Earnings call transcript: Sandfire Resources sees strong FY 2025 performance

Sandfire Resources (SFR) reported a robust financial performance for the fiscal year 2025, with unaudited group sales revenue reaching $1.2 billion and underlying EBITDA at $528 million. The company also reduced its net debt by $273 million. According to InvestingPro data, the company maintains a healthy current ratio of 1.19 and a manageable debt-to-equity ratio of 0.43, indicating strong financial stability. Despite production being slightly below full-year guidance, Sandfire’s stock saw a significant surge, with a 44.17% increase, reflecting investor confidence in its operational resilience and strategic outlook. InvestingPro analysis suggests the stock is currently undervalued based on its Fair Value model.

Key Takeaways

• Sandfire Resources achieved $1.2 billion in sales revenue for FY 2025.
• The company reduced net debt by $273 million, with $120 million in Q4 alone.
• Copper equivalent production was 1% below guidance, yet market fundamentals remain positive.
• Stock price surged by 44.17%, indicating strong investor sentiment.
• Future guidance includes projected increases in copper production at key sites.

Company Performance

Sandfire Resources demonstrated strong financial health in FY 2025, despite a slight miss in production targets. The company produced 152,400 tons of copper equivalent, falling just 1% short of its guidance. With a market capitalization of $125.38 million and trailing twelve-month revenue of $583.71 million, this performance was bolstered by strategic initiatives across its diversified assets in Botswana and Spain, alongside a focus on maintaining low-cost operations. For deeper insights into Sandfire’s financial metrics and peer comparison, check out the comprehensive Pro Research Report available on InvestingPro.

Financial Highlights

• Revenue: $1.2 billion for FY 2025
• Underlying EBITDA: $528 million
• Net debt reduction: $273 million
• Copper equivalent production: 152,400 tons, 1% below guidance

Market Reaction

Sandfire Resources’ stock experienced a remarkable surge of 44.17%, closing at $6.43, near its 52-week high. This reflects positive investor sentiment driven by the company’s strong financial performance and strategic outlook, despite minor production shortfalls.

Outlook & Guidance

Looking forward, Sandfire Resources has set a guidance for FY 2026 with projected copper equivalent production of approximately 96,000 tonnes at both Matza and Matteo. Analysts maintain a Strong Buy consensus on the stock, with InvestingPro data showing target prices ranging from $0.55 to $0.76. The company is also exploring solar power options for Matteo and anticipates slight cost increases at A4 due to transportation and handling.

Executive Commentary

CEO Brendan Harris emphasized the company’s focus on operational basics and safety, stating, "We remain focused on the basics and continue to do what we say," and "The safety of our people must always come before production."

Risks and Challenges

• Potential supply chain disruptions due to transportation and handling cost increases.
• Safety concerns with an increased Total Recordable Injury Frequency (TRIF) to 1.7.
• Electricity tariff hikes in Botswana could impact operational costs.
• Market volatility in copper and zinc prices could affect revenue.

Sandfire Resources remains committed to maintaining its operational resilience and strategic focus, with an eye on consistent production and shareholder returns.

Full transcript - Sandfire Resources NL CFD (SFR) Q4 2025:

Conference Moderator: I would now like to hand the conference over to Mr. Brendan Harris, Chief Executive Officer and Managing Director. Please go ahead.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Good morning, everyone, and welcome to our June quarterly call where we provide a preliminary summary of performance for FY 2025 in advance of our full year results on twenty eight August. Our executive team is here with me today for the Q and A, which we’ll get to in good time recognizing we have another call in a few weeks. So before we start, I’d like to acknowledge the traditional custodians of the land on which we stand, the people of the Noongar nation as well as the First Nations peoples of the lands on which Sandfire conducts its business. We pay our respects to their elders and leaders past, present and emerging. And can I say, it was good to visit Mika Thera again last week to meet with the Yaganiniaya?

The importance of these meetings should not be underestimated as authenticity and consistency is important as we strive to rebuild our relationship and deliver on the commitments we’ve made to them. To safety, our group TRIF was 1.7 at the end of the June, a modest but disappointing increase from last year. While our injury frequency remains well below industry benchmarks, we must believe it’s possible to have a workplace that is injury free and that’s why we’re working hard to raise awareness of the need to report and learn from high potential incidents, which is very much aligned with our efforts to create an inclusive culture that values diversity where everyone feels safe to speak up and empowered to stop work when something doesn’t look or feel right. The safety of our people must always come before production. So stepping back and reflecting on the year more broadly, I am particularly proud of our team for the way they’ve navigated a number of significant challenges beyond their control, including record rainfall and a major power outage in Spain and a generational rain event in Botswana to still deliver 152,400 tons of copper equivalent production, which ended the year only 1% below full year guidance.

That I remind you was established in June June and July. What a truly fantastic result all things considered. At Matza, copper equivalent production of 25,100 tonnes signified the strongest quarter for the year bringing total copper equivalent production to 94,100 tonnes across FY 2025. What’s more, we anticipate another robust year at Matza in FY 2026 and expect to achieve copper equivalent production of approximately 96,000 tonnes for a 2% increase year on year. Matteo continues to let its results do the talking, achieving record quarterly copper equivalent production of 16,004 tonnes in Q4 for total copper equivalent production of 58,300 tonnes across FY 2025 and year on year growth of 29%.

This in turning underpinned a 30% increase in sales in Q4 as five cargoes departed Walvis Bay during the period. Having just visited the operation and reviewed our flood recovery program, I can again confirm that we’re well placed to deliver circa 3% growth rate in copper equivalent production at Matteo in FY 2026. And before I move on, I should note that we are moving with the times and have provided production guidance ranges for FY 2026 having listened to external feedback and assessed evolving industry practice. But please don’t worry, we’ll continue to provide single point estimates for our broader operating parameters at the back of our quarterly report as a guideline to help you build your own projections from first principles. As you’d expect, we continue to focus on the things we can control and have enjoyed lower rates of inflation over the last two years when compared with much of the industry.

