Sandfire Resources Limited

Thank you for standing by and welcome to the Sandfire Resources 2021 September quarterly update. All participants are in a listen only mode. There'll be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Ben Crowley, Head of Investor Relations. Please go ahead.

Good morning, good afternoon everyone. Thank you for joining us today and welcome to Sandfire's conference call for the September quarter. My name is Ben Crowley. I'm the Head of Investor Relations here. With me today, we have Carl Simich, our MD and CEO, Matt Fitzgerald, our Chief Financial Officer, Jason Grace, our Chief Operating Officer, and Julian Hanna, Director of Growth for Botswana. Carl will give us some introductory comments and then we'll hand over to Jason and Matt who will run us through the quarterly. So with that, Carl, over to you.

Thanks very much, Ben, and welcome everyone to what is, in my view, the most significant quarter for SANFAR probably since the discovery of the GRUSA. And I look forward to updating you at a very high level on those strategic initiatives that we have been able to bed down as we're going forward. So it really is a delight to be able to present in this September quarter not only the results of the quarter but those strategic moves that we have made as an organisation. I draw your attention to the purpose of this business and we are here to create value through opportunity. Our five key strategic imperatives are to execute delivery, build a sustainable production profile, accelerate discovery, ensure our people are aligned and empowered, and also to optimise our capital strategy and to ensure that we're engaging and disseminating the information regarding our business to our wider key stakeholders. With respect to executing delivery, Degrasse and Monty continue to perform. Every quarter they do it, they continue to do that. With respect to Mateo, not only have we completed the definitive feasibility study for T3, but we've also released the scoping study and pre-feasibility study for A4 and announced the expansion of those operations. And that is part of executing delivery as well as continuing to work through our gold assessment up at the greater Dugana region and in and around seeing if there is an opportunity for an ongoing gold operation after the current closure of the Degrasse and Monte Copper operations. In terms of building a sustainable production profile with the announcement of the transaction to acquire a wonderful asset in the Maxa complex, that is absolutely critical in terms of us building this sustainable production profile as per our strategy. And well and truly, Samphire will be looking to achieve above 150,000 tonnes of copper production per annum with the completion of the Maxa transaction. and actually very much closer to an annual production profile of close to 200,000 tonnes of copper per annum at very reasonable and very, relatively speaking, low operating cost structures. But what is important about that, a couple of key elements. One is we are absolutely and utterly focused on building and putting into our portfolio quality assets. I think the assets that we are assembling both in what's come out of Degrasse, Monte, what is coming to bear in Botswana and also with respect to Namibia, what we're acquiring in Mesa in Spain and the opportunity that is before us also in the US and to build on is amassing quality projects in this portfolio for the long term for many decades to come. So I think these opportunities are wonderful. And as we also go through the evolution of our strategic plan, which is a living, breathing a beast, we will find that we modify that and our production target profiles will be closer to 200,000 tonnes of copper per annum as we complete the MATSA transaction and we will look in the next five years to be at a production profile of closer to over 300,000 tonnes of copper per annum, a production profile over those three to five year period and that will be our internal objective. With respect to accelerating discovery, we continue to be moving forward on many, many fronts in Western Australia, Eastern Australia, in Botswana. We are also exploring in the US with interesting results. And as well as once the MATSA acquisition is completed, we will be undertaking exploration there as well on a number of fronts on some excellent targets. We presently have 14 drill rigs turning at the moment. and we're very, very excited about the opportunities that will come to bear. Julie and Hannah will be updating you a little bit today on what's happening in Botswana, but it's needless to say from our perspective, it is an extraordinarily exciting province with huge opportunity that has just not been explored. It is absolutely critical as we embark upon the strategic push is that we ensure all of our people all over the world are aligned with our business model that understand where we're coming from, they understand the culture that we're building in this business and that the values are all aligned and that is absolutely critical to have the business to perform in all these multiple jurisdictions and to deliver what will be those targets. Ensuring our people do have the capacity, they do have the resources, and have the support to ensure that they complete the targeted objectives. So that is something we continue to work on and improve consistently. And I'm very, very happy, in fact, with the capabilities that we are building on a global basis, which is really excellent. And ensuring that we can actually commercially deal with this is to have an appropriate balance and optimise our capital structure, understanding the balance between shareholders' returns, leveraging the balance sheet, utilising equity and debt in appropriate forms for the respective activities and strategy that we have and hopefully what we have been executing over the last little while in terms of Working our balance sheet is the first time in a long time that we've got to flex a little bit of that balance sheet. And we're very happy