Aeris Resources Ltd

Thank you for joining the ARIS Resources December quarter results presentation. In a few moments, ARIS Resources Executive Chairman Andre Labouchagne will present the results for the December quarter. At the end of the presentation, Andre will take questions during a Q&A session. You can submit written questions throughout the duration of the call using the Q&A function at the bottom of your Zoom screen. We will also open the floor to verbal questions. To ask a verbal question, please indicate you would like to speak by using the raise hand function at the bottom of your Zoom screen. With housekeeping settled, I will now hand over to Executive Chairman Andre Labouchagne, who will begin the presentation. Andre?

Thank you, Maddy. And good afternoon, everyone, and thank you for joining the ARIS December quarterly activities presentation. These are just the disclaimers, but I would like to jump into the highlights for FY23. For this quarter, the group copper equivalent production was 13.1 thousand tonnes, slightly lower than the previous quarter, but we have seen good improvements at both Triton and Krakow, and that has been offset by lower production from Jag and Mount Colin. But on a year-to-date basis, Jaguar is still way in front of the internal forecasts. We'll talk a little bit more in detail on each one of those. We are very proud to say all the mines have been within their costs as an internal plan, at least on the operating cost side. So a lot of focus has gone into cost control, and we are seeing some of those results as we move forward. We kept spending money on capital. We've invested nearly $37 million on capital projects, including exploration, and that's all, and we'll talk about mainly at Triton where we are. really focusing on developing a VOCA tank and getting budget into production. The resource upgrades, we have some really good success at most of the operations. At Krakow, Golden Plateau seems to be getting bigger and better. The turbo-deposited Jaguar, the more holes we draw, the more promising it looks. And then we got some very good high-grade copper intersections from drilling at a VOCA tank, which is now showing that that ore body is what we expected, but also potential to extend significantly further And then as we talked before, the courage on deposit, we've done some more drilling, got some really good results, and that would be one of the future projects we would embark on in the life of the business. On the cash and receivables, we closed the quarter with $76 million, a $22 million increase. On the previous quarter, we still got no debt. We talked about our focus on projects and specifically the Stockman project and bringing that in production. And we've employed Charles Rousseau as a general manager project who would oversee the Stockman project development and actual, he's a builder, he's a construction guy. but also be involved with other major projects in the business. And as we've stated in the quarterly, although we've got a few big months ahead of us on production-wise, we still maintain our production guidance for all operations. On the ESG side, a good safety performance by the operations in the last quarter or the last four months on last time injuries. A lot of focus is going into the consolidated group after the acquisition of Round Oak, the standardized systems and processes, standardized definitions, and we've seen some of that success. On the sustainability side, we are planning to put another sustainability report out this year. A lot of work is going into data and baseline setting, but there's a lot of internal discussions on the sustainability strategy going forward and set ourselves some targets as we move forward in the business. As we discussed before, we have decided on those four focus areas, and that's where the main focus will be on the sustainability side of the business. We had no environmental incidents for the quarter, so nothing to report on that. Looking at the operations, Tritton did 4,100 tons of copper, an improvement on the last quarter. Although the interest was still below internal plans, that is an unfortunate situation where in the beginning of the first two weeks of December, they could get no cement, and that meant we couldn't do any stoping at the Tritton mine itself. where we use Spaceful as a support. That has now been resolved, and the whole issue around delivery has been resolved, and we are now back on track, and we'll catch up on that Baseful. On the budget, our deposit, as we said before, development has hit the old body quite a few months ago. We're getting small volumes of tons out of it. One of the key capital projects was to get a new ventilation, or is to get a new ventilation shaft in, Unfortunately, the raised bore got stuck 30 meters from the bottom right on surface. We had to drill that out. We managed to get the raised bore out, but what we found is the condition of the first 30 meters or so on top of that raised bore is very bad, bad geotechnically, and we're now putting piling in place. We basically drill holes, put concrete piles in place, and then do the raised bore in the middle. That should be finished by the end of the quarter, and we will see much higher production levels coming out of budgerigar at around 1.8% copper, which is a significant improvement in grade as we go forward. We said previously we're investing in some technology. The Jameson cell, which we're busy installing at the Triton mine, that's underway, and that will improve the concentrate grades, and that payback is less than 12 months. So that is underway. And then on the capital side, we keep on putting money in. The main development was in Avoca tank. And we've seen, we've hit the ore body in December. That was slightly ahead of plan. The plan now is to move as fast as we can, getting the development in place and start to see if we get some actual soaping ore out in the fourth quarter. We already had some development ore into the mine. And some of those grades have been really spectacular. As I said earlier, we've drilled the Karajong deposit. We'll put a mineral resource app on that in quarter three. Some very interesting results. I'll show you a slide coming up. And then we discussed this before in June. In the first and second quarter, we did an airborne EM over the northern part of the tenement package. Those results has returned. We've got 14 new priority targets. And just to take a step back, that's exactly the way how we discovered Constellation. So we did the same. We found the targets. In fact, the first one we really got stuck into and drilled was Constellation, and Constellation is now a 7 million ton ore body. We've also focused a lot on technology in the business, and we have been awarded funds from the New South Wales government minerals and high-tech minerals activation fund for all sorting. A lot of opportunity for us is as we move into these smaller deposits like Constellation, not a small deposit, but trucking that 47Ks, if you can all sort and upgrade it, that