Metals Acquisition Corp (NYSE:MTAL) Q1 2025 Earnings Call Transcript

Metals Acquisition Corp (NYSE:MTAL) Q1 2025 Earnings Call Transcript April 30, 2025

Operator: Thank you for standing by, and welcome to the MAC Copper Limited Q1 Results Call and Webcast. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Mr. Mick McMullen, CEO. Please go ahead.

Mick McMullen: Thank you very much, and thanks everyone for joining us on what is a busy reporting schedule given the shortened holiday period in Australia. I’m Mick McMullen, I’m the CEO. I’ll run through the presentation. I’m joined by our CFO, Morne Engelbrecht, who will talk to some of the slides on the financials. This deck has been released on the ASX along with our quarterly report this morning, and as usual, we’ve got the disclaimers and everything at the front that you can all read at your leisure. So, look, MAC Copper at a glance, we get an enterprise value of around about $940 million. We’re sort of planning to get over 50,000 tonnes of copper in the not-too-distant future on an annual basis, very strong balance sheet.

Obviously, we’ve announced the refinancing of the debt that we did during the quarter. Morne will run through that. And just so everyone is clear, we took – to make sure the market understands how many shares we’re going to issue, 82.5 million shares, and issue about 3.18 million warrants at a strike of $12.50 a share. The gearing under 20%, which is within our range of where we sort of target. And we’ve got two key growth projects underway, the ventilation work, which is – we’ll talk about at later slides. And then the really exciting news actually is the Merrin Mine that we started rolling out in the marketplace during the last quarter, and we’ve made some really good progress on that. And so we’ve got quite a few slides on that as we are quite excited about that thing.

So, going forward, first quarter is always our softest quarter. If you recall, the fourth quarter last year was a very strong quarter. And then obviously, we then have to come through the sort of the January period where we pushed very hard in the back six weeks of last year. And we typically see a little bit of seasonal variation in weather as well, with sort of summer storms. It really is a function of as sort of where we are in the stope sequence, and we can see the stope sequence we have ahead of us right now we’ve got a lot of large tonnage, very high-grade stopes that have been coming online over the last few weeks. And therefore, we’re not changing our guidance based on what we can see coming out of the ground ahead of us. C1 was still pretty decent at $1.91 a pound, total cash cost of about $2.47 a pound and a realized price of $4.04 a pound for the quarter.

And if you read that little footnote there, we’ve had some questions from people about the impact of the hedges on received price and so we are now showing that received price net of hedges. I’ll let Morne really go through all the balance sheet and the financials, and liquidity. But for this year, 43,000 tonne to 48,000 tonne of copper is where the guidance sits. Copper grade somewhere between 3.8% and 4%, and obviously, we had a very strong grade profile during Q1 and growth CapEx of somewhere in the order of $20 million, $25 million and sustaining of $40 million to $50 million. And overall, we have seen some good tailwinds coming in this year from both exchange rate and TCRCs. And actually, for those of you who follow the market, we’ve seen actually spot copper treatment charges at negative $40 a tonne which is sort of should indicate a pretty good annual benchmark settlement for next year, possibly even lower than where we currently sit.

So that’s been quite a good positive thing, which I guess has obviously helped our C1 despite the lower volume during the quarter. Safety, we like to talk about. I would say I’ve said on calls in the past that our TRIFR has been okay, but probably a little sticky, I suppose. But now we’re starting to see the benefit of all the hard work that the team at site have done with the TRIFR starting to trend down quite nicely. And I think by the end of April, we’ve ended up at around a TRIFR of around 7, actually, for the last 12 months. So that’s great. One of our big sustaining capital projects that we’re doing is our Tailings Storage Facility. So the Stage 10 embankment, that’s on track for completion in the fourth quarter of this year. Again, just for the Australians, we’re an annual financial year, so in the December quarter and that will provide us capacity up to about 2030.

