Earnings call transcript: BCI Minerals outlines growth plans in Q1 2025

BCI Minerals, a key player in the mining industry with a market capitalization of $1.44 billion, has outlined its strategic plans and operational achievements during its Q1 2025 earnings call. The company, which operates under the symbol BCI.AX, currently trades near its 52-week high of $21.67, with a year-to-date return of 5.57%. According to InvestingPro analysis, the company maintains a "FAIR" financial health score of 2.38, though it faces some operational challenges. The stock saw a slight uptick, closing 1.85% higher, reflecting investor confidence in the company’s future prospects.

Key Takeaways

• BCI Minerals has a market capitalization of nearly $700 million and available funding close to $900 million.
• The company projects substantial EBITDA from salt and SOP operations, with $285 million and $100 million per annum, respectively, at full capacity.
• BCI aims to be the largest salt operation in Australia and the third-largest globally.
• The company plans to achieve debt-free status by February 2035.

Company Performance

BCI Minerals is making significant strides in its operational capabilities. The company has completed 60% of its construction portfolio, including key infrastructure like the secondary seawater intake and several marine packages. Furthermore, BCI’s innovative pond filling strategy is set to maximize salt production, positioning it as a leader in the global salt market. The company’s safety performance has also improved, with a TRIFR (Total Recordable Injury Frequency Rate) of 1.8, the lowest since the project’s inception.

Financial Highlights

• Market capitalization: Nearly $700 million
• Available funding: Nearly $900 million
• Projected EBITDA from salt operations: $285 million per annum
• Projected EBITDA from SOP: $100 million per annum
• Projected free cash flow: 6.6-8¢ per share

Outlook & Guidance

BCI Minerals has set ambitious targets for the coming years. The company aims to start its first salt production by late December 2026 and expects to be debt-free by February 2035. Additionally, BCI plans to explore new revenue streams, including bromine and magnesium extraction, further diversifying its portfolio. The salt market outlook remains positive, with anticipated shortages and improving pricing in Asian markets.

Executive Commentary

David Boschow, Managing Director, expressed optimism, stating, "We had an excellent quarter." He emphasized BCI’s strategic position, highlighting its potential to become the largest salt operation in Australia. Steve Fuster, CFO, echoed this sentiment, stating, "We’re really excited about what Elk Salt and SOP can deliver."

Risks and Challenges

• Market volatility: Fluctuations in salt and SOP prices could impact profitability.
• Regulatory hurdles: Potential delays in project approvals could affect timelines.
• Supply chain disruptions: Any interruptions could hinder operational progress.
• Environmental concerns: Compliance with environmental regulations is crucial.
• Competitive pressure: Maintaining a competitive edge in a growing market is essential.

BCI Minerals has positioned itself well for future growth, leveraging its strategic advantages and operational strengths. With a clear roadmap and robust financial backing, the company is set to make significant contributions to the global salt and SOP markets.

Full transcript - BC Iron Ltd (BCI) Q3 2025:

Conference Moderator: would now like to hand the conference over to Mr. David Boschow, BCI Minerals’ Managing Director.

Please go ahead.

David Boschow, Managing Director, BCI Minerals: Welcome, everyone, to the March presentation from BCI Minerals. I’m really excited to be here with you today. We had an excellent quarter. And I have to say, the moment I received the news that we’ve got our groundwater management plan approved, I felt like running around the office and high fiving everyone. It was such a good moment, and so good to be here with you this morning.

With me is Steve Fuster. He’s our CFO. I will be taking you through the presentation now. So first of all, I’d like to acknowledge our traditional owners at the our project. It’s the Marathundra people as well as the Robe River Kuruma people.

And here in Perth, it’s the Wajuk people from the Noongar Basin. Over this financial year, just this financial year alone, we’ve spent more than 13,700,000.0 with our traditional owner partners, and we’re really proud to be able to continue to strengthen those relationships with them as we continue to build this project. Now as at the end of this quarter, our market cap is nearly $700,000,000 Also, our project is fully funded with nearly $900,000,000 available, not only for the capital of the project, but also for that working capital as we commence operations. Our project will be the largest salt operation in Australia. It’s the third largest in the world, and we’ve got some unique features that gives us a competitive advantage.

