Aeris Resources Limited (AIS) Earnings Call Transcript & Summary

All right. Good afternoon, everyone, and welcome to the Aeris Resources Investor call. This is just an all disclaimer. As most of you on the call would know, so what I'll do is I'll take you through the company investor presentation, and we'll talk about the documentation and the position after the equity raise and also the launch of the SPT as part of this process. So as you might know, we've got the 2 operating mines. We've got the Tritton copper mine in New South Wales, currently targeting around 24,000 tonnes of copper metal for FY '26. And then the Cracow Gold Mine in Queensland, producing around 40,000 ounces of gold. We got 3 development projects. So at the Jaguar mine, which is a mine which we put into care maintenance about 2 years ago, is currently in care and maintenance, and we'll talk in a bit more detail around Jag and then Stockman, a project in Victoria, which we'll touch on as part of the presentation. I guess just sort of summarizing the position. As you probably know that we have raised $80 million last week. As of this morning, we're debt free. So we repaid our $40 million facility with a $50 million drawn to $40 million for Soul Pattison. And as of today, we've got $62 million in the bank if you take the closing balance as of the first quarter closing cash balance. Washington Soul Pattison coming -- has been diluted through this process to 26%. So that was all part of that agreement or discussions with Soul Pattison is there was a strong support for the placement, and it would also result in the dilution, which is also better for shareholders and overall for the business on being below 30%. So overall, a really great outcome for the business. Balance sheet looks strong. And as we sort of talked quite a few times looking at this year's guidance, we've reached about call it, 44,000 tonnes of copper equivalent production, of which 25,000 will be copper 30,000 ounces of gold. Remember, Trittion also produced gold and silver. So there's about 10,000 ounces of gold from Cracow -- from Trittion and then about 270-odd thousand ounces of silver from Trittion. As you go through those numbers, the key takeaways there is we're putting around $70 million into growth capital. That's in 2 areas for this year, we're starting up the new open pit mine at Murrawombie pit, which basically the capital -- the growth capital, the $70 -- $50 million of that or around $60 million actually is for the capital for the pre-strip of the pit all spent in the first 6 months. So by December, January, we will be in -- or in January, we'll be in ore at the Murra pit. And what we're also doing, it's the first time I've been with this business that we will put around $20 million in exploration. So big focus is on resource growth across the business at all the operations and also at the Jaguar mine in care and maintenance. So you put those numbers in, and you'll see the strong cash flows expected specifically in the second 6 months of this financial year. So the clear strategy, as we've been talking quite a bit about for this year is basically at Trittion, Murra predict production by January. Constellation on time starting constellation mining or the open pit in July next year and a clear focus on drilling for resource extensions at the known ore bodies across Trittion. With the reserve upgrade for Constellation, which we announced a week or 2 ago, clearly, we'll change the life of mine plan, and we're working on those life of mine plans to be ready in the third quarter, in other words, in the March quarter to be reviewed. At Cracow, the Golden Plate opportunity, we'll talk a bit more about that. That's a real exciting opportunity for Cracow. The drilling there is also resource extension drilling and also starting to look at greenfields exploration as part of the life of mine plans. We have said we're going to divest noncore assets. So we announced the other day that the North Queensland assets has now been sold or in the process for around $15.5 million, of which $11.5 million will be paid upfront and it also will release as part of that $11.5 million, $6.5 million in cash back bonds, which will come back to the business. So that's still funds which we will receive in the next 2 to 3 months as part of the divestment process. At Jag, we clearly made the decision that 10-year life and more is what we needed to restart Jag. We're in the process of reducing care and maintenance costs to the bare minimum and then really focus. We've put aside $3 million for exploration of base metal targets. So there's 8 targets out there, and we will kick off drilling those targets in the next 2 to 3 months. At Stockman, we have finalized the Albion test work. We're updating the studies that should be finished in December. We will put something on the way forward for Stockman in the next 2 months. And then we are doing various studies. We looked at Albion. We looked at the normal flotation circuit, but we're also looking at the concept study for sulfuric acid in the flow sheet. On the balance sheet, you can see there basically what we set ourselves to do at the beginning of the year is basically done. We have repaid the debt early and saved ourselves $6 million. We've done the asset sales, specifically in the North Queensland asset, and we have put some gold hedging in place in the last 2 to 3 months. Just touching on the equity raise. So the equity raise was we did $80 million at $0.45. That was a $0.35 