Aeris Resources Ltd
ASX:AIS
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Aeris Resources Ltd
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Thank you for joining the Aeris Resources December quarter results presentation. In a few moments, Aeris Resources, Executive Chairman, Andre Labuschagne, will present the results for the December quarter. At the end of the presentation, Andre will take questions during the 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 Aeris December quarterly activities presentation. These are just the disclaimers, but I would like to jump into the highlights for FY '23. For this quarter, the group copper equivalent production was 13,100 tonnes, slightly lower than the previous quarter, but we have seen good improvements at both Tritton and Cracow, and that has been offset by lower production from Jaguar and Mt Colin. But on a year-to-date basis, Jaguar still weigh in front of the internal forecast. We'll talk a little bit more detail on each one of those. And we are very proud to say all the mines have been within their costs as an internal plan, at least on the operating cost side. So a lot of focus has gone into cost control, and we are seeing some of those results as we move forward.
We kept spending money on capital. We kept -- we've invested another nearly $37 million on capital projects, including exploration. And that's all in -- and we'll talk about mainly at Tritton where we are really focusing on developing Avoca Tank and getting Budgerygar production. The resource upgrades we have some really good success at most of the operations at Cracow Golden Plateau seems to be getting bigger and better. The Turbo deposit at Jaguar, the more holes we drill the more promising it looks. And then we got some very good high-grade copper intersections from drilling at Avoca Tank, which is now showing that, that ore body is what we expected, but also potential to extend significantly further.
And then as we talked before, the Kurrajong deposit, we've done some more drilling. We got some really good results, and that would be one of the future projects we will embark on the life of the business.
On the cash receivables, we closed the quarter with $76 million, a $22 million increase on the previous quarter. We still got no debt. We talked about our focus on projects and specifically the Stockman project and bringing that in production, and we've employed Charl Rossouw as a General Manager project, he would oversee the Stockman project development and actually he is a builder, he is a construction guy, but also be involved with the other major projects in the business. And as we've stated in the quarterly, although we got a few big month ahead of us on production-wise, we still maintain our production guidance for all operations.
On the ESG side, a good safety performance by operations in the last quarter or the last 4 months, lost time injuries. A lot of focus is going into the consolidated group after the acquisition of Round Oak to standardize systems and processes, standardize definitions and we've seen some of that success. On the sustainability side, we are planning to put another sustainability report out this year, a lot of work to go into data on baseline setting, but there's a lot of internal discussions on the sustainability strategy going forward and set ourselves some targets as we move forward in the business. As we've discussed before, we have decided on those four focus areas, and that's where the main focus will be on the sustainability side of the business. We had no environmental incidents for the quarter, so nothing to report on that.
Looking at the operations, Tritton at 4,100 tonnes of copper and improvement over the last quarter. although the interest was still below internal plans, that's an unfortunate situation where in the beginning of the first 2 weeks of December, they could get no cement and that meant we couldn't do any stoping at the Tritton mine itself where we use paste fill as a support. That has now been resolved, and the whole issue around delivery has been resolved, and we are now back on track and we'll catch up on that paste fill.
On the Budgerygar deposit, as we said before, development has hit the orebody quite a few months ago. We're getting small volumes of tonnes out of it. One of the key capital projects was to get a new ventilation -- is to get a new ventilation shaft in, unfortunately, the raisebore got stuck 30 meters from the bottom right on surface. We had to drill that out. We managed to get the raisebore out. But what we found is the condition of the first 30 meters or so on top of that raisebore is very bad in geotechnically and we're now putting piling in place.
We basically drill holes, put concrete poles in place and then to the raisebore in the middle. That should be finished by the end of the quarter, and we will see much higher production levels coming out of Budgerygar at around 1.8% copper, which is a significant improvement in grade as we go forward.
We said previously, we're investing in some technology. The Jameson cell, which we're busy installing at the Tritton mine, that's underway, and that will improve the concentrate grades and that payback is less than 12 months. So that is underway. And then on the capital side, we keep on putting money in the mine development was in Avoca Tank. And we've seen -- we've hit the ore body in December. That was slightly ahead of plan. The plan now is to move as fast as we can, getting the development in place and start to see we get some actual stoping ore out in the fourth quarter.
