Aurelia Metals Limited

We'd now like to hand the conference over to Mr. Brian Quinn, CEO and Managing Director. Please go ahead.

Thank you all for joining our quarterly call to present our quarter one results. We'll be presenting the presentation slides that were released within the ASX announcement today. We're actually presenting from Peak Mine. Some of us are presenting from Peak Mine and others are presenting from Federation Brisbane State. I'm joined today by Chief Financial Officer Mark Cumming, Chief Development and Technical Officer Andrew Graham and our Project Director for Federation Project, Michelle Tracy. Before I take you through the quarter results, I want to thank all of our stakeholders and shareholders for their ongoing support and as we are presenting from various locations, pay my respects for all the traditional owners, past, present and emerging for our locations and thank our other important landowners who host our operations also. As we've presented before, FY24 is about building stronger Aurelia metals through redefining the vision and strategy of the organisation with strategic focus on delivering with confidence, improving our margins, right people, right mindset, and optimising the cobalt basin to set up Aurelia to fill our minerals with low cost and high grade ore, while confidently delivering our business guidance results in 24 and beyond. So if I can get you to turn to slide three, Our Relia team and contracting partners have continued to deliver the business plan and deliver strong production results in the back of some retreating base metal prices. Our good financial results were underpinned by production exceeding our quarter one plan and delivery well within guidance and also our continued focus on cost efficiencies and cash generation across the operating assets and corporate offers. Some of the highlights include Our revenue was ahead of plan at $70 million for the quarter. Our cash balance is strong at $100 million, with current operating cash flow from the operations delivering $12.6 million for the quarter. Our cost efficiencies have delivered mining unit costs for peak, reducing to $127 per tonne from $180 per tonne 12 months ago, representing approximately 30% improvement. Our development needs across peak and federation continue to increase quarter on quarter, which is de-risking the FY24 and FY25 production volumes and setting us up for further growth. And our key growth federation remains on track to deliver our first key milestone, the first so far in Q1 2025 in line with our approved budget. Also, our exploration team continues to deliver some positive results, supporting our growth plans around a peak mine with high quality results as reported in ASX last week. We continue to also restructure our corporate organisation with good cost reductions from October onwards, so the $3 million per annum annualised, and the Board is progressing the fair reduction line with its right side and right skills and reduced costs, as was outlined in the Shares Letter and FY23 Annual Report. We are progressing our strategy to fill our middle as soon as possible, and considering commercially sensible options, And the focus at DART has been to lock in the cash flow potential from this asset and harvest cash till mine life ends. And Mark will talk through some of our hedging process we've commenced. So lots of pleasing progress for the business over the quarter against my CEO 100-day plan. And looking ahead, it's pleasing to advise that guidance for the remainder of FY2040 is unchanged and impacts from inflation will be offset from volumes and cost efficiency programs. I'll just turn to slide four on overall production costs. We are mainly focused on delivering safe and stable production with increased cost efficiencies. And the cost efficiency programs are currently forecasting better costs than we did our guidance. Gold price continues to increase and basements have remained consistent while waiting for China to release policies to improve demand. The results we have presented today are worth looking forward to the Q2 forecast provides clear context we're on track to deliver our commitments around FY24 guidance for production and costs. The operations have achieved strong gold production in this higher gold price environment and we are set up to increase base metal tones and grades for the remainder of the year in modern guidance. We also expect the cost efficiency programs and organisation changes planned to continue to progress over the coming a couple of months, with cost efficiency benefits realised each quarter for the remainder of the year. So turning to slide five, the safety and environment. Our underlying safety principle is that people go home safe and well every shift. And we minimise the impact on the environment and work with our community as a good neighbour. We had four reportable injuries in quarter one, which is four too many, and unfortunately the majority of which were slips and trips. We committed to take the necessary steps to ensure the incidents do not happen, and our teams are ramping up the efforts of field leadership, making sure our bus plans are being done before any work starts, and improvements in training are being rolled out for inexperienced team members as we increase our resources in line with our growth plans. Also, our approach to risk management has ramped up and will continue to mature over the coming 12 months to be normalised in how we make decisions, to really assess and ensure threats to our business and operational areas are well understood and in control. will continue to be third-party expertise to allow us to mature at the right pace for these