MMG Limited (1208) Earnings Call Transcript

Hello, everyone, and thank you for joining MMG's 2025 Fourth Quarter Production Report Teleconference. Before we begin, I would like to remind you that today's discussion may include forward-looking statements and other information intended exclusively for participating investors. The materials provided, including any audio or written transcript of this call are for reference purposes only. MMG has not authorized any third party to reproduce, distribute or disseminate the contents of this meeting. Neither the company nor its affiliates accept any responsibility or liability for any use, distribution or reliance on all or any part of the remarks made during today's discussion. Please be advised that financial markets inherently involve risks. Investment decisions should be made with careful and prudent judgment. We strongly encourage all investors to conduct their own independent analysis and due diligence before acting on any information shared during this call. Joining us today from MMG's management team are Mr. Zhao Jing Ivo, Chief Executive Officer and Executive Director; Mr. Qian Song, Chief Financial Officer; Mr. Wang Nan, Chief Operating Officer; Ms. Guan Xiangjun Sandra, Interim Executive General Manager, Commercial and Development; Mr. Xia Weiquan, President, Africa; and Mr. Chen Xuesong, President, Las Bambas. I will now hand over to Mr. Zhao Jing Ivo to take you through MMG's operational performance for the fourth quarter and the full year 2025. After the presentation, we will also open the line for questions. Thank you.

