Thank you, everyone, for joining. I appreciate your time and interest in our beautiful story, as President Trump would say. Let us quickly introduce ourselves. I'm Artem. I'm founder, chairman, and CEO of ACG Metals. I've been in mining for close to 30 years, mostly creating value through buying and selling mining assets and mining companies. Kind of 10 or 12 of this last 30 was spent in the aluminum industry, where I led all the key transactions that created United Company RUSAL as the largest aluminum company in the world through a series of roll-up acquisitions. When I led RUSAL IPO in Hong Kong in 2010, the company was valued at $20 billion pre-money.
That is a strategy that we are now applying in the copper space, looking to build a significant global multi-asset, multi-jurisdiction copper company listed today on the main board of the London Stock Exchange, starting with the first asset we acquired in Turkey in September. Patrick.
Thanks, Artem. Hi, everyone. Yeah, I tried to cover most of the aspects of the capital structure in the mining space over my career to date. I started in debt financing at UniCredit, did transactions from Burkina Faso gold to Russia and fertilizers, including a lot of transactions in Turkey. That is where the relationship with Lydia, our key shareholder and partner now, came from. I moved to private equity, did a couple of transactions in Eastern Europe. We bought a mine for 180 million, sold it for 400 million, bought a mine for 2 million, which is now 250 million. Good deals there. I moved to corporate, joined Artem in the previous company. Now we joined forces again at ACG in that interesting story here.
Thank you. As you can see from this slide, number one, we've been extremely busy for the last few months. Number two, ACG Metals is a very young story, not well known to the market. Frankly, we were busy putting the business case together since completion of the acquisition of the first mine in Turkey, Gediktepe, for 84 million in cash and 35% of our shares. We have very quickly moved to set up the full team, both at the asset level and the corporate level, signed the EPC contract with a company that is building the sulfide expansion in this mine, raised $200 million three months after completion of the acquisition in bonds. We are bonds. Ended the last year with $85 million in EBITDA. I know that this is higher than the price we paid in cash for the asset.
Perhaps one of the key differentiations for us at this stage, relatively small and unknown company, is our focus on cash. We have moved on to doing excellent First quarter of this year, which we will talk about, reducing our costs further to generate even more cash. We finished kind of putting the business case together with reducing the outstanding warrants by 70%. I originally set up ACG as a SPAC in London, and warrants was one of the key features of that type of structure. Now we moved to be a proper operating company. We thought we remove the warrant overhang to focus and move liquidity into shares. With that in mind, we also changed our trading currency from dollars into pounds. Just a few weeks ago, we started looking at the market and appointed the brokers.
Eight busy months to create a company with half a billion dollars in value, with $90 million in free cash flow, fully funded for the expansion. As I mentioned, cash is a key element of our story. I challenge you to find another company of our size, so fluid with cash. Last year, we generated close to $90 million in free cash flow, a testimony, obviously, to the quality of the asset and the quality of the team. We raised the bonds to invest in the mine and move it from the production of gold into production of copper, essentially. We have $190 million in our balance sheet. As we look to complete the expansion and start the production of copper in the First quarter of next year, our cash generating ability increases to over $110 million. That is on consensus pricing.
On today's market price, that will be even higher. All of that brings us to this page, which is essentially the question why we all here. We see a massive upside in market capitalization, massive upside in our shares in the next 8 to 12 months as we execute on a base case. Our base case is fully funded. We have the full management team in place. We are executing the project construction on time and on budget. In the meantime, we continue to generate massive amounts of cash flows from existing sales of gold and silver Doré bars. Just to point one kind of number here, the competitive comms are trading at roughly six times free cash flow. We are trading today at 1.4. Extremely cheap, full of cash generation, and well positioned for the further growth.
Patrick, maybe you can talk about our conservative approach to the balance sheet management at the same time.
Yeah, Artem, I think just on the capital structure, you see we have 191 million in cash versus the 200 million of bonds. That is just because we are currently drawing from the bonds as we are progressing the construction of the extension of the mine. We have a 7 million shareholder loan still outstanding. In terms of liquidity, what's important is that this cash generation that we have from the operating mine is going to equal out with the bond drawdown we're going to have over the future. We are going to maintain a very neat and tight net debt to EBITDA ratio over time. In addition, in case whatever could potentially happen, we do not see anything. We have an equity backstop facility from one of our key shareholders, Argentem Creek. We also have an unutilized revolving credit facility of 15 million in country.
