Aeris Resources (ASX:AIS) Q3 2026 Earnings Call

0:00 Okay, I think let's start. Good morning everyone and welcome to the Aeris Resources Quarterly Presentation. I will take you through the presentation. At the end of the presentation there will be time for Q and A and if you put up your hand, I will unmute you and you can ask your question. We also have a Q and A where you can type in questions and we will try to answer those at the end of the presentation. I guess to kick off, again a strong quarter, the balance sheet are getting stronger every quarter and really this is sort of setting Aeris up for a very good FY '27. But quarter on quarter for the last three quarters, the business has improved quarter on quarter and we're very pleased when you see the numbers that the balance sheet keeps on looking a lot better.

0:49 Just sort of stepping through the presentation, we're still forecasting to achieve that 40,000 to 49,000 ton copper equivalent as per the guidance. The development projects, they're all progressing well. You'll see when we talk through it. At Jaguar, we started the exploration drilling for the base metals in the last few weeks and stock and feasibility studies getting closer to being able to release. On the exploration side, as we said before, we're putting a lot of effort and money into exploration this financial year. We're targeting around that $30,000,000 spent this financial year on exploration and clearly the focus is on extensions of those resources. The growth as everyone probably on this call know, the Peel transaction is ongoing and we'll touch on Peel a little bit in the presentation in the back end.

1:45 We put this strategy up in the beginning of the financial year and really we're getting to a point where we can tick most if not all of those boxes. At Triton, as we said, it's all about the Marra Pit. The Marra Pit is now in full production and will deliver 1,500,000 tons in the next six to seven months, which means the Triton mill will run nearly at full capacity or at full capacity for FY twenty seven and specifically for quarter four. We really focus on constellation on time and you'll see when we talk through it, we have brought some initial capital forward, just all of that to make sure we do risk the project for early start in quarter one FY twenty seven.

2:31 And exploration as I said, the clear focus. At Krakow, Golden Platte drilling is going extremely well and you'll see some of the results and that was all about how do we extend the Krakow mine life through exploration. The North Wales assets sold at JAG as I said earlier, we've started the base metal drilling, we've got the care and maintenance now to the bare minimum and really we'll start to see some of those results coming through in the next quarter. We've said we'll put the stock feasibility study out early in FY twenty seven and that is progressing to plan. So as we start to work through the different areas and strategies, a lot of it has been done and a lot of it will be done in the fourth quarter.

3:19 So progressing really well to deliver a stronger FY '27. The key points for FY '26, the key takeaway for us is cash receivables sitting at $150,000,000 That's a significant step up quarter on quarter and even from 106,000,000 to 150,000,000 And that is really pleasing to see the balance sheet strengthening. Cash flow from operations really strong quarter on quarter 72% up, dollars 76,000,000 for the quarter. And you can see the production sitting at 10,400 copper equivalent tons at a group level at $4.86 a pound, really a great outcome.

4:04 Cost is always well managed across the business. We'll talk a little about diesel. I'm sure there's questions around what is the diesel impact and I'll deal with it perhaps right now. Currently we had no issues with supply of diesel and we don't see any issues with supply, it's more of pricing. The quarter was not impacted much around pricing. We expect in quarter four to see higher diesel price. Now for us at a group level, that's about $0.12 a pound additional cost, which is a 2.5% increase at a group level, but it's not a material impact. But that's sort of where we see the diesel pricing setting for the next six months or so.

4:51 We talked about Peel, although as we discussed in the last quarter, with the delays due to the due to issues in the mill, in the Marowongi pit, we have revised the plan for Triton as an internal plan. They fell a little bit short on that, not much. And it was mainly due to the first ore grades we got out of the pit in the transition area was lower than we expected and a little bit of dilution from underground. But overall, pretty close to the revised plan. Marwambi Pit is now absolutely on all. There was a stockpile at the end of the quarter. As I said earlier, it will be 1,500,000 tons mined by November. And significant stockpile build up from open pit mining.

