Metals Acquisition Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
April 29, 2025
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Operator

I would now like to hand the conference over to Mr. Mick McMullen, CEO.

Operator

Please go ahead.

Michael McMullen
CEO & Director at MAC Copper

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, Morne Engelbrecht, who will talk to some of the slides on the financials.

Michael McMullen
CEO & Director at MAC Copper

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 US940 million 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.

Michael McMullen
CEO & Director at MAC Copper

More and I will run through that. And just so everyone's clear, to make sure the market understands how many shares we're going to issue, 82,500,000.0 shares an issue, about 3,180,000 warrants at a strike of US12.50 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 is we'll talk about in later slides. And then the really exciting news actually is the Merin mine that we started rolling out in the marketplace during the last quarter, and we've made some really good progress on that.

Michael McMullen
CEO & Director at MAC Copper

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, we then have to come through the sort of the January period where we pushed 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.

Michael McMullen
CEO & Director at MAC Copper

It really is a function of as sort of where we are in the stope sequence. And 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 a buck 91 US pound, total cash costs of about $2.47 a pound, and a realised price of $4.4 a pound US for the quarter.

Michael McMullen
CEO & Director at MAC Copper

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 Mono really go through all the balance sheet and the financials and liquidity. But, you know, for this year, 43,000 to 48,000 tonne of copper is where the guidance sits. Copper grade somewhere between 3.84%.

Michael McMullen
CEO & Director at MAC Copper

And obviously, we had a very strong grade profile during Q1. And growth CapEx of somewhere in the order of US20 million to US25 million and sustaining of US40 million to US50 million And, you know, 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 is sort of, you know, 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. Safety, we like to talk about, you know, I would say, I've said on calls in the past that, you know, our TRIFR has been okay, but probably a little sticky, I suppose.

Michael McMullen
CEO & Director at MAC Copper

But now we're starting to see the benefit of all the hard work that the team at SITE have done with the TRIFR starting to trend down quite nicely. And I think by the April, we've ended up at around a TRIFR of around seven actually for the last twelve months. So that's great. 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.

Michael McMullen
CEO & Director at MAC Copper

And that will provide us capacity out till about 02/1930. And so, we are actually building all of that now. So we're well on track. We've had no reportable environmental incidents during the quarter. From an ESG point of view, actually, we've had a pretty good improvement on where we had been tracking before.

Michael McMullen
CEO & Director at MAC Copper

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 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, you know, head grade a bit over 4% copper, and we expect to see the grade to be as strong, if not a bit stronger.

Michael McMullen
CEO & Director at MAC Copper

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, if you look at our production and cost in the month of March, obviously, as we sort of did a lot of catch up work in January after the very strong December quarter. If you look at the month of March, we produced just under 4,000 tonne of copper, and our C1 was around about 1.45 a pound. So that sort of gives you an indication of where we think the business should be and can be.

Michael McMullen
CEO & Director at MAC Copper

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 Merin 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 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 total CapEx and sort of what's in growth and exploration and sustaining. And Moreno has done a great job on the graph on the left there, sort of trying to outline what we've spent the money on.

Michael McMullen
CEO & Director at MAC Copper

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. And so we're sort of ahead of the game there. Also, some of the timing of rebuilds basically resulted in us needing to spend less capital. You can see there, the growth CapEx was sort of pretty constant around about that $4,000,000 And what's in growth CapEx?

Michael McMullen
CEO & Director at MAC Copper

So, you know, we don't put tailings dams into growth that's in sustaining, but we do put our Merame mine 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, you know, we're starting to give a little bit more detail for people here as to, you know, 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 meters there.

Michael McMullen
CEO & Director at MAC Copper

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 Merin Mine and the Capital Event 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 meters. And so that's really what you're seeing in that graph on the right. In addition to that, we did an extra two twenty seven meters of capital development up in the Merin mine. So if you think about total development for the business, we are actually starting to ramp up capital development quite a bit here.

Michael McMullen
CEO & Director at MAC Copper

And you will see why in the Meron mine, 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. It's really been consistent, safe, low cost copper production. We do want to advance that ventilation project. We want to get the Miramar online and obviously the balance sheet.

