Sandfire Resources Limited

Thank you for standing by and welcome to the Sandfire Resources June 2023 quarterly update. All participants are in a listen-only mode. There will 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. Brendan Harris, Chief Executive Officer of Sandfire. Please go ahead.

Hello and good morning from here in Perth. My name is Brendan Harris and I'd like to welcome you to our June 2023 quarterly conference call. I must say I'm very much looking forward to discussing our operational results with you and giving you a feel for the strategy that we believe will energise our people, unlock significant shareholder value and underpin our future success. This will pave the way for us to discuss the finer details of our simple strategy when we report our financial results at the end of August, when we'll also provide more granular forward-looking guidance the key financial metrics. But before I go further, I should also welcome my team to the call. We've got Matt Fitzgerald, our Chief Financial Officer, Jason Grace, our Chief Operating Officer, Richard Holmes, our Chief Growth Officer, and Scott Brown, our Chief People Officer with us here today. Last time, you may recall we sought to do something a little different by stepping away from the usual presentation, replacing it with a succinct overview of performance led by Jason, Matt, and me. On the basis of the feedback we've received, we're going to be even punchier today. I'll briefly talk to the key messages that we think matter and are helpful to understand, and then we're going to go straight to Q&A and spend even more time as a team on the questions that matter to you. So let's get into it. We achieved record low TRIFA of 1.6 for the year, marginally exceeded revised production guidance at MATSA, delivering 99,000 tonnes copper equivalent, are successfully moving through the commissioning and ramp-up phase of Matheo, and have transitioned to GRUSA to care and maintenance as we assess all alternatives for the operation. The old adage, a safe business is a productive business, rings true. So let me expand on Matheo, as I'm sure you'd like to know more about our newest mine. It is still early days, but things are going very well. In the most recent 14-day period to the 22nd of July, We achieved an average processing run rate of 3 million tonnes per annum and achieved a maximum recovery of close to 90% while testing and exceeding nameplate across a number of shifts. That's why we've reiterated prior guidance for Matheo as we are and should continue to see a rapid ramp up in performance with the initial 3.2 million tonnes per annum processing rate achieved on a sustainable basis in the September quarter of this year. and 5.2 million tonnes of capacity delivered towards the end of the calendar year, creating the platform to grow copper production to over 50,000 tonnes in the 2025 financial year. When we report in August, we'll have more operating data in our back pocket and a growing feel for costs. But at this stage, and let me be clear, we see no need to adjust our prior assumptions. To MATSA, I feel like we're one quarter in to a long process of building consistency, predictability and credibility. We delivered on a revised production guidance for the year. We've contained controllable cost inflation, notwithstanding the significant reduction in by-product credit pricing in Q4. And we've stuck to the forward plan we discussed with you in April. Across FY24, we will run the processing plant at around 4.5 million tonnes per annum rate, and run the mine at a slightly higher clip while spending incrementally more on development and investing in ventilation. This plan will allow us the space to further build our geotechnical knowledge, minimise dilution, open up more mining fronts and create much needed flexibility. All while building around 100,000 tonnes of stock on the ROM pad, giving the team a fighting chance to optimise the processing blends and deliver an increase in recoveries. It's on this basis that we expect to deliver an important 3% increase in copper equivalent production at Matza in FY24. And that's what we're looking for, frankly, signs of continual improvement, knowing we must push beyond 4.5 million tonnes per annum sustainably once we've established a solid base. And of course, our big lever continues to be exploration, given our strategic position in the Kalahari and Iberian belts, their prospectivity. for economic mineralised systems and the drive we have internally to materially extend mine life, unlocking long-term value for shareholders. San Pedro and Olivo at MATSA are prime examples of the potential we see, such that we've focused our exploration effort and will push hard to test near-mine potential quickly and efficiently. This means we've made the difficult decision to scale back very early-stage greenfield exploration in Australia, as it doesn't offer the same risk-reward trade-off, and we need to spend our dollars wisely. I expect we'll spend around $10 million to $15 million less on regional exploration in FY24. And lastly, to Degrussa. The innovation and ingenuity displayed by our team has been quite remarkable. particularly considering the personal uncertainty they face this year. While the decision to process oxide stocks brought with it increasingly high costs, as it should, a sharp focus on the economics created an additional $18 million of pre-tax cash flow. In parallel, we've been assessing all alternatives for the operation, including closure and rehabilitation and divestment. So in summary, we're primed to deliver. We finished the year on a strong note, generating unaudited $313 million in operations EBITDA at a robust margin of 40%, and the outlook gets stronger from here. We're working hard to mitigate cost inflation, steering our capital toward the best risk-return trade-offs, and we have a fantastic platform that will deliver more than 50% production growth across the next two years and holds enormous exploration potential to materially extend mine life. Suffice to say, we're motivated and we have plenty on our plate to keep ourselves busy. So with that, can we please have the first question?

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Raoul and Anne from Morgan Stanley. Please go ahead.