Sandfire Resources Limited ($SFR)

Thank you for standing by, and welcome to the Sandfire Resources March 2026 Quarterly Report. [Operator Instructions] I would now like to hand the conference over to Mr. Brendan Harris, Chief Executive Officer and Managing Director. Please go ahead.

Thank you, and good morning, everyone, and welcome to our quarterly call. As usual, our executive team is here with me today for the Q&A, which we'll get to very shortly. But before we start, I'd like to acknowledge again the traditional custodians of the land on which we stand, the Whadjuk people of the Noongar nation as well as the First Nations peoples of the lands on which we conduct our business. We pay our respects to their elders and leaders past, present and emerging. It's also particularly important that I acknowledge that we had our first ever fatality. When a 34-year-old male contractor, project lease, lost his life while installing a polyethylene paste distribution line in our Magdalena mine on February 25. His loss of life is both tragic and completely unacceptable. And sadly reminds us of the risk that stored potential energy presents for employees and contractors in our industry. We're deeply saddened by these events and our thoughts remain with the individual's family, friends and colleagues. Following the incident, as you'd expect, we immediately activated emergency response protocols, notified the relevant authorities and we continue to support their investigation. We've also engaged very closely with our workforce, contracting partners and the unions to ensure impacted individuals are cared for, and to reinforce the importance of well-designed work. In relation to our broader safety performance, our group TRIFR increased slightly to 1.5 off a low base, and we recorded 5 high potential incidents during the quarter. We are determined to learn from every incident raising risk awareness and capability wherever we operate. At Sandfire, we believe everyone is a leader, and we will only truly be successful when our culture has evolved such that everyone feels safe to speak up when they see something that isn't safe, or just doesn't look right irrespective of their title or level within the organization. Turning to operational performance. Group copper equivalent production for the March quarter was disclosed earlier this month as it fell short of expectations as both heavy rainfall and unplanned maintenance at MATSA and a further delay in the transition to high-grade ore at Motheo constrained performance. In MATSA's case, this led to the lowest level of quarterly throughput in a little more than 3 years and a 12% reduction in copper equivalent production to 21,700 tonnes per year-to-date production of 68,000 tonnes, which somewhat ironically is within 1% of where we were at this time last year. What's not obvious is that MATSA's performance in March improved strongly, as annualized mining and processing rates recovered to 4.9 million and 4.6 million tonnes, respectively. Motheo's performance in the quarter presents a stark contrast to matter in so many ways. As our team achieved record annualized mining and processing rates of 6.5 million and 6.1 million tonnes, respectively. As is too often the way in mining, despite such good operational performance, which included a strong improvement in mobile fleet availability and rates, it has taken longer to reestablish our face positions than we would have liked, such that higher grades are still ahead of us with the average feed grade expected to rise towards 1.2% copper in the fourth quarter for copper equivalent production around the bottom end of our 58,000 to 64,000 tonne guidance range for the year. We pride ourselves on being consistent and predictable, and we're not shying away from our commitments in any respect. And I can confirm that we remain on track to achieve group copper equivalent production within the lower half of our guidance range of 149,000 to 165,000 tonnes in FY '26, which you'd recall was set at plus or minus 5% at the midpoint of 157,000 tonnes back in July of last year. And while this requires us to maintain recent strong momentum across the remainder of the year, I can assure you that our assumptions are based upon robust bottom-up plans. We simply need to run our business well, sustaining throughput rates at Motheo akin to those achieved in the third quarter so we can reap the benefits of those higher grades, which I might add, we are seeing now and deliver a repeat performance at MATSA of the outcomes achieved in the fourth quarter of last year. More broadly, with no major maintenance and high rates of throughput planned in the