We already had some development ore into the mine. And some of those grades has been really spectacular. As I said earlier, we've drilled the Kurrajong deposit. We will put a mineral resource out on that in quarter 3. Some very interesting results. I'll show you a slide coming up. And then we discussed this before in the second -- first and second quarter, we did a airborne EM in the northern part of the tenement package. Those results has returned. We've got 14 new priority targets. And just to take a step back, that's exactly the way how we discovered Constellation.
So we did the same -- we found the target. In fact, the first one we really got stuck into drill was Constellation and Constellation is now a 7 million tonne ore body. We've also focused a lot on technology in the business, and we have been awarded funds from the New South Wales government minerals and high-tech minerals activation fund for ore sorting, a lot of opportunity for us is as we move into these smaller deposit like Constellation or a small deposit, but trucking that 47,000, if you can all sort an upgrade that will be a significant saving going forward. So we've got funds to do that. But we also got significant funds to work with the group looking at coarse particle flotation processing. And if that comes, and that works, that can be a game changer for the industry, in fact.
So just touching on Tritton exploration, there you can see the EM results. There you can see where the targets are, some really high priority targets, but a few others. Those will now be proof tested to make sure that there normally is not an infrastructure on ground, and then we'll do some ground-based EMs and start to do some drilling once we've identified the highest priority targets. At Murrawombie, it's just a mine keep on giving. Now 2 years ago, we thought there's only 12 months left. But every time the geologists just do that next level or a bit of deeper drilling this time around, they did a 250-meter hole down plunge, intersected the ore body and put some EM results down and edge that up showing significant potential for further exploration and further extension of the Murrawombie mine. So Murrawombie mine, if that is 250 meters down plunge, there's a significant potential for them to increase production by another 2 or 3 years.
At Kurrajong, you can see some of those good results, 2.7%, 3.43%, still some good results. And some of those is now outside the original boundaries of what we thought to be a resource. So that keeps on extending the size of the Kurrajong deposit as well. Quite a significant result for us is we always knew that Avoca Tank had deposit [indiscernible]. just been the history of this business for the last 10 years. We went into Avoca Tank with 800,000 tonnes sitting in that top end of where you can -- what you can see there. We drilled a hole about 180 meters below the current EM plate as you can see there, intersected massive sulphide to wait for the results. but you can easily correlate that EM plate to further extend down below. And that will be a significant extension of the life of Avoca Tank.
And if it continues at the grade of Avoca Tank current resource grade is 2.5% copper. So significant potential for Avoca Tank as we get into it, and you can see where the decline sit at this stage with the drilling we're doing. We're getting very good results and some of the stopes we're seeing or the decline development we're seeing looks quite spectacular.
Going on to the Jaguar mine. Jaguar was a little disappointing but not unexpected. It was 7,300 tonnes at all-in sustaining costs of $1.65. The reason for not achieving the mining, the ore mine side was an underbreak in one of the stopes, which impacting on production sequencing. So we had to resequence and we had to resequence some lower-grade stopes for the quarter.
Although we didn't mine it, there's about a 40,000 tonne stockpile at the mine because we need to blend the ore as we put it through the mill. So we still achieved the mill throughput in the mine, although at a slightly lower grade. As we said, the cost is well within plan. As we said, for all the mines. We also had -- what we found with this business, there's quite a big working capital movement going through the business, so you don't get monthly concentrate sales, but we had 2 zinc concentrate shipments for the quarter and 2 copper shipments for the quarter, which sort of impacts the next quarter you might not get as many and you see these high working capital movement that's just part of the business going forward.
We just spent $1.2 million on growth. We quite excited about the Bentley resource itself, where we're currently mining. It looks like when you drill, we keep on seeing potential for that to extend. But really, the Turbo deposit does keep on growing. You can see the resource we put out. Most of that is indicated now a significant increase, 23% and 27% between tonnes and metal. What we are seeing, though, some of the latest drilling, as you can see on that image is outside the current resource and has significant intersections we've been waiting for results.
