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DATE
Wednesday, July 23, 2025 at 7 p.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Mick McMullen
Chief Financial Officer — Morné Engelbrecht
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TAKEAWAYS
Harmony Acquisition Offer: The company announced an all-cash acquisition transaction with Harmony at $12.25 per share, with court hearing scheduled for July 30 and shareholder vote planned for August 29.
Liquidity: $196 million in liquidity as of June 30, 2025, with $102 million in cash on the balance sheet and additional liquidity from undrawn revolving credit and unsold concentrate.
Copper Production: Produced just under 10,600 tons of copper, a 23% increase compared to the previous quarter.
Copper Grade: Average copper grade rose to 4.4%, an 8% increase compared to the previous quarter, with late June periods exceeding 6%-8% and high grades continuing into July.
C1 Cash Costs: C1 costs were $1.48 per pound for the quarter ended June 30, 2025, with June C1 costs reaching a low of $0.94 per pound.
Operating Free Cash Flow: Achieved record operating free cash flow of approximately $42 million, driven by higher production, increased grade, and a 3% rise in realized copper prices.
2025 Production Guidance: The company is maintaining full-year copper production guidance of 43,000-48,000 tons, targeting the lower end of the range.
Growth Capital Expenditure: Growth CapEx rose 139% quarter over quarter, driven by ventilation and Merrimine projects.
Development Meters Advanced: Achieved record development of 1,196 meters, with Merrimine advancing 530 meters (up 65%) and ventilation project 564 meters (up 125%).
Net Gearing Ratio: Net gearing reduced to just over 17% as of June 30, 2025, following refinancing.
Interest Cost Savings: Refinancing actions cut annual interest expense by approximately $14 million per annum, reducing the weighted rate to just under 7%.
Sustaining Capital Projects: Stage ten TSF embankment on track for completion in the fourth quarter of this year.
Outstanding Debt: Senior facility at $159 million and revolving credit drawdown at $66 million, resulting in net debt of $123 million.
Glencore Contingent Payment: Conditions for the first contingent payment to Glencore are expected to be met in August 2025, though actual payment will be deferred until permitted by current debt arrangements or June 2026.
Planned Operational Changes: Concentrate filter plate replacement scheduled for August and grade moderation expected in the latter half of Q3 2025.
SUMMARY
MAC Copper Limited's disclosure of the Harmony all-cash acquisition steps and associated timeline directly addresses a major near-term catalyst for shareholders. The company's record production and free cash flow performance in Q2 2025, along with a marked reduction in interest costs and net gearing, highlight substantial operational and financial improvement. The acceleration of capital projects—Merrimine and ventilation—has resulted in notable quarter-over-quarter increases in both development activity and capital deployment, as the balance sheet remains robust with high liquidity and controlled leverage levels. The near-term schedule for the contingent Glencore payment and specific operational upgrades provide precise guidance on key obligations and operational shifts.
Morné Engelbrecht explained, "We are starting to see the benefits of reducing average weighted interest cost by more than 30% through that refinancing" in Q2 2025.
High-grade stopes accessed in the period accounted for concentrated output improvements, while management attributed production volatility to stope sequencing.
The expected vote on the Harmony transaction is scheduled for August 29, 2025, with the record date set as July 29.
Exploration on newly identified regional anomalies is advancing, with two drill rigs mobilized and management indicating potential results before the upcoming transaction vote.
INDUSTRY GLOSSARY
C1 Cash Costs: Direct production costs of mining and processing copper, excluding sustaining capital, interest, and taxes.
TSF (Tailings Storage Facility): Engineered dam or embankment used to store byproducts (tailings) from mining operations.
Stope Sequencing: Practice of determining the order in which discrete sections (stopes) of an underground mine are excavated, impacting production rates and ore grade delivered.
