Metals Acquisition Limited Announces March 2024 Quarterly Activities Report
Strong Progress Continues on the Back of ASX Listing With Significant
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Figure 1 - CSA Copper Mine Recordable Injuries by Quarter (Graphic: Business Wire)
Metals Acquisition Limited ARBN 671 963 198 (NYSE: MTAL; ASX: MAC), a private limited company incorporated under the laws of Jersey, Channel Islands (“MAC” or the “Company”) is pleased to release its
HIGHLIGHTS
TRIFR of 11.9 – Q1 2024 increase albeit below industry average – implementing strategies to remediate.
67% increase in mine life to 11 years with new Resource and Reserve (“R+R1”) issued
- 64% increase in contained Copper (“Cu”) after replacement of depletion in Ore Reserves at 3.3% Cu average grade.
- 42% increase in contained Cu after replacement of depletion in Mineral Resources at 4.9% Cu average grade.
- 2023 Ore Reserve only extends 95m vertically below the current decline position.
- All deposits2, are open in at least one direction and drilling is continuing to further increase the R+R.
Three-year copper production guidance issued increasing by ~25%3 over the period
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Based on the updated R+R, Cu production guidance is provided for 3 years with the following ranges:
- 2024: 38,000 to 43,000;
- 2025: 43,000 to 48,000; and
- 2026: 48,000 to 53,000 Cu tonnes.
ASX IPO raise with increased liquidity and balance sheet strength
-
Raised
US$214 million (A$325 million ) (before costs) atA$17.00 per CDI (the top of the indicative price range)4. -
Repaid
US$127 million of interest-bearing liabilities including principal under the senior syndicated facility, the deferred consideration as well as the final completion adjustment with Glencore during Q1 2024. -
Liquidity of
~US$100 million as at31 March 2024 , expected to increase in the current quarter on the back of strong copper price.
Based on the reserve plan, Cu production should increase sequentially over remainder of 2024
- Q1 2024 production of 8,786 tonnes of Cu is down 11% quarter on quarter and from our planned rate.
- Lower production was driven by power outage and lower grades being mined from the East and West deposits.
- Mining shifted at the latter part of the quarter to higher grade areas within the QTSN and QTSC zones and reducing the mining at East and West deposits.
C1 Cash cost5 increased mainly due to power outage and lower grade
-
Q1 2024 C1 costs of
US$2.15 /lb, up ~8% on the prior quarter largely due to lower grade milled in addition to a site power outage which resulted in three days of lost production. - Underground capital development of 467m (down 44% on Q4 2023) due to focus on the new mineral reserve plan, increased rehabilitation metres during the quarter, impacts from increased ground support requirements and underground waste storage.
Drilling and exploration results in the quarter
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MAC has continued drilling since acquiring the
CSA Copper Mine inJune 2023 with a view to expand its high quality resource base to underpin a new reserve estimate and mine plan. -
In March continuing exploration and resource development at the
CSA Copper Mine saw additional drilling at QTS North, QTS Central, the near surface QTS South Upper A, the upper Pb-Zn mineralisation of the Eastern and Western Systems and the Cherry Prospect on CML5. - Drill results were reported including 19.2m @ 10.4% Cu, 16.0m @ 10.4% Cu at QTS North and 3m @ 13.9% Cu QTS South Upper A.6
- Given that all the deposits are open, and a large drill program is underway, we consider it likely that there will be changes over the relevant period as the Company’s overall plan to continue operational and production improvement continues to develop.
- To improve exploration targeting underground Downhole Electromagnetic surveys are continuing to be employed by MAC with a permanent geophysical loop installed at QTSC. Drillhole UDD22135 was surveyed, which drilled through QTSC and some 400m east of the deposit, DHEM results are expected in Q2 2024.
