Sandfire Resources Limited

Thank you for standing by and welcome to the Sandfire Resources June 2025 quarterly report. All participants are in a listen only mode. 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.

Good morning everyone and welcome to our June quarterly call where we provide a preliminary summary of performance for FY25 in advance of our full year results on 28 August. Our executive team is here with me today for the Q&A, which we'll get to in good time, recognising we have another call in a few weeks. Before we start, 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 SAMFIRE conducts its business. our respects to their Elders and Leaders past, present and emerging. And can I say, it was good to visit Mita Thera again last week to meet with the Yaganianaya. 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 have made to them. For safety, our group Triff was 1.7 at the end of the June quarter, 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 152.4 thousand tonnes of copper equivalent production which ended the year only 1% below full year guidance. That, I remind you, was established in June of last year, June and July. What a truly fantastic result, all things considered. At MATSA, copper equivalent production of 25.1 thousand tonnes signified the strongest quarter for the year, bringing total copper equivalent production to 94.1 thousand tonnes across FY25. What's more, we anticipate another robust year at MATSA in FY26 and expect to achieve copper equivalent production of approximately 96,000 tonnes for a 2% increase year-on-year. Mateo continues to let its results do the talking, achieving record quarterly copper equivalent production of 16.4,000 tonnes in Q4, for total copper equivalent production of 58.3,000 tonnes across FY25, and year-on-year growth of 29%. This in turn underpinned a 30% increase in sales in 2004 as five cargoes departed Walworth 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 a circa 3% growth rate in copper equipment production at Mateo in FY26. And before I move on, I should note that we are moving with the times and have provided production guidance ranges for FY26, 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 low rates of inflation over the last two years when compared with much of the industry. Consider our preliminary estimates for unit costs at Matza and Matea of $78 per tonne and $40 per tonne respectively across FY25 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 US dollar exchange rate has started to bite at MATSA. And while unit costs, and this is important, are expected to remain well controlled in local currency terms in FY26, sustained strength in the exchange rate would create further upward pressure, recognising around 90% of MATSA's costs are Euro denominated. Similarly, at Mateo, our flood recovery program included an increase in low-grade material feed in Q4 and a 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 a further 10% at Mateo in FY26, as the A4 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 A4 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 2024-25 exploration program. where 27.8 kilometres of diamond drilling was undertaken across 76 holes. The successful program has confirmed the extension of high-grade mineralisation in the Johnny Lee Lower Copper Zone, which is, after all, the juice that drives the project's economics. Sandfire America is expected to complete a new pre-feasibility study for the Black Butte project, including a revised mineral resource and oil reserve estimate in the December quarter which will position us to more clearly define the optimal pathway to realised 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 belts, as we seek to bring greater urgency and build momentum in this critically important area. With this change in accountability, Richard Himes has departed the organisation 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 $1.2 billion in FY25, underlying EBITDA of $528 million and a stunning $273 million reduction in net debt across the year, including $120 million in Q4 alone. Well, 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.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Mitch Ryan from Jefferies.

My first question just relates to the working capital release in half to FY25 primarily in FAO where you're treating some of those stockpiles. Just can you quantify the impact of this on the cash flows in half and then also potentially provide some colour on how we should think about that going into FY26?

Yeah, 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 Mateo with the flood recovery program, the increase in our core source stockpile for future contingency and obviously the release of the lower grade stockpiles, that actually has contributed most significantly to the increase in costs in the quarter and why our costs were $1 a tonne on average across the full year for guidance. So 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.

Yes, thanks Brendan. Thanks Mitch. 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 million. We did have a strong production and sales quarter at Mateo so there was an additional We completed five in the quarter, so some 30% up on previous quarters. And at the same time, MATSA 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. Brennan touched on the $20 million of sales proceeds from Old Highway, which we 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 finalised the outstanding invoices from the March quarter as well as upgraded treatment and refining charges. So we would have seen about let's call it $15 million to $20 million of cash flow coming through in the quarter that was associated with that. So that all comes together with that $120 million reduction that you're seeing in the net debt number.

Thank you. Maybe as well, Mitch. If I can just mention, and obviously I mentioned I was at Mateo circa three weeks ago, they all blend into one. One thing I can tell you is when I went to the concentrate shed, it was swept clean. So as you'd expect at the end of the year, we look to move every piece of material, every ounce almost 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.

Thank you. My second question relates, there was a $5 million legal settlement from Mateo during the quarter. Can you provide some colour on what that relates to?

Yeah, 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, it related to land purchases and other matters around and a structure, if you like, of a land purchase around the Mateo 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?

Yeah, 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.

Okay, thanks for the reminder. I'll pass it on. Thank you. Thanks, Mitch.

