Aeris Resources Ltd
ASX:AIS
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Aeris Resources Ltd
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Thank you for joining the Aeris Resources September Quarter Results Presentation. In a few moments, Aeris Resources Executive Chairman, Andre Labuschagne, will present the results for the September quarter. At the end of the presentation, Andre will take questions during a Q&A session. [Operator Instructions]. We will also open the floor to verbal questions. [Operator Instructions]
With housekeeping settled, I will now hand over to Executive Chairman, Andre Labuschagne, who will begin the presentation. Andre?
Thank you, Mary, and good afternoon, everyone, and thank you for joining the September quarterly activities report presentation. I'm quite excited to report for the first time since the acquisition of the Round Oak assets, the new Aeris and the operations additional operations in the portfolio and also the ongoing improvements we're looking for as we go forward.
I can -- so at this stage that the integration of the Round Oak assets in Jaguar and Mt Colin is mainly done. There's always some tweaks and further improvements you would want to make. But these 2 mines has performed really well in this quarter, and we're looking forward to that going forward -- to continue going forward.
At a group level, just the highlights for this quarter. At a group level, the copper equivalent production at 14,200 tonnes is in line with guidance. Although we had weaker quarters for Tritton and Cracow, Jaguar has had a very, very good quarter, and we'll see that going forward with fairly strong results and keep on continuing to forecast and no change to the full year guidance.
We have invested $35 million in capital across the business. And as you would have seen in some of the announcements we've put out in the last quarter, a very good and significant progress being made on exploration at Golden Plateau, the Turbo deposit at Jaguar, which is a big focus for us.
And then Murrawombie, where it physically came through that additional hole we drilled at Murrawombie, 250 meters below the current workings, which came back with spectacular results. Just shows that the ongoing exploration success and the ongoing of that operation, 18 months ago, we thought Murrawombie had 12 months left or 2 years left with that intersection and drilling, we plan to draw that out. Murrawombie, would be significantly extended in terms of the underground operation.
We have also updated the Mineral Resource of Constellation. We'll talk a bit more about that going forward. The closing cash balance of $51.8 million at the end of the quarter, that is after we paid $80 million to the -- to Washington H. Soul Patt as the completion of the transaction, which is still outstanding at this stage is the working capital adjustment, which is in favor of Aeris, a significant payment, which we're working through, which will be finalized in November and that cash coming back into the business.
We're also, in terms of projects, as I would have said in the previous quarter, we are absolutely focused on getting the Stockman project up and running. And this quarter, we have literally just appointed a GM projects with the General Manager of Projects, which main focus would be the execution of the Stockman feasibility study, but he has also got significant experience in actual construction of mines and that would be the role going forward.
As we said in the quarterly, we don't see any change in the full year guidance. And in fact, we have seen at all the operations, very good high focus on cost, where all the operations has come in either at or below the internal plans on costs.
On the ESG side, we had 1 lost time injury for the quarter, which was a hand injury at Tritton and the lost time injury frequency rate steady at 2.1. And as you can see there, for the quarter, actually a very good improvement quarter-on-quarter in terms of lost time injuries.
On the sustainability side, we have spoken various times, various occasions about the 4 areas, which is our targeted focus areas for, on the ESG side. That is fully integrated now into the business. We're working on reporting to make sure reporting is accurate, and we know exactly where we stand. There's also various projects underway to improve in each one of those areas as we go forward.
COVID, just touching on at Cracow specifically. Particularly, we had a July month where we had quite a few employees of sick through COVID, but of late in the last 2 months, COVID is well-managed, and we don't see any impact over the last month or so through COVID specifically impacting significantly at the operations.
Going a little bit more into detail. So Jaguar, 8,100 tonnes of zinc, all-in sustaining cost per dollar was $1.50, which I think is a great start for Jaguar in terms of where we are. It was as a result of double of stopes being mined during the quarter. So there was a lot of volume coming out. We have started -- they've been take a hanging wall lens. So that is further production, which is going forward.
The processing side was slightly below what we mined, and it was really due to stoppages, which we had in the quarter. But we're sitting with 50,000 tonnes on stockpiles at the ROM stocks at Jag. So in terms of looking forward, there are significant tonnes already been already mined and on the ROM stocks ready to be treated. And then at an all-in sustaining cost of $26 million. And I won't go into all these. Again, all the mines has either been in line or below plan or cost, which in this market, as we all know, is actually a great achievement and the guys focus on costs.
On the exploration side, still a big focus on the Turbo lens and the discovery or the extensions of that Turbo lens. We've seen some really good result, and we keep on seeing that it's stepping up as we drill it, and we see that's a significant opportunity. And you'll see on the next slide.
