Aurelia Metals (ASX:AMI) Q3 2026 Earnings Call

0:00 Thank you for standing by, and welcome to the Aurelia Metals Ltd. March twenty twenty six Quarterly Conference Call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Brian Quinn, Managing Director and CEO. Please go ahead. Thanks, Ashley. Good morning, and thanks to everyone for joining us. It really means my quarterly report. With me today part of our leadership team, including Martin Cummings, CFO Andrew Graham, our Chief Technical Development Officer Angus Wiley, our General Manager for the Crowbar Region.

0:49 We'll be working our way through the slides that were released today and at the back of the end of that presentation we'll obviously move to questions to the people online. Look, today's release is a testament to a really very strong performance in a disciplined delivery outcome that we've actually been able to achieve. We really continue to set the business up to success and each quarter delivering what we say we'll do and ultimately providing good cash flow and profits for our shareholders in FY '26 and beyond. From today's presentation and release I hope investors can appreciate our results are very good and we actually have a lot more to come. So I'll move on to slide two, the forward looking statement. Please take the time to read this at your own time.

1:36 On slide three, it's with great pleasure that I can present the highlights of this quarter to the market today with some really good sets of messages. Firstly, such a strong gold market win right now, we've been able to pivot and really deliver strong gold production for the quarter and obviously set up an improvement to our guidance numbers as well for resetting that for the remainder of the year with an increase in ounces. This is supported by also having long stocks building on our stockpiles up to 61,000 tonnes, so we're really setting up to de risk the business for quarter four and beyond. Our cash flows are also moving in right direction, delivering free cash flow this quarter.

2:25 This is also showing some great results from our business and reinforcing our message to our shareholders that the business is heading the right direction with the production and costs and the investments we're making. Our team have been actively engaged in safety this last quarter, really putting some set changes in place around behaviour based safety programmes, including our revised pain and risk programmes to keep people safe and really improve our closeout actions and field leadership time also. In previous quarters we had numerous injuries around contracting partners and we've been able to really focus heavily on field leadership to improve that over this last quarter. There's still a lot to do. We want everyone to return home the same way they come to work safely and that's obviously something we're very proud that we're working on these programs to improve that for people working at Aurelia.

3:17 Obviously our balance sheet has continued to remain strong and obviously Mark will talk more about that later in terms of what's happening in the balance sheet and what's going be happening into the next quarter as well. Fourthly, the results from our teams at Federation have continued to demonstrate strong and disciplined delivery. Federation of mine has increased tonnages and also gold grades and an 86,000,000 value to our business. These results are actually improving our throughput on our peak mill as well and that's allowed us to support the peak throughput at record rates, which continue to ramp up as we get ready for expansion. The quality and blend of the federation ore is really helping us be able to ramp up our PEEP plant and get rid of the expansion and also build our stocks ready for the expansions.

4:06 Lastly, our projects team are delivering expansion growth projects in the business in a very, very consistent way. We've actually obviously keep up the Great Cobar on track and the Thickham project and the tertiary mill expansion is also on track as per what we've committed in the past. So overall a very pleasing result for the highlights to talk to today and the message about how our business is delivering what we're committed to deliver and in some cases exceeding expectations for the market as well. I'll please turn to slide four, which is our cost and production slide. The key message for this slide is we're very focused on delivering value and cash, as I just spoke about. You can sort of see from the slide the increase in our guidance for gold and also I'll just talk a bit about that increase. So our focus for gold has been to bring in some additional stopes that we've identified from infield drilling, so we're not actually taking stopes out of sequence. These gold stopes are basically going in sequence.

5:11 We're bringing them into the plan and taking advantage of those smaller high grade gold stopes. We're also taking advantage of taking some of the copper ore that we feed into our mill and putting it through our lepting circuit to maximise gold recoveries out of that ore as well. So in total, the benefit is we get more gold recovered and obviously more value for our shareholders. Obviously we're also reporting a slight reduction in our guidance for copper but that's also in line with the focus of pushing for more gold. So on huddle value point of view we're better off with a higher gold with current gold prices and that's going to benefit our business and obviously benefit our cost structure as well. This high gold production will deliver good operating cash and will fit us more good cash flows in the four for this financial year and also set us up strongly for FY '27.

