Earnings call transcript: Aeris Resources Q1 FY26 sees strong copper production

Aeris Resources Ltd, the Australian mining company with a market capitalization of $82.88 million, reported its financial results for the first quarter of fiscal year 2026, highlighting robust copper production and strategic investments. The company’s stock, trading under the symbol AIS, saw a slight decline of 1.89% following the announcement, closing at $0.53. According to InvestingPro data, the stock has demonstrated strong momentum with a remarkable 90.74% return over the past six months.

Key Takeaways

• Copper equivalent production reached 10,300 tonnes in Q1 FY26.
• Tritton operation produced 6,100 tonnes of copper.
• Strong operating cash flows were reported from Tritton and Cracow operations.
• Investments in exploration and new projects are underway, including the Constellation Project.

Company Performance

Aeris Resources demonstrated solid operational performance in Q1 FY26, driven by significant copper production at its Tritton and Cracow sites. The company is focusing on extending mine life and optimizing resources, aligning with broader industry trends towards sustainability and resource efficiency. The strategic divestment of non-core assets in North Queensland also positions Aeris for streamlined operations.

Financial Highlights

• Copper Equivalent Production: 10,300 tonnes
• Cash and Receivables: $46 million
• Closing Cash Position: $32 million
• Debt Facility: $50 million, with $40 million drawn

Outlook & Guidance

Aeris is targeting a production range of 24,000 to 29,000 tonnes of copper for FY26 at Tritton and 36,000 to 42,000 ounces of gold at Cracow. The Constellation Project is poised to begin in Q1 FY27, with exploration investments aimed at extending resources and enhancing production capacity. InvestingPro data shows the company’s stock is near its 52-week high of $38.28, with analysts expecting net income growth this year. For detailed analysis and valuation metrics, including Fair Value estimates and growth projections, investors can access the comprehensive Pro Research Report. The company is also exploring potential projects like Golden Plateau, leveraging historical high-grade areas.

Executive Commentary

André, a company executive, emphasized the importance of long-term planning, stating, "Don’t start a mine with less than 10 years." He also highlighted the company’s strategic reinvestment efforts, noting, "We are investing back in the business to set it up for FY2026, second half, and 2027."

Risks and Challenges

• Market volatility in gold prices could impact ore processing decisions.
• The success of new projects, like the Constellation Project, is contingent on timely execution and market conditions.
• Potential cost overruns in exploration and development projects.

Q&A

During the earnings call, analysts inquired about the Mara Wambi Pit pre-strip and its anticipated ore processing in January. Discussions also covered the potential for resource extension at Avoca Tank and the company’s hedging strategy, which involves 20,000 ounces at $5,200.

Aeris Resources’ strategic focus on extending mine life and optimizing resources, coupled with its proactive investment in exploration, positions the company well for future growth despite current market challenges.

Full transcript - Aeris Resources Ltd (AIS) Q1 2026:

André, Company Executive/CEO, Aeris Resources Limited: Okay, good afternoon everyone, and thanks for joining Quarter One FY26 results from Aeris Resources Limited. Just a normal disclaimer. I guess once again, we had a fair, a good last quarter in FY25, and once again, quite a solid performance from the team on Quarter One for FY26. This is just a standard, you know, just talking a little about what we’re doing going forward. Obviously, Tritton this year is looking really strong, and we’ll talk a little bit more in detail, but looking at around 25,000 tonnes, between 24,000 and 29,000 tonnes of copper from Tritton. I guess we sometimes forget that Tritton also does around 8,000 to 10,000 ounces of gold and around 250,000 ounces of silver, and you know that is quite a large, a big number in terms of credits on those two commodities, especially at these sort of prices.

At Cracow we’re forecasting in the guidance around 36,000 to 42,000 ounces, around that 40,000 ounces for FY26, and both these operations have delivered accordingly to those, and we’ll touch on the projects as we move forward. I just thought it’s appropriate to just re-emphasize this strategy, and clearly when we go through the quarter results, we are basically doing exactly what we’ve set ourselves out to do. At Tritton, the pre-strip of the Mara Wambi Pit is important and on track. We’ve invested around $25 million this quarter in that pre-strip, and we’ll get into a bit more detail. Constellation approval is underway, and the timing for Constellation start towards the first quarter in FY27 is looking strong.

