Sandfire Resources Limited (SFR) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Sandfire Resources investor briefing here at the Rydges Hotel in Kalgoorlie in Western Australia. My pleasure to welcome you here. My name is Ben Crowley. I'm the Head of Investor Relations for Sandfire. Look, the thinking today was, normally, we would obviously run a site visit out to DeGrussa, our head of diggers and dealers. But of course, in the current situation, that's not something that we were able to do. So really, we wanted to try and provide investors and those interested in Sandfire with a little bit more color. We did recently release our quarterly result and presentation, so there was plenty of information in there. But we really wanted to add a bit more depth so I think today in terms of our activities over in Botswana and also other exploration here in Australia as well. So presenting today, we have Karl Simich, our Managing Director and CEO; and Jason Grace, our Chief Operating Officer. But we also have Richard Holmes, who is our freshly minted Head of Exploration; and Julian Hanna, who's our Director of Growth and exploration in Botswana. So they will focus in on those elements of exploration there. Just a word to those who are either on the call or online, we are operating remotely here in Kal, and I understand that the phone quality -- or the call quality on the phone may not be quite so good. So if you do have problems, I would just point you to the webcast, which is also running. [Operator Instructions] So that's enough from me. I will hand over to Karl.

Thanks very much, Ben, and welcome, everyone here, and welcome to those of you who are online. Really, the objective for today, as Ben mentioned, is to really try and give you a little bit more granularity as well about what is happening in Sandfire. We've recently obviously had lots of information in the market in terms of quarterly reports. We've got our full year coming up. It's going to be a tremendous year. But also, I suppose just to recap before we get into the detail, and allow these other gentlemen to talk in more detail about things we actually don't get a lot of time to talk about, is we've been through a bit of a phase within the business of looking at what we do and how we do it with the resources that we've got and how we can forge ahead harder and stronger in those areas. And around the middle of last year, we effectively launched and released to the market a reset of our strategy about our business and what we wanted to do. And towards the end of last year, early December, we actually put a lot of detail into really rolling out to the market and to the world what it was that Sandfire was about and where do we want to go to. Effectively, at the moment, we want to build a sustainable copper-producing business in that future-facing metals. We are one of the pure-play copper operators in Australia, and our objective is at the moment is to continue to focus strongly in that growth commodity, in that future commodity. I talk about this transition, and as we work hard, we want to build a diversified and international sustainable mining company. And that's part of the programs that we've got in the jurisdictions that we've got and the assets that we're pursuing. We've worked hard of late over the last 12 months, 18 months to refresh our business, to refresh our people. First time we've had an Investor Relations person who's working, and I'm delighted to have Ben with us. But there are a number of other key people, and I'll touch on those in a minute. But effectively, all of those align with the strategy that we are pursuing as a business. We've had a tremendous operation at DeGrussa over the last 8 or 9 years. It's produced a significant amount of money. We sit in treasury at the moment of just under $600 million. We also have around $100 million in very liquid investments, and we will consider what we do with those going forward. But essentially, the business today with a market capitalization of about $1.2 billion had $600 million effectively in cash and liquids. And in terms of the operation and performance of DeGrussa just in the next period of time, the next 15 to 18 months, we'll probably generate and underwrite effectively the balance of our market capitalization at another $500 million or $600 million. So effectively, from my perspective, in terms of talking about the investors looking into Sandfire is -- a lot of that enterprise value and organic opportunity is very cheaply priced at the moment. We are at the moment -- we have completed our feasibility study, and we are in construction of a copper mine in Botswana. That copper mine we expect to gather a lot of momentum going forward. And we continue with a number of elements in our pipeline going forward. Business development. We have David Wilson, who joined us from South32, David in the room here with us today, and he and his team with Rob Massad, are extremely busy in our BD strategies. Our exploration, and really I want to get on to Richard Holmes and Julian Hanna shortly. But we will spend after this year's expenditure of some $64 million in exploration, we'll spend in excess of $50 million, and probably under budget, closer to $60 million in exploration as we go forward into next year. Just touching on the copper market briefly. It certainly is, whilst it's being produced for a very, very long time, it is well and truly a future-facing metal along with a number of others. And we definitely want to continue to see ourselves pursuing a very forceful investment into that space. The copper market at the moment is the third deepest market in the resources sector at about $220 billion and 22 million tonnes. Expectations over the next years is for that to probably increase by another 30% or 40%. And potentially, if you look at a number of the other predictors in the market, is by 2050, looking at a demand in the market of getting closer to 40 million to 45 million tonnes, maybe 50 million tonnes of copper required for what we're seeing as burgeoning industries and this new sort of push into carbon neutrality, electric -- EV vehicles and a whole bunch of other technologies that we're going to be using that strong conductivity that copper has. And particularly in that green market of EVs, we're looking at a large increase of 600% in terms of what that green demand in that part of the world. But I think the future, as we see at the moment, is looking very strong. Supply, challenging. There is a little bit of new supply coming along stream but nothing like what will be required to feed the market's demand. We even here, I think it was in the last 24 hours, again, strikes at Escondida in Chile, again, with worker strikes. So whether it's worker strikes in parts of -- that part of the world, South America, which produces about 50% of the world's copper, whether it be high altitude and water issues at those parts of the world, I think new production of copper opportunities