Develop Global Limited (DVP) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Develop June 2026 Quarterly Report Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Bill Beament, Managing Director. Please go ahead.

Good morning, and thanks for joining us. It's been an absolutely cracking quarter for Develop on every front. We now have a very well-established pipeline of production and cash flow growth, both in the immediate, medium and longer terms. Basically, we're now reaping the benefits of the investments we've made over the past 2 to 3 years and the hard work by all our teams. The production results at Woodlawn are excellent with recoveries continuing to increase, underpinning record production and record revenue. And the resource growth drilling at Woodlawn is delivering in spades. I'll talk a little bit more about that in a moment. At Pioneer Dome, we are in the countdown to first sales of direct shipped ore lithium in the December quarter. Again, the drilling results are a standout with the average grade of the infill drilling program exceeding the resource grade. The potential impact of this on the project's cash flow is very substantial. The higher the grade, the more money we get per tonne. And we're very close to a final investment decision on the underground development at Pioneer Dome. It has also been a highly successful quarter in our mining services division, with a major contract win and the starting of two major contracts. The Bellevue Gold contract finishes this month, and we have plenty of uses for the amazing and highly skilled people and equipment this will free up. I'll now run through each of the divisions in some more detail, and then I'm happy to take some questions. So just switching to a very busy quarter. We made two final investment decisions, one on Yitirrti, which is the old name -- is a new name for Sulphur Springs Project, our copper-silver-zinc project and Pioneer Dome lithium projects in Western Australia. We also secured a USD 400 debt facility and warrant package signed with Trafigura to fund both projects and to refinance the existing Woodlawn facility, all on highly favorable terms. And we greatly thank the Trafigura team because that's a huge package that now funds our projects in the coming years. And I guess these agreements really do position Develop for substantial free cash flow generation on the back of three producing projects in Australia, plus the cash flow generated by our mining services. And it shouldn't be understated that we're basically building three mines in 3 years. So on to Woodlawn, as I said, a record quarter across production, revenue and recoveries, with Woodlawn really delivering its strongest performance since commissioning. The team have done an amazing job there. Our copper equivalent production was 4,625, very close to an annualized basis of 20,000 tonnes per annum. That was up 47% from the March quarter. Record revenue earned of AUD 84 million. We sold 4,500 copper equivalent tonnes, which is up 244% from the March quarter. And one of the real things that I'm super excited about is the processing team and what they've been able to achieve. This is a three-stage concentrator. It is a complex set of chemistry, but massive improvements in the recoveries across the plant from the March quarter. Our copper total recovery is now sitting at 80%. That's up 15%. Zinc recoveries at 75%, that's up 6%. Lead sits at 80%, which is up 23% quarter-on-quarter. And the real win that we're seeing is our precious metal content, both silver and gold, silver recoveries at 71% and gold is at 48%, and they're both up substantially quarter-on-quarter and expect those trends well and truly to continue. So we're seeing a lot better recoveries than pressures and definitely well into the month of July. Our feed grade, as we said, when you commission a processing plant, you don't want to put high-grade material through that. We commissioned last year on lower grade, and we're steadily bringing more of the high grade out. But our feed grade for the quarter in June was 2.73% copper equivalent. That's up 27% from the March quarter. And that's really starting now to get in line with the overall reserve grade at 2.8% copper equivalent of Woodlawn. So I think there's upside in our grade moving forward because we still are really yet to put the real big high-grade stuff of [indiscernible] through the processing plant. And the resource growth drilling at Woodlawn is really kicking off. We're extending all the known mineralization of the lenses. The second rig has just been commissioned. That is part of our DM15 project, which is we want to drill and define a mine plan of 15 years. So that has gone extraordinarily well. And again, we'll put more information on that in the coming week or so on an update of the drilling results of that. But officially, we've had really, really good success of extending these lenses, and it's really good to get the second rig in there, which was really the rig that we wanted to get in there for that DM15 project. On the Pioneer Dome lithium mine, again, we made a final investment decision on that. We have hit the ground really quickly on this. Open pit construction is underway. We signed a AUD 70 million mining and crushing contract awarded with Kalgoorlie-based contractor, MLG. And we are on track for first direct shipping ore sales in the December quarter. And we're very close to awarding the cartage contractor and very close to signing up Esperance port. And we've secured quite a bit of capacity down in the port there. So that is coming together extremely well. We're very excited about how that goes. And if there's any investors there, we're doing a site visit Tuesday next week. So pretty excited to take people down to the site and show them the project and how quick it is evolving. Part of the quarterly is we finished off the infill and exploration drilling program, about 20,000 meters. To say it exceeded expectations is an understatement. We've put out a raft of results across that project. We are getting numerous results greater than the resource grade of 1.2%. I think the average intersection to date that we've