Havilah’s Sandfire deal turns exploration portfolio into $77.2m profit

Sandfire transaction drives the profit swing

Havilah Resources Limited (ASX:HAV) has reported a $77.2 million profit for the year ended 31 July 2026, reversing a $3.3 million loss a year earlier. The headline number is substantial, but it is not a measure of recurring mining earnings: Havilah has no producing projects, and $95.0 million of the result came from recognising the Stage 1 consideration under its Kalkaroo earn-in agreement with Sandfire Resources (ASX:SFR).

The agreement delivered a stated $105 million upfront consideration, comprising $31.5 million in cash and 4.64 million Sandfire shares, after shareholders approved the deal in February. The transaction gives Sandfire the right to earn an 80% interest in Kalkaroo by paying a further $105 million within the 24-month earn-in period, subject to the agreement’s conditions. The first payment also established Havilah’s new exposure to Sandfire’s share price, rather than leaving the explorer dependent solely on future project development.

The scale of the transaction had already been outlined in the $105 million Kalkaroo deal, which included a further $30 million regional exploration commitment. In the accounts, Havilah recorded a $3.35 million net fair-value gain on its portfolio of listed shares and options, while recognising an $18.2 million tax expense.

Cash has improved, but some of it is ring-fenced

Havilah finished the year with $40.9 million in cash and cash equivalents, compared with just $541,000 a year earlier. That balance includes $13.8 million of restricted cash that can only be spent on exploration under the Sandfire Strategic Alliance. The group also held $98.2 million in listed shares and options, predominantly the Sandfire and Kantra Copper (ASX:KCP) securities received through its project transactions.

The balance sheet therefore looks markedly different from the one Havilah carried into the year, but the cash is not all discretionary. Operating activities consumed $15.1 million, while exploration and evaluation spending capitalised during the year totalled $3.4 million. The company said it remains committed to disciplined capital management and would assess whether surplus funds could be returned to shareholders, without declaring a dividend for the year.

After year-end, Havilah sold 700,000 Sandfire shares for gross proceeds of $14.5 million and received a $1.38 million fully franked dividend from its remaining Sandfire holding. Those sales reduce the concentration of the listed investment portfolio, but also convert part of the deal consideration into cash rather than leaving it exposed to market movements.

Kalkaroo drilling moves into the next phase

Sandfire has begun the work needed for a new Kalkaroo pre-feasibility study, planning about US$70 million of investment and at least 20,000 metres of drilling. Havilah said the study is expected to be completed during Sandfire’s second half of FY2028, broadly corresponding with Havilah’s year ending 31 July 2028.

The program includes infill and extension drilling, updated resource and reserve work, environmental and heritage studies, groundwater and geotechnical investigations, metallurgy, processing and infrastructure assessments. An 80-person camp and drillcore processing facility were established onsite, while drilling began in June after heavy rain delayed access to the project.

The strategic alliance adds a second exploration track. Sandfire must pre-fund $30 million over an initial 24 months for regional exploration north of the Barrier Highway, with Havilah managing the work before any discovery is formally advanced by Sandfire. Reverse-circulation drilling began at Brooks Dam in July, targeting the interpreted Kalkaroo mineralised horizon roughly 12 kilometres northwest of the deposit. The program was also covered in Brooks Dam drilling, which reported that the work followed heavy rain delays and was funded through the alliance.

Coburn gets a funded development test

Havilah has also put its Coburn copper project, formerly known as Mutooroo, into a staged farm-in with Kantra Copper. Kantra paid $5 million in Stage 1 consideration through shares and options, while committing up to $10 million over as much as 24 months for a pre-feasibility study and related work. Kantra has a further right to acquire 80% of the project for $35 million, with the mix of cash and shares at its election.

The proposed development route is unusually practical for an exploration story: Kantra is testing whether Coburn sulphide ore can be processed through its existing Kanmantoo facility. Early work covers rail logistics and metallurgy, with a 5,000-metre resource-definition drilling commitment. The full study will proceed only if the initial phase demonstrates a potential economic pathway. Havilah’s accounts recorded the Kantra securities at a combined fair value of $7.3 million at issue.

Havilah’s resource base was unchanged during the year, including Kalkaroo’s 100.1 million-tonne JORC Ore Reserve containing 474,000 tonnes of copper and 1.41 million ounces of gold, and Coburn’s 13.1 million-tonne Mineral Resource containing 195,000 tonnes of copper and 20,200 tonnes of cobalt. Those figures provide the inventory; the next question is whether the funded studies and drilling can convert that inventory into an investable mine plan.