MMG Limited (1208) Earnings Call Transcript & Summary

Thank you all for standing by, and welcome to the MMG Limited 2021 Annual Results Presentation. [Operator Instructions] There will be a presentation followed by a question and answer session. [Operator Instructions] I would now like to hand the conference over to Mr. Brent Walsh, Head of Corporate Development. Please go ahead.

Good morning, and welcome to MMG's 2021 Annual Results Briefing. Presenting today are MMG Interim CEO, Li Liangang; and CFO, Ross Carroll. The slides for today's presentation are being webcast in both English and Chinese. They can also be accessed from the Investor and Media section of the MMG website. I will shortly hand over to Li Liangang and Ross to take you through today's presentation, at the end of which we will open the line up for questions. [Operator Instructions] I will now hand over to Li Liangang.

Yes. Thank you, Brent. Good morning, everyone, and welcome to MMG's 2021 Annual Results Briefing. As you know that since early January, I have taken the role of Interim CEO of the company following Geoffrey Gao's resignation to take up a role with our major shareholder, China Minmetals Corporation. I'm more than happy to take this role and lead MMG as the Interim CEO. And I'm grateful to have Geoffrey Gao and our former Chairman, Mr.Guo Wenqing, for having handed over a business in very good health with a solid platform for growth. We are very pleased to have Jerry Jiao back in the role of Chairman of MMG, and many of our investors will be very familiar with Jerry and his long-term contribution to the company of MMG. Now I will provide a brief overview of some of the highlights from 2021. I will shortly hand over to Ross to discuss the financial results in more detail. I'm pleased to report that 2021 was a successful period of time for MMG both operationally and financially due to the commitment and tireless efforts from all our people. We generated a record net profit after tax to equity holders of USD 667 million and perhaps more significantly, a USD 2 billion reduction in our debt levels. In 2021, MMG's production was around 400 -- sorry, 540,000 tonnes on a copper equivalent basis. We continued to deliver strong operational performance despite facing considerable challenges, including community disruptions in Las Bambas and also ongoing management of this COVID-19 pandemic. Regarding our safety and ESG indicators, we reduced our total recordable injury frequency by 21%, but we cannot rest in our pursuit of 0 injuries. As a major supplier of metals linked to a low-carbon future, we will shortly be launching our climate resilience strategy, which targets a 40% reduction in emission by 2030 and net zero by 2050. And consistent with our commitment to mining for progress in 2021, we invested USD 33 million in the economic and social development of our host communities. Looking beyond 2021, we are very pleased today to be able to welcome MMG Board approval for the Kinsevere Expansion Project and the Peruvian government's regulatory approval for the Chalcobamba development at Las Bambas. These projects will deliver additional copper equivalent production for more than 150,000 tonnes per annum by 2025 compared. This is around 28% higher than 2021 production levels. And finally, the rapid reduction in 2021 has given us the balance sheet needed to fund these development opportunities and also to pursue disciplined growth. Our portfolio of future-focused commodities, including copper, zinc and cobalt, are at the core of the world's transition to a low-carbon economy, and we are very positive on their future. Now moving on to our ESG approach and safety performance in detail. As a member of ICMM and through our commitments to global sustainability-related initiatives, MMG remains committed to delivering sustainable development. Our greatest commitment is to the health and safety of our people. Our operations recorded a total recordable injury frequency rate of 1.09 for the full year of 2021. While this injury rate ranks below many of our peers, we are consistently pushing to eliminate all injuries from our workplace. We also continue to improve dam safety, where we are working through compliance to the new global tailings standard. Turning to our environmental and social performance. In 2021, we committed ourselves along with the ICMM membership to a net zero emissions target by 2050. Consistent with this, we have adopted a comprehensive climate resilience strategy to guide us on the journey with an interim target of a 40% reduction in emissions by 2030. Details will be included in our soon-to-be-published 2021 Sustainability Report. To combat the spread of COVID-19, MMG conducted COVID-19 prevention, hygiene and vaccination programs to protect our employees, their families and also our host communities. These measures have ensured that we have endured only limited impacts to production due to COVID-19 over the past 2 years. As you are aware, we continue to face real challenges around inbound and outbound logistics at Las Bambas. Our commitment is to work through these challenges by engagement and dialogue and look to build enduring agreements and deliver long-term development. We are not alone facing these challenges in the country of Peru, but our direct exposure to. [Audio Gap] communities makes those challenges very difficult for us. Our teams are working hard to evolve our strategies to work closely with communities and local, regional and national governments in the country of Peru. The welcome approval of the Chalcobamba pit development is another opportunity to work together with the communities to build shared benefits. This community challenge is clear on this Slide 8. It provides some greater context on the Las Bambas logistics chain subject to over 100 days of blockades again in 2021. There are a few key points to highlight. The first relates to the map on the right side of the page, which shows the southern road corridor used to transport Las Bambas concentrate. This illustrates the point that we have made before. The Las Bambas road logistics system land is 438 kilometers and passes through over 70 communities, making this a complex situation. Since 2016, transport loss related to Las Bambas operations has reached almost 380 days. While we have become very capable at minimizing impact on site operations and production volumes, the key impact has been on the restriction of the sale of finished products or finished goods or copper concentrates. From 2021, we are evolving our approach to focus more directly on joint solutions with governments and community business that focus on shared commitments to development. Whether that be transport service and road maintenance contracts or joint infrastructure development, the intent is to further integrate communities into our value chain of the region. We are also looking to structure benefits differently to extend payments over time and incentives, active involvement rather [ than ] passive one-off compensation. And of this takes time, and I'm particularly concerned that we continue to conduct these negotiations in peace. We have seen what happens when conflict escalates, and for some years now, we have emphasized dialogue and patience. This has cost, but the only enduring solutions are peaceful ones. As at 22nd of March 2022, inventory at the mine site was approximately 70,000 tonnes of copper concentrate. We expect this stockpile to be drawn [ down ] over the second half of this year. And we are working hard to avoid further prolonged disruptions over this period. I will now hand over to Ross to take you through the 2021 financial results in detail. Ross, over to you, please.

