MAC Copper - Earnings Call - Q1 2025

Transcript

Operator (participant)

I would now like to hand the conference over to Mr. Mick McMullen, CEO. Please go ahead.

Mick McMullen (CEO)

Thank you very much, and thanks everyone for joining us on what is a busy reporting schedule given the shortened holiday period in Australia. I'm Mick McMullen, the CEO. I'll run through the presentation. I'm joined by our CFO, Morné Engelbrecht, who will talk to some of the slides on the financials. This deck has been released on the ASX along with our quarterly report this morning, and as usual, we've got the disclaimers and everything at the front that you can all read at your leisure. MAC Copper at a glance, we've got an enterprise value of around about $940 million. We're sort of planning to get over 50,000 tonnes of copper in the not-too-distant future on an annual basis. Very strong balance sheet. Obviously, we've announced the refinancing of the debt that we did during the quarter. Morné will run through that.

Just so everyone's clear, to make sure the market understands how many shares we've got in issue, 82.5 million shares in issue, about 3.18 million warrants at a strike of $12.50 a share. The gearing under 20%, which is within our range of where we sort of target. We have two key growth projects underway, the ventilation work, which we'll talk about in later slides. The really exciting news actually is the Merrin Mine that we started rolling out in the marketplace during the last quarter, and we've made some really good progress on that. We have quite a few slides on that as we are quite excited about that thing. Going forward, first quarter is always our softest quarter. If you recall, the fourth quarter last year was a very strong quarter.

Obviously, we then have to come through the sort of January period where we pushed very hard in the back six weeks of last year. We typically see a little bit of seasonal variation in weather as well with sort of summer storms. It really is a function of sort of where we are in the stope sequence. We can see the stope sequence we have ahead of us right now. We have a lot of large tonnage, very high-grade stopes that have been coming online over the last few weeks. Therefore, we are not changing our guidance based on what we can see coming out of the ground ahead of us. C1 was still pretty decent at $1.91 a pound US, total cash cost of about $2.47 a pound, and a realized price of $4.04 a pound U.S. for the quarter.

If you read that little footnote there, we've had some questions from people about the impact of the hedges on received price. We are now showing that received price net of hedges. I'll let Morné really go through all the balance sheet and the financials and liquidity. For this year, 43,000-48,000 tonne of copper is where the guidance sits. Copper grade, somewhere between 3.8%-4%. Obviously, we had a very strong grade profile during Q1. Growth capEx of somewhere in the order of $20 million-$25 million and sustaining of $40 million-$50 million. Overall, we have seen some good tailwinds coming into this year from both exchange rate and TCRCs.

Actually, for those of you who follow the market, we've seen spot copper treatment charges at negative $40 a tonne, which should indicate a pretty good annual benchmark settlement for next year, possibly even lower than where we currently sit. That has been quite a good positive thing, which I guess has obviously helped our C1 despite the lower volume during the quarter. Safety we like to talk about. I would say I've said on calls in the past that our TRIFR has been okay, but probably a little sticky, I suppose. Now we're starting to see the benefit of all the hard work that the team at site have done with the TRIFR starting to trend down quite nicely. I think by the end of April, we've ended up at around a TRIFR of around seven actually for the last 12 months.

That is great. One of our big sustaining capital projects that we are doing is our tailings storage facility. The stage 10 embankment is on track for completion in the fourth quarter of this year. Again, just for the Australians, we are an annual financial year, so in the December quarter. That will provide us capacity out till about 2030. We are actually building all of that now. We are well on track. We have had no reportable environmental incidents during the quarter. From an ESG point of view, actually, we have had a pretty good improvement on where we had been tracking before. Production, look, obviously we saw production trend down. As I said, it was a combination of pushing very hard during the fourth quarter. You can see there the December quarter numbers were very strong.

Probably a day and a half of production lost in February due to some summer storms, which again, if you think back to last year, exactly what we had that period. Grade was good. Head grade a bit over 4% copper. We expect to see the Q2 grade to be as strong, if not a bit stronger. Really the increase in C1 was driven by volume, right? We've always sort of said that fixed costs are sort of circa 70% of our volume, but we did have a bit of a win on the TCRCs.