6:07 I'll just talk about the operating costs. They're also very much within guidance and we don't see any higher costs coming in from the Middle East crisis at the moment that's going impact these ranges, and Martin will talk to more of that information in his section. So overall, we'll look at the guidance numbers we presented with the exceptional results involved, with a very much good focus on delivering our projects in line with our plans, things are looking very, very good for the company. You'll also notice we've actually reduced our guidance for growth capital. That's all to do with our timing of our projects. The projects are on schedule. It's more around the timing of the spend of those projects, which Mark will also talk to.

6:53 I'll move on to slide six, which is the peak performance. So with slide six, peak has continued to push development to have plenty of working areas available to production. This quarter, Great Cobar was slightly down on metres due to some ventilation establishment works we had to do in that area. That works are now being set up to allow us to drive the development declines all the way to the bottom of the fresh air raise that we'll be sinking or raise boring in the second quarter of FY twenty seven. So pretty much that work is now set up for success for the continuation of the decline now as we move down towards Vancouver. With the build up of the stocks from both Federation and Peak, as I said earlier, we've accumulated 61,000 tonnes of BOM available for mill and effectively this has enabled our mill to keep punching out really strong throughputs through the mill and allows us deliver some record throughputs this quarter which is impressive.

7:58 I really want to take my hats off to the teams who are basically running the mill, getting not just good throughput but also higher recoveries. As in the presentation you'll see some of gold recoveries continue to improve, which is great for our profitability of the business also. A key message here is the plant's ramping up well in FY 'twenty six and setting up FY 'twenty seven once these expansions come online that I'll talk to you very soon. The stock build up is by design and really focuses on de risking FY 'twenty seven. So overall, you look at the big happy time we're progressing and really happy how Panicchita has aged at 1.1. I'll move on to the Federation slide.

8:44 Further great news from the Federation performance, mining tonnes ahead of target. Continuing to sorry, mining tonnes ahead of target, we're kind of 42% higher in the previous quarter. Gold was up by 11% on grade, and both of these sort of key physicals are supporting our improved recoveries in the Peak Plan as well. Overall Federation of mine continues to be a success story with additional information that Andrew will provide around exploration as well. We do see Federation being really a good story for our investors going forward. Just on Federation's costs, the cost per tonne is also moving in right direction as we committed to as well. As we ramp up our tonnes, we are seeing a reduction in our cost per tonne, which is great.

9:31 Really proud to present these results to the shareholders in terms of where Federation is. These are the increase in volumes we committed to, the reduction in costs we committed to and the improvement in our performance is showing through hopefully for shareholders. I'll just move on to the growth projects and exploration slide. I'll talk about the growth projects and hand it over to Andrew to talk to you through the exploration update for the quarter. So the approach to Great Cobar on slide nine, you can sort of see the timeline. The project's progressing well, in line with our commitments. As I said earlier, the focus is getting development down to the bottom of where the fresh air raze will be in place. So we'll have development putting, punching down underneath those areas and then we can start the raised bore work in quarter two FY 'twenty seven.

10:21 The raised bore is an extra key milestone for us for the project. Obviously we're working through finalising the contractors for that work now and we're putting a lot of discipline and focus around making sure that shaft raised ore is done to the best level. Taking learnings from the shafts we've got at Federation and the industry as well to make sure we do that well. The other major change in value in quarter three was the sequencing of the development declines beyond the actual raised ore shaft. We're going be bringing our development to sequence to get down to the drilling platforms sooner so we can set up a drilling platform for infill drilling and also exploration drilling and really unlock the potential of this resource based reserves that Great Cobre has for this company.

11:10 We all believe it's going be a game changer, but obviously we can get down there and put those additional holes in to hopefully keep the shareholders confident of where it's going. I'll just talk to slide 10 now, which is the expansion projects. There's two parts of the project which are progressing very well. Firstly, the tailings and process water management, aka the Thickna project. That project is going very, very well. In fact, now we're dry commissioning that particular Thickna and we'll be basically moving into recommissioning in the middle of May as part of those cut over into the plant when we do the shutdown. So at this point in time, nothing's stopping us from really delivering what we said we had to deliver there in terms of the schedule, and that's going to bode very, very well for us as well because effectively we'll be pushing higher copper ore through in the quarter four of FY twenty six and that copper ore obviously will get the benefit of better recoveries and better throughput from the picking up once it's in place as well. So that will actually work out timing wise, perfect for our sequencing.

