Sandfire Sources Restricted (OTCPK:SFRRF) Q3 2023 Income Convention Name April 26, 2023 10:00 PM ET
Brendan Harris – Managing Director, Leader Government Officer
Jason Grace – Leader Running Officer
Matt Fitzgerald – Leader Monetary Officer
Richard Holmes – Government of Enlargement
Dave Wilson – Head of Technical Services and products
Ben Crowley – Head of Investor Family members
Convention Name Individuals
Hayden Bairstow – Macquarie
Rahul Anand – Morgan Stanley
Kaan Peker – RBC
Daniel Morgan – Barrenjoey
Ben Lyons – Jarden Securities
David Radclyffe – World Mining Analysis
Lyndon Fagan – JPMorgan
Thanks for status through, and welcome to the Sandfire Sources’ March 2023 Quarterly Effects. All members are in a listen-only mode. There will likely be a presentation, adopted through a question-and-answer segment. [Operator Instructions].
I’d now like handy the convention over to Mr. Ben Crowley, Head of Investor Family members. Please cross forward.
Excellent morning, excellent afternoon everybody. Thanks for becoming a member of us nowadays at the name to speak about our March 2023 quarter. It is my excitement nowadays to introduce for the primary time, Sandfireâs new Managing Director and CEO, Mr. Brendan Harris. Additionally talking on nowadays’s name will likely be Jason Grace, our Leader Running Officer; and Matt Fitzgerald our Leader Monetary Officer. And in addition within the room for Q-&-A we now have Richard Holmes, Government of Enlargement; and Dave Wilson, our Head of Technical Services and products.
So with out additional ado, I can give up to Brendan.
Thank you Ben and hi and excellent morning from right here in Perth. My identify is Brendan Harris and I might love to welcome you to our 3rd quarter convention name, my first as CEO. As Ben mentioned, I am joined through Jason Grace, our Leader Running Officer, and Matt Fitzgerald, our Leader Monetary Officer.
Earlier than we dig extra deeply into the effects we equipped nowadays, I might love to make explicit point out of Jason. It is by no means simple main in an appearing capability and I am certain you would all agree he has performed an exemplary process. Thank you Jason, I am actually having a look ahead to reaching good things with you and the wider group.
In my first 4 weeks, I am happy to mention that I have been in particular inspired through the power and exuberance of our other people, the eagerness they have got for Sandfire and our business. I have additionally had the chance to consult with our MATSA mining advanced in Spain, and was once left with an overly sure affect of the embedded doable that exists inside each the geology and our put in infrastructure.
I am clearly excited to be visiting Motheo in the second one week of Would possibly. In no small section, as a result of Jason assures me, copper listen will likely be at the flooring – No force Jason.
Turning to the formalities of nowadays’s name, I might love to remind you of the quite a lot of disclaimers that accompany our quarterly fabrics and the notes we have equipped to assist higher perceive our disclosures. I will have to additionally word, we are making an attempt one thing slightly other nowadays, responding in your comments. Ben Crowley tells us you would like much less time spent on introductory remarks and extra time for Q&A. So we may not be doing a web page flip. Quite, Jason, Matt and I can contact at the essential drivers of our industry in round quarter-hour, sooner than turning to a longer Q-&A dialogue. We welcome all comments following the decision as we might like to make use of those periods to concentrate on your spaces of hobby.
So why Sandfire and why now? Neatly, as an organization, we have established a singular and cast basis from which to develop. We are enjoying in the correct position on the proper time as an rising international copper manufacturer of importance. In fact, protection and broader chance control will at all times be on the core, and whilst I am not one to have fun protection results, as we will be able to sick manage to pay for to take our eye off the ball, it could be remiss of me to not point out the document low chance of one.8 accomplished within the quarter.
From a broader chance control viewpoint, we can not overstate the significance of the brand new agreements that experience secured sexy, mounted value, carbon emissions loose energy provide for MATSA. Those agreements considerably diminished MATSAâs publicity to the spot marketplace, in particular from CY24, and Matt will communicate to this in a while.
From a manufacturing viewpoint, we have given higher prominence to copper an identical metrics. Whilst we will be able to proceed to offer the entire element portions so you’ll check and probe all facets of efficiency, we really feel it is necessary for us to keep up a correspondence in some way that displays how we consider worth when making essential choices working our Polymetallic mines. Jason will supply a fulsome replace on manufacturing in a while.
So what is taking place presently? Neatly, as I touched on previous, we think first listen at Motheo within the coming days, in what’s going to be an increasingly more necessary milestone for our corporate. In parallel, we’re rapid monitoring the embedded low price enlargement to five.2 million tonnes in keeping with annum, to ship contained copper manufacturing of round 50,000 tonnes in keeping with annum from Motheo across the finish of CY24.
We are additionally eager about the hot discovery at San Pedro. I may not thieve Jason’s thunder, however I will verify I used to be fortunate sufficient to eyeball core samples from our newest step out hollow on my contemporary consult with.
With that, I will give up to Jason.
Thanks very a lot, Brendan, and if we have a look at operations and tasks for the March quarter, and beginning with MATSA. Mining persevered throughout all 3 mines with the Aguas TeÃ±idas and Sotiel mines handing over manufacturing charges that both met or relatively exceeded expectancies. At Magdalena, and as in the past indicated, excessive grade Cupriferous ore from the MATSA to the East segment of the mine was once accessed throughout the March quarter, albeit at a slower manufacturing price, intentionally designed to control balance and reduce dilution.
Whilst we noticed an growth in general mining charges accomplished at Magdalena throughout the duration in comparison with the December quarter, productiveness charges remained roughly 15% beneath plan and incorporated some further polymetallic ore from the MATSA to Centro and the MATSA to west spaces of the mine.
The decrease mine manufacturing price from Magdalena in flip constrained ore processing throughput and ended in decrease copper steel manufacturing than deliberate, with zinc, lead and silver manufacturing exceeding expectancies.
Operationally, we additionally noticed additional advantages of mining at this slower price within the MATSO to the East house. This delivered extra balance within the mine plan and a extra predictable mix for ore processing, which in flip facilitated an build up in copper metallurgical recoveries throughout the quarter.
