Earnings call transcript: Aurizon Q4 2024 sees record revenue and income

Aurizon (AZG), with a market capitalization of $312 million, announced record revenue and net income for the fiscal year 2024, showcasing strong operational performance. The company reported revenue of $283.5 million and a net income of $55.7 million attributable to shareholders. The quarterly net income for Q4 reached $30.1 million. According to InvestingPro analysis, the company appears undervalued based on its Fair Value assessment, with an attractive EV/EBITDA ratio of 3.5x. The company remains well-positioned in the gold mining sector, benefiting from rising gold prices now exceeding $3,000 per ounce.

Key Takeaways

• Record annual revenue of $283.5 million in 2024.
• Net income for Q4 reached $30.1 million.
• Gold production exceeded guidance at 118,746 ounces for the year.
• Aurizon is accelerating its Hardrock expansion projects.
• The company maintains a strong cash position with $74 million available.

Company Performance

Aurizon’s performance in 2024 marked a significant milestone with record revenues and net income. The company’s gold production exceeded expectations, with 118,746 ounces produced, reflecting a strong operational year. This growth was supported by strategic expansions and investments in infrastructure, positioning Aurizon favorably in the competitive gold mining sector.

Financial Highlights

• Revenue: $283.5 million for 2024, a record for the company.
• Net Income: $55.7 million for 2024; Q4 net income of $30.1 million.
• Earnings per share: Adjusted EPS of $0.11 for the full year.
• Cash Position: $74 million with available liquidity of $103.2 million.
• Gold Production: 118,746 ounces in 2024, surpassing guidance.

Outlook & Guidance

Aurizon has provided a robust outlook for 2025, projecting gold production between 115,000 and 130,000 ounces. The company anticipates all-in sustaining costs (AISC) to be between $1,400 and $1,500 per ounce. Analyst consensus from InvestingPro strongly favors the stock, with price targets ranging from $0.83 to $1.46, suggesting significant upside potential. Get access to 12+ additional ProTips and comprehensive analysis with an InvestingPro subscription. Aurizon is targeting a production run rate of 170,000 to 180,000 ounces by the end of 2025, with potential acceleration to 220,000 to 250,000 ounces by 2026. Capital expenditures are planned to support these growth initiatives, including $75-80 million for Stage One Hardrock expansion.

Executive Commentary

Patrick Downey, CEO of Aurizon, emphasized the transformative nature of 2025 for the company, stating, "2025 is really a transformational year for Aurizon." He also highlighted the progress on the Hardrock expansion, noting, "We are now well ahead on Stage one hard rock that will allow us to exit 2025 at a run rate of 170 to 180 a year into 2026." Downey underscored the strategic advantage of current gold prices, adding, "At current gold prices that really makes sense for us."

Risks and Challenges

• Volatility in gold prices could impact revenue and profitability.
• Expansion projects may face delays or cost overruns.
• Regulatory changes in mining operations could pose compliance challenges.
• Global economic conditions and currency fluctuations may affect financial performance.
• Competition in the gold mining sector remains intense, requiring strategic positioning.

Aurizon’s Q4 2024 earnings call highlights a year of record achievements and sets a promising outlook for future growth, driven by strategic expansions and a favorable market environment.

Full transcript - Orey Antunes Esc (ORE) Q4 2024:

Conference Operator: and welcome to Aurizon twenty twenty four Year End Results and twenty twenty five Guidance Webcast and Conference Call. Please note that this call is being recorded. After the speakers’ prepared remarks, there will be a question and answer session. Thank you. I’d now like to hand the call over to Patrick Downey, President and CEO.

You may now begin.

Patrick Downey, President and CEO, Aurizon: Thank you, and welcome everybody to the Aurzone Q4 and year end 2024 results and 2025 guidance webcast and conference call. While 2024 was another very, very solid year for the company, very strong results, we had record revenue, record EBITDA, record earnings per share and record net income, which I’m very pleased to state today. Gold production in the quarter was 36,502 ounces, which was a 37% increase quarter over quarter. We did expect a very strong Q4 and we realized that. Full year, 118,000 ounces 118,746 ounces, which exceeded the midpoint of guidance of 110 to 125.

