Metals Acquisition Limited

Thank you for standing by and welcome to the Mac Copper Limited Q1 results call and webcast. 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. Mick McMullen, CEO. Please go ahead.

Thank you very much. And thanks everyone for joining us on what is a busy reporting schedule given the shortened holiday period in Australia. I'm Mick McMullen, the CEO. I'll run through the presentation. I'm joined by our CFO, Mornay Engelbrecht, who will talk to some of the slides on the financials. This deck has been released on the ASX along with our quarterly report this morning. And as usual, we've got the disclaimers and everything at the front that you can all read at your leisure. So look, MAC copper at a glance, we get an enterprise value of around about 940 million US. We're sort of planning to get over 50,000 tonnes of copper in the not too distant future on an annual basis. Very strong balance sheet. Obviously, we've announced the refinancing of the debt that we did during the quarter. More now we'll run through that. And just so everyone's clear with you know, to make sure the market understands how many shares were an issue. 82 and a half million shares an issue about 3.18 million warrants at a strike of $12.50 US a share. The gearing under 20%, which is within our range of where we sort of target. And we've got two key growth projects underway. The ventilation work, which we'll talk about in later slides. And then the really exciting news actually is the Merrin mine that we started rolling out in the marketplace during the last quarter. And we've made some really good progress on that. And so we've got quite a few slides on that as we are quite excited about that thing. So going forward, first quarter is always our softest quarter. If you recall, the fourth quarter last year was a very strong quarter. And then obviously, you know, we then have to come through the sort of the January period where we push very hard in the back six weeks of last year. And we typically see a little bit of seasonal variation in weather as well with sort of summer storms. It really is a function of... sort of where we are in the stope sequence. And, you know, we can see the stope sequence we have ahead of us right now. We've got a lot of large tonnage, very high-grade stopes that have been coming online over the last few weeks. And therefore, you know, we're not changing our guidance based on what we can see coming out of the ground ahead of us. C1 was still pretty decent at $1.91 US a pound. Total cash cost of about $2.47 a pound and a realised price of $4.04 a pound US for the quarter. And if you read that little footnote there, we've had some questions from people about the impact of the hedges on received price. And so we are now showing that received price net of hedges. I'll let Morne really go through all the balance sheet and the financials and liquidity. But, you know, for this year, 43 to 48,000 ton of copper is where the guidance sits. Copper grade somewhere between 3.8 and 4%. And obviously, you know, we had a very strong grade profile during Q1. And growth capex of somewhere in the order of 20 to 25 million US and sustaining of 40 to 50. And overall, we have seen some good tailwinds coming into this year from both exchange rate and TCRCs. And actually, for those of you who follow the market, we've seen actually spot copper treatment charges at negative $40 a tonne, which should indicate a pretty good annual benchmark settlement for next year, possibly even lower than where we currently sit. So that's been quite a good positive thing, which I guess has obviously helped our C1 despite the lower volume during the quarter. Um, safety, we like to talk about, uh, you know, I would say I've, I've said on calls in the past that, you know, our TRIFA has been okay, but probably a little sticky, I suppose. Uh, but now we're starting to see the benefit of all the hard work that the team at site have done, uh, with the TRIFA starting to trend down quite nicely. And I think by the end of April, we've ended up at around a TRIFA of around seven actually, um, for, for, for the last 12 months. Um, so that's great. Um, One of our big sustaining capital projects that we're doing is our tailing storage facility. So the stage 10 embankment, that's on track for completion in the fourth quarter of this year. Again, just for the Australians, we're an annual financial year. So in the December quarter. And that will provide us capacity out till about 2030. And so, you know, we are actually building all of that now. So we're well on track. We've had no reportable environmental incidents during the quarter. So from an ESG point of view, actually, we've had a pretty good improvement on where we had been tracking before. Production, look, obviously we saw production trend down. As I said, it was a combination of pushing very hard during the fourth quarter. You can see there the December quarter numbers were very strong. And probably a day and a half of production lost in February due to some summer storms, which again, if you think back to last year, exactly what we had that period. Grade was good. So head grade a bit over 4% copper. and we expect to see the Q2 grade to be as strong, if not a bit stronger. And again, really the increase in C1 was driven by volume, right? You know, we've always sort of said that fixed costs are sort of