Predictive Discovery Limited (PDI) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us for today's webinar to announce the merger between Predictive Discovery and Robex Resources, a strategic combination that positions the merged entity to become Africa's next mid-tier gold producer and the largest gold producer in Guinea. Today's session will be presented by Predictive Discovery Managing Director, Andrew Pardey; and Robex Resources Managing Director, Matthew Wilcox, who will walk through the transaction highlights, strategic rationale and expected benefits for shareholders and stakeholders across both companies. Please feel free to submit your questions throughout the webinar using the Q&A function located at the bottom of your screen. At the end of the presentation, time permitting, the team will address as many of your questions as possible and where appropriate, we'll group similar questions together. If your question isn't addressed during the session, please follow up using the contact details provided in today's ASX announcement. Before we get started, I'd like to remind you that today's webinar is being recorded. Andrew, over to you.

Thank you. Good morning, ladies and gentlemen, and thank you for joining us on this webcast. I'm joined by Matt Wilcox, the CEO of Robex Resources, and we are delighted to present to you the creation of what will become Guinea's largest gold producer and the next African mid-tier producer through a proposed merger of Predictive Discovery and Robex Resources. The following presentation by Matt and I will run for about 15 minutes, and we'll provide the principal aspects of the merger, and we'll then take about another 5 to 10 minutes for questions after the presentation. Moving on to Slides 2 and 3 for the disclaimers. For the sake of expediency, please do read the disclaimer in your own time, if you haven't already read it, outlining that there are some forward-looking statements within this presentation. So moving on to Slide #4, transaction highlights. Combining PDI and Robex will create one of West Africa's largest pure gold mining companies with a pro forma resource base of over 9 million ounces, annualized gold production of over 400,000 ounces per annum by 2029, a very competitive operating costs, leading to strong cash flow generation and a significant portfolio of exploration assets, which have exceptional growth potential. Not only will the merger enhance the size and scale, but it will significantly derisk the required financing for the construction of the Bankan mine. We'll discuss this in more detail later in the presentation. The merger brings together a complementary expertise at both Board and management levels, forming a team with a strong track record of gold production execution across Guinea, Egypt, Côte d'Ivoire and Burkina Faso. Collectively, the team is very well positioned to deliver the construction of Kiniero and advance the development of Bankan drawing the experience from leading companies, including AngloGold Ashanti, Centamin, West African Resources, Tietto Minerals and Nordgold. With PDI and Robex's principal operations located in Guinea, the merger will create the largest producer of gold in the country and also simplify the relationship with the key local and national stakeholder groups. In addition to this streamlining, the MergeCo will be able to extract a range of synergies across the operations. The MergeCo will have a bigger and better capital market profile with an initial combined market capitalization of over AUD 2.3 billion or CAD 2.2 billion at today's respective share prices. There will be a primary listing on the ASX and a secondary listing on the TSX Venture Exchange, and a shareholder -- this will have a shareholder register with some of the highest quality global institutional investors. We remain highly confident that with the enlarged entity will benefit from future inclusion into indices such as the ASX and other international market indices, including the GDXJ. The strategy -- the strategic alignment is expected to support a share price re-rate in the near term, particularly as Kiniero progresses through construction into production and Bankan advances towards development. The combined entity's diversified asset base, operational depth and funding optionality position it as a compelling investment proposition for the global mining investors. Moving on to Slide 5, the transaction summary. The merger will be completed through an all-share transaction via a plan of arrangement under the regulation of the Business Corporations Act Québec. The enlarged company will be 51% owned by PDI shareholders and 49% by Robex shareholders, with Robex shareholders receiving 8.667 PDI shares for each Robex share. The merger requires a shareholder approval of 66.6% of votes cast by Robex shareholders at Robex's general meeting scheduled for later in the year as well as approval from the Superior Court of Québec and the usual regulatory exchange and court approvals. The merger has the support of Robex's Board and management and its largest shareholders, the Cohen and Eglinton, which together account for over 25% of Robex's shareholder register. The Board of the merged company will be chaired by myself as Non-Executive Chairman with Matthew Wilcox as CEO and Managing Director. Details of the enlarged Board will be covered later in the presentation, but will consist of 7 directors; 4 from PDI and 3 from Robex. Beyond the shareholder vote for Robex's shareholders, the merger is targeted to be completed in either late December 2025 or early 2026. As mentioned earlier, the principal listing will be on the ASX, with the secondary listing on the TSXV of the Toronto Stock Exchange. Moving past Slide 