Sandfire Resources Limited (SFR) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Sandfire Resources FY '22 Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Ben Crowley, Head of Investor Relations. Please go ahead.

Good morning, good afternoon, everyone. Thank you for joining us today as we present our FY '22 financial result and also the DFS for the Motheo expansion. With me today in the room, I have Karl Simich, our MD and CEO; Matt Fitzgerald, our CFO; Jason Grace, Chief Operating Officer; and we also have Richard Holmes, Executive for Growth, and David Wilson, our Head of Technical Services. Karl will give us some opening comments and run through the highlights of FY '22 and the DFS, and then Matt will step through the financials, and Jason will take us through the high-level outcomes of the DFS. And with that, over to you, Karl.

Thanks, Ben, and welcome, everyone, to our year-end financial results at 2022. And also pleasingly, our announcements today regarding the expansion of the Motheo operations in Botswana to 5.2 million tonnes. Just as a highlight, we continue executing our vision, creating value through opportunity and our mission to build an international diversified sustainable mining company. And as we roll through this presentation today, we remain very focused and marching forward on delivering on our strategy and always ensuring we maintain our values at the very core of our business, which effectively underline and provide the culture of our business. In terms of scale, we continue to move forward. And as we go through this transition, we will continue to be moving toward being one of the largest copper producers on the ASX. And obviously, in those future-facing metals, and we believe through the jurisdictions that we are in as high-quality jurisdictions, a great ability to pivot off that and also working through those large exploration endowment that we have and a large exploration footprint both in the Kalahari and the Iberian Pyrite Belts. We essentially have earmarked somewhere in the order of 6 million ounces of contained copper equivalent metal in either resource or T3 inventory that sits within all of the large ground holdings that we have in our various projects. And this is a dramatic change from where we may have been from 2 years ago, where we were effectively moving towards having very little in the way of resources in our metal inventory, and now we're sitting on that pipeline of inventory. So we're really looking forward to then extracting value from that as we transition to our business at the moment. Flicking into the headline financial results and a lot of this information was pre-released earlier on in the quarterly. But just important to highlight record revenue for the last financial year, USD 922 million. And all these numbers are in U.S. dollars. A very strong group. EBITDA margin of almost $450 million and a pleasing second largest profit after tax we've ever recorded of USD 111 million. So very pleasing financial results for the year that we've just had, and the ups and downs and the vagaries of gyration in those markets and commodity markets towards the end of that financial year as well. Strong cash position at the end of the year at USD 440 million -- sorry, USD 463 million from those very strong cash flow generation through the course of this year and net debt at the end of 30 June of about $320 million. I would just like to highlight; Matt [ who is ] the CFO, will give further detail. But prudently, the company believes it's vastly going through this large transition of our business and transitioning of our balance sheet off the back of major transactions with MATSA of about USD 1.9 billion and a large expansion of Motheo from 3.2, also now up to 5.2 million tonnes per annum and that expanded global capital expenditure of about USD 400 million, prudent to put a pause on dividends. Matt will give you a little bit more detail regarding that. If I look at the financial operating highlights for the last 12 months. We produced order of magnitude about 115 kilo tonnes of copper equivalent between copper and zinc at an all-in C1 cost of 127 [ per ] pounds of payable copper. When we look at the combination of what MATSA, we'll do it at 4.7 million tonne throughput and ultimately, Motheo at 5.2 million tonnes, as we head into the mid-financial 24 year, we'll be operating at a combined throughput rate of some 10 million tonnes per annum, and we'll be targeting a production rate of about 150,000 kilo tonnes of copper equivalent, predominantly made up of copper but also significant quantities of zinc as well. As I said, during the course of this year, we completed the MATSA acquisition for about $1.9 billion. We've done -- that's transformational for our business, probably the single most important thing that's occurred to this business since the discovery of DeGrussa, that is integrating, and we are well and truly seeing the benefits of optimization improvements as we work through and getting our feet under the table with MATSA. What I would like to highlight today, though, is the Motheo copper mine development and its progress and its expansion, we've done lots of work. It's advancing extraordinarily well. Production will be looking to ramp up in the June quarter of financial '23. And what was approved by the Board yesterday was the formal expansion to 5.2 million tonnes per annum. The feasibility study has been received. The Board has approved that expansion, and credit funding appropriate for that expansion is in place, and Matt will also, the CFO, will also give you some further detail on that. We also continue -- and Richard Holmes will give you a glimpse into the wonderful opportunity that we see in the Kalahari Copper Belt, and he will talk to about our expanded exploration activity there. So we are building these operations for the future and for we would expect many decades to come. If I just quickly [ turn ] for a bit of completeness housekeeping. The MATSA acquisition, which was completed, it really is just for a complete presentation. The type of funding that was used for that transaction, the financing facility and some hedging that we put in place for that. Quickly turning to group production for the year. Just really to highlight that we had a very strong finish for the year. It was a very strong year. We achieved over guidance from MATSA of around 3,000 tonnes of copper equivalent for the year and DeGrussa was at the top end of its guidance. So a very strong year with effectively a copper equivalent production of 115,000 kilo tonnes of copper and about 82% of our production for the last financial year in copper metal as future-facing metals. I look forward to handing over to Matt Fitzgerald now to continue with the detail of this presentation.

