Aurelia Metals Limited

I would now like to hand the conference over to Mr. Brian Quinn, CEO and Managing Director. Please go ahead.

Hi, it's Brian Quinn, Aurelia Metals Managing Director and CEO. And on behalf of the team, I would like to provide some key points from the quarter just passed. I do thank you all for joining the call today. I'm joined by Aurelia Metals Chief Financial Officer, Martin Cummings, and our Chief Business Development and Technical Officer, Andrew Graham. In today's presentation, we'll be referring to the slides released today and we'll spend some additional time on the illustrations that are within the pack for context. For December quarter, our business remained on track to execute our strategy, which included peak increasing volumes and meters relative to previous quarters. Federation project is progressing with development leaders and many other critical programs are well underway. Noting our Federation first over is still planned for quarter one, 2025. Our cash position is remaining strong relative to our peers and our operating discipline on lowering costs to offset inflationary pressures continues to be a priority, which is ongoing both in our project, our operations and in corporate. We're starting to see some of these benefits flow through and more work is still being targeted in Q3 and Q4 to deliver these outcomes through both focused efforts, especially in mining and maintenance. And I guess we're intentionally delivering this in a sustainable way by targeting annual step change improvements And these improvements, as I've discussed previously, are building to our management KPIs. Our exploration team continues drilling in the Cobar region with four rigs at present and to date delivering excellent results and exciting results for the real estate business. In fact, we published some of these results from Chesney North region at the Peak North mine two weeks ago. This reinforces our view that the region and leases within a real estate portfolio have high prospectivity. to build on the 19 million tonnes resource in close proximity to peak mine, which includes the current 16 million tonnes of copper reported. With these results, we'll continue to transition the peak mine from a zinc lead mine to a copper mine in the medium term. I'll just move to the next slide, which is our group production and cost slide. Our delivery of our guidance at this stage remains within the range provided at the start of the year for gold ounces, which are planned to be at the high end of guidance, Base metals is forecast at the lower end of guidance, and we are resetting our guidance for copper to be outside of the previous guidance issued as per the table in the presentation. I'll discuss the stope sequencing in more detail in coming slides to explain where we are at the end of quarter two and how we will remain on plan for the rest of FY24 to achieve these guidance outcomes. Our oil and sustaining costs, guidance remains on track, largely in the back of higher grade stopes online in quarter three and quarter four, which will also be achieved by focusing on offsetting the lower copper metals production with a tight capital allocation process and lowering our operating costs across the company. I'll move on to the next slide, which is our safety environment. Aurelia Management is spending significant time improving our safety performance as we've experienced several injuries while executing against our strategies. Our one wavering focus is to ensure everyone working at Aurelia Metals has a right to go home without an injury. We've unfortunately had several trips and slips and hand injuries this year to date. And Aurelia did have a very strong year with minimal injuries in FY23. So it demonstrates that we need to keep working diligently on these areas so injuries are prevented and our teams remain focused at all times when at work. This is our highest priority and we cannot rest until we are not experiencing injuries. Therefore, our focus from our leadership is the following. One, we're spending time in field really discussing safety and hazards with our teams and using the appropriate tools before starting work. We're recognising that both preventing injuries and fatalities needs to be a focus and to complement this, we've also commenced a supervisor leadership program across our business. To focus on potential fatalities, we've commenced a detailed, scheduled programme using one fatal risk hazard each month across each site to get the management to really understand what controls need to be in place. Number three, leadership will also be spending time assessing the higher risks at each of their businesses, making sure controls are adequately working and people nominated as risk and control owners understand their responsibilities. Our priority is to reverse the trend and reduce the number of injuries being experienced by our team members while also stopping anything more serious. I'll move on to the slides for each of the assets and projects. I'll ask Andrew to talk in more detail to the exploration results and Martin to expand on financial results shortly. But before I do, I'll focus on some specific future highlights and information regarding each of the businesses. At a high level, our operating cash flow was higher than the previous quarter, delivering $23 million compared with quarter one, $12.6 million. Overall cash balance remaining around 108.7, supported by strong liquidity, and I'll ask Martin to talk in more detail to the liquidity. At peak, the mining production volumes have increased a further 11% from Q1 in line with our plans to continue to fill our mills with quality oil. On the flip side, the oil and sustaining costs were higher in December Q2 versus September Q1 due to lower base metals production. which is a direct result of the sequencing of stoves, which I'll cover in more detail in our slide seven. Development at peak has continued to increase, which is a key value driver for us. It's basically fourth consecutive quarter increase. It's now achieving 743 metres, which really allows the development to be ahead by more than one quarter and unlocks our production stoves, which I'll demonstrate also in our slide seven. This is providing contingency options and helps us to risk the mining production over the next six months. In quarter two, an additional production rig was commissioned to de-bottleneck drilling activities also, which further unlocks these stoves and the rest of this financial year's performance. The focus is to get the bottleneck back to the winder over the medium term, once improvements in drill and blast and trucking have also been implemented. The overall cost of mining per tonne continued to decrease at $1.25 $123 per tonne over the past quarter, with further improvements underway planned in the pipeline, not forgetting this was over $143 per tonne several quarters ago. An example of the next step change in efficiency includes the future use of our winder for people riding, which will increase utilisation of our mining assets underground and improve productivity. With respect to upgrades of lead zinc, I will use the illustration 7 for Pete to explain the sequencing and look forward to provide some context of how the sequencing will be achieved