In the word version of the quarterly that we put out, if you look at our production and cost in the month of March, obviously as we sort of did a lot of catch-up work in January after the very strong December quarter, if you look at the month of March, we produced just under 4,000 tonne of copper. Our C1 was around about $1.45 a pound. That sort of gives you an indication of where we think the business should be and can be. Again, it's really making sure that we have, as a minimum, two or three months really strong in a quarter. Actually, this Merrin Mine has the ability to sort of smooth out some of those ups and downs in the production cycle. Overall, it was an okay quarter.

We do expect always the March quarter to be our softest quarter, and that pattern has been maintained. Lots going on on this slide here, I guess. We've sort of, again, we've had some questions from people around total CapEx and sort of what's in growth and exploration and sustaining. And Morné has done a great job on the graph on the left there, sort of trying to outline what we've spent the money on. You will note that sustaining CapEx has dropped down a fair bit, actually. We had a very strong spend on the stage 10 capital expenditure during the December quarter, and so we're sort of ahead of the game there. Also, some of the timing of rebuilds has basically resulted in us needing to spend less capital. You can see there the growth CapEx was sort of pretty constant around about that $4 million.

What's in growth CapEx? We do not put tailings dams into growth, that is in sustaining. We do put our Merrin Mine expenditure and the capital vent project sits in there. We spend about just over $1 million on exploration. Development meters. We are starting to give a little bit more detail for people here as to where the development meters are going or coming from. You can see here that blue bar on the graph on the right is the capital vent project, which we have spoken about as being very important for the future of the mine. You can see we are starting to ramp up the development meters there again for those of you who have followed us for a while.

As we turn off from the existing workings and head out to these things, the development rates are quite slow because we're interacting with the existing mine. That is Merrin Mine and the capital vent project have both been the same. As we get a bit further out, we can start not interacting with the mine and we can really start ramping up those meters. That is really what you're seeing in that graph on the right. In addition to that, we did an extra 227 meters of capital development up in the Merrin Mine. If you think about total development for the business, we are actually starting to ramp up capital development quite a bit here.

You will see why in the MerrinMine, that's actually we've been able to do a lot of development meters with not a lot of equipment and for a pretty cheap cost. Look, our goals are still the same. It's really been consistent, safe, low-cost copper production. We do want to advance that ventilation project. We want to get the Merrin Mine online and obviously the balance sheet. This sort of bridge gives you a bit of an idea of where we see the production coming from. For next year, 2026, midpoint of guidance around about 50,000 tonnes of copper. We see the Merrin Mine being additive to that. We're getting quite excited about the Merrin Mine, as you're going to see in the next few slides here. Targeting production from the fourth quarter being the December quarter this year.

This is everything from surface down to about 900 meters below surface. It's the Merrin Mine. It's got a whole bunch of different deposits in there, but for just making life easy, we just call it that. Not all of that is in JORC or S-K 1300 resources, but we have sufficient confidence in those mineralized estimates to make investment decisions. That really revolves around the age of some of the assay data and assay certificates with the resource and reserve QPs. The mine planning teams have done a Herculean effort here to digitize a lot of old data and to go and do check drilling and confirmation work, which has taken quite some time. This is data that's gone back over 40 years, 50 years. Actually, we found a significant amount of mineralization that was sitting in there, most of it sitting very close to existing development.

I try and break it down into the simplest form by saying there's really four separate components to this mine. There's the quite high-grade, narrow, three, four meters wide at 10-20% copper in that QTS South upper, which is that little blob sitting right up in the top left of that page there, that image. That's what we're driving out to now. There is a reasonably high-grade, sort of 8-10% zinc with a little bit of lead in it, high-grade zinc zone, which our plan is to mine that and truck that up to PolyMetals to the Endeavour mill for treatment. We then have what we call a medium-grade copper ore body, which actually in terms of tonnage is the largest part, quite substantial, around about 2.5% copper.

