Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MMG Ltd (MMLTF, Financial) reported an increase in EBITDA to USD 779 million for the first half of 2024.
- The company successfully acquired the Khoemacau copper mine in Botswana, expanding its portfolio.
- Las Bambas mine generated an EBITDA of $590 million with a 47% EBITDA margin.
- Kinsevere mine turned positive in EBITDA, generating $41 million in the first half.
- MMG Ltd (MMLTF) raised $1,163 million through a rights issue, significantly reducing its debt and financial costs.
Negative Points
- The total recordable injury frequency (TRIF) increased to 2.44 per million hours worked, indicating a rise in safety incidents.
- Las Bambas produced less copper in the first half compared to the same period last year.
- The Dugald River plant experienced an unplanned maintenance shutdown, affecting operations.
- Kinsevere mine's reliance on third-party ore led to higher costs.
- The company's gearing ratio, although improved, still stands at around 45%, indicating significant debt levels.
Q & A Highlights
Q: For Kinsevere mine, what's the outlook for the second half, especially regarding the positive other operating expenses in the first half?
A: (Qian Song, Executive General Manager - Finance) Kinsevere's positive EBITDA in the first half is notable. The operation has been unusual due to reliance on third-party ore and high costs. We fast-tracked mining at Sokoroshe II to mitigate cost risks. (Wang Nan, Executive General Manager - Operations) We realized mining costs now, but future stockpile reprocessing will be more cost-effective.
Q: How do you expect Kinsevere's costs in 2025?
A: (Qian Song, Executive General Manager - Finance) We haven't published guidance yet, but starting Q4, we will process sulphide ore, ramping up to 80,000 tonnes of copper per annum by the end of 2025, contributing to profitability.
Q: What's the outlook for financial expenses after debt repayment?
A: (Qian Song, Executive General Manager - Finance) Normally, financial costs are $300 million to $400 million annually. This year, debt levels rose due to the Khoemacau acquisition. We repaid $800 million in July and plan to repay $1 billion by year-end, reducing debt levels and financial costs, estimated at around $400 million for the year.
Q: Why was the realized price of cobalt in the first half significantly lower than the market price, and what's the outlook for cobalt stock sales?
A: (Wang Nan, Executive General Manager - Operations) Cobalt prices are hard to predict. We're working with potential buyers for trial sales and getting good feedback. We aim to introduce our product to the market and improve specifications based on feedback.
Q: How will a potential US interest rate cut impact MMG's loans?
A: (Qian Song, Executive General Manager - Finance) We realized an effective interest rate of 5.2% per annum in the first half. Any interest rate reduction will benefit us significantly. We no longer have an interest rate swap, so we will directly benefit from any rate cuts.
Q: What is the expected C1 cost trajectory for Khoemacau as production expands to 130,000 tonnes by 2029?
A: (Wang Nan, Executive General Manager - Operations) We are working towards stabilizing operations and mining rates. As production increases to 130,000 tonnes, C1 costs will significantly improve. Detailed guidance will be provided in the near future.
Q: What CapEx should be expected for the second-stage expansion of Khoemacau from 60,000 to 130,000 tonnes?
A: (Qian Song, Executive General Manager - Finance) The CapEx for the expansion will be $600 million to $800 million, occurring over three years. We aim to complete this by 2028 and ramp up to 130,000 tonnes per annum.
Q: Are there any updates on the Izok project in Canada?
A: (Unidentified Company Representative) We've been working closely with the Government of Canada and local First Nations. The project needs infrastructure to become viable. We expect significant work on infrastructure next year, which will allow us to advance feasibility studies and consider investment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