Okay. Thank you, and welcome to MMG's Fourth Quarter Production Report Teleconference. I'm very pleased to share an update on MMG's operational performance. Safety is MMG's first value. As always, let me begin with our safety performance. In 2025, our safety performance was generally in line with the previous year. The total recordable injury frequency was 2.06 and a significant event with energy exchange frequency was 0.80 per million hours worked. However, we observed an increase in safety performance indicators during the fourth quarter. This reminds us of the importance of staying focused on the safety of all employees and contractors. Moving forward, we will continue to strengthen proactive field task observations to ensure the effective implementation of critical controls and enhance contractor safety management. Now let's turn to our production results. 2025 was a year of strong operational performance for MMG with record and near-record results across our key assets. Total copper production for the year reached 507,000 tonnes, a 27% increase over 2024 and a clear milestone beyond the 0.5 million tonne threshold. This result reflects our strategic focus on copper with our 3 copper mines, particularly our flagship asset, Las Bambas, making a key contribution. Total zinc production reached 230,000 tonnes, up 6% year-on-year with Dugald River delivering its highest annual production on record. Byproduct precious metals also performed strongly. Gold production reached 118,000 ounces, up 22% year-on-year and total production reached 10.6 million ounces, up 17% year-on-year. These byproducts are important contributors to MMG's revenue and helped to support our financial performance, particularly during periods of strong precious metals market conditions. Next, I will go through our performance by business segment. First, the corporate portfolio. Las Bambas achieved a historic operational breakthrough in 2025, with annual copper production exceeding 410,000 tonnes. This represents a 27% year-on-year increase, solidifying its position as one of the world's top 10 copper mines. This result was above the upper end of guidance and was the second highest annual production since the mine began operations. This outstanding performance was driven by improved operating efficiency and stable mining operations at both Ferrobamba Pit and Chalcobamba Pit. Notably, in 2025, Las Bambas set new records for ore mined, ore mills and recovery rates. On cost, thanks to byproduct credits from stronger precious metals prices, the full year average C1 cost was USD 1.12 per pound of copper, better than our guidance range. On community relations, Las Bambas made positive progress by working closely with local communities and the Peruvian government. Through the heart of Las Bambas program, we helped local communities set up a business in transportation, infrastructure, agriculture and catering services. These businesses provide services to the mine and create stable income for local residents. We also invested in local education and infrastructure through Group's Works for Texas program. This allows Texas to be used for community development more quickly and efficiently. These efforts have helped build a strong and stable relationship with the government and communities, supporting the mine's nearly 3 years of stable operations. For 2026, Las Bambas production guidance is 380,000 to 400,000 tonnes of copper in copper concentrate. We expect average C1 costs to be in the range of USD 1.20 to USD 1.40 per pound. If precious metals prices stay strong, actual C1 costs may be lower. With its C1 cash cost position in the lowest 1/3 of global copper mines, Las Bambas enjoys a robust cost advantage. In the context of current strong copper prices, this offers considerable profit resilience and reinforces the stability of our business. Next, Kinsevere. In 2025, Kinsevere focused on ramping up its expansion project. It produced about 53,000 tonnes of copper cathode, up 18% year-on-year. The full year average C1 cost was USD 3.12 per pound. This year, Kinsevere's focus will be addressing challenges, including improving power supply stability, stabilizing production, optimizing the concentrator and roaster and fixing bottlenecks in the hydrometallurgical process. For 2026, Kinsevere copper production guidance is 65,000 to 75,000 tonnes with C1 cost guidance of USD 2.50 to USD 2.90 per pound. Now Khoemacau. In 2025, Khoemacau produced about 42,000 tonnes of copper in copper concentrate. During the third quarter, the change in mining contractors caused a short-term impact on the mining volumes. However, by the fourth quarter, operations recovered and mining expanded into the higher grade Zone 5 North area, this supported higher head grades and improved recovery rates, supported by stronger silver prices and lower ore development costs. Full year C1 costs were USD 1.97 per pound, better than the guidance range. For 2026, as mining moves into higher-grade ore in Zone 5 North and with progress in mine development and the Phase 3 project, copper production is expected to increase. Production guidance is 48,000 to 53,000 tonnes in copper concentrate with C1 cost guidance of USD 2 to USD 2.30 per pound. If fuel prices stay strong, actual C1 cost maybe further improved. I'd also like to share an update on Khoemacau's extension plan. Khoemacau is a new mine that MMG acquired in March 2024. It has attractive resource potential and a clear expansion plan. In December 2025, the Board approved the feasibility study for the Phase 2 expansion. This is an important part of our global mining strategy in Africa. After completion, annual production capacity is expected to increase to 130,000 tonnes of copper in copper concentrate with annual silver production exceeding 4 million ounces. Early works have already started, including camp construction, land acquisition with recruitment and procurement of long lead items. Main construction is planned to commence this year with first copper concentrate expected in the first half of 2028. After commissioning, Khoemacau's average C1 costs are expected to drop to below USD 1.50 per pound, which would significantly improve the mine's profitability and strengthen MMG's position in the global copper supply market. In addition, ongoing exploration at Khoemacau has identified more expansion potential. Annual capacity could increase to 200,000 tons of copper and copper concentrate in the future. We plan to start a pre-feasibility study for the next phase of the expansion this year. For our Zinc portfolio, we delivered record annual results with zinc production reaching 183,000 tons. This result exceeded the prior year by 12% year-on-year and finished at the upper end of guidance, solidifying its position among the world's top 10 zinc mines. For the first time, annual ore processed exceeded 3 million tonnes with plant recovery rates staying stable at around 90%. These strong results were driven by the focus on operational efficiency and technical optimization, which helped the site to recover quickly and perform well after unplanned weather impact in the first quarter. On costs, the full year average C1 cost was USD 0.65 per pound of zinc, better than the previous guidance range. This was mainly due to higher byproduct credits from stronger silver prices, lower treatment charges, high production levels and favorable exchange rates. Looking ahead to 2026, we anticipate potential constraints as the mine deepens alongside seasonal weather challenges in the first half. Our focus will be on enhanced planning and operational execution to maintain resilience through this period. Zinc production for the year is expected to be between 170,000 and 180,000 tons, with C1 cost guidance of USD 0.18 to USD 0.95 per pound. Again, if silver prices remain high, C1 costs may be further improved. Rosebery also delivered a steady performance in 2025 with good execution of the mine plan. Full year zinc production was approximately 49,000 tonnes, while zinc equivalent production reached 140,000 tons. This highlights the value of Rosebery's polymetallic ore body and its effective approach to optimizing byproduct value. On cost, supported by an operating efficiency, high byproduct volumes and favorable precious metals prices, full year C1 costs were negative USD 0.94 per pound of zinc, significantly lower than the previous guidance range. Looking ahead, annual zinc production is expected to be between 45,000 and 55,000 tonnes. Based on 2025 realized to product prices, zinc equivalent production is expected to be 125,000 to 140,000 tonnes. C1 cost guidance is negative USD 0.60 to negative USD 0.10 per pound. If precious metals prices remain strong, Rosebery C1 costs could improve further. Finally, I'd like to share an update on our recent senior management appointment. In December, Mr. Chen Xuesong was appointed as President of Las Bambas and Mr. Xia Weiquan as President, Africa Operations. These appointments aim to extend operating responsibilities to the asset level, strengthen frontline leadership in safety, production and cost optimization. Both Mr. Chen and Mr. Xia are on the line today and available to answer any questions about our asset operations. To wrap up, MMG delivered a strong performance in 2025, unlocking production potential, while achieving steady progress on key growth projects. Looking ahead to 2026, we will remain focused on safety, stability and efficiency to support production reliability. At the same time, we keep advancing in key growth projects like the Khoemacau Phase 2 expansion to stress MMG's long-term value and resilience as a copper-focused diversified mine. On behalf of MMG, I would like to sincerely thank all investors and stakeholders for your support. We are committed to creating sustainable value for all shareholders. That concludes my remarks. I will now hand the call back to the moderator. Thank you.

[Operator Instructions] Since no question on the line, this concludes the Q&A session. I will now hand the call back to Mr. Zhao for closing remarks. Thank you.

Okay. Thank you all for taking the time to join today's teleconference. If you have any further questions, please contact our Investor Relations team. See you next time. Thank you.