Thanks. Thank you. Your next question comes from Rowan and from Morgan Stanley. Please go ahead.

Hi, morning team. Thanks for the call. My first question was around grades that matter. 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.

Great. Look, I know Jason looks forward to this question every quarterly and particularly at 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.

All right. Thanks, Raoul. If you look at it and particularly with reference to Appendix A, If you look at the grade that we had for Q4 FY25, we've basically announced that we saw a 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 FY26, 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 FY25. 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 higher grade production from both Magdalena and Agustinitas into Q4. Now looking forward and particularly with reference to that grade profile over FY26, 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 FY25.

Got it. That's perfect. And what about the mediums and beyond 26? It's too early to talk about that.

At this stage it's 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 FY25 and FY26.

That's perfect. And the second one is also on grades so 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 A4, but a bit above T3 reserve grade. Just wanted to understand, were you able to get a bit of material out of A4? Or is this particularly just come from T3 and you've been able to get higher grades there?

Yeah, 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 2 and the acceleration of Stage 2 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 were 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 and obviously we 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 A4 was, if you like, delayed because of water inundation, that we've actually continued to accelerate activity there, particularly as it relates to Stage 3. and then beyond that when you go to A4 the team has also done a lot of work with water storage facilities, evaporation planning such that we'll have sprinklers operating along all of the haul roads up on the waste piles at A4 and we're moving into the evaporation season and so we expect also in the relatively near term that will regain full access at the A4 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 Mateo 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.

Yeah thanks and building on those themes as well so if we look at FY26 so obviously we've guided an average grade copper grade of 1.0% 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 a higher average reserve grade at A4. So with increasing production levels or increasing all times from A4 coming into the blend, Throughout the year we 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 A4 coming into that blend.

And as I mentioned – and 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 know, I'm sure if you had the chance to visit, you'd see the stark difference as well. It's the size of the core source stockpile. You might remember around commissioning, we had a lot of lower grade material that really, I guess, dominated that core source 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, you know, as I said in my introductory remarks, you know, we've been focusing on the basics, but we're also continuing to work hard to build contingency and build resilience in our operations.

No, that's very clear and comprehensive. Thank you, team. I'll pass it on.

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

Yeah, hi, Brennan, Jason and Megan. I hope you're well. Brennan, a few questions on the operations in FY26 guidance. And just back to Matt specifically, he's looking at the ins and outs on copper head grades and recoveries for 26 versus 25, and they're heading logically in the right direction, i.e., you know, head grade drops recovery drops and vice versa for the other copper circuit but zinc is going the other way so like a 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 you know Jase has stepped through some variability from quarter to quarter?

Yeah look and I think Paul you make a really good point. Jason will colour this in and obviously people who were lucky enough to go on the site visit would have also seen it and 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 which is analysing real-time grade sites coming out of the mills and also grade and specifications which is, as we're progressively now trialling 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 why we... It's hard because you have to focus on it, but we try and step back and look at the bigger picture and how things play out over a year. As you say, it is heavily influenced, recovery is heavily influenced by the type of oil that we're actually delivering to the primary crusher.

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 Tanitas, at Aguas Tanitas we're moving into the main part of the western extension ore body, so very metallurgically favourable 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 FY25 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.

Okay, so just it's more mineralogy and reagents rather than any sort of operating setting changes in the zinc circuits specifically?

Look, there's elements of that as well. We're continuing to optimise 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 maximising zinc recoveries.

Okay, great. Sorry Paul, if I can. I also go back to one of the real learnings, I think, or improvements, and, you know, 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 12 to 18 months is just this habit that wasn't occurring previously whereby our mine geologists are actually walking the ROM stockyard with our processing technical teams. because, as you know, you're not actually recovering zinc or copper or what have you. You're actually recovering galena, spyrite, chalcopyrite, et cetera, and you're primarily trying to make sure you suppress pyrite. So, you know, it sounds trite, but it's been a really important part of having a better understanding on an 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.

Yeah, okay, great. And then switching with Taya, Brennan, and again, just on the mill and just looking at the guide of 5.6 million tonnes throughput, I mean, the mill is performing really well. You had a good year in FY25. But you have one quarter where you ran above 5.6 and the other three quarters you didn't because of weather maintenance and others. But I just wanted to explore how conservative the 5.6 is. Is it just based on the typical 92% utilization? Is it reflective of software or coming from A4? I just want to hear the confidence about hitting the 5.6 and what buffer is sort of being built into the guidance or is it everything has to go right to hit that?

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, but 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's 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 de-bottlenecking 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, optimise performance for all types. 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. All hardness has played a role, but it doesn't seem at this stage. We're seeing a little bit of harder ore. A4 will be interesting, but not materially so. So I think at the moment we think that 5.6 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 life.