Thanks, Karl. We're just presenting here the EBITDA contribution from the different operations and development projects. As you can see on the left, as we've released previously. DeGrussa a very strong year, above guidance production for copper and delivered an operations EBITDA of just under $400 million. Obviously, very pleasing. MATSA, in its first 5 months of our MATSA ownership from February through to June. $150 million of EBITDA. So a combined $543 operations -- million in EBITDA in U.S. dollars, as Karl mentioned. Continuing our progress at Black Butte in terms of permitting and also drilling. Motheo as well in terms of exploration interest and exploration and project development, particularly as we're looking at A4. And then across our exploration drives across our strategy, to remind everyone, we do expense exploration as we go. And also around 1/3 of the exploration and other costs in there relate to MATSA acquisition costs that went through the P&L. So in total, group EBITDA, a very pleasing $447 million for the year, as previously announced. Looking to comparison year-on-year and not surprisingly from $237 million last year to $247 million this year, the majority of the difference comes from the addition of MATSA so period-on-period, got MATSA coming in, as I say, from February -- February to June in terms of its financial results adding $313 million of revenue and associated side. And then also, of course, on the operating cost, employee benefits side, producing, as you can see between those 2 bars relating to MATSA effectively, the EBITDA around the EBITDA number. Also, some movement in exploration, fairly minor year-on-year. Some additional support costs in terms of administration of moving the business to a more global business and a support structure for that. As I said, also in the P&L for this year, some MATSA acquisition costs, which clearly won't continue into the future P&L. So year-on-year, pleasingly increase of EBITDA, as I said, largely driven by the acquisition of MATSA and the contribution of MATSA in those first few months of ownership. Looking at the cash flow. We've also had this out for the June quarter, but just to run from left to right to remind everyone. $149 million presented here for the cash used for the acquisition of MATSA, as Karl mentioned, there's some obviously larger numbers in terms of equity raisings and debt, we've netted them all off for the purpose of highlighting more of the operational side of cash flow. DeGrussa cash flows from operations, just over $400 million around the EBITDA number. MATSA contribution from cash $218 million is above its EBITDA number, and that has some adjustments coming in terms of cash flow in terms of QP alignment during that year so that will come through into the September quarter. Although we do note a recovery in copper price, so we will see some offsetting of some of those booked QP adjustments of last year, probably coming at this stage, coming into the early part of financial 2023. And we'll see that when we put out our September results and cash movements for the September quarter during October. Mine development. As we've mentioned before, $200 million of mine development and CapEx. $131 million of that is developing the Motheo project, the 3.2 million tonne per annum scenario, and Jason will talk shortly about the expanded project. MATSA $36 million larger on the mine development side and accessing new mining areas, DeGrussa and Black Butte make up the difference. Exploration is also Motheo -- very heavily weighted towards Motheo for the period. Of the exploration spend $19 million was Motheo and also the $23 million that we have spent on exploration and evaluation activities at DeGrussa over the financial year. And we sold our investment in Adriatic around the time of the MATSA acquisition, which assisted the balance sheet in terms of entering the MATSA transaction. And into income tax, $132 million paid out in terms of cash flow for the year. Probably just worth noting here, you might note from our financial results, there's a higher effective tax rate of around 44%. There is a note in the financials Note 7, which takes you through the very, very detailed sections. But in a higher level, DeGrussa's future rehab obligations on balance sheet see a $9 million charge to income tax expenses that unwinds and $10 million impact of the nondeductible costs of the MATSA acquisition, given it's a foreign acquisition in a foreign jurisdiction, around $10 million of income tax expense related to nondeductible MATSA acquisition costs. Dividends during the period. Pleasingly, we did pay USD 42.4 million in dividends, representing the final dividend of 2021, which we paid just prior to the MATSA acquisition. And we