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SANDFIRE RESOURCES LIMITED Annual Report 2015
65773_rns_2015-08-19_a53be092-0dd1-445f-81e3-1eb9fda23cad.pdf
Annual Report
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June 2015 Full Year Results Webcast –20 August 2015
•Access this presentation at: http://webcasting.brrmedia.com/broadcast/55cac0e0e0d1f9166658faf1 http://www.sandfire.com.au
Important Information and Disclaimer
Forward-Looking Statements
- This presentation has been prepared by Sandfire Resources NL. This document contains background information about Sandfire Resources NL current at the date of this presentation. The presentation is in summary form and does not purport be all inclusive or complete. Recipients should conduct their own investigations and perform their own analysis in order to satisfy themselves as to the accuracy and completeness of the information, statements and opinions contained in this presentation.
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- • This presentation does not constitute investment advice and has been prepared without taking into account the recipient's investment objectives, financial circumstances or particular needs and the opinions and recommendations in this presentation are not intended to represent recommendations of particular investments to particular persons. Recipients should seek professional advice when deciding if an investment is appropriate. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments.
- • To the fullest extent permitted by law, Sandfire Resources NL, its officers, employees, agents and advisers do not make any representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this presentation. No responsibility for any errors or omissions from this presentation arising out of negligence or otherwise is accepted.
- • This presentation may include forward-looking statements. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Sandfire Resources NL. Actual values, results or events may be materially different to those expressed or implied in this presentation. Given these uncertainties, recipients are cautioned not to place reliance on forward looking statements. Any forward looking statements in this presentation speak only at the date of issue of this presentation. Subject to any continuing obligations under applicable law and the ASX Listing Rules, Sandfire Resources NL does not undertake any obligation to update or revise any information or any of the forward looking statements in this presentation or any changes in events, conditions or circumstances on which any such forward looking statement is based.
Important Information and Disclaimer
Competent Person's Statement – Exploration Results
The information in this report that relates to Exploration Results is based on information compiled by Mr. Shannan Bamforth who is a Member of The Australasian Institute of Mining and Metallurgy. Mr. Bamforth is a permanent employee of Sandfire Resources and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Bamforth consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Exploration and Resource Targets
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• Any discussion in relation to the potential quantity and grade of Exploration Targets is only conceptual in nature. While Sandfire is confident that it will report additional JORC compliant resources for the DeGrussa Project, there has been insufficient exploration to define mineral resources in addition to the current JORC compliant Mineral Resource inventory and it is uncertain if further exploration will result in the determination of additional JORC compliant Mineral Resources.
JORC Compliance Statement
- The DeGrussa VHMS (volcanic-hosted massive sulphide) copper-gold deposit is located 900 kilometres north of Perth and 150 kilometres north of Meekatharra in the Peak Hill Mineral Field. The system is hosted within a sequence of metasediments and mafic intrusions situated in the Bryah Basin that have been metamorphosed and structurally disrupted.
- The sulphide mineralisation consists of massive sulphide and semi-massive sulphide mineralisation. Primary sulphide minerals present are pyrite, chalcopyrite, pyrrhotite and sphalerite, together with magnetite. The sulphide mineralisation is interpreted to be derived from volcanic activity. The deposit shares characteristics with numerous VHMS deposits worldwide. Sandfire Resources are currently exploring the defined prospective sequence in its 100% held tenements and within the Talisman Mining earn in and joint Venture agreement.
