Sandfire Resources posts record revenue as Degrussa copper mine approaches final year

Sandfire Resources’ (ASX: SFR) DeGrussa mine has been a fine stager, but as its tenth birthday approaches the copper-gold deposit is heading into its swan song.

The mine’s reserves will run dry in September next year, with the cash its generating now providing a rainy day fund for Sandfire to weather the gap to the opening of its Motheo mine in Botswana in 2023.

Whether DeGrussa has some George Foreman style comebacks remains to be seen – Sandfire is assessing if the Doolgunna region mine can become a gold hub – but you have to get it while the getting is good as they say.

And all time high copper prices in the middle of the June Quarter has helped Sandfire do just that, smashing last year’s revenue record with an estimated $813 million worth of sales from the WA operation in FY21.

Sandfire Resources sold 70,845 tonnes of copper and 39,459oz of gold at 81 cents per pound of payable copper in the financial year, with 18,252t of copper and 9016oz of gold at 92c/lb in the June Quarter.

That was above the upper end of its guidance range of 67,000-70,000t.

Demand for the base metal, which many commentators view as the metal of the future as the vehicle electrification narrative and renewable energy technologies take hold, is so strong customers pre-paid a $33 million July shipment to get their hands on Degrussa concentrate.

“The low C1 cost allowed us to take full advantage of the very strong copper price which persisted throughout much of the year, helping to drive a 24 per cent increase in sales revenue over the past 12 months to a record $813 million,” Sandfire’s Karl Simich said.

“This reflects very strong global demand for copper as the world increasingly transitions to electric vehicles and other green energy initiatives, all of which require substantial amounts of copper.”

Analysts remain cautious about the production gap between DeGrussa and Motheo, but the company has $574 million in the bank and no debt to ride out the tide.

Sandfire Resources share price today:

One door opens…

While mines like DeGrussa are coming to the end of their lives, with record investment in exploration in WA new mid-tier operations are emerging now at a faster pace than they were a few years ago, particularly in the gold sector.
De Grey Mining’s (ASX: DEG) 6.8Moz Hemi discovery is a case in point.

Bellevue Gold (ASX: BGL) has taken another step towards the development of its high-grade Bellevue gold mine near Leinster today, announcing it had received indicative debt funding proposals of between $170-289 million.

The Tolga Kumova-backed gold explorer is primping its feasibility study for the project which hosts a resource of 3Moz of gold at almost 10g/t.

Earlier this year it put a $255m price tag on the development, so it could potentially fund the project without significant dilution.

According to Bellevue debt advisors Orimco have received proposals from 12 Australian and offshore financial institutions with a shortlist to be put together ahead of the next stage of the financing process.

On the technical side of things Bellevue are currently assessing whether the processing plant for the proposed northern Goldfields mine can be bumped up from 750,000tpa to 1mtpa.