And so, we are actually building all of that now. So we’re well on track. We’ve had no reportable environmental incidents during the quarter. So from an ESG point of view, actually, we’ve had a pretty good improvement on where we had been tracking before. Our production, look, obviously, we saw a production trend down. As I said, it was a combination of pushing very hard during the fourth quarter. You can see there the December quarter numbers were very strong, and probably a day and a half of production lost in February due to some summer storms, which again, if you think back to last year, exactly what we had that period. Grade was good. So, head grade is a bit over 4% copper. And we expect to see the Q2 grade to be as strong, if not a bit stronger.

And again, really, the increase in C1 was driven by volume, right? We’ve always sort of said that fixed costs are sort of circa 70% of our volume, but we did have a bit of a win on the TCRCs. And in the word version of the quarterly that we put out, if you look at our production and cost in the month of March. Obviously, as we sort of did a lot of catch-up work in January after the very strong December quarter. If you look at the month of March, we produced just under 4,000 tonne of copper and our C1 was around about $1.45 a pound. So that sort of gives you an indication of where we think the business should be and can be. And again, it’s really making sure that we have as a minimum two or three months really strong in a quarter, and actually, this Merrin Mine has the ability to sort of smooth out some of those ups and downs in the production cycle.

So, overall, it was an okay quarter. We do expect always the March quarter to be our softest quarter, and that pattern has been maintained. Lots going on this slide here. I guess we’ve sort of – again, we’ve had some questions from people around total CapEx and sort of what’s in growth and exploration and sustaining. And Morne has done a great job on the graph on the left there sort of trying to outline what we’ve spent the money on. You will note that sustaining CapEx has dropped down a fair bit actually. We had a very strong spend on the Stage 10 capital expenditure during the December quarter, and sort of ahead of the game there, also some of the timing of rebuilds has basically resulted in us needing to spend less capital. You can see there the growth CapEx was sort of pretty constant around about that $4 million, and what’s in growth CapEx. So we don’t put tailings dams into growth that’s in sustaining.

But we do put Merrin Mine expenditure, and the capital event project sits in there, and then we spent about just over $1 million on exploration. Development meters. So again, we’re starting to give a little bit more detail for people here as to where the development meters are going. We’re coming from. And you can see here that blue bar on the graph on the right is the Capital Vent project, which we’ve spoken about, has been very important for the future of the mine. You can see we’re starting to ramp up the development meters there. Again, for those of you who followed us for a while. As we turn off from the existing workings and head out to these things, the development rates are quite slow because we’re interacting with the existing mine, and that’s Merrin Mine and the Capital Vent project have both been the same.

But as we get a bit further out, then we can start not interacting with the mine, and we can really start ramping up those meters. And so, that’s really what you’re seeing in that graph on the right. In addition to that, we did an extra 227 meters of capital development up in the Merrin Mine. So if you think about total development for the business, we are actually starting to ramp up capital development quite a bit here, and you will see why in the Merrin Mine, that’s actually we’ve been able to do a lot of development meters with not a lot of equipment and for pretty cheap cost. So look, our goals are still the same. It’s really been consistent, safe, low-cost copper production. We do want to advance our ventilation project. We want to get the Merrin Mine online, and obviously the balance sheet.

So this sort of bridge gives you a bit of an idea of where we see the production coming from. So for next year, 2026, the midpoint of guidance around about 50,000 tonnes of copper. We see the Merrin Mine being additive to that and we’re getting quite excited about the Merrin Mine as you’re going to see in the next few slides here. So, targeting production from the fourth quarter being the December quarter this year. This is everything from surface down to about 900 meters below surface. It’s the Merrin mine. It’s got a whole bunch of different deposits in there, but just making life easier, we just call it that. Not all of that is in or S-K 1300 resources, but we have sufficient confidence in those mineralized estimates to make investment decisions, and really that revolves around the age of some of the assay data and assay certificates with the resource and reserve QPs and the mine planning teams have done a Herculean effort here to digitize a lot of old data and to go and do check drilling and confirmation work, which has taken quite some time.

This is data that’s gone back over 40 years, 50 years, but actually, we found a significant amount of mineralization that was sitting in there. Most of it sitting very close to existing development. I try and break it down into the simplest form by saying there’s really four separate components to this mine. There’s the quite high-grade narrow, three, four meters wide at 10% to 20% copper. In that QTS South Upper, which is that little blob sitting right up on the top-left of that page there, that image. That’s what we’re driving out to now. Then there’s a reasonably high grade sort of 8% to 10% zinc with a little bit of lead and a high-grade zinc zone, which our plan is to mine that and truck that up to polymetals to the Endeavor mill for treatment.