Last is the mixed, which is a mixed copper zinc material, which actually is starting to become reasonably sizable as well. The beauty of this thing is that it is completely separate to the rest of the mine. We access it through the decline. It is 150-200 meters below surface. It is fantastic ground. The team that is up there is running as a separate operation and is doing development at a much faster rate than we currently can do at the bottom of the mine. We really have no great constraints apart from equipment and people. We have been spending a lot of time at site with the corporate team over the last six weeks, actually adding resources to this. We have doubled the number of jumbos that are going in there and increasing the number of trucks, increasing the people.

Because quite frankly, this is a lever we can pull very cheaply. Our cost per meter to develop is roughly one-third of what it is at the bottom of the mine. As we've said often, the more you look, the more you find at CSA. I'll run through some of the things that we've found. We are sort of on track for some production for copper out of this during the fourth quarter. We're actually quite excited about this. The view on the left is a surface plan. All that light gray looking stuff is the surface projection of the existing underground workings. QTS South upper is heading off to the left side of the page. Pink Panther is another deposit we've been drilling out from surface. That is the surface expression of the Merrin Mine.

As we have developed the drive out towards QTS South upper, we have discovered quite a bit of massive sulfide, both copper. You can see in that, actually, that's the tagboard cutty for independent firing there. That's about 2.5 meters of high-grade massive sulfide for copper, which was not in any of the models at all. We've also developed through some quite high-grade zinc and lead mineralization as well on the way out there. We think there's a lot of opportunity to expand this. As I've said, there's no real constraints in terms of going faster or doing more apart from people and equipment. We now have independent ventilation that's been established there. Again, as you start developing out from the existing drives, it's slow. You're interacting with the rest of the mine.

The team have managed to tap into an existing vent shaft out there that's not connected to the bottom of the mine. During the month of April, we've established independent ventilation and therefore independent firing. Now we can really ramp up development rates. Having said that, one jumbo up here has been getting about the same amount of meters, more or less, as three jumbos at the bottom of the mine. Consequently, very cheap on a unit rate basis. We're pretty excited about this area. You can see here, this is the drive going out to QTS South upper. The more you look, the more you find. We drilled, actually, that vertical hole on the right is a J-Tech hole for where the vent rise was going. It hit the typical 3-4 meters at 10-20% copper mineralization.

All of a sudden, we decided to go and drill some more holes up there. And guess what? We've extended that ore body vertically about 70 meters now. We knew enough to go to make the investment decision to go out there, but we knew everything was still open. As we go out there, we're finding more and more stuff. We're pretty happy with the way that's all going. It really will be a separate mine to the rest of the mine. Again, the existing mine is being accessed. The ore comes out through the haulage shafts. This is coming out through the decline. It's around about a six-minute drive from the ore body to the rompad. Very low unit rates relative to what we currently to what it currently costs us to mine. Quite good grade as well, actually.

We have been asked, well, how big could this thing be? Not all of it is in reserve. Very little of it is in reserve. In fact, not all of it is actually in JORC or S-K 1300 resource. I think it is pretty topical right now, but this would be a Woodlawn-sized mine, but mostly copper with a bit of zinc as opposed to the other way. That is probably the most analogous thing I can give to people right now just for the Merrin Mine is that this would be around about a Woodlawn-sized operation. You can tell why we are quite excited about it and why we are throwing more resources at it as quickly as we can. Ventilation project. Again, chugging along, you could see from that graph earlier that the development meters is really starting to ramp up in that thing.

Still on track for Q3, the September quarter next year after completion. This is really important for unlocking the bottom of the mine. Allows us really for the bottom of the mine to get additional vent. In the immediate term, we're developing this Merrin Mine, which will have a reasonably long life. Also, we haven't taken our eye off the ball for this thing because this is actually really important for unlocking the bottom of the mine. With that, I'm going to hand over to Morné, and he can talk to people about the financial side of things. Right.