Michael McMullen
CEO & Director at MAC Copper

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 Merame Mine being additive to that. And we're getting quite excited about the Merame Mine as you're going to see in the next few slides here. So targeting production from the fourth quarter being the December this year, this is everything from surface down to about 900 meters below surface. It's the Merin Mine, it's got a whole bunch of different deposits in there, but for just making life easier, we just call it that.

Michael McMullen
CEO & Director at MAC Copper

Not all of that is in Jawke or SK 1300 resources, but we have sufficient confidence in those mineralized 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 digitize 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 forty years, fifty years. But actually we found a significant amount of mineralization that was sitting in there. Most of it sitting very close to existing development.

Michael McMullen
CEO & Director at MAC Copper

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, 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 That's what we're driving out to now. Then there's a reasonably high grade sort of eight to 10% zinc with a little bit of lead and high grade zinc zone, which our plan is to mine that and track that up to polymetals to the Endeavour Mill for treatment. We then have what we call a medium grade copper ore body, which actually in terms of tonnage is the largest part, quite substantial, round about 2.5% copper.

Michael McMullen
CEO & Director at MAC Copper

And then last is the mixed, which is a mixed copper zinc material, which actually is starting to become reasonably sizable 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 meters below surface. It's fantastic ground.

Michael McMullen
CEO & Director at MAC Copper

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 meter to develop is roughly one third of what it is at the bottom of the mine.

Michael McMullen
CEO & Director at MAC Copper

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 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. So the view on the left is a surface plan. All that light gray looking stuff is the surface projection of existing underground workings. QTS South Upper is, you know, heading off to the left side of the page.

Michael McMullen
CEO & Director at MAC Copper

Pink Panther is another deposit we've been drilling out from surface, and sort of that is the surface expression of the Maranite. As we have developed the drive out towards QTS South Upper, we have discovered quite a bit of massive sulphide, both copper and you can see in that actually that's the tag board cutty for independent firing there, but you know, that's about two and a half meters of high grade massive sulphide for copper, which was not in any of the models at all. We've also developed through some quite high grade zinc and lead mineralization as well on the way out there. So we think there's a lot of opportunity 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.

Michael McMullen
CEO & Director at MAC Copper

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 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.

Michael McMullen
CEO & Director at MAC Copper

Having said that, one jumbo up here has been getting about the same amount of meters, 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, you know, again, the more you look, the more you find.

Michael McMullen
CEO & Director at MAC Copper

Drilled actually that vertical hole on the right is a geotech hole for where the vent rise was going. And it hit the typical three to four meters at 10 to 20% copper mineralization. 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 meters now.

Michael McMullen
CEO & Director at MAC Copper

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.

Michael McMullen
CEO & Director at MAC Copper

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 cost us to mine, and quite good grade as well, actually. And so, we've been asked, 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 in actually in Jawke or SK 13 Hundred resource. I think it's pretty topical right now, but, you know, this would be a woodlawn size mine, but mostly copper with a bit of zinc as opposed to the other way.

Michael McMullen
CEO & Director at MAC Copper

That's probably the most analogous thing I can give to people right now just for the Meron mine is that this would be around about a woodlawn sized operation. So you can tell why we're quite excited about them, 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 meters is really starting to ramp up in that thing, still on track for Q3, the September next year after 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.

Michael McMullen
CEO & Director at MAC Copper

And so, you know, in the immediate term, we're developing this Merin 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.

Morné Engelbrecht
CFO at MAC Copper

All 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.

Morné Engelbrecht
CFO at MAC Copper

Overall, we have significantly delevered 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 March 2025. Just to recap what has changed with the refinance. So as you would remember, we had the old facilities, which were made up of the US159 million dollars term loan facility. There was a $25,000,000 revolving credit facility, 145,000,000 mezzanine debt facility and then a $45,000,000 environmental bond that was provided by Glencore. The new facilities are made up of $159,000,000 term loan facility, dollars 125,000,000 revolving credit facility and a AUD 45,000,000 environmental bond now provided by three new Australian banks.