Consider our preliminary estimates for unit costs at Matasar and Matteo of $78 per ton and $40 per ton respectively across FY 2025 still compare well with guidance we provided as far back as August 2023 of $78 and $41 per tonne. As forewarned however, strength in the euro to U. S. Dollar exchange rate has started to bite at Matza. And while unit costs and this is important are expected to remain well controlled in local currency terms in FY 2026, sustained strength in the exchange rate would create further upward pressure recognizing around 90% of Matza’s costs are euro denominated.

Similarly, at Matteo, our flood recovery program included an increase in low grade material feed in Q4 and the release of working capital, which contributed to a $1 per tonne increase in unit costs across the year relative to revised guidance. Our preliminary analysis indicates that unit costs are likely to increase by further 10% at Matteo in FY 2026 as the A four open pit achieves commercial production and a high proportion of total material movement is expensed importantly with limited cash impact and an increasing contribution of A four material carries additional haulage and handling costs. As a reminder, we will provide our full suite of guidance metrics when we report our full year results. Turning to Black Butte. You will have seen that Sandfire America recently completed its twenty twenty four-twenty twenty five exploration program, where 27.8 kilometers of diamond drilling was undertaken across 76 holes.

The successful program has confirmed the extension of high grade mineralization in the Johnny Lee lower copper zone, which is after all the juice that drives the project’s economics. Sanfra America is expected to complete a new pre feasibility study for the Black Butte project, including a revised mineral resource and well reserve estimate in the December, which will position us to more clearly define the optimal pathway to realize value from the project. Before closing, I should also note that we have transferred accountability for all near mine and regional exploration adjacent, so we can better leverage our strategically valuable operating presence in both the Iberian pyrite and Kalahari copper belt as we seek to bring greater urgency and build momentum in this critically important area. With this change in accountability, Richard Holmes has departed the organization and we want to thank him for establishing the foundations of our exploration program. So bringing this all together, I hope it’s clear to see that we remain focused on the basics and continue to do what we say, while building resilience in our operations and generating plenty of cash.

Our strong finish to the year and strong market fundamentals delivered unaudited group sales revenue of $1,200,000,000 in FY 2025, underlying EBITDA of $528,000,000 and a stunning $273,000,000 reduction in net debt across the year including $120,000,000 in Q4 alone. While we’ve faced some real challenges, this year our talented team, high quality operations, preferred commodity exposure and increasingly strong balance sheet leave us well placed to deliver our simple, effective and proven strategy. With that, let’s go to questions.

Megan, Chief Financial Officer, Sandfire Resources: Thank

Conference Moderator: Your first question comes from Mitch Ryan from Jefferies. Please go ahead.

Mitch Ryan, Analyst, Jefferies: Good morning, Boen and team. My first question just relates to the working capital release in half two FY twenty twenty five, primarily MSAA where you’re treating some of those stockpiles. Just can you quantify the impact of this on the cash flows in the half and then also potentially provide some color on how we should think about that going into FY 2026?

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes. Good one Mitch and thank you. So a couple of things I’ll note and I’m going to pass over to Megan. Obviously, our cash flow was very strong and I think it’s good for Megan to run through that. We sold the Old Highway project obviously in the period, which was additive to cash flow, but it was a very strong period.

We had to perform very well in the fourth quarter. I recall on this conference call circa three months ago, there were a number of suggestions that potentially it was aggressive to retain our guidance and we felt it was achievable and we’re really proud to have got as close as we had. But of course with strong production and then obviously sales, we’ve also managed to sell significant tonnages into what have remained very, very good markets and good pricing. Obviously, that has helped cash flow. The one thing I’d stress as well though is just to remember that it doesn’t all go one way.

So when you look at our fourth quarter, particularly at Matteo with the flood recovery program, the increase in our coarse ore stockpile for future contingency and obviously the release of the lower grade stockpiles that actually has contributed most significantly to the increasing costs in the quarter and why our costs were $1 a ton on average across the full year for guidance. So that it’s important to also understand how that’s playing to the cost side of the equation. But maybe Megan, if you can just run through how you think about the cash waterfall and particularly the strength into Q4 and how that is likely to play out through the early part of this current financial year.

Megan, Chief Financial Officer, Sandfire Resources: Yes. Thanks Brendan. Thanks Mitch. And building upon what Brendan touched on with the cash generation across the business in Q4, it was a very strong quarter. Net debt reduced by $120,000,000 We did have a strong production and sales quarter at Matteo.

So there was an additional shipment and we completed five in the quarter, so some 30% up on previous quarters. And at the same time, Matteo performed very strongly on both the production and the sales front. And so you very much see that in the cash flows. In addition to those operating impacts, there were some, what I would describe more in the one off category. Brendan touched on the 20,000,000 unit sales proceeds from Old Highway, which banked in the quarter.

In addition to that, off the back of settling treatment and refining charge terms for calendar year 2025, which you’d recall, we did that across Q3. So it was reflected in our profit and loss in Q3 and it was reflected in our revised C1 guidance in Q3. We then subsequently finalized the outstanding invoices from the March as well as updated treatment and refining charges. So we would have seen about, let’s call it 15,000,000 to $20,000,000 of cash flow coming through in the quarter that was associated with that. So that all comes together with that $120,000,000 reduction that you’re seeing in the net debt number.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Thank you. Maybe as well, Mitch, if I can just mention and obviously I mentioned I was at Matteo, second three weeks ago and they all blend into one. One thing I can tell you is when I went to the concentrate shed, it was swept clean. As you’d expect at the end of the year, we look to move every piece of material, every ounce or most of concentrate that we can. Now in saying that Mitch, it is important to note that doesn’t mean it’s all sold because we had effectively a fully assembled cargo of concentrate sitting at the port that was actually sold subsequently and we received cash very early in the first weeks of July.