Given the cash generation, the favorable market environment, we are not seeing anything of this being utilized.
Thank you. Just a summary of our shareholder base. Two largest shareholders around 30%. Lydia is a Turkish company from whom we acquired the asset. Argentem Creek, New York-based fund focused on investing in emerging markets quite successfully. Glencore and Traxys came in on transaction in September last year. Glencore has copper offtake from the mine. Traxys is our marketing manager for the zinc offtake. DeHert is Hong Kong-based family office. Moving on to our board. One conclusion you can draw from this picture is that we put together a board which is worth a multi-billion dollar company. It is designed to be the board for a much larger organization, which is proved when Mike Pompeo joined us a few months ago. As you know, he was head of State Department and head of CIA under the first Trump administration.
Mike, extremely helpful to us in jurisdictions where we are looking to buy his assets that he can establish link to the top levels of the governments almost anywhere in the world. Mustafa is the CEO of Lydia, the company from whom we acquired the asset. Martin is the chief investment officer of Argentem Creek. Our independent directors include Fiona, with 35 years in commercial banking in the mining sector. Mark used to be chief investment officer at Global Strategic Group in ADIC, a sovereign wealth fund of Abu Dhabi. We do have access to the large pools of capital in that part of the world. Henny used to be the head of copper at Anglo American. BHP looking to buy Anglo American for its copper asset should say thank you to Henny, who built and managed them really well.
On advisory side, Robert Friedland probably does not need an introduction. The most prominent entrepreneur in the mining sector of our generation, Warren Gilman, used to run money in the mining sector for Mr. Rick Ashin, now has his own investment company, Queens Road Capital. The management team is equally impressive. A note to say that we do not use executive search firms. All these people were hired very quickly through our network of contacts. We've been in the sector for a long time. We actually have a long waiting list of people who are keen to join this exciting company. Just a couple of highlights. Graham Ripley, our project director, built 13 projects globally in the billions of dollars. He is building a Gediktepe sulfide expansion project now. None of his projects were behind schedule or above the budget.
That is exactly what is going to be at Gediktepe. Yaya is our head of processing. Had a very strong pedigree of large companies he worked at before. His involvement is already helping us to increase recoveries from the current oxide operation, which is run by Barış, who has been with the mine for nine years. Well familiar with all 300 people we have working there, as well as with the local communities. The Gediktepe mine we acquired as a first step in execution of our strategy is on the western side of Turkey. Easy proximity to European smelters. Three hours drive from three ports on the Mediterranean coast of Turkey. The closest one of them is Izmir. The mine is fully built, connected to infrastructure. The project we are currently executing on is a brownfield expansion, which has been massively de-risked.
We are currently producing gold and silver Doré from so-called oxide cap. We are in the first quartile of the global cost curve in gold, which means high cash flow generation. We will start producing copper concentrate and zinc concentrate from the sulfide part of the deposit from First quarter of next year. We are on the first quartile of the copper global cost curve, which means high cash flow generation. Patrick, over to you.
Yeah, when we look at the mine itself, you see the pictures here of the current operation. On the right side, the stockpile; on the left side, the liquid solution and the Maricro plant for creating the Doré. At the moment, we are selling gold and silver Doré bars. Very easy cycle. We're selling it on a Thursday with a truck to Istanbul refinery. On Tuesday to Thursday the next week, we have the money in the bank based on LBMA London market prices. Very easy cycle. Yeah, we have this operation now in place since 2022. It's an established operation, but still fairly new. We are utilizing this operation on the oxide. We're building the sulfide operation in the other part of the license area so we could potentially and most likely operate both in parallel.