Thanks, Li Liangang, and welcome to everyone who's on the line with us today. As Li Liangang has flagged, 2021 was a strong year financially, and I'm very pleased that we are able to report record profitability despite the many challenges we encountered. Moving on to the numbers. Our revenue increased by 40% or USD 1.2 billion due to higher copper and zinc prices. This, combined with strong cost control, resulting in profit after tax of $921 million including $667 million attributable to MMG shareholders. The residual profit to minorities reflects the 37.5% of Las Bambas that is owned by our joint venture partners. This slide sets out the EBITDA bridge between 2020 and 2021. As already mentioned, drivers of the stronger performance are higher prices, operating cost control and strong production at our Australian mines. To summarize, copper and zinc prices were 40% and 56% higher, respectively, in 2021 with copper adding $1.2 billion to the revenue uplift and zinc adding around USD 200 million. Total operating expenses were $162 million higher than 2020. We had higher employee incentive costs of $66 million mainly driven by employee profit sharing arrangements in Peru and higher royalties across the group of $39 million due to the higher commodity prices. Operating costs at Las Bambas were also impacted by increased spending on health security and community programs to the amount of $29 million and higher maintenance costs and consumables usage of $35 million. At the Australian operations, costs were increased by the stronger U.S. dollar by USD 27 million. These cost increases were offset by lower mining costs at Kinsevere and $43 million following the suspension of mining activities in the fourth quarter of 2020. Offsetting the increase in operating expenses was a favorable stock movement mainly at Las Bambas of around $156 million due to a buildup of concentrate at the LB site due to roadblocks at the back end of the year. The other positive contributor to the result was the increase in other income of USD 123.6 million due to the gain recognized on the reduction in the Century bank guarantee. Apart from being an add to our profit, this transaction was pleasing because it relieved us of any potential liabilities at the restarted Century mine. Now to Slide 12, which gives an update on our debt profile. We have consistently reduced our overall debt levels since developing Las Bambas and Dugald River in quick succession. This reduction accelerated by $2 billion in 2021 driven by strong cash flows generated by the group as a result of strong commodity prices and the $300 million equity raise that we conducted in June. The transaction was very well supported by new and existing long-term global investors, and the funds will be used for MMG's next stage of disciplined growth. The right side of the chart sets out our updated term debt repayment profile. What is important to note here is that we have very strong relationships with our funding partners being our syndicate of Chinese banks as well as our major shareholder, China Minmetals. These partners remain very supportive and flexible in their approach to funding MMG and helping us to grow. Now to Slide 13, which is an update on our capital expenditure outlook. Our 2021 capital expenditure of $570 million was below the revised guidance range of $600 million to $650 million. The lower spend was due to a delay in the approval of the Kinsevere Expansion Project and regulatory approval delays with Chalcobamba. However, with the approval of the Kinsevere expansion and the Chalcobamba projects, we expect to ramp up our capital expenditure in order to drive further returns to shareholders. Our plan for 2022 CapEx is now USD 700 million to USD 800 million, of which approximately $400 million to $500 million is attributable to Las Bambas including around $70 million at Chalcobamba and a further $180 million to $200 million for the Kinsevere Expansion Project. With the ongoing development of these 2 projects, CapEx is expected to peak in 2023 and 2024 at around $850 million. Despite the uplift in spending, the chart on the right-hand side of this page demonstrates the capital efficiency of both these projects and why we expect they will deliver significant value for our shareholders. What this chart shows is that for all greenfield copper development projects that took place between 2010 and 2020, the average cost per tonne of yearly production was around $15,000. More recently, copper assets have been changing hands for our M&A transactions at around USD 18,000 per tonne of production. And if you look at listed global copper companies, they are currently trading at an average of around $23,000 per tonne. So to acquire new copper production, you're probably going to have to pay well in excess of $15,000 per tonne. Contrasting that to the cost to deliver incremental production from our Kinsevere and Las Bambas assets, and the capital intensity is around $7,000 and $10,000 per tonne, respectively. The next slide gives our investors an indication of our [ pure ] earnings leverage to changes in copper and zinc prices. In 2021, MMG generated a very healthy USD 1.7 billion of free cash flow. As you can see from the red column, despite the higher CapEx profile and tax payments forecast in 2022, we would still expect to deliver around USD 1.2 billion of free cash flow again in the