Again, yes, cash flow is very, very strong, but it’s continued nicely into the start of this year.

Mitch Ryan, Analyst, Jefferies: Thank you. And my second question relates there was a $5,000,000 legal settlement at Matteo during the quarter. Can you provide some color on what that relates to?

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes. Look, I’ll pass over to Megan again, but just to be aware that was disclosed in the first half account. So as an adjustment related to land and other matters around and the structure if you like of the land purchase around the Matteo mine site. As you know, we like to own the land that we operate on where we can because it gives us much greater control. And it works better in this case for the farmers as well.

But Megan, anything to add on that?

Megan, Chief Financial Officer, Sandfire Resources: Yes, just to close it out. It did occur in half one, Mitch. You would have seen it coming through as an adjustment to our underlying earnings in the first half. And Brendan’s correctly described that it’s associated with our land acquisition purchases.

Mitch Ryan, Analyst, Jefferies: Okay. Thanks for the reminder. I’ll pass it on. Thank you.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Thanks Mitch. Thanks.

Conference Moderator: Thank you. Your next question comes from Rahul Anand from Morgan Stanley. Please go ahead.

Mitch Ryan, Analyst, Jefferies: Hi. Good morning team. Thanks for the call. My first question was around grades at Matza. So just wanted to basically visit the zinc grades that you’ve had this quarter.

Obviously, they’ve helped in terms of your cost performance. Just wanted to get a gauge on what you’re thinking about those grades to look like in terms of perhaps next year and medium term? I’ll come back with a second. Thanks.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Great. Look, I know Jason looks forward to this question every quarterly and particularly this time of year as you look across the next full year and I know he’s done a whole lot of work. So he can help you understand the sort of trajectory of grades, copper equivalent production across the year sort of first half, second half split and a little bit of a sense of how that’s likely to play out in the near term. Jason?

Mitch Ryan, Analyst, Jefferies: All right.

Jason, Operations Executive, Sandfire Resources: Thanks, Rahul. If you look at it and particularly with reference to Appendix A, if you look at the grade that we had for Q4 FY twenty twenty five, we’ve basically announced that we were we saw 4.3% average zinc grade. Now that’s up from the prior quarter at 3.4%. Now if you look forward into our guidance and our indication for FY ’twenty six, we expect to see an average grade throughout the year at 3.5, so coming down off that Q4. And going back to prior quarters as well, we had advised that we were expecting higher grades to come through in the second half of FY ’twenty five.

Originally, that was due to come through in Q3, but due to the rain events that we had there, that slowed that down and brought through that high grade production from both Magdalena and Aguas Tornitos into Q4. Now looking forward and particularly with reference to that grade profile over FY ’twenty six, I do expect a step down in zinc grades in Q1, and we start to see slightly elevated grades in Q2, Q3 and sort of more along the longer term averages there in Q4. Now particularly with reference to Q2 and Q3, I don’t expect to see the average grades up as high as we’ve seen in Q4 FY 2025.

Mitch Ryan, Analyst, Jefferies: Got it. That’s perfect. And what about the medium term beyond 2026 or too early to talk about that?

Jason, Operations Executive, Sandfire Resources: Look, at this stage, too early to talk about that. If you look at our longer term guidance we provided to the market earlier this year, we’re looking to maintain our copper equivalent production around the levels that we’ve seen in FY 2025 and FY 2026.

Mitch Ryan, Analyst, Jefferies: Got it. That’s perfect. Okay. And the second one is also on grades and maybe while I’ve got you. So obviously, a strong grade for Masayo as well this period at 1.2%.

Obviously, that’s reserve grade for A four, but a bit above T3 reserve grade. Just wanted to understand, were you able to get a bit of material out of A four? Is this particularly just come from T3 and you’ve been able to get higher grades there?

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes. Look and maybe I can help there and then Jason can fill in a few of the dots. Again, having been there literally three weeks ago to see what the team has done in their flood recovery program, it is impressive. They acted swiftly, protected people first and foremost and then really went into understanding their contingencies. You might remember we said again three months ago on this call that the critical element was that Stage two and the acceleration Stage two previously provided us a whole lot of capacity as we were all bound through the fourth quarter.

It was also the case as we said we knew we had a lot of grade in front of us. And that’s not for any other reason than that was the mine plan and it really related to how things evolved in the sequencing as a result of some of these factors. So that was a very good news story. What I can also tell you is that they’re in the final phases of removing the final water from the T3 open pit. And so that would enable us to get access back to Stage one imminently.

And obviously, did have, as we said previously, some high grade sitting in there. But really to the heart of your question is that at T3, we’ve also taken the opportunity whilst Day four was, if you like, delayed because of water inundation that we’ve actually continued to accelerate activity there, particularly as it relates to Stage three. And then beyond that, when you go to A 4, the team has also done a lot of work with water storage facilities, evaporation, planning such that we’ll have sprinklers along operating along all of the haul roads up on the waste piles at A 4 and we’re moving into the call it the evaporation season. And so we expect also in the relatively near term that we’ll regain full access at the A 4 open pit having received limited ore from it to this point. And that will also help as we move through the remainder of the year with Matteo production.

And maybe Jason filling in that, if you can give a sense for how we think that production profile will actually play out across the rest of the year.

Jason, Operations Executive, Sandfire Resources: Yes. Thanks. And building on those themes as well, so if we look at FY 2026, so obviously, we’ve guided an average grade copper grade of 1% copper. If we look at that growth profile quarter on quarter throughout that period, we do expect to see that increase as we progress through the year. Now as Brendan touched on there as well and you alluded to, we do have an average a higher average reserve grade at A four.

