Sandfire eyes growth as it clears debt ahead of schedule

JOHANNESBURG (miningweekly.com) – Copper and gold miner Sandfire Resources has elected to repay its debt nearly 12 months ahead of schedule, freeing up significant cash flow to pursue growth opportunities in Australia and North America.

A strong cash position of A$10.7-million and rising copper prices have enabled Sandfire to elect to repay the outstanding balance of A$50-million on its revolver facility at the end of the month, MD and CEO Karl Simich said on Tuesday, when the miner also released its second-quarter production results.

Sandfire took on A$380-million in debt to fund the development of the DeGrussa project, in Western Australia, in 2011.

The DeGrussa mine produced 18 130 t of copper and 10 183 oz of gold in the December quarter, a 16% and 5%  improvement respectively on its performance in the September quarter. The company maintained its guidance for the full year to June 30 at between 65 000 t and 68 000 t of copper and between 35 000 oz and 40 000 oz of gold. DeGrussa produced 33 740 t of copper and 19 914 oz of gold in the first half of the financial year.

“With the DeGrussa operation continuing to deliver consistent, strong production and robust margins, the company is now ideally placed to take full advantage of stronger copper prices, with the elimination of our remaining debt also freeing up significant cash flow to pursue new growth initiatives and maximise shareholder returns,” Simich said.

“Our focus over the next 12 months is to leverage off these strong foundations by delivering continued growth for our shareholders, both organically through an aggressive ongoing exploration effort at Doolgunna and further afield by advancing some of our quality growth assets, such as the Black Butte copper project in the US.”

A key focus for the year will be to bring the high-grade Monty copper/gold deposit, located 10 km east of DeGrussa, into production.

The Monty feasibility study is under way and will be completed before the end of March. The study will allow Sandfire and its 30% joint venture partner in Monty, Talisman Mining, to assess the best way of bringing the deposit into production.

Simich said the JV would aim to bring Monty into production as “quickly and seamlessly as possible”.

Discussions are also under way to progress formal agreements between Sandfire and Talisman relating to construction and mining activities at Monty, as well as potential ore process routes and terms.

Sandfire's stock advanced 3.3% to A$6.21 a share on Tuesday.