Metals Acquisition Limited Announces June 2024 Quarterly Report
Record Quarterly Production and Cash Flow Generation1
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Figure 1 - CSA Copper Mine Recordable Injuries by Quarter (Graphic: Business Wire)
Metals Acquisition Limited ARBN 671 963 198 (NYSE: MTAL; ASX: MAC), a private limited company incorporated under the laws of Jersey, Channel Islands (“MAC” or the “Company”) is pleased to release its
HIGHLIGHTS
TRIFR of 14.4 an increase quarter on quarter with remediation strategies implemented, zero recordable injuries in the month of June.
Record quarterly copper production under MAC ownership
- Record copper production under MAC of 10,864 tonnes up ~24% quarter on quarter, with record copper production month in June of 5,378 tonnes
- Record daily production under MAC of 265 tonnes – highest daily production since 2021
- The record quarter achieved despite a major planned maintenance shutdown in April, with 1,583 tonnes produced for the month, and a combined 9,281 tonnes of copper produced over May and June
- Copper grade of 4.2% for the quarter, a ~20% increase from the prior quarter as the mine plan shifted to higher grade stopes and dilution control was improved
-
C1 of
US$1.92 /lb2 and Total Cash Costs ofUS$2.62 /lb3 improved by ~11% and ~17% respectively compared to the March quarter, driven by improved production resulting from grade, operational efficiencies and consistency improvements - Copper production for 2024 tracking to mid-point of guidance with no change to 2025 and 2026 guidance
Generating material free cash flow
-
Operational free cash flow of
~US$21 million 4 for the quarter with an average realised Copper sales price ofUS$4.41 /lb5 (Q2 Copper spot average atUS$4.42 /lb) -
Cash and cash equivalents increased by ~25% to
US$88.6 million after pre-sales ofUS$37.4 million , payment of a one-off Stamp Duty payment ofUS$23.2 million , repayment ofUS$7.9 million in senior debt principal, a~US$1.8 million investment inPolymetals Limited (“POL”) andUS$2.1 million of exploration expenditure -
MAC also has
US$2.8 million of outstanding Quotational Period receipts andUS$20.7 million of unsold concentrate as at30 June 2024 6, with the June quarter resulting in a strong build in cash and available liquidity -
Generated unaudited preliminary revenue of
~US$78 million (excluding pre-sales ofUS$37.4 million ), an increase of 18% quarter on quarter
Strategic investment and simplification of capital structure
-
MAC made a strategic investment in POL with an initial
A$2.5m invested for a 4.31% interest in POL, which also provides for access to water rights and Zinc processing capacity -
Simplification of the capital structure with the completion of the Private and Public warrant redemption process as announced on
10 June 2024
Production and cost summary
Table 1 – Production and cost summary (unaudited)
Units |
Q4 2023 |
Q1 2024 |
Q2 2024 |
QoQ Change (%) |
H1 2024 |
|
Copper Production |
Tonnes |
9,832 |
8,786 |
10,864 |
23.7% |
19,650 |
Sustaining capital |
US$ million |
|
|
|
(0.2%) |
|
Cash cost (C1)7 |
US$/lb |
|
|
|
(11%) |
|
Total cash cost8 |
US$/lb |
|
|
|
(17%) |
|
Group Net Debt9 |
US$ million |
|
|
|
(9%) |
|
Metals Acquisition Limited’s CEO,
“Our operations performed to a record level under MAC’s ownership and in line with our mine plan during the June quarter, reaching a record level of production of 10,864 tonnes of copper with around 89% of that production being produced over the last two months of the quarter. This record production was achieved even with a major planned maintenance shutdown in April.
The production trend in the quarter was for sequentially stronger production each month coming out of the planned mill shutdown in April. Higher grade stopes at the
Our
We again ended the quarter with a large broken ore stockpile of high-grade ore which will underpin production over the upcoming quarter. Based on the reserve plan, we expect copper production to now stabilise over the remaining quarters of the year.
The further benefit of the record production is the fact that our unaudited preliminary revenue (excluding the
This is an incredibly strong result when considered in the context of the bulk of the production and cash flow coming from the last two months of the quarter alone.
We have already put the additional liquidity to good use in reducing our overall interest-bearing liabilities by approximately
As part of the ongoing turnaround and optimisation at the
The operational performance and the resource upgrade support our belief that the
Finally, to reconfirm our disciplined M&A strategy, we will continue to evaluate prospects for growth to enhance shareholder value.”