5:40 Constellation project early works, we have committed 10,000,000 to $15,000,000 which is not in guidance, but we really thought that instead of leaving it for FY '27, bring that forward and start to do with the business. That early works is around infrastructure and road to get that all set up and ready to go. And we'll talk about Krakow and Golden Plateau as we go through the presentation. Strong cash flows from operations, can see that sitting at between the two operations $95,000,000 in operating cash flows. We still invested growth capital of around $20,000,000 in the Marowambi pit and the closing balance as you can see from a cash point of view sitting at $119,000,000 When you look at the year to date, dollars $232,000,000 operating cash, significant investment that was most of that capital was for the Marowambi pre strip. Now that's done, there will be no more growth capital for Frutem in the next quarter or very little, but now it would go into operating costs.

6:53 And you can see the proceeds of the equity raise and closing balance are very strong operating cash flows while we're still investing significantly in the business. Looking at the different operations, certain specific significant increase in ore tons and that is on the back of the mine only pit starting to deliver ore but it also good ore tons from underground. With this focus on keeping the mill running at maximum capacity, so the mill capacity is 1,800,000 tons. Some days we're running it above that level, but we're targeting that 1,800,000 tons and you can see the March quarter starting to deliver an increase in that production both from a mine and processing point of view.

7:45 We have said in the last quarter already that due to the delay of the Marra pit, we are targeting towards the bottom end of the guidance, but we're still targeting within guidance for return and delivery on production. This is a few images, that's the open pit, but you can see the significant work in the bottom image of what was done on the old heap leach pads. Now those are closure costs which is part of the environmental bonds And we use the weights from the pit to close those old heap leach pads and that will be a material change from a cost saving point of view to close those old pads but also will have an impact on the bonding requirements for those pits over time.

8:32 The Marowambi pit as I said earlier, we'll do about 1,500,000 tons in the next till November and the growth capital is now done in the pit, it's all on all and deliveries to the plant. This is as we all know, this is the future of the business constellation. We've done a lot of work, we've now settled on a smaller open pit mine, so two stage pit, which will then go underground. There you can see there's some really good high grades early up in the underground. We've committed to spend that additional capital early and that was to set it up so that when we get on ground we can start to move fast and all the capital currently is planned to be funded from operating cash flows that fit them into the future. And remember, this ore body starts literally eight meters below surface. So it's not a massive pre strip to get on ore, it's perhaps six months and you should see some ore coming out of Constellation.

9:37 On the permitting side, that's all on track. We're expecting a mining lease to be granted in quarter four and as we said before that in quarter one we will kick off constellation development and processes. A lot of money into exploration, we're focusing on all these resource extensions across the portfolio, currently focusing on the Voca tank. And we've seen some really great results coming with Voca tank. We now believe that amount of holes we drilled to a separate structure outside of the current known structure that is building up really nicely. And we will come out with a market update in the next month to really give everyone a feel for what we've seen. So Evoqua tank, it continues at depth. We perhaps found another ore body.

10:30 We're drilling a lot of effort on Badji Gai and what we've seen at Badji Gai is thick and better extensions than what we expected originally. And we're also drilling South Wing and Trenton Adept. So a lot of effort is about extending those resources to two to three years ahead of our salt and really good results. So current drill rigs all running and will keep running into FY twenty seven to keep extensions. At Constellation, we are planning to start a drill program there which will be a great drill program but also looking at further extensions at Constellation and the ability to bring a reserve update out in the next two to three months for Constellation as well. The Krakow results as we've said before, Krakow has been delivering for the business for a long time now on target, on plan and once again they've done exactly the same 10,000 ounces, dollars 3,400 an ounce cost on budget and well managed.

