Ora Banda Mining sets itself to cash in after reaching ‘critical mass’ from going underground at Davyhurst

Ora Banda Mining has reached “critical mass” after taking an approach that went against the historical focus of mining at the Davyhurst gold project north-west of Kalgoorlie-Boulder, the company’s boss says. Managing director Luke Creagh told the Diggers & Dealers Mining Forum last week the company had developed two underground mines — Riverina and Sand King — which meant it was now at the “start of our journey” for growth. Mr Creagh said the Ora Banda land package had had a “chequered history” during the past 20 years because it had been “massively under-capitalised”. He said the belts within a 140km radius were “huge regional, deep-tapping structures known to host high-grade gold”. “But because of the under-capitalised nature and the focus on open pits, everyone has only ever looked for surface gold,” he said. “So, when we changed the strategy three years ago to look for underground (and) we fast-forward with very little capital, very little drilling, we found two undergrounds and got them up-and-running, but really there’s whole trends we have to unlock here. “We’ve got seven major mineralised trends and the top 100m has been peppered and shown a lot of gold, and below that 100m there’s less than 5 per cent of the drill holes. “And that’s really the next phase of what we’re doing.” Mr Creagh said transforming the company from a single-asset to double-asset operation had halved the risk and was a huge benefit to the business. “It’s an order of magnitude shift happening in FY26 — going from single-asset open pit to then single-asset underground to dual-asset undergrounds,” he said. “We hit critical mass, cash flows go up — but suddenly the risk to the business starts dropping, we build stockpiles and we get access to that upside of two major mineralised systems.” He said Riverina, 50km north of the Davyhurst mill, had been a “stock standard ramp up of a stock standard narrow vein” operation. “But it is quite prolific in terms of the strike point,” he said. “We’re starting to view Riverina as a base source of feed between 80 to 100,000oz for seven to 10 years and the drilling we do this year we’ll start infilling and pushing it into resource and reserve.” Sand King, 40km south-east of the plant, had reached steady state mining in July. “When you think of Riverina, first drill hole went in, within 12 months we cut the portal, within 12 months we’re at steady state and we got a payback within 18 months,” he said. “The same thing’s happening at Sand King, just slightly quicker on the back of a stronger gold price. “So, our ability to find these mines and turn them on quickly is pretty outstanding and it also once again points to the prospectivity of the belt because these are only the first two we’ve drilled. “So, these aren’t the best two, they’re just first two, and it’s unlikely they’ll be the best two as we go forward.” Davyhurst currently has a mineral resource estimate of 23.3 million tonnes at 2.6g per tonne for 1.95 million ounces of gold, and an ore reserve of 2.27Mt at 2.7g/t for 190,000oz. The company had a market capitalisation of $1.384 billion, cash in the bank of $84.2 million, debt of $4m, and an undrawn $50m revolving credit facility at July 30. Mr Creagh said production had steadily increased for the past three years, with FY25 being a 60 per cent rise on FY24 — all while the gold price dramatically increased from $3500/oz to more than $5000/oz. “That’s all organically grown and that’s (been) done as rapidly as you can get . . . it points to the prospectivity of the belt and you start drilling the deposits, start trying to understand them on a bigger scale, you can start seeing what it actually means.” He said the 48,000oz produced in FY23 generated about $140m in revenue, while the targeted F26 production of 140,0000z-155,000oz result would earn $750m at the current gold price. “So, that’s what I talk about right-sizing the balance sheet,” he said. “But the other thing we start noticing is (the earlier years) were single asset, single asset, single asset, we’re finally to two undergrounds this year and what we’ve done is we’ve capped our development capacity. “We’ve been doing upgrades to the mill to get it as best we can . . . so really it’s about this next phase . . . is looking at the next growth option of expanding the mill capacity to three million tonnes. Mr Creagh said Ora Banda had a “small, high-cost plant”. “When you’re talking 1.1-1.2 million tonnes, the costs sit between $50 and $60 a tonne,” he said. “It’s hard to get (costs) lower at that scale. “When you build a three million tonnes per annum plant, it actually runs almost the same total spend as the 1.1-1.2 million tonne per annum plant. “So, what that means is you can get a bigger plant operating but you don’t add any operating costs to the business.” Ora Banda is due to report the results of the mill expansion feasibility study in the March 2026 quarter. Mr Creagh said plenty of work had been done on the company’s corporate structure. “From a people perspective, we’re really starting to get all bases covered,” he said. “We’ve got a corporate team now that can not just run one or two operations, we can start building off this without really adding to corporate costs.” He said the company had also focused on “culture and capability” at all levels. “So, not just the corporate executive level (but) right to the team level,” he said. “Right now we’ve seen turnover drop 50 per cent over the year, we’re sitting at below 20 per cent, which is outstanding for the mining industry.” Mr Creagh said Ora Banda’s balance sheet had never been stronger. “I think back 12 months ago it was actually a pretty stressful period,” he said. “(We had) one underground going, we started with $26m in cash . . . we had to start Sand King (underground mine), which we did in August, and it was a self-funded ramp-up with our second underground, plus we wanted to do some drilling. “Over the year . . . we actually grew cash to $84.2m — and the exciting thing about that was we actually did it after (putting) $124m back into the business, both in capital and ramping up that second underground, as well as exploration getting under way on different deposits. “In addition to that, we put in a $50m revolving credit facility just to start right-sizing the balance sheet. “Getting this balance sheet and critical mass capability is (about) getting to the start, because finally we have the ability to deploy resources and funds into that next phase.” Mr Creagh said all this meant the company was finally in a position to “deploy resources” and “drilling power into these deposits”. “What we’re going to do is . . . drill about 330km in this next 12 months and spend $73 million,” he said. “It’s almost double the previous three years combined. “The previous three years (activity) found us two undergrounds, extended one to a kilometre and extended a potential third one down to 400m and got our eye in on a few others. “You can kind of see, you can get a feel for what 330km can do. “And we’re not walking up to greenfields, we’re walking up to pretty advanced targets — and we’re going to get a lot of data out of them.” He said these targets included the Little Gem and Waihi deposits.