Afternoon, and welcome to the ACG Metals Limited investor presentation. Throughout this recorded presentation, investors will be in a scenario mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself; however, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll, and I'd now like to hand you over to the management team. Artem, good afternoon, sir.
Hi everyone. Thank you very much for your time and attention. We are here to talk about the operating results for last year and guidance for this year. I'm Chair and the CEO of ACG Metals. I'm joined by Patrick, our CFO, and Graham, who leads the construction of our sulfide project, which means that this year is a transformational year for ACG as we move from production of gold to the production of mainly copper. If I just remind you where we are today, so ACG is a market cap of about $450 US dollars. We trade in London on the main board of the London Stock Exchange. As you can see on the graph on the right, we had a good start to the year, but many more good things are yet to come. Last year, we outperformed our analyst guidance, producing 39,000 ounces of gold equivalent.
This year, we are moving to production of copper from the middle of this year. We will continue to produce gold and silver dorés for the remainder of oxide ore. From the middle of the year, we are switching to production of copper concentrate and zinc concentrate with our total guidance for the year of 20,000-22,000 tons of copper equivalent. Patrick will walk you through what this entails in details. We are currently covered by three research analysts in the U.K., Canaccord and Berenberg, U.S., Cantor, and Stifel is about to publish as well. We here. Just to remind you, our what we call starter asset is an operating mine on the western side of Turkey.
I have been producing gold and silver from the oxide cap of the deposit, and we're moving to the production of copper and zinc, majority copper by value, from the middle of this year. This is a high-grade, low-cost, well-run mine, as it shows on the production and the financial numbers. Patrick.
Thank you, Artem. Just a few words on safety. I think it's a very impressive statistic that since this mine has been operating, it's been run at a very safe operation, and we have only had a 0.66 LTIF despite having 280 people on site during the last year of years of production. And now, with moving into the construction phase for a couple of months already, we are getting towards 500 people on site, and showing this with a 0.66 track record is actually very impressive. So the team has done an amazing job there. When we move to the financial year 2025 operations update that we published just two weeks ago, as Artem mentioned, we've achieved and exceeded our guidance on the production. Important to note that we started the year actually with a guidance of 34,000-36,000 ounces equivalent.
We then upgraded this to 36,000- 38,000 ounces equivalent in Q3 and then exceeded this by the year end. So again, it's been a very phenomenal year from a production point of view for the team. But also on the cost side, which is even the one thing that we can control as a management team, we've actually achieved an 18% reduction in our C1 cost, and the C1 cost is really the operating cost to run the mine, the mining, the processing, the G&A that's directly impacted to the production of an ounce of gold. So reducing that by 18% despite inflation in the country, and I think that's a really good achievement. The AISC increased slightly, and the AISC increased slightly only because of the fact that gold and silver prices went through the roof.
So the only component that really increased our AISC cost in the year was the royalty payments, the government royalty in Turkey, as well as the royalty to EMX or now Elemental Royalties, is dependent on the prices, and hence that increase in the cost there. All other operating costs were down. When we look at the cost curve position then in 2025 for the gold curve, we were just in the first quartile, but still in the first quartile, producing $1,244 per ounce. If we look at the current gold prices, that's obviously a very nice margin to have.
What is really important to note is that we restructured our royalty agreement with Elemental Royalties last year, which means that the oxide production, where we paid 10% royalty in the last year, is now going down to 2.25% from the 1st of January, which means that the first half year where we're only producing from the oxide will be already at a lower AISC. So we're going to improve that position in the first half year from where we are here. And then from the second half of the year, we still have a little bit of residue from the oxide. We have the sulfide production kicking in, but ultimately the royalty decrease will benefit us in 2026.
When we look then forward on the copper side, as we mentioned, the $2.50 per pound of copper production cost in the ramp-up year, don't forget it's only half a year of production. So hence, actually having that cost position already in the ramp-up year is pretty good. And while we go then through the normal state of the operation for the next 11 years minimum, we actually think that this will improve significantly. Just a quick word on the cash, as we mentioned cash in our announcement as well. We have started with the drawing of the bond, obviously in the beginning of last year. That's when we financed the project fully with this bond. We have the bond with $200 million that we're drawing in stages in an escrow account. Right now, we have drawn about six times from this bond.
