Imperial Metals Corporation (III) Earnings Call Transcript & Summary

As Chair, I propose the following motion: the 7 nominees to whom I have referred be elected as the directors of the company to hold office until the next Annual General Meeting of Shareholders or until their successors are duly elected or appointed unless the office is earlier vacated. The next item of business is the appointment of auditors. Deloitte LLP, the current auditor of the company, is proposed as auditor of the company to hold office until the next Annual General Meeting of Shareholders. As Chair, I propose the following motion: that Deloitte LLP be appointed auditor of the company until the close of the next Annual General Meeting of Shareholders and that the directors be authorized to fix the auditor's remuneration. Darb, are there any questions?

There are no questions at this time.

There being no questions, I declare the polls are now closed for the approval of all matters before this meeting. Based on the interim scrutineer's report, I have been advised by the scrutineer that the majority of the proxies deposited for the meeting have been voted in favor of each of the foregoing resolutions at the meeting. I would ask that the scrutineer compile the final report regarding the results of voting on all business matters and results be published by the company on SEDAR+ and by news release. I direct that the results be included with the minutes of this meeting. If you have any questions, you can submit them now. Imperial knows of no other matter to properly come before the meeting. Therefore, as Chair, I propose the following motion: that the meeting be terminated. Darb, are there any questions?

There are no questions at this time.

Seeing no questions received, I declare the motion carried. Thank you all for your attendance. Now I turn the meeting over to Brian Kynoch for his presentation.