is going to be in significant demand. For us, as a growing footprint and, really, we want to establish ourselves across the globe, we are pursuing quality projects and that we must make sure that we look further than just in front of our noses. And whilst we are Australian-based and we've got a lot of opportunities in Australia, we're looking further afield and have been doing that for quite some time. DeGrussa was a wonderful mine at over 5% copper in Monty, the second discovery there of over 9% copper. And as we sit today, we have our development projects in other parts of the world in Africa, particularly in the Kalahari Copper Belt, where we have a dominant position, the largest tenement holder in that part of the world. But also in the U.S., in Montana, where we achieved the permitting of the first hard rock mining permit in Montana in the last 22 years, so we're looking forward to making progress there. But we have an expansive exploration portfolio in Tier 1 jurisdictions, Western Australia, New South Wales and also, as I mentioned, in the Kalahari Copper Belt, where we have that significant holding. When we reset our strategy recently, we sort of spent quite some time considering what it was that we had in terms of our skills attributes, where we thought we could make a difference and where we wanted to face our business, and we had a really good look at who we are is that we came out, as I said, middle of last year with a reset of our strategy and what it is that we want to be. We want to create value. We want to create value for a lot of different stakeholders, and we list them there. And how are we going to do that? Our purpose, our vision as a company is we want to be an international diversified and sustainable mining company. It's not very complicated, but it does take a lot of effort and energy to get there. And we have 5 key strategic imperatives is -- to actually optimize and maximize and execute delivery on the assets that we do own and making sure we do that well. And we pride ourselves in the work that we do and how we do it and how we execute that. In addition to that, we're putting a huge amount of effort into our building a sustainable pipeline, production pipeline. And effectively, between now and 2025, we want to be producing 150,000 tonnes of copper or equivalent or have a clear line of sight on being able to do that. We would also like to double that 5 years thereafter and be at the rate of 300,000 tonnes of copper by 2030. So they are the strategic imperatives that we're building into our business. As much as we are a large explorers, and we want to accelerate discovery, and the focus will be from our exploration team today -- as we do know, you can wish, pray and hope as much as you like, it won't necessarily mean you're going to make a discovery. We are confident that we will. But to supplement obviously that very intense exploration strategy that we have got will be that business acquisition, business development, that inorganic strategy. We want to make sure our people are in line and aligned with our business and empowered and have all the skills and all the resources that are needed at their disposal to ensure that they can do the best that they can in the business. So we want to and we're working hard with ensuring that our people are aligned and they are empowered and have the resources to achieve their aspirations. We need to make sure we understand we're an economic business and we have responsibilities. We need to make sure that we have economic returns. We want to balance our business and ensure that we manage and maximize that -- the dimensions of our capital strategy, the way we fund our businesses, the way we return funds to our shareholders and the like. In refreshing the company, we've done a number of things from the Board all the way down. And we will continue to make further transformations. Some new additions to our Board have been across a number of different skill sets. Sally Langer, who's joined us and spending a lot of time as she's come out of the recruitment industry and a Chartered Accountant, Sally will now be Head of -- she's been with us for over a year but effectively will be head of our -- Chair of our Audit Committee. Mr. John Richards, had a wonderful career and now is a non- -- independent director for Sandfire, also for Northern Star and Sheffield, along with Sally for Northern Star as well. But essentially, John has had a history, spent most of his time with corporate and business development for the -- Rob de Crespigny with Normandy and has seen much in the way of commercial businesses entirely around the globe. And also Jen Morris, who joins us as a very passionate and driven performance person, very well qualified, is on the Fortescue Board. But Jen has also been an illustrious sports person, having won 2 gold medals for hockey at the Olympics. But importantly, the depth of the organization is really the important thing for me. Dale Burgess has joined 30-odd years with Barrick and spent most of his time internationally dealing with challenging environments and a wonderful addition to our organization, operating in our Perth office but will soon be moving to Botswana as country head. And so we're looking forward to Dale doing that and really starting to put the depth through the business in that part of the world. We want to make sure that we have good country heads in the places that we're operating to be able to deliver on our strategic imperatives in those places. As I mentioned earlier, Richard has joined us. Richard Holmes, Head of Global Exploration, has joined us from OZ Minerals and has had a wonderful 6 or 7 years at OZ Minerals, and they've been able to achieve a lot. And we look forward to the work and what Richard would be doing with Sandfire. We look forward to him talking now. David Wilson, as I said, from South32, David's Head of Business Development and Technical Services, depth of experience there. Ben Crowley, we've mentioned. But also complementing the people that we've already got in our team, Rob Scargill is running our American operations, a mining engineer. Ian Kerr is specifically tasked -- he's worked for a long time here, and a mining engineer, and specifically tasked with completion of the feasibility study with construction and commissioning of the Motheo project in Botswana. And Greg Peden, as always, delivering up at DeGrussa, that wonderful operation. Just as a trophy slide, DeGrussa has produced over 650,000 tonnes of copper, $5.5 billion worth of revenues, which will exceed by the time that mine closes probably closer to $6 billion or $6.5 billion worth of revenue in a relatively short period of time, 10 years. And cash flow is $2.5 billion by the time that mine comes to its natural conclusion at the end of next year calendar, it will be over $3 billion handsomely, great dividends and great profits after tax. I'm just going to hand over to Jason, and I'll be back and join you in a minute.

