00:00I just want to get your thoughts and a lot of people want to know what's going to happen.
00:02Let's start with gold.
00:05So you have a mine in Turkey.
00:08Help us understand what you've been doing as far as output is concerned and where you think prices perhaps.
00:14What are your assumptions in prices?
00:15We always use consensus pricing, which is below current market price.
00:20But if I talk about gold pricing going forward, as long as President Trump is in the White House, we
00:28do expect volatility.
00:30Volatility is good for gold.
00:32And the recent geopolitical events certainly means that more central bank buying will continue shifting the reserves away from the
00:40dollar into the gold.
00:41So we do expect to continue to see the high prices, which is good for us.
00:45Cost of production around $1,000 per ounce, and we continue to produce gold and move into production into copper.
00:53Silver was actually a very big topic before gold again took over.
00:58But just your sense of the silver market and whether or not the market was looking at the asset of
01:02silver in the right way.
01:04I think it was late last year when it went from 60 to north of 100.
01:09Silver, there are two key trends.
01:10Number one, silver actually, unlike gold, has real industrial applications.
01:15Including in defense sector.
01:18So the real demand for the silver.
01:21About 40% of global demand is industrial application.
01:25Two, it does tend to follow gold.
01:28And if the ratio between gold price and the silver price deviates from the historics, you will see the silver
01:35catching up.
01:37So I do expect silver prices to continue to perform strongly.
01:40Any plans around output on both those things before we move on to industrial?
01:44Silver and silver for us is a byproduct.
01:46Our main product is copper.
01:47But we'll continue to produce about 12,000, 15,000 ounces of gold from the current mine in Turkey.
01:53But we're looking to buy other gold, copper mines.
01:56So that will increase.
01:57That is a blessing for that to only be a byproduct.
02:00Let's talk about your copper plants because you have big plants in the sector.
02:03A lot of people know you, of course, in the aluminum market.
02:06But talk us through what the plants are.
02:09ICG is set up as a vehicle to consolidate the copper sector worldwide.
02:14We acquired our first mine in Turkey 18 months ago.
02:18Raised a couple hundred million dollars to invest in that.
02:20And we're looking to about 8 to 10 acquisition opportunities globally.
02:25But focusing on a Tessian copper belt, which is Turkey, Eastern Europe, extending into Central Asia as well.
02:31So we do expect to be a relatively good size producer in three to five years, two to three hundred
02:37thousand tons of copper.
02:39Why copper?
02:40Unlike many other commodities, it is not controlled by any one government.
02:48Indonesian government controls nickel pricing.
02:51DRC government controls cobalt pricing.
02:54I would argue that Chinese government control aluminum pricing.
02:57In copper, you have a real demand, which goes across a number of sectors from traditional, such as construction and
03:04defense,
03:05which is a big demand nowadays, to the new sectors.
03:10Artificial intelligence, data centers, robotics.
03:13So if one sector fails, there will still be consumption of copper.
03:17And yet on a supply side, the industry is constrained.
03:21No new discoveries.
03:22The grades of the existing mines are declining.
03:25So everything is posed to see the copper prices going higher.
03:29I would not be surprised if in a couple of years it will be $15,000 per tonne, maybe $18
03:35,000 in five years.
03:37But at the same time, I don't think it will go into the stratospheric highs because at some point there
03:42will be substitution from aluminum alloys and there is no constraint on aluminum supply, unlike in copper.
03:49When you say at some point the alloys will be replaced, why is it in some point?
03:53Talk to us about that.
03:54How does the dynamic work?
03:55The dynamic is when the ratio between aluminum prices and the copper prices goes above five, six times, then you're
04:05likely to see the substitution.
04:05It's a sensitivity issue to prices.
04:06That's correct.
04:07Just to clarify, when you say copper is a metal that is obviously needed in this world for many applications,
04:14it's not controlled.
04:15When you say controlled, because you have swing producers like Indonesia, China for aluminum.
04:20Indonesia is nickel, not in copper.
04:22Sorry, Indonesia is nickel, for example.
04:24So when you say controlled, that means you simply have a lot of production concentrated in one jurisdiction?
04:30China, for example, does take aluminum.
04:32Made a strategic decision to limit the cap on aluminum production at 45 million tonne.
04:37It takes one decision to increase that cap.
