Sandfire Resources Ltd (ASX: SFR)

Harrison Smith | August 2025

Company Overview & Investment Basis

Sandfire Resources is a copper-focused mining company with two core operating hubs, the Motheo Copper Mine in Botswana and the MATSA Mining Complex in Spain, complemented by a development-stage project in the United States. Together, these assets provide Sandfire with geographic diversification, exposure to both emerging and established mining jurisdictions, and a platform for growth at a time when copper demand is set to accelerate due to electrification and the energy transition.

In FY2025, Sandfire produced 152.4 kt of copper equivalent, an increase of 12% year-on-year. Group revenue was A$1.78 billion, with underlying EBITDA of A$800 million. The balance sheet strengthened considerably, with net debt reduced to just A$186 million, down more than A$400 million over the year. FY2026 guidance targets 149–165 kt of copper equivalent, underpinned by the ramp-up of the higher-grade A4 deposit at Motheo and continued stable performance at MATSA.

The investment case for Sandfire centres on three pillars: (1) the consistency of its low-cost production base at Motheo and MATSA, (2) a strong pipeline of growth options at A4, A1, and Black Butte, and (3) its leverage to copper prices. With a cleaner balance sheet, a technically proven operating platform, and multiple upcoming catalysts, Sandfire is positioned as a mid-cap copper producer with both near-term cash flow and longer-term expansion potential.

Motheo Hub – Botswana

Motheo is Sandfire’s flagship growth project, designed as a centralised hub capable of integrating multiple ore sources. Commissioned at 5.2 Mtpa, the processing plant has already demonstrated throughput of 5.6 Mtpa, highlighting latent capacity for debottlenecking. In FY2025, Motheo delivered 58.3 kt of copper equivalent at a C1 cost of A$2.08/lb, firmly positioning it in the bottom half of the global cost curve.

In FY2026, production is guided at 50–56 kt of contained copper, reflecting the progressive contribution from the A4 open pit. Costs are expected to rise modestly (by ~10%) as waste stripping moves from capital to operating expenditure and higher power tariffs take effect. Sustaining capital expenditure is set to remain elevated, at ~A$130 million, to support tailings storage facility upgrades and debottlenecking projects.

The A1 deposit, located 20 km northeast of the processing plant, represents the next phase of Motheo’s expansion. Infill drilling has been completed, and a maiden reserve and prefeasibility study are scheduled for Q4 FY2026. With T3, A4, and A1 combined, Motheo is expected to sustain production well into the 2030s.

MATSA Mining Complex – Spain

Sandfire’s wholly owned MATSA complex produced 94.1 kt of copper equivalent in FY2025, processing 4.5 Mt of ore. C1 costs averaged A$2.34/lb, with all-in unit costs of A$118/t. Production improved sequentially through the year, with stronger copper output in Q4 offsetting earlier disruptions.

MATSA’s costs are primarily denominated in euros (approximately 90%), creating foreign-exchange sensitivity to EUR/AUD movements. A stronger euro relative to the Australian dollar supports revenue translation but can pressure reported costs. To address long-term sustainability, Sandfire has undertaken an aggressive near-mine exploration program, completing 95 km of drilling in FY2025 and planning a further 50 km in FY2026, particularly around the Magdalena orebody. Success in this program is expected to underpin mine-life extensions into the 2040s.

Growth Pipeline and Near-Term Catalysts

Sandfire’s most immediate growth catalyst is the ramp-up of the A4 pit at Motheo, which will deliver higher-grade ore through FY2026 and enhance copper output. A key milestone will be the maiden reserve and prefeasibility study for the A1 satellite deposit in Q4 FY2026, potentially extending Motheo’s life-of-hub profile.

In Spain, the 50 km exploration program at MATSA is focused on extending resources around the Magdalena corridor, with results expected progressively through FY2026. Meanwhile, the release of the Black Butte prefeasibility study in Q2 FY2026 will provide a clearer picture of its development economics. These three catalysts offer multiple re-rating opportunities for Sandfire over the next 12–18 months.

Management

Sandfire Resources is led by a highly experienced executive team and board, with backgrounds spanning global mining operations, finance, strategy, and project development. The company’s leadership has emphasised operational predictability, capital discipline, and growth optionality, which have underpinned the successful ramp-up of Motheo and improved consistency at MATSA.