We then have what we call a medium-grade copper ore body, which actually in terms of tonnage is the largest part, quite substantial, around about 2.5% copper. And then last is the mixed, which is a mixed copper-zinc material, which actually is starting to become reasonably sizable as well. The beauty of this thing is that it is completely separate to the rest of the mine. We access it through the decline. It’s 150 meters to 200 meters below surface. It’s fantastic ground. The team that’s up there is running as a separate operation and is doing development at a much faster rate than we currently can do at the bottom of the mine. We really have no great constraints apart from equipment and people. We’ve been spending a lot of time at site with the corporate team over the last six weeks actually adding resources to this.

We’ve doubled the number of jumbos that are going in there and increasing the number of trucks, increasing the people. Because, quite frankly, this is a lever we can pull very cheaply. Our cost per meter to develop is roughly one-third of what it is at the bottom of the mine. And as we’ve said often, the more you look, the more you find at CSA and I’ll run through some of the things that we found. So again, we’re sort of on track for some production for copper out of this during the fourth quarter. And we’re actually quite excited about this. So the view on the left is a surface plan, all that light gray looking stuff is the surface projection of the existing underground workings. QTS South Upper is heading off to the left side of the page.

Pink Panther is another deposit we’ve been drilling out from surface, and sort of that is the surface expression of the Merrin Mine. As we have developed the drive out towards QTS South Upper, we have discovered quite a bit of massive sulfide, both copper and you can see in that – actually that’s the tagboard cutty for independent firing there, but that’s about 2.5 meters of high grade massive sulfide for copper, which was not in any of the models at all. We’ve also developed through some quite high-grade zinc and lead mineralization as well on the way out there. So, we think there’s a lot of opportunity to expand this. And as I’ve said, there’s no real constraints in terms of going faster or doing more, apart from people and equipment. So we now have independent ventilation that’s been established there.

So again, as you start developing out from the existing drives, it’s slow, you’re interacting with the rest of the mine. The team have managed to tap into an existing vent shaft out there that’s not connected to the bottom of the mine. And during the month of April, we’ve established independent ventilation and therefore independent firing, and now we can really ramp up development rates. Having said that, one jumbo up here has been getting about the same amount of meters more or less as three jumbos at the bottom of the mine. So and consequently, very cheap on a unit rate basis. So we’re pretty excited about this area. You can see here this is the drive going out to QTS South Upper and again the more you look, the more you find we drilled actually that vertical hole on the right is a geotech hole for where the vent rise was going and it hit the typical three to four meters at 10% to 20% copper mineralization.

So all of a sudden we decided to go and drill some more holes up there, and guess what, we’ve extended that ore body vertically about 70 meters now. So we knew enough to go to make the investment decision to go out there, but we knew everything was still open. As we go out there, we’re finding more and more stuff. So we’re pretty happy with the way that’s all going. It really will be a separate mine to the rest of the mine. So again, the existing mine is being accessed to, the ore comes out through the haulage shafts. This is coming out through the decline. It’s around about a six-minute drive from the ore body to the ROM pad and very low unit rates relative to what we currently cost us to mine and quite good grade as well, actually. And so we’ve been asked, well, how big could this thing be?

Not all of it’s in reserve, very little of it’s in reserve, in fact, is actually in JORC Code resource. I think it’s pretty topical right now, but this would be a wood lawn-sized mine, but mostly copper with a bit of zinc as opposed to the other way. That’s probably the most analogous thing I can give to people right now just for the Merrin Mine, is that this would be a round about a Woodlawn-sized operation. So you can tell while we’re quite excited about and why we’re throwing more resources at it as quickly as we can. Ventilation project, so again, chugging along. You could see from that graph earlier that the development meters is really starting to ramp up in that thing, still on track for Q3, the September quarter next year, after completion.

