29Metals Limited

Thank you for standing by and welcome to the 29 Medals Limited June quarter webcast and call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Mike Silferski, Group Manager, Investor Relations. Please go ahead.

Thank you, Melanie. Good morning, ladies and gentlemen. My name is Mike Sliperski. We will be speaking to 29Metal's June quarterly report, which was released to the ASX this morning. The call and parallel webcast is being recorded and will be available for replay via the 29Metal's website and the Open Briefing website. 29Metal's Managing Director and CEO, Peter Albert, our COO, Ed Cooney, and CFO, Peter Herbert, will each lead you through the June quarterly highlights before we open the call for your questions. So now I'd like to hand over to Peter Albert to commence the discussion. Thanks, Peter.

Yeah, thanks, Mike, and welcome, everybody, and thank you for joining us this morning. The June quarter was predominantly focused on Capricorn Copper and getting ready for a restart in the third quarter, as well as advancing the de-bottlenecking activities at Golden Grove for the acceleration of production in the second half of the year. I'll come back to specific activities shortly. As always, safety and well-being at 29 Metals is our primary focus. TRIFR tripper remained largely stable during the quarter, although we did have one lost time injury. Of course, there's no production yet to report from Capricorn, as we're still in suspension. Golden Grove ramped up production in quarter two as compared to quarter one, largely in line with our plans. Copper production at 4,200 tons was a 31% increase on Q1, and zinc at 13,400 tons was a 54% increase on Q1. Gold and silver production also increased against Q1. The two key drivers for the increase in production were firstly, the release on the mill throughput constraint following approval of the TSF3 lift approval in late April, and secondly, the improved production from Xantho Extended. All production from Xantho Extended was 76,000 tonnes, a 73% increase on Q1. We also achieved a significant increase in development metres at Xantho Extended to 570 metres from 410 metres in Q1, i.e. a 39% increase. Importantly, this increase in Xantho Extended development is before the ventilation updates and upgrades with the new booster fans, which will come online this quarter. Ed will talk to the booster fans in more detail shortly. We have provided an update to guidance today, guiding copper and zinc to be in the bottom half of guidance and adjusting our guidance for gold and silver to 15,000 to 17,000 ounces and 750,000 to 850,000 ounces respectively. Whilst gold and silver production remains weighted to the second half as previously guided, The lower gold and silver production in the first half has resulted in guidance for the full year being revised. Cost guidance, including Capricorn copper recovery costs, remains unchanged. Absolute site costs in Q2 were reduced as compared to Q1, despite the increase in activity levels. This is, again, despite continuing inflationary pressure and reflects early results of the cost-out program we are implementing. Peter Herbert will talk to some examples shortly. C1 and AISC costs are recorded as increases on Q1, driven by a number of factors, notably reduced byproduct credits as a result of lower prevailing zinc prices and higher charges related to movements in stockpiles, with a significant increase in Golden Grove concentrate stocks sold during the June quarter. Golden Grove, of course, by its very nature, is always lumpy in terms of cost outcomes, and we would not expect Q2 outcomes to be reflective of full-year performance. Looking at longer-term operational de-risking projects, and besides the Xantho extended booster fans, we are focused on life of mine tailing storage facility submission to the regulator in this third quarter, and the Gossan Valley submission, which is slightly deferred to the fourth quarter this year. We continued conversion drilling activities at Cervantes during the quarter, with approximately four kilometers of our seven-kilometer program for 2023 completed so far. The focus of this program is to convert a significant proportion of current inferred resources into indicated in order to inform feasibility studies for the project. This would likely occur in the second half of 2024 after release of our next update of mineral resources and oil reserves estimates early in the new year. At Capricorn Copper, our focus has, of course, been on recovery. We've planned activities for the first phase of the restart of operations on schedule. In the first instance, this will be a restart of the mammoth and greenstone mines and process plant in this current quarter that we're in today, with planned commencement of dewatering of Esperanza South in the fourth quarter of this year. Towards the end of the last quarter, the regulator, the Department of Environment and Science, DES, requested additional technical information for the purposes of the approval of the ETSF lift. The further extended approval process obviously puts additional pressure on tailings storage capacity. However, given reduced throughput as well as the number of other short-term tailings options, we remain confident of an ability to secure tailings solutions prior to the implementation of our planned life of mine tailings storage facility outcome. We will be presenting the Life and Mind Taylor Storage Facility proposal to DES shortly, and subject to any initial comments from DES, we will rapidly move to detailed design and approval submission. In terms of financial outcomes, Peter Herbert will discuss these in greater detail, but a couple of highlights. Revenue of $99 million, as expected, down for the quarter compared to the first quarter. This is, of course, a result of Capricorn Copper being suspended and lower revenue at Garden Grove, primarily as a result of lower zinc prices. Cash balance at the end of the quarter of $127 million, noting the unwinding of the $31 million favorable working capital at the end of the first quarter and the drawdown of the U.S. $40 million revolving credit facility. Average copper price received during the quarter was $3.75 a pound