Sandfire Resources Limited

Thank you for standing by and welcome to the Sandfire Resources first half FY24 results call. 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 and Managing Director. Please go ahead.

Hello and good morning. I'd like to acknowledge the traditional custodians of the land on which we stand, the Whadjuk 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. My name is Brendan Harris, CEO of Sandfire Resources. I'd like to welcome you to our half-year financial results conference call. We're fortunate to have the opportunity to connect with you again so soon after our December quarterly call. I'm joined here in Perth by my colleagues, Megan Jansen, Jason Grace, Kath Bozanich, Victoria Twist and Scott Brown. Richard Holmes is currently in transit and sends his apologies. Guided by our new shared purpose, we mine copper sustainably to energise the future. We are hitting critical milestones and remain strongly placed to support the electrification and decarbonisation of the global economy. And nothing is more important than the health and wellbeing of our people. Our unrelenting focus on safety delivered a TRIF of 1.5 at the end of the period, down from 1.6 at the end of the prior financial year. Through strong leadership on the ground, we will further instil our don't walk past operating philosophy and enhance our robust hazard management systems and processes. Similarly, our broader ESG framework must permeate everything we do. And as I mentioned on our last conference call, we were pleased to announce the signing of the framework agreement for seeing Samphire and the Yagan Inaya at the end of December. This was an important first step toward rebuilding our relationship with the Yagan Inaya and ensuring the ongoing protection of cultural heritage at our De Grosser operation. Our decision to retain De Grasse and rehabilitate the operation means we will have an important presence in the region for many years to come, and we look forward to working with the Yaganinaya government and our other stakeholders to deliver meaningful, sustainable outcomes for the community. Megan, over to you to walk through our financial performance for the December 2023 half year.

Thanks, Brendan. I'm very pleased to present our financial results for the first time. As we said when we reported our quarterly numbers at the end of January, we've maintained our production cost and capital guidance for FY24. Growing consistency and predictability at MATSA and continued outperformance at Mateo underpinned copper equivalent production of 63.2 thousand tonnes in the first half, which in turn generated sales revenue of $418 million and underlying operations EBITDA of $165 million for an underlying operations margin of 40%. Operating discipline and robust cost control was a feature of these results as we continue to mitigate broader inflationary pressure at MATSA with mine operating costs remaining stable at $72 per tonne of ore processed. The operation benefited from broader economies of scale and near 45% reduction in power costs and optimisation of consumables usage all of which abated the impact of adverse foreign exchange rates. By signing an agreement with INDESA for the construction of a dedicated solar facility that will supply around 25% of MATSA's overall electricity requirements, progressively from calendar year 25, we have further improved our long-term energy supply mix and reinforced the low carbon credentials of MATSA's metal concentrates. MATEA reported an underlying mine operating cost of $39 per tonne in its first six months of commercial production, reflecting good cost control as the operation ramped up to its interim capacity of 3.2 million tonnes per annum. Below the line, our appreciation and amortisation expense remains elevated at $149.1 million, following the $1.9 billion acquisition of MATSA in FY22. You will also have seen that we have expensed interest associated with the $200 million Mateo finance facility for the first time, as our newest mine achieved commercial production at the start of the period. Our overall net interest expense reflects our level of debt and the margin embedded in our various finance facilities. Noting interest associated with the $60 million A Ford mine development will be expensed rather than capitalized when the open pit achieves commercial production planned for the September 2024 quarter. While our underlying loss increased by $17.2 million in the period, underlying group EBITDA declined by a more modest $2.4 million, despite the cessation of processing activities at De Grossa in May 2023 and its $80.8 million contribution to underlying group EBITDA in the prior corresponding period. This was only possible because the commissioning and ramp up of Matteo added around $50 million to underlying group EBITDA at an operating margin of 43% in its first six full months of operation. With the ramp up of Matteo and delivery of our intentionally simple strategy, we expect to return the business to profitability and pay down debt in the coming years. With regard to our balance sheet, we ended the period with a cash balance of $105 million. and net debt of $476 million, which included $401 million owing under the Matza Finance Facility and $118 million owing under the Mateo Finance Facility with the successful commissioning of the new ball mill at Mateo, completed just prior to Christmas, and the A4 development set to be completed in the current half. We project strong production growth into SEA25 and a further decline in capital expenditure with net debt expected to peak during the current half year. Indeed, I can confirm that net debt at the end of January declined to $459 million as we received cash associated with the Mateo December shipment that was loaded very late in the prior half year. Furthermore, I'm very pleased to confirm that we have made significant progress in our efforts to modernize the structure of the group's debt facilities by securing credit approval for a $200 million corporate revolver facility in early February. Establishment of this revolver is an important step for Sandfire as a global business. The new facility will increase the financial flexibility of the group, reduce our near-term debt repayment profile, and be primarily used to repay the remaining $88 million balance of MATSA Facility A. The establishment of this facility is subject to final documentation and standard conditions. and is on track to be finalised before the end of March. This excellent outcome gives us even greater confidence to invest in the future of our business. So let's look at our plans for CAPEX. Total capital expenditure in the half decreased to $99 million as construction of the 3.2 million tonne per annum first phase development of Mateo was largely completed in the prior financial year. Our rapid and low cost expansion of Mateo remains on time and on budget with the A4 development expected to be completed in the current half as planned. Mine development expenditure included $41 million at MATSA in the period as we sought to progressively open additional mining fronts and provide increased flexibility in our underground mines. And with that, I'll hand back to Brendan.