12:19 The second project is the tertiary ball mill. All the major items are on-site. All the excavation work has been done. We're now in the process of signing up the build of the tertiary ball mill and all the electrical works. It's on schedule for quarter one FY twenty twenty seven also. So going very, very well and we're looking forward to seeing that. I'll just reinforce the fact that we've been out of build up stocks, very good expansion is a great result for the team. The fact that we're getting recoveries through the mill as it stands now and setting up for the expansion is a great result. And the fact that our grades are sort of moving through the plant in a nice way, delivering significant value for us is also in line with our plan. So, as I said earlier, these are all the right steps and the right direction for us as a company at this point in time, and really happy how the approach has been delivered safely.

13:13 So I'm just going hand it over to Andrew to talk through the exploration sludge. Thanks, Brian. We're on slide 11 now for those following along through the pack. Last week we were very excited to be able to release an Energy District exploration update. If you haven't had a look at that release, I'd encourage you to jump on our website or the ASX website and have a look. Obviously, we've been doing very extensive underground infill drilling at Federation, But this reporting is of our first exploration focused drilling from underground and we had to get the declines down, get the platforms in place to then be able to do explorations at added value. And it's great that this first program was immediately successful.

14:00 So the three key items at Federation that we released. Firstly, we drilled out Federation West further down dip, and we got an extremely good hit about 70 meters further down dip. So that's extended that Federation West ore body. You know, when I say very high grade, you know, we were 43% lead plus zinc. We have 1.2% copper with point nine grams gold. You know, a fantastic intercept over nine metres. And then that image, it's on the slide, it's in the sense there on Hole 354. So extremely exciting. We do need to do more work to see if that continues to extend. We are doing some very early work thinking about whether we push an exploration drive in that direction to allow us to explore there, but also to explore the central part of the serrational body at depth.

14:53 The other interesting piece in that slide, which you can see on the left hand side, is that we discovered a a new lens further west, and we call this the Harley lens. It was intercepted from surface as well as from underground. Grade's good. Still an enormous amount of work to be done on that, but the pleasing piece for investors to think about is that we found that offset on Fed West, and now we're seeing additional mineralization further west, which bodes very well for us continuing to find more at Federation. The other fringe benefit we had from exploring from underground is we actually hit some very, very good mineralization in the early part of the exploration hole. So they're adjacent to the underground workings, and this material's being handed straight over to the mine to infield and then bring into the mine plan. And when I say very, very high grade, we only got 43 grams gold over 3.9 metres.

15:47 We got 48% lead blood zinc over 5.5 metres. So these grades are just exceptional and that'll feed straight into the mine plan as additional material for us to mine. The other bit in our release, we covered some regional work, Smile and Landslaught particularly in that release, but it is important to recognise that we're doing quite extensive regional early stage works both at the Nimmigy District but also in the Peak District, I would say, by district around Peak and that's explained in our quarterly report. We're on the hunt for the next federation and it's really exciting to be able to step beyond the mine areas and start looking for these future deposits for the company. I'll turn over now to Martin on the balance sheet.

16:37 Thanks, Andrew. So I'm turning to Slide 13, which has our cash waterfall for the quarter. As Brian mentioned, this has been an extremely good quarter for us, which has culminated in an increase in cash to $94,700,000 and that excludes any restricted cash. Our Cobar Region cash flow from ops was $36,200,000 driven by strong gold production and sales and also continued strength in metal prices. As you can see on the right side of this slide, precious metals remains our dominant revenue source at the moment, and our production outperformance to date this year has enabled us to take advantage of these higher prices. Our hedge book only has 6,000 ounces left over the next three months, so our realised prices will benefit from full exposure to spot from July this year.

