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MTGRF · MGX Resources Limited/ADR
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$0.26 At close · Apr 22
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All earnings calls

Earnings call · FY2026 Q1

MGX Resources Limited/ADR (MTGRF) Q1 2026 Earnings Call Transcript

Concluded Feb 19, 2026 Audio replay
Feb 19, 2026 12:43 6 turns
Period
FY2026 Q1
Runtime
12:43
Sources
2 artifacts

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12:43 Audio
Lisa Head of Investor Relations

Thank you for joining today's teleconference for the release of MGX Resources Financial Results for FY2026. MGX Chief Executive Officer Peter Kerr will be leading the discussion and he's joined by Chief Financial Officer Jill Dobson and External Relations Manager John Facius. Mr Kerr will provide a brief overview after which there will be an opportunity to ask questions. Due to time constraints, only institutional participants will be invited to ask questions at that time. A recording of the call will also be available via the MGX website shortly after completion of today's teleconference. Thank you, and I'll now hand you over to Peter. Thank you, Peter.

Thanks, Lisa. Morning, everyone, and thank you for joining us to discuss MGX's financial results for the 26th financial year. As usual, I'll give a brief overview before handing back to Lisa for any questions, and also, as usual, any dollar references that we state are in Australian dollars, unless we say otherwise. It's a brief webcast call this morning as our results have already been well flagged in the recent June quarter activities report and the financial position of the company is robust and relatively simple. MGX recorded a reasonable underlying financial performance in fiscal 26 in the context of the October 2025 main pit rockfall that we had at Coolant Island and the resultant non-cash impairments on the accounting carrying values of the operation. Importantly, the low-grade sales program at Coolan exceeded our initial expectations and effectively funded the ROC4 response subsequent accelerated site rehabilitation work. We announced in June an agreement to divest that could have been critical to preserving the company's strong balance sheet, the $50 million acquisition of our half interest in the central Tanami gold project in February now gives the company an outstanding opportunity to accelerate work toward Australian gold business. So turning to the financial results, although the October 25 rockfall at Coolan was and prevented us from generating the anticipated operating cash flows over the mine's final year, the site team's response, while high-grade oil sales were limited to 0.87 million wet metric tonnes for the year, we reclaimed and sold 1.81 million wet metric tonnes of low-grade iron ore from our site stockpiles and that resulted in total sales of 2.68 million and that re-related to revenue of 204 million free on board. I disclose our revenues without shipping freight in them, so free on board. That compares with 2.61 million tonnes of high-grade iron ore sold in the prior year. Profit before tax and impairments improved to $29.1 million, which was prior year. And after accounting for $58.9 million in impairments, which effectively cleared the remaining carrying value of the Kulin Island operation, MGX reported a net loss after tax of 30 points basis. The reduction from $484.6 million in the prior year predominantly relates to the Pernay joint venture and the expenditure in that joint venture. I won't go into too much detail regarding coolant, given most of the relevant data was released in our June quarter. The rockfall obviously significantly reshaped our business planal year of the operation. And with mining no longer possible in the main pit, we focused on the low-grade material, the site rehabilitation work. The low-grade sales, given the market conditions, the program ran twice as long as that. And the final four cargoes which were sold after the end of the year, Rather than being a cash drain, Kulin generated positive operating cash flow of 20 points of $204 million, less operating and capital costs. What that cash flow enabled us to do was effective rehabilitation expenditure. Kulin generated a profit before interest impairments and tax. Back then we were selling only high-grade material. Meanwhile, we continued to engage with our insurers regarding a potential claim for the Rockfall incident. and subsequent to year-end, a confidential settlement was reached with one of those insurance companies. Discussions and exchanges of information are now advancing with the balance of the insurers with a view to that the claim is excluded from the Crestlink. From a business acquisition perspective, Fiscal 26 was important given the successful completion of our $50 million acquisition of a half interest in the Central Tanami Gold Project in the Northern Territory and that was from Northern Star Resources and we settled it in February 2020. Our 50% joint venture partner is ASX-listed Tanami Gold NL with a total resource base of 2.8 million ounces of million ounces. This represents an outstanding opportunity to bring one of the country's best undeveloped gold projects into production in the next few years and the transaction we've done was strike at a compelling acquisition cost of 36. Since we completed the acquisition, We've been working closely with Tanami Gold, our joint venture partner, to identify the path for achieving a development decision. Initial activities are focused on the commencement of an exploration decline at Ground Rush, which is imminent, resource definition drilling at the GIMS deposit, and a range of site infrastructure repairs and improvements while we progress mining and processing engineering reviews, resource update engagement. We're excited to advance this project and we look forward to providing progress updates. Just as important as the central Tanami project transaction, in June 26, we announced an agreement to divest Kulin Island to logistics and infrastructure proponents Questlink. Once completed, this divestment will both ensure a positive lasting legacy at Kulin Island for MGX and provide us with a clean and value-accretive exit from iron ore that allows us to Firstly, the Crestlink transaction ensures a positive future for the island and that includes future business opportunities for the Dumbie-Mungari traditional owners through decades. By a major US infrastructure investor, Cerberus Capital Management, a multi-purpose aviation and logistics hub in the region for several years, it already has interests on neighbouring Cockatoo Island. And secondly, this transaction provides us with a clean exit for shareholders without the challenges of ongoing monitoring and holding costs. Under the agreement, Crestlink will make staged payments to MGX of at least 20 future revenue share of up to a further $5 million. And Crestlink will also assume rehabilitation obligations remaining at the time of settlement, and this is obviously very important for us, and that's expected to be in the order of $30 million. Completion of the sale is subject to various conditions, notably FURB approval of Crestlink's acquisition and we hope to complete the transaction by Christmas although in our agreement with Crestlink this timeline can extend through to the end of March next. MGX also continues to examine and invest in other opportunities within the mineral sector and to assess regional exploration opportunities for precious and base metals deposits focused in Australia. At period end our investments in companies where we think they're made. In addition MGX Now, a couple of final items to mention before we close. Firstly, we decided to discontinue our on-market share buyback, having purchased and cancelled about three-point toss of those shares was below current market levels, and the buyback has therefore proven to be an aggressive capital management. Secondly, in line with our move into the precious metals sector, we changed the company's name from Mount Gibson Iron to MGX Resources Limited, to updating the market regarding development and operating plans for the central Tannemi project joint venture and are working to see the substantial... Currently a deep 2027 theme as we progress joint venture. So with that, Lisa, I'll now hand back to you for any queries.

Lisa Head of Investor Relations

Thank you, Peter. Please press star 1 on your phone now to raise your hand to ask a question. That's star 1 on your phone.

Operator

Thanks, Peter.

Lisa Head of Investor Relations

There are no questions.

Thanks, Lisa. OK, thank you all for listening. A copy of this recording will obviously be on the website. And if anyone does have queries, then please reach out to us. Thank you. Have a good day.

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