Sandfire Resources NL (ASX:SFR) has lifted group production guidance for the 2023 fiscal year to reflect the solid operating results of the September quarter, as well as the addition of copper and gold production expected from the DeGrussa processing extension.
It is now forecasting 83-91,000 tonnes of copper, 78-83,000 tonnes of zinc, 6-10,000 tonnes of lead, 12-14,000 ounces of gold and 2.2-3.2 million ounces of silver. This compares to 81-89,000 tonnes of copper, 78-83,000 tonnes of zinc, 6-10,000 tonnes of lead, 10-12,000 ounces of gold and 2.2-3.2 million ounces of silver announced previously.
Further details will be provided in the September 2022 quarterly report due for release late next month.
Processing extension
Underground mining operations are near completion at the DeGrussa Copper Operations in Western Australia, with the final stopes to be extracted and hauled to surface by early next month.
Processing of run-of-mine stockpiles will continue until around the end of October, after which the 1.6-million-tonne-per-annum (Mtpa) 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.
The processing plant is expected to continue operating until January 2023, treating approximately 310,000 tonnes of ore at an average grade of around 1% copper for recovery of about 70% for copper and 40% for gold.
Planned scale trials on oxide copper stockpiles have also commenced and are scheduled to be completed next month, and may support further extension of processing at DeGrussa beyond January 2023.
Securing financing
Sandfire has executed the final documentation for the US$140-million project finance facility with Nedbank and Société Générale to underpin the construction of its new 5.2Mtpa Motheo Copper Mine in Botswana.
The facility has a seven-year tenure with scheduled repayments commencing in December 2023.
Construction of the Motheo Copper Mine is being funded through a combination of cash and the proceeds of the project finance facility, underpinning the current development ahead of expansion of the operations to 5.2Mtpa, which includes output from the A4 Deposit.
The total development capital for the Motheo expansion is estimated at US$397.4 million, incorporating development costs for the A4 Open Pit and 5.2Mtpa plant expansion of US$47.9 million.
Paring debt
Sandfire has completed the first scheduled US$118 million repayment against the US$650 million financing facility for the MATSA Copper Operations in southwest Spain.
The completion of the first scheduled repayment just eight months into the company’s ownership of MATSA is a significant milestone, which has reduced the outstanding balance on the facility to US$532 million.
The next repayment of US$80 million is due in January 2023, with subsequent repayments of US$170 million in 2024, US$119 million in 2025, US$96 million in 2026, and US$67 million in 2027.
Sandfire will also pay down US$98 million (A$150 million) of its A$200 million ANZ corporate debt facility today. A US$33 million (A$50 million) corporate facility, secured against the continued DeGrussa Operations, remains drawn and is repayable on December 31, 2022.
With these payments, Sandfire’s total group debt has been reduced by around a third to US$565 million.
Significant achievements
Sandfire managing director and CEO Karl Simich said: “Completing the Motheo Project Finance Facility and making these significant debt repayments on schedule, just eight months after completing the transformational MATSA acquisition, are significant achievements.
“I would like to acknowledge the work of our project and commercial teams for completing the Motheo Project finance facility on schedule, and to acknowledge the tremendous support of the high-quality international banks Nedbank and Société Générale that have underpinned it.
“All aspects of the Motheo Project are progressing extremely well and remains on track to achieve first production in the June quarter of next year. The proceeds of the debt facility will underpin the delivery of Sandfire’s 5.2Mtpa long-term production hub in the Kalahari Copper Belt.
“The completion of the first MATSA repayment reflects our commitment to disciplined capital management and shows we are on track to rapidly de-leverage our balance sheet. MATSA is continuing to deliver, and I have no doubt that the strong cash-flows generated by this world-class asset will continue to underpin Sandfire’s business for many years to come.
“Finally, it is pleasing to announce formal approval for the DeGrussa Processing Extension Project. This will see processing operations continue in Western Australia until early next year, based on processing low-grade stockpiles remaining on site with already sunk mining costs. This is expected to generate approximately 2,000 tonnes of copper and 2,000 ounces of gold and generate valuable additional revenue.
“DeGrussa has been a wonderful operation which has consistently exceeded expectations, from the first drill-hole right until the end – with the 1.6Mtpa concentrator set to continue running for at least three months more than we originally anticipated. This is a fantastic result and a credit to the hard work and commitment of our entire team.”