This one is last company from my digging at the lower cap end of the market, and after this I will try see if I can get my head around some bigger companies outside of gold.

High level summary

OzAurum Resources are a company looking to transition from explorer to producer in the Western Australian Goldfields. Their team has a mix of Kalgoorlie locals with deep operational history and technical experts who have previously taken assets from IPO to production. They have a large gold resource and are looking to commence heap leaching operations later this year.

Leadership, Governance and Other Related

Andrew Pumphrey: Founder, CEO & MD 

A geologist and mine surveyor with 30+ years in the WA Goldfields. His experience also includes the operation of a private underground gold mine, with the necessary experience to run a smaller scale operation in this location from his operations manager role with Horizon Minerals’ Boorara open pit. MacPherson Resources and Intermin Resources merged to become Horizon (now Maritana).

Andrew personally explored and owned some of the Mulgabbie project tenements for decades before transferring them to OZM.                                                   

Ashok Parekh: Non-Exec Chairman

A highly respected Chartered Accountant based in Kalgoorlie for 40 years. He has advised dozens of mining companies and was instrumental in numerous IPOs and gold mine developments. He provides the financial and local networking experience, which also includes time on the Horizon Minerals board.                                              

Jeffrey Williams - Non-Exec Director 

A mining engineer with 40+ years of experience. He was the MD of Mineral Deposits Ltd for 15 years and has a resume spanning mine planning, feasibility, and full-scale development.                                                                                    

Jessica Fertig Non-Exec Director

Appointed in January 2025, she brings over a decade of investor relations and corporate strategy experience in her boutique firm. Her background in multiple IPOs helps bridge the gap between technical progress and market sentiment.

The directors have approximately 18.3% ownership in the company, which is only dwarfed by the recent $4.1m investment into the company by Forrestania. A summary of their holdings has been provided below.

Market Capitalisation:

OzAurum currently has a market cap of $27.75m, trading at .097c with 286,101,873 currently shares issued. This can be further diluted by an additional 40.2m options with various strike prices ranging from 5c to 23c, and a weighted exercise price of 17.9c.

Financials

Following the Forrestania Investment, the company has approximately $4.5m in cash to progress the feasibility study and development activities for the Stage 1 open pit mining and commence heap leaching activities.

The company made a net loss of $2.279m in FY 2025/26, and $2.535 in 2024/25 exploring the projects and building a mineral resource estimate. No mining activities were completed in these years.

I am expecting a loss in the vicinity of $3-4.5m this financial year, but expecting they will be profitable next FY.

Former Partnership with Line Hydrogen:

During the 2024 year, OzAurum entered into an 50/50 profit share agreement with Line Hydrogen Pty Ltd and BIM Metals Pty Ltd (together LHBM) to complete the Mulgabbie North Heap Leach Feasibility Study. The project was intending to deliver ‘net zero gold’. The opportunity was to try and replace the diesel inputs with green hydrogen, with the renewable infrastructure being funded by Line Hydrogen. The feasibility study for the Mulgabbie north heap leach project was 100% funded by Line Hydrogen.

On 12 August 2025, Line Hydrogen Pty ltd was placed into voluntary administration, which allowed OzAurum to negotiate with the administrator to regain 100% control of the Mulgabbie North project via a Deed of Release The Deed released both parties from the obligations of the Mulgabbie North Feasibility Agreement (announced on 12 September 2024) at no cost to either Party.

OzAurum have since ditched the net zero gold approach and are looking to undertake the traditional mining operations with a heap leaching plant.

Mulgabbie North Project

The Mulgabbie North Gold Project is located approximately 135 km northeast of Kalgoorlie in the Eastern Goldfields of WA, in a typical greenstone belt geological setting within the prolific Archaean Yilgarn Craton. The Eastern Goldfields is a world-class gold district, serviced by the City of Kalgoorlie-Boulder a significant mining and infrastructure hub.

An interpretation of seismic data identified four north-south faults that cross the Relief Shear running through the Mulgabbie North Gold Project. Two of these new cross fault target zones identified at Mulgabbie North were identified as targets for drilling, with drilling commencing at the first target in early January 2025.

The first Aircore (AC) drilling programme commenced in early January 2025 at the newly identified Cross Fault target area which is situated some 1.3km south of OZM’s most southern AC drilling undertaken along the highly prospective Relief Shear corridor.

