Thank you for standing by, and welcome to the MMG Limited third quarter production report. 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 Andrea Atell. Please go ahead.
Thank you. Thank you for joining us for MMG's quarterly production report teleconference. Today's report and today's discussion will cover the operational performance of MMG sites for the third quarter of 2024 , and the outlook for the remainder of the year. Joining us for this call are Mr. Liang Cao, our CEO, Mr. Song Qian, Chief Financial Officer, along with other members of the executive team. I will now hand over to Cao Liang, who will take us through t he highlights o f the report. Following this overview, we will open the call to questions. Thank you.
Thank you, Andrea. Good morning and good afternoon, everyone. Welcome to our third quarter production report teleconference. It is an exciting time for our company, and I'm very pleased to be with you today, sharing our results. As you know, our production report was released yesterday. For the purpose of this presentation, I will take it as read and provide a high-level summary of our results and key highlights. My colleagues and I will be happy to take any questions you may have at the end. At MMG, safety is our first value. It is pleasing that our overall safety performance for the Q3 is showing improvement for both indicators. We are tracking well against our goal of achieving significant and ongoing improvement.
Although I would like to acknowledge there is still a way to go, as a team, we will be remain vigilant and continue to progress our improvement plans across all our sites and champion safety leadership. Now let's turn to the production results. MMG achieved a significant growth in copper production for the Q3, with 22% growth compared to the same period last year, and a 26% growth compared to the previous quarter. This is driven by our strong performance at Las Bambas, Kinsevere, and Khoemacau. Notably, Las Bambas had an impressive result, producing over 90,000 tons of copper in copper concentrate. It's the strongest quarter since 2021.
The site will continue to ramp up production in the fourth quarter, and during that time, it is expected to reach an annualized quarter production of over 400,000 tons. This would see Las Bambas reenter the top 10 open mines in the world, a milestone we will work hard to achieve. At Khoemacau, we had double-digit growth quarter on quarter, an increase driven by improved mining and milling volumes and higher ore grades. Production will continue to ramp up, allowing us to maximize our return from MMG's newest asset. Thanks to increased ore supply from the Sokoroshe II pit and enhanced power supply stability, Kinsevere also performed well.
For our 2024 production guidance off the back of uninterrupted production and operation at the Chalcobamba pit, we are confident in reaching 320,000 tons of production this year at Las Bambas. We also anticipate achieving our targets for our other two mines. Now let's move to zinc. Production was impacted by maintenance at both sites. However, volume are set to recover. While Dugald River and Rosebery had decreased zinc production for the Q3, volume did recover in September and are expected to stabilize in the coming months. I'd like to call out that Dugald River's zinc metal production for September was its second highest since January 2022. An impressive result. With strong feed grades and zinc recoveries will help the metal production. Our guidance for Dugald River production has been low. However, Rosebery remains on track.
Across all sites, C1 cost guidance is unchanged, and it's worth highlighting that the Las Bambas and Rosebery are each expected to come in at the low end of their respective range. In recent years, we have been focused on growth across all operations through expansion and mine life expansion, and our recent development projects have helped deliver this. I would like to highlight some significant project wins. Firstly, we are pleased to share that copper cathode from sulfide ore was produced in late September as part of our Kinsevere expansion project. The completion of this project will, over the coming years, see over the coming year, see the team focused on ramping up to reach nameplate capacity. This will extend the mine life to 2020- 2035.
Our expansion plans to increase the capacity to 130,000 tons annually at Khoemacau are proceeding well. The preliminary feasibility study is now complete. The project is expected to move into feasibility study by the end of this year, with construction expected to begin in 2026 and to be completed by 2028. This will help reduce C1 cost as well. MMG is collaborating with the Huancuire community, companies on the Chalcobamba pit development, which is in early operation. Constructive dialogue with Las Bambas, the Huancuire community, and the Peruvian government continues. Discussions are focused on implementing agreements, including local business and employment opportunities, while seeking to finalize development priorities and strengthening relationships.