circa 70% of our volume, but we did have a bit of a win on the TCRCs. And in the word version of the quarterly that we put out, you know, if you look at our production and cost in the month of March, obviously as we sort of, you know, did a lot of catch-up work in January after the very strong December quarter, If you look at the month of March, you know, we produced just under 4,000 tonne of copper and our C1 was around about $1.45 US a pound. So that sort of gives you an indication of where we think the business should be and can be. And again, it's really making sure that we have, you know, as a minimum, two or three months really strong in a quarter. And actually this Merrin mine has the ability to sort of smooth out some of those ups and downs in the production cycle. So overall, you know, it was an okay quarter. We do expect always the March quarter to be our softest quarter. And that pattern has been maintained. Lots going on on this slide here. I guess we've sort of, again, we've had some questions from people around, you know, total CapEx and sort of, you know, what's in growth and exploration and sustaining. And Morne has done a great job on the graph on the left there, sort of trying to outline, you know, what we've spent the money on. You will note that sustaining CapEx has dropped down a fair bit, actually. We had a very strong spend on the Stage 10 capital expenditure during the December quarter and sort of ahead of the game there. Also, some of the timing of rebuilds has basically resulted in us needing to spend less capital. You can see there the growth capex was sort of pretty constant around about that $4 million and what's in growth capex. So, you know, we don't put tailings dams into growth. That's in sustaining. but we do put our Merrimine expenditure and the Capital Vent project sits in there. And then we've spent about just over a million dollars on exploration. Development meters. So again, we're starting to give a little bit more detail for people here as to where the development meters are going or coming from. And you can see here that... That blue bar on the graph on the right is the Capital Vent Project, which we've spoken about as being very important for the future of the mine. You can see we're starting to ramp up the development metres there again, for those of you who followed us for a while. As we turn off from the existing workings and head out to these things, the development rates are quite slow because we're interacting with the existing mine, and that's Merrin Mine and the Capital Vent Project. have both been the same. But as we get a bit further out, then we can start not interacting with the mine and we can really start ramping up those metres. And so that's really what you're seeing in that graph on the right. In addition to that, we did an extra 227 metres of capital development up in the Merrin mine. So if you think about total development for the business, we are actually starting to ramp up capital development quite a bit here. And you will see why in the Merrin mine, you know, that's actually, we've been able to do a lot of development meters with not a lot of equipment and for a pretty cheap cost. So look, our goals are still the same. You know, it's really been consistent, safe, low cost copper production. You know, we do want to advance that ventilation project. We want to get the Merrin mine online and obviously the balance sheet. So this sort of bridge gives you a bit of an idea of where we see the production coming from. So for next year, 2026, midpoint of guidance around about 50,000 tonnes of copper, we see the Merrimine being additive to that. And we're getting quite excited about the Merrimine, as you're going to see in the next few slides here. So targeting production from the fourth quarter, being the December quarter this year, this is everything from surface down to about 900 metres below surface. It's the Merrin mine. It's got a whole bunch of different deposits in there, but for just making life easy, we just call it that. Not all of that is in JORC or SK 1300 resources, but we have sufficient confidence in those mineralised estimates to make investment decisions. And really that revolves around the age of some of the assay data and assay certificates with the resource and reserve QPs and the mine planning teams have done a Herculean effort here to digitise a lot of old data and to go and do check drilling and confirmation work, which has taken quite some time. This is data that's gone back over 40 years, 50 years. But actually we found a significant amount of mineralisation that was sitting in there most of it sitting very close to existing development. I try and break it down into the simplest form by saying there's really four separate components to this mine. There's the quite high grade, you know, narrow three, four meters wide at 10 to 20% copper in that QTS south upper, which is that little blob sitting right up on the top left of that page there, that image. That's what we're driving out to now. Then there's a reasonably high grade sort of you know eight to ten percent zinc with a little bit of lead and a high grade zinc zone which our plan is to mine that uh and truck that up to polymetals uh to the endeavor mill for treatment uh we then have what we call a medium grade copper ore body which actually in terms of tonnage is the largest part uh quite