run home, we currently expect underlying operating unit costs for both MATSA and Motheo to be materially consistent with prior guidance of $86 and $44 per tonne of ore processed for FY '26. As I'm sure you'd expect, there are more moving parts than usual with the conflict in the Middle East fueling higher energy prices, which is also feeding into freight rates and other input costs and contributing to a slight correction in certain foreign exchange rate markets such as the euro, which is providing some relief at MATSA, and I'm sure Megan will be very much looking forward to talking to you about cost in the Q&A. To give you a flavor for the uncertainty inherent in any forecast that we make today, I remind you that 90% of more of masters costs are typically euro-denominated, while diesel alone accounted for around 3% and 15% of MATSA and Motheo's costs in our FY '26 plan, with the price up something like 50% in recent weeks. Of course, it would be bold to suggest markets aren't sufficient, and it would seem to us that commodity prices have proven to be resilient, perhaps because of the inevitable steepening of cost curves and the increasing risk to supply itself. So while cost sensitivities are understandably of interest to people on this call, we're particularly focused on securing our supply chains for those key consumables as we generate very strong free cash flow, as you've seen at these prices. Within this context, we are well positioned at MATSA, given its primary resilience or reliance on the grid in Spain and the country's industrial heartland. And we have relatively good visibility in Botswana out towards the end of this financial year. I would, however, caution that it's unlikely with fleet, we fully understand all of the second and third order effects of the current conflict which may take some time to manifest. From a strategic perspective, we now have the bit between our peak in South Australia, where we're gearing up for a significant drilling campaign, which could exceed 130,000 meters over the next 12 to 24 months and the associated PFS work streams that could amount to a collective investment of AUD 100 million, all of which is designed to unlock the secrets of the Kalkaroo Copper and Gold project, which we believe has the potential to underpin a 10 million-tonne plus per annum, low-cost, long-life, open-cut mine, ideally located in a preferred jurisdiction to become the next major catalyst for the continuing transformation of our company. Jason and Ian Kerr are onboarding key personnel as we speak. Camp facilities are being prepared and 2 drilling contractors have been secured and are preparing to mobilize. Within the Kalahari Copper and Iberian Pyrite Belt, we're really starting to see the benefit of bringing exploration together, as our talented centralized team of geoscientists are better placed to support and challenge our teams on the ground, ensuring our targeting approach is continually learning, capturing fresh ideas and constantly being rejuvenated. We'll have an increasing emphasis on the drill bit next year as we leverage our depth of knowledge and take a real swing in Motheo hub and in the shadow of MATSA's processing facility, where we have been encouraged by early indications but have much more work to do. So pulling this together, we generated record financial outcomes in the quarter on the back of buoyant commodity markets, particularly in relation to our byproducts such as silver with unaudited group sales revenue of $408 million, translating into underlying EBITDA of $220 million for an underlying margin of 54% to finish the period with net cash of $76 million, having paid I might add AUD 46.5 million to Havilah for our initial entry into South Australia and $26.1 million to the tax authorities in Botswana as Motheo made its first 2 installments. Motheo's rapid transition to a taxpaying position, having paid back its capital base in as little as 3 years is yet another marker of its success and a further indication of the potential that can be realized in the Kalahari when the right company takes the lead and the ingredients are right. As you might expect, we are proud of Sandfire's growing economic contribution to Botswana and the broader local community. And we're also proud of the way we've set our company up for success. I've said it before, we have the right team. We have the right balance sheet. We have the right operations, producing the right commodities at the right time with the right byproducts. And we're incredibly cost competitive with 2 operations that had a C1 cost below $1 per pound in the quarter. So with that, let's go to questions. Thank you.

