Copper production and strong price deliver record annual revenue for Sandfire Resources

Sandfire Resources has combined a strong operational performance with buoyant copper prices to post record annual revenue of $813 million (reports The West Australian).
16th July 2021
Resources Rising Stars

The unaudited figure, which was up 24 per cent on last year, comes after the Karl Simich-led company posted annual copper production of 70,845 tonnes, beating its full-year guidance of 67,000-70,000t.

The strong production figure along with record high prices for the red metal saw Sandfire complete another strong year of copper concentrate sales, including two record shipments with cargo values exceeding $50m.

Gold production of 39,459 ounces was at the upper end of guidance of 36,000-40,000oz.

The company’s C1 costs of US81¢ were also at the lower end of guidance of US80-85¢/lb.

Sandfire says it held cash of $574m at the end of June, which included a $33m pre-payment for a shipment which departed this month.

Mr Simich described DeGrussa as a wonderful asset, which had delivered safe, consistent and profitable production across nearly 10 years of operations.

He said the company’s record revenue reflected strong global demand for copper as the world increasingly transitioned to electric vehicles and other green energy initiatives, all of which required substantial amounts of copper.

The strong operating performance comes after the company last week secured a mining licence for its proposed $US279m ($364m) Motheo mine in Botswana, allowing construction to begin.

Botswana will become the company’s main operational focus in 2023, as production from Sandfire’s flagship DeGrussa mine winds down.

However, the company is eyeing the Old Highway gold deposit and reprocessing of tailing as a way to keep the DeGrussa plant operating.

“Importantly, our ability to harvest significant cash from the DeGrussa operations has put Sandfire in an outstanding position for the future, giving us significant flexibility and optionality in terms of financing our future growth initiatives,” Mr Simich said.

RBC Capital Markets mining analyst Kaan Peker described Sandfire’s June-quarter production as a good set of numbers with cash generation in line with the bank’s estimates.

However, he remained cautious about a looming production gap post DeGrussa and before Motheo ramped up.

“Sandfire has the most leverage to near-term copper price appreciation, given its short mine life, and should generate strong free cashflow in financial year 2022,” Mr Peker said.

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