Finally, off the back of the successful completion of MMG's rights issue, the proceeds for this quarter used to for debt facility repayment. The repayment provides the company greater flexibility with working capital and the funding of corporate costs, as well on ongoing development of MMG's mines, including essential infrastructure and equipment. In closing, we are committed to growing a strong business across the three continents, four countries, and the three commodities. Importantly, our portfolio is leveraged to mineral critical for our low carbon future. I'm proud of our reputation and the commitment to international sustainable leadership stand out. Moving forward, we will continue to focus on generating more value from our operations and maximizing the growth potential of our assets. On behalf of MMG Exco, Executive Committee, many thanks to our team for their hard work and dedication.
I'm excited about the future and what is to come. This concludes the results part of our call. Now, we are happy to take your questions, and we'll hand back to the moderator. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from Jimmy Feng from Citi. Please go ahead.
Hi. Thanks, management, for the presentation, and I have several questions. The first question is for the Las Bambas mine. I is very happy to see the full year C1 cost towards the lower end of the guidance. In this case, as the first quarter C1 cost was high at 1.8, then the second quarter is, I calculate right, the second half C1 cost would be lower than 1.5. So in this case, what would be the C1 cost expectation in 2025 for Las Bambas mine? So this is my first question. T hanks.
Thank you, Jim. So, over to our Ivo, please. Thank you.
Yes, this is Ivo from Las Bambas. Actually, as you mentioned, the Las Bambas C1 cost right now is for 2024 expected to be around $1.55 per pound. So given that actually the C1 cost for the first half of the year is $1.81, actually, because we have more than 50% of the input from Chalcobamba, actually, so that's why we have a very significant improvement. So because of the three, just three reasons, the higher production which we have and improved consumables and efficiencies, and also increased by the byproduct credit.
Well, as you mentioned, for the next year, we prefer to still maintain the high production we have, and also we try to always maximize the efficiency of the current operation we have. So, actually, we try to maintain the annual production for the next year between 360,000-400,000 tons. And within the Chalcobamba, actually, they probably will contribute around 40%-50%. And so for the C1 cost. Actually, I don't have an exact number just for that, but I probably think it will be much better than the first half of the year of 2024. This is what we try to achieve.
Got it. Got it.
Thank you, any comments from, Song to add?
Yes, just we were released the full year guidance for C1, a range $1.55-$1.75 per pound. With what Ivo said, with the good production rate, our costs can reach to the lower end of the guidance. Thank you.
Thanks, management. That’s very clear. Just one quick follow-up. So for the last one of mine, I know that in the first quarter it’s already annualized at 400 KT. So would the guidance for the next year, 350-400 KT, be relatively conservative? Because in the first quarter, we already reached this level. Or is there any change of mining areas that may change the next year’s guidance lower than 400 KT? That’s my quick follow-up. Thanks.
Any other question, Ivo or Nan, you're just... Yeah, please.
Yeah, I didn't caught the number of the production next year. I'm sorry, just please repeat.
Oh, sorry. I mean that, from your previous answer, you said that in the, next year, the production would be around 350-400 KT for Las Bambas. But, for the first quarter of this year, the annualized production already reached 400 KT. So just want to check, whether the next year's production, if, there's no, disruptions like transportation can reach the higher end of this guidance, like, can reach 400 KT.
Yeah, well, actually, just as you know, the production of this year, twenty twenty-four, we have higher production in the second half of the year, because as you know, in the first quarter, normally we have the rainy season, we have lower production. And obviously, with the start of Chalcobamba, we have higher production, and we try to achieve the goal of this year is three hundred and twenty thousand tons. For the next year, obviously, with the Chalcobamba, which contributes more than half of the production, and we may reach between three hundred and fifty to four hundred thousand tons. Obviously, the same, the first quarter of the next year, probably because of the rainy season, we will have a higher production in the second half of the year.
