Q1 2025 Ivanhoe Mines Ltd Earnings Call
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Good morning, ladies and gentlemen, and welcome to the Ivanhoe Mines Q1 earnings Conference call. At this time all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session.
At any time during this call you need assistance, Please press star zero for operator.
This call is being recorded on Thursday may 1st 2025.
Speaker Change: I would now like to turn the conference over to Matthew Keevil Director of Investor Relations and corporate Communications. Please go ahead.
Speaker Change: Thank you operator, and Hello, everyone and good morning, Thanks for joining us it's my pleasure to welcome you to the iron ore mines first quarter financial results conference call I'm sitting here in Sunny Vancouver as the operator mentioned my name is Matthew keyboard I'm, the director of Investor Relations and corporate and corporate communications with Ivanhoe mines are on the line today when the company, we have founder and executive co Chairman Robert.
Speaker Change: Freeland, President and Chief Executive Officer, Martin <unk>, Chief Financial Officer, David Van <unk>, Chief Operating Officer, Mark Ferron, and Executive Vice President corporate development and Investor Relations. Alex Bickered, We will finish today's event with a question and answer session. You can submit a question using the Q&A box on the webcast page as well as through the conference.
Speaker Change: Later via your phone line. Please do contact our Investor Relations team directly if your question is not address during the call.
Speaker Change: Before we begin I'd like to remind everyone that today's event will contain forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements details of the forward looking statements are contained in our April 30th news release as well as on SEDAR, plus and at Www Dot Ivanhoe minds Dot com it.
Robert Friedland: Now my pleasure to introduce I, Havent homelands, founder and executive co Chairman Robert Friedland, Robert Please go ahead.
Speaker Change: Thank you very much to all the participants on this call.
Speaker Change: I agree to you from puzzle ton of Italy.
Speaker Change: Happy of course to introduce our team.
Speaker Change: This record breaking quarter in virtually every respect.
Speaker Change: Our combo concluded the copper complex is now amongst the top three producing copper con.
Speaker Change: Copper producing complexes in the world.
Speaker Change: We had record breaking production in April.
Speaker Change: We are essentially tied with grasberg in the second place for.
Copper production, but we'd have the big momentum and as you'll see we have plans to make the complex even greater.
Speaker Change: So this has been an amazing quarter despite the.
Speaker Change: The macroeconomic situation in our share price can we have the next slide please.
Speaker Change: I wanted to show you. This good news through the good offices of the United States Department of state.
Speaker Change: And the government of Qatar, a peace agreement has been signed under a declaration of principles settling down the travel difficulties and north Eastern Congo. This Saturday has absolutely no impact on our operations, which are well over a thousand kilometers.
Speaker Change: In the south.
Speaker Change: No the road connections, but we're very happy to see that the Congo as stable has the support and interest of the United States government as well as the Qatari government and the principles that have been.
Speaker Change: I've had been put together to have a peace agreement that will last in that area. We're hoping that this is very good for the country of which we are the largest mining company.
Speaker Change: With that I'd like to introduce them or not or whether you'd do that whereas mark.
Speaker Change: Thank you. Thank you robot this is Martin and welcome everybody to Oh and go to Nicole it's been quite an exciting quarter for us I think we've really broken the back of some of the issues we face towards the end of last again, it's still at the beginning of this year, particularly around power and we.
Speaker Change: We are very excited that in April and we've broken that 50000 tons of copper produced.
Speaker Change: The months Oh sets, a new record for us and if you appreciate that on an annual basis that the pit as well as a 600000 tons of copper.
Speaker Change: And the really exciting times for us I think the other thing that really surprised us this quarter and it's already you can flip to the next slide that's really supplies as this quarter was the milling capacity at phase three.
Speaker Change: The mold.
Speaker Change: Milling rates of $6 1 million tonnes, it does more than 20% higher than design capacity. So you can see our teams are really pushing the envelope in terms of letting a lot of infrastructure work for us and just back to power. We went from 50 megawatts of imported probably to about 100 megawatts of imported power during the quarter.
Speaker Change: And we expect that to say the increase for the remainder of the year and that will really assist with and the exciting startup.
Speaker Change: During the second quarter that'd be about to embark on and from a numbers perspective, when it's still die that someday he's going to take you through our quarterly results. It's been a record that go down to Ebitdas is on revenue.
Speaker Change: Thank them from a cost perspective, it's also had been a very good quarter for us because we've been trending towards the bottom of the guidance, although our cash cost guidance and David will give you.
Speaker Change: The talent on that if we flip to the next slide.
Speaker Change: Just sit around health and safety.
Speaker Change: We do strive for excellence when it comes to health and safety and one can never become complacent.
Speaker Change: We performed well.
Speaker Change: And compared to the industry average and we just had our board meetings, we would say to our safety targets for this coming year will be strong for the third the reduction in our diet until record recordable engine injury frequency rates and so it's something that we are working on something that we are very proud of especially if you think that we can.
Speaker Change: Through a period of intense construction and we are also moving into a period of intense construction.
Speaker Change: And then if we move to the next slide.
Speaker Change:
Speaker Change: Very excited to release, our annual sustainability report Tonight I do urge you to go and have a look at this report it really is an outstanding piece of where do you see what our teams are doing across all our projects.
Speaker Change: And then I think the statistic that really stands out is the first one on this batch way Tanaka Kulan Capeci combined contributes about 8% to the GDP of the DRC and despite $1 1 billion in taxes and royalties to the government. It just shows you what the Greenfields discovery do.
Speaker Change: For our country and we believe that there are many more discoveries to be mined in the DRC. So having companies embarking on exploration really changes the destiny.
Speaker Change: Of I mineral rich country, and you can look at the statistics, yet, but we scrubbed and 58% year on year and our workforce.
Speaker Change: And I think it's important tonight that my stuff, our workforce, all local and from the areas in which we operate that's something we pride ourselves on with bold new educational facilities, we support local enterprises.
Speaker Change: And all of these initiatives that we embark on really ensures that we do have a social license to operate in the areas. We waved me, but so was that just a brief introduction. Please and look at this report is a number of nice videos to watch. So that you can see this is not just a talk show, but what we are doing is real and it's impacting on People's lives.