Full Conference Call Transcript
Mick McMullen: Thank you very much, and thank you everyone for joining us. I'm joined on the call by our CFO, Morné Engelbrecht. I'll run through the slides, and these will be released as well so that everyone can refer to them at your leisure. So this is our second quarter 2025 quarterly presentation. Obviously, that is the usual disclaimer at the front that people can read at their leisure. And if I go to slide four, you know, in summary, you know, look at MAC Copper Ltd at a glance. It's a well-capitalized, low-cost, high-grade copper mine in a tier-one jurisdiction. And we're trending towards greater than 50,000 tons of copper by 2026.
Obviously, during the quarter, we announced the transaction with Harmony to sell the company, in the absence of a superior proposal at $12.25 US a share, all cash, and there's been various announcements made about that. We are on our growth pathway. We have a very strong balance sheet. At the end of June 30th, we had about $196 million US dollars at liquidity, and Morné and I will run through the components of that here shortly. You know, we have been advancing our key growth projects, which are the ventilation project and the Merrimine. And we did the refinancing, and we've sort of said that we wanted to have less than 20% net gearing, which is where we are.
And again, there were separate announcements about that, but, you know, that has reduced our interest costs by around about $14 million US dollars per annum. It's reduced our interest rate to a floating rate just under 7% right now. And, you know, we had $102 million US dollars of actual cash on the balance sheet at the end of the second quarter. So overall, we ended Q2 in a really good position. Moving into the next slide, you know, that position is always underpinned by operations. We've got a slide on safety here, and very importantly, we've seen a significant improvement in our safety record.
We produced just under 10,600 tons of copper, which was a 23% increase quarter on quarter. And like we've said before with CSA, you know, we can produce anywhere from 2,000 tons of copper in a month to 5,500. And in the month of July, potentially 6,000 tons. It really comes down to where we are in the stope sequencing. And also, I think, you know, in the full form quarterly, we've made some commentary in there about, you know, how disruptive it is when you have a transaction like we announced. And that was certainly the case here during the first quarter.
And April as well, which, you know, if you look at how much we produced in April versus June, there was a significant difference there. Grade was great, you know, 4.4% copper grade. It was an 8% increase quarter on quarter. We hit a few records during the quarter. So under our ownership, the most copper produced in a day was actually, I think, the 30th of June was 385 tons. We had quite a few days around the 300-ton mark. C1 for the quarter was a good $1.48 US per pound. Whenever we talk about numbers, it's always in US unless especially stated otherwise.
And that's consistent with the goal of where we said we thought we could get the mine to. And really pleasingly, you can see in the month of June, we're at 94 cents a pound C1. So overall, you know, good operating results. Everyone sort of settled down at site after the transaction was announced. And then really delivered for us. Record quarterly operating free cash flow for us of about $42 million US dollars. And we do note here that the first Glencore contingent payment conditions will likely be satisfied in August of this year. And in the absence of the transaction that's proceeding right now, that would then get paid in June of next year.
You know, we've had really strong production the last few months. You know, we're maintaining our guidance of 43,000 to 48,000 tons for the year. I would say we'll be in the sort of bottom half of that maybe. Grade, you know, again, keeping the same grade, notwithstanding the fact that we've been producing well above that grade. We do sort of see the stope sequencing towards the just the middle to the back end of the current quarter will start moving into a bit of that lower grade material and then again towards the back end of the year. We'll see a pretty strong run in terms of production and grade.
Growth CapEx and sustaining CapEx, again, maintaining those guidance ranges where we're tracking for those. Again, you know, the Harmony transaction, you know, we have announced here in the last day or two that the restructuring agreements that were required with both Cisco and Glencore for Harmony have been executed. Got various CPs in them still to be satisfied including, you know, the votes and you know, Furb and Saab. But that has allowed us to schedule a Jersey court hearing, the first court hearing for July 30th. Which will then allow us to dispatch the circular on the 4th of August. And targeting a vote date of August 29th at this stage.
Exploration, I got a little slide at the back. We don't really a lot of information on exploration these days because quite frankly, I don't think the shares trade on the back of the exploration results that we get, notwithstanding that they are world-class. But we've got some interesting stuff happening on exploration as well. So look, our key goals for this year are really consistent safe and low-cost high-grade production, which we are delivering on. Progress the Harmony transaction to close in the absence of a superior proposal, advance our ventilation project through get first ore out of the new mine in Q4 of this year, and maintain balance sheet strength.