in FY24. So if I just go to the illustration for the actual slide 7, you'll see that from a context point of view, our development currently is definitely well ahead of this quarter and into the next quarter. So if you look at the upper Kronos and the lower Kronos and also the Kairos area, we're trying to provide transparency that we have these areas ready to go. And also, if you look at the call out of the 19,000 tonnes, 29.5 and the 37,000 tonnes, which are all Q3 activity, basically they are the stopes that we've moved from Q2 to Q3. Unfortunately, we had to resequence our stopes in Q2 and bring the Q3 stopes forward into Q2 and vice versa, move the Q2 stopes into Q3. And hence the changes in the grades that you will see in our table that we've reported. So overall, if you look at the remainder of Q3 and Q4 activity, we have our stopes well and truly in front of us. We have high-grade material being produced right now in line with what's in the schedule, and we're sort of on track to deliver what we've put in the guidance tables. Just let me jump a bit more to the illustration just to make sure that for those who can't see the PowerPoint pack, we have got basically 19,000 tonnes this quarter at 16% lead zinc. We have 29,500 tonnes at 27% lead zinc and we have 37,000 tonnes at 11,500 lead zinc with an additional 3.7 grams per tonne gold. So they are the stoves that we would have taken in quarter two but have been moved to quarter three And obviously, as I said before, we've moved states from quarter three to quarter two. Hence, on a total year basis, we feel we're actually in a good position to deliver our numbers that we're recording in the tables. This implementation, the other large bit of work we've done in the Cobar region is the implementation of a regional Cobar leadership model. On the previous quarters, I've discussed the implementation of a hub and spoke model or a regional Cobar model. We've actually completed that in the December quarter and now we're implementing it in the March quarter. This will provide synergies, cost benefits to Aurelia in the region for the medium term by having one leadership team led by a regional GM leading the operational activities. This is an opportunity really around standardisation of equipment, training, working capital and optimising the feed into the peaks of value as we progress with production from Federation towards peak. If I just move to the DAGS slide, on slide eight. At DAGS, we continue to provide strong operational stability and credibility, even with some significant weather events. In fact, one rainfall event had 126 millimetres over 48 hours in November, followed by another three-day event at 87 millimetres in December. And the team have done well, focused on tangible cost-saving issues over this period as well. development has now stopped for the remaining life and so our development costs have also stopped looking forward for dards importantly the last stopes will be extracted on retreat out of the mine if you refer to slide eight and we are also in the process of doing some significant planning around what happens post closure how we reuse equipment at both peak and federation and also look at the process of filling the plant and also the potential mine. Retention programs are fully locked in now for all people working at Dargs, and really the key focus for us is delivering safely the remaining stoves on the job for the next six months to the end of the mine. For Dargs, our focus remains on safely maximising cash flow for the remaining stoves. This is what we basically spoke about every quarter so far, and we are delivering that. At Federation, development at Federation has continued to ramp up from previous quarter, after restarting development in August. Some significant weather events actually have occurred in January in the region, Nimmogee region, and actions have been implemented underway to provide some protection for these in the future, but notwithstanding the fact we've actually had to pause development for a period of time to deal with those heavy rainfall events, acknowledging that construction is still underway at the site, and the site isn't finished, and we've got to put these various controls in place as we progress the development of the project. The concrete collar foundations for raised bore shafts were finished in Q2, and the first raised bore was actually mobilised in Q2. I'm actually happy to report that shaft one has been completed in terms of the raised bore, and we've actually allowed us to de-risk the next couple of shafts by understanding the geotechnical geotech conditions much more as well. Actually, latest report is we slightly finished the shock creating lining also in the last 24 hours. The birth on road upgrade has been progressing and on track for completion in Q3, while dealing also with some significant weather impacts recently. Just over two kilometres of the eight kilometre road has been sealed at the end of Q2 and currently we're working to complete the work by quarter three, end of quarter three. Some other key milestones which are important to call out is the underground electrical substations being installed in the decline and commission, and also the underground infield drill rig has been in place and working on the final designs of the stage for our production sequence. Lastly, at a strategic level, our growth team continues to work on optimisation options of our portfolio in the Curvo region to utilise our infrastructure as we continue to set up our operations to be at full capacity in the future. So lots of work still going on in the region on our optimisation work, as we discussed in previous quarters as well. Overall, these results are testament to the Aurelia team delivering, navigating fluctuations in weather events on the eastern states, causing many disruptions, a very tight labour market for talent, and our business has been resilient and delivered the cash to fund our exploration and growth projects. and not draw on any debt facilities at this point in time. Federation is still on track for first all in September quarter one of 2025. It's based on a delivery of the Berthane Road upgrades progressing well. Development has been progressing. The first raised bore work has been started in December. And as I said, many other activities are underway to deliver us and be ready for those events. In terms of costs for the project, we'll also continue to deal with inflationary pressures on many fronts We're managing these currently through reviewing the scope of works for all activities to ensure what's required for the project and refining some of these to manage the overall budget. However, at present, we're focused on delivering 1st April in Q1 2025 and delivering the project in long budget. Lastly, today we also released the changes to the Board of Directors. Obviously, we thank Paul and Helen very much for being directors and for the guidance they provide the management team. and support of the rest of the directors on the board. I personally have learned a lot from both Paul and Helen over their time as directors on the board, and we wish them all the best. I'll pass over to Andrew now to talk to the exploration slides, and he'll pass it on to Martin thereafter. Thanks, Andrew.

