Aussie Gold Miner Aiming for Growth with Large-Scale Gold Project

Australian gold exploration and development company Ausgold Limited (ASX: AUC) has positioned itself as the next mid-tier Australian gold producer through the development of its 100% owned Katanning Gold Project in Western Australia. With over $30 million in funding, an expanding gold resource and promising economics, Ausgold offers upside potential for investors seeking exposure to the gold market.

Large Gold Resource with Significant Expansion Potential

Ausgold’s flagship Katanning Gold Project, located 3.5 hours south of Perth, already hosts a substantial open-cut Mineral Resource of 2.6 million ounces of gold. A Mineral Resource update expected within two weeks is anticipated to demonstrate significant growth.

The current resource includes a high-grade component that has excellent potential for expansion through further drilling. Over 17,000 meters of new RC and diamond drilling has been incorporated into an updated geological model aimed at better representing the project’s high-grade mineralization.

Open-Cut Reserves to Support 10+ Year Mine Life

Last year’s open-cut Pre-Feasibility Study defined a 1.28M ounce Maiden Ore Reserve sufficient for an initial 10 year mine life producing 136,000 ounces. Ausgold is now completing a Definitive Feasibility Study (DFS) based on an expanded 5M tonne per annum processing plant.

The DFS aims to convert more of the Mineral Resource into Ore Reserves. Based on successful exploration results, the company believes Katanning’s resource scale could ultimately support a multi-decade mining operation treating over 5M tonnes per annum.

Good Economics and Fast Payback Period

Katanning’s high-grade near surface mineralization is expected to deliver an internal rate of return of 46% and payback within 20 months. This provides low investment risk and the potential for strong cash flow over the 10+ year lifespan. In the first 6 years of production alone, the forecast average annual production is 155,000 ounces. Beyond this, mine life has expansion potential through further exploration success.

De-Risked Development in Established Mining Region

Located just south of Perth, Katanning benefits from existing infrastructure including grid power, an available skilled workforce and community support. Key approvals and licenses are already in place. With over 250,000 meters of drilling completed to date, the deposit is well understood. Ongoing studies and derisking activities aim to support a 2024 production start.

Beyond the main deposit, Ausgold controls over 5,500 sq km of prospective exploration ground. Multiple satellite gold deposits and targets provide opportunities to add high-grade resources to underpin Katanning’s expandable production profile. The company is also exploring its extensive landholdings for lithium, leveraging the current demand for battery metals. Drilling of lithium pegmatite targets is imminent.

Investment in Gold Market Upside

With improving project economics compared to the PFS and higher gold prices, Katanning’s value proposition is increasingly compelling. Ausgold’s enterprise value per resource ounce compares favourably against developer peers.

Backed by a proven board and management team, Ausgold offers investors torque to the Australian dollar gold price which remains near record highs. Exploration success provides further upside on the back of a rapidly growing gold inventory.

For investors seeking Australian gold leverage with mine development upside, maturing Katanning Gold Project offers an intriguing risk/reward opportunity.

The Investment Thesis for Ausgold and the Katanning Gold Project

• Large and expanding gold resource with over 2.6 million ounces already defined. Continued exploration success is likely to grow the resource inventory even further.
• Central zone contains high-grade zones that could support an underground mining operation in the future, providing production upside.
• Initial economics are very robust, with a rapid payback period of under 20 months. This reduces investment risk.
• Location in Western Australia provides access to excellent infrastructure, an available skilled workforce, and community support.
• Key mining licenses and approvals are already in place, de-risking the development timeline.
• Forecast production of over 150,000 oz per year for the first 6 years will generate strong operating cash flows.
• Ausgold's extensive regional exploration package provides opportunities to add satellite deposits and increase mine life beyond 10 years.
• At the current valuation, there is a disconnect between Ausgold's resource size and its enterprise value per ounce compared to peers.
• Strong board and management with experience taking projects into production.
• Exposure to Australian dollar gold price upside and potential share price re-rating as Katanning advances.
• Demand for lithium battery metals could provide additional upside if exploration is successful.

In summary, Katanning offers investors an attractive combination of resource scale, economic returns, exploration upside and relative valuation opportunity. As the project continues to derisk there is potential for significant shareholder value creation.