Morné Engelbrecht
CFO at MAC Copper

Some of the key highlights of the refinance is really around we've now fully repaid the mezzanine debt facility. So that's the $160,000,000 that we repaid on that facility, which included the 4% premium and the interest to June. We did extend the maturity facilities as well, so both the term and the revolving facilities to March 2028. We increased the revolving credit facility by US100 million dollars to US125 million dollars providing even greater flexibility and available liquidity. The refinance provides for repayment holiday to thirty September twenty five.

Morné Engelbrecht
CFO at MAC Copper

And then also, we've got a new repayment profile, which reduces our repayments by $123,000,000 by December 26 when comparing the old versus the new repayment profile. Importantly, we also reduced the average weighted cost of debt by more than 30%. So that's sort of setting at the March to sort of around that 6.84% on the senior debt we've got outstanding at the moment. That sort of saving equates to about USD $14,000,000 per annum cash interest saving. And then finally, on the continuous copper payments to Glencore, we have maintained a contractual position that the continued 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.

Morné Engelbrecht
CFO at MAC Copper

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 $30,000,000 for the quarter. Secondly, we paid that, as I said, dollars 160,000,000 to extinguish the mezzanine debt facility, which included that 4% premium and then also the interest paid of around 9,000,000 from January to sixteen June twenty five that's included in that $160,000,000 You will note the interest there that we have from the senior facility of $3,000,000 And as I said before, with the repayment of that net debt, we're now saving around US14 million dollars per annum on interest on that.

Morné Engelbrecht
CFO at MAC Copper

We also sold some concentrate at the port of just over 1,500 tonnes at the 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 March, but sort of happened in early April. So, in summary, our senior facility now is sitting at sort of $159,000,000 We drew down on about $66,000,000 on the revolving facility. And then we had $75,000,000 of cash in the bank at the March as well. So that gives us that sort of net debt figure of USD 150,000,000.

Morné Engelbrecht
CFO at MAC Copper

All in all, we also had that very healthy liquidity of $153,000,000 so almost $245,000,000 liquidity available to us at the March. And that sort of consisted of that undrawn revolving facility of AZ $60,000,000 We also had outstanding QP receipts of AZ $8,000,000 unsold concentrate of about $8,200,000 And investment in polymetals, which has done really well for us at around $3,000,000 as well that sort of contributed to that sort of liquidity. So overall, very strong and healthy balance sheet position. And with the completion of the refinance and obviously the repayment of the mezzanine debt facility there, so that which will provide some significant cash interest savings for us going forward. Going to slide 17.

Morné Engelbrecht
CFO at MAC Copper

Slide we've shown before, just showing our targets around production cash costs and gearing. Mick has already covered off on how we are targeting significant growth for the execution of those two key projects in terms of the Merame mine and the ventilation capital project. So will deliver at end of this year and then Q3 next year respectively. And that will drive that targeted annual copper production above 50,000 tonnes. On the cost side of things, again, we've been chipping away at the cash cost there.

Morné Engelbrecht
CFO at MAC Copper

And C1 has reduced significantly around 30% to 1.9 dollars from the March compared to June 23. And then, as Mick has mentioned as well, the C1 in March with the production of that roughly 4,000 tons in March dropped to about 1.4 dollars per pound. So, that's very pleasing to see and already demonstrates that we're sort of getting to that target of 1.5 that we have for 2025. And then with the refinance, as we've sort of walked through, that's reduced significantly from where we started out and that's sort of within our target range of just below 20%. So, all very pleasing and pleasing to see that all those metrics going the right way and pleasing to see the progress there.

Morné Engelbrecht
CFO at MAC Copper

And over back to you, Mick.

Michael McMullen
CEO & Director at MAC Copper

Sure. Thanks for that. So, you know, look, I think in summary, you know, we're executing on the plan, the base plan, maintaining guidance. We, you know, we expect to have a pretty strong second quarter based the production profile we have ahead of us. Our investment in polymetals has done really well.