Thanks, Mick. Good evening, morning, everybody. Going to slide 15 now. We announced during March 2025 the very exciting news that we completed the refinance, as Mick said, of our debt structure with the recut of the senior debt facilities, including the earlier repayment of the mezzanine facility.

Overall, we have significantly delivered and simplified our balance sheet over the last year, reducing our net gearing by more than 50% to just under 20%, as Nick said, at the end of March 2025. Just to recap what has changed with the refinance. As you would remember, we had the old facilities, which were made up of the $159 million U.S. term loan facility. There was a $25 million revolving credit facility, a $145 million mezzanine debt facility, and then a AUD 45 million environmental bond that was provided by Glencore. The new facilities are made up of a $159 million term loan facility, a $125 million revolving credit facility, and a AUD 45 million environmental bond now provided by three new Australian banks. Some of the key highlights of the refinance is really around we've now fully repaid the mezzanine debt facility.

That's the $160 million that we've repaid on that facility, which included the 4% premium and the interest to June. We did extend the maturity of the old facilities as well, so both the term and the revolving facilities to March 2028. We increased the revolving credit facility by $100 million to $125 million, providing even greater flexibility and available liquidity. The refinance provides for repayment holiday to 30 September 2025. We have a new repayment profile, which reduces our repayments by $123 million by December 2026 when comparing the old versus the new repayment profile. Importantly, we also reduced the average weighted cost of debt by more than 30%. That is setting at the end of March to around 6.84% on the senior debt we've got outstanding at the moment.

That sort of saving equates to about $14 million per annum cash interest saving. Finally, on the continuous copper payments to Glencore, we have maintained the contractual position that the continuous payments will not be payable before June 2026, even if triggered, other than from free cash flow after satisfaction of all of our operating costs, royalty, debt repayments, and stream servicing costs. Overall, we are extremely pleased with the refinance position of the balance sheet and obviously very thankful for the great support that has been provided by our lenders in that regard. Moving to slide 16 and the all-important cash flow waterfall. Just to go through a few key elements there. Firstly, again, we had a very healthy free cash flow from operations there after sustaining CapEx of around $30 million for the quarter.

Secondly, we paid that, as I said, $160 million to extinguish the mezzanine debt facility, which included that 4% premium and then also the interest paid of around $9 million from January 1 to June 16, 2025, that's included in that $160 million. You will note the interest there that we have on the senior facility of $3 million. As I said before, with the repayment of that mezzanine debt, we're now saving around $14 million per annum on interest on that. We also sold some concentrate at the port of just over 1,500 tonnes at the end of March. That was just to align the production and sales from a cash point of view. Albeit we couldn't recognize it as revenue because it wasn't loaded on ship by the end of March, but that happened in early April.

In summary, our senior facility now is sitting at sort of $159 million. We drew down on about $66 million on the revolving facility. Then we had $75 million of cash in the bank at the end of March as well. That gives us that sort of net debt figure of $150 million. All in all, we also had that very healthy liquidity of $153 million, so almost AUD 245 million liquidity available to us at the end of March. That sort of consisted of that undrawn revolving facility of $60 million. We also had outstanding QP receipts of $8 million, unsold concentrate of about $8.2 million, and that investment in PolyMetals, which has done really well for us at around $3 million as well. That sort of contributed to that sort of liquidity. Overall, very strong and healthy balance sheet position.

With the completion of the refinance and obviously the repayment of the mezzanine debt facility there, that will drive some significant cash interest savings for us going forward. Going to slide 17, the slide we have shown before, just showing our targets around production, cash cost, and gearing. Mick has already covered off on how we are targeting significant growth through the execution of those two key projects in terms of the Merrin Mine and the ventilation capital project, which will deliver at the end of this year and then Q3 next year, respectively. That will drive that targeted annual copper production above 50,000 tonnes. On the cost side of things, again, we have been chipping away at the cash cost there. C1 has reduced significantly, around 30%, to $1.91 from the March quarter compared to June 2023.

