MAC’s share price has come under significant pressure over the past month, falling 22%, outpacing the 14% fall in spot copper prices over the same period. We expect MAC’s CSA Mine in NSW to produce 40kt of copper in CY24, in the middle of the guidance range. Upgrading the mine ventilation should underpin a 25% lift in copper production to ~50ktpa over the next three years. At that rate, we expect MAC to generate free cash flow yields of ~15%pa. Recent exploration success has demonstrated the potential to continue to expand reserves and resources at the CSA Mine. The investment in Polymetals (POL AU, Not Rated) provides MAC with a pathway to add zinc production, which presents upside risk to our base case. We are reiterating our BUY rating on MAC but lower our price target by 2% to A$22.00, due to the decline in spot copper prices.
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