Karl Simich – Chief Executive Officer
FY2015 in Review
Strong and consistent production; processing enhancements; strong outlook
- •FY2015 production: 67,154t copper and 37,386oz gold; C1 US$1.09/lb
- • Mining and mill throughput: 1.5Mt for the year with rates increased to 1.6Mtpa by year-end; mine development proceeding as planned on C4 and C5
- • Processing plant optimisation programs delivering results:
- • Copper recoveries increased by 2% as a result of flotation improvements and installation of column cell (copper recovery guidance increased to 92% for FY2016)
- • Milling throughput increased following Primary Screen and Pebble Crusher improvements
- • Maiden C4 Ore Reserve and mine life extension to mid-2021: C5 Ore Reserve expected in March 2016 Quarter
- • 10.6MW DeGrussa Solar Power Project to reduce costs and CO2emissions
- • FY2016 production guidance: 65-68,000t copper, 35-40,000oz gold; C1 cash cost US$0.95-1.05/lb
FY2015 in Review
New VMS discovery at DeGrussa; business development; debt restructured
- • Discovery of significant zone of high-grade copper-gold mineralisation – at Monty, 10km east of DeGrussa within the Talisman Mining (ASX: TLM) farm-in: drilling continuing
- • Secured 36% stake in Tintina Resources (TSX-V: TAU) – developing the high-quality Black Butte Copper Project, central Montana, USA
- • Restructure of DeGrussa Finance Facilities – $85M revolver facility and $35M amortising facility at year-end; term extended to December 2017
Financial Results – FY2015
Matthew Fitzgerald – Chief Financial Officer
Headline Financial Results for the Full Year Ended 30 June 2015
Sandfire maintains strong operational and financial performance
- •Sales revenue of $548.6M
- • Strong cash flow from operating activities of $224.0M ($250.1M prior to payments for exploration and evaluation expenses)
- • DeGrussa Mine segment earnings before net finance and income tax of $165.3M
- •Profit before net finance expense and income tax of $119.7M
- •Profit before income tax of $104.8M
- •Net profit after tax $69.0M
- •Earnings per share of 44.18cps (basic and diluted)
- •Cash at 30 June 2015 of $107.2M; finance facility balance reduced to $120.0M
Headline Financial Results for the Full Year Ended 30 June 2015
Sandfire maintains dividend
- •Final dividend of 10.0cps (fully franked)
- •Maintaining dividend stream – $20.4M FY2015 (Interim and Final)
- •Dividend payout ratio increased to 30%
| Sdfiiidiiddtanremanansventpaymens | Diiddven | FY2015 | FY2014 | |
|---|---|---|---|---|
| ()idiiddItnermencpsv | ()fkd3.0nraneu | - | ||
| ()FilDiiddnavencps | ()10.0fllfkduyrane | ()10.0fkdunrane | ||
| ()lTtoacps | ()fkd13.010.0rane | ()fkd10.0nraneu | ||
| ()ihdildEtarnngspersarecps,eu | 44.18 | 50.15 | ||
| Pittayourao | 30% | 20% |
• Balancing shareholder returns (dividends, capital growth, business development and exploration) with operational cash flow requirements (mine development and capital expenditure)
Note: Dividends are presented in the year of their respective earnings, which may differ from the financial year declared and/or paid
June 2015 Full Year Presentation – Headline Income
Income Statement Review – Key Results
- • Increased revenue from copper and gold production – increased metal sold, declining USD copper price (down 19%) offset by lower AUD (also down 19%)
- •Mine operations and employee costs reduced by 6%
- •Post mine gate costs increased 11% with increased sales quantities and concentrate market conditions (TC/RC)
- • Provisional income tax payments for $5,229,000 commenced in the second half of FY2015; $13,128,000 remaining income tax payable
June 2015 Full Year Presentation – Headline Income
Income Statement Review – Key Results
| ()$'000 | J2015une | J2014une | |
|---|---|---|---|
| Slaesrevenue | 548,610 | 525,713 | |
| fibffidPttroeorenenanceanitncomeax | 119,658 | 127,108 | |
| Nfitenanceexpense | ()14,876 | ()15,160 | |
| fibfiPttroeorencomeax | 104,782 | 111,948 | |
| Itncomeaxexpense | ()3825,7 | ()33,970 | |
