How Did Sandfire Overcome Floods and Power Outages to Boost Copper Output 12%?
Sandfire Resources reported a 12% rise in copper equivalent production for FY25, narrowly missing guidance due to severe weather and power outages, while slashing net debt by $273 million. The company projects further growth in FY26 despite expected cost pressures.
- 12% increase in Group Copper Equivalent production to 152.4kt in FY25
- Net debt reduced by $273 million to $123 million
- Operational resilience despite record rainfall and power outages
- Underlying operating costs controlled at $78/t (MATSA) and $40/t (Motheo)
- FY26 production guidance set between 149kt and 165kt CuEq with anticipated cost increases
Operational Performance and Challenges
Sandfire Resources has delivered a robust operational performance in FY25, achieving a 12% increase in Group Copper Equivalent (CuEq) production to 152.4 kilotonnes. This outcome was just 1% shy of the company’s annual guidance, a shortfall attributed primarily to unprecedented weather events, including record rainfall and a significant power outage that disrupted operations.
The company’s two main assets, the MATSA Copper Operations in Spain and the Motheo Copper Operations in Botswana, demonstrated resilience in the face of these challenges. MATSA processed approximately 4.5 million tonnes of ore, producing 94.1kt CuEq, while Motheo achieved a record 58.3kt CuEq production, boosted by a strong recovery from flooding in its T3 open-pit mine.
Cost Discipline and Financial Health
Cost control remained a priority, with underlying operating unit costs maintained at $78 per tonne of ore processed at MATSA and $40 per tonne at Motheo. These figures compare favourably with guidance and reflect the company’s disciplined approach despite inflationary pressures and operational disruptions.
Financially, Sandfire Resources made significant strides in deleveraging, reducing net debt by $273 million over the year to $123 million. This reduction was supported by strong cash flows and the strategic sale of the Old Highway Gold Project, which contributed $21 million to rehabilitation funding.
Exploration and Growth Prospects
Exploration activities intensified, with increased investment in regional and resource extension drilling programs, particularly around the Motheo and MATSA hubs. Notably, drilling at the Black Butte Copper Project in Montana, USA, extended high-grade mineralisation in the Lower Copper Zone, setting the stage for a new pre-feasibility study expected in Q2 FY26.
Looking ahead, Sandfire forecasts Group CuEq production for FY26 to range between 149kt and 165kt, with the midpoint representing a 2% increase over FY25. This growth is anticipated as the A4 open-pit at Motheo ramps up, although the company expects a circa 10% increase in Motheo’s unit operating costs due to higher haulage and handling expenses and the impact of commercial production on previously capitalised waste removal costs.
Safety and Sustainability Focus
Safety remains a critical focus, with a slight increase in the Total Recordable Injury Frequency (TRIF) to 1.7, underscoring the company’s commitment to health and wellbeing. Sustainability initiatives continue to be embedded in operations, including progress toward regulatory approval for a new tailings storage facility at MATSA, which is crucial for extending mine life beyond 2040.
Bottom Line?
Sandfire’s FY25 results underscore operational resilience and financial discipline, but currency and cost pressures in FY26 warrant close investor attention.
Questions in the middle?
- How will sustained Euro strength against the US dollar impact MATSA’s cost structure in FY26?
- What are the key milestones and risks associated with the Black Butte pre-feasibility study?
- How effectively can Motheo manage the expected 10% rise in unit operating costs amid production ramp-up?
