Operator: Thank you for standing by and welcome to the AIC Mines Limited FY27 September quarterly results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you would like to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Aaron Colleran, Non-Executive Chairman. Please go ahead.
Aaron Colleran: Thank you, Darcy. I am joined here in our Sydney office by our CEO, Clint Donkin, our CFO, John Callagher, our COO, Tim Benfield, and our Business Development Manager and Investor Relations Manager, Duncan Bristow. It is unusual, I know, for a Non-Executive Chairman to be presenting a quarterly call, but I am sure our listeners will understand with Clint having only been in the seat for three weeks and me having been the CEO for the September quarter, the responsibility for delivering this result sits with me. The September quarter was a pivotal quarter. It was a quarter where we set ourselves up for short-term, medium-term, and long-term success. For the short term, we produced 3,072 tons of copper and 1,562 ounces of gold in concentrate and generated a record quarterly net mine cash flow of AUD 33.4 million.
Aaron Colleran: When we bought this asset five years ago, I would not have believed we could do that in three months. I think it took us two years to do that. It beat our previous record of AUD 27.7 million set in the March 2026 quarter and underpins our growth spending. For the medium term, we completed the JS3 ventilation shaft and second means of egress at Jericho, allowing us to start stoping at Jolly ahead of schedule. There is a photo of the first production blast at Jericho in the quarterly report to show you just how nicely it came out. There is also a cross-section of the stoping panel to show you how well it behaved. Take a look at those pictures. They definitely support the adage that a picture tells a thousand words.
Aaron Colleran: Also, for the medium term, we started commissioning the on-budget 1.1 million ton per annum plant expansion ahead of schedule. For the long term, we received encouraging exploration results from Brumby, Iris, Eloise South, and Oro Grande. We announced the acquisition of the Mount Cuthbert copper project, a deal that we have been working on for almost four years, a project that we have long coveted, a project that we consider to be the most prospective undeveloped copper project in the Mount Isa Cloncurry region. We entered into a AUD 70 million placement agreement with Hawke’s Point to support the Mount Cuthbert acquisition and ensure that our balance sheet is absolutely bulletproof over the next two years as we drill, baby, drill at the Mount Cuthbert project.
Aaron Colleran: We appointed a new CEO, Clint Donkin, a new NED, Mark Le Messurier, bringing in operational expertise and experience for the production ramp-up, operational improvement, and inorganic growth that we have ahead of us. Now, to run through some details. Eloise production was a bit softer than we had forecast due to a delayed access to higher-grade material in the Eloise Deep and Lens 6 deposits due to a seismic event and earlier-than-planned processing plant shutdowns for cut-over work to connect new equipment. The ore production shortfall from the Deeps and Lens 6 was made up by early access to Jericho ore from the Jolly Shoot, albeit at a lower grade than Deeps and Lens 6 ore. It was obviously great to have the Jericho ore available, already proving the benefits of having two mines.
Aaron Colleran: We are back in the Deeps now, and the high-grade ore that we should have seen in September, we are seeing now. We saw it yesterday, in fact. If you have the quarterly report in front of you, take a look at chart 1 on page 4 of the quarterly, the monthly chart of ore by source and TKM. This is a chart analysts will recall, and this is a chart that a couple of quarters ago I asked analysts if we could remove it going forward, and all the analysts responded, "No, it is useful." I now have to admit, you were right. It is rare to hear that from me. It is a very useful chart. If you look at September monthly production, you will see how much Jolly helped out. The chart shows that the December monthly production forecast is not as big a jump as it first looks.
Aaron Colleran: It is roughly what we achieved at Eloise in August and at Jericho in September, just occurring in the same month, December. September, looking for a silver lining, has shown us that we can achieve the December quarter ramp-up schedule. We have effectively already done it. The other issue in the quarter, the processing plant shutdowns for cut-over work, were earlier than planned because the expansion commissioning is ahead of schedule. These shutdowns were planned for October, not September. Although they cost us tons in September, we should get the benefits in the December quarter. Again, something of a silver lining. We are ahead of schedule. The Eloise AISC of AUD 4.86 a pound copper sold and AIC of AUD 5.01 per pound copper sold were better than last quarter, but still above where we would have liked them.