Thanks, Karl, and welcome to everybody here in the room today and also online. Looking at DeGrussa operations, on balance, FY '21 was our best year ever. And that's a big statement given that FY '20 was -- we set a number of records, including copper and gold production as well as record low C1 cash costs. During the year in FY '21, we started out with very strong safety performance. So year-on-year, we delivered a 31% reduction in our TRIFR, going from 5.8 down to 4.0 on a year-on-year basis. DeGrussa underground delivered in line with plan at about 1.1 million tonnes of production. And Monty underground continued to ramp up its production rate and continued to exceed expectations, delivering around about 371,000 tonnes of copper -- sorry, 425,000 tonnes of ore. Ore processing delivered another strong and consistent year, with processing rates there around 1.54 million tonnes per annum. And this all came together to deliver around about 70,845 tonnes of copper and 39,459 ounces of gold. C1 costs, at USD 0.82 a pound, exceeded plan, and that was driven by higher copper production, higher gold by-product credits on both a volume and a price basis as well. Looking forward to FY '22, we have issued guidance of 64,000 to 68,000 tonnes of copper production and 30,000 to 34,000 ounces of gold at a C1 cost of USD $1 to $1.10 per pound of copper. This is supported by further guidance of a total mining rate at 1.6 million tonne per annum rate and delivering an average grade of 4.6% copper and 1.4 grams per tonne gold. Total ore tonnes processed for the year is forecast to be 1.575 million tonnes and shipping and sales of 275,000 tonnes of concentrate at an average grade of 24% and 3.7 grams per tonne gold. C1 costs are forecast to be higher year-on-year. And this is largely driven by off-site costs or nonsite controllable costs with -- and also impacted by a slightly lower copper production rate, higher diesel costs across the board, an increase in labor costs particularly here in WA, higher TC/RCs and higher shipping costs throughout the year. And looking at production quarter-on-quarter, we would see that comparable range in that 15,000 to 19,000 tonnes of copper per quarter and noting there that we have a bit of fluctuation there quarter-on-quarter with quarters 1 and 3 sitting probably closer to that 15,000 tonne rate and quarters 2 and 4 being at a slightly higher rate. Gold production throughout the quarter and on the quarter-by-quarter basis will typically range from that 6,000 to 9,000 ounces per quarter and noting that once again, Q1 will be slightly lower and then averaging out as we go through to the end of the year. Going into the last full year of production at DeGrussa, we are forecasting to maintain a full production rate right across the board. And one of the questions that I quite often get asked is most mines start to ramp down as we go into the end of mine life -- why is DeGrussa any different? The answer to that is we do see a ramp-down, but that ramp-down will occur in Q1 of FY '23. So we are able to, according to our mine plan and a lot of the work that we have done to date, be able to maintain that production rate all the way through to the end of this current financial year. And if I draw your attention particularly to the 2 diagrams or the 2 images on the right, if we look at the top one there, which is DeGrussa outlines of stopes with the gray being areas that are currently already being mined out and the green areas forecast for production in FY '22, and the yellow areas being forecast production in FY '23. You will note there that we have mined out the majority of the core of the main DeGrussa ore body. And we are moving out into the C1, C1 East, C4 and C5 ore bodies. And in doing so, we are starting to mine a higher number of stopes as we go through. And we've been steadily ramping up that number of stopes that do have to be mined on a year-on-year basis over the last few years. And if we look particularly at those graphs, you will see on a DeGrussa point of view, we are largely forecast to maintain our stope turnaround pretty much at the same level that we've been operating at for the second half of FY '21. Monty, on the other hand, will start to ramp up in terms of the number of stopes and will be a slightly higher contribution to the overall tonnage and helping us to maintain those average grades through to the end of mine life. Monty, you will see there that we are mining predominantly in the lower zone but also opening up some areas close to surface there in the upper zone. So that does 2 things. That will enable us to bring in a few extra tonnes over and above our ore reserves in FY '23, but it also does bring in some more complex metallurgy, particularly as we get towards the top. Now we've been dealing operationally with processing of transitional ore types now for the last 2 years, and we've got a very good handle on how to do that and how to get the most out of our metal production. And [ quota from ] what that will mean is that we will actually batch process those ore tonnages, and we'll run the plant at a slightly lower rate to make sure that we can maintain the recoveries and keep our concentrate specs certainly at a high grade and at a high quality. And now I hand over to Richard.

Thanks, Jason, and good afternoon, everybody. My name is Richard Holmes, Head of Exploration. I'm going to talk a little bit about our Australian-based exploration and starting at Doolgunna. So the focus for the next 12 months is really 2 parts: a focus on copper exploration and a focus on gold exploration. Copper, we're dividing the basin into sort of the Eastern portion and the Western portion. Towards the West, it's -- we're finishing areas around Horseshoe Lights and following up the location of the Karalundi formation. And to the East, we're really focused on what we're calling Doolgunna Deeps, which I'll talk about in a second. The gold strategy is really pushing forward and building a resource base, so following up the work that's been done on Old Highway and testing further gold targets. So if we look at the Doolgunna region, the company spent a long time generating a significant amount of really high-quality geological data. And I think it's fair to say that most of the easy targets have been tested. The top 400 meters has probably been well and truly tested with a combination of air core drilling and EM. So obviously, now that the challenge is -- where do we go next? So working with the team, we've taken information from DeGrussa itself and looked at small scale geological structures and how they interact and then how they interact with the Karalundi formation and taking that to a macro scale. So what we want to do is we want to be testing targets that are sitting below 500 meters. So this is a relatively high risk, high-reward exploration. So we need to refine our geological model, so we need to collect some further information with a variety of deep penetrating geophysical techniques, match that with some machine learning and artificial intelligence. We've got some -- we have fantastic data sets, so we really understand the geochemical signature of the lithologies. Put those 2 together and generate new targets. So we've got about 16 to 20 targets that we need to refine, and we'll be focused on refining those targets in the next couple of quarters and then hopefully drilling those deep targets. And this is a really exciting space. You've got -- you're using cutting-edge technology, and this is the sort of exploration that really can change the dial for the company. Moving on to Old Highway. We've been doing a significant amount of drilling on Old Highway. So over the past 18 months, we've drilled the resource out from a 50 x 50 down to a 25 by 25 basis. We've probably done close to 100,000 meters of drilling. So we're expecting the maiden resource to be -- to come through later this year. That $7 million figure there for the budget going forward. Approximately half of that is infill drilling. So there's what we're calling the Central-East Links, which is supporting the deposit which we haven't yet covered. And we've also in the Central part of the deposit, identified a number of really interesting high-grade shoots. So we're going to spend some significant time doing deep diamond drilling to try and define -- further define that resource at depth. So that's pretty exciting. The balance of the dollars goes through to the feasibility study, which will be pushed through and hopefully will come -- will be published later this year. Over on the Eastern states, we've been pretty active there for a number of years. We have the North Batten JV with Teck. In Queensland, we've been active in and around the Altia with the JV, and that's a project that we're probably looking to exit from and divest. So for the focus for the next 12 months is really based around Cobar. So we're currently drilling Endeavor South, which I'm sure you are aware, is the -- Endeavor was a fabulous high-grade lead, zinc, silver mine. And we're drilling targets there at the moment. We've got a real pipeline of projects. So from early stage targets all the way through to drill ready, so the team's done a fantastic job there, constantly replenishing the pipeline, constantly testing targets. So we expect to see some really exciting news come out of that region over the next couple of quarters. In saying that, COVID in the Eastern states is really beginning to test our exploration program there. A lot of our people are flying in, fly out from other states. And slowly, it's getting more and more difficult to get people on the ground. So while we're currently drilling now, life is getting tough out there, and hopefully, we'll be able to push through, but who knows what's going to happen there on the COVID side. So that's a really high-level overview of exploration from me. And now I'll hand back to Karl.