Speaker Change: I'm going to hand, it over to dive. It now so you can go to the next slide and David will take you through our quarterly results. Thank you.
David: Thank you Mike.
David: Good morning, and good day to everyone joining the call today.
David: Maybe I'll just start by pointing to the loss picks shop.
David: After smelter fair enough on this slide.
David: With the commissioning nearly complete the smelter will be one of the initiatives that will really transform our financial results over the next few quarters.
David: If we move to the next slide.
David: <unk> achieved its highest ever quarterly revenue of $973 million in the first quarter of 2025.
David: At our realized copper price of $4 19 per pound of payable copper.
David: Quarter on quarter revenue was up 15% from the $843 million achieved in the last quarter of 2024.
David: We started stockpiling concentrated in preparation for the smelter start up expected in my 48000 tons of copper and concentrate in inventory at the end of the quarter and therefore payable copper sold was less than produced.
David: As the 22000 tonnes of copper in inventory at the lower lobe of copper smelter or realized.
David: Coming quarters.
David: And with us almost having enough inventory on hand for our own smelter.
David: The sale is expected to be close to or exceed copper produced in the remaining quarters for media.
We therefore expect easily.
David: The.
David: Licensed revenue recorded in the coming quarters, if the copper price stayed close to the current levels of Morningstar.
David: Moving to the next slide.
David: Yes come out kudos record EBITDA of $595 million was delivered at a very healthy margin of 60%.
David: Cash costs down quarter on quarter to $1 69 per pound of payable copper and towards the lower end of our guidance cash cost guidance range.
David: <unk> cash costs were close to the same levels seen in the fourth quarter of last year.
David: We did benefit from the lower treatment and refining charges linked to update the benchmarks, which resulted in.
David: Since quarter on quarter Saturday and cash costs.
David: Considering that the power cost is up by saying, thanks from where it was.
David: In the first quarter of 2024.
David: The team has really done well too to contain our costs.
David: We have come out cooler EBITA water.
David: Right.
David: Okay.
David: The EBITDA waterfall highlights that.
David: The 55% quarter on quarter EBITDA growth was driven principally copper price throughout the quarter.
David: In our Q4 call I mentioned that the quarterly EBITDA for the fourth quarter was artificially low due to <unk>.
David: Re measurement of contract receivables.
David: And that is corrected as predicted in Q1 with the mark to market of.
David: Additionally, cross sells.
David: $51 million guide in Q1 compared to $52 million loss in the fourth quarter of last year.
David: We sold 3000 tonnes.
David: We did in Q4, while EBITDA benefited from the lower treatment and refining charges.
David: Quarter on quarter increase in cost of sales when removing the impact of volume.
mcferran: Was due to the higher power costs in Q1, but mcferran, our CFO will talk you through the recent increase in imported hydropower, which is leading to a decrease in the use of the more expensive backup generator power since mid March 'twenty.
David: Okay.
David: It would be removed.
David: But if it wasn't for the increase in inventory EBITDA for the quarter would have been quite a bit tayo.
David: Sold.
David: I think <unk> thousand tons by which inventory increased niche revenue would've been an estimated $110 million higher and EBITDA would have been roughly $65 million higher and if we had sold the entire 48000 tons of contained copper in inventory during the quarter EBITDA would've been rough.
David: <unk> hundred $17 million higher.
David: So quite a bit of dry powder.
David: Powder that will benefit us in the future.
David: We tend to push you on the next slide.
David: I appreciate it now starting to contribute positively to our EBITDA, even though it's not yet operating at optimal levels.
David: Unsurprisingly logistics are by far the biggest contributor to the cash cost of <unk> and that has been control pretty nicely with total cash cost close to the bottom of our guidance range mining.
David: Mining support services and processing costs are expected to come down as production increases.
David: Looking at organized consolidated results on the next slide.
David: Net profit was up by almost 40% quarter on quarter because of the increase in our share of gross profit, which was up by 45%.
David: Exploration expenditure in Q1 was a little less than we will see in upcoming quarters with exploration progress being dampened by the riding season.
David: On the next slide.
David: Yeah.
David: With record EBITDA contributions from both the Moa and can appreciate it is not a surprise that we had record EBITDA for iron ore mines, but numerous.
David: Initiatives that will drive further growth in coming quarters.
Dave Sorry that now is really good thought John all stock.
David: I would not be surprised if every quarter that follows over the next 12 months is a record.
David: We have seen production increase at the medical cooler over the last months and we expect sales to be closer aligned to production and.
David: Results will look better and better at the smelter ramp up as she moves to steady state <unk> remains as.
David: <unk>.
David: And as we see the benefits of <unk> project not differed from next year.
David: Moving to the next slide.
We have kept.
David: Spending on our growth plans on track during Q1 and keep our guidance unchanged.
David: We have been very successful in securing project table as required and we deem beneficial.
David: And but there's less to me.
David: Most of it need to do so now with the Capex profile type ring off.
David: Increasing our operating cash flows.
David: As we continue with the phase II development for Blackberry larger project Finance facility to fund phase II Capex is being considered.
David: If we move to the next slide.
David: Yes.
David: Delivery structure remains nice and low even with well completion.
David: Completion of the $750 million notes.
Steven and then Steven it's dosed in January.
David: We've set ourselves a target targeted net leverage ratio of one times through the cycle and although it's a little bit higher than that on it.
David: Backward looking basis.
David: La was one two times based on an annualized Q1, EBITDA and will come down pretty quickly as we deliver the level of on X.
David: The EBITDA growth.
David: We were in a very healthy pro rata cash position at the end of March of $763 million with $717 billion of debt sitting at and I've been a modest level.
David: Okay.
David: Okay.
Alex: I'll hand over to Alex to kick off our request for a.
Speaker Change: Corporate development and Investor Relations picked up to cover the exciting operations and project updates together with more firm.
Alex: Okay.
Alex: Thanks, a lot David as David mentioned this Alex pickup coming from also a very sunny London and it will be.