Site & Infrastructure Access

OzAurum has an established camp and office situated onsite at Mulgabbie with good communication infrastructure available. Access to the site is via the Pinjin-Tropicana Road that has been recently upgraded to Main Roads WA specifications allowing road train access with concessional loading.  

The OzAurum land access is from Kalgoorlie is via the heavy haulage road then 15km north west along the OzAurum L28/48 access road to Mulgabbie North.

Given the significant mines in the location, it is not expected that the company would face serious challenges finding staff to work at the facility.

Proposed Heap Leaching operations at Mulgabbie North

The current plan for Mulgabbie North is staged as follows:

Stage 1: Expedited 10ha heap leach operation, designed to fast-track permitting and development. Focussed on the Supergene/Oxide ore, the primary focus of this stage is to prove that the heap leach at Mulgabbie North is feasible.

Environmental approval has been granted for Stage 1, which is now only pending final permitting (Project Management Plan, Dangerous Goods and health poisons) along with the installation of heap leach infrastructure before mining commences.

Stage 2 & 3: Larger (2Mt) heap leach facility planned on M28/240, providing scalability and operational leverage. The Stage 2 expansion will start to include the blending of Transition ore and then moving onto leaching the deep Fresh ore.

Based on the current mineral estimates, the Mulgabbie North project could have an estimated project life of up to 13 years with their current project/mineral estimate.

OzAurum recently purchased an old agglomeration drum for the upcoming stage 1 heap leaching process. From my understanding, the ore is crushed to around 24mm and then put through the agglomeration drum where it is mixed with a small amount of cement until pellets are created.

The pellets are then loaded on the pad where cyanide is percolated through until the gold is leached and returned to the ponds. Once the leaching process is completed, more agglomerated pellets are then added on top of the pad, and with the process continuing several times until the recovery rates slow and/or the planned 7m height limit is reached. There is no need to re-crush ore after, they just lay another pad on top and keep going.

Once they hit Stage 3 with the fresh ore, they can either choose to they leave the ore as is on the pad and start again, or relocate the waste to the waste dump or an empty mining pit so that leaching can recommence at the pad..

Current metallurgical testing on the Heap Leach agglomeration plant is showing gold recovery up to 90%, which was achieved in its previous use at the Marvel Loch Heap Leach Project. The agglomeration plant was then used at Bullabulling to process the equivalent of 1,000 tonnes per day (350,000 per annum) which helped them to produce 96,000 oz of gold at 1.14 g/t.

The proposed design they are using is comparable to what was utilised by the same agglomeration plant when it was used at Nifty Copper, and the OZM team believe that similar results could be achieved at Mulgabbie North. The agglomeration plant has also proven that it can be run to approximately 2,500t per day in the past, which aligns with the proposed goal of 1MT processing capacity during Stage 2/3 of the project.

The heap leach plant refurbishment by Polaris Engineering is 90% complete and final dry commissioning before installation at Mulgabbie North.

Civil and site works on the proposed heap leach facility will be completed inhouse following approvals to manage costs with the option of using local contractors to undertake specialised works such as installation and testing of dam and heap leach liners.

Firming up inputs for the Scoping Study

Recent grade control drilling at the James Stage 1 pit has discovered gold at various depths and grades, mostly exceeding the current grade estimate of 0.7g/t at Mulgabbie North.

Diamond drilling has also been completed earlier this year, with outputs being used for column leach metallurgical test work.

The scoping study is expected to be completed this year, with a program of 18,000m RC drilling to help improve ore confidence for the next stage of mining. Given the recent results achieved, drilling will also help determine if any ore has high enough grade that it can be mined and processed outside of the heap leach plant.

VM Drilling has accepted the 18,000m drilling work and has elected to receive payment in scrip (4.1m shares), which to me demonstrates their belief in the viability of the project and the upside potential of the company.

Further growth opportunities for Mulgabbie North could include:

• 18,000m drilling program could justify a larger pit footprint
• There is approx 4km of relief shear yet to be tested

In a worst case scenario, there is enough measured resources in the ground to get through to around mid 28/29 should Stage 2/3 not be considered viable. They may need to get additional approvals over time, but could easily continue with a smaller pad/footprint that are supported by the gold price and project economics.

Patricia Gold (Heysen's Find)

The Patricia Gold Project is located approximately 150 km northeast of Kalgoorlie in the Eastern Goldfields of WA.

The company faced a broad regulatory setback with the refusal of its Section 18 application over the entire E31/1186 license, which normally restricts activities near heritage sites. However, OZM have successfully secured a specific 'carve-out'" approval to drill the high-priority, high-grade targets at Heysen’s Find. This allows exploration to proceed along a 1km strike length to the north, effectively de-risking the most promising portion of the license while the broader land access issues are managed.