And I think, you know, based on Q2, we are absolutely delivering on all of those things. Safety and TSF, as I said, you know, safety had been a bit sticky for about the first year, but you can see a very sustained reduction there. Which again against the backdrop of all the sort of corporate goings on with site visits and uncertainty around the transaction has been very pleasing. The team have worked really diligently to drive that incident right down. Again, no reportable incidents. You know, for last year, and none this year either. The stage ten TSF embankment works are progressing well.
They're on track for completion in the fourth quarter of this year, which is one of our I guess, our three main capital projects for the year. And, you know, pleasingly, we worked or our team worked with the regulator to get a reduction of four million Australian dollars in our environmental bond, the RCE. So that was good. We also donated a hundred thousand Australian dollars to the local Cobar Shire Council's museum effort. Which is really important in terms of selling Cobar as a destination and why mining's going forward out there. And as we've always said, we're quite happy to put money into the local community because, you know, that's basically where we operate. Right?
On the recommended transaction with Harmony, obviously, a lot of work has gone in both getting to announcement, but also then the restructuring agreements and both the Cisco and Glencore worked with us and with Harmony to get those things papered up. And again, the timetable has been published there, but, you know, we are working towards a vote date on the 29th of August. We will also hold our annual general meeting on the same day as well. And the circular, as I say, we'll have a pretty fulsome description of the transaction. We'll have a pretty fulsome background of the transaction. And that is planned to be sent around on the 4th of August at this stage.
Record date is the 29th of July, so, you know, unlike in Australia, relatively long period between record date and vote date. But, you know, everyone has plenty of notice, I think, at this point. So product as you can see, you know, big jump on the previous quarter, which had been a bit of a slow start to the year. You know, really, a lot of that came in from the back part of May. Certainly in June, you know, you can see the impact of a 6% copper grade in the month of June, you know, lots of copper coming out. Very low C1, obviously.
And, you know, grade has been in excess of 8% for much of the, you know, the last couple of weeks of June. And extending into July. As of yesterday, you know, we produced 4,500 tons of copper in July. We expect this month to be somewhere in the order of 5,900 to 6,200 tons of copper at an average grade of around about 7%. And you can see some of that super high-grade ore coming from the bottom of the mine. You know, that is CSA. We've spoken about this many times before publicly. You know, we have a small number of very high-grade reasonably bulk tonnage stopes that drive our annual production.
And as we explained after Q1, you know, we just didn't have those online. We had them in Q4 last year. Didn't have them really in Q1, and then we got into them in Q2, and now that's extended into Q3. So you know, I guess, that is CSA for you. Right? Like, it is in the porphyry where we've got the same grade plus or minus a couple of percent for all year. It's we have a small number of big high-grade stopes that drive our production. Right? And that's why we get a bit of volatility on quarter on quarter production. You can see there, we had a fair bit of concentrate lying around.
And that pile has only grown. Cost continuing to trend down. You know, great results on costs or, you know, obviously, all in. You know, notwithstanding, obviously, just small amount of general cost escalation. The plan, again, has continued to demonstrate it can produce at, you know, far in excess of what we currently can mine. But, you know, why we're developing some other ore sources. And again, as I said, you know, for the rest of the well, the back half, I suppose, of the Q3, we do expect grade to moderate a bit reasonable. Bulk tonnage stopes with grade to moderate a bit.
And we do have a planned change out of some of the concentrate filter plates in August. But even so, we expect, you know, Q3 should be a reasonably strong quarter, particularly in this instance we've actually started off with our best month in the quarter with July as opposed to being having to come home with a wet sale. Which has been the case in a few of the other quarters. So in general, you know, we're pretty happy with the way sites settled down. They're operating really well. The team's all going well. We've made a few changes as well just to sort of, you know, get people enthused and add some extra resources.
We've been bringing in some extra equipment. Now that we can probably utilize that, you know, we might as well put that extra equipment into the mine. With that, I might hand over to Morné, our CFO. He can talk to the next couple of slides in terms of the financials. Hi, Mick. Good evening and morning, everybody.
