted for late 2024. Aura reported a strong cash position of $130 million and low leverage of just 0.5x net debt/EBITDA at year-end 2022, positioning it well to fund these growth initiatives.

Additionally, Aura is committed to providing shareholder returns through dividends, with an attractive 6% dividend yield last year. The company expects to continue executing its balanced approach of funding growth and dividends.

Significant Upside Potential from Resource Expansion

Beyond its current development portfolio, Aura also has substantial upside potential from resource expansion across its asset base. The company controls a sizable 650,000 hectare land package, of which only around 10% has been explored to date. Recent drilling has uncovered encouraging results that could substantially increase resources at the Matupa project and elsewhere.

As CFO Rodrigo Barbosa noted, “There is a lot still that we can invest to try to find new deposits and increase the resources of the company over time.” This organic growth potential provides significant option value that is not reflected in the current share price.

Trading at a Discount Valuation

Despite Aura’s operational outperformance, production growth outlook, strong financial position and exploration upside, the shares continue trading at a discount to peers. Based on Raymond James’ analysis, the company is valued at 0.47x NAV compared to similar intermediate and senior producers trading between 0.7-1.2x NAV.

As the least followed name among these peers, Aura represents an under-the-radar opportunity for investors to gain exposure to the favorable mining macro environment. With near-term catalysts on the horizon, including the start-up of Almas, the valuation gap presents an opportunity for potential re-rating.

For investors seeking an attractively priced emerging producer with clear visibility on significant production growth, strong margins and financial health, Aura Minerals stands out as a compelling investment case.

The Investment Thesis for Aura Minerals

• Established cash-flow generating portfolio with mines in favorable jurisdictions
• Visible production growth trajectory, targeting 86% expansion by 2025
• Strong balance sheet to fund growth projects while paying dividends
• Proven mine construction and operating capabilities
• Significant optionality from large underexplored land package
• Trading at a discount to peers based on growth outlook and potential to re-rate