One of those is our port. Our port will enable us to load Capesize vessels, the only salt operation in Australia being able to do so, with a short access to customers in our region. And as I mentioned just now, our project is fully funded. That allows us to continue to finish the project as well as those funds we need to be able to commence operations during the ramp up period. This project affords us three revenue streams, three discrete revenue streams.

The first one is our Salt operations that we have commenced operations this quarter, full operation this quarter. Also, the other revenue stream is the SOP revenue stream. We’re in early piloting work. I’ll stick to that in a bit more detail later on. And then the third revenue stream, which we haven’t discussed in a lot of depth, which Steve will take us a little bit later on, is Cape Preston West Port.

That port allows additional revenue stream, low risk for our operations. Before the March, we had excellent safety performance. First of all, we completed more than 200 critical control verifications, and our TRIFR is now at 1.8. That’s the lowest it’s been since the project has commenced. Additionally, I shared with you we received our groundwater management plan.

This is both from the state government and the federal government, and that allowed us to commence full operations on the in the April. Now from a construction perspective, we have completed more than 60% of our construction portfolio. We’ve completed the secondary seawater intake during this quarter. Also Pond 69 is now complete. We’ve completed the construction of the main Hora that connects the salt wash plant and the port.

And on the marine package for the Cape Preston West Port facility, that’s almost 80% complete. That gives us confidence that we still remain on track for our targeted FSOS date in late December twenty six. And during the quarter, we also commenced our engineering work, the early engineering work for our pilot plant of our SAP facility that we’re planning to construct at the Maori site.

Steve Fuster, CFO, BCI Minerals: From a corporate perspective, a big shout out to our lender group who have been major supporters. They’ve backed us in a project that hasn’t come to market for many, many years. Across the quarter, we were able to complete two drawdowns. So we’ve been able to draw down a hundred and $20,000,000 that have been that’s been applied to the project, and that’s in addition to the bank guarantees that we’d already drawn upon. So what that means is we still have around $887,000,000 of funding available to complete the project.

Our CapEx forecast CapEx to complete is an additional $619,000,000. So you can see there’s plenty of funding available there for both the CapEx component of the project as well as the working capital required during ramp up.

David Boschow, Managing Director, BCI Minerals: Now for operations, as I mentioned in my opening remarks, we received the full approval for our groundwater management plan. That meant that we can start operations for Ponds 4 and beyond. The picture you can see on the left there is Pond 4 transfer station where it’s pumping into Pond 4 on the bottom right. And the top left, that’s actually Pond 3. So Pond 3 has been full for a little while.

Also, we’ve signed binding offtake agreements. We’ve mentioned that in previous communication. These are binding offtake agreements that meets our debt funding requirements. They’re fully signed, and they are binding commitments from our customers. We’ve also signed the transshipment agreement.

This agreement is with CSL, and that allows us to do transshipping arrangements from our port and also to load Capesize vessels, which is a key competitive advantage. One of the elements for the operations, also the performance has been very satisfactory. We’ve been able to fill those first three ponds that required more than 80 gigaliters of water to be pumped during from September. We also measure on a weekly basis the dissolved salts, so that’s our salt inventory that’s in the water. And I’m pleased to share with you that our salt inventory is consistent and supports our forecasts of 5,350,000 tonnes of production per annum.

Steve Fuster, CFO, BCI Minerals: And one group I’d really like to call out is our projects team. As we stand here today, the project and the construction component is on track and on budget. And that’s a real testament to the skills and the quality of our team as well as all the contractors that have been working on the project. So where we sit today, we spent between spent cost and committed cost, we’re about 68% of the way through our budget. This time last quarter, we’re around 64%.

So as each quarter is passing by, we’re continuing to derisk our exposure to both cost and to schedule, which gives us the confidence today to be able to say we remain on track, both schedule and from a cost perspective. In terms of the market outlook, we remain very buoyant about the outlook. We still see that there’s a shortage of supply in the coming years. Now in this quarter that’s just passed by, what we have started to see is the price has picked up both into the Chinese market and the broader Asian market. So it really does give us the confidence as we look at some of these forecasts that our long run expectations are going to be met.

