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Sandfire smashes through expectations

28th July 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Copper/gold miner Sandfire Resources has exceeded its yearly production expectations following a strong June quarter.

Copper production during the June quarter reached 34 974 t, up from the 28 774 t produced in the March quarter, pushing full year copper production to 98 367 t, well above the guided 92 000 t to 95 000 t target that Sandfire set for the full year.

Gold production in the June quarter was also up, to 9 075 oz, up from 6 956 oz, meaning gold production for 2022 reached 32 285 oz, which was well within the 30 000 oz to 34 000 oz guidance.

Zinc production in the June quarter was also up from 16 027 t in the March quarter to 22 880 t, while lead production increased from 1 901 t to 2 201 t in the same period. Silver production, likewise, increased from 0.6-million to 0.8-million ounces.

“We are delighted to report on an outstanding June quarter, which caps a transformational year for Sandfire and positions our business for long-term growth,” said MD and CEO Karl Simich.

“Thanks to a strong quarter at MATSA, which exceeded guidance in terms of metal production, and another consistent quarter from our DeGrussa operations in Australia, we were able to exceed our published guidance with an impressive quarterly production performance of 34 974 t of copper and 22 880 t of zinc plus by-product lead, gold and silver.”

Simich said that the strong 2022 production performance underpinned unaudited sales revenue of $922.7-million and group earnings before interest, taxes, depreciation and amortisation (Ebitda) of $448-million for the year, with copper accounting for 82% of the total value of payable metal sold.

“This should provide investors with a clear insight into the strong cashflow generating capability of our expanded global business, with the MATSA operations generating an Ebitda margin of 51% for 2022, a very strong result by any measure.

“The strong margins and cashflows were achieved despite increasing costs. This is a global trend which reflects the impact of rising fuel and energy costs across all the jurisdictions where we operate, as well as significant labour shortages and the impact of Covid-19 in Western Australia. As a result, group C1 unit costs came in slightly above guidance at $1.27/lb of payable copper, which we think is still a very creditable result.

“Operationally, we were very pleased with MATSA’s performance during the quarter, as well as the strong progress with our operational integration, optimisation and excellence programmes,” said Simich.

“Elevated energy costs in Spain remain a challenge and were reflected in C1 unit costs for MATSA of $1.81/lb for the quarter and $1.45/lb for 2022. We are progressing a number of responses to this situation, including the planned construction of new solar farms, engaging with electricity suppliers for new contracts and investigation of other pricing structures.

“We are continuing to drive forward with a number of optimisation programmes at MATSA, and the publication of our first-ever mineral resource during the quarter has established a strong foundation for the growth and optimisation of this asset over the coming years. This also paved the way for the completion of the MATSA ore reserve, which reinforces the quality and scale of the project and underpins our life-of-mine planning.”

Furthermore, Sandfire was also continuing to focus on other key value drivers, including an extensive exploration programme which began to ramp up during the quarter, targeting both immediate extensions of existing deposits and new discoveries in the surrounding region, said Simich.

“At the DeGrussa operations in Western Australia, our team delivered another quarter of safe production despite the challenges of Covid-19 and ongoing cost pressures, with the operation continuing to generate strong margins and make a strong contribution to our group production.

“This will continue for another four months, with mining expected to be completed in September 2022 and processing to wind up in October. We have developed a detailed care-and-maintenance and mine closure plan and have implemented high-quality retention and engagement programmes with our staff and contractors, to ensure a smooth and seamless transition. We are also in parallel continuing to investigate the potential extension of operations through processing of existing stockpiles and mineralised waste on site using the existing plant.

“We also continued to make excellent progress during the June quarter with our key growth project, the Motheo copper mine in Botswana. Construction activities are well advanced, with over 1 700 personnel currently on site and over 7 000 m3 of concrete poured to date.

“Pleasingly, we have been able to keep the project schedule on track despite the global labour and supply challenges, with first production from the 3.2-million-tonne-a-year base case project on track for the June 2023 quarter. We have guided to an upwards revision in the project’s capital costs, mainly due to increased fuel and mining costs,” said Simich.

The definitive feasibility study for the expansion of Motheo to 5.2-million tonnes a year remains on track for completion in the September quarter.

Edited by Creamer Media Reporter

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