[Operator Instructions] First question today comes from Kate McCutcheon at Bank of America.

If I can just drill down on Motheo in March quarter. So that operation has been milling and mining a record, which seems to be running well ahead of the budget for the FY. If you're ahead on tonnes, can you just help me understand that great here? Is grade reconciling well from A4? Is this just a case where the mine plan had to change because of bad weather? I guess there's no underlying grade reconciliation issue, is just what I'm trying to understand though.

Yes. Look, Kate, and I love your attention to the detail. Look, first and foremost, and I'll pass it to Jason, I'll just make a couple of comments, very simple one. If we had a grade reconciliation, we'd tell you. If there was an issue with grade reconciliation, we'd tell you, we're very transparent. You're right. Throughput processing rates, mining rates have been picking up and are running incredibly well. And I know Jason will tell you that it's an operation when things are going well and you don't have your last shops and so on, it's hard to hold it back. It likes to run at a rate in excess of about 5.6 million tonne per annum. And so again, it's really timing. But maybe, Jason, I think it's probably worth you digging into some of this because it is important. And also just really, I guess, build confidence of the grade profile that we should see over the remainder of this year, but also how it sets it up into next year, because, again, I think we're really transitioning from a risk perspective into a different phase of mining at Motheo.

Absolutely. And thanks, Kate. So firstly, just to reiterate, we do not have any reconciliation issues at all. Both ore bodies are reconciling extremely well. We're seeing, particularly at A4 because we're coming down on the top of the ore body, and we are now into it. We are seeing that it's in place, the tonnages are reconciling well. We're seeing the grades and we're also seeing that transition through some of the oxidation that we plan to see of copper mineralogy at the top. And as we stand at the moment, we've been reacting by making sure that, that for blend into the fleet has been capped to manage that, and we've already started to increase that percentage of April in the blend as we're seeing that are freshen up as expected. So just on Brendan's point there, and I might step back and talk about the year, if you cast your mind back to the start of this financial year, we provided guidance in terms of what the production profile would look like throughout the year. And that was driven by basically where we're at in the mine plan with Motheo, transitioning from the end of Stage 2 in T3, right to transitioning formally ore feed being at the top of Stage 3. And that's what we've seen, and we were expecting to see lower grade ore and certainly in Q1 and Q2 with it ramping up towards the end of Q3 and into Q4. Now the issues we've seen with grade so far solely relate to phase position. So we've had challenges there with our overall mining fleet availability, which has meant that we haven't achieved the face position that we required, particularly in T3, and we've got a line plan in place now to pick that up and make sure we take that into this quarter and also beyond as Brendan was talking about. And certainly, from our point of view, when we look at the life of mine, this was 1 of the higher risk production years in Motheo's life. As we move into FY '27 and '28, we very much right into the main part of T3 Stage 3. We're getting right into the body of A4 Stage 1 and Stage 2 and we transition into T3 Stage 4, all of which we have more of an ample ore as well at higher grade throughout that period.

Okay. Crystal clear. And then you're moving into drilling at Kalkaroo this quarter, so you have a new country per se. Is there an update on the strategic review at Black Butte or what time frame are we working towards for an update there?

Yes. Look, again, thank you. I think I mentioned previously that once we entered the process, the formal process of, I guess, reviewing the assets fit within our portfolio, that I wouldn't actually expand too much further until it was concluded. And that's where we're at now. We do expect still to be able to provide you with an update -- a robust update around the time, if not, in conjunction with our full year results in August. So there's probably not a lot more I'd like to add at this stage, Kate, but I certainly appreciate the interest.

Your next question comes from Kaan Peker at RBC.

One on MATSA or maybe 2. Just looking at A4 volumes for the quarter, great to see that the volumes have increased. But obviously, grades are lower than reserve. Maybe if you can talk to when you've started to mine above that 1.1% or 1.2% material? And then I think Jason mentioned that moving deeper into the ore body, is there any metallurgical variability risk as you move deeper? And is recovery is purely a function of the ore type?