Thank you, Larry. Good afternoon, and thank you all for attending our Annual General Meeting. I'll now give a presentation, giving update on all our major projects with a focus on Mount Polley. And after the presentation, we'll have a question-and-answer session. So a cautionary note, I just like to note that some of my comments may contain forward-looking statements, which are uncertain, and actual results may differ from those expressed today. So the next 2 slides are kind of showing the progress we've made in the Springer pit over the last 2 years. So on the first slide, it shows when we were starting in 2022. You'll see the big -- large amount of tailings and water in the 2 pits, the Cariboo and Springer, the big spine between the 2 pits. And if you look across from that, you got 2023. You'll see the -- find the ridge between the 2 pits is gone. We've got access to the Springer pit through the Cariboo ramp. And you'll also note that the vast majority of the water has now been removed, exposing tailings on the bottom of the Springer pit. We go to the next slide, and I'll show you what happened over 2023. So on the left-hand side, the same slide we were just looking at, 2023, the Cariboo and the Springer pits merged, still with the tailings and a little bit of water in the bottom of the Springer. And now you'll see 2024 on the other side. So the tailings gone -- the water gone, the tailings gone. We're kind of back to normal mining, and the tailings are all removed from the Springer Phase 4 pit. And now the Springer Phase 4, you'll see -- look, I'm going to have some cross sections in a minute, but it's -- the vast majority of what's left in Springer 4 is ore, a much less than a 1:1 strip ratio. So a couple of slides to show on the movement of the tailings. You'll see we had it well-dewatered. That -- this slide here is actually, I don't know, the first or second day when we were removing tailings out of the pit up to the top of the southeast rock disposal area. So we're effectively -- we effectively dry stacked all that tailings we removed from the Springer pit. We'll go to the next slide. Here's kind of a water sift -- shed moment for the Springer pit. The tailings, that's the last load of -- there's a little bit of rock. That's the last load of tailings leaving the Springer pit. So no more having to rock in haul roads over tailings, so you don't get trucks stuck, and then all of the kind of extra work that we did to make sure the tailings didn't get wet again. So we're back to normal operations. And as I said before, our low strip ratio for the remainder of the Phase 4. We go to the next slide. So that's scenario photograph of -- I think that's fairly recent, maybe April or May this year. You got Cariboo, the Springer pit, and there's a section line through there. So with the tailings out of the Springer pit, that big wall or the kind of the northeastern side of the Springer pit, that's where the pushback of the Phase 5, which started earlier this year, and it focuses on bringing down that wall to get access to the ore underneath. All the nonasset-generating rock that we mine from there is going to be taken down to the tailings dam and use the buttress -- the tailings dam. And that section line to there 3300 North, on the next slide, we're going to see a section through that part of the pit. So this is the section, as I said, the staddle between the 2 pits is now gone, and the tailings is now all gone. And you see the Springer 4, so again, a very low strip ratio. We're deep in the Springer pit. So we're in less oxidized doors that yield higher copper and gold recoveries. And later, we're going to have -- it's going to be a very similar section to this, but I'm going to show you some of the recent drill results that we're doing down below Springer 4, into 5 and 6 and even beneath that, looking for the roots of the Springer mineralization. So if you go to the next slide, you got a view of the Springer pit looking north and a photograph of the Springer pit looking south. And if you look kind of in the middle of the slide, right up against the south wall down on the very lowest bench, that's actually a diamond drill, one of the diamond drill holes, probably -- maybe not the one we released today, but one of the other ones down in the south end of the pit there. But the majority of the -- we completed 21 holes. And as you've seen the last 2 releases, we've been getting very good results from the drilling on the bottom. And the main goal of this year's drilling campaign was to fill gaps in the drilling in the proposed Phase 5 pit and try to increase the economic of the Phase 5 pit and explore -- and then again explore a depth beneath both of the Phase 5 and Phase 6 pits, see if we can extend the mineralization to depth and maybe look at a Phase 7 or 8 or whatever pit in the future. If we go to the next slide, it's the cross-section 3230 North. And you can see this is the hole 179 that we released, I don't -- maybe -- I think it was maybe 3 weeks ago, and then we released another hole, 180, yesterday. So 179 here on the slide, you can see we intercepted 470 meters of 0.47% copper and 0.39 grams per tonne gold. And you see the top of that hole is in the Phase 6 pit and a little bit of it actually in the Phase 4 pit. So that part of it will increase the kind of the value of the mineralization of the pit because the top part of that hole was very good, higher than we expected. I think the top part was 275 meters of 0.65% and 0.48. And then yesterday, we released a vertical hole, 180, which is 33 meters northwest of the hole shown on this, and it intersected 275 meters, big long intercept as well. So both these holes, 180 and 179, are targeting a gap. These 2 holes are actually in the southern edge of the pit and targeting a gap in the drilling on the south. If I gave you a plan view of the drilling in the Springer pit and you looked at all the historic drilling, you would say it's probably -- it's drilled off. It would look like we have great density. But virtually all the drilling before 2003 was drilled to the current depth of the pit. In the 60s and in the 90s, the drilling was relatively shallow. And so as we move deeper, that's the reason it requires more drilling. We have to fill in the gaps beneath the drilling. The old historic drilling, it was much more shallow. And in fact, that SD designation for all these deeper drill holes we do actually stands for Springer Deep, and the first drill holes -- deep drill holes in the Springer were drilled in 2003. Mount Polley production on the next slide. So one of the items I'd like to highlight on this one is the metallurgical performance of the deeper Springer ore, the Phase 4 mill feed. The copper recovery actually continues to exceed our expectation, based on historic recoveries. In 2024, both copper and gold recoveries, at 79 and 66, were down slightly over the previous year with lower grades being treated. And the milling throughput rate continues to decline, with the first quarter of 2024 being 18,365 compared to just over 16 for an average in 2022. Red Chris production. I think the key thing here is a better copper grade you'll see in the first quarter '24 compared to '23 And then the other thing I'd like to highlight is Newmont's guidance for this year, at 85 million pounds of copper and 57,000 ounces of gold, is up quite a bit from the production in '23. So we're heading into a good production year in what, so far, looks like a year that's also going to give us good production. Another Red Chris slide, and we've shown this one before, but just give an idea of the extent and of the zones and that there's still -- the East Ridge was probably discovered by us but drilled off by Newcrest. It doesn't come