So with increasing production levels or increasing ore tonnes from A four coming into the blend, throughout the year, expect to see a steady increase in copper production on the back of that as well, largely driven by higher grades coming out of higher average grades with A four coming into that blend.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: As I mentioned and just if I can also just stress, and I touched on this earlier, we shouldn’t underestimate all the other work that’s been done. One of the first things I noted, I’m sure if you had the chance to visit, you’d see the stock business as well, is the size of the coarse ore stockpile. You might remember around commissioning, we had a lot of lower grade material that really, I guess, dominated that coarse ore stockpile. It’s now substantially larger and it is effectively raw material, crushed raw material, which is mid and high grade. And so that also now provides us with a whole lot more contingency in the supply chain or the processing sequence, particularly if we had another rain event at some point, but also if we had unplanned maintenance in the primary crusher so on and so forth.

So as I said in my introductory remarks, we’ve been focusing on the basics, but we’re also continuing to work hard to build contingency and build resilience in our operations.

Mitch Ryan, Analyst, Jefferies: No, that’s very clear and comprehensive. Thank you, team. I’ll pass it on.

Conference Moderator: Thank you. Your next question comes from Paul Young from Goldman Sachs. Please go ahead.

Rahul Anand, Analyst, Morgan Stanley: Yes. Hi, Brendan, Jason and Megan. Hope you’re well. Brendan, a few questions on the operations and FY 2026 guidance. And just back to Matt’s specifically, he’s looking at the ins and outs on copper head grades and recoveries for 2026 versus 2025, and they’re heading in logically in the right direction, head grade drops recovery drops and vice versa for the other copper circuit, but zinc is going the other way.

So like I. E, zinc head grade is expected to be lower, but we’re expecting a decent jump in zinc recovery. So first question is around what are you doing in the zinc flotation circuit and the rest of the circuit to boost recoveries considering that JASON steps through some variability from quarter to quarter?

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes. Look, and I think Paul, you make a really good point. And Jason will color this in. And obviously, people who were lucky enough to go on the site visit would have also seen a lot of the really, really good work that’s being done in that process circuit right through to the float cells and the management of reagents. And particularly some of the work we’ve got underway, is analyzing real time grade sites coming out of the mills and also grade and specifications, which is as we’re progressively now trialing AI, so machine learning, it’s also helping us to start to remove some of that variability in the way we manage the float cells.

But as you say, Paul, one of the most important things at all times when we’re looking at this quarter to quarter and while we it’s hard because you have to focus on it, we try and step back and look at the bigger picture and how things play out over a year. As you say, is heavily influenced recovery is heavily influenced by the type of ore that we’re actually delivering to the primary crusher. Maybe, Jason?

Jason, Operations Executive, Sandfire Resources: Yes. So there’s two key themes there, Paul. Firstly, Brendan mentioned the geometallurgical characteristics. If you look at our mine plan, particularly at Magdalena and Aguas Tornitis, at Aguas Tornadoes, we’re moving into the main part of the Western Extension ore body, so very metallurgically favorable ore. And at the same time, we’re in good quality ore from a geometallurgical point of view at Magdalena for the bulk of the year.

And then really just building on Brendan’s comments there as well, the remnants or the additional recovery uplift beyond that relates to a lot of the improvement works that we’ve done in FY 2025 and in particular, reagent management and management of our pulp chemistries, which we’ve already demonstrated in the plant has significant upside and benefits there for zinc recoveries.

Rahul Anand, Analyst, Morgan Stanley: Okay. So Jas, it’s more mineralogy and reagents rather than any sort of project sorry, operating setting changes in the zinc circuit specifically?

Jason, Operations Executive, Sandfire Resources: Look, there’s elements of that as well. We’re continuing to optimize all of our control circuits or our control mechanisms in the plant, and that’s mainly around managing that pulp chemistry. So we’ve seen that, that’s critical in terms of maximizing zinc recoveries.

Rahul Anand, Analyst, Morgan Stanley: Okay. Great. And then three

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Sorry, Paul, if I can. Also go back to of the real learnings I think or improvements and sometimes as we say that focus on the basics, so getting right back to basics is critical. One of the things that Rob really instigated with Antonio and Aden over the last twelve to eighteen months is just this habit that wasn’t occurring previously whereby our mine geologists are actually walking the ROM Stockyard with our processing technical team. Because as you know, you’re not actually recovering zinc or copper or what have you, you’re actually recovering Galena, Spharite, Chakka pyrite, etcetera. And you’re also and you’re primarily trying to make sure you suppress pyrite.

So that it sounds trite, but it’s been a really important part of having a better understanding on a almost daily and weekly basis as to what’s going to present, what mineralogy is going to present into the mill and then as Jason said reacting accordingly.

Rahul Anand, Analyst, Morgan Stanley: Yes. Okay, great. And then switching to Tayo, Brennan. And again, just on the mill and just looking at the guide of 5,600,000 tonnes throughput. I mean the mill is performing really well.

You had a good year in FY 2025, but there you have one quarter where you ran above 5,600,000 and the other three quarters you didn’t because of weather maintenance and others. But just wanted to explore how conservative the 5.6% is? Like is it just based on the typical 92% utilization? Is it reflective of softer ore coming from A four? Just about I just wanted to hear the confidence about hitting the 5.6% and what buffer is sort being built into the guidance?

Or is it everything has to go right to hit that?