Thanks, Richard. We look forward to getting some of those results coming through. A fair degree of time we're going to spend on Botswana now. We're really getting quite excited about what's happening there and really just a bit of an introduction of -- more of a placeholder in terms of this slide because I think pretty much this information sitting here in terms of introducing it to you is pretty much getting overtaken and getting overtaken very, very quickly. And we put in those words, initial feasibility study because that was effectively picking up the feasibility study when we acquired MOD Resources. We optimized that study to give it a greater degree of confidence of delivery, but we wanted to keep the momentum. Clearly as a business, we knew the production profile at DeGrussa, and we wanted to make sure strategic imperative for our business, we kept the momentum as an operating mining company. So those initial numbers we expect to grow. We expect by probably the end of this calendar year to have an upgraded expanded feasibility study that will take into account T3 and the A4 deposit, which we've recently announced our second upgraded resource for, and we're waiting for the balance of reserves to come through, plus further expansionary potential drilling you'll hear about. So 30,000 tonnes of copper production profile is really at the bottom end of what we want to be targeting, and we see that possibly coming out as a production profile closer to the mid-50,000s, 55,000 tonnes of copper -- obviously, more silver and better numbers through the whole system. What we'd also expect with the construction of a processing facility which is designed initially here at 3.2 million tonnes, it's actually -- internally, actually, we're pretty much moving all the way through to an expanded case of 5.2 million tonnes. A little bit of work in terms of other equipment, one key item is ball mill. But Jason will touch on timings as to how we see that evolving. So I think it really is a place card holder to say it's going to be bigger and better and more profitable and far more lucrative. And in fact, dare I say it, when we hear from Julian, I'm sure there's going to be more than 1 operating hub in that belt of 400-odd kilometers that we've got. And I'm delighted to press the next button because we're actually going to go into a video animation. And as I've said many times ago, if you end up with your own flag and your own video, it must mean it's real. So I'm looking forward to this being a reality in due course.