published on the ASX is true width of close to 16 meters at 1.45% lithium. So I think there's an opportunity there to improve the grade of the resource. And also, in particular, keep an eye on the underground drilling component has probably been well in excess of 1.5%. So what does that mean? The higher the grade -- two things, the higher the grade, the more revenue we get per tonne and also the higher recovery we get through the converters. So we get a double positive jaws there. So expect the underground revenue per tonne will be much higher than the open pit revenue per tonne. So what does that mean with the drilling? We'll update the resource and grade control model. That's only about 3 weeks away. So it will be done in the September quarter. And we're very well into the Stage 2 underground getting evaluated. We've basically got a year's worth of DSO on the pit. Obviously, the company's goal will be to not have a production gap between the open pit and the underground. So we're very close to doing all the final work on the underground. And as we say here, we want to make a final investment decision and put it to the Board in the September quarter in the underground. On to our third asset, Yitirrti, copper-silver-zinc mine. Again, we made final investment decision on this. We've got the total capital expenditure to bring the mine into construction of AUD 450 million that we published last month. First concentrate is targeted for the June quarter 2028. And I should emphasize that's less than 2 years away. Our construction is progressing across all work streams. Access road earthworks on site are well advanced. The site is basically cleared. Most of the pre-development works for the processing facility have all been completed. The connection of the haul road is well advanced, and that will be completed in September. And our underground development there, I think we're 24% ahead of schedule, but we did close to 900 meters for the quarter in a single heading decline, which is no mean feat, an amazing job by the team up there, and we've done over 2,300 meters to date. So again, we're severely derisking the mining part of a new project build, which is super important. Most people really stuff that part up and undercapitalize themselves. So we're very happy with that. A lot of key recruits have been recruited, and we're obviously in the final throes of the processing contract with GR Engineering and that will be done in the next couple of weeks. On to the mining services, record external revenue of AUD 63 million for the quarter. Again, very busy. We're awarded the AUD 274 million contract with Core Lithium at their amazing lithium project up in the Northern Territory. So we've kicked that off. I'll be up there today. So looking forward to seeing the night shift, but that's really advancing quite well, and I think we're ahead of schedule on that. And we commenced mining at the AUD 200 million OceanaGold, tunneling job in Waihi, which is going well as well. On to Bellevue, as I said, we conclude that contract in the coming days and really excited about the highly experienced and engaged workforce we had there. And we've got a very large mobile fleet. I think we got a AUD 30 million or AUD 40 million fleet that we can deploy to our other business units, which is really, really great in this environment, which is probably one of the tightest labor markets I've seen in my 30-year career. So we get to redeploy that talent to our other mining services clients that are excited about that and also importantly, into our own assets because we've got all underground mines we're building ourselves. On to corporate, record quarterly revenue earned, AUD 147 million for the quarter, up 108% from March. Cash balance sat pretty flat at AUD 123 million. Trafi debt is drawn at AUD 112 million, which is where it was before because we just basically one-in, one-out refinancing Woodlawn on the new facility. And we have AUD 388 million remaining undrawn facilities. We ended up with unsold concentrate stockpiles at Woodlawn of close to 10,000 tonnes, probably around about AUD 25 million sitting on the deck. We spent AUD 27 million of growth capital. And obviously, part of our deal with Trafi in June was -- we also entered into a very important cooperation agreement with Trafi, which might see -- puts us -- both our companies aim to partner on potential future opportunities in outside our current asset base. So we're already working on a couple of them as we speak. So again, to wrap that up before questions, huge quarter of activity. I think a couple of our staff members needed a week or two up in July for holidays, but come back. We're now into the second quarter of this business and super excited about executing on the final investment decisions and have fundamentally got on track, and I can't be more happy with how the business is performing. With that, moderator, I'll hand over for questions.

[Operator Instructions] There are no questions at this time. I'll now hand back to Mr. Beament for closing remarks.

Yes. Thanks for that. And again, thanks for everyone coming on the call. Just to re-emphasize what we put together last month was really 4 years of heavy lifting. So I want to thank all my teams and all the great work to put two new projects to a Board for final investment decision and get funding of that magnitude. To build it is no mean feat. So a massive job. Thanks for shareholders supporting us there. Pretty excited about entering Chapter 2 with Woodlawn really starting to hit its straps now and making great cash flow. We're on the cusp of more cash flow from Pioneer Dome in December quarter, and we're less than 2 years away of Sulphur Springs. And it should not be lost that you wake up today and we are now sitting at the highest Aussie copper price and one of the highest zinc prices since we started this business 4 years ago. So super excited to build another couple of mines and capitalize on those higher commodities. So we're very well leveraged in this company. So thanks again, and I look forward to talking after the September quarter. Cheers.

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