04:40It will have a disproportional effect on global aluminum pricing.
04:44There is no, of course, if one copper producer goes out of business, it will have an effect.
04:50But you cannot easily ramp up a production like Indonesia can do with nickel.
04:55What are your plans around the capacity?
04:58You have big plans in copper as you line up.
05:00Can you just take us through, do you have a timeline in mind and some milestones in terms of capacity
05:04that you're targeting?
05:06So this year is a transformation year for ACG metals.
05:10We're moving from production of gold, gold and silver doré, into production of copper.
05:15We are starting our flotation plant in the middle of the year to produce 20 to 22,000 tons of
05:22copper equivalent this year.
05:24And then we move to 40,000 tons as we ramp up production from so-called enriched ore.
05:31So, but this year is a critical year with a number of milestones which should have an effect on our
05:36share price.
05:37Well, have you raised the money for that or how are you doing project financing?
05:40We have more cash than we need.
05:43We have $150 million on cash.
05:46We have a remaining CapEx, maybe $50, $60 million.
05:50And we continue to generate significant cash flows from the continuous gold sales.
05:55Yeah, because last year I think you did some changes to your capital structure.
05:59I think you raised some equity financing, some debt as well.
06:01Any big plans to fundraise?
06:03But I know you mentioned your free cash flow on an operating basis is good.
06:07But just in terms of just big fundraising, no plans in the immediate future?
06:10We're not going to raise the money just to raise the money.
06:13Money is a commodity, right?
06:16What we're looking to do is to acquire good assets and good companies.
06:20And if the transaction is good, if the deal is good, it funds itself.
06:23Okay, aluminum, plants there.
06:25I don't, I'm no longer in aluminum for the last 13 years.
06:30Okay, you're stepping away completely from that.
06:31But I obviously follow the market.
06:34Unlike copper, which there is a real supply and demand dynamics in aluminum, as I mentioned already,
06:40one decision by the government in Beijing can spin the prices widely
06:44because you have a lot of idle capacity in China.
06:48And that is not a free market in a sense.
06:51I need to ask you that you're familiar with just also the shipping element of this.
06:56And because of what's happening in the Strait of Hormuz,
06:59what are you observing in as far as disruptions to supplies are concerned across the world?
07:04Certainly, especially when you mentioned aluminum,
07:07it takes a long time to restart an aluminum smelter if it has been put on cane maintenance.
07:14So in the short term, I do expect the aluminum prices to perform well,
07:18but longer term, it's expected to come under pressure because, as I mentioned,
07:23there's really no limitation of supply.
07:25So we'll see a short term effect from the Strait of Hormuz on aluminum prices,
07:31on prices and availability of sulfuric acid.
07:34That's true.
07:35We are blessed in Turkey because Turkey is the next exporter of that,
07:39and we don't consume much.
07:41Just to look at your stock price, you mentioned that as well.
07:44We've obviously seen a rally, as I'm sure you know.
07:45You've been looking at the stock price itself.
07:48Net income, net loss for last year.
07:50Do you expect to turn into a profit this year?
07:52Last year is a pure paper accounting.
07:55Sure, clarify it for us.
07:56Our EBITDA last year is $76 million.
07:59We're making a lot of cash flows.
08:02We produced last year 39,000 ounces of gold equivalent at the cost of $1,200 per ounce.
08:10Average price last year was $32,000 per ounce.
08:15You can make a must.
08:17Yeah, so focus more upwards of that income statement.
08:21Don't look at that income.
08:22Just very quickly, though, top-line targets for this year in terms of revenue compared to last year?
08:27We're planning to produce 2022,000 tons of copper equivalent at the average cost,
08:34let's say $5,500 per ton.
08:38The price is today $12,500, $13,000.
08:42Is that a good assumption to have on price this year?
08:44Yeah, I actually don't expect the copper prices to perform very widely into the positive this year
08:51because there is a lot of supply.
08:53There is a lot of copper in warehouses.
08:56And as the war ends, we all hope there will be pressure on copper pricing.
09:02By the end of the year, I'd expect to see $13,000 back where we are roughly trading today.
09:08But as I said, two years from now, it's more likely to be $15,000.
09:12Going back to ACG, I would not expect us to, given the margin, $7,000, $8,000 per ton of
09:20capacity
09:21that translates it, you know, $140, $160 million every day.
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