Spanning almost 1,000 kilometers, from the grassy savanna of northeastern Botswana, to the semiarid desert of central Namibia, lies the Kalahari Copper Belt, one of the world's emerging copper provinces. Much like the giant deposits found in the nearby Central African Copper Belt, the rich copper mineralization of the Kalahari is hosted within an extensive sedimentary basin. Between the regional centers of Maun and Ghanzi stretches the sealed A3 highway, linking some of the most significant new copper developments in the world. Just 80 kilometers southwest of Maun, Khoemacau Copper Mining Zone 5 underground mine was commissioned in mid-2021 and is forecast to produce more than 60,000 tonnes of copper per year. 80 kilometers northeast of the town of Ghanzi, Sandfire Resources' exciting new Motheo copper project is taking shape. Sandfire's groundhauling extends over most of the central and western portions of the Kalahari Copper Belt. In December 2020, Sandfire announced a final investment decision for the Motheo copper project, with an initial investment of USD 259 million. Preliminary site works for the Motheo project started earlier this year, with full scale construction commencing in July, following the award of the mining license by the government of Botswana. The cornerstone of the Motheo copper project is the T3 deposit. T3 is an extensive sedimentary hosted copper silver deposit. Mineralization extends over a 2-kilometer strike link and approximately 700 meters down dip, where it remains open at depth. The deposit consists of numerous sub-parallel zones of mineralization which strike and dip parallel to a Northwest bidding thrust zone. Calculated as part of the December 2020 feasibility study, T3 has an indicated and inferred mineral resource of 480,000 tonnes of contained copper and 21.8 million ounces of contained silver and an open pit ore reserve of 360,000 tonnes of contained copper and 15.6 million ounces of silver. The T3 deposit will be mined using conventional truck and shovel open cut mining methods. The pit will be developed in 4 stages with a total of 40 million tonnes of ore mined at a strip ratio of 6:1. Sandfire has appointed the open pit mining contract for the T3 pit to African Mining Services, a subsidiary of Perenti Global Limited. The contract, with an estimated value of USD 496 million is the largest single contract for the project. And will be implemented via a joint venture with a local Botswanan partner. In addition to the open pit mining operation, the Motheo T3 project will include a 3.2 million tonnes per annum ore processing plant, that is readily scalable to 5.2 million tonnes per annum; a world class double-lined tailings storage facility; mine infrastructure; access roads and a dedicated 750-bed accommodation village. And a power transmission system linked to the Botswana power grid. The 3.2 million tonnes per annum process plant, is based on a simple but robust metallurgical flow sheet, comprising standard components for primary crushing, grinding and classification, flotation, thickening and filtration, storage and [ lowdown ]. Based on current ore reserves, the Motheo DFS has outlined an initial 12.5-year operation, with annual production of approximately 30,000 tonnes of contained copper, and 1.2 million ounces of contained silver, over the first 10 years of operation. Robust operating margins are driven by forecast all-in sustaining costs of just USD 1.76 per pound. Concentrate will be trucked 1,000 kilometers along the A3 highway, to the modern port of Walvis Bay in Namibia for export to global markets. Reflecting its confidence in the long-term future of the Motheo project, Sandfire has approved an additional upfront investment of USD 20 million for additional process and capacity, providing a clear pathway to a 5.2 million tonnes per annum production rate. The most advanced opportunity for the expanded operation is the A4 deposit, located 8 kilometers west of T3. This exciting recent discovery has delivered some of the highest-grade drill results ever seen in the Kalahari Copper Belt. Sandfire has recently announced an updated indicated and inferred mineral resource for A4 of 134,000 tonnes of contained copper at a grade of 1.4% copper. A feasibility study is well underway on the development of A4 as additional ore feed to an expanded 5.2 million tonnes per annum Motheo production hub. Sandfire expects to make a decision on the A4 development and planned expansion prior to the commissioning of the Motheo process plant. Development of the Motheo project is now underway, with mining scheduled to commence in early 2022, and first production targeted for the first half of 2023. The T3 development is expected to deliver a major boost to the regional economy, generating approximately 1,000 jobs during the construction phase and around 600 direct full-time jobs during operations. At least 95% of the total mine workforce will be Botswanan citizens. An estimated 1,500 indirect jobs supplying provisions, parts, services and support are also expected to be created. The Motheo Copper Project is expected to be the catalyst that unlocks the potential of Sandfire's vast tenement holdings within the Kalahari Copper Belt. The structures which host strata-bound copper mineralization at the new Khoemacau copper operation are interpreted to continue for more than 150 kilometers under the Sandfire licenses. Sandfire has identified numerous priority targets for drilling, including the A1, T2E, A27, A13 prospects, and the deeper NPF contacts. Many of these targets have been identified using state of the art electromagnetic or EM surveys, which have proven to be an effective exploration targeting tool. Botswana is a safe, democratic, politically stable, and mining-friendly jurisdiction, with a supportive government, ranked 1st in Africa and the 11th most attractive country globally for mining investment by the Fraser Institute Annual Survey of Mining Companies. It also holds Africa's strongest credit rating of BBB+ from S&P. The development of its Motheo copper project will support Sandfire's ongoing vision to build an international, diversified and sustainable mining company. Sandfire's operations in Botswana will launch a new era of growth, with progressive, dynamic and socially responsible management serving both investors and communities. Sandfire is looking forward to playing a significant role in the development of the mining industry in the wider Kalahari Copper Belt, and supplying highly prized minerals essential to the decarbonization of the global economy. Sandfire: creating value through opportunity.

Thank you for that. And I'll just pass it over to Jason.

Thanks, Karl. On the 7th of July this year, Sandfire was very pleased to announce that the government of Botswana granted the mining license for the T3 Motheo project. This was the last of all of the major milestones required before the company could undertake full-blown construction of the project. Following this, the project team has updated the project development time line, and we're able to confirm that we're on track for first copper production in the second half of financial year '23. If we step through some of the key items that we have coming up on the project, the Camp environmental management plan is expected to be completed in the next quarter. The process plant engineering and preconstruction works, we've got a very early start on that, and we actually had a precommitment to that work prior to the completion of the feasibility study and prior to the final investment decision. And that has now advanced to a stage where we're at 78.5% completion. And we expect to have that completed or fully completed by the end of the quarter. The accommodation facilities, of which there's 2, and you saw some of the footage there of the construction accommodation facility which will be located directly adjacent to the plant infrastructure at Motheo; the second, and that is on track for completion by the end of this quarter as well. The final and the permanent accommodation facility, which is 750 bed, is scheduled for completion by the end of this financial year. Power infrastructure, including transmission lines and the substation, they're well on track and on target for overall project delivery. Process plant construction will commence in the coming quarter and was -- and is scheduled to go out through to December 2022. And following the appointment of Perenti or African Mining Services, a subsidiary of Perenti, as the mining contractor, we've been working together with them almost immediately to start design of surface infrastructure and support infrastructure. And we'll commence mobilization progressively over the coming year and gearing up to start production and sort of mine pre-strip before the end of this financial year. Process part commissioning is on track for second half of FY '23 and with first production, as I said, in half 2 in FY '23. I'll now hand over to Julian.