David Boschow, Managing Director, BCI Minerals: As far as our SOP is concerned or SOP, our salt production or the production of industrial grade salt offers us of the opportunity to produce byproducts. One of these key byproducts is SOP of sulfate of potash. This is a key ingredient to enable agricultural land to become more fertile, and that’s, of course, specifically for those regions where our populations are growing, that demand is forecasted to increase into the future. We have completed our FEED study work. So a company called Bluestar in China has assisted us with this work.

We shipped KTMS salts from our Maori operations to China, and they completed end to end FEED work in a facility at their testing facilities. The next step for us is to design our pilot plant and then construct our pilot plant at Maori. We’ve commenced the design work. We signed a contract for the design work to commence, and I’m pleased to share with you that that is well on track. This design work will be an outcomes based decision or schedule.

So there’s very specific things we’re gonna be testing, and we wanna verify those things before we move to the next step.

Steve Fuster, CFO, BCI Minerals: The one area I’m really excited about that we haven’t really explored in a lot of details is a Cape Preston West Port that we’re building. Now that’s an asset that’s owned and will be operated by BCI. It has a throughput, an annual throughput of around capacity of around 20,000,000 tonnes per annum. Now we only need about 5,500,000 tonnes of that capacity. So it’s around 14,500,000 tonnes per annum of capacity that surplus to our needs.

Now sitting within our region is a number of prospective projects that really have one of the biggest problems they’ve got to solve for is to be able to get their product through the market. Now there’s there’s port there’s Port Hedland to the North Of us and then Ashburton to the South Of us. But where we’re set is ideally positioned for a number of those projects. So over the coming months, one one area that we’ll be really starting to explore is how can we better leverage that asset to support projects in the region and help them get to market and utilize that asset that we will be owning and operating. From a cash flow perspective, look, we’re really excited about what Elk Salt and SOP can deliver.

If all we ever do is the salt component of the project, then what we would have is around about $0.66 per share of free cash flow that would be able to be distributed through to our shareholders. Now based on current share price, that’s a pretty healthy yield. Now if you add on top of that the SOP, which we remain confident of being able to deliver, that lives at 6.6¢ per share up to around 8¢ per share. What we haven’t factored into in any of these numbers at this stage is what potential Cape Preston West Port could deliver. In this slide, there’s a couple of things I I think is worth calling out.

So in a very short period of time, by around about 02/1935, we will be debt free. That’s the sort of free cash flow that the business will be able to generate. We’ll also start paying taxes to the government and making a contribution to the state from around about 02/1932. So as we move into first revenue late next year, we’ll start to be making a significant contribution both to the state and to the federal governments as well.

David Boschow, Managing Director, BCI Minerals: So in conclusion then, we had an excellent quarter, and it’s great that you’ve been able to join us today. We’ll now be switching over to questions.

Analyst/Questioner: Thanks so much, David and Steve.

David Boschow, Managing Director, BCI Minerals: Welcome everyone.

Analyst/Questioner: We’ve a few questions to go through. Can you talk us through this innovative pond filling strategy that you mentioned in the report where you’re filling the ponds from north and south? Can you elaborate on this approach and explain it further?

David Boschow, Managing Director, BCI Minerals: Yes, absolutely. So one of the first objectives of this project is to be able to get water under the sun. That’s the machine or the mechanism, if you will, that generates salt, and it’s all about surface area. So what we’ve worked with the team, particularly the project team and the ops team, is to develop a method where we can fill the ponds as fast as possible to ensure as much surface area as possible is exposed to the sun before the next summer period. And in doing so, we’ve been able to devise a strategy that helps us to fill water from both the northern part of the project.

So imagine Ponds 9 And 8 down to the south at the same time as we’re filling Ponds 4 And 5 from the south. We will also be filling the crystallizers, and crystallizer also has a very large surface area to ensure we fill the crystallizer at the same time. So all three of those areas are pumping right now as we speak to ensure that surface area is maximised before the next summer season starts.

Analyst/Questioner: Thanks, David. Related to that, would it be possible to commence reporting the quantity of contained salt in the ponds going forward? And could this be accounted for as stock on hand and therefore an asset?