If you look at the numbers, we have talked about these before. Last year, we produced 57,000 ounces of gold equivalent. This year, we're going to produce a bit less. Given the gold price increases, we are thinking about the same financial metrics. The most important thing is the grade. If we look going forward, that's a 2.33% copper equivalent grade in this deposit. It is an open pit mine, which means that it is a lower cost than underground mining operations. In mining, they say grade is king. That is for a reason, because grade gives us enough power to circle or to actually avoid any potential obstacles on the cost or on the environmental side or whatever it is. With grade, you always have enough buffer in your margin.
If you look at the comparison in the market versus good peers in our industry, the grade that we have in our open pit operation is significantly higher than other open pits. If we actually look into Portugal or Spain, others where underground mines have similar grade at significantly higher cost. Grade on the one side, but then also the cost on the other side. I am extremely proud of the team and what the team has achieved in Q1. In an environment like in Turkey, where you have a higher inflation rate, to achieve a reduction in the ISIC is a big achievement. Thanks very much to the team on site making this happen. On the other side, we were also very blessed with some additional findings in Q4 in the ore body. That made a significant increase in the stockpile.
Hence, we could also produce more ounces than actually expected in Q1. On the one side, we produced more than we showed to investors. On the other side, we could reduce the cost, what we've shown to investors. That leads also that we are really in the first quartile of the cost curve globally that we could even improve. If you think about the next step, the copper operation starting from 2026 with the full capacity in 2027, we will still be on the first quartile of the cost curve versus our copper peers at the time. Just one slide. The next slide on the upside potential for the existing operation. As we said, we are having around one to two years of mine life left in the oxide.
What we are trying to do is obviously to extend this because it's a fairly new plant. We want to run both in parallel. This is absolutely not in the base case that we've shown in the base data and the numbers that Artem presented in the beginning. We see we have a near-term exploration potential in the license area that we own, as well as outside of the license area. We also have some stockpile that's called a transition material, which is currently stockpiled, but not really considered in the studies we've done. We are working through some test work to actually make this most economically attractive to us. That alone can extend the oxide mine life quite a bit. In addition, we're talking to other companies in the region. We see also potential for there to increase the oxide mine life further.
The key, obviously, to the future of Gediktepe is the start of production of copper concentrate and zinc concentrate. For that, we are executing on a brownfield expansion project. We have a fixed price EPC contract for $146 million. We are not going to pay more. We raised more money. We raised $200 million. We have quite a bit of buffer. We also have alignment of interest with an EPC contractor because it is also owned by Çalık Holding. Çalık Holding is a large Turkish conglomerate, which is active in a various number of sectors, from construction to energy and to mining. We have acquired Gediktepe Mining from the mining subsidiary, Lydia. The EPC contractor, Garip İnşaat, is the one that is building our sulfide expansion. It is the same contractor that built an oxide plant to begin with. They are well familiar with the mine.
For that reason, and also because they are a subsidiary of our major shareholder, we have full confidence on getting the project done on time and on budget, as it is currently happening. Patrick and I were on the site beginning of this week. I can confirm that we are working on a project to be executed on time and on budget with commissioning in Q1 next year. On top of that, given the fact that this is a brownfield expansion and given the low value of this contract, the project is extremely competitive on a capital intensity. We are building Gediktepe sulfide project at $7,000 per ton of copper equivalent production. Typically, if you go anywhere in the world, the new copper production facilities are being built at $15,000-$20,000 per ton of capacity. We are extremely competitive.
That obviously drives the high IRRs of this project. We have de-risked it as much as it's possible. The offtake is already committed on the copper side to Glencore, on the zinc side to Trafigura. We are fully confident not only of completing the project on time, but generating sales as soon as we start getting product out of the gate. The upside on the sulfide part of the mine will come from extension of the mine life. The previous owner, Lydia Madencilik, they stopped drilling after they had 10 years of initial mine life. Already, we see that 35%-40% of the resource they have on our balance is outside of the eventual pit shell. In about seven years from now, we will do a study and decide whether we go underground to access those resources or whether we expand the pit.
The strike deposit is open along the strike. Actually, as you go further down, the grades increase further. All in all, we expect this mine to be producing for 25-30 years eventually. Patrick.
