Metro Mining Limited

— Metro Mining. Simon, welcome.

Thank you, Lawson. Good morning, everyone. Nice to be here in the land where aluminum and bauxite is a critical mineral, so I’m very happy to be here. I’m gonna unfortunately use the pronunciation of aluminum, aluminum. I don’t think I’m gonna be able to manage to keep that in check through the whole presentation, so please excuse me in advance.

Slightly unusual starting slide, I think, for Americans. Just wanting to emphasize, and you’ll see why as we go through the presentation, where we operate. Acknowledgment of the country in which we operate, the traditional owners of the land. We’re very far north of Queensland, and we take our relationship with the local communities extremely seriously, and we have an excellent working relationship with those groups and provide long-term jobs and benefits into that community. So it’s a great win-win for our business and for the local communities, and we pay respects to those traditional owners.

So quick background just about Bauxite Hills Mine and Metro Mining. In the very northern tip, you can see the black star on the very northern tip of Queensland there. Very well located for the markets. It’s a very remote site. We’re about two hours flight north of Cairns, which is one of the largest cities in North Queensland. So it’s a very remote operation. We exist on what’s called the Weipa Bauxite Plateau. It’s probably one of the top two bauxite provinces in the world, the other being in West Africa. That area’s been mined by Rio Tinto for over 60 years. We commenced operations in 2018. It’s a coastal location, so excellent logistics. And we operate a low-cost and scalable mine and transshipping operation, which I will show you a bit more later.

So we’re now up to almost 500 employees. So fairly labor-intensive given the location, and it’s a fully fly-in, fly-out operation given the remoteness.

So quick snapshot. We’ve got a current market cap of Aussie around 400 million. Our breakout year was last year, where we had a profit of over 140 million bucks, with an underlying EBITDA of over 70 million. And a pretty broad spread of shareholders. Ascend Capital out of Singapore is our largest shareholder with Fidelity Investments out of the UK number two. We’re covered by three analysts for research. They’re all independent, not paid. We’ve got a current share price of around $1.30. Their target prices for us range between $2 and $3 per share. We’ve expanded capacity, doubled capacity over the last couple of years. This is the first year where we’re running it at a full flow sheet. Strong balance sheet, and we’re into cash generation mode.

So what am I gonna talk to today about? So firstly, Metro is really the only way you can get pure upstream exposure to bauxite in this very strongly growing aluminum value chain. Bauxite isn’t a particularly well-known bulk commodity, so I’m gonna talk a bit about industry structure. And we’ve got an excellent and improving industry structure in the Asia Pacific region, which we can participate in. We’ve got a quality resource, simple, scalable, a low-cost operation. The expansion that we’ve just delivered is delivering margin, and we’re now entering capital management and a further growth phase. And we’ve got a good, stable, high quality board and management team. So what Metro is all about is now sustainable cash margins at scale.

So aluminum, and with a deference to Intel here, bauxite is inside almost everything that you use today in your buildings, obviously, but now very much so more into your cars, into your batteries, renewable energy. And there’s more aluminum than copper in the electricity transmission network. And indeed, if you like copper, you should also love aluminum. So it’s a strongly growing commodity. You need about six tons of bauxite to make one ton of aluminum via the intermediate of alumina.

The two biggest producers of bauxite are West, Guinea in West Africa and Australia. That is feeding into the primary production growth of aluminum. It’s a global industry. China has been the largest growing part of that over the last 15 years or so. That is going to come to an end as they’ve capped aluminium production, and the rest of the world is gonna have to take over that mantle, and we’re seeing now growth in smelting in other parts of Asia, particularly in Indonesia, in India. I expect Malaysia and I expect the Middle East to also be adding more capacity. So you’ve got about a 3%, roughly a 3% growth profile for top line aluminum.

Okay. So resources and reserves. Coming into this year, we had roughly a 70 million ton reserve, so that’s about a ten-year life at current production rates. That was also around our existing mine. We also have another 50 million tons of in situ bauxite in a resource status. We’ve been working hard on upgrading that, so putting that from a resource into a reserve category. We have a similar size lease just 30 kilometers to the southeast of where we’re operating at the moment on Pisalite Hills EPM 15 to 78, and we’re looking at how we might bring that into the resource base. And then we’ve got a further five exploration leases which are at various stages of development from a drilling point of view.