Yes. Look, thank you for that. And so going back to Motheo and particularly A4. I think that point that we would stress is, obviously, our plans are not only based and premised on good evidence in terms of the capacity of our mill and broader processing circuit but also on our block models. And as we get obviously closer to extraction detailed blast and grade control results. So again, it gives us a great degree of confidence. I think what Jason was particularly referring to as is the case of T3 and obviously the way in any similar base metals project as you're moving through into the surficial part of the ore body, particularly where they're relatively shallow, there is that potential for a level of oxidized material to come into the mix that you've got to manage and deal with. But as we get into the heart of the ore body, not only do we have good visibility on grade, but we also have very good visibility on metallurgy. And obviously, we have a good understanding of how that performs and behaves in our processing facility. So perhaps as frustrating as it may be, it's a fairly simple story that as you get into those primary bornites and chalcopyrite, and as you know, the very course minerals in Botswana, you tend to see them float very, very well. and you get very, very, very strong rates of recovery. So that really is the relationship that we're talking about here. Jason, anything to add there?

Thanks, Kaan. And just building on Brendan's comments, if we look at large quarter, we are already mining 1.2% material. If you look at -- we report an overall average grade, which includes -- we differentiate different ore types in our grade control, which is a high-grade ROM and also a lower grade stockpile ore. So we are already consistently seeing plus 1.2% material that's already being mined. And we know that's coming -- that percentage of our mining will increase going into Q4 and beyond. If we look at metallurgical recovery and risk, we know at A4 and very similar to T3, we start off at the very tip of the ore body where we do see some oxidation of the copper mineralogy. But we know at A4 because it's slightly deeper, we actually make that transition quicker than we did into T3. And I kind of touched on it there with Kate's question. We're already seeing that transition and that mineralogy improved just over a couple of benches already. So that's as we expect. And particularly going into Q4, we've now grade controlled pretty much 100% of our ore to be mined out of in this quarter. And so we've got a very good handle on that grade and that metallurgy going out to the end of the year. And look, building on Brendan's final point there, the mineralogy copper mineralogy at A4 is dominated by chalcopyrite and bornite, both of which we know liberate extremely well and flowed extremely well to produce a high-grade con. So overall metallurgical risk at A4 is very low, and it decreases with that, if that answers your question.

And maybe, Jason, at risk of repeating ourselves, just to be really, really clear, we are 3 weeks into April, we effectively got a week to run. Obviously, we're getting very close to the end of the year. Motheo is currently running ahead of plan for April. So now we've got to sustain that. We're going to continue to deliver. We've got to do all the things that we've said, particularly in relation to maintaining our face position, our fleet availability, getting the rate that we need, and we obviously need to ensure that the processing facility continues to run. As we mentioned, there's no major shut plan for the remainder of this year. There are your typical routine maintenance programs in place that very really go over 24 hours. So that's built into the plan. But again, as I've said, we are ahead of where we need to be right now. Absolutely.

Great, very detailed and I appreciate it. Second 1 is on MATSA. You've pointed to an improvement into March and April. But where are you actually running today versus nameplate? Is there anything that needs to be done to get back to full throughput?

That's great. Look, I'll take it upfront. So again, we highlighted that as we came out of March, the business is running very, very well in the month. That momentum is continuing. And 1 thing that I look at, and it's just an interesting market. You'll notice I said that we're within 1% of where we were last year. Last year, we ended up producing 94,000 tonnes of copper equivalent on a comparable basis. And if you look at the throughput rates the recoveries, the grades, again, in effect, what we need to do is effectively replicate the performance of that fourth quarter of last year. So there's nothing built into our plan, if you like, that we haven't done before. Maybe, Jason, if you can expand on that?

No, I think you've hit the nail on the head. If you look at our processing rates, pretty much in line with what we've done in prior quarters. And if you look at it, we're probably quarter-on-quarter, have a slight increase in processing of copper-only ore as part of that increase and a slight increase in grade, which is driven by the mine plan. But overall, our polyol is pretty much consistent with last quarter in terms of grade and also expected recovery.

[Operator Instructions] Your next question comes from Ben Lyons at Jarden.

