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Reporting Season: Sandfire Resources Ltd (SFR.ASX)

Aditya Kapdi

Reporting Season: Sandfire Resources Ltd (SFR.ASX)

Maqro Research Team Coverage

Overall, SFR’s results were broadly in-line with expectations, with a downgrade to FY21’s production already known beforehand from its Q4 report released a month ago. The key highlight is the higher than expected dividend (34% higher than expected).



Key Metrics:

Copper ProductionCopper production was 72,238t in FY20, up 4.1% from FY19.
Gold ProductionSFR produced 42,263 ounces of gold in FY20, which was a decline of 4.93% from FY19.
Cost per lbThe C1 cost per pound was 72 cents, a decline of 13.25%.



  • Record DeGrussa Operations FY2020 production and cost performance to be continued into FY21, however production is expected to be 67-70,000t Cu and 36-40,000oz in FY21, slightly lower than current productions.
  • Increase in cash holding ($291.1 million) and debt free balance sheet provides flexibility in project development
  • Expect to complete and announce the results of the Feasibility Studies on the T3 Copper-Silver development project in Botswana and the now fully permitted Black Butte Copper Project in Montana, USA
  • Expect to post a maiden resource for the A4 Dome discovery in Botswana with scoping underway to include it along with T3 in an expanded Motheo production hub
  • Active exploration continues across the Kalahari Copper Belt in Botswana and targeting the next VMS discovery across the emerging Bryah Basin VMS district in  Western Australia.

Sandfire Resources Ltd Conference Call Highlights

  1. Sandfire expects to accelerate the exploration projects in Botswana and Montana (USA). They have indicated that the collective budget for the projects can be somewhere in the range of A$45-50million.
  2. They plan to optimise the capital structure to drive future dividend payments in conjunction with having a sound funding mix and prioritise project investment decisions.
  3. Future funding requirement for SFR is highly dependent on the requirements at the time but they have indicated their balance sheet is in good shape. In particular, they anticipate that cash generation from DeGrussa and Monty projects can be around $600million, a further $300million from available cash and $100million from liquid assets can be possible sources of funds. The key focus for funding is that whilst debt is available to the company the most probable source of funding will be a mix of debt and equity
  4. SFR is reluctant in having a strategic partner as they do not want to dilute themselves. SFR does not require local partnerships in Botswana or USA due to their strong ties to the local jurisdictions but if a sensible partnership arises in the future, they are open to discussions.



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