Aaron Colleran: The higher costs were mainly a result of a lower grade ore treated, the sale of higher-cost concentrate inventory built up during the quarter, and higher diesel prices late in the quarter. I will now hand over to our CFO, John Callagher, to take you through the financial outcomes of the quarter.
John Callagher: Thanks, Aaron. Eloise generated AUD 69.6 million in metal sales, post TC/RC deductions during the quarter. A very strong result. There was a further AUD 8 million in metal sales related to Jericho in the quarter. As advised in the June quarter, these sales sit within the Jericho net contribution of AUD 5.8 million, rather than the revenue line, reflecting that Jericho remains in the development phase. We remain on, excuse me, we remain on track for Jericho to be treated as a commercial operation from January 2027 onwards. Eloise mine operating costs of AUD 28.3 million are down on the June quarter. This reflects the overall reduction in Eloise development meters, with Eloise's second jumbo being moved to Jericho. Diesel costs were also down on the June quarter, although volatility remains and landed diesel costs increased above the guidance range at the end of the quarter.
John Callagher: 25,000 tons of Jericho ore was processed and 360 tons of copper sold during the quarter. Jericho sales volumes are not included in the Eloise AISC and AIC metrics, given they relate to development ore, and the related mining costs are capitalized as part of the expansion project. Commercial mining is expected to commence at Jericho in January 2027, at which point Jericho's operating results will be consolidated with those of Eloise. Capital expenditure warrants some explanation in respect of the September quarter costs against the H1 FY27 guidance. Underground mine development spend is tracking marginally above H1 guidance on a run-rate basis. This reflects a higher proportion of Eloise mining activities being allocated to capital, while the September quarter was impacted by close to AUD 1 million of rehab costs following the seismic event.
John Callagher: Long-term mine development is marginally above guidance for the same reason as described above. Jericho access drive and mine development is circa AUD 1 million above guidance, with the small overspend relating to the wrap-up of JS3. Otherwise, this remains on track. The Eloise expansion capital is now largely spent, with only AUD 1 million remaining. Aggregate spend is within AUD 1 million of guidance. That is an impressive result. Non-planned infrastructure expenditure in the September quarter spend of AUD 5 million compares with H1 guidance of AUD 8 million. This is expected to be substantially complete in the December quarter, in line with guidance. Tailings dam and water storage spend of AUD 4.2 million compares to H1 guidance of AUD 10 million, and overall, this remains on track. The net Jericho contribution is trending ahead of guidance, driven by strong copper prices in the first quarter.
John Callagher: Exploration, slightly ahead of guidance on a run-rate basis, but this is partly seasonal, with spend due to fall in Q2. There is some budget or above-budget activity here associated with drilling at Brumby. Working capital, unfavorable at AUD 12 million in the quarter. This is largely driven by the increase in accounts receivable during the quarter, which reflects the increase in sales volumes in September 2026 relative to June 2026. So in the September quarter, we collected cash on those low June 2026 sales volumes. I will now hand back to Aaron to conclude the review.
Aaron Colleran: Thanks, John. That effectively concludes the review. I will ask the operator to open the line for questions.
Aaron Colleran: Thank you. If you would like to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you would like to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Daniel Morgan, from Barrenjoey. Please go ahead.
Daniel Morgan: Hi, Aaron and team. My question is on exploration. There has been quite a bit of exploration results within the quarter. Just wondering if I can understand how you interpret these results with the latest view of prioritization of targets, and then just
Aaron Colleran: Yeah
Daniel Morgan: how you look at that versus Mount Cuthbert. Thank you.
Aaron Colleran: Yeah, it is a good question. It is actually not an easy question, as you would expect. If I take you back a little bit, the background or the strategy of our regional exploration is we are looking for something transformational. As you know, at Eloise now at the 1.1, let alone 1.5 million ton per annum processing rate, we have 20 years' worth of resources. We are not out looking for 1.5, 2% deposits. We have them, we have plenty of them. What we need is either something that is materially larger, or something as large as Jericho that tells us, whoops, we got 1.5 wrong. We need a 3 million ton per annum plant. Or, something that is 3% or 4% like Eloise was or Eloise is, when it is selectively mined, like it was mined in long hole stoping in the upper levels, which would displace ore.