| Nfifhttteprooreyear | 68,955 | 78,158 |
- •QP realised and unrealised price adjustments, hedge gains - $12,269,000
- •Water ingress expense (Q2 FY2015) – $8,081,000
- • Equity accounted investments and associated financial assets - $14,951,000
- •Equity share of net losses $4,560,000
- •Impairment of investment carrying value $4,943,000
- •Valuation movement on share warrants $5,448,000
June 2015 Full Year Presentation
Balance Sheet Review
| ()$'000 | J2015neu | J2014neu |
|---|---|---|
| ASSETS | ||
| Chdhiltasancaseqaensuv | 107,154 | 57,590 |
| ddhiblTtraeanoerrecevaes | 9,813 | 14,531 |
| Iitnenoresv | 30,951 | 36,501 |
| Ohtttercurrenasses | 931,1 | 2,005 |
| lTtttoacurrenasses | 149,849 | 110,627 |
| Ribleceaesv | 179 | 174 |
| Iitnvenores | 11,698 | 11,698 |
| Miitneproperes | 22,8805 | 98914,4 |
| Plditttroperpananeqpmeny,u | 216,293 | 227,022 |
| Iihdttttnesmenseqmeovuy- | 7,644 | 3,829 |
| Ohfiiltternancaasses | 21,54 | 2,301 |
| lidliEtttxporaonanevauaonasses | 5,233 | 3,148 |
| lTtttoanon-currenasses | 444,889 | 443,075 |
| TOTALASSETS | 594,738 | 553,702 |
- • Cash – approaching zero net debt
- • Inventories – Port and site concentrates, ore stockpiles and stores
- • Mine properties – Underground development continues
- • Property, plant and equipment Plant improvement projects and sustaining capital
- • Investments and other financial assets – Tintina Resources Inc and WCB Resources Ltd shares and warrants
June 2015 Full Year Presentation
Balance Sheet Review
| ($)'000 | J2015une | J2014une |
|---|---|---|
| SLIABILITIE | ||
| Tddhbltraeanoerpaaesy | 39,115 | 45,359 |
| bilibiliiItttneresearngaes | 20,493 | 75,979 |
| Ibltncomeapaaexy | 13,128 | - |
| Piirosonsv | 3,220 | 2,672 |
| Tllibiliitttoacurrenaes | 975,56 | 20014,1 |
| ddhblTtraeanoerpayaes | 294 | 763 |
| Ibilibiliitttneresearngaes | 99,356 | 84,616 |
| Piirovsons | 22,860 | 21,654 |
| Dfdlibiliitteerreaxaes | 48,314 | 30,815 |
| llibiliiTtttoanon-currenaes | 171,004 | 137,884 |
| TOTALLIABILITIES | 246,960 | 261,894 |
| SSSNETAET | 347,778 | 291,808 |
- • Finance facility – $40M repaid during FY2015, $120M remaining ($20M current, $100M non current including $85M revolving facility)
- • Deferred tax liability – a result of taxable income lagging accounting profit
June 2015 Full Year Presentation
Cash Flow and Dividends
Shannan Bamforth – General Manager Exploration
Emerging VMS District – Talisman Farm-In
Recent exploration success highlights potential for multiple centres of mineralisation
- • Sandfire earning 70% interest via $15M farm-in with Talisman Mining (ASX: TLM): $5M spent
- •Two emerging areas of exploration focus
- • Monty – 10km south-east of DeGrussa
- • Significant new high-grade discovery – first discovery outside of DeGrussa
- •Growing footprint of sulphide mineralisation
- • Opens up highly prospective +5km long parallel VMS trend
- •Drilling continuing
- • Homer – 4km east of DeGrussa
- • Thick package of exhalative VMS sequence identified within DeGrussa Mine Corridor
- •Similarities to host sequence seen at DeGrussa
- •Follow-up drilling planned
Monty – new high-grade VMS copper-gold discovery
Recent exploration success highlights potential for multiple mineralisation centres
- • Three significant high-grade copper-gold intercepts to date with drilling continuing:
- • TLDD0004A - 16.5m grading 18.9% Cu and 2.1g/t Au from 409.5m down-hole (true width unknown at this time, top of intercept is 365m below surface)
- • TLDD0005 - 9.2m grading 11.8% Cu and 2.9g/t Au from 417.0m down-hole (true width unknown at this time, top of intercept is 370m below surface)
- • TLRC0004 - 18.0m grading 5.7% Cu and 2.4g/t Au from 108m down-hole and 4.0 metres grading 4.2% Cu and 0.7g/t Au (true width unknown at this time, top of intercepts 90m and 140m respectively below surface)
Next steps:
- • Further diamond drilling up-dip and down-dip to test potential for extensions to mineralisation
- •Ongoing DHEM surveys to guide drilling