Michael McMullen
CEO & Director at MAC Copper

They look to be progressing well towards ramp up. I guess we actually have some high grade zinc material in the Merin mine that we could mine quite quickly. We're just waiting to see how they go ramping up. But again, we would like to think that by the fourth quarter of this year, we are shipping them some zinc mineralization for treatment. We have signed that tolling agreement with Polymetals, but that's subsequent to the end of the quarter, I think on the April, we invested another AUD 2,500,000.0 into poly metals at 35¢ and, you know, they're trading it to 90 ish.

Michael McMullen
CEO & Director at MAC Copper

So that's been a good return for shareholders. And, know, overall, I said, we're liking Merin mine more and more the more we look at it. The ease with which we can get stuff done, now mining is never easy. But on a relative basis, it is quite easy up there. It's very shallow, fantastic ground, really quick to develop stuff.

Michael McMullen
CEO & Director at MAC Copper

And we are finding more and more material up there that can go through either our plant or the polymetals plant. And again, is a woodlawn size mine, but predominantly copper. And we'll try and as we sort of we're moving drill rigs out of the bottom of the mine, that'll give us more ventilation down there for production. We've got a twelve year reserve life at the bottom of the mine anyway, but we want to pull those rigs up and put them up in the top part of the mine in that Merin Mine so that we can start drilling that material out and getting it into reserves so that we can actually start talking about it in a bit more of a sort of SK 1,300 type manner. So overall, look, I think our employees have done a pretty good job.

Michael McMullen
CEO & Director at MAC Copper

We obviously had a really strong December quarter. And then, you know, we had a bit of catch up work that we had to do during January and into February. But it is pleasing to sort of see, you know, turnover stabilized. We've seen, I think March was probably, if not the lowest, certainly one of the lowest turnover months we've had since we've owned the mine. And again, the safety has improved sort of quite markedly.

Michael McMullen
CEO & Director at MAC Copper

So with that, I'm going to hand it over for questions and happy to take questions from anyone who would like to ask some.

Operator

Thank you. Your first question comes from Daniel Morgan from Barron Joey. Please go ahead.

Daniel Morgan
Founding Principal & Mining Equity Analyst at Barrenjoey

Hi, Mick. Good morning and Tim. Probably first question just for Mornay. Can I just confirm that from a cash flow perspective, your production and sales are aligned? So I note that you sold officially 1,200 tonnes less copper than produced in the quarter, but you also got the $22,000,000 payment from Glencore.

Daniel Morgan
Founding Principal & Mining Equity Analyst at Barrenjoey

Is my interpretation correct that basically from a cash perspective your production equals sales?

Morné Engelbrecht
CFO at MAC Copper

Yes. I mean that's typically how we try to run it on a quarterly basis. It's difficult to make all the shipments sort of work out exactly in terms of the quarterly reporting. So in terms of the sales versus production, so if you look at what we pre sold just over 1,500 tonnes, if you add that to the sales volume, you sort of get to the production volume. So that's what I sort of try to do on a quarterly basis is to try and match the cash with the production just to have that sort of consistency in terms of every quarter sort of matching up.

Morné Engelbrecht
CFO at MAC Copper

So that's the aim. We can't recognize it as sales. I can't add it to the sales figure or the sales revenue, and I can't add it to the free cash flow from operations. But until it's loaded onto the ship, but I can add the cash to it. So I do that we do that just to smooth out and make sure that we report to the market, I suppose, cash that reflects the production, because obviously we've sunk the cost into that production already.

Morné Engelbrecht
CFO at MAC Copper

So that's the aim really.

Daniel Morgan
Founding Principal & Mining Equity Analyst at Barrenjoey

That's clear. Mick, maybe going to Meron. I think you indicate expectations of first ore at the end of twenty twenty five, Q4 ish. Will you get any development ore as you go? Is there any potential to pull a stope or is it barren?

Daniel Morgan
Founding Principal & Mining Equity Analyst at Barrenjoey

I guess you've found stuff as you've been developing across.