substantial around about two and a half percent copper And then last is the mixed, which is a mixed copper-zinc material, which actually is starting to become reasonably sizeable as well. The beauty of this thing is that it is completely separate to the rest of the mine. We access it through the decline. It's 150 to 200 metres below surface. It's fantastic ground. The team that's up there is running as a separate operation and is doing development at a much faster rate than we currently can do at the bottom of the mine. We really have no great constraints apart from equipment and people. We've been spending a lot of time at site with the corporate team over the last six weeks, actually adding resources to this. We've doubled the number of jumbos that are going in there and increasing the number of trucks, increasing the people, because quite frankly, this is a lever we can pull very cheaply. Our cost per metre to develop is roughly one third of what it is at the bottom of the mine. And as we've said often, the more you look, the more you find at CSA, and I'll run through some of the things that we've found. So again, we're sort of on track for some production for copper out of this during the fourth quarter, and we're actually quite excited about this. View on the left is a surface plan. All that light gray looking stuff is the surface projection of the existing underground workings. Cutia South Upper is heading off to the left side of the page. Pink Panther is another deposit we've been drilling out from surface. And sort of that is the surface expression of the Maronite. As we have developed the drive out towards Cutia South Upper, Um, we have discovered quite a bit of massive sulfide, both copper and you can see in that, in that actually that's the tag board cutting for independent firing there, but you know, that's about two and a half meters of high grade, massive sulfide for copper, which was not in any of the models at all. Uh, we've also developed through some quite high grade zinc and lead mineralization as well on the way out there. So, um, We think there's a lot of opportunities to expand this. And as I've said, there's no real constraints, you know, in terms of going faster or doing more apart from people and equipment. So we now have independent ventilation that's been established there. So, again, as you start developing out from the existing drives, it's slow. You're interacting with the rest of the mine. The team have managed to tap into an existing vent shaft out there that's not connected to the bottom of the mine. And during the month of April, we've established independent ventilation and therefore independent firing. And now we can really ramp up development rates. Having said that, one jumbo up here has been getting about the same amount of metres, more or less, as three jumbos at the bottom of the mine. And consequently, very cheap on a unit rate basis. So we're pretty excited about this area. You can see here, this is the drive going out to Cutia South Upper. And again, the more you look, the more you find. We drilled actually that vertical hole on the right is a JTEC hole for where the vent rise was going. And it hit the typical three to four metres at, you know, 10 to 20% copper mineralisation. So all of a sudden we decided to go and drill some more holes up there. And guess what? We've extended that ore body vertically about 70 metres now. So we knew enough to go to make the investment decision to go out there, but we knew everything was still open. As we go out there, we're finding more and more stuff. So we're pretty happy with the way that's all going. It really will be a separate mine to the rest of the mine. So again, the existing mine is being accessed. The ore comes out through the haulage shafts. This is coming out through the decline. It's around about a six minute drive from the ore body to the ROM pad and very low unit rates relative to what we currently have. to what it currently costs us to mine, and quite good grade as well, actually. And so, you know, we've been asked, you know, well, how big could this thing be? Not all of it's in reserve. Very little of it's in reserve, in fact. Not all of it is actually in JORC or SK1300 resource. I think it's pretty topical right now, but, you know, this would be a woodlawn-sized mine, but mostly copper with a bit of zinc as opposed to the other way. Yeah. That's probably the most analogous thing I can give to people right now, just for the mayor in mind, is that this would be a roundabout, a woodlawn-sized operation. So you can tell why we're quite excited about it and why we're throwing more resources at it as quickly as we can. Ventilation project. So again, chugging along, you could see from that graph earlier that the Development metres is really starting to ramp up in that thing, still on track for Q3, the September quarter next year for completion. This is really important for unlocking the bottom of the mine, allows us really for the bottom of the mine to get additional vent. And so, you know, in the immediate term, we're developing this Merrin mine, which will have a reasonably long life. but also we haven't taken our eye off the ball for this thing because this is actually really important for unlocking the bottom of the mine. With that, I'm going to hand over to Mornay and he can talk to people about the financial side of things.

