28 July 2016
ASX Limited
Level 8, Exchange Plaza 2 The Esplanade
Perth WA 6000
LODGEMENT OF JUNE 2016 QUARTERLY REPORT, QUARTERLY UPDATE PRESENTATION AND INVESTOR CONFERENCE CALL AND WEBCAST
I am pleased to attach the following items for immediate release to the market:
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June 2016 Quarterly Activities Report
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June 2016 Quarterly Update Powerpoint Presentation
In addition, a teleconference and live webcast on the June 2016 Quarterly Report will be held for the investment community at 10.00am (AWST) / 12.00pm (AEST) today.
The webcast and synchronised slide presentation is available through the Company's website or through BRR Media.
Live date: Thursday, 28 July 2016
Access this webcast at: http://webcasting.brrmedia.com/broadcast/578d8bd6fdce524636710cbb
http://www.sandfire.com.au
Yours sincerely,
Matt Fitzgerald
Chief Financial Officer and Company Secretary
ASX Announcement 28 July 2016
QUARTERLY REPORT
For the period ended 30 June 2016
Production & Operations
Highlights
Contained metal production
|
September 2015 Quarter
|
December 2015 Quarter
|
March 2016
Quarter
|
June 2016 Quarter
|
FY2016
Total
|
Copper (t)
|
16,638
|
17,642
|
16,095
|
17,827
|
68,202
|
Gold (oz)
|
7,885
|
9,420
|
9,080
|
11,227
|
37,612
|
C1 cost (US$/lb)
|
0.97
|
1.02
|
1.01
|
0.85
|
0.95
|
Record annual copper production achieved for FY21016: above guidance.
Strong mine production and milling rates maintained for the Quarter.
FY2017 production guidance: 65-68kt Cu and 35-40koz gold at C1 ~US0.95-1.05/lb.
Development & Exploration
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Feasibility Study commenced on the Monty Copper-Gold Project (Springfield JV) following completion of a maiden Mineral Resource estimate. Multiple work streams in progress with Feasibility Study targeted for completion in March 2017 Quarter.
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16.42km2 Mining Lease Application lodged with the Western Australian Department of Mines and Petroleum for the Monty Copper-Gold Project.
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Maiden C5 Ore Reserve completed as part of updated DeGrussa Mine Plan, Ore Reserve and Mineral Resource Statement, cementing mine life through until 2021.
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Multi-pronged exploration programs continuing at both SFR's Doolgunna project and within the Springfield JV along the Monty and Homer trends including systematic drilling and geophysical programs.
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Diamond drilling commences to test for extensions of the Altia base metal resource at the Altia JV in Queensland, with drilling also planned to test a new DHEM conductor at the Capricorn North prospect.
Sustainability
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DeGrussa Solar Farm successfully commissioned and in steady-state operating mode, having achieved full generation capacity. The project is expected to supply ~20% of DeGrussa's power requirement and will reduce its carbon emissions by ~12,000 tonnes of CO2 per annum.
Corporate
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Total outstanding debt reduced to $50M (Revolver Facility) as at 30 June 2016, with $62M in Company cash and deposit holdings (Group $66M), Sandfire was in a net cash positive position at financial year- end.
1.0 SAFETY PERFORMANCE
The Total Recordable Injury Frequency Rate (TRIFR) for the Sandfire Group for the June Quarter was 6.3. Recordable injuries include those that result in any days away from work (Lost Time Injuries) and those where an employee or contractor cannot perform all or any part of their normal shift (Restricted Work Day Injuries), as well as any injury that requires services that only a medical practitioner can provide (Medical Treatment Injuries).
This safety performance reflected two injuries during the Quarter, one of which involved an exploration driller sustaining serious crush injuries when his leg was trapped by the hydraulic 'breakout' and the spin cage on the drill stand.
Safety systems development and critical control management continues to improve with ongoing focus being applied to improved safety leadership and culture and particular emphasis being applied to assuring controls associated with principal hazards are in place and effective.
Figure 1: Diamond drilling at the Monty Copper-Gold Project, located within the Springfield Joint Venture 10km east of DeGrussa
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OPERATIONS OVERVIEW
Copper production for the June Quarter was 17,827 tonnes (March Quarter: 16,095 tonnes) at an average ore grade of 4.9% Cu (March Quarter: 4.7% Cu). C1 cash operating costs for the Quarter were US$0.85/lb (March Quarter: US$1.01/lb).
Mine production for the Quarter was 421,218 tonnes grading 5.1% Cu, providing total production for FY2016 of 1.59 million tonnes. During the Quarter, production was sourced from all lens at DeGrussa with the C5 lens now in production.
A total of 406,237 tonnes of ore was milled for the June Quarter, with copper recovery averaging 90.5%. Recoveries were impacted by the treatment of one particular stope which accounted for around 30% of mill feed for the quarter. This stope exhibited poor liberation, requiring a finer grind.
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MINING & PRODUCTION
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Overview
June 2016 Quarter - Production Statistics
|
Tonnes
|
Grade (% Cu)
|
Grade (g/t Au)
|
Contained Copper (t)
|
Contained Gold (oz)
|
Concentrator Mined
|
421,218
|
5.1
|
2.0
|
20,669
|
25,698
|
Milled
|
406,237
|
4.9
|
2.0
|
19,706
|
26,631
|
Production
|
73,084
|
24.4
|
4.8
|
17,827
|
11,227
|
Note: Mining and production statistics are rounded to the nearest 0.1% Cu grade and 0.1 g/t Au grade. Errors may occur due to rounding. Production Statistics are subject to change following reconciliation and finalisation subsequent to the end of the Quarter.
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Underground Mining
Mining performance reflects a continued focus on production scheduling, reliable stope design and excavation, as well as improving mining fleet productivity. Opportunities to further enhance mine production will continue to be explored.
During the Quarter, production was sourced from all lenses at DeGrussa with the C5 lens now also in production. The mine remains in balance between production and back-fill. Paste reticulation has been extended in the C4 and C5 production levels during the Quarter. Opportunities to replace paste back-fill in some stopes with mine waste continue to be identified, thereby reducing overall waste haulage to the surface and allowing a focus on ore haulage. Cemented rock-fill is being used to supplement the paste-fill to ensure the production schedule is maintained.
Total underground development had reached 37km at Quarter-end. The Conductor 1 decline was not advanced during the Quarter with the focus on development of the Conductor 4 and 5 declines. The development of the Conductor 1 decline will recommence as required for the extraction of the lower Conductor 1 ore.
During the Quarter, Conductor 4 decline development advanced 129m and Conductor 5 decline development advanced 189m, with all development advance occurring in good ground conditions. It is expected that both the C4 and C5 declines will reach their lowest designed position during August 2016 with development then transitioning to accelerated level development in the C4 and C5 lens.
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Processing
Key processing metrics for the June 2016 Quarter included:
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406,237 tonnes milled at an average head feed grade of 4.9% Cu (March Quarter: 374,955 tonnes at 4.7% Cu);
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Overall copper recovery of 90.5% (March Quarter: 91.7%);
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Concentrate production of 73,084 tonnes (March Quarter: 66,024 tonnes); and
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Metal production of 17,827 tonnes of contained copper and 11,227 ounces of contained gold (March Quarter: 16,095 tonnes of contained copper and 9,080 ounces of contained gold).
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Mill throughput achieved an annualised rate of 1.57Mtpa for FY2016.
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Mill throughput in the June Quarter was impacted by a planned 40-hour shutdown for preventative and corrective maintenance, including the replacement of the SAG mill motor, as well as several unplanned maintenance issues including a large rip on CV03, which necessitated its replacement. In addition, the pebble crusher was offline for 15 hours towards the end of the Quarter to modify the feed chute in order to better distribute feed into the crusher hopper. Additional operational changes have also been made to the pebble crusher circuit to improve reliability and performance with a direct impact on milling rates.
Copper recovery for the June Quarter averaged 90.5%, which is in line with the global average recovery based on the resource copper grade and Cu:S ratio. Each mining area undergoes geo-metallurgical laboratory testing prior to processing, including grinding simulation and copper liberation testing to understand the impact of primary grind and the downstream circuit parameters on copper recovery and copper grade. This work is used to predict copper recovery performance compared with what would be expected from global macro indicators such as copper grade and Cu:S ratio and is used to optimise ROM blending and processing tactics.
Following the successful commissioning of the major enhancement projects completed during FY2015, Sandfire is continuing to investigate opportunities for further improvements in copper recovery. These include examining additional flotation capacity, further improvements in grind optimisation and operating tactic optimisation.
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Guidance - FY2017
FY2017 targeted copper production is expected to be within the range of 65-68,000 tonnes of contained copper metal with gold production within the range of 35-40,000 ounces. Headline C1 cash operating costs are expected to be within the range of US$0.95-1.05lb.
Mine production is forecast at 1.55Mt with the processing of 1.63Mt of ore achieved via the pull-down of ROM stocks. First and third quarter production will be impacted by planned shuts to re-line the SAG mill and replace the trunnion liner. Refer to Sandfire's June 2016 Quarterly Presentation (released today) for further detail and guidance on operating parameters and unit costs.