will be a significant saving going forward. So we've got funds to do that. But we also got significant funds to work with a group looking at coarse particle exploitation processing. And if that comes and that works, that can be a game changer for the industry, in fact. So just touching on certain exploration, there you can see the EM results, there you can see where the targets are, some really high priority targets, but a few others. Those will now be proof tested, so make sure that there normally is not a infrastructure on ground, and then we'll do some ground-based EMs and start to do some drilling once we've identified the highest priority targets. At Moriwambi, it's just a mine keep on giving. Now, two years ago, we thought there's only 12 months left, but every time the geologists just do that next level or a bit of deeper drilling, this time around, they did a 250-meter hole-down plunge, intersected the ore body, and put some EM results down and edged that up, showing significant potential for further exploration and further extension of the Moriwambi mine. So Moriwambi mine If that is 250 meter down plunge, there's a significant potential of that to increase production by another two or three years. At Karajong, you can see some of those good results, 2.7, 3.4, 3%, still some good results. And some of those is now outside the original boundaries of what we thought to be a resource. So that keeps on extending the size of the Karajong deposit as well. Quite a significant result for us is we always knew that all that deposit extends to debt. That's just been the history of this business for the last 10 years. We went into Boca Tank with 800,000 tons sitting in that top end of what you can see there. We drilled a hole about 180 meters below the current EM plate, as you can see there, intersected massive sulfide to wait for the results. But you can easily correlate that EM plate to further expense down below, and that will be a significant extension of the life of a VOCA tank. And if it continues at the grades of VOCA tanks, current resource grade is 2.5% copper. So significant potential for a VOCA tank as we get into it, as you can see where the declines sit, uh at this stage with the drilling we're doing we're getting very good results and and some of the the stoves we're seeing or the decline development we're seeing looks quite spectacular going on to the jaguar mine um jaguar was was a little disappointing but not unexpected um it was 7 300 tons uh at all historical service dollar 65. the reason for not achieving the mining or mine side was an underbreak one of the stoves which impacted on production sequencing. So we had to resequence and we had to resequence some lower grade stoves for the quarter. Although we didn't mine it, there's about a 40,000 tonne stockpile at the mine because we need to blend the ore as we put it through the mill. So we still achieved the mill throughput in the mine, although at a slightly lower grade. As we said, their cost is well within plan, as we said, for all the mines. We also had what we found with this business, there's quite a big working capital movement going through the business. You don't get monthly concentrate sales, but we had two zinc concentrate shipments for the quarter and two copper shipments for the quarter, which sort of impacts the next quarter. You might not get as many, and you see these high working capital movements. That's just part of the business going forward. We just spent $1.2 billion on growth. We're quite excited about the Bentley resource itself. We're currently mining. It looks like when you draw, we keep on seeing potential for that to extend. But really, the turbo deposit, it does keep on growing. You can see the resource we put out. Most of that is indicated now. It's a significant increase, 23% and 37% between tons and metal. um what we are seeing though some of the latest drilling as you can see on that image is outside the current resource and has significant intersections which are waiting for results so the geologists and the mining team out at jaguar is quite excited about the opportunity for this to become bigger and bigger and as it come bigger it will get closer to the current working areas which will help with the access to get into turbo One of the things we're really working on is the old Jaguar mine, which was mined before they discovered Bentley. And when they discovered Bentley, they basically pulled out of Jaguar mine and went straight into the Bentley mine. Looking at the historical information, There's stoves there ready to be mined. There's broken stocks. We need to pump it out, and we are planning to start that process. It's got good copper grade, lower zinc grades, and in this market, focusing on getting more copper, and we think that there's a lot more to get out of that Jaguar mine. So that's part of the things we're looking at. So when we bought this asset, we were only focused on the Bentley mine and the turbo deposit and said, well, we think there's four years' life. But as we get into it, there's a lot more opportunities like the Jaguar mine and a few other deposits, which we can bring into the plan as we go forward. And we see quite a potential to extend this mine life significantly for where it is today. In North West Queensland, the Mount Collins mine, produced 100,000 tons of copper. The mine tons was impacted basically by a breach which formed between two stoves and low load availability. So they are beyond plan at this point in time. We have set it up for quarter three and quarter four production to increase significantly. We've got more mining areas available, but we've also got another loader into the fleet, and that has been the bottleneck was allowed to clean up the stoves and go again. So that has been brought in and we're confident that they will catch up in the next six months going forward. We've also changed to put tons through, it's usually the tons went through the Innes Hendrick plant. We've changed it to go through the Mount Isa copper concentrator. The recovery wasn't as good as we were hoping. So we have moved back, trying to put some tons back to Innes Hendrick. So we treated 82,000 tons, but there's already another 80,000 tons sitting on deck at the Mount Isa mine and some tons sitting at the Ernest Hendry process facility going forward. The Barbara drill program, which we've been working on, we talked about, that drilling has now been done, finished in December. We're waiting for some of the results. We'll then put a resource around it and then start to do the study to see if that is going to become the next operating mine once we finish Mount Collin. At the same time, we've put a team together to look at the regional opportunities within the Mount Isa region. We know that there's a lot of opportunities to do the similar model like we're doing at Mount Collin. We've got a small mining team, a camp set up, and a treatment facility to take the tons to treat at a very decent rate for the amount of tons we're putting through the plant.