ESG
Safety
The TRIFR for the
Figure 1 - CSA Copper Mine Recordable Injuries by Quarter
Regulatory
The CSA Mine Rehabilitation Objectives Statement, Final Landform and Rehabilitation Plan, the Annual Rehabilitation Report and the CSA Mine Forward Program have all been approved by the NSW Resources Regulator. Scoping is currently underway for alternate energy providers for a mix of both wind and solar, to potentially secure long term energy security, pricing and reductions in greenhouse gas emissions.
The STSF Stage 9 buttress bulk earthworks are now complete. Geochemical testing is being completed for Stage 10 material, with the tendering process under way.
Operations
Table 2 - Quarterly Operational Performance of the
CSA Copper Mine Metrics (unaudited) |
Units |
Q4 2023 |
Q1 2024 |
Q2 2024 |
QoQ % variance |
H1 2024 |
U/g development - Capital |
Metres |
841 |
466 |
449 |
(4%) |
915 |
U/g development - Operating |
Metres |
448 |
703 |
611 |
(13%) |
1,313 |
Rehab |
Metres |
153 |
246 |
113 |
(54%) |
360 |
Total development |
Metres |
1,441 |
1,415 |
1,173 |
(17%) |
2,588 |
Ore Mined |
Tonnes |
268,685 |
256,031 |
271,469 |
6% |
527,500 |
Tonnes Milled |
Tonnes |
266,105 |
260,297 |
266,936 |
3% |
527,233 |
Copper grade milled |
% |
3.8% |
3.5% |
4.2% |
20% |
3.8% |
Copper Recovery |
% |
97.6% |
97.6% |
97.3% |
0% |
97.4% |
Copper Produced |
Tonnes |
9,832 |
8,786 |
10,864 |
24% |
19,650 |
Silver Produced |
Ounces |
114,969 |
102,182 |
134,701 |
32% |
236,883 |
Copper Sold |
Tonnes |
10,812 |
8,039 |
8,048 |
0% |
16,087 |
Achieved Copper price10 |
US$/lb |
3.85 |
3.87 |
4.41 |
14% |
4.14 |
|
US$/t Mined |
|
|
|
(4%) |
|
Processing Cost |
US$/t Milled |
|
|
|
24% |
|
G+A Cost |
US$/t Milled |
|
|
|
(23%) |
|
Total Operating Cost |
US$/t |
|
|
|
(3%) |
|
Development Cost |
US$/metre |
|
|
|
(40%) |
|
Sustaining Capital11 |
US$ million |
|
|
|
(2%) |
|
Tonnes Milled per employee |
t/employee |
189 |
184 |
186 |
1% |
185 |
Mining |
US$/lb prod |
0.94 |
1.27 |
1.04 |
(18%) |
1.14 |
Processing |
US$/lb prod |
0.31 |
0.35 |
0.36 |
3% |
0.35 |
General and Admin |
US$/lb prod |
0.36 |
0.44 |
0.28 |
(36%) |
0.36 |
Treatment and refining |
US$/lb prod |
0.36 |
0.17 |
0.17 |
0% |
0.17 |
Work in Progress inventory |
US$/lb prod |
(0.01) |
(0.14) |
0.03 |
(121%) |
(0.04) |
Freight and other costs |
US$/lb prod |
0.17 |
0.17 |
0.14 |
(18%) |
0.15 |
Silver Credits |
US$/lb prod |
(0.14) |
(0.10) |
(0.11) |
10% |
(0.11) |
C1 Cash Cost |
US$/lb prod |
1.99 |
2.15 |
1.92 |
(11%) |
2.02 |
Leases |
US$/lb prod |
0.07 |
0.08 |
0.07 |
(13%) |
0.07 |
Inventory WIP |
US$/lb prod |
0.01 |
0.14 |
(0.03) |
(121%) |
0.04 |
Royalties |
US$/lb prod |
0.20 |
0.13 |
0.13 |
0% |
0.13 |
Sustaining capital |
US$/lb prod |
0.46 |
0.67 |
0.53 |
(21%) |
0.59 |
Total Cash Cost |
US$/lb prod |
2.73 |
3.17 |
2.62 |
(17%) |
2.86 |
Total Revenue |
US$ millions |
88.3 |
66.0 |
78.0 |
18% |
144.1 |
Unless stated otherwise all references to dollar or $ are in USD.
The June quarter was affected by a planned major shut of mill operations in
Double lift extraction sequence was completed on two stopes in Q2 that performed better than expected, resulting in less mining dilution achieved with stronger grades and less total ore tonnes for the same metal. This has been critical to the H1 strategy and will be implemented across future stopes in Q3. Ventilation system upgrades continued to be scoped in Q3 to access future stopes. Increased paste was placed in June meaning the mine is well placed for production into July.