So the geologists and the mining team out at Jaguar is quite excited about the opportunity for this to become bigger and bigger. And as it become bigger, it will get closer to the current working areas, which will help with the access to get into Turbo. One of the things that are on that slide, but one of the things we're really working on is the old Jaguar mine, which was mined before they discovered Bentley. And when they discovered Bentley, they basically pulled out of Jaguar mine and went straight into the Bentley mine.
Looking at the late -- the historical staff information the stopes there ready to be mined. There's broken stocks. We need to pump it up, and we are planning to start that process. It's got good copper grade, lower zinc grades. And in this market, focusing on getting more copper, and we think that there's a lot more to get out of the Jaguar mine. So that's part of the things we're looking at.
So when we bought this asset, we were only focused on the Bentley mine and the Turbo deposit and said, well, we think there's 4 years life. But as we get into it, there's a lot more opportunities like the Jaguar mine and a few other deposits, which we can bring into the plan as we go forward and we see quite a potential to extend this mine life as significantly from where it is today.
In Northwest Queensland, the Mt Colin mine produced 100,000 tonnes of copper. The mined tonnes was impacted basically by a breach which fall between two stopes and loader availability. So they are behind plan at this point in time. But we are -- we have set it up for quarter 3 and quarter 4 production to increase significantly. We got more mining areas available, but we also got another loader into the fleet. And that has been the bottleneck, was the loader to get to clean up the stopes and go again. So that has been brought in, and we're confident that they will catch up in the next 6 months going forward.
We've also changed to put tonnes through -- it's usually the tonnes went through the [indiscernible] plant. We've changed it to go through the Mt Isa copper concentrator. The recoveries wasn't as good as we were hoping, so we have moved back starting to put some tonnes back to [indiscernible]. So we treated 82,000 tonnes, but there's already another 80,000 tonnes sitting on take at the Mt Isa mine and sometimes sitting at [indiscernible] process facility going forward.
The Barbara drill program, which we've been working on, we talked about. That drilling has now -- has been done, finished in December. We're waiting for some of the results, we'll then put a resource around it and then start to do the study to see if there is going to become the next operating mine once we finish Mt Colin.
At the same time, we've put a team together to look at the regional opportunities within the Mt Isa region. We know that there's a lot of opportunities to do this similar model like we're doing at Mt Colin. We've got a small mining team at camp setup and a treatment facility to take the tonnes to treat at a very decent rate for the amount of tonnes we're putting through the plant. And that is the model we want to apply going forward because we think there's a lot of explorers out there who would like to take the opportunity to extract value from the assets.
At Cracow, the team at Cracow is actually doing spectacularly well. The grade of the Cracow mine has dropped over the last 12 months. And they've done a lot of work to understand the grade, and we got the grade now under control. We know what we're mining and the grade 3 considerations are basically on plan. But they've done record tonnes mined, record tonnes milled, so they know we need to push the volume through the plant to keep doing what we're doing. And I must say they're doing exceptionally well on all fronts on both the tonnes milled mined and costs are very well controlled within that business.
We also keep spending growth capital. Golden Plateau is one of the future operations, but we're also doing some work on the southern side of the tenement package for Cracow as we move forward. So you would have seen we put our announcement in January, the Golden Plateau resource sitting at 620,000 tonnes or 62,000 ounces, and that's only the red blocks on that emit on the right-hand side. All those yellow structures, which we're showing there still need to be tested, we had intersected. So we also added an exploration target of 60,000 to 130,000 ounces as still to be drilled and defined in this project. So this can become 150-plus, thousand ounce sort of copper deposit which will then be fast tracked to get into production at Cracow to add to the current mine but also looking at opportunities going forward.
The exploration, the greenfields exploration in the southern side is continuing. We're doing some surveys, they guys are doing some work, and we're planning to put some targets in place to start to drill within that southern region. That southern region is probably still one of our best prospective areas within the Cracow or you can say in the business to find another big ore body.
