Sandfire Announces 147Mt Mineral Resource Estimate For MATSA Mine

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Sandfire Announces 147Mt Mineral Resource Estimate For MATSA Mine Project

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  • Exploration to continue at MATSA with 35,000 metres of resource development drilling planned in FY23
  • MATSA project includes a processing plant with production capacity of 4.7 million tonnes annually
  • Sandfire on track to achieve FY22 production guidance
  • Cash holding of $390M and net debt of $409.5M at 31 March supports future growth plans
  • Copper accounted for 80 percent of Sandfire’s revenue stream for the year to March 2022
  • Global copper supply deficit estimated at 6 million tonnes pa for the next decade.
  • Rising production profile delivered into historically strong metal markets is positive backdrop.

Sandfire Resources Limited (Sandfire or the Company) is an international mining company which is listed on the Australian Securities Exchange (ASX: SFR). The Company has produced copper and gold in concentrate from its DeGrussa Copper-Gold Mine, located 900km north of Perth in Western Australia, since 2012. Ore reserves from this mine are scheduled to be exhausted this year. In its place, in September 2021, Sandfire announced the intended acquisition of the MATSA Mining Complex in Spain for US$1,865 million. The acquisition was completed in February 2022 and positions Sandfire as one of the largest copper-focused producers on the ASX. Copper is a critical metal for a low-carbon future.

MATSA Mining Operations Mineral Resource Estimate at 147.2Mt

Sandfire today released an update of the Measured, Indicated and Inferred Mineral Resource Estimate (MRE) for its MATSA Mining Operations located in the Huelva Province, Spain, as at 31 December 2021. The updated MRE represents Sandfire’s first MRE for MATSA since it assumed ownership of the project in February 2022.

147.2 million tonnes (Mt) of Mineral Resource Estimate sets a solid foundation for long-term profitable growth at MATSA. The MRE contains an estimated 2.1Mt of copper, 4.4Mt of zinc, 1.5Mt of lead and 187.6Mt of silver. Inclusive of the newly identified resources, contained tonnes have increased by 21 percent with an 11 percent increase in contained copper and a 10 percent increase in contained zinc since the previous MRE stated as at 31 December 2019. The increase more than replaces mining depletion over the intervening 2 years and confirms Sandfire’s due diligence assessment of MATSA’s significant geological potential. The MRE also provides a robust and viable platform for future life-of-mine planning at MATSA.

Evaluation and exploration activity will continue with 35,000m of resource development drilling planned in FY23 across Sandfire’s extensive 2,500 km regional exploration footprint in the Iberian Pyrite Belt.

 The MATSA project includes a processing plant with production capacity of 4.7 million tonnes annually. The plant is centrally located to the 3 MATSA mines which are near one another. The processing plant is located approximately 100 kilometres north of the industrial port city of Huelva. The processing facility uses cutting-edge technology and infrastructure, ensuring MATSA’s contribution to FY2022 production estimates has been strong, placing Sandfire on track to achieve FY22 production guidance.

Looking Ahead

MATSA is a world-class base metal asset that will underpin Sandfire’s growth over the long-term. Importantly, the copper price continues to move higher as the world transitions to a low carbon future. This price rise is offsetting global inflationary cost pressures and supports rising operating margins for Sandfire. Copper accounted for 80 percent of Sandfire’s revenue stream for the year to March 2022.

The recent World Copper Conference, the premier gathering for the global copper industry, forecast an annual copper supply deficit of 6 million tonnes per annum for the next decade. The outlook for zinc, which accounts for around 26 percent of Sandfire’s revenue from MATSA, is similar, with inventories falling to historically low levels.

Sandfire maintains a strong balance sheet with cash holding at 31 March 2022 of $390 million and net debt of $409.5 million.

These global macro developments provide a powerful backdrop to Sandfire’s growth prospects, with a rising production profile being delivered into historically strong metal markets.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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