Sandfire Resources Ltd · ASX:SFR
Sandfire Resources — Investor Presentation (November 2022)
68 slides from Sandfire Resources's investor presentation, Nov 18, 2022
Slide 1: Entitlement Offer Presentation
Not for release to US wire services or distribution in the United States Entitlement Offer Presentation 18 November 2022
Slide 2: Important information and disclaimer
Important information and disclaimer The following notice and disclaimer applies to this investor presentation (Presentation) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any information contained in this Presentation. By accepti
Slide 3: Important information and disclaimer (cont.)
Important information and disclaimer (cont.) Investment risk There are a number of risks specific to the Entitlement Offer, SFR and of a general nature which may affect the future operating and financial performance of SFR and the value of an investment in SFR including and not limited to the Compan
Slide 4: Important information and disclaimer (cont.)
Important information and disclaimer (cont.) Disclaimer None of the Underwriter, nor any of its or SFR’s respective advisers or any of their respective advisers, affiliates, related bodies corporate, directors, officers, partners, employees and agents (Limited Parties) have authorised, permitted or
Slide 5: Important information and disclaimer (cont.)
Important information and disclaimer (cont.) Information contained in this document describing mineral deposits may not be comparable to similar information made public by companies subject to the reporting and disclosure requirements of Canadian or US securities laws. SFR ore reserve and mineral re
Slide 6: Contents
Contents 1 Executive Summary 2 Entitlement Offer Overview Appendix A Sandfire Group Overview & Guidance B MATSA Copper Operations C Motheo Copper Project D Key Risks E International Offer Restrictions
Slide 7: Executive Summary
Executive Summary
Slide 8: Overview
Overview Sandfire is raising A$200 million via an Entitlement Offer Entitlement Offer • 1 for 8.8 accelerated non-renounceable entitlement offer (“Entitlement Offer”) at A$4.30 per share to raise A$200M (US$134M(1)) (before costs) • The Entitlement Offer is fully underwritten, and comprises: ─ An ac
Slide 9: Experienced Board and Management team
Experienced Board and Management team Incoming CEO to complement existing experienced Board & Executive team Board of Directors Core Executive Team John Richards Sally Langer Brendan Harris(1) Jason Grace Matt Fitzgerald Richard Holmes Scott Browne Chair Non-Executive Director Incoming MD & CEO Acti
Slide 10: Our Strategy / Our Values
Our Strategy Execute Sustain and Grow Accelerate Align and Empower Optimise Capital Delivery Our Production Discovery Our People Strategy and Pipeline Engagement Our Values Honesty Respect Collaboration Accountability Performance 10
Slide 11: Execution of strategy
Execution of strategy Sandfire has successfully repositioned itself into a significant, diversified, globally relevant, multi asset copper miner Indicative Copper Equivalent Production Profile (ktpa) (1)(2) Delivering growth from long-life 180 assets in Tier-1 copper jurisdictions 150 Motheo MATSA d
Slide 12: High quality assets delivering sustainable copper production
High quality assets delivering sustainable copper production Feeding the global energy transition from a portfolio of high-quality operations in Tier-1 locations MATSA Copper Operations, Spain Black Butte Copper Project, USA (87%) FY2023G: 60-65kt Cu; 78-83kt Zn LOM Avg Production: 23ktpa Cu Cu Zn P
Slide 13: Robust long term copper outlook
Robust long term copper outlook Copper is one of the most widely used minerals in clean energy technologies Growing role for copper in clean energy(1) Cornerstone future-facing metals for the global energy Global refined copper usage, Mt transition, driving copper demand globally 60 40 20 Long term
Slide 14: FY2023 - Group operations guidance summary
FY2023 - Group operations guidance summary Recent upgrade to group production guidance maintained FY23 Guidance summary(1) Capex, corporate costs and D+A breakdown (US$) MATSA DeGrussa Motheo Group Capital expenditure MATSA & DeGrussa mine development: $80-95M Copper (kt) 60-65 19-21 ~4-5 83-91 MATS