6, the PDI and Robex combination. Slide 7, building Guinea's leading gold producer. Today's announcement creates Africa's next mid-tier gold producer and what will become the largest gold producer in Guinea. The merger consolidates two significant gold mines in the Siguiri Basin, which remains as one of the least explored proven gold addresses in Africa. With three gold mines currently in production, Kiniero and Bankan will create a hub within this new gold district, effectively doubling Guinea's commercial gold production from the Siguiri Basin. The neighboring operations have complementary production timetables with Kiniero rapidly advancing through construction and due to pour gold in December of this year, and Bankan scheduled to commence gold production in the second half of 2028. The combination of the MergeCo will add significant momentum to Guinea's burgeoning gold industry and its reputation more broadly as a global mining jurisdiction. Once both Kiniero and Bankan are in production, the company will be multi-asset, mid-tier producer, producing over 400,000 ounces per annum by 2029, with Kiniero having a life of mine of 9 years and Bankan just over 12 years. More details on each mine as well as Robex's Nampala mine in Mali, which is in production, will be covered shortly. The combined all-in sustaining costs of just USD 1,079 places us within the lowest quartile for African gold producers. The Kiniero mine is an open pit operation, as I said before, with an initial life of mine of 9 years is well and truly advanced in construction and will produce an average of around 140,000 ounces per annum with all-in sustaining cost of $1,066 per ounce with gold anticipated to be poured in December. Straightforward CIL operation, 5 million tonne per annum throughput, and an average head grade of almost 1 gram per tonne with recoveries of around 88%. Construction remains on budget and on time and is very close to being completed. Bankan is both an open pit and an underground, and has a 12 years life of mine and will produce an average -- almost 250,000 ounces with an all-in sustaining cost of USD 1,057 an ounce, with a final investment decision targeted for Q2 of 2026 and production by Q2 of 2028. The processing plant will have a throughput of 4.5 million tonnes per annum with an average grade of 1.86 grams per tonne and recoveries of 93%. Importantly, this will also consolidate a large portion of the southwest margin of the Siguiri Basin, allowing a coordinated approach to the significant exploration upside that exists across the permits. Moving on to Slide #8, the pathway to becoming one of West Africa's leading gold producers. As you can see on the slide, the combined entity's mineral resources, production profile and cost base are highly compelling with a total mineral resource of over 9.5 million ounces, annual production well in excess of 350,000 ounces per annum, and all-in sustaining costs of USD 1,070 an ounce. The MergeCo is positioned to become a producer of note in West Africa. Moving through to Slide 9, establishing a Tier-1 West African producer. In terms of a broader global comparison on a mine-by-mine basis, the combined entity sits firmly in the bottom right quartile, which is characterized by long-life assets and low cost of production. This positioning is not only a strong indicator of operational qualities, but also a critical factor in ensuring the sustainability and resilience of the business across commodity cycles. With this profile, the company stands out among the global peers as a disciplined high-margin producer with the capacity to generate consistent returns and attract long-term institutional interest. Looking at Slide 10, derisked funding of Bankan by leveraging on the MergeCo cash flow. One of the key strengths of this transaction is the funding flexibility that it will provide to the MergeCo. There's already cash flow from Robex's Nampala mine in Mali, which provides a strong foundation. It is a small operation and is highly cash generative. Kiniero is expected to contribute approximately USD 160 million in 2026 based on a gold price of $2,400 an ounce. And obviously, now the gold price is significantly higher than that. The in-money and options and warrants are projected to bring -- will bring in an additional $106 million. Together, these sources provide access to over USD 200 million in unlevered cash. This capital can be directed towards Bankan's DFS CapEx estimate of USD 463 million. The ability to fund Bankan using internal cash flows and financial instruments gives the merged company greater flexibility in exploring additional financing options. Moving on to Slide #11, the potential for meaningful corporate and operational optimizations. Not only will the MergeCo benefit from being a larger company, our respective shareholders will benefit from the considerable synergies created, which include the skills developed during the construction of Kiniero, which will prove invaluable for the subsequent construction of Bankan. We're doubling the acreage overnight, taking a 55-kilometer strike length from north to south and opening up the contact between the Birimian and Archean shields, all under one roof. We are all extremely excited about combining our exploration campaigns and budgets and prioritizing our efforts to rapidly grow what already is a considerable gold inventory. The operating of two mines, which are in close proximity brings significant cost savings, centralized maintenance programs, optimizing spares and equipment and other resources critical to the smooth running of such a large operation. Procurement also benefits from economies of scale, particularly when purchasing equipment, consumables and technology as well