Michael McMullen
CEO & Director at MAC Copper

Yes. Well, actually, that massive sulfide sitting in that cutty right there, you know, the look. The short answer is we'll be able to pull development ore out. We've we actually already have, you know, I don't know, dozen truckloads or half a dozen truckloads of fairly high grade zinc lead mineralization sitting on the surface that we mine through as part of the development. So, yeah, look, we're obviously gonna be opportunistic and take it as quick as we can.

Michael McMullen
CEO & Director at MAC Copper

Right now, polymetals isn't running, so that stuff's sitting on service. But if we see copper mineralization that is worthwhile taking, we'll obviously get that and we'll put it through the plan.

Daniel Morgan
Founding Principal & Mining Equity Analyst at Barrenjoey

And so I appreciate that the Marin is still an evolving thing, uncertainty and hard numbers, etcetera, difficult to talk to at the moment. But what tonnage would you see as a success based on where you're sitting now for 2026, for example, I'm talking ore tonnage and where would it come from? I mean you identified a few different areas of mineralization, which have, I guess, different outcomes with grades and economics?

Michael McMullen
CEO & Director at MAC Copper

Yeah. Actually, maybe that plan that's on that slide there would be good. QDS South Upper, you know, I think if we do, you know, somewhere look, I'm hoping we can mine it a bit narrower than what the current plan is, but, you know, somewhere like 50,000 tons at 6% copper out of that. Maybe a little bit out of Pink Panther as well. It's it's lower grade.

Michael McMullen
CEO & Director at MAC Copper

And and then something like a 50,000 tons of, call it, 9% zinc to track up the road to polymetals. And and I would think the sort of what we call the medium grade copper, that stuff that's about two and a half percent. That's actually bit more bulk tonnage. Just not quite sure how much of that will get out next year, but, you know, I don't know, about 100,000, maybe 150,000 tonnes of that at 2.5, something like that.

Daniel Morgan
Founding Principal & Mining Equity Analyst at Barrenjoey

And just to clarify, these numbers you're providing, are these run rate numbers or is that what you would cumulatively success would be for 2026 in

Michael McMullen
CEO & Director at MAC Copper

run rate is higher than that, but we won't be because we're getting into it at the end towards the end of this year, we won't be at full run rate on average for next year. But, yeah, that sort of number, I think we should be able to get out.

Daniel Morgan
Founding Principal & Mining Equity Analyst at Barrenjoey

Okay, thank you very much. I'll let others ask questions.

Michael McMullen
CEO & Director at MAC Copper

Yeah, but again, you can see why we're pretty excited about this because it has the potential to add meaningful production to us. And we've got estimates of what our mining costs will be, but we can look at what our cost per meter of development is, and it is one third of what we're currently paying at the bottom of the mine. Right? So, 2.5, our medium grade stuff at only 2.5% copper, whilst not quite as exciting as 4% at the bottom of the mine, the cost per tonne for that is very low, and it's only going to cover your variable costs, right? Like it doesn't cost us any more overhead or through the plant or overhead through G and A, it's the same stuff, same costs.

Michael McMullen
CEO & Director at MAC Copper

So we think we can make quite a lot of money. So the other advantage of this Merit mine is obviously, you know, we've spoken about it at length. The CSA mine has these, you know, very high grade stoping areas that when you're in them, fantastic. When you're not in them, you know, it's less fantastic. We can produce anywhere from 2,000 ton of copper in a month to 5,500 tons of copper in a month.

Michael McMullen
CEO & Director at MAC Copper

And whilst we can see the stoping profile, and we're comfortable from an annual basis, clearly the market likes to see less volatility on a quarter by quarter basis, right? So one, we think we can make a lot of money out of this Meron mine. So that's a great idea, fantastic return for the capital deployed. But secondly, we think it has the ability to allow us to smooth that production profile out and de risk the operation because it's coming out of different part of the mine, different means of getting out as well. So to me, that's actually a big advantage of this thing is it allows me to engineer out that inherent volatility that the CSA mine, like the current CSA mine has.

Michael McMullen
CEO & Director at MAC Copper

Right? So two advantages. I always like to make money out of things, but the second one is smoothing that volatility up is really important.