Slide 15: MATSA
MATSA Indicative FY2023 production and unit cost summary 23.6 MATSA Indicative Production Profile Unit Cost Summary (US$, unaudited) 23.4 25,000 5.0 FY23 production guidance: 4.0 C1 cash cost buildup (US$/lb payable Cu) 20,000 60-65kt Cu~95% 3.0 0.84 0.72 0.29 Mining and 78-83kt Zn~84% 0.72 0.93 2.1
Slide 16: Strong growth pipeline
Strong growth pipeline Financial strength supports funding Sandfire’s strong near term growth pipeline Overall FY23G Progress(1) investment investment Motheo – Development and Expansion of the Motheo Copper Mine Construction activities well advanced, with first production scheduled from the June Qua
Slide 17: Managing external factors
Managing external factors Proactively managing external macroeconomic and market factors Energy costs Central bank tightening Broader market factors • Russia-Ukraine, Nord Stream gas pipeline disruptions and • Global central bank monetary policy tightening to combat • Central bank inflation response
Slide 18: Entitlement Offer Overview
Entitlement Offer Overview
Slide 19: Entitlement Offer overview
Entitlement Offer overview ● A$200M (US$134M(1)) fully underwritten 1 for 8.8 accelerated non-renounceable entitlement offer (“Entitlement Offer”) ─ Eligible shareholders will be invited to subscribe for 1 new fully paid ordinary Sandfire share (“New Shares”) for every 8.8 existing fully paid Equity
Slide 20: Sources and uses of funds
Sources and uses of funds Entitlement Offer proceeds primarily used for: • Strengthening the balance sheet, providing working capital and enhanced Sources of Funds(3) A$M US$M financial flexibility to support deleveraging through the Company’s growth phase(1) Entitlement Offer 200 134 • Ensuring San
Slide 21: Strong balance sheet flexibility post raising
Strong balance sheet flexibility post raising Successfully deleveraging the balance sheet from operational cash flows Significant deleveraging already complete, strong position Sandfire has been successfully deleveraging the balance sheet since post Entitlement Offer(1)(2)(3)(4)(5) the MATSA acquisi
Slide 22: Financial position post raising
Financial position post raising The Entitlement Offer reduces gearing and enhances balance sheet flexibility Entitlement Offer strengthens the balance sheet and provides enhanced Sandfire capitalisation pre and post Entitlement Offer(1) financial flexibility to support growth objectives(1) Pre-Entit
Slide 23: Entitlement Offer indicative timetable
Entitlement Offer indicative timetable Event Date(1) Announcement of Entitlement Offer, cleansing statement 18 November 2022 Institutional Entitlement Offer Opens 18 November 2022 Announcement of results of Institutional Entitlement Offer 21 November 2022 Trading halt lifted and shares recommence tr
Slide 24: Significant, globally relevant copper producer
Significant, globally relevant copper producer Sandfire is emerging as a meaningful midcap copper player, with a robust growth strategy expected to strengthen its position amongst domestic peers ASX copper producer universe A$2.2bn market capitalisation (pro forma post Entitlement FY22 copper produc
Slide 25: Investment highlights
Investment highlights Positioning into a diversified, Increased financial flexibility Refreshed and experienced Board sustainable, global copper and capacity to fund growth & management, including highly producer through market volatility regarded incoming CEO Brendan Harris commencing in April 2023
Slide 26: Appendix A: Sandfire Group Overview & Guidance
Appendix A Sandfire Group Overview & Guidance
Slide 27: High quality assets delivering sustainable copper production
High quality assets delivering sustainable copper production Feeding the global energy transition from high-quality operations in Tier-1 locations MATSA Copper Operations, Spain Black Butte Copper Project, USA (87%) FY2023G: 60-65kt Cu; 78-83kt Zn LOM Avg Production: 23ktpa Cu Cu Zn Pb Ag Cu Ag Prod
Slide 28: Rising production
