Aeris Resources Limited (ARSRF) M&A Call Prepared Remarks Transcript

2026-02-16 22:47:37 ET

Aeris Resources Limited (ARSRF) M&A Call February 11, 2026 7:01 PM EST

Company Participants

Willie Labuschagne - Executive Chairman & CEO

Presentation

Willie Labuschagne
Executive Chairman & CEO ...

All right. Look, we'll kick off. Thank you very much, and welcome to the Aeris webinar where we will talk about the strategic acquisition of Peel Mining. And I'm sure there will be some Peel shareholders, current shareholders in Peel online and we'll aim to address some of your -- hopefully, you look at this and see the value in what we're putting forward. We are not going to do a Q&A at the back end of this due to the size of the audience, but we will try to address or I will try to address some of the questions, which has been raised since the announcement this morning.

Now this acquisition is a strategic acquisition for Aeris. It really is focused on Tritton and the life of mine for Tritton where we see that adding the Peel Cobar assets, specifically to Mallee Bull and Wirlong into the portfolio will give us that opportunity to extend the mine life and have certainty around the mine life for Tritton specific. So we'll go through the background of the deal. We'll also I'll spend a bit of time on the back end just for a bit more about Aeris, if there are some shareholders on the line, so you can see what we've got and what's the plan.

I'll kick off with the disclaimers, I guess, at a high level, it is strategic, as I said, this acquisition is specifically focused. When we started to talk to Peel a while back, our interest was in the copper assets because we've got a copper mine, and we weren't that interested in the rest of the portfolio. So the arrangement has always been we'll take it over, we'll then demerge the balance of the portfolio. And then the team can basically take that portfolio and actually go again in NewCo.

So this is what we focus has always been the aim. And you can see on that slide on the right-hand side, specifically when you look at Tritton, where you're going from 314,000 copper tonnes to over 500,000 copper tonnes with Peel and Wirlong added to the portfolio. The key is out of this, you can see specifically Mallee Bull, which we see as a key asset that that's an 85% increase in indicated resource. Now what that means for us is we will be able to turn most of that fairly quickly into a reserve, which will then worth Constellation and Mallee Bull really give us that opportunity to put together a really strong 10-year life of mine plan and increase in production. We are targeting with those 2 with grades at around 2% copper, we can clearly see that we can target that plus 30,000 ounces -- tonnes of copper metal.

We obviously have the plants. We've got the skills. We've got the people, which field doesn't have, and we can use our skill sets and our people to deliver the Mallee Bull and Wirlong in the future to the Tritton plant. There's also -- which people don't always understand there's significant further outside. We are picking up a large tenement package. Both these assets continue at depth and also there are some other targets within the tenement package, which we will be focusing on.

This is just sort of give you a feel for the location. So Wirlong is about 100 kilometers from Tritton. Mallee Bull is about 130. We're picking up nearly 1,500 square kilometers of tenement of ground. And we see that -- you can see in that slide that 88% of that Mallee Bull resource is indicated. We will turn that into reserve within the next 6 months. And that reserve plus the Constellation reserve will be very valuable in putting out a 10-plus year mine life. As I said, there's ways to derisk and there's ways to put this forward, but we see this new Tritton regional play and consolidation of that Cobar region as a clear step forward for us in the region.

Talked a bit about the Tritton where we see that 10-year mine life opportunity, and we're trying to illustrate that in the slide, the graph on the right-hand side. Now between Mallee Bull and Constellation, once those 2 are up and running and both underground mines are running at full capacity, we're looking at 1.5 million tonnes delivered to the plant, which can process 1.8 million. So basically, you've got a baseload feed from 2 operating mines, plus you then got the other assets, which is currently in production or known at Tritton, which will fill the mill over that period. And with that, we're always seeing that if you run that mill at full capacity, it's a low-cost operating plant, and that will all bring the cost down specifically when you start to look at the grades we're getting out of these.

So that is what we're targeting. We will turn that into a reserve as quickly as we can. We already got Constellation open pit as a reserve, we will start to look at the underground and come up with a 10-year plan within the next 6 months.

One thing which is always -- while I'm on that is one thing which always sort of differentiate to some of our peer groups is the perceived life of our assets has always been 3 to 4 years, and we never could put together that 10-year mine plan because these things just always just extend itself. With this, we have the opportunity to have a clear plan with a strong reserve and resource backing to put that plan together.

Just on the market position, we should on a pro forma basis be able to trade about $850 million. It is the biggest we have in a mineral resource. That includes our other assets, very large copper resource and at a production level, we're already one of the bigger copper producers in the peer group, but also that will further enhance that opportunity to enhance the portfolio as we move forward.