Yeah, building on that, if you look at last quarter, we ran at about a 5.4 million 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 5.8 million tonnes roughly there, annualised 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. And the deep bottlenecking works. It gives us the optionality to be able to maintain that rate, right, even with higher grades. So that gives us a lot of security.

Okay. No, that's good. Thanks. Thanks, both. Thanks, Paul.

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

Hi Brennan, Jason, Megan and team. The question just relates to resilience of the plan in the next 12 months. Now obviously in FY25 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? you know, Spanish power unreliability or, you know, what if there is an inundation? 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's gone into that? Thank you.

Yeah, look, first and foremost, I'd rather we didn't have another one in a 200-year event next year or this year. And that would probably be because if nothing else, it would prove it's another one in a 200-year event. Now, in saying that, The team has done an enormous amount of work, so we're talking Mateo specifically on drainage, and I reviewed all of that when I was there. We've learnt a lot, and that's not to say that the initial planning and design was not good, but this was a rain event the likes of no one in the region, the farmers, et cetera, 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 bunding 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, you know, for all intents and purposes, we think that places us very well. As I mentioned, we've also got a substantially larger core source 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. So 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. So 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 the 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, I 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 rights first and foremost in light of aiming to be safe, consistent and predictable. And we think, you know, again, everything we've done, the measures that have been taken and the results that we're delivering are starting to prove indeed that Mateo is well-placed to do just that. And as Jason always said to me, there is no doubt that a relatively shallow open-cut mine always gives you a degree more flexibility and capacity to respond than an underground complex. So I think that's for Mateo. 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 stoke turnover, but we've got many more faces that are open and we'll continue to work very hard at that. So in some respects, Jason's 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 FY25. 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 FY26. but we're not getting complacent and it was 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.

And just maybe expanding on that, the power resilience issue, have you had more power variability experience at the sign or frequency issues or anything of that nature or has the power grid returned to normal from your perspective?

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 that again the incident reminded 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 some 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 look 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. We are paying for it. You'll see coming in our numbers, we talk about roughly a dollar a tonne increase in cost material as a result of high power tariffs. Personally, I never like high costs, but I think that's a good thing. I'd rather see high tariffs putting BPC in a better position to complete the necessary maintenance works. And as a good corporate citizen, you know, we're happy to contribute. Now, we are accelerating... and have been accelerating even before this time the work around a dedicated solar facility for Mateo. 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. 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 Mateo 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 an even better position. So, Dan, I hope that gives you a good feel for the sorts of things we're thinking about.

Yeah, thank you very much, Brad and Sam.

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

Good morning Brendan. I hope you enjoyed your time in Botswana. Just a question on treatment charges. Obviously there's plenty going on in the 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 life of mine offtake at MATSA, but just whether you're maximising the economics of the current industry dynamics. Thank you.

Yeah, look, I'll pass to Megan. We've also got Dave Wilson here, of course, head of IR, but also for his sins, he's also head of commercial. So he actually manages this book with the marketing team. You know, just at the outset, we're fairly open at Mateo Steel. Megan will provide you the detail. As you said, the traffic contracts, I think, well known by everyone. The rates in the industry, they're good today if you're a miner. 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 Mateo concentrate for the longer term.

Megan? Hi, Ben, and building further on Brendan's opening in relation to Mateo, what you'll see coming through in the Q4 results in the data tables at the back in particular, you'll see some of the benefit coming through in terms of the lower treatment charges that we have been securing for Mateo. 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 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 Mateo brand. So you can see that benefit coming through in the quarter. For MATSA, 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 quarter 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 30 June.

Thanks, Megan. I think it's fair to say, Ben, that we don't lack interest in imitator concentrates is probably the long and the short of it. So it's just how do we balance those various factors. But I think we're certainly seeing what I'd see as the sorts of outcomes I'd like to see balancing those relative factors.

Okay. Thank you very much. Thanks, Ben.

Thank you. Your next question comes from Khan Peker from RBC. Please go ahead.

Good day, Brendan, Megan, Jason, David and team. Congrats on the strong quarter. A few questions on Mateo. The first one's on the dewatering delay at A4. Just wanted to check if this is solely due to the recent rain event or have you encountered any hydrological or hydrogeological differences than initially expected? And then given the delay, are you still expecting A4 to make up 30% to 40% of the blend in second half? I'll circle back on the cost question. Thanks.