Rising production Copper and zinc growth Combined MATSA (4.7Mtpa) and Copper Dominant 120,000 Revenue Stream(2) Motheo (5.2Mtpa DFS) operating scale(1) producing: 100,000 ~110-120ktpa contained copper 80,000 ~80-100ktpa contained zinc 60,000 Indicative Value of Payable Metal – FY2023-2025 40,000 Cop
Slide 29: MATSA FY2023 Production Guidance
MATSA FY2023 Production Guidance 23.6 23.4 t % In US$ (Unaudited) 5,000,000 8.0 Production: Capital expenditure: 4,500,000 7.0 60-65kt Cu~95% $80-90M Mine 4,000,000 6.0 development 3,500,000 78-83kt Zn~84% 5.0 $40-50M Sustaining 3,000,000 ~6-10kt Pb~90% & Strategic 4.0 2,500,000 4.0 3.4 ~2.0-3.0Moz
Slide 30: MATSA Indicative FY2023 production and unit cost summary
MATSA Indicative FY2023 production and unit cost summary 23.6 MATSA Indicative Production Profile Unit Cost Summary (US$, unaudited) 23.4 25,000 5 4 C1 cash cost buildup (US$/lb payable Cu) 20,000 0.84 Mining and 3 0.72 processing unit 0.93 0.29 0.72 costs driven by 2.19 0.32 2 0.21 0.26 marginally
Slide 31: Motheo Copper Mine
Motheo Copper Mine 75% complete(1) – On track for first production in Q4FY23 23.6 In US$ 70 400 Development capital estimated at 60 350 $397.4M (displayed in graph) 300 50 • Motheo (3.2Mtpa and T3) $325.5M 250 Millions 40 Millions • Motheo (5.2Mtpa expansion and A4) 200 $71.9M 30 150 • At 31 October
Slide 32: DeGrussa FY2023 Production Guidance
DeGrussa FY2023 Production Guidance (7 months to January 2023) t % In US$ (Unaudited) 1,000,000 8.0 Production: Capital expenditure: 900,000 7.0 6.8 800,000 19-21kt Cu~95% $2.1M Mine 6.0 development 700,000 12-14koz Au~91% 5.0 600,000 ~0.1Moz Ag~84% 500,000 3.9 4.0 Containedpayable 400,000 3.1 2.8 3
Slide 33: Strong growth pipeline
Strong growth pipeline High quality development opportunities and a global exploration portfolio in Tier-1 jurisdictions Development into production Mine life extension potential 1 Motheo – Development and Expansion 2 Motheo – Regional Exploration, including A1 Dome Construction activities well adva
Slide 34: Debt summary and repayment profile
Debt summary and repayment profile Robust repayment profile which is de-risked by the existing hedges • US$532M outstanding, reducing to US$452M outstanding Current repayment profile (US$M) MATSA Facility following US$80M repayment scheduled for January 2023 (Tenor to FY27) 120 MATSA • Annual base c
Slide 35: Sustainability
Sustainability Our ESG Pillars(1) Our ESG Pillars describe the ESG areas that are ESG Pillars and select 2022 highlights key drivers for our sustainability outcomes. ESG Pillars are structured to recognise the different $700k 3.8 TRIFR spent on community decreased from social, community and operatio
Slide 36: Appendix B: MATSA Copper Operations
Appendix B MATSA Copper Operations MATSA Operations Exploration • Aguas Teñidas Mine • Iberian Pyrite Belt tenure • Magdalena Mine • Sotiel Mine • 4.7Mtpa Processing Plant
Slide 37: MATSA: Establishing a base for multi-decade operations
MATSA Establishing a base for multi-decade operations Optimisation and implementation • Mineral Resource to Ore Reserve • Regional exploration campaign to of our 5-year Plan conversion to extend the mine life of underpin future expansions of throughput • Safety improvement – driving culture and exis
Slide 38: MATSA: Our cornerstone asset
MATSA Our cornerstone asset Stage Phase 1 (Day 1 to Year 1) Phase 2 (Years 2 to 5) Phase 3 (Years 5+) Objectives Operational integration, strategy alignment and COMPLETE Maximise hub existing processing Iberian Pyrite Belt opportunities reporting Evaluate expansion beyond 5Mtpa Optimise &
Slide 39: MATSA Energy Costs
MATSA Energy Costs € /MWh Spanish Daily Power Prices(1) Historic spike in European Energy Response: 600 Daily Price costs: • Actual Electricity Price for 3 • 20MW Sotiel Solar farm in progress, months to SEP22 estimated completion September 2023 500 was €270/MWh. However prices • Sandfire is engagin
Slide 40: MATSA Infill and Mine Exploration
MATSA Infill and Mine Exploration R&R Growth and Extensional Targets Magdalena FY2023 drilling program targeting R&R growth and near-mine extensions Concepcion • 67,000m of infill drilling across the three mines to lift Resources to higher-confidence categories and drive conversion to Reserves (~18,
