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Annual Report

The Sandfire Resources Annual Report is available online at www.sandfre.com.au

1 Annual Report 2022 Sandfire Resources

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Where we operate	3
About Sandfre	4
Our People	6
2022 Year in Review	8
About Copper	11
Chair’s Report	14
Managing Director’s Report	16
Board of Directors	18
Executive Team	20
Operations Review	21
Governance	36
Sustainability	38
Mineral Resources and Ore Reserves	40
Financial Report	45
Shareholder and Investor Information	139
Glossary of Terms	141
Cautionary Notes and Disclaimers	143
Corporate Information	144

About this Report

This Annual Report, approved for release by Sandfire’s Board of Directors, covers the period from 1 July 2021 to 30 June 2022 (FY2022), unless otherwise stated. The report has been prepared in line with Sandfire’s statutory and regulatory obligations and provides a summary of Sandfire’s operating results and financial position.

The information, opinions or conclusions expressed in the course of this report should be read in conjunction with Sandfire’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available on the Sandfire website.

In this report, the terms ‘Sandfire’, the ‘Company’, the ‘Group’, ‘our business’, ‘organisation’, ‘we’, ‘us’, ‘our’ and ‘ourselves’ refer to Sandfire Resources Limited (ABN 55 105 154 185) and, except where the context otherwise requires, its respective subsidiaries.

The Group changed its presentation currency from Australian (AU) dollars to United States (US) dollars, effective 1 July 2021. Consequently, unless otherwise stated, all references to dollars are to US dollars.

Financial and operational results for the MATSA Copper Operations are for the period 1 February 2022 to 30 June 2022, representing the period of operational control.

Our reporting approach

The Annual Report includes the Financial Report and Directors’ Report approved by the Board of Directors, released on ASX on 30 August 2022. The remainder of the Annual Report may include information that was available up until the release date 30 September 2022 of this report, which includes events that have occurred subsequent to the release of the Financial Report.

We welcome your feedback on our report or any other aspect of our business. Please visit the Contact Us page of our website to provide your feedback.

Annual Report 2022 Sandfire Resources 1

“Sandfire’s vision to create an international and diversified sustainable mining company has rapidly taken shape with the transformational acquisition of the MATSA Copper Operations in south-western Spain.

Karl Simich CEO & Managing Director

2 Annual Report 2022 Sandfire Resources

Where we operate

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Operating Mines

1. MATSA Copper Operations, Spain

Study phase

5. Old Highway Gold Project, Western Australia

2. DeGrussa Copper Operations, Western Australia

Exploration

Development Phase

3. Motheo Copper Project, Botswana T3 and A4 Deposits

6. Iberian Pyrite Belt Exploration, Spain and Portugal

7. Kalahari Copper Belt Exploration, Botswana and Namibia

8. Black Butte Exploration, Montana, USA

9. New South Wales Exploration, Australia

4. Black Butte Copper Project, Montana, USA Johnny Lee and Lowry Deposits

10. Doolgunna Province Exploration, Western Australia

Annual Report 2022 Sandfire Resources 3

About Sandfire

Our Purpose Creating value through opportunity

Captures the essence of Sandfire’s journey to date as well as our aspirations into the future.

Annual Report 2022 Sandfire Resources

Sandfire Resources Limited is an international and diversified sustainable mining company which is listed on the Australian Securities Exchange (ASX:SFR).

With a strong operational base, our business is underpinned by a demonstrated commitment to the highest standards of safety, responsibility and sustainability. We have firmly established a reputation as a consistent and reliable performer, with over ten successive years of safe and profitable operations from our DeGrussa Copper Operations, located 900km north of Perth in Western Australia.

The strong cash-flows generated by DeGrussa have provided us with the platform to grow and diversify across the globe, through the acquisition of the MATSA Copper Operations in Spain, and the development of new long-life copper projects in Botswana and the USA.

Our Values

Our values guide our behaviour. They are a part of every decision we make.

Honesty

Accountability

Respect

Performance

Collaboration

Desired Outcomes

We are proud of what we do , how we • We deliver on our commitments operate and the positive impact we have while and responsibilities together delivering on our strategy • Our fit for purpose approach drives
• We live our values committed to acting excellence, ownership, productivity, respectfully and with integrity across all growth and development stakeholders
Our diverse and inclusive culture contributes to our successes and enables a sense of belonging and pride
We are committed to achieving sustainable and profitable operations

Annual Report 2022 Sandfire Resources 5

Our People

The people who work with us are our greatest asset. We aim to create an inclusive and supportive workplace, where people are empowered to achieve their full potential. Our future success and ability to execute our strategic plan depends on attracting, retaining and empowering the right people with the right skills for today and tomorrow.

Sandfire’s Our People Policy sets out our commitment to our people. The policy is supported by our standards and policies which detail our approach for creating a values driven workplace where our people can thrive. Our approach is informed by ongoing dialogue with our people, biannual performance reviews and annual people surveys, which we use to measure performance and receive feedback about our business.

Employment

We aim to create an enriching work environment for our people where they are able to bring their authentic selves to work each day through living our values of honesty, respect, collaboration, accountability and performance.

Providing opportunities for our people to develop both professionally and personally is a key pillar of our value proposition as an employer and commitment as a member of the Global Extractive Industry. We view capability development programs as a benefit to all parties, driving greater employee engagement, satisfaction and productivity.

Sandfire also provides further education sponsorship opportunities for our employees. These development programs are designed to develop our people in their current roles and into their future careers. Our internal development and external development pipelines are tightly linked to ensure a seamless pathway of growth within our business.

Diversity

Sandfire is committed to fostering a culture of diversity and inclusion, where differences are valued, and everyone is welcomed and treated with respect. We believe that the diverse backgrounds and experiences of our people positively contribute to our organisational culture and the strategic outcomes of the business.

We have committed to achieve a workforce and leadership team that is representative of our growing, diverse international footprint. Our Diversity and Inclusion Policy details how we achieve our commitment to create a diverse and inclusive workforce.

Gender Diversity

Details on Sandfire’s commitment to improve female participation in our workforce, including our measurable objectives to increase the representation of women at every level within Sandfire, are contained within our 2022 Corporate Governance Statement. At 30 June 2022, women make up 23% of our direct employees Globally.

Benefits to our employees

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Reward Empower Train Educate Communicate
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We help our people thrive and grow through an inclusive environment and a commitment to learning and development.

6 Annual Report 2022 Sandfire Resources

Annual Report 2022 Sandfire Resources 7

2022 Year in Review

Our Achievements

Delivered against our Strategic Imperatives

Execute Delivery

Maximise the value of our existing operations and proceed to production in Botswana.

Build a Sustainable Production Pipeline

Strong Group production including a 5-month contribution from the MATSA Copper Operations.
• Progressed development of the 3.2Mtpa Motheo Copper Mine in Botswana.
• Progressed the Motheo Expansion definitive feasibility study, outlining a clear pathway to expand the Motheo Copper Operations to 5.2Mtpa.
Completed the transformational US$1.865 billion acquisition of the MATSA Copper Operations in Spain.

Build a sustainable production pipeline to support pathway to 150kt Cu pa equivalent production by 2025.

Accelerate Discovery

Continue to build and leverage our exploration capability to maximise chances of success.

Align and Empower Our People

Ensure all parts of the business are aligned with long-term strategic outcomes.

Optimise Capital Strategy and Engagement

Position the capital structure to support the strategy and ensure investors and stakeholders are suitably engaged.

Global centralised exploration strategy embedded.
• Increased exploration tenure in highly prospective regions, including the Kalahari Copper Belt and the Iberian Pyrite Belt.
Broadened Executive Committee structure and key management appointments.
Board succession process.
Strong cash flows from operating activities.
• Profitable sale of Sandfire’s investment in Adriatic Metals.
Maintained appropriate funding mix and leverage.

8 Annual Report 2022 Sandfire Resources

Performance highlights

Consistent Operations

Our operations maintained strong reliability during the year, leading to high-margin production.

We continued to achieve these results safely, with significant improvement in key safety indicators.

3.8TRIFR Decreased from 4.0 in FY2021

t 4,102 Lead

t 98,367 Copper

oz 32,285 Gold

t 38,907 Zinc

1.5Moz Silver

Financial Strength

Supported by continued strength in the copper and zinc price, we achieved record sales revenue for the year.

The Group’s cash position at year end remained strong, balancing the Group’s rapid international growth and development pipeline.

$111.4M Net Profit (attributable to equity holders)

$439.5M Operating Cash Flow (prior to exploration)

$463.1M Cash (year-end balance)

$447.3M Group EBITDA

$922.7M

Sales Revenue

Creating Value

We continued to conduct our business responsibly and support the communities in which we operate.

Our product, copper, plays an important role in sustainable development as a key part of the renewable energy transformation.

$73.0M Spent on Employee Wages

Saved t 14,117 of CO -e[through solar use ] 2 in Australia

$563M

Spent on Contractors and Suppliers

3,651 Total Workforce including direct Employees and Contractors

Annual Report 2022 Sandfire Resources 9

[29] Cu Copper

Copper is a chemical element with the symbol Cu (from Latin: cuprum) and atomic number 29. It is a soft, malleable, and ductile metal with very high thermal and electrical conductivity.

Annual Report 2022 Sandfire Resources

About Copper

Copper goes into products that we use everyday.

Electrical & Electronic

Wind turbines, air conditioning and heating, smartphones

Consumer & General Products

Coins, jewellery, fungicides

Building & Construction

Wiring, piping and plumbing and earthing systems

Machinery & Metallurgy

Transformers, generators, power stations

Transportation Equipment

Car wiring (particularly in electric vehicles), motors, plane, train, ship electronics and wiring

Renewable Energy

Renewable energy systems use up to 12 times more copper than conventional power systems[3] .

Recycling

Unlike many other resources and metals, copper boasts the ability to be recycled and reused.

Green Technologies

Given expected increase in green technologies - including electric cars - copper consumption is predicted to rise by more than 40% by 2035[3] .

Superior Conductivity

Copper has a superior electrical and thermal conductivity, is highly durable and can be 100% recyclable, without any loss in performance.

Solar Power

Copper’s combination of high heat conductivity, resistance to atmospheric and aqueous corrosion, ease of fabrication, sealability (joining by soldering), mechanical strength and longevity offer strong advantages over any other material in solar power heating applications.

3 copperalliance.eu

Annual Report 2022 Sandfire Resources 11

Copper Market Opportunity

Copper is entering a new era of historical growth as a future-facing metal, critical for the global energy transition.

As many nations and regions, including the United States and the European Union, target a goal of Net-Zero Emissions by 2050, copper – the “metal of electrification” – is essential to the world’s energy transition plans. However, as the global energy transition to achieve Net-Zero gathers pace, a looming supply gap for copper is starting to emerge.

To achieve global Net-Zero Emissions by 2050, a recent report by S&P Global projected that copper demand would grow from 25 million metric tonnes (MMt) today to about 50MMt by 2035, a record-high level that will be sustained and continue to grow to 53MMt by 2050. New sources of copper supply must come online in the near-term to ensure the goal of Net-Zero Emissions by 2050 remains within reach.

Global refined copper usage

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60
50
40
30
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0
2021 2025 2030 2035 2040 2045 2050
T&D Auto and Charging Solar PV Wind Battery Storage Non Energy Transition Demand Other Power
Millions of metric tonnes
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Note: Based on S&P Global’s Multitech Mitigation scenario; US values are adjusted to align with Biden administration’s net-zero ambitions. T&D = transmission and distribution; PV = photovoltaics; other power includes conventional generation (coal, gas, oil, and nuclear), geothermal, biomass, waste, concentrated solar power, and tidal. Source: S&P Global analysis

Despite this accelerating demand outlook, global mine supply remains structurally challenged due to declining discoveries and mine grades. This presents an opportunity for companies such as Sandfire with high-quality copper operations, a strong development pipeline, and a commitment to maintaining strong governance, environmental and social standards.

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12 Annual Report 2022 Sandfire Resources

“

Copper remains pivotal to the global green energy transformation, with a looming supply deficit as the move towards global Net-Zero Emissions gathers pace. Sandfire is extremely well placed to help meet this rising demand.

Karl Simich CEO & Managing Director

Annual Report 2022 Sandfre Resources 13

Chair’s Report

It is a great privilege to present my first report as Chair of Sandfire, and to reflect on what has been a transformational year for the Group.

Strategic Growth Plan and FY2022 Performance

The Group’s underlying business performance remained strong in FY2022 as our leadership team delivered against the objectives and targets of our Strategic Growth Plan.

The company-defining acquisition of the MATSA Copper Operations in south-western Spain immediately transformed Sandfire into one of the largest copper-focused producers on the ASX and allowed us to join the global league of base metals producers. The acquisition introduces a cornerstone, long-term asset into Sandfire’s asset portfolio, ahead of the imminent closure of the DeGrussa Copper Operations in Western Australia. With a focus on key value drivers, our team is now working towards a 5-year optimisation plan at MATSA and the Board is confident that it will form the foundation of our Company’s success. Together with the significant development progress made at our Motheo Copper Mine in Botswana – which is on track to start production in the latter part of FY2023 – we are well placed to achieve our growth ambitions.

Sandfire delivered strong operating and financial performance in FY2022, with above-guidance production results leading to record sales revenue of US$922.7 million, operating cash flows of US$391.2 million and net profit of US$109.4 million. Importantly, this strong performance was achieved safely, with the Group’s total recordable injury frequency rate (TRIFR) reducing to 3.8 (FY2021: 4.0). As the COVID pandemic evolved around the world, we continued to implement rigorous controls and response measures to protect the health and wellbeing of our workforce and communities. This proactive approach enabled the Group to maintain production at its operations and allowed us to capture the value of strong commodity prices.

Whilst these achievements and progress are yet to be reflected positively in the Company’s share price, I want to assure shareholders that the Board is confident that the significant decisions we have made during the year has given Sandfire an outstanding platform for growth. We are producing copper, a critical metal for a low-carbon future, and our increasing production profile and pipeline has us very well positioned to deliver into markets and uses focussed on future-facing commodities. Sandfire recognises that producing “green” metals alone is not sufficient and the Board has increased its focus on sustainability of that production during the year.

Renewables-focused energy solutions are being planned and implemented at both our MATSA and Motheo operations and we will set out our pathway to net-zero emissions in the near future.

Further details on the Company’s performance are contained in the Managing Director’s report and subsequent sections of this Annual Report.

Board Structure and Succession

We have significantly refreshed the composition of the Board to ensure we reflect an appropriate balance of attributes, skills and experience to effectively oversee Sandfire’s next era of growth.

The Company announced the appointment of highly experienced international business leaders Sally Martin and Robert Edwards to its Board as Independent Non-Executive Directors in July 2022. Each of these directors bring extensive skillsets, and a wealth of knowledge that have already proven invaluable to the Board.

Long standing Chair and Non-Executive Director, Derek La Ferla, recently retired from the Board. Derek led the Board during Sandfire’s rapid growth phase from junior explorer to successful mid-tier miner. He also presided over Sandfire’s transition into an international, multi-asset copper producer with the acquisition and successful integration of MOD Resources Ltd, which brought the Motheo Copper Project into the Company’s portfolio, and, more recently, the MATSA Copper Operations in Spain. On behalf of the Board, I would like to thank Derek for his significant contribution during his 12 years of service as Chair and Director.

The Board succession process has also continued to increase the level of gender diversity on the Board, with three out of seven current sitting directors now being female. Sandfire continues to support the Australian Institute of Company Director’s (AICD) Board diversity initiatives and will continue to evolve its Board in alignment with Company’s needs and diversity best practice.

With enhanced international natural resources experience, ESG credentials, and diversity, our refreshed Board collectively has the right balance of skills necessary to oversee the Group’s expansion and create long-term shareholder value.

14 Annual Report 2022 Sandfire Resources

“ The company-defining acquisition of the MATSA Copper Operations in southwestern Spain immediately transformed Sandfire into one of the largest copperfocused producers on the ASX and introduces a cornerstone, long-term asset into the Company’s asset portfolio.

John Richards, Non-Executive Chair

Environment, Social and Governance (ESG)

We continuously consider the broader economic, environmental and social impacts to which our activities contribute as this has implications for how we pursue our organisation’s long-term strategy and goals. This increasing focus appropriately comes as we see rising expectations from a range of stakeholders for metals to be responsibly mined. These expectations encompass a breadth of sustainability issues including response to environmental concerns and business risk such as climate change and water scarcity, commitment to an ethical supply chain, transparency, and maximising social and economic benefits to communities.

In FY2022 we continued to develop and refine our ESG framework to reflect our global footprint, with particular emphasis on climate change and reducing carbon emissions in line with international targets. Sandfire’s updated Group ESG strategy and targets are being finalised and will be presented in the Company’s annual Sustainability Report in the coming weeks.

Capital Management and Shareholder Returns

Sandfire maintains a disciplined approach to capital management. To complete the acquisition of MATSA, the Group increased its level of financial leverage in FY2022, securing US$795 million of financing facilities. We intend to undertake a similar approach to leverage the value of our new Motheo Copper Mine in Botswana, with the Company targeting an initial US$140 million of project financing to complete the development and construction of Motheo, ahead of further planned expansion with the inclusion of the A4 Deposit.

In keeping with our prudent approach to capital management, the Board has elected to pause dividend payments in the near term to focus on this period of transformative growth and balance sheet transition. The Board continually balances the need to repay debt and fund the ongoing growth of the business against returning capital to shareholders in the form of dividends and will further assess this position at the next reporting period.

Market and Sandfire Outlook

It would be remiss of me not to touch briefly on the volatile and challenging market conditions which have unfolded in the latter half of FY2022 and into FY2023. Sandfire has not been immune to these challenges and our share price has been significantly along with those of many resource companies globally, by rising inflation and input costs, rising interest rates and, more recently, lower commodity prices.

While these impacts cannot be ignored, I believe the Sandfire team has done an excellent job in managing the factors that are within our control and continuing to focus on building the strength of our long-term asset base and the capability of our team. Given the underlying quality of the business, the positive outlook for copper and our strong asset base, I am confident that the Company is well placed to grow and prosper in the longer term.

In conclusion, I would like to acknowledge the hard work and commitment of my fellow directors and senior management team, capably led by our long-serving Managing Director and CEO, Karl Simich, and thank them and our staff for their efforts. I would also like to thank our shareholders for your continued support.

I believe that our achievements over the past 12 months have put Sandfire in excellent stead to deliver strong business growth and positive returns to shareholders. Sandfire enters the 2023 financial year on strategy and well prepared to manage an uncertain nearterm environment.

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John Richards Non-Executive Chair

Annual Report 2022 Sandfire Resources 15

Managing Director’s Report

2022 has been a transformative year for Sandfire in which we delivered strong financial results driven by our profitable copper operations and announced investment decisions to ensure that Sandfire is a resilient and diversified company in the future.

The significant achievements of the past 12 months have fundamentally changed the face of Sandfire and set the scene for our next decade of growth. Sandfire’s vision to create an international and diversified sustainable mining company has rapidly taken shape with the transformational acquisition of the MATSA Copper Operations in south-western Spain.

Quality assets like this are rare in the global base metals space. The fact that Sandfire was able to transact on an asset of this scale, raise equity and leverage its balance sheet with project finance to complete the deal, and then seamlessly integrate it into our business are incredible achievements that should be celebrated. The acquisition will deliver increased operating scale, portfolio diversity and financial strength to fund investments into the future and return value to shareholders by growing the business and our exposure to future-facing commodities.

Our team at MATSA has worked diligently to ensure an orderly and efficient transition of the MATSA operations into Sandfire’s global business, while ensuring operating continuity. We are well progressed on a number of important optimisation programs at MATSA. The recent publication of Sandfire’s inaugural MATSA Mineral Resource and Ore Reserve estimates has established a strong foundation to support our life-of-mine planning and the growth and optimisation of this asset over the coming years, along with increased mine production and plant throughput.

Our performance

The five key pillars that underpin our corporate strategy – Execute Delivery, Build a Sustainable Production Pipeline, Accelerate Discovery, Align & Empower our People, and Optimise Capital Strategy & Engagement – have remained at the heart of our business activities over the course of the year, and our global team has delivered pleasing progress against each of these objectives.

Global production for the year totalled 98,367 tonnes of contained copper and 38,907 tonnes of contained zinc, plus by-products lead, gold and silver. The results were above our guidance range for FY2022 and the increased production led to record sales revenue of US$922.7 million and a net annual profit after tax of $109.4 million. We generated operating cash flows of $439.5 million prior to payments for exploration and evaluation, an increase of 10% from 2021.

Cost performance in FY2022 was challenged by strong global inflationary pressure on energy, labour and supplies costs, predominantly driven by the lagging impacts of the COVID-19 pandemic and the conflict in Ukraine. These cost pressures impacted our operating margins and led to a Group C1 Unit Cost of US$1.27/lb Cu payable, above our guidance of ~US$1.19/lb Cu.

Despite these pressures, the Group’s performance remained resilient and since assuming ownership of MATSA in February 2022, the operation has performed solidly, generating an EBITDA margin of 51% for the five months to the end of June 2022 as we advance underground development activities and grade control drilling ahead of short and medium term production.

The safety, health and wellbeing of our people is integral to our success, and I am pleased to advise that our safety performance remained strong during FY2022, with the year-end TRIFR reducing to 3.8. We will continue to actively promote a culture of compliance, where our people uphold the Sandfire philosophy of ‘Don’t Walk Past’ as we look to further integrate our safety management systems into our global operations.

From a segment perspective, our DeGrussa Copper Operations in Western Australia delivered another year of safe and profitable production, generating robust margins and making a strong contribution to our Group results. Mining of sulphide ore is scheduled to complete in September 2022, with processing to cease in October 2022. We have developed a detailed care and maintenance and mine closure plan for DeGrussa, with retention and engagement programs in place for our staff and contractors. We are also investigating the opportunity to extend the operations through processing of existing mineralised waste and oxide stockpiles using the current plant infrastructure. Further reporting on these initiatives will be made as part of our quarterly reporting.

In Botswana, we have continued to progress the development of the new Motheo Copper Mine. With the positive results of our Motheo Expansion Project definitive feasibility study (DFS), Motheo is scheduled to produce up to 55,000t of copper in concentrate with the inclusion of the A4 Deposit. Despite the widespread labour and supply shortages that persisted throughout the year, the Motheo development schedule is on track, with first production from the 3.2Mtpa Project expected in the June 2023 Quarter. However, Sandfire has not been immune from global inflationary cost pressures, with a recent modest upwards revision in Motheo’s projected capital cost, mainly due to increased fuel and mining costs.

16 Annual Report 2022 Sandfire Resources

“

Karl Simich, Managing Director & CEO

People, culture and sustainability

Sandfire has built a vibrant corporate culture and strong values over the past decade – founded on teamwork, reward for performance and regular and open communication. I am pleased to see this strong culture now being deployed on the world stage as we develop our effective and coordinated global systems.

Reflecting the expanded scope of our operations, we have expanded our senior management team to ensure the Company is appropriately structured and resourced for its next growth phase. Key appointments included the promotion of Richard Holmes to Executive – Growth, with responsibility for the overall strategic oversight and management of the Company’s global business development opportunities and organic exploration programs, and Scott Browne’s appointment as Executive – People & Performance, focused on enhancing Sandfire’s culture and the engagement and high performance of its employees and contractors.

Key progress was made during the year towards our ESG objectives aligned to our sustainability strategy. We continued to operate the DeGrussa Solar Facility at maximum efficiency during FY2022 and explored green energy options at Motheo and MATSA, including the climate and economic benefits that can be derived from these projects.

Studies for solar power generation were completed for the Motheo Copper Project, including scope for the 5.2Mtpa Expansion Case, and environmental permitting commenced by the end of the reporting period. Sandfire is conducting further emissions modelling of our footprint to understand and effectively manage emissions intensity with our expanded portfolio.

As part of the Group’s community initiatives in the Ghanzi region, the Company also completed studies for a Community Based Agri-Business in Botswana to effectively utilise farmland at Motheo.

Sandfire is committed to open and transparent communication about its social and environmental performance and our 2022 Sustainability Report, to be released in the coming weeks, will provide comprehensive disclosure on how we manage our social and environmental impacts and contribute to sustainable development.

Outlook

Sandfire enters FY2023 with great opportunity as well as some risks on the horizon relating to elevated inflation, rising interest rates and increased commodity price volatility. In the past, Sandfire has withstood a range of market conditions by remaining focused on our long term corporate objectives. I am confident that this focus will continue to serve the business well in FY2023 and beyond.

The Group is well positioned in the current environment and the long-term outlook for our commodities, particularly copper, is very robust. Copper remains pivotal to the global green energy transformation, with a looming supply deficit as the move towards global Net-Zero Emissions gathers pace. Sandfire’s asset portfolio – comprising high-quality copper producing assets in Tier-1 jurisdictions and surrounding prospective ground holdings, and a growing production profile in the medium term – means Sandfire is extremely well placed to help meet this rising demand.

Sandfire has a fantastic, committed team that thrives on the opportunity to manage businesses for the long term and I would like to thank each and every one of our hardworking Sandfire team members for their efforts over the year. Our global workforce are working hard to build a single unified “One Sandfire” team.

This has been an exciting and transformative year, and I have every confidence in Sandfire’s ability to deliver growth into the future and continue to build a significant, international copper company.

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Karl Simich Managing Director & CEO

Annual Report 2022 Sandfire Resources 17

Our Leadership

Board of Directors

The Board of Directors guides and monitors the business and affairs of the Group on behalf of the shareholders by whom they are elected and to whom they are accountable.

John Richards

Karl Simich

Sally Langer

Independent Non-Executive Chair

B.Econ (Hons)

Mr Richards is an economist with more than 35 years’ experience in the resources industry. He has held strategy and business development positions across several mining companies and has worked extensively in the investment banking and private equity industries. He has been involved in a wide range of significant mining M&A transactions on a global scale.

Mr Richards is also a Non-Executive Director of leading gold producer Northern Star Resources Ltd and Lead Independent Director of mineral sands company Sheffield Resources Ltd.

Managing Director and Chief Executive Officer

B.Com, FCA, F.Fin

Mr Simich is an experienced international mining executive who has been involved in the financing, construction, development and operation of various mining projects in New Zealand, Australia and Africa. Specialising in resource finance and corporate management, Mr Simich has been a director of and held senior positions with a number of ASX-listed mining companies.

Karl is accountable to the Board of Directors for the day to-day management of the Company.

Independent Non-Executive Director

B.Com, CA, AICD

Ms Langer has 25 years’ experience in Professional Services including as founder and Managing Partner of the management consulting and executive recruitment firm Derwent Executive, where she set up and led the growth of the Perth office servicing a wide range of clients both local and national and led the Mining and Industrial Practice. Prior to that, she was a Director at international recruitment firm Michael Page and a Chartered Accountant at accounting and consulting firm Arthur Andersen.

Note: The skills, experience, and expertise of each Director, including current and former directorships are set out in more detail in the Directors’ Report, as well as on the Directors page of our website.

18 Annual Report 2022 Sandfire Resources

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From left to right: Jenn Morris, Robert Edwards, Sally Martin, John Richards, Karl Simich, Sally Langer and Roric Smith.

Roric Smith

Jenn Morris

Robert Edwards

Sally Martin

Independent Non-Executive Director

B.Sc, B.Sc (Hons) Geology, Ph.D Geology, MAICD

Dr Smith is a highly experienced geologist with extensive Australian and international experience. Dr Smith was previously Vice President, Discovery and Chief Geologist for Evolution, where he played a key role in leading that company’s exploration efforts. Prior to joining Evolution, Dr Smith held senior executive positions with the gold producer AngloGold Ashanti, including as Senior Vice President, Global Greenfield Exploration; Country Manager and Chief Representative China; Exploration Manager – North Asia Region; and Chief Geologist Australia.

Independent Non-Executive Director

B.Arts, MAICD, Finance for Executives (INSEAD)

Ms Morris is a former partner of global professional services firm Deloitte where her career spanned more than 10 years working across the mining, government and transport sectors. Her experience includes advising government entities and corporations on strategy development, governance controls, business transformation, the embedding of environment, social and governance related policies, the development of leadership and understanding of highperformance environments.

Ms Morris is a Fellow of Leadership WA and a member of the Vice Chancellor’s List, Curtin University. Prior to her business career, she was a member of the highly successful Australian Women’s Hockey Team which won Olympic gold medals at both Atlanta in 1996 and Sydney in 2000. In 1997, she was awarded a Medal of the Order of Australia (OAM).

Independent Non-Executive Director

BE (Hons) Mining, Member of the IOM

As a mining engineer, Mr Edwards has worked in the natural resources industry for over 30 years across production mining, new business development, equity research and investment banking.

Robert is the former

Chairman of Global Mining and Metals at Renaissance Capital, providing oversight over investment banking and principal investment activity in the mining, metals and fertiliser sectors. He has also worked for HSBC, the Royal Bank of Canada and served as Non-Executive Director of a number of listed entities, including MMC Norilsk Nickel until early 2022, the world’s biggest producer of nickel and palladium as well as major producer of copper and platinum.

Independent Non-Executive Director

BE (Elec), AICD

Ms Martin is a former senior executive who has held various roles at Shell over the last 34 years. She has extensive operational and business team leadership experience in complex industrial environments including refining and trading. She also has deep working knowledge of stimulating and leading transformational change – most recently as General Manager, Trading and Supply Operations, Europe & Africa. Ms Martin has strong ESG credentials, including in energy transition strategy development as Vice President Health, Safety, Security, Environment & Social Performance at Shell.

Annual Report 2022 Sandfire Resources 19

Our Leadership

Executive Team

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Matthew Fitzgerald

Chief Financial Officer and Company Secretary

B.Com, CA

Mr Fitzgerald is a chartered accountant with extensive experience in the resources industry. He began his career in the Assurance & Advisory division of KPMG, before joining ASX listed Kimberley Diamond Company NL in 2003, where he held the position of Chief Financial Officer and Director until July 2008. Mr Fitzgerald is also the Chair of the Company’s subsidiary, Sandfire Resources America Inc. (TSX-V: SFR), which is permitting the Black Butte Copper Project in Montana, USA.

Matthew’s role includes responsibility for statutory financial compliance and reporting, taxation, treasury, and procurement. Matt also supports the Board as well as advising and implementing good governance practices across the organisation, while providing oversight of corporate affairs, investor relations and legal matters.

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Jason Grace

Richard Holmes

Chief Operating Officer

Executive Growth

BSc Hons (Geology/ Geography), MSc & DIC (Applied Structural Geology and Engineering Rock Mechanics)

B.AppSc (Geo), B.Sc (Hons), MMinEng, MEnt (Exec)

Mr Grace is an experienced mining professional with industry experience spanning Australia and the AsiaPacific region and ranging across multiple disciplines including general and operational management, technical leadership, business improvement, mineral resource evaluation, mine planning and mine geology. He was most recently Executive General Manager – Iron Ore for diversified mining services group Mineral Resources Ltd (ASX: MIN), where he managed the group’s Australian iron ore business.

Mr Holmes is a geologist who has a mining industry career spanning 25 years across the globe with practical experience in over 35 countries. He brings a wealth of experience in leadership, strategic thinking, exploration management, business development, innovation and strong technical evaluation skills that are reinforced by extensive experience reviewing the technical/ financial/commercial aspects of many projects throughout the world. Richard joined Sandfire following his role at Oz Minerals Ltd (ASX:OZL) as the Head of Exploration and Growth, where he successfully built a global pipeline of growth opportunities.

Jason’s role is accountable Oz Minerals Ltd (ASX:OZL) as for the day-to-day operational the Head of Exploration and delivery and performance of Growth, where he successfully the Company. This includes built a global pipeline of growth the DeGrussa Copper opportunities. Operations, MATSA Copper Operations and development Richard’s role is accountable and construction of the Motheo for the growth of the Sandfire Copper Project. Jason’s role exploration and development also includes responsibility portfolio through partnering, for operational planning acquisition and divestment and forecasting, sales and of assets aligned with the marketing, and oversight of the Company strategy. Company’s ESG activities and reporting.

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Scott Browne

Executive People and Performance

B.Com (Hons), AICD

Mr Browne is an experienced human resources leader, with more than 20 years experience within senior and global HR roles. Mr Browne was most recently the Vice President People for Rio Tinto’s Iron Ore business, a position he held from March 2019. In this role, Scott was a member of the Rio Tinto Iron Ore Executive Leadership Team and responsible for direct and functional leadership of the Western Australian People Function. This included the development and delivery of the people strategy, business partnering, capability development, employee relations, talent, performance and remuneration.

Scott’s role is to provide leadership and oversight of all people and culture activities, including oversight of the Company’s global operating model, diversity, equity and inclusion initiatives, learning and talent development and reinforcing the organisation’s culture, purpose and values.

20 Annual Report 2022 Sandfire Resources

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Operations Review

Annual Report 2022 Sandfire Resources 21

MATSA Copper Operations

Iberian Pyrite Belt, Spain

Production (5 Months)

30,628t Copper t Zinc 38,907

C1 Operating costs

Operations EBITDA

$1.45/lb $150.6M of Cu 51 % Margin

Sandfire completed the US$1.865 billion acquisition of the MATSA Copper Operations in February 2022, with this new, cornerstone asset, now fully integrated into the Company’s business.

The MATSA Copper Operations are located in the Huelva Province of south-western Spain in the northern portion of the Iberian Pyrite Belt. MATSA is a substantial polymetallic mining operation comprising a 4.7Mtpa central processing facility that sources ore from three underground mines, Aguas Teñidas and Magdalena Mines in Almonaster la Real and the Sotiel Mine in Calañas, producing copper, zinc and lead mineral concentrates that are shipped from the port of Huelva.

Acquisition and integration

During the reporting period, Sandfire entered into a binding sale and purchase agreement (SPA) with Trafigura and Mubadala Investment Company to acquire 100% of Minas De Aguas Teñidas (MATSA) for a total consideration of US$1.865 billion.

Following the satisfaction of conditions precedent including the receipt of key approvals for the transaction from the relevant Spanish Government authorities, Sandfire completed the MATSA acquisition on 1 February 2022.

The consideration was funded through a combination of existing cash reserves, an AU$1.248 billion equity raising completed in October 2021, and the proceeds of a US$650 million MATSA Syndicated Debt Facility and AU$200 million Corporate Debt Facility.

The details and terms of the debt facilities and associated hedging were provided in the ASX announcement dated 27 October 2021.

Formal rollout of integration activities commenced immediately to ensure an orderly and efficient transition of the MATSA operations into Sandfire’s global business, while working with MATSA’s management and operational teams to ensure business continuity.

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Spain
Madrid
MATSA Copper
Operations
Huelva
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22 Annual Report 2022 Sandfire Resources

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Key integration projects completed during the period included:

Operations improvement initiatives;
Review and update of the MATSA Mineral Resource and Ore Reserve estimates (released subsequent to year-end);
Long-term mine planning; and
Plant readiness, recovery and production optimisation initiatives.

With a focus on key value drivers, Sandfire is now working towards an optimised 5-year plan for the MATSA Copper Operations underpinned by a safety improvement plan, a program to improve mine productivity and expand throughput beyond 4.7Mtpa, near mine mineral resource extensions at existing mines, as well as an expansive exploration program.

Production performance

The MATSA Copper Operations delivered operating performance for the five-month period 1 February to 30 June 2022, representing the period of Sandfire’s operational control, above FY2022 guidance.

			FY2022	FY2022
Production Statistics1,2,3		Units	Total	Guidance
Mining	Total Ore	Tonnes	1,880,936
	Ore – Cupriferous	Tonnes	508,799
	Grade – Cupriferous	Cu%	2.3
	Ore - Poly	Tonnes	1,372,137
	Grade – Poly	Cu%	2.0
	Grade – Poly	Zn%	3.9
Concentrator	Total Milled	Tonnes	1,891,319
	Ore – Cupriferous	Tonnes	529,412
	Grade – Cupriferous	Cu%	2.2
	Ore - Poly	Tonnes	1,361,907
	Grade – Poly	Cu%	2.1
	Grade – Poly	Zn%	3.9
Concentrate produced	Concentrate Contained Copper Contained Zinc Contained Lead Contained Silver	Tonnes Tonnes Tonnes Tonnes Ounces	248,263 30,628 38,907 4,102 ~1.2Moz	~27kt ~38kt ~3kt ~1.1Moz

Note: 1 Refer to Sandfire’s June 2022 Quarterly Report and related presentation released to the ASX on 28 July 2022 for further details relating to mining and processing performance for MATSA.
2 FY2022 production is for the period from 1 February 2022 to 30 June 2022, reflecting the period of Sandfire’s operational control.
3 Mining and production statistics are rounded to the nearest 0.1% Cu and Zn grade. Errors may occur due to rounding.
Production statistics are subject to change following reconciliation and finalisation subsequent to the end of the year.

Annual Report 2022 Sandfire Resources 23

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Production was sourced from the Magdalena, Aguas Teñidas and Sotiel Mines during the period. Since acquisition, MATSA has delivered a significant improvement in mine production with performance in the FY2022 June Quarter achieving an annualised rate of over 4.5Mtpa across all three mines. This was primarily due to improved short-term planning approaches and optimisation of stope designs.

Mill throughput for the period achieved an annualised processing rate of 4.5Mtpa, supported by strong plant utilisation and throughput rates. Copper and zinc metal production exceeded target and guidance due to higher than forecast mined grades from Aguas Teñidas and Magdalena.

Financial performance

Cost inflation, rising energy costs in Europe and lower by-product zinc prices led to above guidance cost performance, with C1 operating costs for the period of US$1.45/lb of copper (FY2022 Guidance: ~US$0.98/lb of Cu).

	US$/lb
Operating costs1,2	Cu payable
Mining	1.17
Processing	0.68
Depreciation and amortisation	0.24
Transport	0.49
Treatment and refning charges	0.35
Gross operating costs	2.94
By-product revenue	(2.05)
By-product transport	0.19
By product treatment and refning charges	0.38
Net by-product credit	(1.48)
Total	1.45

Note: 1 Refer to Sandfire’s June 2022 Quarterly Report and related presentation released to the ASX on 28 July 2022, and Sandfire’s FY2022 Financial Results

announcement and related presentation released to the ASX on 30 August 2022, for further details relating to the operating cost performance of MATSA.

2 FY2022 costs are for the period from 1 February 2022 to 30 June 2022, reflecting the period of Sandfire’s operational control.

