Sandfire Resources Limited (SFR) Earnings Call Transcript & Summary

Good afternoon and welcome to Sandfire Resources' General Meeting of Shareholders. Thank you for taking the time to attend. My name is John Richards, and I'm the Executive Chair of Sandfire Resources. I will chair this meeting. I have been advised that a quorum is present, and I declare the meeting open. Today's general meeting is being held as a physical-only meeting. Any shareholders attending in person may participate live or ask questions. The company is also live streaming the event, which allows shareholders and guests to watch the live stream and listen. Attendees online will not have the opportunity to participate, vote or ask questions via the live stream, but shareholders have been invited to submit questions in writing prior to the meeting. The other members of the Board are either in attendance at the meeting or watching by the live stream. Jenn Morris, who chairs the People & Performance Committee is on my left; Roric Smith, Director is over there; Jason Grace, Chief Operating Officer and acting Chief Executive Officer, is on my right; Scott Browne, Executive People; Matt Fitzgerald, Chief Financial Officer is also here, and Sophie Raven, our Company Secretary, is here as well. I also welcome representatives from our share registry, Automic, and from the company's auditors, I think -- in case they're online. On 10 November 2022, Sandfire announced the appointment of well credentialled and experienced mining executive, Mr. Brendan Harris, as its new Chief Executive Officer and Managing Director. Brendan will commence employment with Sandfire on the 3rd of April, just under 2 weeks from now. Brendan has extensive experience, which includes roles as an exploration geologist, a highly-regarded equity analyst and a senior executive with BHP and South32. He was a member of South32’s executive management team following the demerger from BHP in 2015. He played a key role in the company’s establishment as its inaugural Chief Financial Officer. More recently, he held the position of Chief Human Resources and Commercial Officer, with responsibility for global commodity marketing, procurement and human resources. Brendan had previously served as BHP’s Global Head of Investor Relations, and prior to joining BHP in 2010, held various roles in investment banking, including as Executive Director at Macquarie Securities, where he led the leading Mining & Metals Research team. As part of Brendan’s employment agreement, Sandfire has convened this general meeting to obtain shareholder approval for the equity-related elements of his remuneration package. These were outlined in the annexure to the November 10, 2022, ASX Announcement. Now to the formal part of the meeting, including the tabling of the resolutions, which were set out in the notice of general meeting. A letter with details of the notice of this General Meeting and explanatory statement was sent to all registered holders on the 24th of February, and sufficient notice of the meeting has been given. Unless anyone has any objections, I'll take the notice as having been read. Voting on all resolutions will be conducted by poll. The company's share registry, Automic, will process the poll votes at the end of the meeting, and the results will be announced to the ASX once they are available. I appoint representatives from Automic Group, company's share registry, who have examined and prepared summaries of the proxy forms received, to act as returning officer and to conduct the poll. Shareholders in attendance that have already submitted a vote by proxy should note that your votes have already been counted towards the poll. You do not need to lodge another vote unless you wish to change your proxy instruction. Shareholders in attendance that have not submitted a vote by proxy and wish to vote on the resolutions being put to the meeting today can do so by completing the voting form provided by the Automic representative. If you have not been provided with a voting form, please see the Automic representative at the registration desk just out here. Your votes must be submitted prior to the poll being closed for them to count. As reflected in the Notice of Meeting, I confirm that I intend to vote all available and appropriately authorized proxies that I hold as Chair in favor of each resolution. We now move to consider the resolutions. It should be noted that resolutions 1 through 6 before the meeting are ordinary resolutions, requiring a simple majority of votes cast by shareholders present in person or by proxy or representative entitled to vote on the resolution. The text of each resolution and the proxies received in relation to that resolution will be on the screen as we work through the business of the meeting. Please note that Mr. Harris and his closely related parties, such as close family members and any controlled companies, are not permitted to vote on any of the resolutions unless they are doing so as an appropriately authorized proxy. Now on to Resolution 1. The first resolution for today's meeting relates to the grant of FY 2023 LTI ZEPOs to Mr. Brendan Harris or his nominee. The Board unanimously recommend that all shareholders vote in favor of Resolution 1. Next slide. A summary of the proxies voted for this resolution is set out on the screen in front of you. And at this point, I would like to invite any questions from the floor. I'm advised by the company secretary that no resolutions have been received on this resolution. Resolution 2. Resolution 2 relates to the approval of a potential termination benefit in relation to the FY 2023 LTI ZEPOs proposed to be granted to Mr. Brendan Harris or his nominee. The Board unanimously recommend that shareholders vote in favor of Resolution 2. A summary of the proxies voted for this resolution is set out on the screen for you. At this point, I would like to invite any questions from the floor. I'm advised by the company's secretary that no written questions were being received on this resolution. Resolution 3. Resolution 3 relates to the grant of FY 2023 STI Shares to Mr. Brendan Harris or his nominee. The Board unanimously recommend that shareholders vote in favor of the Resolution 3. A summary of the proxies voted for this resolution are set out on the screen for you. At this point, I would like to invite any questions from the floor. I'm advised by the company secretary that no written questions have been -- sorry.

Is Brendan Harris at the meeting today?

No, he's not. And it's probably not appropriate for him to be here, given that this is about him not for him.

No. It's about us too because we are the company and shareholder. And he probably has generous terms here. And I think we'd like him to explain what he's going to do for these very generous terms.