Just on corporate, on the project. So Stockman, as I said earlier, we now got Charl in place, and he's going to take -- he is taking this on. We're still planning to finish off the definitive study by the end of FY '22. So by June, we are busy with looking at different logistical options to get the concentrate ore. Early works is being defined or refined, and we now have got a much better understanding of the registration clearance offsets, which need to be in place and there is a plan to move that forward.
So quite a few approvals has been received in the quarter. The team is well advanced and the project once the study is done, we'll move it forward. At a corporate level, as I said earlier, the cash and receivables has gone up. And then we've seen the increase. And although sometimes hedges are good or bad, but there's still a little bit of hedge left for the next 2 quarters for gold and zinc. But at this stage, there's no other hedging in place for the business going forward beyond June.
Thank you, everyone. That's the presentation, and I'm very happy to take questions.
[Operator Instructions] It looks like we have a verbal question from William.
Just a couple of quick questions on my behalf. Maybe firstly, just touching on capital spend. Just looking at the year-to-date growth in sustaining spends sitting lower than what guidance would imply just for the first half. Can you provide some color on what that might be a function of and whether any capital decisions are being made that might have an impact on future sequencing of production sources outside [indiscernible] of FY '23?
Sure. So yes, we are below the current plan, but out significantly. There's some capital spend coming over the next 6 months. One of the decisions we have moved into 2024 was the regulation upgrade or the cost of that would have come through in this next 6 months. That's about a $6 million for the next 6 months for Jaguar. The prework and the technical work around that has taken longer, and we decided to move that across into FY '24. And that's also one of the reasons why we are looking at the Jaguar deposit to bring that online because that will bring tonnes forward again if there's any delay in getting to turbo because of the ventilation. So there's a contingency in place of that.
On the other operations, as always, we look at optimizing capital and we don't spend money if it's not necessary. So on our quarterly forecast, we reassess all the capital spend and sometimes you're just not necessarily to spend it. So there's a little bit of that, but nothing has been done, which will impact production in the mid -- short to medium term.
Wonderful. So that's really helpful. Maybe just quickly touching on Tritton. Just regarding the ventilation works going on at Budgerygar, how should we be thinking about the production and grade profile over the next couple of quarters from Budgerygar? And I guess, similarly to Avoca Tank given the piling works that will be going on.
So currently, the piling is underway at Budgerygar. So the current plan is within the next, I think, 20 days of piling will be done, then we can restart the raisebore process or start the raisebore. The plan is that for that to be finished off in -- by the end of this first quarter. And then we'll see a significant increase in production from Budgerygar at a grade of around 1.8% is what we'll see from Budgerygar.
We are going to do exactly the same piling at Avoca Tank. We've seen the impact of this filed or the drill, which got stuck, and that's delayed the Budgerygar production by at least 4, 5 months to full production. We're still getting a small amount of stoping done based on the ventilation available but not to the levels we want to be. So we're going to do exactly the same. The piling contract is going to move direct from Budgerygar to Avoca Tank. And then in the fourth quarter, we'll see production coming out of Avoca Tank grades -- resource grade is 2.5%. We're expecting 2-plus percent coming out of Avoca Tank in the fourth quarter.
Wonderful. And if I might, just one last question. Just regarding Jaguar, I guess there was the disclosure of Bentley development rates being impacted by Bent's deep watering and labor. Are there any implications into the second half for the production and grade profile for Jag as a result of those lower development rates?
Look, we have called up and opened up more resources or more stoping fronts now at Jag. Some of them is going to be a bit lower grade. So we're seeing that they will achieve the guidance, but they weren't too significantly better than guidance. We put -- what we ended up with when we bought it, the water pumping system had to be improved. So we're putting $1 million into improving the pumping for a start. And we got our ventilation engineer, which we had at Tritton, which made a massive difference. 12 months ago, we said, look, we weren't be able to get much deeper at Tritton. We've done some work, and now we think we can put another 6 levels into Tritton based on the ventilation just the quality of the work is done. So he's helping us out now at Jag as well, I'm not saying we can't do it. But ventilation is an issue. That's why that ventilation shaft is quite important to put into Jaguar -- into Bentley.