Figure 2 - CSA Copper Mine Quarterly Copper Production (tonnes)
The average received copper price before hedge settlements was higher when comparing to the prior period with the June quarter at
In addition, the Australian dollar exchange rate was broadly flat compared to the prior quarter.
C1 cash costs decreased by ~11% quarter on quarter from
This is an incredibly strong result given the low production in April due to the planned mill shutdown with C1 for May and June during normal operations at
Figure 3 -
MAC management will continue to implement additional productivity measures to further reduce C1 costs.
Figure 4 provides an illustration of tonnes milled per employee, which remains relatively stable quarter on quarter despite the shut in
Figure 4 - CSA Mine Tonnes Milled per Employee
Figure 5 - CSA Mine Mining Unit Rate US$/t
Apart from copper production, the largest driver of C1 costs is the mining unit rate as mining accounts for approximately 60% of total site operating costs.
Mining unit rates were broadly in line with the prior quarter with similar capital development metres achieved. Lower capital development performance in Q1 and Q2 resulted in a lower portion of costs able to be capitalised in those quarters, and hence contributed to the increase in the mining costs when compared to Q3 and Q4 2023.
Figure 6 - CSA Copper Mine Mining Development Costs
Figure 7 -
Figures 8 and 9 shows the unit rates for processing and site G&A for the year.
Processing costs per tonne milled increased in the June quarter given the 10-day full plant shutdown in April. Work was completed on schedule and budget with no significant incidents recorded.
G&A unit rates decreased during the current quarter after reallocation of stock consumables to mining and processing previously allocated to G&A.
Figure 8 - CSA Copper Mine Processing Unit Rate US$/t
F igure 9 - CSA Copper Mine Site G+A Unit Rate US$/t
As seen in Figure 10, capital spend (including capitalized development) decreased slightly over the quarter, largely driven by work on the TSF embankment, diamond drilling and plant related works as part of the mill shutdown, with the latter adding an additional
Figure 10 -
Rail delays due to coal protest action in the
Cash position, liquidity and debt facilities
The Company’s unaudited cash holding at the end of Q2 2024 was
The unaudited cash position is after taking into account the one-off payment of Stamp Duty to the
As of
Figure 11 - Q2 2024 Cash flow waterfall (US$M)
Mine Plan, Resource and Reserve
As previously reported, on
Acquisition of additional 10% of the joint venture interests in the Shuttleton and Mt Hope Exploration Licence tenements
At the time MAC acquired CMPL from Glencore in 2023, CMPL held an interest (90%) in two tenements (EL6223 and EL6907) in joint venture with
The Mt Hope Joint Venture CMPL (90%) and AuriCula (10%) covered EL6907, which is located approximately 130km south of Cobar. On
The agreement provided that, subject to satisfaction of customary condition precedent, CMPL was to pay
Exploration
During the quarter,
During the quarter, MAC continued the resource development and exploration diamond drilling surrounding the upper Lead-Zinc (“Pb-Zn”) mineralisation of the Eastern and Western Systems, for a total of 1,665m. We are awaiting results and anticipate releasing them shortly but confirmed the presence of in situ, high-grade Pb-Zn material in the upper portions of the mine, within less than 40m of existing development.
Late in the quarter, extensional and infill diamond drilling also recommenced at the shallow, high-grade QTSSU-A resource and ongoing at quarter-end, with results expected to be released when data is finalised.
Exploratory diamond drilling also continued on CML5 for a total of 1,779m during the quarter. The initial drilling has intersected areas of structural complexity and base-metal geochemical anomalism indicating the potential for buried base-metal mineralisation. Preliminary interpretation of the 2024 fixed-loop electromagnetic geophysical survey data shows late-time anomalies, suggestive of deeply buried conductive material, in proximity to and along trend of the drilling at the Cherry prospect.
Warrant redemption
On
1,026 Warrants were exercised at an exercise price of
Three Year Production Guidance
The copper production guidance provided to the market covering 2024, 2025 and 2026 remains unchanged:
Table 3 - CSA Copper Mine Production Guidance
Year |
2024 |
2025 |
2026 |
|||
|
Low |
High |
Low |
High |
Low |
High |
Copper Production (t) |
38,000 |
43,000 |
43,000 |
48,000 |
48,000 |
53,000 |
This 3-year production guidance is based primarily on Ore Reserves but also on measured and indicated Mineral Resources (as at
Changes to Board of Directors
Appointment of Ms
As announced on the
Appointment of Ms
As announced on
In addition to
Change of Glencore Nominee Director
Also announced on
Hedging
Revenue significantly leveraged to spot copper prices with over ~70% of forecast remaining copper sales for 2024 unhedged16.