He is not yet an employee of the company. He doesn't become an employee of the company until the 3rd of April. He still remains under a, I was trying to say, gardening leave, whatever you want to call it from his previous employer, which restricts his ability to do things for us and to attend things like this. So I understand exactly what you're saying. He does work for you. He will -- from the 3rd of April, he will be working for you. I'm sure that he will do an extremely good job for you. Perhaps you might come along to the AGM in November, and I'm absolutely certain he will be delighted to answer any questions and to let you know what he's doing and how he's doing.

And broadly speaking, he will have -- as with all executives, there'll be production targets, cost of production...

Would he be interested in the share price?

Absolutely. So going forward, firstly, the sign-on rights, which we'll talk about at Resolution 5 directly related to the share price and not this year, but from FY '24 onwards, approximately half of his long-term incentive will be share price-related.

Why only half?

Half is pretty much said.

Because this is about the short term.

Yes. We can talk about it on the next one, if you like, which is -- sorry, that was the previous slide. So we will talk about it now. It's actually an industry standard these days that 50% is share price related, shareholder return related and the other 50% relates to other measures. That's very much an industry standard.

The other 50% is sort of charitable.

No. Do you want to talk about what's something measured there?

This is related to the short-term one. So I guess we're getting to the long-term one.

No, we've done the long term one, that's why I thought we thought, we will be able to come back to.

Yes. So we've got -- I mean, it is very standard that looking at total shareholder return, both relative to our copper peers and then across the ASX as well, so that captures 50%. Then having a financial metric on top of the shareholder return is obviously key. So we went through a range of different options. And what we're looking at is around cash earnings because clearly, generating free cash flow of our assets with a real focus on metal is incredibly important to the company. And then looking beyond that, I guess, there's strategic scorecard. So energy-related, climate-related ESG-related measures are becoming increasingly an important component for all companies, including Sandfire, so there's a component of that. But also looking at decarbonization and further opportunities for Sandfire. And that -- all of those areas will sit within, I guess, a basket of strategic measures, which is saying to the executives that we want you to look beyond the current assets. So total shareholder return determined by the market and what happens there is a core component of the long-term incentive as well as future thinking around areas like decarbonization and future opportunities for the company, and we think that's appropriate.

I guess, the dividends to the shareholders, is that one of the hurdles?

Dividends are something, which the Board decides.

So in other words, it's not.

It can't be because he hasn't got the ability to influence dividends. He has the ability only to earnings and he has the ability to influence earnings, and he does get marked on that. The making of the dividend, the declaring of the dividend is a decision for the Board. He's part of that decision, but we can't mark it.

Also focus for the company is both yield and growth, that you've made appropriate decisions on how you deploy your capital against. And we think that we make appropriate decisions in deploying our capital.

Have we answered your question?

Well, I've got an answer, yes, but I am not necessarily happy with it.

Well, I'm happy to talk further about it now or after the meeting if you'd like to. So where was I -- so I think...

Page 4, Slide 9, no written questions there received.

No written questions have been received, thank you. If we move on to Resolution 4. Resolution 4 relates to the approval of potential termination benefit in relation to Mr. Brendan Harris' proposed FY 2023 STI award. The Board unanimously recommend that shareholders vote in favor of Resolution 4. A summary of the proxies voted at this resolution is set out on the screen for you. At this point, I would like to invite any questions from the floor on this resolution. I'm advised by the company's secretary that no written questions have been received on this resolution. On to Resolution 5. Resolution 5 relates to the grant of sign-on rights to Mr. Brendan Harris or his nominee. The Board unanimously recommend that shareholders vote in favor of Resolution 5. A summary of the proxies voted for this resolution is set out on the screen for you. At this point, I would like to ask questions from the floor. I'm advised by the company's secretary that no written questions have been received on this resolution. Resolution 6. Resolution 6 relates to the approval of potential termination benefit in relation to the sign-on rights proposed to be granted to Mr. Harris or his nominee. The Board unanimously recommend that shareholders vote in favor of Resolution 6. A summary of the proxies voted for this resolution is set out on the screen. At this point, I would like to invite any questions from the floor. I'm advised by the company secretary that there are no written questions received on this resolution. Ladies and gentlemen, I will now hand over to our share registry representative to provide an overview of the poll voting process and conduct the poll.

Persons entitled to vote on this poll are all shareholders, representatives and attorneys of shareholders and proxy holders who are holding yellow voting cards. If you are a proxy holder, a summary of votes to which you are entitled has been attached to the yellow voting cards. If you're attending in more one of those capacities, you will have been issued as many yellow voting cards as you have separate capacities. If any one believes they are entitled to vote on this poll in any capacity and does not have your yellow voting card, please raise your hand now and our team will assist you. I will now go through the procedures for voting cards for this poll. If you wish to record all your votes in favor of the resolution, please place a mark in the for box. If you wish to record your votes against the resolution, please place a mark in the against box. You must mark the for or against box to vote your count. If you require assistance for completing the voting process, please raise your hand. When you are finished filling in your voting card, please raise your hand and your card will be collected. I will now hand you back to the Chair. [Voting]

I now declare the poll closed. Representatives from our share registry, Automic, will now process the poll, and the results will be announced to the ASX once they are available. That completes the items on the agenda for our meeting today. At this point, I would like to invite any general questions from the floor. With no further questions, thank you very much for your attendance, and I will now close the meeting. Thank you very much.