June 2020 Quarterly ReportPresentation
30 July 2020
Access this presentation at:https://webcast.boardroom.media/sandfire-resources/20200730/NaNsfr-2020-june or http://www.sandfire.com.au
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This presentation has been prepared by Sandfire Resources Ltd (Sandfire or the Company) and contains information about Sandfire current at the date of this presentation. The presentation is in summary form, has not been independently verified and does not purport to be all inclusive or complete. The Company is not responsible for providing updated information and assumes no responsibility to do so. Recipients should conduct their own investigations and perform their own analysis in order to satisfy themselves as to the accuracy and completeness of the information, statements and opinions contained in this presentation.
This presentation is for information purposes only. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction and may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction. Recipients should inform themselves of the restrictions that apply in their own jurisdiction. A failure to do so may result in a violation of securities laws in such jurisdiction.
This presentation does not constitute investment advice and has been prepared without taking into account the recipient's investment objectives, financial circumstances or particular needs and the opinions and recommendations in this presentation are not intended to represent recommendations of particular investments to particular persons. Recipients should seek professional advice when deciding if an investment is appropriate. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments.
To the fullest extent permitted by law, Sandfire, its related bodies corporate, and each of their officers, employees, agents and advisers expressly disclaim, to the maximum extent permitted by law, all liabilities (however caused, including negligence) in respect of, make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this presentation. No responsibility for any errors or omissions from this presentation arising out of negligence or otherwise is accepted.
Certain statistical and other information included in this presentation is sourced from publicly available third party sources and has not been independently verified.
All figures are expressed in Australian dollars unless otherwise stated.
This presentation should be read in conjunction with the Quarterly Report released today.
This announcement is authorised for market release by Sandfire’s Managing Director and CEO, Karl Simich.
Forward-Looking Statements
This presentation may include forward-looking statements. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Sandfire. There is continuing uncertainty as to the full impact of COVID-19 on Sandfire’s business, the Australian economy, share markets and the economies in which Sandfire conducts business. Given the high degree of uncertainty surrounding the extent and duration of the COVID-19 pandemic, it is not currently possible to assess the full impact of COVID-19 on Sandfire’s business or the price of Sandfire securities. Actual values, results or events may be materially different to those expressed or implied in this presentation. Given these uncertainties, recipients are cautioned not to place reliance on forward-looking statements. Any forward-looking statements in this presentation speak only at the date of issue of this presentation. Subject to any continuing obligations under applicable law and the ASX Listing Rules, Sandfire does not undertake any obligation to update or revise any information or any of the forward-looking statements in this presentation or any changes in events, conditions or circumstances on which any such forward-looking statement is based.
Important Information and Disclaimer
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Competent Person’s Statements
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Exploration Results - Doolgunna
The information in this report that relates to Exploration Results at Doolgunna is based on information compiled by Mr Shannan Bamforth who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Bamforth is a permanent employee of Sandfire and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Bamforth consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Exploration Results – Tshukudu Exploration Project
The information in this presentation that relates to Exploration Results is based on information compiled by Mr Julian Hanna who is a Member of AusIMM. Mr Hanna is a permanent employee of Sandfire and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Hanna consents to the inclusion in the presentation of the matters based on his information in the form and context in which it appears.
Exploration and Resource Targets
Any discussion in relation to the potential quantity and grade of Exploration and Resource Targets is only conceptual in nature. While Sandfire is continuing exploration programs aimed at reporting additional JORC compliant Mineral Resources, there has been insufficient exploration to define mineral resources in addition to the current JORC compliant Mineral Resource inventory and it is uncertain if further exploration will result in the determination of additional JORC compliant Mineral Resources.