MATSA generated solid EBITDA cash-flow margins during FY2022 despite cost inflation and rising energy costs. Spiked energy costs and global inflationary pressures resulted in increased labour, cement, spares and services costs. Mining, processing and transport costs have seen the largest increases. The weakening of the EURO against the US dollar has assisted US dollar reported operating costs.

24 Annual Report 2022 Sandfire Resources

Updated Mineral Resource Estimate

Sandfire reported an updated Measured, Indicated and Inferred Mineral Resource Estimate (MRE) for MATSA totalling 147.2Mt at 1.4% Cu, 3.0% Zn, 1.0% Pb and 39.6g/t Ag containing an estimated 2.1Mt of copper, 4.4Mt of zinc, 1.5Mt of lead and 187.6Moz of silver.

The updated MRE, reported as at 31 December 2021, represents Sandfire’s first MRE for MATSA since ownership. The resource estimation was completed employing industry best practice and robust NSR methodology utilising independent and highly regarded GeoEstima consultants, with support from Sandfire’s technical expertise at MATSA and corporate technical services.

The strong outcome confirms MATSA’s geological potential as assessed by Sandfire during its due diligence process for the project acquisition, delivering a robust and high-quality MRE that will provide a strong platform for future life-of-mine planning. Importantly, approximately 74% of the updated MRE is classified in the higher confidence Measured and Indicated Resource categories.

When compared with the previous MRE reported as at 31 December 2019, the updated December 2021 MRE delivers a 21% increase in contained tonnes, an 11% increase in contained copper and a 10% increase in contained zinc. This is a strong result that more than replaces mining depletion over the intervening two-year period.

Updated Ore Reserve Estimate

Subsequent to the end of the reporting period, Sandfire reported an updated Ore Reserve estimate for MATSA totalling 37.1Mt at 1.6% Cu, 2.6% Zn, 0.8% Pb and 36.1g/t Ag containing an estimated 593Kt of copper, 975Kt of zinc, 286Kt of lead and 43.0Moz of silver with an estimated Net Smelter Return (NSR) of US$116/t (using an NSR cut-off).

The updated Ore Reserve estimate, reported as at 30 April 2022, represents Sandfire’s first Ore Reserve estimate for MATSA since it assumed ownership on 1 February 2022 and was completed employing industry best practice and robust NSR methodology utilising Sandfire’s technical expertise at MATSA and corporate technical services.

The MATSA Ore Reserve has been updated based on the updated MRE and changes to modifying factors. This has resulted in a net overall increase in the MATSA Ore Reserve of 1.2Mt, a decrease of 53kt of contained copper and increase of 46kt of contained zinc after accounting for annual mining depletion and adjustments to modifying factors.

Full details of the updated MATSA Ore Reserve are provided in the Company’s ASX Announcement, dated 28 July 2022, titled ‘37Mt Ore Reserve cements foundation for long-term growth at Sandfire’s MATSA Copper Operations’.

The updated MRE also includes initial Inferred Mineral Resources for the satellite Concepción, Poderosa and CastilloBuitrón deposits totalling 19.8Mt at 1.2% Cu and 1.6% Zn. All three deposits are located close to the existing 4.7Mtpa processing facility.

Full details of the updated MATSA Mineral Resource Estimate are provided in the Company’s ASX Announcement, dated 30 June 2022, titled ‘147Mt Mineral Resource sets strong foundation for optimisation and long-term growth at MATSA’.

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Annual Report 2022 Sandfire Resources 25

DeGrussa Copper Operations

Doolgunna, Western Australia

Production

C1 Operating costs

Operations EBITDA

67,740t Copper oz Gold 32,285

US$1.18/lb of Cu

$392.5M 63 % Margin

The DeGrussa Copper Operations in Western Australia delivered another year of exceptional operating performance, with the operations continuing to generate strong margins.

The DeGrussa Copper Operations (DeGrussa) are located 900km north-east of Perth in Western Australia and include the high-grade DeGrussa and Monty Copper-Gold Mines. Operations at DeGrussa are based on underground mining delivering sulphide ore to an on-site 1.6Mtpa Concentrator producing copper concentrate (also containing gold and silver).

As at the date of this report, mining activities at DeGrussa have been completed, with depletion of run-of-mine (ROM) sulphide ore from the DeGrussa and Monty Copper-Gold Mines.

Processing of ROM sulphide ore is expected to be completed by the end of October 2022, with the Company investigating the potential extension of operations through processing of existing low-grade and oxide stockpiles using the existing plant.

We have developed a detailed care and maintenance and mine closure plan and have implemented high-quality retention and engagement programs with our staff and contractors to ensure a seamless transition.

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Australia
Port Hedland
DeGrussa
Copper
Operations
Geraldton
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26 Annual Report 2022 Sandfire Resources

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Production performance

DeGrussa delivered production at the upper end of guidance in FY2022, with copper accounting for 91% of the total value of payable metal sold.

			FY2022	FY2022
Production Statistics1,2		Units	Total	Guidance
Mining	Total Ore	Tonnes	1,692,952
	Copper Grade	%	4.2
	Gold Grade	g/t	1.4
Concentrator	Milled	Tonnes	1,680,742
	Copper Grade	%	4.3
	Gold Grade	g/t	1.3
Concentrate produced	Concentrate Contained Copper Contained Gold Contained Silver	Tonnes Tonnes Ounces Ounces	287,641 67,740 32,285 297koz	65–68kt 30–34koz ~0.3Moz

Note: 1 Refer to Sandfire’s June 2022 Quarterly Report and related presentation released to the ASX on 28 July 2022 for further details relating to mining and processing performance for DeGrussa.

2 Mining and production statistics are rounded to the nearest 0.1% Cu grade and 0.1 g/t Au grade. Errors may occur due to rounding. Production statistics are subject to change following reconciliation and finalisation subsequent to the end of the year.

Production was sourced from the DeGrussa and Monty Mines during the year, with both mines remaining in balance between production and back-fill. Mine production rates from the DeGrussa and Monty Mines were in line with the mine plan. Underground planning and scheduling focused on matching extraction sequencing with equipment and personnel availability, to provide continued compliance to the mine plan.

Processing for FY2022 continued to be in line with plan, supported by high plant utilisation. This resulted in strong copper recovery of 93.8% for the year.

Annual Report 2022 Sandfire Resources 27

Financial performance

C1 operating costs were US$1.18 per pound for FY2022, below revised C1 cost guidance. Cost guidance was revised upwards during FY2022 due to inflationary pressures and reduced capitalised mine development impacting overheads attributed to mine operating costs.

	US$/lb
Operating costs1	Cu payable
Mining	0.53
Processing	0.33
Depreciation and amortisation	0.13
Transport	0.39
Treatment and refning charges	0.18
Gross operating costs	1.57
By-product revenue	(0.39)
Net by-product credit	(0.39)
Total	1.18

Note: 1 Refer to Sandfire’s June 2022 Quarterly Report and related presentation released to the ASX on 28 July 2022, and Sandfire’s FY2022 Financial Results

announcement and related presentation released to the ASX on 30 August 2022, for further details relating to the operating cost performance of DeGrussa.

Underground mining operations are completing at the DeGrussa Copper Operations in Western Australia, with the final stopes to be extracted and hauled to surface by early October 2022. Processing of run-of-mine stockpiles will continue until around the end of October 2022, after which the 1.6Mtpa DeGrussa Concentrator will transition to low grade copper stockpiles.

Following completion of a positive Feasibility Study, Sandfire will commence the DeGrussa Processing Extension Project, based on processing heavily transitional stockpiles and mineralised waste stockpiles remaining on site at the end of the current operations.

This process is based on utilising the existing DeGrussa flotation plant with minimal circuit changes, adopting a simplistic approach to treat whole stockpiles with oxide reagents. The processing plant is expected to continue operating until January 2023, treating approximately 310kt of ore at an average grade of around 1% Cu.

Due to the transitional mineralogy and grade of this ore, recovery is targeted to be around 70% for copper and 40% for gold. This is expected to deliver approximately 2kt of copper and 2koz of gold contained within around 10,000t of concentrate at a grade of around 22% copper and 5g/t gold.

Plan scale trials on processing of oxide copper stockpiles have also commenced and are scheduled to be completed in October 2022. Results of these trials may support further extension of processing at DeGrussa beyond January 2023.

Work completed to date includes:

A drilling campaign on several stockpiles to collect samples;
Rheology testing to confirm the pumpability of the oxide material;
Thickening and filtration testwork;
A detailed economic assessment and sensitivity analysis; and
Plant trials for mineralised waste and heavily transitional stockpiles.

Further plant trials are also planned for the oxide stockpile processing.

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28 Annual Report 2022 Sandfire Resources

Motheo Copper Project

Kalahari Copper Belt, Botswana

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Production
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Peak production rate
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LOM Processing
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On schedule to commence in the June 2023 Quarter

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55
ktpa Copper
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10
years
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Motheo represents the foundation for Sandfire’s long-term growth plans in Botswana.

The Motheo Copper Mine (Motheo), where development commenced in FY2021, will initially mine a significant sediment-hosted copper and silver deposit (T3 Deposit). Located in the Kalahari Copper Belt in Botswana, the project is supported by our community office in the nearby town of Ghanzi, which is the focal point for managing human resources and community relations in the Ghanzi District.

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Botswana
Motheo
Copper Project
Namibia
Windhoek Gaborone
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Annual Report 2022 Sandfire Resources 29

Motheo Copper Mine 3.2Mtpa Development

Motheo Copper Mine 5.2Mtpa Expansion

Significant progress towards the completion of a Definitive Feasibility Study (DFS) for the Motheo Expansion Project was made during the year, with the results of the DFS released subsequent to 30 June 2022.

The Mining License for the Motheo Copper Mine was granted by the Government of Botswana in July 2021, representing the final major permitting milestone required for full-scale construction of the project to commence.

As part of the Mining License approval process, the Government of Botswana had a right to acquire up to a 15% fully contributing interest in the Motheo Copper Mine. During the year, the Company was advised that the Government of Botswana has elected not to take up their 15% interest.

The DFS results support the planned expansion of the Motheo Copper Mine from 3.2Mtpa to 5.2Mtpa through the inclusion of the A4 Deposit and an expanded processing plant. The A4 Deposit, located approximately 8km from the planned Motheo processing plant and infrastructure, will form an important source of ore for the Motheo Copper Mine, with key highlights of the DFS including:

Subsequent to approval, development and construction activities have significantly progressed at Motheo during the year and the project remains on schedule, with first production expected in the June 2023 Quarter. Key developments during FY2022 included:

Pre-tax NPV 7% of US$548 million and IRR of 29% using consensus metal prices of Cu US$3.57/lb, Ag US$20/oz;
Mine life of 10 years, peak production of 55ktpa copper-inconcentrate, strip ratio of 6.2 waste to ore;
Commencement of T3 Open Pit mining;
LOM production: 440kt Cu and 18.4Moz Ag; and
Completion of the 752 room Motheo Mine Village;
LOM all-in sustaining costs of US$1.79/lb.
Erection and back-fill of the primary crusher lower retaining wall;
Completion of the reclaim tunnel and SAG Mill concrete foundations;

Key critical path items for the 5.2Mtpa expansion have been identified as the ESIA and Mining Licence approvals, with both of these items being actively progressed. Subject to required regulatory approvals and the timing of the award of contracts, site construction activities for the process plant expansion are scheduled to commence in the March Quarter of FY2023. Following process plant expansion construction and commissioning works, increased plant throughput at 5.2Mtpa is expected to commence in the March Quarter of FY2024.

Completion of the Mine Administration Office and Clinic buildings;
Tailings Storage Facility Bulk fill for walls 50% complete and basin lining commenced;
Majority of the process plant equipment including the SAG Mill components all delivered to site; and
Structural, Mechanical and Piping Contractor mobilised and approximately 10% complete at the end of the reporting period.

For more details on the Motheo Copper Mine 5.2Mtpa Expansion DFS and the combined T3 and A4 operations, refer to the Company’s ASX announcement dated 30 August 2022, titled, ‘Motheo Copper Project Expansion DFS’.

Sandfire intends to fund the 3.2Mtpa Motheo development through a combination of cash and project debt. As at the date of this report, the selection of syndicate international banks is complete and the Company has received credit committee approval for a US$140 million project debt facility.

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Motheo Copper Mine showing the planned integration of the A4 Deposit as part of an expanded 5.2Mtpa production hub.

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30 Annual Report 2022 Sandfire Resources

Annual Report 2022 Sandfire Resources 31

Black Butte Copper Project

Montana, USA

The Black Butte Copper Project is one of the world’s highest-grade undeveloped copper projects. The planned mine development will utilise best-practice technology and modern mining techniques to develop a wholly underground mine with minimal surface footprint and environmental impact.

Sandfire holds an 87% interest, via Canadian listed company Sandfire Resources America Inc. (TSX-V: SFR) (Sandfire America), in the high-grade Black Butte Copper Project, located in central Montana in the United States.

Project permitting for Black Butte was completed in April 2020, with the Montana Department of Environmental Quality (MT DEQ) releasing the Final Environmental Impact Statement (EIS) on 13 March 2020 and issuing a positive Record of Decision to grant a Mine Operating Permit (MOP) on 9 April 2020. The MOP was the first issued in Montana in 26 years.

The project is located on private ranch land in Meagher County close to existing road, power and rail infrastructure, with the ability to access a residential workforce located nearby and competitive sources of materials and power.

The proposed underground mine at Black Butte is designed to provide economic opportunity to Central Montana while fully protecting the Smith River Watershed.

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Legal Challenge Update

A legal challenge to the MT DEQ Record of Decision was lodged on June 4, 2020, in the 14th Judicial Court in Meagher County, Montana against the MT DEQ and Sandfire America’s wholly owned subsidiary, Tintina Montana Inc. Following the filing of various briefs on the matter by all parties, oral arguments were heard before the presiding judge on July 16, 2021.

Early in the June 2022 Quarter the District Court Judge granted the plaintiffs’ motion for a summary judgement stating that the MT DEQ violated the Montana Metal Mines Reclamation Act and Montana Environmental Policy Act in its analysis of the project.

As part of this ruling, both parties had 45 days to propose remedial measures to the Judge, and on July 1, 2022, both parties filed a joint motion recommending a stipulated order for remedies.

Subsequently, the District Court Judge issued an order aligned with the joint motion and that will allow Phase I Construction of the Black Butte Copper Project to be completed under the existing Permit.

Sandfire America is working on various legal and technical strategies with the objective of moving the project past Phase 1 of the Permit. On July 27, 2022, Tintina Montana Inc. filed a notice of appeal from the District Court ruling with the Montana Supreme Court.

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USA
Black Butte
Copper Project
Montana
Helena
Bozeman
Idaho Wyoming
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32 Annual Report 2022 Sandfire Resources

Exploration

Exploration remains at the heart of Sandfire’s long-term growth strategy, as we maintain a systematic, multi-pronged exploration program across its large landholdings globally.

Sandfire’s exploration initiatives target some of the world’s premier copper exploration provinces as our project pipeline offers long term growth potential. We are pursuing brownfield expansion opportunities and greenfield exploration with potential for organic growth in several locations in Spain, Botswana and Australia.

Iberian Pyrite Belt Exploration, Spain and Portugal

Exploration at MATSA, Spain Exploration in Portugal Exploration programs at MATSA have been focused on Drilling was undertaken on the Ermidas permit testing residual Resource-to-Reserve conversion at the existing mines to extend gravity anomalies combined with favourable stratigraphy and mine life and enhance operational planning, as well as step-out anomalous copper geochemistry, and at the Aldeia dos Elvas drilling targeting near-mine Resource extensions. prospect to test a residual gravity anomaly at the north-western extension of an historical copper mining lease and the historical Resource definition drilling was conducted at the satellite Montinho Mine along strike. Concepción, Poderosa and Castillo-Buitrón deposits, underpinning the delivery of an inaugural Mineral Resource At Aldeia dos Elvas, drilling intersected black shales with Estimate for these deposits in the June 2022 Quarter. disseminated pyrite, which are interpreted to be the Montinho copper-bearing horizon. Further geophysical surveys will Sandfire is planning to undertake >100,000m of infill and be undertaken to determine the extent of the prospective step-out drilling at the three MATSA mines (Aguas Teñidas, stratigraphy. Magdalena and Sotiel) in FY2023, as well as ~30,000m of drilling across the MATSA Corridor. Key drilling targets include Poderosa and adjacent prospects, with a major gravity gradiometry survey also planned.

Doolgunna Province Exploration, Western Australia

During FY2022 Sandfire embarked on a new exploration strategy for the Doolgunna province. Copper exploration focused on potential extensions to the DeGrussa/Monty VMS systems and new deep targets based upon a conceptual geological model. Several deep holes were drilled and demonstrated elements of a VMS system but no economic mineralisation was encountered.

Annual Report 2022 Sandfire Resources 33

Kalahari Copper Belt Exploration, Botswana and Namibia

Exploration at Motheo, Botswana

During the reporting period, Sandfire completed the acquisition of 11 exploration licences which are contiguous with and complimentary to Sandfire’s existing exploration ground holding in the Kalahari Copper Belt.

We also completed Option Agreements on several other exploration licences in the region. The acquisition and option agreements consolidate Sandfire’s exploration holdings in the central Kalahari Copper Belt and extend Sandfire licences up to 100km into the eastern portion of the Kalahari Copper Belt.

Sandfire has an expanded exploration program underway in the Kalahari Copper Belt, aimed at:

Targeting high-grade satellite discoveries within the Motheo Expansion Project area with the potential to increase the scale of the Motheo Production Hub;
Delineating additional Resources with the potential to extend mine life; and

Exploration continued on the ~1,000km[2] Motheo Expansion Project, within a 30km radius of the Motheo Copper Mine, throughout the reporting period, with drilling focused on the A4 Dome, A1 Dome and the T2 prospect.

Six 1.4km long Induced Polarisation (IP) surveys lines were completed at A1 which delineated two anomalous chargeable zones that extend across the survey area, which are the focus of current drilling.

Belt-wide exploration also continued, with drilling at the T4 prospect stepping-out both east and west along a broad zone of copper anomalism and following up on structural positions in the lower Dkar. Results continue to show the presence of anomalous disseminated and minor vein-hosted copper.

At T23, drilling targeted historical drill results that intersected wide zones of low tenor, disseminated chalcocite and occasional sub-economic bornite in veins. Both holes completed during FY2022 confirmed the presence of similar mineralisation that remains under-explored and open in all directions.

Targeting major new regional discoveries to unlock the copper belt’s broader potential.

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Regional location plan with Sandfire’s Kalahari Copper Belt license holdings showing the Motheo Copper Mine, including T3 and A4 Deposits, multiple exploration targets, the neighbouring Khoemacau Copper Mining licenses and deposits (source: Khooemacau Copper Mining’s website www.khoemacau.com).

34 Annual Report 2022 Sandfire Resources

Annual Report 2022 Sandfire Resources 35

Governance

The Board of Directors of Sandfire Resources Ltd is committed to fostering a culture of compliance, ethical behaviour and good corporate governance.

The Board of Directors guides and monitors the business and affairs of the Group on behalf of the shareholders by whom they are elected and to whom they are accountable. In performing its responsibilities, the Board acts in the best interests of the Company, honestly, fairly and diligently and in accordance with the duties and obligations imposed upon it by Sandfire’s Constitution and the law.

Whilst the Board is responsible for establishing the corporate governance framework of Sandfire, we believe good governance is the collective responsibility of all our management and staff. We believe that excellence in governance is intrinsic to our social license to operate and essential for the long-term sustainability of our business.

Sandfire’s governance framework supports our people to deliver our strategy and provides an integral role in effective and responsible decision making and business conduct. Integral to the framework is our Code of Conduct (Code), which is based on our values. The Code guides our behaviour and reinforces the importance of carrying out our work responsibly. We use our values and Code to drive the best outcomes for our shareholders, employees, business partners, government, regulators and the broader community.

The Company regularly reviews its governance practices and corporate governance policies to reflect the growth and strategy of the Company, current legislation and best practice.

Further information about governance at Sandfire, as well as copies of our Board and Committee Charters; Code of Conduct and various governance policies can be found in the Governance section of our website at www.sandfire.com.au.

FY2022 Corporate Governance Statement

Sandfire’s Corporate Governance Statement (Statement) outlines the key features of Sandfire’s governance framework by reference to the 4th edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Recommendations). The Company’s corporate governance practices have complied with all relevant ASX Recommendations during the 2022 Financial Year (FY2022).

Sandfire’s Corporate Governance Statement is accurate and current as at 30 September 2022 and has been approved by the Board of Directors. The Statement can be found on the Governance page of our website at https://www.sandfire.com.au/aboutsandfire/corporate-governance/, along with the ASX Appendix 4G - a checklist cross-referencing the ASX Recommendations to disclosures in the Corporate Governance Statement, the 2022 Annual Report and the Company website.

In accordance with the ASX Recommendations, the Company’s policies and charters, referred to in this statement, are available on the Governance page of our website at https://www.sandfire.com. au/about-sandfire/corporate-governance/.

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36 Annual Report 2022 Sandfire Resources

Our Governance Framework

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Stakeholders
Government
Business Partners Shareholders Community Employees
& Regulators
Board of Directors
Board Committees
Risk & Audit & People &
Sustainability Finance Performance
Committee Committee Committee
Policies & Procedures Corporate Risk Management &
Culture & Values Internal Control System
Managing Director &
Chief Executive Officer
Management & Staff
Supporting Documents
• Company Constitution
• Code of Conduct
2022
• Board and Committee Charters Corporate
Governance
Statement
• Policies and procedures Code of
Conduct
• Corporate Governance Statement
Creating value through opportunity Creating value through opportunity
Annual Report
Available on our website Sandfire | 2022 Corporate Governance Statement 1 Sandfire | Code of Conduct 1
www.sandfre.com.au/about-sandfre/corporate-governance/
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Annual Report 2022 Sandfire Resources 37

Sustainability

Sandfire’s Sustainability Strategy supports the Company’s purpose of ‘Creating value through opportunity.’

Our goal is for sustainability to be part of every decision we make. We believe that non-financial performance is connected to long term value creation and that this is best achieved by embedding sustainable practices throughout our business.

Our core product, copper, is of critical importance for enabling the low emission economy of the future. Our ambition is to maximise production of this vital commodity whilst minimising the impacts on our people, local communities, and the environments in which we operate.

In 2022 Sandfire undertook to develop a new Sustainability Strategy to support our growing global business into the future. As part of this strategy we have developed an enhanced environmental, social and governance (ESG) framework for the business and defined six ESG pillars that articulate our focus on Our People, Communities, Water, Climate Change, Biodiversity and Business Integrity. Importantly, strong systems underpin everything we do at Sandfire. These are increasingly important given our expanding global presence and underpin our sustainability strategy.

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Communities Our People
ESG
Pillars
Business Water
Integrity
Biodiversity Climate Change
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Further information on our approach to sustainability and our revised Sustainability Strategy will be detailed within our 2022 Sustainability Report, which will be made available on our website in October 2022.

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38 Annual Report 2022 Sandfire Resources

Sustainability Snapshot

Sustainability practices are evolving rapidly, and Sandfire continues to assess industry best-practice, trends, regulations and innovation.

Case Study - Innovation in Water Management

Sandfire MATSA has participated in a research study that led to the development of a new treatment solution to regenerate and reuse wastewater in mining. Sandfire’s state-of-the-art facilities at our MATSA operations now house the first platform for water treatment technological experimentation in the mining sector, the Mining Water Living Lab, which is also supported by renewable energies to drive the recovery of resources and the reuse of process water.

This project, which is co-funded by the European Union’s LIFE programme, is coordinated by Cetaqua Barcelona (a Water Technology Centre), in collaboration with the ŁukasiewiczInstitute of Non-Ferrous Metals of Poland (IMN), which is responsible for examining the replicability of the process in the mining and metallurgical industry; and the French SME Newheat, which specialises in implementing solar thermal energy projects in the industry, which will demonstrate the financial feasibility of using this type of energy in water treatment processes in the mining sector.

The purpose of this platform is to turn the current water treatment process from a linear to a circular economy model, allowing more than 90% of the treated water to be recovered for later reuse.

This system is partly powered by solar thermal energy, reducing the carbon footprint associated with operating evaporation processes and achieving a more sustainable and cost-effective process. A second treatment line will make it possible to recover 70% of the copper and 40% of the zinc in metalrich acidic streams.

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Our approach to sustainability will continue to evolve and grow with the Sandfire business and support the Company’s purpose of ‘creating value through opportunity’.

Annual Report 2022 Sandfire Resources 39

Mineral Resources and Ore Reserves

Sandfire’s Mineral Resource and Ore Reserve estimates are presented in the following pages of this report. The Mineral Resource estimates are reported inclusive of Ore Reserve estimates. Data is rounded to reflect appropriate precision in the estimate and differences may occur due to rounding.

The market announcements (ASX releases), including JORC Table 1 documentation, which detail the material assumptions and technical parameters for each estimate, and the JORC code competent person statements for Mineral Resources and Ore Reserves are available on the Company’s website at https://www.sandfire.com.au/where-we-operate/mineral-resources-and-ore-reserves/. The market announcements (public reports) relevant to Sandfire’s Mineral Resource and Ore Reserve estimates presented in this report are:

“37Mt Ore Reserve cements foundation for long-term growth at Sandfire’s MATSA Copper Operations” released to the Australian Securities Exchange (ASX) on 28 July 2022.
“147Mt Mineral Resource sets strong foundation for optimisation and long-term growth at MATSA” released to the ASX on 30 June 2022.
“Maiden Mineral Resource Estimate for Old Highway Gold Deposit” released to the ASX on 15 December 2021.
“Transformational acquisition of the MATSA Mining Complex in Spain and A$1,248 million equity raising” released to the ASX on 23 September 2021.
“Maiden Ore Reserve for A4 Deposit and PFS confirms 5.2Mtpa Motheo Copper Project” released to the ASX on 22 September 2021.
“Sandfire delivers 34% increase in contained copper at satellite A4 Copper-Silver Deposit at Motheo” released to the ASX on 21 July 2021.
“Sandfire Reports Updated Underground Ore Reserve and Mineral Resource for DeGrussa Operations” released to the ASX on 16 June 2021.
“Sandfire Approves Development of New Long-Life Copper Mine in Botswana” released to the ASX on 1 December 2020.
“USA and Botswana Development Projects Update” released to the ASX on 28 October 2020.
“Updated Mineral Resource Completed for Johnny Lee Deposit, Black Butte Copper Project, USA” released to the ASX on 30 October 2019.

Sandfire is not aware of any new information or data as at 30 June 2022 that materially affects the information included in the respective relevant market announcements and all material assumptions and technical parameters underpinning the estimates in the respective relevant market announcement continue to apply and have not materially changed.

A comparison of the current declared Mineral Resource and Ore Reserve estimates to that of previous declarations for the MATSA Copper Operations (MATSA) is outlined below. Mineral Resources and Ore Reserves for projects and operations which have not had material changes since 1 July 2021, including the Motheo Copper Project (Motheo Project) and the Black Butte Copper Project (Black Butte Project), and Mineral Resources and Ore Reserves for projects and operations which have not had material changes since 1 July 2021 except for mining depletion, including the DeGrussa Copper-Gold Mine (DeGrussa Mine) and the Monty Copper-Gold Mine (Monty Mine) are also outlined below. Other changes to the Company’s Mineral Resource inventory included in this report are the addition of the Old Highway Gold Deposit Project (Old Highway), and removal of the Temora Project after the Company determined that there are no ‘reasonable prospects for eventual economic extraction’.

Sandfire’s Mineral Resources and Ore Reserves are subject to internal governance arrangements which include:

Annual review of Mineral Resource and Ore Reserve reports;
Review of reconciliation performance metrics; and
Where appropriate, utilisation of independent experts to compile and review Mineral Resource and Ore Reserve reports.

Sandfire reports Mineral Resources and Ore Reserves as at a date other than its end of financial year balance date. A brief explanation of material changes that have occurred up to the 30 June 2022 is provided for each respective mine or project.

MATSA Copper Operations

The variance between the 2019 and 2021 MATSA Mineral Resource estimates primarily reflects mining depletion, sterilisation, changes to the geological model and the addition of the Poderosa, Concepción and Castillo-Buitrón Projects. The variance between the 2020 and 2022 MATSA Ore Reserve estimates reflects a Mineral Resource update, mining depletion and a revision to mining modifying factors.

	Tonnes	Copper	Zinc	Lead	Silver	Contained	Contained	Contained	Contained
MATSA	(Mt)	(%)	(%)	(%)	(g/t)	Copper (kt)	Zinc (kt)	Lead (kt)	Silver (Moz)
Mineral Resource
31 Dec 2019 31 Dec 2021	121.8 147.2	1.5 1.4	3.3 3.0	1.1 1.0	43.6 39.6	1,881 2,085	3,984 4,381	1,383 1,513	171 188
Ore Reserve
31 July 2020 30 April 2022	35.9 37.1	1.8 1.6	2.6 2.6	0.8 0.8	36.4 36.1	646 593	931 975	269 286	40 43

40 Annual Report 2022 Sandfire Resources

MATSA – Mineral Resource as at 31 December 2021

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Resource Tonnes NSR Copper Zinc Lead Silver Contained Contained Contained Contained
Deposit Category (Mt) ($/t) (%) (%) (%) (g/t) Copper (kt) Zinc (kt) Lead (kt) Silver (Moz)
Magdalena Measured 15.9 232 2.7 3.5 1.0 50.6 427 560 160 25.9
Indicated 4.5 149 1.9 1.6 0.5 25.6 87 70 23 3.7
Inferred 4.8 162 2.1 1.5 0.5 25.3 103 71 24 3.9
Total 25.2 204 2.4 2.8 0.8 41.3 616 701 207 33.5
Aguas Teñidas Measured 39.4 131 1.3 3.2 0.9 42.1 523 1,273 357 53.3
Indicated 9.0 126 1.2 3.2 0.9 40.5 110 287 80 11.7
Inferred 2.9 167 1.7 4.1 0.9 48.7 49 118 27 4.5
Total 51.3 132 1.3 3.3 0.9 42.2 682 1,678 464 69.5
Sotiel Measured 29.4 91 1.1 3.5 1.5 42.1 316 1,029 443 39.8
Indicated 10.8 87 1.2 2.9 1.2 41.3 126 310 130 14.4
Inferred 10.7 70 0.9 3.2 1.4 37.5 99 338 146 12.9
Total 51.0 86 1.1 3.3 1.4 40.9 540 1,678 719 67.1
Projects Measured - - - - - - - - - -
Indicated - - - - - - - - - -
Inferred 19.8 85 1.2 1.6 0.6 27.6 246 324 123 17.6
Total 19.8 85 1.2 1.6 0.6 27.6 246 324 123 17.6
Total Combined Measured 84.7 136 1.5 3.4 1.1 43.7 1,265 2,862 961 119.0
Indicated 24.3 113 1.3 2.7 1.0 38.1 323 667 232 29.7
Inferred 38.2 97 1.3 2.2 0.8 31.7 496 852 320 38.9
Total 147.2 122 1.4 3.0 1.0 39.6 2,085 4,381 1,513 187.6
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MATSA – Ore Reserve as at 30 April 2022

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Reserve Tonnes NSR Copper Zinc Lead Silver Contained Contained Contained Contained
Deposit Category (Mt) ($/t) (%) (%) (%) (g/t) Copper (kt) Zinc (kt) Lead (kt) Silver (Moz)
Magdalena Proved 13.1 138 2.0 2.4 0.7 35.2 258 320 94 14.8
Probable 4.5 113 1.7 1.5 0.5 24.3 77 70 22 3.5
Total 17.6 131 1.9 2.2 0.7 32.4 335 390 115 18.4
Aguas Teñidas Proved 10.9 108 1.4 3.4 1.0 44.1 147 364 105 15.4
Probable 5.6 99 1.1 3.3 0.9 35.6 61 185 50 6.4
Total 16.4 105 1.3 3.3 0.9 41.2 208 549 155 21.8
Sotiel Proved 2.3 86 1.6 1.0 0.4 28.7 37 23 10 2.1
Probable 0.8 90 1.6 1.7 0.7 32.5 13 13 6 0.8
Total 3.0 87 1.6 1.2 0.5 29.7 50 36 15 2.9
Total Combined Proved 26.2 121 1.7 2.7 0.8 38.3 442 707 208 32.3
Probable 10.9 104 1.4 2.5 0.7 30.7 151 268 78 10.7
Total 37.1 116 1.6 2.6 0.8 36.1 593 975 286 43.0
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The MATSA Mineral Resource and Ore Reserve estimates are declared as at 31 December 2021 and 30 April 2022 respectively. Material changes have occurred in the period between 1 January 2022 and 30 June 2022 due to mining depletion.

The Mineral Resource has been affected by a depletion of approximately 2.3Mt at 2.0% Cu, 2.9% Zn, 0.9% Pb and 40.0g/t Ag for 46kt of contained copper, 66kt of contained zinc, 21kt of contained lead and 2.9Moz of contained silver. Approximate mining depletion per mine for the same period was as follows:

Aguas Teñidas Mine: 1.0Mt at 1.5% Cu, 2.1% Zn, 0.7% Pb and 29.3g/t Ag for 15kt of contained copper, 21kt of contained zinc, 6kt of contained lead and 0.9Moz of contained silver;
Magdalena Mine: 1.0Mt at 2.6% Cu, 3.8% Zn, 1.1% Pb and 51.4g/t Ag for 27kt of contained copper, 39kt of contained zinc, 12kt of contained lead and 1.7Moz of contained silver; and
Sotiel Mine: 0.2Mt at 1.5% Cu, 2.5% Zn, 1.1% Pb and 33.9g/t Ag for 3kt of contained copper, 5kt of contained zinc, 2kt of contained lead and 0.2Moz of contained silver.

The Ore Reserve has been affected by a depletion of approximately 0.7Mt at 2.0% Cu, 3.0% Zn, 0.9% Pb and 38.8g/t Ag for 15kt of contained copper, 22kt of contained zinc, 7kt of contained lead and 0.9Moz of contained silver. Approximate mining depletion per mine for the same period was as follows:

Aguas Teñidas Mine: 0.3Mt at 1.4% Cu, 1.9% Zn, 0.6% Pb and 24.4g/t Ag for 5kt of contained copper, 6kt of contained zinc, 2kt of contained lead and 0.3Moz of contained silver;
Magdalena Mine: 0.3Mt at 2.7% Cu, 4.1% Zn, 1.2% Pb and 52.7g/t Ag for 9kt of contained copper, 14kt of contained zinc, 4kt of contained lead and 0.6Moz of contained silver; and
Sotiel Mine: 0.1Mt at 1.4% Cu, 3.0% Zn, 1.3% Pb and 39.7g/t Ag for 1kt of contained copper, 2kt of contained zinc, 1kt of contained lead and 0.1Moz of contained silver.

Annual Report 2022 Sandfire Resources 41

DeGrussa Copper Operations

DeGrussa Copper-Gold Mine

The DeGrussa Mine underground Mineral Resource and Ore Reserve are declared as at 31 December 2020. Material changes have occurred in the period between 1 January 2021 and 30 June 2022 due to mining depletion of approximately 1.8Mt at 3.5% Cu, 1.4 g/t Au for 65kt of contained copper and 82koz of contained gold.

DeGrussa Mine Underground – Ore Reserve and Mineral Resource as at 31 December 2020

	Ore Reserve Reserve Category Tonnes (Mt) Copper (%) Gold (g/t) Contained Copper (kt) Contained Gold (koz) Proved 1.4 4.0 1.5 58 67	Mineral Resource
Deposit		Resource Category Tonnes (Mt) Copper (%) Gold (g/t) Contained Copper (kt) Contained Gold (koz)
DeGrussa		Measured 1.6 5.4 2.1 89 110 Indicated 0.4 1.8 0.7 7 9 Inferred <0.1 3.3 1.9 1 3
	Probable 0.5 3.0 1.1 14 17

	Total 1.9 3.8 1.4 72 84	Total 2.1 4.7 1.8 98 122

Monty Copper-Gold Mine

The Monty Mine Mineral Resource and Ore Reserve are declared as at 31 December 2020. Material changes have occurred in the period between 1 January 2021 and 30 June 2022 due to mining depletion of approximately 0.7Mt at 6.7% Cu, 1.4g/t Au for 45kt of contained copper and 31koz of contained gold.

Monty Mine Underground – Ore Reserve and Mineral Resource as at 31 December 2020

	Ore Reserve Reserve Category Tonnes (Mt) Copper (%) Gold (g/t) Contained Copper (kt) Contained Gold (koz) Proved 0.6 7.5 1.6 45 31	Mineral Resource
Deposit		Resource Category Tonnes (Mt) Copper (%) Gold (g/t) Contained Copper (kt) Contained Gold (koz)
Monty		Measured 0.5 11.2 2.5 56 40 Indicated 0.1 4.2 1.0 6 4 Inferred 0.1 6.3 1.5 4 3
	Probable 0.1 4.7 1.0 4 2

	Total 0.7 7.2 1.6 48 34	Total 0.7 9.3 2.1 66 48

Old Highway Gold Deposit Project

The Old Highway Project Mineral Resource is declared as at 15 December 2021. No material changes have occurred since the declaration date to 30 June 2022.

Old Highway Project – Mineral Resource as at 15 December 2021

Deposit	Resource Category Tonnes (Mt) Gold (g/t) Contained Gold (koz) Measured - - - Indicated 2.8 2.5 223 Inferred - - - Total 2.8 2.5 223
Old Highway

42 Annual Report 2022 Sandfire Resources

Motheo Copper Project

T3 Open Pit Deposit

The T3 Deposit Open Pit Mineral Resource and Ore Reserve are declared as at 1 December 2020. No material changes have occurred since the respective declaration date to 30 June 2022.

T3 Deposit Open Pit – Ore Reserve and Mineral Resource as at 1 December 2020

	Ore Reserve Reserve Category Tonnes (Mt) Copper (%) Silver (g/t) Contained Copper (kt) Contained Silver (Moz) Proved - - - - -	Mineral Resource
Deposit		Resource Category Tonnes (Mt) Copper (%) Silver (g/t) Contained Copper (kt) Contained Silver (Moz)
T3		Measured - - - - - Indicated 48.8 0.9 12.5 446 19.6 Inferred 4.5 0.7 14.7 34 2.1
	Probable 39.9 0.9 12.2 360 15.6

	Total 39.9 0.9 12.2 360 15.6	Total 53.3 0.9 12.7 480 21.8

A4 Deposit Open Pit

The A4 Deposit Open Pit Mineral Resource and Ore Reserve are declared as at 21 July 2021 and 22 September 2021 respectively. No material changes have occurred since the respective declaration dates to 30 June 2022.