And that is the model we want to apply going forward because we think there's a lot of explorers out there who would like to take the opportunity to extract value from their assets.

At Krakow, the team at Krakow is actually doing spectacularly well. You know, the grade of the Krakow mine has dropped over the last 12 months, and they've done a lot of work to understand the grade, and we've got the grade now under control. We know what we're mining, and the grade reconsiderations are basically on plan. But they've done record tons mined, record tons milled, so they know we need to push the volume through the plant. to keep doing what we're doing. And I must say they're doing exceptionally well on all fronts, on both the tons milled mine and costs are very well controlled within that business. We also keep spending growth capital. Golden Plateau is one of the future operations, but we're also doing some work on the southern side of the tenement package for Krakow as we move forward. So you'd have seen we put our announcement in January, the Golden Plateau resource sitting at 620,000 tonnes or 62,000 ounces, and that's only the red blocks on that image on the right-hand side. All those yellow structures which we're showing there still need to be tested, re-intersected, so we also added an exploration target of 6,230,000 ounces as still to be drilled and defined in this project. So this can become 150-plus tonnes 1,000-ounce sort of copper deposit, which will then be fast-tracked to get into production at Krakow to add to the current mine, but also looking at opportunities going forward. The exploration, the Greenfoot exploration of the southern side is continuing. We're doing some surveys. The guys are doing some work, and we're planning to put some targets in place to start the drill within that southern region. That southern region is probably still one of our best prospective areas, within the Krakow or you can even say in the business to find another big oil body. Going just on corporates on the project, so Stockman, as I said earlier, we now got Charles in place and he's going to take, he's taking this on. We're still planning to finish off the definitive study by the end of FY23, so by June. We are busy with looking at different logistical options to get the concentrate to port. Early works is being defined or refined, and we now have got a much better understanding of the vegetation clearance offsets which need to be in place, and there is a plan to move that forward. So quite a few approvals have been received in the quarter. The team is well advanced, and the project, once the study is done, will move it forward. At a corporate level, as I said earlier, the cash and receivables has gone up. And then we've seen the increase. And although, you know, sometimes hedges are good or bad, but there's still a little bit of hedge left for the next two quarters for gold and zinc. But at this stage, there's no other hedging in place for the business going forward beyond June. Thank you, everyone. That's the presentation, and I'm very happy to take questions.