It’s the first time in a long time that we’re putting around $20 million in exploration across the business, and it’s really that focus on resource extensions and life of mine updates and increasing the life of mine. Both Tritton and Cracow are focusing on those. Golden Plateau is an exciting opportunity. We’ll touch on that again. We have been saying for the last three months or so that we are selling our North Queensland assets. Now we’re running a process, and that’s getting close to completion, and we’ll update the market as soon as that’s done. It was all around getting moving on non-core assets, but also simplifying the business across the group. The JAG strategy is clear now in mind. It’s reducing the care and maintenance costs, focus on extending the mine life, a lot of base metal targets available for us to go and drill.

We’ve allocated $3 million in this financial year to test those eight targets. We’ll touch on that a little bit in going forward, but it just makes sense. You know, don’t start a mine with less than 10 years. There are opportunities to create a 10-plus year mine life, and that’s when we will start it. The next 12 months is all about focus on those base metal targets and extensions of those. On Stockman, we’ve finalized the album test work. We’re busy updating the studies. We’ll update the market within the next few months, and really then it will be what do we do next and where do we take Stockman. On the growth, focus on resource extensions, and you’ll see through the presentation, you know, we are spending the money where we said we’re going to spend it. On the balance sheet, we considered hedging.

We did hedge 20,000 ounces at around $5,200 an ounce. It’s much lower than the current price, but it was with specific reason. We knew that we will spend about $70 million in growth capital doing the pre-strip of the Mara Wambi Pit and also a new Taddeys Dam at Cracow, and that was to ensure that we can underpin those capital expenditures. That’s just a summary. We’ve been saying this for a few months now, a few quarters, and we’re clearly in line with what we’re saying we’re busy doing across the business. At Quarter One, once again, a solid performance against the internal plans. 10,300 tonnes of copper equivalent. Costs, as always, and capital across the group well managed and within our own internal targets. Cash and receivables at Quarter: $46 million. Cash has gone up, receivables slightly down.

That is just timing of specifically Tritton concentrate sales, but a strong healthy position considering that we have put close to $30 million into growth capital. It’s a self-funded capital growth exercise, and when we talk about that Mara Wambi Pit, you’ll see what I’m talking about. Safety performance has been good across the group. Tritton, 6,100 tonnes of copper metal. We always said the first six months is sort of in line with what we’ve done in the last quarter, but in the second half, when we get the volume of tonnes coming from the Mara Wambi Pit, we’ll see a significant increase in production. On the drilling side, big focus on Avoca Tank. As you know, that is our highest grade ore body. We did intersect mineralization 400 mL below the current mineralization, so obviously there’s something there.

A lot more work needs to be done to test it, and we’ll show you some of the pictures which we’ve seen. Cracow, in line with plan, although they had a few days off with power, they still managed to achieve their budgeted and internal plans on gold production and all-in sustaining costs. Quite a good outcome for the Cracow team. We keep on doing work around the Western Main Field, and you know, you keep on finding, as I always said, Cracow has got a two-year life, and it’s always had a two-year life, and you keep on extending and finding more. Once again, we added 20,000 ounces into the mine plan for Cracow as part of the review we’re doing using the higher gold price and also looking at the peripherals around old workings. Golden Plateau is an exciting opportunity.

I’m not going to spend too much time on it. There’s a slide on it which we’ll talk, and then, as I said earlier, the North Queensland assets, that process is moving quite well, and we should have something pretty soon. If you look at the cash flow waterfall, Tritton and Cracow have good operating cash flows, quite a lot of money. About $30 million of that capital and exploration was growth capital. About $25 million has been spent on the Mara Wambi Pit and another $5 million on a Taddeys Dam lift at Cracow. We are investing back in the business to set it up for FY2026, second half, and 2027, and the other bits and pieces around finalizing the cash flow, the cash at bank up from 2028 to 2032. Touching on Tritton, as I said, 6,100 tonnes, but something notable.