Having a look ahead to the fourth quarter and entire yr, we will be able to proceed with this working technique at Magdalena. That is forecast to extend the share of polymetallic ore being extracted, generating decrease annual copper manufacturing and offset through upper ranges of zinc, lead and silver, and is forecast to ship mixed steel manufacturing inside 1.4% of steering on a copper an identical foundation.
In step with this, we’re offering up to date monetary yr 2023 manufacturing steering from MATSA of roughly 98,000 tonnes of copper an identical with decrease copper manufacturing at roughly 56,000 tonnes, in large part offset through upper zinc at 86,000 tonnes, lead at 9,000 tonnes and silver manufacturing at roughly 2.6 million oz.
Transferring now to crew manufacturing, at DeGrussa operations effectively transitioned to processing of oxides copper stockpiles in mid-February after finishing processing of transitional ore and mineralized waste stockpiles. Processing of oxide stockpiles is in accordance with using the present DeGrussa flotation plant with minimum circuit adjustments and adopting a simplistic option to deal with stockpiles with oxide reagents.
Manufacturing for the March quarter was once 4,396 tonnes of copper and 5,111 oz of gold contained. While we think processing to proceed into the June quarter, no formal manufacturing steering is equipped past the 28,000 tonnes of copper manufacturing lately projected for the yr.
At Motheo, we’re very excited that first listen manufacturing is expected to happen inside days and our first listen cargo is now scheduled for the center of the calendar yr. Development actions are actually very on the subject of crowning glory with a number of key milestones accomplished throughout the quarter and incorporated. First ore mine from the T3 open pit was once dropped at the Motheo ROM Pad, with over 0.5 million tonnes of ore now stockpiled.
The main crusher and direction ore stockpile dealing with device has been commissioned and is now absolutely operational. The sag mill erection is now entire with the variable pace power and motor in part commissioned and the operations group are at complete power and greater than able to take keep watch over of the web page.
In accordance with the mixed outlook for all operations, crew manufacturing steering for the yr has been subtle to roughly 87,000 tonnes of copper, roughly 86,000 tonnes of zinc, 9,000 tonnes of lead, 20,000 oz of gold and roughly 2.8 million oz of silver for a complete copper an identical manufacturing of roughly 134,000 tonnes contained.
And after all as Brendan discussed previous, we are all very eager about Sandfire’s contemporary discovery at MATSA. On 24 January this yr, Sandfire introduced to the marketplace that underground drilling at MATSA had recognized a brand new zone of volcanic large sulphide mineralisation, which we name the San Pedro zone. San Pedro is without delay adjoining to the Aguas TeÃ±idas mine with very encouraging widths and grades of mineralisation intersected to-date. This zone was once came upon following a complete geological reinterpretation of the Aguas TeÃ±idas geology through the MATSA group and this represents the primary vital exploration step forward below Sandfireâs possession.
Preliminary step-out and closed-space drilling, infill drilling has outlined a strike duration already of over 400 meters in extent, with step-out drilling roughly 100 meters to the west not too long ago finished. As Brendan touched on in the past, we had been lucky sufficient in an effort to see this drill core on a up to date consult with to MATSA and we are completely overjoyed to peer the level and tenor of the intersected large sulphide mineralization.
Having a look out past the preliminary San Pedro discovery and almost definitely extra importantly, the MATSA group via their superb paintings have additionally recognized an extra 2 kilometer strike duration of this untested potential horizon.
I can now give up to Matt.
Thank you Jason. Steel manufacturing drove decrease earnings of $163 million for the quarter and $595 million year-to-date with over 70% of earnings coming from 62,000 tonnes of payable copper from MATSA and DeGrussa and 20% from 50,000 tonnes of payable Zinc at MATSA. 12 months-to-date operations EBITDA has risen to $243 million out of 41% operations EBITDA margin, with MATSA contributing $157 million and crew EBITDA of $190 million [ph].
Whilst MATSA sells its concentrates successfully each day, DeGrussa noticed a construct in extremely marketable copper listen shares with round 6,000 tonnes of payable copper to be had on the market within the June quarter, with listen from oxide processing working at round 35% copper. This impacted March quarter crew earnings EBITDA and money holdings. We additionally be expecting the overall one or two DeGrussa high-grade listen gross sales to happen into the September quarter, impacting money and dealing capital at 30 June.
Running prices have stabilized and diminished throughout mining and processing as power costs are pleasingly settling against ancient ranges as guided following their height within the first part of the monetary yr. We’re seeing the have an effect on in relation to value of latest long-term energy provide agreements. Upper TCRCs got here into impact this quarter in step with actions in international benchmarks.
Running money flows at MATSA at $65 million for the quarter mirrored the EBITDA end result. MATSA finished its scheduled $80 million debt reimbursement in January following the $118 million reimbursement in September final yr, whilst proceeding to take a position closely in mine construction around the 3 mines.
As in the past flagged, following the ore reserve extension accomplished mid-last yr at MATSA, we’re progressing the re-sculpting and rescheduling of the rest $453 million MATSA debt facility to lend a hand the technology of operating capital and easy the rest agenda throughout a now a lot much less restrictive ore reserve tail throughout the vital general mineral useful resource. Amendments are progressing effectively via credit score and documentation evaluation processes.
In C1 phrases, less than deliberate copper manufacturing impacted unit prices. On the other hand, with the scheduled excessive copper and zinc manufacturing within the June quarter, we predict C1 unit prices at MATSA to transport to round $1.50 in keeping with pound. Complete-year C1 steering at MATSA is in large part flat general, with decrease copper steering offset through upper zinc, using upper derivative credit.
This fall manufacturing at DeGrussa has noticed additional copper manufacturing to April. On the other hand, any in large part unguided manufacturing in Would possibly and into June will likely be at a better C1 price and decrease margin, say round 10% to fifteen% at $4 copper, because of the processing of the overall lower-grade and lower-expected restoration stockpiles throughout this time. Manufacturing is scheduled to finish at DeGrussa in the second one part of the June quarter, with a proper gross sales procedure for DeGrussa progressing in parallel.
