Astral Resources (ASX:AAR) has been sold off so far this year, despite the continued advancement of the Mandilla gold project near Kalgoorlie.

The Mark Connelly-chaired company has dropped more than 55% so far this year and has a market capitalisation of just over $200 million.

Speaking at the Melbourne Mining Club last week, Astral managing director Marc Ducler said the company looked cheap compared to many of its gold developer peers.

He used $1.3 billion-capped Minerals 260 as a comparison.

“On an EV per ounce basis, we have MI6 with a $200 valuation on one end for a 1 gram per tonne orebody 70km from Kalgoorlie, and on the other end you have Astral’s $70 per ounce valuation on a 1g/t orebody 70km from Kalgoorlie,” Ducler said.

Minerals 260 just released a prefeasibility study for its 4.5 million ounce Bullabulling project this month.

“MI6’s Bullabulling project has a $2.3 billion NPV after they spend $180 million before they hit FID. Astral’s Mandilla has a $2.1 billion NPV,” Ducler said, adding that he adjusted Astral’s NPV to a 5% discount rate to match Minerals 260’s.

Looking at it in another way, enterprise value as a percentage of future NPV is 51% for Minerals 260 and just 7% for Astral.

“Is there difference in scale? Absolutely. MI6 has got three times the scale of Astral Resources, but does that actually justify three times premium for an EV per resource ounce basis?

“And then, does it justify seven times premium for an EV per NPV5 basis on what are essentially two pre-feasibility studies?

“So, either MI6 is expensive, Astral is cheap, or it’s somewhere in the middle.”

DFS ongoing

Mandilla has pre-production capital costs of $227 million for a long-life operation producing 95,000oz of gold per annum at all-in sustaining costs of A$2140/oz.

The post-capex, pre-capex NPV8 is $1.4 billion with a payback period of 12 months, based on a A$4250 an ounce gold price.

At $6000/oz gold, which is closer to spot, the NPV8 increases to $2 billion and the payback period drops to just six months.

At A$4250/oz gold, the project would generate free cashflow of $2.8 billion, increasing to $5.2 billion at A$6000/oz gold.

“In this current gold price environment, it will still absolutely print cash,” Ducler said.

A definitive feasibility study is underway and due for completion in the March quarter of 2027, followed by an immediate final investment decision.

While the DFS schedule has drifted by around six months, Astral is hoping to mitigate the delay with an early revenue opportunity at the Think Big deposit.

The company signed a letter of intent with contractor Mineral Mining Services for a development partnership and joint venture at Think Big, which has a resource of 85,200oz at 1.1g/t gold.

“This early revenue opportunity presents $50 million worth of free cash for Astral,” Ducler said.

“You put that together with our $73 million in the bank, and you see how quickly we get to bridge that funding gap for the development of Mandilla.”

Mandilla still growing

Astral has a 2.1Moz resource base across Mandilla and the nearby Spargoville and Feysville projects.

Exploration is continuing and resource updates are expected across the portfolio in early 2027.

The company has two drill rigs on site.

A diamond drilling program to test depth extensions at the main Theia deposit is underway and has been expanded from the originally planned 3000m to 7500m due to success.

“Our view was always that this deposit was still open at depth, so we set out to test that,” Ducler said.

“Every hole to date has logged visible gold. It is demonstrating the potential to significantly increase the scale of Theia.

“From a depth perspective, it’s clear that we can actually double this deposit in terms of its vertical extent.”

The latest results, reported last week, included 52.6m at 1.48g/t gold from 389.4m, including 0.45m at 17.9g/t, 0.3m at 16.4g/t and 0.3m at 18.3g/t.

Ducler said the ongoing exploration effort and the DFS would lead to a re-rate for Astral.

“Mandilla is a long-life, low-cost, high-margin gold project – the DFS is going to confirm that when it comes out,” he said.

“Our ongoing exploration effort is going to demonstrate our ability to continue to grow.

“We are well funded, and we have more cash coming with the early revenue opportunity, and the combination of that will see us well funded as we head into development.

“And compared to our neighbour in MI6, we are great value if you’re looking for exposure to a gold developer.”