Aura Minerals (ORA.TSX) vaulted itself into a finite class of mid-tier gold producers when it entered into a deal with Yamana Gold (AUY) on June 9, 2009 to acquire three producing gold mines, the San Andreas mine in Honduras and the Sao Francisco and Sao Vicente mines in Brazil. This transaction will make Aura a mid-tier gold producer, boasting an annual production profile of approximately 220,000 ounces of gold. The acquisition of the San Andreas mine is complete while the Brazilian gold mining assets are scheduled to be completed in the first quarter of 2010. With the company’s newly acquired producing gold assets, in addition to a strong development pipeline of projects, including the Arapiraca project and the Aranzazu copper-gold-silver mine in Zacatecas, Mexico, CEO Patrick Downey has been busy informing the market about his under-followed mining company that offers investors both leverage to the gold price and at a valuation discount to its peer group.

Late yesterday the company announced the completion of the preliminary economic assessment study on its advanced-stage Serrote da Laje deposit at its wholly-owned Arapiraca Copper-Gold-Iron Ore project in Alagoas State, Brazil. The results of the study were positive and support an open pit and concentrator processing 41,000 tonnes per day of ore feed, producing a copper/gold concentrate and an iron rich (67% Fe) magnetite concentrate. Average annual copper production is expected to be 137 million pounds with the average in the first three years being 155 million pounds. Average annual magnetite production is expected to be approximately 1.3 million tonnes of concentrate. The average life of mine cash cost for copper is estimated at $0.82 per pound including by-product credits for iron and gold sales. The expected payback period is 2.8 years, while the expected after tax net present value is $325 million at a 10% discount rate and the after tax internal rate of return is 25.4%. The study also assumed the following, below-market commodity price assumptions: $2.00 per pound of copper, $800 per ounce of gold, and 85 cents per dry metric tonne unit of iron ore fines.

Results of the study show that the Serrote Deposit contains 157.4 million tonnes of mineable sulphide material in the Measured and Indicated categories (64.8 million tonnes in the Measured and 92.6 million tonnes in the Indicated category), and an additional 12.2 million tonnes in the Inferred category, which represents approximately 7% of the total tonnes. Serrote also contains a significant oxide resource, which was treated as waste for the purposes of the study, although does represent additional potential ore to improve the economics of the project. Early test work on the oxide portion exhibited an average copper recovery of 64%. Preliminary economics based upon an 8,000 tonnes per day of oxide process facility at an estimated capital cost of $52 million and estimated operating costs of $6.57 per tonne of ore yield a pre-tax NPV of $34 million at a 10% discount. Aura is planning further test work and engineering studies to better determine the economic feasibility of a separate oxide process plant.

Based on these results, Aura intends to move forward with a feasibility study level for Serrote by the third quarter of 2010. Concurrently, drilling has begun in order to acquire dedicated representative metallurgical samples to follow up on the recently completed test work at SGS Lakefield in Ontario, Canada. The company stated that this work will be aimed at further improving copper recovery and concentrate grades and optimizing the process flowsheet. Aura has also begun drilling to convert Inferred resources to the Measured and Indicated categories. In addition, the company is conducting follow-up drilling at the Caboclo target, which, according to the company “could provide additional near-surface higher-grade copper and gold ore, which could be fed to the concentrator in the early years of operation thereby further enhancing project economics.”

Patrick Downey, Aura’s President and CEO, stated “we are very pleased with the positive results of our study. This study further demonstrates that the Serrote Deposit is robust and would provide strong economic returns in an area of excellent infrastructure in Brazil, one of the world’s most favorable mining jurisdictions. We have recently received the Installation License for the Serrote Deposit, which will allow the Company to proceed to the construction stage and we have excellent exploration upside near the Serrote Deposit to add to the project resources and economics.”

In morning trading shares of Aura were unchanged at C$2.80 while the gold price was down $1.38 to $1,005.88 per ounce.