I think we're quite confident that we will try to achieve the higher level of our target. Thank you.
Got it. Thanks. Very clear. My second question is for the Khoemacau project. When ramping up to 60 KT per annual output in 2026, what would be the C1 cost expectation? Will it be lower to what level? Do you have this expectation? Thanks.
Go on, Nan.
Yeah. Yeah, Jimmy, I think once we ramp up, obviously, to 60,000 tons, our range will be sort of somewhere around $50-$70 range. You know, as we go, we're still doing some planning, working out the budget for next year and then beyond that. So, early next year, we'll have a better clarity on the ramp-up profile, and then we can provide more update to the market. Yeah.
Sure. Thanks. Got it, and that's also a very good improvement in the Khoemacau C1 cost. Thanks. I have no further questions, and thanks for the sharing.
Thanks, Jimmy.
Thank you. The next question comes from Lawrence Lau, from BOCI. Please go ahead.
Hi. First of all, congratulations for the strong performance at Las Bambas in the third quarter. I have two questions. First of all, regarding Las Bambas, we noticed that the sales volume of copper actually is below your output for two consecutive quarters already. I just wonder if you have encountered any problem or difficulty in selling your products, or is it just some kinds of a temporary situation? And secondly, for Kinsevere, I just wonder why you are not guiding for the high end of your annual guidance for the full year output, because we have seen a very strong third quarters. And are you expecting a lower output for the fourth quarter on a Q-on-Q basis? I think that's all my question now. Thank you.
. Thank you for the question. For the first one, Ivo, Sandra, please comment in terms of the products selling, Kinsevere, Nan, please. Yeah.
Yeah, this is Sandra. Actually, I can comment on the sales. So, we don't, well, we didn't experience, you know, big issues in terms of logistics. You know, when you look at the numbers, probably it's more of a temporary disruption on the road for a few days and also as well, a port, so that we were not able to load the concentrate. So just to confirm, actually, we didn't see material disruptions in terms of logistics. So Ivo, I don't know if you got-
Yeah, yeah, yeah. Yeah, totally agree.
Okay, Lawrence, this is Nan here. Just, in regard to your question on Kinsevere, we do see pretty steady production performance in Q3 and then coming into October as well. But as we go towards the end of our oxide feed and then getting into the sulfide feed, so we finish our mechanical completion of the sulfide plant and then roaster. But yeah, we just start the ramp up. So to build in a bit of a conservatism in that ramp up process, because as you know, when we commission any sort of processing facilities, there will be up and downs. So we did bank some conservatism in there.
Secondly, as we go towards the end of the year, our oxide grade starts to drop to a lower level compared with now. So obviously, aiming to bringing the sulfide component, you know, as part of the ramp up. You know, overall, we definitely aim for a high end of the production figure for the year. But yeah, so we're just giving the range, you know, just considering some potential ramp up issues. Yeah. But that's pretty much part of our plan anyway. Yeah. Thanks.
Okay, thank you very much.
Thank you.
Thank you once again. To ask a question, please press star one on your phone. The next question comes from Chris Xu from Polymer Capital Management. Please go ahead.
Thank you very much, management team, and congratulations on the great operating performance. I've got two questions on Las Bambas. The first one is regarding the grade. So I see a great improvement, you know, on the grade, you know, on a quarterly, quarter-to-quarter basis. So, I'm just wondering, to what extent is that sustainable or actually do you see any upside to that going forward? Thank you.
Thank you, Ivo and Nan, please comment.
Yeah. Yeah, Chris. Yeah, Chris, this is Nan here. If I can jump in and respond to this question. In terms of the grade, we try to reach to a reasonable ore grade level between Ferrobamba Pit and Chalcobamba Pit. You know, obviously, we don't want a high grade operation. So we do see the grade will be sustainable. It will be well balanced between Ferrobamba and Chalcobamba to bring the best value to our operation, and then the most valid production profile for Las Bambas going forward.