At our new copper mine Motheo in Botswana, we drew down the overall $30 million tranche of the overall $140 million, 3.2 million tonne in keeping with annum T3 debt facility with SociÃ©tÃ© GÃ©nÃ©rale and Nedbank, forward of now-progressing formal discussions across the deliberate $200 million uplifted facility, which finances the deliberate A4 enlargement to five.2 million tonnes in keeping with annum processing price, at the side of working money flows from T3.
Ultimate crew money was once $177 million on the finish of the quarter, with internet debt of $415 million. Whilst we think crew internet debt to cut back with a technology of sure money drift from MATSA after which Motheo, we will be able to additionally see the preliminary have an effect on of any uplifting facility at Motheo contributing to A4 enlargement capital. In that regard, we stay up for updating the marketplace at the key capital control actions over the approaching weeks throughout each MATSA, Motheo, and in addition DeGrussa, as we proceed our steadiness sheet transition enthusiastic about supporting our expansion technique.
Thank you Matt. The paintings you and the group are doing at the steadiness sheet is obviously a key enabler of our industry. So sooner than we transfer to Q&A, I might like to go away you with this.
We are primed to ship 25% expansion in copper an identical manufacturing within the 3 years to FYâ25. To get there we have outlined our rapid priorities. Care for momentum in protection efficiency, not anything is extra necessary. Identify a reputable pathway to cut back our carbon emissions. Lock in solar power provide for MATSA, the final pillar in our energy provide negotiations. Advance underground construction and basic oil frame wisdom at MATSA, and optimize our making plans processes to reduce dilution and build up recoveries with a focal point on worth over throughput.
And naturally, it is going with out announcing, we will have to ship the robust build up in manufacturing plan for the fourth quarter, ramp up Motheo safely and sustainably, and paintings to temporarily perceive the level of San Pedro mineralization that lies at a fairly shallow intensity inside 100 meters of Aguas TeÃ±idas. Whilst we will sharpen our focal point at the fundamentals, as that is our price tag to the sport, it is our rising figuring out of the geology that will get me in particular excited.
So with that, are we able to please have the primary query? Thanks.
Thanks. [Operator Instructions]. Your first query comes from Hayden Bairstow with Macquarie. Please cross forward.
Good day! Excellent morning, guys, and welcome aboard Brendan. Only a couple extra from me. At the start, on MATSA, perhaps a query for Grace, simply in accordance with from the web page too. I am prepared to raised perceive what is if truth be told occurring at Magdalena and the way temporarily you assume you’ll get to the bottom of it or is there going to be a complete want for redesigning your scopes to ensure you’ll get extra strong flooring stipulations to get that final manufacturing price up against that on the subject of 2.5?
Glance Hayden, I will throw it to Jason. If I will simply make a few very fast observations.
Once more, before everything, I suppose I will come at this with recent eyes. And having long past underground at Magdalena solely a few weeks in the past, you’ll see that we are working in and across the shear zone, we do not disguise from that.
What you’ll additionally see despite the fact that is that the group is doing an excellent process within the instances. Bear in mind, once we inherited this mine, there was once little or no geotechnical figuring out and modeling and so as to a point it has supposed the groups now and then are flying slightly blind. This is converting and converting swiftly as a result of you will have heard us communicate concerning the geological reinterpretation paintings that is being performed.
That still interprets to a heavy quantity of labor occurring to rework and perceive the geotechnical traits of the ore frame. And that, mixed with the focal point that now we have on each and every side of our mine making plans, I feel units us up effectively. However once more, we aren’t going to hurry to check out and power throughput to 4.7 million tonnes; we will get there. In reality, the weekend previous to my arrival on web page, the group was once if truth be told working around the weekend at 4.8 million tonnes in keeping with annum throughput charges within the plant.
So we all know the plant can do it, however it is a subject of using on the proper time in some way that is lowering that dilution impact and clearly as we mentioned, maximising recoveries, and that is the reason constructed into our plan, as a result of in the end that is going to price as we mentioned, the price of the useful resource.
However Jason, over to you.
Completely. And actually to reiterate that, Hayden, we have been speaking about this for some time. The ore frame wisdom that we had, that we inherited there at MATSA was once actually very, very elementary. And for us to be extra predictive and feature keep watch over and balance round, in particular round supply of our mine plan, we wish to entire that paintings. Now in large part we are effectively complex, however no doubt we have had this plan now for a time frame the place we think to have that complete wisdom beginning to come into mine plans round past due 2024, so almost definitely about some other one year.
So some of the issues you are seeing, and coming again in your remark there about, will we wish to redesign Magdalena? The solution to this is no. What we do wish to do is administered sure spaces which might be suffering from in particular constructions and balance. We wish to run them just a little slower, so we are ensuring we aren’t losing the ore frame, we aren’t over-diluting it, and we aren’t looking to push a nasty place in relation to the manufacturing agenda.
Now, to do this we wish to increase our evolved shares. We have been operating on that for some time, however we will be able to see that when once more kick in against the top of subsequent yr. So, the way that we have been taking as Brendan mentioned is ready, when you like simply reacting to the ore frame and what we are seeing, getting balance into that mine plan and compliance. And what that permits us to do is if truth be told provide a constant or a predictable mix going to the processing plant and actually ship upside there on progressed restoration and general efficiency within the plant, which can ship us higher worth and higher steel manufacturing as effectively.
A âMatt Fitzgerald
And Hayden sorry, I would possibly simply upload, what we are not looking for other people to remove from this is that due to this fact, as we glance to subsequent yr, we have were given vital considerations. We’ve not equipped up to date steering to FYâ24 nowadays, as a result of we’re operating via our making plans processes and the group’s I feel doing a little actually excellent paintings there. However what I will inform you is the initial estimates with, I suppose a relatively moderated option to throughput. We’re nonetheless seeing the similar varieties of degree of an identical steel manufacturing as was once in the past indicated, albeit with copper incrementally upper than what we are anticipating to peer this yr. So with a bit of luck that is helping.
Yeah, terrific. After which Brendan, I do know its early days, however are you kind of making plans, I have no idea, the total yr end result or later this yr to kind of put a type extra strategic outlook for what you are considering in relation to Sandfire? Clearly the 2 core property and each will likely be in manufacturing through then. Clearly you continue to were given a good bit of debt to care for, however do you assume you’ll be able to be ready later this yr or is the focal point actually simply round getting those operations buzzing and getting that debt degree down?