- • Diamond and RC drilling along strike to test the entire 5km long prospective sequence
- • Two rigs operating with potential for further drilling capacity to be added
Summary and Outlook
Continued strong outlook for FY2016 and beyond
- • Consistent, low-cost copper-gold production
- •FY2015 performance: 67,154t Cu, 37,386oz gold at C1 US$1.09/lb
- •FY2016 guidance: 65-68,000t Cu, 35-40,000oz Au at C1 US$0.95-1.05/lb
- • New chapter of discovery success and growth at DeGrussa
- •High-grade Monty VMS discovery re-rates district exploration potential
- • Strong cash flow funding growth and shareholder returns
- •Continued dividend stream for shareholders
- •Committed exploration to further extend mine life
- •Cornerstone position acquired in high-grade USA copper project
- •Emerging international and domestic growth pipeline
A premier Australian copper-gold company
Contact Details:
Sandfire Resources NL Registered Office and Principal Place of Business Level 1, 31 Ventnor Avenue, West Perth, Western Australia 6005 T +61 8 6430 3800F +61 8 6430 3849www.sandfire.com.au
Monty Drilling – Additional Information
Table 1 – Drill-hole Information Summary, Springfield Project Details and coordinates of drill collars are provided below:
| leHoID | hDetp | ipD | imhAztu | Grid_ID | Eats | hNotr | RL | LeIDase | leSHotatus |
|---|---|---|---|---|---|---|---|---|---|
| TLDD0002A | 463 | °-61 | °110 | MGA94_50 | 743544 | 7171211 | 602 | /E522282 | Coletemp |
| TLDDA0004 | 817 | °-60 | °148 | MGA94_50 | 743588 | 7171281 | 601 | E/522282 | Coletemp |
| TLDD0005 | 478 | °2-6 | °391 | MGA94_50 | 743544 | 7171211 | 602 | /E522282 | Coletemp |
| TLDD0006 | 554 | °-62 | °138 | GMA94_50 | 743479 | 7171160 | 602 | /E522282 | Coletemp |
| TLRC0004 | 306 | °2-6 | °314 | MGA94_50 | 743497 | 7171025 | 605 | /E522282 | Coletemp |
| TLDD0007 | 895 | °-62 | °138 | MGA904_5 | 307454 | 2717171 | 026 | E2/22825 | Coletemp |
Table 2 – Significant Drill-hole Assay Intersections, Springfield Project Details of all relevant intersections are provided below:
| HoleID | From | To | DoholeWidhtwn | ionIntertsec | |||
|---|---|---|---|---|---|---|---|
| ()Cu% | (/)Autg | ()Zn% | |||||
| TLDD0004A | 409.5 | 426.0 | 16.5 | 18.9 | 2.1 | 1.5 | |
| TLDD0005 | 417.0 | 426.2 | 9.2 | 11.8 | 2.9 | 2.3 | |
| ()TLRC00041 | 107.0 | 125.0 | 18.0 | 5.7 | 2.4 | 3.2 | |
| ()CTLR00042 | 158.0 | 162.0 | 4.0 | 4.2 | 0.7 | 0.1 |
Mineral Resource, Ore Reserve and Mine Plan
Maiden C4 Ore Reserve and Mineral Resource addition extended mine life to mid-2021
- • Previously announced increases to high-grade Underground Mineral Resource incorporated into DeGrussa Mine Plan, extending mine life to mid-2021
- •Maiden Ore Reserve reported for C4 deposit – 2Mt grading 4.5% Cu and 1.5g/t Au
- • DeGrussa Ore Reserve updated based on mining depletion to 31 December 2014 to 10.6Mt grading 3.5% Cu and 1.3g/t Au for 376,000t of contained copper and 456,000oz of contained gold
| Table1 –Deber2014Coisof theUndedMinePlanMinelRedOreRecemmparn orgrounrasource anserve, | ||||||||
|---|---|---|---|---|---|---|---|---|
| DeGrUndedMineussargroun | ()ToMtnnes | ()Co%pper | (/)Goldtg | ()CoinedContatpper | ()CoinedGoldntaoz | |||
| MinePlan | 9.6 | 4.4 | 1.6 | 424,000 | 484,000 | |||
| MinelRerasource | 9.5 | 5.7 | 2.0 | 546,000 | 616,000 | |||
| OreReserve | 7.8 | 4.4 | 1.5 | 343,000 | 368,000 | |||
| DeGrUndedMinebybodyussargrounore | ()ToMtnnes | ()DGMt | ()C1Mt | ()C4Mt | ()C5Mt | |||
| MinePlan | 9.6 | 1.1 | 4.7 | 2.2 | 1.5 | |||
| inelMRerasource | 9.5 | 1.0 | 4.7 | 2.4 | 1.4 | |||
| OreReserve | 7.8 | 1.1 | 4.6 | 2.0 | - |
| Table2 –Deber2OreRe014cemserve | |||||
|---|---|---|---|---|---|
| GrineOrefdeleionDeMRet otussaserve,nep | ()ToMtnnes | Co(%)pper | Gold(/)tg | CoinedCo()ntatpper | CoinedGold()ntaoz |
| UndedMinergroun | 87. | 4.4 | 1.5 | 33,4000 | 38,6000 |
| ()SkpilesToltocta | 2.9 | 1.2 | 1.0 | 35,000 | 89,000 |
| Deber2014 –Toltacem | 10.6 | 3.5 | 1.3 | 376,000 | 456,000 |