A4 Deposit Open Pit – Ore Reserve and Mineral Resource

	Ore Reserve as at 22 September 2021 Reserve Category Tonnes (Mt) Copper (%) Silver (g/t) Contained Copper (kt) Contained Silver (Moz) Proved - - - - -	Mineral Resource as at 21 July 2021
Deposit		Resource Category Tonnes (Mt) Copper (%) Silver (g/t) Contained Copper (kt) Contained Silver (Moz)
A4		Measured - - - - - Indicated 8.9 1.4 22.0 124 6.2
	Probable 9.7 1.2 18.0 114 5.7
		Inferred 0.9 1.0 15.0 9 0.4
	Total 9.7 1.2 18.0 114 5.7	Total 9.8 1.4 21.0 134 6.6

Black Butte Copper Project

Johnny Lee Deposit

The Johnny Lee Deposit Mineral Resource and Ore Reserve are declared as at 15 October 2019 and 19 October 2020 respectively. No material changes have occurred since the respective declaration dates to 30 June 2022.

Johnny Lee Deposit - Ore Reserve and Mineral Resource

	Ore Reserve as at 19 October 2020 Reserve Category Tonnes (Mt) Copper (%) Contained Copper (kt) Proved 2.0 3.0 61	Mineral Resource as at 15 October 2019
Deposit		Resource Category Tonnes (Mt) Copper (%) Contained Copper (kt)
Johnny Lee		Measured 2.0 3.5 69 Indicated 8.9 2.7 242 Inferred 2.7 3.0 80
	Probable 6.8 2.4 165

	Total 8.8 2.6 226	Total 13.6 2.9 391

Lowry Deposit

The Lowry Deposit Mineral Resource is declared as at 15 October 2020. No material changes have occurred since the declaration date to 30 June 2022.

Lowry Deposit – Mineral Resource as at 15 October 2020

Deposit	Resource Category Tonnes (Mt) Copper (%) Contained Copper (kt) Measured - - - Indicated - - - Inferred 8.3 2.4 200 Total 8.3 2.4 200
Lowry

Annual Report 2022 Sandfire Resources 43

Competent Person Statements

The information in this report that relates to Mineral Resources or Ore Reserves is based on information compiled by the Competent Persons listed in the table below. All Competent Persons listed below have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which is undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Sandfire confirms that it is not aware of any new information or data that materially affects the information included in the announcements referred to above (Original Announcements) and that all material assumptions and technical parameters underpinning the Mineral Resources and Ore Reserves estimates in the Original Announcements continue to apply and have not materially changed. Sandfire confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the Original Announcements.

The Mineral Resource and Ore Reserve statements have been approved for inclusion in this report by Francisco Maturana (Mineral Resource), who is a Fellow of The Australasian Institute of Mining and Metallurgy and is a full-time employee of Sandfire and Neil Hastings (Ore Reserves), who is a Member of The Australasian Institute of Mining and Metallurgy and is a full-time employee of Sandfire. Mr Maturana and Mr Hastings consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

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Activity Competent Person Professional Membership SFR Relationship Responsible Activity
Mineral Resources Orlando Rojas MAusIMM Independent Consultant MATSA Mineral Resource Estimate
Principal Consultant GeoEstima
Callum Browne MAusIMM Previous SFR employee Senior DeGrussa Mine, Monty Mine and T3
Resource Geologist Open Pit Deposit Mineral Resource
Estimates
Mark Zammit MAIG Independent Consultant A4 Open Pit Deposit Mineral
Principal Consultant Geologist Resource Estimates
Cube Consulting
Erik Ronald M.Eng, P.Geo, RM-SME Independent Consultant Black Butte Project Mineral
Principal Resource Geology Resource Estimate
SRK Consulting (U.S.) Inc.
Roger Stangler FAusIMM Independent Consultant Old Highway Project Mineral
Principal Geostatistician Golder Resource Estimate
Associates Pty Ltd
Ore Reserves Neil Hastings MAusIMM(CP) SFR Principal Mining Engineer DeGrussa Mine, Monty Mine and
MATSA Ore Reserve Estimates
Jake Fitzsimons MAusIMM Independent Consultant Motheo Project Ore Reserve
Orelogy Consulting Pty Ltd Estimates
Brad Evans MAusIMM(CP) Independent Consultant Black Butte Project Ore Reserve
Estimate
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44 Annual Report 2022 Sandfire Resources

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Financial Report

Director’s Report	46
Auditor’s Independence Declaration	62
Letter from the Chair of the People
and Performance Committee	63
Remuneration Report	65
Consolidated Financial Statements	86
Directors’ Declaration	130
Independent Auditor’s Report	131

Annual Report 2022 Sandfire Resources 45

Directors’ Report

The Directors present their report on the consolidated entity (referred to as the Group) consisting of the Parent entity, Sandfire Resources Limited (Sandfire or the Company), and the entities it controlled at the end of, or during, the year ended 30 June 2022 (the reporting period) and the auditor’s report thereon.

Directors

The names and details of the Company’s Directors in office during the financial year and until the date of this report are set out below.

Name	Period of Directorship
Mr John Richards	Appointed 1 January 2021
Independent Non-Executive Chair	Chair since 30 April 2022
Mr Karl Simich	Appointed Director 27 September 2007
Managing Director & Chief Executive Officer	Managing Director and Chief Executive Offcer since 1 July 2009
Dr Roric Smith	Appointed 31 December 2016
Independent Non-Executive Director
Ms Sally Langer	Appointed 1 July 2020
Independent Non-Executive Director
Ms Jennifer Morris OAM	Appointed 1 January 2021
Independent Non-Executive Director
Mr Robert Edwards	Appointed 8 July 2022
Independent Non-Executive Director
Ms Sally Martin	Appointed 8 July 2022
Independent Non-Executive Director
Mr Derek La Ferla	Appointed 17 May 2010
Independent Non-Executive Director	Resigned 8 July 2022
Mr Paul Hallam	Appointed 21 May 2013
Independent Non-Executive Director	Resigned 26 November 2021

The qualifications, experience, other directorships and special responsibilities of the Directors in office for the financial year ending 30 June 2022 and up to the date of this report are detailed below.

Independent Non-Executive Chair

John Richards, age 61 Independent Non-Executive Chair Qualifications B.Econ (Hons) Experience John Richards is an economist with more than 35 years’ experience in the resources industry. He has held strategy and business development positions across several mining companies and has worked extensively in the investment banking and private equity industries. He has been involved in a wide range of significant mining M&A transactions on a global scale.

His previous positions include Group Executive – Strategy & Business Development at Normandy Mining Ltd; Head of Mining & Metals Advisory (Australia) at Standard Bank; Managing Director at Buka Minerals Ltd and Operating Partner at Global Natural Resources Investments (GNRI).

He holds a Bachelor of Economics (Honours) from the University of Queensland.

Other current listed company directorships

Former listed company directorships in last three years

Non-Executive Director of Northern Star Resources Ltd (since February 2021). Non-Executive Director of Sheffield Resources Ltd (since August 2019).

Non-Executive Director of Saracen Mineral Holdings Ltd (May 2019 to February 2021). Non-Executive Director of Adriatic Metals Plc (November 2019 to July 2020).

Special responsibilities Member of the People and Performance Committee. Karl Simich, age 58 Managing Director and Chief Executive Officer Qualifications B.Com, FCA, F.Fin Experience Mr Simich is an experienced international mining executive who has been involved in the financing, construction, development and operation of various mining projects in New Zealand, Australia and Africa over the past 36 years. Specialising in resource finance and corporate management, Mr Simich has been a director of and held senior positions with a number of ASX-listed mining companies. Mr Simich is a Fellow of the Institute of Chartered Accountants and a Fellow of the Financial Services Institute of Australasia and has completed post-graduate studies in business and finance.

46 Annual Report 2022 Sandfire Resources

Directors’ Report

Directors (continued)

Roric Smith, age 60 Independent Non-Executive Director Qualifications B.Sc, B.Sc (Hons) Geology, Ph.D Geology, MAICD Experience Dr Smith is a highly experienced geologist with extensive Australian and international experience. Dr Smith was previously Vice President, Discovery and Chief Geologist for Evolution, where he played a key role in leading that company’s exploration efforts.

Prior to joining Evolution, Dr Smith held senior executive positions with the gold producer AngloGold Ashanti, including as Senior Vice President, Global Greenfield Exploration; Country Manager and Chief Representative China; Exploration Manager – North Asia Region; and Chief Geologist Australia. Dr Smith holds a B.Sc, B.Sc (Hons) Geology and Ph.D from the University of Natal in South Africa.

Non-Executive Director of Saracen Mineral Holdings Ltd (July 2017 to February 2021).

Former listed company directorships in last three years Special responsibilities Member of the Risk and Sustainability Committee. Member of the Audit and Finance Committee.

Sally Langer, age 48 Independent Non-Executive Director Qualifications B.Com, CA, AICD Experience Ms Langer has 25 years’ experience in Professional Services including as founder and Managing Partner of the management consulting and executive recruitment firm Derwent Executive, where she set up and led the growth of the Perth office servicing a wide range of clients both local and national and led the Mining and Industrial Practice. Prior to that, she was a Director at international recruitment firm Michael Page and a Chartered Accountant at accounting and consulting firm Arthur Andersen.

During her career, Ms Langer has been responsible for strategy development and execution with a strong focus on profitable business growth, supervising and coordinating large teams and other management functions including strategy, business development, budgeting and human resources. She has been a trusted advisor to numerous Boards on recruitment, talent management, culture and organisational structure.

As an experienced director of public companies, Ms Langer is also Non-Executive Director of Gold Corporation/Perth Mint. Sally holds a Bachelor of Commerce from the University of Western Australia, is a Chartered Accountant and is a graduate of the Australian Institute of Company Directors.

Other current listed company directorships

Former listed company directorships in last three years

Non-Executive Director of Northern Star Resources Ltd (since February 2021). Non-Executive Director of MMA Offshore Limited (since May 2021).

Non-Executive Director of Saracen Mineral Holdings Ltd (May 2020 to February 2021).

Other current listed company directorships Former listed company directorships in last three years	Company Directors. Non-Executive Director of Northern Star Resources Ltd (since February 2021). Non-Executive Director of MMA Offshore Limited (since May 2021). Non-Executive Director of Saracen Mineral Holdings Ltd (May 2020 to February 2021).
Special responsibilities	Chair of the Audit and Finance Committee.
	Member of the People and Performance Committee.
Jennifer Morris OAM, age 49	Independent Non-Executive Director
Qualifcations	B.Arts, MAICD, Finance for Executives (INSEAD)
Experience	Ms Morris is a former partner of global professional services frm Deloitte where her
	career spanned more than 10 years working across the mining, government and transport
	sectors. Currently a Commissioner on the Board of the Australian Sports Commission, she
	was also previously a Senior Marketing Analyst for Rio Tinto Iron Ore and the CEO of Walk
	Free, the Minderoo Foundation's global initiative against slavery.
	Jennifer holds a Bachelor of Arts (Psychology and Journalism) from Curtin University,
	received with Distinction and has completed Finance for Executives at INSEAD.
	Her experience includes advising government entities and corporations on strategy
	development, governance controls, business transformation, the embedding of
	environment, social and governance related policies, the development of leadership and
	understanding of high-performance environments.
	Ms Morris is a member of the Australian Institute of Company Directors, a Fellow of
	Leadership WA and a member of the Vice Chancellor’s List, Curtin University. Prior to her
	business career, she was a member of the highly successful Australian Women’s Hockey
	Team which won Olympic gold medals at both Atlanta in 1996 and Sydney in 2000. In 1997,
	she was awarded a Medal of the Order of Australia (OAM).
Other current listed company directorships	Non-Executive Director of Fortescue Metals Group Ltd (since November 2016).
	Non-Executive Director of Liontown Resources Ltd (since November 2021).
Special responsibilities	Chair of the People and Performance Committee.
	Member of the Risk and Sustainability Committee.

Annual Report 2022 Sandfire Resources 47

Directors’ Report

Directors (continued)

Robert Edwards, age 56 Qualifications Experience

Independent Non-Executive Director

BE (Hons) Mining, Member of the IOM

A mining engineer, Rob Edwards brings 30 years of experience in the natural resource sector from production mining, new business development, equity research, investment banking and board level experience. After graduating from the Camborne School of Mines, he started his career in South Africa working in production mining and new business roles before joining HSBC as a precious metals equities analyst as part of the award winning HSBC Global Mining team. Thereafter he moved to Russia and was instrumental in transforming Renaissance Capital (RenCap) from a niche single country investment bank into a successful boutique resource focused investment bank. His final role at RenCap was serving as Chairman, Mining and Metals providing oversight over investment banking and principal investment activity in the mining, metals and fertiliser sectors. After leaving Renaissance he has worked as a Senior Advisor to the Royal Bank of Canada (Europe) Investment Banking Division working on mergers and acquisitions and senior client coverage.

Mr Edwards also served as an Independent Non-Executive Chairman of Sierra Rutile until its sale to Iluka Resources in 2016 as well as an Independent Non-Executive Director of GB Minerals until its sale in 2017 to Itafos. Until early 2022 he served as an Independent Non-Executive Director of MMC Norilsk Nickel, the world’s biggest producer of nickel and palladium as well as major producer of copper and platinum. He currently serves as an Independent Non-Executive Director of Chaarat Gold Limited with producing and exploration assets in Armenia and Kyrgyzstan.

Other current listed company directorships Special responsibilities Chair of the Risk and Sustainability Committee. Member of the Audit and Finance Committee.

Non-Executive Director of Chaarat Gold Ltd (since September 2018).

Sally Martin, age 57 Independent Non-Executive Director Qualifications BE Electrical, AICD Experience Ms Martin is a former senior executive who has held various roles at Shell over the last 34 years. She has extensive operational and business team leadership experience in complex industrial environments including refining and trading. She also has deep working knowledge of stimulating and leading transformational change – most recently as General Manager, Trading and Supply Operations, Europe & Africa. Ms Martin has strong ESG credentials, including in energy transition strategy development as Vice President Health, Safety, Security, Environment & Social Performance at Shell.

Ms Martin is a Non-Executive Director of Porvair Plc. (LON: PRV), a specialist filtration and environmental technology company listed on the London Stock Exchange. She has particular focus on safety management, project delivery and managing large and dispersed teams. She leads Porvair’s employee engagement processes and chairs the Group’s Remuneration Committee.

She holds a Bachelor of Engineering degree from University College Cork in Ireland and is a member of the Australian Institute of Company Directors.

Other current listed company directorships Non-Executive Director of Porvair Plc. (since October 2016). Special responsibilities Member of the People and Performance Committee. Member of the Risk and Sustainability Committee.

48 Annual Report 2022 Sandfire Resources

Directors’ Report

Interests in the shares of the Company and related bodies corporate

As at the date of this report, the interests of the Directors in the shares of Sandfire Resources Limited were:

	Number of ordinary shares
John Richards	60,000
Karl Simich	5,200,051
Roric Smith	-
Sally Langer	26,080
Jennifer Morris	9,484
Robert Edwards	-
Sally Martin	-

Company Secretary

Matthew Fitzgerald Company Secretary and Chief Financial Officer Qualifications B.Com, CA Experience Mr Fitzgerald was appointed to the position of Company Secretary in February 2010. Mr Fitzgerald is a Chartered Accountant with extensive experience in the resources industry. He began his career in the Assurance and Advisory division of KPMG, before joining ASXlisted Kimberley Diamond Company NL in 2003, where he held the position of Chief Financial Officer and Director until July 2008. Mr Fitzgerald also holds the position of Non-Executive Chairman of the Company’s subsidiary Sandfire Resources America Inc.

Committee structure and membership

Members acting on the committees of the Board during the year are set out below. Directors were a member of the committee for the entire period unless otherwise noted.

Audit	People and Performance	Risk
Sally Langer1– Chair	Jennifer Morris1- Chair	John Richards – Chair
Roric Smith	Sally Langer	Jennifer Morris
John Richards	Derek La Ferla	Roric Smith
	Paul Hallam2

1 Appointed as Chair on 1 September 2021.

2 Mr Hallam resigned as Independent Non-Executive Director on 26 November 2021. He served as a member of the People and Performance Committee from 1 July 2021 to 31 August 2021.

Subsequent to year end the Board resolved to establish the following Committees, with effect from 1 July 2022.

Audit and Finance	People and Performance	Risk and Sustainability
Sally Langer – Chair	Jennifer Morris - Chair	Robert Edwards1– Chair
Roric Smith	Sally Langer	Jennifer Morris
Robert Edwards1	John Richards	Roric Smith
	Sally Martin1	Sally Martin1

1 Mr Edwards and Ms Martin were appointed as Independent Non-Executive Directors on 8 July 2022.

Annual Report 2022 Sandfire Resources 49

Directors’ Report

Directors’ meetings

The number of meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings attended by each Director are detailed below:

	Board Meetings	Meetings of Committees
		Audit People and Performance Risk
	A B	A B A B A B
John Richards Derek La Ferla Karl Simich Roric Smith Sally Langer Jennifer Morris Paul Hallam1	11 11 11 11 11 11 11 11 11 11 11 11 6 6	4 4 - - 4 4 - - 5 5 - - - - - - - - 4 4 - - 4 4 4 4 5 5 - - - - 5 5 4 4 - - - 1 - -

A Number of meetings attended.
B Number of meetings held during the time the Director held office or was a member of the relevant committee during the year.
1 Mr Hallam resigned as Independent Non-Executive Director on 26 November 2021. He served as a member of the People and Performance Committee from 1 July 2021 to 31 August 2021.

Principal activities

The principal activities of the consolidated Group during the year were:

Production and sale of copper concentrate, containing gold and silver by-products from the Group’s 100% owned DeGrussa Copper Operations in Western Australia;
Production and sale of copper, zinc and lead concentrate, containing silver by-products from the Group’s 100% owned MATSA Copper Operations in Spain;
Development of the Motheo Copper Mine and evaluation of the Motheo Expansion Project in Botswana;
Evaluation of Sandfire Resources America Inc.’s high-grade Black Butte Copper Project in Montana, United States; and
Exploration, evaluation and development of mineral tenements and projects in Australia, Botswana, Spain, Portugal and elsewhere overseas, including investment in early stage mineral exploration companies.

Dividends

The details in relation to dividends announced or paid since 1 July 2021, are set out below:

			Amount	Franked amount per
			per share	share	Total dividends
Record date	Date of payment	Period	(AUD cents)	(AUD cents)	$000
07 September 2021	22 September 2021	2021 FY Final	26	26	33,600
16 March 2022	30 March 2022	2022 FY Interim	3	3	8,804

50 Annual Report 2022 Sandfire Resources

Directors’ Report

Operational and financial review

Change in Presentation Currency

The Group has changed its presentation currency from Australian dollars to United States (US) dollars, effective 1 July 2021. Consequently, unless otherwise stated, all references to dollars are to US dollars.

COVID-19 Business Response

The Group continued to proactively implement protocols to minimise the potential transmission of COVID-19 and to ensure the health and wellbeing of our staff and contractors. While the Group was required to adjust some of its usual operating practices during the year, the direct impact to our operations was limited, which enabled the Group to maintain strong operating performance.

Safety Performance

The Total Recordable Injury Frequency Rate (TRIFR) for the Group at the end of 30 June 2022 was 3.8 compared with 4.0 in 2021.

Matsa Copper Operations, Spain

Located in the Huelva Province of south-western Spain, MATSA Copper Operations (MATSA) consist of three underground mines and a 4.7Mtpa central processing facility. MATSA generates revenue from the delivery and sale of copper, zinc and lead concentrates with silver by-products.

Overview

During the year the Company announced the acquisition of MATSA in Spain exercising operational control and economic ownership effective from 1 February 2022.

Production for the 5 months to 30 June 2022 was 30,628 tonnes of contained copper, 38,907 tonnes of contained zinc, 4,102 tonnes of contained lead and ~1.2 million ounces of contained silver. A summary of ore and poly-ore production for the 5-month period of operational control is provided below:

==> picture [477 x 240] intentionally omitted <==

----- Start of picture text -----

MATSA Production Statistics Units FY2022
Mining Total Ore Tonnes 1,880,936
Ore – Cupriferous Tonnes 508,799
Grade – Cupriferous Cu% 2.3
Ore - Poly Tonnes 1,372,137
Grade – Poly Cu% 2.0
Grade – Poly Zn% 3.9
Concentrator Total Milled Tonnes 1,891,319
Ore – Cupriferous Tonnes 529,412
Grade – Cupriferous Cu% 2.2
Ore - Poly Tonnes 1,361,907
Grade – Poly Cu% 2.1
Grade – Poly Zn% 3.9
Concentrate Produced Concentrate Tonnes 248,263
Contained Copper Tonnes 30,628
Contained Zinc Tonnes 38,907
Contained Lead Tonnes 4,102
Contained Silver Ounces ~1.2Moz
----- End of picture text -----

Note: Mining and production statistics are rounded to the nearest 0.1% Cu and Zn grade. Errors may occur due to rounding.

Underground Mining

Processing

Annual Report 2022 Sandfire Resources 51

Directors’ Report

Operational and financial review (continued)

Sales & Marketing

A total of 245,675 tonnes of concentrate was sold for the period containing 30,380 tonnes of copper, 39,012 tonnes of zinc, 3,840 tonnes of lead and 1.2 million ounces of silver.

Exploration

The Group holds a significant landholding in the Iberian Pyrite Belt of Spain and Portugal and is continuing to test near-mine and greenfield targets.

Details in relation to these exploration projects and activities can be found on Company’s website www.sandfre.com.au and in the Company’s June 2022 Quarterly Report ASX announcement, dated 28 July 2022.

DeGrussa Copper Operations, Western Australia

DeGrussa Copper Operations (DeGrussa) are located approximately 900km north-east of Perth in Western Australia and include the highgrade DeGrussa and Monty Copper-Gold Mines.

Overview

Production for the 12 months to 30 June 2022 was 67,740 tonnes of contained copper and 32,285 ounces of contained gold. A summary of copper and gold production for the year is provided below:

DeGrussa Production Statistics	DeGrussa Production Statistics	Units	FY2022
Mining	Total Ore	Tonnes	1,692,952
	Copper Grade	%	4.2
	Gold Grade	g/t	1.4
Concentrator	Milled	Tonnes	1,680,742
	Copper Grade	%	4.3
	Gold Grade	g/t	1.3
Concentrate Produced	Concentrate Contained Copper Contained Gold Contained Silver	Tonnes Tonnes Ounces Ounces	287,641 67,740 32,285 ~0.3Moz

Note: Mining and production statistics are rounded to the nearest 0.1% Cu grade and 0.1 g/t Au grade. Errors may occur due to rounding.

Underground Mining

Production was sourced from the DeGrussa and Monty Mines during the year, with both mines remaining in balance between production and back-fill. Mine production rates from DeGrussa and Monty were in line with the mine plan with underground planning and scheduling focused on matching extraction sequencing with equipment and personnel availability to provide continued compliance to the mine plan.

With life-of-mine development at the Monty Mine being completed during the March 2022 Quarter, operations during the June 2022 Quarter focused primarily on production ore extraction along with minor ongoing backfill activities.

Processing

Mill throughput for the year continued to be in line with plan and was supported by strong plant utilisation. This resulted in strong copper recovery of 93.8% for the year.

Sales & Marketing

A total of 291,472 tonnes of concentrate was sold for the year containing 68,037 tonnes of copper and 32,076 ounces of gold. Twenty-eight shipments were completed from Port Hedland and Geraldton during the year.

Processing Extension Study

During the year, work continued to evaluate the viability of treating oxide stockpiles, heavily transitional stockpiles and mineralised waste stockpiles at the end of the current DeGrussa mine life.

This new study is based on utilising the existing DeGrussa flotation plant with minimal circuit changes, adopting a simplistic approach to treat whole stockpiles with oxide reagents.

Study work completed during the year included the collection of additional samples for rheology testing to confirm the pumpability of the oxide material, thickening and filtration testwork and a more detailed economic assessment and sensitivity analysis. The final step in this study is to undertake full scale plant trials, scheduled for the September 2022 Quarter.

52 Annual Report 2022 Sandfire Resources

Directors’ Report

Operational and financial review (continued)

Development Projects

Motheo Copper Project, Botswana

The Motheo Copper Project (Motheo), where development commenced in FY2021, will initially mine a significant sediment-hosted copper and silver deposit (T3 Deposit). Located in the Kalahari Copper Belt in Botswana, the project is supported by our community office in the nearby town of Ghanzi, which is the focal point for managing human resources and community relations in the Ghanzi District.

Motheo Copper Mine Mining License

Motheo Copper Mine Development

Development of the Motheo Copper Mine (Motheo) is proceeding on schedule, with first production expected in the June 2023 Quarter.

Following the award of the Mining License in early July 2021, project construction and development progressed well during the year with over 1,700 personnel on site by the end of FY2022. Key developments included:

Completion of all 752 rooms in the Motheo Mine Village
Award of the Electrical and Instrumentation installation contract (final process plant contract)
Erection and back-fill of the primary crusher lower retaining wall
Completion of Reclaim tunnel and SAG Mill concrete foundations
Completion of Mine Administration Office and Clinic buildings
Tailings Storage Facility Bulk fill for walls 50% complete and basin lining commenced
Majority of the process plant equipment including the SAG Mill components all delivered to site during the year
Structural, Mechanical and Piping (SMP) contractor mobilised and approximately 10% completed by the end of the financial year.

Project Funding

Sandfire intends to fund the development of the Motheo Copper Mine through a combination of cash and project debt. The selection of banks was completed by the end of the financial year. The Group has obtained credit approval for a $140.0 million project debt facility to fund construction completion.

Motheo Expansion Project Definitive Feasibility Study (DFS)

The Motheo Expansion Project is centered on the development of the A4 Deposit as part of an expanded 5.2Mtpa Motheo Production Hub strategy.

Following the release of the A4 Ore Reserve in September 2021 and the strong economics of the Motheo Expansion Project pre-feasibility study (PFS), the DFS was completed in the September 2022 Quarter. Open pit design and production scheduling has been completed, along with design and estimation of the required process plant upgrades. Estimates for infrastructure requirements are also complete and documentation is currently being finalised.

The “Scoping and Terms of Reference” updated submission to the Botswana Department of Environmental Affairs (DEA) is imminent following receipt of detailed feedback from the DEA requiring minor changes to the submission. The Environmental-Social Impact Assessment (ESIA) is scheduled to be submitted to DEA in the December 2023 Quarter.

Fabrication of the only long-lead delivery plant equipment required for the plant expansion, a 4.5MW Ball Mill, is well advanced with delivery on schedule for the December 2023 Quarter.

Kalahari Exploration

The Group holds highly prospective exploration licences in the Kalahari Copper Belt of Botswana and Namibia. Sandfire’s 100% owned licences represent a rare belt-scale exploration opportunity globally, comprising an extensive and strategic position extending more than 300km along the centre of a major emerging sediment-hosted copper belt.

Details in relation to these exploration projects and activities can be found on Company’s website www.sandfire.com.au and in the Company’s June 2022 Quarterly Report ASX announcement, dated 28 July 2022.

Annual Report 2022 Sandfire Resources 53

Directors’ Report

Operational and financial review (continued)

Black Butte Copper Project, USA (Sandfire: 87%)

Sandfire holds an 87% interest, via North American-listed company Sandfire Resources America Inc. (TSX-V: SFR), in the high-grade Black Butte Copper Project, located in central Montana in the United States. This high-quality project, which is one of the world’s highest-grade undeveloped copper projects, has completed the final stage of permitting. The planned mine development will utilise best-practice technology and modern mining techniques to develop a wholly-underground mine with minimal surface footprint and environmental impact.

Legal Update

Sandfire’s 87%-owned subsidiary, Sandfire Resources America Inc. (Sandfire America), announced the results of the state District Court Legal Challenge related to its Mine Operating Permit (MOP) during the year.

The District Court Judge granted the plaintiffs’ motion for a summary judgement stating that the Montana Department of Environmental Quality (MT DEQ) violated the Montana Metal Mines Reclamation Act and Montana Environmental Policy Act in its analysis of the project.

As part of this ruling, both parties had 45 days to propose remedial measures to the Judge, and on the 1st of July 2022, both parties filed a joint motion recommending a stipulated order for remedies. Subsequently, the District Court Judge issued an order aligned with the joint motion and that will allow Phase I Construction of the Black Butte Copper Project to be completed under the existing Permit.

Sandfire America is working on strategies to complete additional test work, analysis and reporting for additional authorisations from the MT DEQ with the objective of moving the project past Phase 1 of the Permit.

For further details refer to the market releases of Sandfire Resources America Inc. available on the Company’s website www.sandfireamerica.com.

54 Annual Report 2022 Sandfire Resources

Directors’ Report

Operational and financial review (continued)

Corporate

Equity Raising

To partially fund the acquisition of MATSA the Group successfully completed an equity raising in October 2021, comprising the issue of new fully paid ordinary Sandfire shares to eligible retail and institutional investors to raise approximately A$1,248.0 million ($905.0 million) at an issue price of A$5.40 per share.

Finance Facilities

The Group also executed and fully drew down a A$200.0 million ($137.8 million) Corporate Debt Facility with ANZ to partially fund the acquisition of MATSA. Repayment of the facility via bullet payment is due on 30 September 2022 with ANZ holding security over Sandfire’s DeGrussa Copper Operations as well as corporate security with minimum quarterly cash holdings until repayment.

Execution of documentation for a $650.0 million MATSA Syndicated Debt Facility was also completed during the year with full draw down occurring on completion of the acquisition of MATSA.

The details and terms of the A$200.0 million Corporate Debt Facility with ANZ and $650.0 million MATSA Syndicated Debt Facility were provided in the ASX announcement dated 27 October 2021.

Hedging

Prior to completing the acquisition of MATSA, copper and zinc hedge agreements were entered under the terms of the MATSA Syndicated Debt Facility. As at 30 June 2022, the hedging tenor extends to January 2025 with 62,028 tonnes of copper production hedged under committed swaps at an average price of $4.17/lb, and 71,674 tonnes of zinc production hedged at an average price of $1.28/lb. The end of period unrealised mark-to-market gain on MATSA hedging was $44.6 million.

DeGrussa hedging as at 30 June 2022 comprised 5,000 tonnes of copper at an average price of $4.43/lb with a tenor out to August 2022 and 9,000 ounces of gold at an average price of $1,802/oz with a tenor out to December 2022. The end of period unrealised mark-to-market gain on DeGrussa hedging was $7.3 million.

Sale of Investment in Adriatic Metals Plc

During the year, Sandfire sold an aggregate of 34,600,780 CHESS depository interests (CDIs) representing ordinary shares in the capital of Adriatic Metals Plc (ASX: ADT), or 16 percent of Adriatic’s existing issued ordinary share capital, at a price of $2.08 (A$2.80) per Secondary Placing Share. The sale realised aggregate gross proceeds of $71.0 million (A$97.0 million).

Group Financial review

Group Financial review
				Motheo
			Black Butte	Copper	Exploration
	DeGrussa	MATSA*	Project	Project	and Other	Group
Year ended 30 June 2022	$000	$000	$000	$000	$000	$000
Revenue	626,379	296,326	-	-	-	922,705
EBITDA^	392,512	150,593	(14,082)	(19,401)	(62,332)	447,290
Proft before net fnance and income tax	257,167	34,856	(14,242)	(20,199)	(67,021)	190,561
Proft before income tax						194,974
Net proft for the year						109,432
Net proft attributable to the equity holders						111,430
of the parent
Basic and diluted earnings per share (cents)						32.05

FY2022 MATSA Copper Operations financial information is for the period 1 February 2022 to 30 June 2022, reflecting the period of Sandfire’s operational ownership. The calculation of basic and diluted earnings per share was negatively impacted by the equity raise which was completed to fund the acquisition of MATSA from October 2021, several months prior to the consolidation of MATSA earnings.

^ EBITDA is a non IFRS measure. This measure is presented to enable a better understanding of the operations of the Group and is reconciled to statutory net profit in Note 3 of the financial statements.

The DeGrussa Copper Operations contributed profit before net finance and income tax of $257.2 million (2021: $283.5 million) from underground mining and concentrator operations. The current year result was adversely affected by inflationary pressures in the sector and broader economy and impacted by reduced capitalised mine development impacting overheads attributed to mine operating costs.

The MATSA Copper Operations contributed profit before net finance and income tax of $34.9 million (2021: nil) from the sale of copper, zinc and lead concentrate as well as underground mining.

Black Butte Project represents the Group’s 87% interest in Sandfire Resources America Inc. (TSX-V: SFR) which contributed a loss before net finance and income tax of $14.2 million (2021: $14.1 million) from evaluation work on the Black Butte Copper project in USA.

The Motheo Copper Project represents the Group’s activities within the Kalahari Copper Belt which includes the Motheo Copper mine and several resource expansion prospects. Motheo contributed a loss before net finance and income tax of $20.2 million (2021: $8.7 million) for the year primarily attributable to exploration and evaluation expenses of $12.3 million.

Annual Report 2022 Sandfire Resources 55

Directors’ Report

Operational and financial review (continued)

The Exploration and Other segment contributed a loss before net finance and income tax of $67.0 million (2021: loss of $58.4 million). The loss includes immediately expensed exploration of $19.9 million, corporate and business development activities of $8.8 million and expensed MATSA related acquisition and integrations costs of $13.5 million.

Dividends of $42.4 million were declared during the year, including $33.6 million in respect of the 2021 financial year.

Revenue

Revenue
Revenue	DeGrussa $000 MATSA* $000 Total 30 Jun 2022 $000
Gross value of metal payable sold ^ QP price adjustment gain/(loss) Hedge gain/(loss) Value of payable metal sold Port services and sea freight Treatment and refning charges	688,814 442,319 1,131,133 (16,927) (62,105) (79,032) (18,908) (5,644) (24,552)
	652,979 374,570 1,027,549 - (32,691) (32,691) (26,600) (45,553) (72,153)
Total Revenue	626,379 296,326 922,705

FY2022 MATSA Copper Operations financial information is for the period 1 February 2022 to 30 June 2022, reflecting the period of Sandfire’s operational ownership.
^ Value of metal payable sold is a non IFRS measure. This measure is presented to enable a better understanding of the operations of the Group and is reconciled to total statutory revenue above.

==> picture [129 x 8] intentionally omitted <==

----- Start of picture text -----

Copper Dominant Revenue Stream
----- End of picture text -----

==> picture [445 x 201] intentionally omitted <==

----- Start of picture text -----

5% 2% 2% 4% 1%
1%
8%
10%
28%
Group MATSA DeGrussa
82% 66% 91%
Value of Payable Metal Sold - FY2022
Copper Zinc Lead Gold Silver
----- End of picture text -----

Exploration and evaluation

For the year ended 30 June 2022 the Group’s Exploration and evaluation expenses across all segments was $46.4 million (2021: $48.9 million).

Exploration and evaluation expenditure comprises expenditure on the Group’s projects, including:

a) Near-mine and the Greater Doolgunna regional exploration, which include a number of joint venture earn-in arrangements;
b) Near mine and within the Iberian Pyrite Belt, in Spain and Portugal;
c) The Kalahari Copper Belt, in Botswana and Namibia;
d) Expenditure arising on the consolidation of the Group’s controlled entities from the Group’s investment in Sandfire Resources America Inc; and
e) Other Australian and international exploration projects.

56 Annual Report 2022 Sandfire Resources

Directors’ Report

Operational and financial review (continued)

Depreciation and amortisation

Depreciation and amortisation
			Depreciation
	Carrying value	Carrying value	and amortisation
	June 2022	June 2021	during the year
	$000	$000	$000
Mine properties	1,347,534	163,183	(158,353)
Plant and equipment	1,202,724	89,290	(84,063)
Right of use assets - AASB 16 Leases	30,166	8,990	(14,313)
	2,580,424	261,463	(256,729)

Income tax expense

Income tax expense of $85.5 million for the year consists of current and deferred tax expense and is based on the taxable income of the Group entities, adjusted for temporary differences between tax and accounting treatments. Cash tax payments during the year amounted to $132.8 million.

The Group has derecognised during the period the $9.0 million deferred tax asset associated with DeGrussa rehabilitation obligations, with a corresponding increase in income tax expense.

Financial Position

Net assets of the Group have increased by $981.5 million to $1,665.4 million during the reporting period primarily due to continued strong profitability at DeGrussa and the acquisition of MATSA.

Cash balance

Group cash on hand was $463.1 million as at 30 June 2022 (2021: $431.3 million).

Trade and other receivables

Trade and other receivables include remaining funds to be received from the sale of concentrate subject to provisional pricing and quotational periods at the time of sale. At 30 June 2022 $53.7 million (2021: receivable of $11.5 million) was payable to customers as a result of provisional pricing adjustments arising from a reduction in metals prices in the last month of the financial year. The amounts payable to customers are classified under trade and other payables.

Inventories

Current inventories have increased by $10.9 million to $51.4 million primarily due to the acquisition of MATSA which contributed $8.4 million in stores and consumables, $4.3 million in unsold concentrate and $5.5 million to ROM stockpiles.

Property, plant and equipment, including mine properties and assets under construction

The carrying value of property, plant and equipment (PPE), including mine properties and assets under construction, has increased by $2,319.0 million to $2,580.4 million at the end of the year driven by the assets acquired as part of the acquisition of MATSA of $2,360.7 million and additions in relation to the development of the Motheo Copper Project of $148.1 million, offset by Group amortisation and depreciation charges of $256.7 million. The closing carrying value of DeGrussa Property, plant and equipment was $13.7 million as the operation nears end-of-mine life.

Derivative financial asset and liabilities

Derivative financial assets of $52.2 million represents the end of period unrealised mark-to-market gain on copper and zinc commodity swaps for the DeGrussa and MATSA Copper Operations. Derivative financial liabilities of $0.3 million represent the unrealised mark-to-market loss on gold commodity swaps for the DeGrussa Copper Operations.