Daniel Morgan
Founding Principal & Mining Equity Analyst at Barrenjoey

Sorry, Mick, to come back. Just on the fixed cost leverage in the business. Is it fair to say that the mine is about breakeven at maybe 35,000 tonnes per annum of copper production and then after that, that's your margin. Is that a fair way of looking at it?

Michael McMullen
CEO & Director at MAC Copper

Think it'd be a lower number than that. More than I'd be able to work it out for you, but I have done the exercise a while back. I would think it's high 20s, 30, probably the number.

Daniel Morgan
Founding Principal & Mining Equity Analyst at Barrenjoey

Thank you so much. I'll pass it on.

Michael McMullen
CEO & Director at MAC Copper

Thanks.

Operator

Thank you. Your next question comes from Ben Wood from Wilson's Advisory. Please go ahead.

Ben Wood
Associate Analyst at Wilsons Advisory

Hi, Nick. Good morning. Positive to see you guys that the strong volumes coming through in March lead to those meaningful cost reductions that we were sort of baking into our forecast. My question sort of so previous copper production guidance for calendar year 'twenty six was sitting between forty eight and fifty three kilotonnes. But I noticed in this release that you referenced further down that there's a pathway to greater than 50 kilotonnes of copper equivalent production.

Ben Wood
Associate Analyst at Wilsons Advisory

And just sort of wondering, should we interpret this as perhaps a more conservative outlook in '26 for copper, but perhaps signaling a greater emphasis of zinc? Or how should we sort of, yeah, interpret that wording?

Michael McMullen
CEO & Director at MAC Copper

Well, no real change, to be honest with you. I think, yeah, we've obviously if we are you know, when we put that guidance out originally, we weren't planning on mining any zinc. Now we are planning on mining some zinc. We've also got the agreement in place with polymetals, so we've got a know, we've an outlet for it. I think with between with what we see in this Merin mine, we're feeling pretty comfortable on the there's upside risk in that forecast.

Michael McMullen
CEO & Director at MAC Copper

But I I you know, it's a bit of an evolving thing this merrimon. Right? Like, I think I'd rather get to the end of this year, and then I can upgrade next year, if that makes sense.

Ben Wood
Associate Analyst at Wilsons Advisory

Yeah. Yeah. No worries.

Michael McMullen
CEO & Director at MAC Copper

So I'll develop mine by that stage. Right? Then I'll have a much better idea.

Ben Wood
Associate Analyst at Wilsons Advisory

Excellent. So just a second one as well, if I can. Previous sort of estimates for the vent project sitting at about $40,000,000 There's sort of been $8,000,000 spent on growth CapEx in the last two quarters, sort of implying that thirty four, thirty five million left for the vent project. Is is that still on track?

Michael McMullen
CEO & Director at MAC Copper

Yeah. Yeah. So, I think it's 42 Aussie versus eight US. Yeah. You know?

Michael McMullen
CEO & Director at MAC Copper

So yeah. That's right.

Ben Wood
Associate Analyst at Wilsons Advisory

But those numbers still sort of hold?

Michael McMullen
CEO & Director at MAC Copper

Yeah. Yeah. Look. Again, I think we may not have it in the deck. It's I think it's in the in the word version of the quarterly.

Michael McMullen
CEO & Director at MAC Copper

The cost per as as we're doing more meters, more I may you you may have the exact number, but I think we saw a reduction in the cost per meter of development come down a bit as we did more meters.

Ben Wood
Associate Analyst at Wilsons Advisory

Yep.

Michael McMullen
CEO & Director at MAC Copper

Yeah.

Morné Engelbrecht
CFO at MAC Copper

That's that's about That's down to about $11,000 a meter from from 12 and a half.

Michael McMullen
CEO & Director at MAC Copper

Yep. Yep. Yep. But no. That's not right.

Ben Wood
Associate Analyst at Wilsons Advisory

Yep.