Yeah, I don't want to spend too much time on the 2024 results. We are focusing on the future, not on the past. I think what's really important to see here is that since the beginning of the operation, there was zero lost time injury. We are very proud of the safety record. That continued into Q1 and also to date. It just keeps adding to the record of having no incident on site. I think what you see here is a lot of year-over-year changes that are positive. That also indicates that the mine since 2022 to date, there was a good learning effect and always improvements. That is obviously something that with the transition to ACG, we encourage and also foresee. We're seeing further improvements since the transition to ACG.
If we look at the key highlights that we had in the last year, I think we talked about it before in the beginning. Obviously, very happy that we have raised a 200 million bond in the end of the year just to ensure we have the funding in place to fully have the construction built, have a clean balance sheet. That is also shown in our current position. Since we had the bond, we paid down the initial acquisition loan of 37.5 million completely, meaning that it was really just one item next to the small shareholder loan we have. Since then, we have actually drawn, you can see it here, roughly 62 million from the bond for the sulfide expansion project.
On the other side, we also generated significant cash, which means that our cash position is almost equal to the bond size at the moment, leaving a net debt position that is very, very healthy. We are seeing that with the cash generation coming, we have coupon payments to do. We obviously are also adding NPV to the project because we are further de-risking the construction with every month we are constructing. We are also proving to the market that we are delivering on what we are saying, which we have done so far really well. You can see that even if the bond is then fully capitalized, we still have an NAV roughly of $500 million, which is significantly higher than our current 120 million market cap. The last point maybe on this slide, we also did a hedging on the gold.
We hedged 50% of the gold production only, which means we have 50% gold open. The 100% on the silver is still open. That 50% hedged position has significant upside because we did it in a collar structure, which means we protect the downside. We are also maintaining the upside with only $100 in the gold price as a cost to it, so to say. That is obviously ensuring that we have the cash flow from 2025 for the coupon payments, for the bond coverage. We have enough buffer in the system at all times. It is just a conservative approach that does not protect us from any upside that we are seeing right now in the gold price.
The story is really simple. And it's been proven in the mining sector many times over. When you have a number of assets on the one platform, the platform trades at a higher multiple. And you have a smoother cash flow profile. And you diversify risk among the jurisdictions. We started with the first asset in Turkey. We are looking to become relatively quickly, in Çalık, they say in Turkey, a second largest copper producer on the London Stock Exchange. We are focused on copper because we like the sector, one of the few mining sectors that is not controlled by China, unlike nickel, cobalt, or lithium, et cetera. There are very few pure play copper companies. And those that exist trade at significant premium to diversified. Hence, we believe there will be reward for continuing to be a pure play copper.
In summary, our vision is to get to 200,000 to n300,000 tons of copper production in the next two to three years. Thanks for President Trump, the copper prices are not running too high at the moment, which gives us a window of opportunity to acquire further asset. The base case upside is very simple, as we've shown in the beginning of this presentation. There is a four to five times upside in equity just from existing very high cash flow generating business. We're looking to acquire cash producing assets. Our focus on cash, as I said, is extremely important. You can think of ACG as all cash global. We are going to have additional cash generated assets in other jurisdictions. Essentially, if you're in copper, you have to be in one of the copper producing regions.
We are currently on a copper belt in Turkey that extends into Eastern Europe. We have targets there. We're looking at targets in African Copper Belt and South American Copper Belt. A significant upside from existing mine and existing base case scenario, further M&A can double and triple that upside. Let me pause here and see if we have any questions.
Fantastic. Thank you very much indeed, Artem and Patrick. Ladies and gentlemen, do please continue to submit your questions just using the Q&A tab situated on the right-hand corner of the screen. We just want the team to take a moment to look at those questions we've received so far today. Just to remind you, the recording of the presentation, along with the published Q&A, can be accessed via your Investor Dashboard. As you can see, guys, we have had several questions come through throughout today's presentation. Perhaps if I may, let's start with the first one. I think you have actually covered on this, Artem, but I'll read it out for you. How do you evaluate potential targets? And will they be all production assets, which I think you've alluded to, or greenfield?