also paid a $0.03 interim dividend earlier in the year, and I'll mention -- talk about capital management and our dividend shortly on the next slide. Now over time and other parts that come into that in terms of corporate and other parts of the business, overall, a $32 million increase in cash. At the end of the year, $463 million in treasury. So moving to dividends and noting that Sandfire has a very proud history of dividend payments, particularly from strong operating cash flows at DeGrussa and what we expect from strong operating cash flows from MATSA and further into Motheo, we'd expect to also continue to be a dividend-paying company. And that philosophy certainly hasn't changed. We have decided at this stage though, to pause dividends in this transformative year, and transformative not only in terms of the business, but also in terms of the balance sheet transition. And as I did note before, we had -- we did play out $42 million of dividends during this year. Really moving at this stage to a capital management focus. We do need to make sure that we appropriately fund and build the 5.2 million tonne per annum Motheo copper project as we've announced today, very pleasingly to get credit approval on the first part of that funding facility. And we also, of course, through the MATSA acquisition, took on -- set some debt that was already in MATSA and took on some additional debt in terms of that. So we want to be sure that we are well positioned to make those, that aggressive debt repayment. I'll talk about that in the next slide. Repayments, I'll talk about that again in the next slide. The back end of DeGrussa as DeGrussa finishes processing under our guidance around the end of October or early November. We do have around $70 million of balance sheet movement in terms of DeGrussa's closure and payout of creditors and work final working capital positions, as well as the payment effectively almost entirely DeGrussa-related for the financial 2022 year at the back end of this calendar year. So all DeGrussa-wise, the next 6 months will see us pay out around $70 million of DeGrussa closure. Also in our corporate facilities we know also related to the MATSA acquisition to $138 million or $200 million -- [ denominated ] in AUD 200 million, and we have that cash sitting aside ready for the end of September bullet repayment. Really an objective in terms of the next sort of 6 to 12 months is that capital position to support our Ore Reserve growth, particularly around MATSA exploration pushes around MATSA and Motheo and our capital development programs and also working to build, actually build an appropriate working capital position in the business after debt repayments to make sure that we are able to do all of the things that we are looking to do in terms of our strategy. So as I said, pausing dividends for now, but we obviously hope to bring them back in the not-too-distant future. Moving to debt facilities and hedging now. As we know, a $650 million facility at MATSA related to acquisition, we have those repayments due during the year. Our corporate facility, as I've mentioned. Our current repayment profile as a returning around 43% of our debt balances to repaying those during the financial 2023 year. So we clearly leveraged up for the MATSA acquisition, which we're very pleased with. And this is a time of balance sheet transition and consolidation. Motheo facility supporting the initial T3, 3.2 million tonne per annum base case. And we're very pleased to state that we have credit approval from the banks for $140 million facility. That's out of what we're scoping around a combined $180 million to $200 million facility support what is the larger operation of 5.2 million tonnes at Motheo producing up to 55,000 tonnes per annum of copper. So as I say, scoping $180 million to $200 million and at the initial stages is the credit approval received and pleasingly received and Board approved in terms of the $140 million facility, which would be a 7-year facility at this stage, and we're very close to finalizing the documentation and we're signing those documents hopefully in the next few weeks. Our hedge book is, again, protecting our cash flow to a certain extent. As we saw towards the end of the financial year, we saw copper and zinc -- both come down. Zinc has recovered very strongly and copper has also commenced its recovery. The last -- when we put out the quarterly, I think our copper hedging for the next financial year was around 25% above spot. It currently sits about 15% above spot. So that relates to the recovery in -- recent recoveries in copper prices. We also have that copper price protection in terms of cash flows and debt repayments and working capital into the future exactly as designed.