Our gold sales in the quarter were 34,833 ounces at an average realized price of $2,632 per ounce, which resulted in $91,800,000 in revenue. And our full year sales were 118,697 ounces at an average realized price of $2,384 which resulted in record revenue of $283,500,000 All in sustaining costs for the quarter very, very solid in Q4 were $12.73 dollars and for the full year were $14.47 dollars which were within revised guidance, which was affected by obviously the gold price, which increased the royalties and the regional power issues, which were outside of our control. If those had not occurred, we actually would have been inside our actual guidance for the year, which is another very solid year. As I stated, record net income in the quarter was $30,100,000 and for the full year was $55,700,000 attributable to Aurizon shareholders. And we ended in the year in a very, very strong financial position, cash of $74,000,000 senior debt of $67,300,000 and available liquidity of $103,200,000 dollars And very importantly, for the second year in a row, we have had zero LTIs, which is very much attributable to the team on-site.

We had one point three three million hours worked during the quarter and five point three 7,000,000 worked in 2024. And we’ve now got over 19,000,000 worked LTI free, which is really and truly world class. I’ll now hand over to Peter Tam, Chief Financial Officer to go through the financial and operating highlights.

Peter Tam, Chief Financial Officer, Aurizon: Thanks, Patrick. For 2024, as stated earlier, Ozone reported record revenue, net income and earnings per share helped by an impressive fourth quarter. Gold production of 36,502 ounces in Q4 was driven by improved head grades and record mill throughput further fueled by record gold prices resulting in quarterly net income attributable to Aurizon shareholders of $30,100,000 and adjusted earnings per share of $0.06 For the full year 2024, net income attributable to Aurizon shareholders was $55,700,000 and adjusted earnings per share was $0.11 Gold sales were 118,697 ounces at an average realized price of $2,384 per ounce with all in sustaining cost per ounce of $14.47 dollars This resulted in a healthy all in sustaining cost margin of $937 per ounce. In terms of growth, we commenced construction of the Phase two Hardrock expansion in the second half of twenty twenty four after securing over $105,000,000 in new debt and equity. On debt, we upsized our senior secured loan facility with Chorus Bank, our trusted partner by another $58,000,000 under a new Phase II term loan.

A first drawdown of this loan was made in late December. Liquidity at 12/31/2024 stood at 103,200,000 with $74,000,000 in cash and over $29,000,000 in undrawn debt. With this liquidity, Stage one construction of the Hard Rock expansion is comfortably financed to commissioning at First Gold expected later this year. Finally, gold has continued its ascent with spot prices now above $3,000 per ounce, which will benefit Aurizon greatly as our gold production remains fully unhedged to rising gold prices. Next slide.

On production and unit costs for mining, mine tons were $4,700,000 in Q4 of twenty twenty four, a decline of 20% from the same quarter in 2023 as Q4 of twenty twenty three benefited from temporary utilization of a second mining contractor. Mining rates did improve in the last two months of 2024 once additional new excavators and dump trucks were placed into service by the mining contractor with mining rates in 2025 now hitting 2,000,000 tonnes per month. Plant throughput hit a new quarterly record in Q4 of twenty twenty four at 1,650,000 tonnes processed, a remarkable achievement when compared to plant design of 1,300,000 tonnes. Plant throughput was aided by softer blend of oxide ore in the mill feed as mining progressed into the southern pits at Siga East and Siga South, stable grid availability and no major planned maintenance. Processing costs per tonne saw a sharp drop in the current quarter when compared to the same quarter in 2023.

This drop was attributable to the record plant throughput and improved power costs as grid utilization was high at 92% and per tonne power consumption was lower due to the softer nature of the mill feed. With that, I’ll hand it back to Patrick. Thanks, Peter.

Patrick Downey, President and CEO, Aurizon: So now I’ll go through 2025 production and cost guidance. Our gold production guidance will be between 115,000 to 130,000 ounces, very similar to 2024, slightly more on the upside on the higher end. All in sustaining costs again between $1,400 to $1,500 we expect to hold that. Sustaining CapEx of $9,000,000 to $10,000,000 and growth capital of $44,000,000 to $51,000,000 which I’ll go through in a little later here and our Stage one hard rock expansion capital of $75,000,000 to $80,000,000 Our gold production like every other year that we’ve been operating in the oxides will be weighted towards Q1 and Q4, generally due to seasonality and mine sequencing, and we expect another strong Q4 in 2025. We also are investing in the future.