David Boschow, Managing Director, BCI Minerals: Yes. So the way I would describe it, there’s three areas of inventory for salt operation. The first one would be a surface, so salt that’s already mined or harvested and it’s on the surface or either pre or post plant stock. The second component, which is further back in the supply chain, would be in ground stock, so salt that’s already crystallized in the crystallizers. And if you take it one step further, that’s the salt in suspension in your pond system.

So absolutely, that could be part of our reporting period going forward reporting numbers going forward.

Steve Fuster, CFO, BCI Minerals: Yeah. And I’ll just So we talk about having the funds available for working capital. So what we’re talking about there, it’s a great question because what you will start to see on our balance sheet is a capitalisation of some of those costs, which then reflects that build up of inventory. So certainly from an accounting perspective you will start to see that recognised on that balance sheet.

Analyst/Questioner: We’ve been asked whether Cape Preston Westport is obviously a critical piece of infrastructure and provides the potential for incremental revenue streams. But would you define BCI as the natural owner? And how should people think about the value case for this strategic asset?

Steve Fuster, CFO, BCI Minerals: Yes. I think we’ve invested around $350,000,000 in that asset. For us, it’s a key component of our logistics and supply chain. So certainly, we do see having that control over that asset and being able to manage our shipping process is critical to the success of our operations, but also critical to the success of our customers and being able to deliver on our promise to them. So absolutely, I think we are at least the natural operator and the natural owner.

In terms of expanding that capacity, I do think we should be looking to leverage that surplus. You For too long in the Pilgrim, a lot of this infrastructure has been owned by large companies that haven’t been willing to share. We’re in a unique position where we’re not competing with other projects in that area. So we’re very happy to look at opening up that surplus capacity.

David Boschow, Managing Director, BCI Minerals: I might also just add the facilities at a current design will have a lot of excess capacity. That excess capacity, of course, for already invested capital makes a lot of sense to make sure we maximise the return on that invested capital.

Analyst/Questioner: Related to that, we’ve been asked can you provide an update on the revised port dredging plans? Will these new plans incur additional environmental imposts and also costs?

David Boschow, Managing Director, BCI Minerals: Yeah. So important important for us to clarify that we currently have a fully approved dredging strategy that’s fully costed for. That strategy is, of course, to dump on land. However, we think there’s a better strategy. We believe there’s a better way to do that, and it will be more cost effective to dump it at an allocated position for sea dumping.

This is common practice up and down the Poole bro. Most of the ports being dredged up and down the Pearlborough as we speak has got specific sea dumping permits. That process with the federal government and the state government is well advanced. And in fact, that will reduce our costs and reduce our footprint. One of the important things to clarify is when we dump on land, there is also an environmental impact.

And for us to be able to minimize that, it’s important. One of the key contributors to that is to be able to base reduce the haulage cost or transport costs by shortening the distance between the dump site and the harvest site, and of course, sure that the volume is exactly the volume we need for the final dredging pockets.

Steve Fuster, CFO, BCI Minerals: Now my understanding to those from when we originally looked at the dredging, with the work that the

Analyst/Questioner: construction team have done, we’ve been able to reduce the amount of material that we now need to move.

David Boschow, Managing Director, BCI Minerals: Yeah. Absolutely. So our approvals allow us to dredge up to 800,000 cubes. For the salt only volume, we reduced that volume now down to 350,000 just for the salt production. Of course, if we need other commodities out of that process, that come with its own process at that time.

Analyst/Questioner: Can you provide an estimate of the total real GDP contribution to the Australian economy over the life of the project, including all economic multipliers? And what is the estimated total net profit per year once the project is in full production?

David Boschow, Managing Director, BCI Minerals: I’ll take the first question. So the estimated contribution to GDP to Australia is $4,800,000,000 over the total period of the project’s life. This was estimated independently for the supplier for the request and request by lenders. And of course, for a project our size, that is significant. The project has got a very long life, and that’s one of the factors that plays a key role.