As Mick has mentioned as well, the C1 in March with the production of that roughly 4,000 tonnes in March dropped to about $1.49 U.S. per pound. That is very pleasing to see and already demonstrates that we're sort of getting to that target of 150 that we have for 2025. With the refinance, as we've sort of walked through, that has reduced significantly from where we started out. That is within our target range of just below 20%. All very pleasing and pleasing to see that all those metrics are going the right way and pleasing to see the progress there. I will back to you, Mick.

Sure. Thanks for that. I think in summary, we're executing on the plan, the base plan, maintaining guidance.

We expect to have a pretty strong second quarter based on the production profile we have ahead of us. Our investment in PolyMetals has done really well. They look to be progressing well towards ramp-up. I guess we actually have some high-grade zinc material in the Merrin Mine that we could mine quite quickly. We're just waiting to see how they go ramping up. We would like to think that by the fourth quarter of this year, we are shipping them some zinc mineralisation for treatment. We have signed that tolling agreement with PolyMetals. That is subsequent to the end of the quarter. I think on the first or second of April, we invested another AUD 2.5 million into PolyMetals at AUD 0.35 and now trading it to AUD 0.90-ish. That has been a good return for shareholders.

Overall, as I said, we're liking Merrin Mine more and more the more we look at it. The ease with which we can get stuff done. Mining's never easy. On a relative basis, it is quite easy up there. It's very shallow, fantastic ground, really quick to develop stuff. We are finding more and more material up there that can go through either our plant or the PolyMetals plant. Again, it is a Woodlawn-sized mine, but predominantly copper. We'll try and as we're moving drill rigs out of the bottom of the mine, that'll give us more ventilation down there for production. We've got a 12-year reserve life at the bottom of the mine anyway.

We want to pull those rigs up and put them up in the top part of the mine in that Merrin Mine so that we can start drilling that material out and getting it into reserve so that we can actually start talking about it in a bit more of a sort of SK-1300-type manner. Overall, look, I think our employees have done a pretty good job. We obviously had a really strong December quarter. We had a bit of catch-up work that we had to do during January and into February. It is pleasing to sort of see turnover has stabilized. We've seen, I think March was probably, if not the lowest, certainly one of the lowest turnover months we've had since we've owned the mine. Again, the safety has improved sort of quite markedly.

With that, I'm going to hand it over for questions. Happy to take questions from anyone who'd like to ask some.

Operator (participant)

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. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Daniel Morgan from Barrenjoey. Please go ahead.

Daniel Morgan (Founding Principal of Mining Equity Analyst)

Hi, Mick, Morné and Team. Probably first question just for Morné. Can I just confirm that from a cash flow perspective, your production and sales are aligned? I note that you sold officially 1.2 thousand tonnes less copper than produced in the quarter, but you also got the $22 million payment from Glencore.

Is my interpretation correct that basically from a cash perspective, your production equals sales?

Mick McMullen (CEO)

Yeah. I mean, that's typically how we try to run it on a quarterly basis. It's difficult to make all the shipments sort of work out exactly in terms of the quarterly reporting. In terms of the sales versus production, if you look at what we pre-sold, just over 1.5 thousand tonnes, if you add that to the sales volume, you sort of get to the production volume. That's what I sort of try to do on a quarterly basis, to try and match the cash with the production just to have that sort of consistency in terms of every quarter matching up. That's the aim. We can't recognize it as sales. I can't add it to the sales figure or the sales revenue.

I can't add it to the free cash flow from operations. Until it's loaded onto the ship, I can add the cash to it. We do that just to smooth out and make sure that we report to the market, I suppose. Cash that reflects the production because obviously we've sunk the cost into that production already. That's the aim, really.

Morné Engelbrecht (CFO)

That's clear. Mick, maybe going to Merrin, I think you indicate expectations of first ore at the end of 2025, Q4-ish. Will you get any development ore as you go? Is there any potential to pull a stope, or is it barren? I guess you've found stuff as you've been developing across.

Mick McMullen (CEO)

Yes. Actually, that massive sulfide sitting in that cutty right there, look, the short answer is we'll be able to pull development ore out.

