Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sandfire Resources Ltd (SFRRF, Financial) achieved a 47% increase in group production to 133,500 tonnes, driven by the ramp-up of Motheo and consistent production at MATSA.
- The company reported a 40% increase in underlying EBITDA to $362 million, reflecting strong operational performance and cost control.
- Sandfire Resources Ltd (SFRRF) reduced its net debt to $396 million by year-end, supported by higher production and disciplined cost management.
- The company secured 73% of its stationary electricity requirements from renewables and signed an agreement for a dedicated solar facility at MATSA.
- Sandfire Resources Ltd (SFRRF) achieved a 40% female representation in its leadership team and an 84% employee engagement score.
Negative Points
- Despite strong operational performance, Sandfire Resources Ltd (SFRRF) reported an underlying loss of $5.5 million and a statutory loss of $19.1 million.
- The company's D&A expense increased to $304 million, reflecting the acquisition of MATSA and initial depreciation of Motheo, with further increases expected in FY25.
- No dividend was declared for FY24 as the company prioritized debt repayment and ongoing investment in the business.
- The underlying income tax expense was impacted by the cessation of operations at DeGrussa, limiting the ability to offset tax losses in Australia.
- MATSA's unit costs are expected to increase by 4% to $75 per tonne due to higher stock turnover and increased maintenance costs.
Q & A Highlights
Highlights from Sandfire Resources Ltd (SFRRF) FY 2024 Earnings Call
Q: Can you explain the $31 million in sustaining strategic CapEx, specifically the bottleneck activities to optimize the plant?
A: Brendan Harris (CEO) and Jason Grace (COO) explained that the $31 million includes $6 million for additional concentrate thickening capacity at the backend of the plant. This is to support higher rates of throughput, leveraging the plant's capacity to exceed 5.2 million tonnes per annum.
Q: What is the focus and timeline for exploration at Motheo, particularly the T3 footwall?
A: Brendan Harris (CEO) and Jason Grace (COO) emphasized that the T3 footwall is part of a broader, sophisticated understanding of the Kalahari Copper Belt. Drilling commenced in the second half of FY24, with results expected around mid-FY25.
Q: Can you provide the timing for news flow that supports bringing forward higher-grade metal into FY27?
A: Brendan Harris (CEO) stated that the rescheduling and optimization of pit shells are ongoing. They expect to provide an updated and optimized profile by mid-year, potentially during the half-year or financial results.
Q: What are the assumptions underlying the C1 cost guidance for MATSA, particularly regarding byproduct credits?
A: Jason Grace (COO) explained that higher zinc production in FY25 is driven by processing a higher proportion of polymetallic ore and a 1% increase in zinc recovery. Brendan Harris (CEO) added that operating unit costs are a more reliable metric for internal accountability.
Q: Is the goal still to fully pay off debt before switching to dividends?
A: Brendan Harris (CEO) confirmed that the priority is to de-gear and move towards a net cash position. He emphasized the importance of returning cash that is already on the balance sheet rather than prospective cash.
Q: Are there any significant sequencing issues in production guidance for the next 12 months?
A: Jason Grace (COO) mentioned that production at Motheo is expected to be flat and consistent throughout the year. At MATSA, copper production should be consistent, with zinc production stepping up slightly after Q1.
Q: What is the status of the Sotiel standalone study and thoughts on adding processing capacity in the region?
A: Brendan Harris (CEO) and Jason Grace (COO) discussed that the focus is on extending the known life of MATSA. They are exploring conventional flotation for Sotiel, optimized for its ore body, and are closely monitoring hydrometallurgical processes.
Q: What is the meaningful organic exploration expenditure moving forward, considering the target of a 15-year reserve life at both MATSA and Motheo?
A: Brendan Harris (CEO) and Jason Grace (COO) highlighted that the exploration plan is granular and sophisticated. MATSA's plan involves consistent drilling over several years, while Motheo's spend could ramp up substantially with new discoveries.
Q: What are the plans for Black Butte, and when can we expect an updated feasibility study?
A: Brendan Harris (CEO) and Megan Jansen (CFO) mentioned that $12 million is allocated for drilling and updating the feasibility study. They expect a decision point in 18 months, with updated resource and economic assessments.
Q: Can you provide an update on the balance of the banking credit accounts inside Sandfire?
A: Megan Jansen (CFO) stated that the balance is approximately $300 million as of the end of June, with further disclosures available in the financial statements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