This is really important for unlocking the bottom of the mine allows us really for the bottom of the mine to get additional vent. And so, in the immediate term, we’re developing this Merrin Mine, which will have a reasonably long life, but also we haven’t taken our eye off the ball for this thing because this is actually really important for unlocking the bottom of the mine. With that, I’m going to hand over to Morne, and he can talk to people about the financial side of things.

Morne Engelbrecht: Right. Thanks, Mick. Good evening, morning, everybody. Going to Slide 15 now, we announced during March 2025, the very exciting news that we completed the refinance, as Mick said, of our debt structure with the recut of the senior debt facilities, including the early repayment of the mezzanine facility. Overall, we have significantly delevered and simplified our balance sheet over the last year, reducing our net gearing by more than 50% to just under 20%, as Mick said, at the end of March 2025. Just to recap what has changed with the refinance. So, as you remember, we had the old facilities, which were made up of the $159 million term-loan facility. There was a $25 million revolving credit facility. A $145 million mezzanine debt facility and then a $45 million Aussie environmental bond that was provided by Glencore.

The new facilities are made up of $159 million term loan facility, $125 million revolving credit facility, and an AUD45 million environmental bond now provided by three new Australian banks. Some of the key highlights of the refinance is really around we’ve now fully repaid the mezzanine debt facility. So that’s the $160 million that we repaid on that facility, which included the 4% premium in the interest to June. We did extend the maturity of the old facilities as well, so both the term and the revolving facilities to March 2028. We increased the revolving credit facility by $100 million to $125 million providing even greater flexibility and available liquidity. And the refinance provides for repayment holiday to 30 September ’25. And then also we’ve got a new repayment profile, which reduces our repayments by $123 million by December ’26, when comparing the old versus the new repayment profile.

Importantly, we also reduced the average weighted cost of debt by more than 30%. So that’s sort of setting at the end of March to sort of around that 6.84% on the senior debt we’ve got outstanding at the moment. That sort of saving equates to about 100 – equates to about $14 million per annum cash interest saving. And then finally, on the contingent copper payments to Glencore, we have maintained the contractual position that the contingent payments will not be payable before June ’26, even if triggered other than for – from free cash flow after satisfaction of all of our operating costs, royalty, debt repayments, and stream servicing costs. So overall, we are extremely pleased with the refinance position of the balance sheet and obviously very thankful for the great support that’s been provided by our lenders in that regard.

Moving to Slide 16, and the all-important cash flow waterfall. Just to go through a few key elements there. So firstly, again, we had a very healthy free cash flow from operations there after sustaining CapEx of around $30 million for the quarter. Secondly, we paid that, as I said, $160 million to extinguish the Mezzanine facility, which included that 4% premium and then also the interest paid of around $9 million from 1 January to 16 June ’25, that’s included in that 160. You will note the interest there that we have from the senior facility of $3 million. And as I said before, with the repayment of that mezzanine debt, we’re now saving around $14 million per annum on interest on that. We also sold some concentrate at the port of just over 1,500 tonnes at the end of March.

So that was just to align the production and sales from a cash point of view, albeit we couldn’t recognize it as revenue because it wasn’t loaded on ship by the end of March, but that sort of happened in early April. So in summary, our senior facility is now sitting at sort of $159 million. We threw down on about $66 million on the revolving facility and then we had $75 million of cash in the bank at the end of March as well. So that gives us that sort of net debt figure of $150 million. And all in all, we also had a very healthy liquidity of $153 million, so almost AUD245 million. Liquidity available to us at the end of March and that sort of consisted of that undrawn revolving facility of $60 million. We also had outstanding QP receipts of $8 million unsold concentrate of about $8.2 million.

And that investment in Polymetals, which has done really well for us at around $3 million as well, that sort of contributed to that sort of liquidity. So, overall, very strong and healthy balance sheet position and with the completion of the refinance and obviously the repayment of the mezzanine debt facility there, so that – which will buy some significant cash interest savings for us going forward. Going to Slide 17, just a slide we’ve shown before, just showing our targets around production, cash costs and gearing. Mick has already covered off on how we are targeting significant growth through the execution of those two key projects in terms of the Merrin Mine and the Ventilation Capital project. So, yes, so – which we’ll deliver at the end of this year and then Q3 next year, respectively.