Just a couple of quick ones on the detail, please. Probably the first 1 for Megan, and apologies for leading with that question on tax. But I appreciate the additional steer that you've given us on the effective group tax rate for fiscal '26 and a reminder of that Botswana calculation in the footnotes. But given that you've now appear to have largely used up your CapEx tax yield in Bots, if we were to assume that elevated copper and ore prices prevail through fiscal '27 and beyond, should we expect an effective tax rate for Bots towards the top of that sliding scale unless you would undertake more meaningful CapEx programs like using the opening up of A1 CapEx is a bit of a tax shield.

Yes. Great question, Ben. And you'll notice that we've really, I guess, further emphasized what's happening in Botswana this period. We think it is important people understand it. I think it's also important that -- but the questions like yours give us a chance to even build upon that. And you're right. A key component of this is ongoing capital that is deductible and then, of course, any specific larger for 1 of a better frame, lump of capital and how that plays through. I know Megan is always reviewing the models and updating them. So over you for the details, Megan.

Thanks, Brendan. Thanks for the question, Ben, and very happy to elaborate that on a little bit further. So as you're aware, the Botswana tax rate uses a sliding scale, and that takes into account taxable profitability divided by gross revenue potentially. Now our capital spend in the given year is a really key component of that, as Brendan touched on. So in periods where there is quiet capital spend that comes through in the calculation. So during half 1 FY '26, we actually utilized all of our carryforward tax losses in Botswana, and they were in connection with the construction of Motheo. I mean that purely reflects the profitability of the asset and the reality that effectively, we've achieved payback within sort of a circa 3-year period. And then what we've tried to provide some guidance around in the quarterly is where we think our effective tax rate is going to land at June for FY '26. And that's really based on what we know today and taking into account the strength in commodity prices that we've seen play out in recent months. And so we've provided some numbers around that with the rate within the range of 34% to 37% anticipated for FY '26. Now then, what I would say beyond FY '26, what I expect to happen based on what I can see in front of me today. And obviously, metal prices is the biggest swing factor here, together with the level of capital spend. But I expect beyond FY '26 that we should see the effective tax rate for Motheo start to approximate around the Australian statutory rates. Not exactly, it will be a little bit higher, but it's going to level out back to that sort of level. What we're seeing in FY '26 is it is going to elevate and that's really a function of the accounting reform that we have at the end of the period to revalue our deferred tax liabilities to reflect the rates that we expect will apply when those deferred tax liabilities effectively reversed in future. And that's why we have an elevation in this next quarter. In terms of your comment on the upper end of the range, the 55%, that is probably not a realistic upper end in a practical sense because you would only ever get to 55% if there was 0 deductions, if you know what I mean. But probably, I think the key thing to come back on is over the life of the mine, based on what we know today, we expect it to sort of approximate what we see in Australia, albeit a few percentage points higher.

And then, it is complicated because obviously, we've got various capital plan buildings there. I think Megan, we assume were A1 is constructed in our life of mine. It's not a large -- I've said many times, it's not going to be a large pit. But we -- there are certain elements in there. But what I would say over and above that is obviously Dave Wilson, who you all know well, as a chemical engineer, he is rapidly becoming a tax expert. And so he would be very happy to sit down with any of you on the call to degree that he can and try and help you work through and understand some of the nuances that are at play. Megan, anything else?

Probably just to highlight then, I'm sure you're aware it's in the footnote. That's based on the current tax legislation. Some of you would be aware, there's proposed changes that are currently under consideration in Botswana. That would be the most significant change if it goes through, would see a change from moving away from upfront deduction of capital to effectively a minimum 10-year period to take that capital reduction over. So the numbers I've been talking around and the guidance we've provided in the quarterly is based on the current tax legislation, not the proposed amendment that are currently under consideration with the government.

Yes, yes. Yes. No, it's very helpful, very detailed and a very kind offer to follow it up with Dave. But the less we talk about tax, I think the better. But no, it was very reassuring that 55% outcome, which would be extremely egregious in terms of a fiscal take seems to be an incredibly lower probability event and an outcome closer to the Australian corporate tax rate, 30%, is much better outcome. So I appreciate you stepping through that. Maybe just 1 more for me. Just on the regional exploration program in Bots. I know you haven't hit the meters that you were planning on just given those safety interventions with the drilling contractor earlier in the fiscal year. But just given the overall importance of that program and noting that you're hitting up 7 of your high priority targets, anything that you're seeing coming out early doors that gives you indication you're on the right track, whether it's actually decent intercepts or even past one mineralization?

