Good afternoon, ladies and gentlemen. Welcome to Ma'aden Earnings Call for the third quarter and nine months of 2024. Thank you for joining us. My name is Abdulaziz AlNaim. All participants in today's call will be in a listening mode only. Once today's call concluded, the presentation and all relevant material will be available on our website and on Ma'aden app. Please refer to our disclaimer on slide two, which apply to all disclosure made in today's presentation. Kindly note that our figures discussed in this presentation in Saudi riyal, unless otherwise stated. I'm joined today by Ma'aden CEO, Bob Wilt, and CFO, Louis Irvine. They will take us through the company performance of Q3 and the first nine months of 2024. As usual, we will open the floor for your questions at the end of the presentation.
However, the chat function is open, so please feel free to post your questions during the call. We hope to go through as much as possible today. If you have any follow-up questions, please do not hesitate to email us. With that, let me hand it over to Bob.
Thank you, Abdulaziz, and thank you to everyone for joining today's call. This quarter was a standout for us. We delivered the second-highest nine-month EBITDA on record at SAR 8.8 billion, second only to the first nine months of calendar year 2022, where during the enormous run-up of commodity prices. This is indicative of the momentum we're building as we execute our long-term growth strategy. As you can see, revenue was up 6% year-on-year to SAR 22.6 billion, and net profit increased by over four times as we have been improving our production capacity across the organization. We also generated over SAR 7 billion in operating cash flow, giving us the flexibility to keep driving key growth initiatives while maintaining our leverage ratio within the guided range. Our growth doesn't stop here, obviously.
We're making strategic moves that are setting the stage for even greater progress, and I'll touch on those in more detail shortly. Turning to operational performance, we made strong advances across all businesses of the organization. We delivered near record production and sales volume for DAP and record gold production year to date. Our aluminum business was a major highlight this quarter as we announced three transformative transactions that will support our future regional and international growth. Our Phosphate 3 expansion project is actively progressing, and we've scaled our exploration efforts through our partnership with Ivanhoe Electric, with all three Typhoon systems now operational. We're also advancing our drilling program rapidly with a total of 347 km drilled year to date. Particularly proud of the advancements we're making in our Ma'aden transformation programs.
This is how we are shaping Ma'aden into a more efficient, tech-enabled, people-centric company. We've made meaningful progress in Q3 as evidenced by our results, and the key initiatives we're putting in place are set to drive significant impact in Q4 and beyond. I wanna highlight the role Ma'aden plays in establishing mining as the third pillar of the Saudi economy. Across the kingdom, we have estimated $2.5 trillion worth of untapped mineral resources in the ground. Ma'aden's role is central in accessing these resources and maximizing the contribution of the mining industry to the Saudi economy. We're accelerating this through the largest mineral exploration program in any single jurisdiction on the globe. We're proud of our Saudi base, but our ambitions go beyond our borders. We're building a platform that positions Ma'aden as a global leader in strategic and critical minerals, fueling industries that matter.
If we say globally relevant, we're already globally relevant. We're selling to approximately 55 countries. We own and operate assets in nine countries. The transaction we'll discuss shortly relative to Alba will make us a global champion in aluminum. We're also leveraging advanced technology through our value chain. We're driving efficiency, cutting costs, and paving the way for a tech-enabled mining future, all the way from exploration through processing and distribution. Obviously, our people are the driving force behind our success, and we are committed to becoming the employer of choice in Saudi Arabia. With safety as a core focus, we lead with integrity and care for our workforce. We empower an extraordinary team of innovators, miners, and leaders committed to achieving our ambitious goals. Finally, we're building a global mining champion, fueling the mineral needs of the kingdom's downstream industry.
Each of these pillars represents a commitment not just to Ma'aden's growth, but to sustainable and diversified economic future of the kingdom. You're gonna hear me on all future calls, talk about these five key enablers and pillars of our strategy. Today we're gonna dive deeply into the globally relevant as we talk about the Alba transactions. With that in mind, as you've heard throughout the quarter, we're making pivotal moves to build a global aluminum leader, which is a central part of our 10x EBITDA ambition by 2040. The three strategic announcements we made this quarter are transformational for our aluminum business. They set the foundation for creating a globally competitive aluminum platform and further expand our footprint in this critical segment.
Starting with Alcoa, we have agreed to purchase their share in both Ma'aden Aluminium Company and the Ma'aden Bauxite and Alumina Company, gaining full operational and management control of our upstream aluminum assets. This is a big step forward for building a market-leading aluminum business and is expected to close in the first half of next year. With Alba, we have the potential to create a new global powerhouse. By leveraging the expertise and resources of both Ma'aden Aluminium Company and Alba, this partnership could significantly boost aluminum production capacity, and develop, deepen economic ties between Saudi Arabia and Bahrain, and create a global powerhouse. Due diligence is underway currently, and we will update the analyst community as diligence progresses. Finally, we have agreed to acquire SABIC's 20.62% share in Alba. This move will strengthen our capabilities, not just in the Kingdom, but regionally and globally.