-
In March a high-powered
Fixed-Loop Electromagnetic Geophysical Survey using low temperature Superconducting Quantum Interference Device sensors was commenced. The survey, upon completion, covered 26km² of highly prospective ground surrounding theCSA Mine on CML5 and encompassing exploration licence EL5693. This survey is partially complete and preliminary data indicates a number of anomalies have been generated. -
During Q1 2024
US$1.3 million (Q4 2023:US$0.7 million ) was invested in exploration.
Unless stated otherwise all references to dollar or $ are in USD.
Metals Acquisition Limited’s CEO,
“Our operations performed largely as expected during the March quarter with the exception of lower mill grade and a power outage from a large off site storm event as announced in March. The quarter-on-quarter variances we are seeing is also impacted by the lower number of high grade stopes in Q1 relative to other quarters. The higher-grade stopes are a large proportion of our production and the timing of mining these has a significant impact on quarter on quarter production.
We ended the quarter with a large broken ore stockpile of high-grade ore which, combined with two large high grade stopes to be mined in Q2, will underpin a sequentially higher production during Q2. Based on the reserve plan, copper production should continue to increase sequentially over the remaining quarters of the year.
In this quarter, we successfully listed on the ASX and thank our new shareholders for their support. The listing is a huge milestone for the Company as we continue to expand towards our long-term goal of owning and operating multiple metals and mining assets to become a notable and respected player in the industry.
We have already put the additional liquidity to good use in reducing our overall interest-bearing liabilities by approximately
As part of the ongoing turnaround and optimisation at the
The listing and the resource upgrade vindicate our belief that the
Importantly, despite the near doubling of the Ore Reserves and a 67% increase in the mine life to 11 years, we still have 4.7Mt @ 4.9% Cu (230Kt Cu) in the Measured and Indicated Category and 3.3Mt @ 5.5% Cu (180Kt Cu) in the Inferred Category that are not included in the Ore Reserves and work is underway to convert these to our Ore Reserve estimates in the future.
We also announced exploration drilling results in and around the mine confirm the high-grade nature of the operation with most deposits open at depth and in some cases up dip as well (QTSC). The results from the QTSS Upper A deposit are highly encouraging so close to surface and we are excited to see what additional value we can create through the drill bit.
Following the new Reserves and Resources Statement we also issued a three-year copper production guidance which shows copper production increasing by around 25% over the three-year period, if the mid-point outcomes for each year is assumed, to over 50,000 tonnes of copper in 2026.
With a disciplined M&A strategy, we will continue to evaluate prospects for growth to enhance shareholder value.
Finally, we welcomed our new CFO,
ESG
Safety
The TRIFR for the
Figure 1 - CSA Copper Mine Recordable Injuries by Quarter
Regulatory
The March quarter was relatively quiet on regulatory matters and very much a business-as-usual quarter.
The site has reviewed and updated the Environmental Management System to be consistent with ISO14001, updated the Rehabilitation Management Plan, the Site Water Management Plan as well as a review and update of the Pollution Incident Response Management Plan.
The STSF Stage 9 buttress bulk earthworks are largely complete, with the surface stabilisation works underway. Geofabric has been placed over the buttresses and the 80,000m3 of screened waste rock from North TSF placed as capping to prevent erosion.
The project is tracking ahead of schedule and under budget. Current works to complete for
Figure 2 - CSA Copper Mine Covering Geofabric on Stage 9 Buttress
Planning work is underway for the Stage 10 lift, with the tender documents nearing completion.