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STRATEGIC GROWTH PLAN – CREATING OPPORTUNITY
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Execute delivery
Optimise capital structure
Build a sustainable production profile
Align and empower our people
Accelerate discovery
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DeGrussa Operation
• Record quarterly and annual DeGrussa performance
• Accelerating discovery to extend mine life
Tshukudu Project
• Optimisation of T3 Copper-Silver Project Feasibility Study continues; scoping larger scale production hub concept
• Promising results at A4 and resource drilling well advanced; further target drilling to commence in FY2021
Black Butte Project
• FS progressing to finalisation; EIS and positive ROD received
Corporate
• FY2020 Revenue $657M (unaudited)
• Group cash and deposits $291M (unaudited)
• Impairment of oxide stockpile and regional resources up to $23.6M pre-tax (unaudited)
JUNE 2020 QUARTER HIGHLIGHTS
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Contained copper (t)
Contained gold (oz)
C1 costs (US$/lb)
June 2020 Quarter 19,313 13,541 0.51
FY2020 72,238 42,263 0.72
FY2021 Guidance 67 - 70,000 36 - 40,000 0.90 - 0.95
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Safety, health and wellbeing
• Heightened focus on employee and contractor health and wellbeing during the COVID-19 global pandemic
• Total Recordable Injury Frequency Rate (TRIFR) of 5.8 at Quarter-end (6.1 at March 2020 Quarter-end)
• Principal hazard management – driving continuous improvement in safety leadership, culture and assurance of critical controls
Environment
• Approval of the Tshukudu T3 ESIA by the Botswana Department of Environmental Affairs
Community
• Donation of medical supplies to the Ghanzi Hospital to support the COVID-19 response in the region
HSEC
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DEGRUSSA OPERATION, WESTERN AUSTRALIA
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DeGrussa Operation – June 2020 Quarter Physicals
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Record quarterly production: 19,313t Cu
13,541oz Au contained
53.3% Au recovery
93.0% Cu recovery
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MINING__________________________________________
PROCESSING________________________
SALES_________
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DeGrussa Operation – FY2020 Physicals
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45.9% Au recovery
92.9% Cu recovery
Record annual production:72,238t Cu
42,263oz Au contained
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DeGrussa Operation – FY2020 Production and Costs
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C1US$0.72/lb
Record annual production:72,238t Cu
42,263oz Au contained
C1
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DeGrussa Operation – FY2020 Costs and Capital
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Unit operating costsQ4 FY2020
(US$/lb)FY2020(US$/lb)
Commentary (unaudited)
Mining 0.41 0.42• FY2020 Revenue $657M
• Record quarterly and annual production
• High quarter by-product credits from record gold production (41% above YTD average) and increased gold price (14% above YTD average)
• FY2020 DeGrussa mine development $40M
• FY2020 Monty mine development $40M
• FY2020 Sustaining and strategic capital $8M
• FY2020 depreciation & amortisation $198M (DeGrussa) $201M (Group)
Processing 0.24 0.25
Business services 0.11 0.12
Transport 0.21 0.21
Treatment and refining 0.16 0.17
C1 cost (pre by-product credit) 1.12 1.18
By-product credit (0.61) (0.46)
C1 cost 0.51 0.72
Royalties 0.15 0.14
Production cost 0.66 0.86
Depreciation and amortisation 0.78 0.87
Total production cost 1.44 1.73
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DeGrussa Operation – FY2021 Physicals Guidance
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48% Au recovery
92% Cu recovery
Production guidance:
67-70,000t Cu 36-40,000oz Au
contained
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• C1 unit costs guided to return into LOM average range:
• Lower copper production – 5% lower on lower copper head grade (4.9% to 4.6% Cu)
• Higher cash mining costs – increase in number of stopes at DeGrussa and Monty, reduced average stope size
• Lower by-product credits – on 12% lower gold and 21% lower silver production
• Capital expenditure:
• DeGrussa mine development $39M
• Monty mine development $6M
• Strategic and sustaining capital $11M
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DeGrussa Operation – FY2021 Cost and Capital Guidance
FY2021C1 unit cost guidance:US$0.90-0.95/lb
Capital expenditure
guidance:$56 Million
C1 unit costs guidance based on USD FX 0.70 and gold price of US$1,770/oz; production change based on mid-point of guidance band.
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• Gold originally discovered at Old Highway prior to the DeGrussa and Monty discoveries:
• Synergies with the DeGrussa Tailings Gold Retreatment Project studies
• Part of the initial phase of resource definition drilling is designed to test areas proximal to existing gold mineralisation hosted in discrete quartz veining associated with shearing in sediments
• Mineralisation observed to date occurs in cubic pyrite associated with discrete quartz veining and sericite alteration
• Inferred Mineral Resource, metallurgical testwork and scoping study scheduled for completion by the end of the December 2020 Quarter
DeGrussa Old Highway Resource Definition Drilling
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FY2021 gold resource drilling:
$4 Million
10,148mDefinition drilling completed since
May 2020
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DeGrussa Exploration Area
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June 2020 Quarter:
69,652m AC/RAB drilling
12,375m RC drilling
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• Exploration continuing as a priority along the highly prospective VMS corridor that hosts the DeGrussa and Monty deposits:
• Continuation of major regional AC drilling programs to aid geological interpretation and provide quality geochemical coverage
• RC and DD drilling at Morck Well targeting MLEM geophysical anomaly and to investigate anomalous geochemical results from AC drilling
• Continued first pass gold anomalism identified at Morck Well1
• Advanced AC drilling on the Cheroona Project JV testing the prospective Karalundi sequence
• Extensive MLEM geophysical surveys completed over Enterprise Metals JV; Follow up RC and DD drilling commenced
DeGrussa Exploration
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1 Refer to Auris Minerals Ltd ASX Announcement, dated 17 July 2020, titled ‘Further Significant Gold in Morck Well JV Air Core Drilling’ for more details.