Steve Fuster, CFO, BCI Minerals: So in terms the earnings outlook, so we keep referring to the EBITDA. So EBITDA, in real terms, from SALT is around £285,000,000 per annum, and that’s when we add nameplate capacity. In addition to that, SOP EBITDA is around $100,000,000 per annum, again, when we achieve nameplate capacity. Now the reason we keep referring to EBITDA and not NPAT as the question asked, over time our debt profile will look quite different. So our interest charge will change.

And similarly, our tax position will also change. So to be able to give people an idea of what that sustaining cash flow looks like, we refer to EBITDA. And the other piece that sits in that free cash flow calculation is also the sustaining capital cost that’s associated with the project, which we estimate at between 10,000,000 and $20,000,000 per annum over the life of the project.

Analyst/Questioner: So Steve, you mentioned before that there was $255,000,000 of free cash flow. Can you explain if this includes the port? And is it real or nominal?

Steve Fuster, CFO, BCI Minerals: So all those cash flows are on a real basis. So you would expect over time with the impact of inflation and some expansion around pricing. In nominal terms, that number will grow over time. In terms of whether it includes the port, at this stage, those numbers are specifically around SALT and SOP. So both of those well, SALT, we’re currently in construction and development phase, so there’s greater certainty in and around that.

David and the team are doing a lot of work around SOP and the pilot plant, So we’ve firm plans in and around how we’ll generate earnings there. On the port side, we really are just starting to kick off the due diligence around what it would take to be able to open that up to further users. So at this stage we haven’t included any of the potential earnings that could be attributed to the port.

Analyst/Questioner: Related to that, Steve, how long before you will have an idea of interest from potential users of the Cape Preston West Port?

Steve Fuster, CFO, BCI Minerals: We’re already receiving inbound interest at this stage. So we think there’s a pretty compelling demand within the region. Port Hedland is at near full capacity. The Port Of Ashburton to our south is further away from where we are. So we do think the projects in the area really would benefit from us opening up that capacity to them.

Analyst/Questioner: David, how do you determine the FSOS date given there’s so many natural factors out of your control?

David Boschow, Managing Director, BCI Minerals: Yeah. I think it’s important to stress that our weather assumptions weather assumptions generally is a very key part to any salt operation. As I mentioned earlier, evaporation and the surface area is a key part of, I guess, manufacturing salt or growing salt. So the assumptions we’ve used is forty five year average weather assumptions for that particular site and that area. That gives us, of course, a level of certainty, but the actual weather between now and December next year will determine the result.

So we are committed to keep the market updated on how those things are progressing. Of course, there’s both upside and downside to that. If we get really hot summer, next summer particularly and one thereafter, that date can be earlier. And of course, contrary to that, if it’s the opposite, that can be slightly later, but we’ll make sure the market is well informed.

Analyst/Questioner: Thank you. Steve, are the contracted salt volumes in the first three years tied to China or ex China pricing? Are indications that it is consistent with the pricing in the OFS?

Steve Fuster, CFO, BCI Minerals: Yes. So in terms of those offtake agreements, all the tonnes are binding and committed. So volumes are locked in. The price is not locked in. So price will be determined based on market conditions at the time.

So about 50% of those sales those committed sales at the moment will go to China, and the other half is through the rest of the Asian region. But each year, as we sort of lead into the next calendar year, there will be a price setting discussion with our customers, and that would reflect what is happening in the market at the time.

Analyst/Questioner: Excellent. Another question. Are there any other commodities that could be commercially produced at Marty? For example, bromine?

Steve Fuster, CFO, BCI Minerals: Yeah. Bromine certainly is an element that we have started to think about. And it really is just thinking. I spent some time in China late last year and visited some salt projects there where they are extracting salt, they’re extracting SOP, but they’re also extracting bromine. It’s a relatively simple or straightforward process, but there are some complicating factors in the production of bromine.

So there is quite a lot of chlorine involved in that process, and we would need to think through how we would be able to manage the risks around handling that type of chemical. But like I say, it is certainly being done globally, and it’s definitely a revenue stream. The other one that’s the other element that is also extracted from salt brine is magnesium. And again, it’s an interesting area for us to explore. But in terms of our focus over the next five years, bromine and magnesium and those other products aren’t factoring as a current priority.

Analyst/Questioner: Thanks so much, David and Steve. That concludes our question time today.

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