This is expected to complete in the first quarter of next year. Together, these transactions contribute to building a fully integrated aluminum value chain that positions Ma'aden at the forefront of the industry and drives sustainable growth both for our shareholders and the economies we serve. Now I'll pass it over to Louis Irvine to talk about the financials.
Thank you, Bob, and good afternoon, everyone. We continued our momentum with a solid nine-month performance, delivering near record results as we benefited from improved production costs and favorable market conditions. Revenue increased by 6%, reaching SAR 22.6 billion, supported by higher overall prices and volumes in all business segments. EBITDA grew significantly by 45% year-on-year to SAR 8.8 billion, reflecting improved production costs, favorable market pricing, and the positive impact from an insurance claim received during the period, as well as the absence of the one-off industrial utility charges that we recorded last year. Net profit for the nine months reached SAR 3 billion, more than four times the profit reported in the prior year, driven by strong EBITDA performance and lower depreciation. Turning to the EBITDA bridge for the nine months of the year.
Year-on-year, we achieved solid EBITDA growth, primarily driven by improved overall pricing, raw material costs, and higher sales volumes. Higher volumes in primary aluminum, flat rolled product, and gold contributed to a positive impact on EBITDA of SAR 755 million. The insurance claim of SAR 563 million received year to date, along with the absence of the one-off industrial charge, about SAR 490 million incurred in the prior year, more than offset the higher exploration costs. Moving to our cash flow for the nine months of the year, we generated strong operating cash flows of SAR 7 billion year to date, supported by higher profitability.
Our largest cash outflow was funding our share of the Manara Minerals investment in Vale Base Metals, which amounted to approximately SAR 5 billion, with an additional SAR 2.7 billion invested in growth and sustaining CapEx. Most of our growth capital expenditure was focused on progressing Phosphate 3 phase I and completing Mansourah-Massarah in the first quarter. We ended the period with a cash position of SAR 13.7 billion. Our financial position remains solid, and we continue to maintain adequate leverage to support our growth strategy. While our long-term borrowings remain stable, net debt increased by 7%, largely due to a reduction in our cash balance following the Vale Base Metals investment through Manara. Our improved profitability has allowed us to maintain leverage within our guided range with net debt to EBITDA at 1.9 times.
While our growth initiatives, including potential future investments may impact leverage in the short term, we are committed to ensuring that our balance sheet remains robust and capable of supporting our growth plans throughout the cycle. As we look ahead, we remain focused on balancing strategic investments with financial discipline. Turning our attention to the phosphate business unit. This quarter, we achieved near-record DAP production and sales volumes, up 11% and 4% respectively quarter-on-quarter. The increase was driven by higher prices, reflecting strong demand as some important markets had low inventories ahead of their key application season. Year to date, DAP production remains stable compared to the record levels of the prior year. Ammonia production was lower for the first nine months, primarily due to a number of plant shutdowns at all three of our ammonia plants.
Ammonia sales volumes were up 20% quarter-on-quarter as a result of higher production. Overall, quarter-on-quarter ammonia prices were up due to supply disruptions in the market. On a year-on-year basis, the EBITDA margin improved by 5 percentage points to 46%. Turning to the phosphate EBITDA bridge. Year-on-year, higher DAP prices more than offset softer ammonia prices, positively impacting EBITDA by SAR 396 million. Additionally, the business unit benefited from lower overall raw material costs. Lower sales volumes compared to the record nine-month period in 2023 impacted EBITDA by SAR 287 million. Transitioning to the quarterly bridge, stronger DAP and ammonia prices, combined with higher volumes, supported an EBITDA increase to SAR 2 billion in the third quarter, up from SAR 1.6 billion in the second quarter. Turning to the aluminum business unit.
Aluminum production was up 2% quarter-on-quarter and rose by 12% year-on-year, reflecting continued operational improvements following the successful completion of the pot relining program, which impacted performance in 2023. During the third quarter, alumina prices increased, primarily driven by supply disruptions in the sector. Sales and production volumes for flat-rolled product increased quarter-on-quarter, supported by recovering demand in the can sheet market. However, alumina sales volumes decreased by 33% in the third quarter due to shipment delays, which we pushed through to October. Aluminum sales volumes remained stable quarter-on-quarter. The stable pricing environment, along with higher overall volumes in the aluminum business unit, supported significant year-on-year growth in EBITDA. Turning to the breakdown of this period's EBITDA.