I guess it sort of comes back to we clearly put the strategy out in '26. We said we're going to focus on life of mine. We're going to focus on resource extensions at the operations. We focus at Tritton and Murrawombie pit that will be in production in this quarter, the Constellation deposit coming online in FY '27. And this will allow us to put that resource extension and that life of mine plan out with a strong backed resource base.

At Cracow, just touching on it while we're on this slide, Golden Plateau drilling we put out this week looks really positive. That will make a material difference to the life of Cracow if that drilling and that open pit opportunity comes to life.

We talked about selling noncore assets before. That's done. The deal should complete in the next few weeks. At Jaguar, we clearly said we want to do base metal drilling. We want to extend the mine life to plus 10 years. Drilling there will start this quarter. And at Stockman, all the different technical studies is done. We now finish off the feasibility study, which will be out by June.

And on the gold side, we always said we look at external opportunities. We've been very open that we believe that region where Tritton is in is open for consolidation, and it's nice to be one of the first movers to take this opportunity and really set Tritton up with a really good life of mine.

Maybe just touching a little bit on what we're buying. As I said earlier, the main asset is Mallee Bull. It's not far. It's about 130 KMs from Tritton. You can see that mine design that will deliver about 750,000 tonnes on an annual basis. We know it can go through the plant. The work is done. There's already an exploration decline approved to kick that off. And you can see there pretty sizable resource of which 88% is indicated.

Now one of the questions which people is asking and which we got is why do it now if it's only going to come in production later in the cycle. The answer to that is it takes time to get all the approvals in place to start up new mines. So we've taken that into account. We will obviously expedite this. We already started work on approvals. The team will work on fast tracking this. So although we, in this presentation, talk about FY '29 start date, there's always an attempt to bring it forward.

And look, the other answer to that is it's not us, it would be someone else. And this has been an opportunity in the region and a fairly competitive opportunity in the region. And we just feel that being there will give us that option value. We own the land. So there's no landowner issues to get this in place. There's already an exploration decline approved, so we can start a decline and that would be to drill it out further to ensure that we got the grade control drilling done. So nothing stops us to start early, but we've just been conservative in our view on sometimes the timing of getting approvals for these takes longer than normal.

Wirlong, it's a good deposit. It's already 4 million tonnes. We do have a view it needs more drilling. It would be a future project, but it would not be the priority project in the short to medium term. It will be a project. We will do more drilling, make sure we understand the geology and then we'll start to put a mine plan around it. Now when I talk about 10-year mine plan, it doesn't include Wirlong in that plan. So that is further upside beyond 10 years.

The transaction overview, and I know it's very complex, but I'll try to summarize it at a simplistic level. So we will buy Peel Mining at a listed level. So they traded at $0.16. We offered $0.19, which is a 19% premium, which our shareholders would pay for it. So then what we will do is there will be a demerger of the other assets, which we don't put a lot of value on because we don't see that there's any value for us in the region from the current mill we got because it's copper and other base metals -- gold and other base metals.

Then the current Peel shareholders will get opportunity to continue exposure in that to NewCo and current valuation of that is about $0.044, and that gives them a total premium of around that $0.46. But for us as shareholders and for Aeris as shareholders, it is not a 46% or major dilution at that sort of level, we are diluting the current shareholders by around that 20%.

So you can see the pro forma ownership. NewCo, as I said, will do an in-specie distribution and then they will go again and set up an exploration company with the remaining assets. We have got support from the Peel Board and the major shareholder and really welcome their support and them as shareholders in Aeris once this deal is done. Just to be clear as well that there's no employees coming across to Aeris as part of this process. It's really just the assets, the properties and the associated tenements.

I'm not going to spend too much time on this. I think we already discussed this, but it does enhance the Tritton operations. It gives it stability, derisks the business and really that focus on 10 years and consolidation of the Cobar region does set us up as a business with a much more lower risk business. Then there's a value to the Peel shareholders. Obviously, you're getting a good premium. There's a logical establishment, you get exposure to Aeris as well as an operator, so you can see your assets being developed and get the benefits of that as we grow. And then obviously, being part of a new leadership company, you can further get exposure to the assets, which we don't put much value on.

This is sort of just a pro forma, a snapshot. So currently, our market cap as of yesterday was $670 million. We're paying $0.19 or $175 million to equity to Peel shareholders, which should give us a pro forma basis of about $850 million. What we get for it, of course, is significant increase in both in copper resources, also some gold. But clearly, when you look specifically at Tritton is that extension of mine life.