Trade and other payables

Trade and other payables are primarily comprised of ordinary trade payables of $185.9 million, the majority of which relates to MATSA ($112.8 million) which operates under longer dated trading terms. Trade payables owing to customers arising from provisional pricing adjustments comprises $53.7 million of the balance (refer to Trade and other receivables section above).

Interest bearing liabilities

Interest bearing liabilities comprise the A$200.0 million ($137.8 million) Corporate Debt Facility with ANZ and $650.0 million MATSA Syndicated Debt Facility. Interest bearing liabilities are initially recorded at fair value net of transaction costs and subsequently measured at amortised cost, with interest accrued under the effective interest rate (EIR) method.

Annual Report 2022 Sandfire Resources 57

Directors’ Report

Operational and financial review (continued)

Current and deferred tax liabilities

The estimated taxable profit on operations for the year exceeded tax instalments resulting in the Group booking a current income tax payable of $39.4 million at year-end.

The Group has recorded a deferred tax asset (DTA) of $16.5 million, which predominantly relates to revenue losses available for offset against future taxable income at Motheo, offset by the differing tax depreciation and amortisation rates of mining assets and equipment compared to accounting rates at DeGrussa.

In addition, The Group has recorded a $493.5 million deferred tax liability (DTL), primarily attributable to the acquisition of MATSA. At the date of acquisition MATSA had a net DTL of $263.8 million predominately due to the timings of tax deductibility of capital expenditure. Spanish tax law does not permit a reset of the tax cost base of assets acquired under a business combination. As a result of the $725.2 million purchase price allocation (PPA) uplift an additional $241.8 million DTL has been recognised during the year.

Provisions

Total current and non-current provisions for the Group have increased by $45.8 million to $87.8 million as at 30 June 2022. The Group’s provisions predominately relate to mine rehabilitation activities as well as employee entitlements.

The current year increase is primarily due by the initial recognition of the provision associated with MATSA rehabilitation obligations of $29.0 million and an increase in the Motheo Copper Project rehabilitation liability of $11.5 million due to additional disturbance following the ramp-up in project development.

Cash Flows

Operating activities

Net cash inflow from operating activities was $391.2 million for the year (2021: $347.5 million) inclusive of $132.8 million income tax payments. Net cash inflow from operating activities prior to payments for exploration and evaluation activities was $439.5 million (2021: $401.0 million) for the year.

Investing activities

Net cash outflow from investing activities was $1,632.0 million for the year (2021: $97.8 million) including $1,494.1 million (net of $50.0 million cash acquired) for the acquisition of MATSA, payments for property, plant and equipment of $32.6 million and payments for mine development of $166.8 million, $128.6 million of which relates to project development at the Motheo Copper Mine.

Proceeds from the sale of investments for the year of $73.4 million was primarily attributable to the sale of shares held in Adriatic Metals Plc, which realised aggregate gross proceeds of $71.0 million (A$97.0 million).

Financing activities

Net cash inflow from financing activities of $1,291.5 million for the year (2021: $43.0 million outflow) included proceeds from the MATSA capital raising of approximately $905.0 million and proceeds from loans and borrowings of $482.5 million comprising drawdown of the $137.8 million (A$200.0 million) ANZ Corporate Debt Facility and $650.0 million MATSA Syndicated Debt Facility, offset by MATSA indebtedness at acquisition repaid on completion of $313.0 million.

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Business risks and external factors

Sandfire’s business, operating and financial performance are subject to various risks and uncertainties, some of which are beyond Sandfire’s reasonable control. The identification and, where possible, mitigation and management of these risks is central to achieving the objectives and targets of our Strategic Growth Plan.

The matters that have the potential to materially impact Sandfire’s operating and/or financial results are set out below. The matters identified are not listed in order of importance and are not intended as an exhaustive list of all the risks and uncertainties associated with Sandfire’s business.

Information that could result in unreasonable prejudice to the Group has been excluded, including that which is confidential or commercially sensitive, except where disclosure is required pursuant to our continuous disclosure obligations.

Business Risks

Commodity Prices

The Group’s revenues and cash flows are largely derived from the sale of copper, zinc, lead and gold. The financial performance and operating cash margin of Sandfire is exposed to fluctuations in the market price of these commodities. Sandfire has active copper and zinc hedges to manage this risk.

Prior to completing the acquisition of MATSA, copper and zinc hedge agreements were entered under the terms of the MATSA Syndicated Debt Facility. Additional Copper and Gold hedging has also been put in place for DeGrussa (refer to Note 11).

Foreign Exchange Currency

The Group is an Australian business that reports in US dollars with Group revenue derived from the sale of commodities that are priced in US dollars. Operating costs are denominated in a range of foreign currencies through the Group’s projects in Australia, Spain, Botswana and the USA. The impact of exposure to movements in foreign exchange rates cannot be predicted reliably and requires careful management to ensure operating cash margin is maintained.

The Group monitors its ongoing exposure to foreign currency exchange risk and uses forward exchange contracts to minimise and manage foreign currency risk. In FY2022, the Group completed a substantial equity raising denominated in AUD to fund the USD acquisition of MATSA. To manage its exposure to adverse foreign exchange movements the Group entered into forward exchange contracts to provide a high degree of certainty over the rate at which the AUD equity proceeds would be converted to USD.

Interest Rates

During the 2022 financial year the Group acquired variable interest-bearing liabilities comprising the A$200.0 million ($137.8 million) Corporate Debt Facility with ANZ and $650.0 million through the MATSA Syndicated Debt Facility. Additional interest-bearing liabilities are expected to be entered into during the 2023 financial year in relation to the financing of the Group’s Motheo Copper Project.

Interest rate movements affect both returns on funds on deposit as well as the cost of borrowings. Global inflationary pressures are expected to impact interest rates in the near term.

The Group continues to monitor and optimise appropriate funding arrangements to meet strategic objectives.

Concentrate Sale Costs

The price of sea freight, smelting and refining charges are market driven and vary throughout the year.

Sea freight, smelting and refining charges for MATSA are set until 31 December 2022 with rates adjusted against market in January 2023 for the 2023 calendar year.

As at 30 June 2022 approximately 40% of the DeGrussa Copper Operations concentrate sales were committed with the remaining 60% exposed to market in relation to smelting and refining charges. DeGrussa shipments for the 2023 financial year are subject to market rates for freight.

Annual Report 2022 Sandfire Resources 59

Directors’ Report

Business risks and external factors (continued)

Strategic Objective Risks

Executing Delivery

During the 2022 financial year operational and development activities have seen significant increases in supply chain and labour market costs, primarily driven by increased commodity prices, global conflicts, ongoing global impacts of COVID-19, inflation and labour shortages. This has been reflected in increased costs for power, diesel, consumables, labour (both contractor and employee based), freight and equipment.

The Group’s operations are subject to uncertainty with respect to (without limitation): ore tonnes, mined grade, ground conditions, metallurgical recovery or unanticipated metallurgical issues (which may affect extraction costs), infill resource drilling, mill performance, failure of tailings facilities, transportation and logistics issues, the level of experience of the workforce, regulatory changes, safety related incidents, unplanned mechanical failure of plant or equipment, natural events such as storms, floods or bushfires.

The estimation of the Group’s Mineral Resources and Ore Reserves involve subjective judgements regarding a number of factors including (but not limited to) analysis of drilling results, associated geological and geotechnical interpretations, metallurgical performance evaluation, mining assessment, operating cost and business assumptions as well as a reliance on commodity price assumptions. As a result, the assessment of Mineral Resources and Ore Reserves involve areas of significant estimation and judgement. The ultimate level of recovery of minerals and commercial viability of deposits cannot be guaranteed.

The Group employs suitably qualified personnel to assist with the management of its exposure to these risks and continues to monitor and optimise processes, procedures, technical capability and capacity across the business to meet its strategic objective of executing delivery.

Growth

Business development and exploration remains a key focus for Sandfire and the Group’s ability to discover or acquire new mineral prospects is an important factor to being able to sustain or increase its current level of production in the future. Exploration activities are speculative in nature and the ability to find or replace reserves is a significant operational risk.

The Group maintains a business development capability and a systematic, multi-pronged exploration program across its large landholdings globally and employs suitably qualified personnel to assist with the management of its exposure to this risk and to meet its strategic growth objective.

Align and Empower our People

Our people are integral to our business with key talent loss, ongoing attraction and retention of critical skills in a tight market, creating a safe and inclusive work environment and maintaining the Sandfire culture through this transformational period a strategic focus. The second half of FY2022 has seen the business focusing on the MATSA integration as well as the ramping up of the development of the Motheo Copper Project.

To ensure the Group is appropriately structured and resourced for its next growth phase, Sandfire has reviewed structure and resourcing at both MATSA and at head office including strengthening its executive management group during FY2022. This included the appointment of Richard Holmes (Executive – Growth) and Scott Browne (Executive – People and Performance) whose role is to oversee the implementation of the Group’s aligned and empowered people strategy to ensure all parts of the business are aligned with our long-term strategic objectives.

Optimise Capital Strategy and Engagement

The 2022 financial year has been a transformational year for Sandfire. The Board and management team have positioned the business for long-term growth through the acquisition of the MATSA Copper Operations, and progression of construction and development of the Motheo Copper Project. To part fund these growth initiatives, the business has acquired material debt for the first time in a number of years and will see debt requirements increase with the debt financing of the Motheo Copper Project.

The Group employs suitably qualified personnel to assist with the management of its exposure to these risks including careful monitoring of debt compliance, cashflow management and access to additional liquidity if required via capital markets (equity raise etc.) and capital management and investor engagement will continue to be a focus for the Group Board and management in line with its strategic objectives.

Environment, Social and Governance Risks

The Group has material exposure to environmental and social sustainability risks, including changes in community expectations, and environmental, social and governance legislation (including, for example, those matters related to climate change) which can impact on its social license to operate, financial performance and support for ongoing or future project development.

With the acquisition of MATSA and the ongoing development of the Motheo Copper Project, the business has been incorporating MATSA into its ESG program as well as implementing its standards in Botswana as the Motheo Copper Project develops.

The Group reports annually on its sustainability strategy and employs suitably qualified personnel to assist with the management of its exposure to these risks.

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Directors’ Report

Significant changes in the state of affairs

In the opinion of the Directors there were no other significant changes in the state of affairs of the Group that occurred during the financial year, other than those described in this report under ‘Operational and financial review’.

Significant events after the balance date

No matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Likely developments and expected results

The Group will continue to monitor developments and impacts from the COVID-19 pandemic to our operations and business practices. Further comments on likely developments and expected results of operations of the Group are included in this financial report under ‘Operational and financial review’.

Share options

Unissued shares under option

During the year, the Company issued 65,056 unlisted Zero Exercise Price Options (ZEPOs) expiring 17 July 2026 to executives and senior managers. Each ZEPO constitutes a right to receive one ordinary share in the capital of Sandfire, subject to meeting certain performance conditions.

Indemnification and insurance of Directors, Officers and Auditors

Indemnification

The Company indemnifies each of its Directors and Officers, including the Company Secretary, to the maximum extent permitted by the Corporations Act from liability to third parties and in defending legal and administrative proceedings and applications for such proceedings, except where the liability arises out of conduct involving lack of good faith.

The Company must use its best endeavours to insure a Director or Officer against any liability, which does not arise out of a conduct constituting a wilful breach of duty or a contravention of the Corporations Act 2001. The Company must also use its best endeavour to insure a Director or Officer against liability for costs and expenses incurred in defending proceedings whether civil or criminal. The Directors of the Company are not aware of any such proceedings or claim brought against Sandfire Resources Limited as at the date of this report.

To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). However, the indemnity does not apply to any loss in respect of any matters which are finally determined to have resulted from Ernst & Young’s negligent, wrongful or wilful acts or omissions. No payment has been made to indemnify Ernst & Young during or since the end of financial year.

Insurance premiums

The Company has paid insurance premiums in respect of Directors’ and Officers’ liability and legal expenses insurance contracts for current and former Directors, Executive Officers and Secretaries. The Directors have not included details of the premium paid in respect of the Directors’ and Officers’ liability and legal expenses’ insurance contracts, as such disclosure is prohibited under the terms of the contract.

Rounding

The amounts contained in this financial report have been rounded to the nearest $1,000 (unless rounding is applicable) where noted ($000) under the option available to the Company under ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191. The Company is an entity to which this legislative instrument applies.

Non-audit services

The following non-audit services were provided to the Group by the Company’s auditors. The Directors are satisfied that the provision of nonaudit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

The Company’s auditors received or are due to receive the following amounts for the provision of non-audit services:

in $	2022
Ernst & Young Australia – Other advisory services	15,830

Annual Report 2022 Sandfire Resources 61

Directors’ Report

Auditor’s Independence Declaration

The Directors received the following declaration from the auditor of Sandfire Resources Limited.

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Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

Auditor’s independence declaration to the directors of Sandfire Resources Limited

As lead auditor for the audit of the financial report of Sandfire Resources Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been:

a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Sandfire Resources Limited and the entities it controlled during the financial year.

Ernst & Young

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Philip Teale Partner 29 August 2022

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

62 Annual Report 2022 Sandfire Resources

Directors’ Report

Letter from the Chair of the People and Performance Committee

Dear Shareholders,

On behalf of the Board of Directors of Sandfire Resources Ltd, I am pleased to provide you with the Remuneration Report for the year ended 30 June 2022, for which we will seek your approval at the next annual general meeting.

FY2022 performance

Sandfire has had an outstanding year as our leadership team has delivered against the key objectives and targets of our transformational Strategic Growth Plan and we are confident that Sandfire is well-positioned to deliver further growth.

Importantly, our unwavering focus on safety has seen the Group’s Total Recordable Injury Frequency Rate (TRIFR) reduce to 3.8 (FY2021: 4.0).

The Group achieved above-guidance copper production (98,367t) and zinc production (38,907t) for FY2022 which included production from the newly acquired MATSA Copper Operations (MATSA) from February 2022 onwards. Cost performance was challenged by strong global inflationary pressure on energy, labour and supplies as well as lagging impacts of the COVID-19 pandemic on supply chains and labour shortages. Despite these pressures the performance by our entire team, led by our Executives, resulted in strong financial performance across several key metrics, including sales revenue ($922.7 million), operating cash flows ($391.2 million) and net profit ($109.4 million).

While capital markets have faced headwinds in recent months, we are confident in the strategic and operational position of the Group and are well placed to deliver increasing copper production in the coming years into critical industries that will drive decarbonisation and the transition to green energy.

The Company’s strong operational and financial performance has been coupled with key milestone achievements during FY2022. This included the company-defining acquisition, integration and optimisation of the MATSA Copper Operations in Spain, and the related expansion of Sandfire’s capital base; the development, construction, and expansion studies for the Motheo Copper Project in Botswana and; progression of the Black Butte Copper Project in Montana, USA.

Aligned to our Sustainability Strategy, it is also pleasing that we delivered on a majority of our FY2022 ESG actions and targets. We believe that non-financial performance is connected to long term value creation and will continue to refine our approach to ESG, as we refresh our sustainability strategy and embed it into our global operations.

Remuneration Framework

There was a minor change in the remuneration framework in FY2022 to remove the short-term incentive (STI) 12-month service deferral while retaining clawback rights. This reflected the Board’s view that deferral was of limited value, given the FY2021 LTI grant serves as a strong retention tool and contains malus and clawback provisions.

Performance measures

FY2022 Group STI Plan performance measures were changed to incorporate MATSA-specific performance measures. Aligned to our existing Group STI key performance measures, MATSA KPIs relating to production, cost of production and safety were introduced to strengthen the link between pay and performance. The weighting of Individual KPIs remained at 50% of the STI opportunity.

Annual Report 2022 Sandfire Resources 63

Directors’ Report

Remuneration outcomes in FY2022

We continue to ensure that remuneration outcomes reflect the performance of the Group over short and long-term timeframes.

Executive fixed remuneration
The Executives’ total fixed remuneration per annum was not changed in FY2022.
Executive incentives
Short-term incentives (STI): In light of Sandfire’s strong operational, financial and strategic performance during FY2022, the Board awarded 76.8%, 76.0% and 77.6% of the maximum annual STI opportunity to Karl Simich, Jason Grace and Matthew Fitzgerald, respectively.
Transformation award: To recognise the strategic importance and significant, coordinated effort required to deliver the transformational acquisition of the MATSA Copper Operations to the Group, each executive KMP received US$217,740 (A$300,000). Led by the Executive team, the acquisition included conducting a substantial capital raise which introduced new strategic investors and resolved structural issues in the Company’s asset portfolio (notably, the imminent closure of the DeGrussa Copper Operations). The MATSA acquisition has delivered a change in scale of the business and provided a strong foundation for long term growth.
Long-term incentives (LTI): Independent assessment of the three-year performance period 1 July 2019 to 30 June 2022 established that Sandfire achieved relative performance against the ASX200 Resources Index at the 28th percentile. This performance resulted in 0% of the three-year FY2020 LTI award vesting. The past four years have seen 0% of LTI awards vest. Due to the four-year grant in FY2021, no LTI was granted in FY2022.
Prior to final award decisions, the Board reviewed outcomes against the shareholder experience, COVID impact on operations, underlying safety performance, behaviour consistency with our values and code of conduct, and governance, and confirmed awards remained appropriate and that no exercise of discretion was warranted.
Board and Committee fees
Following a market benchmarking exercise, Board Non-Executive Director (NED) committee member fees of US$9,435 (A$13,000) have been applied. NED fee levels in FY2022 were otherwise unchanged from FY2021 and total fees remain within the shareholder approved fee pool limit.

Looking forward

As Sandfire further optimises MATSA’s operations, completes construction and development at the Motheo Copper Project towards production, and cements its expanded Executive team, it is evident that Sandfire has significantly progressed its Strategic Growth Plan and that there has been a substantial increase in the scale and complexity of Sandfire’s business. The Company is now well established on a long-term growth trajectory as an international and diversified, multi-asset copper company with an expanded global footprint.

Consequently, the Board is reviewing the remuneration framework to ensure it continues to attract and retain high performing Executives and incentivise them to outperform. Any changes arising from the review will be described in the 2022 Annual General Meeting (AGM) Notice of Meeting. Considerations will include the transition to an annual LTI grant cycle starting in FY2023 aligning the newly expanded Executive team over the long-term.

We value our shareholders’ support and will continue to regularly engage with and provide ongoing updates to our shareholders regarding the appropriateness of our remuneration policies and objectives.

On behalf of the Board, I invite you to review the full report and thank you for your ongoing support of Sandfire.

Yours sincerely,

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Jenn Morris

Chair of the People and Performance Committee

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Remuneration report (audited)

Reporting currency

As announced to the market in February 2022, Sandfire changed its reporting currency from Australian dollars (AUD) to United States dollars (USD), commencing with reporting of the 31 December 2021 half-year financial results. In line with Sandfire’s USD reporting currency, the majority of the Remuneration Report is now disclosed in USD (unless otherwise stated) with all remuneration components having been converted from AUD to USD using an average rate of 0.7258 for FY2022 and 0.7468 for FY2021.

The Executive cash value of remuneration realised table in this Remuneration Report (section 6.1) will continue to be disclosed in AUD. Given the CEO and Executives are contracted and paid in AUD and are predominantly based in the Corporate Office in Western Australia, the Executive cash value of remuneration realised table will continue to clearly provide the remuneration “actually realised" by the Executives without USD exchange rate fluctuations.

1. Remuneration report overview

The Directors of Sandfire Resources Ltd present the Remuneration Report (the Report) for the Company and its controlled entities for the year ended 30 June 2022. This Report for the Group forms part of the Directors’ Report and has been audited in accordance with section 300A of the Corporations Act 2001.

The Report details the remuneration arrangements for Sandfire’s key management personnel (KMP) and include:

the Company’s Non-Executive Directors (NEDs); and
the Group’s Executive Directors and Senior Executives (collectively the Executives).

KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling the major activities of the Company and Group.

The table below outlines the KMP of the Group and their movements during FY2022.

Name	Position	Term as KMP
Non-Executive Directors
John Richards	Independent Non-Executive Chairman	Appointed 30 April 2022
	Independent NED	Full fnancial year
Derek La Ferla	Independent NED	Full fnancial year
	Independent Non-Executive Chair	Ceased 30 April 2022
Roric Smith	Independent NED	Full fnancial year
Sally Langer	Independent NED	Full fnancial year
Jennifer Morris	Independent NED	Full fnancial year
Paul Hallam	Independent NED	Ceased 26 November 2021
Executive Director
Karl Simich	Managing Director and Chief Executive Offcer	Full fnancial year
Senior Executives
Jason Grace	Chief Operating Offcer	Full fnancial year
Matthew Fitzgerald	Chief Financial Offcer and Company Secretary	Full fnancial year

Mr Derek La Ferla resigned from the position of Independent Non-Executive Director on 8 July 2022. Ms Sally Martin and Mr Robert Edwards were each appointed to the position of Independent Non-Executive Director on 8 July 2022, after the reporting date and before the date the financial report was authorised for issue. There were no other changes to KMP in this time.

Annual Report 2022 Sandfire Resources 65

Directors’ Report

Remuneration report (continued)

2. How remuneration is governed

2.1 Remuneration decision making Figure 1 presents the Group’s remuneration decision making framework during FY2022.

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Board of Directors
Review and approval
People and Performance Committee Remuneration Advisors
Advise the Board on: External, independent advice and information that
• Company wide remuneration framework and policy is free from influence of management.
• Executives and NED remuneration outcomes
CEO
Recommendations of remuneration outcomes for Executive team
Management
• Implementation of remuneration policies and practices
• Advising the People and Performance Committee of changing statutory and market conditions
----- End of picture text -----

Figure 1: Sandfire’s Remuneration Governance Framework.

The People and Performance Committee (Committee) consists solely of Independent NEDs and operates under a Board-approved Charter. Non-committee members, including the CEO, only attend meetings of the Committee at the invitation of the Committee Chair as appropriate, and do not vote on matters before the Committee.

The Committee provides assistance and recommendations to the Board to ensure that it can fulfill its responsibilities. This includes ensuring remuneration decisions are appropriate from the perspectives of business performance, executive performance, governance, disclosure, reward levels and market conditions. Specifically, the Committee determines the performance targets, extent of the Executives’ achievements and the remuneration outcomes.

More details on the Company’s governance framework including Board committee structures and related committee charters are available on the Governance page of the Company’s website at www.sandfire.com.au.

2.2 Alignment of the Remuneration Framework to the Strategic Growth Plan

The key elements of Sandfire’s Strategic Growth Plan are detailed in Figure 2. The strategy is targeted at delivering sustainable returns to our shareholders over the long term as the organisation moves beyond the life of mine of the DeGrussa asset.

Our remuneration framework in FY2022 was designed to support the execution of the Strategic Growth Plan. The framework links the remuneration outcomes for Executives to the achievement of the key objectives and targets of the Strategic Growth Plan to drive longterm value creation for shareholders, including long-term production profile and Ore Reserve growth. This is the remuneration framework described in this report.

The Company’s management team, led by the Executives, has continued to deliver against the objectives and targets of the Strategic Growth Plan, including the transformational acquisition of the MATSA Copper Operations. The acquisition has delivered a world-class copper mine into Sandfire’s production profile and significant opportunity for further growth in value, including to convert further Mineral Resources to Ore Reserves and exploration opportunities targeting extension of mine life.

Further, the Group’s strategic growth in Botswana is on track and positioned to deliver rising production and increased mine life from a new copper mine in an emerging, world-class copper belt.

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Remuneration report (continued)

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----- Start of picture text -----

SI 1 SI 2 SI 3 SI 4 SI 5
Execute Build a Sustainable Accelerate Align and Empower Optimise Capital Strategy
Delivery Production Pipeline Discovery Our People and Engagement
Maximise the value Build a sustainable Continue to build and Ensure all parts of the Position the capital
of DeGrussa and production pipeline through leverage our exploration business are aligned structure to support
proceed to production in the near-term acquisition capability to maximise with long-term strategic the strategy and
Botswana. of an operating asset, chances of success. outcomes. ensure investors and
development studies stakeholders are suitably
and ongoing strategic engaged.
investments.
• Safely deliver against the • Build a development • Identification of new • Teams and individuals • Maintain flexibility to
DeGrussa Mine Plan. pipeline to support resources to replace aligned to strategy. enable the support of
pathway to 150kt Cu pa depletion of current future growth plans.
• T3 in production early • High performing and
equivalent production production and
CY2023 at 30kt Cu pa. engaged workforce in the • Appropriate funding mix
by 2025. support production continued success and by project.
• A4 Deposit brought into growth target to
production realising the • Define Ore Reserves for 150kt Cu equivalent growth of the business. • Minimised secured
Motheo Production Hub Lowry and Old Highway. pa. • Values driven workforce. corporate debt.
Concept. • Optimise Black Butte
• Global operating model • Engaged investors and
Copper Project. embedded. stakeholders.
Strategic Imperatives
Objectives
Targets
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Figure 2: Sandfire’s Strategic Growth Plan.

2.3 Remuneration advisors

The Committee may seek the advice of the Company’s auditors, solicitors or other independent advisers, consultants or specialists as to any matter relating to the powers, duties or responsibilities of the Committee.

Any engagement with third parties will be in a manner that seeks to ensure that engagement and advice received is independent.

During FY2022, the Committee engaged the services of external advisers to provide market remuneration data. The remuneration data was provided to the Committee as input into decision making and did not include making a remuneration recommendation.

None of the Committee’s external adviser engagements were for work which constituted remuneration recommendations for the purposes of the Australian Corporations Act 2001.

2.4 Securities Trading Policy

Sandfire’s Securities Trading Policy provides clear guidance on how Company securities may be dealt with and applies to the NEDs, Executives and all other personnel of the Company including employees and contractors.

The Securities Trading Policy details acceptable and unacceptable periods for trading in Company securities including the consequences of breaching the policy. The policy also sets out a specific governance approach for how Directors and Executives can deal in Company securities.

The policy can be found on the Governance page of the Company’s website at www.sandfire.com.au.

2.5 Minimum shareholding requirements

In July 2021, the Company introduced a minimum shareholding requirement for Non-Executive Directors to further strengthen the alignment of the interests of NEDs with those of shareholders. The policy requires NEDs to hold Sandfire shares to the value of at least 100% of the annual NED base fee. The period for NEDs to obtain the minimum shareholding requirement is the earlier of five years from the policy adoption date, or their appointment date.

As at the date of this report, the Company does not have a minimum shareholding requirement for Executive KMP. However, the Board acknowledges minimum shareholding requirements can facilitate long-term alignment between Executives and shareholders and will consider this within the FY2023 remuneration framework.

Annual Report 2022 Sandfire Resources 67

Directors’ Report

Remuneration report (continued)

3. Executive remuneration policy and practices

Sandfire’s remuneration strategy is designed to:

Motivate the Executives to focus on our Strategic Growth Plan and operational success of the Company and Group;
Establish a strong alignment between pay and performance;
Attract, motivate and retain high performing Executives; and
Reflect our business performance and sustainability.

The remuneration strategy identifies and rewards high performers and recognises the contribution that each Executive makes to the continued growth and success of the Group. The elements of the Executive remuneration framework and its connection to Sandfire’s Strategic Growth Plan are summarised in Figure 3 below.

Fixed Remuneration

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Base salary plus superannuation reviewed annually by the Board using market benchmarking data provided by independent
remuneration advisors. Set taking into account:
• the size and complexity of the role, • the criticality of the role to successful • skills and experience of the individual
including role accountabilities execution of the business strategy • market pay levels for comparable roles.
• performance requirements • period of service
Variable Remuneration - STI Plan
FY2022
The performance conditions for the STI Plan relate to key short-term targets that are aligned to Sandfire’s Strategic Growth Plan.
Cash and Equity
Group KPIs – 50% Strategic Imperatives Individual KPIs – 50%
SI 1 Execute Delivery
Safety 7.5%
ESG 5%
Production 22.5% SI 2 Build a Sustainable Production Pipeline Financial and non-financial
Cost of Production 15% measures that are aligned
with Sandfire’s Strategic
Representing the key drivers for SI 3 Accelerate Discovery Growth Plan.
strong financial performance and
profitability, under the direct SI 4 Align and Empower Our People
influence of the Executives.
SI 5 Optimise Capital Strategy and Engagement
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Variable Remuneration - LTI Plan
4 Year Performance Period with 1 year deferral for the market related measures of the LTI Opportunity
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
The performance conditions for the LTI Plan are a mix of operational, growth and market fi nancial measures that are aligned to Sandfi re’s
Strategic Growth Plan and long-term shareholder interests.
Equity with a deferral component
Production Scale – 25% Ore Reserves – 25% ATSR – 25% RTSR – 25%
Production Scale carries Replacement and growth Market-based performance measures directly align participants’
a minimum performance of Ore Reserves is a crucial outcomes with the shareholder experience, enforce discipline when
threshold as a gateway component of Sandfire’s executing on the Strategic Growth Plan, and ensure decisions to
to the other performance sustainable operating strategy deliver growth in Ore Reserves and maintenance of Production
measures. as it nears the end of the Scale (e.g. acquired assets) do not come at the expense of longer
currently known Ore Reserves term shareholder returns.
at DeGrussa.
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Figure 3: Sandfire’s Executive remuneration framework

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Remuneration report (continued)

3.1 FY2022 Executive remuneration mix

Figure 4 shows the remuneration mix for stretch performance when maximum at risk remuneration is earned for both the CEO and their direct reports in FY2022.

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TFR
38.5% 38.5%
STI Cash at Risk
STI Deferral at Risk Figure 4: Sandfire’s FY2022
Executive remuneration mix
LTI at Risk
11.5% 11.5%
61.5% at Risk
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3.2 Remuneration benchmarking and market positioning

Sandfire has adopted a market positioning strategy to support fair and equitable outcomes between employees.

When determining the relevant market for each role, Sandfire considers the companies from which it sources talent, and to whom it could potentially lose talent. From time to time, the Committee engages independent remuneration advisors to provide remuneration advice, including benchmarking data, as input into setting remuneration for Executives.

Executive remuneration packages are benchmarked against comparable roles at a bespoke peer group. The Board periodically reviews the peer group and may consider revising its composition as the Group’s operations evolve in line with the Strategic Growth Plan.

The peer group used in FY2021 and FY2022 is detailed below. Companies within the peer group are all ASX-listed; are in the Mining and Metals sector with at least one producing asset; and have similar market capitalisation, revenues, assets and number of employees at the time of benchmarking. These characteristics give rise to similar risks and market conditions as Sandfire.

Champion Iron Ltd	Lynas Corporation Ltd	Mount Gibson Iron Ltd	Orocobre Limited	OZ Minerals Ltd
Perseus Minerals Ltd	Pilbara Minerals Ltd	Ramelius Resources Ltd	Regis Resources Ltd	Resolute Mining Ltd
Silver Lake Resources Ltd	St Barbara Ltd	Western Areas Ltd	Westgold Resources Ltd

The peer group is being reviewed given the substantial increase in the scale and complexity of Sandfire’s business following the acquisition of the MATSA Copper Operations. Sandfire will report on changes to the peer group for FY2023 in its FY2023 Remuneration Report.

The Board has set the total remuneration opportunity (TRO), which includes TFR, STI opportunity and LTI opportunity, for Executives at the 75th percentile of the peer group.

3.3 Total Fixed Remuneration (TFR)

TFR acts as a base-level reward and includes cash, compulsory superannuation and any salary-sacrificed items (including FBT if applicable). TFR levels for the Executives are reviewed annually by the Board using market benchmarking data provided by independent remuneration advisors. The Board considers variations to the benchmark based on:

the size and complexity of the role, including role accountabilities;
the criticality of the role to successful execution of the business strategy;
skills and experience of the individual;
period of service;
performance requirements; and
market pay levels for comparable roles.

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3.4 Short Term Incentive (STI) Plan: Key questions and answers on how it works

Why does the	The purpose of the STI Plan is to make a proportion of the total remuneration package subject to meeting various short-term
Board consider	targets linked to Sandfre’s Strategic Growth Plan, thereby strengthening the link between pay and performance. The STI
a STI Plan is	Plan is designed to focus and motivate Executives to meet or exceed business optimisation and business value creation
appropriate?	objectives that are beyond the standard expected in the normal course of employment.
How is it paid?	STI awards for Executives are paid part in cash (50%) and part in shares (50%) according to the extent of achievement of
	the applicable performance measures.
What is the	STI awards are assessed over a 12-month performance period aligned with the Company’s fnancial year.
performance period and how much can	The maximum STI opportunity for Executives is 60% of TFR. STI award potentials are pro-rated for the period of service and the actual outcome depends on the extent of achievement of the applicable performance measures.
the Executive
earn?
How is	Performance measures include Group and individual KPIs (50% each). KPIs include fnancial and non-fnancial measures
performance	that align with the Group’s Strategic Growth Plan and the Group’s core values.
assessed and what are the performance	The acquisition of the MATSA Copper Operations led to a reweighting of the Group component of the STI during FY2022. This resulted in half of the Group component of the STI measuring the objectives for the existing Group operations (Group KPI) and half measuring the objectives for the MATSA Copper Operations (MATSA KPI).
measures?
	The Board, with the assistance of the People and Performance Committee (Committee), sets and assesses the KPIs
	applicable for the Group and the CEO. The outcome of the assessment determines the STI amount payable to the CEO.
	The CEO sets and assesses the individual KPIs for the other Executives. The Committee reviews the outcome of the
	assessment.

The KPIs generally have a range of pre-determined performance levels, which are detailed below.

Performance Level	% Outcome	Description of Performance Level
Threshold	50%	Represents the minimum level of performance required for an
		STI award to be paid. Performance below this level results in a nil
		outcome.
Target	75%	Represents the achievement of planned performance, set at a
		challenging level.
Stretch	100%	Represents exceptional performance, set at a stretch level.
The Group KPI areas for FY2022, their weightings		and link to strategy are listed below.
	Weighted
	opportunity
Group KPI area	(% of STI)	Rationale why chosen and link to strategy
Production*	10%	Critical to the execution of Sandfre’s Strategic Growth Plan is the
		strategic imperative to “Execute Delivery” and strong production
		and cost control are the key drivers for short-term fnancial
		performance.
Cost of production	7.5%	Maximising the value of our existing DeGrussa Copper Operations
		and strong fnancial performance will facilitate the achievement of
		the medium and longer-term growth goals of our strategy.
Safety	2.5%	The Safety and ESG KPI areas support the responsible achievement
		of our strategic imperatives.
ESG	5.0%	We believe that non-fnancial performance is connected to long
		term value creation, and this is best effected when sustainability is
		embedded throughout our business.
	25%

Gold production represents approximately 8% of revenue from the DeGrussa Copper Operations. Accordingly, assessment of production results is weighted proportionately towards copper production.

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How is performance assessed and what are the performance measures? (continued)	The MATSA KPI areas for FY2022, their weightings and link to strategy are listed below.
	MATSA KPI area Weighted opportunity (% of STI) Rationale why chosen and link to strategy
	Production* 12.5% Critical to the execution of Sandfre’s Strategic Growth Plan is the strategic imperative to “Execute Delivery” and strong production and cost control are the key drivers for short-term fnancial performance. Cost of production 7.5% Maximising the value of the new MATSA Copper Operations and strong fnancial performance will facilitate the achievement of the medium and longer-term growth goals of our strategy. Safety 5% The Safety KPI supports the responsible achievement of our strategic imperatives.
	25%
	* Zinc production represents approximately 27% of revenue from the MATSA Copper Operations. Accordingly, assessment of production results is weighted proportionately towards copper production. The remaining 50% of the STI opportunity relates to performance against individual Executive KPIs. The individual KPIs are specifc to the key tasks, functions and targets appropriate to assess the performance of the Executive in the areas they control and infuence. While assessing individual performance, individual KPIs remain tied to Group strategy and objectives that drive the success of the Group. Refer to section 4.3 for further detail of the Group and individual CEO KPIs for FY2022, including relative commentary on the performance assessment and achievements.
Is there a gateway?	Yes. Participants will not qualify for a STI award unless all the qualifcation criteria are met. The frst criterion relates to a minimum performance level of threshold for individual performance. Unless the participant meets threshold level as per their individual performance scorecard, regardless of Group performance, no incentive will be paid. The second qualifcation criterion is service. Participants must be employed by Sandfre at the time the incentive is to be paid.
Is there a deferral mechanism and why?	No. However, half of any STI award is paid in ordinary shares in the Company, with the number of shares to be allocated equal to 50% of the STI award, divided by the face value of Sandfre shares, calculated as the 5-day volume-weighted average price (VWAP) up to and including the end of the performance period (represented by 30 June 2022 for the FY2022 STI award). STI awards are subject to clawback (refer below).
What happens to STI awards when an Executive ceases employment?	If the Executive’s employment is terminated for cause, no STI will be paid. If the Executive resigns before the end of the performance period, the STI may be granted on a pro-rata basis in relation to the period of service completed, subject to the discretion of the Board and conditional upon the individual performance of the Executive.
Was the transformation award an integral part of the STI?	No. FY2022 STI KPIs were designed to focus executives on delivering against the Strategic Imperatives of the Strategic Growth Plan. The transformation award was made to Executives in recognition of the signifcant and coordinated effort required to deliver the transformational acquisition of the MATSA Copper Operations to the Group, which included conducting a substantial capital raise which introduced new strategic investors and introduced new banks onto the balance sheet. The acquisition resolved structural issues in the Company’s asset portfolio (notably, the imminent closure of the DeGrussa Copper Operations), delivered a change in scale of the business, and provided a strong foundation for long term growth. The award recognised the requirement for Executives to provide the additional time and requisite skill to work as an integrated team to complete the transaction in an appropriate timeframe and on commercial terms that met the Company’s stringent IRR requirements. At the same time, the Executives were required to maintain high levels of focus to achieve STI KPI operational targets.
Are there malus or clawback provisions?	Yes. The Board has discretion to reduce or clawback all vested and unvested awards in certain circumstances to ensure Executives do not obtain an inappropriate beneft. The circumstances in which the Board may exercise this discretion are extensive and include situations where an Executive has engaged in misconduct, where there has been a material misstatement of the Company’s results in determining vesting, behaviours of Executives that bring Sandfre into disrepute or any other reasonable factor as determined by the Board. The Board also has discretion, where appropriate, to reduce the amount of the STI otherwise payable, taking into consideration the interests of the Group and its shareholders. In the event of a critical or serious safety or environmental incident, the Board will assess all available information relating to the incident and apply discretion where appropriate.