discount on the 5-day VWAP or the share price at the time when we launched the equity raise. What we're now doing is we're putting a share purchase plan for shareholders to give shareholders opportunity to participate where you're in to buy $30,000 of shares at the same price as what we raised the money at. Now I know the price is currently below the $0.45, but that's just the market where it is today. I'm convinced there's a lot more value in the share price than where it is trading right now. The SEP timeline is so that's been launched today. The closing date would be Tuesday, the 2nd of December. We'll announce the results of the 5th and then the shares will be issued to shareholders who have taken up on the 9th of December. The aim is to raise $10 million, but we will have the option to look at oversubscriptions if they are. If not, we'll see where we end with the SPP. These are proceeds, so we have already paid down the [ Ron Px ] facility. We are looking to apply some of these funds to growth capital and exploration. That is for things like bringing in early works for Constellation to ensure we can kick it off in July next year. We're also looking at bringing forward and spending more on exploration, specifically at Golden Plateau and Southern Wing Field at Cracow. And the balance of the funds would be just for working capital and other costs. The current capital structure. So with the issue of the $80 million, there's now 1.1 billion shares, cash at $62 million and net cash position, obviously, with zero debt, which is a significant improvement of where we've been in the last 2 to 3 years, where we now see the business really focused on growth and delivery of the operational plans for FY '26. I'll just touch base again on the different operations. So Trittion in New South Wales. As you know, we're mining 2 to 3 mines at any time. Currently, we're mining Trittion Budgerygar Avoca Tank, and we're doing the pre-strip of Murrawombie pit, forecasting around that 24,000 to 29,000 tonnes of copper, which is a significant improvement on FY '25. And the main reason for that being the start of the open pit tonnes coming into the production plan in the second half of this financial year. You can see there just a step-up year-on-year over the last 3 years, we did between 17,000 and 20,000 tonnes of metal. The step-up this year is mainly driven by additional tonnes from the pit. And this slide sort of explains it all. And this sort of also shows you the setup for FY '27. So the brown bars there is the open pit tonnes coming in ore from January onwards. So from January onwards, we mine more tonnes than what we can process. That blue line is the process of 1.8 million tonnes. So there will be a significant stockpile of about 900,000 tonnes, which will only be processed in '27. So your cash harvesting of this mine and this pit will be over the next 18 months where it will be processed for the next -- well, 6 months from January onwards, but then also into '27, where there will be 900,000 tonnes. We then set the mine up really for a great start to get into the Constellation mine and get that open pit going post the Murra pit completed. So as you know, you might know, we have announced ore reserve on the Constellation pit about a week ago at 2.3 million tonnes at 2% copper and 0.6% gold, very strong gold grades. There's also included in that some oxides, which we've done test work on and got good recoveries. And there's also some of the inferred resources in the pit shell, which we know which we will mine in any way. So a very strong open pit opportunity. You will have an open pit mine for 5 to 7 years depending on the size you go for. The current plan is to go underground in year 2. And as part of the open pit, you will mine underground at the same time. So this is the future which sets Trittion up really for the next 5 to 10 years in terms of production profile and very strong economics coming from this deposit. This is the first time we will spend, we will drill 80,000 meters of underground exploration drill meters. And it's really focusing on how do we extend all the underground mines below the current resource. So we know all our operations extend at depth. And it's only been for the last 2 to 3 years, we haven't drilled far enough ahead of ourselves. So the focus this year is spending the money to drill out Piga depth, Tritton at depth, the South Wing and Avoca Tank. All of those with the aim to extend the resource position and get a stronger resource balance and resource mine plan for Tritton to be mined with the Constellation deposit as part of the FEED process. Over to Cracow in Queensland. This is a 600,000 tonne process facility, very, very good condition and has been well looked after by various parties, various owners before we got this asset. Cracow, you can see just one of these mines, which never got a big reserve position, but still got a very strong resource position. There's still over 500,000 ounces of gold in resource. It's about converting from resource to reserves, but also then looking outside of those areas for opportunities, which secures a longer resource-backed life for Cracow. So the 2 areas we're focusing on, one is Golden Plateau. And I don't always think people understand what we're really saying is this is an opportunity hasn't been looked at before. It's old workings. It was mined in the 1930s at 10 gram a tonne and a lot of blank areas left behind. In the 1980s, someone put open pit over the top of it. They got