Yeah, glance, I suppose I am going again to prior enjoy. In a previous lifestyles as you understand, I used to be concerned within the formation of an overly massive corporate from not anything on day one. And I feel we realized firmly in that procedure that there is worth in sitting again, listening, gazing and ensuring you already know your context, however then popping out with actual intent. And so for me, I am very a lot getting across the grounds when you like. I have been to MATSA, Iâll get to Motheo as I mentioned, in a few weeksâ time.
I’ll meet with quite a lot of the analysts and clearly quite a lot of buyers. It is bringing all that in combination to ensure, once more, that I have were given the total context, in particular as I mentioned, listening to from our other people what is operating effectively, the place they see the alternatives for growth and construct that during.
Now, I’d say alternatively, once more, we have were given an unbelievable expansion pipeline. It is natural, it is there. Crucial factor for us is to ship on that during the best way that we have defined. We’ve not talked so much about Black Butte as effectively. I feel you will get started listening to us communicate extra about that over the approaching 12 to 18 months. Allowing is sure, it’s been a problem, however we expect we are beginning to get some â when you like we will see some mild on the finish of the tunnel there. It is rather laborious to seek out copper gadgets. It is rather laborious to shop for them within the setting nowadays for worth and so you probably have them, be sure to perceive them and be sure to optimize the ones sources to the utmost extent imaginable.
And we do wish to perceive Black Butte. I feel there is a considerable alternative there for us to create worth. And once more, I stay up for speaking about that extra one day. I imply, Jason was once simply in Black Butte. I would possibly simply in no time cross it to him and notice if there may be any observations he needs to make.
Yeah. Glance Hayden, as you understand, I had a perfect commute over there. It was once about 3 weeks in the past, the week sooner than Brendan arrived and that was once planned. So it was once about getting an replace on the place that mission is, getting an replace on considering from the group over there and I will stroll away. I have at all times been a believer on this mission, however no doubt this solidified my trust within the doable over there. I do imagine we now have a pathway to manufacturing over there, however we do wish to perform a little extra paintings in an effort to get there. So I am no doubt very excited.
K, nice. Thank you guys.
Thank you Hayden.
Thanks. Your subsequent query comes from Rahul Anand with Morgan Stanley. Please cross forward.
Hello group! Thank you for the decision. Brendan, welcome and perfect needs for the brand new alternative. I have were given two questions. First one’s on MATSA. I simply sought after to get some readability. I imply, it is principally a follow-up to Hayden’s. I imply, I wish to get my head round kind of the place we will be able to be expecting the throughput charges to be. I imply, is 4.4 the correct quantity to be fascinated with long term throughput charges as you attempt to goal that reserve grade and also you additionally attempt to support recoveries and dilution?
After which additionally as a persist with on, I imply, that 5 million tonne in keeping with annum goal, is that no longer actually one thing that you will be enthusiastic about first of all and you are simply principally going to check out to maximise the outdated frame worth simply by having a look at that reserve grade and four.7? That is the first one. I will come again with a 2d. Thank you.
K. Glance, nice questions and thank you Rahul for the sooner remarks as effectively. So before everything, let’s be actually transparent. We see presently the price in if truth be told that specialize in recoveries, however in particular managing dilution to ensure we get the most productive worth from the ones sources by the use of the steel an identical manufacturing we reach. So within the close to time period, when you glance in recent years, 4.4 million tonnes to 4.5 million tonnes is a great quantity. However let’s be actually transparent, as I mentioned solely weeks in the past, the plant was once working at 4.8. So it is going to be variable relying on the place we’re within the mine plan.
And I will guarantee you that once we begin to see the degrees of restoration that we have constructed into subsequent yr’s plan and are being subtle, and we are beginning to see once more this geotechnical wisdom come via, our absolute purpose is to as temporarily as we will be able to and as safely as we will be able to, however most significantly, as sustainably as we will be able to, is to power to 4.7 million tonnes in keeping with annum, in order that’s simply on that one.
Now, I feel in relation to the 5.2 million tonnes in appreciate of Motheo, it is actually necessary to comprehend that the best way that that plant’s been evolved, which is relatively distinctive, the group’s if truth be told been construction a three.2 million tonne or nominal 3.2 million tonne in keeping with annum mission, figuring out that we are transferring temporarily to five.2 million tonnes. Such a lot of the plant has been designed at a 5.2 million tonne in keeping with annum price.
In impact, the most important element we want is the Ball Mill to visit 5.2 million tonnes in keeping with annum, and that paintings is being run in parallel. So once more, we expect that is going to ship us an overly speedy and cheap enlargement. Rahul, did that duvet off for your questions?
Sure, it did. My 5 million tonne reference was once principally within the outer years. I feel originally when the asset was once obtained, that is MATSA, it was once talked a few doable run price that will be the most sensible of the mine plan, mines acting completely, vegetation acting completely, in order that was once kind of my query round MATSA. However glance, I perceive you are almost definitely that specialize in that 4.7 million tonnes first up, however if you wish to upload the rest to that, I might love just a little extra colour.
Sure, apologies. I heard the 5.2 million tonnes, so my mistake. Glance, this can be a excellent query, as I mentioned. Once more, get balance, get consistency, get the recoveries, power to 4.7 million tonnes after which proceed to creep. I imply you are by no means going to face nonetheless. That is an business the place it’s a must to power persistent growth. So I don’t believe we are right here to mention there may be any alternate in that. However once more, I feel the essential factor for us is we have were given to turn out our talent to ship on those numbers. That begins with the fourth quarter.
There is a considerable uptick in manufacturing, which is not going to solely power revenues. It is going to have a vital have an effect on on prices. We wish to reach that in order that you get started getting the arrogance that we imagine you will have. Thank you Rahul.
K, best possible. Only one fast follow-up on that Brendan if I would possibly. On my numbers, it does not. However is that this contingent for your debt restructuring plans, the power to run at that decrease run price? I imply, you probably did specify that you are anticipating identical or higher copper manufacturing. However does that then have an effect on zinc, and does your debt restructuring plan make this new mine plan contingent in some way?