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Look, so in very simple terms, and Jason can kick me under the table if he likes, we, in many respects, are constraining it at 5.6%. And I’m not suggesting significantly,

Daniel Morgan, Analyst, Baron Joey: but

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: at the margin. And the reason being is at the moment, we don’t have the reserves or resource life in front of us that would really encourage us to run at a faster rate. Now, of course, the mine is still young. The processing circuit is still young. And so there’s still a lot to do for us to understand indeed what the true potential is.

And one of the things we’ve said is this debottlenecking at the back end of the plant will just give us some extra contingency depending on the grade that presents to the mill and making sure that we can, if you like, optimize performance for all types. But again, I think our view would be and you’ve seen it, we can run it at rates that certainly exceed that throughput target. We haven’t sought to really push it hard continually. Ore hardness has played a role, it doesn’t seem at this stage. We’re seeing a little bit of harder ore.

A four will be interesting, but not materially so. So I think at the moment, we think that 5.6 is a is just a good optimal rate to run this piece of kit at also in the context, as I mentioned, of the tonnes that we have in front of us in terms of reserve and resource loss.

Jason, Operations Executive, Sandfire Resources: Building on that, if you look at last quarter, we ran at about a 5,400,000 tonne per annum rate. From our point of view, we did guide towards that back at the last quarterly. So we did expect to have lower throughput rates coming into Q4 and that was on the back of a major planned shutdown. We took that shutdown in April and that was for a period of five days. And then going back beyond that, obviously, we had weather impacts in Q3.

We did 5,800,000 tonnes roughly there annualized rate in Q2. And then prior to that, we were really still in that process of ramping up to the full expanded throughput rate. So from where I sit, not quite as confident as Brendan conveyed, but from my point of view, I think we’ve got a very robust plan at 5.6%. The debottlenecking works, it gives us the optionality to be able to maintain that rate, right, even with higher grades. That gives us a

Karn Peaker, Analyst, RBC: lot of certainty.

Rahul Anand, Analyst, Morgan Stanley: No, that’s good. Thanks, guys.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Thanks, Paul.

Conference Moderator: Thank you. Your next question comes from Daniel Morgan from Baron Joey. Please go ahead.

Daniel Morgan, Analyst, Baron Joey: Hi, Brennan, Jason, Megan and team. Questions just relate to resilience of the plan in the next twelve months. Now obviously in FY 2025, you had weather and power external pressures on your business. Can you just maybe talk about what resilience you have or what planning you have if indeed you had any repeat of these sort of issues? So Spanish power unreliability or what if there isn’t an Anandash?

Can you just remind us on the wet season when it arrives and what happens if you have a really bad one again? What planning has gone into that? Thank you.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes. Look, first and foremost, I’d rather we didn’t have another one in February event next year or this year. And that would probably be because if nothing else, it would prove it’s not a one in two hundred year event. Now in saying that, the team has done an enormous amount of work. So we’re talking Matteo specifically on drainage and I reviewed all of that when I was there.

We’ve learned a lot and that’s not to say that the sorry, should say the initial planning and design was not good. But this was a rain event the likes of no one in the region, the farmers, etcetera, who have been there for generations recall. And again, as we’ve said, because of the very flat topography, you actually get sheet water rather than running water. And understanding how that moves, it’s very hard to predict until you see it. But again, the drainage that’s been put in place, the extra bonding and other, if you like, measures, we think put us in a very good place.

We’ve also built additional water storage capacity that is assisting us. So for all intents and purposes, we think that places us very well. As I mentioned, we’ve also got a substantially larger coarse ore stockpile. One of the challenges for us is going to be working hard to maintain that because that gives us good contingency whether that be for a rain event or indeed another issue in perhaps the primary crusher, one of your key risk areas. That’s obviously very pleasing.

And of course, we’re not far away from the next lift on the Tailings Dam facility, which turns that into one very large cell, which again is part of the longer term planning. We think that we’re very well placed. As I mentioned as well, we didn’t rest on our laurels. So whilst all of that work was going on with regards to flood recovery program, the team actually rather than parking up equipment, we moved equipment back to T3 and we accelerated the development of the pit shells, which will give us additional contingency. One of the things that Jason and I are talking about is also thinking through at the margin how we can manage the if you like the annual production cycle within those shells to ensure that we have material exposed through what are the weather months that is higher if you like in the sequence rather than in the base of Stage one and the degree to which we can do that to again mitigate risk, which is how things played out this year.

So look, think it’s fair to say you can’t be prepared for everything. And we’re not wanting to suggest that. But we do believe that the way we’re working through these issues, it is very much consistent with the first pillar of our strategy, which is right first and foremost in light of aiming to be safe, consistent and predictable. And we think, again, everything we’ve done, the measures that have been taken and the results that we’re delivering are starting to prove indeed that Matteo is well placed to do just that. And as Jason always said to me, is no doubt that a relatively shallow open cut mine always gives you a degree more flexibility and capacity to respond an underground complex.

So I think that’s for Matteo. Then as we said for Matza, remember we’ve highlighted that we’re in San Pedro, we’re in Olivo, we’ve been opening additional mining fronts. We do have higher stope turnover, but we’ve got many more phases that are open and we’ll continue to work very hard at that. So in some respects, Jason has often said to me even before the major floods and then the wettest winter on record at Matza that the riskier year in the mine plan always felt in both mines to be FY 2025. It’s not to say we don’t carry risk, but the mine plans do feel as though they’ve got a degree more resilience as we go into FY 2026.

But we’re not getting complacent and what’s often said that mining has a habit of biting you in the backside. So we’re really working hard to ensure that we don’t have any hubris and we remain humble and just focus as I said right at the intro focused on those basics.

Daniel Morgan, Analyst, Baron Joey: And just maybe expanding on that the power resilience issue, have you had more power variability experienced at the site or frequency issues or anything of that nature? Or is the power grid returned to normal from your perspective?