Year-on-year, a significant positive impact of SAR 629 million came from increased volumes, primarily in aluminum and flat rolled product, more than offsetting lower alumina sales volumes. We benefited from favorable raw material costs, contributing a positive SAR 405 million year-on-year to EBITDA. Cost of sales also saw a positive impact of SAR 161 million, as the absence of the one-off industrial utility charges from the previous year more than offset the higher operating costs due to increased volumes. EBITDA for the nine-month period was further supported by an insurance claim benefit of SAR 563 million, of which SAR 94 million was received in the third quarter. Quarter-on-quarter, EBITDA decreased to SAR 647 million, mainly due to lower insurance claim proceeds compared to the second quarter, alongside higher maintenance and shipping costs.
Moving to our base metals and new minerals business unit. The business unit reported stable production this quarter, with revenue increasing by 1%, supported by higher gold prices. EBITDA for the quarter was impacted by lower production and sales volumes, primarily due to mine rehabilitation works at the Sukhaybarat mine. Gold prices continued to show strength, with average realized prices up 7% quarter-on-quarter to a record $2,485 per ounce. Year-on-year, revenue increased by 44% for the nine-month period, driven by higher prices and increased production from Mansourah-Massarah. Moving on to the EBITDA bridge of the business unit. Year-on-year, higher gold prices and increased contribution from Mansourah-Massarah drove a significant improvement in EBITDA, reaching SAR 1.6 billion.
This was partially offset by higher production costs and progressively charging group exploration costs compared to the one-off adjustment we made at the end of last year. On a quarterly basis, EBITDA decreased to SAR 506 million, driven by lower sales volumes, higher exploration costs, and a lower share of income from joint ventures. I'll now hand it back to Bob to take us through the outlooks.
Thanks, Louis. As you can see, we're making progress across our pipeline of projects, pushing forward to secure our growth ambitions. Construction is underway at Phosphate 3, with phase I expected to add 1.5 million tons in annual capacity. You'll note we've adjusted our growth CapEx guidance downwards to SAR 3 billion-SAR 4 billion for 2024 due to temporary challenges with contract awards. The contracting process took longer, and it took more intense negotiations to negotiate back to the original bid prices. We're reflecting that reality in our CapEx guidance for the year. Not anticipated to impact the project timeline significantly, and we'll provide more updates for our full year results if needed.
Our recycling project in aluminum and the Ar Rjum Gold Mine are advancing, moving into the bankable feasibility stages, with final investment decisions targeted for early next year by the first half. While we are still in early phases, we are committed to expanding our aluminum pot lines one and two, adding to our annual capacity. Certainly, this is an important part of establishing Ma'aden as a regional and global aluminum leader. We're on track to meet our 2024 production targets with DAP guidance revised upwards, you'll note, based on Louis' comments about near record production again this year. Ammonia guidance has been adjusted slightly downward, as Louis mentioned. I also, as we talked about growth CapEx, downwardly adjusted that guidance for 2024, reflecting the procurement and contracting delays for Phosphate 3.
We delivered solid operational performance across the businesses with near record production in phosphate, made three strategically important moves in aluminum that will create a regional and global leader. We're focused on executing our strategic initiatives in the near term. We're on track to complete the acquisition of Mosaic's stake in Ma'aden Wa'ad Al Shamal by end of year, which will increase our stake to 85%. We're progressing with due diligence on the Alba deal and advancing construction of Phosphate 3. Additionally, our large scale drilling program across the key gold regions are moving forward. All in all, our foundations are stronger than ever, and we are well-positioned to unlock further opportunities to deliver our ambitious growth agenda and create shareholder value.
Thank you, Bob. Thank you, Louis, for the presentation. Now, I'll open the floor for any of the audience questions. I see one question from Alex, Bank of America. I'm gonna unmute you. Please go ahead and unmute yourself and ask the question. Alex, you are unmuted. Please go ahead. Okay, let me move to the second question. Patrick, please go ahead and ask your question.
Yeah. Hi, can you hear me?
Yes, we can. Go ahead, please.
All right. Thanks for giving me the opportunity. I had two questions. First on your gold business, the Sukhaybarat mine. What's the issue exactly which you're facing, and how soon would you be able to turn around that mine, in order to get better-
I'm sorry, Patrick. You have a problem with your connection.
Yes.
Yeah.
Okay.
Can you ask your question again?
Yes. The first question is on gold business. The Sukhaybarat Mine, what's the issue which you're facing in that mine, and how soon can that mine start producing gold to prior levels? That's number one question. The number two question is that on your CapEx, the growth CapEx, should we assume that the cut in 2024 guidance will just roll over in 2025 CapEx or,
Okay.
There's something fundamentally which has changed? Thank you.
Clear. Thank you.
Okay, Patrick, thank you very much for the question. On the gold mine, the plant was essentially just taken down for maintenance for a month, and it is back online. The production impact was experienced in the quarter, but it's back online and producing. With regards to the.
