Release Date: February 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aurelia Metals Ltd (ASX:AMI, Financial) reported strong operating cash flow of $34.3 million for H1 FY '24.
- The company's cash in the bank stands at $108.7 million, with an overall strong liquidity position of $163 million.
- The Federation project is progressing well and remains on track for first stope ore in Q1 FY '25.
- Exploration results in the Cobar region have been promising, with significant mineralization found in multiple areas.
- The company has a fully funded high-grade project at Federation, which is on track and within the approved budget.
Negative Points
- Production volumes were lower in H1 FY '24 compared to the previous period, partly due to the closure of the Hera Mine.
- Gold production was lower this half, driven by a 23% lower grade at Peak.
- The company experienced safety issues, including slips, trips, and hand injuries, which have not met expectations.
- Revenue was $45 million lower than H1 FY '23, with $40 million of this variance attributed to the closure of Hera.
- The realized price for zinc was significantly lower this half, impacting overall revenue.
Q & A Highlights
Q: What's the expectation on the utilization of tax losses going forward?
A: Martin Cummings, CFO: We have $9.2 million in carryforward tax losses, and we don't expect any tax payments in the near term due to the tax shield from early-stage Federation development. Commercial production at Federation is expected around 6 to 9 months after first stope ore.
Q: Can you provide guidance on depreciation for the remainder of FY '24 and into FY '25?
A: Martin Cummings, CFO: Depreciation will be slightly higher in the second half of FY '24 due to higher production. We are recalibrating Dargues' assets to the expected finish date in Q1 FY '25. Guidance on Federation depreciation will be provided in time.
Q: What is the current thinking around the Cobar Basin strategy and Great Cobar's role in it?
A: Andrew Graham, Chief Development & Technical Officer: We have a robust plan focusing on Federation and Peak. Great Cobar's development will be sequenced based on maximizing value. We are also considering potential synergies with third parties in the Cobar Basin.
Q: How much CapEx will go into FY '25 for Federation until development changes to sustaining?
A: Martin Cummings, CFO: We expect around $30 million in capital from first stope ore to commercial production, which includes some capitalized production costs. Detailed guidance for FY '25 will be provided later.
Q: Can you elaborate on the tailings facility at Hera and its handling of recent rainfall?
A: Bryan Quinn, CEO: We have installed pipelines and water management systems at Hera to handle rainfall. Spillways and water evaporators are being implemented to manage water levels and ensure operational readiness.
Q: What are the key opportunities for achieving the $100 per tonne unit cost target?
A: Bryan Quinn, CEO: Key opportunities include increasing volume, improving jumbo performance, optimizing maintenance costs, and better utilization of equipment. We are also focusing on availability and efficiency improvements.
Q: Are you seeing more skilled labor availability due to challenges in the nickel mines in the west?
A: Bryan Quinn, CEO: We are focusing on the East Coast for labor. We have deployed a charter to bring in labor from Brisbane and other Eastern states, which has improved our labor availability.
Q: Has the metallurgical issue at Nymagee been resolved?
A: Andrew Graham, Chief Development & Technical Officer: We haven't done recent metallurgical test work but are aware of historical issues. Current drilling results are promising, and we will address metallurgical considerations in future studies.
Q: Is there a timeframe and cost estimate for upgrading the Hera mill to treat Federation ore?
A: Andrew Graham, Chief Development & Technical Officer: The plan is to restart Hera as it was, with minimal additional costs. We are also exploring targeted capital improvements to enhance operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