Aaron Colleran: What that means, in terms of our exploration strategy is if we hit something that looks nice, 5 meters at 1.5%, we will drill it, but we will move on, to try to find something that is materially better than what we have. Because if we were wandering around the bush with a drill rig and we find something similar to what we already have, it is not going to displace that, and it is not going to change our outlook. We have to find something materially large and materially better. That is why you will see, what I thought were well worth highlighting, those results. The two copper results, the two gold results. Ordinarily, you would be pretty excited about those. But, the one we will clearly then go back to, Dan, and there is no surprise we have a rig there right now, is Brumby.
Aaron Colleran: Brumby clearly looks as though, maybe I am getting a bit carried away. I have to be careful. I am an explorationist at heart. It is one hole. It could end up a one-hole wonder. But, from what we have seen, if there is another project in the region, it could be Brumby, so we will go back there. Iris has the strike extent and similarities with Jericho that put it ahead of the pack. But some of these other things, we keep them in the arsenal, but we will not be going back to them urgently because they do not look like they will displace what we have got at Eloise. That is Eloise. Now, you turn to Mount Cuthbert. That thing is an absolute lolly shop. We are spoilt for choice.
Aaron Colleran: You will see, that is exactly why we did the placement of Hawke’s Point, AUD 70 million there to pay for, and like I said in the intro, drill, baby, drill. There is nothing stopping us drilling 60,000 meters as quickly as humanly possible out there. That will not impact. So that will not impact our exploration budget at Eloise Regional or at Brumby. That is deliberate. So maybe if the question you are asking is, how do we decide? We cannot. We love all these children, all equally. They are all wonderful children. So we have raised enough money to drill all of them. I hope that answers the question, Dan.
Daniel Morgan: No, that is fantastic color. Just wondering what needs to be done to fully close off your two projects in train in the December quarter. What needs to be done from here? What are the remaining risks, if any, can you highlight to us? Thank you.
Aaron Colleran: So, you are referring to Jericho ramp-up and Eloise expansion commissioning?
Daniel Morgan: Yes, of course, the plant and Jericho. Yeah.
Aaron Colleran: Yeah. Look, nothing at Jericho. As I sort of alluded to, we did it in September, so I do not see why we cannot do it in October, November, and December. We have been mining at development ore for some time at Jericho. So, metallurgically and all those sort of things, we are happy with. Now stoping. Development ore, as we have shown in the past, it is where it was supposed to be, and it is the grade it was supposed to be. Now the stope, hence, I put the photo as well as the cross-section in the quarterly, so you can get that comfort that we have, that touch wood, we are literally business as usual at scale at the 37,000 tonnes per month that we initially want to ramp up to. We have done it, albeit over a short range. So we are not concerned with Jericho. We are doing that.
Aaron Colleran: It will ramp up easily now in line with the commissioning. There is plenty of ore on the ROM. It will be at low grade, but plenty of ore on the ROM. As soon as that big crusher and big mill get moving, we will ramp up. What do we have to do? We are in that fun part of putting rocks through things and seeing how it works. We have turned them on. It all worked. We put water through it. A few bits of water came out the wrong spot. We have run around with the Silastic, fixed that up. Now we are putting rocks through, slowly going through that process. Rocks in the box all done well, and we continue on. That is the next four to eight to even 12 weeks. That is what this quarter is all about. From what we can see at the moment, it is gremlins, Dan.
Aaron Colleran: This is not greenfield, it is not unusual technology, it is not big. It is big for us. We think it is an amazing size. But it is a 1.5 million ton per annum crusher and ball mill. So, nothing particularly complicated, but there are always gremlins. We are working through those little bits and pieces, ourselves and with Gres, literally as we speak. As John noted, we are within AUD 1 million of that EPCM figure. That is bloody sensational. We are two weeks ahead of schedule. That is plus or minus. If we were two weeks behind, it would not bother me. So I do not want to get excited about being two weeks ahead. I think plus or minus four weeks on these things is very impressive. So I am very happy with where we are, Dan.
Daniel Morgan: Yeah, absolutely. What a signature moment for you and your team. Thanks for your focus.
Aaron Colleran: I agree. Thanks.
Aaron Colleran: Thank you. Your next question comes from Daniel Roden from Jefferies. Please go ahead.
Daniel Roden: Good day, team. Thanks for having me on, and congratulations on the good quarter, and just to reiterate again the sentiment, it is a very pivotal moment for you guys, so congratulations on getting the delivery there.
Aaron Colleran: Thanks, Dan.