Look, this is a slide about our low-cost scalable flow sheet, but I might ask for us to show a quick two-minute video because I think that’ll be easier for me to explain. So if we could run the video, please.

Okay. Thanks. So bauxite is about half a meter below the surface. We use quite traditional mining equipment. Once we’ve cleared the topsoil, there’s about a one to three-meter bauxite horizon. We stockpile the overburden, and then we’re using a pioneered technology that we’ve taken on, road trains, and we’ve converted them to off-road. We run 250 ton payload road trains on our roads at about 80 kilometers an hour. We take that between five and 20 kilometers from the pits to the port where we run a screening process. We’ve got two screens, and then we put it into an overland conveyor and onto barges. And you can see there the pisolitic nature, little round balls. That is the high-grade bauxite that we get out of the Weipa Plateau.

Grade control, we’re using a neutron scanner, and we take physical samples every three minutes, and we’re loading barges. We have a fleet of six 90-meter barges which take up to 7,000 tons per barge. And those six barges get cycled in and out every day, roughly for a 30,000 tons per day capacity. Fleets of seven tugs tow those barges out to an offshore anchorage where we have two transhippers, one floating crane and one very large transhipper. Her name is Ekamba. You can see there two high-capacity electric cranes which unload the bauxite and feed a conveyor system that goes into a ship loader. We load the largest Cape-size vessels, up to 220,000 ton vessels, and that takes us through to our customers in Asia. So I hope that gives you a sense of that pretty simple, straightforward mining operation. That’s what we like to do. Keep it simple and low cost is exactly where we need to be.

Now, I’m gonna indulge you mineral economists a little bit with some cost curve explanation. I think this is the best way to explain what’s going on in our industry. And you can see the gray line at the bottom there was the cost curve in 2022. As time has moved forward, that cost curve has steepened and risen and extended. Indonesia exited between ’22 and ’25. They were a large producer in Asia. They have now stopped exporting, and we’ve had a large influx of bauxite from West Africa, mainly from Guinea. And the result of that is that you’ve seen the cost curve rise up. You’ve got Australia there on the left-hand side, and then you’ve got mostly West African supply on the middle and right-hand side.

And so you can see here demand plotted. This is China as the largest importer in the Asia-Pacific as a proxy. You can see as demand has gone out, then the equilibrium price for bauxite has gone up. So from around 50 bucks US delivered in 2022, we saw proof of concept around this cost curve in 2025, early ’26 of around low sixties, 60 to 65. And the projected cost curve, as more supply comes on from West Africa supplying into the Asia-Pacific, is that that equilibrium price is gonna rise towards $70 in 2030. These cost curves, I want to emphasize, and I’ll come back to this, assume no lasting impact from the Gulf War on freight and logistics, and there has been a massive impact on freight from the Gulf War.

So what’s Metro doing? Well, in ’22 we were sitting in that second quartile and we’ve now expanded, as I said, doubled our production and the budget for this year projected us at just over 30 US dollars delivered into the market, and so the lowest cost producer into that Asia-Pacific market. So that’s a good place to be when you’ve got protection from a cost curve that looks like this.

Okay. So bauxite pricing there on the right-hand side, you can see a steady increase in prices over the last few years since the end of COVID. There was a big spike at the end of 2024 due to a number of reasons. It was not a very liquid spike. And what you can see then is that that caused a bit of oversupply coming back in. And you can see that there was effectively a low part of the cycle at the beginning of this year. That’s then started to rise again as we go forward into the rest of 2026. And the reason that’s been rising is because that cost curve is coming into play.

