Sandfire Resources (ASX:SFR) used its quarterly call to outline first-half operational performance, an unchanged full-year guidance outlook, and several strategic updates spanning exploration and development options across its portfolio. Management also addressed operational issues at its Motheo copper operation and provided additional color on the company’s review of the fully permitted Black Butte project in the U.S.
Safety and first-half production tracking to guidance
Management opened with safety results, reporting a group total recordable injury frequency (TRIF) of 1.3 at the end of the period, down from 1.4 at the end of September. While the company described the outcome as pleasing, executives said it would continue focusing on learning from injuries and high-potential incidents to strengthen workplace controls.
The company reiterated that other key annual guidance metrics, including underlying operating costs and capital expenditure, remain unchanged. Executives also highlighted that byproduct price strength is now delivering “significant benefit” to C1 costs.
Motheo: maintenance brought forward; second-half uplift expected
A central focus of the call was the outlook for Motheo, where management said second-half performance is expected to improve following disruptions in the December quarter.
Sandfire said it was forced to bring forward planned maintenance after a premature failure of an OEM specification grate in the SAG mill. Management expects this will translate into higher throughput rates in the second half, and said the early maintenance creates “a really good run throughout the remainder” of the fiscal year.
In the Q&A, management attributed the SAG mill issue to a casting problem tied to a specific foundry used by the OEM. The company said the OEM informed it that other customers had similar problems and that the OEM has stopped using that foundry. Sandfire said the new grates currently installed were cast by the OEM’s original foundry and have had “no issues.” Executives also emphasized the issue was not related to ore hardness or changing ore characteristics.
Beyond the mill maintenance, management discussed mobile fleet availability as another factor weighing on Motheo’s recent results, particularly during a transition between stage two and stage three at T3 alongside progressing down the orebody at A4. The company cited planned mid-life rebuilds on key equipment, including trucks and drills, and noted that three trucks were out for most of the quarter for planned engine replacements. Management said it is already seeing “significant improvements” in truck fleet availability in January and expressed confidence the operation will “come through this.”
Sandfire also pointed to steps taken to de-risk the ramp-up into higher-grade ore at T3 and A4, including early completion of an A4 dewatering program following an extreme weather event and the decision to fast-track relocation of mobile equipment to A4 to ramp up deferred waste stripping. Management noted that ore mined at A4 in the second quarter was stockpiled adjacent to the pit, with delivery of higher-grade ore to the processing facility’s ROM stockpile now ramping up.
Collectively, management said these drivers underpin its confidence in Motheo’s forecast 61,000 tonnes of copper-equivalent production in FY26. The company also flagged a shipping timing item, noting that only three concentrate shipments sailed from Walvis Bay in the second quarter, with the planned fourth shipment departing in early January.
MATSA: stronger ore feed and recoveries; incremental uplift expected
At MATSA in Spain, Sandfire said the first half was “far less eventful,” delivering copper-equivalent production of 46.4 thousand tonnes, representing 48% of the midpoint of annual guidance. Management attributed the first-half result to an increase in higher-grade polymetallic ore feed in the second quarter alongside improved flotation recoveries.
Management expects an incremental uplift in metal production at MATSA in the second half, supported by increased mining of “high value polymetallic ore” within the western extension of Aguas Teñidas.
On costs, Sandfire said underlying operating costs remained aligned with annual guidance at both operations, citing $87 per tonne of ore processed at MATSA and $43 per tonne at Motheo. Management said Motheo’s underlying operating cost is expected to rise slightly in the second half as the proportion of higher-grade A4 ore feed increases, due to additional haulage and handling requirements.
Exploration, Kalkaroo pathway, and Black Butte review
Sandfire said it invested $5 million in regional exploration and another $5 million in near-mine and extension exploration programs across the Iberian Pyrite Belt and Kalahari Copper Belt. The company said regional exploration investment in the Motheo hub is expected to accelerate following the recommencement of drilling in December 2025.
During the quarter, Sandfire signed a binding term sheet with Havilah Resources that it said provides a pathway to earn an 80% interest in the Kalkaroo Copper Gold project and establish a strategic alliance to explore South Australia’s Curnamona Province. Management said it had made “strong progress” advancing definitive agreements ahead of a Havilah shareholder vote scheduled for Feb. 6. Executives discussed a “limited number” of conditions precedent, including the shareholder vote, transferability of certain titles, and final transaction documentation.
In response to analyst questions, management described Kalkaroo as a high-priority opportunity, highlighting its reserve scale and grade metrics, strip ratio comparisons, and the staged payment structure as a way to manage risk while advancing the project through pre-feasibility work.
Sandfire also provided an update on Black Butte, calling it fully permitted and referencing the recently announced pre-feasibility study (PFS) for the Johnny Lee deposit and an updated mineral resource estimate for Lowry. Management said the study supported the economic case for a high-grade underground mine and cited a post-tax NPV of about $100 million at a copper price “significantly lower than spot,” noting the PFS only considered Johnny Lee with Lowry as a satellite deposit accessed from the same decline.
However, Sandfire said it has commenced a review of Black Butte’s fit within the group’s global portfolio, focusing on the project’s materiality given Sandfire’s growth since its initial investment in FY15. Management said it expects to provide “much more clarity” by the time it reports full-year financial results, around August, while noting sensitivities as an 87% shareholder in a publicly listed company.
Financial position, hedging approach, and shareholder returns
Sandfire reported unaudited group sales revenue of $344 million and underlying EBITDA of $167 million for the December quarter, equating to a margin of just under 50%. The company said it reached a targeted balance sheet position with net cash of $13 million at Dec. 31, positioning it to fund commitments related to its planned move into South Australia, including an AUD 31.5 million cash payment subject to conditions and an initial AUD 15 million payment tied to the proposed exploration alliance.
On capital management, executives said their approach to returning excess cash to shareholders is unchanged, reiterating that distributions would be considered only when cash is on the books and not in a way that would move the balance sheet back into net debt. Management also urged investors to consider upcoming transaction-related payments when assessing the Dec. 31 net cash figure.
On pricing and hedging, the company said it continues a quotational pricing (QP) hedging program after concentrate is loaded to protect against working capital volatility through settlement, but indicated it is effectively unhedged on forward sales, noting the previous MATSA forward-sales hedging program (required under a prior debt facility) was completed during the quarter.
About Sandfire Resources (ASX:SFR)
Sandfire Resources Limited, a mining company, engages in the exploration, evaluation, and development of mineral tenements and projects. It primarily explores for copper, gold, silver, lead, and zinc deposits. Sandfire Resources Limited was incorporated in 2003 and is based in West Perth, Australia.
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