as building a stronger key supplier relationships. And through -- also through coordinating our environmental discipline, we'll have more control over the impact we make from our operations as well as protecting the environment, coordinated engagement with local communities and maximizing local content across all of our operations in Guinea. We are also very confident that we are building a Tier-1 gold mining hub, reducing our corporate overheads and attracting additional business to operate in the Siguiri Basin as well as developing significant infrastructure, which will provide local communities with quality access opportunities, which will have a hugely positive impact on industries in the region beyond mining. Now Slide #12, the right skill set to drive value creation. The combined leadership team possesses an in-country track record and skill set to develop and operate a combined portfolio. As mentioned earlier, this is a merger of equals, and the Board composition reflects this with four directors from Predictive Discovery and three from Robex. All of the directors bring significant skills and knowledge to all of the key aspects of MergeCo's future growth from exploration, permitting, financing, construction and production, with significant capital experience in navigating multiple international stock exchanges. This extensive experience has been shaped building mid-tier and large-cap miners with strong operational histories across Africa. Slide 13, enhanced capital markets relevance. With scale of operations comes the advantages of scale from a capital markets perspective. Ahead of any potential re-rating a merger may bring to both sets of shareholders, we'll have a market valuation of approximately USD 1.5 billion. We believe that this valuation, a combination of market caps of both companies has significant upside, particularly in narrowing the substantial discount to immediate peers as reflected in NPV ratios, production growth and cash flow forecast. The pro forma value creation comfortably puts the MergeCo eligible for inclusion in multiple indices, including the S&P, ASX, GDXJ, with MergeCo also likely to graduate at a later stage into the ASX 200. Slide 14, operating jurisdiction. Guinea is an established gold producing country, hosting multiple world-class projects. And both Matt and myself have previous experience working in Guinea. Guinea is also home to the largest mine development project in the world, Simandou. It's a global leader in bauxite, and mining contributes significantly to the GDP of the country. The benefits for Guinea, it's a fast growth of the gold hub in the Siguiri Basin. The combination will deliver substantial and sustained tax revenues for the country, further supporting local content and communities, and moves Guinea into being a top gold producer in Africa. And with that, I'd like to hand over to Matt, who will talk about the merged company portfolio overview. Over to you, Matt. Thank you.

Thanks very much, Andrew. Yes, look, for us, it's a tremendous opportunity to bring two of the better undeveloped projects in Africa together. And we really think we're bringing one of the best undeveloped projects with one of the best development teams in Africa. So the Kiniero project is very much unexplored. We're completely constrained by our drilling at the moment, both at depth to the south and all over the permit. It's underexplored. With the current sort of 2.2 million ounces of indicated, it will grow and extend the mine life in the greater future. So we are looking to start up and pour first gold in less than 3 months now. And we should be very quickly into commercial production. It's an all oxide start-up with two routes to feed the mills, and a CIL train that's pretty much finished. So it's a simple CIL and IRR like 61% at $2,320, which is an almost laughable gold price really for economic analysis now when gold hit $3,900 over the weekend. So it's -- we're looking forward at being into cash generation very soon and moving forward straight -- more or less straight into the development of Bankan. In terms of where we're at, I guess, where CIL train is pretty much finished, launders have gone in, but now it's putting agitators in and screens in there, you can see the SAG mill there is pretty much done. The ball mill is actually the shell, and the heads are being assembled as we speak. That photo is about a month old. But -- and then we're -- yes, the generators are on site, and they'll be put in there over the next few weeks as well. Pretty much every bit of gear we need to finish the construction is on site now or in "on the way to site", and we're really moving quickly towards our initial gold pour there. As you can see there, we've got a lot of exploration potential. We've got the northern pits with border on Bankan's deposit, and these are almost unexplored at the moment. They're fantastic geochem anomalies. The initial sort of target definition work has come up really good, and we'll have RC rigs on those sites by the end of the year. There's just a tremendous potential here between Sabali and Mansounia to build this into what we call a super pit that should be about 3 kilometers long and about 600 meters wide at its longest point. And underneath the SCA, Jean complex, which is the previously mined complex by SEMAFO, there's real potential there for some high-grade material and possibly an underground operation in the future. So it's an exciting permit to be on, and it will continue to grow like naturally with exploration over the course of the mine life. That's the combined entities, and it really gives us a 50-kilometer strike along some of, I think, the most prospective gold region in West Africa at the moment. I don't