Yes. Look, it's a difficult one. I'll be honest with you. At times, I wonder from a regulatory perspective, what we can and can't actually say in this day age with regards to exploration. I think it's a vexed issue, and I actually don't think it's overly helpful to investors because I think investors deserve to understand progressive trends and progress more broadly. So I'll give it a go, Ben. Look, we've said that for a period of time, we spent a lot of effort building that deep geological and geophysical knowledge base both in the Iberian Pyrite Belt and obviously, in the Kalahari. And on the back of that and then the learnings, and I think the critical piece we've talked about many times, the learnings that we've garnered by actually opening up to ore bodies and really getting a much more tangible understanding of the genesis of these ore bodies and the drivers for economic mineralization, bringing all of that together has been obviously a particularly important piece for us. And then bringing all of exploration together under Jason's guidance, I think, has been critical because it means that we're really making sure that all of those learnings and elements that come from our mine geological teams, through to our centralized teams, through our regional teams are all being if you get it brought together and then being built into a, as I said, a process of exploration, which is continually learning and if you like, upgrading targets. Now that's all great. But as we often say here, the ruby hit road when you actually put a drill in the ground, and we were somewhat delayed for reasons that we've mentioned in Botswana. We're past that. We're working primarily with new drilling contractors, and we're starting to make big inroads. Now there is -- I've talked about an area that's proximal to the A1 area that we will expect to declare a reserve for towards the back end of this year and most likely with our results or around that timing. I've said before, we think it's somewhere between 0.5 year and a year. That's sort of broadly unchanged. So -- and we expect it to be economic and to make its way blended into the mine plan in the 2030s. And so that's important. Proximal to that, but not with included in that area, we have had some very encouraging intercepts. We have been drilling around that with a number of holes where we're seeing a continuation of those, call it, encouraging intercepts. The question now is how continuous or contiguous is it? What is the strike length? What are the thicknesses? How much is the volume? What would the strip ratio be? And could it become an economic load? We don't know the answer to that. And it is absolutely way too early. Beyond that, we are, as you said, targeting those broader structures in and around primarily the Motheo hub. And you'll see us focus even more so in that area over the next 12 months. We've had other similar and 1 specifically recently, very interesting intercept that all I can say is precisely what we're looking for. It's in a different structure. What we don't know is whether we'll see repeats of that. What we don't know is the scale or potential. But again, what it highlights, and I think the message I want to leave you with is that all the things we see continue to encourage us that being in the Kalahari copper district is the right place and that it is just statistically highly unlikely that we found that the only 3 ore bodies in that district almost within a millisecond of each other, and there isn't more to be found and more to be mined. That's what we've got approved to ourselves, and we've got approved to all of you over the coming 2 and 3 or 4 years. And that's the sort of time frame we've got before I think we we're going to be in a position where we need to find that discovery hole, so to speak, and then repeat that somewhere in that sort of time frame. Does that help, Ben?

Yes. No, that's awesome. Very encouraging outcomes there. So look forward to hearing how they're followed up in the future. Good luck.

No, thanks, Ben. I think I said to Jason, the other day, exploration is always that story. It happens quickly, but it took me a decade. It took me many years. And that's the reality here that there's so much work and so much time put into this. But when you make the discovery hole, it always feels like going to happen easily and quickly. So again, we're going to stay the course. We're very focused. We're putting the dollars in the ground and what's really important for me is that latter point. It's all only good to do all the, call it, the academia around exploration. The critical thing is actually drilling holes. And Jason, as I've said, is literally got the bit for his team, both in Spain and Botswana.