current commodity price environment. I will now quickly run through a few of the key points in relation to the 4 operating sites. Firstly, to Las Bambas. In 2021, LB's production was impacted by lower average feed grades and community roadblocks. This resulted in a 7% reduction in copper production from 2020. EBITDA was 83% higher due to higher copper prices and increased moly sales volumes. C1 cost was stable at $1.02 per pound. The stable C1 was a function of the deferral planned project spending, diligent cost management and higher product credits. This offset the cost pressures we are encountering due to lower grades, higher social costs and higher consumable prices. Looking forward, we are very pleased to confirm that the Peru Ministry of Energy and Mines has announced a regulatory approval for the development of the Chalcobamba pit and associated infrastructure. We will now continue to take the next steps with the local Huancuire community to advance the development of this deposit, the significant stripping activity planned to take place towards the end of the first half, with first production planned for the third quarter of 2022. Following the approval of Chalcobamba, MMG's full year guidance for copper production remains at 300,000 to 320,000 tonnes for 2022. As previously disclosed to the market in our fourth quarter production report, C1 costs are expected to increase to $1.30 to $1.40 a pound due to a number of one-off factors and inflationary cost pressures. These include increased material movement, longer haul distances, higher consumable usage, increased spend on social and development programs as well as higher energy prices, contractor rates and consumable prices -- increases that are being seen across the industry. We're also forecasting a lower contribution from byproduct credits in 2022, although this will be dependent on market prices for moly, gold and silver. For the medium term, the Chalcobamba development is expected to underpin a production increase at Las Bambas to around 380,000 to 400,000 tonnes of copper in concentrate per annum with a higher production partially offsetting some of these cost pressures I've just discussed. Moving to Kinsevere, our copper cathode production fell by 33% compared to 2020 due to the suspension of mining and the subsequent processing of lower grade stockpiles and third-party ores during the year. However, higher copper prices, stable plant performance and lower operating costs resulting in EBITDA of USD 138 million, an increase of 102% compared with 2020. Looking forward, following Board approval for the expansion project, mining activity will now return towards the second quarter -- sorry, during the second quarter. The expansion project will extend Kinsevere's life by 13 years and take annual production up to more than 100,000 tonnes of copper equivalent production. For 2022, MMG's full year guidance for copper production in Kinsevere is unchanged at 45,000 to 50,000 tonnes. C1 cost guidance is temporarily higher than 2021 levels at USD 2.50 to USD 2.80 per pound due to the resumption of mining activity during the year and ahead of the significant benefits that will be driven by the higher production and higher cobalt by-product credits arising from the Kinsevere Expansion Project. At Dugald River, operational performance continues to be strong with another record year of 190,000 tonnes of zinc and over 200,000 tonnes of zinc equivalent. EBITDA of USD 213 million was 113% higher than 2020. Lower treatment charges as well as higher production volumes also reduced C1 costs to $0.67 per pound. In 2022, Dugald is expected to produce between 170,000 tonnes and 190,000 tonnes of zinc and zinc concentrate with C1 cost in the range of USD 0.70 to USD 0.80 per pound. It is also important to mention that Dugald River has entered into a long-term energy agreement powered by solar with the APA Group. This will help reduce our carbon footprint and provide cost savings from 2023. We will also continue to study initial renewable energy solutions such as wind turbines, and we'll keep the market updated as we progress these sustainability initiatives. And finally, moving on to Rosebery. Despite the age and depth of the mine, Rosebery produced over 69,000 tonnes of zinc during 2021 and 157,000 tonnes in zinc equivalent terms, which includes lead, copper, gold and silver byproducts. This was 11% higher than 2020 with byproducts contributing more than 50% of the revenue in the period. This really shows the benefit of the polymetallic nature of the mine. EBITDA of $203 million was a 50% increase -- 56% increase on 2020. C1 costs for 2021 benefited from the material contribution from the precious metal byproduct credits coming in at a negative USD 0.34 per pound, making Rosebery a highly cash-generative operation. We remain fully committed to extending the life of Rosebery further. Resource extension drilling is yielding encouraging results, and work continues to find additional tailings management solutions. Zinc production for 2022 is expected to be between 55,000 and 65,000 tonnes with a C1 cost of USD 0 to USD 0.15 per pound. This guidance range reflects longer-term grade declines, lower byproduct credits and higher costs associated with operating at debt as well as increasing energy costs. I will now hand you back to Li Liangang to wrap up the presentation. Thank you.