initiatives. Going to slide six, peak operations. Peak is significantly to development rates this quarter. We further plan to increase these rates going into Q2. The development improvements really helped the business in terms of having confidence for the next 12 to 18 months, which continues to provide confidence also in delivering our volumes and upside in FY24. The cost efficiencies have also been a priority focus of PEAT, as reported in my CEDA 100-day plan. The team has delivered a 30% reduction over the last 12 months on a cost-to-come basis and continues to implement various operating efficiency initiatives that have been identified in the Working Smarter program, which are mainly ID supported from the shop floor. Overall utilization and availability of mine equipment has improved substantially now that PEAT's resourcing is approaching target levels. they are the only sustained capital for peak uh all the same costs are peaked at 15.84 dollars per ounce that takes these cost efficiencies and started in the higher expected base levels production for the remainder of the year to drive the cost down as per our plans so this quarter the focus on the operations has been mining the lead ink soaps from the south mind both chorus and chorus which is your good gold results. And for quarter two, we completed the lead-zinc stoves, which carried up from quarter one, moving to copper stoves and persevering feeds in the South Mine, Jubilee and the North Mine. This will be followed by commencing high-grade lead-zinc towards the end of Q2. Copper and gold stoves are a couple, currently in production drilling, and all developers progressing well in the Upper Promise, which positions Q2 wealth as a guiding target. Development is also currently underway in Jubilee and Uppercross to prepare for Q3 copper and lead zinc slopes to meet our Q3 numbers. Turning to slide 7, DARS operations. At DARS, we continue to sustainably maximise the cash from this business while setting up for closure in 2025, and our current quarter two forecast shows we are well on track to deliver guidance results based on the planning due that's underway. DARS development has been the plan in the finishing Q2, which will continue to de-risk the complexity of the mine, with increased growth switching to production drilling, backfilling and remnant mining of the remaining hydrate orchards. Obviously, as the mine is within 12 months of completion, the focus is on retention of good people to work with DARS, and we are working with our contracting partners to retain the people but also applying a hybrid employee and contractor model to try and keep the best people working for Aurelia. Obviously, we'll be working and looking to continue to attract good quality talent that we can to bring across to the Karabakh region in the future where our growth will continue to occur. Turning to our Critical Meals Growth Project, that's by the Federation, which has been reported as one of the highest-based metals projects in Australia. The resource go over approximately 6.7% equivalent. We've commenced the project well with zero record of injuries. I'm happy that we are tracking very well those development meters and construction works on the surface. In fact, I was actually there yesterday. I'm very happy with the stand and the quality of work being achieved by Aurelia management and the DevPath team. The focus for Aurelia under the leadership of Michelle Tracy, who's on the call today, has been to deal with the project costs in Shetland by bringing our high-quality, capable staff with expertise across various work packages of mining, sharp-ticking, surface infrastructure works and project management and construction activities, as well as commercial areas. The team is actively searching for companies to partner with, with strong background and credibility in the delivery of these work packages. As highlighted in the presentation, all the work packages are in progress and the scope continues to be refined with the ultimate goal of building mine well and achieve first steps all by Q1 2025 as our first milestone. Also in the presentation you can see the green arrow highlighting the work completed till the end of Q1 and the yellow is the work completed up until Sunday this week. During this quarter we've also mobilised drillers on site to assess our potential off-site and extensions to the web and in Q2 are planning on installing a drill rig in one of the caddies to commence drilling on the ground. Currently we're happy to report we're on track to move the overall project on budget and schedule while managing the associated pressures across the industry. Turn to slide nine, exploration. As for the release last week on the ASX, we continue to invest in the exploration near Peak with numerous high priority targets and continue to be pleased with the results of our program this year. And for those who know the region around Peak, this is not very surprising and keeps giving and demonstrates the prospectivity of our business. In the Southline Corridor, assay results from the Upper Cross, Perseverance Zone A and Perseverance Deep, areas of concern continue extensions of significant mineralisation on the Upper Northern and Lowland and Perseverance deposits. The strong grades intersected as shown on the presentation and ASX release are particularly encouraging to restriking similarities with the Kronos deposit. Acknowledging the disease, but these grades could offer extensions for filling our mills in the coming years. Moving to the North, behind Coral, assay results from the Chertley South deposit has confirmed extensions of mineralisation south of the Chertley deposit. in close proximity to the recent