Slide 41: MATSA Regional Exploration
MATSA Regional Exploration Exploration Potential Testing regional exploration targets and enhancing our understanding of the basin • Four drill rigs active on testing exploration targets in Spain, one in Portugal • Large airborne gravity gradiometry survey to aid understanding of the basin • Histori
Slide 42: Appendix C: Motheo Copper Project
Appendix C Motheo Copper Project Motheo Copper Mine Exploration • T3 Deposit Development • Motheo Expansion Project • A4 Deposit Expansion Project • Kalahari Copper Belt tenure
Slide 43: Motheo Copper Project
Motheo Copper Project Building a world-class copper mine Development of the 3.2Mtpa Positive 5.2Mtpa Motheo Expansion Sandfire is funding the Motheo Copper Mine is proceeding Case Definitive Feasibility Study development of the Motheo Copper on time with first production scheduled (DFS): Mine throug
Slide 44: 5.2Mtpa Motheo Expansion
5.2Mtpa Motheo Expansion Expansion Case DFS Positive DFS confirms strong DFS shows outstanding project Total development capital for the business case for development of economics from an expanded 5.2Mtpa Motheo Copper Project expansion the A4 Deposit as part of an processing operation, mining both
Slide 45: 5.2Mtpa Motheo Expansion case
5.2Mtpa Motheo Expansion case (DFS) Copper production ramping up to peak ~55ktpa t % 60,000 1.20 50,000 1.00 40,000 0.80 Tonnes 30,000 0.60 20,000 0.40 10,000 0.20 0 0.00 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Financial Year T3 Copper Contribution A4 Copper Contribution Mined Co
Slide 46: 5.2Mtpa Motheo Expansion Case DFS Key Outcomes
5.2Mtpa Motheo Expansion Expansion Case DFS Key Outcomes Key Drivers Unit 5.2Mtpa DFS Key Drivers Unit 5.2Mtpa DFS Physicals Economic Life of Mine (processing) Years 10.0 Cu price (LOM average)(1) US$/lb 3.57 Waste : Ore (inc. pre-strip) 6.2 Ag price (LOM average) US$/oz 20.00 Cu grade % 0.94 LOM Re
Slide 47: Motheo 5.2Mtpa Indicative Development Timeline
Motheo Copper Mine 5.2Mtpa Indicative Development Timeline Mining Licence Approval & Land Titles Process Plant Engineering & Pre-Construction Works Accommodation Facility 132KV Powerline & Sub-stations Design & Construction 3.2Mtpa Process Plant Construction Mining Contractor Mobilisation & Establis
Slide 48: Motheo Copper Mine
Motheo Copper Mine 75% complete(1) – On track for first production in Q4FY23 23.6 In US$ 70 400 Development capital estimated at $397.4M (displayed in graph) 60 350 300 • Motheo (3.2Mtpa and T3) $325.5M 50 250 Millions • Motheo (5.2Mtpa expansion and A4) $71.9M 40 Millions 200 30 • At 31 October 202
Slide 49: Motheo Exploration
Motheo Exploration Dominant position in an emerging belt Land holding more than 26,000km2 of the Kalahari Copper Belt • Under-explored and globally significant copper terrane • Only 643 holes drilled in 15 years of regional exploration • Regional geophysical data collection to enable a holistic basi
Slide 50: Motheo Exploration: A1 Satellite Prospect
Motheo Exploration A1 Satellite Prospect A1 Dome, an emerging mineral system 19km from the Motheo Copper Mine • Mineralisation identified over 1.8km and remains open to the NE and up/down dip • 35 holes completed on ~200m spaced grid, assays received for 25 holes1 • Mineralisation occurs as semi-mas
Slide 51: Motheo: Supporting our communities
Motheo Supporting our communities Our Motheo community framework pillars Community Health Education Women Empowerment Youth Development Improved outcomes for Encourage attendance in Support equality, Promote training and the physical and mental schools, improve learning inclusiveness and employment
Slide 52: Appendix D: Key Risks
Appendix D Key Risks
Slide 53: Key risks
Key risks 1. ENTITLEMENT OFFER RISKS Underwriting The Company has entered into an underwriting Agreement with Macquarie Capital Limited (Underwriter) (Underwriting Agreement). Pursuant to the Underwriting Agreement, the Company appointed the Underwriter as sole bookrunner and lead manager to the Ent
Slide 54: Key risks (cont.)