Michael McMullen
CEO & Director at MAC Copper

Yeah. So look, the the the bigger components obviously is when you start, you know, we we gotta do a bit more development, but we there's there's some somewhat sizable vent fans that have gotta be bought. So they're from memory of don't hold me to it, but off the top of my head, there that there'd be 4,000,000 or $5,000,000 between those two there as like a one off lump. And then there's a raise boring work, which is the other sort of big component.

Michael McMullen
CEO & Director at MAC Copper

Right?

Ben Wood
Associate Analyst at Wilsons Advisory

Alright. Thanks, team. I'll hand it on.

Operator

Thank you. Your next question comes from David Radcliffe from Global Mining Research. Please go ahead.

David Radclyffe
Managing Director at Global Mining Research

Hi. Good morning, Mick and Morne. My question is just coming back to that profile again and maybe just thinking about the shaft production for the year because it looks like you've got an average sort of north of 3,000 tonnes per day or hoisted. The mine hasn't done that for a while. So maybe could you talk to just that the outlook for this year and give us some more color on how that profile looks?

David Radclyffe
Managing Director at Global Mining Research

And maybe is there some more great upside there that gives you confidence in hitting your targets? Thanks.

Michael McMullen
CEO & Director at MAC Copper

Yeah, that's right. So again, look, we've been very clear that, you know, sort of when we bought the mine, dilution control and mining practices weren't best in class, I think is probably the best way to put it. So the guidance for this year that we had for grade was, I think it's on the front slide there, but it was 3.8 to four. And obviously, you know, we're running at 4.1, yeah, throughout to four. So we are sort of seeing a little bit better grade.

Michael McMullen
CEO & Director at MAC Copper

So I'd always rather haul less dirt for the same metal. So what's likely to happen is, you know, round about that, you know, sort of 4%, maybe 4.1% for the year and hold a little bit less dirt. That's probably what where it looks like it's coming out.

David Radclyffe
Managing Director at Global Mining Research

Okay. That makes sense then. Thanks for that. I'll pass it on.

Operator

Thank you. Your next question comes from Tim Hoss from Canaccord. Please go ahead.

Timothy Hoff
Analyst at Canaccord Genuity (Australia)

I was just wondering around the offtake terms that you've got for any zinc production that might have been produced through the tolling arrangement. Does that go through Glencore's current arrangement?

Michael McMullen
CEO & Director at MAC Copper

No, not at this stage. So it is a tolling agreement. So as opposed to an all sale, so we will get Con back, you know, to deal. We have not at this stage signed off take. And, you know, I've spoken about the copper market, you know, in terms of it's incredibly tight for copper con.

Michael McMullen
CEO & Director at MAC Copper

Actually, it's really tight for zinc con as well. I must admit I haven't had a look for a few weeks, but zinc con on spot will be, if not below zero, pretty close to zero. And so we immediate focus has been to charge on out to get the high grade copper out there. Quite frankly, there's high grade zinc we could take in a very short space of time even quicker than the copper. But we have to wait for polymetals to be up and running, right and let them get up and running and not try and force them, get them up and running.

Michael McMullen
CEO & Director at MAC Copper

That I just we have a draft of the offtake. We'll be signing something in the not too distant future, I think.

Timothy Hoff
Analyst at Canaccord Genuity (Australia)

Okay. Fantastic. Just to clarify that the copper is also separate to the CSA offtakes?

Michael McMullen
CEO & Director at MAC Copper

Sorry, which copper?

Timothy Hoff
Analyst at Canaccord Genuity (Australia)

So the copper, any copper you might produce through polymetallic ore going to poly.

Michael McMullen
CEO & Director at MAC Copper

Yeah, that's right. Yep.

Timothy Hoff
Analyst at Canaccord Genuity (Australia)

Yep.

Michael McMullen
CEO & Director at MAC Copper

If we're sending copper ore up to polymetals, we won't recover the copper because it their circuits are zinc lead circuit. You know, that's why we've chosen the the zinc lead ore up there.

Michael McMullen
CEO & Director at MAC Copper

Anything that's got copper in it, that's going to run through our plant.

Timothy Hoff
Analyst at Canaccord Genuity (Australia)

Right. Roger. I think that was it for me. Thank you.