Okay. Now moving on to the development of the Motheo copper mine in Botswana. Firstly, as a quick update on the development of the 3.2 million tonne per annum project. Construction continues to proceed on schedule with first production expected in the June quarter of 2023. Construction activities are now around their peak levels with over 1,700 personnel currently on site, over 9,200 cubic meters of structural concrete has been poured and a total of 950 tonnes of structural steel has been erected to date. In addition to this, Sandfire has now achieved another important milestone in the company's plans to establish a major new long-term copper mining hub in the Kalahari Copper Belt. This is through the completion of the definitive feasibility study for the 5.2 million tonne per annum Motheo Expansion Project. This project includes the development of the A4 open pit mine and delivers outstanding project economics, including a pretax NPV of USD 548 million and an IRR of 29%. Finally, Sandfire is also very pleased to announce that Motheo funding has also taken a major step forward. The selection of the syndicate of international banks now completed, and credit committee approvals received for a USD 140 million project debt facility. If we now look in more detail at the 5.2 million tonnes per annum definitive feasibility study. Completion of this work has confirmed a very strong business case for the development of the A4 deposit as part of an expanded 5.2 million tonne per annum Motheo Production Hub. And this is underpinned by our combined Ore Reserve for both the A4 deposit and the T3 deposit of 49.6 million tonnes at 1% copper and 14 grams per tonne silver for close to 500,000 tonnes of contained copper and over 21 million ounces of contained silver. As mentioned before, the project delivers very robust economics over a 10-year mine life, which is scheduled to produce a total of 440,000 tonnes of copper and 18.4 million ounces of silver and an average all-in sustaining cost of USD 1.79 per pound. Total development capital for the expansion project is estimated to be $397 million, and this includes development costs for the A4 open pit and 5.2 million tonne per annum plant expansion of $47.9 million. Subject to contract award timing, site construction activities for the process plant expansion are scheduled to commence in the March quarter of financial year 2023 and increased plant throughput at a 5.2 million tonne per annum rate expected to commence in the March quarter of financial year 2024. As part of the definitive feasibility study, the life of mine plans for both the T3 open pit and the A4 open pit have been integrated and optimized for a combined ore production rate of 5.2 million tonnes per annum. This yields a peak annual copper production of approximately 55,000 tonnes and maintains around 50,000 tonnes per annum production rate over a 6-year period. Subject to the approval of the environmental and social impact assessment and granting of the mining license for A4 by the Botswana government, pre-strip mining at A4 is anticipated to commence by the March quarter of financial year 2024. Formal submission of the environmental and social impact assessment to the Department of Environmental Affairs in Botswana is planned for the December quarter of financial year 2023 with final approval anticipated by the middle of next year. Looking now at the key definitive feasibility outcomes. As mentioned before, project economics are definitely very robust and make a major difference to the overall project. And these have withstood the significant increases currently seen in the input pricing from mining costs, diesel supply, reagents, grinding [ media ] and labor. As some of these numbers have been covered before, I won't go through all of them, as shown on the slide, but I will touch on the estimated operating costs with the C1 cash costs over the life of mine and on a payable [ copper ] basis is estimated to be approximately USD 1.47 per pound of copper. And this includes $0.84 per pound in mining costs, $0.56 per pound in processing inclusive of power and site administration, offsite logistic costs of $0.23 per pound, $0.19 per pound in treatment and refining charges and a silver byproduct credit of $0.35 per pound of copper. If we now look at the expanded mine layout. In completing the DFS, Sandfire has been able to leverage off the work currently underway for the development and construction of the 3.2 million tonne per annum project as well as the prior work completed on the 3.2 million tonne per annum feasibility study. Mine facilities for the expanded project includes surface mining operations at the A4 deposit, expansion of the processing plant and supporting the infrastructure. New infrastructure for A4 includes a light vehicle access road, linking the open pit mine to the already constructed access road for the Motheo site, a dual-lane heavy vehicle haul road to be constructed directly from A4 to the Motheo processing plant, workshops, fuel facilities, [ crew ] and office facilities along with electrical and water supplies. The recently completed Motheo mining accommodation facility requires no expansion as provision for additional personnel numbers were incorporated in the scope of the original Motheo project. Planning is also well advanced for a 22-megawatt solar power facility and battery energy storage system. The solar plant will be located next to the processing plant, with the potential to supply up to 34% of the project's future energy needs and will reduce carbon emissions by 475,000 tonnes over the life of mine. Capital for the solar plant is currently not included in the life of mine capital as firm pricing submissions are currently being sought. If we now drill down on the processing plant area, as you can see, expansion to 5.2 million tonne per annum will be a very simple process with the addition of a 4.5-megawatt ball mill being the only major piece of infrastructure required. The reason for this simplicity and overall efficiency is due to Sandfire's discovery and drill out of the A4 deposit during the period when the original Motheo definitive feasibility study was being completed. This allowed us to design the processing plant exactly for this outcome, which was to be readily scalable to 5.2 million tonnes per annum. And finally, looking at construction and development capital. The total development capital for Motheo is now estimated at USD 397.4 million. This includes $47.9 million for the future development of the A4 open pit and the 5.2 million tonnes per annum plant expansion and also includes the $29.5 million increase in capital cost forecast for the 3.2 million tonne per annum project as disclosed in the company's June 2022 quarterly report. Please note, as shown on the slide, about $71.9 million includes $24 million of preapproved capital. Life of mine capital is estimated at USD 499 million, and as at the 31st of July 2022, the company had invested $185.4 million of the total $397.4 million of the development capital.