Alex: Saving this section jewelry.
Speaker Change: Ausiello Marsha Barron.
Speaker Change: But I'll kick off with an operational review of low cooler in the first quarter on the next slide.
Speaker Change: So just to set the scene I think we've stated several times that the first quarter was.
Speaker Change: Very much on having a good quarter in terms of the the power challenges that we were facing certainly up until mid March and we're very pleased to say that those are challenges that we've now largely overcome and mark will be commenting on that in much more detail.
Speaker Change: But despite all of the challenges I think we can say that come out of the cool it still delivered very strongly operationally during the quarter.
We made $3 7 million tonnes, which is comfortably a record that's close to 15 million tonnes annualized we still think there's plenty of upside forget add up to 17 million tons.
Speaker Change: With with 100% stable power.
Speaker Change: Phase III really has been a star performer since its commissioning last year.
Speaker Change: In milling at well over 20% above its design capacity of 6 million tonnes per annum and there is potential to push that through so there is always some optimization.
Speaker Change: Looking at the grade you can see the blended grade on the left hand side is 48, 1% which is coming.
Speaker Change: Roughly two thirds coming from from the <unk> mine in roughly one third coming from the Salobo mine.
Speaker Change: The grades at the cooler were very solid against are about 5%.
Speaker Change: Sam Colella around 275% of those are expected to trend upwards towards 3% over the coming year as the mine moves from development into more of a steady state stoping operations.
Speaker Change: And then also very pleasing on the recoveries extra.
Speaker Change: Cooler, specifically, we saw record recoveries, well above 88%, which is very good to see in advance of a project 95 initiatives coming in early next year.
Speaker Change: And then at <unk>, we had recoveries around 85%, which also reflects a plenty of room for upside even before the optimization thats come in.
Speaker Change: So with that we've maintained our guidance for this year of $5 20 to 580000 tonnes of copper and I'll come onto the recent results on the next slide which are far in excess of that kind of production rates.
Speaker Change: In the medium term, we are certainly targeting 600000 tonnes of copper potentially higher from from next year onwards annualized.
Speaker Change: And so coming back to the recent operating performance, we announced earlier in April.
Speaker Change: The whole team at Alaska.
Speaker Change: Actual job in securing additional imported hydro power coming in from a number of sources a lot of that is coming in from Mozambique.
Speaker Change: We've effectively doubled our imported power from 60 megawatts to 100 megawatts, which is in addition to the 50 megawatts that's coming from.
Speaker Change: The generation on the DRC grid.
Speaker Change: And what you can see on the right hand side is really a step change in terms of performance since that power is being coming in Karnataka, Hulu has really been delivering quite incredible numbers than we are.
Speaker Change: Are they excited about what this means for the rest of the year. So what you can see on that chart is the the weekly calculated concentrate production in the bonds, but also we've put the annualized rates above.
Speaker Change: Which you can see has been blessed with well over 600000 tons and actually a small correction. The bulk of the 28 of April was a provisional number. We now have the month ends numbers and in that is about 12000 tons for the month, which is equivalent to 624000 tons annualized so it really is.
Speaker Change: Delivering massive production.
Speaker Change: And then also the the record in April that's a major milestone forget about 50000 tons I think we have to congratulate the asset.
Speaker Change: The team at Hulu and just to just to announce for the first time that final number was 50246 times. So we comfortably the 50000 mark despite it being a short term 30 day month.
Speaker Change: I'll now pass over to Mark on the next slide to talk in more detail about the power.
Speaker Change: Yeah.
Mark: Thanks, Alex.
Mark: So maybe just looking back a quarter, we were really backing the power.
Mark: And typically we're now diesel Gen sets, we installed the 232 megawatts of diesel as everybody knows.
Mark: And we used about 100 to 150 megawatts continuously.
Mark: We started this quarter in January with imported power and snow Pan with just under 100 megawatts and at the end of March just to put in perspective, we were sitting at a 150.
Mark: We are getting into the month of May we should we should have 220 megawatts of.
Mark: Our balance between snow, so basically in country hydropower and imported power.
And until we start to smell that means that we will not use any chance it or diesel diesel power.
Mark: We're told to demand when we do run the smelter.
Mark: <unk> is about 250 at 270 megawatts for the basically the target is the end of this year.
Mark: And we have plans in place to covenant with imported power.
Mark: And local generated entre power.
Mark: All in all we do.
Mark: Speaking about it I'm not going to go through all the initiatives in detail, but we are making progress.
Speaker Change: I think the end of quarter two early quarter three that the big 188 megawatt turbine will be Tony.
Mark: To get to.
That will create additional generating power and also this work that we're doing inside the grid to stabilize at the work that I spoke about it and I'll speak about every time to stabilize the grid and make sure that we get consistent stable power around and through that network. All those projects are occurring.
Mark: And I think we are getting support and thank goodness for that for getting support to do longer term input.
Mark: Projects as well as in country projects to be able to increase our <unk>.
Mark: City in the country.
Mark: This allows us to grow the business.
Mark: We won't be able to do the things that we want to do.
Mark: So first of all we have to get it stable.
Mark: Increased.
Mark: The facilities input and local and I think it's moving in the right direction.
Mark: Another day.
This thing, possibly would be two 222 megawatts of redundant diesel power and maybe get criticized for over capitalizing on that I'll be very happy when that happens.
Mark: So that's where we are on the power and the initiatives.
Mark: Inside that grid.
Mark: Okay excellent.
Mark: So these projects that we're going to talk about now.
Mark: Really very quick to implement <unk>.
Mark: Project, not too far off as committed 30% complete.
Mark: We will finish project 95 in quarter, one next year and it will give us about 32, it might be a little bit more 50000 tons of copper production from quarter one.
Mark: What's nice about this copper production that doesn't come with any mining costs to massive capital cost so you're going to see it's going to have a big influence on us when cash cost because it's absolutely just recovery based so we will be increased.
Mark: Increasing the recoveries of mining and production and processing that we've really created and done so.
Mark: So the bottom line the impact of straight to the bottom line, which I think is going to be very good.