Operations
Table 1 - Quarterly Operational Performance of the
|
Q2 2023 |
Q3 2023 |
Q4 2023 |
Q1 2024 |
Ore Tonnes Milled |
254,381 |
300,328 |
266,105 |
260,297 |
Grade Milled |
3.1% |
3.4% |
3.8% |
3.5% |
Copper Recovery (%) |
98.1% |
97.3% |
97.6% |
97.6% |
Copper Produced (t) |
7,779 |
9,845 |
9,832 |
8,786 |
Silver Produced (oz) |
99,117 |
115,081 |
114,969 |
102,182 |
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Processing Cost/t Milled (US$) |
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G+A Cost/t Milled (US$) |
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Total Operating Cost/t (US$) |
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C1 (US$/lb) |
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Development Cost/metre (US$) |
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Total Capital Expenditure (US$m) |
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Tonnes Milled/employee |
162 |
201 |
189 |
184 |
The March quarter was affected by the sitewide power outage occurring on
In addition, copper production was also affected by the lower mill grade, of 3.5%, when comparing against the prior quarter production. This resulted in the lower copper production tonnes as seen in Figure 3. Copper grades were negatively impacted by a higher proportion of ore mined from the East and West deposits compared to the prior two quarters. Grades in the QTSN and QTSC deposits are significantly higher, and based on the new reserve mine plan the mining from East and West deposits is being reduced and pushed towards the latter years.
Mining has been redirected to the higher grade QTSN and QTSC deposits to maximise production in the near term whilst the ventilation constraints at the mine are removed.
Figure 3 - CSA Copper Mine Quarterly Copper Production
The average received copper price before hedge settlements was consistent when comparing to the prior period with March quarter at
In addition, the Australian dollar exchange rate was broadly flat compared to the prior quarter.
As seen in Figure 4, C1 cash costs increased quarter on quarter from
Figure 4 -
MAC management will continue to implement additional productivity measures to further reduce C1 costs.
Figure 5 provides an illustration of tonnes milled per employee with the slight decrease during the March quarter again driven by the decrease in tonnes milled due to the power outage affecting ore availability.
Figure 5 - CSA Copper Mine Tonnes Milled per Employee
Apart from copper production, the largest driver of C1 costs is the mining unit rate as mining accounts for approximately 60% of total site operating costs.
Figure 6 - CSA Copper Mine Mining Unit Rate
Mining unit rates increased from the prior quarter partly a result of the lower capital development performed during the quarter, in addition to the impacts of lower volumes a result of the power outage and increase in costs.
The lower capital development performed resulted in a lower portion of costs able to be capitalised in the quarter, and hence contributed to the increase in the mining costs.
Figure 7 illustrates the cost per metre of development over the course of the year, with a 60% increase in the unit rate during the March quarter when compared to the prior quarter.
This is largely driven by the decrease in capital development metres from 841m in December quarter to 467m during the March quarter, with resources allocated to rehabilitation works instead of development.
Figure 7 - CSA Copper Mine Mining Development Costs
Figures 8 and 9 shows the unit rates for processing and site G&A for the year.
Processing costs per tonnes milled increased in the March quarter given the decrease in volume.
In addition, G&A unit rates also increased during the current quarter.
Figure 8 - CSA Copper Mine Processing Unit Rate
Figure 9 - CSA Copper Mine Site G+A Unit Rate
As seen in Figure 10, capital spend (including capitalized development) has increased over the quarter, largely driven by work on the TSF embankment. This is in line with previous indications to the market.
Capital development metres also decreased in the March quarter by 44%, resulting in a higher unit cost per metre. Increased volumes in capital development will be required in the future in order to keep the unit costs down.