17:28 Our operating costs were higher this quarter in line with our plan as mining rates ramp up at Federation. Federation mining costs include a slightly higher proportion of operating development that is supporting the above planned production from the mine. For peak, our mining costs in total were lower, which along with higher mined tonnes reduced our unit cost to $142 a tonne. This does remain above our target with initiatives underway through our mining productivity improvement project to either lower spend or increase tonnes mined. And our processing costs were slightly higher this quarter driven by planned maintenance. I'll just cover off diesel as part of our cost base. So we have a long term supply contract for diesel and our deliveries have remained as planned with no interruptions.

18:16 We continue to have regular engagement with our supplier and we're comfortable from a supply perspective that these deliveries will continue uninterrupted. As we set guidance around diesel, diesel represented around 3% of our total costs. So with the recent increase in oil prices, that's more like 6% today. But as we noted in the report, there are also some rise and fall clauses within our contracts, mainly for logistics related activities. We're monitoring all our contracts very closely, and again we will expect to see some cost increases come through from that, but overall we're comfortable that these costs will be managed within our cost guidance. Therefore, we haven't altered our cost guidance today.

19:03 And lastly on the COVID cash flow was our sustaining capital, which is reported as part of that 36,200,000 Sustaining capital was lower, and for those who have been following that over the year, our spend profile was biased to the first half with some equipment replacement and some machine overhauls. So the majority of our spend now for the rest of FY 'twenty six is on sustaining mine development, and we expect to therefore come in within our guidance range of 50,000,000 to $60,000,000 for the year. For growth capital, as Brian mentioned, we did lower our guidance with three main drivers. Firstly, on the plant projects, when we set our guidance, we did include all of the capital for these projects in FY 'twenty six. There's around $3,000,000 of spend for the ball mill that will now be incurred early in FY 'twenty seven as we commissioned the ball mill, and the crushing and materials handling project of around $8,000,000 has been deferred.

20:00 For Federation, this year we have balanced our mining activity between operating and capital development activities, whereas the guidance did have a higher bias towards pushing the decline down in capital. So this change to balance between operating and capital has meant less capital spend at Federation and about $5,000,000 which will push into FY 'twenty seven for the decline. And lastly, around our financing cash flows, we did add another $10,000,000 to restricted cash for rehab bonds, taking the total to just under 38,000,000 So it was a particularly pleasing result that even with that extra $10,000,000 in restricted cash and the payment of some taxes, we still grew our cash balance over the quarter.

20:47 So just turning to Slide 14, It was a very busy quarter for us on the refinance process, which culminated in the execution of a commitment letter and term sheet with three Tier one global institutions for a senior secured AUD150 million facility. I'm absolutely thrilled with what we were able to achieve, with this strengthening our balance sheet even further. Of key significance was the performance bond facility, which we've managed to upsize by $45,000,000 to $110,000,000 That $110,000,000 is split into an $80,000,000 five year tranche and a $30,000,000 three year tranche, and provides enough capacity and headroom to cater for rehab bond requirements for the foreseeable future.

21:33 But crucially in this facility, there are no requirements to cash back like we have been any bonds for the term of the facility, which is a key differentiator. For our revolving credit facility, again, it's slightly larger than what we put in place for Trafigura and has no amortization profile built in, meaning we are able to access that facility limit for the term of the facility being three years. And finally, as we've noted, the pricing is very competitive relative to the market and also considerably lower than our current facilities. So just to close off comments on the refi, I'd just like to thank our Aurelia team and our advisers for the effort to secure this amazing commitment. My thanks also to Citi, Credic and HSBC for your demonstrated support of our business going forward.

22:23 I'd like to shout out to some of the other institutions that were involved in this process. As we included in the announcement, this was an oversubscribed process, and we weren't able to accommodate all of the credit approved offers that we received. But I do thank you for your efforts in participating with us. So in summary, it's been a fantastic quarter for us with strong production, generating free cash and our future financing facilities in place with financial close targeted for May. So thank you, and I'll hand it back to you, Brian. Yeah, thanks, Brian. Thanks, Andrew. Just to wrap up in terms of the key focus areas for the organisation, to leverage the results for this quarter and the previous quarters that we've been able to achieve to the market, We're really tightly prioritising strong gold production delivering a robust cash flow outlook, building on what we've already put in place and building on the balance sheet that Grant just talked about, and obviously building on the refi we're doing as well. So the company's in really good shape and much more to come. So our focus areas are really about maximising cash flow generation and value through using our portfolio of both corporations to maximise that, and as we said before, to continue to maximise the plant throughput and work towards our objective of 40,000 copper equivalent tonnes in FY 'twenty eight. And at this point in time, all the projects, all of the work is well underway and on track and delivering as we've committed.