A Programme of Work (POW) has been granted by the DMPE to undertake exploration drilling of these targets and OZM plans to undertake an RC drilling program at Heysen’s Find.

While historic investigations at Patricia have been limited, the site has the potential to act as a high-grade satellite "feeder" or a potential Stage 4 successor, located within an economical 50km trucking distance of the Mulgabbie North infrastructure. This proximity allows the company to leverage the existing heap leach pads and agglomeration drum, essentially "plugging in" Patricia's ore once the initial Mulgabbie North resource is depleted.

Other opportunities (toll treatment or relocating heap leach infrastructure) could be pursued post Mulgabbie North processing if significant resources are found at the Patricia Gold project site.

Brazil Catalao & Salitre Niobium & REE Projects

The Salitre and Catalao Niobium REE Projects were identified as prospective areas for carbonatite intrusion related niobium mineralisation and are situated within the Alto Paranaba Magmatic Province (APMP). The APMP hosts 97% of worldwide niobium production, all from carbonatite intrusions.

The Salitre Project is adjacent to the Salitre and Serra Negra carbonatite complexes that host significant niobium and phosphate Mineral Resources. Open pit mining and processing at the Salitre carbonatite produces phosphate, which in turn hosts niobium and rare earth minerals.

During the September 2024 quarter, OZM undertook soil sampling programs. The first programme identified a widespread niobium in soil anomaly over a 1km2 area, with a peak niobium in soil result of 271 ppm. The main target was identified as an ultra violet (UV) anomaly by the OZM consultant Dr Neil Pendock and OZM considers this to be an exciting opportunity, based on the high gamma radiation readings and a cluster of nine UV anomalies within the niobium anomaly.

OZM has reduced its tenure and associated holding costs in Brazil to focus on the Target 1 area. On completion of the ground magnetometer survey, the Company will review proposed plans for diamond drilling at Target 1 utilising the company-owned diamond drilling rig and drilling crew. In the Jan 2026 announcement, the company confirmed that the magnetometer investigations have been delayed

This project is a slow burn and not progressing quickly given the focus at Mulgabbie North.

Why do I like them?

• The CEO has significant skin in the game with a 15.1% ownership stake.
• CEO has experience with the geology, exploration and the mining operations sides of the business in the Kalgoorlie Region.
• From the outside it looks like Andrew is running a tight ship to keep costs down, and using his own industrial yard workshop (at no cost) to keep costs controlled for the refurbishment of the agglomeration plant, or progression of works using the company owned drill rig in Brazil.
• Potential takeover opportunity by Forrestania, using the heap leach as a secondary income stream to further advance their position in the region (especially if OZM can prove that they are a successful gold producer)
• OZM can utilise the operational and metallurgical engineering experience of the FRS Chairman (now they are shareholders) to further bulk up the scoping study - refer announcement on 30 January 2026.
• Management reducing ownership in the Brazilian tenure to only focus on promising locations.
• No longer constrained by Line Hydrogen joint venture for the feasibility study progress and pursuits of net zero gold.
• Very low shares issued to date.
• Other bigger mines in the area, who could potentially sell their lower grade ores to OZM to keep heap leach operations active at Mulgabbie North.

The majority of the company’s value is in Mulgabbie North site, and any subsequent finds in at the Patricia gold Site or Brazil Niobium projects will help mitigate the single project risk.

Risks/Impacts:

• Execution Risk - Owner-miner approach across mining, processing and civil works is being pursued to deliver low operating costs and capital efficiency. This could be a risky outcome especially seeing that the board does not have any heap leach experience. They will be relying heavily on the metallurgical advice from the FRS chairman, however there are no third parties to recover from if things go bad.
• Stage 2/3 completion risk – scoping study financials do not support additional stages being delivered (low likelihood given the margin but still a risk)
• Resource size too small for big players to get interested.
• Single project risk – any significant outage of the operations prevents money coming in the door and impacts the bottom line.
• Significant project challenges arise during scoping study or production, such as:
• increased capital development costs in the scoping study
• grades being significantly lower than what is tested
• heap leach recovery rates are nowhere near the 90% recovery rate
• unviability of the heap leach program or current infrastructure once you get to the Fresh ore level in Stage 3
• resource shortages (people or diesel)
• significant input cost inflation
• weather related events
• other unforeseen items or reduce the overall viability of the project.
• Forrestania currently holds a blocking stake in OZM which could potentially deter other companies from considering a takeover. Forrestania has a $500m market cap vs OZM market cap of $27.75m. Unless something significantly dire happens, a reverse takeover by OZM is unlikely.
• OZM currently has a trading volume of less than 1m shares per day, with more buyers than sellers on many occasions. This could be attributed to the size of the company, along with the Top 25 holders having just over 50% ownership in the company. There is a possibility that volume potentially improves over time once the market cap of the company increases.
• Some AI still seems to think that their agreement with Line Hydrogen is active, which could have some interested parties worried about a 50% stake in the profits.

