Sandfire Resources Limited

Thank you for standing by and welcome to the Sanfire Resources H1 FY26 Financial Results Conference Call. 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 Brendan Harris, Chief Executive Officer and Managing Director. Please go ahead.

Good morning everyone and welcome to our financial results for the half year. As always, our executive team is here with me today and I'll pass to Megan very shortly to walk you through the all-important numbers. But 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 we conduct our business. We pay our respects to their elders and leaders past, present and emerging. Starting with safety. We finished the period with a group TRIF of 1.3 down from 1.7 at the end of FY25. While this outcome moves us a step closer to our goal of having a workplace that is free from injury, the number of high potential incidents in our business remains a concern and highlights the importance of the work we're doing to further strengthen our internal system of risk management and control. Of course, from a cultural perspective, the regular reporting of these incidents is an important indication that our efforts to build an inclusive environment where every employee and contractor feels safe to stop work and speak up is starting to take hold. More broadly, our two high-margin mining operations in Spain and Botswana really proved their worth in the period as the copper market firmed and their valuable byproducts of zinc, lead and silver further enhance their competitive cost position. And it was by no means our best half operationally. While MATSA started the year well, building further operational resilience and consistency, it's been somewhat more challenging, as you know, at Mateo, where we brought forward planned maintenance and were impacted by a temporary drop-off in mobile fleet availability to finish the half at a collective 46% of annual production guidance, having delivered 48.6,000 tonnes of copper 49,000 tonnes of zinc, 3.5,000 tonnes of lead and 2.4 million ounces of silver. The copper equivalent output of 72.1,000 tonnes. But of course, that's only part of the story. We've always said we want to be judged on our ability to deliver on all aspects of the mining value equation. And in this regard, we've done well to control costs across an extended period that has been characterised by broad-based industry-wide inflationary pressure. And our track record remains intact, as we've retained annual guidance for underlying operating unit costs, production and capital expenditure at both MATSA and MATEA. Quite simply, our focus on the basics and fiscal discipline is keeping our house in order. I'll leave our broader financial highlights and achievements for Megan to summarise. which should also help you gain an even better understanding of our approach to capital management. But before I pass over to Megan, I'd like to formally introduce the formidable partnership we've formed with Havala Resources to advance the Calcaru Copper Gold Project and establish an exploration strategic alliance across the highly prospective Kenomona Province in South Australia. Under the terms of these agreements, we now have an exclusive right to earn an 80% controlling interest in what we believe to be one of the best copper and gold greenfield development opportunities in Australia that has the potential to become a large-scale, long-life operation, ideally located in a preferred jurisdiction. Calcaroo is an exciting opportunity for our shareholders that firmly re-establishes our exploration and development footprint in Australia. We expect to commence an extensive infill and extension drilling program at Calcaroo once we have established camp facilities and received the required approvals, which are expected in the June quarter, if not sooner. Make no mistake, we plan to move prudently but quickly to test the full extent of the Kalkaroo copper and gold deposit and establish the value maximising pathway for its development. In this regard, we are uniquely positioned. We have the balance sheet, we have the technical teams and we have a proven and matched fit projects team. that only recently completed the successful construction and commissioning of Mateo. With that, I'll hand over to Megan.