Operator

Thank you. Your next question comes from Eric Windmill from Scotiabank. Please go ahead.

Eric Winmill
Equity Research Analyst at Scotiabank

Great. Thanks very much, Mick and team for taking my question. Sorry if I missed it earlier, the line was cutting out a bit. But just on tariffs, I mean, you seeing any issues in the supply chain or anticipating any major impacts in terms of cost or availability of consumables, things like that?

Michael McMullen
CEO & Director at MAC Copper

Doesn't seem to be an issue for us right now. Obviously, it's very unstable world. I think Morne and our General Counsel did an amazing job getting our refinancing done, notwithstanding the ups and downs in the market and everything. I sleep much easier knowing that we have all that liquidity and no near term principal repayments to weather any storms. I think that's more what we're going to see.

Michael McMullen
CEO & Director at MAC Copper

We haven't seen any, like, consumable or critical spare issues at this stage. Can't rule them out. It's probably more of a just what I would call a general market uncertainty. Right? That's been more of an issue for us.

Michael McMullen
CEO & Director at MAC Copper

But as I say, I do sleep much easier having having that refinance done.

Eric Winmill
Equity Research Analyst at Scotiabank

Okay, fantastic. No, I appreciate that. Thanks very much. I'll hop back in queue. Cheers.

Operator

Thank you. There are no further questions at this time. I'll now hand back to Mr. McMullen for closing remarks.

Michael McMullen
CEO & Director at MAC Copper

Look, I appreciate everyone. I know it's a really busy reporting period in Australia. Look, I think clearly, if you asked me at the end of last quarter, which was our strongest quarter, what would I want? More copper is always the answer. Clearly in Q1, more copper is the answer.

Michael McMullen
CEO & Director at MAC Copper

I'll say the same thing at the end of Q2, just given the leverage we have to our fixed costs. But I think things that we've got a really good runway ahead of us now for 2025 and into 'twenty six. The major projects are all being executed. And look, the more we get into this Merit mine, the more we really think that thing has got the ability to really move the needle for shareholders and cap it on that. If you can see our growth CapEx for this year, in total that Maranion circa 25,000,000 Aussie dollars for that kind of production, it's a no brainer for us to do it.

Michael McMullen
CEO & Director at MAC Copper

Right? And so we're very excited about it, but obviously not taking off the ball with our capital vent project. You can see those development leaders and that really starting to pick up. So thanks everyone. And we'll talk to you after Q2.

Operator

And that does conclude our conference for today. Thank you for participating. You may now disconnect.

Analysts
    • Michael McMullen
      CEO & Director at MAC Copper
    • Morné Engelbrecht
      CFO at MAC Copper
    • Daniel Morgan
      Founding Principal & Mining Equity Analyst at Barrenjoey
    • Ben Wood
      Associate Analyst at Wilsons Advisory
    • David Radclyffe
      Managing Director at Global Mining Research
    • Timothy Hoff
      Analyst at Canaccord Genuity (Australia)
    • Eric Winmill
      Equity Research Analyst at Scotiabank
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Key Takeaways

  • Copper production guidance: 43,000–48,000 t Cu for FY25, targeting above 50,000 t annually as Merin mine and ventilation project come online.
  • Q1 seasonally soft: production dipped as expected, C1 cash cost US$1.91/lb, total cash cost US$2.47/lb and realised price US$4.40/lb net of hedges.
  • Balance sheet refinancing: repaid US$145 M mezzanine, extended senior and revolving facilities to March 2028 (RCF now US$125 M), cut average cost of debt ~30% to 6.84% saving ~US$14 M/yr, net gearing under 20%.
  • Merin mine ramp-up: decline access established with high-grade intercepts (up to 20% Cu, 8–10% Zn), first output targeted Q4 FY25, low‐cost development at ~⅓ current meter rates and potential Woodlawn-scale production.
  • Ventilation capital project: on track for Q3 FY26 completion to boost underground airflow, unlock deeper stopes and smooth production volatility.
AI Generated. May Contain Errors.
Earnings Conference Call
Metals Acquisition Q1 2025
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