CapEx.
The CapEx guidance, we're clearly reviewing our budgets and our business plans at this point in time. Obviously some of the cash will then roll forward through to 2025. Once we concluded our budget and our business planning cycle, we'll update the market when we issue our full year results.
Thank you, Louis. Now I'll move to Anup. Anup, please ask your question. You are muted. Unmute yourself and ask your question.
Yeah. Hi, good afternoon. Thanks for the opportunity. Congrats on a great set of numbers and also on some amazing deal-making through this year. Just one question on your DAP business. You're operating, you know, significantly over 100% right now. Should we assume that the Wa'ad Al Shamal unit is now operating at 100%, or is this growth coming from your MPC DAP unit? That's question one. Question two is on your deal with Alba. It's not clear if will MRC be a part of the merged entity, or are you keeping that off that asset?
Yeah, I'll take that one. We are at nameplate capacity at Wa'ad Al Shamal, and we are exceeding nameplate capacity at the Ras Al Khair Phosphate DAP unit. Great work by both teams. The increase is coming from Ras Al Khair. Mansour and his team have done an exceptional job this year, exceeding records. That's when we talked about the Ma'aden transformation and how we monitor core business performance, that's the result, getting Wa'ad Al Shamal back up to nameplate and exceeding nameplate and beyond at Ras Al Khair. Relative to Alba, the MRC, the rolling facility is outside of the perimeter of the deal. It includes only the bauxite mine, the alumina refinery, the smelter, and the cast house on our side.
Okay. Thank you.
Thank you.
One more question, if I may. It's on your CapEx. Over the next three years, you've guided at SAR 8.5 billion. Does this include expenditure for the phase II of Phosphate 3 as well, or is it just phase I?
It's just phase I, Anup, at this point in time, because we only guided 2024, 2025, 2026, and phase II comes in later.
2029.
Yeah.
Good. Yeah. Thank you. Clear. Thanks a lot.
Thank you, Anup. Now, I leave the floor to Yusuf. Yusuf, you are unmuted. Please ask your question.
Thank you guys so much for the presentation, allowing us to ask questions. Just two from me. Was just wondering if there's any update on how you guys plan to account for the Vale Base Metals investment. I mean, last time you weren't sure yet if it's gonna be associated or cost method. Any update on that would be great. Just a second one for me around the minority stakes owned by SABIC in the DAP business. Have you guys considered like sitting down with them and discussing if you could potentially buy those out or is that something that's not on the cards at all at the moment? Thank you so much.
Okay, Yusuf, thanks for the question. I'll take the first one. Vale Base Metals, firstly, we account for our investment in Manara on an equity accounted basis. We haven't yet resolved how we will account for Manara, but we will have done so by the end of the year.
Relative to our conversations with SABIC on their participation and partnership in our phosphate business, we've had no conversations to the extent that we're interested in buying them out at all. They're great partners. We continue to value their input, and we enjoy the partnership. No news on that front.
Thank you, Bob.
Very clear.
Now, I leave it to Abdulrahman. Please, Abdulrahman, ask your question. You are unmuted. Abdulrahman?
Can you hear me now?
Seems that you have a problem. Yeah, you can go ahead.
Yes. I just have a question regarding the rolling mill. Could you give us an idea of why it wasn't included in the Alba deal?
Yeah. I think the biggest reason is, you know, I was an upstream producer. Our strength is in upstream, and we wanted to create an upstream powerhouse. You know, the rolling mill's got its own competitive advantages. It's a different type of business. We elected to leave it out of the perimeter.
That's clear. Thank you.
Thank you, Bob. Now, one more time, Alex from Bank of America, please ask your question.
Hi, team. Thank you very much. Apologies, I had some technical issues earlier. Thank you very much for the presentation. Just a question on your Zambia copper deal. Is this still expected by the end of the year? Also, can you please remind us what's your view on the government strategy to seek at least 30% ownership in future critical mines in the country? Thank you.
You're talking about our Manara joint venture with the PIF. No news on any potential negotiations or new deals. We've got an active pipeline, and we will update you when it's appropriate relative to anything closing. No news there. Yeah, our Manara team is working hard to secure critical minerals, and we continue to say our focus is on copper, lithium, nickel, and iron ore. Most of our nickel needs are provided for by our Vale Base Metals investment. I think the team is mostly focused on copper and lithium assets globally. Like I said, we'll update you in due course if anything changes.
Thank you, Bob. Thank you, Louie. I don't think that we have any further questions at the moment. With this, I would like to conclude today call. Please do not hesitate to reply with more questions if you have through our email, invest@maaden.com.sa. All material will be available on our website and on Ma'aden app. With this, I'm gonna conclude the call. Thank you and have a good day.
Thank you.
Thanks.