Mark: Phase III unexpected about phase III running at around 6 million tonnes, there will be some tweaking on phase III. Some debottleneck work that we did on phase one and two so quite a similar approach to that.
Not an expensive project, but we want to stabilize that throughput from the fall off to about a $6 five number which would take our total production to about 17 million tonnes a year with what we would currently installed so phase one phase two phase III, a little bit more capital, probably 50 number and.
Mark: Then we should be able to process, sorry, 17 million tonnes consistently.
Mark: That project has been identified and <unk>.
Mark: And we'll finalize what needs to be done in this year and executed as fast as we can because it is not expensive and it's going to give us about 20% extra protection.
Mark: This is really to look at what does comerica crude and lube block in the long term how many more phases to be put in is there another phase and how does it look like and how to retirement.
Mark: That work is drawing to a close and I'm happy to say that that is definitely a place for that will come in it's probably going to be stepped I did speak about it the last time with some early works probably on the <unk> and then we're going to target.
Mark: Massive amount of tailings that we've deposited first cell with a grade of about seven 8% copper and will start up the back end of that concentrate to deliver about 50 odd thousand 40% to 50000 tons of copper through that facility.
Mark: Again, without a mining cost and a reasonably efficient capital structure that goes with it while we build up our reserves for a full phase four.
Mark: If you know what phase three looks look and you do because we've told you.
Mark: This fall, we will probably end up being a replica of phase III.
Mark: Ill buildup or reserves.
Mark: The current infrastructure that we have created so basically demands that we've created for phase III.
Mark: I think it will be a very efficient total proceeds in terms of capital.
Mark: And then the number you're going to target.
Mark: <unk> steady state because it's always a question is for long term.
Mark: I think north of 700000 tonnes of copper in some some of the year's braking north of 800000 tons of copper.
Mark: It's a big monetary, creating there's one more big step along the way.
Mark: We need to secure some more power obviously for these projects, but you can have a look at our track record we've done all the three phases.
Mark: Been on time, they've been on track with managed to find enough power to service them.
Mark: And we're going to start up the smelter in this next month. So the smelter will be heated up in the next month and we should start feeding in July.
Mark: Hopefully we can we can have enough stable power to.
Mark: To be able to to make sure they're testing runs perfectly.
Mark: As it looks I think we forecasting.
Mark: Get stable power and to increase it over time and that will just carry on into phase four.
Mark: The next slot index.
Speaker Change: Okay. This is what we're talking about let's talk about this Alex yeah. Thanks, Doug I'll just set the scene in terms of the.
Mark: The smelter.
Mark: You can see in the image water fantastic facilities.
Mark: Incredible capital project has been delivered by the team at <unk>.
Mark: Cost of about $1 $1 billion, but it is the largest copper south Africa or 500000 tons of capacity.
Mark: Producing a 99, 7% on a product and in fact, it's the largest sell through all of its kind.
Mark: Anywhere in the World and we have had some questions from people about the economics of the smelter in the context of the proper treatment charges for those who don't know copper treatment charges are trading at all time lows, which really reflects the.
Mark: The incredible tightness that we currently see in the level of demand for copper concentrates.
Mark: But I think focusing on the treatment charges basically misses the point entirely in terms of why we have built this.
Mark: Please note the facility there are many more benefits to the smelter than simply the saving on the treatment charge.
Mark: The biggest is the smelter will save more than 50% on the logistics costs, which are currently around a third of our cash costs going from shipping concentrate to shipping alerts and that saving 11 is to the tune of one hundreds of millions of dollars per year.
Mark: The benefit that we mentioned on this page.
Is the production of sulfuric acid that we will be producing up to 700000 tons of asset.
Mark: That was a surprise.
Mark: Yes, typically is a $200 per ton in the DRC Cup about where it is consumed by most of the other operations that are producing copper from oxides and the uptake discussions for that asset are very well advanced.
Mark: And then aside from simply the financial benefit or the results of our tax benefit that I didn't mention.
Mark: But also in terms of our emissions and our CIO to credentials. The smelter will be one of the most efficient smelters in the world running on hydro power.
Mark: It will also create a significant reduction in our scope three emissions, which are largely arising from the logistics of moving copper concentrates on the trucks.
Mark: That is why we are incredibly started.
Speaker Change: Incredibly excited to startup the smelter over the course of this year and I'll just let mark on the next slide I think comment.
Mark: And what we're expecting in terms of the operations and the ramp up.
Mark: Alright, Thanks, Alex Yes.
Mark: As we discussed we sort of we're waiting for enough struggled to get into the country. We will start to heat up in my.
Mark: That's where we are at the moment and we will feed to feed it looks like in July.
Mark: And then there's a ramp up of Tibet.
Mark: Eight to nine months to get it to 80% capacity and we take it onto 100, we've trained a very large workforce.
Mark: The mixture of expense and local people.
Mark: Ex-patriot from all over the world.
Mark: <unk> smelter with.
Period once technology in it and would welcome your calls to come and never look anytime you want fantastic installation.
Mark: So we're very excited to actually get to smelter running but as Alex if the main reason for this is to offset the.
Mark: Huge transport cost that we havent to increase that 60% margin that David was referring to.
Mark: This smells just going to have huge financial benefits to the company.
Mark: So we're very excited to get it moving.
Mark: It will do 500000 tons of plus to enter it.
Mark: That's what it.
Mark: <unk>, which is the biggest one of its kind in the world.
Mark: And let's see let's see how we go from.
Mark: Heating up in my.
Mark: And first street in July has been a huge amount of work to go in here, it's a massive footprint.
Mark: We've done a lot of risk assessment around fire after all generate two players.
Mark: But also it's a crucial area of focus on <unk> smelter. So it's an area of focus and it's received a full attention.
Mark: We think it's going to be a fantastic pointed out.
Mark: Our plan here.
Mark: Taking it forward and getting it running smoothly.
Mark: Excellent.
Mark: Okay I appreciate it.
Mark: Pushy.
Mark: We sort of current moving last year it.
Mark: It was commissioned its too its running but it needs to be optimized this record revenue into funds last year, that's being executed.