And that will drive that targeted annual copper production above 50,000 tonnes. On the cost side of things, again, we’ve been shipping away at the cash cost there. And C1 has reduced significantly from around 30% to $1.91 from the March quarter compared to June ’23. And then, as Mick has mentioned as well, the C1 in March with the production that roughly 4,000 tonnes in March dropped to about $1.49 per pound. So that’s very pleasing to see and already demonstrates that we sort of getting to that target of $150 that we have for 2025. And then with the refinance, as we’ve sort of walked through that’s reduced significantly from where we started out, and that’s sort of within our target range of just below 20%. So all very pleasing and pleasing to see that all those metrics are paying the right way, and pleasing to see the progress there.

And, back to you, Mick.

Mick McMullen: Sure. Thanks for that. So look, I think in summary, we’re executing on the plan, the base plan, maintaining guidance. We expect to have a pretty strong second quarter based on the production profile we have ahead of us. Our investment in Polymetals has done really well. They look to be progressing well towards ramp-up. I guess we actually have some high-grade zinc material in the Merrin Mine that we could mine quite quickly. We’re just waiting to see how they go ramping-up. But again, we would like to think that by the fourth quarter of this year, we are shipping them some zinc mineralization for treatment. We have signed that tolling agreement with Polymetals. But that’s – subsequent to the end of the quarter, I think on the 1st or 2nd April, we invested another AUD2.5 million into Polymetals at AUD0.35 and trading it to 90-ish.

So that’s been a good return for shareholders. And overall, as I said, we’re liking Merrin Mine more and more the more we look at it. The ease with which we can get stuff done, mining is never easy. But on a relative basis, it is quite easy up there. It’s very shallow, fantastic ground, really quick to develop stuff, and we are finding more and more material up there that can go through either our plant or the Polymetals plant. And again, it is a wood lawn-sized mine, but predominantly copper. And we’ll try and as we sort of – we’re moving drill rigs out of the bottom of the mine, that will give us more ventilation down there for production. We’ve got a 12-year reserve life at the bottom of the mine anyway, but we want to pull those rigs up and put them up in the top part of the mine in that Merrin Mine so that we can start drilling that material out and getting it into reserve so that we can actually start talking about it in a bit more of sort of S-K 1300 type manner.

So overall, look, I think our employees have done a pretty good job. We obviously had a really strong December quarter, and then we had a bit of catch-up work that we had to do during January and into February. But it is pleasing to sort of see turnover has stabilized. We’ve seen, I think, March was probably if not the lowest, certainly one of the lowest turnover months we’ve had since we’ve owned the mine. And again, the safety has improved sort of quite markedly. So with that, I’m going to hand it over for questions, and happy to take questions from anyone likes to ask some.

Q&A Session

Operator: [Operator Instructions] Your first question comes from Daniel Morgan from Barrenjoey. Please go ahead.

Daniel Morgan: Hi, Mick, Morne, and team. Probably first question just for Morne. Can I just confirm that from a cash flow perspective, your production and sales are aligned? So I note that you sold officially 1,200 tonnes less copper than produced in the quarter, but you also got the $22 million payment from Glencore. Is my interpretation correct? Basically, from a cash perspective, your production equals sales.

Mick McMullen: Yes. I mean, that’s typically how we try to run it on a quarterly basis. It’s difficult to make all the shipments sort of work out exactly in terms of the quarterly reporting. So in terms of the sales versus production, so if you look at what we presold, just over 1,500 tonnes, if you add that to the sales volume, you sort of get to the production volume. So that’s what I sort of try to do on a quarterly basis, is to try and match the cash with the production, just to have that sort of consistency in terms of every quarter sort of matching up. So that’s the aim. We can’t recognize it as sales. I kind of add it to the sales figure, or the sales revenue, and I can’t add it to the free cash flow from operations. But until it’s loaded onto the ship, that I can add the cash to it.