Thank you, Brendan, and good morning to everyone on the call. I'm pleased to present our financial results for the first half of FY26. As Brendan touched on, we have delivered 72.1 thousand tonnes of copper equivalent production for the six months to 31 December 2025. This performance, coupled with healthy pricing for our key commodities, delivered revenue of $672 million, a record for a six-month period, which would have been some $23 million higher if not for the impact of the hedging program associated with the master acquisition, which was fully executed by the end of the period, leaving all future sales fully unhedged and giving the group a pure exposure to commodity prices. The combination of record revenue and good cost control delivered underlying EBITDA of $304 million, and an underlying profit of $107 million which has more than doubled since the last half for a statutory profit of $96 million. Digging deeper, at Mateo, despite the somewhat challenging start to the year, we delivered a robust set of financial results with underlying operations EBITDA largely unchanged at $161 million for a still healthy operating margin of 57% at strong commodity prices mitigated the impact of lower-than-expected production. Mateo delivered an operating unit cost of $43 per tonne, marginally below our annual guidance of $44 per tonne, impacted by mining contractor and labour costs, and the previously advised 50% increase in power tariffs. At MATSA, underlying operations of U50A increased by 37% to $184 million, at a 47% margin. primarily driven by higher commodity prices and lower TCR fees, which more than offset a 15% increase in underlying operating costs that were impacted by recent strength in the euro to US dollar exchange rate, an increase in costs associated with recovery improvement initiatives and a release of working capital as ROM stocks were consumed for an operating unit cost of $87 per tonne, which is broadly in line with FY26 guidance. Below the line, our DNA expense of $144 million included $113 million at Matta and $30 million at Mateo, which decreased by 6% in comparison to the prior corresponding period, primarily as a result of lower mining rates. We expect our DNA expense to rise in the second half to reflect the planned increase in throughput at both Matta and Mateo. Our overall underlying net finance expense of $11.4 million decreased by 58% compared to the prior half, as the group experienced a significant $16.2 million reduction in net interest and facility fee expenses to $9.3 million and a half, reflecting the injection of $301 million into our balance sheet across the prior 12-month period and the lower margin that our corporate revolver facility provides. The rise in the group's profitability led to an increase in our underlying income tax expense to $42 million for an underlying effective tax rate of 28%, which continues to be impacted by the limited ability to recognise benefits associated with tax losses in Australia and the USA. On the topic of tax, subsequent to the period end, we paid our inaugural tax installment for Mateo of $11.6 million. following the utilisation of carry forward tax losses, a reflection of the operation's strong cash generation and blank commodity market. Looking ahead to the second half of FY26, we expect cash payments to step up, trending toward our effective tax rate in future years. Total capital expenditure across the group increased by 14% from the prior half to $112 million. As the strength of the Euro and commencement of activity to construct our new tailing storage facility at MATSA and incremental investment support, the optimised 5.6 million tonne per annum throughput rate and ongoing A1 drilling and PFS costs at Mateo saw an uplift in our level of investment. The group's balance sheet has been fundamentally transformed. Strong operational performance, buoyant commodity markets have delivered 489 million into our balance sheet over the past two years. This is a significant leap forward for the group's financial position when you consider that our balance sheet had peak net debt of $481 million just 21 months ago and we are now sitting on a net cash position of $13 million. In accordance with our capital management framework, excess capital will be deployed in a manner that maximises TSR and our per share metrics. In simple terms, this means that any discretionary investment alternatives will need to compete with shareholder dividends and share buybacks. The agreements that were struck with Havela Resources are a good example of this framework in practice and have seen an initial $31.5 million Australian dollar cash payment, Havela, subsequent to period end as part of the Stage 1 payment and a further $15 million Australian dollar cash payment has also been made subsequent to period end to fund exploration in the Kurnamona province. in the Kurnamona Province. These additional commitments were an important consideration for the board when contemplating the recommencement of shareholder dividends whilst balancing preservation of the group's strong financial position, ensuring that any distribution doesn't move the group away from its targeted net cash position. With this in mind, no dividend has been declared in respect of half one FY26. As Brendan touched on, we've retained annual guidance for underlying unit costs production and capital expenditure of both MATSA and MATEO. However, we have incrementally increased group capital expenditure guidance by $10 million to $240 million to capture the planned ramp-up of activity at Kelkaroo and guidance for exploration and evaluation expenditure by $5 million to $51 million to reflect both the planned commencement of regional exploration in the Kurnamona Province and additional activities to keep the Blackbeard project moving forward following completion of the PFS in December. Turning to future concentrate sales. Our recent tender for Mateo Concentrate was well received by the market and we secured approximately 75% of calendar year 26 and calendar year 27 sales with a select number of customers at TCRC terms which reflect the prevailing market. The high number of participants and competitiveness of the bids reflect the tightness in the concentrate market and the quality of the material concentrate. We expect these positive outcomes to benefit our C1 unit cost in half too. Our strong financial position and growing profitability continues to give us confidence for the future and we will remain financially disciplined. With that, I'll hand back to Brendan.