Mark: And I think the end of the Debottlenecking work incident about October this year and then we should.
Mark: Go beyond the nameplate, we all sort of hitting nameplate achievement at the moment, but we will go beyond the nameplate while that October this year.
Mark: And while a number of really is to get us north of 250000 tons of between 250, and 300000 tons of zinc, which will make it I think its top three top <unk> producers in the world. So it's a tiny tiny little footprint, it's not a big one, but it's very hard great. The feed grade you can see on this.
Mark: <unk> 32, 2% feet.
Mark: And I think over this next.
Mark: The next quarter. The next two quarters, we will get could pursue running smoothly.
Mark: It's operating cost wasn't bad aiming to keep it below a dollar per pound. So it makes a margin and contributes to our EBITDA significantly a massive oman, but it's a very well run operation in terms of monitoring and with the improvement due to the processing I think it is going to be a really really lovely business history.
Mark: And then we run an excellent.
Speaker Change: Yes, I spoke about Debottlenecking.
Mark: It's growing nicely it's also.
Speaker Change: Some issues with power, we still have a few issues with bell I'd appreciate it.
Speaker Change: Similar approach to power in terms of Derisking, it and making sure that we get it stable, it's not a big ask the total project with a total <unk> of 18 megawatts.
Speaker Change: It's not that difficult to to manage that scope.
Speaker Change: Focusing there.
Speaker Change: And like I said as soon as you get to steady state, which to me will be quarter three quarter. Four we will run north of 250000 tons of zinc.
Speaker Change: We still don't gardens, we should we should end the year.
Speaker Change: Just over $200000 somewhere in and around 200000 tons of zinc relieving quite heavily on what we do in the second sorry, the third and fourth quarter here, but its looking good.
Speaker Change: Excellent.
Speaker Change: Yeah.
Speaker Change: Do you want to start with is Alex Yes, sure. Thanks, Alcoa shifting gears now to the flat rate in South Africa and recapping on the study results that we published for flat rates back in mid February.
Speaker Change: I would just note that the technical report for that study is now published on our website. So I'd recommend reading that for the full details.
These studies really create a pathway to take flat range from being the.
Speaker Change: The world's largest precious metals deposit to one of the world's largest and lowest cost producers of this weaker metals, which is platinum palladium rhodium and doubled on the pressure side, but also a very significant contribution from nickel and copper production.
Speaker Change: The study is split into two parts there is a feasibility study.
Speaker Change: Which is looking at the phase one production, which is coming later on this year.
Speaker Change: Gather with the phase two expansion, which we're dealing with and is on track for 2027.
Speaker Change: Around 400000 ounce production and then there is a much larger expansion study, which basically triples, the hoisting and the milling capacity by 2030.
Speaker Change: That's why we take what read through over 1 million ounces.
Speaker Change: PGM default the format will add the salt precious metal production.
Speaker Change: And thats reflected in the EBITDA of the scoping study.
Alright, Thanks Barclays.
And this slide is really just outlining that graphic lease or you can see where we are in 'twenty to 'twenty five and we're expecting to start the phase one concentrated towards the backend of this year.
Speaker Change: Has a milling capacity of 800000 tonnes per annum. So we will be producing some cash flow through 2026, and 12% to seven but really our main focus is on getting this minus a scale which represent.
Speaker Change: The phase III expansion.
Speaker Change: And the critical thing here is the shaft infrastructure in our hosting infrastructure. So the key date that we are looking at and Mark will cover in the next slide is when we have shaft number three hoisting, which takes our overall hoisting rate two 4 million tons and that basically allows you to.
Speaker Change: It really opened up the underground footprint of flat rates.
Speaker Change: In terms of the scale of this ore body or the other side really is the limit in terms of how big you can go and we are continuing with the work on shaft, two which basically is a shaft that can host 8 million tonnes.
Speaker Change: Overall wife's per annum as one of the very largest shopped in the world and that will really be the thing that unlocks the the long term potential in the long term footprint.
Speaker Change: Towards the backend of this decade.
Speaker Change: But I'll pass over to Mark now to speak more specifically about the operations and projects.
Mark: Thanks, Alex.
Mark: So blackberries history to donate 50, that's exciting for everybody. So we anticipate that the refinery will start ramping up the long hole stoping sections.
Mark: We own reef and opening up the footprint very exciting for everybody.
Mark: Greg back to sort of the history here and very quickly because it's been a long history, the sleeping giant sort of history.
Mark: <unk> is awaiting a product can promise you that you can believe it or not but.
Patrick: Patrick is going to start moving now.
Speaker Change: Sure two is the shorter two need to unlock <unk> capacity in terms of ways to go.
Patrick: That shaft.
Patrick: Let out to basically hold it from underground and now we're working flat out to equipment and we will have it running in quarter. One 2026 once it runs at quarter 126, if not only de risks the first phase of production that 800000 tons, but it creates the opportunity for us to ramp up pretty quickly.
Patrick: Into what we call the phase III, the 450 odd thousand ounces.
Patrick: ROFO and while we're drilling all of it or not I'm talking a lot, but while we're doing that we're also.
Patrick: Working flat out on phase III. So basically these phases are interlinked sharp number two unlocks what eight what Alex was referring to 8 million tons per year of hoisting that.
Speaker Change: Sure he is not being delight, we actually.
Patrick: Good.
Patrick: We did the <unk> of it the raise bore and now next year, we'll start slopping it and equipping it so it will be ready for phase III hoisting as we move along.
Patrick: I think in terms of where we are with batteries. We are finally, starting to get there.
Patrick: We've got to show up one, which we've used to access the ore body.
Patrick: And to give us the ability to get into sharp II <unk> III to install ventilation shaft, which you've done.
Patrick: And I'm very excited about <unk>.
Patrick: We are now in the ore body officially youll start opening up the footprint, we will hoist unresolved III from quarter one 2026.
Patrick: And from that moment onwards, we will see a very fast ramp into it into a phase III and a phase III with a very good operating margin.
Patrick: And we're confident about the work that.
Patrick: Published in this latest if it's an <unk>.
Patrick: Study I think it's a very solid footprint that we have.