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: I think, look, Matt, no, we haven’t. I mean, I always look back and say, it reminds me as an old South Australian Adelaide boy, so to speak. But again, the incident remind me very much of when they lost the interconnector. These things can drive pretty swift action. I haven’t seen the latest weekly, if you like, statistics, but we were starting to see a higher proportion of baseload versus call it variable renewables.

In the grid, there’s sort of interesting narrative coming out of Spain in terms of the main driver of the outage itself. I’ll leave you to think why that is, but it does seem to us as though there is some, if you like, linkage to that significant increase in variable renewables at the time. And so again, we feel like there’s been fairly swift action to address that as has been the case, as I mentioned, in places like Australia when similar events have occurred. Then if we looked at Botswana, we think the BPC has done a tremendous job with government to secure additional power whilst they work through maintenance issues within their fleet. And indeed, we’ve obviously been a beneficiary of that and we are paying for it.

You’ll see coming in our numbers, we talk about roughly $1 a ton increase in cost of Matteo as a result of higher power tariffs. Personally, I never like higher cost, but I think that’s a good thing. I’d rather see higher tariffs putting BPC in a better position to complete the necessary maintenance works. As a good corporate citizen, we’re happy to contribute. We are accelerating and have been accelerating even before this time the work around a dedicated solar facility for Matteo.

Not only do we think that’s the right thing to do if we can make the economics work, it also provides us with an additional level of contingency. And of course, with the power tariffs rising, it only helps if you like make that case. And the last thing is and again, I think the team did an excellent job here is we still have the generators in place for the original project at Matteo. And in addition to that, we obviously have generation backup generation for the camp. And I’ve mentioned this before, but there’s a lot of work that’s continuing and ongoing to make sure that in the event that we did suffer power outages or constraint in supply in Botswana that we can actually reduce our demand off the grid through using some of that, if you like, generation capacity of our own.

And then as I said, if we can bring some solar capacity in that will only put us in even better position. So Dan, I hope that gives you a good feel for the sorts of things we’re thinking about.

Daniel Morgan, Analyst, Baron Joey: Yes. Thank you very much, Brendan and Tim.

Conference Moderator: Thank you. Your next question comes from Ben Lyons from Jarden. Please go ahead.

Ben Lyons, Analyst, Jarden: Good morning, Brendan. Hope you enjoyed your time in Botswana. Just a question on treatment charges. Obviously, there’s plenty going on in concentrate markets at the moment, resulting in a collapse in both copper and zinc treatment charges and persistent negative spot TCRCs in copper in particular. And I can see that starting to come through in the breakdown of the unit costs.

Just wondering if you can possibly update us on your commercial offtake arrangements at both of the assets. I’m aware of the loss of mine offtake at Matza, but just whether you’re maximizing the economics of the current industry dynamics. Thank you.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes. Look, I’ll pass to Megan. We’ve also got Dave Wilson here, of course, Head of IR, but also for Essence, he’s also Head of Commercial. So he actually manages this book with the marketing team. Just at the outset, we’re fairly open at Matteo Steel.

Megan will provide you the detail. As you said, the traffic contracts, think, well known by everyone. The rates in the industry, they’re good today, if you’re a minor. I still have reservations as to how that plays out over the longer term. But as you’d imagine, Ben, we’re very much focused on ensuring that our shareholders are benefiting from these industry dynamics, whilst also ensuring that we work with the right customers that help build the brand of the Matteo concentrate for the longer term.

Megan?

Megan, Chief Financial Officer, Sandfire Resources: Hi, Ben. And building further on Brendan’s opening in relation to Matteo, what you’ll see coming through in the Q4 results in the data tables at the back end in particular, you’ll see some of the benefit coming through in terms of the lower treatment charges that we have been securing for Matteo. And without kind of getting into specifics on each of the contracts, the rates we’re seeing sort of range between negative sort of 10s and low few dollar treatment charges. And the balance is always trying to obtain the benefit of where the market currently is at, where that spot pricing is currently at. But at the same time, there’s other key commercial terms that the team seeks to achieve.

And Brendan touched on also building up that customer base as we build the Matteo brand. So you can see that benefit coming through in the quarter. For Matza, as you know, we have a life of mine offtake. So the treatment charges follow the calendar year benchmark. We did include reasonably comprehensive updates in our March report in terms of where those treatment charges had landed on both the copper and the zinc.

And that’s now fully baked into the cost that you can see the C1 cost and also the cash flows to thirty June.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Thanks, Megan. I think it’s fair to say Ben that we don’t like interest in the Matteo concentrates is probably the long and the short of it. So it’s just how do we balance those various factors. But yes, I think we’re certainly seeing what I’d see is the sorts of outcomes I’d like to see balancing those relative factors.

Ben Lyons, Analyst, Jarden: Okay. Thank you very much.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Thanks, Ben.

Conference Moderator: Thank you. Your next question comes from Karn Peaker from RBC. Please go ahead.

Karn Peaker, Analyst, RBC: Good day, Brendan, Megan, Jason, David and team. Congrats on the strong quarter and year. A few questions on Matteo. The first one is on the dewatering delay at A four. Just wanted to check if this is solely due to the recent rain event?

Or have you encountered any hydrological or hydrological differences than initially expected? And then given the delay, are you still expecting A four to make up 30% to 40% of the blend in the second half? And I’ll circle back on the cost question. Thanks.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes. Good. And look, I’ll ask Jason to, as you said before, color this in. And I think I just continue to refer people to those back tables where we provide quite a lot of information to supplement, if you like, the formal guidance that we’re providing. And as I mentioned, there’s the range, but you’ll notice that the back tables are the midpoint for the key numbers.