We still have a very, very healthy cash position because we're not only having that escrow account to completion, we also generate significant money, obviously from the oxide production of gold and silver. Hence, our net debt position with 60%+ completion on the project is still at $56 million. If we look a bit forward and we look at the mid-year, we're going to have the bond fully drawn, and fully drawn means $175 million roughly because there's a $25 million cushion in the bond that will be released once completion is done. And then we still have more production to come from the oxide. So even mid-year, when we have fully drawn the bond, our net debt position will be very, very healthy. With this, I hand over to Graham for an update on the project. Oh, sorry. I'm actually just on the guidance. Apologies.
But I wanted to just mention a bit more in detail what we're actually doing on the guidance because the guidance is twofold. We have the oxide production in the first half year, as mentioned, and the sulfide production from the second half year. The oxide will be about 17,500 ounces equivalent production. The important fact here is that everything is on stockpile, which means that we don't have to mine any of these ounces. They're already sitting in front of the plant, and we are basically putting them through the processing facility, selling them as doré to Istanbul and receiving the cash. Then the second part of the year, we're going to have a ramp-up. That's about three months' time of ramp-up until we get to commercial production. In commercial production, then we actually go into 15 ,000- 17,000 tons of copper equivalent production.
And that's, as we mentioned before, still trying to be a bit conservative on that front, given it's a transformational year. One thing that we wanted also to mention is that we obviously, in a very, very strong market, copper prices went to $13,000. We also see a stable zinc environment. We see very, very high uplift in the gold and the silver market. Hence, we also felt we can actually upgrade our mining sequence, which means that we decided to move more to the North Pit. We will have more stripping in the beginning there, but we can afford it right now. But what it actually means is that we can unlock higher grade zones early, which means the grade of the copper especially is going to be higher in the first half year of the production.
And that means we can actually achieve a higher production as we're guiding to. But also what it means actually is that we have then the North Pit unlocked. We have the Mid Pit and the South P it unlocked, and therefore we can actually make the feed to the plant homogeneous, and we have more de-risking and more stable feed to the plant for the next 11-20 years. So it has a lot of benefits, but it's important to note that we are starting now the mining in a different pit than we initially assumed. So now I finally hand over to Graham.
Thank you, Patrick. I'm here to explain to you how we're going to achieve our mid-year startup and commissioning and startup and production. And once I've run through the slides and explained them to you, you'll see that I'm very, very confident that we are going to achieve all of our targets set out for the first half of this year. Okay. At the moment, we're 63% completed overall. Now that is everything, including the tails dam, tails line, and of course, the plant itself. Okay. I'll move to the next slide. Our Sulfide Expansion Project, we are on time. We are on schedule, and we are on budget, as Patrick explained earlier on. We have got nearly all of our equipment on site. The two mills are days away from coming on site.
In fact, I was actually talking to the trucking company today about the weather, etc., and the condition of the road, etc., to bring our mills to site this week. We have got all of our thickeners, our flotation plant, our thickeners, all of our scavenger cells, etc., on site, as you can see in the picture. We've also got, as when this photograph was taken, we had 1,700 ton, or I should say 1,300 ton of the 1,700 ton of steel that will complete the project. Currently, we're sitting on 420 ton of erected steel. This photograph was, of course, taken at the end of December. We have had quite a bit more equipment come in since then, which is why I'm saying that we've got nearly all of our equipment on site.
And then, of course, the other picture, our foundations itself for the final production, the mill foundations, the flotation foundations, and the filter press foundations are sitting on approximately 80% complete. The primary crusher, which was the first structure that we started with, is, as far as equipment, we've got everything in. We've got the jaw crusher. We've got the feeders. We've got everything in. The only thing we haven't got in is the conveyor, which is a discharge conveyor from underneath the jaw crusher through. I can't put that in at the moment because I'm still doing work there. I need access to both sides of the shed, but it is available to go in. The only thing that is left now is the overhead crane and the cladding. We'll be starting the cladding tomorrow, actually.
So the next picture you see down the track will be covered in environmentally green cladding. I visited the Remas mill place one month ago, the manufacturer, which is in Istanbul. They are the bearing shells for both the ball mill and the SAG mill sitting there. They're just waiting to get packaged to come to site. That'll all happen during the course of this week and a little bit of next week. We've got approximately 20 truckloads of mill equipment coming to site. As you can see, we've got our thickeners sitting there. Some other steel is along beside it, but all of our thickeners, our scavenger cells, everything is on site. Our earthworks for the tailings dam or tailings storage facility, I should say, is well underway. We are currently working on both embankments.