I am aware that there is a bull case scenario where the grades achieved are far less than the 0.7g/t rate over time. The model I have prepared has some assumptions baked in from a production perspective (i.e. 80% recovery and 10% less contingency than they suggest is possible). However if grades get down to 0.5, its operating just above breakeven at $5500 gold.

Valuation:

DCF Approach

With the help of Google, I have put together a highly speculative DCF approach for the future earnings. Using a discount rate of 8%, recovery rate of 80% and average gold price of $5,500 AUD, the project would have an NPV in the range of $240-$300m. I have tested two different scenarios, being an 8 year mine life and 13 year mine life, along with a +/- $100 average gold price for the life of the project.

I have done some extensive calculations using my own modelling spreadsheet (a derivation of the sheet kindly shared by Bkrdzn for AAR).

In FY 25/26, I am expecting the company to produce 4500 to 5000 ounces of gold, which would equate to revenue of $23-29m and equate to an NPAT between $4.5 to $7m.

I have mapped out the Stage 2-3 to be operational near the end of FY 26/27, and aiming start ramping up to nameplate capacity from Q4 27/28. Using an average gold price of $5,500, this would equate to a revenue of $38-$53m in 25/26 and $50-$65m in 27/28, with respective NPAT being $7.7- $15m and $15-19m.

All things going to plan, the FY 27/28 earnings per share could be at least around the 5-8c mark, which is getting close to the current trading price per share of the company. Once you apply a more appropriate P/E for the company, I could easily see this trading anywhere between the 30 to 60c range.

These calculations are based on the following assumptions:

• A starting AISC of $2,700 AUD which slowly increased over time (which has some contingency built in for diesel price increases)
• A gold price between $5000 and $6,500
• A production rate of 320,000 tonnes per annum which considers outages, maintenance and unforeseen issues.
• Recovery rate of 80% and average grade of 0.7 in line with resource estimate
• No further capital raises are necessary and any Stage 2/3 works can be completed using revenue generated from operations.
• First revenue from gold sales will commence around October 2026
• Exploration/drilling costs of $1m per annum, which is almost double the minimum requirements under their leases. This will hopefully bulk up the resource estimate and upgrade some from inferred material to indicated/measured.
• Approx. $15m costs to scope, prepare and install the infrastructure for Stage 2/3 heap leaching
• Stage 2/3 FID is reached by June 2027 after the scoping study and further economics are tested, the Stage 2/3 expansion is approved, constructed and operational by end 2027.

Any extended period with the spot gold price above $6,500 will significantly increase the NPAT for the company.

I am aware that a 8% discount rate is very low for a project of this nature, however I am not wholly relying on the outputs for my valuation and its used to to also show the significant gap between the current market cap and the potential future cash flows.

I am primarily utilising my modelling work and a market P/E to come up with my valuation.

Note: The timeline and financials in this analysis will need to be updated once the scoping study lands, or further information is known about the delivery timeframes.

EV/OZ approach

This approach has been used as a check method against the valuation above.

With $4.5m cash and $27.75m market cap the company has an Enterprise Value of approximately $23m. Dividing this by the estimated 260,000 ounces of gold gives an enterprise value of $89/oz. I do not that only 15% of the resources are measured,

In the current market this is the value that is attributed to early-stage explorers, with small scale new developers typically having EV/OZ somewhere between $300-600/oz range.

This also demonstrates significant upside potential of this company once heap leach operations are underway.

Final Summary

Near term heap leach gold producer with rerate opportunity once they start operating. Even more upside if they can get to FID at the same time the scoping study is completed.

Expecting a rerate to the 20-35c range when the scoping study is completed and a firmer NPV is available to inform the FID. This will bring the price closer to the $300/koz and a forward P/E of 7-10 on the expected earnings.

Disc: Held IRL and SM.