11:39 And we remind that they would end up around the midpoint of guidance. Golden Plateau is of course what we've been saying for a while now is where we think the future additional time and future can be other than the Western Wind Field which will continue. Now we started off with a small drill campaign to start to test our theory around open pit mine in Golden Plateau. We then expanded that to a 14,000 meter drill program and you can see some of those results we're getting. The key for us was to confirm what we expected and what we've seen so far with the 32 holes drilled. They all intersected what we expected. So if that keeps going the way we think it is, we're getting more and more confidence that there will be a future open pit opportunity for Krakow around Colden Plateau.

12:36 Now, besides of that, we were all defined, but that can be a material increase in mine life for Krakow on top of what you'll get out of the Western mine field at Krakow. On the project side, I'll just start to the high level. We've said we wanted to test the eight base metal targets at JAG and you can see each one of those yellow blocks, that's the target. We've already drilled the Panther target and there's been some good results or encouraging results. We've already started the second hole and we will drill all of those targets within the next two months and then see where we go from there. But some encouraging results going through that. For those who haven't sort of been on this before, we have made the clear decision that we would start JAG with a ten plus year mine life and part of developing that ten year mine life is these eight base metal targets.

13:40 So we will drill them out and then see how do we progress with that further. As I said early, the Stockman updated feasibility study will be released early in FY twenty seven. And as part of the simplification and looking at non core assets, North Reasons be divested. We got $5,000,000 cash forward and with release of cash back bonds. Those cash back bonds are still restricted within the Washington sole pay facility for the bonding which we've got in place. At a corporate level, you can look at the closing cash quarter on quarter improvements although September to December was on the back of an equity raise but December to March was purely driven by operating cash flows and good results from the operation.

14:29 At the receivables, dollars 30,000,000 in receivables. Now if you try to split that out, 20,000,000 of that is just final payments for concentrates which has already been sold and $10,000,000 is for stock on hand and invoiced at the port. So that is money which will come in within the next month, the $20,000,000 at least as payments for receivables. The operating cash flow for operations at $75,000,000 that's a 72% increase. So from where we sit, strong support for pretty high commodity prices, but it's also delivered through ongoing production achievements at the two operations.

15:17 We'll just touch a little on the Peel transaction for those hasn't been in these presentations. So clearly for us, we looked at Peter's strategic transaction on how do we get to a ten year 30,000 ton mine with two strong resource or reserve back projects. Now we've already talked about Constellation. Constellation is the next ten years. It will do about 750,000 ounces annually at around 2% copper plus gold. And one of the key other assets which we always thought made sense was Malibu, which is in the Peel portfolio. Malibu is already a 6,000,000 to 7,000,000 ton resource, also around 2%.

16:03 Now as soon as we can put a home for it for processing, we can turn that into reserve. Between Malibu and Constellation for once they're both up and running, you're looking at 1,500,000 tons at that 2% copper target plus then all the other assets at Chatham. So pricing was strategic. The logic makes sense that's a 63% increase in resource for Triton with Malibu obviously the bigger resource and most of that 122,000 tons of copper metal will convert into a reserve within a few months after the deal is closed. So clearly for us, how do we put them to that 30,000 tons? The key deliverables will be Malibu and Constellation, which you can see on that slide. And then we got Wurlong and other Triton assets, which we showed you earlier in the drilling results, all of those extending. So for us within the next three years, we are targeting that as a group level around that 55,000 to 60,000 copper equivalent tons and that taking 13 to 30 plus frac out and then obviously post that with the projects we have available.

17:22 This is sort of indicative timeline, everything so far is on target. We have the court hearing next week and that will then progress further into closing of the transactions by late June, early July. That's the current thought process. So that's sort of the summary. Obviously, we're on target for what we wanna do. It's very pleasing to see the balance sheet improving, cash at hand improving and we can invest where we need to invest to set the business up for FY 2027 going forward into the next three to five years by setting it up and starting up these long life projects and focusing on delivering longer life operations at both Krakow and Triton.

