Metals Acquisition Limited

Thank you for standing by. This is the conference operator. Welcome to the Metals Acquisition Limited Q3 2024 conference call and webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Mick McMullen, CEO of Metals Acquisition Limited. Please go ahead.

Thank you and thank you everyone for joining. I'll be presenting the slides today along with our CFO, Morne Engelbrecht. So this is our Q3 quarterly results presentation. and we'll also give a bit of an update on our exploration activities. As usual, we've got our disclaimer at the front that this presentation has been lodged on the ASX platform and you can read that at your leisure. I would characterize the quarter as another business as usual quarter. The team delivered a very strong result of just over 10,000 tons of copper at a head grade of 4% milled. I think after our very strong Q3, there were some questions around whether we could sustain that sort of 4% plus head grade, and the answer is yes. C1 came in at the bottom end of the range. We'd recently guided to $1.90 a pound US, which is continuing a downward trend, and Morne will talk about how we managed to arrive at that. We have a clear pathway to 50,000 tonnes plus of copper out of this mine here within the next couple of years. We, again, had a very strong EBITDA margin through the year, about 50%, and we convert about 77% of that margin to cash. Post the recent equity raise, we've got pro-forma liquidity of about US$226 million. which is well over $300 Australian dollars. Again, all numbers in this presentation are in US dollars unless we specifically call them out. But it is a very large liquidity position for a company of our size, provides us with a lot of optionality. So I'd say it was a good quarter, another business as usual quarter. And despite production being down slightly quarter on quarter, Our C1 was also down and we guided the market to being Q3 just with the sort of scheduling of the stopes down slightly. And then we expect Q4 to be the strongest quarter of the year for us, actually. We realised broadly the spot price, you know, so prices went down a bit during the quarter on quarter periods, but we broadly get spot. And as I said, we expect Q4 to be our strongest quarter. We have a very strong liquidity position. As I said, we ended the quarter Q3 with about US$81 million of cash after paying off some debt. We are, again, tracking towards the midpoint of guidance as we've guided people towards around that 40,500 tonnes of copper. And again, copper grade is hanging in there strongly at around about that 4%. On the exploration front I'll talk about, we've had some really good success here. QGIS South Upper continues to confirm some high-grade copper hits as well as some zinc. We are drilling out much of the inferred, which allows us to incorporate that into our reserves. And we've actually had some really good success in stepping out into Virgin Country to really expand the resources. We spent about $2 million in Q3 on exploration. Our big capital projects, so the Vent project is well underway. That's integral to sort of getting our production up well over that 50,000 tonnes of copper level. And QDS South Upper to commence in Q4. Well, actually, it commenced this morning where we took the first cut out of that take-off drive to head out towards that deposit. We invested just under $13 million in capital projects again. We've guided the market to 52 million US for the year, and we continue to sort of bang on where that number was. And then post-quarter, obviously, we raised 150 million Australian dollars in equity. That delivered the balance sheet, gives us a lot of flexibility to pursue strategic opportunities and also to retire that mezzanine debt. I'm going to hand over to Mornay, our CFO, to talk about a couple of the financial slides. And over to you.

