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Murray Ward
South American-focused developer Aguia Resources looks to have rounded the corner after its latest quarterly report showed customer receipts more than tripled to $639,000 as its twin gold and phosphate projects begin to deliver cash flow.
The revenue surge from $200,000 in the previous quarter signals a significant operational turnaround, with the company’s high-grade Santa Barbara gold mine in Colombia hitting breakeven for the first time and early sales flowing from its massive phosphate stockpile in Brazil.
The Colombian operation has been the star performer, with record September production covering all local operating and corporate costs. The mine produced 36.75 ounces of gold from 105 dry tonnes of ore, generating gross revenue of $218,000 for the month.
Notably, the ore processed in the quarter through a third-party plant owned by the Colombian Mint averaged a solid 10.88 grams per tonne (g/t) of gold. The most recent batch hit an even more impressive 12.75g/t. With the operation now standing on its own two feet, Aguia is looking to double monthly output from 100 tonnes to more than 200 tonnes in the coming months.
While the Colombian gold mine rings the till, the company is also advancing its flagship Três Estradas phosphate project in Brazil, where it has built a 30,000-tonne stockpile of ore – with an estimated value of $5,000,000 – ready for processing. A further 1600 tonnes of processed ore is also available for sale at its Cacapava plant, which operates under a separate licence to the mine. At the current production rate of 4000 tonnes per month, Aguia expects this inventory to support sales for the next six months.
The company has already demonstrated a strong local appetite for its fertiliser product, locking in a whopping $2.3 million in sales for 11,000 tonnes within just six weeks of commissioning its plant. More recently, it landed payments for 825 tonnes of its Pampafos organic phosphate product at an average price of A$192 per tonne.
The timing of the newly operational phosphate venture looks spot on, with Brazil’s government keen to bolster domestic fertiliser production to reduce its heavy reliance on imports. A federal $2.7 billion program known as “Profert” was recently approved to incentivise local producers, providing a powerful tailwind for projects such as Três Estradas. With the incumbent government returned to power in the recent election, that policy support looks set to continue.
While Aguia continues to mine, process and sell phosphate under its existing operating licence, a legal challenge to its environmental licensing process remains unresolved. However, the company expects the Federal Regional Court to revisit the case within 30 to 60 days after a dissenting judge prioritised the matter for review, while the local municipality of Lavras do Sul has also sought to overturn the earlier ruling.
The project has attracted significant political support, with more than 20 mayors, councillors and parliamentarians attending a recent public rally in Porto Alegre to back Três Estradas and the regional investment it promises.
The company is also shoring up its future ore supply, having kicked off an environmental assessment for its nearby Passo Feio tenement, which could provide a replacement feedstock for Três Estradas down the track.
Aguia ended the quarter with $499,000 in cash after spending $1.2 million on exploration and $1 million on property, plant and equipment as it ramped up its projects. Management says it is currently in mature discussions for a $5 million financing package to bolster its balance sheet.
After weathering some serious operational and legal headwinds, the company is now showing the market the power of its two-pronged South American strategy.
Aguia’s Colombian gold project is no longer just a prospect; it’s a cash-generating engine providing the financial muscle to help navigate the legal process in Brazil. With its Brazilian phosphate project backed by favourable government policy and a massive stockpile ready to go, the sharp jump in quarterly revenue might just be the first chapter in a significant turnaround story.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
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