We are connected to the grid, but we expect that the availability will be between 90% to 92% going forward. So we are purchasing a fully installed diesel power plant, which will replace the rental equipment that we currently have and will allow us that 100% availability on the power, which is similar to what the other companies are doing in the region. Our tailings footprint expansion is really a one time this year. We’re doing spending $11,000,000 to $13,000,000 but I want to point out that is for the full construction of the life of mine footprint, which includes Stage one and Stage two of the hard rock. So we’re investing that capital this year that will allow us to go fully forward on the expansion of the hard rock and contain the oxides as well.

Our resettlement action plan, which is really villages and infrastructure and housing, would be 11 to 14. We have one more to do after this. So this is our second last one. So we’re almost finished on the RAP. They’ve all gone very smoothly, I’ve got to say, and gone very well.

And this will allow us access into the high grade T-seventeen area by the end of the year. So production forecast and ramp up, this is a very important point to make. I’ve talked about our guidance. We are now well ahead on Stage one hard rock that will allow us to exit 2025 at a run rate of 170 to 180 a year into 2026. We are now looking at bringing the Stage two hard rock forward.

We were originally planning to do that in 2028 with a start up in 2029. We are now in an active process of pulling that forward and constructing it in 2026. So we would exit 2027 sorry, 2026 at a run rate of 220,000 to 250,000 ounces a year. At current coal prices that really makes sense for us. We’ve just done a recent raise, which will allow us to look at that and we do make a decision to accelerate that forward in the second half of this year.

So we’re quite excited about that. So where are we at with the Stage one? Just a reminder, the oxide is in the background, which is operating. We’re building Stage one in the foreground. The Jaw Crusher will be for the full $5,000,000 so no changes there.

Putting in a SAG mill with five tanks and ore reclaimed system and some minor modifications to the gold recovery circuit. Concrete started three months ahead of schedule and has remained ahead of schedule. The engineering is ahead of schedule and bulk quantities and all of the equipment are in line with budget and mostly have been ordered. The SAG mill components arrived on-site last week as did all of the tank plate work and the CIL tank construction direction will start in March, will likely start beginning of next week. And as I stated, the TSF expansion is underway.

At the current schedule, this will allow us to ramp up in Q4 and we’ll exit Q4 into 2026 at the run rate of $170,000,000 to $180,000,000 Quick photograph to show what it looks like and we will be putting out videos every month starting probably in April. In the background, you can see the oxide plant and the tailings cell one that will the expansion that we’re doing will wrap fully around that, which will be for the full stage one, stage two hard rock and the oxide. In the foreground is the oxide plant. You can see plenty of room, plenty of space. We do design our plants so they can run effectively, which has been very much shown in the oxide, which is designed for 5.2 and is running at over six.

Photograph two there is the dump pocket and the jaw crusher. We’re just about to shutter those walls and start pouring those walls next week. CIL tanks are finished, all concrete done and we’ll be laying out and erecting the tanks beginning next week. That contractor is fully mobilized onto site. Photograph four is the ball mill raft, which is a fairly large foundation poured into the ground sorry, the side mill raft and then we’re pouring the shuttering the piers right now and we’ll be pouring the piers sometime in April.

And you can see in photograph five, the sag mill components have all now arrived on-site. So all going very well, all managed by us, by the way, it’s our team doing all of this work. So how do we get the 5,000,000 tons per annum? It again is another brownfields expansion. We expect it will cost between $90,000,000 to 95,000,000 We’re updating that estimate right now.

We’re updating our detailed engineering with our engineer, Lycopodium, and we expect to have that done in the next month or so. It will be four extra tanks, an oxygen plant, a ball mill, which we’ve already identified, a thickener and water infrastructure and a pebble crusher. We expect to go to the board to ask for that decision to go forward in late in Q2. And then we would get into that work and start ordering equipment later on this year. It’s about a twelve month construction.

We’re fairly confident of that. Obviously, we’ve got real life costing in terms of all components, so we’re fairly confident of what we can do here. And the planned accelerated ramp up would have us completion in Q4 and exiting 2026 at a run rate of around 230,000 to 250,000 ounces a year. So very exciting going forward. I hope to be able to announce that later in Q2 of this year.

So in summary, 2025 is really a transformational year for Aurizone. We’ve been running the oxide plant very successfully, met guidance two years in a row now, sort of last full year this year of oxide only. We are in the stages of completion in the hard rock expansion and that will bring our overall head grade up production to around 7,180 and will also reduce all in sustaining costs going forward. So as you see this year, the 1,400 to 1,500 will come down in 2026. It will also provide increased operational flexibility.