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3.5 Long Term Incentive (LTI) Plan: Key questions and answers on how it works

3.5 Long Term	Incentive (LTI) Plan: Key questions and answers on how it works
Why does the Board consider the LTI Plan is appropriate?	The Board believes that the LTI Plan can: • Focus and motivate Executives to achieve outcomes that are aligned to optimising shareholder value; • Ensure that decisions and planning have regard to Sandfre’s Strategic Growth Plan and the Group’s long-term performance; • Be consistent with remuneration governance guidelines; • Be consistent and competitive with current practices of comparable companies; and • Create an immediate ownership mindset among the Executive participants, linking a substantial portion of the potential reward to Sandfre’s share price and returns to shareholders.
Who is eligible?	Executives and selected senior managers who are responsible for setting the strategic direction for projects and functions of the Group.
How often are awards made and was an award made in FY2022?	There was no LTI grant in FY2022. The last LTI grant was in FY2021. The FY2021 LTI allocation represented a four-year LTI opportunity to tie Executives’ awards to the strategic performance cycle of the Group and create a strong retention mechanism. The performance period for the FY2021 LTI award is 1 July 2020 to 30 June 2024. The grant to the CEO was made following shareholder approval at the Company’s 2020 AGM.
How is the award delivered?	The LTI grant in FY2021 was in the form of Zero Exercise Price Options (ZEPOs) over ordinary shares in the Company for no consideration. The ZEPOs carry neither rights to dividends nor voting.
What is the quantum of the award and what allocation methodology is used?	The quantum of ZEPOs granted to an Executive was determined by the Executive’s TFR; the applicable multiplier (i.e. percentage of TFR); and the face value of Sandfre shares, calculated as the 30-day volume weighted average price (VWAP) up to and including 30 June 2020. The maximum LTI opportunity for Executives is 100% of TFR.
What is the expiry date for the ZEPOs?	Six years from the grant date, which for the FY2021 grant is 17 July 2026.
What are the performance conditions, and what is their link to Sandfre’s strategy?	Service condition -The service condition is met if employment/engagement with Sandfre is continuous for the period commencing on or around the grant date until the date the ZEPOs vest. Performance conditions –The performance conditions for the FY2021 LTI award are a mix of operational, growth and market fnancial measures that are aligned with Sandfre’s Strategic Growth Plan and long-term shareholder interests. Each measure carries an equal weighting (25%) of the grant and include:
	Measure Rationale why chosen and link to strategy
	Ore Reserves Replacement and growth of Ore Reserves is a crucial component of Sandfre’s sustainable operating strategy as it nears the end of the known Ore Reserves at DeGrussa. The replacement of Ore Reserves is critical for Sandfre to maintain a suffcient Production Scale in future years. This measure directly aligns with the “Build a Sustainable Production Pipeline” and “Accelerate Discovery” strategic imperatives in Sandfre’s Strategic Growth Plan.
	Production Scale Critical to the execution of Sandfre’s strategy is to “Execute Delivery” of existing operating mines and bring new mines into production over time. Sandfre needs to maintain a suffcient Production Scale in order to meet the future capital requirements of the Strategic Growth Plan to develop new operating assets.
	Absolute Total Shareholder Return (ATSR) Market-based performance measures directly align participants’ outcomes with the shareholder experience, enforce discipline when executing on the Strategic Growth Plan, and ensure decisions to deliver growth in Ore Reserves and maintenance of Production Scale. (e.g. acquired assets, etc.) do not come at the expense of longer-term shareholder returns. A mix of absolute and relative returns is appropriate to test the return to shareholders in a competitive operating and capital market. Relative Total Shareholder Return (RTSR)

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How is Ore Reserves performance measured?	Delivery of Ore Reserves over the performance period. For the FY2021 LTI offer with a 4-year performance period of 1 July 2020 to 30 June 2024, 25% of the total tranche issued to Executives will be measured against the following Ore Reserves criteria. If the Ore Reserve change is: • Negative: Nil vest • Depletion replaced: 50% vest • Depletion replaced plus up to a 20% increase: pro rata between 50% and 100% vest • Depletion replaced plus 20% increase or greater: 100% vest
What is Production Scale and how is it measured?	Production Scale is the forecast annual copper equivalent metal production rate, measured in tonnes and assessed at the end of the performance period. The Production Scale measure supports the achievement of a sustainable production profle and represents the Group’s future production profle detailed in the strategic planning report. For the FY2021 LTI offer with a 4-year performance period of 1 July 2020 to 30 June 2024, 25% of the total tranche issued to Executives will be measured against the following Production Scale criteria. If the annual Production Scale is: • Up to 30,000t Cu (Threshold): Nil vest • 30,001t Cu to 70,000t Cu: pro rata between 0% and 100% vest • More than 70,000t Cu: 100% vest
What is ATSR and how is it measured?	Absolute total shareholder return (ATSR) is a method for calculating the return shareholders would earn if they held a notional number of shares over a period of time based on a 30-day VWAP at the relative measure points. TSR measures the growth in a company’s share price together with the value of dividends during the period, assuming that all of those dividends are re-invested into new shares. For the FY2021 LTI offer with a 4-year performance period of 1 July 2020 to 30 June 2024, 25% of the total tranche issued to Executives will be measured against the following ATSR performance criteria.
	ATSR of Sandfre Percentage of ZEPOs that vest
	Less than 10% Nil 10% to 20% Pro rata between 50% and 100% vest Greater than 20% 100% vest
	The Company will engage an independent advisor to calculate the ATSR of the Company to ensure an objective assessment.
What is RTSR and how is it measured?	Relative total shareholder return (RTSR) is a method for calculating the return shareholders would earn if they held a notional number of shares over a period of time measured against a comparator group based on a 30-day VWAP at the relative measure points. TSR measures the growth in a company’s share price together with the value of dividends during the period, assuming that all of those dividends are re-invested into new shares. The comparator group for Sandfre constitutes companies in the ASX200 Resources Index (ASX:XJR). For the FY2021 LTI offer with a 4-year performance period of 1 July 2020 to 30 June 2024, 25% of the total tranche issued to Executives will be measured against the following RTSR performance criteria.
	RTSR of Sandfre relative to comparator group Percentage of ZEPOs that vest
	Less than 50th percentile Nil At the 50th percentile 50% vest 50th to 75th percentile Pro rata between 50% and 100% vest Greater than 75th percentile 100% vest
	The Company will engage an independent advisor to calculate the RTSR ranking to ensure an objective assessment.
Why is the ASX200 Resources Index an appropriate comparator group?	The Board considers the ASX200 Resources Index to be an appropriate comparator group against which Sandfre’s performance can be appropriately benchmarked. Benchmarking against comparable companies within the index minimises the impact of fuctuations in commodity price to illustrate how effective management have been in creating value from the Group’s assets. Constituents of the ASX200 may be subject to corporate transactions (e.g. mergers and acquisitions) during the performance period and as such may result in a change to the number of companies evaluated at the vesting date.

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Is there a	Yes. This is based on a minimum performance level to be achieved for the Production Scale performance condition. If
gateway?	the minimum (threshold) Production Scale target is not met, then regardless of the performance in respect of the other
	tranches (Ore Reserves, ATSR and RTSR), no LTI incentive tranches will vest.
	The Board believes this overriding performance condition is crucial to ensure that Sandfre maintains a suffcient
	scale post current DeGrussa Copper Operations such that the Company can fund future growth opportunities whilst
	minimising the need to raise additional equity capital. In addition, production scale reduces the cost of debt and brings
	the opportunity for access to international capital markets should the need arise.
Is there a	Yes, ZEPOs relating to the market-based performance measures (ATSR and RTSR) are subject to a service-based
deferral	deferral period of 12 months from the applicable vesting date (deferral period).
mechanism and why?	Deferral mechanisms allow the impact of decisions made in any one year to play out in future years and provide an opportunity for the Board to reinforce accountability for those decisions through remuneration reductions if necessary.
How is	The Company will engage an independent advisor to report on the market performance conditions (ATSR and RTSR).
performance assessed?	With regard to the non-market measures, this will be reviewed by the Board.
How are	No dividends are paid on ZEPOs prior to vesting. For any ZEPOs that ultimately vest, a cash payment equivalent to
dividends	dividends paid by Sandfre during the period between grant of the awards and vesting and during the deferral period will
treated	be made.
during the performance	No cash payment will be made in respect of dividends on awards which do not vest.
period and
deferral
period?
What happens	If the Executive’s employment is terminated for cause, or due to resignation, all unvested ZEPOs will lapse, unless
to ZEPOs	otherwise determined by the Board.
when an Executive	For Executives who cease employment for other reasons, the Board has discretion to vest any unvested ZEPOs on a pro- rata basis taking into account time and the current level of performance against the performance conditions, or to hold the
ceases	LTI award to be tested against performance conditions at the end of the performance period.
employment?
What happens	In the event of a change in control, the Board will exercise its discretion, and determine the treatment of the unvested
in the event of	ZEPOs which may include a pro-rata vesting.
a change of
control?
Are there	Yes. The Board has discretion to reduce or clawback all vested and unvested awards in certain circumstances to ensure
malus or	Executives do not obtain an inappropriate beneft. The circumstances in which the Board may exercise this discretion
clawback	are extensive and include situations where an Executive has engaged in misconduct, where there has been a material
provisions?	misstatement of the Company’s results in determining vesting, behaviours of Executives that bring Sandfre into disrepute
	or any other reasonable factor as determined by the Board.
	The Board also has discretion, where appropriate, to reduce the amount of the LTI otherwise payable, including deferred
	LTI, taking into consideration the interests of the Group and its shareholders. In the event of a critical or serious safety or
	environmental incident, the Board will assess all available information relating to the incident and apply discretion where
	appropriate.
Why does	The Board acknowledges that formulaic incentive awards and selected performance measures are unable to provide the
the Board	right remuneration result in every situation, leading to occasions where the incentive does not refect true performance. It
consider Board	is at this point that discretion becomes necessary, such that the Board can adjust outcomes up or down as warranted.
discretion to be appropriate?	The Board has not applied upward discretion to any incentive awards in the past. This is clearly refected in recent times with the FY2019, FY2020, FY2021 and FY2022 LTI outcomes, of which 0% vested.
	The Board will continue to ensure discretion is only applied in a manner that aligns Executive rewards from incentive plans
	to shareholder value creation.

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4. Executive remuneration outcomes in FY2022

4.1 FY2022 Company performance

Group performance was strong for FY2022 during a time of acquisition, international expansion, organisational change and global inflation.

Sandfire’s Board and management team have driven transformational change during the 2022 financial year, with the Company now well established on a long-term growth trajectory as an international and diversified, multi-asset copper company with an expanded global footprint. The Company has embarked on this new growth chapter against the backdrop of an exceptional long-term outlook for copper due to its pivotal role in the global energy transformation and push to decarbonise the world economy.

Key achievements during FY2022 have included the company-defining acquisition and integration of the MATSA Copper Operations in Spain and the related expansion of Sandfire’s capital base; the development, construction and expansion studies for the Motheo Copper Project in Botswana; and the continued strong operating and financial performance of the DeGrussa Copper Operations in Western Australia.

Operational and financial

Driven by operating excellence and careful workforce management, Sandfire’s global operations continued to operate at full capacity and the Group achieved above-guidance copper production (98,367t) and zinc production (38,907t) for FY2022, which included production from MATSA from February 2022. Cost performance was challenged by strong global inflationary pressure on energy, labour and supplies as well as lagging impacts of the COVID-19 pandemic on supply chains and labour shortages. Despite these pressures the Group’s performance by our entire team, led by our Executives, resulted in strong financial performance across several key metrics, including sales revenue ($922.7 million), operating cash flows ($391.2 million) and net profit ($109.4 million).

Development and construction

Strong progress was made during FY2022 at the Group’s key growth project, the Motheo Copper Mine in Botswana. Development and construction activities are well advanced, and despite the global labour and supply challenges, management have been able to keep the project schedule on track, with first production from the 3.2Mtpa Base Case project on track for the June 2023 Quarter.

The Group is well positioned for future growth at Motheo in Botswana with the release of the 5.2Mtpa Expansion Case DFS incorporating the A4 deposit into the existing 3.2Mtpa T3 project. We also continue to actively explore across our extensive Kalahari Copper Belt tenure.

Safety

With a focus on employee and contractor health and wellbeing, and underpinned by a safety improvement plan, further pleasing results have been achieved in safety performance and assurance, with the Group’s TRIFR at 30 June 2022 reducing to 3.8.

Sustainability

Key progress was made during FY2022 toward ESG objectives aligned to our sustainability strategy.

The Company operated the DeGrussa Solar Facility at maximum efficiency during FY2022 and explored green energy options at Motheo and MATSA.

Sandfire is conducting further emissions modelling of our footprint to understand and effectively manage emissions intensity with our expanded portfolio.

As part of the Group’s community initiatives in the Ghanzi region, the Company also completed studies for a Community Based Agri-Business in Botswana to effectively utilise excess land at Motheo.

COVID Business response

The Company’s performance during FY2022 has remained strong and resilient throughout this challenging period. The Group has dealt professionally with the direct and indirect risks, impacts and challenges that the pandemic has brought.

Prior to final award decisions, the Board reviewed outcomes against the shareholder experience, COVID impact on operations, underlying safety performance, behaviour consistency with our values and code of conduct, and governance, and confirmed awards remained appropriate and that no exercise of discretion was warranted.

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Performance measures

A summary of Sandfire’s business performance as measured by a range of financial and other indicators, including disclosure required by the Corporations Act 2001, is outlined in the table below.

Table 1 – Company performance[(a)]

Table 1 – Company performance(a)
Measure	30 Jun 18	30 Jun 19	30 Jun 20	30 Jun 21	30 Jun 22
Net proft ($’000)	93,625	80,646	47,557	127,428	109,432
Net proft attributable to equity holders of the parent ($’000)	95,386	76,161	48,743	128,594	111,430
Cash and cash equivalents at year end ($’000)	179,873	173,536	199,812	431,313	463,093
Secured bank loan balance at year end ($’000)	-	-	-	-	782,283
Net cash infow from operating activities ($’000)	189,932	147,568	183,677	347,510	391,188
Basic earnings per share (cents)	60.36	46.67	28.79	72.14	32.05
ASX share price at the end of the year (A$)	9.16	6.69	5.07	6.83	4.45
Dividends per share (A$ cents)	27	23	19	34	3

(a) The comparative information for FY2018 has not been restated following the adoption of AASB 15 and AASB 9 in prior years and the adoption of AASB 16 in FY2020 and continues to be reported under the previous accounting policies.

4.2 Fixed remuneration outcome

There was no change to Executive fixed remuneration during FY2022 based on the remuneration benchmarking methodology outlined in section 3.2 and section 3.3 of the Remuneration Report.

The TFR for the CEO of A$1,100,000 per annum remained unchanged since the 2014 financial year.

4.3 STI performance and outcomes

As discussed elsewhere in the Remuneration Report, FY2022 was the second year for Executives to deliver on the objectives of the Strategic Growth Plan, during which the Executives completed the acquisition of the MATSA Copper Operations in Spain. The transaction immediately transformed Sandfire into one of the largest copper-focused producers on the ASX. The MATSA Copper Operations will form the cornerstone of Sandfire’s business over the next decade and beyond, marking the beginning of a new and exciting era for the Company.

Highlighted accomplishments beyond the MATSA acquisition include the significant progress of construction and development of the Motheo Copper Project, including the release of the A4 Ore Reserve and progress towards the Motheo Expansion definitive feasibility study, whilst at the same time maintaining high levels of operating performance, including strong production at DeGrussa.

In addition to these operational accomplishments, we delivered on the FY2022 ESG actions and targets, including those which were explicitly included in our STI measures. We believe that non-financial performance is connected to long term value creation and will continue to refine our approach to ESG, as we refresh our sustainability strategy and embed it into our global operations.

The Group and MATSA-specific KPIs for the Executives and illustrative Individual KPIs for the CEO in FY2022, with commentary on achievements, are provided in Tables 2, 3 and 4, respectively. The STI award percentages and payments to Executives are presented in Table 5.

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Table 2 – Linking reward and performance (Group performance objectives and outcomes)

KPI Area	Measure Weighting (% of STI) Threshold Target Stretch Achievement Outcome (% of STI)
Production	Tonnes of contained copper and ounces ofgoldproduced 10.0% > 64,000t Cu > 30,000oz Au > 66,000t Cu > 31,500oz Au > 68,000t Cu > 33,000oz Au 67,740t Cu 32,385oz Au Target 7.5%
Cost of Production	C1 Costs measured in $US/lb 7.5% < US$1.10/lb < US$1.05/lb < US$1.00/lb US$1.18/lb below Threshold -
Safety	Group TRIFR at fnancial year end 2.5% TRIFR < 7.0 TRIFR < 5.5 TRIFR < 4.5 TRIFR 4.2 at 30 June 2022 Stretch 2.5%
ESG	Development of a Community Based Agri-Business in Botswana 2.5% Complete an assessment of options that suit the Company’s community and water stewardship objectives by 30 June 2022 Develop a viable option and seek community feedback by 30 June 2022 Commence a Scoping Study by 30 June 2022 Scoping Study completed Stretch/Target 2.25%
	Reduce forecast Carbon Emissions intensity from the Motheo Copper Mine through solar power generation 2.5% Complete studies for solar power generation by 30 Jun 2022 Complete studies for solar power generation, including scope for the A4 Open Pit and 5.2Mtpa Expansion Project by 30 Jun 2022 Complete studies for solar power generation, including scope for the A4 Open Pit, 5.2Mtpa Expansion Project and environmental permitting commenced by30 Jun 2022 Studies completed and permitting underway through A4 ESIA Stretch 2.5%
	Total 25.0% 14.75%

Table 3 – Linking reward and performance (MATSA performance objectives and outcomes)

		Weighting					Outcome
KPI Area	Measure	(% of STI)	Threshold	Target	Stretch	Achievement	(% of STI)
Production	Tonnes of contained	12.5%	> 24,000t Cu	> 25,000t Cu	> 27,000t Cu	30,628t Cu	12.5%
	copper and tonnes		> 34,000t Zn	> 36,000t Zn	> 38,000t Zn	38,907t Zn
	of zinc produced					Stretch
Cost of	C1 Costs measured	7.5%	< US$1.02/lb	< US$0.98/lb	< US$0.94/lb	US$1.52/lb	-
Production	in $US/lb					below Threshold
Safety	MATSA TRIFR at	5.0%	TRIFR < 8.0	TRIFR < 6.0	TRIFR < 4.5	TRIFR 2.9 at	5.0%
	fnancial year end					30 June 2022
						Stretch
	Total	25.0%					17.5%

As disclosed in Section 3.4 of the Remuneration Report, individual KPIs for the CEO relate directly to Sandfire’s Strategic Imperatives. Table 3 includes the main KPIs and commentary on achievements for the CEO and is illustrative and at summary level.

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Table 4 – Linking reward and performance (CEO’s individual performance objectives and outcomes)

Strategic	Weighting			Outcome
Imperative	(% of STI)	KPI	Achievement	(% of STI)
SI1 Execute	15.0%	Motheo Copper Project (T3)	T3 project development and construction on time for frst	13.1%
Delivery		development and construction on	production scheduled in the June 2023 Quarter; capital
		time and on budget.	costs impacted by increased diesel price and labour
		Delivery of A4 Deposit Mineral Reserve and Motheo Expansion defnitive feasibility study (DFS).	charges. Cost control programmes initiated through long lead and early contracting strategy. Completion of A4 Deposit drill out to Mineral Reserve standard, leading to positive Motheo Expansion PFS.
			Signifcant progress toward completion and delivery of
			Motheo Expansion DFS.
SI2 Build a	12.5%	Lead a business development team	Delivered the MATSA business development opportunity	10.9%
sustainable production		to deliver project opportunities consistent with Sandfre's strategic	consistent with Sandfre’s strategic investment criteria leading to a positive investment decision.
pipeline		criteria and capable of board
		endorsement.
SI3	7.5%	Execute an effective exploration	Globally centralised exploration strategy embedded with	6.6%
Accelerate		strategy to identify additional	structure well advanced.
Discovery		resources to support the Group’s production growth target.	Systematic competitive funding approach applied, balancing the Group’s capital requirements with
			exploration priorities.
			Prospective land holding in the Kalahari Copper-Belt
			increased, addition of prospective exploration tenure in
			the Iberian Pyrite Belt of Spain and Portugal.
SI4 Align and	7.5%	Achieve employee engagement	Achieved employee engagement score across	7.4%
empower our		score	10 measures of 3.8.
people		> 4.0 across 10 measures = Stretch
		> 3.5 = Target
		> 3.2 = Threshold
		Lead global organisational culture.	Specifc focus on in-person rollout of Sandfre values and
			one team approach to global operations.
		Implement and embed global	Global operating model embedded, with key
		operating model.	improvements supporting the international expansion
			into Spain via the acquisition of the MATSA Copper
			Operations.
SI5 Optimise	7.5%	Capital structure appropriately	The Group maintained strong cash fow from operations	6.5%
capital		positioned to support the Group’s	during FY2022: $391.2 million with increased balance
strategy and		growth objectives.	sheet leverage.
engagement			Effective engagement of capital markets to appropriately
			fund and support the Group’s growth objectives.
			Achieved an appropriate funding mix to maintain a
			Debt-to-Equity ratio of <1.
Total	50%			44.5%

Table 5 – STI award for Executives in FY2022

Table 5 – STI award for	Executives in FY2022
	Maximum potential	STI outcome	STI outcome	Percentage of	Percentage of
	value of award	(50% Cash)	(50% Shares)	maximum grant	maximum grant
	$	$	US$	awarded	forfeited
Karl Simich	660,000	183,906	183,906	76.8	23.2
Jason Grace	360,000	99,289	99,289	76.0	24.0
Matthew Fitzgerald	339,000	95,424	95,424	77.6	22.4

78 Annual Report 2022 Sandfire Resources

Directors’ Report

Remuneration report (continued)

4.4 Transformation award

Each Executive KMP received a transformation award payment of US$217,740 (A$300,000) during FY2022.

The transformation award was made to Executives in recognition of the significant and coordinated effort required to deliver the transformational acquisition of the MATSA Copper Operations to the Group, which included conducting a substantial capital raise that introduced new strategic investors and introduced new banks onto the balance sheet. The acquisition resolved structural issues in the Company’s asset portfolio (notably, the imminent closure of the DeGrussa Copper Operations), delivered a change in scale of the business, and provided a strong foundation for long term growth.

The award recognised the requirement for Executive KMP to provide the additional time and requisite skill to work as an integrated team to complete the transaction in an appropriate timeframe and on commercial terms that met the Company’s stringent IRR requirements. At the same time, the Executives were required to maintain high levels of focus to achieve STI KPI operational targets.

4.5 Testing of LTI performance rights granted in FY2020

The table below shows the performance of Sandfire against the LTI performance hurdles for the FY2020 LTI performance rights which were tested during FY2022. Vesting was based on Sandfire’s RTSR against a comparator group comprising of constituents of the ASX200 Resources Index (ASX:XJR). The vesting schedule was: 50% vesting at the 51[st] percentile with straight line vesting up to 100% vesting at the 75[th] percentile.

Sandfire’s TSR over the performance period was negative 10.05%. Accordingly, the performance hurdle was not achieved resulting in nil vesting of the award as shown in Table 6.

Volatility in global markets can result in situations where threshold performance measures are not achieved and the Board retains the ability to apply discretion to awards at all times. No such discretion has been applied to the LTI award in FY2022. The past four years have seen 0% of LTI awards vest, with the Board electing not to apply any upward discretion.

Table 6 – Testing of LTI performance rights granted in FY2020

Performance hurdle	Performance period	Percentile ranking	% of Rights vested	% of Rights lapsed
RTSR to constituents of ASX200	1 July 2019 to	28th	Nil	100
Resources Index (ASX:XJR)	30 June 2022

Full details of the FY2020 LTI Plan are disclosed in the Company’s 2020 Remuneration Report and the details of Rights held by Executives are set out in Tables 14 and 15 of the 2022 Remuneration Report.

5. Executive contracts

Remuneration arrangements for Executives are formalised in employment agreements or service contracts (contract). The following table outlines the key terms of the contracts with Executives.

Table 7 – Executive key contract provisions

		Notice period from	Notice period from	Treatment of STI
Name	Term of contract	the Company(a)	the Executive	and LTI on cessation
Karl Simich	Rolling service contract	12 months	6 months	Refer to section 3 of the
	with Resource Development			Remuneration Report for the
	Company Pty Ltd			treatment of STIs and LTIs on
				cessation of employment.
Jason Grace	Ongoing employment	6 months	3 months	Refer to section 3 of the
	agreement			Remuneration Report for the
Matthew Fitzgerald	Ongoing employment agreement	6 months	6 months	treatment of STIs and LTIs on cessation of employment.

(a) The Company may make payment in lieu of notice and must pay statutory entitlements together with superannuation benefits. No notice period or payment in lieu of notice applies if termination was due to serious misconduct.

Termination payments

The Company did not make any termination payments to KMP during FY2022. All contractual termination benefits comply with the provisions of the Corporations Act 2001.

Annual Report 2022 Sandfire Resources 79

Directors’ Report

Remuneration report (continued)

6. Executive remuneration tables

6.1 Executive cash value of remuneration realised in FY2022

The actual remuneration earned during the year in accordance with the Corporations Act 2001 and accounting standards is outlined in section 6.2 of the Remuneration Report. The cash value of remuneration realised by Executive KMP in FY2022 is set out below. This information is considered to be relevant as it provides shareholders with a view of the ‘take home pay’ received by Executive KMP in FY2022 and may differ from the remuneration disclosure in the statutory remuneration table.

Table 8 – Executive cash value of remuneration realised in FY2022

	Salary and fees(a)	Benefts and allowances(b)	Cash Variable(c)	Equity STI(d)	LTI Plan rights(e)	Total actual remuneration
In AUD	$	$	$	$	$	$
Karl Simich	1,100,000	10,000	553,385	415,596	-	2,078,981
Jason Grace	600,000	-	436,800	224,059	-	1,260,859
Matthew Fitzgerald	565,000	-	431,475	217,383	-	1,213,858

(a) Salary and fees comprise base salary and superannuation entitlements. It reflects the total of “Salary and fees” and “Superannuation” in the statutory remuneration table.

(b) Benefits and allowances include the value of motor vehicle insurance provided to Mr Simich. It reflects the same value that is disclosed in the statutory remuneration table under “Benefits and allowances”.

(c) Cash Variable represents the cash component of the FY2022 STI award and the Transformation Award to Executives. It reflects the same value that is disclosed in the statutory remuneration table under “Cash STI“.

(d) Equity STI represents the vested portion of the FY2021 deferred STI and the FY2022 equity STI. It reflects the same values that are disclosed in the statutory remuneration table under “Equity STI“ and “Deferred STI”.

(e) No LTI Plan awards granted to Executives in prior years vested during the current financial year. This differs from the amount disclosed in the statutory remuneration table under “Share-based payments”, which includes the fair value of LTI grants which may or may not vest in future years.

80 Annual Report 2022 Sandfire Resources

Directors’ Report

Short-term benefts Long- term benefts Post employment Share-based payments Financial year Salary and fees $ Benefts and allowances(a) $ Cash STI(b) $ Long service leave $ Superannuation $ Equity STI(c) $ Deferred STI(d) $ LTI Plan rights(e) $ LTI Plan options(f) $ Total $ Performance related % Karl Simich 2022 798,380 7,258 401,646 - - 183,906 117,732 127,306 610,097 2,246,325 50.71 2021 821,480 7,468 223,339 - - - 111,670 202,358 369,769 1,736,084 52.25 Jason Grace 2022 417,335 - 317,029 3,360 18,145 99,289 63,332 47,907 388,768 1,355,165 55.62 2021 429,410 - 120,141 - 18,670 - 60,071 49,293 381,387 1,058,972 57.69 Matthew Fitzgerald 2022 392,971 - 313,164 10,053 17,105 95,424 62,352 43,775 366,091 1,300,935 55.58 2021 405,740 - 118,280 10,344 16,201 - 59,140 75,793 359,139 1,044,637 58.62 Total 2022 1,608,686 7,258 1,031,839 13,413 35,250 378,619 243,416 218,988 1,364,956 4,902,425 53.36 2021 1,656,630 7,468 461,760 10,344 34,871 - 230,881 327,444 1,110,295 3,839,693 55.48 (a) Benefts and allowances include the value of motor vehicle insurance provided to Mr Simich under the Group’s motor vehicle insurance policy as part of Mr Simich’s remuneration. (b) The amounts include the cash component of the FY2022 STI award based on achievement of KPIs in accordance with the STI Plan and amounts paid for the transformation award. (c) Relates to the equity component of the FY2022 STI award based on achievement of KPIs in accordance with the STI Plan. (d) Relates to the deferred equity component of the FY2021 STI award, including the value of any applicable dividend equalisation payments. The values disclosed represent the portion of the award expensed in FY2022 based on period of service measured over the performance period. (e) The fair value of Rights is calculated at the date of grant using the Monte Carlo Simulation model and recognised over the period in which the minimum service conditions are fulflled (the vesting period). The fair value is not related to or indicative of the beneft (if any) that the individual Executive may in fact receive. (f) The fair value of Options is calculated at the date of grant using the Monte Carlo Simulation model and recognised over the period in which the minimum service conditions are fulflled (the vesting period). The fair value is not related to or indicative of the beneft (if any) that the individual Executive may in fact receive.	Short-term benefts Long- term benefts Post employment Share-based payments Financial year Salary and fees $ Benefts and allowances(a) $ Cash STI(b) $ Long service leave $ Superannuation $ Equity STI(c) $ Deferred STI(d) $ LTI Plan rights(e) $ LTI Plan options(f) $ Total $ Performance related % Karl Simich 2022 798,380 7,258 401,646 - - 183,906 117,732 127,306 610,097 2,246,325 50.71 2021 821,480 7,468 223,339 - - - 111,670 202,358 369,769 1,736,084 52.25 Jason Grace 2022 417,335 - 317,029 3,360 18,145 99,289 63,332 47,907 388,768 1,355,165 55.62 2021 429,410 - 120,141 - 18,670 - 60,071 49,293 381,387 1,058,972 57.69 Matthew Fitzgerald 2022 392,971 - 313,164 10,053 17,105 95,424 62,352 43,775 366,091 1,300,935 55.58 2021 405,740 - 118,280 10,344 16,201 - 59,140 75,793 359,139 1,044,637 58.62 Total 2022 1,608,686 7,258 1,031,839 13,413 35,250 378,619 243,416 218,988 1,364,956 4,902,425 53.36 2021 1,656,630 7,468 461,760 10,344 34,871 - 230,881 327,444 1,110,295 3,839,693 55.48 (a) Benefts and allowances include the value of motor vehicle insurance provided to Mr Simich under the Group’s motor vehicle insurance policy as part of Mr Simich’s remuneration. (b) The amounts include the cash component of the FY2022 STI award based on achievement of KPIs in accordance with the STI Plan and amounts paid for the transformation award. (c) Relates to the equity component of the FY2022 STI award based on achievement of KPIs in accordance with the STI Plan. (d) Relates to the deferred equity component of the FY2021 STI award, including the value of any applicable dividend equalisation payments. The values disclosed represent the portion of the award expensed in FY2022 based on period of service measured over the performance period. (e) The fair value of Rights is calculated at the date of grant using the Monte Carlo Simulation model and recognised over the period in which the minimum service conditions are fulflled (the vesting period). The fair value is not related to or indicative of the beneft (if any) that the individual Executive may in fact receive. (f) The fair value of Options is calculated at the date of grant using the Monte Carlo Simulation model and recognised over the period in which the minimum service conditions are fulflled (the vesting period). The fair value is not related to or indicative of the beneft (if any) that the individual Executive may in fact receive.
Long- term benefts Post employment Share-based payments


Short-term benefts

Annual Report 2022 Sandfire Resources 81

Directors’ Report

Remuneration report (continued)

7. Non-Executive Director remuneration

7.1 NED remuneration policy and fee structure

Sandfire’s NED remuneration policy is designed to attract and retain suitably skilled Directors who can discharge the roles and responsibilities required in terms of good governance, oversight, independence and objectivity. The Board seeks to attract Directors with different skills, experience, expertise and diversity.

Under the Company’s Constitution and the ASX Listing Rules, the total annual fee pool for NEDs is determined by shareholders. The current maximum aggregate NED fee pool of A$1,500,000 per annum was approved by shareholders at the 2021 AGM. Within this aggregate amount, NED fees are reviewed annually by the People and Performance Committee and set by the Board.

The Committee reviews NED fees against comparable companies within the broader general industry and taking into account recommendations from independent remuneration advisors. Sandfire has set the benchmark for NED fees at the 75th percentile of the defined market.

Following a market benchmarking exercise, the Board introduced committee member fees of A$13,000 per annum. NED fee levels in FY2022 were otherwise unchanged from FY2021 and total fees remain within the shareholder approved NED fee pool limit. The table below summarises the annual Board and committee fees payable to NEDs.

Table 10 – NED fee structure (inclusive of superannuation)

Table 10 – NED fee structure (inclusive of superannuation)
In AUD Role FY2022 FY2021	Role FY2022 FY2021
Board fees Chair $220,000 $220,000 NED $136,000 $136,000	Committee fees Chair $26,000 $26,000 Member $13,000 Nil

The payment of committee fees recognises the additional time commitment required by NEDs who serve in those positions. The Chair of the Board does not receive additional fees for being a member of any Board committee. NEDs do not receive retirement or termination benefits and do not participate in any incentive plans.

7.2 Total fees paid to NEDs

Table 11 – Statutory NED remuneration

Financial year	Short-term benefts Post-employment Salary and fees $ Other $ Superannuation $ Total $
Current Directors John Richards(b) 2022 2021 Derek La Ferla(c) 2022 2021 Roric Smith 2022 2021 Sally Langer 2022 2021 Jennifer Morris(d) 2022 2021	120,416 - 12,041 132,457 55,243 - 5,247 60,490 137,352 - 13,735 151,087 150,041 - 14,254 164,295 108,319 (a)26,128 10,831 145,278 110,485 26,884 10,496 147,865 115,468 - 11,546 127,014 102,429 - 9,730 112,159 114,038 - 11,403 125,441 46,376 - 4,406 50,782
Previous Directors Paul Hallam(e) 2022 2021 Robert Scott 2021	38,819 - 3,881 42,700 100,809 - 9,576 110,385 55,243 - 5,247 60,490
Total 2022 2021	634,412 26,128 63,437 723,977 620,626 26,884 58,956 706,466

(a) Represents fees paid to a related entity for work beyond services as a NED.

(b) Mr Richards was appointed as Independent NED on 1 January 2021. He was appointed Chair on 30 April 2022.

(d) Ms Morris was appointed as Independent NED on 1 January 2021.

(e) Mr Hallam resigned as Independent NED on 26 November 2021.

82 Annual Report 2022 Sandfire Resources

Directors’ Report

Remuneration report (continued)

8. Equity instrument reporting

8.1 Options and Rights holdings of Executives

The table below discloses the movements in Options held by Executives issued under the LTI Plan.

Table 12 – Options Holdings - LTI Plan

Table 12 – Options Holdings - LTI Plan
Balance at 1 Jul 21 Granted as remuneration Vested Lapsed Balance at 30 Jun 22	Unvested Value of unvested Options(a)
Karl Simich 927,703 - - - 927,703 Jason Grace 506,020 - - - 506,020 Matthew Fitzgerald 476,502 - - - 476,502	927,703 $2,263,995 506,020 $1,588,732 476,502 $1,496,057

(a) This is based on the fair value, at grant date, of Options that have yet to vest. The fair value of Options is calculated at the date of grant using the Monte Carlo Simulation model and recognised over the period in which the minimum service conditions are fulfilled (the vesting period). The fair value is not related to or indicative of the benefit (if any) that the individual Executive may in fact receive. Refer to Note 28 to the Financial Statements for details relating to the valuation of Options.

The Options ‘on foot’ are disclosed in the table below. Should the Options not vest, the award will expire.

Table 13 – Details of Options ‘on foot’ – LTI Plan

		Number of	Fair	Performance and
	Grant date	Options	value(a)	service period(b)	Vesting Outcome
Karl Simich	27 Nov 2020	927,703	$2.61	1 Jul 2020 to 30 Jun 2024	To be determined
Jason Grace	17 Jul 2020	506,020	$3.18	1 Jul 2020 to 30 Jun 2024	To be determined
Matthew Fitzgerald	17 Jul 2020	476,502	$3.18	1 Jul 2020 to 30 Jun 2024	To be determined

(a) The fair value of Options is calculated at the date of grant using the Monte Carlo Simulation model and recognised over the period in which the minimum service conditions are fulfilled (the vesting period). The fair value is not related to or indicative of the benefit (if any) that the individual Executive may in fact receive. The fair value disclosed is the weighted average exercise price at grant date.

(b) Options relating to the market-based performance measures (ATSR and RTSR) are subject to a service-based deferral period of 12 months from the end of the performance period. Refer to section 3 of the Remuneration Report for details.

The table below discloses the movements in Rights held by Executives issued under the LTI Plan.

Table 14 – Rights Holdings - LTI Plan

Table 14 – Rights Holdings - LTI Plan
Balance at 1 Jul 21 Granted as remuneration Vested Lapsed(a) Balance at 30 Jun 22	Unvested Value of unvested Options(b)
Karl Simich 281,516 - - (116,650) 164,866 Jason Grace 53,957 - - - 53,957 Matthew Fitzgerald 71,692 - - (29,278) 42,414	164,866 $278,262 53,957 $136,789 42,414 $107,526

(a) This relates to the LTI Plan award made to Executives with a performance period 1 July 2018 to 30 June 2021, Sandfire achieved a TSR of negative 16.43%, placing it 21st out of 34 companies in the comparator group, resulting in 0% of the award vesting.

(b) This is based on the fair value, at grant date, of Rights that have yet to vest. The fair value is not related to or indicative of the benefit (if any) that the individual Executive may in fact receive.

Annual Report 2022 Sandfire Resources 83

Directors’ Report

Remuneration report (continued)

The Rights ‘on foot’ are disclosed in the table below. Should the Rights not vest, the award will expire.

