MAC Copper Limited (MTAL) Earnings Call Transcript & Summary

Hello, and welcome to the 2024 Annual General Meeting of Shareholders of Metals Acquisition Limited. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Metals Acquisition Limited's Chair, Patrice Merrin, Patrice?

Thank you. Good morning, ladies and gentlemen or to those joining us from the United States, late afternoon, Jersey, good evening, and welcome to Metals Acquisition Limited 2024 Annual General Meeting which is our first Annual General Meeting as a dual-listed company on the New York Stock Exchange and the ASX. I'm Patrice Merrin, Chair of Metals Acquisition Limited and Chair of the Nominating and Corporate Governance Committee, speaking to you from Toronto, Canada. Thank you for joining us today via webinar and also at the company's Australian registered office in Cobar. I'll be chairing the annual meeting today, and I'm also delighted to be able to extend a warm welcome to all of our shareholders and CDI holders who are participating through our online meeting platform. So to begin with some introductions. As we convene our first Annual General Meeting since our dual listing on the ASX, I'd like to introduce the members of our Board of Directors and key management personnel who are in attendance today beginning with Mick McMullen, our CEO and Director; Leanne Heywood, Director; Anne Templeman-Jones, Director; Rasmus Gerdeman, Director; Graham van't Hoff Director; Charles McConnell, Director; and Mohit Rungta, Director. The key management personnel in attendance are Chris Rosario, General Counsel and Joint Company Secretary. I note that Chris is assisting with the conduct of the meeting, so you may hear him speak from time to time. And Morne Engelbrecht, our Chief Financial Officer. A number of the company's advisers are attending the meeting today, and I welcome, in particular, Siobhan Hughes from EY, the company's auditor, who is available to address any relevant questions which arise in relation to the financial statements and reports. I have been advised that a quorum is present, and I declare the meeting open. Today's meeting can be broken down into 9 key segments. I'll begin with the Chair's address. We'll then table the company's financial statements and reports. We've allocated time for questions and answers in relation to the financial statements and reports. You can start submitting questions now, including any questions to the company's auditor, and we will address these questions later in the meeting. You can submit these questions by clicking on the Question icon which looks like a single chat bubble. We have 10 resolutions to be voted on today. We have also allocated time for questions and answers and related to these resolutions once the resolutions are presented. Following my address and the formal business of the meeting, there will be a short presentation by our CEO, Mick McMullen. I'll give you a clear prompt later in the meeting to warn of the closing of voting. Voting will then close and if there is no further business, I will then declare the meeting closed. So as we reflect on the significant developments at MAC since we acquired the CSA Copper Mine in June 2023, I truly am filled with pride and optimism for our journey ahead. Our teams, both at site and in corporate, have worked tirelessly to reinvigorate the asset in the business. The safety of our teams remains our highest priority. Our efforts in this regard have been unwavering, allowing us to navigate challenges while protecting the wellbeing of our workforce. We will continue to prioritize the safety of our people. 2024 has been an exceptional year for MAC. Our focus this year was to simplify our capital structure and delever our balance sheet, deliver strong production and operational improvements and continue building shareholder value. We advanced this milestone by successfully listing on the ASX and raising of AUD 325 million. This achievement underscores the confidence our new shareholders have in our vision and strategy. The market shares this same view as we continue to establish global visibility through the inclusion in the Russell 3000 Index, the S&P/ASX 300 Index and more recently, the MSCI Global Small Miners index. Furthermore, in early May, we successfully executed the redemption of warrants, and in October, we completed AUD 150 million equity raise. With these additional resources, we've optimized our balance sheet and are well equipped to explore both organic and inorganic growth opportunities, solidifying MAC's position in the mining sector. Our strategic investment with Polymetals Resources Limited exemplifies our commitment to collaboration within the Cobar Basin. The CSA Copper Mine appears to host high-grade zinc mineralization near surface and adjacent to existing development. This