Now moving on to Motheo exploration. Let's talk a little bit about our dominant position in an emerging belt. The Kalahari Copper Belt is probably one of the most underappreciated belts around the globe. And putting that into context that the known endowment of dispel already is 9 million tonnes of contained copper, and that sits around -- in around 20 deposits. The reason why we like this belt is the average grade of those deposits is around 1.4% copper. And if you look around the globe in operating mines, the average grade around the world at the moment is around 0.5% copper. If you look at the pipeline of the study projects coming on, again, is around 0.4% to 0.5% copper. So we think we've got an amazing opportunity in this belt to bring on high-grade deposits into the Motheo exploration portfolio. [indiscernible] has seen a little expression over around 15 years. So just over 600 holes drilled. If you look at our land holding sitting around 26,000 square kilometers equates to 1 hole every 40 square kilometers. So we think we've got a real opportunity here to build out large regional data sets, build our targeting models to really push forward exploration and bring on those new discoveries. So big focus going forward for the year will be A1. So A1 is a prospect that sits around 19 kilometers from Motheo as the [indiscernible]. A significant amount of work has been undertaken here already. We've done a fair amount of billing and some [ IP ] and EM. We've identified a prospect has got about 9 kilometers of strike. Previous operators, the MOD Resources discovered significant worth of copper mineralization at the NPF contact, so relatively deep. We have a slightly different approach in different geological model. And our challenge now is to locate high-grade [ economic ] mineralization near surface in the D'Kar formation. So we're working hard on that at the moment. So the exploration budget going forward for the year for the Kalahari Copper Belt will be around USD 13 million, and a significant portion of that will be aimed at A1 in helping build out our mineral inventory to support the Motheo processing plant.

