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DIGGeRs & DeALeRs

Sandfire ready

for international

awakening

he clock may be ticking at the company’s prospectivity in the region because we have challenge to the issuing of the Black Butte
TDeGrussa copper operation in Western found two deposits but they’re not massive, mining licence in Montana is expected to take
Australia but Sandfire Resources NL manag- they’re not easy to find.” more than 18 months, meaning Sandfire will
ing director Karl Simich is as bullish as ever With the September 2022 date looming, necessarily park the project once it has com-
about the company’s growth prospects. Sandfire has begun investigating alternative pleted an updated feasibility study later this
Sandfire is currently staring at a September uses for the DeGrussa plant to keep opera- year. That will leave the road clear for the com-
2022 closure of DeGrussa if current reserves tions running. pany to concentrate the majority of develop-
remain static and despite the analyst com- “We want to preserve the longevity of that ment efforts on the T3 copper project in north-
munity beginning to question what the future asset,” Simich said. “Before Christmas we ex- ern Botswana.
holds, Simich has a very clear view of where pect to announce a gold resource for the High- Acquired through the merger with ASX-
the company is headed. way project, Sandfire’s original project in the listed junior Mod Resources last year, T3’s
“We have $300 million in treasury in the Doolgunna district, as well as a gold resource economics have already been proven, a 2019
next two years, we will add after-tax cash of for the DeGrussa tailings. DFS pointing to an 11-year, 3 mtpa operation
$600 million and we have close to $100 mil- “A combination of fresh resources at High- producing 28,000 tpa copper-in-concentrate
lion in liquid investments. So, there is nearly $1 way blended with tailings means we could use for $250 million capital outlay.
billion in the business, there is no debt and we the existing front-end of the DeGrussa plant, On acquisition, Sandfire immediately be-
have a good team ready,” Simich told Paydirt. add a new CIL circuit and create an opportu- gan optimisation work aimed at identifying the
“Our value at cash backing is $5.62/share nity to add to the mine life. It could be 4-6 years optimal size for the operation given the wider
versus a price of around $4.80 currently. The of 40-55,000 ozpa gold production. That is a regional potential and its more robust balance
clear implication is that analysts are not valu- not insignificant quantity of gold and it will give sheet in comparison to Mod.
ing our growth projects but there’s no point us a window to continue copper exploration. “The T3 Hub feasibility study is going well
complaining. We need to put the rubber on While the company will continue to explore and once that is released towards the end of
the road with our development plans and then its 8,000sq km land package in the Bryah Ba- the year people will come to the conclusion
start educating people and that’s what will oc- sin – it has set a budget of $24 million for FY21 that we have a 50-60,000 tpa scenario, a plus-
cur from the end of the year.” – its future is no longer entirely wedded to the 10-year mine life and long legs because the
The irony is Sandfire is enjoying its strong- cornerstone asset. exploration opportunity is fantastic.”
est ever period at DeGrussa. The asset in Instead, the company is preparing for what T3 already boasts a resource of 60.2mt @
Western Australia’s Doolgunna region pro- Simich describes as “the next chapter of the 0.98% copper and 13.9 g/t silver resource but
duced a record 72,238t copper and 42,263oz Sandfire story” – the company’s first interna- continued exploration success at the nearby
gold at C1 cash costs of $US0.72/lb in FY20, tional development. In the last five years, the A4 prospect – just 8km west of T3 – will see
delivering group EBITDA of $315.3 million and company has acquired advanced explora- that number added to later this year.
NPAT of $74.1 million for the company. Guid- tion projects in the US state of Montana and “We will have a resource for A4 before the
ance is similar for FY21. Southern African nation of Botswana and end of the year,” Simich said. “It is modest
“We have had this extraordinary productive is now preparing to release its development tonnes, but the grade is 20-25% above T3.
and lucrative operation and with the Monty plans for both assets. So, it will be a bit like the Monty fairy dust we
mine coming on it has been getting better and “We see it as now getting back into the have sprinkled on DeGrussa; it will change the
better. However, the reality is that mines are hard work of project development,” Simich ex- economics.”
finite, and we probably haven’t been as suc- plained. “That is the critical part for us, navigat- Exploration results in the June quarter re-
cessful as we’d have liked to have been with ing a way through COVID to the next mine.” turned the best intersection at A4 so far – 18m
the drill bit. That doesn’t mean there is no The path is taking shape. A recent legal @ 5.2% copper and 124 g/t silver from 77m.

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