partnership is a logical way of securing a processing option for any zinc ore we might mine without distracting our operations from the core business of mining and recovering copper. As we look ahead, our commitment to environmental, social and governance stewardship remains steadfast. We recognize the responsibility we bear in ensuring the sustainable and responsible development of mineral resources, operating safety and collaboration with local communities. We look forward to publishing our inaugural sustainability report in Q1 2025. During the year, we strengthened our team and welcomed Leanne Heywood, Anne Templeman-Jones and Mohit Rungta to our Board of Directors and Morne Engelbrecht as our CFO. Their experience and dedication, I assure you, will be instrumental as we navigate the complexities of our business landscape. As we look ahead, we are committed to being a [ 50-plus thousand ] tonne a year copper producer by 2026. Our growth projects, including the expansion of the mine to incorporate QTS South Upper and the Ventilation project are key to achieving this goal. Our disciplined M&A strategy continues to guide us as we evaluate prospects that will allow us to acquire and operate assets in stable mining jurisdictions. These initiatives are essential for maximizing value and achieving our long-term goal of becoming a leading player in the electrification and decarbonization of the global economy. We are excited about the future of MAC genuinely as we continue to refine our operational strategies and expand our resource base. In closing, I must express my personal most sincere gratitude to our dedicated team for their exceptional efforts and to all our shareholders for your continued support. Together, we are well-positioned to achieve our goals and drive shareholder value. We're now going to move on to the formal AGM business. You've received the notice of meeting. It was served or given on the 22nd of October 2024 and the notice of meeting is available on the company's website. The notice of meeting contains the meeting information, the tabling of financial statements and reports, the 10 resolutions and an explanatory memorandum which is intended to provide the company's shareholders and CDI holders with sufficient information to assess the merits of the resolutions. I will take the notice of the meeting as read. With respect to voting, the persons entitled to vote at this meeting are all shareholders, representatives and attorneys of shareholders and proxies validly appointed by shareholders or CDI holders. Voting on the resolutions will be decided by poll once the voting is declared to be open. Once the voting is declared open, you can vote at any time throughout the meeting. The company's share registry, Computershare, will process the poll of votes at the end of the meeting, and the results will be announced to the ASX once available. CDI holders will also be able to participate in the meeting by asking questions. However, CDI holders will not be able to vote at the meeting. In order to have votes cast at the meeting on their behalf, CDI holders must have returned the CDI voting instructions form prior to this meeting. Resolutions 1 to 7 and Resolution 10 are ordinary resolutions, meaning that they can pass by a simple majority. Resolutions 8 and 9 require a special majority being 75% of the votes entitled to be cast. Regarding proxies, Computershare has received a number of valid proxies. I will provide the proxy details when discussing today's resolution. For the proxies that I'm holding as Chair, if a member has directed me to vote in a certain way, I will vote in accordance with that direction. If I have not been directed to vote in any way, I intend to vote in favor of the resolution. With this backdrop, we will now move to the formal business of the AGM. The first agenda item is to receive and table the company's financial statements for the financial year ended 31st December 2023, together with the company's directors' report and the auditor's report as set out in the company's 2023 annual report. This is available on the company's website. The company is required to comply with the Jersey Companies Law, which requires the company to present its audited financial statements before its shareholders at the annual meeting. There is no requirement to vote to approve the financial statements, but you are, of course, welcome to ask questions or comment on them. As mentioned earlier, a representative of our auditors, Siobhan Hughes from EY is in attendance and is available to take questions on the financial statements and reports. I would like to invite any questions from the shareholders and CDI holders in relation to the financial statements and reports. And I would pass over to Siobhan to answer these questions, should there be any.