Thank you, Andre. I'd like to remind attendees that they can submit questions using the Q&A function or the raise hand function at the bottom of their Zoom screens. We will give callers a few moments to get their questions in. Hi, Andre. It looks like we have a verbal question from William. William, I'm going to turn your mic on now. Can you hear us? Is this working?

Hello, can you hear me?

Yes, I can hear you, William. How are you doing?

Wonderful. Good afternoon, Andre. Thanks for hosting, Nicole. Just a couple of quick questions on my behalf. Maybe firstly, just touching on capital spends, just looking at the year-to-date growth in sustaining spend, it's sitting lower than what guidance would imply just for the first half. Yeah. Provide some colour on what that might be a function of and whether any capital decisions are being made that might have an impact on future sequencing and production sources outside necessarily of FY23.

Sure, sure. Yes, we are below the current plan, but not significantly. There's some capital spent coming under the next six months. One of the decisions we have moved into 2024 was the regulation upgrade. The cost of that would have come through in this next six months. That's about $6 million for the next six months for Jaguar. the pre-work and the technical work around that has taken longer, and we decided to move that across into FY24. And that's also one of the reasons why we are looking at the Jaguar deposit to bring that online, because that will bring tons forward again if there's any delay in getting to turbo because of the ventilation. So there's a contingency in place of that. On the other operations, as always, we look at optimizing capital and we don't spend money if it's not necessary. So on our quarterly forecast, we reassess all the capital spent and sometimes it's just not necessary to spend it. So there's a little bit of that, but nothing has been done which will impact production in the short to medium term.

Okay, wonderful. Thank you, Andre. That's really helpful. Maybe just quickly touching on Triton, just regarding the ventilation works going on at Budrigar, how should we be thinking about the production and grade profile over the next couple of quarters from Budrigar? And I guess similarly to it, like, given the piling works that will be going on?

Sure. So currently the piling is underway at Badgerigar. So the current plan is within the next, I think, 20 days, the piling will be done. Then we can restart the race ball process or start the race ball. The plan is for that to be finished off by the end of this first quarter. And then we'll see a significant increase in production from Badgerigar at a grade of around 1.8%. That's what we'll see from Badgerigar. We are going to do exactly the same piling at a VOCA tank. We've seen the impact of this failed or the drill which got stuck and that's delayed the budget production by at least four or five months to full production. We're still getting a small amount of stoping done based on the ventilation available but not to the levels we want to be. So we're going to do exactly the same. The piling contract is going to move direct from budget going to a Boca tank. And then in the fourth quarter, we'll see production coming out of Boca tank. Grades, you know, resource grade is 2.5%. We're expecting 2 plus percent coming out of a Boca tank in the fourth quarter.

Okay, wonderful. Thank you, Andre. And if I might, just one last question. Just regarding Jaguar, I guess there was the disclosure of Bentley development rates being impacted by vents, dewatering and labour. Are there any implications into the second half for the production and grade profile for JAG as a result of those lower development rates?

We have called up and opened up more resources or more stoping plants now at JAG. Some of them is going to be a bit lower grade. So we're seeing that they will achieve the guidance, but they won't do significantly better than guidance. What we ended up with when we bought it, the water pumping system had to be improved. So we're putting a million dollars into improving the pumping system. for a start. And we got our ventilation engineer, which we had at Triton, which made a massive difference. Twelve months ago, we said, look, we won't be able to get much deeper at Triton. He'd done some work, and now we think we can put another six levels into Triton based on the ventilation. Just the quality of the work is done. So he's helping us out now at JAG as well. I'm not saying we can't do it, but ventilation is an issue. That's why that ventilation shaft is quite important to put into JAG, into Bentley, sorry.

Excellent. Wonderful.

Thanks, William.

I'll pass on.

Thank you, William. Andre, we have a question submitted through our Q&A by some Sabbaths. Some Sabbath is asking, Andre, you mentioned no further hedging in place past June. Does that mean the board has decided to leave currency on an unhedged basis going forward? You mentioned in the last meeting that you would be looking at your currency risk management policy. Can you share what that is?