The one thing we’re doing here is the oxide plant can run completely independently of the hard rock, so it gives us great operational flexibility. We’ve also commenced a renewed exploration focus. We started that in Q4 of twenty twenty four. We’ve put out some results already. Just a reminder, we’ve got 2,400,000 ounces of mineral reserve at a $1,500 gold price with an average pit depth of less than 40 meters, so very, very shallow.

It supports the full ramp up of two twenty to two fifty. So anything above that really is additional to that. So the current drilling we started in the North had very positive results. We went down 200 meters below the reserve pit and we continue to sub grades of very thick widths of 1.64 over 46 meters. We’re now down in the South, which is a high grade P16, P17 areas.

We’ve got two rigs down there right now. We’re looking to planning to bring a third and we’re expecting to release results from P16 and P17 in the near future. And that will also start to show the underground potential of Bomburri, which again we’re very excited about. We did announce that we’re looking at an Australian secondary listing that is advancing fairly rapidly. We expect that that will give us increased trading liquidity and we’ve seen that already with that announcement.

Access to new investors, which we’ve already done. We raised $40,000,000 recently in a very, very strong financing. It was very much oversubscribed and several large Australian funds participated in that. And that will allow us to accelerate Stage two here in terms of making that decision on when we do Stage two in 2026. So that’s it.

A very strong year, a record year, very pleased to announce that and a very exciting year in 2025. Thank you. I’ll hand it back to the operator.

Conference Operator: Your first question comes from the line of Angelina Guo from Canaccord Genuity. Your line is now open. Good morning team and congratulations on the I have two questions on the 2025 CapEx guidance provided. First, in terms of the total CapEx for Stage one, it increased by about 16% to $93,000,000 if we take the midpoint of the 2025 guidance and also factor in what was already spent in 2019. I just want to know what’s driving the increase for the Stage one CapEx?

And could you also provide a bit more color on the other growth CapEx items?

Patrick Downey, President and CEO, Aurizon: Yes. A bit of that is some contingency we’ve added in there. And we’re also doing a little bit more work on preparing for the Stage two. So we’ve added a little bit more capital in there. We’ve also got more pricing and where we’re at and we’ve accelerated some of our equipment deliveries.

So we want to make sure that we’ve got things in place for the Q4 startup. That’s really it. On the growth capital, it’s really $20,000,000 to $25,000,000 on that power plant. We weren’t initially going to do that. We’re actually going to continue to rent at one point, which we wouldn’t have that capital.

But when we looked at that, we decided that it was much better for us to buy that equipment and own it. And we would operate it, we have full control of it then. And it’s for the oxide and the hard rock. So it’s a decision that we made. We looked at what other companies were doing in the region.

I’ve seen Keyak are now doing exactly the same thing and they will be on the grid. So it really was that opportunity to do that. We had the money to do it, so we decided to do it. On the footprint, the TSF, we have about $11,000,000 to 13,000,000 and that’s really around the doing the TSF for both the Stage one and Stage two. We could have done a smaller footprint there, but essentially doing the large footprint gives us that optionality that if we do the stage two in 2026 that TSF is there and ready to accept the full 5,000,000 tons from the hard rock and the 6,000,000 tons from the oxide going forward.

That’s essentially it.

Conference Operator: Okay. Thank you. That’s really helpful. And my second question is when should we expect the 2025 CapEx estimate for a Stage two as it’s on track to start later this year?

Patrick Downey, President and CEO, Aurizon: We’re working on it right now. We’ve actually engaged the engineers on that. They’re doing the what we call the FEED, the front end engineering and design. So we know what the obviously a lot of the components are. We will we’re looking at three ball mill options that we would expect to have an answer on here in the coming weeks.

Once that’s done, we will have our very, very tight estimate of that to go to the board. I expect that will happen later in Q2 and we’ll have an answer and a news to the market probably later in Q2 end of Q2.

Conference Operator: Okay, that’s great. Thank you. And that’s all for me. I’ll jump back into queue. Your next question comes from the line of Alan As of right now, since we don’t have any pending questions, I’d now like to hand the call back over to Patrick.

Thank you.

Patrick Downey, President and CEO, Aurizon: Okay, good. Thanks. As I said, very, very good 2024, a record year, 2025 transformational, really looking forward to getting Stage one of the hard rock started up and then making a decision on Stage two. But more importantly as well as the exploration that we have coming forward results throughout the year. So looking forward to a very, very busy 2025.

Thank you.

Conference Operator: Thank you for attending today’s call. You may now disconnect. Goodbye.

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