Madam Chair, I confirm that at this time, no questions have been raised in relation to the financial statements.

Thank you very much, Chris Rosario, our General Counsel and Co-Corporate Secretary. Thank you, Chris. All right then. Moving forward, Metals Acquisition -- we're going to move to election of officers. Metals Acquisition Limited has proposed 10 resolutions to be put forward to the company's shareholders for voting. A summary of the proxy voted for Resolution 1 is set out on the screen for you. Resolution 1. Re-election of Mick McMullen as a Director. Based on McMullen's relevant experience and qualifications, the Board, in the absence of Mick McMullen supports his re-election as a Director. Resolution 2. A summary of the proxies voted for resolution 2 is set out on the screen for you. Resolution 2 is the re-election of Charles McConnell as a Director. Based on Charles McConnell's relevant experience and qualification, the Board supports his re-election as a Director. Resolution 3, a summary of the proxies voted for resolution 3 is set out on the screen for you. Resolution 3 is the re-election of Graham van't Hoff as a Director. Based on Graham van't Hoff's relevant experience and qualifications, the Board, in the absence of Graham van't Hoff supports his re-election as a Director. Resolution 4. A summary of the proxies voted for Resolution 4 is set out on the screen for you. Resolution 4 is the re-election of Leanne Heywood as a Director. Based on Leanne Heywood's relevant experience and qualifications, the Board, in the absence of Leanne Heywood, supports her re-election as a Director. Resolution 5. A summary of the proxies voted for Resolution 5 is set out on the screen for you. Resolution 5 is the re-election of Anne Templeman-Jones as a Director. Based on Anne Templeman-Jones' relevant experience and qualifications, the Board, in the absence of Anne Templeman-Jones, supports her re-election as a Director. Resolution 6, a summary of the proxies voted for Resolution 6 is set out on the screen for you. Resolution 6 is re-election of Mohit Rungta as a Director. Based on Mohit Rungta's relevant experience and qualification, the Board, in the absence of Mohit Rungta, supports his re-election as a Director. Resolution 7. A summary of the proxies voted for Resolution 7 is set out on the screen for you. Resolution 7 is the EY be reappointed as auditors of the company and that the directors be authorized to fix EY's remuneration. The Board recommends that shareholders vote in favor of Resolution 7. Resolution 8. A summary of the proxies voted for Resolution 8 is set out on the screen for you. Resolution 8 is the amendment of the Articles of Association. Recently, there have been a number of developments in law and general and commercial practice for listed entities, including listed -- entities listed on the New York Stock Exchange and the Australian Stock Exchange. Legislative amendments have been made to enable technology, such as we're using today, to be used to facilitate the holding of virtual meetings and the delivery of certain notices and documents to shareholders, including notices of meetings, which are of significant benefit in assisting MAC to convene meetings that allow all shareholders across our global register to participate. The company has also proposed amending the quorum, reducing it from 50% of the share register as this was a legacy threshold when the company was not a publicly listed vehicle. Notwithstanding the quorum change, all shareholders will receive at least 30 days notice of general meetings, and MAC will ensure ongoing compliance with all legal and regulatory rules regarding notice imposed on the company by applicable Jersey, NYSE and ASX regulations. A summary of these proposed amendments to the Articles of Association are set out in the table format in the explanatory memorandum to the notice of meeting. The Board unanimously recommend that shareholders vote in favor of Resolution 8. Resolution 8 is a special resolution and, therefore, requires approval of 2/3 of the votes validly cast. Resolution 9. Change of company name. A summary of the proxies voted for Resolution 9 is set out on the screen for you. Resolution 9, the change of company name to MAC Copper Limited. The Board believes that the change of company name is necessary to better reflect the business activities of the company and positioning within the market. The name change is in part being made in response to significant feedback from our North American stakeholders who have expressed concern that our current name is causing confusion as not all market participants identify that the company is no longer a SPAC, a special-purpose acquisition company, and is now a traditional company listed on the NYSE and the ASX. Resolution 9 is a special resolution and, therefore, requires approval of 2/3 of the votes validly cast. Resolution 10. A summary of the proxies voted for Resolution 10 is set out on the screen for you. Resolution 10 is ratification of prior issue of CDI. These being the CDIs issued in connection with the company's approximately AUD 150 million, approximately USD 103 million, October 2024 placement. The Board believes that the ratification of the placement is beneficial to the company as it allows the company to retain the flexibility to issue further securities representing up to 15% of the company's share capital during the next 12 months. Accordingly, the Board unanimously recommends shareholders vote in favor of resolution 10. At this point, I would like to invite any questions from the floor. I'll pause to check if any questions have been received on any of the resolutions.

Madam Chair, I confirm no questions have been received on any resolution or any other business.

Thank you for reporting that, Chris. I will now close the Q&A. I now declare voting to be open. As previously instructed, voting will be conducted by way of poll. We will keep the polls open until the end of the CEO presentation, which fortunately, you're just about to hear. I'm delighted to turn the mic over to our CEO, Mick McMullen, truly an exceptional CEO. And Mick will now present the CEO presentation. Thank you, Mick.