Thank you, Ross. Now we move on to MMG's strategy and outlook. I want to quickly touch on the 2 exciting development products that we have announced today. This [ way ] is a very significant milestone, be able to announce a record profit as well as the approvals for Chalcobamba and the Kinsevere Expansion Project, or KEP. These projects follow a difficult 2-year period that has seen our business impacted by COVID, political instability, regulatory delays and community disruptions. The Kinsevere Expansion Plan, or KEP, and Chalcobamba development will drive nearly 30% production growth over the coming years and very reasonable CapEx. KEP will deliver an additional 750,000 tonnes of copper and 48,000 tonnes of cobalt during the current life of mine out to 2035. It involves the mining and processing of copper sulfide and cobalt ores at Kinsevere and will include the installation of floating plant, roster system and cobalt processing circuit. The total capital cost of these products is expected to be between USD 550 million to USD 600 million and will be funded via available cash reserves and debt facilities. KEP's first cobalt is expected in 2023 and first copper cathode from sulfide by 2024 and full ramp-up from 2025. Once fully ramped up since 2025, annual copper equivalent production will exceed 100,000 tonnes per annum including 80,000 tonnes of copper and 4,000 to 6,000 tonnes of cobalt. This will make the Kinsevere operation one of the largest producers of cobalt in the world. Regarding Chalcobamba, following the final regulatory approval from the Peruvian Ministry of Energy and Mines, the operation will now be developed by open pit mining with associated waste dumps to be commissioned progressively over the next 5 months or will be transported by haul truck for approximately 13 kilometers to the existing crushing and [ convenience ] plants located near the Ferrobamba pit. The Chalcobamba development will underpin the copper production increase to around 380,000 to 400,000 tonnes per annum for the medium term, again, making Las Bambas a world top-10 producing copper mine. We look forward to working with the nearby community of Huancuire to derive benefits from this important development. These growth products (sic) [prospects] discussed on the previous slide come at an important time for MMG and are delivering the commodities that are essential to the world's transition to a low carbon economy. We intend to leverage this mega trend with a portfolio positioned to outperform over the upcoming decade. And we will continue to focus our growth plans on these critical minerals. We believe this is a secular shift in demand for these metals. The period from now to 2050 will be dominated by the shift from nonrenewable, high-carbon energy to renewable, low and no emission technologies. As a result, it will be metal-intensive. Regarding the shift to electric vehicles, the development static storage to smooth the peaks and troughs of wind and solar generation or the shift to renewable supply chains for materials, base metals will be in high demand. The other side of this is how difficult it is to discover and develop new resources. While the circular economy will increase, the contribution of recycled metals significant new supply is required. That supply takes longer to permit and build, is typically low-grade and more energy-intensive and faces the ongoing challenges of social, labor and geopolitical constraints. That is particularly so for cobalt which we will add to the portfolio in 2023. Cobalt's unique properties in temperature control in batteries makes it critical for battery development. While new supply is hard to find, I'm very happy we welcome cobalt to the portfolio of the company. In closing, let me reaffirm that MMG's vision is to build the world's most respected mining company. I am proud of the contribution from our most hardworking teams during these challenging times. On behalf of the MMG management team, I thank our shareholders, host communities, contractors and all MMG employees for their support. Thank you for your time today. I will now hand over to the moderator who will open the line to questions.