Right, thanks, Mick. Good evening, morning, everybody. Going to slide 15 now. We announced during March 2025 the very exciting news that we Completed the refinance, as Mick said, of our debt structure with the recut of the senior debt facilities, including the earlier repayment of the mezzanine facility. Overall, we have significantly delivered and simplified our balance sheet over the last year, reducing our net gearing by more than 50% to just under 20%, as Mick said, at the end of March 2025. Just to recap what has changed with the refinance. As you remember, we had the old facilities which were made up of the $159 million US term loan facility. There was a $25 million revolving credit facility, a $145 million mezzanine debt facility, and then a $45 million Aussie environmental bond that was provided by Glencore. The new facilities are made up of a $159 million term loan facility, 125 million revolving credit facility and a 45 million Aussie dollar environmental bond now provided by three new Australian banks. Some of the key highlights of the refinance, it's really around, you know, we've now fully repaid the mezzanine debt facility, so that's the $160 million that we've repaid on that facility, which included the the 4% premium and the interest to June. We did extend the maturity of the old facilities as well, so both the term and the revolving facilities to March 2028. We increased the revolving credit facility by 100 million US to 125 million US, providing even greater flexibility and available liquidity. The refinance provides for repayment holiday to 30 September 25. And then also we've got a new repayment profile which reduces our repayments by $123 million by December 26 when comparing the old versus the new repayment profile. Importantly, we also reduce the average weighted cost of debt by more than 30%. So that's sort of sitting at the end of March is sort of around that 6.84%. um on on the on the on the senior debt we've we've got a outstanding at the moment that that sort of saving equates to about 100 equates to about 14 million us a million per annum cash interest saving and then finally on the uh continuous copper payments to glencore we have maintained the contractual position that the continuous payments will not be payable before june 26 even if triggered other than from free cash flow after satisfaction of all of our operating costs, royalty, debt repayments and stream servicing costs. So overall, we are extremely pleased with the refinance position of the balance sheet and obviously very thankful for the great support that's been provided by our lenders in that regard. Moving to slide 16. and the all-important cash flow waterfall. Just to go through a few key elements there. So firstly, again, we had a very healthy free cash flow from operations thereafter, sustaining capex of around $30 million for the quarter. Secondly, we paid that, as I said, $160 million to extinguish the mezzanine debt facility, which included that 4% premium and then also the interest paid of around 9 million from 1 January to 16 June 2025. That's included in that 160. You will note the interest there that we have from the senior facility of $3 million. And as I said before, you know, with the repayment of that MES debt, we're now saving around 14 million US per annum on interest on that. We also sold some concentrate at the port of just over 1,500 tons at the end of March, so that was just to align the production and sales from a cash point of view, albeit we couldn't recognize it as revenue because it wasn't loaded on ship by the end of March, but that sort of happened in early April. So in summary, our senior facility now is sitting at sort of $159 million. We threw down on about $66 million on the evolving facility. And then we had $75 million US of cash in the bank at the end of March as well. So that gives us that sort of net debt figure of $150 million US. All in all, we also had that very healthy liquidity of $153 million, so almost 245 million Aussie liquidity available to us at the end of March. And that sort of consisted of that undrawn revolving facility of 60 million. We also had outstanding QP receipts of 8 million, unsold concentrate of about 8.2 million, and that investment in polymetals, which has done really well for us at around 3 million US as well that sort of contributed to that sort of liquidity. So overall very strong and healthy banner sheet position and with the completion of the refinance and obviously the repayment of the mezzanine debt facility there, which will require some significant cash interest savings for us going forward. Going to slide 17, you know, slightly shown before, just showing our targets around production, cash costs and gearing. Meg has already covered off on how we are targeting significant growth through the execution of those two key projects in terms of the Merrimine and the Ventilation Capital project. So, you know, so which will deliver at the end of this year and then Q3 next year, respectively. And that will drive that targeted annual copper production above 50,000 tons. On the cost side of things, again, we've been chipping away at the cash cost there, and, you know, C1 has reduced, you know, significantly, you know, around 30% to $1.91 from the March quarter compared to June 23. And then, as Mick has mentioned as well, you know, the C1 in March with the production of that roughly 4,000 tons in March dropped to about $1.49 US per pound. So that's very pleasing to see and, you know, already demonstrates that we're sort of getting to that target of 150 that we have for 2025. And then with the refinance, as we've sort of walked through, you know, that's reduced significantly from where we started out. And, you know, that's sort of within our target range of just below 20%. It's all very pleasing and pleasing to see that all those metrics are going the right way and pleasing to see the progress there. And I will back to you, Mick.