nearly 3 million tonnes around 2.5, 3 gram a tonne gold, just mining those -- through those old workings. We see the opportunity to put a bigger open cut over that and also extending to the west and at depth. We've done the work. We will start drilling there in the next few weeks. With this money we just raised, we will do extra drilling with the aim to turn this into a resource and then put a mine plan around it. There is a strong opportunity there for significant future firm life of mine plan from open pit mining. This is on the mining lease. It's about a kilometer from the process plant, so it's within the area which we mine and a real exciting opportunity to actually be able to define a resource-backed life for Cracow. That then allows you time to actually look at the greenfields exploration opportunity. Now the Southern Vein Field, which you can see there is to the south of the Western field, which is the area which has been mined for a very long time, already 2.5 million ounces. There you can see Golden Plateau from where it's located. But the Southern Vein Field has always been seen as a high-priority exploration target. We've done the necessary work, and we will really start to do some targets generation in the next 3 months. And within the next 6 months, we will start drilling the Southern Vein Field. Now the view is if you find something there, you potentially find another Western Vein Field. Now that is a real upside opportunity and the opportunity for us, which these funds would allow us to actually try to expedite the drilling specifically in the Southern Vein Field. On the projects, so you can see this is old the Jaguar mine, which is in care and maintenance. We made the clear decision that you can always run these models and start a mine with 5 years and hope you can get another 5 years out of it or have confidence you'll find another 5 years. We made the decision that we will actually do the drilling first. Each one of those yellow areas is target, which hasn't been tested before. So it's new greenfields exploration targets. Each one of those really good, strong targets, and we will drill those first. So we allocated $3 million to test each one of those. And obviously, if you hit something, you will drill it out and get a better plan. Now the reason for taking a step back to this 10-year mine plan is the costs associated with operating that mine at depth, specifically at the Bentley mine requires a lot of power with ventilation and refrigeration or cooling. And when you've got a 10-15 year mine plan, you can start to look at renewable power instead of gas genset. So it is about allowing you the best possible capital layout and operating costs when you get more than 10 years of life. We think that's the best way forward for this. Those targets will be drilled within the next 6 to 8 months, and then we will decide what's the best way forward. As a real upside opportunity for Jack, although it's a base metal mine, as you can see there, it's located between big gold miners, Thunderbox and King of the Hills, with various deposits very close by. Each one of those yellow ones, again, is gold anomalies, which really hasn't been tested. And the option value here is you drill it, you find a gold deposit and you can talk to the gold miners or you invite the gold miners into a joint venture, then you spend the money together. We believe that there's a huge upside on this, but not immediate priority for us. The base metal targets and the other projects will take priority above the gold at this point in time, but a great option value. At Stockman, as you can see there, when you look at 10 million tonnes at nearly 2% copper, 4.3% zinc, gram a tonne gold and silver, it is a great reserve position for this project. We've done the Albion test work. We're busy assessing the financials around Albion. We're also reassessing the original flow sheet with optimization of the float circuit and with the aim to get better recoveries. And we're also, as I said earlier, looking at sulfuric acid flow sheet because we've been approached by the government to look at sulfuric acid because 50% of this deposit is pyrite. So it is about potentially you're working through those as a further flow sheet scenario for Stockman. But then on top of that, there is 50 anomalies or targets, which we can also look at for exploration with some of them very strong anomalies close by the Kurrajong mine as further uplift in reserves and resources. So a strong project, a lot of the approvals already in place, but obviously, we will change with different flow sheets. We need to -- we're busy finalizing the financial modeling and the assessment of the different options, and we will share that with the market at the right time. I guess that just sort of summarizes it. The clear takeaway for me is the opportunity we had to raise this money to get ourselves debt-free, focusing on the strategic delivery for FY '26 and forward, bringing in those additional resources, building stronger life of mine plans and keep focusing on the growth of the assets with what we got is a great platform for this business and for shareholders to get the returns they are looking for from this business. That is sort of the summary with everyone online. We're not going to take questions that we got a lot of people online, but please feel free to reach out to us on the Info Aeris website or e-mail address or reach out to me or anyone in the company if you need more information. Thank you very much.