[Operator Instructions] Your first question comes from Jack Shang from Citi.

So this is Jack Shang from Citi. So first of all, congrats for the great results last year despite all these difficulties and roadblocks. So a great job done last year, congrats to that. I have a couple of follow-ups. So regarding -- the first one is on Las Bambas. So again, congrats on Chalcobamba approval. The follow-up would be what -- so I noticed that there is no change in production volume guidance for the year despite this approval, so maybe more details on the, say, construction and the ramp-up forecast for Chalcobamba pit contribution. And what could be the range of production if Chalcobamba really ramps up next year? So shall we put Las Bambas production in 2023 back to 400,000 tonnes? That first one on Chalcobamba. The second one is on Kinsevere. Kinsevere, we noticed that there's an update on the reserve report, but the resource numbers largely stays the same. Can we -- can you just give us more information about the process of redefining or just the increased ore reserve and the methodology behind that with the overall resource base with no changes? So what -- do you have further potential upside to further increase the ore reserves going forward on Kinsevere? And the third question is regarding the logistic issues more in general, not only in Peru but Peru, of course. So more production with the Chalcobamba pit addition to the existing mining capacity means that more trucks on the road. So what is the road capacity assuming there's no roadblock, what can be expected to be trucked out, out of Las Bambas each year? Does it require us to further invest on the road capacity or the truck fleet? And what are the options since Chalcobamba is now -- has the green light, do we need to work on, say, potential plans to -- for pipeline construction or even rail, I think, was discussed in the past couple of years on the logistic solutions, more permanent logistics solutions in Peru? And also a follow-up on the Congo situation, on DRC situation. We noticed that a couple of companies had produced copper but not being able to really bring copper out of the region in Africa. So what is the company seeing on the ground in DRC? What are the key bottlenecks there in terms of logistics issues in Africa? And my last question, sorry. My last question is regarding the, say, C1 cost guidance for Las Bambas and Kinsevere. Are these increases predominantly on diesel? I mean the change -- the variance, the changes of 2022 versus 2021, was that mostly on diesel and, say, the fuel input costs?

Thanks, Jack. It's Ross. Thanks for those questions. Firstly, in regard to Chalcobamba, it was already included in our guidance of 300,000 to 320,000 for the year. And we expect to have a sort of a modest input this year because the production will start off slow. We're using small trucks until we get the mine set up. But in 2023 and '24, we do expect production to return to sort of between 380,000 and 400,000 tonnes, and that is largely on the back of the Chalcobamba contribution. That's sort of reasonably clear?