The NewCo highlights, as I just said, you can see on that map, there is the tenements which will go with NewCo. And basically, the opportunity there is for Nick and the team to take those and the current shareholders to actually extract value out of those assets going forward.

The indicative time line, because it's the demergers and it's a scheme of arrangements, there's a process currently targeting completion sort of late June, early July. And that is just because it's got to go through various processes and court approvals, and we'll keep the market up to date on hitting those time lines as we move forward.

I thought I'll take some time just to -- for those who don't know Aeris, just to give you a bit of a feel for Aeris in itself or the assets and what we are planning to do with the various assets and work underway. So currently, we have the 2 operating mines. We've got Tritton Copper mine and the Cracow Gold Mine. Tritton do about 24,000 tonnes of copper metal, Cracow around 40,000 tonnes and as a group, targeting that sort of 45,000 copper equivalent tonnes.

Then we've got 2 other projects. We've got the Jaguar copper zinc mine, which is a mine we put into care and maintenance a few years ago, and we'll talk in a bit more detail of that later in the presentation. And then we've got a very good quality reserve back project in Victoria, which is busy with the feasibility study. So good operating assets in this price environment, obviously, doing really well in operating cash generation.

We're investing in Tritton, starting up the Murra pit and also Constellation. But really, the company has seen significant growth over the last, call it, 8 months from September, you can look at that slide where we've gone from below $0.20 all the way up to around $0.60. Current cash in the bank is $86 million. We raised money in November. We repaid our debt so we're debt-free and really, the company is in the best position it's been for a very long time to actually take these opportunities and execute on these opportunities, and we're very happy with the outcome.

Looking a bit at Tritton. So that's the photo of the plant. That's a 1.8 million tonne process facility. You can see the regional map. We sort of talked about it earlier. So now as a group, we will have over 3,000 Tritton 3,000 square kilometers of exploration ground. We've got various projects at Tritton in production. So typically, at Tritton, we'll mine 2 to 3 mines to fill the plant as much as we can. And then the future projects as they come online, will step up the production and life of those, of course.

The Murra pit, that's a cutback we're doing, also using the waste to close old heap leach pads, saving ourself $8 million. The pre-strip is nearly done. We'll be in production by the end of this quarter. And there's a significant amount of tonnes, which will come out very early in FY '27, but processed across FY '27. So we'll see quite a full plant in FY '27 driven by this Murrawombie pit and the outcome of those.

Constellation is the key asset in the portfolio. It's been discovered about 4 to 5 years ago, currently already 8 million tonnes at 2% copper and really good gold grades. Current indications are that we'll start with an open pit mine. It starts 8 meters below surface. And at the right time, we'll go underground and keep mining it. And currently, this plan would be a 10-year plan of mining constellation. It's still open at depth. We know that there's high-grade intersections down the bottom. And this would be part of that, what I discussed. The 2 baseload projects will be Constellation and Mallee Bull feeding into the mill and keeping it at nearly 1.5 million tonnes without any other sources coming in.

And as you've seen on the previous slide, there's quite a few other sources at current mines we're mining in going forward. One of them is, of course, Avoca Tank. Avoca Tank is a small high-grade copper deposit currently mining between 2% and over 3% copper. We're spending a lot of money in areas currently. We're putting about $25 million into exploration across the group with a specific focus to increase the resource base of all these assets.

So the drilling we're currently doing is looking down dip, but also we've tested an opportunity outside of the current resource structure. We dissected good copper grades, as you can see there, 22 over 3%. We keep on drilling. There's others who already intersected copper, which were waiting the results back. So there's indications there that this is potentially another ore source or stepped out of the Avoca Tank ore body, which will give additional life. So we are working on those drilling the holes and extending the resource at Avoca Tank.

The other work we're doing, as I said, a lot of money is going in to extend these resource life. So we've got Budgerygar currently in production. We've got a drill rig drilling that out, and we're finding bigger and thicker intersections than expected. At Tritton, it's already 1,300 meters deep. It's still open. We've got a drill rig running South Wing in Tritton and then there's also work being done. So we currently got 4 drill rigs running, another one coming in, and it's all about extending those resources so that we've got the profile to run with the 2 baseload assets from potentially these or other assets, which has already been like Kurrajong, Budgerygar is already defined resources within the business.