So I do that – we do that just to smooth out and make sure that we report to the market, I suppose, cash that reflects the production, because obviously, we’ve sent the cost into that production already. So, that’s the aim really.

Daniel Morgan: No, that’s clear. And Mick, maybe going to Merrin. I think you indicate expectations of first ore at the end of 2025, Q4-ish. Will you get any development ore as you go is there any potential to pull a stope, or is it barren? I guess you’ve found stuff as you’ve been developing across

Mick McMullen: Yes. Well, actually, that massive sulfide sitting in that cutty right there, look, the short answer is we’ll be able to pull development ore out. We actually already have, I don’t know, dozen truckloads or half a dozen truckloads of fairly high-grade zinc-lead mineralization sitting on the surface that we mine through as part of the development. So yes, look, we’re obviously going to be opportunistic and take it as quick as we can. Right now, Polymetals isn’t running, so that stuff sitting on the surface. But if we see copper mineralization that is worthwhile taking, we’ll obviously get that and we’ll put it through the plant.

Daniel Morgan: And so I appreciate that the Merrin is still an evolving saying, uncertainty and hard numbers, et cetera, are difficult to talk to at the moment. But what tonnage would you see as a success based on where you’re sitting now for 2026, for example, I’m talking ore, ore tonnage, and where would it come from? I mean, you identified a few different areas of mineralization, which have, I guess, different outcomes with grade and economics?

Mick McMullen: Yes, actually, maybe that plan that’s on that slide there would be good. So QTS South Upper, I think if we do somewhere – look, I’m hoping we can mine it a bit narrower than what the current plan is, but somewhere like 150,000 tonnes at 5%, 6% copper out of that. Maybe a little bit out of Pink Panther as well. It’s lower grade and then something like 150,000 tonnes, call it 9% zinc to truck up the road to Polymetals. And I would think the sort of what we call the medium-grade copper, that stuff that’s about 2.5% that’s actually bit more bulk tonnage. Just not quite sure how much of that will get out next year, but I don’t know, about 100,000, maybe 150,000 tonnes of that at 2.5, something like that.

Daniel Morgan: And just for clarity, these numbers you’re providing are these run rate numbers, or is that what you would cumulatively success would be for 2026 in —

Mick McMullen: Yes. Look, run rate is higher than that, but we won’t be – because we’re getting into it at the end – towards the end of this year, we won’t be at full run rate on average for next year. But yes, that sort of number, I think we should be able to get out.

Daniel Morgan: Okay. Thank you very much. I’ll let others ask questions.

Mick McMullen: Yes. But again, you can see why we’re pretty excited about this because it has the potential to add meaningful production to us and we’ve got estimates of what our mining cost will be, but we can look at what our cost per meter of development is and it is one-third of what we’re currently paying at the bottom of the mine, right. So 2.5%, our medium grade stuff at only 2.5% copper whilst not quite as exciting as 4% at the bottom of the mine, the cost per tonne for that is very low and it’s only going to cover your variable-cost, right, like it doesn’t cost us any more overhead or through the plant or overhead through G&A, it’s the same stuff, same costs. So yes, we think we can make quite a lot of money. So the other advantage of this Merrin Mine is obviously, we’ve spoken about it at length.

The CSA Mine has these very high-grade stoping areas that, when you’re in them, it’s fantastic; when you’re not in them, it’s less fantastic. We can produce anywhere from 2,000 tonne of copper in a month to 5,500 tonnes of copper in a month. And whilst we can see the stoping profile and we’re comfortable on an annual basis, clearly, the market likes to see less volatility on a quarter-by-quarter basis, right? So one, we think we can make a lot of money out of this Merrin Mine. So that’s a great idea. Fantastic return for the capital deployed. But secondly, we think it has the ability to allow us to smooth that production profile out and derisk the operation because it’s coming out of different part of the mine, different means of getting out as well.

So to me, that’s actually a big advantage of this thing is it allows me to engineer out that inherent volatility that the CSA Mine, like the current CSA Mine has, right? So two advantages. I always like to make money out of things, but the second one is smoothing that volatility up is really important.

