Aura Minerals studies new M&A opportunities
Aura Minerals will continue to study merger and acquisition opportunities in order to be among the largest gold mining companies in the world. The Canadian company recently acquired Big River Gold, owner of the Borborema project, in Rio Grande do Norte."We will look for projects that can come into operation when we finish the construction of the Matupa and Borborema projects," said Rodrigo Barbosa, the company’s chief executive.Gold production accounts for 75% of Aura’s revenues, while copper represents 25%, according to the CEO. With the execution of Matupa and Borborema, the share of copper will be diluted, as the company intends to return to the current composition of the business through new investments in copper. "We like this 75%-25% balance," he said.Aura works with three fronts of value generation, said Mr. Barbosa. The first is to execute relevant growth projects, which have already allowed the company to double in size since 2017. This is expected to help the company surpass the production threshold of 450,000 gold equivalent ounces by 2025, an 82% growth compared to the current operation.The second front is related to exploration. "It is one thing to grow in production, and another thing to increase the amount of gold we have in our projects," he said, recalling that Aura still has about 650,000 hectares to be explored.According to the executive, Aura is aware that companies with steady growth usually trade at higher multiples. Today, Aura’s multiple is 0.32 times, considering the price-to-net asset value ratio, compared with 0.9 times of large gold mining companies."So we want to continue to look at M&A opportunities and grow while also paying dividends," he said."Aura is still moving from being a junior to a medium-sized mining company, but we want to become a large one," he said.The company has not yet defined how it will finance the construction of the Matupá and Borborema gold production projects, but debt and equity are expected to comprise at least 50% of the amount needed, said Kleber Cardoso, Aura’s chief financial officer. "We will study market conditions," he said during Aura Day.The company is on its way to finishing the construction of another project, Almas, in Tocantins, scheduled for 2023. Next come Borborema and Matupá, probably in this order.In the last 14 months until September, Aura disbursed more than $100 million for investments and expansion projects, in addition to the payment of dividends and share...
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