Patrick: It's a massive ore body it is a huge competitive edge.
Patrick: Vantage of its peers because of the different ore body that we have compared to anything else in that pressure complex.
Speaker Change: And I'm very excited about what we're doing there. Thank you excellent.
Speaker Change: Yes, we spoke about this suite.
Speaker Change: On 850, we developing towards it on 750 of Israel.
Speaker Change: The rest of this year will be opening up the footprint developing some of the oil.
Speaker Change: I think the long hole stopes, and really getting ready for the hoisting shaft, which will then come in quarter. One next year and then we can we can open up the mining and feed the first concentrate and the next one at the end of 2027.
Speaker Change: We'll start moving quickly from now.
Speaker Change: Next one.
Speaker Change: Next slide.
Speaker Change: Alex.
Speaker Change: Thanks, Bob.
Speaker Change: Having the best until last as usual talking about western follows that our exploration efforts.
Speaker Change: Going to be another monumental year of exploration and drilling in the western Poland. So we have a budget of about.
Speaker Change: $50 million.
Speaker Change: A 35% increase from what we did in 2020 call.
Speaker Change: And ambitious drilling program of 102000 meters, which is 20% higher than what we did in 2024.
Speaker Change: So we currently have five rigs drilling or exit the backend and the wet season now so that is very soon going to more than double 11.
Speaker Change: 11 rigs is the dry season.
Speaker Change: In coming.
Speaker Change: Lot of that drilling is going to be focused on the 300 square kilometers of new licenses that we acquired in late 2024.
Speaker Change: An area that we are quite excited about.
Speaker Change: And as previously mentioned.
Speaker Change: We are planning on and enter in mineral resource update that will be published within the next few weeks and I think that will really take people by surprise in terms of what we basically manage to achieve through 2024.
Speaker Change: The first quarter of 2025 will be the cutoff.
Speaker Change: For a spend of about 30 or $35 million of exploration during that time.
Managed to very very significantly drill outs and expand our resource base in Makoko Makoko Western telco.
Speaker Change: Reason I say that we called out of inventory and resources that we fully expect payable to update that results again. This time next year.
Speaker Change: Be that sort of platform to move much more into kind of studies.
Speaker Change: In engineering.
Speaker Change: And then the final slide.
Speaker Change: Is just talking about our exploration more broadly we did announced some very exciting news in early April which is the entry of Ivan headlines in a big way into Zambia. So we have recently states a license package.
Speaker Change: Around 7750 square kilometers setup.
Speaker Change: While north of three times larger than the entire western Poland.
Speaker Change: Licensed package that we have today and what you can see on the map.
Speaker Change: Basically chasing quite a similar geological thesis, which is the continuation of western swollen style sedimentary geology through that LOE question corner, Zambia, and ultimately into Angola, where we have a license.
Speaker Change: License holding is about 22000 square kilometers so roughly three times bigger again than what we have in Zambia.
Speaker Change: In Angola, specifically, we've now sort of laid the foundations in terms of building up an exploration well.
Speaker Change: We're planning over 6000 meters of drilling during the dry season this year.
Speaker Change: Zambia, we will be coming back with more news in terms of what our plans are.
Speaker Change: What we will say if the Zambian government has done fantastic work and completing high resolution airborne airborne geophysics over the entire license area.
Speaker Change: That really does give us a great head starts and we can hopefully commenced drilling in targeted drilling much more quickly and then the last thing last but not least and not shown on this slide and we do expect to have more news coming over the course of this year about our initial exploration program in Kazakhstan, we plan to be drilling some of those projects.
Speaker Change: By around the middle of this year.
Speaker Change: So with that I think.
Speaker Change: Well I'll conclude the presentation and pass back to Matt to Chad the Q&A.
Matt: Thanks, Alex.
Speaker Change: As per usual, we'll kicked back to the operator first and foremost to clear any analyst questions on the phone line and then pending time remaining we will address sort of the web questions as they come in so operator. Please proceed with the phone line questions and we'll go from there. Thank you.
Speaker Change: Thank you first question comes from Rs <unk> with Scotiabank. Please go ahead.
Speaker Change: Hi, good morning, and thanks for the update.
Speaker Change: Just curious these near term growth plans at Comerica cool lot in terms of project 95 that throughput optimization on page three.
Speaker Change: Is that included in your estimate or forecast them.
Speaker Change: Complex producing around 600000 tonnes of copper starting next year or is that incremental to that 600000 ton number and say that in 'twenty six 'twenty 728 time frame.
Mark: It's mark here.
Mark: Good question. So project 95 is sort of re leases some pressure off.
Mark: Holding 600, let's call it.
Mark: About 600.
Mark: Above the 600 number.
Mark: Anything else like for example, if we do project for <unk>.
Mark: Okay.
Mark: Some early early works treating the tightening that's another 50. So then you then you sort of moving into the 600 5700 number.
Mark: And then.
Mark: Anything nor any other project, which is the first full project will take us to north of between seven and 750.
Mark: So project 95 itself is to get a stable at a 600 slightly north of 600 number and anything else is incremental it's beyond so we are aiming to go.
Mark: I've given you of giving you some guidance yet.
Mark: North of 700 for a long time.
Mark: Perfect.
Mark: And just as the Capex associated with project 95, and the throughput optimization that page three is that already in the 25 and 26 Capex budget.
Mark: Yes.
Mark: Forest.
Mark: All right.
Mark: I'll take that one.
Mark: Check 95 is complete including them in the <unk>.
Mark: And the Capex guidance the initial cost of the throughput optimization is included.
Mark: Augment sake.
Mark: Okay. Thank you very much.
Mark: Daniel major at UBS. Please go ahead.
Hi, yes, thanks for the questions.
Mark: First question just on the profile through the remainder of the year.
Mark: Coming out of the cooler.
You've built about 50000 tons of copper in concentrate inventory.
Mark: 2024 in the first quarter of 2025.
Mark: The expectation for Q2, and then the release.
Mark: Yeah potential releases kind of.
Mark: That inventory through the balance of the year.
Mark: Yeah.