reported major mineral resource at Burr Bungie. This area has significant further potential for exploration success due to the presence of this known mineralization. The high copper and gold grades intersected in these near-mine locations are the subject of further exploration and evaluation activities in the medium term, and are well located to understand underground infrastructure. At this point, I will pass to Martin to speak to the financial slides. Thanks, Brian. And I'll be talking to slide 10. And the key message on this slide is that our balance sheet now is in great shape. We have $110 million of cash on hand. And that was really driven by some major milestones in the quarter, as I've stated in the results call recently, with the receipt of proceeds from the retail entitlement offer and the cash backing returned after we reached financial close on the Trafigura facilities. Our cash is expected to be boosted further this quarter from a tax refund of around $21 million. And please remember, our loan note facility remains undrawn at US$24 million, providing further liquidity. For our operations, it was a solid start to the year for both Peak and Dargs. Peak operating cash flow was $9.2 million, benefiting from strong gold production and from lower operating costs and capital spend. Our copper production is also higher and pleasingly we were able to send a copper shipment during the quarter. Our lead and zinc production was slightly down driven by grade but as Brian said we expect that will increase in the coming quarters from a combination of higher ore mines as well as higher grade ore. Our DARPS cash flow was $3.4 million which was lower than the prior quarter. In this quarter we had planned to have one more shipment depart but that will instead depart in the December quarter. Our costs were higher due to planned reliance of the crusher and door mill and also from the impact at our new electricity contract which commenced on the 1st of July. The new rate in that contract is approximately 60% higher than the previous rate but I must stress that this increase was included in our budget and is factored into our cost guidance. During the quarter we also completed planned containment replacements on our mobile fleet and given that fleet has a useful life post guard at either peak or federation, we'll continue to maintain that equipment in accordance with the standard maintenance regimes. The team at SARGS are doing a great job to ensure that we maximise cash from the operation during its remaining life, but at the current gold price in Australian dollars, it also presents an opportunity to enhance those returns relative to our plan. To lock in that opportunity, we have commenced a hedging program for up to 100% of the payable gold production from DARC out to September 24 quarter. To date, we've done about 40% of the planned volumes, and we'll look to add to that in the near future. For context, DARC produces about 50% of our group gold production, so we still have a meaningful unhedged gold position at peak. To accompany those gold hedges, we considered it prudent to also hedge some base metals, Our plan is to hedge up to 25% of our lead and zinc payable production from PEAT, which will provide some price protection to our by-product credits. Again, we're looking at the time period out to September 24th, which coincides with 1st October from Federation. Some let me think we haven't executed any hedges yet, but we'll look to do some soon. And on Federation, it was a really pleasing start to the project led by Michelle. As said earlier, development metres are ahead of plan and the team has made some really good progress on the other main packages for the road upgrade, ventilation and raised warring. We've spent $10.6 million in the quarter and pleasingly that was funded from the operating cash flow generated by peak and dark in the quarter. Spend is planned to ramp up in the coming quarters as development rates increase and we've progressed with those major packages. Just to remind you, we've got a capital federation of $70 million to $80 million for FY24. In closing, it's been a really solid start to the year for our operations and our projects, generating good cash and really we now have the balance sheet position to support those growth opportunities. Thanks for your time and I'll hand the call back to Brian. Thanks, Simon. So, summarised the Q1, I'm looking forward to Q2. We focus on improving our current HSC performance and ensuring we have tight controls in place for all our key risks to our business, both HSC and the nation. Our cost efficiency at peak to improve cash flow and also unlock a 90 million tonne resource at the mine is a large prize for us to go after. Delivery of the cash flow from DARC and the sustainment system there is obviously paramount. Delivery of the rapid advance in development of Federation and the Rage Boarding Project is well on track and a key focus. We'll continue to invest in drilling, which is yielding very positive results for our future, both in the new proximity to peak and also in the new region. Our progress on the Great Predile Project for this financial year will be a key deliverable towards the end of the year. And we'll continue to be in the Karabakh region to leverage our efforts, focusing on filling our mills with high-value ore while also working through various synergies and cost savings in the region to improve our business if it makes commercial sense. So I'd like to hand it over to the adjudicator to now look at questions and answers section of the presentation, please.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from William Thurlow from Auslanet. Please go ahead.