No, on no account. In reality, what we think is that this new mine plan is solely going to ship us higher results each in relation to as Jason mentioned, that predictability, however it’ll drift via into the financials as effectively. If you are generating identical ranges, introduced in the similar ranges of steel an identical manufacturing at decrease throughput charges, that is a excellent tale.
Now glance, I feel as Matt mentioned, and I have had relatively numerous, when you like, oversight of this as effectively, we are progressing really well with the conversations with the banks. We do not wish to cross too some distance as a result of clearly you are by no means performed till you are performed, however as Matt mentioned, the syndicate is operating via credit score approvals as we talk. So we will supply an replace, once more, as Matt mentioned, within the coming weeks, however there is no linkage between those two issues.
Once more, coming with recent eyes, having a look at what the group’s doing, that is tips on how to run the industry for shareholder worth. And once more, do not assume for one minute we are taking our eye off without equal prize, which is getting the ones throughput charges up, however with higher underlying efficiency.
Understood. K, thanks. I will queue again in.
Thanks. Your subsequent query comes from Paul Younger with Goldman Sachs. Please cross forward.
Thank you. Hello, Brendan. Hello, Jason and group. Brendan, excellent to glue at the name. Keen on a few of your additional ideas on Matt’s and Brendan’s factor, is that it has obviously a whole lot of exploration upside, however the mine advanced has kind of struggled to get persistently above kind of 4.2 million tonne run price because the acquisition. I see you will have left it â in your level, you will have left FY24 and FY25 steering unchanged. So I am simply curious concerning the subsequent kind of company replace at the medium-term mine plan you are doing with Geotech, reworking at the present time. When are we able to be expecting an replace at the medium-term plan?
Yeah, thank you Paul. Glance, we’d be expecting having finished the yearly cycle to offer a complete replace within the fourth quarter document, however in particular clearly once we get across the grounds and arrange to peer other people and speak about effects on the complete yr. So once more, we stay up for that chance and with a bit of luck as I indicated previous, we aren’t seeing a shift in steel an identical manufacturing relative to what we now have mentioned in the past, not anything subject material, albeit as I mentioned, you’re going to most likely see numerous marginally slower throughput price for that duration. So Paul, that is almost definitely all I will upload at this level.
No, that is superb Brendan. Then switching over to, down south to Botswana and Motheo, simply so far as you are near to to begin up and bring copper. So far as referencing the DFS and prices inside that learn about and the place we sit down, everyone knows there may be been business price inflation. I feel your final estimate, lifetime of mine for C1 price was once about $1.50 a pound. I suppose the query is, are you pleased with that estimate or will you replace the marketplace additionally with the four-year end result?
Yeah glance, Jason’s dwelling and respiring the commissioning and ramp-up profile of Motheo, so perhaps I will throw it to him to have the primary shot.
Yeah Paul, glance, from our perspective, we did supply an replace there once we finished the $5.2 million tonne in keeping with annum feasibility learn about, which is rather contemporary. We have no longer noticed numerous motion in prices there in Botswana at this day and age, noting that there’s rather wholesome inflation charges there happening. It does have an effect on our labour charges, however labour charges are not say as excessive a share as they’d be right here in Australia.
So general that $1.58 that we quoted on that C1 price, at this day and age that is the most recent knowledge we now have. As we begin to enter manufacturing, we will be able to be updating the ones prices, in particular for the fourth quarter, and our estimates for subsequent yr when we begin to see in particular what the processing plant is doing over the following couple of months.
Yeah Paul, I feel some of the issues for me, we are clearly going to wish to watch and notice how that progresses. Getting the tonnes goes to be the essential piece as you understand, however for me, what I’ll be having a look at maximum carefully is the whole lot that I have learn and the entire learn about paintings. When it issues to mineralisation, it being fairly coarse, and it will have to drift effectively. Word the group’s very hopeful that it will have to be fairly clear-cut, barring the rest unexpected for us to ramp up this operation. Once more, it is not metallurgically advanced, so we will be able to supply an extra replace clearly with the fourth quarter after which into the total yr.
Yeah, thank you Brendan. Final one simply on slide 25, the aerial kind of map of Motheo and yeah, simply noticing clearly the [inaudible] Copper Mission and the proximity to Motheo. I do know you mentioned that you have got numerous natural expansion and exploration upside at MATSA and Black Butte, you discussed on your feedback there if truth be told. I feel it is been a tricky going. However I suppose the query is, you have got numerous paintings to do and you have to ramp up Motheo before everything, however I suppose there may be a chance there with doubtlessly a whole lot of synergy. So perhaps the query is that has this chance perhaps come slightly bit too quickly, you understand for Sandfire primarily based and the place you are at?
Yeah glance, superb query Paul, and I knew it would not be misplaced on you whilst you seemed on the map, however there’s a birthday celebration that sits clearly proximal to our Motheo operation. I feel the very first thing I might say is, when you have a look at our land preserving within the belt, we now have a considerable land preserving. So we have already got the bulk when you like of that acreage and our spaces are fairly underexplored. So we see vital doable there and as I mentioned previous, that is about setting up a strategically precious manufacturing hub.
At the turn facet, as once more you will have repeated, we now have an exquisite natural expansion pipeline. Crucial factor for shareholders is that we do not get distracted and we ship on our guarantees and we expect via that we will clearly liberate considerable shareholder worth. If the [inaudible] asset involves the marketplace, as individuals are suggesting it is going to, in fact we wish to glance.
However once more, I can by no means take my eye off shareholder worth. I have at all times believed that M&A is a nice-to-have if it is sensible; it is by no means a have-to-have, and much more so you probably have a industry like ours with such robust embedded expansion doable. So once more, do we take a look? Positive. Are there synergies? Doubtlessly. Wouldn’t it most likely be a aggressive procedure? Richard Holmes is sitting right here with me. I feel he’d recommend it is going to be. However it is by no means an issue to head in and notice what you’ll be informed. So I’m hoping that is not too imprecise Paul, however that is almost definitely all I will upload at this level.