Brendan Harris – Managing Director & Chief Executive Officer
Brendan Harris was appointed Managing Director and CEO in 2023. He brings over 25 years of experience across the resources sector, having previously served as Chief Financial Officer and Chief Human Resources Officer at South32. Earlier in his career, Harris worked with BHP and also gained experience as a mining analyst in equity markets. At Sandfire, Harris has focused on instilling financial discipline and operational reliability, with a clear strategy to reduce leverage, optimise performance at Motheo and MATSA, and progress the company’s development pipeline.

Jason Grace – Chief Operating Officer
Jason Grace has more than two decades of technical and operational experience across a range of commodities, including copper, nickel, and gold. He joined Sandfire in 2019 and has held senior roles in project development and operations. As COO, Grace has been instrumental in the successful commissioning and ramp-up of the Motheo Copper Mine in Botswana, and he continues to oversee integration of new deposits such as A4 and the planned development of A1. His operational expertise ensures a focus on safety, cost discipline, and delivery against guidance.

Matthew Fitzgerald – Chief Financial Officer
Appointed CFO in 2022, Matthew Fitzgerald is a chartered accountant with significant experience in financial management within the mining sector. Prior to Sandfire, he held senior finance roles at mid-tier miners and advisory firms. Fitzgerald has overseen the company’s balance sheet strengthening, including the reduction of net debt by more than A$400 million in FY2025, and plays a key role in capital allocation decisions across the group’s global portfolio.

John Richards – Non-Executive Chairman
John Richards was appointed Chairman of Sandfire in 2022. He has over 35 years of experience in the resources sector, specialising in strategy, business development, and M&A. Richards has previously worked in senior executive roles at Normandy Mining, AngloGold Ashanti, and international advisory firms. His focus as Chairman is on governance, shareholder engagement, and ensuring Sandfire’s strategy aligns with long-term value creation.

Other Non-Executive Directors
Sandfire’s board also includes experienced non-executives with backgrounds in law, finance, and project development. Collectively, they provide governance oversight, technical expertise, and international mining experience. Their presence has strengthened Sandfire’s capability to manage multi-jurisdiction operations and engage with stakeholders across Africa, Europe, and North America.

Sector Positioning & Macroeconomic Tailwinds

Copper is one of the most critical commodities for the global energy transition, with demand driven by electrification, grid infrastructure, renewable energy, and electric vehicles. The International Copper Study Group expects near-term surpluses in 2025–26 as new mines come online, followed by tightening balances toward the late 2020s as demand growth outpaces supply.

Figure 1 shows Sandfire’s operating leverage to copper price forecasts. A SARIMAX model projects copper at US$4.61/lb (≈A$6.98/lb) by December 2026, while futures markets anchor quarterly projections at US$4.70/lb (≈A$7.12/lb) over the same horizon. The 95% confidence interval on the statistical forecast remains wide, from US$1.13–8.09/lb (≈A$1.71–12.26/lb), underscoring inherent volatility.

For Sandfire, every ±A$1.00/lb move in copper translates to approximately ±A$190 million in EBITDA, or around ±A$2.00/share in equity value at current multiples. This provides investors with substantial upside optionality in a constructive copper market.

Figure 1: Copper price forecasts to December 2026 (source: SARIMAX model and futures projections; converted to AUD at A$1=US$0.66).

A second structural driver for copper lies on the supply side. Even as demand accelerates, new copper supply faces significant headwinds. Large-scale projects are increasingly challenged by long permitting timelines, escalating capital costs, and declining ore grades at mature mines. At the same time, geopolitical risks in South America and Africa add uncertainty to the timing and scale of new capacity. Figure 2 highlights the widening gap between projected demand growth and committed supply, demonstrating the likelihood of sustained deficits from the late 2020s onward.

Sandfire, which operates in relatively stable jurisdictions such as Botswana and Spain, and continues to progress expansion opportunities at Motheo and MATSA, this tightening supply environment enhances the long-term value of its producing assets and development pipeline.

Figure 2: Global copper demand versus supply projections to 2050
Source: The Oregon Group / BHP, 2024. Converted for illustrative purposes.