Mark: I'm happy to take that one.
Mark: We expect to probably.
Mark: Yes.
Mark: To be pretty close to our production for the over the next 30 months there'll be a bit of an increase for inventory to be helpful. For us smelter. But then also we will see a decrease on inventory held at the lower copper smelter.
Mark: Should be pretty flat over the next quarter with possibly.
Mark: A small increase and then that inventory is at <unk>.
Mark: A lot of our compass smelter and on smelters.
Mark: We expect to release through the third and the.
Mark: In the fourth quarter with.
Mark: As we noted an estimated 17000.
Mark: Tons of copper as sort of beat to be retained.
Mark: Okay.
Mark: Okay. So just to clarify that 17000 tonnes of copper in the circuit. So you should you should release the 48 minus 17 by the end of the year is that right.
Mark: Yeah, Yeah, correct, plus some a small bit of working capital.
Mark: Okay.
Mark: Okay.
Mark: Yeah.
Mark: The top side of that that I think that.
Mark: I think I got it.
Speaker Change: Okay, Yeah, just second question.
Speaker Change: On a financial question on the net debt balance set to come out of Tequila.
Speaker Change: J D. I think that's about $1 7 billion on 100% basis.
Speaker Change: If we're thinking about the.
Speaker Change: Cash flow inflection point for the JV in the second half of this year and into 'twenty five 'twenty six how much would you be looking to reduce net debt and come out the cooler.
Speaker Change: In the next few years and how.
Speaker Change: So that will impact the amount of cash this upstream to the yes.
Speaker Change: JV shareholders.
Speaker Change: Yes, we are.
Speaker Change: Tried to sort of include the repayment terms of the current facilities.
Speaker Change: Our MD&A and you will note that.
Paul: Yes, Paul.
Speaker Change: All paid down pretty quickly.
Speaker Change: I mean, we've got some optionality to increase.
Speaker Change: And that at Attica model Kakuta label because of it.
Speaker Change: So generally I think profile and the fact that leverage at a low.
Speaker Change: Fuller label is is very low as well.
Speaker Change: So we'll we'll look at just optimizing that and the amount of cash we want to we want to ultimately upstream I think.
Speaker Change: It's beneficial to have.
Speaker Change: A good bit of states.
Speaker Change: At both levels.
Speaker Change: That's under consideration.
Speaker Change: Okay. So just to push on that I mean, so it would be it would be fair to assume you would you would want to reduce the one point.
Speaker Change: <unk> billion of net debt at the JV to some degree is that does that fat.
Speaker Change: Yes, that's fair.
Speaker Change: That's fair to some degree, but we will always look to keep a portion of data at least differently and some local facilities and probably have a bit of offshore facilities as well.
Speaker Change: That level.
Speaker Change: Yes.
Speaker Change: This is Alex maybe if I could just add.
Speaker Change: That sort of thing as well I mean, yes.
Speaker Change: $1 $7 billion of net debt at the JV level, considering that <unk> is generating or should be generating well north of $3 billion kind of run rate going forward.
Speaker Change: It's very low leverage to carry.
Speaker Change: To the extent that I think we can roll facilities and just keep those outstanding.
Speaker Change: We will where it makes sense in terms of capital cost of capital.
Speaker Change: Allow us to unlock them.
Speaker Change: More cash flow.
Speaker Change: Super clear, thanks, and if I could just squeeze one more in just on the western Poland.
Speaker Change: Im not sure it was a different messaging.
Speaker Change: You've been giving around the resource update in terms of giving.
Speaker Change: An official resource update relative to to the interim update you gave in January is that a change in messaging will have just misinterpreted it.
Speaker Change: Okay.
Speaker Change: Well the interim update in January was just.
Speaker Change: So really showing you in terms of the strike and the deposits that we will be including in the resource update that we have not put any numbers out too.
Speaker Change: To substantiate tons and grade the last numbers, we thought that we're roughly <unk> 18 months ago now.
Speaker Change: These numbers that are expected in the next couple of weeks are basically proteins.
Speaker Change: Full resource estimates tonnes and grades that will be signed off by an independent <unk>.
Speaker Change: Which includes the Makoko West discovery includes the telco discovery the more drilling at the Coker itself.
Speaker Change: And that basically based on that.
Speaker Change: Cutoff up to the end of March of this year, but obviously, we're still drilling very very heavily which is why we call. It an interim results whereby we're by no means done and most of those deposits.
Speaker Change: Do remain open to some extent.
Speaker Change: In various directions in particular and to the south and to the west.
Speaker Change: Great quarter. Thanks.
Speaker Change: Yeah.
Speaker Change: Lawson Winder at Bank of America Securities. Please go ahead.
Speaker Change: Great. Thank you operator, thank you, Matt and thank you, Alex David and Mark just wanted to.
Speaker Change: I'll ask about the power you guys spoke at length about the various power initiatives.
Speaker Change: Where I would like to focus is on the.
Speaker Change: Solar power.
Speaker Change: Product that you guys have have created.
Speaker Change: What is the expected.
Speaker Change: Relative to your current grid costs.
Speaker Change: The solar project.
Speaker Change: Sorry, I forgot to mention it it's mark.
Speaker Change: We've committed to solar projects of 30 megawatts each.
Speaker Change: And both of them will be running.
Speaker Change: Mid 26, 60 megawatts and we are talking to providers of the next two projects. So.
Speaker Change: There'll be sort of we'll be bringing in solar into the mix.
Speaker Change: Overtime.
Speaker Change: The number the C for kilowatt hour varies but it is a range from about let's call. It 15 to 18 on <unk>.
Speaker Change: So kilowatt hour it is quite expensive.
Speaker Change: But I think after these initial projects, we'll see lower numbers coming through overtime.
Speaker Change: And it's important to add to what Mark was saying that that's that 15 to 18 centers, including the depreciation because we are not funding the capital costs.
Speaker Change: Ipp's will fund the Capex, we will just be the uptake.
Speaker Change: I would hesitate not to add.
Speaker Change: It's about less than half the cost of burning diesel guys.
Speaker Change: With no capital cost.