No, that is helpful. Thank you Brendan. Subsequent time.
Thanks. Your subsequent query comes from Kaan Peker with RBC. Please cross forward.
Yeah, hello Brendan, Jason, Matt, Ben and group, and congrats and welcome Brendan. Simply the primary query is at the energy settlement at MATSA. I feel in the past there was once indications that it could be backdated to the beginning of CY23, and it looks as if at the presentation, since we are speaking about CY24 now, I simply sought after to test if all that â the ability settlement covers MATSAâs wishes and the way that sun piece suits in there. Thank you.
Yeah, nice query Kaan. So let me have a cross at that and the group can chip in as wanted. So whilst you consider this negotiation, as I discussed previous, a fully essential negotiation at that. There may be restricted spot availability of extra powder available in the market lately and so whilst you have a look at CY23 and the agreements are being installed position, there are a variety of tranches. So the primary tranche, which is name it kind of 30% of the operations energy necessities, covers CY23 at a set value that is if truth be told clearly sexy and at a aggressive degree once we have a look at the present marketplace charges.
Then you definitely have some other tranche that is available in in CY24, after which that will get you as much as one thing shut, tough numbers round 60% of the operations energy necessities. So once more, that is why from CY24 you have got a lot much less publicity to the spot marketplace.
The general piece within the puzzle is the sun agreements. They’re at a sophisticated level I would possibly upload. That will get you as much as round 80% protection with a bit of luck from round that CY24 duration or via that point horizon. That is actually what I sought after you to remove. You might be completely proper. The primary tranche this is impacting and having an impact this yr was once backdated to the beginning of 2023.
Now, why you are seeing prices going up isn’t as a result of energy. We are seeing â when you have a look at the increments, you’ll see the ease coming via, reasonably clearly decrease manufacturing, however you additionally had a step-up in remedy and refining fees. Does that assist Kaan?
Sure, certain. Only a follow-up on thatâ¦
Iâm sorry Kaan. Kaan, if I will, simply to I feel rigidity. So whilst you have a look at the element of power within the numbers that we have mentioned nowadays, the price base, it is down beneath 10% now as a share of price. So it is round â I feel it was once round 9%, in truth and it was once over 20% within the height. So actually it emphasizes how we’re completely now seeing that translate into an growth in processing prices.
Sure, understood. Only a follow-up on that TCRC. That is coming principally from copper so far as I perceive. I feel that zinc fees are set only recently and from reminiscence Sandfireâs TCRCs are all off annual benchmarks. Is that proper?
A – Jason Grace
Sure, it is proper Kaan. It is principally from copper, so it drives about 30% of an build up within the copper facet and no longer a lot at the zinc facet.
Thank you. And simply in the second one query, I do know we have mentioned this relatively at duration, however simply with â on MATSAâs throughput, I feel perhaps Jason discussed it, however he mentioned higher construction over the yr and perhaps, I feel the phrase he used was once kicking in against the top of the yr. If the whole lot is going to devise, is throughput proper at I assume the bottom case, anticipated to extend to 4.7 on the finish of FY24?
Sure glance, once more, I don’t believe we wish to be drawn on that nowadays. I am getting what you are looking to do is figure out what to place within the promote on your type. Once more, what I am enthusiastic about is what the steel an identical output is, and to be brutally fair, I might reasonably we get extra steel at much less throughput. In order that’s why I do not actually wish to be drawn on that nowadays.
In fact, in time to get to that 4.7 quantity, we will pop out with extra readability as we way the total yr. The group is true in the midst of that annual making plans cycle. Unashamedly, I am 4 weeks in. You’ll consider I wish to probe relatively deeply past what I have had a possibility to do nowadays. Certainly, all going effectively, I am hoping to spend a month in MATSA from mid-June into July, and once more, we will be well-placed to return again to you in the end.
Positive, thank you. If I may squeeze yet one more in, it is simply at the enlargement to five.2. I feel during the last couple of quarters that T4 dewatering turns out to had been driven out. Does that imply environmental approval? Thank you.
A – Jason Grace
No, glance, environmental approvals are nonetheless on the right track. We have if truth be told moved via a session duration and we are out for public remark at the present time. So the whole lot as we perceive at the present time is in large part on the right track. The dewatering, in relation to the timing on that, there hasn’t been numerous motion, however that may not gradual us down in any respect.
Positive, thank you. I will cross it on. I admire it.
Thank you Kaan.
Thanks. Your subsequent query comes from Daniel Morgan with Barrenjoey. Please cross forward.
Hello, Brendan and group. My first query simply pertains to Motheo. When do you are expecting to be exiting run charges of three.2 million tonnes in keeping with annum on section 1? Thanks.
We think to be there in July.
K, very transparent. And whilst you say there may be going to be a concentrated cargo mid-year, will it sneak in sooner than 30 June? Is that the expectancy or after? And I consider that you will not have business manufacturing this fiscal yr, so no income to return via. Is that assumption proper?
Yeah glance, I feel at this level, Matt’s nodding. Now we have been just a little lovable with the remark we have placed on gross sales. We have performed round with that. It deliberately says mid-year for excellent reason why. There’s a affordable chance that it slips into the following yr. It is very laborious for us to expect. It would get proper right down to the cord. So, in some respects I feel what we might want is you suppose it creeps into the following yr and that there’s clearly a construction operating capital, however on the finish of the day we are clearly centered at the larger value.
Yeah, very, very smart. After which additional I imply Brendan, congratulations for your function. You might be new to the industry. I am simply curious on what’s your plan or ambition in the end with the Sandfire platform? What’s the mandate that you simply sought and were given from the board when you were given employed? Thanks.
Yeah, thank you Dan. It is a great way to invite the query, if truth be told. Glance, I got here in right here on day one and what I mentioned to the group is I do not have a elementary alternate mandate, and the principle reason why for that’s, as I engaged with the board and the control group in the ones early discussions, I may if truth be told see very robust alignment. This can be a industry as I mentioned this is primed for expansion. It is primed for expansion in a commodity that the arena I feel is actually solely coming to grips with how a lot goes to be required to decarbonize the worldwide economic system, clearly during the primary electrification procedure that is underway. So we now have the entire proper hallmarks right here.