Daniel Morgan: Sorry, Mick, to come back. Just on the fixed price leverage – fixed-cost leverage, sorry, in the business. Is it fair to say that the mine is about breakeven at maybe 35,000 tonnes per annum of copper production, and then after that, that’s your margin. Is that a fair way of looking at it?

Mick McMullen: I think it will be a lower number than that. Morne would be able to work it out for you. But I have done the exercise a while back. I would think it’s high 20s, 30, yes. Probably the number.

Daniel Morgan: Thank you so much. I’ll pass it on.

Mick McMullen: Thanks.

Operator: Thank you. Your next question comes from Ben Wood from Wilsons Advisory. Please go ahead.

Ben Wood: Hi, Mick and Morne. Positive to see you guys that the strong volumes coming through in March led to those meaningful cost reductions, I mean, that we were sort of baking into our forecast. My question sort of previous copper production guidance for calendar year ’26 was sitting between 48 and 53 kilotonnes. But I noticed in this release that you referenced a further down that there’s a pathway to greater than 50 kilotonnes of copper equivalent production. And just sort of wondering, should we interpret this as perhaps a more conservative outlook in ’26 for copper, but perhaps signaling a greater emphasis of zinc, or how should we sort of yes, interpret that?

Mick McMullen: Well, not a real change to be honest with you. I think, yes, we’ve obviously, if we are – when we put that guidance out originally, we weren’t planning on mining any zinc. Now we are planning on mining some zinc. We’ve obviously got the agreement in place with Polymetal. So we’ve got an outlet for it. I think with between – with what we see in this Merrin Mine, we’re feeling pretty comfortable on the – there’s upside risk in that forecast. But it’s a bit of an evolving thing, this Merrin Mine, right. Like, I think I’d rather get to the end of this year, and then I can upgrade next year. If that makes sense.

Ben Wood: Yes. No worries.

Mick McMullen: So, I’ll develop the mine by that stage, right. Then I’ll have a much better idea.

Ben Wood: Excellent. So, just a second one as well, if I can. And previous sort of estimates for the vent project sitting at about $40 million there’s sort of been $8 million spent on growth CapEx in the last two quarters, sort of implying about $34 million, $35 million left for the Vent project. Is that still on track?

Mick McMullen: Yes, although I think it’s AUD42 versus $8.

Ben Wood: Yes.

Mick McMullen: So, yes, that’s right.

Ben Wood: Are those numbers still sort of hold?

Mick McMullen: Yes. Look, again, I think we may not have it in the deck. I think it’s in the word version of the quarterly. The cost – as we’re doing more meters, the – Morne you may have the exact number, but I think we saw a reduction in the cost per meter of development come down a bit as we did more meters. But yes, no…

Ben Wood: No, that’s down to about $11,000 a meter from 12.5.

Mick McMullen: Yes. No, that’s about – yes. So, look the bigger components obviously is when you start – we got to do a bit more development, but we – there’s some – somewhat sizable vent fans that have got to be bought. So they’re from memory of don’t hold me to it, but off the top of my head, there’d be $4 million or $5 million between those two there as like a one-off lump. And then there’s rise a boring work, which is the other sort of big component, right.

Ben Wood: All right. Thanks, team, I’ll hand it on.

Operator: Thank you. Your next question comes from David Radclyffe from Global Mining Research. Please go ahead.

David Radclyffe: Hi, good morning, Mick and Morne. My question is just coming back to that profile again, and maybe just thinking about the shaft production for the year, because it looks like you’ve got an average sort of north of 3,000 tonnes per day or hoisted. And the mine hasn’t done that for a while. So, maybe could you talk to just that the outlook for this year and give us some more color on how that profile looks? And maybe is there some more great upside there that gives you confidence in hitting your targets? Thanks.

Mick McMullen: Yes, that’s right. So again, look, we’ve been very clear that sort of when we bought the mine, let’s dilution control and mining practices weren’t best-in-class, I think is probably the best way to put it. So the guidance for this year that we had for grade was, I think it’s on the front slide there, but it was 3.8 to 4, and obviously, we’re running at 4.1, yes, throughout to 4. So we are sort of seeing a little bit better grade. So I’ve always rather haul less dirt for the same metal. So what’s likely to happen is round about that sort of 4%, maybe 4.1% for the year, and haul a little bit less, that’s probably what – where it looks like it’s coming out.