At this stage, we haven't spent any growth capital, a lot of work has been put into both the ventilation and pumping upgrades. We'll see some of that money starting to flow through in the next quarters coming up. We -- in the next 2 or 3 quarters.
On the greenfield side. We haven't done much work on the greenfield side, but we are now planning a geophysical survey over the entire 10-month package. We have got a large sentiment, and we'll start to put specific plans in place on how do we look, start to look for deposits, which is not known at this point in time. It's just the Turbo lens.
You can see on the right-hand side, there are some results very, very good in rates and even copper grades, and you can see that deposits keep on extending. It's still open nearly in all directions. And we already see the footprint has gone extended for a further 200 meters to start into 400 in Golden Plateau. So significant already increase in that size from, since we did the acquisition.
As I said earlier, on the regional side or the greenfield side, a lot of focus on the gravity server will go in that will take about 3 to 4 months to finish off, but we're really looking for new greenfield VMS targets. And hopefully, that will start to identify with the work, which has already been done prior to us getting this plus this gravity survey we're quite confident would identify some, a few new greenfields, VMS targets going forward.
Touching on North Queensland or Mt Colin. Mt Colin produced 2,000 tonnes of copper this quarter. It is a bit more lumpy with North Queensland, what we're doing there. We mined 80,000 to 100,000 tonnes and then it gets batch treated and then you get your concentrate, your payments. We treated about 100,000 tonnes at Ernest Henry. That engagement has now changed where it will be treated through the Mt Isa, where they will treat about 80,000 to 100,000 tonnes, in between every 4 to 6 weeks or 6 to 8 weeks. The whole idea there is it is easier for us, and that arrangement has been put in place to put it all within 1 group.
We also seen that we're actually starting the next treatment process on Wednesday. So Wednesday, there will be another 100 or 80,000 tonnes being put through the Mt Isa more, and then the revenue returns will come for us there.
The -- on the exploration side, as we said many times, the model for North Queensland of Mt Colin region is to create multiple of these 4 Mt Colin style deposits where we can basically take the camp and the infrastructure, with Barminco to the next one, and you mine it again.
So we're currently spending about -- we have spent $200 million on exploration at the Barbara deposit, and we are also looking at some greenfield exploration. We do have a lot of tenements in the Mt Isa region and really starting to look at the greenfield opportunities.
But on top of that, we have started to engage with a few explorers in and around the area to see what opportunities are there to actually further extend that model within some other deposits sitting in the hands of some of the other explorers.
So on the Barbara deposit. You can see that currently, there's a mineral resource of 1.8 million tonnes at 2.2% copper with gold and silver. We're busy drilling that out to further extend that deposit. We have really drilled 6 older planning to drill another 9, and then we will start to put a study together to make sure that, that fits into that pipeline where you're going to move from Mt Colin to the Barbara deposit as the life of the Mt Colin deposit runs out in about 2 years' time. We're planning to put a mineral resource out on this by March next year as part of and then the study would be done at the same time.
At Tritton, certain production of 3,800 tonnes of copper, all-in sustaining costs at $6.89 a pound, obviously not what we would have expected, although the cost for the quarter is well under control. The biggest challenge the guys had at Tritton was they had a very good start to July and a fairly good outcome for September. But end of July, August, they had a base for blockage.
And when that happens, it takes a lot of effort and a lot of man hours to unblock those pipelines. That is a pipeline which you basically pump tailings with concrete or cement down the mine. And if that gets stuck, the concrete set and it's quite a big challenge to get that to unblock.
The guys did it in 7 days, all efforts and everyone is focused on getting that out of the way. And obviously, that impacted production. It also started -- impacted the production starting off for about 5 days after it was clear that is now cleared. But what we're seeing at Tritton is the model, which we've implemented in January for moving away from high tonne slow grade to higher grades in the last month or so.
We've seen significant improvement in grades at the bottom of Tritton. So where we said we're going to be lower tonnes, higher grade. There is a high-grade zone within there. And we've seen there's a high potential to extend that even further on other 3 to 6 levels to keep mining those high-graded Tritton.
The Budgerygar deposit is in production, although it had a slower ramp-up. The ventilation needs to be in place. So we had a raise bore hole, which we need to finish off. And then for production out of those higher grades will come in.
So the Tritton model still remains replacing low grade with high grades. Our budgets are coming online or in production, but the volume out of Budgerygar will step up in the next 3 to 6 months. We've seen Avoca Tank. So we spent about $10.7 million on capital, and that's predominantly Avoca Tank development and some exploration at corridor in Murrawombie, which we built that deeper tomorrow.
The decline development is basically by the end of December, we'll be finished it with head to ore body, and it will be in production with first production coming out in quarter 4 as per the original plan. So the guys at Avoca Tank, and those grades will then come in at 2.5% copper that is Avoca Tank expectations.
You would have seen we also updated the consolidation. We nearly doubled the mineral resource. It's now nearly 7 million tonnes at 1.85% copper with really good gold grades. They still open out punch, will talk a bit more on the next slide.
That intersection we did at Murrawombie, which intersected 250 meters down plunge, which is just above 2% in some of it. That is a great result. We started off Murrawombie thinking there's 2 years of life. And I think we've been in there now for more than 5 or 6 years, and this competition extended significantly beyond where we thought it's going to go 18 months ago.
At Kurrajong, that's all part of this getting a pipeline of higher-grade projects. So Kurrajong being drilled to get that into a maiden resource, and that's targeted for quarter 3 FY '23. So that drilling is happening.
Obviously, at all these mines, we had a lot of rain in the last 2 months or 2 -- lucky for us, it's all underground mines, so impact on production is minimal. But when you start to do drilling on surface, it is a lot more challenging with wet weather. So at some of these, you need to stand off for a bit so that it can dry out to get back in.
Touching just quickly again on Constellation. So you can see that the current resources, the purplish and the greenish area, everything in red, including those EM plates down the bottom, is potential further extensions to that resource. That is still our highest target area to continue drilling, especially to identify what is in those EM plates down the bottom because most of our projects, as you would have seen, keep on extending our depth, and we're very confident that the further drilling there would increase the results.
What we are now doing with environmental impact studies are underway. The preliminary mine plant continues. And during this quarter, we will start to pull some mine plans and studies together to see what is the different options on Constellation going forward.
On the Cracow side, they produced 10,400 ounces, all-in sustaining cost is $2,558. Although the guys didn't achieve their ounces, there was a huge effort on the cost side, and they managed to pull the cost into -- within their planned unit cost number. Although they had issues with tonnage throughput specifically due to people not being available for work and many levels, they have still done a great job to manage to where they got to.
A lot of planning has been done. You would have recalled the issues around grade, which we couldn't understand the difference in [indiscernible]. There were some reconciliation issues to what we thought we mined and what we milled. Those -- we're doing a lot more grade-controlled drilling now. So there's a much better handle on the grades before we start mining it. And we've seen in the last few months that the reconciliation between mine grade and processing is reconciled really. Also there's a much better understanding of where we are.
And then there has been plans being put in place to increase production and focus on higher grades for the next phase of this financial year and really getting it back on track, and there's a lot of confidence in that.
On the exploration side, Golden Plateau, as we've set out quite a few times, that is quite a big future plan for Cracow. The drilling is underway. We're doing a lot of work to understand the opportunity. As you would have seen, we've put this out a few times. We originally targeted that purplish area as an exploration target. But what we've seen wherever you get these cross cut structures within there, their significantly higher grades.
And we're now seeing where we thought there's 1 structure. There's 5 or more structures, which will result in a potential for a much bigger resource than originally thought when we kicked this off. And that is sort of where we see the future.
So a lot of effort is put into speeding up the exploration for Golden Plateau and bring that into the mine plants as quickly as we can because that will also then result in better grades going to the Cracow process plant.
At a corporate level and projects. So Stockman, as I said earlier, we have appointed a new general manager, [ Shall Rosseau ], who is the new General Manager looking after Stockman.
The definitive feasibility study, which was the study, which Round Oak started before the acquisition. That's on track for completion by the end of FY '23. We are doing some modifications to it. So there's more work being done on flotation designs. We're doing more metallurgical test work for improvements in the flotation circuit. There's new technology on the market or fine grinding. There's technologies in terms of flotation recoveries like the Jameson cells. So we're doing a lot more work around that because it's important that we make sure that the best technologies gets used for this project going forward.
We're also doing some cost estimates on the TSF. And obviously, social impact, study assessments being completed. So as part of this project, and once again, we should remember that the mining lease is in place, the use of the Tailings Dam is in place, the -- these are all the other approvals which need to be done, which is nothing different to any other mine you're going to start anywhere nearly in the world. But the key approvals in the lease and the Tailings Dam is in place, and that gives us a lot of comfort that this will go ahead.
At a corporate level, as I said earlier, cash and equivalents sitting at $54.8 million has decreased, but most of that is due to the additional $1 million payment to Soul Patt. And within this working capital adjustment is we have paid bills, which should have been before the end of June, which we still need to recover as part of the working capital adjustment, and that is a significant number, which we would hope to finish off in the next month.
A key takeaway. We remain debt-free after the acquisition. On the hedging side, coal is currently in the money at above AUD 2,600 an ounce. Even zinc, hedging of 1,000, 500,000 over the next 2 quarters are still significant money at $3,268, and I think the current spot price is USD $2,850 -- a tonne. So the hedges still in the money, and we are looking forward to using these in the next 3 quarters, but we only hedge up until the end of the June quarter.
That summarized the quarterly report and the results for the order. Happy to take questions, if anyone wants to put questions to us.
[Operator Instructions] Today, we'll begin the Q&A session with 2 written questions submitted before the call by [ Tish Sada ].
So Andre, the first question. "Within the last 1.5 years, Aeris raised almost $175 million from retail and institutional investors and gave 30% ownership to Washington H. Soul Pattison to acquire Round Oak. Do you still see any capital raise happening in the next 12 months?"
Look, as we said when we did the acquisition of Round Oak, the new portfolio of multiple ore mines will set us up in terms of how do we want to grow this business. From a cash balance of $52 million plus an outstanding which will significantly increase that number, we are well funded for our growth projects, which we're working on right now, and we don't see at this stage, at least, that there will be any more capital raise as we're going forward, at least in the short term to medium term.
Thanks, Andre. We have a second follow-up question. "Share price has been falling since July last year. Last year, a capital raise of $50 million was done at $0.175, which is $1.22 in today's post-consolidation price. When do you think things will turn around for Aeris?"
Look, this market is hard to say. I mean if you look at, we had a Board meeting this week, and you look at your peer groups, everyone is down between 50% and 60% just on value and share price.
We understand as Aeris. We need to deliver on what we said. We need to deliver, at least, a few good quarters, too, in terms of production and costs and keep the focus on growth and keep the focus on exploration, which will naturally give us the best position for an upside. Right now, the market is so finicky, you get up in the morning, you look at what happened overnight and you know what your share price is going to do. So it is a bit more tricky, but we know what we need to do to get the best potential for us to get an uplift, if that makes sense.
Thanks, Andre. We'll move on to our next written question. "So we have great work to date, Andre and team. I'm curious why copper hedging wasn't undertaken at the time of the Roundup acquisition."
Well, anonymous. Thank you very much for your comment on the work we've done. On the copper side, we always had a view that there's more upside to downside on copper. And even in today's market, we still believe there's upside or downside to the copper price. At the time of the acquisition, copper was -- it's always one of the things we're looking at. But we also want to make sure that we get the right balance in terms of hedging. And by the time we were trying to think about hedging, the copper price significantly dropped, and we do believe there's more upside and downside. And that's the reason why we haven't done anything because if we look at the current Aussie dollar copper price, it's still $12,000 a tonne, which is a pretty good price. If you think 18 months or 2 years ago, I think it was $6,500 a tonne. So we do believe that.
And in terms of this whole drive for renewables and electric vehicles and all of those, those metrics still in our view, at least, show that there's more upside.
Thanks, Andre. We'll move over to some verbal questions. We'll circle back to written questions shortly. So in terms of table questions, David Coates.
Do you hear me?
Yes.
Yes. Great. Thanks for the presentation on the call this morning. Just a couple of quick questions. I guess one of the things that comes with diversification is balancing out of performance and Jay has done the job that seems this quarter. How sustainable are those productivity, those mining products to be -- that have helped out? Do you -- what sort of production line, should we see that, expect those production rates to continue through the year? Or is that sort of a bit of an [indiscernible] elevation that will revert back to sort of guidance-type levels as FY '23 continues?
The productivity numbers and what we've seen was a great job by the guys and there was the double stope, which helped out. In terms of looking forward, we're still maintaining Jaguar at the guidance levels, although they had a great start. And we have for -- especially with having 50-plus thousand tonnes on a wrong stockpile means you've got really good capacity to push the plant hard to recover those metals.
Okay. And at Tritton, you mentioned that Budgerygar progression. I think said stoping -- sorry, this quarter or next quarter? And then how's Budgerygar's progress towards production progressing in general?
So Budgerygar has -- accessing the ore body has done we've gone really well, getting tonnes out of it is going well. We do have a current project, which we're working on, on ventilation. We need to get a ventilation shaft in -- we, unfortunately, had a drill rod hanging up, a raise bore hang up or got stuck, which we had to get loose and restart the hole. So that is underway to get that in place. So we need that ventilation to really push Budgerygar to full production, and that should be in the next couple of months.
Okay. So it sounds like that raise bore was pretty key or one of the reasons [ it paved ] a way. And just quickly on the balance sheet. Any indication on the scale of the working capital adjustment we should maybe expect soon? Do you think that will be adjusted through this current quarter? Or is that sort of take one of the...
Look, it should be currently, we're in final discussions and it should be within this quarter. Look, I shouldn't give you a number, but it is a significant number in terms of what we're expecting to get.
We have another verbal question, Andre, from Paul Kaner.
Just at Tritton firstly, you sort of mentioned that the Paste fill line blockage impacted production at the treated mine specifically. With Avoca and Budgerygar coming online and combining with the existing Murrawombie, could you maybe comment on what percentage of feed is likely to come from the Tritton mine moving towards the back end of this financial year?
Look, at Tritton at depth, Paul, I'm talking sort of ballpark numbers, I think at depth, we will be about 300,000 to 400,000 tonnes of the total 1.6, which roughly come from Tritton Deeps that is where Budgerygar, Murrawombie and Avoca Tank.
No, that's great. And then just sort of moving to Murrawombie specifically, appears like stopes are breaking back to that graphitic contact. I mean how do you actually go about preventing this moving forward?
That's a bit of a technical question. I know the guys are working on the mine designs to see how they can minimize it and the type of exposures we're using. But there's been -- control has been put in place from a blasting and control point of view to improve those over breaks.
Yes. And are you seeing that sort of less dilution now in the current quarter with those factors you've implemented?
Yes. Yes, we are seeing better growth coming through the plant.
Great. And then just finally, just moving to Jaguar. You mentioned there's no growth capital spent this quarter. You've budgeted sort of $6 million to $8 million for the vent and pumping to come through. When do we sort of expect that to come in? Is that the third and fourth quarter?
It would be third and fourth quarter with a little bit in this quarter, but it will -- the money will start to flow, but the bulk of the spend will be in the second half.
Thank you, Paul. Andre, back to written questions. We have a question here from [ Nishal Jenne ], who has asked, are you able to give some information on the ANZ facility? And is the current cash balance sufficient to cover Avoca Tank and other's CapEx?
So the ANZ facility is just a working cap facility of $20 million, which can be drawn and need to be repaid within a short space of time. So it's purely a working facility. The other facility we have at ANZ, is a bonding facility, and that's just the bonds where the guarantee of the environmental bonds.
In terms of the cash balance, official covered Avoca Tank and other CapEx. As I said earlier, currently with the current balance available within the business and where we are with specific Avoca Tank within the next 6 months will be in production at Avoca Tank. And then it is about just the exploration for the next 6 months. There's other capital projects, but we believe we sufficiently funded to implement all the capital projects we're planning.
Great. Thank you, Andre. We have another question through from [ Sam Sabet Sukasumi ], who has asked, "With regards to hedging, you only mentioned the copper in Australian dollars. Do you have a separate currency risk management policy, given the current AUD/USD level plus your positive outlook for base metals, especially for copper? Do you separate your hedging into currency and underlying metals?
Interesting question in this market. Look, historically, we only hedged Australian dollar prices. But our internal policy are being looked at in terms of hedging for the Aussie/U.S. dollar level currencies. Currently, we don't have anything in place, but it's surely something which we are looking for -- looking at.
For the future, we might do it, might not, but it is something which we need to consider, especially if you think there's upside on the U.S. dollar price and the Aussie dollar sitting at $0.64 might make sense to do something, but we are currently reviewing our options, and we'll keep the market up today.
2 more questions. "Are there any plans to upgrade the Tritton plant, noting the age of the plant mill and higher mining grades forecasted?"
No. It's not necessary to upgrade the plant. Over the last 5 years, we have basically replaced a crusher. We have spent quite a bit of money on the mills, and the mills just need to be normal maintenance done. We have replaced the flotation cells at Tritton. So in terms of big capital spend other than normal just maintenance, we don't see any need to upgrade the plant, also no need to upgrade the tonnes throughput because the current plant capacity can do around 1.8 million tonnes as a throughput.
Next question. And I'm assuming this person is referring to Robert Millner. So with Robert Millner from Sol Patt's joining the Board is his involvement with AIS going forward?
Look, Robert Millner joined us because they got a 30% shareholding on the board. He is a non Exec Director like all other directors, he comes with a wealth of experience in business as everyone know. Well-known in the industry and just being in that business acumen and history within adds a huge amount of value to the Board.
Thanks, Andre. That looks like it might be it for questions. We might just give it another 30 seconds, in case there are any final questions. That looks like it might be it, Andre.
Thank you, Mary, and thanks, everyone, for joining the call.
Thank you.