SP1 Your next question comes from Daniel Morgan at Barrenjoey.

A lot of encouraging, I guess, chatter about Motheo and just how the mine has set up for FY '27, '28, you're saying it's basically very derisked in terms of the face position. What does that mean for managing that operation through there? You're going to have a lot of ore at good grades, how will you manage that? And does this mean that we might see some modest production upside through FY '27 and '28?

Good question, Dan. I think -- and I'll throw it to Jason. I think what we're saying is that the plans we provided you in previous iterations site to us and other things where we said we expect that we'll hold sort of FY '26 plus or minus guided production rates out to the end of this decade at a minute. But what we're saying is, we expect to do so. But into next year, it's a lower risk plan, touch wood, all else being equal than as we went into this year. Jason?

Brendan, you've hit the nail on the head again. So if we look at it, we'll see a much more even production profile over each of the quarters going into FY '27. And where we are, we've got access to moral in both A4 and T3 over the next 2 years. At the same time, we do need to make sure that we are doing our waste stripping, which will set us up for FY '29 and beyond that as well. So that's very important that we maintain particularly those total material movement rates ready open pit mining because once again, we can introduce risk if we don't maintain the range and keep moving them by throughput or those hole mining rates through this period as well. But short answer, yes, in terms of oil supply, we have derisked the plan. We've got ready access to good quality ore over the next 2 years.

And then I guess, a similar question at MATSA. I mean, obviously, the June quarter, you're going to benefit from a lot better grade. But how are the leading indicators of performance beyond this quarter looking like in terms of development events. The -- how is the mine set up to deliver? I'm not looking for quantitative guidance, but just is it set up well for next year?

Yes. Look, and I think in many ways, we have provided an indication on the quantitative side, where we said similarly that we expect to retain or maintain similar levels of, call it, copper equivalent production again at the end of the decade at MATSA. Very, very simply, it's a similar story. Jason will expand upon it. But we've talked a lot about all of in San Pedro. And we've talked a lot about the amount of work we've put in, investing heavily in underground development. And we've talked about the importance of creating additional degrees of freedom as we go into next year, that is probably the most important delta for us, as we start to see those additional degrees of freedom open up, because effectively of the level of development we're getting into some of those areas. Jason?

Dan, if you look at it the last couple of years, And if I'd start with Aguas Tenidas, so we've invested a lot of capital development in opening up the Western extension, which is the main part of the higher-grade ore body that's remaining there at Aguas Tenidas. So we've now opened that up, and we've set up particularly our ventilation, our capital development and all the infrastructure that we need to maintain a higher mining rate through those areas. So firstly, that set us up well, particularly over the next year or 2. And at Magdalena, we've established that underhand mining there in MATSA 2. And that's working very well for us at the moment. So if I look out beyond and really just to reiterate Brendan's themes there is that we provided prior outlook for the next 3 years. And everything I'm looking at, at the moment is that we've got quite a stable mine plan covering that period going forward. So consistent with what we've given to the market previously.

Very clear. And just last question on Kalkaroo. I appreciate you're only just starting on the Kalkaroo journey. But what is the -- how are you going to interact with your joint venture partner, Havilah with regard to the release of results over time as they come in for that big drilling program?