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DeGrussa FY2021 Exploration Strategy
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• DeGrussa exploration strategy:
• Accelerate discovery to extend mine life
• Focus on Mineral System Element Processes for deep targeting
• 22 favourable structural corridors identified in the Sandfire managed tenure
• Basin scale geodynamics review underway
• Rolling out new geophysical technology to allow deeper targeting
• Continue first pass exploration in prospective areas of the Bryah Basin never previously explored for copper
• Targeted eastern states regional exploration programs to continue into FY2021
FY2021 DeGrussa
exploration cost guidance:
$24 Million
Regional exploration
cost guidance:$4 Million
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TSHUKUDU PROJECT, BOTSWANAF
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Tshukudu Project Area
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A4(Resourcedrill out)
A1(Target)
T1 (Target)
Tshukudu Motheo Production Hub
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T3 (OFS)
MOTHEO MINE
• Emerging production hub concept within T3 Expansion Project Area
• Progressing in parallel with Optimised Feasibility Study (OFS) of T3 and Motheo Mine:
• 3.2Mtpa base case for OFS (T3 Pit)
• Scoping operating scale scenarios:
• 5.2Mtpa expansion case (adding A4, maintaining mine life)
• Extending mine life (targets at A1, T1, T2W & T2E, A27 and A13 within ~30km radius of proposed Motheo Mine)
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Tshukudu T3 Copper-Silver Project
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• T3 development a cornerstone to Motheo Production Hub concept:
• Optimised Feasibility Study for the T3 Copper-Silver Project nearing completion
• ESIA approval received from Department of Environmental Affairs
• Mining Licence Application expected to be submitted during the September 2020 Quarter
• Funding scenarios continue to progress in parallel -significant interest from financial institutions
• Early engineering works to commence during the September 2020 Quarter
• Continue to assess and monitor potential impacts of COVID-19 on project execution and timeframe to production
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Tshukudu A4 Dome
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• Discovery progressing towards maiden Mineral Resource
estimate:
• Impact on production hub concept, studies and financing
being considered
• 6 diamond rigs at A4 with high-grade vein hosted copper
intersected in many holes at shallow depth
• A4 is the first potential satellite deposit to be tested, only
8km from the T3 Project
• After A4, drilling is planned to focus on potential for
similar type mineralisation at A1, 20km east of A4
• Additional high priority drilling targets within T3
Expansion Project include T1, T2W & T2E, A27 and A13
FY2021 resource drilling guidance:
$4 Million
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Tshukudu FY2021 Exploration Strategy
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A4 Dome: (MO-A4-035D) 18m @ 3.9% Cu & 124g/t Ag
from 77m (top-cut to 15% Cu) – announced 17 April 2020
• Tshukudu Exploration strategy:
• Targeting high-grade satellite discoveries with potential
to expand the scale of T3 as a production hub
• Preferred targets are near surface high-grade vein
systems (e.g. T3, A4, A1) and extensive NPF contact
deposits
• AEM is very effective at mapping the mine sequence to
~500m depth to identify drill targets (e.g. A4 Dome and
A1 Dome)
• Re-processing of existing AEM data has identified several
new targets within the T3 Expansion Project (~950km2)
• Major AEM survey (>7,500km2) planned to cover other
regional structural zones up to the Namibian border
• Substantial regional RC drilling program has commenced
to test extensive soil and structural anomalies west of T3
FY2021 exploration
cost guidance:$13 Million
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BLACK BUTTE PROJECT, MONTANA USAF
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Black Butte Copper Project Development
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• Advanced, high grade copper resource:
• Environmental Impact Statement (EIS) and Record of
Decision (ROD) issued
• Legal challenge to state permitting process
• Feasibility Study (FS) completing across key areas
• NI 43-101 Mineral Resource estimate for the Johnny Lee
Deposit:
Mineral Resource (100%) MtCu Grade
(%)Contained Cu
(kt)
Measured and Indicated 10.9 2.9 311
Inferred Resource 2.7 3.0 80
• Sandfire’s interest in the Black Butte Copper Project, located in central Montana USA, is held via its 85% interest in
Sandfire Resources America Inc. (TSX-V: SFR). The Mineral Resource excludes the Lowry deposit. Mineral Resource at a
1.0% Cu cut-off grade. Refer to Sandfire’s ASX Announcement dated 30 October 2019, titled, ‘Updated Mineral Resource
Completed for Johnny Lee Deposit, Black Butte Copper Project, USA’ for more details.
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• Record DeGrussa FY2020 production and cost performance
• Growing cash holding and debt free balance sheet positions us for flexibility in project development
• Optimisation of T3 Copper-Silver Project Feasibility Study continuing; scoping production hub concept including A4
• Final EIS and positive ROD issued for Black Butte Copper Project; Feasibility Study progressing to completion
• Active exploration continues targeting the next VMS discovery across the emerging Bryah Basin VMS district
SUMMARY & OUTLOOK
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Contained copper (t)
Contained gold (oz)
C1 costs (US$/lb)
June 2020 Quarter 19,313 13,541 0.51
FY2020 72,238 42,263 0.72
FY2021 Guidance 67 - 70,000 36 - 40,000 0.90 - 0.95
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June 2020 Quarterly ReportPresentation
30 July 2020
Access this presentation at: https://webcast.boardroom.media/sandfire-resources/20200730/NaNsfr-2020-june or http://www.sandfire.com.au
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Level 2, 10 Kings Park Road, West Perth WA 6005 Australia
PO BOX 1495, WEST PERTH WA 6872 AUSTRALIA
+61 8 6430 3800 +61 8 6430 3849 www.sandfire.com.au
Contact Details
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