We actually already have, I don't know, a dozen truckloads or half a dozen truckloads of fairly high-grade zinc lead mineralization sitting on the surface that we mine through as part of the development. Yeah, look, we're obviously going to be opportunistic and take it as quick as we can. Right now, PolyMetals isn't running, so that stuff is sitting on surface. If we see copper mineralization that is worthwhile taking, we'll obviously get that and we'll put it through the plant.

Daniel Morgan (Founding Principal of Mining Equity Analyst)

I appreciate that the Merrin is still an evolving thing and certainty and hard numbers, etc., are difficult to talk to at the moment. What tonnage would you see as a success based on where you're sitting now for 2026, for example? I'm talking ore tonnage and where would it come from?

I mean, you identified a few different areas of mineralization which have, I guess, different outcomes with grade and economics?

Mick McMullen (CEO)

Yeah. Actually, maybe that plan that's on that slide there would be good. QTS South Upper, I think if we do somewhere, look, I'm hoping we can mine it a bit narrower than what the current plan is, but somewhere like 150,000 tonnes at 5%-6% copper out of that. Maybe a little bit out of Pink Panther as well. It's lower grade. Then something like 150,000 tonnes at, I don't know, call it 9% zinc to truck up the road to PolyMetals. I would think the sort of what we call the medium-grade copper, that stuff that's about 2.5%, that's actually a bit more bulk tonnage. Just not quite sure how much of that will get out next year.

I don't know, about 100, maybe 150,000 tonnes of that at 2.5, something like that.

Morné Engelbrecht (CFO)

Just for clarity, these numbers you're providing, are these run rate numbers or is that what you would cumulatively success would be for 2026 in the delivery?

Mick McMullen (CEO)

Run rate is higher than that. We won't be because we're getting into it towards the end of this year, we won't be at full run rate on average for next year. Yeah, that sort of number, I think we should be able to get out.

Daniel Morgan (Founding Principal of Mining Equity Analyst)

Okay. Thank you very much. I'll let others ask questions.

Mick McMullen (CEO)

Yeah. You can see why we're pretty excited about this because it has the potential to add meaningful production to us. We've got estimates of what our mining costs will be.

We can look at what our cost per meter of development is, and it is one-third of what we're currently paying at the bottom of the mine, right? 2.5%, our medium-grade stuff at only 2.5% copper, whilst not quite as exciting as 4% at the bottom of the mine, the cost per tonne for that is very low. It has only got to cover your variable costs, right? It does not cost us any more overhead or through the plant or overhead through G&A. It is the same stuff, same cost. Yeah, we think we can make quite a lot of money. The other advantage of this Merrin Mine is obviously we have spoken about it at length. The CSA mine has these very high-grade stoping areas that when you are in them, it is fantastic. When you are not in them, it is less fantastic.

We can produce anywhere from 2,000 tonne of copper in a month to 5,500 tonne of copper in a month. Whilst we can see the stoping profile and we're comfortable on an annual basis, clearly the market likes to see less volatility on a quarter-by-quarter basis, right? One, we think we can make a lot of money out of this Merrin Mine. That's a great idea. Fantastic return for the capital deployed. Secondly, we think it has the ability to allow us to smooth that production profile out and de-risk the operation because it's coming out of a different part of the mine, different means of getting out as well. To me, that's actually a big advantage of this thing. It allows me to engineer out that inherent volatility that the CSA mine, like the current CSA mine has, right? Two advantages.

I always like to make money out of things. The second one is smoothing that volatility up is really important.

Daniel Morgan (Founding Principal of Mining Equity Analyst)

Sorry, Mick, to come back. Just on the fixed cost leverage, in the business, is it fair to say that the mine is about break-even at maybe 35,000 tonne per annum of copper production? After that, that's your margin. Is that a fair way of looking at it?

Mick McMullen (CEO)

I think it'd be a lower number than that. Morné would be able to work it out for you. I have done the exercise a while back. I would think it's high 20s, 30, probably the number.

Daniel Morgan (Founding Principal of Mining Equity Analyst)

Thank you so much. I'll pass it on. Thanks.

Operator (participant)

Thank you. Your next question comes from Ben Wood from Wilsons Advisory. Please go ahead.

Ben Wood (Associate Analyst)

Hi, Mick and Morné. Positive to see you guys.

The strong volumes coming through in March led to those meaningful cost reductions that we were sort of baking into our forecast. My question sort of is the previous copper production guidance for calendar year 2026 was sitting between 48-53 kilotonnes. I noticed in this release that you reference further down that there's a pathway to greater than 50 kilotonnes of copper equivalent production. Just sort of wondering, should we interpret this as perhaps a more conservative outlook in 2026 for copper, but perhaps signaling a greater emphasis of zinc? Or how should we sort of, yeah, interpret that wording?

Mick McMullen (CEO)

No real change, to be honest with you. I think, yeah, obviously, when we put that guidance out originally, we were not planning on mining any zinc. Now we are planning on mining some zinc.

We've obviously got the agreement in place with PolyMetals, so we've got an outlet for it. I think with what we see in this Merrin Mine, we're feeling pretty comfortable on that there's upside risk in that forecast. But it's a bit of an evolving thing, this Merrin Mine, right? I think I'd rather get to the end of this year and then I can upgrade next year, if that makes sense.

Ben Wood (Associate Analyst)

Yeah. Yeah. No worries.

Mick McMullen (CEO)

Because I'll have developed a mine by that stage, right? Then I'll have a much better idea.

Ben Wood (Associate Analyst)

Excellent. Just a second one as well, if I can. Previous sort of estimates for the vent project sitting at about $40 million. There's sort of been $8 million spent on growth CapEx in the last two quarters, sort of implying about $34-35 million left for the vent project. Is that still on track?

Mick McMullen (CEO)

Yeah. Yes.

Although I think it's AUD 42 versus $8. So yeah, that's right. Those numbers still sort of hold. Yeah. Yeah. Look, again, I think we may not have it in the decades. I think it's in the Word version of the quarterly. As we're doing more meters, Morné, you may have the exact number, but I think we saw a reduction in the cost per meter of development come down a bit as we did more meters. Yeah.

Ben Wood (Associate Analyst)

No, that's down to about $11,000 a meter from $12.5. Yeah. Yeah. Yeah. No, that's about right.

Mick McMullen (CEO)

Yeah. Look, the bigger components, obviously, is when you start, we've got to do a bit more development, but there's some somewhat sizable vent fans that have got to be bought.

They're from memory, don't hold me to it, but off the top of my head, there'd be $4 million-$5 million between those two there as a one-off lump. Then there's the raised boring work, which is the other sort of big component, right? All right.

Ben Wood (Associate Analyst)

Thanks, Mick. I'll hand it on.

Operator (participant)

Thank you. Your next question comes from David Radclyffe from Global Mining Research. Please go ahead.

David Radclyffe (Managing Director)

Hi. Good morning, Mick and Morné. My question is just coming back to that profile again and maybe just thinking about the shaft production for the year because it looks like you've got an average sort of north of 3,000 tonnes per day or hoisted. The mine hasn't done that for a while. Maybe could you talk to just the outlook for this year and give us some more color on how that profile looks?

Maybe is there some more grade upside there that gives you confidence in hitting your targets? Thanks.

Mick McMullen (CEO)

Yeah. That's right. Again, look, we've been very clear that sort of when we bought the mine, dilution control and mining practices were not best in class, I think is probably the best way to put it. The guidance for this year that we had for grade was, I think it's on the front slide there, but it was 3.8-4. And obviously, we're running at 4.1, yeah, 3.8-4. We are sort of seeing a little bit better grade. I'd always rather haul less dirt for the same metal. What's likely to happen is round about that sort of 4%, maybe 4.1% for the year, and haul a little bit less dirt.

That's probably where it looks like it's coming out.

David Radclyffe (Managing Director)

Okay. That makes sense.

Thanks for that. I'll pass that on.