with the transactions that we're undertaking and how we are funding those, ultimately with the objective to maximising that value and that return to our shareholders. and ensuring that through this process we are able to disseminate that information to all of our stakeholders and clearly our shareholders and analysts and regulators in terms of what we are doing. So we're really, really, really excited about where we are at the moment at a very, very high level, highlights for the quarter. totally and right on budget production profile in terms of copper and gold for the quarters. We're very happy with that. We maintain our guidance as we sit here today around the middle of expectations, around the middle of copper production, the high end of gold production, and also still... Even though the quarter is a little bit up, still within that $1 to $1.10. And probably as we see it at the moment on the high end of C1 costs for the year end is our expectations. But once again, an extraordinary asset that continues to deliver fantastically ever since the first day we put the first tonne through the mill at Degrassa and complemented with Monty as well. We're working hard on completing the scoping studies for Old Highway Gold Project and we're expected in the March quarter to come out with those completed studies and then we can make some sensible decisions with respect to our strategy for the De Grasse facilities and that strategic footprint that we have in the region. As another significant highlight through the quarter and as announced on the 22nd of September, the day before the MAPSA transaction was announced, we announced the expansion of the Mateo production tap from 3.2 to 5.2 million tonnes per annum when we completed the pre-feasibility study together with the maiden ore reserve for the A4 deposit which will complement the 3T3 deposit so now we have that satellite deposit feeding in higher grade material on average. And what was delightful to see in the preparation of the maiden oil reserve for A4 was about an 83% to 85% resource to reserve conversion ratio, which augurs well for the future in terms of the work that we'll be doing in and around that complex where we have a multitude of other exceptionally exciting projects targets to drill and where our expectations are that we will have other potential satellite feed to give that expanded production profile now of moving from up to 60,000 tons of copper per annum from that Mateo production hub and it's something that then we will be working hard to ensure that we can continue that a long ways into the future with those further satellite potential opportunities. Construction is full steam ahead at the moment in Botswana at the Mateo Hub, and we will see as we roll into 2022, you know, there's significant work on foot. So there's a lot of work, and Jason will go through that in a little bit more detail today. Clearly, you know, a critical point as we've touched on, is the transformational acquisition of MATSA. It is the single largest thing in terms of strategic imperative that we had set ourselves over the last two years. And we were looking to buy a long life, quality, high grade, low cost, mining asset with excellent infrastructure and personnel and all the other attributes in an excellent mining jurisdiction and I can tell you after four and a half years of working in and around the MATSA asset is that we were delighted when it came to market in a process. Obviously a process is always an interesting and a challenging exercise but we were very steadfast in our views and I think at the end of the day We have paid what was for the sellers of that asset a fair price. I think what is for Sandfire and its shareholders an excellent price. And in a relative sense, the acquisition price of $1.865 billion US is about two-thirds of what I think this asset is worth. in the listed public company market using standard market multipliers for peer assets and peer companies for this asset. So I think from a public company listed vehicle perspective, It is worth probably order of magnitude a $3 billion asset as it sits today. And the opportunity there is significant in terms of optimisation of that asset, in terms of significant resource to reserve conversions, well and truly above what are there at the moment. And can I say, from an exploration perspective, there is so much more work to be done there. We're very, very excited. We are acquiring assets. three high-quality underground mines in a VMS province. So we've got lots of specialist skills there for a wonderfully presented plant, a 4.7 million tonne per annum central processing facility, which is underutilised as it sits today, and for a production profile that is in excess of 100,000 tonnes of copper equivalent and about 65% of that being a dominant copper production. And from our business going forward, and we want to be facing to the future, And as the world is working towards the zero carbon emission by 2050, we will continue to build in our business very much those future facing metals and predominantly a copper business. So we're looking forward to moving to the next level as a business into the international global base metals and copper focused situation and I think the assets that we are amassing and those significantly prospective opportunities within those assets are yet to be delivered and we look forward to doing that over the next five to ten years and building on what we've got. Cash at the end of the quarter is about $405 million. Matt Fitzgerald can give you a greater detail as to what's happened, but it's wonderful to know that DeGrasse still has pumped around order of magnitude $100 million of free cash into the system for the quarter, and there's been a variety of different things that have worked its way out of the system to leave us with over $400 million Aussie cash, but he can get into that detail if you're interested in due course. I look forward now to handing over to Jason to give you a bit more detail in what I've talked about. Thank you.