The essential factor for me is clearly getting to understand our other people, ensuring we embed the correct tradition. I feel we wish to have the ability to embody the tradition in Spain, while ensuring the issues that we cling pricey, the ones usual core commonplace methods and processes are completely mirrored there. The similar is going for Botswana. And as I mentioned, then figuring out what the possible is of Black Butte.
The truth is I really like the truth that we perform polymetallic mines. As you understand, the foremost, primary basin offering copper gadgets on the earth nowadays is in South The united states, and plenty of of the ones very massive mines do not have massive derivative credit. So if you’ll get the productiveness proper from your polymetallic mines, optimise the ones throughput charges, after which have the benefit of by-products, you will be firmly entrenched, once more in the price curve beneath that primary slate of manufacturing, and that within the setting that I see enjoying out over the approaching years, I feel positions Sandfire in particular effectively.
I imply, essentially, our purpose isn’t about scale. It is about how we develop shareholder worth and that is the reason what I stay up for coming again and speaking with you about once we meet on the complete yr. Thank you Dan.
Paul Younger requested a identical query previous, however is M&A throughout the mandate you may have,
and clearly there may be [inaudible] within sight, however extra extensively, may you place out what may well be thought to be and what will not be? After which what’s in do you assume Sandfire’s DNA so as to add worth to any alternatives?
Glance, I feel it is going with out announcing that, once more, via handing over at the commitments we have made round MATSA, that may increasingly more construct the arrogance of our shareholders in our working functions. Now we now have that distinctive talent to perform underground and clearly now with Botswana transferring into an open-cut surroundings, proving that provides us an exquisite platform.
I actually do not love to get drawn on do you do M&A or do not you do M&A? As a result of frankly, I will be fair with you, I feel shareholders be expecting us to do the whole lot and the rest to create and maximize shareholder worth. And due to this fact, our process is to grasp the panorama, each internally and externally, and make the correct choices and clearly we will be judged within the fullness of time. And once more, I would not be expecting inside Sandfire, I might take any other option to that.
K, thanks very a lot.
Thanks. Your subsequent query comes from Ben Lyons with Jarden Securities. Please cross forward.
Thanks. Excellent day, Brendan. Welcome again. Very a lot having a look ahead to that catch-up for a cup of tea with you flagged, so please upload me in your checklist. And clearly regards additionally to Jason, Matt, Ben, and the wider group in fact.
Only a couple on Motheo from me please. At the start, just a bit marvel that the SAG Mill isn’t absolutely commissioned at this juncture. Yeah, it was once having a look lovely excellent there in early February, albeit I acknowledge that the remark was once struck at 31 March, and it is some other 4 weeks long past through since then. So are you able to communicate to any particular problems in commissioning that essential bit of equipment or is it just about on-line for commissioning as we talk?
Thank you, Ben. Glance, you are proper. On our numbers and on our detailed schedules, we are about 3 and a part weeks in the back of the place we had was hoping to be, in particular originally of the yr. It does not relate in particular to the rest within the SAG Mill itself. SAG Mill’s having a look excellent. The explanation that we will be able to’t fee this is we are nonetheless finishing building at the flotation circuit. So principally, it’s the very last thing that must be finished and the whole lot else is both imminently able or already finished.
So the only merit that we have had is that we have been ready to fee as we undergo gradually, and we think that to ramp up rather temporarily when we get someplace for that SAG Mill slurry to if truth be told cross to after it is going via that mill.
Superior! Thank you very a lot, Jason. I admire that. Possibly simply transferring throughout to the ROM pad, actually enjoyable to peer that you have got virtually a month of high-grade ore sitting at the ROM now, 1.1% copper. Possibly a two-part query; initially, are you able to explain if that 1.1% is overall contained copper or recoverable copper, clearly except for the ones oxides that have by no means been thought to be recoverable? After which the second one a part of the query can be at the commissioning technique, whether or not you stack the mill and the drift tanks with the low-grade, the 0.6% ore otherwise you roughly mix it with the high-grade or do you cross instantly for the high-grade? Thanks.
Yeah, so I would possibly get started with that one, Ben. Now we have been crushing low-grade ore, so we will be commissioning on low-grade principally throughout Would possibly and no less than a part of the best way via June on present plans. We think to be principally beginning to feed a few of that high-grade subject material getting into past due June and July.
We think as effectively to ramp up, and additional to the questions sooner than, we think throughput to ramp up in no time. Like a podium that has been our EPCM contractor, has constructed virtually the very same plant somewhere else in Africa, so we now have excellent benchmarks in relation to ramp-up schedules, commissioning and ramp-up schedules in this precise plant.
So we think that throughput will ramp up in no time after which it is going to come right down to principally control of the grind and the drift circuit to get recoveries up. So we think to be there just about in July.
In relation to the copper grades on stockpile, they’re overall copper, however we now have estimated recoverable copper or acid-soluble copper in there as effectively, however general we’re seeing that degree of oxidation lower very swiftly as we growth down during the ore mine.
Superb, thank you very a lot Jason. That is actually useful. Possibly only a ultimate one on Bots. You’ve got simply long past during the rainy season over there. You had the added complication of Cyclone Freddie which was once construction within the East Coast of Africa on the similar time. Simply any observations you’ll make about what took place at the grounds as opposed to your expectancies for the rainy season, whether or not you suffered any have an effect on to web page get admission to as an example or extra floor water or any headaches with the TSF and so on.? Thanks.
No Ben, glance general it is been actually relatively powerful. Website online get admission to has been actually excellent, so no problems in any way. There is a actual merit there having the A3 freeway principally inside 15 kilometers of the web page, so no problems in relation to provide chain and provide routes. If we have a look at it, no problems round water across the web page in any respect. However what we did do was once, in particular in March the place we did see upper rainfall, it did decelerate mine manufacturing relatively, however general we are seeing that even that mine manufacturing is relatively powerful.
Possibly Ben if I will, I simply wish to actually take the chance to once more reiterate the fantastic process I feel that the group’s performed. I have learn quite a lot of analyst experiences nowadays and I feel a couple of have made point out of what virtually a outstanding effort is to ship a mission as they have got inside price range within the present local weather. So initially, I simply sought after to recognize that.