If you look at that by-product credit line, that’s $15 million in by-product credits from gold and silver. If you analyze that, that’s more than $60 million worth over 12 months. Sometimes we forget about the value of those. I talked about the pre-strip, $25 million, and really the diamond drilling and the exploration is the big focus. We’ve allocated over $10 million to exploration for Tritton in this financial year, and the guys are on track to achieve about 80,000 meters of drilling in FY2026. This is just two photos. I think the key takeaway there is the Mara Wambi Pit is going well. The real, and I keep on talking about this first six, second six, and that slide clearly shows you that by January we’ll be in ore at the pit, and you’re going to produce more ore than what you can process.

That line is the capacity of the mill, around 1.8 million tonnes. There will be about 900,000 tonnes, which would be stockpiled and will be processed in FY27. That’s quite exciting. This is the first time the mill will run at full capacity for a long period of time, and we have done it in the last quarter, so we know the mill can do up to 1.82 million tonnes, and that would be what we were targeting for the second six. Constellation, as you all might know, this is the future for Tritton. The mine designs have come back with bigger open cut mines than we originally thought. We talked about that before. That is already close to an 8 million tonne ore body at over 2% copper and nearly 0.7 gold, so a lot of value in gold as well.

The idea is we will shortly put a maiden reserve out on the open cut for Tritton. We’ve done some work, interesting results. There is an oxide cap on this. Now we are doing test work to see if we can treat those oxides through the process plant. If you do it in heaplets on oxides, you don’t get your gold or your precious metals out, while if you put it through the plant, you might get lower copper recoveries, but you’ll get most of your gold and silver out if it’s there. There’s some work on that, and if that works, that will even be a stronger economic valuation for Constellation. Once you do a heaplet, you need to do rehab, and there’s all sorts of different things. If you can truck it to the plant and process it, it might be a much stronger case.

The current design is open cut, and then you go underground. Currently, we’re thinking to go underground in year two, so there will be a few years where you’ll do open cut and underground at the same time. As we know, it’s still open in depth, and you can see some of the best grades have been down the bottom. We’re working through those. Environmental approvals and permits are all underway and in process with a target date of starting this, as I said earlier, in Quarter One, FY27. On the exploration side, quite exciting results for Avoca Tank. You can see some of those holes, those two holes we drilled intersected mineralisation quite deep, another 400 meters below current resource. We are doing some EM surveys down those holes currently to see where we target the next round of drilling. That’s exciting.

As you know, Avoca Tank is our highest grade ore body at Tritton. At Cracow, once again, although the ounces are lower than the first June quarter, that is on plan. They achieved exactly what we expected them to do. They mined a tonne, slightly lower grade, but we managed to, even though they had an outage, they still achieved the internal plans for Cracow. The TSF lift, so we’re putting a new TSF lift in. That’s on target. That’s actually ahead of schedule currently, and you can see there that growth capital in that table of $5.5 million is the cost for that Taddeys Dam lift. The exciting opportunity, we’ve announced it the other day and we talked about it. Golden Plateau is an old mining area which has been mined in the 1930s at over 10 gram a tonne. A lot of voids has been left.

A lot of areas have been left behind because they were lower grade. In the 1980s, someone put an open pit mine over it and mined close to 3 million tonnes at close to 3 gram a tonne. The mineralisation extends another 150 meters below that pit and also extends to the west. We will launch in November, we’ll launch a new drilling program to test those and define the opportunity. If this comes and it works, you know, this can easily become a four or five-year mine plan just on open cut mining, which will be a huge improvement from the historical two years life, but it’s always been two years for forever. This can be a real strong case for Cracow in terms of where do we go going forward. We also did an airborne magnetic and radiometric survey across the whole tenement package.

That work is still underway, but it’s really trying to define the drilling targets in the southern main field. As we said before, that’s going to be one of the target areas for exploration at Cracow in the next three quarters. On the project side, just a high-level summary. JAG is on care and maintenance. We incurred $2.1 million. That was all per plan. We are planning to drop that cost significantly in the next three quarters. As we said before, focus on testing those base metal targets. The whole thing is, you know, we assessed it and made a clear decision that we will start this mine when we got a 10-plus year mine life. To us, that makes a lot of sense. There’s eight base metal targets. We allocated $3 million in this financial year to test those. Obviously, if you find something, you’ll drill more.