23:54 We are going to continue to outperform the plan of Federation. It is going very well, as I mentioned, and hopefully investors can sort of see that Federation is delivering now and with the information Andrew shared, it's got a lot more potential that will be unpacked in the near future. We're going to continue to execute our plan at peak as well. We've put a productivity project in at peak and really looking at how we can extract more value from the peak operations while has been set up, and it's going to be a key focus going ongoing key focus to execute that productivity improvement plan. In terms of Grancova, Great it's about really us focusing on the key milestones that need to be achieved and make sure that we de risk any of the project deliverables and make sure they deliver on time and on cost going forward to set up the business properly going forward as well, like we have the other projects.

24:50 And importantly, we need to continue to attract and retain the right people in the organisation to enable us to do this. Aurelia has really good infrastructure and improving their infrastructure for the expansions. It has a high perspective geology, as we've already spoken about, and you can sort of see from the grades and recoveries we're getting now, both the geology and infrastructure support. This business can deliver a lot of value for our shareholders, and with the right people, this business can really try going forward beyond what it's doing now. So I really want to wrap up by saying thank you to our teams for their support and getting these results. But like I said, there's a lot more to come and the organisation's in a really good position right now to leverage what we've built over the past.

25:35 So Ashley, I'll hand it back over to you so we can go through any questions we may have, and then I'll provide a wrap up after that. Thank you. Your first question today comes from Paul Kaner with Aurelia Metals Just a couple of questions for myself. Firstly, just on guidance at peak, you're obviously prioritizing gold now by focusing on some of those smaller, more complex stopes, sort of noting that these were outside of the mine plan, just want to confirm that there's sort of no implications for 'twenty seven guidance and that sort of stope sequencing in FY 'twenty seven?

26:40 Yeah, thanks Paul. I'll answer that briefly and hand it over to Angus if he wants to add into it. Basically, these stopes were identified during infill drilling from the various underground workings and so the opportunity was while we're there we could set them up for success and take the gold ore now. So, we're not sort of robbing or bringing things forward to take them there and then shortfall FY 'twenty seven. That's exactly what we're not doing. Angus, any other comments on that at all? Yes. As Brian said, no, we're not robbing from 'twenty seven. The tech services team has done a great job identifying different additional resource areas and able to bring that into the plan this year.

27:29 Okay. Great. Yeah. No. That that answers it. And I guess, is there any additional material that you've identified from from infill that can maybe come into the mine plan now for FY '27? I'm sorry. Go ahead. There's ongoing infill work at both Chesney and Kairos at the moment and Peak North, and, yeah, we'll continue to bring material in as it presents itself. And certainly, yeah, we continue to see good results from our infill, and the team are working hard on bringing that material forward. And I guess the key point, Paul, is that, you know, obviously, we aren't stealing from the future to pay for now. These opportunistic ore that we can bring in while we're in those locations using the infill information we have now. It's a great result for our regional tech services team to identify these things and with the current prices be dynamic about these things as well without destroying medium and long term shareholder value. So we're very excited by this opportunity we've been able to find based on the current price environment as well.

28:37 Yeah, no, that's clear, Brian. And I guess given there's no change to group operating cost guidance, there's no material additional costs by bringing this stuff in? Look, in terms of the smaller stopes, obviously, require the same as the larger stopes. So when you're seeing multiple smaller stopes, it's the same for the total volume of large stopes. You do have to put some additional costs into it. And as we sort of reported, the cost per tonne at peak is obviously down from last quarter, not down to where we'd like it to be in terms of where we're sort of focused on as a business through our productivity improvement projects.