Table 15 – Details of Rights ‘on foot’ – LTI Plan

		Number of	Fair value	Performance and
	Grant date	Rights	of Right(a)	service period(b)	Vesting Outcome
Karl Simich	27 Nov 2019	164,866	$1.66	1 Jul 2019 to 30 Jun 2022	(b)0% vested
Jason Grace	28 Jun 2019	53,957	$2.58	1 Jul 2019 to 30 Jun 2022	(b)0% vested
Matthew Fitzgerald	28 Jun 2019	42,414	$2.58	1 Jul 2019 to 30 Jun 2022	(b)0% vested

(a) The fair value of Rights is calculated at the date of grant using the Monte Carlo Simulation model and recognised over the period in which the minimum service conditions are fulfilled (the vesting period). The fair value is not related to or indicative of the benefit (if any) that the individual Executive may in fact receive.

(b) For the LTI Plan award made to Executives with a performance period 1 July 2019 to 30 June 2022, Sandfire achieved a TSR of negative 10.05% placing it 24[th] out of 33 companies in the comparator group, resulting in 0% of the award vesting subsequent to year end. Refer to section 4.4 of the Remuneration Report for details.

8.2 Shareholdings of KMP

The following table discloses the movements in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by each KMP, including their related parties.

Table 16 – Shareholdings of KMP

	Balance at 1 Jul 21 or		Received on the vesting	Net other	Balance at 30 Jun 22 or
	date becoming a KMP	Purchases	of Rights / Options	movements	date ceasing to be a KMP
Non-Executive Directors
John Richards	20,000	40,000	-	-	60,000
Derek La Ferla	21,668	-	-	-	21,668
Roric Smith	-	-	-	-	-
Sally Langer	3,580	22,500	-	-	26,080
Jennifer Morris	1,754	7,730	-	-	9,484
Paul Hallam(a)	10,000	5,000	-	-	15,000
Executives
Karl Simich	4,900,051	300,000	-	-	5,200,051

(a) Mr Hallam resigned as Independent NED on 26 November 2021.

84 Annual Report 2022 Sandfire Resources

Directors’ Report

Remuneration report (continued)

9. Other transactions and balances with KMP and their related parties

Certain KMP or their related parties hold positions in other entities that result in them having control or significant influence of those entities. The transactions with related parties are made on terms no worse than those that prevail in arm’s length transactions. There have been no guarantees provided or received for any related party receivables or payables. The Board reviews and approves all transactions with related parties. Board members who are a party to the transaction are excluded from the review and approval process.

Table 17 – Other transactions with KMP and their related entities

			Transaction value	Balance outstanding
			30 Jun 2022	30 Jun 2022
KMP and their Director related entity	Transaction	Note	$	$
Karl Simich	Lease of corporate offce parking	(a)	10,541	-
Tongaat Pty Ltd	premises
Karl Simich	Lease of corporate offce parking	(a)	9,814	-
Resource Development Company Pty Ltd	premises
Karl Simich	Corporate administrative, clerical	(b)	615,539	92,175
Resource Development Company Pty Ltd	and accounting services
			635,894	92,175

(a) The Company leases parking bays located in West Perth from Tongaat Pty Ltd and Resource Development Company Pty Ltd. The parking bays are provided for the benefit of Sandfire staff and are leased on independently assessed market rates.

(b) The Company’s related party transactions with Resource Development Company Pty Ltd (RDC) relate to the provision of staff to Sandfire for corporate administrative, clerical and accounting services. The RDC staff are contracted by the Company and are considered essential by Sandfire as they have serviced the Company for a number of years. The provision of services to Sandfire are carried out at cost, with no profit margin applicable. The director of these private companies, as such, does not profit from any arrangement with the Company.

Signed in accordance with a resolution of the Directors.

==> picture [75 x 33] intentionally omitted <==

John Richards Non-Executive Chair

==> picture [79 x 20] intentionally omitted <==

Karl Simich Managing Director and Chief Executive Officer

West Perth, 29 August 2022

Annual Report 2022 Sandfire Resources 85

Consolidated Income Statement

For the year ended 30 June 2022

			30 June 2021
		30 June 2022	US$000
	Note	US$000	(restated)
Revenue	4	922,705	609,017
Other gains / (losses)		600	(1,173)
Changes in inventories of fnished goods and work in progress		(1,260)	2,306
Mine operations costs		(220,729)	(102,593)
Employee beneft expenses	5	(76,638)	(45,853)
Freight expenses		(69,506)	(37,854)
Royalties expenses		(33,946)	(31,685)
Exploration and evaluation expenses		(46,389)	(48,848)
Administrative expenses		(14,045)	(6,354)
Acquisition and integration costs	25	(13,502)	-
Depreciation and amortisation expenses	21	(256,729)	(134,610)
Proft before net fnance expense and income tax expense		190,561	202,353
Finance income	6	20,776	1,215
Finance expense	6	(16,363)	(7,676)
Net fnance (expense) / income		4,413	(6,461)
Proft before income tax expense		194,974	195,892
Income tax expense	7	(85,542)	(68,464)
Net proft for the year		109,432	127,428
Attributable to:
Equity holders of the parent		111,430	128,594
Non-controlling interests		(1,998)	(1,166)
		109,432	127,428
Earnings per share (EPS):
Basic EPS attributable to ordinary equity holders of the parent (cents)	8	32.05	72.14
Diluted EPS attributable to ordinary equity holders of the parent (cents)	8	32.05	72.14

The consolidated income statement should be read in conjunction with the accompanying notes.

86 Annual Report 2022 Sandfire Resources

Consolidated Statement of Other Comprehensive Income

For the year ended 30 June 2022

		30 June 2021
	30 June 2022	US$000
	US$000	(restated)
Net proft for the year	109,432	127,428
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations, net of tax	(19,230)	50,420
Gain on derivatives designated as cash fow hedges	39,117	-
Items not to be reclassified to profit or loss in subsequent periods:
Changes in fair value of equity investments carried at fair value through other	6,068	16,860
comprehensive income, net of tax
Other comprehensive income for the year, net of tax	25,955	67,280
Total comprehensive income for the year, net of tax	135,387	194,708
Attributable to:
Equity holders of the parent	137,344	195,949
Non-controlling interests	(1,957)	(1,241)
	135,387	194,708

The consolidated statement of other comprehensive income should be read in conjunction with the accompanying notes.

Annual Report 2022 Sandfire Resources 87

Consolidated Balance Sheet

As at 30 June 2022

			30 June 2021	1 July 2020
		30 June 2022	US$000	US$000
	Note	US$000	(restated)	(restated)
ASSETS
Cash and cash equivalents	9	463,093	431,313	199,812
Trade and other receivables	18	69,097	19,704	18,275
Inventories	19	51,405	40,496	36,851
Derivative fnancial asset	11	14,975	-	-
Income tax receivable		-	-	11,219
Other current assets		12,156	1,606	3,648
Total current assets		610,726	493,119	269,805
Financial investments	16	4,305	65,168	28,834
Receivables		1,117	671	172
Exploration and evaluation assets	20	84,126	49,486	116,079
Property, plant and equipment	21	2,580,424	261,463	197,748
Derivative fnancial asset	11	37,229	-	-
Deferred tax asset	7	16,505	-	-
Other non-current assets		5,435	-	-
Total non-current assets		2,729,141	376,788	342,833
TOTAL ASSETS		3,339,867	869,907	612,638
LIABILITIES
Trade and other payables	12	239,568	54,600	37,765
Deferred revenue		-	24,450	-
Derivative fnancial liabilities	11	257	-	-
Interest bearing liabilities	10	348,334	-	-
Lease liabilities	14	18,492	8,234	6,896
Income tax payable	7	39,413	47,366	-
Provisions	29	15,317	6,044	4,907
Total current liabilities		661,381	140,694	49,568
Trade and other payables		-	752	1,073
Interest bearing liabilities	10	433,949	-	-
Lease liabilities	14	13,127	1,352	1,681
Provisions	29	72,518	35,975	27,072
Deferred tax liabilities	7	493,454	7,178	19,307
Total non-current liabilities		1,013,048	45,257	49,133
TOTAL LIABILITIES		1,674,429	185,951	98,701

NET ASSETS		1,665,438	683,956	513,937
EQUITY
Issued capital	13	1,189,309	304,444	304,444
Reserves	13	(12,820)	(42,368)	(110,739)
Retained profts		488,506	419,480	319,589
Equity attributable to equity holders of the parent		1,664,995	681,556	513,294
Non-controlling interest		443	2,400	643
TOTAL EQUITY		1,665,438	683,956	513,937

The consolidated balance sheet should be read in conjunction with the accompanying notes.

88 Annual Report 2022 Sandfire Resources

Consolidated Statement Changes in Equity

For the year ended 30 June 2022

			Foreign
			currency					Non-
	Note	Issued capital $000	translation reserve $000	Hedging Reserve $000	Other reserves* $000	Retained profts $000	Total $000	controlling Interest $000	Total equity $000
At 1 July 2021		304,444	(64,601)	-	22,233	419,480	681,556	2,400	683,956
Proft for the year		-	-	-	-	111,430	111,430	(1,998) 109,432
Other comprehensive		-	(19,230) 39,117		6,027	-	25,914	41	25,955
income
Total comprehensive
income for the period		-	(19,230)	39,117	6,027	111,430	137,344	(1,957)	135,387
Transactions with
owners in their
capacity as owners:
Issue of shares ^		901,679	-	-	-	-	901,679	-	901,679
Share issue costs		(16,814)	-	-	-	-	(16,814) -		(16,814)
Share based
payments		-	-	-	3,440	-	3,440	-	3,440
Dividends	17	-	-	-	-	(42,404) (42,404) -			(42,404)
Share issue in
controlled entity		-	-	-	194	-	194	-	194
At 30 June 2022		1,189,309	(83,831)	39,117	31,894	488,506	1,664,995	443	1,665,438

Other reserves consists of share-based payments reserve; fair value reserve and capital reserve.

^ To partially fund the acquisition of MATSA the Group successfully completed an equity raising in October 2021, comprising the issue of new fully paid ordinary Sandfire shares to eligible retail and institutional investors.

			Foreign
			currency					Non-
		Issued capital $000	translation reserve $000	Hedging Reserve $000	Other reserves* $000	Retained profts $000	Total $000	controlling Interest $000	Total equity $000
	Note	(restated)	(restated)	(restated)	(restated)	(restated)	(restated)	(restated)	(restated)
At 1 July 2020		304,444	(115,021)	-	4,282	319,589	513,294	643	513,937
(restated)
Proft for the year		-	-	-	-	128,594	128,594	(1,166)	127,428
Other comprehensive		-	50,420	-	16,935	-	67,355	(75)	67,280
income
Total comprehensive
income for the period		-	50,420	-	16,935	128,594	195,949	(1,241)	194,708
Transactions with
owners in their
capacity as owners:
Share based
payments		-	-	-	2,712	-	2,712	-	2,712
Dividends	17	-	-	-	-	(28,703)	(28,703)	-	(28,703)
Share issue in
controlled entity		-	-	-	(1,696)	-	(1,696)	2,998	1,302
At 30 June 2021		304,444	(64,601)	-	22,233	419,480	681,556	2,400	683,956
(restated)

Other reserves consists of share-based payments reserve; fair value reserve and capital reserve.

The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Annual Report 2022 Sandfire Resources 89

Consolidated Statement of Cash Flows

For the year ended 30 June 2022

			30 June 2021
		30 June 2022	US$000
	Note	US$000	(restated)
Cash fows from operating activities
Cash receipts		959,301	636,655
Cash paid to suppliers and employees		(388,195)	(206,361)
Income tax paid		(132,793)	(30,811)
Payments for exploration and evaluation		(48,347)	(53,471)
Interest received		1,222	1,498
Net cash infow from operating activities	9	391,188	347,510
Cash fows from investing activities
Payments for exploration and evaluation assets		(6,877)	(6,271)
Payments for plant and equipment		(32,606)	(8,256)
Payments for mine properties		(166,800)	(74,117)
Payments for investments		(5,157)	(13,059)
Proceeds from sale of investments		73,403	4,017
Payment for MATSA Acquisition net of cash acquired	25	(1,494,103)	-
Refund / (payment) of security deposits and bonds		153	(105)
Net cash outfow from investing activities		(1,631,987)	(97,791)
Cash fows from fnancing activities
Proceeds from rights issue in subsidiary		9	1,265
Proceeds from share issue		905,000	-
Share issue costs		(16,775)	-
Proceeds from loans and borrowings	25	482,525	-
Transaction costs related to loans and borrowings		(19,729)	-
Payments for derivatives		(1,243)	-
Repayment of lease obligations		(13,868)	(10,144)
Interest and other costs of fnance paid		(1,995)	(477)
Cash dividends paid to equity holders		(42,404)	(33,600)
Net cash infow / (outfow) from fnancing activities		1,291,520	(42,956)
Net increase in cash and cash equiva lents		50,721	206,763
Net foreign exchange differences		(18,941)	24,738
Cash and cash equivalents at the beginning of the period		431,313	199,812
Cash and cash equivalents at the end of the period	9	463,093	431,313

The consolidated statement of cash flows should be read in conjunction with the accompanying notes.

90 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Index – notes to the Consolidated Financial Statements

Corporate information and basis of preparation	Corporate information and basis of preparation	Page
1.	Corporate information	92
2.	Basis of preparation	92
Segment information
3.	Segment information	96
Results for the year
4.	Revenue	98
5.	Expenses	99
6.	Finance income and fnance expense	100
7.	Income tax	100
8.	Earnings per share (EPS)	103
Capital and debt structure
9.	Cash and cash equivalents	104
10.	Interest bearing liabilities	105
11.	Derivatives	106
12.	Trade and other payables	107
13.	Issued capital and reserves	108
14.	Lease liabilities	109
15.	Financial risk management objectives and policies	110
16.	Fair value measurement	113
17.	Dividends paid and proposed	114
Invested capital
18.	Trade and other receivables	115
19.	Inventories	116
20.	Exploration and evaluation assets	116
21.	Property, plant and equipment	117
22.	Commitments	119
Group structure and related party information
23.	Information relating to Sandfre Resources Limited (the Parent)	120
24.	Information relating to subsidiaries	120
25.	Acquisition of MATSA	121
26.	Deed of Cross Guarantee	122
27.	Related party disclosures	124
Other notes
28.	Share-based payments	125
29.	Provisions	127
30.	Signifcant events after the reporting date	129
31.	Accounting standards and interpretations issued but not yet effective	129
32.	Auditor remuneration	129

Annual Report 2022 Sandfire Resources 91

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Corporate information and basis of preparation

1 Corporate information

The consolidated financial statements of Sandfire Resources Limited and its subsidiaries (collectively, the Group) for the year ended 30 June 2022 were authorised for issue in accordance with a resolution of the Directors on 29 August 2022.

Sandfire Resources Limited is a for profit company incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange (ASX). The nature of the operations and principal activities of the Company are described in the Directors’ report. Information on the Group’s structure is provided in Note 24.

2 Basis of preparation

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report also complies with IFRS as issued by the International Accounting Standards Board.

The financial report has been prepared on a historical cost basis, except for trade receivables, cash-settled share-based payments and equity investments which have been measured at fair value.

The 2022 financial year has been a transformational year for Sandfire. The Group is well placed for long-term growth through the acquisition of the MATSA Copper Operations, and progression of construction and development of the Motheo Copper Project. To part fund these growth initiatives, the business has acquired material debt for the first time in a number of years and will see debt requirements increase with the debt financing of the Motheo Copper Project.

At balance date the Group had a net working capital deficiency of $50.7 million. The deficiency included $38.7 million of trade payables (net of hedging), the scheduled debt repayments of the A$200.0 million ($137.8 million) Corporate Debt Facility with ANZ and $198.0 million MATSA Syndicated Debt related to the transformational acquisition of MATSA. The Group has obtained credit approval for a Motheo project debt facility from a syndicate of banks and forecasts to generate positive cash flows from operating activities to meet its required debt repayment obligations and fund its planned capital commitments to complete construction. As a result the Group is forecasting to meet its commitments as and when they fall due.

Rounding

Change in presentation currency

The Directors have elected to change the Group’s presentation currency from Australian dollars to United States (US) dollars effective from 1 July 2021. The change in presentation currency is a voluntary change which is accounted for retrospectively. The Financial Report has been restated to US dollars using the procedures outlined below:

Consolidated Income Statement and Consolidated Statement of Cash Flows have been translated into US dollars using average foreign currency rates prevailing for the relevant period;
Assets and liabilities in the Consolidated Balance Sheet have been translated into US dollars at the closing foreign currency rates on the relevant balance sheet dates;
The equity section of the Consolidated Balance Sheet, including foreign currency translation reserve, issued capital, retained profits and other reserves, has been translated into US dollars using historical rates; and
Earnings per share and dividend disclosures have also been restated to US dollars to reflect the change in presentation currency.

All other accounting policies adopted are consistent with those applied by the Group in the preparation of the annual consolidated financial statements for the year ended 30 June 2021 except for the adoption of the new standards and amendments which became mandatory for the first time this reporting period commencing 1 July 2021. The adoption of these standards and amendments did not result in a material adjustment to the amounts or disclosures in the current or prior year. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

92 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

2 Basis of preparation (continued)

(a) Key estimates and judgements

The preparation of the Group’s consolidated financial statement requires management to make judgments in the process of applying the Group’s accounting policies and estimates that effect the reported amounts of revenue, expenses, assets and liabilities. Judgements and estimates which are material to the financial report are found in the following notes.

Note			Key	estimate or judgement
Note	4	Revenue	•	Price adjustment for estimate of concentrate specifcations.
			•	Fair value of receivables is based on the closing forward LME metal price.
Note	7	Income tax	•	The recognition of deferred tax asset depends on the probability of future taxable
				profts.
Note	14	Lease liabilities	•	The Group determines whether a contract is, or contains, a lease at the
				commencement date. Judgement is applied to determine whether or not the
				contract contains an identifed asset, has the right to obtain substantially all of the
				economic benefts from the use of the identifed asset throughout the period of use
				and has the right to direct how and for what purpose the asset is used throughout
				the period of use. Judgement is also applied in assessing a supplier’s right and
				practical ability to substitute alternative assets through the period of use.
Note	16	Fair value measurement	•	Where the fair value of an instrument is not determinable with reference to active
				market prices, an alternative valuation technique is used to estimate the fair value
				of the instrument.
Note	20	Exploration and evaluation assets	•	The application of the Group’s accounting policy for exploration and evaluation
				assets requires judgment to determine whether future economic benefts are likely
				from either future exploitation or sale.
			•	An exploration and evaluation asset shall be reclassifed to mine properties when
				the technical feasibility and commercial viability of extracting a mineral resource
				are demonstrable and a decision has been made to develop and extract the
				resource.
Note	25	Acquisition of MATSA	•	Identifable assets acquired and liabilities and contingent liabilities assumed in a
				business combination are, with limited exceptions, measured initially at their fair
				values at the acquisition date. The application of acquisition accounting requires
				signifcant judgement and estimates to be made including but not limited to the tax
				amortisation beneft of individual assets fair valued.
Note	29	Provisions	•	Rehabilitation, restoration and dismantling provisions are reassessed at the end
				of each reporting period. The estimated costs include judgement regarding the
				Group’s expectation of the level of rehabilitation activities that will be undertaken,
				technological changes, regulatory obligations, cost infation and discount rates.

(b) Basis of consolidation and business combinations

The consolidated financial statements comprise of the financial statements of Sandfire Resources Limited and its subsidiaries it controls (as outlined in Note 24).

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Generally, there is a presumption that a majority of voting rights results in control. To support this presumption, and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

The income statement and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

Annual Report 2022 Sandfire Resources 93

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

2 Basis of preparation (continued)

(b) Basis of consolidation and business combinations (continued)

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in Acquisition and integration costs.

If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of AASB 9 Financial Instruments, is measured at fair value with the changes in fair value recognised in the income statement.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the fair value of the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

(c) Foreign currencies

Functional and presentation currency

The consolidated financial statements are presented in United States dollars. Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates, the ‘functional currency’. The functional currency of Sandfire Resources Limited is Australian dollars.

Transactions and balances

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction.

Group companies

On consolidation, the assets and liabilities of any foreign operations are translated into United States dollars at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the dates of the transactions or the average exchange rates over the reporting period. The exchange differences arising on translation for consolidation purposes are recognised in OCI. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is reclassified to the income statement.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.

(d) Input tax (GST/VAT)

Revenues, expenses and assets are recognised net of the amount of input tax (GST/VAT), except:

When the input tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the input tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable;
When receivables and payables are stated with the amount of input tax included.

The net amount of input tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Commitments and contingencies are disclosed net of the amount of input tax recoverable from, or payable to, the taxation authority.

Cash flows are included in the statement of cash flows on a gross basis and the input tax component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows.

94 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

2 Basis of preparation (continued)

(e) Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that a non-financial asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

The recoverable amount of property, plant and equipment including mine development is dependent on the Group’s estimate of the Ore Reserve that can be economically and legally extracted. The Group estimates its Ore Reserve and Mineral Resource based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body, and requires complex geological judgments to interpret the data.

The estimation of Ore Reserves is based on factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, and production costs along with geological assumptions and judgments made in estimating the size and grade of the ore body and removal of waste material. Changes in these estimates may impact upon the carrying value of mine properties, property, plant and equipment, provision for rehabilitation, recognition of deferred tax assets, inventory as well as depreciation and amortisation charges during the period.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

Impairment losses for continuing operations are recognised in the income statement in expense categories consistent with the function of the impaired asset. An assessment is made at each reporting date to determine whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGUs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

(f) Other accounting policies

Significant and other accounting policies that summarise the measurement basis used and are relevant in understanding the financial statements are provided throughout the notes to the financial statements.

Annual Report 2022 Sandfire Resources 95

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Segment Information

This section contains information which will help users understand how the Group’s operating segments are organised, with each segment representing a strategic business.

3 Segment information

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenditure and about which separate financial information is available that is evaluated regularly by the Group’s Chief Operating Decision Makers (CODM) in deciding how to allocate resources and in assessing performance.

The operating segments reported including comparatives have been updated in the current financial year in accordance with current segment information provided to the CODM, being the executive management team and the Board of Directors.

Segment name	Description
DeGrussa Copper Operations	This segment consists of both the DeGrussa and Monty Copper-Gold Mines located in the Bryah Basin
	mineral province of Western Australia. The mines generate revenue from the sale and shipment of
	copper-gold concentrate to customers in Asia and Europe.
MATSA Copper Operations	This segment consists of the Minas De Aguas Teñidas (MATSA) polymetallic mining complex in Spain,
	comprising three underground mines and a 4.7Mtpa central processing facility. The mines generate
	revenue from the sale and delivery of copper, zinc and lead concentrate to customers in Spain.
Black Butte Project	This segment consists of the evaluation activities for the Black Butte Copper Project located in central
	Montana in the United States of America, held through the Group’s 87% interest in Sandfre Resources
	America Inc. (TSX-V: SFR).
Motheo Copper Project	This segment consists of the Group’s development of the Motheo Copper Mine, exploration and
	evaluation activities in Botswana and Namibia within the Kalahari Copper Belt including the T3 and A4
	Copper-Silver Projects.
Exploration and Other	This segment includes the Group’s exploration and evaluation activity including both regional and
	Doolgunna based exploration activities and the Group’s corporate expenses that are unable to be
	directly attributed to an operating segment.

Segment information is evaluated by the executive management team and is prepared in conformity with the accounting policies adopted for preparing the financial statements of the Group.

Segment results

Segment results
	DeGrussa	MATSA
	Copper	Copper	Black Butte	Motheo	Exploration
Income statement for the	Operations	Operations	Project	Copper Project	and Other	Group
year ended 30 June 2022	$000	$000	$000	$000	$000	$000
Revenue	626,379	296,326	-	-	-	922,705
Other gains/(losses)	-	1,783	-	-	(1,183)	600
Changes in inventories	(2,444)	1,184	-	-	-	(1,260)
Mine operations costs	(114,361)	(106,368)	-	-	-	(220,729)
Employee beneft expenses	(27,083)	(22,717)	(416)	(6,208)	(20,214)	(76,638)
Freight expenses	(56,033)	(13,473)	-	-	-	(69,506)
Royalties expense	(33,946)	-	-	-	-	(33,946)
Exploration and evaluation	-	(1,940)	(12,285)	(12,298)	(19,866)	(46,389)
expenses
Administrative expenses	-	(4,202)	(1,381)	(895)	(7,567)	(14,045)
Acquisition and integration	-	-	-	-	(13,502)	(13,502)
costs
EBITDA	392,512	150,593	(14,082)	(19,401)	(62,332)	447,290
Depreciation and amortisation	(135,345)	(115,737)	(160)	(798)	(4,689)	(256,729)
expenses
Segment result (EBIT)	257,167	34,856	(14,242)	(20,199)	(67,021)	190,561
Finance income						20,776
Finance expense						(16,363)
Proft before income tax						194,974
Income tax expense						(85,542)
Net proft for the year						109,432

96 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

3 Segment information (continued)

		Matsa
	DeGrussa	Copper	Black Butte	Motheo	Exploration
	Operations	Operations	Project	Project	and Other	Group
Income statement for the	$000	$000	$000	$000	$000	$000
year ended 30 June 2021	(restated)	(restated)	(restated)	(restated)	(restated)	(restated)
Revenue	609,017	-	-	-	-	609,017
Other gains/(losses)	-	-	-	-	(1,173)	(1,173)
Changes in inventories	2,306	-	-	-	-	2,306
Mine operations costs	(102,593)	-	-	-	-	(102,593)
Employee beneft expenses	(26,666)	-	(1,930)	(384)	(16,873)	(45,853)
Freight expenses	(37,854)	-	-	-	-	(37,854)
Royalties expense	(31,685)	-	-	-	-	(31,685)
Exploration and evaluation expenses	-	-	(11,149)	(6,892)	(30,807)	(48,848)
Administrative expenses	-	-	(615)	(1,188)	(4,551)	(6,354)
Acquisition and integration costs	-	-	-	-	-	-
EBITDA	412,525	-	(13,694)	(8,464)	(53,404)	336,963
Depreciation and	(128,998)	-	(405)	(246)	(4,961)	(134,610)
amortisation expenses
Segment result (EBIT)	283,527	-	(14,099)	(8,710)	(58,365)	202,353
Finance income						1,215
Finance expense						(7,676)
Proft before income tax						195,892
Income tax expense						(68,464)
Net proft for the year						127,428

Adjustments and eliminations

Finance income, finance costs and taxes are not allocated to individual segments as they are managed on a Group basis.

Revenue

Revenue includes the gross revenue adjusted for both the realised and unrealised price and hedge adjustments during the quotational period as well as treatment and refining charges charged by the customer.

Segment assets and liabilities

The Group does not separately report assets or liabilities for its operating segments to the CODM.

Geographical information on non-current assets

		Botswana	United States
	Australia	and Namibia	of America	Spain	Group
30 June 2022	$000	$000	$000	$000	$000
Exploration and evaluation assets	2,789	43,033	11,604	26,700	84,126
Property, plant and equipment	13,735	280,293	8,400	2,277,996	2,580,424
Total Non-Current Assets	16,524	323,326	20,004	2,304,696	2,664,550
		Botswana	United States
	Australia	and Namibia	of America	Spain	Group
	$000	$000	$000	$000	$000
30 June 2021	(restated)	(restated)	(restated)	(restated)	(restated)
Exploration and evaluation assets	3,045	35,644	10,797	-	49,486
Property, plant and equipment	127,795	125,883	7,785	-	261,463
Total Non-Current Assets	130,840	161,527	18,582	-	310,949

Geographical information on sales and customers

The Group’s revenue (refer to Note 4 for details) arise from sales to customers in Asia and Europe. In 2022, the majority of the product was sent to Spain for processing (25%) and the remainder to the Philippines (24%), Singapore (24%), United Kingdom (14%) and Switzerland (11%). During 2021, the majority of the product was sent to China for processing (32%) and the remainder to the Philippines (21%) and Japan (18%). The geographical information is based on the location of the customer’s operations.

Five customers individually accounted for more than ten percent of total revenue during the year. Sales revenue from these major customers ranged from 13% to 30% of total revenue, in combination contributing approximately 92% of total revenue (2021: 90%).

Annual Report 2022 Sandfire Resources 97

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Results for the year

This section focuses on the results and performance of the Group. It includes information on profitability and the resultant return to shareholders via earnings per share.

4 Revenue

4 Revenue
		2021
	2022	$000
	$000	(restated)
Revenue from contracts with customers
Revenue from sale of concentrate	999,683	562,701
Revenue from shipping services	26,606	13,045
Total revenue from contracts with customers	1,026,289	575,746
Realised and unrealised fair value movements on receivables subject to QP adjustment	(79,032)	33,271
Realised and unrealised hedge losses	(24,552)	-
Total Revenue	922,705	609,017

Recognition and measurement

The Group’s principal revenue is from the sale of metal concentrate. The Group also earns revenue from the provision of shipping services in relation to the concentrate. Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer and at the amount that reflects the consideration to which the Group expects to receive in exchange for those goods or services.

The Group has generally concluded that it is the principal in its revenue contracts because it typically controls the goods or services before transferring them to the customer.

Concentrate sales

Each shipment or delivery of metal concentrate under a master services agreement is determined to be a contract with a customer.

Revenue from metal concentrate sales is recognised when control of the concentrate passes to the customer, which is generally determined when title passes together with significant risks and rewards of ownership, which for CIF shipments of concentrate is the bill of lading date, for EXW delivery is the holding certificate date.

The Group’s sales of metal concentrate allow for price adjustments based on the market price of contained metal at the end of the relevant quotational period (QP) stipulated in the contract. These are referred to as provisional pricing arrangements and are such that the selling price for metal concentrate is based on prevailing spot prices on a specified future date after shipment to the customer. Adjustments to the sales price therefore occur based on movements in market prices of the contained metal up until the end of the QP. The period between provisional invoicing and the end of the QP is generally between two to five months.

Revenue is measured at the amount to which the Group expects to be entitled, being the estimate of the price expected to be received at the end of QP, being the forward price at the date the revenue is recognised net of the customer’s treatment and refining charges. For provisional pricing arrangements, any future changes that occur over the QP are embedded within the trade receivables. Given the exposure to the commodity price, these provisionally priced trade receivables are measured at fair value through profit or loss. Subsequent changes in the fair value of provisionally priced trade receivable in the line item realised and unrealised fair value movements on receivables subject to QP adjustment, presented separately from revenue from contracts with customers. Changes in fair value over the term of the provisionally priced trade receivable are estimated by reference to updated forward market prices for the contained metal as well as taking into account relevant other fair value considerations including interest rate and credit risk adjustments.

Shipping services

Where the Group’s concentrate sales are sold under CIF Incoterms, the Group is responsible for providing freight/shipping services after the date that the Group transfers control of the metal concentrate to its customers. The Group, therefore, has a separate performance obligation for freight/shipping services which are provided solely to facilitate the sale of the concentrate it produces.

For CIF arrangements, the transaction price (as determined above) is allocated to the metal concentrate and freight/shipping services using the relative stand-alone selling price method. Shipping services revenue is generally recognised over the period of time in which the shipping services are being provided.

Deferred revenue

Deferred revenue is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Deferred revenue is recognised as revenue when the Group performs under the contract (i.e. transfers control of the related goods or services to the customer).

98 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

4 Revenue (continued)

Key estimates and judgements – Revenue

Under the sales contracts, adjustments are made to the transaction price for variations in assay and weight between the time of dispatch of the metal concentrate and time of final settlement. The Group estimates the amount of consideration receivable using the expected value approach based on internal assays. Management consider that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur due to a variation in assay and weight.

The transaction price for metal concentrate is based on the prevailing forward metal price on the London Metals Exchange (LME) at the time control passes to the customer. The customer makes a provisional payment to the Group against a provisional invoice for the contained copper, zinc and lead and precious metal credits (for gold and silver) in the shipment. Final settlement of the sales transaction is based on the average LME metal price over a subsequent pricing period as specified by the terms of the sales contract.

The period commencing on the date of shipment to the end of the pricing period is known as the Quotational Period (QP). The QP historically reflects the average time to elapse (generally two to five months) between the date control passes to the customer and the date of processing by the smelter at final destination. This pricing methodology is standard within the industry and represents an embedded derivative under AASB 9 Financial Instruments. Accordingly subsequent changes in fair value of the receivable is recognised within realised and unrealised price adjustments in the income statement in each period until final settlement. A key input into the fair value determination of the receivable at the balance date is the closing forward LME metal price on the final day of the month. The revaluation of the receivable is performed up until the final invoice is received. For the year ended 30 June 2022 an unfavourable $79,032,000 (2021: favourable $33,271,000) mark-to-market adjustment to profit or loss was recognised.

5 Expenses

Profit before income tax includes the following expenses:

			2021
		2022	$000
	Note	$000	(restated)
Employee benefts expense
Wages and salaries		64,337	40,031
Defned contribution superannuation expense		8,711	2,830
Employee share-based payments	28	3,628	2,712
Other employee benefts expense		3,040	2,401
Foreign currency exchange difference		1,480	284
		81,196	48,258
Less employee benefts expense capitalised to mine properties		(4,558)	(2,405)
Total employee beneft expense		76,638	45,853

Recognition and measurement

Employee benefits

Wages, salaries and defined contribution superannuation expense are recognised as and when employees render their services. Expenses for non-accumulating personal leave are recognised when the leave is taken and measured at the rates paid or payable.

Refer to Note 29 for the accounting policy relating to short-term and long-term employee benefits.

Employee share-based payments

The accounting policy, key estimates and judgements relating to employee share-based payments is set out in Note 28.

Annual Report 2022 Sandfire Resources 99

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

6 Finance income and finance expense

6 Finance income and fnance expense
	2021
2022	$000
$000	(restated)
Finance income Interest on bank deposits calculated using the effective interest rate method 1,234	1,215
Net foreign exchange gain 19,542	-
Total fnance income 20,776	1,215
Finance expense Interest charges calculated using the effective interest rate method (14,582)	(14)
Interest on lease liabilities (608)	(484)
Net foreign exchange loss -	(6,695)
Unwinding of discount on provisions (739)	(269)
Facility fees and charges (434)	(214)
Total fnance expense (16,363)	(7,676)

Recognition and measurement

Interest income and expense is recognised as interest accrues using the effective interest method.

Provisions and other payables are discounted to their present value when the effect of the time value of money is significant. The impact of the unwinding of these discounts is reported in finance costs.

7 Income tax

7 Income tax
	2021
2022	$000
$000	(restated)
Components of income tax are: Current income tax Current year income tax expense 115,256	90,769
Over provision for prior year (663)	(795)
Deferred income tax Origination and reversal of temporary differences (29,127)	(22,030)
Under provision for prior year 76	520
Income tax expense in the income statement 85,542	68,464
Deferred income tax related to items credited directly to equity Financial assets carried at fair value through other comprehensive income 1,679	7,633
Relating to fnancial instruments 14,032	-
15,711	7,633
Reconciliation of income tax expense to pre-tax proft Proft before income tax 194,974	195,892
Income tax expense at the Australian tax rate of 30% (2021: 30%) 58,492	58,768
Increase (decrease) in income tax due to: Non-deductible expenses 11,305	1,676
Foreign tax losses and deductible temporary differences not recognised 6,995	5,170
Derecognition of deferred tax assets on rehabilitation obligations 9,015	-
Over provision for prior year (587)	(275)
Tax rate differential on foreign income 432	1,371
Recognition of previously unrecognised prior year capital losses -	(78)
Other assessable income -	1,553
Exchange differences (110)	279
Income tax expense 85,542	68,464

100 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

7 Income tax (continued)

Recognised tax assets and liabilities

Recognised tax assets and liabilities
in $000	2022 2021 (restated)
	Current tax receivable / (payable) Deferred income tax Current tax receivable / (payable) Deferred income tax
Opening balance Charged to income Exchange differences Charged to equity Other payments (net) Acquisitions/disposals	(47,366) (7,178) 11,219 (19,307) (114,594) 29,052 (88,225) 19,760 6,591 (7,230) (704) - 1,679 14,033 - (7,631) 116,516 - 30,344 - (2,239) (505,626) - -
Closing balance	(39,413) (476,949) (47,366) (7,178)

	2021
2022	$000
$000	(restated)
Deferred income tax at 30 June relates to the following: Deferred tax liabilities Investments - Mine properties 392,193 Plant and equipment including assets under construction 122,097 Inventory - Other 29,622	10,484 12,377 4,764 2,532 323
Gross deferred tax liabilities 543,912 Set-off of deferred tax assets (50,458)	30,480 (23,302)
Net deferred tax liability 493,454	7,178
Deferred tax assets Employee benefts provision 1,086 Inventories 55 Other payables and accruals 2,769 Rehabilitation, restoration and dismantling provision - Share issue costs refected in equity 12 Revenue losses available for offset against future taxable income 47,499 Capital losses - Deferred revenue - Mine properties (including rehabilitation asset) 5,956 Plant and equipment (including rehabilitation asset) 2,664 Inventory 390 Other 6,532	1,063 - 1,885 9,096 39 - 2,752 7,335 - - - 1,132
Gross deferred tax assets 66,963 Set-off against deferred tax liabilities (50,458)	23,302 (23,302)
Net deferred tax assets 16,505	-

Recognition and measurement

Current income tax

Current income tax assets and liabilities for the period are measured at the amount expected to be recovered from, or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Management periodically evaluates tax positions taken with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Annual Report 2022 Sandfire Resources 101

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

7 Income tax (continued)

Deferred tax

Deferred tax is provided for using the balance sheet full liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Except as noted below, deferred income tax is recognised for all temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax is not recognised in the following situations:

(a) Where temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

(b) In respect of temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax liabilities are not recognised if the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised in equity is recognised in equity.

The Group offsets deferred tax assets and deferred tax liabilities if, and only if, it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

The temporary differences associated with investments in subsidiaries and joint ventures, for which a deferred income tax liability has not been recognised, aggregate to $36.7 million (2021: $36.0 million).

Key estimates and assumptions – Income tax

Judgement is required to determine whether deferred tax assets and certain deferred tax liabilities are recognised on the balance sheet. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the timing and generation of sufficient future taxable profits in the same taxing jurisdiction to offset future expenditure such as rehabilitation costs. Judgements are also required about the application of income tax legislation.

Determining if there will be future taxable profits depend on management's estimates of the timing and quantum of future cash flows, which in turn depend on estimates of future production, sales volumes, exploration discoveries, economics commodity prices, operating costs, rehabilitation costs, capital expenditure, dividends and other capital management transactions.