It’s really saying, let’s create life before we even consider restarting the mine. At Stockman, the test work is finished. The processing option is completed. We’re busy putting up, finishing up the models, and we will then decide what’s the best way forward for those projects. As I said earlier, North Queensland assets divestment is close to a position where we can announce it. In terms of the corporate side, you can see an increase in the closing cash balance. Receivables slightly down with just the timing of concentrates. The closing cash position at $32 million is a strong position for us considering that we’ve invested a significant amount of money into growth capital to set it up for the second half of FY2026. At the debt level, still unchanged at $40 million, OS Washington, Saul Paterson. It’s a $50 million facility drawn to $40 million.

That is due and payable in August next year. From the current thinking and current forecast and plans, we should generate significant cash from the business to make sure we can deal with the Saul Paterson facility at the time. I guess that sort of summarizes the quarter. I’m more than happy to take questions. If anyone wants to put up their hand, I will unlock and you can ask your questions. Hey, David.

Morning, André. How are you?

Good. How are you doing?

Thank you very much. Nice quarter. Well done. Traditionally, good costs and it was ahead of our expectations, so that was good to see. Nice on there.

Thank you.

You’ve kind of answered this in your comments, but you’ve added an extra digger at Mara Wambi to lift productivity there. It sounds like now you’re on track to get dirt into the mill like in January, you’ve said. That sounds like a good outcome there.

Yeah, look, that’s sort of the whole focus there is, you know, get the pre-strip done as quickly as you can. The more that we can bring it forward, the better. The plans are for it to be delivered in January, and it’s still on track to do that.

Excellent. I just thought on the December quarter in general, you’ve again in your comments, you sort of said it’d be sort of similar to the last couple of quarters. Will that, without the Mara Wambi Pit open pit stockpiles helping this quarter, come from a lift at Tritton or Avoca Tank? Can you just give us maybe a little bit more on where the dirt’s coming from at Tritton in the December quarter?

Yeah, so look, a lot of the dirt is coming from Avoca Tank. You know, we’ve done some drilling at Avoca Tank and it’s realized that it also extends up the. Some of the stopes we will mine are actually stopes going high up in the ore body than down. There’s good volumes coming out of JAG, out of Avoca Tank, and Budgie Guard are the two main producers for the quarter coming up.

Cool. Just on that Avoca Tank, I mean, you know, 400 meters down deep or outside resource extensions, obviously pretty encouraging start. I understand there’ll be a bit more drilling that’s going to have to go into this, but when should we maybe expect maybe a bit more visibility, I guess, on a sort of a formal kind of mine plan or reserve or a resource or reserve update?

David, I think it would probably be in quarter three, early quarter four. We’re doing the EM survey now, and that will direct us to the best area. Currently, the turnaround of these samples takes forever, so there is a bit of a lag on some of those samples coming back. I would say to be safe, it would be end of quarter three, beginning quarter four.

Sure, it does sound from what you just said also, it sounds like you’ve been able to find a bit more dirt in the Avoca Tank just with the grade control drilling. Is that sort of a fair understanding?

Yeah, that’s sort of the ore body. I don’t know if you, I think you have been down there, but it is just one of the nature of that is as you do more grade control drilling, you understand the structure better, and you can mine a little better as you go through it. Yeah, we are seeing some a bit better results coming out of Avoca Tank. The Budgie Guard itself is doing quite well.

Cool, thank you. Finally for me, grades at Cracow are a bit lower this quarter. Should we expect a pickup for the balance of FY26 or?

There would be a little pickup, but if you look at the guidance, it is around that 10,000 ounces. If you go on average, it was lower, but we expected it to be lower. It will be a slightly higher quarter coming up. Overall, that 10,000 odd ounces a quarter is sort of the rough target, knowing that this quarter was going to be lower. There’s a little bit more coming up in some of the quarters.

Excellent. Thanks very much, André. I’ll pass it on.

Thanks, David. Paul, now to talk. Paul came in.

Hey, André.

Hey, how are you doing?

Good, thanks. How are you?

It’s good. Not too bad, not too bad. Thanks for taking my questions. Just firstly on Tritton and following on from Dave’s questioning, you sort of finished that first phase of the Mara Wambi Pit. Second, the stage two pre-strip to complete this quarter with first ore in January. As you mentioned, this quarter will have increased contributions from Avoca Tank, but from memory, you’re planning a mill shutdown this quarter as well. Really, the second quarter will likely be the softest before you sort of get that significant improvement in the second half. Is that correct? Look, it would be probably a little softer, but it’s not materially softer. You know, more shutdowns are a plan in the forecast in any way. It might be slightly, but it’s not going to be something material.

