Aurelia Metals (AMI) – Delayed but not denied

Aurelia Metals produces and explores for gold, silver, copper, lead, and zinc. The company was incorporated in 2004 and is headquartered inBrisbane, Australia.

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Aurelia Metals recent guidance missed market expectations for FY26 and FY27 and has ultimately pushed out the free cash flow (FCF) inflection point by one year. Ord Minnett highlights that the near-term driver of softer group zinc output is largely the Peak South operation. This is due to zinc and lead grades that appear to fall away faster than we had expected as the mine approaches its end of life in around three years.

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Our investment thesis remains largely intact for the key value drivers of the business, i.e. Federation, a zinc-lead-gold-copper-silver project, and the base metals and gold Great Cobar extension of the New Cobar operation. Together, Federation and New Cobar account for more than 90% of our Aurelia valuation.

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We see investment appeal in Aurelia – based on our numbers and spot prices, we calculate a price to net asset value ratio (P/NAV) of just 0.4x and a FCF yield of 28% in in FY28. The unwinding of the P/NAV discount, however, is predicated on near-term delivery of its projects and reaching the FCF inflection point in FY27. We retain our Buy recommendation but cut our target price to $0.31 from $0.41.