No, thank you, Brian. And for those following along, we're just turning to page 10 at the moment. It's certainly great to be back to running a fully funded exploration program this year. We've said it numerous times over the last year that our ground is very prospective. And when we explore it in a systematic way, we're very sure that we'll have success. And this quarter is certainly evidence of that. Obviously, as Brian referred to, we had a very successful drill program at Chesney North. where all six holes completed in that program hit significant copper, as well as gold in some holes. That was the subject of an announcement on the 18th of January, and I'll cover that in a little bit more detail shortly. For those looking at the slide, just be aware that the green boxes appear to have shuffled a little bit to the right. So just assume they're a little bit further left, but it won't change your understanding of what we're doing there. Basically, what we've been doing at peak is progressing our high-priority targets. And we do a process every year of thinking about where we want to be drilling, prioritising those methodically, and then working through them. So for peak, particularly in the last quarter, doing some work around Jubilee North. You can see that just to the northern end of the North Mine. We have been drilling around Upper Blue Lands, which is back down in the South Mine at peak north. and also we've been drilling around Chesney, as I referred to those results earlier. Excitingly to me, we've also stepped out to drill Mount Pleasant, and it's a bit covered up by the green box in this slide, but if you think about North Mine and track back, we've got obviously a new co-bar, ore bodies, if you get into Chesney, the next one along is Borough Bungee, and what we're chasing now is the next one along, Mount Pleasant. Mount Pleasant had some drilling in it, which was really quite interesting in 1997, I believe, again in 2007, but it really hasn't been methodically tested recently. So it's really exciting to be able to get some holes into that, hoping that we continue to stack up those ore bodies in the North Mine. We are awaiting assays on some drilling there, and we'll let you know once we get those results. The other interesting piece, which isn't on this slide, but You know, you're all fully aware of what we have. It's what we call an imaging district, which covers Federation and HERA and the imaging mine itself in that whole region. The team down there has been extremely busy. So we've been completing soils on Lancelot. You may recall from last year the exciting IP results that we got around there. So the next step in that exploration plan is to do detailed soils. Hopefully, you know, we get good results on that, which then helps us target our exploration work with drilling. So we'll come back to you, obviously, with those results once they come in. We've been also doing drilling at the historic Nimigi mine and also drilling for extensions around Federation. And again, we've got results which sort of were along the lines of what we were expecting geologically. Those are in for assay at the moment. Once we have those assays, we'll come back to you with information on that. Turning then to slide... which is the Chesney summary of Chesney North drilling. This is linked to the announcement that went out on the 18th of January. And if you haven't read that announcement, I'd certainly encourage you to download that and have a look. We were targeting extensions to the northern end of the resource at Chesney. Chesney is an important place for us from the point of view of copper feed. And you can see what we were trying to do was fill in that hole in the resource to the north. Excitingly, as I mentioned earlier, all six holes in that program delivered very, very good copper. And you can see that in some of the core trade photos we've got there. Extremely good grades, good meters, 17 meters, 1.8% copper in one of those holes, which included 3.4 meters at 5.3% copper. And similarly, 7.6% at 2.2% copper in another hole. And that hole included up to 9.7% copper over 0.8 of a metre. So it's excellent to be able to see good copper results all outside the resource there at Chesney, but all within close proximity of where we're expecting to be mining. Hopefully, they've added to the very substantial resource we have at peak on copper at the moment, which is Brian referred to 16 million tonnes at 1.8% copper and 0.8 cold. And it does actually create some optionality for us, which we referred to in that release around how we sequence copper feeds and then when we target great cobar. So definitely very exciting drilling for us. I'll pass over now to Martin, who's going to run through some of the financial results.