Thank you. In the next two to three years, we're only going to be looking to acquire producing or near producing assets that will help us to grow the platform quickly and the production profile quickly. Also, the existing cash flows enable us to use debt funding for the acquisition. We already got our first bond issue done. We can do second bond issue, et cetera. We have access to both debt and equity funding. Using the debt in any transaction obviously magnifies the return for equity investors. That is what we are looking to do.
I want to think perhaps more for Patrick. Again, I think you may have touched on this. Do you have any hedging in place? What's the plan with the cash generation and free cash from the business?
Yeah, thank you. Yeah, I touched on the hedging. We have 50% on the gold only. This is a collar structure, which means that we have basically secured 15% above the budget that we set ourselves for 2025 on those 50%. We also enabled in the structure that we are still participating from the gold increases. Right now, above 3,065, we are again participating, which means in the current gold price environment, we are again benefiting from the upside. If we look at the cash generation in the business and what do we want to do with it, I think we obviously want to keep the flexibility with the bond. We are generating cash. There's a potential that we repay this, as we showed in the bond presentation to the investors in December.
The cash generation from the business could be absolutely sufficient to pay back the 200 million by the end of 2029. In all honesty, if we're looking at the track record of the business and once we have one year of operation under the sulfide project, there's nothing holding us back to refinance this bond for a cheaper rate. We are then a repetitive issuer. We then have potentially a credit rating from a leading institution. Our capital costs will decrease further, which is to the benefit of all stakeholders. Yeah, the cash generation of the business, we will also use going forward after everything is done well on the sulfide for other projects.
Fantastic. Thank you. Perhaps another one for you here, actually, Patrick. Question reads as follows. Is it correct that you're trading at close to one times 2024 cash flow?
I think that's one way to look at it, yes. No, we've been extremely pleased with the asset we managed to buy, the partner we actually managed to get with our Turkish partner in place now, and also our shareholder. I think also with the team that we acquired, we're really happy. Yes, if you think about the pure numbers with $89 million of operating free cash flow in 2024, and we're currently trading at 120 , and going forward, we're going to have $110 million free cash flow. That's actually on conservative consensus real-term prices. That is a correct answer. Yeah.
Yes, the stock is dirt cheap.
Thanks. Gold and silver production, as we come through into 2025, what's the expected EBITDA from that?
Some guidance, Patrick, on 2025 production.
Yeah, I mean, we gave a guidance on the production between, yeah, I think 30,000 to 35,000 ounces equivalent. What we're seeing currently, also with the learning effects, the efficiency effects since we came in, bringing on Yaya, who really helped on the recoveries, I think there's good reason to believe we can go above this. We are not revising our guidance because we rather show results. We rather surprise positively in the market than saying something that we can't hold.
Thank you. Another question here. I guess you've covered some of this as well on the charts that you've shown. Why are you different to any other gold and copper producer? I guess one for you, I guess, Artem. Thank you.
Yeah. If you look at the companies of similar size, junior companies have been in existence for eight months. I doubt that you'll find another so well-capitalized company generating $90 million in free cash flow, fully funded for the expansion, led by a totally experienced management team with a world-class board of directors. One conclusion can anyone draw from that, that this company is not going to stay small for a long time?
Thank you indeed. That has covered all those questions received. Of course, any further questions that do come through, the team will be able to review those. We will publish responses where appropriate to do so on the platform. Artem, I was going to ask you for a few closing comments. I do not know. It is quite difficult to follow what you have just said. If you have got a few closing comments, that would be fantastic, please.
No, thank you very much. I think the simple story here is that we're a new company. We've been busy building the base case. It's now done. It shows four to five times upside from just execution on the base case, generating massive amounts of cash flows. And a promise in a blue sky of further M&A could further enhance those returns. We just started explaining our story to the investor public. We have hired brokers only a few weeks ago. Do not wait.
Fantastic. Thank you very much indeed, Artem and Patrick. Can I please ask investors not to close the session? It should be automatically redirected to provide your feedback in order for the team to better understand your views and expectations. This will only take a few moments to complete, and it is greatly valued by the company. On behalf of the management team of ACG Metals Limited, we'd like to thank you for attending today's presentation. That concludes today's session. Good afternoon to you all.
Thank you.
Thanks everyone.