We have got an embankment at the open pit side at the far end of the tail dam. That embankment, we're about one-third of the way through of the 352,000 cu m of rock we've got to put in on that. And the main embankment, which is at the opposite end, is we're working on the foundations at the moment, removing excess soil down to our dam. Now, that dam has got 420,000 cu m of material in it, which we've got about 90% of it already stockpiled waiting to go in. The tail dam has been built from our rock from our overburden stripping. So we're utilizing everything on site that we possibly can to assist us to get this over and done with and keep it on budget. This is sulfide, as I said before, is on time and on budget. The gray, I won't talk to that.
That's gone. It's in the past. It's fairly self-explanatory. The blue, which is Q1 2026, all of our major equipment will be installed by the end of Q1. Our substation will be energized. Q2, which will be mill and plant, will be energized, and our commissioning will begin. And of course, at the end of Q2 2026, we will be declaring commercial production. And I'm absolutely confident, as I said before, that we will be declaring commercial production on time.
Thank you, Graham.
One more to go, I think.
Yes, that's true.
Okay. Yeah. You want to get me over and done with quicker than what I want. Enriched Ore Project is underway. We had our kickoff meeting with our CH Consultants, CH Engineering out of Ankara, who will be doing the main design and engineering. They have already done some drawings, some basic drawings, designs for us so we could kick the project off and start our permitting. Our permitting is started on Q1 2026. Our permitting started last week as of the kickoff meeting that I had with CH, also with Çınar, who is quite a large environmental company. There's many, many years of experience within Turkey in doing EIAs and permitting to assist us and get this project kicked off. And then, of course, Q4 2026, commissioning of phase I gold and silver recovery.
We're not doing anything else other than phase I to start with, which is only gold and silver. Then once approximately two years later, we'll move into phase II. Now, phase I will be built with some portions of phase II will be built at the same time. But that's underway. We're in the talks with the manufacturer for our mills, which is a ball mill and SAG mill, as well as a jaw crusher. We're in talks with them getting that underway. So we're actually already kicked off this very exciting project that I've been working on for over a year now. So it's a very exciting time to go into it. Okay. And that's the end of me. Artem, you don't have to listen to me anymore. Back to you.
Thank you, Graham. So essentially, to sum it all up, this is a transitional year for ACG Metals. There's a lot of things happening. Number one, obviously, the key objective is delivery of the sulfide project on budget and on time. As Graham has just explained, we have full confidence of getting to commercial production by the middle of the year. And that will enable us also to achieve our production guidance that Patrick has explained. We do see further upside, including the capital optimization, capital structure optimization, meaning the first call on our bond will be in a year from now in January 2027, and we'll be able to refinance it at a lower cost where it's currently trading. And then, as we have met with a number of investors, including over the last week, one key question keep getting back, that is liquidity.
We have improved liquidity significantly since the first analyst reports published in June last year. That increased 800%. But we certainly believe, like our investors, that we need to work further on that. And we expect to be qualified for index inclusion in FTSE. We are on the main board of the London Stock Exchange, and that will help to drive the passive flows into the stock and continue to help us with liquidity. As you see on the numbers on top, the analyst target price is below our own estimates of net asset value, even at consensus, not even touching base on what it would be at spot. Therefore, there is a very significant upside in shares of ACG Metals, and that is before any M&A that we are looking to do. We are actively working on a number of transactions.
Nothing is done until it's done, and we'll update the markets accordingly once we have something to talk about on this front. That's us. Let me go into the questions. We have received a couple so far. The first question is, how exposed is the business to copper price volatility during the ramp-up phase, and what hedging strategies are in place, if any? I'll pass over to Patrick for that answer.
Thanks, Artem. Yeah. I mean, exposed to the copper price volatility. I mean, obviously, the business is always exposed to copper once we start producing from the sulfide, so even in the ramp-up phase. But I think what's important to note is that we're obviously focusing on the cost side. As we mentioned, even in the ramp-up, we're conservatively looking at $2.5 per pound of copper. So if you look at our current copper price, that's probably $6 per pound now. There's a very, very significant margin. So there's a buffer in the system there. Even if copper drops, there's still enough buffer. But I think what's more important is that we have prepared ourselves not only on the technical side, where we've done enough work to be ready for the ramp-up, be it geological work, geotechnical work, be it also metallurgical work in the lab.