Thanks, Matt, Jason and Richard. And just really to wrap up. Thanks, everyone, for attending today. We're very pleased with the very strong financial results for the last financial year [ through ] June '22. We're delighted to be announcing today's expansion with Board approval and funding appropriately for the Motheo facilities to 5.2 million tonnes as we continue to transform our business and work towards that global vision of having those global capabilities as we build a diversified international sustainable mining company. Look forward to your questions, and we'll open the floor now to that. Thanks very much for your time.

[Operator Instructions] The first question today comes from Rahul Anand from Morgan Stanley.

Look, two questions from me. First one is around dividends. Obviously, you've chosen to suspend them today, and you've talked about how you can reinstate them going forward. So I wanted to get a bit of a framework perhaps. How are you viewing your target net debt? I mean on my numbers, you're basically sitting at 1 to 1.5x net debt to EBITDA next year, 20% to 25% gearing. What kind of level do you want to get that down to before you can recommence dividends? That's the first one, and I'll come back with a second.

Thanks, Rahul. Karl here. I think, Rahul, just at the moment, what we need to do is, as we go through this transformation is deal with what we have in front of ourselves. Clearly, the acquisition of MATSA was a transformational transaction, and we put the balance sheet to work. And at the same time, we are working towards that expansion of Motheo, which is in the best economic interest of all shareholders to do that and to accelerate that expansion. So I think with that, we don't have -- we have not set a target ratio at this point in time, Rahul. We will work for, I suppose, through the financial '23 year to attend to those debt structure and repayments as I currently anticipated and build it up. And I think when we see things roll out, then we'll start to put together target numbers and target ratios. But I think as we go through this period of significant transformation and change, we just need to work through that. So we don't have target numbers in front of us at the moment for those numbers.

Sure. Okay. No worries. And then, Karl, look a good result in terms of that expansion study at T3. Perhaps wanted to touch upon potential to extend life. I mean, there's an additional 5 years sitting in the resource both to the reserves. Is some of the drilling work that you mentioned just towards the end of that presentation, is that targeted towards life extension? Or is this, I mean, infill? Or is that more exploratory drilling to basically expand the resource base? I just wanted to get an understanding when we can start giving you a bit more credit in terms of the life of the asset beyond sort of the 10 years that we currently have.

I will pass it to Jason 1 second, other than to say, I think some of the highlighted points that Richard made is that we have 26,000 square kilometers of tenure in the Kalahari Copper Belt. And just a real highlight again just the endowment that is there at a very underexplored province. So I think it is a very, very long journey here, and we're at the very early stages, but over to you, Jason.

Yes, Rahul. Look, there's a number of things that are happening at the moment. We believe there's still some more tonnes to be had or Ore Reserves to be had at A4. So we have factored into our budget this year and for next year as well resource extension drilling that may or may not extend the A4 open pit, but all indications are at the moment that, that is highly prospective, and there's a good likelihood. And particularly, I'll hand over to Richard, but the work being done around A1 and up at T1, T2, and in particular, that area that we've called in the past, the Motheo project area, is particularly exciting and I think highly prospective.

So yes, Rahul, the budget I talked about is it's greenfields exploration, but obviously being focused on A1, T2, which are easily within tracking range of the Motheo processing plant.

Got you. Okay. Final question from me then around MATSA and solar. Obviously, gas prices, energy price is very volatile at the moment and perhaps improving economics for additional solar, I guess, by the hour rather than by the day. How are you viewing that opportunity? What is the update there? Is there a change in scope? Can we make that bigger? I just wanted to sort of get an idea of how we're thinking about energy costs at the asset going forward.

Rahul, Dave Wilson here. Look, we have our plans at MATSA for solar I think we've spoken about it before, but we have an initial 20-megawatt facility, which there's a signed agreement. That one is expandable to 40 megawatts, which then we're looking at now there. So that project is the most advanced, and that one we based at the [indiscernible] the Southern part of the MATSA operations. We're also in the turnover working through an additional 20-megawatt facility near our West [indiscernible] concentrator. So that one is a little bit early stage. So all in all, we've got 40 megawatts capacity in the pipeline. And just to put that, I guess, as a reference point, our [indiscernible] demand were somewhere around 37 to 39 megawatts, so that would cover 100% of our new plan -- obviously, they're generating 100%. Beyond that, we'll need to look at the ore storage and other things, [indiscernible] many options.

That's helpful. And how should we think about timing of these coming online?

The first one, where timing towards the end of quarter 3 FY '23 related [indiscernible] and the other one, we're still working through a provider to get a firm date [indiscernible].

The next question comes from David Radclyffe from Global Mining Research.

My question just comes really to the balance sheet. And as you put it, the aggressive debt repayment profile this year. Just trying to understand why you really chose not to restructure the maturity profile to better suit the needs of the business, given that it seems to have cost in a token dividend here. And then in the absence of sort of debt targets as the, as you were asked before, how should we think about what you're thinking here? Are we being just conservative? Or do you see other opportunities you want to present the -- or position the balance sheet for?

David, Karl here. Look, just very quickly, I think initially, when we look at the transaction of MATSA, which has been ended up with the structure that we've got. If we just go back 1 step. MATSA transaction was order of magnitude about USD 1.9 billion. Clearly, transformational for us in terms of scale and what we believe it will ultimately deliver over a -- put our hand on heart and say a 10-, 20- to 30-year mine life, lots of exploration potential and significant footprint in the Iberian Pyrite Belt. If we sort of go through the bouncing ball, we maximize the quality of debt, equity that we could raise on a 1-for-1 equity raising with an ASX-approved waiver for a 30% placement. So there was not one more share we could issue. We inherited the -- with the blessing of the previous vendors, the debt facility that was within the project of MATSA itself, and so that just got rolled over. And then we looked at what our cash requirements were from our expanded large treasury or just our normal business requirements from the Motheo expansion. At the time, we also had a sense that there might be requirements for further expansionary capital for Botswana. So we had that factored into our modeling. And therefore, there was a quantum that we could -- we were happy to release out of our treasury, and then the balance was extra debt that we wanted to secure -- that had to be secured above the MATSA asset in a holding company and that was a balance of debt in fact, the gross MATSA debt up to $650 million. So it wasn't, it was really out of necessity as to be able to complete the transaction at the time, extraordinarily quickly with effectively limited options available to achieve it without going to -- information being leaked to the market or any of that sort of other stuff. So we sort of got what we got. So -- and things like we grew down also on a corporate facility with the ANZ Bank for a couple of hundred million Aussie, and that was all to complete the transaction. It was what it was, and it would enable us to be competitive and complete that transaction. So we didn't sit here in luxury at around going around in circles about what debt amortization look perfect for the project. And that will all occur over a period of time as we're going through balance sheet. So I think we need to go through this period of time, it will be the next 6, 9, 12 months. As Matt said earlier on, 43% of the current debt profile is repayable within this current financial year, which is not normal smooth amortization of debt facilities but it is what is required to get the job done back on settlement of first of February of this year. So it is what it is, and that's what we're dealing with. There's no problems. We knew about it, and we're catering for it and the business is set up to deal with that and complete all the other strategic imperatives that we have got without compromising this strategy that we have got on table. What will occur through the course, I have no doubt of this year and as we get time to integrate all of these [ big ] things into our business and complete the Motheo construction and ramp it up is that we'll start to modify and work within having target debt ratios and all the rest of it. So it really is as a matter of necessity to get something done, and we're in this position. And as we see things roll out, we will start to cover look at how we want at MATSA, where we want working capital to be, what our dividend philosophy is going to be, what our target debt ratios are going to be. That is not something that we need to focus on because we've got far more important things here right now to focus on, which is the completion of the integration, which is going well with MATSA, fantastic expansion, optimization and for the completion of construction and expansion of Motheo. Absolutely, it's on schedule, on budget, on -- when I say on budget, time-wise. There's been a little bit of an uplift in cost, which is relatively insignificant comparable to what's happening in the rest of the industry. And we've had a 10% uplift. And during this period of supply chain disruption and COVID is relatively low, we've had to find that from our treasury to fund that clearly. But importantly, for that asset to optimize that business unit, it is to accelerate that development into a double it's T3, A4 as quickly as possible because the returns are significantly greater than that otherwise would be. But at the same time, not to prejudice our organic growth development at MATSA but also exploration of Botswana. So there are a number of moving parts at the moment. I think at an appropriate time, it won't be too far way down in the future. We will be able to get back to those more mainstream things of ratios and what's your sense of that after we've gone over the transitional hump. So it doesn't pinpoint and answer your question. It gives you a sense of what is going on. And the importance of being -- we're very focused at the task at hand at the moment and doing exactly what we said we're going to do in dealing with -- achieving our targets and milestones and delivering back on the requirements of our syndicates and debt ratios and repayments and all those other things. So -- and then going back to the dividend, it's just prudent to go and say, well, we're doing that when we're in the middle of doing extraordinary transitional transaction, 3x the size of the company and doing a large development that's expanding as we're going along, which is all on track. So it's just sensible, the Board management being sensible and prudent for where our business is today -- give us a general sense of where we are as an organization.