Thanks very much. In only 3 slides today, I'll try and convey the just extraordinary and quite unique opportunity that Sandfire has in Botswana. It really is out of the box. There's nothing like it globally. There are approximately 7 copper belts on this scale -- sorry, sediment hosted copper belts around the planet, of which the Kalahari Copper Belt is one. It's arguably and, I'm pretty sure, clearly the least explored of all of them. And the potential is still there in the ground. If we look at it on the plan that's up on the wall there, if you look, it's sort of divided into 3 parts. The Eastern part is dominated by Cupric Canyon Capital. And in that area alone, that's where the bulk of prior exploration has been carried out, so that gray color up there. And the dominant feature there, dominant mine is the Khoemacau Zone 5 mine, which, I think interestingly, is being mined underground through 5 declines along a 4.2 kilometer strike length. It's a large mine. It's 20-year-plus and around about up to 2 million tonnes of copper and resources. As the previous speakers pointed out, that potential that's up the Eastern end of the belt extends all the way through the Central part of the belt up to the Namibian border and, we believe, beyond that into Namibia. So for that reason, Sandfire through its acquisition of MOD back in October 2019 and through other additional acquisitions along the way, has now covered pretty well the majority of the potential outside of Cupric and this copper belt. I think other things I'd like to kind of convey is that really in the last 6 months has just been through the superb technical skills in Perth, supported by Perth, but in Botswana as well and just a wonderful team that we have in country on the exploration team there has really elevated our understanding of the geology and the structural controls of this copper belt and also really unearthed in our own minds and in others as well, I think just a really unique potential for more discoveries here. So this really is one of these very rare opportunities to geologists where you have free rein to test new ideas, to bring the best technology to bear and to find new mines. So we have a wonderful group of people managing that process. I think our priority, however, in the next 12 months, certainly, and we have a substantial exploration budget. And Karl's convinced me that on the next discovery, once we go into resource drill-out, don't worry, Julian, the money will keep coming. So thank you, Karl, for that. But our priority is what we call the Motheo expansion project. It's all about scale here. This is roughly 1,000 square kilometers with just in our own licenses within a 30,000 radius of the processing plant, which we saw on the video. It is extremely prospective, and the T3 deposit discovered in 2016 and the A4 deposit 8 kilometers away discovered in 2018, is just the tip of the iceberg. So I'm 100% convinced we have further mines to discover and develop within that expansion area. And outside of that, I think that there is excellent potential for new discoveries outside of that expansion project around Motheo. And if we look at the map there, there are 4 stars, there should actually be a fifth star in Namibia, but these are areas that we're currently drilling. So the A4 dome, we think there's a lot more potential, and my second slide will just home in on that because it just gives a nice kind of snapshot of why our geologists are excited and some of the potential in this Motheo area. 30 kilometers to the East of that and the second star, if you can see that up there, is the A1 dome, and we've asked the government to assist us with getting access onto that to commence a drilling program as soon as possible. Then so they're within that area, 50 kilometers to the north of Motheo, we've commenced drilling Ngamiland. This is a different district in Botswana. And it's a different geological kind of structural zone that hasn't really been scratched running through our licenses up in that area and drilling some pretty exciting targets there as well. So we'll find out how that comes out. And then to the Southwest near our hometown, if you like, of Ghanzi, where all of the current operations in country are managed from. You'll see another star, T23, T4, we're currently drilling in this area. For scale, just those -- that target between T23 and T4 is 15 kilometers long. So we're looking for things that are not small, not isolated, they are regional scale. And then in Namibia, as I said, a star missing there, but we are currently doing some RC drilling, trying to tease the geology and the geological context and structures that we see in Botswana across the border into Namibia and having some early encouragement there as well. I should say in the Eastern part of the belt, just if you look at metal content based on prior drilling, in the gray, in the Cupric Canyon licenses, approximately 6 million tonnes of copper in resources, of which 2 million is in resource at the Zone 5 mine. And really that displays a 20-year history of exploration drilling, resource development and now, of course, production from that mine. And at the 1st of July, Cupric, through a public announcement, announced their first concentrate production. So they did set a target of first production by the middle of 2021, and they got there on the 1st of July, so missed it by a day. Now the second slide is really just to show that the electromagnetics, airborne electromagnetics has been a breakthrough in this region. And this is just showing a 50-kilometer long section within our licenses around that T3 Motheo project, which is in the middle. So the very first discovery T3 was a very exciting moment. It looked like a mine pretty well from the first drill hole. Airborne EM was flown subsequent to the discovery and subsequent to the first resource and found a very similar domal shape feature called the A4 Dome at that time. And to give you an idea of scale, A4 itself is 9 kilometers long. We've drilled so far a section about 1.2 kilometers of that dome. And the A4 resource, the 134,000 ounces is contained within that 1.2 kilometers. So we're drilling at A4. We think this -- it's a very strongly mineralized dome. We don't really understand it yet. It's early days just on A4 alone. And we've got a couple of diamond rigs drilling there today. And if you look to the right-hand side of that image there, I'm not sure if there's a pointer here, but probably, you'll see another feature appearing there, the A1 dome. This is -- had 7 drill holes put in by MOD Resources back in 2018 and all intersected copper. And in a sense, it's just starting to show its opportunity here. It's 15 kilometers long, so you're dealing with, again, a very large potential target here. I think there's this thing here. So that is directly along strike from A4. And then we look on the left-hand side, and there's really 2 styles of deposit, 2 quite distinct styles. We're looking for high-grade vein-hosted deposits on the top of these domes or these anticlines. And the best in the section to date, just to give you an indication of the sort of tenor in the vein of these vein systems, 35.7 meters at 7.1% copper and 116 grams per tonne silver, so some pretty stunning intersections when you get in amongst these high-grade vein systems. And then the -- so that's the primary target. The secondary target is a contact we call the NPF contact, and that sits about 200 meters below the domes. We know that from drilling. And we've had quite continuous success with intersecting mineralization on that contact. It's deeper for us in this area. It's potentially an underground target, and we're continuing to deepen some existing holes and try and scope that out to an extent. And there are 2 sub types to this. The Zone 5 mine of Cupric, which is 100 kilometers to the northeast of where we are up in here somewhere along strike geologically is a sort of steep dipping 65-degree NPF contact deposit. That's one type, subtype if you like, of that. Underneath the domes, we see almost sub horizontal contact. It's always mineralized, and it makes a very compelling target. So then just to run on to my third slide, trying somehow summarize in one slide to try and illustrate the potential for further discoveries. Top right is a long section produced -- a long 4-kilometer section of the A4 dome. And it's Those slices that you see there are airborne electromagnetic section, CDIs they're called, but they show conductive versus nonconductive rocks. And very, very fortunately, the top of the mine sequence that we see throughout the region and throughout the basin appears to be highly conductive, and so we tend to see this strong conductive surface. So when we start to see this, we start to get excited. We know the geology immediately adjacent and below that becomes a target for us. And then it also shows the deeper NPF contact, which is around about 200 meters below that. Center of this particular dome here, the A4 Dome is the A4 resource, 134,000 tonnes of copper and shaping up very nicely and heading down the path towards a feasibility study as a second ore source for Motheo. What we have discovered by -- there's no adjacent drilling here except for 1.2 kilometers to the West and about 1.5 kilometers to the East, and both of these holes here have picked up similar style of vein hosted mineralization at depth. This hole was drilled originally by MOD. It was hole #2 asset turned out on the A4 dome. And I guess we're obviously pretty interested in what this potential could represent. So we're drilling those holes right now as we speak. We'll see where that leads us. But excitement levels amongst our geological team are very high at the moment. If we look below the cross sections there, I just want to make another point, the A4 dome, this is a cross-section across the A4 dome or the anticline, but dome is just a simple word for us to use. The resource sits up in this area here very near surface, and it's an easy open pit option for us. If we look 30 kilometers along strike at the A1 dome, we see through the airborne electromagnetic data a very, very similar structural position. You're seeing rocks that are being thrust over the top of other rocks and dislocated effectively along these dislocation planes. So we're seeing the same situation appearing here. And the style of deposit we're looking for is quartz-carbonate veins loaded with quartz-copper minerals, high value. And so with that, I'll hand back to Karl. Thank you very much.

Thank you, Julian. I just want to round out the presentation just touching on the U.S. and our strategy there. About 6 years ago, Sandfire invested in a company called Tintina, now renamed Sandfire Resources America, listed on the Toronto Venture Exchange. It in itself has a market capitalization of about CAD 250 million. We own about 87% of it. But more importantly, the objective here was we were pursuing a strategy to invest in quality copper projects around the globe. And this project certainly is an interesting one where we've now been working hard on to at least get it to a stage of initial feasibility. A couple of other points I'll make, but at this very high level, once again, I make the comment it's an initial feasibility study because we haven't had the ability to do a lot of work on the project whilst we've been looking to permit it. The #1 objective for this project was to see if we could permit a copper project in Montana. As I said earlier on, this is the first hard rock mining permit issued in that state in 22 or 24 years. And so we took the original data that we effectively had picked up when we made the acquisition some 6 years ago and worked that resource up. And we completed this initial feasibility study. Our target for this project over the next little while, as we're sitting here now, optimizing, we'd be looking at to improve that initial sort of production profile to over 30,000 tonnes of copper to get that mine life up to well and truly over a decade. Consequently, that will give us better production tonnes and ultimately change the economics at the bottom. And these numbers were all done at commodity prices, which I'm not going to dwell on effectively just as that first start to get this project up and running in terms of a commercial context. They're all done at low $3 a pound of copper. So the world's moved on. But really what we're doing here, it was strategically to create a footprint in the Americas. It's a good project, as I've said. The last little bit of exploration that was done outside of the original discovery envelope, the discovery was in the mid-80s by Teck Cominco. It was too small for them here in this part of the world. This project, private mineral rights, private land rights, private water rights. So it's owned by private landowners, the mineral rights. And it went back to those ranchers. And effectively, we, with a group of other people, reinstigated an interest in the project through the previous company and now the controlling group. But effectively, really, it is to, one, establish that we can get a permit, which we've done. And now we're dealing with a legal challenge that's been brought by some NGO groups. It's a relatively -- in our sense, a weak legal challenge. But once again, as we can all understand, the U.S. is a bit of a process that we need to go through that process of dealing with that challenge. Our expectations are that will take probably the next 12 to 18 months, as a guess. And by the time we get to the end of next year calendar, we would expect to be in a position that, one, we've dealt with the legal challenge; two, we've been able to optimize this project. And what we are doing during that optimization process is that we're looking at a secondary ore body that has been excluded from the feasibility study, the Lowry deposit. And we're doing further exploration work around that to look at improving the economics of the primary deposit of Johnny Lee. In addition to that, we are actually undertaking exploration for the first time. And so there's been no exploration in this region outside the discovery envelope ever, and it's a very prospective area for exploration. So work is continuing, and we look forward to sort of updating an optimized scenario with respect to that. And what I will say, it will be a part of the world that, once you have a permit, that is not subject to any legal challenge, it will be a permit you keep forever -- this part of the world. So all of these projects we have, have different positives and negatives about them, but we're really looking forward to establishing a number of projects in the medium to long term in Tier 1 jurisdictions around the world. And this will be certainly a foundation stone and a building block for us for this project but also for other project opportunities in that part of the world and demonstrating that we're able to stick with projects and also to deal with things like permits and legal challenges and get the job done. So I think it's an extraordinarily good skill to have to be able to do that, and we will continue to do that. Just to wrap it up, and thanks very much, everyone, for your time, and those people have dialed in, and this will be something that people can come back to as well. But really, we do believe that we have reset our business model, and we are on the pathway to moving into this vision of becoming a sustainable, diversified, global base metals company. And that is the focus of future-facing metals. And we can build off the assets that we've got in our business at the moment. And those assets are not just those commercial assets but also the people, their integrity, their capabilities, the other resources they've got endowed within the business. And as we do know and we hear many people talking about, it's not just the commercial elements and the business elements, but it's the ability of getting all your people to be aligned in the right culture, with the right values and to move together for a common objective and a common goal. And I do -- really do think we've got a number of those elements. We will have another production profile in Botswana that will continue to expand not only that project but along that belt. And I think just listening to Julian about the opportunity, he probably undersells it immensely. But we look forward. Obviously, the proof is in the pudding, and we need to do the work and get the results. And off the back of those results, then we can plan for it. But I have no doubt that there'll be great success there along that copper belt in Botswana and into Namibia. So we're really building a pipeline of projects around the globe in these T1 jurisdictions. We do have a refreshed group of people. We're very empowered. We feel very excited about what we're doing. And we look forward to continuing to doing our work and creating that value proposition and adding value for all of our stakeholders, which is our objective. So thanks very much for your time, everyone and listening in today. And really now it's an opportunity to ask questions in a bit more detail and for us to give you that ability to do that. So thanks very much.