So and intentionally so with a range of about plus or minus 5%. So a couple of things. You might have heard, Karim, that I mentioned that we’ve really gone back and focused on dewatering T3 and continuing to work on the further stage development of the mine, so Stage one and then into the development of Stage three. Now the critical thing with that is this is a generational rain event that recharged the aquifer. And as a result of that, as we moved and refocused pumping etcetera on T3, what we found is unsurprisingly having regained access, we received a level of inflow recharge back into A four.

And it’s been well managed. I should note just for everyone’s information, it is remarkable the degree to which we’ve seen the pit walls hold up through this incident. We’re seeing very, very good control there and no real degradation, which is fantastic in both of the mines. So as I mentioned, we were when I was there three weeks ago, we were days away from completing final dewatering of Stage one and then the pumping and all of the other elements I talked to will get back in earnest into A four. And it’s not a significant amount of water, but the pit is quite shallow and broad.

So it just takes a bit of time. And as a result of that, we are confident that we’ll get back in there and extract those higher grade tonnes as we’ve described. Just to be very clear, we’re not seeing anything that suggests the hydrogeological nature of the ore bodies has changed in any way. In fact, prior to the rain event, we were starting to see that as we got down into A 4, it was proving to be drier. So initially, we thought there was potentially water make.

But what we found was that was very much tied to the Calgary layer. As we got down below that, we found that A 4 was actually quite dry. And we are now seeing the kind of depression as the water is the watershed is moving. And as obviously our pumping has been underway, we’re starting to see that water ingress and recharge coming back into pit really slow. So again, things

Jason, Operations Executive, Sandfire Resources: are playing out as we’d anticipate. Maybe Jason, some of the specifics around timing. Yes. So really the only thing to add there as well. So we are dealing with the water and we’re progressing with mining.

What we’ve done with our mine plan for A four for this year to take that into account is ineffectively slowed down our vertical rates of advance. So when you’re following the water table down, it not so much not always affects mine production rate, but it does typically impact on those vertical rates of advance. So we’ve slowed those down in the mine plan that we’ve achieved going into FY 2026. And I touched on that before that we do see the percentage of A four in the blend increase significantly, particularly in Q3, but then beyond that, Q4 stepping up once again. So and that builds up to around about 30 or just below 30% of our total blend during those periods, particularly in Q4.

So we expect to see higher grades then. And in particular, going beyond copper, we know that A four is characterized by higher silver grades typically than T3. So we expect to see higher silver production rates at the back end of the year. And really just building on the only thing I would add to Brendan’s comments around dewatering is in essence, we had set up a four to be able to do the majority of our dewatering through basically a ring of dewatering bores around the pit. And prior to mining, we had dewatered and brought down that water table through about a year’s worth of pumping.

So what we’ve seen is a lot of that dewatering that we’ve done, the water table is going back up to its prior levels and recharged very quickly. And what we’re doing now is we’ve put additional dewatering boards in around the pit to increase the amount that we can dewater outside of the production areas and also using the significantly upgraded pumping capacity in pit using a sump systems that we bought and invested in during the rain event and in responding to this generational rain event earlier in the year. So our overall capacity to be able to drop that water table is significantly higher than it was pre the rain event.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes. And I think that’s the key point, Kyle. So we’re very well placed. We just shifted the focus to T3. That was the right thing to do.

And now that dewatering focus post additional recharge, again, the teams when I was there very confident and you could see it very clearly as to the various measures they had in place to achieve the planned outcome. So a lot of good work and a lot of good innovation and thinking by the team.

Karn Peaker, Analyst, RBC: Sure. Thank you. Very detailed. And then the second one on material costs, I understand you’re going to give a bit more detail around FY 2026 cost guidance. But and you’ve called out higher costs at A four and also higher electricity costs.

But just wondering what T3 minuteing costs are achieving. Have you seen an increase in T3 minuteing costs? And how are they tracking in terms of the DSF?

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: T3 has gone very well. Yes, I think T3 has gone very well. I’d take you back to the comment I made. If you look at our costs in the context of the guidance we provided two years I think our cost performance has been as good as anyone’s. Matteo’s as we know has delivered everything we could have asked and more in almost every respect.

If you look at A 4, the reality is no matter what we would like, it’s eight kilometers away. And so it has high transportation costs. So that’s haulage costs. It also has some rehandling costs. So that’s why we have called those out.

And that’s because we do have some direct ore deliveries from the pit into the ROM Stockyard at the processing facility. But we also do have some double handling because the initial work which has been confirmed is that there is a value benefit in using some smaller trucks to actually transport some of that ore. So all of that plays into the fact that we see slightly higher costs coming out of A four. Of course, I should note you get high grade with that. So let’s not forget it.

But yes, it is unfortunately, it’s an inevitability.

Karn Peaker, Analyst, RBC: Sure. Thank you very much. Thank

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: you.

Conference Moderator: Thank you. Your next question comes from Kate McCutcheon from Citi. Please go ahead.

Kate McCutcheon, Analyst, Citi: Hi, good morning Brendan and Megan. I have a very exciting question about tax. So you noted 35%

Megan, Chief Financial Officer, Sandfire Resources: to 38% effective rate for FY 2025.

Kate McCutcheon, Analyst, Citi: Is there any color you can provide about how to think about that based on your FY 2026 budget?

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes, great. And I know Jason would like to take the tax question, but I will hand this one to Megan.

Megan, Chief Financial Officer, Sandfire Resources: Thank you, Kate. I have been very much looking forward to a question on tax today. Hope you’re well. And maybe just there are a number of variables as we’ve really attempted to set out in the report that do go into our effective tax rate. The range provided at this stage, we’re still working through finalizing our financial year 2025 accounts.