Key risks (cont.) Dividends The Company does not have an official dividend policy however it has a history of paying dividends in respect of financial periods prior to completion of the acquisition of MATSA. The payment of dividends (if any) by the Company is determined by the Company Board from tim
Slide 55: Key risks (cont.)
Key risks (cont.) The Company maintains anti-bribery policies, anti-corruption training programs, codes of conduct, procedures and other safeguards designed to prevent the occurrence of fraud, bribery and corruption. Botswana and Spain are lower on the Transparency International Corruption Perceptio
Slide 56: Key risks (cont.)
Key risks (cont.) Country risk The Company’s business necessarily involves risks associated with operating in Spain, Botswana and other international markets, including any ongoing impacts of COVID-19 (discussed below). Investors should note that developing countries could be subject to rapid change
Slide 57: Key risks (cont.)
Key risks (cont.) Further, in the ordinary course of operations and development, the Company will be required to issue financial assurances, particularly insurances and bond/bank guarantee instruments, to secure statutory and environmental performance undertakings and commercial arrangements. The Co
Slide 58: Key risks (cont.)
Key risks (cont.) Regulatory requirements including exploration and mining permits and licences The Company’s operations are subject to various Federal, State and local laws in the countries in which it operates including Botswana, the United States of America, Australia and Spain. These laws includ
Slide 59: Key risks (cont.)
Key risks (cont.) COVID-19 The outbreak of the coronavirus disease (COVID-19) has had a material effect on global economic markets. This has and may continue to have impacts on capital markets, supply chains, international travel and trade. The Company has a strong record of achieving guidance and c
Slide 60: Key risks (cont.)
Key risks (cont.) Wars, terrorism and natural disasters Events such as acts of terrorism, particularly in Africa and Southern Europe, civil disturbance or protest, war, political intervention and natural activities such as earthquakes, floods, fires, pandemics, outbreaks of disease, adverse weather
Slide 61: Key risks (cont.)
Key risks (cont.) Health, safety and hazardous materials The potentially hazardous nature of exploration and mining means that health and safety regulations impact the activities of the Company, particularly in respect of acquired projects failing to meet appropriate standards. Any injuries or accid
Slide 62: Key risks (cont.)
Key risks (cont.) Global economic conditions The Company’s funding position, financial performance and ability to execute its strategy is impacted by a variety of general global economic, political, social and business conditions. In addition to commodity prices and currency fluctuations, factors th
Slide 63: International Offer Restrictions
MATSA Mining Complex Scale and Life Significant Producing Asset Adds >10Yrs Life Appendix F Pro Forma Indicative Copper Equivalent Production (ktpa) (1,2,3,4,6) Cornerstone Asset with minimum mine life of International Offer Restrictions ~12 years supported by Mineral Resources MATSA acquisition ach
Slide 64: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any
Slide 65: International Offer Restrictions (cont.)
International Offer Restrictions (cont.) Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commission in H
Slide 66: International Offer Restrictions (cont.)
International Offer Restrictions (cont.) New Zealand (cont.) Other than in the Entitlement Offer, the New Shares may only be offered or sold in New Zealand (or allotted with a view to being offered for sale in New Zealand) to a person who: • is an investment business within the meaning of clause 37
Slide 67: International Offer Restrictions (cont.)
International Offer Restrictions (cont.) United Arab Emirates This document does not constitute a public offer of securities in the United Arab Emirates and the New Shares may not be offered or sold, directly or indirectly, to the public in the UAE. Neither this document nor the New Shares have been
Slide 68: Contact Details
MATSA Mining Complex Scale and Life Significant Producing Asset Adds >10Yrs Life Pro Forma Indicative Copper Equivalent Production (ktpa) (1,2,3,4,6) Cornerstone Asset with minimum mine life of Contact Details ~12 years supported by Mineral Resources MATSA acquisition achieves Sandfire’s Sustained m
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