29:22 But those costs are sort of still in line with our guidance, but it's not changing those numbers. That's correct, Paul. Yeah, great. And then just last one for me, just on that capital growth capital deferral there at Federation, you're prioritizing operating developments. Guess similarly, what sort of implications does this have for 'twenty seven and 'twenty eight developments, specifically the decline development there in 'twenty seven? Yeah, we're pushing the decline development down for infill drilling and exploration drilling. So in terms of the overall production profile, it doesn't impact the overall production profile. In fact, you look at our development meters at Federation, we're actually doing very, very well with development meters. So I have to say, on balance, when we talk to the geos about what's required versus our production profile, we can deliver both with the current scheduling and current profile we're delivering. So there's no impact on FY 'twenty seven. In fact, FY 'twenty seven we're quite hopeful that we can present some real numbers on what that looks like also on the way from FY 'twenty six numbers in production.

30:35 Okay, great. No, that's it for me. I'll pass it on. Thanks, Paul. Your next question comes from Paul Hissy with Mollis. Please go ahead. Thanks. Apologies. I did try to cancel my questions. But seeing as I'm here just to follow-up. But I mean from the outside looking in and look, sorry, let me go back a step. You provided a great breakdown with Paul earlier. But just from the outside looking in, it does look like you're trying to prep the business to be a little bit more defensive from a cash flow perspective. So with the deferral of some of the CapEx and the prioritization of some potentially higher margin gold material, look I think you probably answered the question around what's driving that. But maybe just a little bit more on the timing of the CapEx and some of these projects. It looks like the spend is going to now move out into next year, if you can, Brian, please. Yeah, sure. On the CapEx for the expansion for the tertiary mill, That's just a timing thing in terms of when the work's being done and obviously when the money will come through. It doesn't change the schedule.

31:47 We always said quarter one FY 'twenty seven would be sort of a target time for ramping up. We're still with that quarter. It's just a timing thing, Paul, in that case. In terms of the other capital that Martin spoke about, basically when we set that target in FY 'twenty six, it was based on sequencing of the mines when we were going to be obviously taking more ore out of the North Mine versus the South Mine. With current gold prices and current commodity prices in general, definitely the plan looks in favour of more mining out of the South Mine. And we have a crusher in place underground for the South Mine in situ. So when it looks at timing of when we need to put the mobile crusher and materials handling in, we're still working through that as management, and when that's likely to be in place, we'll then sort of talk about when that capital is required.

32:40 But right now it's not urgent to put it in, but it will be at some point in time. We just wait for the time. So it's nothing to do with trying to defer capital for cash or anything else. It's just literally a timing of when it makes sense based on when the mine plan dictates when it should actually happen. Does that make sense? Yeah, okay, thank you. And just in terms of the other part of the question in terms of taking higher grade now, it's literally because we are in working areas where we've done infill drilling, we thought we'd be closing out areas and we aren't closing them out, we're finding more. So rather than come back later, you'd better take it now and the price environment supports that, so it makes complete sense. So it's not high grading, it's literally taking the high grade that we're finding in those areas while working there while we're looking at closing those areas out. We're not closing it out. In fact, we're opening it up. So it's fantastic to use the PICS service guys to work on that for us.

33:39 Yeah. Okay. Understood. Thanks, Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. We'll now pause a short moment for any final questions to register. There are no further questions at this time. I'll now hand back to Mr. Quinn for closing remarks. Yeah, thanks, Ashley, and thanks, everyone, for dialing in today to hear the Q3's March quarter results. Like I said, we are very happy how we're traveling as a company. I'd like to thank, obviously, the teams on the ground, everyone contributing to these results across the board, both our employees and our contracting partners.

34:26 Special thanks to obviously the executive management team. They're working very hard to set the company up for the future and making sure that we've got the right sort of thinking in place to continue to look at value both at the cash flow level and value for our shareholders as well. The Boards are being supportive of the plan we've put in place and the strategy we're delivering against right now. But once again, to the shareholders for supporting us and believing the story and tracking us as we continue to improve. We believe we have a good outlook and we believe there's much more to deliver in the future quarters, so I hope you can continue to support us, and we'll keep delivering. Thanks very much for joining the call. We appreciate it. That does conclude our conference for today. Thank you for participating. You may now disconnect.