Stepping into Cracow, that's in Queensland, really well looked after gold plant, producing about 40,000 ounces. Over the years, we bought it 5 years ago, it had 3 years life and 5 years later, we say, well, we think there's a lot more than 3 years life. So it's just one of those high-grade narrow veined ore bodies. If you look at this slide, you can see there's still a significant resource left, but it is just one of those, which doesn't necessarily have the reserve backing at the time to put a 5-year plan out, for example, at Cracow.

But what we're working on and there is a real opportunity is the Golden Plateau target. This is an old historical underground mine mined in the 1930s at 10 gram a tonne. We have done a lot of work. There was an open pit mine put in the 1980s where someone mined 2 million to 3 million tonnes at around 2.5%, 3% gram a tonne gold. We've done a lot of work with historical drilling, and we think that there's an opportunity to do a further cutback and extend the resource, for example, to furnish out and really put another bigger pit over there and targeting an increased life through an open pit mine through this.

You can see some of the results. So we've got a drill program running currently. The 2 results we got back, you can see there on the screen, 5 meters at 12 gram, 19 at 0.9 with some high grade in between. it's what we expected. So we're actually trying to drill to see what we expect to get is it what we're getting. And so far, it's proven correct. And once this is defined in the next 6 months, we'll start to put a plan around it, and we can see if this works that there will be 4, 5 years of open pit mining defined for Cracow plus what we mine in this Western vein field, which is the current production area will allow us for a substantial increase in mine life for Cracow.

What that does, though, it allows us to look at the greenfields exploration, specifically the Southern vein field. It's obviously to the south of the current mining areas. All the work has been done. The target has been identified. We will start drilling in Southern in field in this quarter or within this financial year to start to test some of those targets. The view is if you find something, it's potentially a much larger deposit and potentially another Western vein field or similar if you find something. So within the group, this is one of the real exciting exploration opportunities within the business.

At the project level, this is the Jaguar mine in Western Australia, which is care maintenance. So what we've made the decision -- so just to baby step back. So we put in care maintenance about 3 years ago now when the copper price, I mean the zinc price dropped by 30%, and we needed to put more capital in, but there was just not enough resources to keep the mill full. And we decided, look, we'd rather put in care maintenance than losing money. And then we sort of this year worked out that less there's really great exploration targets for base metals.

You can see in that map, all those yellow markets are base metal has never been tested. and create a 10-year plan before we actually start up. So right now, we've put $3 million aside. Drilling will start there within the next few months, and we'll test those targets. If you find something, obviously, you'll drill it out. But clearly, for us, the best for us to start is if you got life and not try to start it with short life and think it will increase.

What it does -- the other opportunity, of course, remember, this is in Western Australia, it's in gold country. You look at the tenement package, it sits between Thunderbox, which is 4.7 million ounces and King of the Hills, which is 3.5 million ounces and current resources sitting close by. Each one of those yellow markers there is a gold anomaly. So the other option, which is great for Jag is it's also a gold opportunity. So there's opportunity to drill that gold up. There's also gold explorers around us. You can always turn that base metal mine into a gold mine, if that's what you want to do. So really great optionality. We need to define that and decide which way we go. But clearly, from where we sit, that's a real opportunity.

And then Stockman, I'll just touch briefly on it. So Stockman is nearly a 10 million tonne, 2% copper 4.3% zinc with gold and silver ore body. It's a reserve backed at 10-year mine plan on reserves. We've done a lot of work over the last 2 years to look at technical opportunities to improve the recoveries. We've landed basically on an improved flotation circuit, which is low cost, lower capital cost and operating costs, and we're busy finishing off the feasibility study on that basis and not going to try to use expensive technology to get the improvement in recovery, but the cost outweighs that improvement.

So holding cost is minimal. A lot of exploration upside around that region. Currently, we're only looking at this one mine called Currawong. There's also Wilga. There's also 50 other targets and 4 or 5 real good targets we want to look at. But right now, we want to finish of the feasibility study, so we can start to talk about the opportunity for Stockman.

I guess that sort of summarize the presentation. Look, for us, we are excited about this. We always -- and for people who's been in this business for a long time, know that we've always seen that Cobar region as a consolidation opportunity. We always worked on how do we improve the life at Tritton, so we could talk about it and get real value behind it. And this is the opportunity.

I think where we're looking at from adding the value and creating that life for Tritton, which you can then put the right infrastructure in place because you know you've got the life. And in this environment where both copper and gold is at really good nearly record prices, I do believe this is the opportunity to derisk these businesses, put more money into exploration, create these life of mine so you can sustain the cycles because they will come. And I think this is how we look at it from an Aeris point of view.

Thank you very much, and thank you for joining the Aeris webinar.

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