During the quarter, the Company delivered 3,105 tonnes of copper into the hedge book at an average price of
Table 4 – Hedge position
|
Copper |
|||
|
2024 |
2025 |
2026 |
Total |
Future Sales (t) |
6,210 |
12,420 |
5,175 |
23,805 |
Future Sales ($/t) |
3.72 |
3.72 |
3.72 |
3.72 |
Conference Call
The Company will host a conference call and webcast to discuss the Company’s second quarter 2024 results on
Details for the conference call and webcast are included below.
Webcast
Participants can access the webcast at the following link https://event.choruscall.com/mediaframe/webcast.html?webcastid=Odl1UuhQ.
Conference Call
Participants can dial into the live call by dialing one of the numbers below and request the operator connect to the
Toll Free Dial In: |
|
|
+1-844-763-8274 |
International Dial In: |
|
|
+1-647-484-8814 |
|
|
|
+61-3-8592-6289 |
Replay
The conference call will be available for playback until
US Toll Free: |
|
+1-877-344-7529 |
International Toll Free: |
|
+1-412-317-0088 |
-ENDS-
This report is authorised for release by the Board of Directors.
About
Estimates of Mineral Resources and Ore Reserves and Production Target
This release contains estimates of Ore Reserves and Mineral Resources as well as a Production Target. The Ore Reserves, Mineral Resources and Production Target are reported in MAC’s ASX Announcement dated
Forward Looking Statements
This release includes “forward-looking statements.” The forward-looking information is based on the Company’s expectations, estimates, projections and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management of the Company believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Assumptions have been made by the Company regarding, among other things: the price of copper, continuing commercial production at the
MAC’s actual results may differ from expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward- looking statements. These forward-looking statements include, without limitation, MAC’s expectations with respect to future performance of the
More information on potential factors that could affect MAC’s or CSA Copper Mine’s financial results is included from time to time in MAC’s public reports filed with the
Non-IFRS financial information
MAC’s results are reported under International Financial Reporting Standards (IFRS), noting the results in this report have not been audited or reviewed. This release may also include certain non-IFRS measures including C1, Total Cash costs and Free Cash Flow. These C1, Total Cash cost and Free Cash Flow measures are used internally by management to assess the performance of our business, make decisions on the allocation of our resources and assess operational management. Non-IFRS measures have not been subject to audit or review and should not be considered as an indication of or alternative to an IFRS measure of financial performance.
C1 Cash Cost
C1 costs are defined as the costs incurred to produce copper at an operational level. This includes costs incurred in mining, processing and general and administration as well freight and realisation and selling costs. By-product revenue is credited against these costs to calculate a dollar per pound metric. This metric is used as a measure operational efficiency to illustrate the cost of production per pound of copper produced.
Total Cash Cost
Total cash costs include C1 cash costs plus royalties and sustaining capital less inventory WIP movements. This metric is used as a measure operational efficiency to further illustrate the cost of production per pound of copper produced whilst incurring government-based royalties and capital to sustain operations.
Free Cash Flow
Free cash flow is defined as net cash provided by operating activities less additions to property, plant, equipment and mineral interests. This measure, which is used internally to evaluate our underlying cash generation performance and the ability to repay creditors and return cash to shareholders, provides investors with the ability to evaluate our underlying performance.
_________________________
1 Record production referencing the
2 See “Non-IFRS financial information” and refer to table 2 for reconciliation of C1 Cash Cost.
3 See “Non-IFRS financial information” and refer to table 2 for reconciliation of Total Cash Cost.
4 See “Non-IFRS financial information.”
5 Realised sales price excluding hedging impact.
6 2,185 dmt at Cu spot price of
7 See “Non-IFRS Information” and refer to table 2 for reconciliation of C1 Cash Cost.
8 Excludes corporate costs from parent entity. See “Non-IFRS financial information” and refer to table 2 for reconciliation of Total Cash Cost.
9 Senior Debt + Mezzanine Facility – Cash and cash equivalents (excluding streams)
10 Realised price is before impact of hedging
11 Sustainable capex
12 See “Non-IFRS Information” and refer to table 2 for reconciliation of C1 Cash Cost.
13 See “Non-IFRS Information” and refer to table 2 for reconciliation of C1 Cash Cost.
14 Net debt is calculated taking senior debt (+) mezzanine debt (-) cash and cash equivalents excluding streams.
15 Spot Copper price as of
View source version on businesswire.com: https://www.businesswire.com/news/home/20240722961999/en/
Chief Executive Officer
investors@metalsacqcorp.com
Chief Financial Officer
Source: