Operational Hurdles at Motheo Challenge Sandfire’s Q2 Production Momentum
Sandfire Resources reported solid H1 FY26 production with a shift toward stronger H2 volumes, improved safety metrics, and a strategic move to acquire an 80% stake in the Kalkaroo Copper-Gold Project.
- Group copper equivalent production at 72.1kt in H1 FY26, maintaining full-year guidance
- Total Recordable Injury Frequency (TRIF) improved to 1.3, reflecting ongoing safety focus
- Operational challenges at Motheo impacted Q2 production but maintenance completed
- Binding term sheet signed to earn 80% interest in Kalkaroo Copper-Gold Project
- Unaudited Q2 sales revenue of $344M and underlying EBITDA of $187M, net cash position of $13M
Operational Performance and Safety
Sandfire Resources delivered a steady operational performance in the December 2025 quarter, reporting Group copper equivalent (CuEq) production of 72.1kt for the first half of FY26. This represents 46% of the mid-point of the company’s annual guidance, with production volumes now expected to be more heavily weighted towards the second half of the year. The company maintained its full-year guidance for production, costs, and capital expenditure despite some operational headwinds.
Safety remains a priority, with the Total Recordable Injury Frequency (TRIF) improving slightly to 1.3 at the end of December 2025, down from 1.4 in the previous quarter. However, Sandfire continues to address six high potential incidents recorded in Q2 FY26, underscoring the ongoing need for vigilance and risk management in its operations.
Site-Specific Highlights, MATSA and Motheo
The MATSA mining complex in Spain contributed 46.4kt CuEq in H1 FY26, achieving 48% of its annual guidance midpoint. An increase in higher-grade polymetallic ore feed and improved flotation recoveries supported this solid start. Operating costs at MATSA remained well aligned with guidance at $87 per tonne of ore processed, aided by favourable currency movements and strong by-product pricing.
Conversely, the Motheo operations in Botswana faced challenges in Q2 FY26, including a premature equipment failure in the SAG mill and reduced mobile fleet availability. These factors contributed to a 12% reduction in CuEq production to 25.7kt in H1 FY26, representing 42% of the annual guidance midpoint. Maintenance was rescheduled and completed, and the company expects production to recover in H2 FY26 as higher-grade ore from the A4 mine is accessed. Motheo’s operating costs remain within guidance, though incremental increases are anticipated due to additional haulage and handling requirements associated with higher-grade ore.
Exploration and Strategic Growth
Sandfire invested $10 million in regional and near-mine exploration during Q2 FY26, focusing on the Iberian Pyrite Belt in Spain and Portugal, and the Kalahari Copper Belt in Botswana. Exploration drilling activity has ramped up, particularly at Motheo, where programs are targeting extensions of known mineralisation to support future growth.
Strategically, Sandfire signed a binding term sheet with Havilah Resources to earn an 80% interest in the Kalkaroo Copper-Gold Project in South Australia. This deal includes a significant upfront consideration and establishes an exploration alliance across the highly prospective Curnamona Province. The transaction is subject to Havilah shareholder approval, scheduled for early February 2026, and positions Sandfire to replicate its successful entry into the Kalahari Copper Belt.
Financial Position and Outlook
Financially, Sandfire reported unaudited sales revenue of $344 million and underlying EBITDA of $187 million for Q2 FY26. The group ended the quarter with a net cash position of $13 million, a significant improvement from a net debt position of $62 million three months earlier. Capital expenditure is progressing as planned, with $65 million invested at MATSA and $47 million at Motheo during H1 FY26.
The company is also reviewing the Black Butte Copper Project in Montana following a positive pre-feasibility study confirming its economic viability. This review will assess the project’s fit within Sandfire’s global portfolio amid the company’s growth trajectory.
Bottom Line?
Sandfire’s strategic moves and operational resilience set the stage for a pivotal H2 FY26 as it navigates project developments and exploration milestones.
Questions in the middle?
- How will the completion of the Kalkaroo transaction reshape Sandfire’s growth profile?
- What are the implications of the operational challenges at Motheo for near-term production and costs?
- What outcomes will the Black Butte project portfolio review yield for Sandfire’s global strategy?