18:13 That is sort of the presentation. I'm happy to take questions if there's any questions from people on the call. Paul Kainer's got a question. Paul, can you hear me? Yeah, got you, Andre. Can you hear me mate? Yep, perfect. Good. Good, mate. Good. Just quickly on Mottawambi. Yep. I just wanna get a sense of how that that grade is tracking. Obviously, you've sort of gone through this transitional material this quarter. You've sort of moved into the sulfide. So I just want to get a sense of how that sulfide trade is tracking and what we should assume for the coming quarters.

19:07 So we've seen Paul that in the last this month that the grade is now reconciling a lot better now that the sulfide, so the grades gone back up. The average grade over that 1,500,000 tons I talked about earlier is around 11% copper. That's sort of what we'll see coming out of the pit over the next five months. Okay. Great. And apologies if I missed this, just moving on to crack out. Just how that exploration drilling is going there at Dalton Plateau. When should we expect a study on that? And when could this material feasibly come into the mine plan?

19:55 The drilling is going extremely well. We've got drill rigs running all the time. You can see some of the results there. The key for us was always to ensure that what we think is there and what we've seen so far is confirming what we expected. So we will cut off exploration at Golden Plateau, the results starting to put new design around it by June. And then use those numbers to do a new design. That really will continue, but that would be the aim to start to get approvals and approvals will take about twelve months. So the aim for us is from today around eighteen months to two years to have gold and paddle in production.

20:47 That's clear. No. That's it for me, Andre. Thanks. Thanks for your answers, mate. Thanks, Paul. There was a few online questions. I don't think anyone else has put up their hand currently. I might just go to the Q and A. We've got a question here, what is the plan used for growing cash balance, no typical transaction is a script not cash.

21:33 The plan used for the growing cash balance is investing in these capital projects. We will develop consolation in the next twelve to two years. We will then develop the Malibu mine and also look at Golden Plateau. So there's a lot of use and it's all about setting, investing in the next few years for the long term because once you got these big projects up and running, the investment will drop off because they will run for ten plus years, specifically malleable and constellation. I hope that answers the question. I've got a few questions from Jason. Jason, I might answer some of those, the others will come back to you.

22:20 We talked about the grade and I think we talked that through. We talked about the grade we expected. The question was sort of what is the grades and then equities in brownfields growth levers. So brownfields growth levers for Triton, Jason, is really saying these extensions which we're drilling at all these deposits on the property is where the brownfield sits. Drilling constellation out further and extending that life and improve that resource to reserve. That's where we see the value for the future, specifically for Triton. Talked to you asked about high gold prices and are we focusing on getting as much tons to the mill.

23:06 That has been the case. We have done new mine plans around cut off grades based on the higher prices which we've seen. And cracker is just the nature of the cracker ore body is just these narrow vein high grade ore bodies and you keep on extending them as you mine. And that's always been the case. But we have done the work and some of those resources is now in the mine plan. We talked about the drill rigs, think that makes sense. Drill rigs will keep going into FY twenty seven to drill out Bajiditai South Wing Evoca tank. The Evoca tank specific with the new load we found that will take quite a bit of drilling and we're focusing a lot of effort into drilling that out because we see some really exciting results coming out of those.

23:59 I think we've dealt with some of the other stuff. So Jason, we might contact you and send you separate emails, but we talked about JAG and we talked about the alterations. We'll get back to you on some of those. Just checking if there's any other questions from anyone. There's a question from Steve. Are there any workforce or technical constraints on expansion of operations? The answer Steve is no, we've got the technical in house workforce, but we also use consultants if needed to close out some of these projects. But we have set the business up successfully for all these projects coming up.

24:55 I don't see any other questions or any other hands. If that is, I'll give another minute or so for questions and then we'll sign off. Okay, everyone, thank you. I don't see any questions, any more questions. Let me just make sure that we don't have any more questions. Then if that's nothing else, let's just have a quick look. In that case, thank you everyone, appreciate your time and we'll talk again in three months. Thank you.