I feel simply kind of to the guts of your query, I feel we’d have even been relatively forward of the place we’re nowadays if no longer for a kind of kind of teething problems that you’ve got against the top of a mission, wherein probably the most group of workers when you like isn’t essentially as motivated to finish if they do not have a role to visit. I feel the group spoke back to that in no time as a result of we began to peer a slight drop off in productiveness charges, exertions productiveness charges within the mission. They spoke back in no time through putting in place sure kind of milestone bonuses, and so on., not anything subject material, however if truth be told to get other people centered at the prize once more to ensure we get to that first manufacturing.
So, while I don’t believe climate had an have an effect on, it was once arguably a exertions productiveness have an effect on that simply almost definitely driven us 3 or 4 weeks past the place we if truth be told was hoping to be. Certainly we had been hopeful solely almost definitely round one and a part months in the past previous to my graduation as I are aware of it that we might if truth be told be speaking about first listen manufacturing within the quarterly.
Yep, I were given it. That is actually useful. Thanks very a lot Brendan. I’m hoping you revel in embracing the tradition in Spain and Botswana over the approaching weeks.
Thank you for that. I admire it Ben.
Thanks. Your subsequent query comes from David Radclyffe with World Mining Analysis. Please cross forward.
Hello! Excellent morning Brendan and group. So sorry for labouring the purpose right here on MATSA capability, however I simply wish to ask the query a unique approach given your recent eyes, as a result of we appear to be locked in right here to the loose present mines, which clearly the problem this is that you have got a hungry mill. So having a look ahead and in the longer term, are we actually lacking right here a fourth mine both discovered or obtained or wouldn’t it make sense perhaps to consider toll treating probably the most regionals round for the reason that your plant would possibly if truth be told be higher suited for them?
Glance, that is actually liked and I feel it would not marvel you that the thread of your query is certainly one thing we communicate so much about right here and that’s the proven fact that I feel many of us call to mind MATSA as one mine. The truth is we now have 3 mines with a centralized processing facility and with clearly Motheo approaching we will have 4.
That provides me numerous convenience, as a result of everyone knows that mining is inherently risky so before everything it offers us some, when you like, range within the portfolio before everything. However in your level then, the actual query for us, as we begin to perceive mineralization like San Pedro, as we check the down plunge extension of Magdalena and too early to mention, however the possibility of an extension of high-grade copper, the query then is what do you do with that 4.7 million tonnes and perhaps 5 million tonnes of throughput capability? How do you feed that subject material into the mill to optimize worth? As a result of it can be that the best way that you wish to have to run that facility, no longer solely to maximise the web contained steel, but additionally to lend a hand you with the way you arrange simply that general drift sheet, your reagents and your recoveries, it will alternate.
After which the query is what do you do with a few of these different deposits and sources, such things as Sotiel which is obviously no longer working at an optimized price and the way does that play right into a broader technique?
So I do not wish to be drawn on that an excessive amount of presently, however you are completely proper that I feel that could be a essential query that we wish to perceive and in particular perceive within the means during which shall we doubtlessly release worth that is hidden at the present time. So, thanks for elevating that. It’s on our clearly focal point checklist and its proper within the crosshairs of the place I feel there may well be worth introduction. However it is simply too early, as a result of a few of that will depend on this geological wisdom that we have been speaking about, figuring out the mineralization doable, however a perfect problem for us.
All proper, good. Thank you Brendan. I will cross it on.
Thanks. Your subsequent query comes from Lyndon Fagan with JPMorgan. Please cross forward.
Thank you very a lot and congratulations Brendan. Glance, the primary query I had was once only a follow-up at the depreciation at MATSA and I am questioning in case you are ready to present any colour but on easy methods to calculate money tax and the depreciation we will have to be the usage of as a tax defend as opposed to the guided depreciation of 250. Thank you.
Thank you Lyndon. I feel as we have discussed sooner than, you are perfect to almost definitely type it on an EBITDA minus CapEx foundation for tax, for money tax. And in addition the depreciation facet as you mentioned we have guided about 250 for the yr. We are almost definitely in that vary we expect as we get there, that can, relying at the fulfillment of our objectives within the June quarter given the all that we are gaining access to in there that can be 250 to 260 within the depreciation facet. However as I say at the money tax facet, I feel you are perfect to stay in EBITDA minus CapEx and we will be able to upload some extra colour to that as you as you would like.
Simple performed. K, thanks. After which the opposite one perhaps simply to in short contact on Copper TCs. They’ve long past up a good bit within the quarter. I am simply questioning if that is the brand new run price going ahead or whether or not there was once one thing distinctive concerning the quarter?
Yeah, glance, I don’t believe so. I feel fact is it is you understand reflective as we have mentioned within the word of marketplace charges. Sadly given our measurement we are not going to steer the ones, however I have no idea Matt if there may be somebody who’d similar to so as to add any further colour?
Yeah Lyndon, Dave Wilson right here. I suppose that our remedy and refining fees in our price of work is pushed through MATSA. It is the place the amount is on this quarter and that is the reason our take price is connected to the benchmark and you will have almost definitely noticed throughout the quarter the Copper benchmark went from 65 and six.5 to 88 and eight.8, in order that’s more likely to imply the shift in TCs and as any person discussed in an previous query, I feel TCs being launched early on this quarter which can drift via our contract resets on a calendar yr foundation.
K, that is all I had. Thank you once more.
Thank you Lyndon.
Thanks. There are not any additional questions presently. I will now hand again to Mr. Harris for final remarks.
Neatly, thank you everybody. I actually admire the questions and the demanding situations. As I mentioned, we stay up for getting round and seeing as lots of you as imaginable within the coming weeks and months.
It is a excitement to clearly have the ability to provide the primary quarterly because the CEO of Sandfire. I am extremely eager about the possible. It is a marathon no longer a dash. We are going to be operating laborious and once more, our purpose is actually to peer how a lot shareholder worth we will be able to extract from what I feel is an overly sexy asset portfolio.
So, thanks once more and feature a excellent day!
That does conclude our convention for nowadays. Thanks for collaborating. You might now disconnect.