Thanks, Dan. In terms of how we're going to interact more broadly, we're really building, I'd say, an incredibly fruitful and productive relationship. I met with them only, I think, 2 Fridays ago, very, very good discussion, strong alignment. And I know they're excited about the level of commitment we're putting in the fact that we committed to a 20,000 -- minimum 20,000 meter drilling program. As I've said to you, we think it could be as much as 130,000, assuming we continue to see the results that at least we're anticipating. And obviously, the -- what goes hand-in-hand with that, and the drilling is the biggest piece is that expectation of a total spend moving towards the conclusion of a PFS of around AUD 100 million. So I know they're very pleased with that. In terms of results, it's still obviously early. We haven't actually got drill rigs on site yet, as I mentioned, they're preparing to mobilize. My current thinking, but to be tested, is that we will provide most likely the results on a quarterly basis for the drilling program. And the reason for that is at different points, undoubtedly, there may be material outcomes relative to, if you like, Havilah's disclosure thresholds as opposed to ours. And so as a result of that, I think if you look at your current release discrete drill holes, you have to release the broader, if you like, suite of information. So I think 1 way to manage that is actually to be -- as we like to be transparent, and release the information as it comes to hand. But again, Dan, 1 for us to work through, but that's probably the current thinking that we have. So in other words, I think there should be a very, very strong level of information flow coming out of Kalkaroo over the next 12 months. Because just to be clear, the sort of 24 months we talk about, our expectation, barring something unforeseen with regards to weather, frankly, fuel availability is that the vast majority of the planned drilling will actually be done within around 12 to 15 months. So again, with that information, not only will we have a good understanding of where it's headed, my sense is if you do the work you will do.

Your next question comes from David Radclyffe at Global Mining Research.

So my question is really a follow-up to Dan's on Kalkaroo and now the deal is done and you're starting to spend not a significant amount of cash on the projects. Really, the question to the point of scale that you see in the asset what you would hope to define to make the asset worth the squeeze, if I use the terminology you've used before. Because it would seem that if you look back at, say, even the BHP 2023 concept scale size, it wouldn't quite be to the scale of your existing operations on an equivalent basis. There's obviously other benefits for some location and mine life, and let's see what the studies show. But given the time frame and the scale here, is it fair to assume that there's room for you guys to continue to look to enhance the portfolio with other growth options?

Thank you for that. I really appreciate it. I think the way I think about the latter part of that question, it's beholden on any management team to always be looking for opportunities to create value. And if we can generate like ideas, translate them into action, where there's a symmetry of returns well in excess of the cost of capital, I think that's what shareholders want us to do. And I think if you look at the Kalkaroo transaction, there's a win-win. What we do will benefit Havilah substantially, but it leaves us in a position where there is really strong asymmetry and return for our shareholders. And I don't think that's been common in deals of this nature. So we're very, very pleased with that. As you mentioned, there is a lot of work to do. I think Havilah talked about historically a mineral inventory for 1 of a better term, which I think was a way of trying to understand the opportunity of around 184 million tonnes, well in excess of the current reserve. Now our program is designed to test whether that scale is also significantly undercooked relative to the potential of the geology that we see. And on that basis, I think if you work through the numbers, you can start to see an ore body that has the potential to support throughput rates, which when combined, would match our 2 operations today. If you think about the grade profile, it's not dissimilar to Motheo. It's slightly less got more byproduct than copper or if you like, it's got to show a greater ratio of byproduct to copper than Motheo. But the strip ratio from what we can tell is probably about half as much. So -- and it's also at that scale amenable. And because of the geometry of the ore body and the thickness, it's amenable, we believe, to much larger mining equipment, higher productivity rates and so on. And so when we look at all of that, we think it has the potential to be a very significant operation for Sandfire, but 1 that also has the potential to run for decades. And that's what this program of work is designed to test. That's why the spend is what it is. It's why the number of meters is as high as it is. So -- and of course, if we're not seeing what we expect, we will throttle back those plans. So I guess that's the first point. But as I said, right at the outset, we're very excited about the potential of Kalkaroo, that doesn't mean we don't look around the world for opportunities that could match the potential of Kalkaroo, where we see similar asymmetry in returns that can benefit our shareholders but we're never going to try and grow the company for the sake of growth.

Thank you. That does conclude our question-and-answer session. So I'd like to hand the call back for some closing remarks. Thank you.

Look, again, I know hopefully a slightly less busy day than usual and hence, really appreciated and enjoyed the depth of questioning. As I mentioned, Dave and Tom are really eager to help through the course of the day as you try and work through some of these things. We know they're complicated. We appreciate your time. We look forward to seeing you all in person again soon. Thanks again.