near surface. I think you have to drill 200, 300 meters to get to the top of it. And we'll show some more slides later why it's kind of a prime candidate for another block cave. But there's certainly room to go look on the west side of the deposit, in the Gully zone/Far West. And even that area between the Gully and the main, that's under drill. And then this is a section -- I had it last year as well, but it's through the East Ridge. And I think 3 things to note here. One, it's near vertical orientation, which yields -- which makes it very good candidate for caving. The high grades, I think one of the holes that's listed on here is 705. It hit 250 meters of a gram per tonne gold and 1.1% copper from 718 meters. And then this last year, we released the results from a hole 875. That's not shown on this section. But it's the only hole that was drilled in the East Ridge from the south to the north. All these other drilling starts and the northern goes across to the south, and it was drilled down the East Ridge deposit to confirm its down-dip continuity. And it hit 532 meters of 0.98% copper and 1.1 gram per tonne, like confirming that this mineralization kind of up and down is continuous in the East Ridge. This is an oblique section showing the proposed macro blocks in the East zone in the kind of center of the photograph. And what I want to highlight here is this -- it's a conceptual East Ridge block cave that Newcrest had put together. Here, you can see it very proximal to the -- all the development work we're doing to get the East block cave going. And that -- the target over there, at some point, Newcrest -- Newmont will give us a resource over there. But Newcrest, before they left, did do an exploration target for that zone, and it's 400 million to 500 million tons of 0.42 to 0.39 grams per tonne gold and 0.49% and 0.47% copper, so another big deposit on the site. Next one is a quick summary of the East zone block cave that was done in 2021. So as you can see here, the life of mine annual production, 158,000 ounces of gold and 48,000 tonnes of copper every year, much higher in the first 4 or 5 years of production. Over the life of the mine, all-in sustaining cost of $180 an ounce. The total estimated capital then for Macro Blocks 1,2 and 3 was $2.6 billion. Some of that -- you need to get Macro Block 1 running. So once it's running, some of that other capital is really sustaining capital or more development capital. It happens after it gets into production. The prices they use in the study $3.30 and $1,500. So I guess from my perspective, we've had a lot of inflation since then, so the cost may be higher. But we've also had inflation recently in the prices. So the prices of copper and gold are quite a bit higher than the study used. And at that time, it said payback was 3.2 years and a 31-year mine life. And so we're still waiting. Now that Newmont has taken over the project, we're waiting to see for them to produce a feasibility study on this project. I think one thing, before I leave this one, is I think with all of the work we're doing -- I'm going to describe some of the work, advanced development here on the next slide, we've got a project that's kind of already underway. The development of the block cave with all the advanced development is underway. And I see that derisking the project and with these kind of economics even with cost increase, I think we have an imminently financeable project, given the outlook for the copper price. This next slide we got is the advanced development. I think the solid lines were as of -- it looks like the end of February and the darker colors are what they plan to do March, April and May. So we're probably getting close to this -- all this work being done. So the [indiscernible] decline is now down over 4,000 meters and that -- one of the biggest risks in a block cave mine is getting down to the extraction level. It takes a long time, and poor ground conditions can impact the cost and even further lengthen the time it gets the mine into operations. So this advanced development, with it approaching the undercut level, and that, along with the fact that we have a project that has had a mill treating Red Chris ores for a number of years, means that we have a block cave project that has been significantly derisked. A lot of the riskiest stuff, the metallurgy and access to the bottom, is well underway and nearly done. Just a couple of slides on Huckleberry. We did some -- last year, we did some exploration on a thing called Whiting Creek, which is about 8.5 kilometers away from Huckleberry as the crow flies. So in addition to Red Chris and Mount Polley, we own a copper mine that's on care and maintenance. And so with copper prices, we can look at reopening it. I think our plan is reopen it after we figure out all the financing and get Red Chris going. The remaining life of the mine, when it was put on care and maintenance, was about 8 years, producing about 40 million pounds of copper a year at an average grade of about 0.3% copper. So if we look at the next one that's drilling that we did 8 kilometers away, it's a new zone. We had Creek zone, and you can see it's west of the Creek zone, the initial drilling last year, and maybe these 2 zones would hook up with more drilling. But really, what we're looking up at Whiting Creek is to find some higher grade near the Huckleberry mine. Historically -- when Huckleberry started, the head grades were 0.5%, 0.6%. They're now 0.3%. If you could find some more 0.6% ore, we'd have -- we'd really dramatically positively impact the economics that either reopened Huckleberry. And so you see one of these holes. The first hole we actually did out in that Creek zone west intercepted 52 meters of 0.45% copper, starting from the top of bedrock. So not quite 0.6%, but over 0.3%, and I think this is a place, with more drilling, we can hopefully find it a deposit of higher grade. We'll probably do a couple more -- 3 more holes up there this year to see if we can find some higher grades. And we go to the next slide. Just a little bit of stuff about -- since we sold 70% of Red Chris to Newcrest, we've taken out about $270 million worth of debt. I just wanted to highlight the fact that we -- that debt we're taking is actually investments in the block cave project at Red Chris and the restarting of Mount Polley. So virtually, all the debt we've taken on has gone into Red Chris or Mount Polley, about $180 million into the development of the block cave at Red Chris and about $70 million getting Mount Polley going in. So I think the advanced development, as I said before, is derisking our project and a key part to ensuring that the block cave starts as soon as possible. And the reopening of Mount Polley, I think the -- our timing there is towards the end of the COVID pandemic. It appears that we had the right timing. We've been borrowing money to get these projects going. And now Mount Polley is going, and the price seems to be going our way as well. So it looks like good timing to get these projects going. And then just -- we're open for questions. But I think one thing, if we're going to have decarbonized the world's economy, copper is going to be needed in massive amounts. And we're in a great position to benefit with our copper assets, including 30% of Red Chris, Mount Polley now operating and Huckleberry on care and maintenance with permits and ready when we want to put 4it into production. So with that, I'll end. And if we got questions, I'll try to take the questions. Okay. If there's no questions, thank you so much for attending. Appreciate it, and look forward to good copper/gold prices and lots of production this year. Thanks again.

This concludes the meeting. You may now disconnect.