These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the balance sheet and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to income tax expense within the income statement.

The Group has unrecognised temporary differences and carry forward losses for which no deferred tax asset is recognised on the statement of financial position of $119.0 million (2021: $116.1 million) that have not been recognised as the statutory requirements for recognising those deferred tax assets have not been met.

Tax Consolidation

Sandfire Resources Limited and its 100% owned Australian resident subsidiaries formed a tax consolidated group with effect from 1 July 2017. Sandfire Resources Limited is the head entity of the tax consolidated group. Members of the tax consolidated group have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations.

102 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

8 Earnings per share (EPS)

		2021
	2022	$000
	$000	(restated)
Net proft attributable to equity holders of the parent	111,430	128,594

	2022	2021
	Number	Number
Weighted average ordinary shares adjusted for the effect of dilution	347,718,424	178,251,333

Basic EPS amounts are calculated by dividing the net profit for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year. Diluted EPS amounts are calculated by dividing the net profit attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. As at 30 June 2022 there were 338,878 performance rights (2021: 602,114) and 3,459,677 zero exercise price options (2021: 3,511,279) on issue which are contingently issuable shares and are included in diluted earnings per share.

Annual Report 2022 Sandfire Resources 103

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Capital and debt structure

This section contains information which will help users understand the management of the Group’s capital and debt structure.

9 Cash and cash equivalents

		2021
	2022	$000
	$000	(restated)
Cash at bank and on hand	462,561	430,733
Short-term deposits	532	580
Total cash and cash equivalents	463,093	431,313

Recognition and measurement

Cash and cash equivalents in the consolidated balance sheet and consolidated statement of cash flows comprise of cash at bank and on hand and short-term deposits that are readily convertible to known amounts of cash with insignificant risk of change in value. Short-term deposits are usually between one to three months depending on the short-term cash flow requirements of the Group.

Cash flow information

A reconciliation between cash and cash equivalents and net cash inflow from operating activities is as follows:

	2021
2022	$000
$000	(restated)
Cash and cash equivalents in the statement of cash fows 463,093	431,313
Reconciliation of net proft after tax to net cash fows from operations: Proft for the period 109,432 Adjustments for: Net loss / (gain) on sale of assets (6,539) Depreciation and amortisation included in the income statement 256,729 Share based payments expense 3,628 Unrealised QP price adjustments and foreign currency adjustments 39,715 Unrealised hedge adjustments (1,661) Interest and other costs of fnance 14,999 Other non-cash items 6,321 Change in assets and liabilities: (Increase) / decrease in trade and other receivables 5,488 (Increase) / decrease in inventories 7,854 Increase / (decrease) in income tax payable (900) Increase / (decrease) in trade and other payables 5,430 Increase / (decrease) in deferred revenue (24,451) Increase / (decrease) in deferred tax liabilities (28,313) Increase / (decrease) in provisions 3,456	127,428 110 134,610 2,712 17,931 - - 6,303 (8,791) (5,147) 58,660 8,340 24,451 (21,032) 1,935
Net cash infow from operating activities 391,188	347,510

104 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

10 Interest bearing liabilities

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of borrowings using the effective interest rate method. Fees paid on establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs and amortised over the period of the remaining facility.

		30 Jun 2021
	30 Jun 2022	$000
	$000	(restated)
Current interest-bearing liabilities
Secured bank loans	348,334	-
Total current interest-bearingliabilities	348,334	-
Non-current interest-bearing liabilities
Secured bank loans	433,949	-
Total non-current interest-bearingliabilities	433,949	-

Secured Bank Loans

During the year, the Group entered into a Corporate Debt Facility with ANZ and a Syndicated Debt Facility to fund the acquisition of MATSA.

Corporate Debt Facility:

The key terms of the Corporate Debt Facility with Australia and New Zealand Banking Group Limited (ANZ) include:

Total debt facility of $137.8 million (A$200 million);
The effective interest rate (EIR) on the debt facility is 2.95% (variable);
Maturity date of 30 September 2022;
Bullet repayment on maturity; and
The Facility is secured against Sandfire’s DeGrussa Copper Operations and other corporate assets.

MATSA Syndicated Debt Facility:

During the year, the Group executed a secured Syndicated Debt Facility to fund the acquisition of MATSA.

As at 30 June 2022, the loan was fully drawn down to fund the acquisition. The key terms of the Facility include:

A Syndicated Debt Facility of $650.0 million;
The effective interest rate on the debt facility is 4.67% (variable);
Maturity of 5 years from financial close (1 February 2022); and
The Facility is supported and secured by the cash flows of MATSA.

Maturity analysis by year

	On demand Less than 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Total
	$000 $000 $000 $000 $000 $000 $000
Secured bank loans*	- 359,470 179,919 124,868 99,027 67,754 831,038

Maturity profile of secured bank loans excludes capitalised transaction costs

Interest bearing liabilities reconciliation

Interest bearing liabilities reconciliation
		30 Jun 2021
	30 Jun 2022	$000
	$000	(restated)
Opening Balance	-	-
Loan drawdowns	795,525	-
Capitalised transaction costs	(18,563)	-
Interest accrued under the EIR method	14,546	-
Interest paid	(1,427)	-
Principal repayments	-	-
Exchange differences	(7,798)	-
Closingbalance	782,283	-

Bond Facility

The bond facility is drawn in the form of bank guarantees to the relevant government agencies for environmental restoration and property managers for security deposits and does not involve the provision of funds. As at 30 June 2022, the Company has drawn $10,000 of the $100,000 facility limit.

Annual Report 2022 Sandfire Resources 105

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

11 Derivatives

During the period, Sandfire entered into copper, gold and zinc commodity swap arrangements that were designated in cash flow hedge relationships.

Fair value of derivatives

Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in the profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. Derivatives are not offset in the financial statements unless Sandfire has both legal right and intention to offset. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

Hedge Accounting

Sandfire designates certain commodity swap contracts as hedging instruments in the form of cash flow hedges. At the inception of the hedge relationship, Sandfire documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking hedge transactions.

Sandfire has entered into copper, zinc and gold swaps for a portion of the copper, zinc and gold sold from DeGrussa and MATSA in order to minimise and manage commodity price risk. Sandfire’s commodity price risk arises through its sale of metal in concentrate. Commodity price risk arises due to sales pricing being determined based on the average price of copper, zinc and gold between two and five months after shipping.

In order to reduce exposure to copper, zinc and gold price fluctuations, the Group has entered into derivative instruments to effectively fix the price of sales, therefore reducing the short- and medium-term exposure to the market price of metal for completed or forecasted shipments.

Furthermore, at the inception of the hedge and on an ongoing basis, Sandfire documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:

there is an economic relationship between the hedged item and the hedging instrument;
at the date the hedges were entered into the transaction and future commodity sales are highly probable;
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that Sandfire actually hedges and the quantity of the hedging instrument that Sandfire actually uses to hedge that quantity of hedged item.
a qualitative assessment of the critical terms (exposed tonnes, maturity and pricing) provides that the hedged item and the hedging instrument are closely aligned. Therefore, the hedging instrument and the hedged item have values that will generally move in the opposite direction because of the same risk and hence that an economic relationship exists between the hedged item and the hedging instrument and hedge ineffectiveness is not expected.

Cash flow hedges

The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income and presented in the cash flow hedge reserve under equity. Sources of ineffectiveness include the mismatch of the timing of settlements between the hedged item and the hedging instrument. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss and is included in the Other gains / (losses) line item. The Group recognised an expense of $1.2 million within profit and loss due to hedging ineffectiveness in the current period (FY21: nil).

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item.

Sandfire discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. If the forecast transactions are no longer expected to occur, the gain or loss accumulated in cash flow hedge reserve in equity is reclassified to profit or loss immediately.

Unrecognised gains and losses recorded in the hedge reserve will give rise to a deferred tax asset or liability. This is recorded in the cash flow hedge reserve. Sandfire then considers if this is recoverable in the event it is a deferred tax asset. In the event it is a deferred tax liability, Sandfire considers whether unrecognised deferred tax assets should be recognised to offset the liability. Where this occurs the recognition of the deferred tax asset is recorded through income tax benefit in the profit and loss statement.

Fair value measurement

When measuring the fair value of its assets and liabilities, the Company uses observable market data. All assets and liabilities measured at fair value, including hedging instruments, use Level 2 valuation techniques.

106 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

11 Derivatives (continued)

Commodity swap contracts

	30 Jun 2021
30 Jun 2022	$000
$000	(restated)
Derivative assets Commodity swap contracts – current 14,975	-
Commodity swap contracts – non-current 37,229	-
Total derivative assets 52,204	-
Derivative liabilities Commodity swap contracts – current 257	-
Total derivative liabilities 257	-

MATSA Hedging

MATSA hedging as at 30 June 2022 comprised of 62,028 tonnes of copper production hedged under committed swaps at an average price of US$4.17/lb, and 71,674 tonnes of zinc production hedged at an average price of US$1.28/lb. The end of period net unrealised mark-to-market gain on MATSA hedging was $44.6 million.

DeGrussa Hedging

DeGrussa hedging as at 30 June 2022 comprised 5,000 tonnes of copper at an average price of US$4.43/lb. with a tenor out to August 2022 and 9,000 ounces of gold at an average price of US$1,802/oz. with a tenor out to December 2022. The end of period unrealised net mark-tomarket gain on DeGrussa hedging was $7.3 million.

Maturity analysis by year

Maturity analysis by year
	On demand Less than 1 year 1 - 2 years 2 - 3 years Total
	$000 $000 $000 $000 $000
Commodity swap contracts – Copper Commodity swap contracts – Gold Commodity swap contracts – Zinc	- 36,283 19,349 7,184 62,816
	- (257) - - (257)
	- (1,805) (5,006) (3,801) (10,612)
Total	- 34,221 14,343 3,383 51,947

12 Trade and other payables

		2021
	2022	$000
	$000	(restated)
Current
Trade and other payables	185,872	54,600
Trade payables owing to customers	53,696	-
Total trade and other payables	239,568	54,600

Recognition and measurement

Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are generally unsecured and are usually paid within 30 - 90 days of recognition. They are initially measured at fair value and subsequently carried at amortised cost. The carrying value of these payables approximates their fair value.

Trade payables owing to customers arise as a result of provisional pricing adjustments and are measured at fair value through profit or loss from the date of recognition of the corresponding sale, with subsequent movements in fair value being recognised in the comprehensive income statement.

Annual Report 2022 Sandfire Resources 107

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

13 Issued capital and reserves

Issued ordinary shares

				2021
	2022	2022	2021	$000
	Number	$000	Number	(restated)
Movement in ordinary shares on issue
On issue at 1 July	178,251,333	304,444	178,251,333	304,444
Issue of shares, net of transaction costs and tax	231,730,560	884,865	-	-
On issue at 30 June	409,981,893	1,189,309	178,251,333	304,444

Recognition and measurement

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

The holders of ordinary shares are entitled to receive dividends and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Group’s residual assets. Ordinary shares have no par value.

Capital management

For the purpose of the Group’s capital management, capital includes issued capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Group’s capital management is to maximise shareholder’s value. In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to any interest-bearing loans and borrowings that form part of its capital structure requirements. There have been no breaches in the financial covenants of any interest bearing liabilities during the current financial year or prior financial years.

The Group manages and makes adjustments to its capital structure in light of changes in economic conditions. In order to maintain or adjust the capital structure, the Group may for example return capital to shareholders, issue new shares or sell assets to reduce debt. No changes were made in the objectives, policies and processes for managing capital, during the years ended 30 June 2022 and 2021.

Nature and purpose of reserves

Share-based payments reserve

The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer to Note 28 for details.

Foreign currency translation reserve

Exchange differences arising on the translation of entities with a functional currency differing from the Group’s presentation currency, are taken to the foreign currency translation reserve (FCTR).

Fair value reserve

The fair value reserve represents the changes in fair value of investments where an irrevocable election has been made at initial acquisition to present fair value movements in other comprehensive income (OCI).

Capital reserve

The capital reserve represents gains or losses that are not recycled into the income statement, including the residual difference between the consideration paid to acquire a non-controlling interests share in a subsidiary and the non-controlling share of the subsidiaries assets and liabilities.

Hedging reserve

The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income and presented in the cash flow hedge reserve. Any gain or loss recognised in other comprehensive income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. If the forecast transactions are no longer expected to occur, the gain or loss accumulated in cash flow hedge reserve in equity is reclassified to profit or loss immediately.

108 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

14 Lease liabilities

		2021
	2022	$000
	$000	(restated)
Current	18,492	8,234
Non-current	13,127	1,352
Total lease liability	31,619	9,586

Maturity analysis by year

	On demand Less than 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Total
	$0 $0 $0 $0 $0 $0 $000
Lease payments	- 20,568 14,340 467 - - 35,375

Lease liabilities reconciliation

		2021
	2022	$000
	$000	(restated)
Reconciliation
At 1 July 2021	9,586	8,638
Additions to lease liability	440	10,333
Liabilities acquired as part of the acquisition of MATSA	37,939	-
Interest on lease liabilities	576	482
Lease repayments (cash fow)	(13,868)	(10,144)
Exchange differences	(3,054)	277
At 30 June 2022	31,619	9,586

Recognition and measurement

Lease liabilities

The Group has lease contracts for various items of plant, machinery, vehicles and other equipment used in its operations. Leases of plant and machinery generally have lease terms between one and ten years, while motor vehicles and other equipment generally have lease terms between one and five years.

The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. As at 30 June 2022 lease liabilities have a weighted remaining lease term of two years and nine months and were determined using an weighted average effective interest rate of 2.46%. The undiscounted cash-flows over the remaining lease term across all segments are $35.4 million.

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period on which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

The Group applies the short-term lease recognition exemption for leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition exemption to leases that are considered of low value. Lease payments on short-term leases and leases of low value assets are recognised as an expense on a straight-line basis over the lease term.

During the year, the Group incurred short-term lease expenses of $8.1 million (2021: $2.2 million) and productivity-based (variable) lease payments of $27.5 million (2021: $18.5 million), these amounts were not required to be included in the measurement of the lease liability and were recognised in the income statement.

Annual Report 2022 Sandfire Resources 109

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

14 Lease liabilities (continued)

Key estimates and judgements – Leases

The Group determines whether a contract is, or contains, a lease at the commencement date. Judgement is applied to determine whether or not the contract contains an identified asset, has the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and has the right to direct how and for what purpose the asset is used throughout the period of use. Judgement is also applied in assessing a supplier’s right and practical ability to substitute alternative assets through the period of use.

15 Financial risk management objectives and policies

This note presents information about the Group’s financial assets and financial liabilities, its exposure to financial risks, as well as objectives, policies and processes for measuring and managing these risks.

During the current reporting period, the Group’s principal financial liabilities were lease liabilities as well as trade and other payables. The Group did not have any external borrowings at year end or throughout the year. The Group’s principal financial assets comprise equity investments, trade and other receivables and cash and short-term deposits.

The Group’s activities expose it primarily to the following financial risks:

Market risk including interest rate risk, foreign currency exchange risk and commodity price risk;
Credit risk; and
Liquidity risk.

Primary responsibility for the identification and control of these financial risks rests with the Group’s senior management. The Group’s senior management is supported by both the Audit Committee and Risk Committee under the authority of the Board. The committees provide assurance to the Board that the Group’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives.

The Group uses different methods to measure and manage different types of risks to which it is exposed.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk for the Group comprise three types of risk: interest rate risk, currency risk and other price risk, such as commodity price risk. The Group’s principal financial instruments affected by market risk include financial liabilities, trade receivables, cash and short-term deposits.

The sensitivity analysis in the following sections relate to the position as at 30 June 2022 and 2021.

Interest rate risk management and sensitivity analysis

Interest rate risk is the risk that the fair value of future cash flows of an interest bearing financial instrument will fluctuate because of changes in market interest rates.

The following tables demonstrate the sensitivity of the exposure at the balance sheet date to a reasonably possible change in interest rates.

	Efect on proft before tax
	2022 $000 2021 $000 (restated)
2% increase 2% decrease	(15,760) - 15,760 -

Foreign currency risk and sensitivity analysis

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s foreign currency cash holdings and receivables from sale of metal concentrate products denominated in US dollars, and the Group’s net investments in foreign subsidiaries including MATSA. The Group did not use any form of derivatives to hedge its exposure to foreign currency risk during the financial year ended 30 June 2022.

110 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

15 Financial risk management objectives and policies (continued)

The carrying amount of the Group’s financial assets by its currency risk exposure as at 30 June 2022 is listed below.

	Denominated in US$ presented in US$000 Denominated in EU$ presented in US$000 Other currencies presented in US$000 Total in US$000
	2022 $000 2021 $000 (restated) 2022 $000 2021 $000 (restated) 2022 $000 2021 $000 (restated) 2022 $000 2021 $000 (restated)
Cash and cash equivalents Trade and other receivables Trade and other payables	79,372 36,802 19,346 - 4,032 2,982 102,750 39,784
	1,856 11,743 27,840 - 7,032 2,380 36,728 14,123
	(19,596) (7,556) (92,679) - (4,692) (2,485) (116,967) (10,041)
Total	61,632 40,989 (45,493) - 6,372 2,877 22,511 43,866

The following tables demonstrate the sensitivity of the exposure at the balance sheet date to a reasonably possible change in the AUD/USD and EUR/USD exchange rates, with all other variables held constant. The impact on the Group’s profit before tax and equity is due to changes in the fair value of monetary assets and liabilities.

	Efect on proft before tax AUD/USD Efect on proft before tax EUR/USD
	2022 $000 2021 $000 (restated) 2022 $000 2021 $000 (restated)
10% increase (2021: 10% increase) 10% decrease (2021: 10% decrease)	4,246 1,206 (4,342) -
	(4,246) (1,206) 4,342 -

Commodity price risk and sensitivity analysis

The Group is exposed to commodity price volatility on the sale of metal in concentrate products such as copper, zinc and gold, which are priced on, or benchmarked to, open market exchanges, specifically the London Metal Exchange (LME). The Group aims to realise average metal prices, which are materially consistent with the prevailing average market prices for the same period.

The group have entered into commodity swap contracts during the year ended 30 June 2022 (2021:nil) in order to reduce the exposure to fluctuations in metal prices. Refer to Note 11 for further information.

The following table demonstrates the sensitivity to the exposure at the balance sheet date of a reasonably possible change in commodity prices from the 30 June 2022 London Metals Exchange (LME) forward curve, with all other variables held constant.

	Efect on proft before tax
	2022 $000 2021 $000 (restated)
20% increase (2021: 20% increase) 20% decrease (2021: 20% decrease)	30,990 23,986
	(30,990) (23,986)

The impact on the Group’s profit before tax and equity is due to changes in the fair value of the gross value of provisionally priced sales contracts, offset by the impact of outstanding commodity swap contracts, outstanding at year end totaling $445,080,310 (2021 restated: $125,074,054). The sensitivity analysis does not include the impact of the movement in commodity prices on the total sales for the year.

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities with trade receivables and from its financing activities, including deposits with financial institutions. At the reporting date, the carrying amount of the Group’s financial assets represents the maximum credit exposure.

The credit risk on cash and cash equivalents is managed by restricting dealing and holding of funds to banks which are assigned high credit ratings by international credit rating agencies. The Group’s cash and cash equivalents as at 30 June 2022 are predominately held with financial institutions with a credit rating of AA- or higher with Standard & Poor’s. As short-term deposits have maturity dates of less than twelve months, the Group has assessed the credit risk on these financial assets using life time expected credit losses. In this regard, the Group has concluded that the probability of default on the term deposits is relatively low. Accordingly, no impairment allowance has been recognised for expected credit losses on the short-term deposits.

Annual Report 2022 Sandfire Resources 111

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

15 Financial risk management objectives and policies (continued)

Credit risk in trade receivables is managed by the Group undertaking a regular risk assessment process including assessing the credit quality of the customer, taking into account its financial position, past experience and other factors. As there are a relatively small number of transactions, they are closely monitored to ensure payments are made on time. Credit risk arising from sales to customers is managed by contracts that stipulate either an upfront payment, or a provisional payment of between 90 and 100 per cent of the estimated value of the sale payable promptly after vessel loading supported by a letter of credit arrangements with approved financial institutions. The balance outstanding is received within 2-5 months of the goods arriving at the final delivery destination. The Group does not have any significant receivables which are past due or impaired at the reporting date and it is expected that these amounts will be received when due. The Group does not hold any collateral in relation to these receivables.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk by conducting regular reviews of the timing of cash flows in order to ensure sufficient funds are available to meet these obligations.

The Group’s liquidity risk exposure relates to interest bearing liabilities as detailed in Note 10, trade and other payables as detailed in Note 12 and lease liabilities in Note 14. All current trade payables will be repaid within one year from the reporting date.

112 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

16 Fair value measurement

The following table shows the fair values of financial instruments, other than cash and cash equivalents, including their levels in the fair value measurement hierarchy as at 30 June 2022.

		Level 1	Level 2	Level 3	Total
	Note	$000	$000	$000	$000
Financial assets
Trade receivables at fair value through proft and loss	(i)	-	32,225	-	32,225
Financial assets at fair value though other comprehensive	(ii)	3,830	-	475	4,305
income
Derivative Assets – commodity swap contracts	(iii)	-	52,204	-	52,204
Total fnancial assets		3,830	84,429	475	88,734
Financial liabilities
Trade payables at fair value through proft and loss	(i)	-	(53,694)	-	(53,694)
Derivative liabilities – commodity swap contracts	(iii)	-	(257)	-	(257)
Total fnancial liabilities		-	(53,951)	-	(53,951)

(i) Trade receivables and payables relate to concentrate sale contracts still subject to price adjustments where the final consideration to be received or paid will be determined based on prevailing London Metals Exchange (LME) metal prices at the final settlement date. Receivables and payables still subject to price adjustments at balance date are fair valued by estimating the present value of the final settlement price using the LME forward metals prices at balance date. The fair value takes into account relevant other fair value considerations including any relevant credit risk.

(ii) Equity instruments designated at fair value through OCI include investments in equity shares of non-listed companies. These investments were irrevocably designated at fair value through OCI as the Group considers these investments to be strategic in nature.

(iii) Refer to Note 11 for further information relating to the fair value of derivatives

The fair value of the financial instruments as at 30 June 2021 are summarised in the table below.

	Level 1	Level 2	Level 3	Total
	$000	$000	$000	$000
	(restated)	(restated)	(restated)	(restated)
Financial assets
Trade receivables at fair value through proft and loss	-	11,255	-	11,255
Financial assets at fair value though other comprehensive income	64,762	-	406	65,168
Total fnancial assets	64,762	11,255	406	76,423
Financial liabilities
Derivatives liabilities – commodity swap contracts	-	-	-	-
Total fnancial liabilities	-	-	-	-

The carrying amount of all financial assets and all financial liabilities other than lease liabilities, recognised in the balance sheet approximates their fair value.

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to or by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Annual Report 2022 Sandfire Resources 113

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

16 Fair value measurement (continued)

Fair value hierarchy

All assets for which fair value is recognised or disclosed are categorised within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole, as follows:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

There were no transfers between Level 1 and Level 2 fair value measurements and no transfers into or out of Level 3 fair value measurements, during the year ended 30 June 2022 or the comparative period ended 30 June 2021.

Key estimates and assumptions – Fair value measurement

When the fair values of assets or liabilities are recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including discounted cash flow models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.

17 Dividends paid and proposed

17 Dividends paid and proposed
		2021
	2022	$000
	$000	(restated)
Cash dividends on ordinary shares declared and paid:
Final franked dividend for 2021: 26 cents (AUD) per share	33,600	17,670
(2020: 14 cents (AUD) per share)
Interim franked dividend for 2022: 3 cents (AUD) per share	8,804	11,033
(2021: 8 cents (AUD) per share)
	42,404	28,703
Proposed dividends on ordinary shares:
Final cash dividend for 2022: nil (2021: 26 cents (AUD) per share)	-	33,600

Franking credit balance

Franking credit balance
		2021
	2022	$000
	$000	(restated)
The amount of franking credits available for the subsequent fnancial year are:
Franking account balance at the end of the fnancial year at 30% (2021: 30%)	227,608	162,577
Estimated franking debits that will arise from the payment of dividends as at the	-	(14,932)
end of the fnancial year
Estimated franking credits that will arise from the payment (refund) of income tax	42,228	47,366
as at the end of the fnancial year
	269,836	195,011

114 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Invested capital

This section provides information on how the Group invests and manages its capital.

18 Trade and other receivables

18 Trade and other receivables
		2021
	2022	$000
	$000	(restated)
Current
Trade receivables	32,225	11,255
VAT receivable	35,341	288
Other receivables	1,531	8,161
Total current trade and other receivables	69,097	19,704

Recognition and measurement

Receivables are classified at initial recognition, and subsequently measured at amortised cost or fair value through profit or loss. The classification of receivables at initial recognition depends on the receivable’s contractual cash flow characteristics and the Group’s business model for managing them. Except for trade receivables the Group initially measures a receivable at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables are initially measured at the transaction price determined in accordance with the accounting policy for revenue.

In order for a receivable to be classified and measured at amortised cost, it needs to give rise to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

Trade receivables are subject to provisional pricing and are exposed to the commodity price risk which causes such trade receivables to fail the SPPI test. As a result, these receivables are measured at fair value through profit or loss from the date of recognition of the corresponding sale, with subsequent movements in fair value being recognised in the comprehensive income statement.

There are no contract assets, for which consideration is conditional that have been recognised from contracts with customers.

Other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method.

The Group recognises an allowance for estimated credit losses (ECLs) for all receivables not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. For receivables due in less than 12 months, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date. The expected credit loss is based on its historical credit loss experience in the past two years, current financial difficulties of the debtor and is adjusted for forward-looking factors specific to the debtor and the economic environment. As at 30 June 2022 no allowance for ECLs has been recognised as it is expected that all receivable amounts will be received in full when due. No impairment expense was recognised in relation to receivables for the 2022 and 2021 financial years.

Refer to Note 15 on credit risk of trade receivables to understand how the Group manages the credit risk and measures credit quality of trade receivables that are neither past due nor impaired.

Annual Report 2022 Sandfire Resources 115

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

19 Inventories

19 Inventories
		2021
	2022	$000
	$000	(restated)
Current
Concentrate – at cost	26,771	25,832
Ore stockpiles – at cost	12,593	9,493
Stores and consumables – at cost	29,719	9,324
	69,083	44,649
Allowance for obsolete stock – stores and consumables	(17,678)	(4,153)
	51,405	40,496
Cost ofgoods sold	504,787	292,632

Recognition and measurement

Stores and consumables, ore and concentrate are stated at the lower of cost and net realisable value. Costs are capitalised to ore inventory once commercial production commences which is generally once stoping activities start.

Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs include direct materials, direct labour and a proportion of variable and fixed overhead expenditure which is directly related to the production of inventories to the point of sale.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Stores and consumables, and ore inventories expected to be processed or sold within twelve months after the balance sheet date, are classified as current assets.

20 Exploration and evaluation assets

20 Exploration and evaluation assets
		2021
	2022	$000
	$000	(restated)
Reconciliation
At 1 July 2021	49,486	116,079
Assets acquired as part of the acquisition of MATSA	26,700	-
Other expenditure and exploration tenements acquired	11,389	6,910
Transfer to mine properties	(65)	(82,320)
Exchange differences	(3,384)	8,817
At 30 June 2022	84,126	49,486

Recognition and measurement

Exploration and evaluation expenditure includes pre-license costs, costs associated with exploring, investigating, examining and evaluating an area of mineralisation, and assessing the technical feasibility and commercial viability of extracting the mineral resource from that area. Other than acquisition costs, exploration and evaluation expenditure incurred on licenses where the commercial viability of extracting the mineral resource has not yet been established is generally expensed when incurred. Once the commercial viability of extracting the mineral resource are demonstrable (at which point, the Group considers it is probable that economic benefits will be realised), the Group capitalises any further evaluation costs incurred. The recoverability of the exploration and evaluation assets is dependent on the successful development and commercial exploration, or alternatively, sale of the respective area of interest.

Exploration and evaluation assets are assessed for impairment if:

insufficient data exists to determine commercial viability; or
other facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

An exploration and evaluation asset shall be reclassified to mine properties when the technical feasibility and commercial viability of extracting a mineral resource are demonstrable and a decision has been made to develop and extract the resource. Exploration and evaluation assets shall be assessed for impairment, and any impairment loss shall be recognised, before reclassification to mine properties. No amortisation is charged during the exploration and evaluation phase.

Key estimates and assumptions – Exploration and evaluation assets

The application of the Group’s accounting policy for exploration and evaluation assets requires significant judgment to determine whether future economic benefits are likely from either future exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves.

116 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

21 Property, plant and equipment

Reconciliation of the carrying amounts for each class of property, plant and equipment is set out below.

	Mine	Mine	Plant and	Right of use	Right of use	Assets under
	Properties		equipment	asset		construction	Total
2022	$000		$000	$000		$000	$000
Opening net carrying amount	163,183		51,179	8,990		38,111	261,463
Additions	27,289		2,447	440		195,875	226,051
Assets acquired from acquisition of MATSA	1,303,345		948,206	35,383		73,794	2,360,728
Disposals		(57)	(1,632)		-	-	(1,689)
Transfers	10,097		53,032		-	(63,129)	-
Transfer from exploration and evaluation		65	-		-	-	65
Depreciation and amortisation	(158,353)		(84,063)	(14,313)		-	(256,729)
Movement in the rehabilitation and restoration	12,671		(2,644)		-	-	10,027
asset
Foreign exchange movements	(10,706)		(8,088)	(334)		(364)	(19,492)
Closing net carrying amount	1,347,534		958,437	30,166		244,287	2,580,424
At 30 June 2022
Gross carrying amount – at cost	2,064,801		1,269,936	63,475		244,287	3,642,499
Accumulated depreciation	(717,267)		(311,499)	(33,309)		-	(1,062,075)
Net carrying amount	1,347,534		958,437	30,166		244,287	2,580,424

	Mine	Plant and	Right of use	Assets under
	Properties	equipment	asset	construction	Total
	$000	$000	$000	$000	$000
2021	(restated)	(restated)	(restated)	(restated)	(restated)
Opening net carrying amount	117,090	71,362	8,809	487	197,748
Additions	38,661	3,179	10,376	40,003	92,219
Transfers	-	2,134	-	(2,134)	-
Transfer from exploration and evaluation	82,320	-	-	-	82,320
Depreciation and amortisation	(89,724)	(33,998)	(10,888)	-	(134,610)
Movement in the rehabilitation and restoration	1,782	1,024	-	-	2,806
asset
Foreign exchange movements	13,054	7,478	693	(245)	20,980
Closing net carrying amount	163,183	51,179	8,990	38,111	261,463
At 30 June 2021
Gross carrying amount – at cost	778,729	301,073	30,167	38,111	1,148,080
Accumulated depreciation	(615,546)	(249,894)	(21,177)	-	(886,617)
Net carrying amount	163,183	51,179	8,990	38,111	261,463

Recognition and measurement

Mine properties

Mine property and development assets include costs incurred in accessing the ore body and costs to develop the mine to the production phase, once the technical feasibility and commercial viability of a mining operation has been established. At this stage, exploration and evaluation assets are reclassified to mine properties.

Mine property and development assets are stated at historical cost less accumulated amortisation and any accumulated impairment losses recognised. The initial cost of an asset comprises of its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the estimate of the rehabilitation costs, and for qualifying assets (where relevant), borrowing costs. Any ongoing costs associated with mining which are considered to benefit mining operations in future periods are capitalised.

Annual Report 2022 Sandfire Resources 117

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

21 Property, plant and equipment (continued)

Plant and equipment

Plant and equipment is stated at historical cost, less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items and costs incurred in bringing the asset into use.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is de-recognised. All other repairs and maintenance costs are recognised in the income statement as incurred. The present value of the expected cost for the decommissioning, restoration and dismantling of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Refer to Note 29 Provisions for further information about the recognised decommissioning provision.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.

Right-of-use asset

The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

Depreciation

The depreciation methods adopted by the Group are shown in table below:

Category	Depreciation method
Mine properties	Units of ore extracted basis over the life of mine
Plant and equipment	Straight line over the life of the mine/asset (2 - 5 years)
Right-of-use assets	Straight line over the shorter of the lease term and life of the asset

The estimation of the useful lives of assets has been based on historical experience, lease terms (for leased equipment) and turnover policies (for motor vehicles). In addition, the condition of the assets is assessed at least once per year and considered against the remaining useful life.

The assets' residual values, useful lives and depreciation methods are reviewed at each reporting period and adjusted prospectively, if appropriate.

Impairment

The Group’s policy for the impairment of non-financial assets is disclosed in Note 2.

118 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

22 Commitments

Group resource property commitments

Sandfire Resources America Inc. - Black Butte Copper Leases and Water Use Agreement

The Company’s subsidiary Sandfire Resources America Inc., through its wholly-owned subsidiary Tintina Montana Inc., has entered into a number mining leases and surface use and water lease agreements (collectively, the “Black Butte Agreements”) with the owners of the Black Butte Copper-Cobalt-Silver property in central Montana, United States.

The Black Butte Agreements provide Tintina, with exclusive use and occupancy of any part of the property that is necessary for exploration and mining activities.

Future minimum payments due under the Black Butte Agreements as at 30 June are as follows:

		2021
	2022	$000
	$000	(restated)
Within one year	495	502
After one year but not more than fve years	1,991	2,047
More than fve years	6,733	7,522
Total commitments	9,219	10,071

Contractual commitments

The Group has entered into a number of key contracts as part of its operations. The minimum expected payments in relation to these contracts which were not required to be recognised as liabilities at 30 June 2022 amount to approximately $93,887,000 (undiscounted) (2021: $73,033,000).

Royalties

Motheo Copper Mine

As announced on 23 October 2019, Sandfire completed the acquisition of MOD Resources Limited (MOD) by way of a scheme of arrangement. As part of the acquisition of MOD, a royalty equal to 2% of net smelter returns (gross revenue less certain allowable deductions) from the T3 Project is payable until the total amount of royalty paid reaches US$2 million. First production from the T3 Project is expected in 2023. The T3 Project royalty is not recognised as a liability at 30 June 2022 as payment remains wholly within the control of the Group.

Annual Report 2022 Sandfire Resources 119

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Group structure and related party information

This section provides information on the Group’s structure as well as related party transactions.

23 Information relating to Sandfire Resources Limited (the Parent)

The consolidated financial statements of the Group include:

		2021
	2022	$000
	$000	(restated)
Current assets	300,056	476,530
Total assets	1,977,753	942,989
Current liabilities	247,074	127,713
Total liabilities	277,675	171,385
Issued capital	1,189,349	304,444
Retained earnings	446,531	333,155
Share based payment reserve	8,187	4,654
Proft or loss of the Parent entity	122,893	155,187
Total comprehensive income of the Parent entity	82,629	226,516

24 Information relating to subsidiaries

The consolidated financial statements of the Group include:

Country of incorporation	% equity interest
	2022 2021
Pormining LDA (iii) Portugal Sandfre Resources America Inc. (i) Canada Sandfre BC Holdings (Australia) Pty Ltd Australia Sandfre BC Holdings Inc. Canada Sandfre (RMP) Pty Ltd Australia Tintina Montana Inc. U.S.A EMEA (BIH) Pty Ltd Australia Triassic Resources d.o.o. Bosnia and Herzegovina Sandfre Australia Holdings Pty Ltd Australia Sandfre Australia Pty Ltd Australia Sandfre Resources Botswana Pty Ltd Australia Metal Capital Limited United Kingdom Metal Capital Exploration Limited United Kingdom MOD Resources (Botswana) Pty Ltd Australia Tshukudu Metals Botswana (Pty) Ltd Botswana Tshukudu Exploration (Pty) Ltd Botswana MOD Resources Botswana (Pty) Ltd Botswana Trans Kalahari Copper Namibia (Pty) Ltd Namibia Sandfre Spain Holdings Pty Ltd (ii) Australia Sandfre Spain UK Ltd (ii) United Kingdom Sandfre Spain Holdings Limited (ii) United Kingdom Sandfre Resources (ES), S.L (ii) Spain Minas De Aguas Teñidas, S.A. (iii) Spain El Potroso, S.L. (iii) Spain Emisurmin, Unipessoal LDA. (iii) Portugal	51.00 -
	86.90 86.90
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 100.00
	100.00 -
	100.00 -
	100.00 -
	100.00 -
	100.00 -
	100.00 -
	100.00 -

(i) Changes in ownership in Sandfire Resources America Inc. due to the rights issue within Sandfire Resources America Inc.

(ii) The wholly owned subsidiaries were formed and incorporated in the current financial year.

(iii) The wholly owned subsidiaries were acquired as part of the acquisition of MATSA in the current financial year.

120 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

25 Acquisition of MATSA

As announced on 1 February 2022, Sandfire completed the acquisition of MATSA. The acquisition delivers Sandfire 100% ownership of MATSA, located in the world-class Iberian Pyrite Belt in the Huelva Province of Andalusia in south-western Spain. MATSA is a substantial polymetallic mining complex comprising three underground mines and a 4.7Mtpa central processing facility. The acquisition aligns with the Group’s strategy to become an international diversified and sustainable mining company. With the successful completion of the transaction, Sandfire exercised operational control and economic ownership at MATSA effective from 1 February 2022.

Purchase Consideration – cash outflow

==> picture [465 x 93] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|$000|
|Outflow of cash to acquire subsidiary, net of cash acquired|
|Payment for MATSA Acquisition net of cash acquired|1,494,103|
|Cash acquired on acquisition|49,951|
|Purchase consideration|1,544,054|
|Purchase price and working capital adjustments|(28,671)|
|Payment for acquisition of MATSA (net of cash acquired)|1,515,383|

----- End of picture text -----

The amount presented above is net of the repayment of MATSA indebtedness at acquisition of $313.0 million repaid on completion of the transaction.