Speaker Change: So if youre looking at the Cascade of what you'd like to do really a nice to have solar with battery storage as backup that solar that's available 24 hours a day instantaneously.
Speaker Change: Does not solar that is only available five hours a day.
So it's going to be the largest solar facility in any mining operation on planet Earth avail.
Speaker Change: Available.
Speaker Change: Four hours a day.
Speaker Change: Less than half the cost well under half the cost of burning diesel.
Speaker Change: Thank you.
Speaker Change: Yes, that's a very exciting thank you very much Robert nice to hear from you.
Speaker Change: And then I wanted to ask about inkjet to also know very well.
Speaker Change: Perspective, and an exciting source of power going forward. So the initial allocation you mentioned in the release was 71 megawatts and that would increase that 178, so a very significant amount of your power needs is that.
Speaker Change: Baseline and then the increased secured by some sort of contract or is there any risk that that could be pulled back or allocated to other users.
It's mark again, so yes, it was 178 megawatts the turbine.
Speaker Change: So it gets released into the grid over Tom because these certain other areas that we have to strengthen.
Speaker Change: Adding capacity addition into the grid at both.
Speaker Change: Switching stations when it Ingo and when it <unk> and then there is some stability projects that we've initiated I think I've mentioned in the last time.
Speaker Change: So the full 178 is basically a motorist eight I think.
Speaker Change: October November next year.
Speaker Change: It starts with an initial 50 and then it moves on to a 100 that will get allocated and then I think we've called for something like 150 out of the one that we've asked for in the long term.
Speaker Change: So there will be some.
Speaker Change: Let's call it our our work Oh.
Speaker Change: Kipp capacity there to introduce getting.
Speaker Change: Basically assisting assisting communities into different areas.
Speaker Change: But not a lot of it.
Speaker Change: So it might be just a I think is a contractual obligation on the site.
Speaker Change: The utility to provide the maximum allocation to people who contributed to the upgrade of generation and stability of the grid, but you do gate and at the time and if these other old capacity constraints. So I think it remains to be seen and sort of as the generation becomes available to demand.
Speaker Change: But that time constraints will be but that's about it was had the inputs and we are working on a few exciting and projects for infrastructure to get additional minority power directly to the mine.
Speaker Change: As well to ensure that we have sufficient power for glass projects too.
Speaker Change: Yeah. This is Robert I think you can stop upset.
Speaker Change: And you can stop worrying about power for the long term we have so many other plans to bring empower originally and to improve the regional grid. Our problem is this growing pains guys. We grew this mind, so fast nobody ever nobody in the world thought we'd grow this mine as fast.
Speaker Change: It's thrown out with well over $6 billion of cash.
Speaker Change: Since it started less than four years ago, which is kind of mind blowing.
Speaker Change: So we have turned the corner on power, we have a lot of ideas.
Speaker Change: Regionally and it's very important that benefit the Congolese Nash and we are now responsible for about 80% of the GDP of the country and we're heading to at least 10% of GDP.
Speaker Change: In the future we see.
Speaker Change: A future where they can out of a can produce millions of tons of copper per year that are not being produced now the fundamental limiting.
Speaker Change: Factor is hydroelectricity and we're gonna have it so.
Speaker Change: It's a 100% true to stay at the Congo as the world's fastest.
Speaker Change: And greenest copper production on the planet Congo's gone.
Speaker Change: From about number eight to number two in the world and copper production in no small part due to the <unk>.
Speaker Change: Of our 30000 people.
Speaker Change: And Congress is going to stay number one or number two for the foreseeable future highest grade greenschist copper production on Earth.
Speaker Change: So.
Speaker Change: We're not really going to tell you about all the other ideas we have on power, but we will tell you. We have turned the corner on power and that's a function of the enormous efforts that Marta and Mark and her team have entered into thank you.
Speaker Change: Okay. Thank you guys and there is no question you guys have an incredible world class asset and its nice to see that the power situation of catching up as a result of your hard work and thank you for taking my questions.
Speaker Change: Thank you.
Speaker Change: Thank you Andrew Mega Chuck at BMO capital markets. Please go ahead.
Speaker Change: Just a quick question on the Western Forlenza can you get us give us any sense of.
Speaker Change: How the drilling since the last resource has been kind of divided.
Speaker Change: Should we expect a.
Speaker Change: A much more material impact on Tim Makoko Makoko west versus telco.
Speaker Change: Just just so we have an idea of when we look at the old numbers.
Speaker Change: Where there should be most impact.
Speaker Change: Thank you Andrew.
Speaker Change: Andrew It's nice to hear your voice. This is Robert Vreeland I've been in the mineral exploration business for 40 years.
Speaker Change: I think you should exercise patience.
Speaker Change: We're going to 11 drill rigs and we will reveal everything as you know we need independent of president of what we've done and it's always a backward looking look to last March.
Speaker Change: In a few weeks, we could have another conference call.
Speaker Change: To explain what the independent engineers are saying, but it does say something that we've increased our drilling budget and.
Speaker Change: Only God knows what may ultimately be found in the western <unk> and she may changed her mind.
Speaker Change: So yeah.
Speaker Change: Give us a few more weeks.
Speaker Change: These independent numbers there'll be opening soon as a theater near you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Mostly expected that hits your thank you Robert.
Speaker Change: And thank you to the team for all the detail on the power and the success you've had there I'll sign off.
Speaker Change: Thank you Andrew.
Speaker Change: Yeah.
Speaker Change: Thank you there are no further questions on the line I will turn the call back over to Rebecca chemo.
Rebecca Chemo: Thanks, very much operator, and we are running up against time here with our 60 minutes. So we will conclude the call here today I'd like to thank everyone. Once again for attending today's event.
Rebecca Chemo: Look forward to speaking with you again soon on the many more exciting milestones to come in 2025 as Robert rents mentioned do pay attention to the upcoming resource update on western for Linda in the forthcoming call on that so with that thank you very much and operator, you can wrap up the call.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and we ask that you. Please disconnect your lines.
Speaker Change: Yes.
Speaker Change: Okay.
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Yes.
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Speaker Change: Okay.
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