Daniel Roden: probably leads into my first question as well is, how do we think about, I guess, the December quarter and through to H2 FY27? If I'm reverse engineering your December quarter guidance, it's
Aaron Colleran: Yeah.
Daniel Roden: implying something in the order of low 200s to mid 200,000 tons versus the 173 in September. Yeah, I know you've spoken to how the commissioning is going at the moment, but I guess, what's your confidence in delivering that target and where are some of the elements that you might be worried about
Aaron Colleran: Yeah
Daniel Roden: if there was risk in that profile?
Aaron Colleran: Dan, our confidence is good for those reasons I effectively just outlined to Daniel Morgan, on the Jericho ramp-up, the Eloise expansion commissioning. So we're very confident. I don't know how you judge confidence, but the point you made on some of the maths, do the calc. Yes, the September quarter puts us behind. We're behind at the first quarter, and it's not going to be easy to make up ground. Look, I did talk about the early cutover hurt us in September, it'll help us in October. The grade we lost from the deeps in September, we'll catch in October, sure. But if we were 5% ahead of our guidance at this point, I would tell you we're extremely confident. We're behind, so it's hard work ahead of us. We're confident. We have a plan in place. You can see the guidance.
Aaron Colleran: You can do the maths from the numbers that we have given you. We bravely gave H1 and H2 guidance this year, and now we have given you December quarter guidance. You will see that midpoint is what we are targeting, not top end. My suggestion to you, Dan, is that midpoint is where we are heading. We will be doing everything we can. You know us, and if grade goes our way, we will be doing everything we can to do better than midpoint and get back towards top end of guidance. We are only one quarter into a game of four quarters. Boom, boom. At this point, we would say we are confident of midpoint. I hope that answers your question. I hope you do not see that as negative. That is just a normal sort of conservatism and sensibleness of AIC.
Daniel Roden: No, that is great. I like asking the open-ended questions, gets you talking.
Aaron Colleran: Yeah.
Daniel Roden: Just, I guess leading on from that, there was, I guess the CapEx associated with Jericho is pretty high for the quarter. Just trying to understand, it sounds like that is all relatively done, but is there any, I guess, residual CapEx that we would expect in the December quarter? Probably where I am going with that is you are kind of at the start of that journey of a material inflection in primary copper production, and that is going to commence over from next quarter through to the end of FY27. Theoretically, you are going to start dropping off a lot of that CapEx spend. So a lot of that is just translating into free cash flow back onto the balance sheet. I guess, is there anything, any legacy or CapEx that we should be aware of over the next quarter or two of-
Aaron Colleran: Yes and no. I will just quickly answer it, John. Sorry, and you can tell me if I am wrong, but as John noted in his commentary for Jericho, JS3 ventilation shaft, second means of egress, AUD 1 million over. Otherwise, that is why we wanted to sort of pull that out for you. That is why the Jericho CapEx is over budget. It is that piece. It is not as though development is costing us more, or we underestimated or any of those sort of things. While we are over by AUD 1 million, John also noted we are now on track. What that on track means is the other development. Sure, we are spending a lot of money on development this year and next year with the Matilda access drive. So, you have got those numbers. That is in our guidance.
Aaron Colleran: That doesn't really fall away, because we're rushing, we're racing to Matilda, to get the better tonnes, the better productivity out of that ore body as quickly as we can for the 1.5 million tonne per annum scenario. Is that clear, Dan?
Daniel Roden: Yeah. No, Chris.
Aaron Colleran: Yeah.
Daniel Roden: Yeah. It's more
Aaron Colleran: That's all right, John.
Daniel Roden: It is probably more thematic of where you are going to be in 12 months' time, sorry, what
Aaron Colleran: Oh, yeah.
Daniel Roden: the stepping stones between now
Aaron Colleran: Reigning cats. In 12 months' time, reigning cats. It will company just be so easy to run. I cannot believe the ease that I am leaving behind. Yeah.
Daniel Roden: I'm glad you said it.
Aaron Colleran: Thank you, Dan.
Daniel Roden: Maybe just a final quick one from me about coming into December, weather readiness. Are you thinking about how you build up a sales buffer? Is the new, I guess, Jericho integration and new plant expansions, are they throwing some spanners in the works in terms of how you have historically prepared for, I guess, wet season and some access cutoffs? Any risk mitigations there?