And you can see freight, which was the basis of that cost curve, was around 25, 27 dollars a ton from Guinea to China before the start of the Gulf War. That’s gone up to over 50 US dollars per ton on a dry ton basis. Obviously, that’s affected Australia too, but by a much lesser effect. And so you can see there that the tyranny of distance really does protect us, and that’s obviously driven partly by the freight charter rates, but it’s been also driven obviously a lot by the oil price. So if you’re looking for a bit of a hedge on the oil price, then Metro is not a bad place to look given the cost curve protection that we get from the West African supply into Asia. The Guinea government is also looking to... they’re now effectively like the OPEC of the bauxite world, and they’re looking to put in some protection for pricing for their local producers and for their own tax and royalty regime. And we’re expecting some quotas to come out, legislated by the end of this year.

Okay, so fairly simple strategy. We recapitalized the business in ’21. New management team. Myself coming in in 2021. Built a new team around the company. We’ve taken the run rate up from around two million tons, and this year’s guidance is 6.6 to 7.1 million tons. We’re on track at the moment to deliver within that guidance. That’s also been about a repositioning in the market, really getting hold of our logistics chain, increasing resilience to weather up in that northern part of Queensland, and fast-tracking that expansion to deliver the economies of scale. And you can see the economies of scale coming through there with nominal cost reductions and margins increasing through that period.

So where are we at the moment? Well, we’ve secured the balance sheet. There’s 23 million debt repaid last year. We should be around about $30 million of debt by the end of this year. We were close to net cash, as I said earlier, at the end of last year, so we should be strongly net cash this year. We’re looking to generate over $300 million of cash available for allocation, net of debt servicing, through the next five years. And we’re also looking, as I said earlier, to maintain and increase our reserve and resource life. So we’re prioritizing the organic growth. As I said, the target prices represent our internal valuation of around about a billion dollar Australian project NPV. And we’re progressing to debottleneck our capacity towards that eight million tons. So we should be able to continue the real cost reductions that we’ve been achieving over the last couple of years.

We’re into a growth phase too, so we’ve talked to the market about identifying some synergistic M&A, looking for high IRRs obviously, and we’re gonna be very disciplined about that. So we’ve said to the market that initially we’re going to limit the consideration for any M&A activity to less than 20% of our market cap, and we’re gonna be targeting Australian projects. And so then delivering that to benefits to shareholders. So we’ve got a dividend policy out there of at least 20% of free cash, net of servicing, from the end of this year. We have a buyback program in place, and we successfully delivered on a share consolidation this year.

So in summary, we’re the only way to access on any share market a pure bauxite producer. We’re targeting the lowest cost delivery into the Asia-Pacific, which continues to be the largest growing market for aluminum and for bauxite. What that will deliver is sustainable cash margins at scale. So every $10 a ton of price delivers about $100 million of EBITDA into our business. And so we’ve got an extremely solid future of cash generation and certainly as we expand our reserves and resources, that should continue to be over more than ten years. So look, that’s the end of the formal presentation. Lawson, is there anything—

Yeah. Thank you very much, Simon. That was fantastic. I think we have time for a question or two. I wanted to ask about the low mining cost. Could you maybe help crystallize for us why the mining costs are so low for you guys relative to peers?

Yeah, sure. Look, it’s really about keeping things really simple. As I said, firstly, we have a high grade resource. This means that we can ship on a direct shipping ore basis, so we don’t need to process this ore in any serious way. The physicals work in our favor, so we’ve got a very low strip ratio. So I said only about half a meter of overburden and topsoil has to come off the product. And then we’ve got very short haul distances to the mine site. So keeping that mining process very simple.

As I said, we’ve pioneered some quite interesting technology with those road trains. A normal dump truck in the mining space, three to four million dollars. The tires alone can be in the hundreds of thousands of dollars. We’re using fairly standard on-road technology. We’ve converted that to off-road. And so that consists there of a prime mover and four trailers, would be about a million dollars rather than the three or four, and the maintenance of that would be very straightforward. So keeping things very simple. The transhipping part is, at around that seven million ton scale, we’re maximizing those tugs and barges at this point. And having a single large transshipper also allows us to keep our labor costs down. So in that sense, we’re just keeping things extremely simple, and roundabout that seven to eight million ton capacity is where we can keep those costs optimized.

Okay, fantastic. Thank you very much for your presentation, Simon.

All right. Thanks, Lawson. Thanks, everybody.