Thank you, Patrice. And I appreciate there's a lot of items of business on the agenda here and much to get through. Before I launch into the presentation, which everyone is available online. I'd just like to say thank you to all of our team who worked tirelessly over 18 months to make the business a success that it is. And we're very excited to actually own CSA and to get the turnaround underway. So good morning and good evening, everyone, and welcome to Metals Acquisition Limited's AGM for 2024. It's a pleasure to address our shareholders, Board members and valued employees who continue to contribute to MAC's success in the global copper mining sector. Since our acquisition of the mine in mid-2023, we've been working tirelessly to optimize operations, and the company is very proud of what we've achieved. Just as a summary, looking back, since we've acquired CSA, we've paid down around about USD 168 million in interest-bearing liabilities, underscoring our commitment to financial discipline and a stronger balance sheet. In the third quarter of 2024, we achieved a copper production of just over 10,000 tonnes with an impressive grade of 4% copper and that's on Slide 25 that people can see. Again, this is the highest grade copper mine in Australia. We believe it's the highest grade copper mine outside the DRC. We have a guidance range for the year of 38,000 to 43,000 tonnes of copper, and we're still on track to get into the midpoint of that guidance. All of the efforts that Patrice touched on, and we've spoken about before, in terms of turning the mine around and our capital investment programs are really positioning us with a clear pathway forward to producing over 50,000 tonnes of copper annually within the next 2 years. This ongoing performance, combined with strategic deleveraging of the balance sheet, places MAC in a position of resilience and strength. Our commitment to cost efficiency is evident. Again, on that Slide 25, you can see our Q3 C1 cost of USD 1.90 per pound, representing a 6% reduction from Q2, which was a strong result given that our production was down slightly, but our costs actually came down at the same time. This reflects both our efforts to continue to control operational costs and the benefits of our recent improvements at the CSA site. At the end of Q3, we held approximately USD 81 million in cash with an additional undrawn USD 25 million revolving facility which gave us pro forma liquidity after that capital raise of about USD 226 million. And, I guess, we view having very strong liquidity as a strength in the business. So we will always endeavor to keep that. That financial flexibility empowers us to pursue strategic opportunities that align with our long-term growth plans. Our efforts in exploration of continued to yield promising results with recent drilling confirming high-grade copper targets. And again, if you look at the bottom of Slide 27 there, you can see the very strong success we've had in terms of increasing the resource, which has also gone to the reserve. Historically, this mine has had a 5-year reserve life, and around about 10 million, 11 million, 12 million tonne total resource of all categories. And you can see from that slide that we've significantly expanded that. We invested USD 2.1 million in exploration during Q3 alone. Our drilling projects have upgraded both the inferred and mineralized material, expanding our resources and reserves of CSA. We think that this continued resource growth solidifies our long-life copper exposure, with significant reserve increases achieved in 2024. If we go to Slide 20 -- 30, sorry. You can see there that we have a strong pathway, well defined of growing this production into sort of midpoint of guidance for 2026 into the mid-50,000. And to support those production targets, we've launched several capital projects, including a ventilation project that will enhance CSA's production capacity to over 50,000 tonnes annually. These projects are not only critical for our production, but also reinforce our commitment to safe and sustainable operations. And I just -- I'd comment that the fact that we've actually been able to extend the mine life gives us a solid basis on which to then undertake those capital projects. Safety and sustainability are at the core of MAC's operations. On Slide 29, you can see there how our TRIF has been going, and we're working tirelessly to gradually drive that down. We've seen a slight increase in TRIFR over the last couple of quarters, but we've implemented some additional proactive measures and are pleased to report that we've been able to gradually reduce that, and we expect to see continued reductions. It is a strong focus of us and our strength and field leadership and enhanced safety inspections are really part of that sort of maintaining a safe work environment across all levels of the operation. On the environmental front, I'm proud to report that our annual return to the EPA has reported no incidents, pollution events or license breaches. We're exploring further options to optimize and reduce the environmental impact of our tailings storage facilities as we continue our responsible mining approach. And again, on Slide 29, you can see our TSF there, which is actually a relatively small facility. We are in the process now of building Stage 10 on that and continuing to do ongoing rehabilitation as we build that facility. Looking ahead, we are -- our strategic priorities remain focused on operational excellence, growth and value creation for our shareholders. We're on track to reach our production rate exceeding 50,000 tonne year by 2026 with the continued strength of our balance sheet and liquidity, enabling us to consider further opportunistic M&A activities that fit our operational expertise and core to us is that they are located in stable, high-quality jurisdictions. You can also see on some of the slides there, particularly Slide 31, some of the growth that we've seen in our resource and reserve and some of the recent drilling. We've announced those as separate releases. You can see that this mine contains a significant amount of additional high-grade mineralization that is yet to be incorporated into the resources. And on Slide 32 of the deck, again, you can sort of see where we see our future of the business going in terms of production, C1 and our net gearing ratio, and we feel very comfortable with those forecasts. So we would say that in conclusion, 2024 has been a year of progress and achievement. And I would say we now move into the stabilized phase of the business. And that MAC is well positioned to continue delivering value to our shareholders while advancing our operational and sustainability goals. I'm confident in our pathway to growth, our financial resilience and our commitment to responsible and efficient copper production. And with that, I'll hand back over to Patrice for the remainder of the business of the meeting.

Thank you, Mick. We're going to take you at your word, and we know it is your word. We are now at the results of the polls, which are closed. And I can confirm that all resolutions have been passed. Full and final details of the results will be announced to the ASX and the New York Stock Exchange once they are available. I must draw your attention to the disclaimer, which is to say that participants in the meeting are reminded to note that the applicable disclaimers when utilizing the information included in the presentation slides. And this concludes the items on your agenda for our meeting today. We thank you very much for your attendance and participation. I think we are a wrap here. I think we can wrap up. So thank you very much for attending people from near, far, local and we appreciate your support. Thank you for participating with us, and we'll see you next year.

This concludes the meeting. You may now disconnect.