So it is preliminary and the auditors are working through their work. So I want to sort of caution in that regard. Looking forward into FY 2026, we’ll still have the same deltas in terms of the impacts coming through from spend in Australia. That does have an impact on the effective tax rate as well as the variability that plays out in the Botswana tax rate. And so we attempted to include some additional disclosure in the appendix to the report, but effectively that runs off a sliding scale.

And effectively, will vary sort of over the life of the mine linked to the profitability effectively, but in tax terms. So I’m not going to I’m not wanting to put specific numbers out there for FY 2026 at this time. I think the appropriate way to approach it is when we provide more fulsome guidance for FY 2026 that we can provide an updated range on the tax at that time.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: And Megan correct me here, but just to help a little more for people familiar with the Australian way of treating these things is it’s not unlike accelerated depreciation. So in the sense that in some respects you have a capital charge, an ongoing capital charge, which you do get a benefit for as an offset against profitability and how that plays out. So obviously, as some of our larger project spend is coming off, you’ve got less deductibility and so you move up the sliding scale, particularly with strong pricing as we’re seeing and obviously strong margins.

Megan, Chief Financial Officer, Sandfire Resources: Yes, that’s right.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: That’s broad. Very simplistically, that’s one way to think about it.

Megan, Chief Financial Officer, Sandfire Resources: That’s one sort of one of the main kind of components that does impact the rate year on year for Botwana. So it’s framed as accelerated depreciation or accelerated capital deduction. I think the nuance with the Botswana corporate tax rate is that sliding scale, Kate. So there’s a minimum 22% rate that has a sort of an upper end of 55%. And that rate is determined with reference to what is effectively a tax profitability calculation that does take into account this capital investment in the period that Brendan was alluding to.

There’s a lot of moving parts.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes. Hopefully, that Got helps,

Kate McCutcheon, Analyst, Citi: it. And then secondly, I guess, Street is probably looking at Sandfire being net cash within the next twelve months. Can you just remind me on the franking credits? I remember there’s some that can be

Conference Moderator: used from the Degroffa, Dave.

Megan, Chief Financial Officer, Sandfire Resources: Yes, absolutely. So we’ve got in the range of $260,000,000, Kate, of of franking credits available to us generated during the De Grasse days off the back of the strong profits there. And in terms of moving towards that net cash position, that’s obviously something you can see where we’re approaching. We’ve previously spoken to normal quarterly reduction of 50,000,000 to $60,000,000 per quarter or thereabouts. But obviously, that’s heavily impacted by pricing.

And you can sort of work through the math to have a good sense of when you think we’re probably going to hit that milestone.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: And just on that, Megan, the franking grossed up, that number is a grossed up

Megan, Chief Financial Officer, Sandfire Resources: number. Yes.

Kate McCutcheon, Analyst, Citi: That’s right. Yes. Okay.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Thank you, Kate.

Conference Moderator: Got it. Thank you. Thank you. Your next question comes from Ben Wood from UBS. Please go ahead.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources0: Hi, Brendan, Jason, Megan and team. Congratulations on the result again. I’ll make this one quick, but just with net debt now just over $100,000,000 and in a very different financial position to a year ago. I just would like to understand how capital prioritization has evolved internally from a growth perspective. So sort of talking about projects specifically at Matza and Matteo rather than Black Butte.

But just hoping to get more of an idea about how the company is thinking about some higher level initiatives sort of answer what’s next at those two assets beyond the risk mitigation you mentioned before?

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Yes. So thanks, Ben. Good question. And look, I’m going to leave you a little bit on the hook with a bit of a teaser because we’ve said that with our full year results, we’ll provide a little bit more clarity around our capital management strategy. In saying that, I don’t think you should expect rocket science because the best way I know to think about how you manage your capital and I.

E. Be disciplined is actually to look at it through a fairly simple lens. So and that’s what we do, right? So we focus on firstly optimizing our operations, building that consistency and resilience. So if you like, we optimize free cash flow generation.

We then think about it pretty clearly. We’ve got to invest in the ongoing sustaining capital required to again help support almost as a continuum that safe consistent predictable production. And then for us, there’s obviously a necessity to continue investing that, call it, near mine within the pit shell exploration as we seek to deliver that fifteen years of reserves within three to five years. So that’s very much, if you like, the first call on capital. And then once we look beyond that, it’s really discretionary as to how we allocate it and everything should compete.

And that shareholder dividends, share buybacks and investments to grow our business. But we’ll always look at it through a very simple lens and that is to maximize total shareholder returns. We’re acutely aware that there have been a number of companies in our industry historically that have actually grown market capitalization, I. E. Perception of value often through buy and write strategies, but there’s no actual value creation coming out the other side.

Our focus is to work very hard through a disciplined lens to deliver growth in TSR. And if that means remaining solely focused on our existing assets and returning capital to shareholders in the most efficient way, we’ll be very happy to do that. So no real change in that Ben, but a really good question and thank you for it.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources0: Thanks, Ben.

Conference Moderator: Thank you. There are no further questions at this time. I’ll now hand back to Mr. Harris for closing remarks.

Brendan Harris, Chief Executive Officer and Managing Director, Sandfire Resources: Look, thanks again. We really do appreciate your interest. Excellent questions. I’m sure we’ll have a good chance over the coming weeks, particularly we’ll speak to you again in four weeks to dig into some of the detail even more so knowing that you’ll have a lot more information with our detailed financial accounts. Look, unashamedly, we’re really proud of the last twelve months.

It’s not been easy. As we’ve said, some really significant challenges that were beyond the team’s control, they’re down together and I think delivered excellent set of operating results. And we do appreciate the feedback. As I’ve mentioned, it’s really important for us to listen, to learn and remain humble and that’s what we’ll continue to do. And we look forward to, as I mentioned, speaking with you again in four weeks’ time if we don’t see some of you beforehand.

Take care and we’ll speak then. Thank you.

Conference Moderator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

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