Yeah, good. And look, I'll ask Jason to, as I said before, colour this in. And I think I just continue to refer people to those back tables that will provide quite a lot of information. 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, and intentionally so, with a range of about plus or minus 5%. So a couple of things. You might have heard, Khan, 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, you know, this is a generational rain event that recharged the aquifer. And as a result of that, as we moved and refocused pumping, et cetera, on T3, what we found is, unsurprisingly, having regained access, we received a level of inflow recharge back into A4. 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, 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 A4. And it's not a significant amount of water, but the pit's 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 high-grade tonnes as Webb described. Just to be very clear, we're not seeing anything that suggests the hydrogeological nature of the oil bodies has changed. In fact, prior to the rain event, we were starting to see that as we got down into A4, 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 Kalkre layer. As we got down below that, we found that A4 was actually quite dry. And we are now seeing the kind of depression, you know, as the watershed is moving and as obviously our pumping's been underway, we're starting to see that water ingress and recharge coming back in to be really slow. So again, things are playing out as we'd anticipate. Maybe Jason, just some of the specifics around timing.

Yeah, 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 A4 for this year to take that into account is in effect we've slowed down our vertical rates of advance. So when you are 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 FY26 and I touched on that before that we do see the percentage of A4 in the blend increase significantly particularly in Q3 but then beyond that Q4 is stepping up once again. 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 A4 is characterised 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 fall 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's gone back up to its prior levels and recharged very quickly. And what we're doing now is we 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 system 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.

And I think that's the key point, Carl. 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 team, 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.

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 FY26 cost guidance. And you've called out higher costs at A4 and also higher electricity costs. But just wondering what T3 mining costs are achieving. Have you seen an increase in T3 mining costs and how are they tracking in terms of the DSF?

Yeah, T3 has gone very well, I think. Yeah, I think T3's gone very well. I take you back to the comment I made. If you look at our costs in the context of the guidance we provided two years ago, I think our cost performance has been as good as anyone's. Mateo, as we know, has delivered everything we could have asked and more in almost every respect. If you look at A4, the reality is no matter what we would like, it's eight kilometres away. and so it has high transportation costs so that's haulage costs. It also has some re-handling 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 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 A4. Of course, I should note, you get higher grade with that, so let's not forget it. But yes, it is... Unfortunately, it's an inevitability.

Sure. Thank you very much. Awesome.

Thank you.

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

Hi. Good morning, Brendan and Megan. I have a very exciting question about tax. So you noted 35% to 38% effective rate for FY25. Is there any colour you can provide about how to think about that based on your FY26 budget?

Yeah, great. And I know Jason would like to take the tax question but I will hand this one to Megan.

Thank you, Kate. I have been very much looking forward to a question on tax today. Hope you're well. And maybe just, you know, there are a number of variables as we've really attempted to set out in the report that do go into our effective tax rates. The range provided, you know, at this stage, we're still working through finalising 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 FY26, 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 rates. 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 it will vary sort of over the life of the mine linked to the profitability effectively but in tax terms. So I'm not wanting to put specific numbers out there for FY26 at this time. I think the appropriate way to approach it is when we provide more fulsome guidance for that we can provide an updated range on the tax at that time.

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 at some of our larger project spenders 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.

Yes, that's right.

Very simplistically, that's one way to think about it.

That's one of the main kind of components that does impact the rate year on year for Botswana. So it's framed as accelerated. depreciation or accelerated capital deduction. I think the nuance with the box line 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. Yeah.

Hopefully that helps, Kate.

Got it. And then secondly, I guess the street is probably looking at Sandfire being net cash within the next 12 months. Can you just remind me on the franking credits? I remember there's some that can be used from the De Graaffer, aren't there, Dave?

Yes, absolutely. So we've got in the range of $260 million US, Kate, for franking credits available to us. generated during the de grata 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 to 60 mil 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.

And just on that, Megan, the franking grossed up, that number's a grossed up number. Yep, that's right.

Okay.

Thank you, Kate.

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

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 mil and in a very different financial position to a year ago, I just would like to understand how capital prioritisation has involved internally from a gross perspective, so sort of talking about projects specifically at Mateo rather than Black Butte, but just hoping to get more of an idea about how the company's thinking about some higher level initiatives to sort of answer what's next at those two assets beyond the risk mitigation you mentioned before.

Yeah, 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. And that's what we do. So we focus on, firstly, optimising our operations, building that consistency and resilience. So, if you like, we optimise 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 to invest in that, call it, near mine, within the pit shell exploration as we seek to deliver that 15 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's 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 maximise total shareholder returns. We're acutely aware that there have been a number of companies in our industry historically that have actually grown market capitalisation 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 discipline 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. Thanks, Sam.

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

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 12 months. It's not been easy. As we've said, some really significant challenges that were beyond the team's control. They're bound together and I think delivered an 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.

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