Monsters of Rock: New copper monster hops on bourse, mining services firms have results party

$1.2 billion Metals Acquisition lists, bringing new copper monster to the ASX
Mining services stocks put runs on the board, led by a Perenti payout
Sayona down on Moblan lithium study

Copper lovers have their newest toy with Metals Acquisition Corp completing its secondary listing on the ASX, backed by a $325 million IPO run by Barrenjoey and Canaccord Genuity.

Investors forked out $17 per chess depositary interest in the float, which will drop the second $1 billion copper pure play onto the bourse behind Sandfire Resources (ASX:SFR).

MAC, primarily listed in New York and led by former Detour Gold and Stillwater CEO Mick McMullen, counts Australia’s highest grade operating copper mine as its major asset.

The firm spent US$1.1 billion last year to purchase Glencore’s CSA copper operations in Cobar in New South Wale’s Lachlan Fold Belt.

The mine is projected to produce 40,000t of copper and 450,000oz of silver this year with cash costs of US$1.99/lb in the fourth quarter. CSA is backed by 314,000t of copper reserves contained within 7.9Mt of ore at a grade of 4% Cu.

Its broader mineral resource contains 13.3Mt at an even higher grade of 5.3% Cu.

The mine produced 37,000t of copper at a recovery rate of 98% and C1 costs of US$1.51/lb including by products on the last official numbers, adjusted for the terms of MAC’s current offtake arrangements.

In 2017, the mine produced as much as 53,400t of copper. MAC produced 9832t of copper and 114,969oz of silver in the December quarter, up 26% and 16% respectively on Glencore’s output in the second quarter of last year.

As per its name, MAC has been scouring for other copper mines to acquire in the Australian market, where a dearth of copper options exist to capture the expected tailwinds from the energy transition.

“An Australian IPO and listing will allow us to pursue a range of organic and inorganic growth opportunities in Australia and globally to continue building shareholder value,” McMullen said.

“While we have made significant progress in improving overall operational performance at our CSA Copper Mine to date, our initial focus will be to assess further exploration, development, and production improvement opportunities.

“With a disciplined M&A strategy, we will continue to evaluate prospects for growth through acquiring and operating assets in stable mining jurisdictions that will benefit from a turnaround and optimisation program to enhance value.

“The listing is an important milestone for the Company as we continue to expand and work towards our long-term goal of owning and operating multiple metals and mining assets that are critical to the electrification and decarbonisation of the global economy and become a notable player in the industry.”

Metals Acquisition Corp (ASX:MAC) share price today

Mining services firms host results party

Perenti has completed a multi-year turnaround process by issuing its first dividend since 2021, lifting its shares more than 7% on the announcement of the 2c payout.

It comes after the mining services firm generated record revenue of $1.6 billion and underlying EBITDA of $312.4m, along with EBIT of $148.5m and statutory NPAT of $69.8m, up from $44m in the first half of 2023.

That was partly driven by the acquisition of major Aussie driller DDH1, with $5.2m of cash synergies realised to date and $22m expected to be realised by FY25.

Formed by Ron Sayers as Ausdrill in the 1980s, Perenti expects to generate more than $100 million in free cash through FY24.

“We are pleased with the consolidated operational and financial performance that was delivered during 1H24,” MD Mark Norwell said.

“One of the many benefits of our globally diversified business is that the overall performance of the Group is not leveraged to any one project, commodity, jurisdiction or business.

“We have nearly four decades of experience across a range of our service offerings and are confident that the fundamentals of our business are robust, with the acquisition of DDH1 complete and with cash generation an ongoing strategic priority.”

On top of the interim distribution, Perenti had paid out $8.5 million to shareholders via a buyback scheme to the end of December.

Macmahon Holdings (ASX:MAH) also posted strong results, reporting its statutory NPAT had lifted 56.7% to $36.5m for the first half.

Underlying EBIT(A) came to $68.1m, up 26.9% YoY for the contract miner, with underlying EBITDA of $176m – up 17.9% – despite revenue falling slightly from $987.2m to $966.3m. However, the 2023 result was impacted by $150m of one off cost recovery revenue on the transition between phases at the Batu Hijau mine in Indonesia, with revenues up 15% on a like for like basis.

MAH will pay a 0.45c per share interim dividend – a 23.8% payout – up from 0.3c last year, with FY24 revenue and EBIT(A) guidance of $1.8-1.9b and $130-140m respectively suggesting it will enjoy a stronger second half.

Monadelphous (ASX:MND) reported a $30.1m NPAT with a record cash balance of $263.3m bankrolling a 25c per share dividend driven by record maintenance and industrial services revenue of $708m.

Also reporting profits were Emeco Holdings (ASX:EHL) – which saw statutory NPAT rise $16.7m to $19.4m and operating EBITDA up 21% to $137m — and MLG Oz (ASX:MLG), the Goldfields haulage provider lifting NPAT 174.4% to $7.1m. However, MLG said it had deferred any talk of dividends to focus on capital spending.

Mining services reporters stock prices today

No respite for Sayona as DFS draws yawns

Struggling Canadian lithium producer Sayona Mining (ASX:SYA) was down almost 5% as it failed to draw excitement from investors with the release of its DFS on the Moblan lithium project in Quebec.

The proposed mine is the centrepiece of its Canadian lithium portfolio, with the 34.5Mt resource at a grade of 1.36% Li2O expected to support a two-decade-long mine life producing around 300,000tpa of 6% spodumene concentrate.

That would come at a ‘competitive operating unit cost’ of C$555/t and all in sustaining cost of C$748/t, implying it would find a margin at current prices of US$850/t (C$1148/t).

According to Sayona’s DFS the mine would have a post-tax NPV of US$1.64b and IRR of 34.4%, but it’s worth noting that is calculated at life of mine average prices of US$1990/t for SC6, more than double spot rates.

That’s based on Benchmark Mineral Intelligence numbers from Q3, 2023, which project long term spodumene prices of US$1850/t from 2032 on.

Sayona said it would look to review timelines for Moblan ‘given the current market conditions’.

“We are confident that the current lithium market will recover over the medium term and enable Moblan to benefit from the long-term industry fundamentals to become a profitable long-lasting operation for the benefit of all stakeholders,” interim CEO James Brown said.

“Sayona will now look to review the timelines given the current market conditions, and continue to advance the necessary regulatory approvals, seek community support and secure the necessary financing and project partners capable of advancing this Project through to successful production, with the ultimate ambition to integrate Moblan into a regional supply chain for battery materials in Québec.”

SYA owns 75% of and operates the North American Lithium operation in Quebec, the only substantive lithium producer in Canada currently.

But the fall in lithium prices has hammered the stock, down 71% over the past year to 6c and a market cap of ~$566m.

Sayona has been reviewing its plans for NAL after prices for its product fell 52% in the December quarter to $946/t (AUD), with unit operating costs lifting 14% to $1397/t.

But it had a $158 million war chest at December 31 on the back of capital raisings, helping shield the miner against the immediate impacts of the lithium downturn.