U.S., and for zinc, $1.13 U.S. a pound, down 9% and 17% respectively on the March quarter. During the quarter, 29 Metals lenders provided covenant relief under the group's corporate debt facilities, and in respect of insurance, significant progress has been made with 29 Metals insurers. Key factors in our submission include the magnitude of the claim, the extent of damaged facilities, and the complexity of the claim. Insurers have all the information they need to confirm their view on policy response, and we will be engaging with them closely regarding a progress payment to assist with the recovery costs at Capricorn Copper. And I should say that notwithstanding the liquidity available to the company at 30th of June, we remain focused on enhancing our liquidity through delivering on higher production in the second half at Golden Grove, pursuing an interim payment from our insurers as a result of the extreme weather event at Capricorn, reviewing all non-essential capital items, including those in connection with recovery efforts, and reducing costs across the group. In addition, there are other moving pieces, such as the restart of Capricorn Copper coming soon, strong support and engagement from our lenders, as well as a positive engagement with insurers. We will, of course, update the market of key developments as they crystallize. I'll now hand over to Ed Cooney, the COO, on production activities at the two operating mines. And Ed will then hand over to Peter Herbert to talk about financial and commercial outcomes. So over to you, please, Ed. Thanks Peter. Good morning everyone. Well Peter has spoken about our safety metrics and production outcomes for the quarter. So I'll begin with progress against our recovery plan in Capricorn Copper. The key focus of the SAF team has been on progressing the various water reduction initiatives outlined in our May strategic update. During the quarter we have recommissioned existing additional evaporative capacity onsite and procurement of new high-efficiency evaporators as well advanced, with commissioning expected in early August. With the existing water treatment plant still inaccessible, pre-establishment of water treatment to support mining and processing operations as well advanced, via existing settlement finals three and four, with commissioning of this new system expected in early August. This project is intended to avoid reliance on additional freshwater drawn from the adjacent lake, contributing to an improved salt water balance over the medium term. Additionally, detailed engineering is underway on expanding treatment of water contained within on-site soil restructuring ahead of release opportunities during the upcoming wet season. Engagement with the regulator remains constructive and ongoing. Further technical matters related to our application for ETSF LIFA II have been raised and we are working with our external subject matter experts to address these matters. The delay to this approval has necessitated a need to progress and accelerate alternative options, which were already previously being considered available to Capital Corn Copper to address new-turn sailing storage. Notably, the Esperanza pit in which tailings has been previously and historically deposited prior to the current lift on the ETSF. This option remains subject to the plan for the revision performance of the upcoming six-month period. in addition to approval of an existing application to increase flow storage capacity within the pit. In parallel, planning of a life and mine facility continues as a high priority. In terms of mining, both Mammoth and Greenstone ore bodies are ready to recommence production, with recent activities focused on additional paste fill reticulation in order to maximise conversion of tailings to backfill underground, remodelisation of burn cut resources which were reallocated to alternative burn cap projects following the extreme rainfall event. And in parallel, progressing design and procurement of dewatering infrastructure for Esperanza South Albany. Additionally, a number of personnel seconded to Golden Grove are returning to Capricorn Copper ahead of planned recommencement of the phase one restart in August. Moving on to Golden Grove and progress on commissioning of the new booster fans for Xantho extended has been marginally delayed by completion of the required civils infrastructure and subsequent interruption to Gossan Hill access following remediation of the portal following the activities undertaken late in the March quarter. Access has now been reinstated with a focus on completion of the outstanding civils followed by mechanical installation of the fans and then commissioning. No further procurement is required and we anticipate commissioning of the fans to occur in August. As mentioned previously, these fans support increased volumetric flows into Xantho Extended, enabling higher mining activity levels at depth during the second half. Notwithstanding this delay to the booster fans, as Peter mentioned earlier, pleasingly development performance at Xantho Extended increased by approximately 40% quarter on quarter. Construction progress of TSF3, which was approved in early May, has been excellent, and construction is expected to be completed ahead of schedule in August. We have been focusing on preparation of our application for our new life and mine tailings facility, TSF4, and anticipate submission this quarter. Given our focus of regulatory processes being on life and mine tailings facilities at Golan Grove, recovery and tailings capacity at Capricorn Copper, Our submission for the Gossam Valley project is now expected to be made later in 2023, which we anticipate to have no impact on the longer-term G&G outlook presented to the market in May. And in terms of production outcomes at Olinbury, June quarter performance saw a 23% increase in mill throughput relative to the March quarter, higher recoveries and metal production across copper, zinc, gold and silver. And looking forward, production during the second half is anticipated to be higher than the first half, notably in Q4 for zinc, not dissimilar to 2022. I'll now hand over to Peter Herbert to discuss financial outcomes for the quarter.