Morné Engelbrecht: Going to slide eleven now. This is covering the overall capital expenditure and development meters where we had another record on the MAC ownership and development meters for the quarter. So overall capital expenditure, as you can see, they increased by around 85% quarter on quarter. So this is mostly driven by, obviously, the increased activity around event projects, in the Merrimine. Which we'll go through next. Yeah. With the development meters, overall increasing to that record-breaking 1,196 meters for the quarter. That's obviously under MAC ownership. With the Merrimine development, meters increasing by around 65% to 530 meters. The VIN project increasing by 125% to 564 meters. So this translated into growth capital expenditure for the quarter.
Increasing by 139%, and this is mainly driven by those two key projects for us in terms of the event project, which is around $7.3 million spent for the quarter. And the Merriman, which is around $3.5 million US for the quarter. Obviously, very pleasing to see those two key projects being executed really well by the team at site and obviously to plan with the Merrimine coming online in Q4 this year. On the sustaining CapEx side, that mainly consists of the Stage ten TSF which is set up again and progressing to plan. And that's sort of marked for completion in Q4 of this year as well. Moving to slide twelve now and the all-important cash flow waterfall.
Where there's a number of key drivers to keep in mind that impacted the cash flow over the June quarter. Firstly, we had another record for the quarter on the MAC ownership as Mick mentioned, it's relating to free cash flow from operations. And that's obviously off the sustaining CapEx, which amounted to around $42 million US for the quarter. This was mainly driven by that 23% increase in production, The 8% increase in grade obviously made a big difference as well. And then there's a 3% increase in realized copper price over the quarter. That added to that number. Secondly, as you can see, our interest costs have significantly reduced over the quarter.
And that's after the refinancing was completed. And in the March, where we are starting to see the benefits of reducing average weighted interest cost by more than 30% through that refinancing, and we're definitely well on our way to realize that $14 million US of interest savings span. Then moving to growth capital, which incorporates the event project in Merriman as I said before and then exploration as well. This ramped up for the quarter, a total cash spend of $30 million US. Which drove that development which stood by that record development leaders done in the quarter as well.
Our senior facility still sits at $159 million US, and we maintained a drawdown on a revolving facility of $66 million US as well with $102 million US in bank. Cash to bank. At the end of June. Which leaves us with that net debt figure of $123 million US. And as Mick has said, that's way under 20%. So we're just over 17% at the moment in terms of that net gearing ratio. We also had a very healthy $196 million US in liquidity. That's almost $300 million Aussie.
Available to us at the end of the quarter, and that consisted of that undrawn revolving facility of $59 million US outstanding QP receipts of eleven unsold concentrate at June 30th of eighteen and a half. And then that investment in polymetals is all around five point five. That's still doing great for us. Finally, on the continued copper payments to Glencore, we currently anticipate that based on the average daily Alamy closing price, over the last eighteen-month period leading up to June. The condition of the payment for the first contingent payment will be met. Around that August of this year as Mick has previously mentioned.
So under the terms of the CSL agreement, with Glencore and the integrated deed, you know, that obligation to make that payment is deferred. Until the earlier of the payment being permitted by the current debt arrangements. And the three-year anniversary of when MAC actually acquired the CSA Copper Mine. So we therefore expect that the first continued payment that Mick has mentioned will become payable on the 17th of June 2026. Given MAC's current liquidity position, the company to be able to fully cash settle this obligation when it becomes payable. So overall, a very strong and healthy balance sheet. Position at the end of the quarter. With that, like, $102 million of cash.
At bank and $196 million of liquidity available to us. With that, I will hand back to Mick. Yeah.
Mick McMullen: Thanks, Morné. And, yes, as I sort of showed on that photo, we had even more concentrate last week sitting at the mine. And so, you know, we have a significant amount of liquidity over and above what's actually that $196 as well. So, you know, again, we've shown this before. Really, there's, you know, we set all on track to moving towards that 50,000-ton mark or greater than those key projects, you know, obviously, the Capital Vint project and the Merritt line. You know, that's where our, you know, growth capital comes in. And you can see clearly we're doing a lot more meters of development. We're buying more equipment for those projects.