David Radclyffe: Okay. That makes sense. And thanks for that. I’ll pass it on.

Operator: [Operator Instructions] Your next question comes from Tim Hoff from Canaccord. Please go ahead.

Timothy Hoff: Sorry, guys. I was muted there. I was just wondering around the off-take terms that you’ve got for any zinc production that might have been produced through the tolling arrangement. Does that go through Glencore’s current arrangement?

Mick McMullen: No, not at this stage. So it is a tolling agreement, so as opposed to an all-sale. So we will get con back to deal. We have not at this stage signed off-take. And I’ve spoken about the copper market in terms of – it’s incredibly tight for copper con. Actually, it’s really tight for zinc con as well. I must admit I haven’t had a look for a few weeks, but zinc con on spot will be, if not below zero, pretty close to zero. And so we – our immediate focus has been to charge on out to get the high-grade copper out there. Quite frankly, there’s high-grade zinc we could take in a very short space of time even quicker than the copper, but we have to wait for Polymetals to be up and running right. And let them get up and running and not try and force them, get them up and running, but that I just – we have a draft of the off-take. We’ll be signing something new in the not-too-distant future.

Timothy Hoff: Okay. Fantastic. Just to clarify that the copper is also separate to the CSA off-takes.

Mick McMullen: Sorry, which copper?

Timothy Hoff: So the copper – any copper you might produce through polymetallic or going to poly?

Mick McMullen: Yes, that’s right. Yes. Well, if we’re sending copper or up to Polymetals, we won’t recover the copper because it their circuits are zinc-lead circuit. So, that’s why we’ve chosen the zinc-lead ore up there, anything that’s got copper in it, that’s going to run through our plant.

Timothy Hoff: Right, Roger. I think that was it for me. Thank you.

Operator: Thank you. Your next question comes from Eric Winmill from Scotiabank. Please go ahead.

Eric Winmill: Great. Thanks very much, Mick and team for taking my question. Sorry if I missed it earlier, the line was cutting out a bit. But just on tariffs, I mean, are you seeing any issues in the supply chain, or anticipating any major impacts in terms of cost or availability of consumables, things like that?

Mick McMullen: It doesn’t seem to be an issue for us right now. Obviously, look, it’s a very unstable world. I think Morne and our General Counsel did an amazing job getting our refinancing done notwithstanding the ups and downs in the market and everything, I sleep much easier knowing that we have all that liquidity and no near-term principal repayments to weather any storms. I think that’s more what we’re going to see. We haven’t seen any like consumable or critical spare issues at this stage, we can’t rule them out. It’s probably more of a – just a what I would call a general market uncertainty, right, that’s been more of an issue for us. But as I say, I do sleep much easier having that refinance done.

Eric Winmill: Okay. Fantastic. No, I appreciate that. Thanks very much. I’ll hop back in the queue. Cheers.

Operator: Thank you. There are no further questions at this time. I’ll now hand back to Mr. Mick McMullen for closing remarks.

Mick McMullen: Look, I appreciate everyone. I know it’s a really busy reporting period in Australia. Look, I think clearly we – if you ask me at the end of last quarter, which was our strongest quarter, what would I want, more copper is always the answer. Clearly, in Q1, more copper is the answer. I’ll say the same thing at the end of Q2, just given the leverage we have to our fixed costs. But I think things that we’ve got a really good runway ahead of us now for 2025 and into ’26. The major projects are all being executed. And look, the more we get into this Merrin Mine, the more we really think that thing has got the ability to really move the needle for shareholders and capital on that, it’s – if you can see our growth CapEx for this year, in total, that Merrin Mine circa AUD25 million for that kind of production, it’s a no-brainer for us to do it, right.

And so, we’re very excited about it and – but obviously not taking an eye off the ball with our Capital Vent Project. You can see those development meters, and that really starting to pick up. So thanks, everyone, and we’ll talk to you after Q2.

Operator: And that does conclude our conference for today. Thank you for participating. You may now disconnect.