Yes.

Your second question about Kinsevere, the reason why the total resource hasn't moved much at all was we've actually just moved really from resource to reserves. So the overall base is the same. It's just a different classification now that we've got the ability to exploit those resources. So overall, there's no real change. There's nothing new in there. It's just a reclassification from resource to reserves. Now on to logistics issues. In Peru, we have produced at 400,000 tonnes plus in the past. So the inclusion of Chalcobamba, which would hopefully get us up into that region next year, doesn't mean that there's any additional or any new requirements on the road. But as you've seen, we sort of continue to get blocked. So the biggest challenge with logistics is not the infrastructure or the capacity. It's the ability to continue using the road on a sort of an unchartered basis. So there's certainly enough capacity there, it's more just the disruption that would potentially cause these issues. With the pipeline, we have started a prefeasibility study or a scoping study on that. But the pipeline wouldn't be an immediate solution because it would -- once we've done all the engineering approvals, it will probably take us 5 years to get land access and then maybe another 2 or 3 years to build the pipeline. So you're talking, even if everything fell into place tomorrow, it would be probably the end of the decade before we saw anything coming from that. And then the other issue with that is that we then take away a lot of business with people down the haul road. So whilst probably the people along the haul road don't appreciate the impact of trucks in some ways, it brings a butt load of business into those towns. So it's a bit of a double-edged sword that we're fighting there that in some ways I want the trucks, but in other ways, I want the business. So -- but yes, so the pipeline is on a short answer. And with the rail, that's been talked about. But if anyone has seen the topography up there, you're talking about 15,000 feet. It would be like running a new railway line through the Swiss Alps, and that's just not going to be economic to put basically 1 million tonnes of concentrate down a railway line. So for that to occur, it would need government involvement. Now as far as Kinsevere and logistics, we don't have any issue there at all. We sell all our product at the mine gate to Trafigura, so it sort of becomes the issue at the mine gate, but as far as I'm aware, they haven't had any issues either. So yes, so really Kinsevere today I'd say for us is business as usual. And then finally, with the C1 cost, there's a heap of factors contributing to the increase in C1. I mean with COVID, we've had some additional costs with COVID but has also stopped us doing a lot of things both in the community, and this is Las Bambas I'm talking about, in the community, in our development program. We are seeing cost increases with diesel but also all our other consumables. We also -- this year, we'll have every sort of 3-year EBA negotiation. And when that negotiation is resolved, we have to pay a bonus to the staff. So that's sort of a common -- or is the way things work in Peru. And then we've got less deferred stripping. We've got longer hauls with Chalcobamba. And then with Chalcobamba using smaller trucks to start with, that is more expensive than using the bigger trucks. So there's a wide variety of reasons for the increase in C1 at LB. Now if we get the production back up to 400,000 tonnes or thereabouts next year, we would expect that C1 cost to come down, not to $1.02 but maybe somewhere around $1.15 or $1.20. And then Kinsevere, the reason why the costs are higher there is that we plan on starting mining again, but we're still running at low volumes because -- well not that our plant is running at low volume, but we'll be putting low grades through the plant. So we've potentially got full operating costs but still only getting 50,000 tonnes a year of production. And if you compare that to 2 or 3 years ago, where we were at 80,000 tonnes or a bit more. So this is a transitionary year for Kinsevere. And in 2023, we'll see slightly higher copper production but also cobalt production, which will provide the byproduct credits to the Kinsevere C1 cost. I hope that answered your question.

Yes, that's very clear.

[Operator Instructions] Your next comes from Chris Shiu from Balyasny Asset Management.

I've got 3 questions. So starting with the first one, so congratulations on the results and especially on the approvals of the 2 new growth projects. But I would like to understand more about your longer term strategy because the company has the target of double and double and to reach 2 million tonnes of copper equivalents by 2030. And these 2 projects, while they are good, they will not be enough to meet that very ambitious target. So my first question is, what is the strategy to drive the production towards that longer-term target? That's the first one.