I think we've been doing excessive work to prepare for that ramp-up phase. But also, we have ensured that there is enough liquidity in the system at any given time. So we mentioned the $25 million buffer in the bond. We have obviously significant cash buffer from the oxide cash flows coming in. And then we have a further liquidity buffer in an RCF and an equity backstop facility. So it means that there is, for any eventuality, we have enough liquidity in the system. Just to address the hedging, I am really not a fan of hedging base metals, given that they're usually in backwardation. If they're in backwardation, you automatically lose going forward. It makes sense when you think really that there's a significant drop coming.
But as long as fundamentals are intact and we see the shortage in the system in copper, it's really, yeah, I don't know if it makes sense, but we're constantly monitoring the market. And if there is a good opportunity and a good setting in the market for us to do something, we could. But ideally, and given we are strong believers in copper, we really don't intend to.
Yeah. Copper is a main focus of ours. Therefore, we do not expect to hedge copper. This year, overall, if you take our kind of standard year of production, 50% of revenue from copper, 25% from zinc, 25% from gold and silver, that at consensus prices at spot will probably be more in terms of gold and silver, as well as the fact that this is a transitional year and we're actually producing only gold and silver in the first half, you'll probably have a higher contribution from gold and silver this year, mitigating any copper volatility as such. Moving to the next questions. The first one, or the next one is on permits for the Enriched Ore Project. We are looking to obtain those by the end of the year. As in any kind of permitting process, there are no hard deadlines.
But based on our experience and experience of our consultants, we are well covered to obtain those much before we expect to start commissioning from the Enriched Ore plant. What helps us on this front is that essentially we are obtaining permits for processing of waste stored on our site. It improves the environmental footprint as this waste potentially could be asset generating. Therefore, we do not expect any issues with this permitting process. There's also a question on whether we are in advanced talks with any of the other local manufacturers to utilize our heap leach facility. That's a very good question because indeed that is our plan. Essentially, we will process the remainder of our own oxide ore. Most of that by the end of H1; there will be some residual leaching in Q3.
We are in discussions with several parties around us in order to utilize our heap leach to process third-party ore. Once and when we reach an agreement with any of them, we'll update the market. Graham, the next question is for you. Could you please give some details on ramp-up of the sulfide plant? Essentially, in broad strokes, we will finish assembly in Q1 and go into the wet and dry commissioning in Q2 to reach full commercial production. And the definition of commercial production is 70% of the capacity of the nameplate capacity. We aim to reach full commercial production by July. Anything to add on that front in terms of your confidence in getting this done on time?
Yeah. I haven't got much to add to that. Artem, you explained that pretty well. Our dry commissioning will happen as soon as we start fitting our equipment into the plant itself. Our finish of dry commissioning will be just punch listing, making sure that everything's working properly, all of our safety things are all in place, guarding handrails, our stairways, etc., on that. Wet commissioning will be very, very quick. Wet commissioning on this plant will be just filling it with water, make sure there's no leaks. And anything, then we half empty out and we go straight into hot commissioning, which is essentially we'll be putting low-grade ore into the plant. And from that point on, we'll actually be making copper and some zinc through the process, albeit until we make sure that everything's working right.
It'll only be in small amounts, but we will be essentially producing product once we start hot commissioning. Thank you.
Thank you. There's a related question just came in. Graham, does the remaining work between now and commercial production look achievable within the stated timeframe?
Yes. It is achievable given the fact that all of our equipment is virtually on site. And our mills, which are our biggest part of all of our equipment, will be here during the course of this week. We have already got the primary crusher completed with all of the equipment, with the exception of the discharge conveyor. And of course, we've got to put cladding on it and the overhead crane in, but that is complete. Our ore bin discharge. All of our concrete work is done. We've only got mechanical work to do, which is putting in feeders and conveyors, which is not a big job. We've got all of our flotation cells ready to install. We have just installed a tower crane, which is going to speed our work up quite considerably than using mobile cranes on that.
I'm very confident as a person that's building it that we will complete everything on time and call commercial production after we've achieved our 70% of nameplate, which will be in July.
Thank you, Graham. I understand that we are finishing in five seconds. So we'll have to get back to everybody else on any further questions. Thank you very much. Really appreciate it. The recording of this call will be available on our site. Thanks a lot.
Thank you.
That's great. Thank you for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and it will be 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, and good afternoon to you all.