Metro Mining Q4 Earnings Call Highlights

Metro Mining (ASX:MMI) used its quarterly update and investor call to review a record full-year shipment result from the Bauxite Hills Mine, outline operational issues that constrained fourth-quarter volumes, and discuss expectations for pricing, costs, and operational reliability heading into 2026.

Shipments and operational performance

Managing Director and CEO Simon described the quarter as a “solid outcome,” with shipments of just under 2.1 million tonnes in the fourth quarter. That brought full-year shipments to roughly 6.2 million metric tonnes, which he said was another record output for the company and around 9% higher than 2024.

However, Simon noted the company had originally planned higher Q4 shipments—around 2.3 to 2.4 million tonnes—before a series of issues reduced output. He said maintenance problems at the barge loading facility in October led the company to reassess guidance. Metro also incurred additional costs in October and November to address mining and stripping issues as it moved into a new mining area where yields differed from initial expectations. He added that the company had also been managing grade issues tied to outstanding contracts.

Shipping was curtailed around December 23 due to vessel timing and weather. Simon said a vessel was delayed by weather in North China and arrived after the monsoon season had set in, prompting Metro—together with the vessel owner and customer—to defer the cargo into the next operating season. He said the vessel remains in the shipping schedule.

Pricing, legacy contracts, and cash/debt position

Simon said Q4 provided a “cleaner” look-through to market pricing because Metro had a larger number of CIF contracts that were negotiated under market conditions. He cited an achieved price of just under $8.74 per wet tonne (as presented on the call). He also referenced typical freight and adjustments of roughly $13 to $14 per tonne in moving from CIF to an FOB netback context.

A key topic was the impact of a legacy fixed-price contract signed in 2022 for 3 million tonnes, which Simon said was used to help underpin lending at the time but later became “out of the market” as prices rose. He said those legacy contracts hurt FOB netback pricing in Q3 and Q4, but added that the contract is effectively finished, with one remaining cargo to deliver sometime in Q2. With that contract rolling off, he said Metro expects its FOB pricing to benefit significantly in 2026 as it returns largely to market pricing.

Metro ended the financial year with just under AUD 60 million in cash on hand, according to Simon. He said debt repayments continued through Q4 and that the company had just over an Australian-dollar equivalent of about AUD 62 million in senior debt remaining.

On costs, Simon said unit costs were pressured by volumes coming in below the top end of the plan, given a high fixed cost base at Skardon River due to its remote location. He said Metro would normally expect costs in the low 20s (per tonne) if producing 2.3 to 2.4 million tonnes for the quarter, and he noted a royalty timing difference added about AUD 1 to AUD 2 compared with the prior quarter. Simon also said Metro still produced “double-digit EBITDA margins” despite those factors.

Reliability initiatives and operational plans for 2026

Simon said Metro has a “firm intention” to meet its strategic target associated with realizing its expansion and emphasized work aimed at improving reliability and meeting run rates. He cited actions including a new maintenance structure, changes to critical spares and preventative maintenance, and marine-channel works following a channel collapse in the first half of the prior year.

He said Metro brought in an external contractor to widen the channel from 60 to 70 meters and plans to widen it further to 80 meters early this year, increasing tolerance for potential slumping. He also discussed bed leveling and a potential opportunity to take the channel down to around 2 meters if conditions allow, which he said could extend daily operating windows and increase tonnes per barge.

Metro also described internal leadership changes. Simon said the company appointed an experienced Executive General Manager, Paul Green, to run the site, emphasizing the move did not increase management headcount but reallocated responsibilities. He also said Troy McMillan joined as Director of HR and People and Culture. In addition, Simon referenced a new management operating system intended to drive integrated planning, cost control, and performance management.

Market commentary: China demand, Guinea supply, and price outlook

In market remarks, Simon said there had been another record year of bauxite trade in the Asia-Pacific, driven primarily by China, which he said had exceeded 200 million tonnes of imported bauxite for the year. He attributed this to growth in alumina production in China and a reduction in domestic bauxite supply.

He noted that additional output from Guinea ramped up during the year, contributing to increased supply and softer pricing. Simon said alumina prices had dropped and stabilized, with the alumina cost curve “probably sitting around” CNY 2,700 per tonne, and he said some refineries were beginning to struggle to make cash at those levels. He said he expects a “shakeout,” with some newer refineries ramping up and older inland refineries ramping down or closing, although he added that closures of inland refining may not materially affect traded bauxite demand because many rely on domestic Chinese bauxite.

Simon also highlighted Guinea-specific dynamics, saying the government was focused on ensuring the mining industry “pay their way,” and he expects higher taxes and royalties there, as well as higher freight rates, to pressure the higher-cost portion of the cost curve. He said bauxite prices were softer during Q4 and that Metro maintained CIF prices, but he expected further pressure during Q1 and Q2, noting spot prices were already “probably a couple of dollars lower” as the market moved into February. Longer-term, he suggested a floor could emerge if Guinea pricing reaches around $60 to $65 per tonne, where some suppliers begin to struggle to meet cash costs.

Exploration, screening work, and shareholder questions

On exploration, Simon said work progressed in the northern part of Skardon River (EPM 16755), and Metro had begun negotiating conduct and compensation agreements with traditional owners for leases near Aurukun Township, about 250 kilometers south. He said drilling results from the Q4 program were not yet available. He described the exploration budget as modest—roughly AUD 1 million to AUD 2 million over the next 12 to 18 months—adding that drilling itself is not expensive, but sampling costs drive the budget.

Simon also discussed screening and beneficiation work aimed at reducing silica in grade-limited resources to convert more material into reserves. He said Metro had completed bulk test work for dry and wet screening and was developing plans, potentially using a hybrid approach across direct-shipping ore, dry screening, and wet screening. He said he expects more information to share on screening results in the next three to four months.

During Q&A, executives addressed several investor topics:

• Financial assurance: Nathan said the company’s required cash surety increased by around AUD 10 million, largely due to increased activity and investment in clearing and pre-stripping. He said Metro was in an active process with interested parties to provide a bank guarantee to help release cash, and also described efforts to reduce the surety amount through rehabilitation certification and engagement with the financial provisioning scheme.
• Dividend considerations: Simon said capital management was now a regular board consideration and referenced a dividend and capital management policy published during the prior year. He said the board would consider annual results at a meeting at the end of February and would weigh maintenance programs, restart timing, vessel dry-docking, and future capital needs or external opportunities.
• Currency hedging: Nathan said Metro’s current currency hedge position was $165 million at an Australian strike rate of AUD 0.64. He said the company was close to about 100% hedged for Q2 and roughly 50% for both Q3 and Q4 into 2026, with continued monitoring for opportunities to build the hedge book.
• M&A and growth: Simon said Metro’s focus remains on adding value at Skardon River but that the company has started looking at other opportunities, including bauxite and other bulk mining opportunities where Metro can deploy remote operations and transshipping expertise, while keeping a disciplined cap on risk if stepping outside bauxite.

Metro also noted it had won an award for the second consecutive year from the Australian Mining and Exploration Companies, with Simon highlighting a community contribution award tied to a joint venture with the Jonathan Thurston Academy focused on high school engagement.

About Metro Mining (ASX:MMI)

Metro Mining Limited, together with its subsidiaries, operates as an exploration and mining company in China. It explores for bauxite. The company's flagship project is the Bauxite Hills Mine property that covers an area of approximately 1,900 square kilometers located on Western Cape York. The company was formerly known as MetroCoal Limited and changed its name to Metro Mining Limited in December 2014. Metro Mining Limited was founded in 2004 and is headquartered in Brisbane, Australia.