Aaron Colleran: Well, yeah, the wet season does worry us, as does everybody in the region. We've had two nasty ones in a row. Maybe we're due for a nice one or for a fair one. Certainly hasn't been dealt in the past two years. So, we are sufficiently concerned, Dan. Yep, we got pumping and piping and all sorts ready to go in every direction. Putting in a tailings dam rise at the moment, as you see mentioned in the quarterly and an additional water dam. So work is underway.
Tim Benfield: Filter press.
Aaron Colleran: Yeah. Sorry. Thank you, Tim. The other important piece is, we now effectively have moved, we are moving, we have moved from our solar drying to a filter press. That filter press is dropping concentrate on the ground at
Tim Benfield: 8%
Aaron Colleran: roughly, yeah, 8% moisture content. Ready to go. Literally ready to go straight in the back of a truck. Every other copper concentrate producer who is dialing into this call and thinking, "God, these guys are a bit back in the 1950s." We have just come into the 2000s, and it is wonderful. We are producing concentrate that we can truck immediately, and we will. So the whole solar drying issues that we have had in the past two wet seasons, they go away to some degree. But road closures and pad closures at Mount Isa, they do not go away. But that is a large part of that problem has already gone away.
Daniel Roden: Yeah. No, awesome. Cannot wait until you guys catch up to the 2020s, but that will be fun. Nothing wrong with that, but
Aaron Colleran: Thanks. We like to keep it simple. Cheers.
Aaron Colleran: Thank you. Once again, if you would like to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Shane Laplastria, a private investor. Please go ahead.
Shane Laplastria: Hi, Aaron.
Aaron Colleran: Hey.
Shane Laplastria: My question is about exploration drilling. Away from Eloise, Jericho, where will drilling be happening before the onset of the wet season?
Aaron Colleran: Yeah. Brumby right now. We will be hard up against it. So we have got a rig at Jericho, a rig at Brumby, and that may well be all we get, or may be all we get done. We will not start at Mount Cuthbert this year. We will be ready to start in earnest at the close of the wet season. So, ahead of us. Unfortunately, that is not to say there are not some good results to look forward to. When you get a chance and you go through the quarterly, you will see we actually did a lot of drilling in the quarter just gone. We owe you. The labs owe us a lot of results. So we have got plenty of results to come. All going well that they are good.
Aaron Colleran: Because I do not know if you are aware or many listeners are aware, but rigs are hard to get in Queensland at the moment, and lab turnaround has really slowed down. Now we are almost back to peak times in Queensland. In North Queensland, for some reason, a lot of activity. It sounds as though it is more busy up there than it is in WA, which is normally the bellwether. So Shane Laplastria, that is two rigs running up until end of November, beginning of December.
Shane Laplastria: Right. Would it be fair to say that the second program at Brumby, is that proving to be a little larger than perhaps initially allowed for?
Aaron Colleran: Well, in terms of budget, yes. I think you will see in the finance commentary for Johnny notes that we have moved an extra half a million dollars there. It is not big, but half a million dollars gated across into Brumby, and that is the program we have got out there now. So four or five holes, all fairly deep holes. We are about a third of the way through it.
Shane Laplastria: Right. So there is the initial discovery hole, the other two, and this second program.
Aaron Colleran: Correct
Shane Laplastria: those four to five holes.
Aaron Colleran: Yeah, correct. So, there is nothing at the lab yet. So that is a good 3 months away, unfortunately, with the turnarounds we are seeing at the moment.
Shane Laplastria: Right. Okay, great. Thank you.
Aaron Colleran: No worries. Thanks, Shane Laplastria.
Aaron Colleran: Thank you. There are no further questions at this time. I will now hand back to Aaron Colleran for any closing remarks
Aaron Colleran: Thanks, Darcy. I am very happy to be handing over a great company in great condition to Clint. A company that is set up for short-term, medium-term, and long-term success. We are on the final straight to completing the expansion of the Eloise plant. The plant commissioning has commenced. The ore body is performing well. The copper price is strong. We have got an exciting few months ahead of us. Beyond that, the Mount Cuthbert acquisition advances our ambition to build the next Australian mid-tier copper producer by adding a potential second production center in Northwest Queensland. You cannot own too many AIC Mines shares. Just ask Hawke’s Point. Thank you for dialing in. That concludes the call.
Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