And therefore, that's why the capital spend is going up in those. And, again, that's consistent with what our guidance is. So we are delivering on those things. And then, you know, the Merritt line, we are moving fairly quickly on development out there now. The exploration team have also continued to sort of close out the drilling out of Qdya South Upper that we're, I guess, about halfway across or a bit more than halfway across. And they've drilled that pink pant that which, you know, has got some other material that, you know, has potential to be mined as well. Lower grade than QTS South Apo, but still, but it's still there.
And, you know, this area of the mine has independent firing. So the development rates in this, as you can see from the previous graphs, are materially faster than what we get at the bottom of the mine just because it's so much easier and we can fire independently from the rest of the mine. So it's progressing quite rapidly there now. You can see that little schematic there where we are, and you can see the sort of the body just on the very left of that thing there. So, you know, additional ventilations going in, you know, we are well on track for this.
Again, we sort of said, you know, it's very slow to get started on it because you're interacting with the existing mine. Until you get to independent firing. And now that we've got that, now we can go much faster. So seems to be going pretty well up there. And, you know, not only do we have that sort of, QD South upper stuff we're developing out to, but there's a series of zinc stopes that are being planned and some copper areas there. Are not currently in resource. And we're sort of in the process of drilling that stuff out and sort of getting a plan around going to mine that stuff.
So during the quarter, you know, you'd have noticed Polymetals has announced they've recommissioned their concentrator. During the month so that sort of, you know, that is up and running to provide the processing route for the zinc ore. We still think it'll be towards the end of the year before we would be ready to send some material to them. But we are certainly making plans to do so. Ventilation project, again, we're, you know, we are starting to spend a fair bit more money on this thing as part of your capital budget. You know, if you want to get your project done, you need to spend your money.
And then we're not that far away from starting the vertical raised boring works on that as well, which will be the next sort of key phase of that project. Finally, exploration. You know, we don't really talk about exploration much anymore. No one sort of seems to give us much value for exploration. The exploration team are quite excited. They've sort of done an AM survey about fifteen kilometers north of the mine. It has picked up a very strong anomaly that looks, you know, quite similar to what we have at the CSA mine. So we have very quickly moved two drill rigs onto that. And we are currently drilling that.
And we shouldn't be far away from hitting the target zone on that. So we think that's quite an exciting area for us to go and try and explore. If we can find a CSA style ore body that could be pretty interesting. So we'll come back to the market if we find something material on it. Certainly ahead of the vote date, so that everybody has the full amount of information. So closing off, you know, just in terms of our goals for this year that we've sort of been pretty consistent about. You know, we are accelerating work on many of these projects.
I think we've, you know, having near enough to $300 million Australian dollars of liquidity on the balance sheet for a company our size. Definitely tick the box for a strong balance sheet. I think the fact that we managed to, you know, get the C1 in the quarter down to $1.48 US a pound, but, you know, clearly, June at 94 cents was pretty good. And if we produce more copper in July, well, I guess it's going to be even better. And then there's been a large amount of document harmony transaction, and so we've now managed to get that out of the way. And now we're moving forward through to getting organized for the vote.
So with that, that's really the summary of the second quarter. I think overall, it was a, you know, great result from a safe point of view, good result from a production and cost point of view, and as I say, July has been quite exceptional as well. And so we think given where we started the year at the end of Q1, you know, where, obviously, we were a bit behind, where we needed to be. We've now caught up and gotten a bit ahead of where we need to be. And that's always a good spot to be in as you're coming into the end of the year.
With that, I'm going to open up the floor to questions if anyone's got some.
Operator: 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 two. And if you're on a speakerphone, please pick up the handset to ask your question. Pause momentarily for any questions to register. Thank you. There are no questions at this time. I'll now hand back to Mr. McMullen for closing remarks.
Mick McMullen: Okay. Well, look, I appreciate everyone taking the time to dial in. Thank you very much, and we'll be back to you as we progress the transaction. Bye.
Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.