Sandfire Resources Limited Maintained Its Strong Mine Production And Milling Rates In Q1 FY2019

Production & Operations

The quarterly report of Sandfire Resources Limited (ASX: SFR) for the period ended 30 September 2018 is published. In the Q1 FY19, the total production of copper was 17,924 tonnes and gold was 11,141 oz. with at C1 cost US$0.89/lb. The company was able to maintain Strong mine production and milling rates for the Q1 FY19. The installation of additional concentrate thickener and filter is completed. The commissioning and ramp-up about to complete. The production report for this quarter is at par with the guidance report for FY2019. The report highlights the results under various categories. They are development Projects, exploration, corporate and safety. 

Development Projects

  Monty development works are in progress with decline, however the lateral development advanced to 3,202m at Quarter-end. Monty’s first development ore is on track for December 2018. It is expected that a draft Environmental Impact Statement (EIS) shall be made available for public to comment in Q2 of FY19.This EIS statement will be prepared for the 78% owned Black Butte Copper Project in central Montana, USA. In order to do the feasibility study of Black Butte, key consultants have already been assigned for the same.

Exploration

 Continuous multi-pronged exploration programs are going across Sandfire’s Greater Doolgunna Project. In this quarter there is an increase in Sandfire’s aggregate contiguous exploration area, including Joint Venture and Farm-in arrangements up to 6,588km2 as a result of the Alchemy Resources Ltd Farm-in. There were continuous follow-up drilling and geophysics at the Morck Well Project. There is an aggressive ongoing work plan made for diamond and RC drilling and in-fill aircore drilling.

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Corporate

The company has acquired 30% interest of Talisman Mining Ltd. in the Springfield Exploration and Mining Joint Ventures. The company had to pay approximately $72 million in cash along with an ongoing 1% Net Smelter Return (NSR) royalty on any discoveries made in future. They also need to pay an assumed royalty of 2.25% to the financiers.

The company also provided a convertible loan of $1 million to White Rock Minerals Ltd (ASX: WRM) for their high-grade zinc VMS Red Mountain Project in Alaska for its exploration activities

The company also entered into an agreement to acquire Independence Group NL’s current Farm-in Rights over Alchemy Resources Ltd.’s Bryan Basin Project. This will help Sandfire to further expand its commanding ground position in regions of Doolgunna.  The Group has cash in hand worth ~$218.4 million at the end of 30 September 2018.

SAFETY PERFORMANCE

By the end of the September 2018, the Total Recordable Injury Frequency Rate (TRIFR) reported for the Sandfire Group was 8.6 which was 7.1 in June quarter.  Recordable injuries include Lost Time Injuries, Restricted Duty Injuries, Restricted Duty Injuries and Medical Treatment Injuries. There is a continuous focus made in order to prevent the incidents and principal hazard management Safety system developments continue to focus on the prevention of incidents and principal hazard management. New software is introduced to the management to assist and improve the safety culture for both employees and contractors.

The current market price of the share is A$6.590 with market capitalization of A$1.09 billion and PE ratio 8.790x.


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