Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Metals Acquisition Ltd (MTAL, Financial) reported record revenue and underlying EBITDA for the half year, with a significant EBITDA margin of 50%.
- The company has materially reduced its net debt position by 29%, from USD 430 million to USD 320 million.
- Cash and cash equivalents have increased by 174%, from USD 32 million to USD 88 million, driven by strong cash generation from operations.
- The company has successfully raised USD 192 million through an ASX IPO, providing greater financial flexibility.
- Production guidance indicates potential to exceed 50,000 tons of copper over the next few years, with ongoing drilling showing promising results for future expansion.
Negative Points
- Despite operational successes, the share price has only increased by 0.09% over the past year, indicating market undervaluation.
- The company reported a statutory net loss of USD 95 million for the half year, heavily impacted by non-cash changes in the fair value of financial instruments.
- There are ongoing challenges with inventory management, including a significant backlog of concentrate that needs to be cleared.
- The company faces high fixed costs, making it crucial to maintain high production levels to achieve cost efficiency.
- Safety remains a work in progress, with efforts needed to further reduce the Total Recordable Injury Frequency Rate (TRIFR).
Q & A Highlights
Q: Can you give us a sense of how the operations have performed post the end of the quarter?
A: We feel comfortable with our guidance of 40,500 tons. Q3 will be slightly weaker than Q2 by a few hundred tons of copper due to scheduling of high-grade stopes, but Q4 looks stronger. No real surprises overall.
Q: Any latest plans to potentially exploit QTS South upper?
A: We are finalizing contractor inputs and will make a decision soon. We are confident in our ability to execute the project ourselves. A drill program is underway to upgrade the resource to measured and indicated, which will allow us to add it to guidance.
Q: Can you remind us about the spend and major deliverables for the vent raise project?
A: The project will cost around AUD42 million and will run through mid-2026. We have spent about USD2-3 million so far. Major deliverables include geotech drilling, development meters, and raise boring, which will start early next year.
Q: Have the rail issues affecting concentrate sales been resolved?
A: The issues are being sorted out, and we expect to clear the backlog by the end of September or early October. We still have a lot of concentrate on-site, but we are able to recognize revenue from pre-sales.
Q: What should we model for taxes for the rest of the year?
A: We recognized a tax expense of about $7 million for the half. We have a tax shield from the mine acquisition, which may shield us from tax liability for the year. We do not expect to be in a taxpaying position by the end of this year.
Q: Can you explain the working capital moves related to forward sales?
A: We recognized additional sales to align production with sales volumes. By the end of September or early October, we expect to have a normal run of inventory. We aim to maintain around USD10 million of inventory.
Q: What are the remaining opportunities for cost reduction in the business?
A: Headcount and commercial contracts are optimized. The key now is to grow production, which will reduce costs per unit. We saw significant improvements in May and June, and we aim to maintain that level of production.
Q: What should be the normal inventory level for copper concentrate?
A: Ideally, we aim for around USD10-18 million worth of inventory, which equates to about 11,000 tons of concentrate. This is necessary to ensure smooth operations and shipping schedules.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