Assets and liabilities acquired

The assets and liabilities recognised as a result of the acquisition are as follows:

==> picture [464 x 252] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|$000|
|Net identifiable assets acquired|
|Cash and cash equivalents|49,951|
|Trade and other receivables|40,603|
|Inventories|20,141|
|Property, plant and equipment|1,022,000|
|Right-of-use assets|35,383|
|Mine properties|1,303,345|
|Exploration and evaluation assets|26,700|
|Other assets|12,570|
|Total Assets|2,510,693|
|Borrowings|(315,201)|
|Trade and other payables|(100,438)|
|Lease liabilities|(37,939)|
|Deferred tax liabilities|(505,616)|
|Provisions|(36,116)|
|Total Liabilities|(995,310)|
|Total Purchase consideration|1,515,383|

----- End of picture text -----

We note that the fair values assigned to identifiable assets and liabilities above are presented on a provisional basis. As at the date of this report, taxation and fair value allocations are not yet finalised. The Group will recognise any adjustments to these provisional values as a result of completion the fair value accounting within twelve months following the acquisition date.

The acquired business contributed revenues of $296.3 million and net profit of $24.7 million to the group for the period 1 February 2022 to 30 June 2022. If the acquisition had occurred on 1 July 2021, consolidated pro-forma revenue and net profit for the year ended 30 June 2022 would have been $711.1 million and $59.3 million respectively, based on an extrapolation of actual results since acquisition. The consolidated pro-forma information may not be representative of future performance.

Acquisition-related costs

Expensed acquisition and integration costs of $13.5 million are included in the Consolidated Income Statement.

Key estimates and assumptions – Acquisition of MATSA

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The application of acquisition accounting requires significant judgement and estimates to be made including but not limited to the tax amortisation benefit of individual assets fair valued.

Annual Report 2022 Sandfire Resources 121

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

26 Deed of Cross Guarantee

Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 relief has been granted to the Company and all its Australian subsidiaries from the Corporations Act 2001 requirements for the preparation, audit and lodgment of their financial report.

As a condition of the Corporations Instrument, the Company and all its Australian subsidiaries (“Closed Group” (Refer to Note 23)), entered into a Deed of Cross Guarantee (“Deed”) on 17 April 2020. Australian subsidiaries added to the Group during the period have opted into the Deed.

The effect of the Deed is that the Company has guaranteed to pay any deficiency in the event of winding up of an Australian subsidiary within the Closed Group or if they do not meet their obligations under the terms of loans or other liabilities subject to the guarantee. The Australian subsidiaries have also given a similar guarantee in the event that the Company is wound up or if it does not meet its obligations under the terms of loans or other liabilities subject to the guarantee.

The consolidated statement of comprehensive income and consolidated balance sheet of the Closed Group are set out below.

		2021
	2022	$000
Consolidated Statement of Comprehensive Income – Closed Group entities	$000	(restated)
Revenue	626,379	609,017
Other gains	4,219	4,181
Changes in inventories of fnished goods and work in progress	(2,444)	2,306
Mine operations costs	(114,361)	(102,593)
Employee beneft expenses	(47,297)	(43,540)
Freight expenses	(56,033)	(37,854)
Royalties expenses	(33,946)	(31,685)
Exploration and evaluation expenses	(20,824)	(31,369)
Depreciation and amortisation expenses	(140,035)	(133,975)
Acquisition and integration costs	(13,502)	-
Administrative expenses	(7,559)	(4,557)
Proft before net fnance expense and income tax expense	194,597	229,931
Finance income	9,793	1,486
Finance expense	(5,959)	(7,623)
Net fnance income / (expense)	3,834	(6,137)
Proft before income tax expense	198,431	223,794
Income tax expense	(72,130)	(68,464)
Net proft for the year	126,301	155,330
Other comprehensive income
Items to be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations, net of tax	(3,568)	50,004
Items not to be reclassified to profit or loss in subsequent periods:
Changes in fair value of equity investments carried at fair value through other	5,811	16,935
comprehensive income, net of tax
Other comprehensive income for the year, net of tax	2,243	66,939
Total comprehensive income for the year, net of tax	128,544	222,269

122 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

26 Deed of Cross Guarantee (continued)

26 Deed of Cross Guarantee (continued)
		2021
	2022	$000
Consolidated Balance Sheet – Closed Group entities	$000	(restated)
ASSETS
Cash and cash equivalents	265,417	417,986
Trade and other receivables	12,536	16,944
Inventories	33,160	-
Income tax receivable	7,618	40,496
Other current assets	9,537	1,108
Total current assets	328,268	476,534
Financial investments	4,305	65,168
Receivables	4,177	94,142
Investment in subsidiaries	1,222,492	109,431
Exploration and evaluation assets	27,981	3,121
Property, plant and equipment	226,022	127,794
Deferred tax asset	13,445	-
Total non-current assets	1,498,422	399,656
TOTAL ASSETS	1,826,690	876,190
LIABILITIES
Trade and other payables	91,485	41,850
Deferred revenue	-	24,450
Lease liabilities	2,085	8,143
Interest bearing liabilities	138,377	-
Income tax payable	42,228	47,366
Derivative fnancial liability	257	-
Provisions	14,476	5,901
Total current liabilities	288,908	127,710
Trade and other payables	-	1,110
Lease liabilities	298	1,137
Provisions	42,416	34,010
Deferred tax liabilities	-	7,178
Total non-current liabilities	42,714	43,435
TOTAL LIABILITIES	331,622	171,145

NET ASSETS	1,495,068	705,045
EQUITY
Issued capital	1,189,309	304,461
Reserves	18,346	25,559
Foreign currency translation reserve	(91,328)	(54,181)
Retained profts	378,741	429,206
TOTAL EQUITY	1,495,068	705,045

Annual Report 2022 Sandfire Resources 123

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

27 Related party disclosures

As at, and throughout the financial year ended 30 June 2022, the ultimate parent entity of the Group was Sandfire Resources Limited. Information in relation to interest in other entities is set out in Note 24 to the consolidated financial statements.

Compensation of key management personnel of the Group

Compensation of key management personnel of the Group
		2021
	2022	$000
	$000	(restated)
Short-term employee benefts	2,647,783	2,125,739
Long-term employee benefts	13,413	10,344
Post-employment benefts	35,250	34,870
Share-based payments	2,205,979	1,668,529
Total compensation	4,902,425	3,839,482

The amounts disclosed in the table represent the amount expensed during the reporting period related to KMP and Directors.

Transactions with KMP

Certain KMP or their related parties hold positions in other entities that result in them having control or significant influence of those entities. There have been no guarantees provided or received for any related party receivables or payables. The Board reviews and approves the nature of all transactions with related parties. Board members who are a party to the transact ion are excluded from the review and approval process. Subsequent to the end of the financial year, the below corporate administrative and accounting service transactions have ceased.

KMP and their Director related entity Transaction	Transactions value year ended 30 June Balance outstanding as at 30 June	Transactions value year ended 30 June Balance outstanding as at 30 June

	2022 $ 2021 $ (restated) 2022 $ 2021 $ (restated)
Karl Simich– Tongaat Pty Ltd Lease of corporate offce parking premises Karl Simich– Resource Development Company Pty Ltd Lease of corporate offce parking premises Karl Simich– Resource Development Company Pty Ltd Corporate administrative and accounting services	10,541 7,168 - -
	9,814 6,945 - -
	615,539 553,857 92,175 98,663
	635,894 567,970 92,175 98,663

124 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Other notes

28 Share-based payments

The expense recognised during the current and previous financial year relating to share-based payments are:

		2021
	2022	$000
	$000	(restated)
Expense arising from equity-settled share-based payments – SFRA	3,534	2,702
Expense arising from equity-settled share-based payments – SFRAB	94	10
Total expense arising from share-based payment transactions	3,628	2,712

A Long-term Incentive Plan.

B Relates to Sandfire America employee share-based payment plans. Detailed disclosure of the plan has not been made as the amount is not considered material for the Group.

Recognition and measurement

Equity-settled transactions

The Group provides benefits to its employees and contractors (including key management personnel) in the form of share-based payments, whereby employees render services in exchange for rights over shares (equity-settled transactions).

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made. That cost is recognised, together with a corresponding increase in the share-based payment reserve in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.

No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vested irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

(i) Long-term Incentive Plan (LTI Plan)

Listed below are the terms and conditions of issues made by the Group during previous financial years which remain outstanding as at 30 June 2022:

			Expected	Performance
Grant date	Number	Fair value^	Vesting date	period
27 November 2019	164,866	$1.66	31 Aug 2022	3 years
28 June 2019	174,012	$2.58	31 Aug 2022	3 years

^ Represents the fair value per right at grant date.

Under the LTI Plan, awards are made to executives and other management personnel (collectively referred to as senior management) who have an impact on the Group’s performance. LTI awards are delivered in the form of performance rights over ordinary shares in the Company for no consideration, which vest over a service period of 3 years subject to meeting performance measures, with no opportunity to retest. Performance rights granted under the LTI Plan are not entitled to dividends nor do they have voting rights. Refer to the Group’s Remuneration Report for further details on the plan.

Annual Report 2022 Sandfire Resources 125

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

28 Share-based payments (continued)

Pricing model

The following table lists the assumptions used in determining the fair value of performance rights granted during previous financial years.

	Grant date
	27 Nov 19 28 Jun 19
Fair value at measurement date Underlying share price for issue Dividend yield Expected volatility Risk-free rate Expected life (years)	$1.66 $2.58 $3.83 $4.53 4.90% 5.20% 35.00% 35.00% 0.7% 1.0% 2.6 3.0

The fair value of performance rights granted is estimated at the date of grant using a Monte-Carlo simulation model, taking into account the terms and conditions upon which the rights were granted. The model simulates the TSR and compares it against the comparator group constituting companies in the S&P/ASX200 Resources Index (ASX: XJR). It takes into account historical and expected dividends, and the share price fluctuation covariance of the Company and the comparator group to predict the distribution of relative share performance.

Movements in LTI Plan during the year

The movement in the number of performance rights during the year is set out below.

	2022	2021
	Number	Number
Opening balance	602,114	977,869
Rights lapsed or forfeited during the year	(263,236)	(375,755)
Closing balance	338,878	602,114

(ii) Long-term Incentive Option Plan (ZEPO Plan)

Listed below are the terms and conditions of issues made by the Group during the current financial year.

				Expected	Performance
Issue Date	Number	WAEP value^		Vesting date	period
FY2022
30 August 2021	65,056		$4.45	30 Jun 2025	3.84

^ Represents the weighted average exercise price (WAEP) at grant date.

The LTI award for FY2022 is in the form of Zero Exercise Price Options (ZEPOs) over ordinary shares in the Company for no consideration. The ZEPOs carry neither rights to dividends nor voting. Under the ZEPO Plan, awards are made to executives and other management personnel (collectively referred to as senior management) who have an impact on the Group’s performance. To the extent that the applicable vesting conditions are satisfied at the end of the performance period, LTI awards are delivered by vesting of all or a portion of ZEPOs which may be exercised thereafter in return for allocation of fully paid ordinary shares. Refer to the Group’s Remuneration Report for further details on the plan.

Pricing model

The following table lists the assumptions used in determining the fair value of performance rights granted during the current and prior financial years.

	Issue date
	17 Jul 20 27 Nov 20 23 Mar 21 3 May 21 31 May 21 30 Aug 21
Number of rights issued and outstanding WAEP at measurement date Underlying share price for issue Dividend yield Expected volatility Risk-free rate Expected life (years)	2,107,390 927,703 135,668 108,857 115,003 65,056
	$3.18 $2.61 $3.56 $4.17 $4.45 $4.45
	$3.81 $3.27 $4.36 $5.12 $5.48 $6.50
	2.68% 3.79% 3.36% 3.28% 3.20% 3.20%
	37.50% 38.00% 40.00% 40.00% 40.00% 40.00%
	0.41% 0.19% 0.11% 0.29% 0.28% 0.28%
	4.95 4.59 4.27 4.16 4.08 3.84

126 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

28 Share-based payments (continued)

The fair value of ZEPOs granted is estimated at the date of grant using a Monte-Carlo simulation model, taking into account the terms and conditions upon which the rights were granted. The model simulates the TSR and compares it against the comparator group constituting companies in the S&P/ASX200 Resources Index (ASX: XJR). It takes into account historical and expected dividends, and the share price fluctuation covariance of the Company and the comparator group to predict the distribution of relative share performance.

Movements in ZEPO Plan during the year

The movement in the number of performance rights during the year is set out below.

==> picture [418 x 72] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|2022|
|Number|
|Opening balance|3,511,279|
|Rights granted during the year|65,056|
|Rights lapsed or forfeited during the year|(116,658)|
|Closing balance|3,459,677|

----- End of picture text -----

29 Provisions

==> picture [483 x 161] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|2021|
|2022|$000|
|$000|(restated)|
|Current|
|Employee benefits|12,466|6,044|
|Rehabilitation, restoration and dismantling|2,010|-|
|Other|841|-|
|15,317|6,044|
|Non-current|
|Employee benefits|491|3,706|
|Rehabilitation, restoration and dismantling|70,312|32,269|
|Other|1,715|-|
|72,518|35,975|

----- End of picture text -----

The movement in the rehabilitation, restoration and dismantling provision during the financial year is set out below.

==> picture [418 x 111] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|2022|
|$000|
|At 1 July 2021|32,269|
|Arising during the year|12,326|
|Acquired as part of the acquisition of MATSA|28,992|
|Unwinding of discount|739|
|Inflation and discount rate adjustments|573|
|Foreign exchange movements|(2,577)|
|At 30 June 2022|72,322|

----- End of picture text -----

Annual Report 2022 Sandfire Resources 127

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

29 Provisions (continued)

Recognition and measurement

General

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value of the provision reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision resulting from the unwinding of the discounting on the provision is recognised as a finance cost.

Rehabilitation, restoration and dismantling

The Group recognises a provision for the estimate of the future costs of restoration activities on a discounted basis at the time of exploration or mining disturbance. The nature of these restoration activities includes dismantling and removing structures, rehabilitating mines and tailings dams, dismantling operating facilities, closure of plant and waste sites, and restoration, reclamation and re-vegetation of affected areas.

When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the related assets to the extent that it was incurred by the development/construction of the asset. Rehabilitation and restoration obligations arising from the Group’s exploration activities are recognised immediately in the income statement.

If a change to the estimated provision results in an increase in the rehabilitation liability and therefore an addition to the carrying value of the related asset, the Group considers whether this is an indication of impairment of the asset. If the revised assets, net of rehabilitation provisions, exceed the recoverable amount, that portion of the increase to the provision is charged directly to the income statement.

Key estimates and assumptions – Rehabilitation provisions

The Group assesses its rehabilitation, restoration and dismantling (rehabilitation) provision at each reporting date. Significant estimates and assumptions are made in determining the provision as there are numerous factors that will affect the ultimate amount payable. These factors include estimates of the extent, timing and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to the inflation rates, and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at reporting date represents management’s best estimate of the present value of the future rehabilitation costs.

The discount rate used in the calculation of the provision is derived from an average of the applicable segments government bond rate, with the exception of Botswana and Namibia for which the provision is calculated in USD and therefore an applicable USD discount rate has been applied. The discount rate approximates the estimated time period for when the majority of the future rehabilitation costs are expected to be incurred. The discounts rates used are as follows:

==> picture [481 x 58] intentionally omitted <==

----- Start of picture text -----

Australia Botswana and Namibia United States of America Spain
2022 2021 2022 2021 2022 2021 2022 2021
Discount rate 3.36% 1.13% 2.15% 2.00% 3.32% 2.93% 2.56% -
Inflation rate 4.00% 2.40% 4.50% 5.00% 2.93% 1.10% 1.05% -
----- End of picture text -----

Employee Benefits

(i) Short-term benefits

Liabilities for wages and salaries, including non-monetary benefits and other short-term benefits expected to be settled within 12 months of the reporting date are recognised in respect of employees' services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating personal leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to future expected wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

128 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

30 Significant events after the reporting date

31 Accounting standards and interpretations issued but not yet effective

The standards and interpretations that have been issued or amended but not yet effective, have not been early adopted by the Group for the annual reporting period ended 30 June 2022. Except where noted below, the Group has evaluated the impact of the new standards and interpretations and determined that the changes are not likely to have a material impact on its financial statements. The Group intends to adopt these standards when they become effective.

AASB 2020-3 Amendments to Australia Accounting Standards – Annual Improvements 2018-2020 and Other Amendments - AASB 116 Property, Plant and Equipment – Proceeds before intended use

The amendment requires an entity to recognise the sales proceeds from selling items produced while preparing property, plant and equipment for its intended use and the related costs in profit or loss, instead of deducting the amounts received from the cost of the asset.

Without a detailed assessment being performed at this stage, this amendment will be expected to have an impact on the presentation of net profit after tax, net assets and financial position for the year ending 30 June 2023.

AASB2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current

The amendments require a liability be classified as current when companies do not have a substantive right to defer settlement at the end of the reporting period.

AASB 2020-6 defers the mandatory effective date of amendments that were originally made in AASB 2020-1 so the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2023 instead of 1 January 2022.

The Group has performed an assessment and do not expect the amendment to have a material impact on its financial statements for the year ended 30 June 2023.

32 Auditor remuneration

The auditor of Sandfire Resources Limited is Ernst & Young (EY) Australia.

		2021
	2022	$
	$	(restated)
Amounts received or due and receivable by EY (Australia) for:
Fees for auditing the statutory fnancial report of the parent covering the group	496,502	248,305
and auditing the fnancial reports of any controlled entities
Fees for other services
Taxation services	-	10,196
Other advisory services	15,830	6,195
Total Fees to EY (Australia)	512,332	264,696
Amounts received or due and receivable by related practices of EY for:
Fees for auditing the fnancial reports of any controlled entities	144,854	125,802
Other services in relation to the entity and any other entity in the consolidated group:
Other advisory services	-	32,202
Total fees to overseas member frms of EY (Australia)	144,854	158,004
Total auditor’s remuneration	657,186	422,700

Annual Report 2022 Sandfire Resources 129

Consolidated Financial Statements

Directors' Declaration

In accordance with a resolution of the Directors of Sandfire Resources Limited, I state that:

In the opinion of the Directors:
a) the financial statements and notes of Sandfire Resources Limited for the financial year ended 30 June 2022 are in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of its performance for the year ended on that date; and
- (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2; and
c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
d) at the date of this declaration, there are reasonable grounds to believe that members of the Closed Group identified in Note 26 will be able to meet any liabilities to which they are, or may become, subject by virtue of the Deed of Cross Guarantee.
This declaration has been made after receiving the declarations required to be made to the Directors by the chief executive officer and chief financial officer in accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2022.

On behalf of the Board

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John Richards Non-Executive Chairman

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Karl Simich Managing Director and Chief Executive Officer

West Perth, 29 August 2022

130 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Independent Auditor’s Report

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Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

Independent auditor’s report to the members of Sandfire Resources Limited

Report on the audit of the financial report

Opinion

We have audited the financial report of Sandfire Resources Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated balance sheet as at 30 June 2022, the consolidated statement of other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022 and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Annual Report 2022 Sandfire Resources 131

Consolidated Financial Statements

Independent Auditor’s Report

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We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report.

Valuation of trade receivables

Why significant

How our audit addressed the key audit matter

As disclosed in Note 18 of the financial report,
commodity concentrate sales are subject to a
quotational pricing period at 30 June 2022. During
the quotational pricing period, the consideration from
the sale of commodity concentrate is adjusted for
changes in the commodity prices, with the final
consideration determined based on the prevailing
commodity price at the end of the quotational pricing
period.
As revenue is recognised prior to the completion of
the quotational pricing period, trade receivables are
subject to quotational pricing adjustments and are
required to be measured at fair value through profit
or loss under Australian Accounting Standards.
In determining the fair value of trade receivables, a
key input is the expected commodity price at the
completion of the quotational pricing period, which is
based on market forward prices. Given changes in
market forward prices can significantly impact the fair
value of trade receivables and the unrealised price
adjustment, being a gain or loss, recognised in the
consolidated statement of other comprehensive
income, this was considered a key audit matter.

In completing our audit procedures, we:
►
Assessed the methodologies, inputs and
assumptions used by the Group in determining
the fair value of trade receivables subject to
quotational pricing.
►
Compared observable inputs in the Group’s
valuation model, such as quoted prices, to
externally available market data.
►
Recalculated the Group’s fair value
measurement of trade receivables still subject to
quotational pricing adjustments as at 30 June
2022, using 30 June 2022 market forward
prices.
►
Evaluated the adequacy of the Group’s
disclosures in the financial report in accordance
with Australian Accounting Standards.

Why significant

How our audit addressed the key audit matter

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132 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Independent Auditor’s Report

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Recognition and measurement of rehabilitation, restoration and dismantling provisions

Why significant

How our audit addressed the key audit matter

As disclosed in Note 29 of the financial report, the
Group has rehabilitation, restoration and dismantling
provisions of $72 million at 30 June 2022.
The calculation of these provisions requires
judgement in estimating the costs to undertake
required rehabilitation, restoration and dismantling
activities, the timing as to when these costs will be
incurred and the determination of an appropriate rate
to inflate and discount these costs to present value.
The Group reviews the underlying costs, discount and
inflation rates used to calculate the rehabilitation,
restoration and dismantling provisions on a semi-
annual basis. This review incorporates the
identification of any new rehabilitation, restoration
and dismantling obligations that have arisen, an
assessment of the underlining cost assumptions used,
effects of any changes in local regulations, and the
expected method and timing of restoration and
rehabilitation.
Given the judgement and estimation involved in
determining the rehabilitation, restoration and
dismantling provision, this was considered a key audit
matter.

In completing our audit procedures, we:
►
Evaluated the reasonableness of the cost
estimates used to calculate the rehabilitation,
restoration and dismantling provisions and
considered the completeness of the
rehabilitation, restoration and dismantling
activities identified by the Group.
►
Considered the qualifications, competence and
objectivity of the internal and external experts
engaged by the Group to determine its cost
estimates.
►
Considered the timing of the Group’s proposed
rehabilitation, restoration and dismantling
activities for consistency with the Group’s legal
and/or constructive obligations under its
environmental authorities and mining licences
and the useful lives of its associated mining
operations.
►
Assessed the mathematical accuracy of the
calculations and the appropriateness of the
inflation and discount rates applied by the
Group.
►
EY reviewed the rehabilitation, restoration and
dismantling provision assessment of the
component auditor forMinas De Aguas Teñidas
(“MATSA”). The component auditor evaluated
the reasonableness of the cost estimates used to
calculate the rehabilitation, restoration and
dismantling provisions and considered the
completeness of the rehabilitation, restoration
and dismantling activities.
►
Evaluated the adequacy of the Group’s
disclosures in the financial report in accordance
with Australian Accounting Standards.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Annual Report 2022 Sandfire Resources 133

Consolidated Financial Statements

Independent Auditor’s Report

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MATSA operations – reliance on the work of a non-EY component team

Why significant

How our audit addressed the key audit matter

As detailed in Note 25 to the financial report, a
significant component of the Group’s operating
segments and activities take place outside of
Australia, predominantly in Spain. These
decentralised operations require adequate monitoring
activities from a financial reporting perspective.
In our role as Group auditor, we are required to obtain
sufficient appropriate audit evidence regarding the
financial information of the entities or business
activities (“components”) within the Group in order to
be able to express an audit opinion on the
consolidated financial report. We are responsible for
the direction, supervision, and performance of the
Group audit.
Given the financial significance of the Spanish
component to the Group result, the extent of our
direction and supervision of the non–EY component
audit team was considered a key audit matter.

In fulfilling our responsibilities as Group auditor:
►
We performed a risk assessment and component
scoping at the consolidated Group level and,
based on this scoping, identified the Spanish
component to be audited by a non-EY
component auditor (“component auditor”).
►
We sent instructions to the component auditor
detailing significant audit areas to be covered,
including the relevant risks and the information
to be reported to the Group audit team. The
Group audit team approved the component
materiality, having regard to the size and risk
profile of the component relative to the Group.
►
The component team provided written
confirmation to the Group audit team confirming
the work performed and the results of that work
as well as key documents supporting their
independence, significant findings and
observations.
►
We performed a site visit, met with local
management and the component auditors to
gain an understanding of the component’s
operations.
►
We held regular meetings with the component
team to discuss the outcome and extent of their
procedures.
►
With the assistance of EY’s Spanish member
firm, we reviewed the underlying working papers
and documentation of the component auditor for
selected areas of audit focus.
►
We ensured that the trial balance and related
supporting schedules audited by the component
auditor agreed to the Group consolidation
schedule and, where relevant, financial
statement notes.
►
We assessed the accounting policies of the
component for consistency with the Group’s
accounting policies and tested the Group’s
accounting for intercompany transactions.

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134 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Independent Auditor’s Report

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MATSA business combination

Why significant

How our audit addressed the key audit matter

As detailed in Note 25 to the financial report, the
Group acquired Minas De Aguas Teñidas (“MATSA”)
which was completed on 1 February 2022 for a total
consideration price of $1,515 million, net of cash
acquired. This acquisition was accounted for as a
business combination using the acquisition method.
The Group has performed a provisional purchase
price allocation (“PPA”) exercise to account for this
business combination from acquisition date to 30
June 2022.
We have determined this to be a key audit matter
based on the materiality of the acquisition, the
significant management judgment and estimates
made in relation to the provisional PPA and the
adjustments made to align accounting policies of
MATSA with those of the Group. The significant
management judgment and estimates involved in
the provisional PPA exercise relate mainly to the
determination of the fair value of the acquired
identifiable assets and liabilities.

In completing our audit procedures, we:
►
Read the purchase agreement in order to gain
an understanding of its key terms and
conditions.
►
Assessed the competence, qualifications and
objectivity of both internal and external
specialists, to consider whether they were
appropriately qualified to carry out the PPA
valuation.
►
Engaged our internal valuation specialist to
assist us in the audit of certain aspects of the
PPA.
►
Assessed the valuation model, the cash flow
forecasts, and the key assumptions, including
forecast commodity prices and discount rate
used in the calculation and allocation of the fair
values of acquired identifiable assets and
liabilities.
►
Evaluated the adequacy of the Group’s
disclosures in the financial reportin
accordance with Australian Accounting
Standards.

Information other than the financial report and auditor’s report thereon

The directors are responsible for the other information. The other information comprises the information included in the Company’s 2022 annual report, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. We obtained the directors’ report that is to be included in the annual report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual report after the date of this auditor’s report.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Annual Report 2022 Sandfire Resources 135

Consolidated Financial Statements

Independent Auditor’s Report

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Responsibilities of the directors for the financial report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

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136 Annual Report 2022 Sandfire Resources

Consolidated Financial Statements

Independent Auditor’s Report

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Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Annual Report 2022 Sandfire Resources 137

Consolidated Financial Statements

Independent Auditor’s Report

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Report on the audit of the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report in the directors’ report for the year ended 30 June 2022.

In our opinion, the Remuneration Report of Sandfire Resources Limited for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Ernst & Young

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Philip Teale Partner Perth 29 August 2022

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

138 Annual Report 2022 Sandfire Resources

Shareholder and Investor Information

The shareholder information set out below is current as at 31 August 2022.

Australian Securities Exchange listing

Sandfire shares are listed on the Australian Securities Exchange (ASX). The Company is listed as Sandfire Resources Ltd with an ASX code of SFR.

Issued Capital

Share capital comprised 409,981,893 fully paid ordinary shares and the Company had 14,656 holders of ordinary fully paid shares.

Distribution of shareholders

			Percentage of
Range	Total holders	Number of shares	issued capital
1 – 1,000	6,771	3,055,026	0.75
1,001 – 5,000	5,418	14,075,337	3.43
5,001 – 10,000	1,387	10,586,903	2.58
10,001 – 100,000	1,010	24,182,632	5.90
100,001 – and over	70	358,081,995	87.34

The number of Sandfire shareholders holding less than a marketable parcel ($500) based on the market price of $4.62 was 1,099.

Twenty largest holders of ordinary fully paid shares (as named on the Register of Shareholders)

Holder name	Holder name	Number of shares	Percentage held
1	HSBC Custody Nominees (Australia) Limited	126,493,769	30.86%
2	J P Morgan Nominees Australia Pty Limited	100,725,555	24.57%
3	Citicorp Nominees Pty Limited	51,005,319	12.44%
4	HSBC Custody Nominees (Australia) Limited	16,883,296	4.12%
5	National Nominees Limited	13,823,212	3.37%
6	BNP Paribas Noms Pty Limited	12,800,372	3.12%
7	HSBC Custody Nominees (Australia) Limited	4,209,548	1.03%
8	Metal Tiger Plc	4,164,286	1.02%
9	UBS Nominees Pty Ltd	2,531,937	0.62%
10	Macquarie Bank Limited	2,427,555	0.59%
11	Tongaat Pty Ltd	2,358,215	0.43%
12	First Samuel Ltd	2,206,498	0.54%
13	Woodross Nominees Pty Ltd	2,018,054	0.49%
14	Resource Development Company Pty Ltd	1,486,786	0.36%
15	BNP Paribas Nominees Pty Ltd	1,236,089	0.30%
16	Kape Securities Pty Ltd	1,014,750	0.25%
17	Citicorp Nominees Pty Limited	983,886	0.24%
18	BNP Paribas Nominees Pty Ltd	733,574	0.18%
19	Morgan Stanley Australia Securities (Nominee) Pty Limited	696,582	0.17%
20	HSBC Custody Nominees (Australia) Limited - GSCO ECA	583,250	0.14%
Total		348,382,533	84.84%

Annual Report 2022 Sandfire Resources 139

Substantial shareholders in Sandfire Resources Ltd

The Company has received the following notices of substantial shareholding (Notice).

		Relevant interest per
		the Notice
Substantial shareholder	Date received	- number of shares
AustralianSuper Pty Ltd	10 May 2022	56,152,837
State Street Corporation	4 August 2022	25,941,176
L 1 Capital Pty Ltd	29 July 2022	26,961,639
Other securities on issue
Class of security	Number	Holders
Zero exercise price options expiring 17 July 2026	3,459,678	14

Voting rights

The voting rights of security holders of the Company are set out in the Company’s Constitution and, in summary, each member has one vote for each fully paid share held by the member in the Company. Holders of performance rights and zero exercise price options do not have voting rights.

On-market buy back

The Company does not have a current buy-back plan.

Key shareholder information

To assist those considering an investment in the Company, the Sandfire website contains key shareholder information. The site contains information on Sandfire’s operations, ASX releases and financial and quarterly reports. It also contains a facility for shareholders and investors to direct inquiries to the Company, and to elect to receive communications from Sandfire via email.

Dividends

Sandfire’s Board of Directors typically makes a determination on dividend payments twice each year. Dividend payments are credited directly into any nominated bank, building society or credit union account. Sandfire does not operate a dividend reinvestment plan (DRP).

Share registry information

Shareholders who require information about their shareholdings, dividend payments or related administrative matters should contact the Company’s share registry:

Automic Group Ltd
Level 5, 191 St Georges Terrace
Perth WA 6000
T: 1300 288 664 (within Australia)
+61 2 9698 5414 (outside Australia)
F: +61 2 8583 3040
E: [email protected]
W: www.automicgroup.com.au
Visit the Automic website to access a wide variety of holding information, change your personal details and download forms. You can:

check your current and previous holding balances
elect to receive financial reports electronically
• update your address details • update your bank details • confirm whether you have lodged your Tax File Number (TFN) • enter your email address • download a variety of instruction forms

You can access this information via a security login using your Security Holder Reference Number (SRN) or Holder Identification Number (HIN).

140 Annual Report 2022 Sandfire Resources

Glossary of Terms

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Term Definition
Ag Silver
Au Gold
BCM Bulk cubic metres
Co Cobalt
Cu Copper
CuEq Copper equivalent
EM Electromagnetic
EM conductors Electromagnetic conductors returned from EM surveys
Employees People directly employed by Sandfire wherever they are located in the world.
g Metric gram
GJ Gigajoules
g/t Metric gram per metric tonne
Integrated waste The waste rock dump and the tailing storage facility are one facility known as an integrated waste landform. The
landform (IWL) waste rock dump surrounds the tailings storage facility.
km Kilometres
koz Thousand ounces
kt Thousand metric tonnes
ktpa Thousand metric tonnes per annum
ML Megalitres
MLEM Moving-loop electromagnetic surveys
MMT Millions of metric tonnes
Moz Million ounces
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Annual Report 2022 Sandfire Resources 141

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Term Definition
Mt Million metric tonnes
Mtpa Million metric tonnes per annum
Ni Nickel
oz Ounce
Pb Lead
Permanent contractor Contractors with a fixed term contract.
Principal hazard Hazards that have a potentially fatal risk.
RC Reverse circulation drilling
Recordable injury The combination of fatalities, lost time injuries, restricted work injuries and medically treated injuries.
t Metric tonnes
Tailings Tailings are finely ground rock and mineral waste products of mineral processing operations.
Tailings storage
Purpose built retaining embankment to store tailings for the life of mine.
facility (TSF)
Total number of recordable injuries (for the 12 month period/total hours worked for the 12 month period) multiplied
TRIFR
by 1,000,000 hours.
VTEM Airborne versatile electromagnetic surveys
Waste Rock Waste rock is material that contains minerals in concentrations considered too low to be extracted at a profit.
Workforce All employees and contractors working on any Sandfire operation in the world.
Zn Zinc
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142 Annual Report 2022 Sandfire Resources

Cautionary Notes and Disclaimers

Forward-Looking Statements

Certain statements made within this Report contain or comprise certain forward-looking statements regarding Sandfire’s Mineral Resources and Ore Reserves, exploration and project development operations, production rates, life of mine, projected cash flow, capital expenditure, operating costs and other economic performance and financial condition as well as general market outlook.

Such forward-looking information is often, but not always, identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect” and “intend” and statements that an event or result “may”, “will”, “should”, “could”, or “might” occur or to be achieved and any other similar expressions. In providing the forward-looking information in this report, Sandfire has made numerous assumptions which management believes are reasonable as at the date they are made. Although Sandfire believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward-looking statements and no assurance can be given that such expectations will prove to have been correct. No representation, express or implied, is made as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in this Report.

Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, delays or changes in project development, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in metals prices and exchange rates and business and operational risk management.

Except for statutory liability which cannot be excluded, each of Sandfire, its officers, employees and advisors expressly disclaim any responsibility for the accuracy or completeness of the material contained in these forward-looking statements and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in forward-looking statements or any error or omission. Sandfire undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events other than required by the Corporations Act and ASX Listing Rules. Accordingly, you should not place undue reliance on any forward-looking statement.

Exploration and Resource Targets

Any discussion in relation to the potential quantity and grade of Exploration Targets is only conceptual in nature. While Sandfire is continuing exploration programs aimed at reporting additional JORC compliant resources for the Company’s projects, 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.

Annual Report 2022 Sandfire Resources 143

Corporate Information

Directors

John Richards Karl Simich Sally Langer Roric Smith Jennifer Morris OAM Robert Edwards Sally Martin

Independent Non-Executive Chair Managing Director and Chief Executive Officer Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director

Company Secretary

Matthew Fitzgerald

Chief Financial Officer and Company Secretary

Registered Office and Principal Place of Business

Level 2, 10 Kings Park Road West Perth WA 6005

T: +61 8 6430 3800
F: +61 8 6430 3849
E: [email protected]

W: www.sandfire.com.au

Share Registry

Automic Group Limited Level 5, 191 St Georges Terrace Perth WA 6000

Auditors

Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia

Home Exchange

Australian Securities Exchange Limited Level 40, Central Park 152-158 St George’s Terrace Perth WA 6000

ABN

55 105 154 185

T: 1300 288 664 (within Australia)
+61 2 9698 5414
F: +61 2 8583 3040
E: [email protected]

ASX Code

Sandfire Resources Limited shares are listed on the Australian Stock Exchange (ASX).

Ordinary fully paid shares: SFR

Sandfire produces a range of publications, which can be downloaded or viewed at our website.

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2022
Corporate
Governance
Statement Modern Slavery
Code of Statement 2021
Conduct
Creating value through opportunity through opportunityCreating value Creating value through opportunity
Annual Report
Sandfire | 2022 Corporate Governance Statement 1 Sandfire | Code of Conduct 1 Sandfire | Modern Slavery Statement 2021 1
Annual Report Corporate Governance Code of Conduct Modern Slavery Statement
Statement
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144 Annual Report 2022 Sandfire Resources

Creating Value through Opportunity

sandfire.com.au

Annual Report 2022 Sandfire Resources 145

Creating Value through Opportunity

sandfire.com.au

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SANDFIRE RESOURCES LIMITED — Annual Report 2022

65773_rns_2022-09-29_54aca9b4-c528-498b-9cb7-ca65e734ba1d.pdf

Contents

About this Report

Our reporting approach

Where we operate

Operating Mines

Study phase

Exploration

Development Phase

Sandfire Resources Limited is an international and diversified sustainable mining company which is listed on the Australian Securities Exchange (ASX:SFR).

Our Values

Honesty

Accountability

Desired Outcomes

Our People

Employment

Diversity

Gender Diversity

Benefits to our employees

2022 Year in Review

Our Achievements

Delivered against our Strategic Imperatives

Execute Delivery

Build a Sustainable Production Pipeline

Accelerate Discovery

Align and Empower Our People

Optimise Capital Strategy and Engagement

Performance highlights

Consistent Operations

Financial Strength

$922.7M

Creating Value

$563M

3,651 Total Workforce including direct Employees and Contractors

[29] Cu Copper

About Copper

Copper goes into products that we use everyday.

Electrical & Electronic

Consumer & General Products

Building & Construction

Machinery & Metallurgy

Transportation Equipment

Renewable Energy

Recycling

Green Technologies

Superior Conductivity

Solar Power

Copper Market Opportunity

Copper is entering a new era of historical growth as a future-facing metal, critical for the global energy transition.

Global refined copper usage

Chair’s Report

It is a great privilege to present my first report as Chair of Sandfire, and to reflect on what has been a transformational year for the Group.

Strategic Growth Plan and FY2022 Performance

Board Structure and Succession

Environment, Social and Governance (ESG)

Capital Management and Shareholder Returns

Market and Sandfire Outlook

Managing Director’s Report

Our performance

People, culture and sustainability

Outlook

Our Leadership

Board of Directors

John Richards

Karl Simich

Sally Langer

Independent Non-Executive Chair

B.Econ (Hons)

B.Com, FCA, F.Fin

Independent Non-Executive Director

B.Com, CA, AICD

Roric Smith

Jenn Morris

Robert Edwards

Sally Martin

Independent Non-Executive Director

Independent Non-Executive Director

Independent Non-Executive Director

SANDFIRE RESOURCES LIMITED Annual Report 2022