Chris, really, the strategy to get to that higher production levels is trying to optimize everything we can out of the existing operations. So basically, Kinsevere, it will go to 100,000 tonnes of copper equivalent. And then Rosebery will stay at similar levels to where it is now. Then at Dugald River, we've had some pretty good exploration initial discoveries with zinc and also some copper. And then at Las Bambas, obviously, we'd like to get more than 400,000 tonnes out of that mine. So that will be a matter of prosecuting the exploration targets in the area. But obviously, that will be dependent on community and land access as well. So that's really part of it, it's about optimizing the existing portfolio. And then the second part is that we will need to be active in the M&A market. So the M&A team has been very busy, and we came close on a couple of things last year. But we'll definitely be approaching the M&A market fairly aggressively but at the same time staying disciplined.

Got it. Understood. And in terms of the types of metals that you would consider and also regarding the region, I mean, is there any emphasis or any sort of restriction?

No. Well, I think the -- yes, the strategy -- sorry, I'm cutting on Li Liangang here, but the strategy is still largely copper and zinc. Hopefully, cobalt will come with copper and give valuable byproduct credits. We'd also look at nickel for the right opportunity, but finding the right nickel opportunity is very difficult. So that's basically the product mix. And then geographically, it's really where we are now, so it's Africa, Latin America and Australia. Now Australia being such a mature environment, it's hard to grow in. So probably the growth is more likely to come from Africa and in Latin America. Previously, we've looked at Chile and Peru pretty much in isolation, but we may look at spreading our wings a bit further in Latin America as well.

Got it. And how about the diesel projects, right? And given that since prices have gone up a lot, is there any breakthrough in terms of the infrastructure there?

No. Unfortunately, there's not any breakthrough with the infrastructure, Chris. I think the local indigenous body was -- with Canadian government support was looking at developing the road. But if anything, that's had a couple of setbacks. So yes, so at this point, there's nothing really happening there. And obviously, for us, we can't afford to spend all that money on the infrastructure, that our minor line doesn't pay for it. So yes, unfortunately, there's no real update on that.

Got it. And the second question is regarding capital management. So if we look at our major mining peers in China. For example, within China Molybdenum, [ DRC ] copper, et cetera, many of them have actually got dual listing, not just Hong Kong but also in the Asia market, and that gives them an advantage in terms of lower funding cost, right? Is there any particular reason why MMG has so far not been pursuing that funding source?

I think from our perspective, Chris, we're very comfortable with how we can fund the business and getting low funding costs. So that's -- to be honest, it's the least of our worries. And our Chinese banking partners and our major shareholders have always been incredibly supportive. So the real challenge for us is more so finding the right assets to buy. But we've -- any sort of new funding we get is always very, very cost competitive and it comes without restriction, so we don't need to sort of add an additional listing to access that funding.

Got it. And last question. So on the other hand, how about the future dividend outlook because the company has suspended the dividend since 2014, right? But given that the company has deleveraged a lot, and the free cash flow generation has been very strong, what is the time line for that? Or if you can give us some preconditions for dividends, right, I mean what sort of gearing ratio? And then what sort of payout percentage in terms of free cash flow or maybe earnings? That would be very helpful for us to evaluate.

Yes. Chris, the debt slide in the pack, which will show that we still have, I think, about $600 million of debt repayments this year and then the next 3 years, we've actually got significant payments to the major shareholder and also the Chinese banking syndicate. So sort of over the next 4 years is still in excess of $4 billion of debt to be repaid, so we have to sort of bear that in mind. And then we also, at the moment, and I think most people are aware of this, have some issues with cash being sort of trapped in the Las Bambas JV, and that's sort of as a result of our banking arrangements, so we really need to start being able to get some of that cash out of the Las Bambas JV and then using it to help pay the shareholder debt. So we're probably not in a position to give clear guidance just yet, but I think over the next 6 or 12 months, we'll be able to come out with a clear policy and what we're looking to do with dividends.

There are no further questions at this time. I'll now hand it back to Mr. Li for closing remarks.

Yes. Thank you very much, again. And I think that I would like to take this opportunity to say thank you again to all the investors and all the partners that are working with MMG during the past years and we are looking forward to the continuous support in the coming future. Thank you.

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