Figure 10 - CSA Copper Mine Site Capital Expenditure
Mine Plan, Resource and Reserve
Subsequent to quarter-end on
Highlights from the R+R include:
- 67% increase in mine life to 11-years (end of 2034) based on Ore Reserves only, compared to the 6-year mine life in the 2022 Resources and Reserves Statement
-
64% increase in contained copper (“Cu”) after replacement of depletion to 0.5Mt in Ore Reserves (Refer Table 3 included in the R+R ASX Announcement on
23 April 2024 for breakdown) at an average grade of 3.3% Cu -
42% increase in total contained Cu after replacement of depletion to 1Mt in total Mineral Resources (Refer Table 2 included in the R+R ASX Announcement on
23 April 2024 for breakdown) at an average grade of 4.9% Cu - 83% increase in contained Cu after replacement of depletion to 0.8Mt in the Measured and Indicated Resources categories
-
Above increases have come after only 10 months of ownership and based on data from 2.5 months post-closing of the acquisition with the effective date for the R+R being
31 August 2023 - 2023 Ore Reserve only extends 95m vertically below the current decline position
- All deposits (other than QTSSU-A (feasibility study), are open in at least one direction and drilling is continuing to further increase the R+R, subject to exploration success and economic factors
Work is continuing on updating the mine plans as new information is received and importantly following on from the completion of MAC’s dual listing on the ASX and public offer that raised
Finance and Corporate
ASX IPO
During January the Company lodged a prospectus with the
MAC raised
Based on the final price of
MAC was admitted to the ASX on
Resignation of Non-Executive Director
Subsequent to quarter end on
Three Year Production Guidance
Based on the updated R+R, the Company is providing the following production guidance for the next 3 years:
Table 2 - CSA Copper Mine Production Guidance
2024 |
2025 |
2026 |
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Cu Production (tonnes) |
38,000 |
43,000 |
43,000 |
48,000 |
48,000 |
53,000 |
This 3-year production guidance is based primarily on Ore Reserves but also on measured and indicated Mineral Resources (as at
Hedging
During the quarter, the Company delivered 3,105 tonnes of copper into the hedge book at an average price of
Table 3 – Hedge position
Year |
Tonnes |
Price US$/lb |
2024 |
9,315 |
|
2025 |
12,420 |
|
2026 |
5,175 |
|
Liquidity
During the quarter the Company paid a further
On
As of
Conference Call
The Company will host a conference call and webcast to discuss the Company’s first quarter 2024 results on
Details for the conference call and webcast are included below.
Webcast
Participants can access the webcast at the following link https://events.q4inc.com/attendee/225480402.
Conference Call
Participants can dial into the live call by dialling 800-274-8461 or +1-203-518-9783 and providing the conference ID ‘METALS’.
Replay
The conference call will be available for playback until
This report is authorised for release by the Board of Directors.
About
Estimates of Mineral Resources and Ore Reserves and Production Target
This release contains estimates of Ore Reserves and Mineral Resources as well as a Production Target. The Ore Reserves, Mineral Resources and Production Target are reported in MAC’s ASX Announcement dated
Forward Looking Statements
This release includes “forward-looking statements.” The forward-looking information is based on the Company’s expectations, estimates, projections and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management of the Company believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Assumptions have been made by the Company regarding, among other things: the price of copper, continuing commercial production at the
MAC’s actual results may differ from expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward- looking statements. These forward-looking statements include, without limitation, MAC’s expectations with respect to future performance of the
More information on potential factors that could affect MAC’s or CSA Copper Mine’s financial results is included from time to time in MAC’s public reports filed with the
Non-IFRS financial information
MAC’s results are reported under International Financial Reporting Standards (IFRS), noting the results in this report have not been audited or reviewed. This release may also include certain non-IFRS measures including C1 costs. These C1 cost measures are used internally by management to assess the performance of our business, make decisions on the allocation of our resources and assess operational management. Non-IFRS measures have not been subject to audit or review and should not be considered as an indication of or alternative to an IFRS measure of financial performance.
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1 Refer to Reserves and Resource Statement issued subsequent to quarter end on
2 Other than QTSSU-A which is subject to a feasibility study. Also subject to exploration success and economic factors.
3 Assuming the mid-point outcome for each year.
4 Top of the guidance range was
5 MAC’s reports under International Financial Reporting Standards (IFRS), noting the results in this report have not been audited or reviewed. This release also includes certain non-IFRS measures including C1 costs. These measures are used internally by management to assess the performance of our business, make decisions on the allocation of our resources and assess operational management. Non-IFRS measures have not been subject to audit or review and should not be considered as an indication of or alternative to an IFRS measure of financial performance.
6 Refer to ASX announcement made on
7 Includes
View source version on businesswire.com: https://www.businesswire.com/news/home/20240429865979/en/
Chief Executive Officer
investors@metalsacqcorp.com
Chief Financial Officer
Source: