MMG (1208) Q2 2024 TU earnings summary

Executive summary

• Achieved a significant reduction in total recordable injury frequency (TRIF) to 2.28 per million hours, with June at a year-low of 1.72, though significant energy exchange events increased to 1.38 per million hours.

• Total copper production (cathode and concentrate) was 90,972 tonnes, down 2% year-over-year but up 36% sequentially, with Las Bambas and Kinsevere showing sequential growth and Khoemacau contributing its first full quarter.

• Zinc production reached 50,300 tonnes, up 1% year-over-year, with Rosebery achieving its second highest quarterly ore mined and milled volumes in 20 years.

• Completed a $1.2 billion rights issue, oversubscribed 2.8x, to fund the Khoemacau acquisition and reduce gearing from 60% to 44%.

• Key community agreements were reached at Las Bambas, and Kinsevere's expansion project remains on track, with first cobalt sales in June.

Financial highlights

• Rights issue proceeds will repay debt and support future growth, with net debt expected to fall to $4.7 billion and annual interest cost reduced by $80 million.

• Copper prices averaged $9,753/t in Q2 2024, up 15.6% from Q1, while zinc averaged $2,833/t, also up 15.6% quarter-on-quarter.

• MMG entered into hedges for 120 KT copper, exceeding current output, and for zinc, to secure cash flow and support expansion projects.

• Gold and silver prices surged by 12.9% and 23.6% respectively, quarter-on-quarter, driven by geopolitical concerns and a dovish Fed stance.

• MMG's interest in Khoemacau reduced to 55% following joint venture formation, with up to $611.1 million committed.

Outlook and guidance

• Las Bambas copper production for 2024 expected at the higher end of 280,000–320,000 tonnes, with improved C1 cost guidance of $1.55–$1.75/lb.

• Las Bambas 2025 copper output targeted at 350,000–400,000 tonnes, with Chalcobamba contributing higher-grade ore.

• Kinsevere 2024 copper cathode guidance at 39,000–44,000 tonnes, C1 cost revised up to $3–$3.35/lb; ramp-up to 80,000 tonnes copper and 4,000–6,000 tonnes cobalt by 2025.

• Khoemacau 2024 copper production guidance at 30,500–40,500 tonnes, C1 cost $2.30–$2.65/lb; full ramp-up to 60,000 tonnes by 2026 and 130,000 tonnes by 2028.

• Dugald River zinc production for 2024 expected at lower end of 175,000–190,000 tonnes, C1 cost $0.70–$0.85/lb.

• Rosebery zinc production for 2024 guided at 50,000–60,000 tonnes, C1 cost $0.05–$0.20/lb.