Thanks very much, Karl. Good afternoon, everyone. My name is Nicholas Read, and I'm pleased to be emcee-ing question time on behalf of the Sandfire team. So we are going to do questions in 3 parts this afternoon. We're going to start with the people who have dialed in to the teleconference, and there's about 25 of them online at the moment. [Operator Instructions] We are then going to do online questions, which will come directly through to my laptop here. [Operator Instructions] And then we'll finish up with questions in the room, and we do have a roving microphone as well so that everyone listening in can hear the question. So we'll start with the teleconference, so I'm going to see if Darren at the back can please dial us through to Chorus Call. I think Melanie, our operator, is there. Melanie, can you hear us?

Yes. [Operator Instructions] Our first question comes from Peter O'Connor with Shaw and Partners Australia.

Three questions, if I may, Karl. Firstly, just by way of [ development ] time line. Richard talked about the Cobar drilling and feasibility. Could you just confirm, is the outcomes of those are due calendar year or in fiscal year '22? And likewise, with Botswana, upgraded the feasibility study and drilling there, we expect that calendar year or fiscal year '22?

Yes. So sorry, it's Jason here, Peter. So in terms of the Cobar drilling, and you're happy if I answer this, Richard?

Yes.

So look, we're actively drilling there at the moment. We've got one drill rig going. We are operating at a slightly lower activity rate than we would at the moment given the COVID situation in New South Wales. We are going to drill particularly in and around, particularly that Endeavor South and in close proximity to the old Endeavor mine. But we've also -- Damien and his team have got a number of regional targets there as well that we are working up in terms of a pipeline that Richard referred to before. So in terms of delivery, we expect to have completed a lot of the work around the Endeavor South drilling before the end of this calendar year, and we'll continue to do that work and work on that pipeline really quite heavily over the remainder of the financial year and out probably at least for another 2 years after that.

Okay. Can I ask, is the Cobar program just about the drill bit or is BD a part of the strategy in the Cobar area?

Look, we are actively looking for opportunities in that region as well but mainly at an exploration level at this point in time.

And a question for Julian. Are you constrained in terms of Botswana by dollars, people, COVID -- what's limiting you from getting the resource any quicker? And what would you cap out the resource out of this [indiscernible] going ahead with 50,000 tonnes or 60,000 tonnes or whatever the number may be with production rate? Just trying to understand the moving parts for exploration and finding more versus building a bigger plant.

Yes. Peter, I heard most of that question. In terms of constraints by COVID, obviously, Botswana, like every other country, has been impacted. We've managed to continue drilling, apart from a short lockdown period back in May last year. So we had a lockdown there for, I think, went for 3 weeks. But we've managed to really continue business as usual as certainly as best we can. We have established isolation facilities. We established separate accommodation to try and separate our teams and our drilling companies. And it's going really, really well. And we're very fortunate to have started, I guess, with a solid group of around about 80 people in our exploration team in Botswana that tremendously committed to Sandfire and what it's trying to achieve. They understand the potential and the future for Botswana. So the morale is excellent. The work is continuing. We have had some COVID cases, but it's been very well managed with all the right protocols, testing and isolation in place when we need it. So...

I think Peter's other part was, was there any other restrictions that you've got about checkbook or any other items?

I didn't hear that part, Peter, sorry. I guess we're on private farmland, and there's a long history of farming there. And so clearly, people seeing an opportunity there for us. We have access agreements with dozens of farmers to go and explore. And of course, they all want us to find copper. And I guess things change from that point on. But we've acquired -- or Sandfire has acquired 2 farms so far, 1 over T3 and 1 over A4. Each farm was roughly 50 square kilometers, and some are held in groups by one family or something like that, but it's working.

So when you said you're looking at the government support for one of the areas you're looking to drill, is that because of farming or farmer intervention?

There is a bit of pushback from one farmer there, and the government wants us to explore. They want us to bring more mines online. And that A1 area particularly is a very high-priority target for us. And we keep the government informed very closely of our successes or our various milestones along the way, so they have sort of stepped into trying to pursue that access agreement as soon as possible.