AIC Mines (ASX:A1M) Chief Executive Officer Aaron Colleran said the company delivered on production and cost guidance in the December quarter despite significant weather-related disruptions that complicated inventory levels and the timing of cash receipts.
December quarter production and costs
Colleran said the Eloise operation produced 3,202 tonnes of copper in concentrate during the quarter. He reported an all-in sustaining cost (AISC) of AUD 4.87 per pound (or US$3.26 per pound) and an all-in cost of AUD 5.22 per pound (or US$3.50 per pound), which he said met guidance.
Weather impacts and stockpiles weighed on reported cash flow
Colleran said extreme rainfall in December affected processing and logistics rather than mining. He reported 571 mm of rain in December, including 357 mm over a 48-hour period. While mining was not impacted, he said wet ore reduced crushing and concentrate trucking was hindered.
As a result, the company ended the quarter with unusually large ore and concentrate stockpiles. Colleran said some investors may have expected the December quarter to be the company’s strongest cash flow period given commodity prices, but results were “pretty much in line” with the June and September quarters for three reasons:
- December quarter cash flow largely reflected September, October, and November sales due to timing.
- Reduced processing capacity from wet ore led to 27,000 tonnes of ROM and crushed ore stockpiles, containing about 450 tonnes of copper.
- Poor drying conditions, temporary road closures, and issues at the Mount Isa smelter delivery pad resulted in a concentrate stockpile of about 2,000 tonnes, containing 464 tonnes of copper.
Colleran estimated the concentrate stockpile was worth about AUD 8 million and said it is expected to be sold in the March quarter. He added that January copper prices were higher than December prices, which could benefit the next period.
Exploration and development updates: Eloise and Jericho
Colleran pointed to drilling results at Eloise Deeps and Lens Six, describing the intercepts as having exceptional widths and copper grades, and noting “exceptional gold grades” as well.
At the Jericho project, he said deep drilling at Jumbuck and Squatter included 200-meter step-out holes that successfully intersected mineralization. He also noted that water in the access drive was anticipated but slowed progress during the quarter; by quarter-end, the development was 90 meters from crossing the J1 Lens, with an update expected “shortly.”
Plant expansion: on budget and on schedule, with ramp-up risk later
Colleran said the Eloise plant expansion is progressing well and, while still early in the construction period, is on budget and on schedule. In response to a question on execution risk, he said the scope is not especially complicated, citing power upgrades and the challenge of segregating construction work from ongoing plant operations to minimize disruption.
He also said the bigger uncertainty is less about building the expansion and more about the December-quarter ramp-up once the new equipment is cut over and commissioned, including how quickly higher throughput rates can be achieved.
Colleran said stockpiling is not expected to be a constraint, noting that ore stockpiles are already significant. He also described an opportunity over the next six months to process “decent parcels” of Jericho ore through the current plant to observe performance, while reiterating that prior metallurgical test work supports expectations of good flotation performance.
Capital spending and potential Jericho acceleration tied to commodity prices
On capital expenditure, Colleran said overall spending was broadly tracking guidance at the halfway mark, with most line items around 50% of full-year expectations. He flagged several areas running ahead:
- Eloise underground mine development: guided at AUD 32 million for the year, with AUD 21.7 million spent (67%) at the halfway point; he now expects around AUD 36 million due to cost creep.
- Eloise resource definition drilling: guided at AUD 2.5 million with AUD 1.6 million spent; he expects around AUD 3.5 million as previously “success-dependent” spend is brought forward.
- Non-plant infrastructure: at 59% spent, which he attributed mainly to timing.
Colleran summarized the potential Eloise CapEx overrun at roughly AUD 4–5 million (about 10%) and said it would be offset by stronger-than-expected revenue.
He also highlighted a statement from the quarterly report: if current prices hold for the next six months, Eloise could generate about AUD 30 million more cash flow than originally forecast. Colleran said that pricing strength, combined with drilling results at Jolly, has led the company to consider re-optimizing the development rate at Jericho. He said faster development would increase upfront costs but could accelerate a ramp-up to 1.1 million tonnes per annum and provide a stronger platform for a stage 2 expansion to 1.5 million tonnes per annum.
Colleran said the company expects more detail with an updated mineral resource and ore reserve estimate due in April. Until then, he said the company will continue to describe the 1.5 million tonnes per annum rate as “aspirational” due to JORC constraints, but after April he expects it may be referenced as “the new plan A.”
In the Q&A, management also discussed shipment pricing mechanics, noting that around 90% is provisionally paid in the month following shipment, with the remaining 10% settled later depending on nominations, and confirmed the company is “fully bonded,” with only potentially minor future requirements described as not material.
About AIC Mines (ASX:A1M)
AIC Mines Limited explores for, develops, and acquires gold and copper deposits in Australia. It holds interest in the Marymia project comprising an area of approximately 3,600 square kilometers located in the Eastern Gascoyne region of Western Australia; the Eloise copper mine located in North Queensland; and interest in the Lamil project that covers an area of 1,200 square kilometers located in the Paterson Province of Western Australia. The company has also interest in the Delamerian project located in the Delamerian Orogen in western New South Wales.
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