Sandfire Resources Limited

Thank you for standing by and welcome to the Standfire Resources March 2026 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.

Thank you and good morning everyone and welcome to our quarterly calls. As usual, our executive team is here with me today for the Q&A, which we'll get to very shortly. But before we start, I'd like to acknowledge again 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. It's also particularly important that I acknowledge that we had our first ever fatalities, when a 34-year-old male contractor tragically lost his life while installing a polyethylene paste distribution line in our Magdalena mine on February 25. His loss of life is both tragic and completely unacceptable, and sadly it reminds us of the risk that stored potential energy presents for employees and contractors in our industry. We're deeply saddened by these events and our thoughts remain with the individual's family, friends and colleagues. Following the incident, as you'd expect, we immediately activated emergency response protocols, notified the relevant authorities and we continue to support their investigation. We've also engaged very closely with our workforce, contracting partners and their unions to ensure impacted individuals are cared for and to reinforce the importance of well-designed work. In relation to our broader safety performance, our group truth increased slightly to 1.5 off a low base and we recorded five high potential incidents during the quarter. We are determined to learn from every incident, raising risk awareness and capability wherever we operate. At Sandpile, we believe everyone is a leader and we will only truly be successful when our culture has evolved such that everyone feels safe to speak up when they see something that isn't safe or just doesn't look right, irrespective of their title or level within the organisation. Turning to operational performance. Group copper equivalent production for the March quarter was disclosed earlier this month. as it fell short of expectations, as both heavy rainfall and unplanned maintenance at MATSA and a further delay in the transition to high-grade or at-meteo constrained performance. In MATSA's case, this led to the lowest level of quarterly throughput in a little more than three years and a 12% reduction in copper equivalent production to 21,700 tonnes, for year-to-date production of 68,000 tonnes, which, somewhat ironically, is within 1% of where we were at this time last year. What's not obvious is that MATSA's performance in March improved strongly, as annualised mining and processing rates recovered to 4.9 and 4.6 million tonnes respectively. Mateo's performance in the quarter presents a stark contrast to MATSA in so many ways, as our team achieved record annualised mining and processing rates of 6.5 and 6.1 million tonnes respectively. As is too often the way in mining, despite such good operation performance, which included a strong improvement in mobile fleet availability and rates, it has taken longer to re-establish our face positions than we would have liked, such that higher grades are still ahead of us, with the average feed grade expected to rise toward 1.2% copper in the fourth quarter for copper equivalent production around the bottom end of our 58 to 64,000 tonne guidance range for the year. We pride ourselves on being consistent and predictable, and we're not shying away from our commitments in any respect. And I can confirm that we remain on track to achieve group copper equivalent production within the lower half of our guidance range of 149,000 to 165,000 tonnes in FY26, which you'd recall was set at plus or minus 5% at the midpoint of 157,000 tonnes back in July of last year. And while this requires us to maintain recent strong momentum across the remainder of the year, I can assure you that our assumptions are based upon robust, bottom-up plans. We simply need to run our business well, sustaining throughput rates at Mateo akin to those achieved in the third quarter, so we can reap the benefits of those higher grades, which I might add we are seeing now, and deliver a repeat performance at MATSA of the outcomes achieved in the fourth quarter of last year. More broadly, with no major maintenance and high rates of throughput planned in the run home, we currently expect underlying operating unit costs for both Nasa and Mateo to be materially consistent with prior guidance of $86.44 per tonne of ore processed for FY26. As I'm sure you'd expect, there are more moving parts than usual, with the conflict in the Middle East fuelling higher energy prices which is also feeding into freight rates and other input costs, and contributing to a slight correction in certain foreign exchange rate markets, such as the euro, which is providing some relief at MATSA. And I'm sure Megan will be very much looking forward to talking to you about costs in the Q&A. To give you a flavour for the uncertainty inherent in any forecast that we make today, I remind you that 90% or more of MATSA's costs are typically euro-denominated. while diesel alone accounted for around 3% and 15% of MATSA and MATEA's costs in our FY26 plan, with the price up something like 50% in recent weeks. Of course, it would be bold to suggest markets aren't efficient, and it would seem to us that commodity prices have proven to be resilient, perhaps because of the inevitable steepening of cost curves and the increasing risk to supply itself. So while cost sensitivities are understandably of interest to people on this call, we're particularly focused on securing our supply chains for those key consumables as we generate very strong free cash flow, as you've seen, at these prices. Within this context, we are well positioned at MATA, given its primary resilience or reliance on the grid in Spain and the country's industrial heartland. and we have relatively good visibility in Botswana out toward the end of this financial year. I would, however, caution that it's unlikely we fully understand all of the second and third order effects of the current conflict which may take some time to manifest. From a strategic perspective, we now have the bit between our teeth in South Australia where we're gearing up for a significant drilling campaign which could exceed 130,000 metres over the next 12 to 24 months, and the associated TFS workstreams that could amount to a collective investment of AU$100 million, all of which is designed to unlock the secrets of the Kalkaroo Copper and Gold Project, which we believe has the potential to underpin a 10 million tonne plus per annum, low cost, long life, open cut mine, ideally located in a preferred jurisdiction to become the next major catalyst for the continuing transformation of our company. Jason and Ian Kerr are onboarding key personnel as we speak. Camp facilities are being prepared and two drilling contractors have been secured and are preparing to mobilise. Within the Kalahari copper and Iberian pyrite belts, we're really starting to see the benefit of bringing exploration together. as our talented, centralised team of geoscientists are better placed to support and challenge our teams on the ground, ensuring our targeting approach is continually learning, capturing fresh ideas and constantly being rejuvenated. We will have an increasing emphasis on the drill bit next year as we leverage our depth of knowledge and take a real swing in the Mateo Hub and in the shadow of MATSA's processing facility where we have been encouraged by early indications but have much more work to do. So pulling this together, we generated record financial outcomes in the quarter on the back of buoyant commodity markets, particularly in relation to our by-products such as silver, with an unaltered group sales revenue of $408 million, translating into underlying EBITDA of $220 million for an underlying margin of 54%, to finish the period with net cash of $76 million, having paid, I might add, $46.5 million to Havala for our initial entry into South Australia and $26.1 million to the tax authorities in Botswana as Mateo made its first two instalments. Mateo's rapid transition to a taxpaying position, having paid back its capital base in as little as three years, is yet another marker of its success and a further indication of the potential that can be realised in the Kalahari when the right company takes the lead and the ingredients are right. As you might expect, we are proud of SanFi's growing economic contribution to Botswana and the broader local community. And we're also proud of the way we've set our company up for success. I've said it before, we have the right team, we have the right balance sheet, we have the right operations, producing the right commodities at the right time with the right by-products. And we're incredibly cost competitive with two operations that have a C1 cost below $1 per pound in the quarter. So with that, let's go to questions. Thank you.

Thank you. If you wish to ask a question, please press star then 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. And if you are on a speakerphone, please pick up your handset before asking your question. First question today comes from Kate McCutcheon at Bank of America. Please go ahead.