Thanks, Mick. Good evening, morning, everybody. I'll be taking you through, as Mick said, through this slide and then the next slide as well, which covers the cash flow waterfall for the quarter, and again in US dollars, and a quick recap on the recent equity raise as well. And then I'll cover some productivity slides later on. Also, please note that all these numbers are unaudited, and we have more detail in our operational and financial performance noted in the quarterly report released today as well. On slide six, overall, we have a very healthy pro forma liquidity, as Mick mentioned, as of 30 September for around $226 million, as indicated there. This includes the most recent successful equity raise completed after the quarter end, which provided a boost to the MAC banner sheet of around 150 Aussie, 103 U.S. before costs. This positioned us in a position of strength and further boosted by the fact that we had an undrawn revolving facility of $25 million on-sold, concentrate, ready to be shipped. outstanding QP payments, and also a successful list of investments in polymetals, which total around $17 million that contributed to that liquidity. If we look at the operational corporate side of the quarter-on-quarter movement, there are a few key drivers there to keep in mind that impacted the cash flow for the quarter. Firstly, you will remember that in the previous quarter, we sold concentrate that was ready for shipment after a material build-up of inventory. This meant that more than 2,000 tonnes of copper was sold in the June quarter, that shipped in the September quarter, with all of that cash flow recognised in the June quarter. That meant that around $25 million of cash was captured in the June quarter that would have otherwise been recognised in the September quarter. In saying that, we still had a very healthy free cash flow from operations of around $30 million for Q3. An important point to notice that we have now also largely worked through that backlog of concentrate that we spoke about in the previous quarter with the closing volume of unsold concentrate representing about $9 million U.S. as of 30 September, which is in line with where we saw it reducing to by the end of this quarter. So for the December quarter, we would expect, again, that the copper tons sold should be in the same ballpark as the tons produced for the quarter, all things being equal. Secondly, we further reduced our senior debt by another $8.1 million over the quarter, with our senior facility now sitting around $166 million, down another 5% over the quarter. And then with the equity raised, we also have a pro forma net hearing ratio, 30 September, of around 16%. The third point I wanted to make here is that we paid interest of around $9 million over the quarter with about $5 million relating to the mezzanine debt facility, which is the high-cost element of our debt stack that we focused on specifically in the recent equity rates, which I'll cover in the next slide. The other key elements of the cash flow note is the sustaining capex, as Mick mentioned, at around $13 million, which is largely in line with Q2 and also in line with our broader capex guidance 2024 of around sort of $15 million US. So in summary, we are in an excellent position from a balance sheet strength point of view, where we've delivered the balance sheet and have the ability to reduce our high-cost debt and continue to generate strong free cash flow from our operations as well. On slide seven, as we outlined earlier in the year, a couple of our strategic goals for 2024 were to not only simplify, but also deliver the banner sheet. We have delivered on these goals, but not only reducing our net gearing by more than 6% since the start of 2024, but also simplifying our balance sheet by redeeming our private and public warrants early in the year. Furthermore, as we announced on the 9th of October, we completed that successful placement, as we noted, of around $150 million Aussie, $103 million US. The placement, as I said, was extremely well supported from both new and existing institutional and sophisticated investors, both in Australia and offshore, which we are very thankful for. We are now well equipped to further optimize our banner sheet through the retirement of the existing $145 million mezzanine debt facility at the earliest practical date, with 16 June 2025 being the backstop date for that, while also providing additional flexibility to pursue strategic inorganic growth opportunities. I suppose a key piece of feedback, as we noted during the call with the equity raise as well, is from investors over the last year was around our cost of debt, and in particular the mezzanine facility, which carries a minimum interest of around 13%. And with that increasing to 17% of the corporate price had to reduce to below $3.40 a pound. So at 13%, this takes up around $19 million of our cash every year. So definitely worthwhile in terms of being a creditor from a capital raise point of view to obviously raise the equity and pay that debt back as soon as we can. And to put this in context, we currently pay around 7.8% on our senior facilities, so quite a big difference in terms of opportunity for us to reduce our overall debt cost. We do need consent from the mezzanine debt provider to repay the debt before the 16th So failing that, we will definitely be targeting the repayment of that debt on the 16th of June next year. So either way, the debt will be retired by then. So in summary, with the great support from our new and existing sales, we're now in a very strong and commanding position and arguably we are in the best position from a balance sheet point of view since the inception of the company. And as we noted, we've got some $226 million U.S. of pro forma liquidity, pro forma net gearing down to 16%, and we have the cash in the balance sheet to retire that high cost debt and also provide that flexibility if and when we need it. So with that, Nick, I'll hand back to you.