There's always, you know, when you said with a price, copper price setting at you know, where it sits today, it says really good Australian dollar copper prices and you really very tempted to look at what do you do. At this stage, we haven't done anything. But at some point, it might make sense. We're not saying we won't do it. I think it's more managing the risk of the business. We are spending capital. So if it makes sense, we will still look at it. But at this stage, there's nothing being discussed or implemented in the business.

Great. Thank you, Andre. We will give callers a few more minutes to get their questions in via the Q&A function or the raise hand function. So we'll just wait a few minutes.

All right, Maddy, I think – have you got any more questions?

Andre, it doesn't appear we have any further questions for this call. That brings us to the end of our Q&A. Thank you, everyone, for joining the ARIS Resources December quarter results presentation. We'll see you next time. Maddy, just hold on.

There's one open, but it's just stopped at Round Oak. Gregory? Gregory had something, but it stopped at Round Oak.

Gregory has just raised his hand for a verbal question. Gregory, we'll just unmute you now. Gregory, is that working for you?

Just put you, take your cell phone from you. It's still on mute, Matty. I can hear you. There you go, Grady.

Yeah, thank you. Now, I had trouble getting that raise hand functioned. I'm not used to this sort of stuff. I'm interested, with the Round Oak acquisition last year, which effectively happened at the end of the financial year, you nominated the working capital adjustment of $28.7 million. And the thing is, I noticed in the quarterly activities report, there's no add-on the value of the cash flow that the Round Oak mine has produced in the current quarter, it is reported. And I was wondering, you know, because in the Solon-Patterson, it used to produce around about, you know, $18.25 million a quarter. And I was wondering, is that included in your cash flow?

Is that going to be nominated later days? No, look, the current cash show, what we're showing there is cash in the bank. There's 76, including receivables. That includes the $28 million, which we got from Washington Soul Packs. Look, the time where they made $80 million a quarter was when zinc price was through the roof and the Mount Collin mine was generating good money. Now, zinc price has come back. We are reinvesting a lot more than what they would have done. They were in the process of, you know, end of their ownership of that asset. We're investing quite a bit more to get the Jaguar mine, you know, settled down and and for the long term. So the numbers you're seeing includes that and includes the cash from Jaguar and the Mount Colin mine, both generating operating cash.

All right. Okay. All right. I was hoping to see a bit more cash in the current quarter activities report. That was all?

Yeah. No, I understand. But we are putting a lot of money back into capital for BocaTank. and Jaguar and Crackel. So we are investing to create the future at this point in time.

The other one's a different question to ask. Because there's relatively a small number of shareholders in the company, like 670,000 shares on each of them, is it likely the company could consider paying a dividend in August?

No, we won't be paying dividends, Gregory, not at this point in time at least. While we've got the investments we need to do, I think the prudent value is to put the investments back and shareholders will get a significant value through that if we can grow this, you know, turn it into an 8 to 10-year mine life and even Jaguar significantly increase. So for us, it's a capital period, which I think is better for us to put the money back in the business.

All right. Thank you very much for your time.

Thank you, Gregory.

Thank you, Gregory. Andre, we have one more verbal question from Owen. Owen, I'm going to give you permission to talk now. Can you hear us? Is that working for you?

Hi, Alan. How are you doing? I actually don't have a question. But whilst you've got me, Constellation is very silent in your report on Constellation. Is that sort of being relegated down the food chain relative to Budry Gard, Vocatech?

Look, absolutely not. Not relegated, I think. What we are doing with Constellation, we've got enough drilling to get the resource. We've got enough drilling to put a mine plan and a strategic plan or business plan around it. So the team is putting a feasibility study around it before we start drilling it again. There's enough information there to know, you know, there's 7 million tonnes sitting there. We're looking at an open pit mine and an underground or just one, just an underground. So we're assessing all the different options, the capital costs to bring it into production, So all of that is being – are being assessed. The approval process is to get mining licenses and environmental approvals is already underway. So it's just we're not – the reason why we're silent is we're not doing any drilling currently. It's all about getting the studies done, and once that's done, we'll do a lot more great control drilling and setting it up. Okay. All right. Thanks, everyone.

Wonderful. All right, Mary. We'll just give everyone a few more moments for any final questions. Great. That brings us to the end of our Q&A. Thank you for joining the ARIS Resources December quarter results presentation. We'll see you next time.

Thank you, everyone. Appreciate the time.