Thank you. Got it. Thank you very much. Yeah. And the second question is, now that, Chalcobamba is already, has started, contributing, so what are the thoughts on, in Chalcobamba now? Any plan?
Ivo, could you comment?
Yeah, this is Ivo from Las Bambas. Actually, right now, we also have a lot of social programs with the Chalcobamba, with the community, which is Pamputa, and all the surrounding communities as well. We have this engagement with them, and what we're trying to do is still to keep this dialogue with them and trying to have some connections and dialogue in the coming months. Obviously, the third pit is still on the schedule of the Las Bambas development. So currently we are doing all this engagement with the community. Thank you.
Understood. So, there is no sort of definitive timeline yet for Chalcobamba, is that right?
Yeah, according to the timeline and what we're trying to evaluate, this deal is proper to have the how to date very optimistic ones. But we still try to maintain the timeline we have and trying to improve this negotiation with the communities, of course, with the government participating. Thank you.
Anything from Troy you want to add on this Chalcobamba item? Hello?
Thank you. The next question- Oh, apologies. The next question comes from Yuji Wang from Polymer. Please go ahead.
Hi. Hello. Thanks, management, for the introduction, and congratulations about the very good results. So basically, two questions from my side. So the first one is about the Las Bambas facility agreement. So I noticed you have made some progress in this part. Just wondering about the potential interest expense saving on this part. This is my first question. And the second one is just wondering about the Kinsevere current run rate, and I was still wondering if the mine is still sourcing external raw materials or just purely relying on your self-used raw materials. Thanks.
Thank you for your question. Song, could you handle the LB facility? And then, Nan, please handle the Kinsevere.
Yes, thanks, Yuji. This is, we have restructured the project facility of $1.8 billion in this July and August. In July, we repaid eight hundred million with a combination of cash and RCF rolling facility. And further in August, we repaid one billion by the newly set up a bank facility of one billion. With that repayment, we successfully reduced the interest rate, because previously, project facility at that moment was at a high interest rate period. By this restructure, we reduced at least 1.5% of the financing costs, which annualized interest can be...
For example, in 2025, can be $30-40 million cost savings.
Okay, hi, Yuji, this is Nan here. I'm just gonna respond to your Kinsevere-related question on the external ore source. As we continue to ramp up the sulfide plant now, and then use more and more sulfide ore, the reliance on third-party oxide ore will reduce. We not really rely on the third-party ore, but if there's a good opportunity with a good quality third-party ore at the right price, we'll definitely consider.
Sure. Sure, got it. Actually, two quick follow-ups from my side. So just firstly, is just to clarify the numbers management mentioned earlier, in terms of the interest expense saving for next year is around, like, $30-$40 million, right?
Yes, if you calculate with $1.5 billion with 1.5% interest rate and plus, that's roughly, you know, not-
Sure, sure, sure.
And with the-
Yeah, got it. And this-
With the-
Yeah, please.
Federal interest rate further cut, that will help us a lot further.
Sure. Sure, got it. And the second follow-up is about Kinsevere. So just wondering about your kind of like, guidance for next year, especially from your self-produced, I mean, the copper cathode produced from your self-owned, like, copper concentrates. So what's the guidance for next year, volume guidance?
Yeah, the guidance will. Well, we're currently still working through the ramp-up profile, and then also the budget process for twenty twenty-five. So we'll be in a better position to provide update in early next year, January, during our Q4 announcement. Thank you.
Sure. Sure. Looking forward to the updated guidance. Thanks, management. No further question.
Thank you. We're just still in the cycle, budget cycle, so we'll be ready later rather than now. Thank you. Thank you. One more time, to register a question, please press star one on your phone. We'll pause for a moment to allow any last parties to enter the queue. At this time, we're showing no further questions. I'll hand the conference back to Andrea for closing remarks.
Thank you for joining us. If you have any additional questions, please reach out to our investor relations or corporate affairs team. Thank you for your time. Bye for now.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.