Sandfire Resources NL (ASX:SFR) has recorded its best-ever full-year financial performance, recording $171.6 million profit after tax in FY21 and a full-year dividend payout of 34 cents per share.
That represented a 132% increase on the 2020 financial year, driven by a strong copper price and “outstanding” operational performance, giving Sandfire a strong platform for its next phase of global growth.
Sandfire recorded sales revenue of $813 million, up 24% on the year prior, and sold 65,689 tonnes of copper and 37,394 ounces of gold.
“Standout” result
Sandfire managing director Karl Simich said the FY21 results were a testament to “a standout year of delivery, achievement and growth”.
“Another disciplined and focused performance at our high-margin DeGrussa Operations in Western Australia allowed us to reap the full benefits of a rising copper price, which hit decade-long highs during the year and was reflected in record sales revenue of $813 million,” he said.
“That, in turn, flowed through to surging cash flow from operations and a remarkable EBITDA contribution from DeGrussa of $549.8 million.
“The incredible performance of our WA operations allowed us to reward our shareholders by declaring a record final dividend of 26 cents per share, taking the full-year payout to 34 cents, an increase of nearly 80% on FY2020’s dividend.
“Our year-end group cash position almost doubled to $573.7 million, after once again making substantial investments in exploration and our future growth pipeline during the year.
“Our strong cash position and debt-free balance sheet represent a fantastic springboard for Sandfire as we move ahead with the execution of our strategic growth plan, having significantly expanded the depth and capability of our organisation and senior leadership team during the year and embarked on the development of a major new copper mine at Motheo in Botswana.”
DeGrussa operations
Sandfire produced 70,845 tonnes of contained copper and 39,459 ounces of contained gold at direct production costs of US$0.82/lb.
It has completed resource drilling at the Old Highway gold prospect, with studies to continue on transition to gold production at DeGrussa leveraging existing infrastructure.
“DeGrussa has been delivering some exceptional results, and we are looking forward to announcing a maiden JORC mineral resource later this year in conjunction with a Feasibility Study on future gold production,” Simich said.
“Exploration is also underway within an extended search space targeting new volcanogenic massive sulphide (VMS) copper-gold discoveries at depth.”
Sandfire has provided guidance for DeGrussa for the 2022 financial year, forecasting 64-68,000 tonnes of contained copper and 30-34,000 ounces of contained gold at direct production costs of up to US$1.10/lb.
“This will ensure we can continue to take full advantage of the strong copper price environment, with no significant tailing off or ramp-down as is typically seen at the end of the life of many mines,” Simich added.
Motheo mine in Botswana
Forming a significant part of Sandfire’s strategic plan is the new Motheo copper mine in Botswana.
The company secured a mining licence for the mine in early July, with Sandfire now mobilising additional personnel to the site to commence construction of the process plant and other infrastructure, while orders have already been placed for all key process equipment and long-lead items.
In late July Sandfire released a resource update for the mine, with the satellite A4 copper-silver deposit containing about 134,000 tonnes of copper and 6.6 million ounces of silver at the indicated and inferred level - representing a 34% increase in contained copper compared with the maiden inferred only estimate announced in December 2020.
Simich said the mine had “exceptional exploration upside” within dominant ground-holding in Botswana and Namibia, with high priority targets in the Motheo expansion project to be drilled in FY2022.
“We are looking forward to the completion of a maiden ore reserve for the A4 satellite, which will underpin a pre-feasibility study and our near-term pathway to expand to a 5.2Mtpa hub concept,” he said.
Looking ahead
Simich said Sandfire was confident of a bumper FY22, with a $50 million exploration budget in place.
“On the exploration front, we are ramping up our efforts globally, with $16 million allocated to our ‘dual-track’ copper and gold exploration strategy in the Doolgunna Region of WA, an increased $14 million budget allocated to Eastern Australia and $19 million allocated to a greatly expanded exploration push across the Kalahari Copper Belt in Botswana and Namibia,” he said.
“On other fronts, we are progressing a very encouraging near-mine exploration program at the Black Butte copper project in Montana, continuing to enhance the Black Butte feasibility study against the backdrop of improved copper prices and maintaining a very focused business development program.
“As the world continues to embrace multiple strategies to decarbonise and switch to green energy solutions, demand for copper is widely expected to grow exponentially – with some commentators even predicting a new copper super-cycle.
“With a strong production base, a robust balance sheet and a world-class team of mining and exploration professionals driving the execution of its growth strategy, we are well placed to capitalise on this environment.”
- Daniel Paproth