think there's a better gold discovery anywhere in the world with over 9 million resource ounces in that 30-kilometer radius. When you compare it to something like De Grey's which is just over 10 million ounces, but it's a refractory ore body. This is 3 million gold. It's over like -- combined, it's well over 1 gram a tonne, and it's already half developed, I guess, with Kiniero about to come online. So it's a very exciting gold district, and it's going to be a fantastic double project as we get them both into production. I mean the financials, it's $2.9 billion combined at $3,300 at spot. I think someone did it the other day, and it was over USD 4.2 billion NPV. So it's just got amazing potential and IRR that just almost irrelevant it pays itself off so quickly. It's a current mine life of over 12 years on Bankan. I've got no doubt we'll extend both deposits well beyond that with relatively minimal drilling. This is Bankan. This is kind of new to me in terms of what we're seeing, but we've done a very comprehensive due diligence project over this over the last couple of months, and it's really held up. We've had some -- it's probably, yes, the easiest mine in terms of open pit mining. You've got -- it's a massive, big wide ore body that will sit on one side of the pit and the other side of the pit will be a strip cutback in waste. It's going to make for a tremendous mining operation. You'll have one side of the pit that's ore and one side of the pit that's waste. There will be minimum dilution across the faces. It will really -- it will come into operation just brilliantly. I can't speak highly enough about this deposit. I think it is most definitely the best undeveloped project in the world that could be -- that's available at the moment. And it's only going to get better with increased drilling. It's still a lot -- there's a lot of exploration targets to continue to define, and it's just going to grow and grow as we drill with years to come. Also, we've got Nampala. Nampala is small, but it's kind of mighty in terms of its cash generation. It's been generating more than USD 3 million a month over the last few months with this gold price we've been seeing at the moment. And it's got modest mine life in front of it, but it's certainly -- it can be extended, and it will be extended sort of year-on-year at a time. Obviously, Mali is a challenging jurisdiction, but we're confident in operating there, and I think we'll extend this over the next few years, a little bit at a time. It will stay in oxide, and it's -- it will just continue to grow naturally. There's two great exploration leases to the south that will continue to grow as well. So it's -- it is a great thing to have in your pocket. It's pretty much been paying all our corporate costs and a lot of the other sort of builds around operations, and it will be somewhat dwarfed by Kiniero, but it will continue to remain an important asset to us into the future. In terms of what this brings to the table, by 2029, we should be producing well over 400,000 ounces at this at a very, very low quartile cash cost. It will be, I think, the biggest resource base in a 30 kilometer radius like that's being brought into development in the nearest years. I've got no doubt that, that 9 million ounces will grow well over 10 million as we progress through the construction. In terms of our financing, we've run the numbers a lot of different ways. We think we're going to be able to do this with minimal extra debt without any further capital raises to dilute the share price. And we've got a tremendous development team, both in construction and operations to bring both these projects into operations, hopefully, in the best possible way we can. And I think it's -- this really should put us in the right track for an ASX 200 listing and move us towards index inclusion across a number of indexes across both the TSX and ASX. That's it for me today. I'll pass over to questions for myself and Andrew.

I'd just like to say just a quick summary, reinforcing again what Matt said as well. The transaction is going to be highly accretive for both sets of shareholders. With a nil premium merger with no cash consideration, we offer both sets of shareholders a clear upside to a significant growth profile of the merged company, which will be created through this. And it's going to be a fantastic journey moving forward with Matt at the helm, et cetera, and his team and moving us up the next stage of the ladder and into being a multi-asset mid-tier gold producer. And on that note, I'd like to hand back for Q&A, please. Thank you.

Thanks, Andrew, and thanks, Matt, for that. The first question is about the build timing at Bankan. May I ask that you comment on the build timing at Bankan. With the combined team's strong build experience, is there opportunity for any acceleration or cost savings versus what was outlined in the study?

I think there's always opportunity for acceleration in cost savings. So I guess we're still permit dependent at the moment, but we have got very supportive finances. And I think if we can accelerate the permitting, and I think with the Guinea elections almost over, that's a real possibility. We could certainly accelerate the thing. And we've -- I've done my own internal CapEx estimate. I think we can certainly do some things that make it a whole lot better. And in terms of the overall OpEx costs, I think we've got some ideas there, too. So there will be more announcements and some reoptimization over the next 6 months as we go forward. And yes, I think it can only get better from here. So it's better to underpromise and overdeliver. So we'll leave that for now, but there's definitely some opportunities. That's what I'll say.