The next question comes from Matt Greene from Credit Suisse.

I just have a few questions on the Motheo study. Just to start with on the economics. The NPV -- the reference date today for the [ PFS ] versus the [indiscernible] study, are you using the same reference date to that?

Reference dates?

I mean is the feasibility study NPV as of today, whereas the PFS is as of 12 months ago?

The PFS and the feasibility are pretty much the same date. They are the same dates.

Okay. So that's September last year, I take it. I'm just trying to bridge the gap between what's driving that 20% drop in NPV. We know that CapEx has stepped up a bit, and you've mentioned some of the cost pressures, but I'm just trying to get a sense as to how much of those costs because it does seem like the profile at T3 has changed a fair bit. I think it would be [ PFS ] if I just have all the copper production profile, 27, 28, you're reaching 60,000 tonnes a year. But now it seems like you're peaking up at 50. So can you just perhaps talk about what's changed on the profile? Because the grade doesn't think to change a great deal. So is this more about managing the strip?

No. That's absolutely correct. So if you look at it, our Ore Reserve hasn't changed at all from base pre-feasibility through to feasibility study on that. So that's for both A4 and also the updates that we've used on T3. The one thing I'm not sure if you've seen the ASX word release or the broader report, it does do a reconciliation there about changes or key changes and assumptions between the pre-feasibility study and the feasibility study? So that hopefully might give you some more insights in there as well. But if you look at metal production, in particular, what we have done is integrate the 2 mine plants, and we've also optimized those mine plants for actually that lending configuration and also our open pit mining schedule. Now the only thing that has shunted some metal around in terms of changing of timing. We actually changed our staging designs in the A4 open pit between the pre-feas and the final feasibility study. The pre-feas actually used a 3-stage pit on A4. But when we looked at that in more detail from a mining efficiency and a cost point of view, it was actually more efficient to actually change that back to a 2-stage open pit.

Okay. And the T3 stating hasn't changed?

No, it hasn't.

Okay. That's great. And Matt, just on the project finance facility of $140 million. You said it in the first half, hoping to get it up to $180 million to $200 million. If you can increase this, when do you expect the balance of that facility to flow through?

We're targeting probably somewhere around the middle of calendar year next year. So the process now will be -- the banks clearly are aware of A4 and they also have in their head a 5.2 million-tonne per annum project as a full project. But given the completion of the DFS and an approval of the DFS, those banks, the funding banks, will have a look at that combined model. As Jason mentioned, it does reschedule and does optimize T3 and A4 together. So there will be an impact on their models as well of that. So I'd expect that probably something like a 6- to 9-month process in terms of engineering experts and most of the things to run over the combined model. But as I say, Sandfire and those banks, I can safely say, have a 5.2 million-tonne per annum project ultimately in their mind.

Okay. That's helpful. And I heard you mention it as a 7-year term. So sorry if I -- I'm sorry if I missed this, but when do the repayments commence? And is this a pretty flat amortization schedule?

Yes, 7-year term. They are current -- we are currently sculpting the repayments under the model and the final debt facility documentation. So that will come out, I'm guessing at this stage, during September, we'll have a bit more detail. But that's not exactly final yet. It'll be sculpted based on the final agreement. At this stage, debt repayments would start towards the back end of calendar '23.

Understood. And just lastly, Karl, I think I may have heard you correctly. Did you say that you inherited the $650 million facility at MATSA?

The MATSA facility, when we completed the acquisition, there was an initial facility within MATSA of USD 313 million, so we effectively roll that over. And in addition to that, we secured a further facility for MATSA above the project level at the holding company above. So our holding company into Spain of $337 million. And the two of them collectively, what we call the MATSA facility or the project facility, for USD 650 million. So really, the MATSA in your hedge, it's almost we inherited the project, the debt facility, right into MATSA and we've got an additional acquisition facility, if you want to sort of think about it in two parts of $337 million, which was to assist us in making the acquisition of MATSA together with the ANZ facility for AUD 200 million or USD 140 million as well as money out of our treasury as well as the funding from the equity raising that we did at the time. Is this clear?

Yes. Yes, that is.