Okay, great. No, that’s clear. On Cracow, are you sort of seeing any sort of cost creep in this price environment where I guess you may be taking some more marginal material, or are you really just trying to leverage your margins more there?

Look, there is a bit of, if you call it, cost creep on a unit basis because we are targeting areas with slightly lower grades purely because it, you know, at this price it makes money. The nature of that ore body is that, you know, it’s been mined historically and two gram a tonne dirt was left behind in the peripherals and we’re now doing the assessment on all of those. If that makes sense, we do take it. You’ll see, if like you say, the cost creep in terms of the unit cost, although the costs are all well controlled. Yeah, it’s a conscious decision, you know, that mine in terms of creating life and looking at how do we create a better opportunity and create time. That is something we’re consciously doing.

Yeah, yeah, that makes sense, especially considering the current life of mine. You sort of touched on the extensions there in the western main field. I guess how much longer does that extend things by?

It’s that 20,000 ounces. You know, if we do 48,000 ounces, that’s potentially another six months. We have already, the last few quarters last year, I think we added 60,000 ounces. You know, it’s just keep doing the work is sort of where we are. As we mine, we find a lot of times find different new veins or new structures, but that’s sort of what the life would be added.

Okay. Okay. Staying on Cracow, and you touched on Golden Plateau, but moving a bit further south, I know ground conditions are a bit tricky there. Is there any more work being done on potential drill program there targeting the southern main field, or are you just waiting for a bit more free cash flow maybe in the second half of this financial year to have a crack at that?

It is twofold. The one is just the surveys we just finished. We’re waiting for those results to actually make sure we target the right areas. We haven’t got it back yet, but we’ve got some of it. The guys will do the work to target, and then we always plan to do the drilling only in the second half, you know, based on we should make significantly more cash, and then we’ll do it then. They still need to do the technical work to really clearly define the target areas.

Okay, that’s great. Lastly, on hedging, as you sort of touched on, you’ve locked in some pricing there to get you through that growth phase at Tritton with about 16,000 ounces remaining on that program. Is that enough to get you through, or are you thinking about doing a bit more maybe on top of what you’ve already done?

This might be always a challenging question. At this stage, we’re not thinking of adding more. Even at the gold price where it is, even if it comes back, it’s still better than where we locked it in. There’s always opportunities, but at this stage, we sort of think there’s more upside on the copper side. Gold, we, it just pulled back overnight, but no one really knows. At this stage, we sort of at a group level have decided we won’t necessarily hedge more than 50% of our gold production.

Okay, no, that’s clear. Thanks, André. That’s it for me. I’ll pass it on. Thank you.

Thanks, Paul. Peter Cooper, I see your hand’s up. Let me just ask a minute. Can you hear me, Peter?

Yes, I can hear you, André.

Yep.

Congratulations on a really, really solid quarter. It’s nice to get some runs on the board.

Yeah, it is.

I’ve just got one question, two parts. Thinking about Tritton and thinking about Cracow, what are the main operational things for each site that you want to achieve in the current quarter that’s going to lift us into a good second half?

All right. Tritton, it’s one thing, finish the pre-strip. That pre-strip and making sure we get into tonnes in January and fill that mill to max capacity from January onwards, that is critical. For Tritton, really focusing on that second quarter is important. At Cracow, finishing off the Taddeys Dam lift is important. We need to have it done by the end of the year so that we don’t impact production. That is all in play to deliver so that there’s no impact on any production. Then just ongoing success in the western main field in terms of ongoing resource extensions. That’s not actually going to change the next six months. That’s more year two and three onwards. I think for Cracow it’s just, guys, keep doing what you’re doing. You’ve been doing a great job for the last two years. Just keep doing what you’re doing.

Thanks very much, André, and good luck.

All right, thanks, Peter. I just want to see if there’s any questions in the chat. No, I don’t see any more hands. If there’s nothing else, I’ll give it another 30 seconds or so if anyone wants to ask another question. Otherwise, we’ll sign off. Okay, in that case, everyone, thank you very much for joining the call, and we’ll talk in three months. Thank you.

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