Andre, we have a question submitted through our Q&A by [indiscernible] is asking Andre, you mentioned no further hedging in place past June. Does that mean the Board has decided to leave currency on an unhedged basis going forward? You mentioned in the last meeting that you would be looking at your currency risk management policy. Can you share what that is?
Look, there's always -- when you said with the price -- copper price sitting at where it sits today, it is a really good Australian dollar copper prices. And you really very tempted to look at what you do. At this stage, we haven't done anything. But at some point, it might make sense. We're not saying we won't do it. I think it's more managing the risk of the business. We are spending capital. So if it makes sense, we will still look at it. But at this stage, there's nothing being discussed or implemented in the business.
[Operator Instructions].
All right, Mary. I think have you got any more questions?
Andre, it doesn't appear we have any further questions for this call. That brings us to the end of our Q&A. Thank you, everyone, for joining the Aeris Resources December quarter results presentation. We will see you next time. [Operator Instructions] Next question from Gregory.
No, I had trouble getting that raise hand function. I'm interested with the Round Oak acquisition last year, which effectively happened at the end of the financial year, we nominated the working capital adjustment of $28.7 million. And I think, as I noticed in the quarterly activities report, there's no add-on value of the cash flow that the Round Oak mine has produced in the current quarterly activities report. And I was wondering because in the Soul Pattison, it used to produce around about $80.25 million a quarter. And also, is that included in your cash flow? Is that going to be nominated at a later date?
No. Look, the current cash show what we're showing there is cash in the bank, there's $76 million, including receivables. That includes the $28 million which we got from Washington Soul Pattison. Look, the time where they made $80 million a quarter was when zinc price was through the roof and the Mt Colin mine was generating good money. Zinc prices come back. We are reinvesting a lot more than what they would have done. They were in the process of -- their ownership of that asset. We're investing quite a bit more to get the Jaguar mine settle down and for the long term. So the numbers you're seeing includes that and includes the cash from Jaguar and the Mt Colin mine, both generating operating cash.
All right. I was hoping -- talking to more cash in the current quarter activities report, that's all?
Yes. No, I understand. But we are putting a lot of money back into capital for Avoca Tank and Jaguar and Cracow. So we are investing to create the future at this point in time.
The other one is a different question because it's relatively a small number of shareholders in the company, like 670,000 shares in issue. Is it likely the company could consider paying a dividend in August?
No, we won't be paying dividends, Gregory, not at this point in time at least. While we got the investments we need to do, I think the prudent value is to put the investments back and shareholders will get a significant value through that if we can grow this Tritton to a 8- to 10-year mine life and even Jaguar significantly increased. So for us, it's a capital period, which I think is better for us to put the money back in the business.
Andre, we have one more verbal question from Owen. [Operator Instructions]
I actually don't have a question. Andre, [indiscernible] Constellation very silent in your report on Constellation. Is that sort of being relegated down the food chain relative to Budgerygar Avoca Tank?
Look, absolutely not relegated. I think what we are doing with Constellation, we've got enough drilling to get the resource. We've got enough to put a mine plan on strategic plan or business plan around it. So the team is putting a feasibility study around it before we start drilling it again. There's enough information there to know there's 7 million tonnes sitting there. We're looking at open pit mine and underground or just underground. So we're assessing all the different options, the capital cost to bring it into production. So all of that is being -- are being assessed the approval process is to get mining licenses and environmental approvals is already underway. So it's just -- we're not -- the reason why we saw in these, we're not doing any drilling currently. It's all about getting the studies done. And once that's done, we'll do a lot more greater on drilling and setting it up.
Wonderful. [Operator Instructions]. Great. That brings us to the end of our Q&A. Thank you for joining the Aeris Resources December quarter results presentation. We'll see you next time.
Thank you, everyone. Appreciate your time.