Mick McMullen (CEO)

Thank you. Once again, if you wish to ask a question, please press star one. Your next question comes from Tim Hoff from Canaccord. Please go ahead.

Tim Hoff (CG Senior Mining Analyst)

Sorry, guys. I was muted there. I was just wondering around the off-take terms that you've got for any zinc production that might have been produced through the tolling arrangement. Does that go through Glencore's current arrangement?

Mick McMullen (CEO)

Not at this stage. It is a tolling agreement as opposed to an ore sale. We will get con back to deal. We have not at this stage signed off-take. I've spoken about the copper market in terms of it's incredibly tight for copper con. Actually, it's really tight for zinc con as well.

I must admit I haven't had a look for a few weeks, but zinc con on spot will be, if not below zero, pretty close to zero. Our immediate focus has been to charge on out to get the high-grade copper out there. Quite frankly, there's high-grade zinc we could take in a very short space of time, even quicker than the copper. We have to wait for PolyMetals to be up and running, right? Let them get up and running and not try and force them. Get them up and running. We have a draft of the off-take. We'll be signing something here in the not too distant future, I think.

Tim Hoff (CG Senior Mining Analyst)

Okay. Fantastic. Just to clarify that the copper is also separate to the CSA off-takes.

Mick McMullen (CEO)

Sorry, which copper?

Tim Hoff (CG Senior Mining Analyst)

Any copper you might produce through polymetallic or going to Poly.

Mick McMullen (CEO)

Yeah. That's right.

Yeah. If we're sending copper ore up to PolyMetals, we won't recover the copper because their circuit's a zinc lead circuit. That's why we chose to send the zinc lead ore up there. Anything that's got copper in it, that's going to run through our plant. Right. Roger. I think that was it for me. Thank you.

Operator (participant)

Thank you. Your next question comes from Eric Winmill from Scotiabank. Please go ahead.

Eric Winmill (Mining Equity Research Analyst)

Great. Thanks very much, Mick and team, for taking my question. Sorry if I missed it earlier. The line was cutting out a bit. Just on tariffs, I mean, are you seeing any issues in the supply chain or anticipating any major impacts in terms of cost or availability of consumables, things like that? Doesn't seem to be an issue for us right now. Obviously, look, it's a very unstable world.

Mick McMullen (CEO)

I think Morné and our General Counsel did an amazing job getting our refinancing done. Notwithstanding the ups and downs in the market and everything, I sleep much easier knowing that we have all that liquidity and no near-term principal repayments to weather any storms. I think that's more what we're going to see. We haven't seen any consumable or critical spare issues at this stage. Can't rule them out. It's probably more of just what I would call a general market uncertainty, right? That's been more of an issue for us. As I say, I do sleep much easier having that refinance done.

Eric Winmill (Mining Equity Research Analyst)

Okay. Fantastic. No, appreciate that. Thanks very much. I'll hop back in the queue. Cheers.

Operator (participant)

Thank you. There are no further questions at this time. I'll now hand back to Mr. McMullen for closing remarks.

Mick McMullen (CEO)

Look, I appreciate everyone.

I know it's a really busy reporting period in Australia. Look, I think clearly, if you asked me at the end of last quarter, which was our strongest quarter, what would I want? More copper is always the answer. Clearly, in Q1, more copper is the answer. I'll say the same thing at the end of Q2, just given the leverage we have to our fixed costs. I think things that we've got a really good runway ahead of us now for 2025 and into 2026. The major projects are all being executed. Look, the more we get into this Merrin Mine, the more we really think that thing has got the ability to really move the needle for shareholders. Cap it on that.

If you can see our growth CapEx for this year, in total, that Merrin Mine's circa AUD 25 million for that kind of production. It's a no-brainer for us to do it, right? We are very excited about it, obviously not taking our eye off the ball with our capital Ventilation Project. You can see those development meters and that really starting to pick up. Thanks, everyone. We will talk to you after Q2.

Operator (participant)

That does conclude our conference for today. Thank you for participating. You may now disconnect.